##### Table of Contents





UNITED
    STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
    20549
       FORM 10-Q
   þ

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended June 30,
    2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934   Commission File Number 1-10351
    POTASH CORPORATION OF
    SASKATCHEWAN INC.
 (Exact name of registrant as specified in its charter)
    Canada

N/A(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)122  1st Avenue South

S7K 7G3Saskatoon, Saskatchewan, Canada

(Zip Code)(Address of principal executive offices)    306-933-8500
 (Registrants telephone number, including area code)
    þ o
  Regulation S-T
  o o
  Rule 12b-2
  Large accelerated filer þ

Accelerated filer o

Non-accelerated filer o

Smaller reporting company o(Do not check if a smaller reporting company)   Rule 12b-2).
  o þ




---





TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSCondensed Consolidated Statements of Financial PositionCondensed Consolidated Statements of Operations and Retained EarningsCondensed Consolidated Statements of Cash FlowCondensed Consolidated Statements of Comprehensive IncomeCondensed Consolidated Statements of Accumulated Other Comprehensive IncomeNotes to the Condensed Consolidated Financial Statements For the Three and Six Months Ended June 30, 200914. Seasonality15. Contingencies16. Guarantees17. Related Party Commitment18. Reconciliation of Canadian and United States Generally Accepted Accounting PrinciplesITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERSITEM 6. EXHIBITSSIGNATURESExhibit 4(a)Exhibit 4(b)Exhibit 4(c)Exhibit 4(n)Exhibit 11Exhibit 31(a)Exhibit 31(b)Exhibit 32    Table of Contents  
  PART I.  FINANCIAL
    INFORMATION
 
  ITEM 1.
    FINANCIAL
    STATEMENTS  Potash
    Corporation of Saskatchewan Inc.

    Condensed Consolidated Statements of Financial Position(in millions of US dollars except share
    amounts)
    (unaudited)
  June 30,


December 31,2009


2008AssetsCurrent assetsCash and cash equivalents

$
371.3


$
276.8Accounts receivable


998.9



1,189.9Inventories (Note 2)


658.4



714.9Prepaid expenses and other current assets


191.9



79.2Current portion of derivative instrument assets


0.4



6.42,220.9



2,267.2Derivative instrument assets


9.9



11.5Property, plant and equipment


5,492.7



4,812.2Investments


3,173.1



2,750.7Other assets


250.4



288.7Intangible assets


20.5



21.5Goodwill


97.0



97.0$
11,264.5


$
10,248.8LiabilitiesCurrent liabilitiesShort-term debt and current portion of long-term debt
    (Note 3)

$
735.7


$
1,324.1Accounts payable and accrued charges


590.7



1,183.6Current portion of derivative instrument liabilities


84.7



108.11,411.1



2,615.8Long-term debt (Note 4)


3,082.1



1,739.5Derivative instrument liabilities


100.3



120.4Future income tax liability


769.8



794.2Accrued pension and other post-retirement benefits


266.0



253.4Accrued environmental costs and asset retirement obligations


133.6



133.4Other non-current liabilities and deferred credits


2.7



3.25,765.6



5,659.9Contingencies and Guarantees(Notes 15 and 16,
    respectively)Shareholders EquityShare capital


1,415.2



1,402.5Unlimited authorization of common shares without par value;
    issued and outstanding 295,552,385 and 295,200,987 at
    June 30, 2009 and December 31, 2008, respectively 
    Unlimited authorization of first preferred shares; none
    outstandingContributed surplus


145.8



126.2Accumulated other comprehensive income


1,099.4



657.9Retained earnings


2,838.5



2,402.35,498.9



4,588.9$
11,264.5


$
10,248.8    2




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##### Table of Contents



Potash
    Corporation of Saskatchewan Inc.

    Condensed Consolidated Statements of Operations and Retained
    Earnings(in millions of US dollars except per-share
    amounts)
    (unaudited)
  Three Months Ended


Six Months EndedJune 30


June 302009


2008


2009


2008Sales(Note 8)

$
856.0


$
2,621.0


$
1,778.5


$
4,511.6Less: Freight


38.9



103.4



76.5



205.8Transportation
    and distribution


37.7



33.3



64.7



65.6Cost of
    goods sold


608.8



1,047.0



1,237.1



1,946.9Gross Margin


170.6



1,437.3



400.2



2,293.3Selling and administrative


53.4



79.7



96.8



126.9Provincial mining and other taxes


(18.1
)


163.0



14.9



262.4Foreign exchange loss (gain)


37.9



1.9



7.7



(25.8
)Other income (Note 11)


(188.4
)


(103.3
)


(223.4
)


(115.2
)(115.2
)


141.3



(104.0
)


248.3Operating Income


285.8



1,296.0



504.2



2,045.0Interest Expense(Note 12)


26.5



15.7



49.7



26.9Income Before Income Taxes


259.3



1,280.3



454.5



2,018.1Income Taxes(Note 6)


72.2



375.2



(40.9
)


547.0Net Income

$
187.1


$
905.1



495.4



1,471.1Retained Earnings, Beginning of Period










2,402.3



2,279.6Repurchase of Common Shares










-



(1,981.7
)Dividends










(59.2
)


(62.8
)Retained Earnings, End of Period









$
2,838.5


$
1,706.2Net Income Per Share(Note 7)Basic

$
0.63


$
2.91


$
1.68


$
4.70Diluted

$
0.62


$
2.82


$
1.63


$
4.54Dividends Per Share

$
0.10


$
0.10


$
0.20


$
0.20    3




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##### Table of Contents



Potash
    Corporation of Saskatchewan Inc.

    Condensed Consolidated Statements of Cash Flow(in millions of US dollars)
    (unaudited)
  Three Months Ended


Six Months EndedJune 30


June 302009


2008


2009


2008Operating ActivitiesNet income

$
187.1


$
905.1


$
495.4


$
1,471.1Adjustments to reconcile net income to cash provided by
    operating activitiesDepreciation and amortization


70.1



83.9



144.1



163.8Stock-based compensation


20.1



25.1



22.6



27.9Loss (gain) on disposal of property, plant and equipment


0.9



(6.9
)


1.4



(6.8
)Gain on disposal of auction rate securities


(115.3
)


-



(115.3
)


-Provision for auction rate securities


-



0.7



-



43.8Foreign exchange on future income tax


11.7



(4.6
)


(2.1
)


(9.3
)Provision for (recovery of) of future income tax


41.4



47.4



(75.1
)


26.8Undistributed earnings of equity investees


69.1



(1.1
)


31.2



(24.5
)Derivative instruments


3.5



(1.9
)


(41.8
)


(19.0
)Other long-term liabilities


16.1



7.7



27.2



7.1Subtotal of adjustments


117.6



150.3



(7.8
)


209.8Changes in non-cash operating working capitalAccounts receivable


54.5



(283.5
)


191.9



(494.9
)Inventories


0.5



(106.2
)


61.1



(229.3
)Prepaid expenses and other current assets


(26.8
)


0.8



(53.6
)


(23.4
)Accounts payable and accrued charges


(396.6
)


228.1



(652.0
)


403.6Subtotal of changes in non-cash operating working capital


(368.4
)


(160.8
)


(452.6
)


(344.0
)Cash (used in) provided by operating activities


(63.7
)


894.6



35.0



1,336.9Investing ActivitiesAdditions to property, plant and equipment


(399.6
)


(237.9
)


(765.7
)


(434.4
)Purchase of long-term investments


-



(76.7
)


-



(251.2
)Proceeds from disposal of property, plant and equipment


15.5



9.3



15.8



9.6Proceeds from disposal of auction rate securities


132.5



-



132.5



-Other assets and intangible assets


0.7



(17.4
)


(10.5
)


(21.4
)Cash used in investing activities


(250.9
)


(322.7
)


(627.9
)


(697.4
)Cash before financing activities


(314.6
)


571.9



(592.9
)


639.5Financing ActivitiesProceeds from long-term debt obligations


1,795.0



-



2,555.0



-Repayment of and finance costs on long-term debt obligations


(1,538.8
)


(0.2
)


(2,229.2
)


(0.2
)Proceeds from short-term debt obligations


196.4



828.9



411.5



842.4Dividends


(29.0
)


(30.7
)


(58.7
)


(62.5
)Repurchase of common shares


-



(1,476.6
)


-



(1,897.1
)Issuance of common shares


7.2



12.0



8.8



28.3Cash provided by (used in) financing activities


430.8



(666.6
)


687.4



(1,089.1
)Increase (Decrease) in Cash and Cash Equivalents


116.2



(94.7
)


94.5



(449.6
)Cash and Cash Equivalents, Beginning of Period


255.1



364.6



276.8



719.5Cash and Cash Equivalents, End of Period

$
371.3


$
269.9


$
371.3


$
269.9Cash and cash equivalents comprised of:Cash

$
56.1


$
42.5


$
56.1


$
42.5Short-term investments


315.2



227.4



315.2



227.4$
371.3


$
269.9


$
371.3


$
269.9Supplemental cash flow disclosureInterest paid

$
30.5


$
22.8


$
46.0


$
37.1Income taxes paid

$
589.0


$
227.1


$
736.2


$
385.6    4




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##### Table of Contents



Potash
    Corporation of Saskatchewan Inc.

    Condensed Consolidated Statements of Comprehensive Income(in millions of US dollars)
    (unaudited)
  Three Months Ended


Six Months EndedJune 30


June 30(Net of related income taxes)

2009


2008


2009


2008Net income

$
187.1


$
905.1


$
495.4


$
1,471.1Other comprehensive incomeNet increase in unrealized gains on
    available-for-sale
    securities(1)


363.9



820.6



437.6



969.6Net gains (losses) on derivatives designated as cash flow
    hedges(2)


16.4



154.6



(28.8
)


198.7Reclassification to income of net losses (gains) on cash flow
    hedges(3)


16.8



(8.5
)


25.4



(14.2
)Unrealized foreign exchange gains on translation of
    self-sustaining foreign operations


7.4



3.3



7.3



4.9Other comprehensive income


404.5



970.0



441.5



1,159.0Comprehensive income

$
591.6


$
1,875.1


$
936.9


$
2,630.1   (1)
    
    Available-for-sale
    securities are comprised of shares in Israel Chemicals Ltd. and
    Sinofert Holdings Limited and investments in auction rate
    securities. The amounts are net of income taxes of $(0.3)
    (2008  $155.8) for the three months ended
    June 30, 2009 and $26.5 (2008  $186.2) for the
    six months ended June 30, 2009.(2)
    
    Cash flow hedges are comprised of
    natural gas derivative instruments, and are net of income taxes
    of $10.0 (2008  $62.3) for the three months ended
    June 30, 2009 and $(17.5) (2008  $81.2) for the
    six months ended June 30, 2009.(3)
    
    Net of income taxes of $10.1
    (2008  $(3.3)) for the three months ended
    June 30, 2009 and $15.4 (2008  $(5.8)) for the
    six months ended June 30, 2009. 
  Condensed
    Consolidated Statements of Accumulated Other Comprehensive
    Income
    (in millions of US dollars)
    (unaudited)
  June 30,


December 31,(Net of related income taxes)

2009


2008Net unrealized gains on
    available-for-sale
    securities(1)

$
1,199.4


$
761.8Net unrealized losses on derivatives designated as cash flow
    hedges(2)


(104.0
)


(100.6
)Unrealized foreign exchange gains (losses) on translation of
    self-sustaining foreign operations


4.0



(3.3
)Accumulated other comprehensive income


1,099.4



657.9Retained Earnings


2,838.5



2,402.3Accumulated Other Comprehensive Income and Retained
    Earnings

$
3,937.9


$
3,060.2   (1)
    
    $1,349.8 before income taxes
    (2008  $885.7)(2)
    
    $(165.8) before income taxes
    (2008  $160.2)   5




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##### Table of Contents



Potash
    Corporation of Saskatchewan Inc.

    Notes to the Condensed Consolidated Financial Statements
    For the Three and Six Months Ended June 30, 2009
    (in millions of US dollars except share, per-share, percentage
    and ratio amounts)
    (unaudited)
  1.
    Significant
    Accounting Policies  Basis
    of Presentation
      Change
    in Accounting Policy
  Goodwill
    and Intangible Assets
        Recent
    Accounting Pronouncements
  IFRSs
   6




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##### Table of Contents



Credit
    Risk and the Fair Value of Financial Assets and Financial
    Liabilities
    Business
    Combinations
    Noncontrolling
    Interests in Consolidated Financial Statements
    Mining
    Exploration Costs
    Financial
    Instrument Disclosure
   7




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##### Table of Contents



2.
    Inventories  June 30,


December 31,2009


2008Finished products

$
336.2


$
421.8Intermediate products


163.0



117.1Raw materials


45.7



67.8Materials and supplies


113.5



108.2$
658.4


$
714.9     3.
    Short-Term
    Debt and Current Portion of Long-Term Debt  June 30,


December 31,2009


2008Commercial paper

$
735.4


$
324.8Credit facility


-



1,000.0735.4



1,324.8Current portion of long-term debt


0.3



0.2Less net unamortized debt costs


-



(0.9
)$
735.7


$
1,324.1   364-day
 8




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##### Table of Contents



4.
    Long-Term
    Debt  June 30,


December 31,2009


2008Senior Notes7.750% notes due May 31, 2011

$
600.0


$
600.04.875% notes due March 1, 2013


250.0



250.05.250% notes due May 15, 2014


500.0



-6.500% notes due May 15, 2019


500.0



-5.875% notes due December 1, 2036


500.0



500.0Credit facilities


750.0



400.0Other


8.0



8.23,108.0



1,758.2Less net unamortized debt costs


(30.3
)


(22.8
)Add unamortized interest rate swap gains


3.2



3.93,080.9



1,739.3Less current maturities


(0.3
)


(0.2
)Add current portion of amortization


1.5



0.4$
3,082.1


$
1,739.5         5.
    Capital
    Management   9




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##### Table of Contents



June 30,


December 31,2009


2008Short-term debt and current portion of long-term debt

$
735.7


$
1,324.1Long-term debt


3,082.1



1,739.5Total debt


3,817.8



3,063.6Less: cash and cash equivalents


371.3



276.8Net debt


3,446.5



2,786.8Shareholders equity


5,498.9



4,588.9Less: accumulated other comprehensive income


1,099.4



657.9Adjusted shareholders equity


4,399.5



3,931.0Adjusted
    capital(1)

$
7,846.0


$
6,717.8   (1)
    
    Adjusted capital = (total
    debt  cash and cash equivalents) +
    (shareholders equity  accumulated other
    comprehensive income)    As At or For the12 Months EndedJune 30,


December 31,2009


2008Components of ratiosAdjusted EBITDA (twelve months ended)

$
3,310.4


$
5,030.0Net debt

$
3,446.5


$
2,786.8Adjusted interest expense (twelve months ended)

$
139.6


$
105.7Adjusted capital

$
7,846.0


$
6,717.8RatiosAdjusted EBITDA to adjusted interest
    expense(1)


23.7



47.6Net debt to adjusted
    EBITDA(2)


1.0



0.6Net debt to adjusted
    capital(3)


43.9
%


41.5
%   (1)
    
    Adjusted EBITDA to adjusted
    interest expense = adjusted EBITDA (twelve months ended) /
    adjusted interest expense (twelve months ended)(2)
    
    Net debt to adjusted EBITDA =
    (total debt  cash and cash equivalents) / adjusted
    EBITDA (twelve months ended)(3)
    
    Net debt to adjusted capital =
    (total debt  cash and cash equivalents) / (total
    debt  cash and cash equivalents + total
    shareholders equity  accumulated other
    comprehensive income)     10




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##### Table of Contents



Twelve














TwelveMonths Ended


Three Months Ended


Months EndedJune 30,


June 30,


March 31,


December 31,


September 30,


December 31,2009


2009


2009


2008


2008


2008Net income

$
2,519.5


$
187.1


$
308.3


$
788.0


$
1,236.1


$
3,495.2Income taxes


489.2



72.2



(113.1
)


66.8



463.3



1,077.1Interest expense


85.6



26.5



23.2



20.6



15.3



62.8Depreciation and amortization


307.8



70.1



74.0



80.4



83.3



327.5Provision for auction rate securities


45.0



-



-



17.5



27.5



88.8Gain on disposal of auction rate securities


(115.3
)


(115.3
)


-



-



-



-Gain on sale of assets


(21.4
)


-



-



-



(21.4
)


(21.4
)Adjusted EBITDA

$
3,310.4


$
240.6


$
292.4


$
973.3


$
1,804.1


$
5,030.0   Twelve














TwelveMonths Ended


Three Months Ended


Months EndedJune 30,


June 30,


March 31,


December 31,


September 30,


December 31,2009


2009


2009


2008


2008


2008Interest expense

$
85.6


$
26.5


$
23.2


$
20.6


$
15.3


$
62.8Interest capitalized to property, plant and equipment


54.0



17.2



12.8



10.8



13.2



42.9Adjusted interest expense

$
139.6


$
43.7


$
36.0


$
31.4


$
28.5


$
105.7   6.
    Income
    Taxes      
    A future income tax recovery of $119.2 for a tax rate reduction
    resulting from an internal restructuring during the first
    quarter.
    A current income tax recovery of $47.6 recorded in the first
    quarter that related to an increase in permanent deductions in
    the US from prior years. The recovery will have a positive
    impact on cash.
    A future income tax provision of $24.4 related to a
    second-quarter functional currency election by the parent
    company for Canadian income tax purposes.
    The benefit of a lower proportion of consolidated income earned
    in the higher-tax jurisdictions.    
    The benefit of a scheduled one and a half percentage point
    reduction in the Canadian federal income tax rate applicable to
    resource companies along with the elimination of the one percent
    surtax that became effective at the beginning of the year.
    A future income tax recovery of $42.0 recorded during the first
    quarter that related to an increase in permanent deductions in
    the US from prior years.
    No tax expense on the $25.3 gain recognized in the first quarter
    that resulted from the change in fair value of the forward
    purchase contract for shares in Sinofert Holdings Limited
    (Sinofert) as the gain was not taxable. 11




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##### Table of Contents



7.
    Net
    Income Per Share      8.
    Segment
    Information    Three Months Ended June 30, 2009Potash


Phosphate


Nitrogen


All Others


ConsolidatedSales

$
210.7


$
324.7


$
320.6


$
-


$
856.0Freight


10.6



15.8



12.5



-



38.9Transportation and distribution


11.6



12.5



13.6



-



37.7Net sales  third party


188.5



296.4



294.5



-Cost of goods sold


82.3



275.9



250.6



-



608.8Gross margin


106.2



20.5



43.9



-



170.6Depreciation and amortization


5.9



37.9



23.9



2.4



70.1Inter-segment sales


-



-



15.0



-



-   Three Months Ended June 30, 2008Potash


Phosphate


Nitrogen


All Others


ConsolidatedSales

$
1,194.5


$
782.0


$
644.5


$
-


$
2,621.0Freight


60.3



29.8



13.3



-



103.4Transportation and distribution


13.9



8.4



11.0



-



33.3Net sales  third party


1,120.3



743.8



620.2



-Cost of goods sold


233.9



402.9



410.2



-



1,047.0Gross margin


886.4



340.9



210.0



-



1,437.3Depreciation and amortization


24.0



35.7



22.3



1.9



83.9Inter-segment sales


-



10.5



40.6



-



-   12




---



##### Table of Contents



Six Months Ended June 30, 2009Potash


Phosphate


Nitrogen


All Others


ConsolidatedSales

$
479.9


$
654.6


$
644.0


$
-


$
1,778.5Freight


17.3



34.0



25.2



-



76.5Transportation and distribution


15.2



20.9



28.6



-



64.7Net sales  third party


447.4



599.7



590.2



-Cost of goods sold


174.6



570.4



492.1



-



1,237.1Gross margin


272.8



29.3



98.1



-



400.2Depreciation and amortization


13.4



76.9



49.2



4.6



144.1Inter-segment sales


-



-



20.8



-



-   Six Months Ended June 30, 2008Potash


Phosphate


Nitrogen


All Others


ConsolidatedSales

$
1,990.7


$
1,295.2


$
1,225.7


$
-


$
4,511.6Freight


115.6



61.9



28.3



-



205.8Transportation and distribution


25.3



16.4



23.9



-



65.6Net sales  third party


1,849.8



1,216.9



1,173.5



-Cost of goods sold


448.8



720.0



778.1



-



1,946.9Gross margin


1,401.0



496.9



395.4



-



2,293.3Depreciation and amortization


46.8



68.3



44.9



3.8



163.8Inter-segment sales


-



14.7



82.6



-



-   Assets
  Potash


Phosphate


Nitrogen


All Others


ConsolidatedAssets at June 30, 2009

$
3,912.6


$
2,273.3


$
1,582.8


$
3,495.8


$
11,264.5Assets at December 31, 2008


3,350.0



2,283.0



1,593.6



3,022.2



10,248.8Change in assets


562.6



(9.7
)


(10.8
)


473.6



1,015.7Additions to property, plant and equipment


536.8



173.3



44.5



11.1



765.7   9.
    Stock-Based
    Compensation    Expected dividend

$
0.40Expected volatility


48%Risk-free interest rate


2.53%Expected life of options


5.9 years  13




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##### Table of Contents



10.
    Pension
    and Other Post-Retirement Expenses  Defined
    Benefit Pension Plans
  Three Months


Six MonthsEnded June 30


Ended June 302009


2008


2009


2008Service cost

$
4.3


$
3.8


$
8.6


$
7.6Interest cost


11.1



10.0



22.2



20.0Expected return on plan assets


(9.6
)


(12.8
)


(19.2
)


(25.8
)Net amortization and change in valuation allowance


7.3



2.9



14.4



5.0Net expense

$
13.1


$
3.9


$
26.0


$
6.8   Other
    Post-Retirement Plans
  Three Months


Six MonthsEnded June 30


Ended June 302009


2008


2009


2008Service cost

$
1.6


$
1.4


$
3.1


$
2.8Interest cost


4.2



4.0



8.3



8.0Net amortization


0.2



0.2



0.3



0.3Net expense

$
6.0


$
5.6


$
11.7


$
11.1     11.
    Other
    Income  Three Months


Six MonthsEnded June 30


Ended June 302009


2008


2009


2008Share of earnings of equity investees

$
29.8


$
60.3


$
67.7


$
83.7Dividend income


40.4



33.7



40.4



33.7Gain on disposal of auction rate securities


115.3



-



115.3



-Other


2.9



10.0



-



16.3Gain on forward purchase contract for shares in Sinofert


-



-



-



25.3Provision for auction rate securities


-



(0.7
)


-



(43.8
)$
188.4


$
103.3


$
223.4


$
115.2    14




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##### Table of Contents



12.
    Interest
    Expense  Three Months


Six MonthsEnded June 30


Ended June 302009


2008


2009


2008Interest expense onShort-term debt

$
9.4


$
4.6


$
13.7


$
6.3Long-term debt


40.1



23.6



73.8



47.3Interest capitalized to property, plant and equipment


(17.2
)


(10.5
)


(30.0
)


(18.9
)Interest income


(5.8
)


(2.0
)


(7.8
)


(7.8
)$
26.5


$
15.7


$
49.7


$
26.9   13.
    Financial
    Instruments and Related Risk Management    Credit
    Risk
    June 30,


December 31,2009


2008Cash and cash equivalents

$
371.3


$
276.8Accounts receivable


998.9



1,189.9Derivative instrument assets


10.3



17.9Auction rate securities


-



17.2     June 30,


December 31,2009


20081  30 days

$
11.5


$
33.331  60 days


0.6



8.7Greater than 60 days


3.4



1.7$
15.5


$
43.7     As At and For the


As At and For theSix Months Ended


Year EndedJune 30,


December 31,2009


2008Balance  beginning of period

$
7.7


$
5.9Provision for receivables impairment


0.7



5.0Receivables written off during the period as uncollectible
    (primarily related to offshore receivables)


-



(3.2
)Balance  end of period

$
8.4


$
7.7    15




---



##### Table of Contents



Liquidity
    Risk
    June 30, 2009Total

Amount OutstandingAmount

and Committed

Amount AvailableCredit facilities

$
2,780.0
(1)

$
1,487.9
(1)

$
1,292.1
(1)Line of credit


75.0



30.5
(2)


44.5   (1)
    
    The amount available under the
    $750.0 commercial paper program is limited to the availability
    of backup funds under the credit facilities. Included in the
    amount outstanding and committed is $737.9 of commercial paper.
    Per the terms of the agreements, the commercial paper
    outstanding and committed, as applicable, is based on the US
    dollar balance or equivalent thereof in lawful money of other
    currencies at the time of issue; therefore, subsequent changes
    in the exchange rate applicable to Canadian dollar denominated
    commercial paper have no impact on this balance.(2)
    
    Letters of credit committed.          CarryingAmount ofLiability atJune 30,


Contractual


Within








Over2009


Cash Flows


1 year


1 to 3 years


3 to 5 years


5 yearsShort-term debt
    obligations(1)

$
735.4


$
739.8


$
739.8


$
-


$
-


$
-Accounts payable and accrued
    charges(2)


483.3



483.3



483.3



-



-



-Long-term debt
    obligations(1)


3,108.0



4,557.9



157.8



875.1



1,699.5



1,825.5Derivative financial instrument liabilitiesForeign currency forward contracts


13.7Outflow






443.5



443.5



-



-



-Inflow






(429.8
)


(429.8
)


-



-



-Natural gas hedging derivatives


171.3



179.0



70.6



58.5



16.3



33.6$
4,511.7


$
5,973.7


$
1,465.2


$
933.6


$
1,715.8


$
1,859.1  16




---



##### Table of Contents



(1)
    
    Contractual cash flows include
    contractual interest payments related to debt obligations.
    Interest rates on variable rate debt are based on prevailing
    rates at June 30, 2009.(2)
    
    Excludes taxes, accrued interest,
    deferred revenues and current portions of accrued environmental
    costs and asset retirement obligations and accrued pension and
    other post-retirement benefits. This also excludes derivative
    financial instrument liabilities which have been presented
    separately.  Market
    Risk
    Foreign
    Exchange Risk
    Carrying Amount


Foreign Exchange Riskof Asset (Liability)


5% increase in


5% decrease inat June 30,


US$


US$2009


Income


OCI


Income


OCICash and cash equivalents denominated in Canadian dollars

$
15.3


$
(0.8
)

$
-


$
0.8


$
-Accounts receivable denominated in Canadian dollars


9.5



(0.5
)


-



0.5



-Available-for-sale
    investmentsIsrael Chemical Ltd. denominated in New Israeli Shekels


1,426.3



-



(71.3
)


-



71.3Sinofert denominated in Hong Kong dollars


782.7



-



(39.1
)


-



39.1Short-term debt denominated in Canadian dollars


(511.4
)


25.6



-



(25.6
)


-Accounts payable denominated in Canadian dollars


(137.1
)


6.9



-



(6.9
)


-Derivative instrumentsForeign currency forward contracts


(13.6
)


(21.5
)


-



21.5



-     Interest
    Rate Risk
    Carrying Amount


Interest Rate Riskof Asset (Liability)


1% decrease in


1% increase inat June 30,


interest rates


interest rates2009


Income


OCI


Income


OCIFixed rate instrumentsLong-term debt
    obligations(1)

$
(2,352.1
)

$
-


$
-


$
-


$
-Variable rate instrumentsCash and cash equivalents


371.3



(3.7
)


-



3.7



-Long-term debt obligations


(755.9
)


7.6



-



(7.6
)


-Short-term debt
    obligations(2)


(735.4
)


-



-



-



-  17




---



##### Table of Contents



(1)
    
    The company does not measure any
    fixed rate debt at fair value. Therefore, changes in interest
    rates will not affect income or OCI as there is no change in the
    carrying value of fixed-rate debt and interest payments are
    fixed.(2)
    
    Commercial paper is excluded from
    interest rate risk on short-term obligations since interest
    rates are fixed for their stated period. The company is only
    exposed to interest rate risk on the issuance of new commercial
    paper.  Price
    Risk
    Carrying Amount


Price Riskof Asset (Liability)


10% decrease in


10% increase inat June 30,


prices


prices2009


Income


OCI


Income


OCIDerivative instrumentsNatural gas hedging derivatives

$
(161.0
)

$
-


$
(79.8
)

$
-


$
80.4Available-for-sale
    investmentsIntercorporate investments


2,209.0



-



(220.9
)


-



220.9     Fair
    Value
  point-in-time
    June 30,


December 31,2009


2008Carrying





CarryingAmount


Fair Value


Amount


Fair Valueof Asset


of Asset


of Asset


of Asset(Liability)


(Liability)


(Liability)


(Liability)Cash and cash equivalents

$
371.3


$
371.3


$
276.8


$
276.8Accounts receivable


998.9



998.9



1,189.9



1,189.9Derivative financial instruments


(174.7
)


(174.7
)


(210.6
)


(210.6
)Investments


3,173.1



6,674.9



2,750.7



4,615.2Short-term debt obligations


(735.4
)


(735.4
)


(1,323.9
)


(1,323.9
)Accounts payable and accrued charges


(483.3
)


(483.3
)


(565.3
)


(565.3
)Long-term debt


(3,108.0
)


(3,197.7
)


(1,758.2
)


(1,730.3
)    
  14.
    Seasonality   18




---



##### Table of Contents



15.
    Contingencies  Canpotex
    Mining
    Risk
    Investment
    in Arab Potash Company Ltd. (APC)
    Legal
    and Other Matters
    
    In 1998, the company, along with other parties, was notified by
    the US Environmental Protection Agency (USEPA) of
    potential liability under the US federal Comprehensive
    Environmental Response, Compensation and Liability Act of 1980
    (CERCLA) with respect to certain soil and
    groundwater conditions at a PCS Joint Venture blending facility
    in Lakeland, Florida and certain adjoining property. In 1999,
    PCS Joint Venture signed an Administrative Order and Consent
    with the USEPA pursuant to which PCS Joint Venture agreed to
    conduct a Remedial Investigation and Feasibility Study
    (RI/FS) of these conditions. PCS Joint Venture and
    another party are sharing the costs of the RI/FS, which is now
    complete. A Record of Decision (ROD) based upon the
    RI/FS was issued on September 27, 2007. The ROD provides
    for a remedy that requires excavation of impacted soils and
    interim treatment of groundwater. The total remedy cost is
    estimated in the ROD to be $8.5. Soil excavation activities are
    expected to begin in the fourth quarter of 2009. PCS Joint
    Venture and additional potentially responsible parties have
    negotiated with the USEPA a Remedial Design/Remedial Action
    Consent Decree, pursuant to which the parties will perform the
    ROD remedy. In addition, negotiations are underway regarding the
    appropriate share of the cost of the remedy that should be borne
    by each party. Although PCS Joint Venture sold the Lakeland
    property in July 2006, it has retained the above-described
    remediation responsibilities and has indemnified the third-party
    purchaser for the costs of remediation and certain related
    claims.
    The USEPA has identified PCS Nitrogen, Inc. (PCS
    Nitrogen) as a potentially responsible party with respect
    to a former fertilizer blending operation in Charleston, South
    Carolina, known as the Planters Property or Columbia Nitrogen
    site, formerly owned by a company from which PCS Nitrogen
    acquired certain other assets. The USEPA has requested
    reimbursement of $3.0 of previously incurred response costs and
    the performance or financing of future site investigation and
    response activities from PCS Nitrogen and other named
    potentially responsible parties. In September 2005,
    Ashley II of Charleston, L.L.C., the current owner of the
    Planters Property, filed a complaint in the United States
    District Court for the District of South Carolina (the
    Court) seeking a declaratory judgment that PCS
    Nitrogen is liable to pay environmental response costs that
    Ashley II of Charleston, L.L.C. alleges it has incurred and
    will incur in connection with response activities at the site.
    The Court entered an order bifurcating the case into two phases.
    In the third quarter of 2007, the Court issued its decision for
    the first phase of the case, in which it 19




---



##### Table of Contents



determined that PCS Nitrogen is the successor to a former owner
    of the site and may be liable to Ashley II of Charleston,
    L.L.C. for its environmental response costs at the site. PCS
    Nitrogen has filed and is pursuing third-party complaints
    against owners and operators that it believes should be
    responsible parties with respect to the site. In the first
    quarter of 2009, the judge who had been handling the case
    disqualified himself and the case was transferred to a new
    judge. PCS Nitrogen has filed a motion to vacate the orders
    entered by the previous judge, including the order finding that
    PCS Nitrogen is a successor to a former owner of the site. The
    Court entered an order in June 2009 denying PCS Nitrogens
    motion to vacate. PCS Nitrogen denies that it is a potentially
    responsible party and is vigorously defending its interests in
    these actions.  
    PCS Phosphate Company, Inc. (PCS Phosphate), along
    with several other entities, has received notice from parties to
    an Administrative Settlement Agreement (Settling
    Parties) with the USEPA of alleged contribution liability
    under CERCLA for costs incurred and to be incurred addressing
    PCB soil contamination at the Ward Superfund Site in Raleigh,
    North Carolina (Site). PCS Phosphate has agreed to
    participate, on a non-joint and several basis, with the Settling
    Parties in the performance of the removal action and the payment
    of certain other costs associated with the Site, including
    reimbursement of the USEPAs past costs. The cost of
    performing the removal action at the Site is estimated at $65.0.
    The removal activities commenced at the Site in August 2007. In
    July 2009, the Settling Parties served the company, and more
    than 100 other entities, with complaints seeking contribution
    for and recovery of response costs incurred in performing the
    removal action. The company anticipates recovering some portion
    of its expenditures for the removal action from other liable
    parties through settlement or litigation. In addition to the
    removal action at the Site, investigation of sediments
    downstream of the Site in what is called Operable Unit
    1 has occurred. In September 2008, the USEPA issued a
    final remedy, with an estimated cost of $6.1, for Operable Unit
    1. In October 2008, the USEPA issued special notice letters to
    PCS Phosphate and other alleged potentially responsible parties
    requiring a good-faith offer to perform
    and/or pay
    for the
    clean-up of
    Operable Unit 1, to perform further investigation at the Site
    and adjacent properties, and to reimburse USEPA for its past
    costs. In January 2009, in addition to good-faith offers made by
    other potentially responsible parties, PCS Phosphate, along with
    some of the Settling Parties, submitted a good-faith offer to
    the USEPA. The USEPA is reviewing the good-faith offers. At this
    time, the company is unable to evaluate the extent of any
    exposure that it may have for the matters addressed in the
    special notice letter.
    The USEPA has an ongoing initiative to evaluate implementation
    within the phosphate industry of a particular exemption for
    mineral processing wastes under the hazardous waste program. In
    connection with this industry-wide initiative, the USEPA
    conducted hazardous waste compliance evaluation inspections at
    numerous phosphate operations, including the companys
    plants in Aurora, North Carolina; Geismar, Louisiana; and White
    Springs, Florida. The USEPA has notified the company of various
    alleged violations of the US Resource Conservation and Recovery
    Act (RCRA) at its Aurora and White Springs plants.
    The company and other industry members have met with
    representatives of the US Department of Justice, the USEPA and
    various state environmental agencies regarding potential
    resolutions of these matters. During these meetings, the company
    was informed that the USEPA also believes the Geismar plant is
    in violation of these requirements. As part of the initiative,
    the company entered into RCRA 3013 Administrative Orders on
    Consent to perform certain site assessment activities at its
    White Springs, Aurora and Geismar plants. The company is
    uncertain if any resolution will be possible without litigation,
    or, if litigation occurs, what the outcome would be. At this
    time, the company is unable to evaluate the extent of any
    exposure that it may have in these matters.
    The USEPA also has begun an initiative to evaluate compliance
    with the Clean Air Act at sulfuric and nitric acid plants. In
    connection with this industry-wide initiative, the USEPA has
    sent requests for information to numerous facilities, including
    the companys plants in Augusta, Georgia; Aurora, North
    Carolina; Geismar, Louisiana; Lima, Ohio; and White Springs,
    Florida. The USEPA has notified the company of various alleged
    violations of the Clean Air Act at its Geismar and Lima plants.
    The company has met and will continue to meet with
    representatives of the USEPA and the US Department of Justice
    regarding 20




---



##### Table of Contents



potential resolutions of these matters. At this time, the
    company is unable to evaluate the extent of any exposure that it
    may have in these matters.  
    Significant portions of the companys phosphate reserves in
    Aurora, North Carolina are located in wetlands. Under the Clean
    Water Act, the company must obtain a permit from the US Army
    Corps of Engineers (the Corps) before disturbing the
    wetlands. On June 10, 2009, the Corps issued the company a
    permit to mine reserves in excess of thirty years. On
    June 17, 2009, USEPA advised the Corps that USEPA would not
    seek additional review of the permit or invoke its veto
    authority. In a related approval for mining, on March 12,
    2009, four environmental organizations (Pamlico-Tar River
    Foundation, North Carolina Coastal Federation, Environmental
    Defense Fund, and Sierra Club) filed a Petition for a Contested
    Case Hearing before the North Carolina Office of
    Administrative Hearings challenging the Certification issued to
    the Company by the North Carolina Department of Environment and
    Natural Resources Division of Water Quality pursuant to
    Section 401 of the Clean Water Act, 33 U.S.C.
    § 1341 and state rules. The company has intervened in
    this proceeding and, at this time, is unable to evaluate the
    extent of any exposure that it may have in this matter.
    Pursuant to the 1996 Corrective Action Consent Order (the
    Order) executed between PCS Nitrogen Fertilizer,
    L.P., formerly known as Arcadian Fertilizer, L.P. (PCS
    Nitrogen Fertilizer) and Georgia Department of Natural
    Resources, Environmental Protection Division (GEPD)
    in conjunction with PCS Nitrogen Fertilizers purchase of
    real property located in Augusta, Georgia from the entity from
    which PCS Nitrogen Fertilizer previously leased such property,
    PCS Nitrogen Fertilizer agreed to perform certain activities
    including a facility investigation and, if necessary, a
    corrective action. In accordance with the Order, PCS Nitrogen
    Fertilizer has performed an investigation of environmental site
    conditions, has documented its findings in several successive
    facility investigation reports submitted to GEPD, and has
    conducted a pilot study to evaluate the viability of in-situ
    bioremediation of groundwater at the site. Based on these
    findings, the requirements of the Order and the pilot study, in
    May 2009, PCS Nitrogen Fertilizer submitted a Corrective Action
    Plan (CAP) to GEPD proposing to utilize in-situ
    bioremediation of groundwater at the site. In the event GEPD
    approves the CAP, a full-scale bioremediation remedy will be
    implemented.
    In April 2009, the USEPA proposed rules to require greenhouse
    gas emission inventory reporting and to find that greenhouse gas
    emissions from mobile sources endanger public health and
    welfare. In May 2009, the Canadian government announced that its
    new industrial greenhouse gas emissions policies will be
    coordinated with policies that may be implemented in the US. It
    is anticipated that target numbers for emissions reductions will
    not be published until December 2009 at the earliest. The
    company is monitoring these policy changes and any effect they
    may have on our operations when they become final.
    At the direction of the USEPA, the Florida Department of
    Environmental Protection (FDEP) has announced a
    rulemaking to restrict nutrient concentrations in surface waters
    to levels below those currently permitted at the companys
    White Springs, Florida plant. The company is working with FDEP
    on the rulemaking to pursue an acceptable resolution. The
    company is uncertain if any resolution will be possible without
    litigation, or, if litigation occurs, what the outcome would be.
    The company, having been unable to agree with Mosaic Potash
    Esterhazy Limited Partnership (Mosaic) on the
    remaining amount of potash that the company is entitled to
    receive from Mosaic pursuant to the mining and processing
    agreement in respect of the companys rights at the
    Esterhazy mine, issued a statement of claim in the Saskatchewan
    Court of Queens Bench against Mosaic on May 27, 2009.
    Under the statement of claim the company has asserted that it
    has the right under the mining and processing agreement to
    receive potash from Mosaic until at least 2012, and seeks an
    order from the Court declaring the amount of potash which the
    company has the right to receive. Mosaic in its statement of
    defence dated June 16, 2009, asserts that at a delivery
    rate of 1.24 million tons of product per year, the
    companys entitlement to receive potash under the mining
    and processing agreement will terminate by August 30, 2010.
    Also, on June 16, 2009 Mosaic commenced a counterclaim
    against the company asserting that the company has breached the
    mining and processing agreement due to its refusal to take
    delivery of potash 21




---



##### Table of Contents



product under the agreement based on an event of force majeure.
    The company will continue to assert its position in these
    proceedings vigorously and it denies liability to Mosaic in
    connection with its counterclaim.  
    Between September 11 and October 2, 2008, the company and
    PCS Sales (USA), Inc. were named as defendants in eight very
    similar antitrust complaints filed in federal courts. Other
    potash producers are also defendants in these cases. Each of the
    separate complaints alleges conspiracy to fix potash prices, to
    divide markets, to restrict supply and to fraudulently conceal
    the conspiracy, all in violation of Section 1 of the
    Sherman Act. Five of the eight complaints were brought by
    plaintiffs who claim to have purchased potash directly from at
    least one of the defendants during the period between
    July 1, 2003 and the present (collectively, the
    Direct Purchaser Plaintiffs). All five Direct
    Purchaser Plaintiffs purport to sue on behalf of a class of
    persons who purchased potash in the United States directly from
    a defendant. The Direct Purchaser Plaintiffs, who filed a
    single, consolidated amended complaint on November 13,
    2008, seek unspecified treble damages, injunctive relief,
    attorneys fees, costs and pre- and post-judgment interest.
    The other three complaints were brought by plaintiffs who claim
    to be indirect purchasers of potash (collectively, the
    Indirect Purchaser Plaintiffs). The Indirect
    Purchaser Plaintiffs, who purport to sue on behalf of all
    persons who purchased potash indirectly in the United States,
    filed a single, consolidated amended complaint on
    November 13, 2008. In addition to the Sherman Act claim
    described above, the Indirect Purchaser Plaintiffs also assert
    claims for violation of various state antitrust laws; violations
    of various state consumer protection statutes; and for unjust
    enrichment. The Indirect Purchaser Plaintiffs seek injunctive
    relief, unspecified damages, treble damages where allowed,
    costs, fees and pre- and post-judgment interest. All eight
    lawsuits have been consolidated into a Multidistrict Litigation
    proceeding, or MDL (No. 1996), for coordinated pretrial
    proceedings before Judge Ruben Castillo in the United States
    District Court for the Northern District of Illinois (the
    Court). Two consolidated complaints, one for the
    Direct Purchaser Plaintiffs and one for the Indirect Purchaser
    Plaintiffs, have been filed. In June 2009, the company and PCS
    Sales (USA), Inc., along with the other defendants filed motions
    to dismiss the amended consolidated complaints filed by the
    Direct Purchaser Plaintiffs and the Indirect Purchaser
    Plaintiffs. The Court has stayed all discovery pending a
    resolution of the defendants motions to dismiss. The
    company and PCS Sales (USA), Inc. believe each of these eight
    private antitrust law lawsuits is without merit and intend to
    defend them vigorously.  and/or
       22




---



##### Table of Contents



16.
    Guarantees    back-to-back
         23




---



##### Table of Contents



17.
    Related
    Party Commitment   
  18.
    Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles    (a) Inventory valuation:
  (b) Long-term investments:
    (c) Property, plant and equipment and goodwill:
  (d) Depreciation and amortization:
  (e) Exploration costs:
  (f) Pension and other post-retirement benefits:
 24




---



##### Table of Contents



(g) Foreign currency translation adjustment:
  (h) Offsetting of certain amounts:
  (i) Stock-based compensation:
    (j) Stripping costs
  (k) Income taxes related to the above adjustments:
  (l) Income tax consequences of stock-based employee
    compensation:
  (m) Income taxes related to uncertain income tax
    positions:
 25




---



##### Table of Contents



(n) Cash flow statements:
  The application of US GAAP, as described above, would have
    had the following effects on net income, net income per share,
    total assets and shareholders equity.
  Three Months


Six MonthsEnded June 30


Ended June 302009


2008


2009


2008Net income as reported  Canadian GAAP

$
187.1


$
905.1


$
495.4


$
1,471.1Items increasing (decreasing) reported net incomeInventory valuation (a)


5.4



-



(0.3
)


-Depreciation and amortization (d)


2.1



2.1



4.2



4.2Exploration costs (e)


-



-



-



(5.9
)Stock-based compensation (i)


4.5



1.5



4.1



3.5Stripping costs (j)


(2.5
)


(2.8
)


(2.8
)


(3.5
)Share of earnings of equity investees (b)


0.6



0.8



-



0.2Pension and other post-retirement benefits (f)


0.3



0.1



0.6



0.2Deferred income taxes relating to the above adjustments (k)


(2.5
)


-



1.4



0.1Income taxes related to US GAAP effective tax rate (k)


(0.6
)


-



-



(3.2
)Income taxes related to stock-based compensation (l)


(3.8
)


(11.8
)


(4.4
)


(29.1
)Income taxes related to uncertain income tax positions (m)


4.2



2.4



(3.9
)


6.1Net income  US GAAP

$
194.8


$
897.4


$
494.3


$
1,443.7Basic weighted average shares outstanding  US GAAP


295,443,000



310,615,000



295,338,000



313,138,000Diluted weighted average shares outstanding  US GAAP


304,066,000



321,082,000



303,736,000



323,710,000Basic net income per share  US GAAP

$
0.66


$
2.89


$
1.67


$
4.61Diluted net income per share  US GAAP

$
0.64


$
2.79


$
1.63


$
4.46   26




---



##### Table of Contents



June 30,


December 31,2009


2008Total assets as reported  Canadian GAAP

$
11,264.5


$
10,248.8Items increasing (decreasing) reported total assetsInventory (a)


(0.3
)


-Property, plant and equipment (c)


(88.6
)


(92.8
)Exploration costs (e)


(13.0
)


(13.0
)Stripping costs (j)


(39.5
)


(36.7
)Pension and other post-retirement benefits (f)


(90.2
)


(105.2
)Margin deposits associated with derivative instruments (h)


(90.0
)


(91.1
)Investment in equity investees (b)


(1.0
)


1.3Income tax asset related to uncertain income tax positions (m)


29.6



24.8Goodwill (c)


(46.7
)


(46.7
)Total assets  US GAAP

$
10,924.8


$
9,889.4   June 30,


December 31,2009


2008Total shareholders equity as reported  Canadian
    GAAP

$
5,498.9


$
4,588.9Items increasing (decreasing) reported shareholders equityAccumulated other comprehensive income, net of related income
    taxes, consisting of:Income taxes related to uncertain income tax positions (m)


(1.2
)


(1.2
)Pension and other post-retirement benefits (f)


(238.2
)


(246.6
)Share of accumulated other comprehensive income of equity
    investees (b)


(1.2
)


-Foreign currency translation adjustment (g)


(20.9
)


(20.9
)Foreign currency translation adjustment (g)


20.9



20.9Provision for asset impairment (c)


(218.0
)


(218.0
)Inventory valuation (a)


(0.3
)


-Depreciation and amortization (d)


82.7



78.5Exploration costs (e)


(13.0
)


(13.0
)Stripping costs (j)


(39.5
)


(36.7
)Pension and other post-retirement benefits (f)


16.4



15.8Stock-based compensation (i)


3.5



-Share of earnings of equity investees (b)


1.3



1.3Deferred income taxes relating to the above adjustments (k)


31.5



30.1Income taxes related to US GAAP effective tax rate (k, l)


(82.3
)


(82.3
)Income taxes related to uncertain income tax positions(m)


82.6



86.5Shareholders equity  US GAAP

$
5,123.2


$
4,203.3  27




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##### Table of Contents



Supplemental
    US GAAP Disclosures
  Fair
    Value Measurement
    Fair Value Measurements Using:Carrying





Quoted Prices inAmount of





Active Markets for


Significant Other


SignificantAsset (Liability)





Identical Assets or


Observable


Unobservableat June 30,


Cash Collateral


Liabilities


Inputs


InputsDescription

2009


Netting


(Level 1)


(Level 2)


(Level 3)Derivative instrument assets

$
10.3


$
-


$
-


$
0.4


$
9.9Derivative instrument liabilities


(95.0
)


90.0
(1)


-



(58.4
)


(126.6
)Available-for-sale
    securities


2,209.0



-



2,209.0



-



-   (1)
    
    Amount represents the effect of
    legally enforceable master netting arrangements between the
    company and its counterparties and the payable or receivable for
    cash collateral held or placed with the same counterparty.  Three Months


Six MonthsFair Value Measurements Using Significant Unobservable Inputs
    (Level 3)

Ended June 30


Ended June 30For Derivative Instruments

2009


2008


2009


2008Beginning balance

$
(159.4
)

$
180.5


$
(110.8
)

$
127.7Total gains (losses) (realized and unrealized) before income
    taxesIncluded in earnings


(14.8
)


11.9



(23.2
)


17.9Included in other comprehensive income


38.9



205.1



(13.3
)


261.9Purchases, sales, issuances and settlements


18.6



(15.6
)


30.6



(25.6
)Ending balance, June 30

$
(116.7
)

$
381.9


$
(116.7
)

$
381.9Amount of total losses for the period included in earnings
    attributable to the change in unrealized losses relating to
    instruments still held at the reporting date

$
-


$
(3.1
)

$
(0.4
)

$
(3.4
)Gains (losses) (realized and unrealized) included in earnings
    for the period reported in Cost of goods sold

$
(14.8
)

$
11.9


$
(23.2
)

$
17.9   Three Months


Six MonthsFair Value Measurements Using Significant Unobservable Inputs
    (Level 3)

Ended June 30


Ended June 30For Available-For-Sale Securities

2009


2008


2009


2008Beginning balance

$
18.1


$
43.1


$
17.2


$
56.0Total gains (losses) (realized and unrealized) before income
    taxesIncluded in earnings


115.3



(0.7
)


115.3



(43.8
)Included in other comprehensive income


(0.9
)


4.5



-



34.7Purchases, sales, issuances and settlements


(132.5
)


-



(132.5
)


-Ending balance, June 30

$
-


$
46.9


$
-


$
46.9Amount of total gains (losses) for the period included in
    earnings attributable to the change in unrealized losses
    relating to instruments still held at the reporting date

$
-


$
(0.7
)

$
-


$
(43.8
)Gains (losses) (realized and unrealized) included in earnings
    for the period reported in Other income

$
115.3


$
(0.7
)

$
115.3


$
(43.8
)   Recent
    Accounting Pronouncements
  Derivative
    Instruments and Hedging Activities
   28




---



##### Table of Contents



Accounting for Derivative Instruments
        Cash Flow Hedges
   29




---



##### Table of Contents



Derivative Instruments Not Designated as Hedging
    Instruments
  marked-to-market
  Fair Values of Derivative Instruments in the Consolidated
    Statements of Financial Position
  June 30,


December 31,Fair value of derivative instrument
    assets:(1)                          Balance

    Sheet Location

2009


2008Derivatives designated as hedging instrumentsNatural gas contracts

Current portion of derivative instrument assets

$
0.3


$
0.1Natural gas contracts

Derivative instrument assets


9.9



11.5Total derivatives designated as hedging instruments


10.2



11.6Derivatives not designated as hedging instrumentsForeign currency forward contracts

Current portion of derivative instrument assets


0.1



6.3Total derivative instrument assets



$
10.3


$
17.9   June 30,


December 31,Fair value of derivative instrument
    liabilities:(1)                  Balance

    Sheet Location

2009


2008Derivatives designated as hedging instrumentsNatural gas contracts

Current portion of derivative instrument liabilities

$
71.0


$
50.2Natural gas contracts

Derivative instrument liabilities


100.3



120.4Total derivatives designated as hedging instruments


171.3



170.6Derivatives not designated as hedging instrumentsForeign currency forward contracts

Current portion of derivative instrument liabilities


13.7



57.9Total derivative instrument liabilities

$
185.0


$
228.5   (1)
    
    All fair value amounts are gross
    and exclude netted cash collateral balances.  The Effect of Derivative Instruments on the Consolidated
    Statements of Operations for the Three Months Ended June 30
  Amount ofLocation of (Loss)

(Loss) GainAmount of (Loss) Gain


Gain Recognized in

Recognized inAmount of


Location of (Loss)

Reclassified from


Income (Ineffective

Income (Ineffective(Loss) Gain


Gain Reclassified

Accumulated OCI into


Portion and Amount

Portion and AmountRecognized in OCI


from Accumulated

Income (Effective


Excluded from

Excluded fromDerivatives in Cash Flow

(Effective Portion)


OCI into Income

Portion)


Effectiveness

Effectiveness Testing)Hedging Relationships

2009


2008


(Effective Portion)

2009


2008


Testing)

2009


2008Natural gas contracts

$
26.4


$
220.1


Cost of goods sold

$
(26.9
)

$
15.0


Cost of goods sold

$
-


$
(3.2
)  30




---



##### Table of Contents



Amount of (Loss) GainDerivatives Not Designated



Recognized in Incomeas Hedging Instruments

Location of (Loss) Gain Recognized in Income

2009


2008Foreign currency forward contracts

Foreign exchange (loss) gain

$
(18.9
)

$
7.8   The Effect of Derivative Instruments on the Consolidated
    Statements of Operations for the Six Months Ended June 30
  Amount ofLocation of (Loss)

(Loss) GainAmount of (Loss) Gain


Gain Recognized in

Recognized inAmount of


Location of (Loss)

Reclassified from


Income (Ineffective

Income (Ineffective(Loss) Gain


Gain Reclassified

Accumulated OCI into


Portion and Amount

Portion and AmountRecognized in OCI


from Accumulated

Income (Effective


Excluded from

Excluded fromDerivatives in Cash Flow

(Effective Portion)


OCI into Income

Portion)


Effectiveness

Effectiveness Testing)Hedging Relationships

2009


2008


(Effective Portion)

2009


2008


Testing)

2009


2008Natural gas contracts

$
(46.1
)

$
283.5


Cost of goods sold

$
(40.6
)

$
23.6


Cost of goods sold

$
(0.2
)

$
(3.6
)   Amount of (Loss) GainDerivatives Not Designated



Recognized in Incomeas Hedging Instruments

Location of (Loss) Gain Recognized in Income

2009


2008Foreign currency forward contracts

Foreign exchange (loss) gain

$
(22.5
)

$
2.5   Methods
    and Assumptions
    over-the-counter Over-the-counter
  Contingent
    Features
   31




---



##### Table of Contents



Business
    Combinations
      Noncontrolling
    Interests in Consolidated Financial Statements
      Framework
    for Fair Value Measurement
      FASB
    Accounting Standards Codification
  FASB Accounting
    Standards
    Codification tm
    Fair
    Value Measurement in Inactive Markets and Distressed
    Transactions
      Other
    Than Temporary Impairment on Debt Securities
   32




---



##### Table of Contents



Fair
    Value Disclosure
      Subsequent
    Events
      Variable
    Interest Entities
    19.
    Comparative
    Figures   33




---



##### Table of Contents



ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K,
  POTASHCORP
    AND OUR BUSINESS ENVIRONMENT
        POTASHCORP
    VISION
      POTASHCORP
    STRATEGY
     34




---



##### Table of Contents



KEY
    PERFORMANCE DRIVERS  PERFORMANCE COMPARED TO
    GOALS
    
    management will focus on the most important things, which will
    be reinforced by having the measurable, relevant results readily
    accessible;
    employees will understand and be able to effectively monitor
    their contribution to the achievement of corporate
    goals; and
    we will be even more effective in meeting our targets.    Representative


PerformanceGoal


2009 Annual
    Target


to June 30,
    2009Achieve no harm to people.


Reduce total site severity injury rate by 25 percent by the
    end of 2011 from 2008 levels.


Total site severity injury rate was 0.88 for the first six
    months of 2009, representing a reduction of 10 percent
    compared to the 2008 annual level. The total site severity
    injury rate was not tracked in the first half of 2008.Achieve no damage to the environment.


Reduce total reportable releases, permit excursions and spills
    by 15 percent from 2008 levels.


Reportable release rate on an annualized basis declined
    71 percent, annualized permit excursions were down
    50 percent and annualized spills were down 25 percent
    during the first six months of 2009 compared to 2008 annual
    levels. Compared to the first six months of 2008, reportable
    releases were down 50 percent, permit excursions were down
    50 percent and spills were down 40 percent.Maximize long-term shareholder value.


Exceed total shareholder return for our sector and companies on
    the DAXglobal Agribusiness Index for 2009.


PotashCorps total shareholder return was 27 percent
    in the first six months of 2009 compared to the DAXglobal
    Agribusiness Index weighted average return of 25 percent
    and our sector weighted average return of 34 percent.   FINANCIAL
    OVERVIEW
  Form 10-Q.
 35




---



##### Table of Contents



Earnings
    Guidance
  26-28 percent.
    Overview
    of Actual Results
  Operations
  Three Months Ended June 30


Six Months Ended June 30Dollars (millions)  except







Dollar


%








Dollar


%per-share amounts

2009


2008


Change


Change


2009


2008


Change


ChangeSales

$
856.0


$
2,621.0


$
(1,765.0
)


(67
)

$
1,778.5


$
4,511.6


$
(2,733.1
)


(61
)Freight


38.9



103.4



(64.5
)


(62
)


76.5



205.8



(129.3
)


(63
)Transportation and distribution


37.7



33.3



4.4



13



64.7



65.6



(0.9
)


(1
)Cost of goods sold


608.8



1,047.0



(438.2
)


(42
)


1,237.1



1,946.9



(709.8
)


(36
)Gross margin

$
170.6


$
1,437.3


$
(1,266.7
)


(88
)

$
400.2


$
2,293.3


$
(1,893.1
)


(83
)Operating income

$
285.8


$
1,296.0


$
(1,010.2
)


(78
)

$
504.2


$
2,045.0


$
(1,540.8
)


(75
)Net income

$
187.1


$
905.1


$
(718.0
)


(79
)

$
495.4


$
1,471.1


$
(975.7
)


(66
)Net income per share  basic

$
0.63


$
2.91


$
(2.28
)


(78
)

$
1.68


$
4.70


$
(3.02
)


(64
)Net income per share  diluted

$
0.62


$
2.82


$
(2.20
)


(78
)

$
1.63


$
4.54


$
(2.91
)


(64
)     year-over-year
 36




---



##### Table of Contents



other-than-temporary
        Balance
    Sheet
     37




---



##### Table of Contents



available-for-sale
  Business
    Segment Review
   38




---



##### Table of Contents



and/or
    Potash
  Three Months Ended June 30Dollars (millions)


Tonnes (thousands)


Average Price per
    Tonne(1)2009


2008


% Change


2009


2008


% Change


2009


2008


% ChangeSales

$
210.7


$
1,194.5



(82
)Freight


10.6



60.3



(82
)Transportation and distribution


11.6



13.9



(17
)Net sales

$
188.5


$
1,120.3



(83
)Manufactured productNet salesNorth American

$
115.1


$
437.5



(74
)


200



1,086



(82
)

$
576.29


$
403.03



43Offshore


71.2



680.8



(90
)


194



1,633



(88
)

$
366.70


$
416.93



(12
)186.3



1,118.3



(83
)


394



2,719



(86
)

$
473.05


$
411.38



15Cost of goods sold


78.7



232.4



(66
)













$
199.95


$
85.56



134Gross margin


107.6



885.9



(88
)













$
273.10


$
325.82



(16
)Other miscellaneous and purchased productNet sales


2.2



2.0



10Cost of goods sold


3.6



1.5



140Gross margin


(1.4
)


0.5



n/mGross Margin

$
106.2


$
886.4



(88
)













$
269.54


$
326.00



(17
)   Six Months Ended June 30Dollars (millions)





Tonnes (thousands)


Average Price per
    Tonne(1)2009


2008


% Change


2009


2008


% Change


2009


2008


% ChangeSales

$
479.9


$
1,990.7



(76
)Freight


17.3



115.6



(85
)Transportation and distribution


15.2



25.3



(40
)Net sales

$
447.4


$
1,849.8



(76
)Manufactured productNet salesNorth American

$
200.5


$
729.1



(73
)


333



2,053



(84
)

$
601.75


$
355.12



69Offshore


239.2



1,112.8



(79
)


535



3,202



(83
)

$
447.19


$
347.56



29439.7



1,841.9



(76
)


868



5,255



(83
)

$
506.54


$
350.51



45Cost of goods sold


167.2



444.1



(62
)













$
192.60


$
84.52



128Gross margin


272.5



1,397.8



(81
)













$
313.94


$
265.99



18Other miscellaneous and purchased productNet sales


7.7



7.9



(3
)Cost of goods sold


7.4



4.7



57Gross margin


0.3



3.2



(91
)Gross Margin

$
272.8


$
1,401.0



(81
)













$
314.29


$
266.60



18   (1)
    
    Rounding differences may occur due
    to the use of whole dollars in per-tonne calculations.  n/m = not meaningful
 39




---



##### Table of Contents



Highlights
  
    Gross margin down $780.2 million for the quarter and
    $1,128.2 million for the first half of 2009 compared to
    same periods in 2008.
    Increased North American realized sales prices year over year
    reflect price increases introduced in 2008. Lower realized
    offshore prices quarter over quarter were indicative of levels
    recently established in the export market.
    Net sales down $931.8 million for the quarter,
    $1,402.4 million for the first half of 2009, compared to
    same periods in 2008, due to reduced sales volumes. Sales
    volumes down 86 percent for the quarter, 83 percent
    for the first half, due to major markets destocking inventories.
    Inventories up 1,375,000 tonnes from second-quarter 2008,
    281,000 tonnes from March 31, 2009, due to lower demand
    (partially offset by production curtailments).
    Cost of goods sold per-tonne increased $114 per tonne quarter
    over quarter, $108 per tonne year over year, due to production
    shutdown costs and brine inflow costs being allocated over fewer
    tonnes and higher royalties as a result of a higher potash sales
    price. The impact of a weaker Canadian dollar relative to the US
    dollar positively impacted cost of goods sold for both the
    second quarter and first half of 2009 compared to the same
    periods in 2008.  Manufactured
    potash gross margin variance attributable to:
  Three Months Ended June 30



Six Months Ended June 30Dollars (millions)


2009 vs. 2008



2009 vs. 2008Change in











Change inPrices/Costs











Prices/CostsChange in







Cost of Goods







Change in







Cost of GoodsSales Volumes



Net Sales



Sold



Total



Sales Volumes



Net Sales



Sold



TotalManufactured productNorth American


$
(313.5
)


$
37.0



$
(2.3
)


$
(278.8
)


$
(521.4
)


$
82.2



$
3.6



$
(435.6
)Offshore



(505.7
)



(20.9
)



27.2




(499.4
)



(779.0
)



53.3




36.1




(689.6
)Change in market mix



(1.4
)



1.3




-




(0.1
)



(0.1
)



-




-




(0.1
)Total manufactured product


$
(820.6
)


$
17.4



$
24.9



$
(778.3
)


$
(1,300.5
)


$
135.5



$
39.7



$
(1,125.3
)Other miscellaneous and purchased product


















(1.9
)


















(2.9
)Total

















$
(780.2
)

















$
(1,128.2
)     Sales and Cost of Goods Sold
    
    Despite limited product movement, our average realized potash
    price was 15 percent higher than second-quarter 2008
    levels; however, such prices dropped 11 percent from the
    previous quarter principally due to activity in the export
    markets. Offshore realized prices were below those of the
    trailing quarter as market pricing recalibrated to lower levels.
    Prices for most product shipped by PotashCorp to Canpotex
    Limited (Canpotex, the offshore marketing company
    for Saskatchewan potash producers) in the latter half of the
    quarter were adjusted to levels commensurate with those recently
    established in the offshore market. Offshore realized prices for
    the quarter were also affected by the allocation of
    transportation and distribution fixed costs over fewer sales
    tonnes. North American realized prices increased $173 per tonne
    due to price increases introduced in the second and third
    quarters of 2008. Realized North American prices declined $64
    per tonne from the trailing quarter due to weaker demand.
    Sales volumes were down 86 percent as buyers continued to
    operate with caution, carefully managing cash in a difficult
    economy and waiting to regain confidence in pricing levels.
    Offshore sales volumes fell 40




---



##### Table of Contents



88 percent as customers worldwide destocked inventories.
    Canpotex did not settle its annual price contracts with China
    and India by the end of the second quarter, whereas last year
    both contracts were settled by the second quarter. Canpotex only
    shipped 21,000 tonnes to China during the second quarter of
    2009, down 86 percent from the same period last year. India
    received 20,000 tonnes from Canpotex in the quarter, a decrease
    of 94 percent. Canpotex shipments to Brazil were 86,000
    tonnes, down 87 percent as that country cautiously began
    purchasing to replenish largely depleted inventories in advance
    of their key planting season. The 223,000 tonnes sent to
    Indonesia, Malaysia, Taiwan and Thailand in 2009 was
    73 percent below last year, as customers there worked
    through inventories. In North America, sales to our customers
    declined 82 percent as the decision by a large proportion
    of farmers to defer application resulted in an approximately
    40 percent reduction in potash applications for the current
    crop year. Volumes were further impacted by uncertainty about
    planting decisions and weather delays. As a result, dealers
    continued to manage purchases carefully, buying only as much as
    needed so they could end the spring season with limited
    inventories.  
    As a result of our long-held strategy of matching production
    with market demand, production levels were down 74 percent
    as shutdown weeks increased from 2 in 2008 to 50 weeks in
    2009. Cost of goods sold per tonne increased $114 per tonne as
    fixed costs were allocated over fewer tonnes sold. The impact of
    higher potash royalty rates ($8 per tonne) as a result of higher
    potash prices negatively impacted the price variance in cost of
    goods sold by $3.1 million. The weaker Canadian dollar
    relative to the US dollar positively impacted cost of goods sold
    by $13.1 million. The price variance in offshore cost of
    goods sold was more favorable than North America due to brine
    inflow management costs at New Brunswick decreasing
    $15.6 million as surface drilling equipment was temporarily
    idled since further grouting from surface is not considered
    necessary, in the near term, to control the water inflow rate.
    The price variance for North America cost of goods sold was
    negative due to industrial products, which cost more to produce,
    comprising a larger proportion of sales.    
    
    Offshore prices rose 29 percent due to announced price
    increases in Brazil, India, China and Southeast Asia in 2008
    being realized for a portion of 2009. With dealers and farmers
    globally continuing to work through inventories or reduce
    applications, potash prices moved lower during the second
    quarter of 2009, but avoided the significant decline seen in
    phosphate and nitrogen. In North America, realized prices
    climbed $247 per tonne as price increases implemented in 2008
    largely carried over to 2009. Prices in the North American
    market were affected by the higher than historic, and higher
    than offshore, proportion of industrial volumes relative to
    fertilizer.
    Sales were limited in the first half of 2009 as agreements for
    2009 shipments to India and China were not reached by
    June 30, 2009. Sales volumes in both North American and
    offshore markets remained weak due to market uncertainty over
    potash pricing. India, Canpotexs largest customer to date,
    took 263,000 tonnes in 2009 compared to nearly 700,000 tonnes in
    the first six months of 2008. Canpotexs shipments to China
    were 169,000 tonnes in 2009 compared to 324,000 tonnes in the
    first six months of 2008. Brazil took 86,000 41




---



##### Table of Contents



tonnes compared to 1,284,000 tonnes in the first six months of
    2008 when that country was Canpotexs largest customer.  
    Production levels were down 66 percent as a result of 89
    shutdown weeks compared to 2 shutdown weeks last year. All per
    tonne costs were amplified by the fact that there were fewer
    production tonnes over which to allocate the costs. The impact
    of a weaker Canadian dollar relative to the US dollar positively
    impacted cost of goods sold by $29.2 million. Potash
    royalties increased cost of goods sold by $7.0 million as
    potash prices increased. Brine inflow management costs at New
    Brunswick decreased $23.3 million as a result of stable
    brine inflow rates. Since the costs of brine inflow were
    attributed to production of potash that was mainly sold in the
    offshore market, the positive price component of the cost of
    goods sold variance was higher for the offshore market than for
    North America.    Phosphate
  Three Months Ended June 30Dollars (millions)


Tonnes (thousands)


Average Price per
    Tonne(1)2009


2008


% Change


2009


2008


% Change


2009


2008


% ChangeSales

$
324.7


$
782.0



(58
)Freight


15.8



29.8



(47
)Transportation and distribution


12.5



8.4



49Net sales

$
296.4


$
743.8



(60
)Manufactured productNet salesFertilizer  liquids

$
43.6


$
128.8



(66
)


177



190



(7
)

$
246.54


$
679.76



(64
)Fertilizer  solids


80.3



355.0



(77
)


273



370



(26
)

$
294.11


$
960.63



(69
)Feed


72.2



139.9



(48
)


139



183



(24
)

$
517.47


$
762.31



(32
)Industrial


96.2



105.2



(9
)


134



166



(19
)

$
717.46


$
633.50



13292.3



728.9



(60
)


723



909



(20
)

$
403.96


$
802.20



(50
)Cost of goods sold


274.7



391.8



(30
)













$
379.62


$
431.35



(12
)Gross margin


17.6



337.1



(95
)













$
24.34


$
370.85



(93
)Other miscellaneous and purchased productNet sales


4.1



14.9



(72
)Cost of goods sold


1.2



11.1



(89
)Gross margin


2.9



3.8



(24
)Gross Margin

$
20.5


$
340.9



(94
)













$
28.35


$
375.03



(92
)   42




---



##### Table of Contents



Six Months Ended June 30Dollars (millions)


Tonnes (thousands)


Average Price per
    Tonne(1)2009


2008


% Change


2009


2008


% Change


2009


2008


% ChangeSales

$
654.6


$
1,295.2



(49
)Freight


34.0



61.9



(45
)Transportation and distribution


20.9



16.4



27Net sales

$
599.7


$
1,216.9



(51
)Manufactured productNet salesFertilizer  liquids

$
87.7


$
223.7



(61
)


273



449



(39
)

$
320.94


$
498.44



(36
)Fertilizer  solids


172.9



531.3



(67
)


543



637



(15
)

$
318.29


$
834.31



(62
)Feed


140.7



235.4



(40
)


253



397



(36
)

$
556.03


$
592.62



(6
)Industrial


190.8



196.4



(3
)


250



358



(30
)

$
763.81


$
548.48



39592.1



1,186.8



(50
)


1,319



1,841



(28
)

$
448.79


$
644.67



(30
)Cost of goods sold


567.2



696.4



(19
)













$
429.91


$
378.29



14Gross margin


24.9



490.4



(95
)













$
18.88


$
266.38



(93
)Other miscellaneous and purchased productNet sales


7.6



30.1



(75
)Cost of goods sold


3.2



23.6



(86
)Gross margin


4.4



6.5



(32
)Gross Margin

$
29.3


$
496.9



(94
)













$
22.21


$
269.91



(92
)    (1)
    
    Rounding differences may occur due
    to the use of whole dollars in per-tonne calculations.  Highlights
  
    Gross margin down $320.4 million quarter over quarter,
    $467.6 million year over year. Manufactured gross margin
    for second-quarter 2009 comprised of: industrial
    $40.9 million, liquid fertilizer $2.5 million, feed
    $(0.6) million and solid fertilizer $(25.2) million.
    Manufactured gross margin for first six months of 2009 comprised
    of: industrial $76.1 million, liquid fertilizer
    $5.5 million, feed $(1.0) million and solid fertilizer
    $(55.7) million.
    Average realized sales price fell 50 percent quarter over
    quarter, 30 percent year over year, as a result of price
    weakness in all product usages except industrial.
    Volumes for all manufactured products declined, as customers
    exercised caution in the midst of economic uncertainty and drew
    down their own inventories while seeking market stability.
    Manufactured cost of goods sold declined $117.1 million
    from last years second quarter, $129.2 million from
    first half of 2008, as a result of curtailed production and
    lower sulfur costs. Manufactured cost of goods sold per tonne
    decreased quarter over quarter as a result of lower sulfur and
    ammonia input costs and increased year over year due to fixed
    costs being allocated over fewer tonnes.
    Curtailed production offset a decline in sales volumes and
    resulted in finished product inventories increasing slightly
    from 204,000 tonnes at June 30, 2008 to 206,000 tonnes at
    June 30, 2009. Inventories at the end of the second quarter
    increased from 186,000 tonnes at March 31, 2009 due to
    sales volumes falling further than second quarter production
    curtailments. 43




---



##### Table of Contents



Manufactured
    phosphate gross margin variance attributable to:
  Three Months Ended June 30



Six Months Ended June 30Dollars (millions)


2009 vs. 2008



2009 vs. 2008Change in











Change inPrices/Costs











Prices/CostsChange in







Cost of Goods







Change in







Cost of GoodsSales Volumes



Net Sales



Sold



Total



Sales Volumes



Net Sales



Sold



TotalManufactured productFertilizer  liquids


$
(22.2
)


$
(57.3
)


$
27.0



$
(52.5
)


$
(47.2
)


$
(48.5
)


$
26.3



$
(69.4
)Fertilizer  solids



(57.3
)



(194.7
)



36.9




(215.1
)



(56.6
)



(280.3
)



6.0




(330.9
)Feed



(19.8
)



(27.1
)



(23.5
)



(70.4
)



(42.5
)



(9.3
)



(51.0
)



(102.8
)Industrial



(12.6
)



14.2




19.9




21.5




(32.0
)



53.8




19.4




41.2Change in product mix



0.9




(0.7
)



(3.2
)



(3.0
)



(25.8
)



25.9




(3.7
)



(3.6
)Total manufactured product


$
(111.0
)


$
(265.6
)


$
57.1



$
(319.5
)


$
(204.1
)


$
(258.4
)


$
(3.0
)


$
(465.5
)Other miscellaneous and purchased product


















(0.9
)


















(2.1
)Total

















$
(320.4
)

















$
(467.6
)   Sales and Cost of Goods Sold
    
    Realized prices for solid fertilizer, liquid fertilizer and feed
    products decreased, reflecting weaker market conditions and
    markedly lower prices for raw material inputs. Industrial prices
    rose 13 percent as some of these products are sold to
    customers pursuant to contracts that contain cost-plus or market
    index provisions that lag current market conditions.
    Fertilizer sales volumes fell due to customer uncertainty about
    planting decisions, weather delays, lack of pricing direction
    and the economy. North American solid and liquid fertilizer
    dealers carefully managed purchases, buying only as much as
    needed so they could end the spring season with low stocks.
    Total feed sales volumes declined 24 percent caused by
    weakening economics for beef, pork and poultry producers in the
    US, lower offshore demand and the use of cheaper feed phosphate
    sources as a substitute. Industrial sales volumes were down
    19 percent due to reduced demand in the US associated with
    the poor economic conditions.
    Manufactured cost of goods sold per-tonne decreased
    12 percent mainly due to lower costs of sulfur and ammonia.
    Sulfur costs were down 55 percent and positively impacted
    the change in gross margin by $71.2 million while ammonia
    prices that were down 18 percent positively impacted the
    gross margin change (particularly, solid fertilizers) by
    $6.3 million. All product lines benefited from lower sulfur
    costs but feed had a negative price variance due to the
    absorption of a higher portion of fixed costs at our facility in
    White Springs, Florida and write-downs of finished product due
    to cost exceeding net realizable value.    
 44




---



##### Table of Contents




    All major phosphate product prices, except industrial, decreased
    due to lower demand and input costs throughout 2009. Industrial
    prices increased as a result of certain contracts based on prior
    year input costs which were significantly higher in 2008.
    Solid fertilizer sales volumes fell 15 percent due to
    demand deferral caused by pricing uncertainty and the decision
    by customers to work through existing inventory levels. Liquid
    fertilizer sales volumes decreased 39 percent due to
    decreased demand in the US. Demand for feed product declined
    36 percent due to weak economics for beef, pork and poultry
    and increased use of substitutes. Industrial sales volume fell
    30 percent due to a slow down in demand for purified
    phosphoric acid used for food (e.g., soft drinks, vegetable
    oils, salad dressings, etc.) and other commercial purposes
    (e.g., fire retardants, metal finishing, aluminum brightening,
    etc.).
    The increase in cost of goods sold per tonne was the result of
    fixed costs being allocated over fewer tonnes due to reduced
    operating rates at both our White Springs, Florida and Aurora,
    North Carolina operations. The price variance in cost of goods
    sold was flat despite lower sulfur costs ($37.0 million)
    and lower ammonia costs ($2.2 million), due to write-downs
    of finished product to net realizable value. All product lines
    benefited from lower sulfur costs but feed had a negative price
    variance due to a higher allocation of fixed costs (as a result
    of liquid fertilizer production volumes falling significantly
    and feed being the highest volume product at our White Springs,
    Florida plant which was shuttered for a significant portion of
    2009 through June 30, 2009) and write-downs of finished
    product to net realizable value.
    Significant sales volume declines in industrial and feed (for
    which prices are higher than fertilizers) coupled with
    significant price increases in industrial and only slightly
    lower feed prices, caused the change in market mix to produce an
    unfavorable variance of $25.8 million related to sales
    volumes and a favorable variance of $25.9 million in sales
    price.  Nitrogen
  Three Months Ended June 30Dollars (millions)


Tonnes (thousands)


Average Price per
    Tonne(1)2009


2008


% Change


2009


2008


% Change


2009


2008


% ChangeSales

$
320.6


$
644.5



(50
)Freight


12.5



13.3



(6
)Transportation and distribution


13.6



11.0



24Net sales

$
294.5


$
620.2



(53
)Manufactured productNet salesAmmonia

$
123.9


$
238.0



(48
)


450



432



4


$
275.07


$
551.09



(50
)Urea


92.9



177.0



(48
)


330



330



-


$
281.30


$
536.09



(48
)Nitrogen solutions/Nitric acid/Ammonium nitrate


69.2



145.6



(52
)


418



512



(18
)

$
165.64


$
284.38



(42
)286.0



560.6



(49
)


1,198



1,274



(6
)

$
238.67


$
440.04



(46
)Cost of goods sold


242.0



355.4



(32
)













$
201.94


$
278.97



(28
)Gross margin


44.0



205.2



(79
)













$
36.73


$
161.07



(77
)Other miscellaneous and purchased productNet sales


8.5



59.6



(86
)Cost of goods sold


8.6



54.8



(84
)Gross margin


(0.1
)


4.8



n/mGross Margin

$
43.9


$
210.0



(79
)













$
36.64


$
164.84



(78
)   45




---



##### Table of Contents



Six Months Ended June 30Dollars (millions)


Tonnes (thousands)


Average Price per
    Tonne(1)2009


2008


% Change


2009


2008


% Change


2009


2008


% ChangeSales

$
644.0


$
1,225.7



(47
)Freight


25.2



28.3



(11
)Transportation and distribution


28.6



23.9



20Net sales

$
590.2


$
1,173.5



(50
)Manufactured productNet salesAmmonia

$
214.8


$
478.6



(55
)


929



906



3


$
231.10


$
528.24



(56
)Urea


214.5



308.9



(31
)


725



627



16


$
295.89


$
492.88



(40
)Nitrogen solutions/Nitric acid/Ammonium nitrate


142.2



276.3



(49
)


804



1,067



(25
)

$
177.01


$
258.87



(32
)571.5



1,063.8



(46
)


2,458



2,600



(5
)

$
232.53


$
409.15



(43
)Cost of goods sold


478.6



682.0



(30
)













$
194.74


$
262.30



(26
)Gross margin


92.9



381.8



(76
)













$
37.79


$
146.85



(74
)Other miscellaneous and purchased productNet sales


18.7



109.7



(83
)Cost of goods sold


13.5



96.1



(86
)Gross margin


5.2



13.6



(62
)Gross Margin

$
98.1


$
395.4



(75
)













$
39.91


$
152.08



(74
)    (1)
    
    Rounding differences may occur due
    to the use of whole dollars in per-tonne calculations.  n/m = not meaningful
  Highlights
  
    Gross margin down $166.1 million quarter over quarter,
    $297.3 million year over year.
    Realized sales prices fell dramatically due to declining raw
    material input costs and weak demand from both the fertilizer
    and non-fertilizer sectors.
    Average natural gas costs in production, including hedging
    losses, decreased to $3.77 per MMBtu compared to $7.74 per MMBtu
    for second-quarter in 2008 due to lower US natural gas prices
    and Tampa ammonia prices to which our Trinidad natural gas is
    primarily indexed. Average natural gas costs in production,
    including hedging losses, decreased to $3.70 per MMBtu for the
    first six months of 2009 from $7.23 per MMBtu in the first six
    months of 2008.
    Our Trinidad operation, which benefits from long-term,
    lower-cost natural gas contracts, generated $22.9 million
    in second-quarter gross margin, $45.0 million in the first
    half of 2009. Our US operations which profited from lower spot
    gas costs in the second quarter, contributed $46.9 million
    in second-quarter 2009 gross margin, $92.5 million in
    first half of 2009. Our US operations experienced natural gas
    hedging losses of $25.9 million for the quarter and
    $39.4 million for the first six months of 2009. 46




---



##### Table of Contents



Manufactured
    nitrogen gross margin variance attributable to:
  Three Months Ended June 30



Six Months Ended June 30Dollars (millions)


2009 vs. 2008



2009 vs. 2008Change in











Change inPrices/Costs











Prices/CostsChange in







Cost of Goods







Change in







Cost of GoodsSales Volumes



Net Sales



Sold



Total



Sales Volumes



Net Sales



Sold



TotalManufactured productAmmonia


$
5.8



$
(124.0
)


$
75.0



$
(43.2
)


$
7.9



$
(276.1
)


$
148.9



$
(119.3
)Urea



1.1




(88.9
)



45.7




(42.1
)



24.8




(142.8
)



62.2




(55.8
)Solutions, NA, AN



(13.1
)



(48.0
)



24.2




(36.9
)



(31.0
)



(65.8
)



43.8




(53.0
)Hedge



-




-




(37.8
)



(37.8
)



-




-




(59.2
)



(59.2
)Change in product mix



(18.9
)



19.2




(1.5
)



(1.2
)



(50.5
)



50.5




(1.6
)



(1.6
)Total manufactured product


$
(25.1
)


$
(241.7
)


$
105.6



$
(161.2
)


$
(48.8
)


$
(434.2
)


$
194.1



$
(288.9
)Other miscellaneous and purchased product


















(4.9
)


















(8.4
)Total

















$
(166.1
)

















$
(297.3
)   Sales and Cost of Goods Sold
    
    Realized sales prices for nitrogen products dropped sharply
    against a backdrop of declining natural gas prices, weak
    downstream industrial demand for resins, nylons, plastics and
    rubber, and soft ammonia demand for solid phosphate fertilizers.
    Fertilizer sales volumes decreased 5 percent due, in part,
    to delayed spring plantings in North America due to suboptimal
    weather conditions, and light demand for nitrogen solutions due
    to high system-wide inventories. Non-fertilizer sales volumes
    were down 7 percent, largely as a result of demand
    contraction for customers associated with downstream housing,
    automotive, coal and metal mining markets, which have weakened
    considerably with the economic downturn. Ammonia sales were
    slightly higher as Trinidad production displaced sales of
    purchased product due to tempered industrial demand. Urea sales
    were flat, as a marked drop in industrial shipments was offset
    by an increase in offshore business.
    Manufactured cost of goods sold decreased 32 percent due to
    lower volumes and lower cost natural gas. The price variance in
    cost of goods sold was favorable $105.6 million. Total
    average natural gas cost in production, including hedge, was
    51 percent lower than second-quarter 2008. Trinidad natural
    gas cost is primarily indexed to Tampa ammonia prices and was
    60 percent lower in second-quarter 2009 compared to
    second-quarter 2008. US spot natural gas costs fell
    67 percent, though the impact on cost of goods sold was
    partially offset by losses from US natural gas hedging
    activities of $25.9 million this year, compared to gains of
    $11.9 million in 2008. The cost of goods sold price
    variance was more favorable in ammonia than in other products as
    natural gas is a larger component of ammonia than downstream
    products.
    The change in market mix caused an unfavorable variance of
    $18.9 million in sale volumes and a favorable variance of
    $19.2 million in sales price, due to a reduction in sales
    volumes for lower-priced nitrogen solutions, nitric acid and
    ammonium nitrate being more than offset by flat and slightly
    higher sales volumes for higher-priced urea and ammonia,
    respectively. 47




---



##### Table of Contents




    Realized sales prices fell as a result of lower natural gas
    prices and weak industrial demand associated with the economic
    downturn.
    Sales volumes for urea were up 16 percent due to higher
    shipments to offshore markets. Ammonia sales volumes were up
    three percent, with soft North American demand for direct
    application of solid phosphate fertilizers offset by export
    opportunities to high gas cost regions that had curtailed
    production. Nitrogen solutions sales volumes were down
    23 percent as customers worked through high inventories
    during cool, wet spring weather conditions. Nitric acid and
    ammonium nitrate sales volumes decreased 26 percent due to
    reduced industrial demand in the US as certain of our
    customers facilities operated at substantially lower rates
    due to the effects of the weak economy on consumer goods and
    durables and commercial explosives businesses.
    Cost of goods sold decreased 30 percent mainly due to the
    49 percent decrease in average natural gas costs included
    in production. Our natural gas costs in Trinidad production
    decreased 64 percent while our US natural gas spot costs in
    production decreased 56 percent. Losses from our US natural
    gas hedging activities were $39.4 million compared to gains
    of $19.8 million in 2008. Lower natural gas costs were
    offset somewhat by higher turnaround costs recognized in 2009
    that were not incurred in 2008 and additional costs associated
    with a fire at one of our plants at Trinidad in March. Ammonia
    had a greater effect on the decrease in cost of goods sold than
    urea and other nitrogen products as a higher proportion of
    natural gas is used.
    Market mix caused a variance of $50.5 million in both sales
    price (favorable) and sales volumes (unfavorable), due to lower
    sales volumes in lower-priced nitrogen solutions, nitric acid
    and ammonium nitrate being offset by increased sales volumes for
    higher-price ammonia and urea.    Expenses
    and Other Income
  Three Months Ended June 30


Six Months Ended June 30Dollars (millions)

2009


2008


Dollar Change


% Change


2009


2008


Dollar Change


% ChangeSelling and administrative

$
53.4


$
79.7


$
(26.3
)


(33
)

$
96.8


$
126.9


$
(30.1
)


(24
)Provincial mining and other taxes


(18.1
)


163.0



(181.1
)


n/m



14.9



262.4



(247.5
)


(94
)Foreign exchange loss (gain)


37.9



1.9



36.0



n/m



7.7



(25.8
)


33.5



n/mOther income


188.4



103.3



85.1



82



223.4



115.2



108.2



94Interest expense


26.5



15.7



10.8



69



49.7



26.9



22.8



85Income taxes


72.2



375.2



(303.0
)


(81
)


(40.9
)


547.0



(587.9
)


n/m      48




---



##### Table of Contents



other-than-temporary
    Three Months Ended June 30

Six Months Ended June 30%







%Dollars (millions)  except percentage
    amounts

2009

2008

Change

Change

2009

2008

Change

ChangeLong-term debt obligations, including current portionWeighted average outstanding

$
3,032.3

$
1,358.4

$
1,673.9


123

$
2,694.5

$
1,358.5

$
1,336.0


98Weighted average interest rate


4.8%


6.5%


(1.7)%


(26)


4.6%


6.5%


(1.9)%


(29)Short-term debt obligationsWeighted average outstanding

$
638.6

$
399.2

$
239.4


60

$
583.0

$
246.0

$
337.0


137Weighted average interest rate


1.5%


2.8%


(1.3)%


(46)


1.7%


3.1%


(1.4)%


(45)    49




---



##### Table of Contents



Current
    Market Conditions
       50




---



##### Table of Contents



and/or
          LIQUIDITY
    AND CAPITAL RESOURCES
    Cash
    Requirements
     51




---



##### Table of Contents



Contractual
    Obligations and Other Commitments
  June 30, 2009Dollars (millions)

Payments Due By PeriodTotal


Within 1 year


1 to 3 years


3 to 5 years


Over 5 yearsLong-term debt obligations

$
3,108.0


$
0.3


$
606.9


$
1,500.8


$
1,000.0Estimated interest payments on long-term debt obligations


1,449.9



157.5



268.2



198.7



825.5Operating leases


660.2



100.2



167.8



142.8



249.4Purchase
    obligations(1)


909.9



223.3



345.6



124.7



216.3Other commitments


73.8



30.5



19.9



10.6



12.8Other long-term liabilities


1,192.1



139.3



121.3



79.5



852.0Total

$
7,393.9


$
651.1


$
1,529.7


$
2,057.1


$
3,156.0   (1)
    
    Potash purchase obligations have
    been priced using expected prices as at August 6, 2009    Long-Term
    Debt
  back-to-back
      back-to-back
   52




---



##### Table of Contents



Operating
    Leases
    Purchase
    Obligations
          Other
    Commitments
      Other
    Long-Term Liabilities
      Capital
    Expenditures
    ramp-up
 53




---



##### Table of Contents



2-million-tonne-per-year ramp-up
  ramp-up
  ramp-up
      Sources
    and Uses of Cash
    Three Months Ended June 30


Six Months Ended June 30$


%








$


%Dollars (millions)

2009


2008


Change


Change


2009


2008


Change


ChangeCash (used in) provided by operating activities

$
(63.7
)

$
894.6


$
(958.3
)


n/m


$
35.0


$
1,336.9


$
(1,301.9
)


(97
)Cash (used in) investing activities


(250.9
)


(322.7
)


71.8



(22
)


(627.9
)


(697.4
)


69.5



(10
)Cash provided by (used in) financing activities


430.8



(666.6
)


1,097.4



n/m



687.4



(1,089.1
)


1,776.5



n/m       June 30,


December 31,





%Dollars (millions)  except ratio amounts

2009


2008


Change


ChangeCurrent assets

$
2,220.9


$
2,267.2


$
(46.3
)


(2
)Current liabilities

$
(1,411.1
)

$
(2,615.8
)

$
1,204.7



(46
)Working capital

$
809.8


$
(348.6
)

$
1,158.4



n/mCurrent ratio


1.57



0.87



0.70



80    54




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##### Table of Contents



2006-2008
    
    Our spending on property, plant and equipment was
    $399.6 million in the second quarter of 2009 and
    $765.7 million for the first half of the year, an increase
    of $161.7 million and $331.3 million, respectively,
    compared to the same periods in 2008. Approximately
    71 percent (2008  76 percent) of our
    consolidated capital expenditures for the second quarter related
    to the potash segment and 70 percent (2008 
    69 percent) related to the potash segment in the first six
    months of 2009.
    During the second quarter of 2009, $132.5 million was
    received from the disposal of the auction rate securities.
    During the first three months of 2008, $173.7 million was
    paid to settle the companys forward purchase contract for
    shares of Sinofert. During the second quarter of 2008, the
    company purchased additional shares in Sinofert for a total cost
    of $76.4 million. No such transactions took place during
    2009.   55




---



##### Table of Contents



Principal
    Debt Instruments
  June 30, 2009Total

Amount Outstanding

AmountDollars (millions)

Amount

and Committed

AvailableCredit facilities

$
2,780.0
(1)

$
1,487.9
(1)

$
1,292.1
(1)Line of credit


75.0



30.5
(2)


44.5    (1)
    
    The amount available under the
    $750.0 million commercial paper program is limited to the
    availability of backup funds under the credit facilities.
    Included in the amount outstanding and committed is
    $737.9 million of commercial paper. Per the terms of the
    agreements, the commercial paper outstanding and committed, as
    applicable, is based on the US dollar balance or equivalent
    thereof in lawful money of other currencies at the time of
    issue; therefore, subsequent changes in the exchange rate
    applicable to Canadian dollar denominated commercial paper have
    no impact on this balance.(2)
    
    Letters of credit committed.    debt-to-capital debt-to-EBITDA
       56




---



##### Table of Contents



Outstanding
    Share Data
    Off-Balance
    Sheet Arrangements
    Guarantee
    Contracts
  Form 10-Q
  Derivative
    Instruments
  marked-to-market
  Long-Term
    Fixed Price Contracts
    QUARTERLY
    FINANCIAL HIGHLIGHTS
  Dollars (millions)  except


June 30,



March 31,



December 31,



September 30,



June 30,



March 31,



December 31,



September 30,per-share amounts


2009



2009



2008



2008



2008



2008



2007



2007Sales


$
856.0



$
922.5



$
1,870.6



$
3,064.3



$
2,621.0



$
1,890.6



$
1,431.4



$
1,295.0Gross margin



170.6




229.6




873.1




1,741.0




1,437.3




856.0




535.0




475.1Net income



187.1




308.3




788.0




1,236.1




905.1




566.0




376.8




243.1Net income per share  basic



0.63




1.04




2.63




4.07




2.91




1.79




1.19




0.77Net income per share  diluted



0.62




1.02




2.56




3.93




2.82




1.74




1.16




0.75      57




---



##### Table of Contents



RELATED
    PARTY TRANSACTIONS
      CRITICAL
    ACCOUNTING ESTIMATES
  Form 10-Q.
      RECENT
    ACCOUNTING CHANGES
  Form 10-Q
  International
    Financial Reporting Standards
    case-by-case
 58




---



##### Table of Contents




    Scoping and diagnostic phase  This phase involves
    performing a high-level impact assessment to identify key areas
    that may be impacted by the transition to IFRSs. Potentially
    affected areas are ranked as high, medium or low priority.
    Impact analysis, evaluation and design phase  In this
    phase, each area identified from the scoping and diagnostic
    phase is addressed in order of descending priority, with project
    teams established as deemed necessary. This phase involves
    specifying changes required to existing accounting policies,
    information systems and business processes, analyzing policy
    alternatives allowed under IFRSs and developing draft IFRSs
    financial statement content. Broader implications on our
    business activities are being assessed particularly in relation
    to our debt covenants, compensation arrangements, hedging
    activities, budgeting and management reporting. Also in this
    phase, internal controls over financial reporting and disclosure
    controls and procedures are evaluated to ensure that they remain
    effective both during and after the transition to IFRSs.
    Implementation and review phase  This phase includes
    executing changes to information systems, business processes and
    internal controls, completing formal authorization processes to
    approve recommended accounting policy changes and conducting
    training programs across the companys finance and other
    staff, as necessary. This stage culminates in collecting
    financial information necessary to compile IFRSs-compliant
    financial statements, embedding IFRSs in business processes,
    eliminating any unnecessary data collection processes and audit
    committee approval of IFRSs financial statements. Implementation
    also involves delivering further training to staff as revised
    systems begin to take effect.      First-Time
    Adoption of IFRSs
   59




---



##### Table of Contents



Business
    Combinations
    Property,
    Plant and Equipment
  asset-by-asset
  Share-Based
    Payments
    Employee
    Benefits
    Cumulative
    Translation Differences
    Decommissioning
    Liabilities
    Expected
    Areas of Significance
   60




---



##### Table of Contents



Asset
    Impairment
    Employee
    Benefits
    Share-Based
    Payments
    Provisions
    (Including Asset Retirement Obligations)
      Income
    Taxes
   61




---



##### Table of Contents



RISK
    MANAGEMENT
    and/or
  Form 10-K.
        OUTLOOK
   62




---



##### Table of Contents



55-60 million
    1 ramp-up
  market-by-market
  14-16 percent, 23-25 percent.
    1 Constructed

    capacity: Equipment in a state of readiness to produce. While
    constructed capacity is increased at mechanical completion of a
    project, a period of
    ramp-up may
    be required to achieve full operating levels.
 63




---



##### Table of Contents



FORWARD-LOOKING
    STATEMENTS
  Form 10-Q, Form 10-Q, Form 10-K
 
  ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Form 10-Q.
 
  ITEM 4.
    CONTROLS
    AND PROCEDURES  Securities Exchange Act of 1934
   64




---



##### Table of Contents



PART II.
    OTHER INFORMATION
 
  ITEM 1.
    LEGAL
    PROCEEDINGS  Form 10-Q.
 
  ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS      FOR


AGAINST


WITHHELD*Christopher M. Burley


224,562,550



1030



893,953William J. Doyle


224,658,162



6630



797,781John W. Estey


216,399,288



1030



9,057,215C. Steven. Hoffman


224,649,728



1030



806,775Dallas J. Howe


224,567,968



4930



888,145Alice D. Laberge


224,585,833



1030



870,670Keith G. Martell


216,391,587



1030



9,064,916Jeffrey J. McCaig


216,264,540



1030



9,191,963Mary Mogford


224,639,332



1030



817,171Paul J. Schoenhals


216,431,467



6630



9,024,476E. Robert Stromberg, Q.C.


214,187,279



6630



11,268,664Elena Viyella de Paliza


214,306,269



6630



11,149,674        (*)
    
    Number of withheld votes is based
    upon proxies received prior to the Meeting. 65




---



##### Table of Contents



ITEM 6.
    EXHIBITS    Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)3(a)

Articles of Continuance of the registrant dated May 15,
    2002.

10-Q

6/30/20023(b)

Bylaws of the registrant effective May 15, 2002.

10-Q

6/30/20024(a)

Term Credit Agreement between The Bank of Nova Scotia and other
    financial institutions and the registrant dated
    September 25, 2001.4(b)

Syndicated Term Credit Facility Amending Agreement between The
    Bank of Nova Scotia and other financial institutions and the
    registrant dated as of September 23, 2003.4(c)

Syndicated Term Credit Facility Second Amending Agreement
    between The Bank of Nova Scotia and other financial institutions
    and the registrant dated as of September 21, 2004.4(d)

Syndicated Term Credit Facility Third Amending Agreement between
    The Bank of Nova Scotia and other financial institutions and the
    registrant dated as of September 20, 2005.

8-K

9/22/2005

4(a)4(e)

Syndicated Term Credit Facility Fourth Amending Agreement
    between The Bank of Nova Scotia and other financial institutions
    and the registrant dated as of September 27, 2006.

10-Q

9/30/20064(f)

Syndicated Term Credit Facility, Fifth Amending Agreement
    between the Bank of Nova Scotia and other financial institutions
    and the registrant dated as of October 19, 2007.

8-K

10/22/2007

4(a)4(g)

Indenture dated as of June 16, 1997, between the registrant
    and The Bank of Nova Scotia Trust Company of New York.

8-K

6/18/1997

4(a)4(h)

Indenture dated as of February 27, 2003, between the
    registrant and The Bank of Nova Scotia Trust Company of New
    York.

10-K

12/31/2002

4(c)4(i)

Form of Note relating to the registrants offering of
    $600,000,000 principal amount of 7.75% Notes due
    May 31, 2011.

8-K

5/17/2001

44(j)

Form of Note relating to the registrants offering of
    $250,000,000 principal amount of 4.875% Notes due
    March 1, 2013.

8-K

2/28/2003

44(k)

Form of Note relating to the registrants offering of
    $500,000,000 principal amount of 5.875% Notes due
    December 1, 2036.

8-K

11/30/2006

4(a)4(l)

Form of Note relating to the registrants offering of
    $500,000,000 principal amount of 5.25% Notes due
    May 15, 2014.

8-K

5/1/2009

4(a) 66




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##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)4(m)

Form of Note relating to the registrants offering of
    $500,000,000 principal amount of 6.50% Notes due
    May 15, 2019.

8-K

5/1/2009

4(b)4(n)

Amended and Restated Revolving Term Credit Facility Agreement
    between the Bank of Nova Scotia and other financial institutions
    and the registrant dated as of January 21, 2009.4(o)

First Amending Agreement to the Amended and Restated Term Credit
    Facility Agreement between the Bank of Nova Scotia and other
    financial institutions and the registrant dated March 5,
    2009.

8-K

3/6/2009

4(a)    Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10
(a)

Sixth Voting Agreement dated April 22, 1978, between
    Central Canada Potash, Division of Noranda, Inc., Cominco Ltd.,
    International Minerals and Chemical Corporation (Canada)
    Limited, PCS Sales and Texasgulf Inc.

F-1
    (File No.
    33-31303)

9/28/1989

10(f)10
(b)

Canpotex Limited Shareholders Seventh Memorandum of Agreement
    effective April 21, 1978, between Central Canada Potash,
    Division of Noranda Inc., Cominco Ltd., International Minerals
    and Chemical Corporation (Canada) Limited, PCS Sales, Texasgulf
    Inc. and Canpotex Limited as amended by Canpotex S&P
    amending agreement dated November 4, 1987.

F-1
    (File No.
    33-31303)

9/28/1989

10(g)10
(c)

Producer Agreement dated April 21, 1978, between Canpotex
    Limited and PCS Sales.

F-1
    (File No.
    33-31303)

9/28/1989

10(h)10
(d)

Canpotex/PCS Amending Agreement, dated as of October 1,
    1992.

10-K

12/31/1995

10(f)10
(e)

Canpotex PCA Collateral Withdrawing/PCS Amending Agreement,
    dated as of October 7, 1993.

10-K

12/31/1995

10(g)10
(f)

Canpotex Producer Agreement amending agreement dated as of
    January 1, 1999.

10-K

12/31/200010
(g)

Canpotex Producer Agreement amending agreement dated as of
    July 1, 2002.

10-Q

6/30/2004 67




---



##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10
(h)

Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978, between International
    Minerals & Chemical Corporation (Canada) Limited and
    the registrants predecessor.

F-1
    (File No.
    33-31303)

9/28/1989

10(e)10
(i)

Agreement dated December 21, 1990, between International
    Minerals & Chemical Corporation (Canada) Limited and
    the registrant, amending the Esterhazy Restated Mining and
    Processing Agreement dated January 31, 1978.

10-K

12/31/1990

10(p)10
(j)

Agreement effective August 27, 1998, between International
    Minerals & Chemical (Canada) Global Limited and the
    registrant, amending the Esterhazy Restated Mining and
    Processing Agreement dated January 31, 1978 (as amended).

10-K

12/31/1998

10(l)10
(k)

Agreement effective August 31, 1998, among International
    Minerals & Chemical (Canada) Global Limited,
    International Minerals & Chemical (Canada) Limited
    Partnership and the registrant assigning the interest in the
    Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978 (as amended) held by International
    Minerals & Chemical (Canada) Global Limited to
    International Minerals & Chemical (Canada) Limited
    Partnership.

10-K

12/31/1998

10(m)10
(l)

Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Directors, as amended.

10-K

12/31/200610
(m)

Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Officers and Employees, as amended.

10-K

12/31/200610
(n)

Short-Term Incentive Plan of the registrant effective January
    2000, as amended.

10-K

12/31/200810
(o)

Resolution and Forms of Agreement for Supplemental Retirement
    Income Plan, for officers and key employees of the registrant.

10-K

12/31/199510
(p)

Amending Resolution and revised forms of agreement regarding
    Supplemental Retirement Income Plan of the registrant.

10-Q

6/30/1996

10(x)10
(q)

Amended and restated Supplemental Retirement Income Plan of the
    registrant and text of amendment to existing supplemental income
    plan agreements.

10-Q

9/30/2000

10(mm)10
(r)

Amendment, dated February 23, 2009, to the amended and
    restated Supplemental Retirement Income Plan.

10-K

12/31/200810
(s)

Form of Letter of amendment to existing supplemental income plan
    agreements of the registrant.

10-K

12/31/2002

10(cc) 68




---



##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10
(t)

Amended and restated agreement dated February 20, 2007,
    between the registrant and William J. Doyle concerning the
    Supplemental Retirement Income Plan.

10-K

12/31/2006

10(s)10
(u)

Amendment, dated December 24, 2008, to the amended and
    restated agreement, dated February 20, 2007, between the
    registrant and William J. Doyle concerning the Supplemental
    Retirement Income Plan.

10-K

12/31/200810
(v)

Amendment, dated February 23, 2009, to the amended and
    restated agreement, dated February 20, 2007, between the
    registrant and William J. Doyle concerning the Supplemental
    Retirement Income Plan.

10-K

12/31/200810
(w)

Amendment, dated February 23, 2009, to the amended and
    restated agreement dated August 2, 2006, between the
    registrant and Wayne R. Brownlee concerning the Supplemental
    Retirement Income Plan.

10-K

12/31/200810
(x)

Amendment, dated February 23, 2009, to the amended and
    restated agreement, dated August 2, 1996, between the
    registrant and Garth W. Moore concerning the Supplemental
    Retirement Income Plan.

10-K

12/31/200810
(y)

Supplemental Retirement Benefits Plan for U.S. Executives dated
    effective January 1, 1999.

10-Q

6/30/2002

10(aa)10
(z)

Amendment No. 1, dated December 24, 2008, to the
    Supplemental Retirement Plan for U.S. Executives.

10-K

12/31/200810
(aa)

Amendment No. 2, dated February 23, 2009, to the
    Supplemental Retirement Plan for U.S. Executives.

10-K

12/31/200810
(bb)

Forms of Agreement dated December 30, 1994, between the
    registrant and certain officers of the registrant.

10-K

12/31/1995

10(p)10
(cc)

Form of Agreement of Indemnification dated August 8, 1995,
    between the registrant and certain officers and directors of the
    registrant.

10-K

12/31/1995

10(q)10
(dd)

Resolution and Form of Agreement of Indemnification dated
    January 24, 2001.

10-K

12/31/2000

10(ii)10
(ee)

Resolution and Form of Agreement of Indemnification 
    July 21, 2004.

10-Q

6/30/2004

10(ii)10
(ff)

Chief Executive Officer Medical and Dental Benefits.

10-K

12/31/2004

10(jj)10
(gg)

Deferred Share Unit Plan for Non-Employee Directors, as amended.

10-Q

3/31/2008

10(bb)10
(hh)

U.S. Participant Addendum No. 1 to the Deferred Share Unit
    Plan for Non-Employee Directors.

10-K

12/31/2008

10(jj) 69




---



##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10
(ii)

Potash Corporation of Saskatchewan Inc. 2005 Performance Option
    Plan and Form of Option Agreement, as amended.

10-K

12/31/2006

10(cc)10
(jj)

Potash Corporation of Saskatchewan Inc. 2006 Performance Option
    Plan and Form of Option Agreement, as amended.

10-K

12/31/2006

10(dd)10
(kk)

Potash Corporation of Saskatchewan Inc. 2007 Performance Option
    Plan and Form of Option Agreement.

10-Q

3/31/2007

10(ee)10
(ll)

Potash Corporation of Saskatchewan Inc. 2008 Performance Option
    Plan and Form of Option Agreement.

10-Q

3/31/2008

10(ff)10
(mm)

Potash Corporation of Saskatchewan Inc. 2009 Performance Option
    Plan and Form of Option Agreement.

10-Q

3/31/200910
(nn)

Medium-Term Incentive Plan of the registrant effective January
    2009.

10-K

12/31/2008

10(qq)11


Statement re Computation of Per Share Earnings.31
(a)

Certification pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.31
(b)

Certification pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32


Certification pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.  70




---



##### Table of Contents



SIGNATURES
    
   By:
    /s/  Joseph
    Podwika   Senior Vice President, General Counsel and
 Secretary
     By:
    /s/  Wayne
    R. Brownlee   Executive Vice President, Treasurer and
 Chief Financial Officer
 (Principal Financial and Accounting Officer)
 71




---



##### Table of Contents



EXHIBIT INDEX
  Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)3(a)

Articles of Continuance of the registrant dated May 15,
    2002.

10-Q

6/30/20023(b)

Bylaws of the registrant effective May 15, 2002.

10-Q

6/30/20024(a)

Term Credit Agreement between The Bank of Nova Scotia and other
    financial institutions and the registrant dated
    September 25, 2001.4(b)

Syndicated Term Credit Facility Amending Agreement between The
    Bank of Nova Scotia and other financial institutions and the
    registrant dated as of September 23, 2003.4(c)

Syndicated Term Credit Facility Second Amending Agreement
    between The Bank of Nova Scotia and other financial institutions
    and the registrant dated as of September 21, 2004.4(d)

Syndicated Term Credit Facility Third Amending Agreement between
    The Bank of Nova Scotia and other financial institutions and the
    registrant dated as of September 20, 2005.

8-K

9/22/2005

4(a)4(e)

Syndicated Term Credit Facility Fourth Amending Agreement
    between The Bank of Nova Scotia and other financial institutions
    and the registrant dated as of September 27, 2006.

10-Q

9/30/20064(f)

Syndicated Term Credit Facility, Fifth Amending Agreement
    between the Bank of Nova Scotia and other financial institutions
    and the registrant dated as of October 19, 2007.

8-K

10/22/2007

4(a)4(g)

Indenture dated as of June 16, 1997, between the registrant
    and The Bank of Nova Scotia Trust Company of New York.

8-K

6/18/1997

4(a)4(h)

Indenture dated as of February 27, 2003, between the
    registrant and The Bank of Nova Scotia Trust Company of New
    York.

10-K

12/31/2002

4(c)4(i)

Form of Note relating to the registrants offering of
    $600,000,000 principal amount of 7.75% Notes due
    May 31, 2011.

8-K

5/17/2001

44(j)

Form of Note relating to the registrants offering of
    $250,000,000 principal amount of 4.875% Notes due
    March 1, 2013.

8-K

2/28/2003

44(k)

Form of Note relating to the registrants offering of
    $500,000,000 principal amount of 5.875% Notes due
    December 1, 2036.

8-K

11/30/2006

4(a)4(l)

Form of Note relating to the registrants offering of
    $500,000,000 principal amount of 5.25% Notes due
    May 15, 2014.

8-K

5/1/2009

4(a)




---



##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)4(m)

Form of Note relating to the registrants offering of
    $500,000,000 principal amount of 6.50% Notes due
    May 15, 2019.

8-K

5/1/2009

4(b)4(n)

Amended and Restated Revolving Term Credit Facility Agreement
    between the Bank of Nova Scotia and other financial institutions
    and the registrant dated as of January 21, 2009.4(o)

First Amending Agreement to the Amended and Restated Term Credit
    Facility Agreement between the Bank of Nova Scotia and other
    financial institutions and the registrant dated March 5,
    2009.

8-K

3/6/2009

4(a)    Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10
(a)

Sixth Voting Agreement dated April 22, 1978, between
    Central Canada Potash, Division of Noranda, Inc., Cominco Ltd.,
    International Minerals and Chemical Corporation (Canada)
    Limited, PCS Sales and Texasgulf Inc.

F-1
    (File No.
    33-31303)

9/28/1989

10(f)10
(b)

Canpotex Limited Shareholders Seventh Memorandum of Agreement
    effective April 21, 1978, between Central Canada Potash,
    Division of Noranda Inc., Cominco Ltd., International Minerals
    and Chemical Corporation (Canada) Limited, PCS Sales, Texasgulf
    Inc. and Canpotex Limited as amended by Canpotex S&P
    amending agreement dated November 4, 1987.

F-1
    (File No.
    33-31303)

9/28/1989

10(g)10
(c)

Producer Agreement dated April 21, 1978, between Canpotex
    Limited and PCS Sales.

F-1
    (File No.
    33-31303)

9/28/1989

10(h)10
(d)

Canpotex/PCS Amending Agreement, dated as of October 1,
    1992.

10-K

12/31/1995

10(f)10
(e)

Canpotex PCA Collateral Withdrawing/PCS Amending Agreement,
    dated as of October 7, 1993.

10-K

12/31/1995

10(g)10
(f)

Canpotex Producer Agreement amending agreement dated as of
    January 1, 1999.

10-K

12/31/200010
(g)

Canpotex Producer Agreement amending agreement dated as of
    July 1, 2002.

10-Q

6/30/2004




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##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10
(h)

Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978, between International
    Minerals & Chemical Corporation (Canada) Limited and
    the registrants predecessor.

F-1
    (File No.
    33-31303)

9/28/1989

10(e)10
(i)

Agreement dated December 21, 1990, between International
    Minerals & Chemical Corporation (Canada) Limited and
    the registrant, amending the Esterhazy Restated Mining and
    Processing Agreement dated January 31, 1978.

10-K

12/31/1990

10(p)10
(j)

Agreement effective August 27, 1998, between International
    Minerals & Chemical (Canada) Global Limited and the
    registrant, amending the Esterhazy Restated Mining and
    Processing Agreement dated January 31, 1978 (as amended).

10-K

12/31/1998

10(l)10
(k)

Agreement effective August 31, 1998, among International
    Minerals & Chemical (Canada) Global Limited,
    International Minerals & Chemical (Canada) Limited
    Partnership and the registrant assigning the interest in the
    Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978 (as amended) held by International
    Minerals & Chemical (Canada) Global Limited to
    International Minerals & Chemical (Canada) Limited
    Partnership.

10-K

12/31/1998

10(m)10
(l)

Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Directors, as amended.

10-K

12/31/200610
(m)

Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Officers and Employees, as amended.

10-K

12/31/200610
(n)

Short-Term Incentive Plan of the registrant effective January
    2000, as amended.

10-K

12/31/200810
(o)

Resolution and Forms of Agreement for Supplemental Retirement
    Income Plan, for officers and key employees of the registrant.

10-K

12/31/199510
(p)

Amending Resolution and revised forms of agreement regarding
    Supplemental Retirement Income Plan of the registrant.

10-Q

6/30/1996

10(x)10
(q)

Amended and restated Supplemental Retirement Income Plan of the
    registrant and text of amendment to existing supplemental income
    plan agreements.

10-Q

9/30/2000

10(mm)10
(r)

Amendment, dated February 23, 2009, to the amended and
    restated Supplemental Retirement Income Plan.

10-K

12/31/200810
(s)

Form of Letter of amendment to existing supplemental income plan
    agreements of the registrant.

10-K

12/31/2002

10(cc)




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##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10
(t)

Amended and restated agreement dated February 20, 2007,
    between the registrant and William J. Doyle concerning the
    Supplemental Retirement Income Plan.

10-K

12/31/2006

10(s)10
(u)

Amendment, dated December 24, 2008, to the amended and
    restated agreement, dated February 20, 2007, between the
    registrant and William J. Doyle concerning the Supplemental
    Retirement Income Plan.

10-K

12/31/200810
(v)

Amendment, dated February 23, 2009, to the amended and
    restated agreement, dated February 20, 2007, between the
    registrant and William J. Doyle concerning the Supplemental
    Retirement Income Plan.

10-K

12/31/200810
(w)

Amendment, dated February 23, 2009, to the amended and
    restated agreement dated August 2, 2006, between the
    registrant and Wayne R. Brownlee concerning the Supplemental
    Retirement Income Plan.

10-K

12/31/200810
(x)

Amendment, dated February 23, 2009, to the amended and
    restated agreement, dated August 2, 1996, between the
    registrant and Garth W. Moore concerning the Supplemental
    Retirement Income Plan.

10-K

12/31/200810
(y)

Supplemental Retirement Benefits Plan for U.S. Executives dated
    effective January 1, 1999.

10-Q

6/30/2002

10(aa)10
(z)

Amendment No. 1, dated December 24, 2008, to the
    Supplemental Retirement Plan for U.S. Executives.

10-K

12/31/200810
(aa)

Amendment No. 2, dated February 23, 2009, to the
    Supplemental Retirement Plan for U.S. Executives.

10-K

12/31/200810
(bb)

Forms of Agreement dated December 30, 1994, between the
    registrant and certain officers of the registrant.

10-K

12/31/1995

10(p)10
(cc)

Form of Agreement of Indemnification dated August 8, 1995,
    between the registrant and certain officers and directors of the
    registrant.

10-K

12/31/1995

10(q)10
(dd)

Resolution and Form of Agreement of Indemnification dated
    January 24, 2001.

10-K

12/31/2000

10(ii)10
(ee)

Resolution and Form of Agreement of Indemnification 
    July 21, 2004.

10-Q

6/30/2004

10(ii)10
(ff)

Chief Executive Officer Medical and Dental Benefits.

10-K

12/31/2004

10(jj)10
(gg)

Deferred Share Unit Plan for Non-Employee Directors, as amended.

10-Q

3/31/2008

10(bb)10
(hh)

U.S. Participant Addendum No. 1 to the Deferred Share Unit
    Plan for Non-Employee Directors.

10-K

12/31/2008

10(jj)




---



##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10
(ii)

Potash Corporation of Saskatchewan Inc. 2005 Performance Option
    Plan and Form of Option Agreement, as amended.

10-K

12/31/2006

10(cc)10
(jj)

Potash Corporation of Saskatchewan Inc. 2006 Performance Option
    Plan and Form of Option Agreement, as amended.

10-K

12/31/2006

10(dd)10
(kk)

Potash Corporation of Saskatchewan Inc. 2007 Performance Option
    Plan and Form of Option Agreement.

10-Q

3/31/2007

10(ee)10
(ll)

Potash Corporation of Saskatchewan Inc. 2008 Performance Option
    Plan and Form of Option Agreement.

10-Q

3/31/2008

10(ff)10
(mm)

Potash Corporation of Saskatchewan Inc. 2009 Performance Option
    Plan and Form of Option Agreement.

10-Q

3/31/200910
(nn)

Medium-Term Incentive Plan of the registrant effective January
    2009.

10-K

12/31/2008

10(qq)11


Statement re Computation of Per Share Earnings.31
(a)

Certification pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.31
(b)

Certification pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.32


Certification pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.