##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
|   |  | For the Quarterly Period Ended June 30, 2005                                                
|  
|OR
|  
|o  |  | 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                   |  |           
|Saskatoon, Saskatchewan, Canada          |  | S7K 7G3   
|(Address of principal executive offices) |  | (Zip Code)

306-933-8500


(Registrants telephone number, including area code)




þ o




þ o


APPLICABLE ONLY TO CORPORATE ISSUERS:














---

TABLE OF CONTENTS



|                                                                                             |  |  |  |  |  |  |  | 
|-------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I.FINANCIAL INFORMATION                                                                
|ITEM 1.FINANCIAL STATEMENTS                                                                 
|Condensed Consolidated Statements of Financial Position                                     
|Condensed Consolidated Statements of Operations and Retained Earnings                       
|Condensed Consolidated Statements of Cash Flow                                              
|Notes to the Condensed Consolidated Financial Statements                                    
|ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|KEY PERFORMANCE DRIVERS -- PERFORMANCE COMPARED TO GOALS                                    
|ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|ITEM 4.CONTROLS AND PROCEDURES                                                              
|PART II.OTHER INFORMATION                                                                   
|ITEM 1.LEGAL PROCEEDINGS                                                                    
|ITEM 2.ISSUER PURCHASE OF EQUITY SECURITIES                                                 
|ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|SIGNATURES                                                                                  
|Statement re Computation of Per Share Earnings                                              
|Certification Pursuant to Section 302 of CEO                                                
|Certification Pursuant to Section 302 of CFO                                                
|Certification Pursuant to Section 906                                                       



---



##### 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,
|                                                                |                                                                                                                                                                             | 2005     |         | 2004        
|                                                               
|Assets                                                          |                                                                                                                                                                             |          |         |              |  |   |         |      
|Current assets                                                  |                                                                                                                                                                             |          |         |              |  |   |         |      
|                                                                | Cash and cash equivalents                                                                                                                                                   |          | $       | 423.3        |  |   | $       | 458.9 | 
|                                                                | Accounts receivable                                                                                                                                                         |          |         | 373.7        |  |   |         | 352.6 | 
|                                                                | Inventories (Note 3)                                                                                                                                                        |          |         | 390.1        |  |   |         | 396.8 | 
|                                                                | Prepaid expenses and other current assets                                                                                                                                   |          |         | 34.6         |  |   |         | 35.3  | 
|                                                               
|                                                                |                                                                                                                                                                             |          | 1,221.7 |              |  |   | 1,243.6 |      
|                                                               
|Property, plant and equipment                                   |                                                                                                                                                                             |          | 3,107.2 |              |  |   | 3,098.9 |      
|Other assets (Note 4)                                           |                                                                                                                                                                             |          | 745.0   |              |  |   | 650.2   |      
|Intangible assets                                               |                                                                                                                                                                             |          | 36.4    |              |  |   | 37.1    |      
|Goodwill                                                        |                                                                                                                                                                             |          | 97.0    |              |  |   | 97.0    |      
|                                                               
|                                                                |                                                                                                                                                                             | $        | 5,207.3 |              |  | $ | 5,126.8 |      
|                                                               
|                                                               
|Liabilities                                                    
|Current liabilities                                             |                                                                                                                                                                             |          |         |              |  |   |         |      
|                                                                | Short-term debt                                                                                                                                                             |          | $       | 93.3         |  |   | $       | 93.5  | 
|                                                                | Accounts payable and accrued charges                                                                                                                                        |          |         | 586.3        |  |   |         | 599.9 | 
|                                                                | Current portion of long-term debt                                                                                                                                           |          |         | 10.2         |  |   |         | 10.3  | 
|                                                               
|                                                                |                                                                                                                                                                             |          | 689.8   |              |  |   | 703.7   |      
|                                                               
|Long-term debt                                                  |                                                                                                                                                                             |          | 1,258.1 |              |  |   | 1,258.6 |      
|Future income tax liability                                     |                                                                                                                                                                             |          | 527.5   |              |  |   | 499.4   |      
|Accrued post-retirement/post-employment benefits                |                                                                                                                                                                             |          | 211.9   |              |  |   | 193.4   |      
|Accrued environmental costs and asset retirement obligations    |                                                                                                                                                                             |          | 83.0    |              |  |   | 81.2    |      
|Other non-current liabilities and deferred credits              |                                                                                                                                                                             |          | 19.6    |              |  |   | 4.9     |      
|                                                               
|                                                                |                                                                                                                                                                             |          | 2,789.9 |              |  |   | 2,741.2 |      
|                                                               
|                                                               
|Contingencies and Guarantees(Notes 15 and 16,
    respectively) |                                                                                                                                                                             |          |         |              |  |   |         |      
|Shareholders Equity                                            |                                                                                                                                                                             |          |         |              |  |   |         |      
|Share capital (Note 5)                                          |                                                                                                                                                                             |          | 1,425.3 |              |  |   | 1,408.4 |      
|                                                                | Unlimited authorization of common shares without par value;
    issued and outstanding 108,642,994 and 110,630,503 at
    June 30, 2005 and December 31, 2004, respectively |          |         |              |  |   |         |       | 
|                                                                | Unlimited authorization of first preferred shares; none
    outstanding                                                                                                     |          |         |              |  |   |         |       | 
|Contributed surplus                                             |                                                                                                                                                                             |          | 28.6    |              |  |   | 275.7   |      
|Retained earnings                                               |                                                                                                                                                                             |          | 963.5   |              |  |   | 701.5   |      
|                                                               
|                                                                |                                                                                                                                                                             |          | 2,417.4 |              |  |   | 2,385.6 |      
|                                                               
|                                                                |                                                                                                                                                                             | $        | 5,207.3 |              |  | $ | 5,126.8 |      
|                                                               



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 Ended
|                                         |         | June 30            |         | June 30         
|                                         |         | 2005               |         | 2004             |  | 2005 |       | 2004
|                                        
|Sales(Note 10)                           |         | $                  | 1,057.3 |                  |  | $    | 833.7 |      |  | $ | 1,978.7 |      |  | $ | 1,562.1 |     
|Less: Freight                            |         |                    | 67.4    |                  |  |      | 68.9  |      |  |   | 134.6   |      |  |   | 127.0   |     
|Transportation
    and distribution      |         |                    | 32.1    |                  |  |      | 31.3  |      |  |   | 61.0    |      |  |   | 54.3    |     
|Cost of
    goods sold                   |         |                    | 613.0   |                  |  |      | 562.8 |      |  |   | 1,179.8 |      |  |   | 1,086.1 |     
|                                        
|Gross Margin                             |         |                    | 344.8   |                  |  |      | 170.7 |      |  |   | 603.3   |      |  |   | 294.7   |     
|                                        
|Selling and administrative               |         |                    | 54.9    |                  |  |      | 25.4  |      |  |   | 84.2    |      |  |   | 51.6    |     
|Provincial mining and other taxes        |         |                    | 44.2    |                  |  |      | 29.3  |      |  |   | 82.6    |      |  |   | 44.4    |     
|Provision for PCS Yumbes S.C.M. (Note 7) |         |                    |        |                  |  |      | 5.9   |      |  |   |        |      |  |   | 5.9     |     
|Foreign exchange gain                    |         |                    | (6.1    | )                |  |      | (9.9  | )    |  |   | (12.0   | )    |  |   | (18.1   | )   
|Other income (Note 13)                   |         |                    | (13.9   | )                |  |      | (9.2  | )    |  |   | (33.9   | )    |  |   | (16.1   | )   
|                                        
|                                         |         |                    | 79.1    |                  |  |      | 41.5  |      |  |   | 120.9   |      |  |   | 67.7    |     
|                                        
|Operating Income                         |         |                    | 265.7   |                  |  |      | 129.2 |      |  |   | 482.4   |      |  |   | 227.0   |     
|Interest Expense                         |         |                    | 20.6    |                  |  |      | 20.9  |      |  |   | 41.3    |      |  |   | 43.0    |     
|                                        
|Income Before Income Taxes               |         |                    | 245.1   |                  |  |      | 108.3 |      |  |   | 441.1   |      |  |   | 184.0   |     
|Income Taxes(Note 8)                     |         |                    | 80.9    |                  |  |      | 35.7  |      |  |   | 145.6   |      |  |   | 60.7    |     
|                                        
|Net Income                               |         | $                  | 164.2   |                  |  | $    | 72.6  |      |  |   | 295.5   |      |  |   | 123.3   |     
|                                         |         |                    |         |                  |  |      |       |      |  |  
|Retained Earnings, Beginning of Period   |         |                    |         |                  |  |      |       |      |  |   | 701.5   |      |  |   | 462.8   |     
|Dividends                                |         |                    |         |                  |  |      |       |      |  |   | (33.5   | )    |  |   | (27.0   | )   
|                                        
|Retained Earnings, End of Period         |         |                    |         |                  |  |      |       |      |  | $ | 963.5   |      |  | $ | 559.1   |     
|                                        
|Net Income Per Share(Note 9)             |         |                    |         |                  |  |      |       |      |  |   |         |      |  |   |         |     
|                                         | Basic   |                    | $       | 1.50             |  |      | $     | 0.68 |  |   | $       | 2.68 |  |   | $       | 1.15 | 
|                                         | Diluted |                    | $       | 1.46             |  |      | $     | 0.67 |  |   | $       | 2.61 |  |   | $       | 1.14 | 
|                                        
|Dividends Per Share                      |         | $                  | 0.15    |                  |  | $    | 0.13  |      |  | $ | 0.30    |      |  | $ | 0.25    |     
|                                        



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 Ended
|                                                                                 |                                                           | June 30            |        | June 30         
|                                                                                 |                                                           | 2005               |        | 2004             |   | 2005 |       | 2004 
|                                                                                
|Operating Activities                                                             |                                                           |                    |        |                  |   |      |       |       |   |   |        |       |   |   |       |      
|Net income                                                                       |                                                           | $                  | 164.2  |                  |   | $    | 72.6  |       |   | $ | 295.5  |       |   | $ | 123.3 |      
|                                                                                
|Adjustments to reconcile net income to cash provided by
    operating activities |                                                           |                    |        |                  |   |      |       |       |   |   |        |       |   |   |       |      
|                                                                                 | Depreciation and amortization                             |                    |        | 62.4             |   |      |       | 63.9  |   |   |        | 122.0 |   |   |       | 123.6 |  
|                                                                                 | Stock-based compensation                                  |                    |        | 23.0             |   |      |       | 2.8   |   |   |        | 24.0  |   |   |       | 5.6   |  
|                                                                                 | Loss (gain) on disposal of long-term assets               |                    |        | 3.5              |   |      |       | (0.3  | ) |   |        | 5.5   |   |   |       | (0.3  | )
|                                                                                 | Foreign exchange on future income tax                     |                    |        | (2.8             | ) |      |       | (4.9  | ) |   |        | (4.0  | ) |   |       | (7.8  | )
|                                                                                 | Provision for future income tax                           |                    |        | 8.1              |   |      |       | 9.3   |   |   |        | 14.6  |   |   |       | 24.3  |  
|                                                                                 | Share of earnings of equity investees                     |                    |        | (13.4            | ) |      |       | (3.9  | ) |   |        | (26.5 | ) |   |       | (7.7  | )
|                                                                                 | Dividends received from equity investees                  |                    |        | 12.1             |   |      |       | 4.6   |   |   |        | 12.1  |   |   |       | 4.6   |  
|                                                                                 | Provision for PCS Yumbes S.C.M.                           |                    |        |                 |   |      |       | 5.9   |   |   |        |      |   |   |       | 5.9   |  
|                                                                                 | Other long-term liabilities                               |                    |        | 13.8             |   |      |       | 0.5   |   |   |        | 19.0  |   |   |       | 5.9   |  
|                                                                                
|                                                                                 | Subtotal of adjustments                                   |                    |        | 106.7            |   |      |       | 77.9  |   |   |        | 166.7 |   |   |       | 154.1 |  
|                                                                                
|                                                                                 | Changes in non-cash operating working capital             |                    |        |                  |   |      |       |       |   |   |        |       |   |   |       |       |  
|                                                                                 | Accounts receivable                                       |                    |        | 35.5             |   |      |       | (23.3 | ) |   |        | (28.0 | ) |   |       | 9.6   |  
|                                                                                 | Inventories                                               |                    |        | 11.3             |   |      |       | 29.7  |   |   |        | 9.6   |   |   |       | 3.1   |  
|                                                                                 | Prepaid expenses and other current assets                 |                    |        | 6.7              |   |      |       | 18.2  |   |   |        | 0.5   |   |   |       | 6.9   |  
|                                                                                 | Accounts payable and accrued charges                      |                    |        | 24.0             |   |      |       | 7.7   |   |   |        | 19.6  |   |   |       | 20.1  |  
|                                                                                
|                                                                                 | Subtotal of changes in non-cash operating working capital |                    |        | 77.5             |   |      |       | 32.3  |   |   |        | 1.7   |   |   |       | 39.7  |  
|                                                                                
|Cash provided by operating activities                                            |                                                           |                    | 348.4  |                  |   |      | 182.8 |       |   |   | 463.9  |       |   |   | 317.1 |      
|                                                                                
|Investing Activities                                                             |                                                           |                    |        |                  |   |      |       |       |   |   |        |       |   |   |       |      
|Additions to property, plant and equipment                                       |                                                           |                    | (74.5  | )                |   |      | (33.0 | )     |   |   | (131.3 | )     |   |   | (49.4 | )    
|Investment in Arab Potash Company (APC)                                        |                                                           |                    | (18.6  | )                |   |      |      |       |   |   | (18.6  | )     |   |   |      |      
|Investment in Israel Chemicals Ltd. (ICL)                                      |                                                           |                    | (74.9  | )                |   |      |      |       |   |   | (74.9  | )     |   |   |      |      
|Proceeds from disposal of long-term assets                                       |                                                           |                    | 0.9    |                  |   |      | 0.7   |       |   |   | 8.4    |       |   |   | 0.7   |      
|Proceeds from sale of shares of PCS Yumbes S.C.M.                                |                                                           |                    |       |                  |   |      |      |       |   |   | 5.2    |       |   |   |      |      
|Other assets and intangible assets                                               |                                                           |                    |       |                  |   |      | 3.5   |       |   |   | (0.1   | )     |   |   | 4.3   |      
|                                                                                
|Cash used in investing activities                                                |                                                           |                    | (167.1 | )                |   |      | (28.8 | )     |   |   | (211.3 | )     |   |   | (44.4 | )    
|                                                                                
|Cash before financing activities                                                 |                                                           |                    | 181.3  |                  |   |      | 154.0 |       |   |   | 252.6  |       |   |   | 272.7 |      
|                                                                                
|Financing Activities                                                             |                                                           |                    |        |                  |   |      |       |       |   |   |        |       |   |   |       |      
|Repayment of long-term debt obligations                                          |                                                           |                    | (0.4   | )                |   |      | (0.3  | )     |   |   | (0.6   | )     |   |   | (0.5  | )    
|(Repayment of) proceeds from short-term debt obligations                         |                                                           |                    | (1.0   | )                |   |      | 33.5  |       |   |   | (0.2   | )     |   |   | (84.8 | )    
|Dividends                                                                        |                                                           |                    | (16.7  | )                |   |      | (13.5 | )     |   |   | (33.2  | )     |   |   | (27.0 | )    
|Repurchase of common shares                                                      |                                                           |                    | (235.1 | )                |   |      |      |       |   |   | (317.4 | )     |   |   |      |      
|Issuance of common shares                                                        |                                                           |                    | 16.2   |                  |   |      | 21.6  |       |   |   | 63.2   |       |   |   | 41.4  |      
|                                                                                
|Cash (used in) provided by financing activities                                  |                                                           |                    | (237.0 | )                |   |      | 41.3  |       |   |   | (288.2 | )     |   |   | (70.9 | )    
|                                                                                
|(Decrease) Increase in Cash and Cash Equivalents                                 |                                                           |                    | (55.7  | )                |   |      | 195.3 |       |   |   | (35.6  | )     |   |   | 201.8 |      
|Cash and Cash Equivalents, Beginning of Period                                   |                                                           |                    | 479.0  |                  |   |      | 11.2  |       |   |   | 458.9  |       |   |   | 4.7   |      
|                                                                                
|Cash and Cash Equivalents, End of Period                                         |                                                           | $                  | 423.3  |                  |   | $    | 206.5 |       |   | $ | 423.3  |       |   | $ | 206.5 |      
|                                                                                
|Supplemental cash flow disclosure                                                |                                                           |                    |        |                  |   |      |       |       |   |   |        |       |   |   |       |      
|                                                                                 | Interest paid                                             |                    | $      | 29.5             |   |      | $     | 30.2  |   |   | $      | 40.7  |   |   | $     | 43.6  |  
|                                                                                 | Income taxes paid                                         |                    | $      | 31.9             |   |      | $     | 9.0   |   |   | $      | 107.4 |   |   | $     | 15.2  |  
|                                                                                



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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, 2005


(in millions of US dollars except share and per-share
amounts)


(unaudited)




|   |                                
|-- | -------------------------------
|1. | Significant Accounting Policies



| |                      
| | ---------------------
| | Basis of Presentation







| |                            
| | ---------------------------
| | Principles of Consolidation





























| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements



| |                                                                   
| | ------------------------------------------------------------------
| | Comprehensive Income, Equity, Financial Instruments and
    Hedges





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Financial assets will be classified as either held-to-maturity,
    held-for-trading or available-for-sale. Held-to-maturity
    classification will be restricted to fixed maturity instruments
    that the company intends and is able to hold to maturity and
    will be accounted for at amortized cost. Held-for-trading
    instruments will be recorded at fair value with realized and
    unrealized gains and

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##### Table of Contents



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | losses reported in net income. The remaining financial assets
    will be classified as available-for-sale. These will be recorded
    at fair value with unrealized gains and losses reported in a new
    category in shareholders equity called other comprehensive
    income (OCI).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Derivatives will be classified as held-for-trading unless
    designated as hedging instruments. All derivatives, including
    embedded derivatives that must be separately accounted for, will
    be recorded at fair value on the Consolidated Statement of
    Financial Position. For derivatives that hedge the changes in
    fair value of an asset or liability, changes in the
    derivatives fair value will be reported in net income and
    be substantially offset by changes in the fair value of the
    hedged asset or liability attributable to the risk being hedged.
    For derivatives that hedge variability in cash flows, the
    effective portion of the changes in the derivatives fair
    value will be initially recognized in OCI and the ineffective
    portion will be recorded in net income. The amounts temporarily
    recorded in OCI will subsequently be reclassified to net income
    in the periods when net income is affected by the variability in
    the cash flows of the hedged item.



2.   Change in Accounting Policy




| |                                            
| | -------------------------------------------
| | Consolidation of Variable Interest Entities



3.   Inventories


|                       |  |          |       |              |  |   |       | 
|---------------------- |  | -------- | ----- | ------------ |  | - | ----- | 
|                       |  | June 30, |       | December 31,
|                       |  | 2005     |       | 2004        
|                      
|Finished product       |  | $        | 172.1 |              |  | $ | 181.8 | 
|Materials and supplies |  |          | 95.2  |              |  |   | 97.7  | 
|Raw materials          |  |          | 44.1  |              |  |   | 50.3  | 
|Work in process        |  |          | 78.7  |              |  |   | 67.0  | 
|                      
|                       |  | $        | 390.1 |              |  | $ | 396.8 | 
|                      

4.   Other Assets




6



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##### Table of Contents



5.   Share Capital






6.   Plant Shutdowns  2003








|                                          |  |             |       |             |  |   |       | 
|----------------------------------------- |  | ----------- | ----- | ----------- |  | - | ----- | 
|                                          |  | Cumulative  |       | Total Costs
|                                          |  | Costs       |       | Expected   
|                                          |  | Incurred to |       | to be      
|                                          |  | Date        |       | Incurred   
|                                         
|Nitrogen Segment                          |  |             |       |             |  |   |       | 
|Employee termination and related benefits |  | $           | 4.8   |             |  | $ | 4.8   | 
|Writedown of parts inventory              |  |             | 12.4  |             |  |   | 12.4  | 
|Asset impairment charges                  |  |             | 101.6 |             |  |   | 101.6 | 
|Other related exit costs                  |  |             |      |             |  |   | 12.1  | 
|                                         
|                                          |  |             | 118.8 |             |  |   | 130.9 | 
|                                         
|Phosphate Segment                         |  |             |       |             |  |   |       | 
|Employee termination and related benefits |  |             | 0.6   |             |  |   | 0.6   | 
|Writedown of parts inventory              |  |             | 0.3   |             |  |   | 0.3   | 
|Asset impairment charges                  |  |             | 4.0   |             |  |   | 4.0   | 
|                                         
|                                          |  |             | 4.9   |             |  |   | 4.9   | 
|                                         
|                                          |  | $           | 123.7 |             |  | $ | 135.8 | 
|                                         

7



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##### Table of Contents



7.   Provision for PCS Yumbes
S.C.M.  2004




8.   Income Taxes




9.   Net Income Per Share






|    |                    
|--- | -------------------
|10. | Segment Information



|                                |  |                                  |       |           |  |          |       |            |  |              |       |  |  |   |     |  |  |   |         | 
|------------------------------- |  | -------------------------------- | ----- | --------- |  | -------- | ----- | ---------- |  | ------------ | ----- |  |  | - | --- |  |  | - | ------- | 
|                                |  | Three Months Ended June 30, 2005
|                                |  | Potash                           |       | Phosphate |  | Nitrogen |       | All Others |  | Consolidated
|                               
|Sales                           |  | $                                | 401.6 |           |  | $        | 291.3 |            |  | $            | 364.4 |  |  | $ |    |  |  | $ | 1,057.3 | 
|Freight                         |  |                                  | 37.5  |           |  |          | 20.0  |            |  |              | 9.9   |  |  |   |    |  |  |   | 67.4    | 
|Transportation and distribution |  |                                  | 9.5   |           |  |          | 8.8   |            |  |              | 13.8  |  |  |   |    |  |  |   | 32.1    | 
|Net sales  third party         |  |                                  | 354.6 |           |  |          | 262.5 |            |  |              | 340.7 |  |  |   |    |  |  |   |         | 
|Cost of goods sold              |  |                                  | 131.3 |           |  |          | 240.4 |            |  |              | 241.3 |  |  |   |    |  |  |   | 613.0   | 
|Gross margin                    |  |                                  | 223.3 |           |  |          | 22.1  |            |  |              | 99.4  |  |  |   |    |  |  |   | 344.8   | 
|Depreciation and amortization   |  |                                  | 18.3  |           |  |          | 24.0  |            |  |              | 17.5  |  |  |   | 2.6 |  |  |   | 62.4    | 
|Inter-segment sales             |  |                                  | 2.4   |           |  |          | 4.7   |            |  |              | 28.7  |  |  |   |    |  |  |   |        | 

8



---



##### Table of Contents



|                                |  |                                  |       |           |  |          |       |            |  |              |       |  |  |   |     |  |  |   |       | 
|------------------------------- |  | -------------------------------- | ----- | --------- |  | -------- | ----- | ---------- |  | ------------ | ----- |  |  | - | --- |  |  | - | ----- | 
|                                |  | Three Months Ended June 30, 2004
|                                |  | Potash                           |       | Phosphate |  | Nitrogen |       | All Others |  | Consolidated
|                               
|Sales                           |  | $                                | 316.4 |           |  | $        | 236.9 |            |  | $            | 280.4 |  |  | $ |    |  |  | $ | 833.7 | 
|Freight                         |  |                                  | 41.2  |           |  |          | 16.1  |            |  |              | 11.6  |  |  |   |    |  |  |   | 68.9  | 
|Transportation and distribution |  |                                  | 12.5  |           |  |          | 7.4   |            |  |              | 11.4  |  |  |   |    |  |  |   | 31.3  | 
|Net sales  third party         |  |                                  | 262.7 |           |  |          | 213.4 |            |  |              | 257.4 |  |  |   |    |  |  |   |       | 
|Cost of goods sold              |  |                                  | 141.3 |           |  |          | 207.7 |            |  |              | 213.8 |  |  |   |    |  |  |   | 562.8 | 
|Gross margin                    |  |                                  | 121.4 |           |  |          | 5.7   |            |  |              | 43.6  |  |  |   |    |  |  |   | 170.7 | 
|Depreciation and amortization   |  |                                  | 19.9  |           |  |          | 21.4  |            |  |              | 20.3  |  |  |   | 2.3 |  |  |   | 63.9  | 
|Inter-segment sales             |  |                                  | 0.7   |           |  |          | 3.4   |            |  |              | 22.3  |  |  |   |    |  |  |   |      | 

|                                |  |                                |       |           |  |          |       |            |  |              |       |  |  |   |     |  |  |   |         | 
|------------------------------- |  | ------------------------------ | ----- | --------- |  | -------- | ----- | ---------- |  | ------------ | ----- |  |  | - | --- |  |  | - | ------- | 
|                                |  | Six Months Ended June 30, 2005
|                                |  | Potash                         |       | Phosphate |  | Nitrogen |       | All Others |  | Consolidated
|                               
|Sales                           |  | $                              | 753.7 |           |  | $        | 555.8 |            |  | $            | 669.2 |  |  | $ |    |  |  | $ | 1,978.7 | 
|Freight                         |  |                                | 74.7  |           |  |          | 39.8  |            |  |              | 20.1  |  |  |   |    |  |  |   | 134.6   | 
|Transportation and distribution |  |                                | 18.6  |           |  |          | 16.9  |            |  |              | 25.5  |  |  |   |    |  |  |   | 61.0    | 
|Net sales  third party         |  |                                | 660.4 |           |  |          | 499.1 |            |  |              | 623.6 |  |  |   |    |  |  |   |         | 
|Cost of goods sold              |  |                                | 260.9 |           |  |          | 460.0 |            |  |              | 458.9 |  |  |   |    |  |  |   | 1,179.8 | 
|Gross margin                    |  |                                | 399.5 |           |  |          | 39.1  |            |  |              | 164.7 |  |  |   |    |  |  |   | 603.3   | 
|Depreciation and amortization   |  |                                | 36.4  |           |  |          | 46.1  |            |  |              | 34.6  |  |  |   | 4.9 |  |  |   | 122.0   | 
|Inter-segment sales             |  |                                | 4.4   |           |  |          | 8.9   |            |  |              | 48.5  |  |  |   |    |  |  |   |        | 

|                                |  |                                |       |           |  |          |       |            |  |              |       |  |  |   |     |  |  |   |         | 
|------------------------------- |  | ------------------------------ | ----- | --------- |  | -------- | ----- | ---------- |  | ------------ | ----- |  |  | - | --- |  |  | - | ------- | 
|                                |  | Six Months Ended June 30, 2004
|                                |  | Potash                         |       | Phosphate |  | Nitrogen |       | All Others |  | Consolidated
|                               
|Sales                           |  | $                              | 540.1 |           |  | $        | 454.5 |            |  | $            | 567.5 |  |  | $ |    |  |  | $ | 1,562.1 | 
|Freight                         |  |                                | 74.7  |           |  |          | 31.8  |            |  |              | 20.5  |  |  |   |    |  |  |   | 127.0   | 
|Transportation and distribution |  |                                | 21.2  |           |  |          | 12.7  |            |  |              | 20.4  |  |  |   |    |  |  |   | 54.3    | 
|Net sales  third party         |  |                                | 444.2 |           |  |          | 410.0 |            |  |              | 526.6 |  |  |   |    |  |  |   |         | 
|Cost of goods sold              |  |                                | 256.1 |           |  |          | 405.2 |            |  |              | 424.8 |  |  |   |    |  |  |   | 1,086.1 | 
|Gross margin                    |  |                                | 188.1 |           |  |          | 4.8   |            |  |              | 101.8 |  |  |   |    |  |  |   | 294.7   | 
|Depreciation and amortization   |  |                                | 36.8  |           |  |          | 41.9  |            |  |              | 40.2  |  |  |   | 4.7 |  |  |   | 123.6   | 
|Inter-segment sales             |  |                                | 3.6   |           |  |          | 6.5   |            |  |              | 44.1  |  |  |   |    |  |  |   |        | 



|    |                         
|--- | ------------------------
|11. | Stock-based Compensation



9



---



##### Table of Contents





|                                                                                                                                                         |  |               |       |               |  |      |      |      |  |   |       |   |  |   |       |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----- | ------------- |  | ---- | ---- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                                                                                                                         |  | Three Months  |       | Six Months   
|                                                                                                                                                         |  | Ended June 30 |       | Ended June 30
|                                                                                                                                                         |  | 2005          |       | 2004          |  | 2005 |      | 2004
|                                                                                                                                                        
|Net income  as reported                                                                                                                                 |  | $             | 164.2 |               |  | $    | 72.6 |      |  | $ | 295.5 |   |  | $ | 123.3 |  
|Add: Stock-based employee compensation expense included in
    reported net income, net of related tax effects                                           |  |               | 15.4  |               |  |      | 2.2  |      |  |   | 16.1  |   |  |   | 4.4   |  
|Less: Total stock-based employee compensation expense
    determined under fair value based method for all option awards,
    net of related tax effects |  |               | (15.4 | )             |  |      | (3.2 | )    |  |   | (16.1 | ) |  |   | (6.4  | )
|                                                                                                                                                        
|Net income  pro
    forma(1)                                                                                                                            |  | $             | 164.2 |               |  | $    | 71.6 |      |  | $ | 295.5 |   |  | $ | 121.3 |  
|                                                                                                                                                        



|    |                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Compensation expense under the fair value method is recognized
    over the vesting period of the related stock options.
    Accordingly, the pro forma results of applying this method may
    not be indicative of future results.

|                             |             |  |   |      |  |  |   |      |  |  |   |      |  |  |   |      | 
|---------------------------- | ----------- |  | - | ---- |  |  | - | ---- |  |  | - | ---- |  |  | - | ---- | 
|Basic net income per share   |             |  |   |      |  |  |   |      |  |  |   |      |  |  |   |     
|                             | As reported |  | $ | 1.50 |  |  | $ | 0.68 |  |  | $ | 2.68 |  |  | $ | 1.15 | 
|                             | Pro forma   |  | $ | 1.50 |  |  | $ | 0.67 |  |  | $ | 2.68 |  |  | $ | 1.14 | 
|                            
|Diluted net income per share |             |  |   |      |  |  |   |      |  |  |   |      |  |  |   |     
|                             | As reported |  | $ | 1.46 |  |  | $ | 0.67 |  |  | $ | 2.61 |  |  | $ | 1.14 | 
|                             | Pro forma   |  | $ | 1.46 |  |  | $ | 0.66 |  |  | $ | 2.61 |  |  | $ | 1.12 | 



|                         |  |               |           |      |  |      |         |  |  |   |         | 
|------------------------ |  | ------------- | --------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                         |  | Year of Grant
|                         |  | 2005          |           | 2003 |  | 2002
|                        
|Expected dividend        |  | $             | 0.60      |      |  | $    | 0.50    |  |  | $ | 0.50    | 
|Expected volatility      |  |               | 28%       |      |  |      | 27%     |  |  |   | 32%     | 
|Risk-free interest rate  |  |               | 3.86%     |      |  |      | 4.06%   |  |  |   | 4.13%   | 
|Expected life of options |  |               | 6.5 years |      |  |      | 8 years |  |  |   | 8 years | 





|    |                                         
|--- | ----------------------------------------
|12. | Post-Retirement/Post-Employment Expenses

|                               |  |               |      |               |  |      |      |      |  |   |       |   |  |   |       |  
|------------------------------ |  | ------------- | ---- | ------------- |  | ---- | ---- | ---- |  | - | ----- | - |  | - | ----- | -
|                               |  | Three Months  |      | Six Months   
|                               |  | Ended June 30 |      | Ended June 30
|Defined Benefit Pension Plans  |  | 2005          |      | 2004          |  | 2005 |      | 2004
|                              
|Service cost                   |  | $             | 3.4  |               |  | $    | 3.5  |      |  | $ | 7.0   |   |  | $ | 7.0   |  
|Interest cost                  |  |               | 7.8  |               |  |      | 7.5  |      |  |   | 15.6  |   |  |   | 15.0  |  
|Expected return on plan assets |  |               | (9.5 | )             |  |      | (8.4 | )    |  |   | (18.4 | ) |  |   | (16.8 | )
|Net amortization               |  |               | 1.3  |               |  |      | 1.1  |      |  |   | 3.0   |   |  |   | 2.2   |  
|                              
|Net expense                    |  | $             | 3.0  |               |  | $    | 3.7  |      |  | $ | 7.2   |   |  | $ | 7.4   |  
|                              

10



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##### Table of Contents



|                            |  |               |     |               |  |      |     |      |  |   |      |  |  |   |      | 
|--------------------------- |  | ------------- | --- | ------------- |  | ---- | --- | ---- |  | - | ---- |  |  | - | ---- | 
|                            |  | Three Months  |     | Six Months   
|                            |  | Ended June 30 |     | Ended June 30
|Other Post-Retirement Plans |  | 2005          |     | 2004          |  | 2005 |     | 2004
|                           
|Service cost                |  | $             | 1.4 |               |  | $    | 1.4 |      |  | $ | 2.8  |  |  | $ | 2.8  | 
|Interest cost               |  |               | 3.3 |               |  |      | 3.5 |      |  |   | 6.6  |  |  |   | 7.0  | 
|Net amortization            |  |               | 0.4 |               |  |      | 0.4 |      |  |   | 0.8  |  |  |   | 0.8  | 
|                           
|Net expense                 |  | $             | 5.1 |               |  | $    | 5.3 |      |  | $ | 10.2 |  |  | $ | 10.6 | 
|                           





|    |             
|--- | ------------
|13. | Other Income

|                                      |  |               |      |               |  |      |     |      |  |   |      |  |  |   |      | 
|------------------------------------- |  | ------------- | ---- | ------------- |  | ---- | --- | ---- |  | - | ---- |  |  | - | ---- | 
|                                      |  | Three Months  |      | Six Months   
|                                      |  | Ended June 30 |      | Ended June 30
|                                      |  | 2005          |      | 2004          |  | 2005 |     | 2004
|                                     
|Share of earnings of equity investees |  | $             | 13.4 |               |  | $    | 3.9 |      |  | $ | 26.5 |  |  | $ | 7.7  | 
|Dividend income                       |  |               |     |               |  |      | 2.2 |      |  |   | 3.1  |  |  |   | 2.2  | 
|Other                                 |  |               | 0.5  |               |  |      | 3.1 |      |  |   | 4.3  |  |  |   | 6.2  | 
|                                     
|                                      |  | $             | 13.9 |               |  | $    | 9.2 |      |  | $ | 33.9 |  |  | $ | 16.1 | 
|                                     



|    |            
|--- | -----------
|14. | Seasonality





|    |              
|--- | -------------
|15. | Contingencies



| |         
| | --------
| | Canpotex





| |            
| | -----------
| | Mining Risk





| |                  
| | -----------------
| | Investment in APC



11



---



##### Table of Contents





| |                        
| | -----------------------
| | Legal and Other Matters













|    |           
|--- | ----------
|16. | Guarantees



12



---



##### Table of Contents

















|    |                                                                                          
|--- | -----------------------------------------------------------------------------------------
|17. | Reconciliation of Canadian and United States Generally
    Accepted Accounting Principles



Long-term investments:


Property, plant and equipment and goodwill:


13



---



##### Table of Contents



Depreciation and amortization:


Asset retirement obligations:


Post-retirement and post-employment benefits:




Foreign currency translation adjustment:


Derivative instruments and hedging activities:


Comprehensive income:


14



---



##### Table of Contents





Income taxes:


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, shareholders equity and comprehensive
income. All share and per-share data have been retroactively
adjusted to reflect the stock split described in
Note 18.


|                                                      |                                                        |  |               |      |               |      |             |      |      |  |             |      |   |  |             |      |  
|----------------------------------------------------- | ------------------------------------------------------ |  | ------------- | ---- | ------------- | ---- | ----------- | ---- | ---- |  | ----------- | ---- | - |  | ----------- | ---- | -
|                                                      |                                                        |  | Three Months  |      | Six Months   
|                                                      |                                                        |  | Ended June 30 |      | Ended June 30
|                                                      |                                                        |  | 2005          |      |               | 2004 |             |      | 2005 |  |             | 2004
|                                                     
|Net income as reported  Canadian GAAP                |                                                        |  | $ 164.2       |      |               |      | $  72.6     |      |      |  | $ 295.5     |      |   |  | $ 123.3     |     
|Items increasing or decreasing reported net income    |                                                        |  |               |      |               |      |             |      |      |  |             |      |   |  |             |     
|                                                      | Cash flow hedge ineffectiveness                        |  |               | 0.8  |               |      |             |     |      |  |             | 1.0  |   |  |             |     |  
|                                                      | Depreciation and amortization                          |  |               | 2.1  |               |      |             | 2.1  |      |  |             | 4.2  |   |  |             | 4.2  |  
|                                                      | Accretion of asset retirement obligations              |  |               |     |               |      |             |     |      |  |             |     |   |  |             | 3.3  |  
|                                                      | Deferred income taxes related to the above adjustments |  |               | (1.0 | )             |      |             | (0.7 | )    |  |             | (1.7 | ) |  |             | (2.7 | )
|                                                     
|Net income  US GAAP                                  |                                                        |  | $ 166.1       |      |               |      | $  74.0     |      |      |  | $ 299.0     |      |   |  | $ 128.1     |     
|                                                     
|Basic weighted average shares outstanding  US GAAP   |                                                        |  | 109,636,000   |      |               |      | 107,046,000 |      |      |  | 110,365,000 |      |   |  | 106,866,000 |     
|                                                     
|Diluted weighted average shares outstanding  US GAAP |                                                        |  | 112,436,000   |      |               |      | 108,642,000 |      |      |  | 113,406,000 |      |   |  | 108,230,000 |     
|                                                     
|Basic net income per share  US GAAP                  |                                                        |  | $  1.52       |      |               |      | $  0.69     |      |      |  | $  2.71     |      |   |  | $  1.20     |     
|                                                     
|Diluted net income per share  US GAAP                |                                                        |  | $  1.48       |      |               |      | $  0.68     |      |      |  | $  2.64     |      |   |  | $  1.18     |     
|                                                     

15



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##### Table of Contents



|                                                    |                                                                   |          |         |              |   |   |         |        |  
|--------------------------------------------------- | ----------------------------------------------------------------- | -------- | ------- | ------------ | - | - | ------- | ------ | -
|                                                    |                                                                   | June 30, |         | December 31,
|                                                    |                                                                   | 2005     |         | 2004        
|                                                   
|Total assets as reported  Canadian GAAP            |                                                                   | $        | 5,207.3 |              |   | $ | 5,126.8 |       
|Items increasing (decreasing) reported total assets |                                                                   |          |         |              |   |   |         |       
|                                                    | Inventory                                                         |          |         | 3.1          |   |   |         | (3.0   | )
|                                                    | Other current assets                                              |          |         | 3.6          |   |   |         | 2.6    |  
|                                                    | Available-for-sale securities (unrealized holding gain)           |          |         | 240.8        |   |   |         | 161.7  |  
|                                                    | Fair value of derivative instruments                              |          |         | 168.5        |   |   |         | 66.5   |  
|                                                    | Property, plant and equipment                                     |          |         | (122.3       | ) |   |         | (126.5 | )
|                                                    | Post-retirement and post-employment benefits                      |          |         | 11.7         |   |   |         | 11.7   |  
|                                                    | Intangible asset relating to additional minimum pension liability |          |         | 9.6          |   |   |         | 9.6    |  
|                                                    | Goodwill                                                          |          |         | (46.7        | ) |   |         | (46.7  | )
|                                                   
|Total assets  US GAAP                              |                                                                   | $        | 5,475.6 |              |   | $ | 5,202.7 |       
|                                                   

|                                                                |                                                                         |          |         |              |   |   |         |        |  
|--------------------------------------------------------------- | ----------------------------------------------------------------------- | -------- | ------- | ------------ | - | - | ------- | ------ | -
|                                                                |                                                                         | June 30, |         | December 31,
|                                                                |                                                                         | 2005     |         | 2004        
|                                                               
|Total shareholders equity as reported  Canadian GAAP          |                                                                         | $        | 2,417.4 |              |   | $ | 2,385.6 |       
|Items increasing (decreasing) reported shareholders
    equity |                                                                         |          |         |              |   |   |         |       
|                                                                | Accumulated other comprehensive income, net of related income
    taxes |          |         | 222.2        |   |   |         | 96.8   |  
|                                                                | Foreign currency translation adjustment                                 |          |         | 20.9         |   |   |         | 20.9   |  
|                                                                | Provision for asset impairment                                          |          |         | (218.0       | ) |   |         | (218.0 | )
|                                                                | Depreciation and amortization                                           |          |         | 49.0         |   |   |         | 44.8   |  
|                                                                | Cash flow hedge ineffectiveness                                         |          |         | 3.6          |   |   |         | 2.6    |  
|                                                                | Post-retirement and post-employment benefits                            |          |         | 11.7         |   |   |         | 11.7   |  
|                                                                | Deferred income taxes relating to the above adjustments                 |          |         | 28.7         |   |   |         | 30.4   |  
|                                                               
|Shareholders equity  US GAAP                                  |                                                                         | $        | 2,535.5 |              |   | $ | 2,374.8 |       
|                                                               

|                               |                                                                              |                  |       |       |   |   |       |       |  
|------------------------------ | ---------------------------------------------------------------------------- | ---------------- | ----- | ----- | - | - | ----- | ----- | -
|                               |                                                                              | Six Months Ended
|                               |                                                                              | June 30         
|                               |                                                                              | 2005             |       | 2004 
|                              
|Net income  US GAAP           |                                                                              | $                | 299.0 |       |   | $ | 128.1 |      
|Other comprehensive income     |                                                                              |                  |       |       |   |   |       |      
|                               | Change in unrealized holding gain on available-for-sale
    securities       |                  |       | 79.1  |   |   |       | 55.5  |  
|                               | Change in gains and losses on derivatives designated as cash
    flow hedges |                  |       | 131.0 |   |   |       | 43.5  |  
|                               | Reclassification to income of gains and losses on cash flow
    hedges       |                  |       | (22.9 | ) |   |       | (25.8 | )
|                               | Deferred income taxes related to other comprehensive income                  |                  |       | (61.8 | ) |   |       | (24.2 | )
|                              
|                               | Other comprehensive income, net of related income taxes                      |                  |       | 125.4 |   |   |       | 49.0  |  
|                              
|Comprehensive income  US GAAP |                                                                              | $                | 424.4 |       |   | $ | 177.1 |      
|                              



|                                                               |  |          |       |              |  |   |       |  
|-------------------------------------------------------------- |  | -------- | ----- | ------------ |  | - | ----- | -
|                                                               |  | June 30, |       | December 31,
|                                                               |  | 2005     |       | 2004        
|                                                              
|Unrealized gains and losses on available-for-sale securities   |  | $        | 159.7 |              |  | $ | 106.7 |  
|Gains and losses on derivatives designated as cash flow hedges |  |          | 119.8 |              |  |   | 47.4  |  
|Additional minimum pension liability                           |  |          | (36.4 | )            |  |   | (36.4 | )
|Foreign currency translation adjustment                        |  |          | (20.9 | )            |  |   | (20.9 | )
|                                                              
|Accumulated other comprehensive income  US GAAP               |  | $        | 222.2 |              |  | $ | 96.8  |  
|                                                              

16



---



##### Table of Contents





| |                                 
| | --------------------------------
| | Supplemental US GAAP Disclosures



| |                                 
| | --------------------------------
| | Recent Accounting Pronouncements









17



---



##### Table of Contents











| |                            
| | ---------------------------
| | Available-for-Sale Security



18



---



##### Table of Contents



Stock-based Compensation




|                                                                                                                                                         |  |               |       |               |  |      |      |      |  |   |       |   |  |   |       |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | ----- | ------------- |  | ---- | ---- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                                                                                                                         |  | Three Months  |       | Six Months   
|                                                                                                                                                         |  | Ended June 30 |       | Ended June 30
|                                                                                                                                                         |  | 2005          |       | 2004          |  | 2005 |      | 2004
|                                                                                                                                                        
|Net income  as reported under US GAAP                                                                                                                   |  | $             | 166.1 |               |  | $    | 74.0 |      |  | $ | 299.0 |   |  | $ | 128.1 |  
|Add: Stock-based employee compensation expense included in
    reported net income, net of related tax effects                                           |  |               | 15.4  |               |  |      | 2.2  |      |  |   | 16.1  |   |  |   | 4.4   |  
|Less: Total stock-based employee compensation expense
    determined under fair value based method for all option awards,
    net of related tax effects |  |               | (15.4 | )             |  |      | (3.2 | )    |  |   | (16.1 | ) |  |   | (6.4  | )
|                                                                                                                                                        
|Net income  pro forma under US
    GAAP(1)                                                                                                              |  | $             | 166.1 |               |  | $    | 73.0 |      |  | $ | 299.0 |   |  | $ | 126.1 |  
|                                                                                                                                                        



| |     |                                                                                                                                                                                                                                     
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Compensation expense under the fair value method is recognized
    over the vesting period of the related stock options.
    Accordingly, the pro forma results of applying this method may
    not be indicative of future results.

|                                           |             |  |   |      |  |  |   |      |  |  |   |      |  |  |   |      | 
|------------------------------------------ | ----------- |  | - | ---- |  |  | - | ---- |  |  | - | ---- |  |  | - | ---- | 
|Basic net income per share under US GAAP   |             |  |   |      |  |  |   |      |  |  |   |      |  |  |   |     
|                                           | As reported |  | $ | 1.52 |  |  | $ | 0.69 |  |  | $ | 2.71 |  |  | $ | 1.20 | 
|                                           | Pro forma   |  | $ | 1.52 |  |  | $ | 0.68 |  |  | $ | 2.71 |  |  | $ | 1.18 | 
|                                          
|Diluted net income per share under US GAAP |             |  |   |      |  |  |   |      |  |  |   |      |  |  |   |     
|                                           | As reported |  | $ | 1.48 |  |  | $ | 0.68 |  |  | $ | 2.64 |  |  | $ | 1.18 | 
|                                           | Pro forma   |  | $ | 1.48 |  |  | $ | 0.67 |  |  | $ | 2.64 |  |  | $ | 1.17 | 

Derivative Instruments and Hedging Activities




| |                 
| | ----------------
| | Cash Flow Hedges





| |                  
| | -----------------
| | Fair Value Hedges



19



---



##### Table of Contents





|    |                    
|--- | -------------------
|18. | Comparative Figures







|    |                 
|--- | ----------------
|19. | Subsequent Event



20



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##### Table of Contents








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



POTASHCORP AND OUR BUSINESS ENVIRONMENT








POTASHCORP VISION






POTASHCORP STRATEGY






21



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KEY PERFORMANCE DRIVERS  PERFORMANCE COMPARED TO
GOALS






|  |                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------
| | management will focus on the most important things, which will
    be reinforced by having the 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                                                                                                             |  | Performance                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |  | 
|Goal                                                                                                      |  | 2005 Annual Target                                                                                                         |  | to June 30, 2005                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | 
|                                                                                                         
|To continue to outperform our sector and other basic materials
    companies in total shareholder return. |  | Exceed total shareholder return performance for our sector and
    companies on the DJBMI for 2005 and three-year average. |  | PotashCorps total shareholder return in the second quarter
    of 2005 was 9 percent, exceeding the DJBMI return of
    -9 percent as well as our sector average return of 8
    percent for the same quarter. Our 15-percent return for the six
    months ended June 30, 2005 exceeded the DJBMI of
    -7 percent, though not our sector average of
    24 percent. Our three-year average return at
    191 percent significantly exceeds the DJBMI three-year
    average return of 17 percent, though below our sector
    average of 222 percent. |  | 
|                                                                                                         
|To remain the leader and preferred supplier of potash, phosphate
    and nitrogen products worldwide.     |  | Increase potash sales volumes by 5 percent at 25 percent higher
    realized prices.                                       |  | Potash sales volumes decreased 7 percent for the second quarter
    of 2005, while realized prices were 49 percent higher in
    the second quarter of 2005 compared to second-quarter 2004. Year
    over year potash sales volumes increased 4 percent at
    49 percent higher realized prices. Compared to the 2004
    annual average, realized prices increased 34 percent during the
    six months ended June 30, 2005.                                                                                                                           |  | 
|                                                                                                         
|To be the low-cost supplier in our industry.                                                              |  | Achieve rock costs at Aurora and White Springs 5 percent below
    2004.                                                   |  | Rock costs at Aurora decreased 5 percent while White Springs
    increased 2 percent during the second quarter of 2005 compared
    to the corresponding period in 2004. On a year over year basis,
    rock costs decreased 2 percent at Aurora and increased
    2 percent at White Springs. Compared to the 2004 annual
    average, Aurora and White Springs rock costs have decreased 2
    and 1 percent, respectively.                                                                                                                             |  | 
|                                                                                                         
|To move closer to our goal of no harm to people, no accidents,
    no damage to the environment.          |  | Reduce recordable and lost-time injury rates by 10 percent.                                                                |  | Recordable and lost time injury rates to June 30, 2005 were 0.32
    and 2.24, respectively, compared to the targets of 0.20 and
    1.72. This represents an improvement over the quarter ended
    March 31, 2005 at which time the recordable and lost time injury
    rates were 0.40 and 2.55, respectively.                                                                                                                                                                                                                                         |  | 
|                                                                                                         

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FINANCIAL OVERVIEW








| |                  
| | -----------------
| | Earnings Guidance





| |                           
| | --------------------------
| | Overview of Actual Results



| |           
| | ----------
| | Operations

|                                              |  |                            |         |                          |  |        |       |        |  |      |       |      |  |        |     |        |  |   |         |  |  |   |         |  |  |   |       |  |  |  |     | 
|--------------------------------------------- |  | -------------------------- | ------- | ------------------------ |  | ------ | ----- | ------ |  | ---- | ----- | ---- |  | ------ | --- | ------ |  | - | ------- |  |  | - | ------- |  |  | - | ----- |  |  |  | --- | 
|                                              |  | Three Months Ended June 30 |         | Six Months Ended June 30
|                                             
|                                              |  | Dollar                     |         | %                        |  |        |       | Dollar |  | %   
|(Dollars millions  except per-share amounts) |  | 2005                       |         | 2004                     |  | Change |       | Change |  | 2005 |       | 2004 |  | Change |     | Change
|                                             
|Sales                                         |  | $                          | 1,057.3 |                          |  | $      | 833.7 |        |  | $    | 223.6 |      |  |        | 27  |        |  | $ | 1,978.7 |  |  | $ | 1,562.1 |  |  | $ | 416.6 |  |  |  | 27  | 
|Freight                                       |  |                            | 67.4    |                          |  |        | 68.9  |        |  |      | (1.5  | )    |  |        | (2  | )      |  |   | 134.6   |  |  |   | 127.0   |  |  |   | 7.6   |  |  |  | 6   | 
|Transportation and distribution               |  |                            | 32.1    |                          |  |        | 31.3  |        |  |      | 0.8   |      |  |        | 3   |        |  |   | 61.0    |  |  |   | 54.3    |  |  |   | 6.7   |  |  |  | 12  | 
|Cost of goods sold                            |  |                            | 613.0   |                          |  |        | 562.8 |        |  |      | 50.2  |      |  |        | 9   |        |  |   | 1,179.8 |  |  |   | 1,086.1 |  |  |   | 93.7  |  |  |  | 9   | 
|                                             
|Gross margin                                  |  | $                          | 344.8   |                          |  | $      | 170.7 |        |  | $    | 174.1 |      |  |        | 102 |        |  | $ | 603.3   |  |  | $ | 294.7   |  |  | $ | 308.6 |  |  |  | 105 | 
|                                             
|Operating income                              |  | $                          | 265.7   |                          |  | $      | 129.2 |        |  | $    | 136.5 |      |  |        | 106 |        |  | $ | 482.4   |  |  | $ | 227.0   |  |  | $ | 255.4 |  |  |  | 113 | 
|                                             
|Net income                                    |  | $                          | 164.2   |                          |  | $      | 72.6  |        |  | $    | 91.6  |      |  |        | 126 |        |  | $ | 295.5   |  |  | $ | 123.3   |  |  | $ | 172.2 |  |  |  | 140 | 
|                                             
|Net income per share  basic                  |  | $                          | 1.50    |                          |  | $      | 0.68  |        |  | $    | 0.82  |      |  |        | 121 |        |  | $ | 2.68    |  |  | $ | 1.15    |  |  | $ | 1.53  |  |  |  | 133 | 
|                                             
|Net income per share  diluted                |  | $                          | 1.46    |                          |  | $      | 0.67  |        |  | $    | 0.79  |      |  |        | 118 |        |  | $ | 2.61    |  |  | $ | 1.14    |  |  | $ | 1.47  |  |  |  | 129 | 
|                                             





23



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| |              
| | -------------
| | Balance Sheet





24



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##### Table of Contents









| |                        
| | -----------------------
| | Business Segment Review



Potash


|                                |                        |                            |       |                    |  |                            |       |       |  |      |     |          |   |      |       |       |  |          |       |       |  |  |    |     |   |   |        |        |  |   |        |        |  |  |    |    | 
|------------------------------- | ---------------------- | -------------------------- | ----- | ------------------ |  | -------------------------- | ----- | ----- |  | ---- | --- | -------- | - | ---- | ----- | ----- |  | -------- | ----- | ----- |  |  | -- | --- | - | - | ------ | ------ |  | - | ------ | ------ |  |  | -- | -- | 
|                                |                        | Three Months Ended June 30
|                               
|                                |                        | Dollars (millions)         |       | Tonnes (thousands) |  | Average Price per Tonne(1)
|                               
|                                |                        | 2005                       |       | 2004               |  | % Change                   |       | 2005  |  | 2004 |     | % Change |   | 2005 |       | 2004  |  | % Change
|                               
|Sales                           |                        | $                          | 401.6 |                    |  | $                          | 316.4 |       |  |      | 27  |          |   |      |       |       |  |          |       |       |  |  |    |     |   |   |        |        |  |   |        |        |  |  |    |   
|Freight                         |                        |                            | 37.5  |                    |  |                            | 41.2  |       |  |      | (9  | )        |   |      |       |       |  |          |       |       |  |  |    |     |   |   |        |        |  |   |        |        |  |  |    |   
|Transportation and distribution |                        |                            | 9.5   |                    |  |                            | 12.5  |       |  |      | (24 | )        |   |      |       |       |  |          |       |       |  |  |    |     |   |   |        |        |  |   |        |        |  |  |    |   
|                               
|                                |                        | $                          | 354.6 |                    |  | $                          | 262.7 |       |  |      | 35  |          |   |      |       |       |  |          |       |       |  |  |    |     |   |   |        |        |  |   |        |        |  |  |    |   
|                               
|Net Sales                       |                        |                            |       |                    |  |                            |       |       |  |      |     |          |   |      |       |       |  |          |       |       |  |  |    |     |   |   |        |        |  |   |        |        |  |  |    |   
|                                | North American         |                            | $     | 155.7              |  |                            | $     | 117.5 |  |      |     | 33       |   |      |       | 973   |  |          |       | 1,119 |  |  |    | (13 | ) |   | $      | 159.98 |  |   | $      | 104.99 |  |  |    | 52 | 
|                                | Offshore               |                            |       | 196.0              |  |                            |       | 138.2 |  |      |     | 42       |   |      |       | 1,427 |  |          |       | 1,474 |  |  |    | (3  | ) |   | $      | 137.31 |  |   | $      | 93.77  |  |  |    | 46 | 
|                               
|                                |                        |                            | 351.7 |                    |  |                            | 255.7 |       |  |      | 38  |          |   |      | 2,400 |       |  |          | 2,593 |       |  |  | (7 | )   |   | $ | 146.54 |        |  | $ | 98.61  |        |  |  | 49 |   
|                                | Miscellaneous products |                            |       | 2.9                |  |                            |       | 7.0   |  |      |     | (59      | ) |      |       |      |  |          |       |      |  |  |    |    |   |   |        |       |  |   |        |       |  |  |    |   | 
|                               
|                                |                        |                            | 354.6 |                    |  |                            | 262.7 |       |  |      | 35  |          |   |      | 2,400 |       |  |          | 2,593 |       |  |  | (7 | )   |   | $ | 147.75 |        |  | $ | 101.31 |        |  |  | 46 |   
|Cost of goods sold              |                        |                            | 131.3 |                    |  |                            | 141.3 |       |  |      | (7  | )        |   |      |       |       |  |          |       |       |  |  |    |     |   | $ | 54.71  |        |  | $ | 54.49  |        |  |  |   |   
|                               
|Gross margin                    |                        | $                          | 223.3 |                    |  | $                          | 121.4 |       |  |      | 84  |          |   |      |       |       |  |          |       |       |  |  |    |     |   | $ | 93.04  |        |  | $ | 46.82  |        |  |  | 99 |   
|                               

25



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|                                |                        |                          |       |                    |  |                            |       |       |  |      |     |          |   |      |       |       |  |          |       |       |  |  |   |   |  |   |        |        |  |   |       |        |  |  |     |    | 
|------------------------------- | ---------------------- | ------------------------ | ----- | ------------------ |  | -------------------------- | ----- | ----- |  | ---- | --- | -------- | - | ---- | ----- | ----- |  | -------- | ----- | ----- |  |  | - | - |  | - | ------ | ------ |  | - | ----- | ------ |  |  | --- | -- | 
|                                |                        | Six Months Ended June 30
|                               
|                                |                        | Dollars (millions)       |       | Tonnes (thousands) |  | Average Price per Tonne(1)
|                               
|                                |                        | 2005                     |       | 2004               |  | % Change                   |       | 2005  |  | 2004 |     | % Change |   | 2005 |       | 2004  |  | % Change
|                               
|Sales                           |                        | $                        | 753.7 |                    |  | $                          | 540.1 |       |  |      | 40  |          |   |      |       |       |  |          |       |       |  |  |   |   |  |   |        |        |  |   |       |        |  |  |     |   
|Freight                         |                        |                          | 74.7  |                    |  |                            | 74.7  |       |  |      |    |          |   |      |       |       |  |          |       |       |  |  |   |   |  |   |        |        |  |   |       |        |  |  |     |   
|Transportation and distribution |                        |                          | 18.6  |                    |  |                            | 21.2  |       |  |      | (12 | )        |   |      |       |       |  |          |       |       |  |  |   |   |  |   |        |        |  |   |       |        |  |  |     |   
|                               
|                                |                        | $                        | 660.4 |                    |  | $                          | 444.2 |       |  |      | 49  |          |   |      |       |       |  |          |       |       |  |  |   |   |  |   |        |        |  |   |       |        |  |  |     |   
|                               
|Net Sales                       |                        |                          |       |                    |  |                            |       |       |  |      |     |          |   |      |       |       |  |          |       |       |  |  |   |   |  |   |        |        |  |   |       |        |  |  |     |   
|                                | North American         |                          | $     | 284.6              |  |                            | $     | 191.6 |  |      |     | 49       |   |      |       | 1,895 |  |          |       | 1,901 |  |  |   |  |  |   | $      | 150.19 |  |   | $     | 100.78 |  |  |     | 49 | 
|                                | Offshore               |                          |       | 368.8              |  |                            |       | 229.5 |  |      |     | 61       |   |      |       | 2,828 |  |          |       | 2,640 |  |  |   | 7 |  |   | $      | 130.40 |  |   | $     | 86.93  |  |  |     | 50 | 
|                               
|                                |                        |                          | 653.4 |                    |  |                            | 421.1 |       |  |      | 55  |          |   |      | 4,723 |       |  |          | 4,541 |       |  |  | 4 |   |  | $ | 138.34 |        |  | $ | 92.73 |        |  |  | 49  |   
|                                | Miscellaneous products |                          |       | 7.0                |  |                            |       | 23.1  |  |      |     | (70      | ) |      |       |      |  |          |       |      |  |  |   |  |  |   |        |       |  |   |       |       |  |  |     |   | 
|                               
|                                |                        |                          | 660.4 |                    |  |                            | 444.2 |       |  |      | 49  |          |   |      | 4,723 |       |  |          | 4,541 |       |  |  | 4 |   |  | $ | 139.83 |        |  | $ | 97.82 |        |  |  | 43  |   
|Cost of goods sold              |                        |                          | 260.9 |                    |  |                            | 256.1 |       |  |      | 2   |          |   |      |       |       |  |          |       |       |  |  |   |   |  | $ | 55.24  |        |  | $ | 56.40 |        |  |  | (2  | ) 
|                               
|Gross margin                    |                        | $                        | 399.5 |                    |  | $                          | 188.1 |       |  |      | 112 |          |   |      |       |       |  |          |       |       |  |  |   |   |  | $ | 84.59  |        |  | $ | 41.42 |        |  |  | 104 |   
|                               



|    |                                                                                              
|--- | ---------------------------------------------------------------------------------------------
|(1) | Rounding differences may occur due to the use of whole dollars
    in per-tonne calculations.









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Phosphate


|                                |                      |                            |       |                    |  |                            |       |      |  |      |     |          |  |      |       |      |  |          |     |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |    | 
|------------------------------- | -------------------- | -------------------------- | ----- | ------------------ |  | -------------------------- | ----- | ---- |  | ---- | --- | -------- |  | ---- | ----- | ---- |  | -------- | --- | --- |  |  | -- | -- |  | - | ------ | ------ |  | - | ------ | ------ |  |  | --- | -- | 
|                                |                      | Three Months Ended June 30
|                               
|                                |                      | Dollars (millions)         |       | Tonnes (thousands) |  | Average Price per Tonne(1)
|                               
|                                |                      | 2005                       |       | 2004               |  | % Change                   |       | 2005 |  | 2004 |     | % Change |  | 2005 |       | 2004 |  | % Change
|                               
|Sales                           |                      | $                          | 291.3 |                    |  | $                          | 236.9 |      |  |      | 23  |          |  |      |       |      |  |          |     |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |   
|Freight                         |                      |                            | 20.0  |                    |  |                            | 16.1  |      |  |      | 24  |          |  |      |       |      |  |          |     |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |   
|Transportation and distribution |                      |                            | 8.8   |                    |  |                            | 7.4   |      |  |      | 19  |          |  |      |       |      |  |          |     |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |   
|                               
|                                |                      | $                          | 262.5 |                    |  | $                          | 213.4 |      |  |      | 23  |          |  |      |       |      |  |          |     |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |   
|                               
|Net Sales                       |                      |                            |       |                    |  |                            |       |      |  |      |     |          |  |      |       |      |  |          |     |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |   
|                                | Fertilizer  liquids |                            | $     | 40.4               |  |                            | $     | 30.8 |  |      |     | 31       |  |      |       | 171  |  |          |     | 143 |  |  |    | 20 |  |   | $      | 235.83 |  |   | $      | 214.66 |  |  |     | 10 | 
|                                | Fertilizer  solids  |                            |       | 102.7              |  |                            |       | 86.0 |  |      |     | 19       |  |      |       | 467  |  |          |     | 427 |  |  |    | 9  |  |   | $      | 219.91 |  |   | $      | 201.68 |  |  |     | 9  | 
|                                | Feed                 |                            |       | 55.6               |  |                            |       | 43.7 |  |      |     | 27       |  |      |       | 222  |  |          |     | 207 |  |  |    | 7  |  |   | $      | 250.13 |  |   | $      | 211.02 |  |  |     | 19 | 
|                                | Industrial           |                            |       | 60.0               |  |                            |       | 50.3 |  |      |     | 19       |  |      |       | 176  |  |          |     | 154 |  |  |    | 14 |  |   | $      | 340.61 |  |   | $      | 327.22 |  |  |     | 4  | 
|                               
|                                |                      |                            | 258.7 |                    |  |                            | 210.8 |      |  |      | 23  |          |  |      | 1,036 |      |  |          | 931 |     |  |  | 11 |    |  | $ | 249.54 |        |  | $ | 226.49 |        |  |  | 10  |   
|                                | Miscellaneous        |                            |       | 3.8                |  |                            |       | 2.6  |  |      |     | 46       |  |      |       |     |  |          |     |    |  |  |    |   |  |   |        |       |  |   |        |       |  |  |     |   | 
|                               
|                                |                      | $                          | 262.5 |                    |  | $                          | 213.4 |      |  |      | 23  |          |  |      | 1,036 |      |  |          | 931 |     |  |  | 11 |    |  | $ | 253.23 |        |  | $ | 229.25 |        |  |  | 10  |   
|Cost of goods sold              |                      |                            | 240.4 |                    |  |                            | 207.7 |      |  |      | 16  |          |  |      |       |      |  |          |     |     |  |  |    |    |  | $ | 231.90 |        |  | $ | 223.13 |        |  |  | 4   |   
|                               
|Gross margin                    |                      | $                          | 22.1  |                    |  | $                          | 5.7   |      |  |      | 288 |          |  |      |       |      |  |          |     |     |  |  |    |    |  | $ | 21.33  |        |  | $ | 6.12   |        |  |  | 249 |   
|                               

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|                                |                      |                          |       |                    |  |                            |       |       |  |      |     |          |  |      |       |      |  |          |       |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |    | 
|------------------------------- | -------------------- | ------------------------ | ----- | ------------------ |  | -------------------------- | ----- | ----- |  | ---- | --- | -------- |  | ---- | ----- | ---- |  | -------- | ----- | --- |  |  | -- | -- |  | - | ------ | ------ |  | - | ------ | ------ |  |  | --- | -- | 
|                                |                      | Six Months Ended June 30
|                               
|                                |                      | Dollars (millions)       |       | Tonnes (thousands) |  | Average Price per Tonne(1)
|                               
|                                |                      | 2005                     |       | 2004               |  | % Change                   |       | 2005  |  | 2004 |     | % Change |  | 2005 |       | 2004 |  | % Change
|                               
|Sales                           |                      | $                        | 555.8 |                    |  | $                          | 454.5 |       |  |      | 22  |          |  |      |       |      |  |          |       |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |   
|Freight                         |                      |                          | 39.8  |                    |  |                            | 31.8  |       |  |      | 25  |          |  |      |       |      |  |          |       |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |   
|Transportation and distribution |                      |                          | 16.9  |                    |  |                            | 12.7  |       |  |      | 33  |          |  |      |       |      |  |          |       |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |   
|                               
|                                |                      | $                        | 499.1 |                    |  | $                          | 410.0 |       |  |      | 22  |          |  |      |       |      |  |          |       |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |   
|                               
|Net Sales                       |                      |                          |       |                    |  |                            |       |       |  |      |     |          |  |      |       |      |  |          |       |     |  |  |    |    |  |   |        |        |  |   |        |        |  |  |     |   
|                                | Fertilizer  liquids |                          | $     | 93.0               |  |                            | $     | 61.5  |  |      |     | 51       |  |      |       | 421  |  |          |       | 279 |  |  |    | 51 |  |   | $      | 220.87 |  |   | $      | 219.87 |  |  |     |   | 
|                                | Fertilizer  solids  |                          |       | 174.0              |  |                            |       | 157.4 |  |      |     | 11       |  |      |       | 794  |  |          |       | 782 |  |  |    | 2  |  |   | $      | 219.08 |  |   | $      | 201.33 |  |  |     | 9  | 
|                                | Feed                 |                          |       | 110.7              |  |                            |       | 88.1  |  |      |     | 26       |  |      |       | 452  |  |          |       | 414 |  |  |    | 9  |  |   | $      | 244.59 |  |   | $      | 213.10 |  |  |     | 15 | 
|                                | Industrial           |                          |       | 114.7              |  |                            |       | 98.1  |  |      |     | 17       |  |      |       | 331  |  |          |       | 299 |  |  |    | 11 |  |   | $      | 346.60 |  |   | $      | 328.33 |  |  |     | 6  | 
|                               
|                                |                      |                          | 492.4 |                    |  |                            | 405.1 |       |  |      | 22  |          |  |      | 1,998 |      |  |          | 1,774 |     |  |  | 13 |    |  | $ | 246.35 |        |  | $ | 228.35 |        |  |  | 8   |   
|                                | Miscellaneous        |                          |       | 6.7                |  |                            |       | 4.9   |  |      |     | 37       |  |      |       |     |  |          |       |    |  |  |    |   |  |   |        |       |  |   |        |       |  |  |     |   | 
|                               
|                                |                      | $                        | 499.1 |                    |  | $                          | 410.0 |       |  |      | 22  |          |  |      | 1,998 |      |  |          | 1,774 |     |  |  | 13 |    |  | $ | 249.69 |        |  | $ | 231.18 |        |  |  | 8   |   
|Cost of goods sold              |                      |                          | 460.0 |                    |  |                            | 405.2 |       |  |      | 14  |          |  |      |       |      |  |          |       |     |  |  |    |    |  | $ | 230.12 |        |  | $ | 228.47 |        |  |  | 1   |   
|                               
|Gross margin                    |                      | $                        | 39.1  |                    |  | $                          | 4.8   |       |  |      | 715 |          |  |      |       |      |  |          |       |     |  |  |    |    |  | $ | 19.57  |        |  | $ | 2.71   |        |  |  | 622 |   
|                               



|    |                                                                                              
|--- | ---------------------------------------------------------------------------------------------
|(1) | Rounding differences may occur due to the use of whole dollars
    in per-tonne calculations.

2 5








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2 5


Nitrogen


|                                |                                                   |                            |       |                    |  |                            |       |       |  |      |     |          |  |      |       |      |  |          |       |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |    | 
|------------------------------- | ------------------------------------------------- | -------------------------- | ----- | ------------------ |  | -------------------------- | ----- | ----- |  | ---- | --- | -------- |  | ---- | ----- | ---- |  | -------- | ----- | --- |  |  | -- | -- | - | - | ------ | ------ |  | - | ------ | ------ |  |  | --- | -- | 
|                                |                                                   | Three Months Ended June 30
|                               
|                                |                                                   | Dollars (millions)         |       | Tonnes (thousands) |  | Average Price per Tonne(1)
|                               
|                                |                                                   | 2005                       |       | 2004               |  | % Change                   |       | 2005  |  | 2004 |     | % Change |  | 2005 |       | 2004 |  | % Change
|                               
|Sales                           |                                                   | $                          | 364.4 |                    |  | $                          | 280.4 |       |  |      | 30  |          |  |      |       |      |  |          |       |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |   
|Freight                         |                                                   |                            | 9.9   |                    |  |                            | 11.6  |       |  |      | (15 | )        |  |      |       |      |  |          |       |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |   
|Transportation and distribution |                                                   |                            | 13.8  |                    |  |                            | 11.4  |       |  |      | 21  |          |  |      |       |      |  |          |       |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |   
|                               
|                                |                                                   | $                          | 340.7 |                    |  | $                          | 257.4 |       |  |      | 32  |          |  |      |       |      |  |          |       |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |   
|                               
|Net Sales                       |                                                   |                            |       |                    |  |                            |       |       |  |      |     |          |  |      |       |      |  |          |       |     |  |  |    |    |   |   |        |        |  |   |        |        |  |  |     |   
|                                | Ammonia                                           |                            | $     | 139.6              |  |                            | $     | 108.8 |  |      |     | 28       |  |      |       | 482  |  |          |       | 503 |  |  |    | (4 | ) |   | $      | 289.70 |  |   | $      | 216.22 |  |  |     | 34 | 
|                                | Urea                                              |                            |       | 92.4               |  |                            |       | 60.8  |  |      |     | 52       |  |      |       | 331  |  |          |       | 308 |  |  |    | 7  |   |   | $      | 279.05 |  |   | $      | 197.18 |  |  |     | 42 | 
|                                | Nitrogen solutions/ Nitric acid/ Ammonium nitrate |                            |       | 72.8               |  |                            |       | 62.4  |  |      |     | 17       |  |      |       | 479  |  |          |       | 493 |  |  |    | (3 | ) |   | $      | 152.17 |  |   | $      | 126.74 |  |  |     | 20 | 
|                                | Purchased                                         |                            |       | 28.9               |  |                            |       | 19.6  |  |      |     | 47       |  |      |       | 103  |  |          |       | 105 |  |  |    | (2 | ) |   | $      | 278.40 |  |   | $      | 187.17 |  |  |     | 49 | 
|                               
|                                |                                                   |                            | 333.7 |                    |  |                            | 251.6 |       |  |      | 33  |          |  |      | 1,395 |      |  |          | 1,409 |     |  |  | (1 | )  |   | $ | 239.21 |        |  | $ | 178.57 |        |  |  | 34  |   
|                                | Miscellaneous                                     |                            |       | 7.0                |  |                            |       | 5.8   |  |      |     | 21       |  |      |       |     |  |          |       |    |  |  |    |   |   |   |        |       |  |   |        |       |  |  |     |   | 
|                               
|                                |                                                   | $                          | 340.7 |                    |  | $                          | 257.4 |       |  |      | 32  |          |  |      | 1,395 |      |  |          | 1,409 |     |  |  | (1 | )  |   | $ | 244.14 |        |  | $ | 182.73 |        |  |  | 34  |   
|                               
|                                | Fertilizer                                        |                            | $     | 141.6              |  |                            | $     | 109.0 |  |      |     | 30       |  |      |       | 545  |  |          |       | 590 |  |  |    | (8 | ) |   | $      | 259.76 |  |   | $      | 184.90 |  |  |     | 40 | 
|                                | Non-fertilizer                                    |                            |       | 199.1              |  |                            |       | 148.4 |  |      |     | 34       |  |      |       | 850  |  |          |       | 819 |  |  |    | 4  |   |   | $      | 234.12 |  |   | $      | 181.17 |  |  |     | 29 | 
|                               
|                                |                                                   |                            | 340.7 |                    |  |                            | 257.4 |       |  |      | 32  |          |  |      | 1,395 |      |  |          | 1,409 |     |  |  | (1 | )  |   | $ | 244.14 |        |  | $ | 182.73 |        |  |  | 34  |   
|Cost of goods sold              |                                                   |                            | 241.3 |                    |  |                            | 213.8 |       |  |      | 13  |          |  |      |       |      |  |          |       |     |  |  |    |    |   | $ | 172.89 |        |  | $ | 151.79 |        |  |  | 14  |   
|                               
|Gross margin                    |                                                   | $                          | 99.4  |                    |  | $                          | 43.6  |       |  |      | 128 |          |  |      |       |      |  |          |       |     |  |  |    |    |   | $ | 71.25  |        |  | $ | 30.94  |        |  |  | 130 |   
|                               

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|                                |                                                   |                          |       |                    |  |                            |       |       |  |      |    |          |   |      |       |       |  |          |       |       |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |    | 
|------------------------------- | ------------------------------------------------- | ------------------------ | ----- | ------------------ |  | -------------------------- | ----- | ----- |  | ---- | -- | -------- | - | ---- | ----- | ----- |  | -------- | ----- | ----- |  |  | - | --- | - | - | ------ | ------ |  | - | ------ | ------ |  |  | -- | -- | 
|                                |                                                   | Six Months Ended June 30
|                               
|                                |                                                   | Dollars (millions)       |       | Tonnes (thousands) |  | Average Price per Tonne(1)
|                               
|                                |                                                   | 2005                     |       | 2004               |  | % Change                   |       | 2005  |  | 2004 |    | % Change |   | 2005 |       | 2004  |  | % Change
|                               
|Sales                           |                                                   | $                        | 669.2 |                    |  | $                          | 567.5 |       |  |      | 18 |          |   |      |       |       |  |          |       |       |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |   
|Freight                         |                                                   |                          | 20.1  |                    |  |                            | 20.5  |       |  |      | (2 | )        |   |      |       |       |  |          |       |       |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |   
|Transportation and distribution |                                                   |                          | 25.5  |                    |  |                            | 20.4  |       |  |      | 25 |          |   |      |       |       |  |          |       |       |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |   
|                               
|                                |                                                   | $                        | 623.6 |                    |  | $                          | 526.6 |       |  |      | 18 |          |   |      |       |       |  |          |       |       |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |   
|                               
|Net Sales                       |                                                   |                          |       |                    |  |                            |       |       |  |      |    |          |   |      |       |       |  |          |       |       |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |   
|                                | Ammonia                                           |                          | $     | 238.5              |  |                            | $     | 220.5 |  |      |    | 8        |   |      |       | 888   |  |          |       | 915   |  |  |   | (3  | ) |   | $      | 268.71 |  |   | $      | 240.79 |  |  |    | 12 | 
|                                | Urea                                              |                          |       | 182.8              |  |                            |       | 115.8 |  |      |    | 58       |   |      |       | 690   |  |          |       | 563   |  |  |   | 23  |   |   | $      | 264.68 |  |   | $      | 205.62 |  |  |    | 29 | 
|                                | Nitrogen solutions/ Nitric acid/ Ammonium nitrate |                          |       | 138.0              |  |                            |       | 119.7 |  |      |    | 15       |   |      |       | 929   |  |          |       | 926   |  |  |   |    |   |   | $      | 148.58 |  |   | $      | 129.33 |  |  |    | 15 | 
|                                | Purchased                                         |                          |       | 52.1               |  |                            |       | 60.1  |  |      |    | (13      | ) |      |       | 196   |  |          |       | 258   |  |  |   | (24 | ) |   | $      | 265.32 |  |   | $      | 233.68 |  |  |    | 14 | 
|                               
|                                |                                                   |                          | 611.4 |                    |  |                            | 516.1 |       |  |      | 18 |          |   |      | 2,703 |       |  |          | 2,662 |       |  |  | 2 |     |   | $ | 226.19 |        |  | $ | 193.88 |        |  |  | 17 |   
|                                | Miscellaneous                                     |                          |       | 12.2               |  |                            |       | 10.5  |  |      |    | 16       |   |      |       |      |  |          |       |      |  |  |   |    |   |   |        |       |  |   |        |       |  |  |    |   | 
|                               
|                                |                                                   | $                        | 623.6 |                    |  | $                          | 526.6 |       |  |      | 18 |          |   |      | 2,703 |       |  |          | 2,662 |       |  |  | 2 |     |   | $ | 230.68 |        |  | $ | 197.84 |        |  |  | 17 |   
|                               
|                                | Fertilizer                                        |                          | $     | 247.4              |  |                            | $     | 213.3 |  |      |    | 16       |   |      |       | 1,008 |  |          |       | 1,081 |  |  |   | (7  | ) |   | $      | 245.57 |  |   | $      | 197.34 |  |  |    | 24 | 
|                                | Non-fertilizer                                    |                          |       | 376.2              |  |                            |       | 313.3 |  |      |    | 20       |   |      |       | 1,695 |  |          |       | 1,581 |  |  |   | 7   |   |   | $      | 221.82 |  |   | $      | 198.18 |  |  |    | 12 | 
|                               
|                                |                                                   |                          | 623.6 |                    |  |                            | 526.6 |       |  |      | 18 |          |   |      | 2,703 |       |  |          | 2,662 |       |  |  | 2 |     |   | $ | 230.68 |        |  | $ | 197.84 |        |  |  | 17 |   
|Cost of goods sold              |                                                   |                          | 458.9 |                    |  |                            | 424.8 |       |  |      | 8  |          |   |      |       |       |  |          |       |       |  |  |   |     |   | $ | 169.75 |        |  | $ | 159.60 |        |  |  | 6  |   
|                               
|Gross margin                    |                                                   | $                        | 164.7 |                    |  | $                          | 101.8 |       |  |      | 62 |          |   |      |       |       |  |          |       |       |  |  |   |     |   | $ | 60.93  |        |  | $ | 38.24  |        |  |  | 59 |   
|                               



|    |                                                                                              
|--- | ---------------------------------------------------------------------------------------------
|(1) | Rounding differences may occur due to the use of whole dollars
    in per-tonne calculations.







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Expenses and Other Income


|                                  |  |                    |      |                  |  |        |      |        |  |      |      |      |  |        |     |        |  |   |       |  |  |   |      |  |  |   |      |   |  |  |     |  
|--------------------------------- |  | ------------------ | ---- | ---------------- |  | ------ | ---- | ------ |  | ---- | ---- | ---- |  | ------ | --- | ------ |  | - | ----- |  |  | - | ---- |  |  | - | ---- | - |  |  | --- | -
|                                  |  | Three Months Ended |      | Six Months Ended
|                                  |  | June 30            |      | June 30         
|                                 
|                                  |  | Dollar             |      | %                |  |        |      | Dollar |  | %   
|Dollars (millions)                |  | 2005               |      | 2004             |  | Change |      | Change |  | 2005 |      | 2004 |  | Change |     | Change
|                                 
|Selling and administrative        |  | $                  | 54.9 |                  |  | $      | 25.4 |        |  | $    | 29.5 |      |  |        | 116 |        |  | $ | 84.2  |  |  | $ | 51.6 |  |  | $ | 32.6 |   |  |  | 63  |  
|Provincial mining and other taxes |  |                    | 44.2 |                  |  |        | 29.3 |        |  |      | 14.9 |      |  |        | 51  |        |  |   | 82.6  |  |  |   | 44.4 |  |  |   | 38.2 |   |  |  | 86  |  
|Provision for PCS Yumbes S.C.M.   |  |                    |     |                  |  |        | 5.9  |        |  |      | (5.9 | )    |  |        | n/m |        |  |   |      |  |  |   | 5.9  |  |  |   | (5.9 | ) |  |  | n/m |  
|Foreign exchange gain             |  |                    | 6.1  |                  |  |        | 9.9  |        |  |      | (3.8 | )    |  |        | (38 | )      |  |   | 12.0  |  |  |   | 18.1 |  |  |   | (6.1 | ) |  |  | (34 | )
|Other income                      |  |                    | 13.9 |                  |  |        | 9.2  |        |  |      | 4.7  |      |  |        | 51  |        |  |   | 33.9  |  |  |   | 16.1 |  |  |   | 17.8 |   |  |  | 111 |  
|Interest expense                  |  |                    | 20.6 |                  |  |        | 20.9 |        |  |      | (0.3 | )    |  |        | (1  | )      |  |   | 41.3  |  |  |   | 43.0 |  |  |   | (1.7 | ) |  |  | (4  | )
|Income tax expense                |  |                    | 80.9 |                  |  |        | 35.7 |        |  |      | 45.2 |      |  |        | 127 |        |  |   | 145.6 |  |  |   | 60.7 |  |  |   | 84.9 |   |  |  | 140 |  



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Status of Restructuring Activities






|                                          |  |             |       |             |  |   |       | 
|----------------------------------------- |  | ----------- | ----- | ----------- |  | - | ----- | 
|                                          |  | Cumulative  |       | Total Costs
|                                          |  | Costs       |       | Expected   
|                                          |  | Incurred to |       | to be      
|Dollars (millions)                        |  | Date        |       | Incurred   
|                                         
|Nitrogen Segment                          |  |             |       |             |  |   |       | 
|Employee termination and related benefits |  | $           | 4.8   |             |  | $ | 4.8   | 
|Writedown of parts inventory              |  |             | 12.4  |             |  |   | 12.4  | 
|Asset impairment charges                  |  |             | 101.6 |             |  |   | 101.6 | 
|Other related exit costs                  |  |             |      |             |  |   | 12.1  | 
|                                         
|                                          |  |             | 118.8 |             |  |   | 130.9 | 
|                                         
|Phosphate Segment                         |  |             |       |             |  |   |       | 
|Employee termination and related benefits |  |             | 0.6   |             |  |   | 0.6   | 
|Writedown of parts inventory              |  |             | 0.3   |             |  |   | 0.3   | 
|Asset impairment charges                  |  |             | 4.0   |             |  |   | 4.0   | 
|                                         
|                                          |  |             | 4.9   |             |  |   | 4.9   | 
|                                         
|                                          |  | $           | 123.7 |             |  | $ | 135.8 | 
|                                         

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LIQUIDITY AND CAPITAL RESOURCES


Cash Requirements




Contractual Obligations and Other Commitments


|                                    |  |                        |         |               |  |              |       |              |  |              |       |  |  |   |       |  |  |   |         | 
|----------------------------------- |  | ---------------------- | ------- | ------------- |  | ------------ | ----- | ------------ |  | ------------ | ----- |  |  | - | ----- |  |  | - | ------- | 
|                                    |  | Payments Due By Period
|                                    |  | Dollars (millions)    
|                                   
|                                    |  | Total                  |         | Within 1 year |  | 1 to 3 years |       | 3 to 5 years |  | Over 5 years
|                                   
|Long-term debt (including interest) |  | $                      | 1,704.4 |               |  | $            | 97.8  |              |  | $            | 547.8 |  |  | $ | 118.7 |  |  | $ | 940.1   | 
|Operating leases                    |  |                        | 572.7   |               |  |              | 79.7  |              |  |              | 139.3 |  |  |   | 112.9 |  |  |   | 240.8   | 
|Purchase obligations                |  |                        | 860.5   |               |  |              | 103.1 |              |  |              | 183.1 |  |  |   | 161.8 |  |  |   | 412.5   | 
|Other commitments                   |  |                        | 46.8    |               |  |              | 11.6  |              |  |              | 18.4  |  |  |   | 16.8  |  |  |   |        | 
|Other long-term liabilities         |  |                        | 322.5   |               |  |              | 27.6  |              |  |              | 63.5  |  |  |   | 36.8  |  |  |   | 194.6   | 
|                                   
|Total                               |  | $                      | 3,506.9 |               |  | $            | 319.8 |              |  | $            | 952.1 |  |  | $ | 447.0 |  |  | $ | 1,788.0 | 
|                                   

Long-term Debt






Operating Leases






34



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Purchase Obligations








Other Commitments




Other Long-term Liabilities




Capital Expenditures






Share Repurchase Program






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Sources and Uses of Cash




|                                                |  |                    |        |                  |  |        |       |      |  |      |     |        |  |   |        |   |  |   |       |   |  |  |     | 
|----------------------------------------------- |  | ------------------ | ------ | ---------------- |  | ------ | ----- | ---- |  | ---- | --- | ------ |  | - | ------ | - |  | - | ----- | - |  |  | --- | 
|                                                |  | Three Months Ended |        | Six Months Ended
|                                                |  | June 30            |        | June 30         
|                                               
|                                                |  | %                  |        |                  |  | %     
|Dollars (millions)                              |  | 2005               |        | 2004             |  | Change |       | 2005 |  | 2004 |     | Change
|                                               
|Cash provided by operating activities           |  | $                  | 348.4  |                  |  | $      | 182.8 |      |  |      | 91  |        |  | $ | 463.9  |   |  | $ | 317.1 |   |  |  | 46  | 
|Cash used in investing activities               |  | $                  | (167.1 | )                |  | $      | (28.8 | )    |  |      | 480 |        |  | $ | (211.3 | ) |  | $ | (44.4 | ) |  |  | 376 | 
|Cash (used in) provided by financing activities |  | $                  | (237.0 | )                |  | $      | 41.3  |      |  |      | n/m |        |  | $ | (288.2 | ) |  | $ | (70.9 | ) |  |  | 306 | 





|                                        |  |          |         |              |  |        |         |   |  |  |    |  
|--------------------------------------- |  | -------- | ------- | ------------ |  | ------ | ------- | - |  |  | -- | -
|                                        |  | June 30, |         | December 31, |  | %     
|Dollars (millions) except ratio amounts |  | 2005     |         | 2004         |  | Change
|                                       
|Current assets                          |  | $        | 1,221.7 |              |  | $      | 1,243.6 |   |  |  | (2 | )
|Current liabilities                     |  | $        | (689.8  | )            |  | $      | (703.7  | ) |  |  | (2 | )
|Working capital                         |  | $        | 531.9   |              |  | $      | 539.9   |   |  |  | (1 | )
|Current ratio                           |  |          | 1.77    |              |  |        | 1.77    |   |  |  |   |  









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Debt Instruments


|                           |  |               |         |             |  |           |         |           |  |   |      |  |  |   |       | 
|-------------------------- |  | ------------- | ------- | ----------- |  | --------- | ------- | --------- |  | - | ---- |  |  | - | ----- | 
|                           |  | June 30, 2005
|                          
|                           |  | Total         |         | Amount      |  | Amount    |         | Amount   
|Dollars (millions)         |  | Amount        |         | Outstanding |  | Committed |         | Available
|                          
|Syndicated credit facility |  | $             | 750.0   |             |  | $         |        |           |  | $ | 93.3 |  |  | $ | 656.7 | 
|Line of credit             |  |               | 75.0    |             |  |           |        |           |  |   | 14.4 |  |  |   | 60.6  | 
|Commercial paper           |  |               | 500.0   |             |  |           | 93.3    |           |  |   |     |  |  |   | 406.7 | 
|US shelf registration      |  |               | 2,000.0 |             |  |           | 1,250.0 |           |  |   |     |  |  |   | 750.0 | 









Off-Balance Sheet Arrangements




37



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Guarantee Contracts














Derivative Instruments




38



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Long-term Fixed Price Contracts




QUARTERLY FINANCIAL HIGHLIGHTS


|                                      |  |          |         |           |  |   |              |  |               |  |          |       |           |  |   |              |  |               |   |       |  |  |   |       |  |  |  |   |       |  |  |   |        |  
|------------------------------------- |  | -------- | ------- | --------- |  | - | ------------ |  | ------------- |  | -------- | ----- | --------- |  | - | ------------ |  | ------------- | - | ----- |  |  | - | ----- |  |  |  | - | ----- |  |  | - | ------ | -
|                                      |  |          |         |           |  |  
|Dollars (millions) except per-        |  | June 30, |         | March 31, |  |   | December 31, |  | September 30, |  | June 30, |       | March 31, |  |   | December 31, |  | September 30,
|share amounts                         |  | 2005     |         | 2005      |  |   | 2004         |  | 2004          |  | 2004     |       | 2004      |  |   | 2003         |  | 2003         
|                                      |  |          |         |           |  |  
|Sales                                 |  | $        | 1,057.3 |           |  | $ | 921.4        |  |               |  | $        | 866.6 |           |  | $ | 815.7        |  |               | $ | 833.7 |  |  | $ | 728.4 |  |  |  | $ | 717.6 |  |  | $ | 674.6  |  
|                                      |  |          |         |           |  |  
|Gross margin                          |  |          | 344.8   |           |  |   | 258.5        |  |               |  |          | 197.3 |           |  |   | 189.4        |  |               |   | 170.7 |  |  |   | 124.0 |  |  |  |   | 92.5  |  |  |   | 84.5   |  
|                                      |  |          |         |           |  |  
|Net income (loss)                     |  |          | 164.2   |           |  |   | 131.3        |  |               |  |          | 100.1 |           |  |   | 75.2         |  |               |   | 72.6  |  |  |   | 50.7  |  |  |  |   | 26.5  |  |  |   | (185.9 | )
|                                      |  |          |         |           |  |  
|Net income (loss) per share  basic   |  |          | 1.50    |           |  |   | 1.18         |  |               |  |          | 0.91  |           |  |   | 0.69         |  |               |   | 0.68  |  |  |   | 0.48  |  |  |  |   | 0.25  |  |  |   | (1.78  | )
|                                      |  |          |         |           |  |  
|Net income (loss) per share  diluted |  |          | 1.46    |           |  |   | 1.15         |  |               |  |          | 0.88  |           |  |   | 0.68         |  |               |   | 0.67  |  |  |   | 0.47  |  |  |  |   | 0.25  |  |  |   | (1.78  | )
|                                      |  |          |         |           |  |  





39



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OUTSTANDING SHARE DATA






RELATED PARTY TRANSACTIONS




CRITICAL ACCOUNTING ESTIMATES








RECENT ACCOUNTING CHANGES


Change in Accounting Policy




40



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Recent Accounting Pronouncements


Canada






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Financial assets will be classified as either held-to-maturity,
    held-for-trading or available-for-sale. Held-to-maturity
    classification will be restricted to fixed maturity instruments
    that the company intends and is able to hold to maturity and
    will be accounted for at amortized cost. Held-for-trading
    instruments will be recorded at fair value with realized and
    unrealized gains and losses reported in net income. The
    remaining financial assets will be classified as
    available-for-sale. These will be recorded at fair value with
    unrealized gains and losses reported in a new category in
    shareholders equity called other comprehensive income
    (OCI).                                                                                                                                                                                                                                                                                                               
|
| |  | Derivatives will be classified as held-for-trading unless
    designated as hedging instruments. All derivatives, including
    embedded derivatives that must be separately accounted for, will
    be recorded at fair value on the Consolidated Statement of
    Financial Position. For derivatives that hedge the changes in
    fair value of an asset or liability, changes in the
    derivatives fair value will be reported in net income and
    substantially offset by changes in the fair value of the hedged
    asset or liability attributable to the risk being hedged. For
    derivatives that hedge variability in cash flows, the effective
    portion of the changes in the derivatives fair value will
    be initially recognized in OCI and the ineffectiveness will be
    recorded in net income. The amounts temporarily recorded in OCI
    will subsequently be reclassified to net income in the periods
    when net income is affected by the variability in the cash flows
    of the hedged item.



United States






41



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42



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RISK MANAGEMENT










RECENT TRANSACTION




OUTLOOK




43



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FORWARD LOOKING STATEMENTS




44



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ITEM
3.       QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK




Commodity Risk






Foreign Exchange Risk






Interest Rate Risk








45



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ITEM 4.       CONTROLS
AND PROCEDURES






46



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PART II.       OTHER
INFORMATION







ITEM 1.       LEGAL
PROCEEDINGS


Shaw








Moultrie Property




General




47



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ITEM 2.       ISSUER
PURCHASE OF EQUITY SECURITIES




ISSUER PURCHASES OF EQUITY SECURITIES


|                               |  |                  |           |                |  |                     |       |                     |  |  |           |  |  |  |           | 
|------------------------------ |  | ---------------- | --------- | -------------- |  | ------------------- | ----- | ------------------- |  |  | --------- |  |  |  | --------- | 
|                               |  |                  |           |                |  | (c) Total Number of |       | (d) Maximum        
|                               |  |                  |           |                |  | Shares Purchased as |       | Number of Shares   
|                               |  | (a) Total Number |           | (b) Average    |  | Part of Publicly    |       | that May Yet Be    
|                               |  | of Shares        |           | Price Paid per |  | Announced           |       | Purchased Under the
|Period                         |  | Purchased        |           | Share(1)       |  | Programs(2)         |       | Programs           
|                              
|April 1, 2005 - April 30, 2005 |  |                  | 195,900   |                |  | $                   | 83.00 |                     |  |  | 1,330,100 |  |  |  | 4,169,900 | 
|May 1, 2005 - May 31, 2005     |  |                  | 1,960,300 |                |  | $                   | 87.11 |                     |  |  | 3,290,400 |  |  |  | 2,209,600 | 
|June 1, 2005 - June 30, 2005   |  |                  | 362,900   |                |  | $                   | 89.71 |                     |  |  | 3,653,300 |  |  |  | 1,846,700 | 
|                              
|Total                          |  |                  | 2,519,100 |                |  | $                   | 87.17 |                     |  |  | 3,653,300 |  |  |  | 1,846,700 | 
|                              



|    |                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Average price paid per share includes cash paid for commissions.                                                                                                                                                                                                                                                                                                                                   
|   
|(2) | On January 25, 2005, the company announced that its Board
    of Directors had approved an open market repurchase program of
    approximately 5 percent of the companys outstanding
    common shares, or approximately 5.5 million shares, through
    a normal course issuer bid. Purchasing under the program
    commenced on February 16, 2005 and may continue until
    February 14, 2006.






|        |                                                    
|------- | ---------------------------------------------------
|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS



|    |                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | On May 5, 2005, the company held an annual and special
    meeting (the Meeting) of its shareholders.                                                                                        
|   
|(b) | At the Meeting, the companys shareholders voted upon each
    of the following proposed director nominees with the results of
    the voting set forth opposite the name of each such nominee.

|                          |  |     |            |         |  |           |   |  |  |  |            | 
|------------------------- |  | --- | ---------- | ------- |  | --------- | - |  |  |  | ---------- | 
|                          |  | FOR |            | AGAINST |  | WITHHELD*
|                          |  |     |            |         |  |          
|Frederick J. Blesi        |  |     | 93,432,781 |         |  |           | 0 |  |  |  | 98,680     | 
|William J. Doyle          |  |     | 93,431,118 |         |  |           | 0 |  |  |  | 100,343    | 
|John W. Estey             |  |     | 93,433,435 |         |  |           | 0 |  |  |  | 98,026     | 
|Wade Fetzer III           |  |     | 93,431,690 |         |  |           | 0 |  |  |  | 99,771     | 
|Dallas J. Howe            |  |     | 93,296,392 |         |  |           | 0 |  |  |  | 235,069    | 
|Alice D. Laberge          |  |     | 93,434,288 |         |  |           | 0 |  |  |  | 97,173     | 
|Jeffrey J. McCaig         |  |     | 93,434,712 |         |  |           | 0 |  |  |  | 96,749     | 
|Mary Mogford              |  |     | 93,435,165 |         |  |           | 0 |  |  |  | 96,296     | 
|Paul J. Schoenhals        |  |     | 93,293,292 |         |  |           | 0 |  |  |  | 238,169    | 
|E. Robert Stromberg, Q.C. |  |     | 78,930,355 |         |  |           | 0 |  |  |  | 14,601,106 | 
|Jack G. Vicq              |  |     | 92,964,793 |         |  |           | 0 |  |  |  | 566,668    | 
|Elena Viyella de Paliza   |  |     | 92,903,764 |         |  |           | 0 |  |  |  | 627,697    | 



|    |                                                                                                                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) | The companys shareholders also voted upon the appointment
    of the firm of Deloitte & Touche, LLP, the present auditors,
    as the companys auditors, to hold office until the next
    annual meeting of the companys shareholders. The results
    of the vote were: 92,941,697 shares for, 0 shares against and
    574,701 shares withheld*.
|   
|(d) | In addition, at the Meeting the shareholders voted on a
    resolution (attached as Appendix B to the Management Proxy
    Circular dated March 11, 2005) approving the adoption of a
    new stock option plan. The results of the vote were: 78,223,383
    shares for and 12,525,967 shares against.                                               



|  |                                                                                  
|- | ---------------------------------------------------------------------------------
|* | Number of withheld votes is based upon proxies received prior to
    the Meeting.

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

|        |  |                                                                                                                                                                                                                                                                                                                                                                         
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                         
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                         
|3(a)    |  | Articles of Continuance of the registrant dated May 15,
    2002, incorporated by reference to Exhibit 3(a) to the
    registrants report on Form 10-Q for the quarterly
    period ended June 30, 2002 (the Second Quarter 2002
    Form 10-Q).                                                                                                                     
|3(b)    |  | Bylaws of the registrant effective May 15, 2002,
    incorporated by reference to Exhibit 3(a) to the Second
    Quarter 2002 Form 10-Q.                                                                                                                                                                                                                                
|4(a)    |  | Term Credit Agreement between The Bank of Nova Scotia and other
    financial institutions and the registrant dated
    September 25, 2001, incorporated by reference to
    Exhibit 4(a) to the registrants report on
    Form 10-Q for the quarterly period ended September 30,
    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, incorporated by
    reference to Exhibit 4(b) to the registrants report
    on Form 10-Q for the quarterly period ended
    September 30, 2003 (the Third Quarter 2003
    Form 10-Q).
|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,
    incorporated by reference to Exhibit 4(c) to the
    registrants report on Form 8-K dated
    September 21, 2004.                                                            
|4(d)    |  | Indenture dated as of June 16, 1997, between the registrant
    and The Bank of Nova Scotia Trust Company of New York,
    incorporated by reference to Exhibit 4(a) to the
    registrants report on Form 8-K dated June 18,
    1997 (the 1997 Form 8-K).                                                                                                          
|4(e)    |  | Indenture dated as of February 27, 2003, between the
    registrant and The Bank of Nova Scotia Trust Company of New
    York, incorporated by reference to Exhibit 4(c) to the
    registrants report on Form 10-K for the year ended
    December 31, 2002 (the 2002 Form 10-K).                                                                                   
|4(f)    |  | Form of Notes relating to the registrants offering of
    $400,000,000 principal amount of 7.125% Notes due June 15,
    2007, incorporated by reference to Exhibit 4(b) to the 1997
    Form 8-K.                                                                                                                                                                     
|4(g)    |  | Form of Notes relating to the registrants offering of
    $600,000,000 principal amount of 7.75% Notes due May 31,
    2011, incorporated by reference to Exhibit 4 to the
    registrants report on Form 8-K dated May 17,
    2001.                                                                                                                                 
|4(h)    |  | Form of Note relating to the registrants offering of
    $250,000,000 principal amount of 4.875% Notes due March 1,
    2013, incorporated by reference to Exhibit 4 to the
    registrants report on Form 8-K dated
    February 28, 2003.                                                                                                                           



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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|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., incorporated by reference
    to Exhibit 10(f) to the registrants registration
    statement on Form F-1 (File No. 33-31303) (the
    F-1 Registration Statement).                                                         
|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, incorporated by
    reference to Exhibit 10(g) to the F-1 Registration
    Statement.
|10(c)   |  | Producer Agreement dated April 21, 1978, between Canpotex
    Limited and PCS Sales, incorporated by reference to
    Exhibit 10(h) to the F-1 Registration Statement.                                                                                                                                                                                                                                                                                         
|10(d)   |  | Canpotex/PCS Amending Agreement, dated as of October 1,
    1992, incorporated by reference to Exhibit 10(f) to the
    registrants report on Form 10-K for the year ended
    December 31, 1995 (the 1995 Form 10-K).                                                                                                                                                                                                                                      
|10(e)   |  | Canpotex PCA Collateral Withdrawing/PCS Amending Agreement,
    dated as of October 7, 1993, incorporated by reference to
    Exhibit 10(g) to the 1995 Form 10-K.                                                                                                                                                                                                                                                                                             
|10(f)   |  | Canpotex Producer Agreement amending agreement dated as of
    January 1, 1999, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 2000 (the
    2000 Form 10-K).                                                                                                                                                                                                                    
|10(g)   |  | Canpotex Producer Agreement amending agreement dated as of
    July 1, 2002, incorporated by reference to
    Exhibit 10(g) to the registrants report on
    Form 10-Q for the quarterly period ended June 30, 2004
    (the Second Quarter 2004 Form 10-Q).                                                                                                                                                                                                
|10(h)   |  | Form of Agreement of Limited Partnership of Arcadian
    Fertilizer, L.P. dated as of March 3, 1992, and the
    related Certificate of Limited Partnership of Arcadian
    Fertilizer, L.P., filed with the Secretary of State of the
    State of Delaware on March 3, 1992, incorporated by
    reference to Exhibits 3.1 and 3.2 to Arcadian
    Partners L.P.s Registration Statement on
    Form S-1 (File No. 33-45828).                               
|10(i)   |  | Amendment to Agreement of Limited Partnership of Arcadian
    Fertilizer, L.P. and related Certificates of Limited
    Partnership of Arcadian Fertilizer, L.P. filed with the
    Secretary of State of the State of Delaware on March 6,
    1997 and November 26, 1997, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 1998 (the
    1998 Form 10-K).                         
|10(j)   |  | Second amendment to Agreement of Limited Partnership of PCS
    Nitrogen Fertilizer, L.P. dated December 15, 2002,
    incorporated by reference to Exhibit 10(i) to the 2002
    Form 10-K.                                                                                                                                                                                                                                                                   
|10(k)   |  | Third amendment to Agreement of Limited Partnership of PCS
    Nitrogen Fertilizer, L.P. dated December 15, 2003,
    incorporated by reference to Exhibit 10(k) to the Second
    Quarter 2004 Form 10-Q.                                                                                                                                                                                                                                                     
|10(l)   |  | Geismar Complex Services Agreement dated June 4, 1984,
    between Honeywell International, Inc. and Arcadian
    Corporation, incorporated by reference to Exhibit 10.4 to
    Arcadian Corporations Registration Statement on
    Form S-1 (File No. 33-34357).                                                                                                                                                                                             
|10(m)   |  | Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978, between International Minerals &
    Chemical Corporation (Canada) Limited and the registrants
    predecessor, incorporated by reference to Exhibit 10(e) to the
    F-1 Registration Statement.                                                                                                                                                                              

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10(n)   |  | 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, incorporated
    by reference to Exhibit 10(p) to the registrants
    report on Form 10-K for the year ended December 31,
    1990.                                                                                                                                                                                                                                   
|10(o)   |  | 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),
    incorporated by reference to Exhibit 10(l) to the 1998
    Form 10-K.                                                                                                                                                                                                                                                                                    
|10(p)   |  | 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, incorporated by reference to Exhibit 10(m) to
    the 1998 Form 10-K.                                                  
|10(q)   |  | Operating Agreement dated May 11, 1993, between BP
    Chemicals Inc. and Arcadian Ohio, L.P., as amended by
    the First Amendment to the Operating Agreement dated as of
    November 20, 1995, between BP Chemicals Inc. and
    Arcadian Ohio, L.P. (the First Amendment),
    incorporated by reference to Exhibit 10.2 to Arcadian
    Partners L.P.s current report on Form 8-K for
    the report event dated May 11, 1993, except for the First
    Amendment which is incorporated by reference to Arcadian
    Corporations report on Form 10-K for the year ended
    December 31, 1995.
|10(r)   |  | Second Amendment to Operating Agreement between BP
    Chemicals, Inc. and Arcadian Ohio, L.P., dated as of
    November 25, 1996, incorporated by reference to
    Exhibit 10(k) of the registrants report on
    Form 10-K for the year ended December 31, 1997 (the
    1997 Form 10-K).                                                                                                                                                                                                                                                                                                           
|10(s)   |  | Manufacturing Support Agreement dated May 11, 1993, between
    BP Chemicals Inc. and Arcadian Ohio, L.P.,
    incorporated by reference to Exhibit 10.3 to Arcadian
    Partners L.P.s current report on Form 8-K for
    the report event dated May 11, 1993.                                                                                                                                                                                                                                                                                                                                         
|10(t)   |  | First Amendment to Manufacturing Support Agreement dated as of
    November 25, 1996, between BP Chemicals, Inc. and
    Arcadian Ohio, L.P., incorporated by reference to
    Exhibit 10(l) to the 1997 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                      
|10(u)   |  | Letter of amendment to the Manufacturing Support Agreement and
    Operating Agreement dated September 8, 2003, between BP
    Chemicals Inc. and PCS Nitrogen Ohio, L.P.,
    incorporated by reference to Exhibit 10(s) to the Third
    Quarter 2003 Form 10-Q.                                                                                                                                                                                                                                                                                                                                       
|10(v)   |  | Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Directors, as amended January 23, 2001,
    incorporated by reference to Exhibit 10(bb) to the Second
    Quarter 2001 Form 10-Q.                                                                                                                                                                                                                                                                                                                                                                                                        
|10(w)   |  | Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Officers and Employees, as amended
    January 23, 2001, incorporated by reference to
    Exhibit 10(aa) to the 2000 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                          
|10(x)   |  | Short-Term Incentive Plan of the registrant effective January
    2000, as amended March 10, 2005, incorporated by reference
    to Exhibit 10(x) to the registrants report on
    Form 10-K for the year ended December 31, 2004 (the
    2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                           
|10(y)   |  | Long-Term Incentive Plan of the registrant effective January
    2000, incorporated by reference to Exhibit 10(aa) to the
    registrants report on Form 10-Q for the quarterly
    period ended June 30, 2000 (the Second Quarter 2000
    Form 10-Q).                                                                                                                                                                                                                                                                                                                                               
|10(z)   |  | Long-Term Incentive Plan of the registrant effective January
    2003, incorporated by reference to Exhibit 10(y) to the
    2002 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10(aa)  |  | Resolution and Forms of Agreement for Supplemental Retirement
    Income Plan, for officers and key employees of the registrant,
    incorporated by reference to Exhibit 10(o) to the 1995
    Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                               

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|        |  |                                                                                                                                                                                                                                                                                                                                                  
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                  
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                  
|10(bb)  |  | Amending Resolution and revised forms of agreement regarding
    Supplemental Retirement Income Plan of the registrant,
    incorporated by reference to Exhibit 10(x) to the
    registrants report on Form 10-Q for the quarterly
    period ended June 30, 1996.                                                                             
|10(cc)  |  | Amended and restated Supplemental Retirement Income Plan of the
    registrant and text of amendment to existing supplemental income
    plan agreements, incorporated by reference to
    Exhibit 10(mm) to the registrants report on
    Form 10-Q for the quarterly period ended September 30,
    2000 (the Third Quarter 2000 Form 10-Q).
|10(dd)  |  | Form of Letter of amendment to existing supplemental income plan
    agreements of the registrant dated November 4, 2002,
    incorporated by reference to Exhibit 10(cc) to the 2002
    Form 10-K.                                                                                                                                             
|10(ee)  |  | Supplemental Retirement Benefits Plan for U.S. Executives
    dated effective January 1, 1999, incorporated by reference
    to Exhibit 10(aa) to the Second Quarter 2002 Form 10-Q.                                                                                                                                                             
|10(ff)  |  | Forms of Agreement dated December 30, 1994, between the
    registrant and certain officers of the registrant, concerning a
    change in control of the registrant, incorporated by reference
    to Exhibit 10(p) to the 1995 Form 10-K.                                                                                                       
|10(gg)  |  | Form of Agreement of Indemnification dated August 8, 1995,
    between the registrant and certain officers and directors of the
    registrant, incorporated by reference to Exhibit 10(q) to
    the 1995 Form 10-K.                                                                                                                            
|10(hh)  |  | Resolution and Form of Agreement of Indemnification dated
    January 24, 2001, incorporated by reference to
    Exhibit 10(ii) to the 2000 Form 10-K.                                                                                                                                                                                           
|10(ii)  |  | Resolution and Form of Agreement of Indemnification 
    July 21, 2004, incorporated by reference to
    Exhibit 10(ii) to the Second Quarter 2004 Form 10-Q.                                                                                                                                                                                   
|10(jj)  |  | Chief Executive Officer Medical and Dental Benefits,
    incorporated by reference to Exhibit 10(jj) to the 2004
    Form 10-K.                                                                                                                                                                                                                  
|10(kk)  |  | Second Amended and Restated Membership Agreement dated
    January 1, 1995, among Phosphate Chemicals Export
    Association, Inc. and members of such association,
    including Texasgulf Inc., incorporated by reference to
    Exhibit 10(t) to the 1995 Form 10-K.                                                                          
|10(ll)  |  | International Agency Agreement dated January 1, 1995,
    between Phosphate Chemicals Export Association, Inc. and
    Texasgulf Inc. establishing Texasgulf Inc. as
    exclusive marketing agent for such associations wet
    phosphatic materials, incorporated by reference to
    Exhibit 10(u) to the 1995 Form 10-K.                    
|10(mm)  |  | Deferred Share Unit Plan for Non-Employee Directors,
    incorporated by reference to Exhibit 4.1 to the
    registrants Form S-8 (File No. 333-75742) filed
    December 21, 2001.                                                                                                                                                             
|10(nn)  |  | Potash Corporation of Saskatchewan Inc. 2005 Performance Option
    Plan and Form of Option Agreement, incorporated by reference to
    Exhibit 10(nn) to the registrants report on
    Form 10-Q for the quarterly period ended March 31,
    2005 (the First Quarter 2005 Form 10-Q).                                                       
|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.                                                                                                                                                                                                                                                                     

52



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SIGNATURES






| |                      
| | ---------------------
| | POTASH CORPORATION OF
| | SASKATCHEWAN INC.    



| |     |                   
| | --- | ------------------
| | By: | /s/ Joseph Podwika

| |                                              
| | ---------------------------------------------
| |                                              
| | Joseph Podwika                               
| | Vice President, General Counsel and Secretary



| |     |                      
| | --- | ---------------------
| | By: | /s/ Wayne R. Brownlee

| |                                             
| | --------------------------------------------
| |                                             
| | Wayne R. Brownlee                           
| | Senior Vice President, Treasurer, and       
| | Chief Financial Officer                     
| | (Principal Financial and Accounting Officer)

53



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EXHIBIT INDEX


|        |      |                         |  |                                                                                                                                                                                                                                                                                                                                                                         
|------- | ---- | ----------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                        
|Number  |      | Description of Document
|        |      |                        
|        | 3(a) |                         |  | Articles of Continuance of the registrant dated May 15,
    2002, incorporated by reference to Exhibit 3(a) to the
    registrants report on Form 10-Q for the quarterly
    period ended June 30, 2002 (the Second Quarter 2002
    Form 10-Q).                                                                                                                     
|        | 3(b) |                         |  | Bylaws of the registrant effective May 15, 2002,
    incorporated by reference to Exhibit 3(a) to the Second
    Quarter 2002 Form 10-Q.                                                                                                                                                                                                                                
|        | 4(a) |                         |  | Term Credit Agreement between The Bank of Nova Scotia and other
    financial institutions and the registrant dated
    September 25, 2001, incorporated by reference to
    Exhibit 4(a) to the registrants report on
    Form 10-Q for the quarterly period ended September 30,
    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, incorporated by
    reference to Exhibit 4(b) to the registrants report
    on Form 10-Q for the quarterly period ended
    September 30, 2003 (the Third Quarter 2003
    Form 10-Q).
|        | 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,
    incorporated by reference to Exhibit 4(c) to the
    registrants report on Form 8-K dated
    September 21, 2004.                                                            
|        | 4(d) |                         |  | Indenture dated as of June 16, 1997, between the registrant
    and The Bank of Nova Scotia Trust Company of New York,
    incorporated by reference to Exhibit 4(a) to the
    registrants report on Form 8-K dated June 18,
    1997 (the 1997 Form 8-K).                                                                                                          
|        | 4(e) |                         |  | Indenture dated as of February 27, 2003, between the
    registrant and The Bank of Nova Scotia Trust Company of New
    York, incorporated by reference to Exhibit 4(c) to the
    registrants report on Form 10-K for the year ended
    December 31, 2002 (the 2002 Form 10-K).                                                                                   
|        | 4(f) |                         |  | Form of Notes relating to the registrants offering of
    $400,000,000 principal amount of 7.125% Notes due June 15,
    2007, incorporated by reference to Exhibit 4(b) to the 1997
    Form 8-K.                                                                                                                                                                     
|        | 4(g) |                         |  | Form of Notes relating to the registrants offering of
    $600,000,000 principal amount of 7.75% Notes due May 31,
    2011, incorporated by reference to Exhibit 4 to the
    registrants report on Form 8-K dated May 17,
    2001.                                                                                                                                 
|        | 4(h) |                         |  | Form of Note relating to the registrants offering of
    $250,000,000 principal amount of 4.875% Notes due March 1,
    2013, incorporated by reference to Exhibit 4 to the
    registrants report on Form 8-K dated
    February 28, 2003.                                                                                                                           







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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|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., incorporated by reference
    to Exhibit 10(f) to the registrants registration
    statement on Form F-1 (File No. 33-31303) (the
    F-1 Registration Statement).                                                         
|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, incorporated by
    reference to Exhibit 10(g) to the F-1 Registration
    Statement.
|10(c)   |  | Producer Agreement dated April 21, 1978, between Canpotex
    Limited and PCS Sales, incorporated by reference to
    Exhibit 10(h) to the F-1 Registration Statement.                                                                                                                                                                                                                                                                                         
|10(d)   |  | Canpotex/PCS Amending Agreement, dated as of October 1,
    1992, incorporated by reference to Exhibit 10(f) to the
    registrants report on Form 10-K for the year ended
    December 31, 1995 (the 1995 Form 10-K).                                                                                                                                                                                                                                      
|10(e)   |  | Canpotex PCA Collateral Withdrawing/PCS Amending Agreement,
    dated as of October 7, 1993, incorporated by reference to
    Exhibit 10(g) to the 1995 Form 10-K.                                                                                                                                                                                                                                                                                             
|10(f)   |  | Canpotex Producer Agreement amending agreement dated as of
    January 1, 1999, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 2000 (the
    2000 Form 10-K).                                                                                                                                                                                                                    
|10(g)   |  | Canpotex Producer Agreement amending agreement dated as of
    July 1, 2002, incorporated by reference to
    Exhibit 10(g) to the registrants report on
    Form 10-Q for the quarterly period ended June 30, 2004
    (the Second Quarter 2004 Form 10-Q).                                                                                                                                                                                                
|10(h)   |  | Form of Agreement of Limited Partnership of Arcadian
    Fertilizer, L.P. dated as of March 3, 1992, and the
    related Certificate of Limited Partnership of Arcadian
    Fertilizer, L.P., filed with the Secretary of State of the
    State of Delaware on March 3, 1992, incorporated by
    reference to Exhibits 3.1 and 3.2 to Arcadian
    Partners L.P.s Registration Statement on
    Form S-1 (File No. 33-45828).                               
|10(i)   |  | Amendment to Agreement of Limited Partnership of Arcadian
    Fertilizer, L.P. and related Certificates of Limited
    Partnership of Arcadian Fertilizer, L.P. filed with the
    Secretary of State of the State of Delaware on March 6,
    1997 and November 26, 1997, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 1998 (the
    1998 Form 10-K).                         
|10(j)   |  | Second amendment to Agreement of Limited Partnership of PCS
    Nitrogen Fertilizer, L.P. dated December 15, 2002,
    incorporated by reference to Exhibit 10(i) to the 2002
    Form 10-K.                                                                                                                                                                                                                                                                   
|10(k)   |  | Third amendment to Agreement of Limited Partnership of PCS
    Nitrogen Fertilizer, L.P. dated December 15, 2003,
    incorporated by reference to Exhibit 10(k) to the Second
    Quarter 2004 Form 10-Q.                                                                                                                                                                                                                                                     
|10(l)   |  | Geismar Complex Services Agreement dated June 4, 1984,
    between Honeywell International, Inc. and Arcadian
    Corporation, incorporated by reference to Exhibit 10.4 to
    Arcadian Corporations Registration Statement on
    Form S-1 (File No. 33-34357).                                                                                                                                                                                             
|10(m)   |  | Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978, between International Minerals &
    Chemical Corporation (Canada) Limited and the registrants
    predecessor, incorporated by reference to Exhibit 10(e) to the
    F-1 Registration Statement.                                                                                                                                                                              



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##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10(n)   |  | 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, incorporated
    by reference to Exhibit 10(p) to the registrants
    report on Form 10-K for the year ended December 31,
    1990.                                                                                                                                                                                                                                   
|10(o)   |  | 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),
    incorporated by reference to Exhibit 10(l) to the 1998
    Form 10-K.                                                                                                                                                                                                                                                                                    
|10(p)   |  | 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, incorporated by reference to Exhibit 10(m) to
    the 1998 Form 10-K.                                                  
|10(q)   |  | Operating Agreement dated May 11, 1993, between BP
    Chemicals Inc. and Arcadian Ohio, L.P., as amended by
    the First Amendment to the Operating Agreement dated as of
    November 20, 1995, between BP Chemicals Inc. and
    Arcadian Ohio, L.P. (the First Amendment),
    incorporated by reference to Exhibit 10.2 to Arcadian
    Partners L.P.s current report on Form 8-K for
    the report event dated May 11, 1993, except for the First
    Amendment which is incorporated by reference to Arcadian
    Corporations report on Form 10-K for the year ended
    December 31, 1995.
|10(r)   |  | Second Amendment to Operating Agreement between BP
    Chemicals, Inc. and Arcadian Ohio, L.P., dated as of
    November 25, 1996, incorporated by reference to
    Exhibit 10(k) of the registrants report on
    Form 10-K for the year ended December 31, 1997 (the
    1997 Form 10-K).                                                                                                                                                                                                                                                                                                           
|10(s)   |  | Manufacturing Support Agreement dated May 11, 1993, between
    BP Chemicals Inc. and Arcadian Ohio, L.P.,
    incorporated by reference to Exhibit 10.3 to Arcadian
    Partners L.P.s current report on Form 8-K for
    the report event dated May 11, 1993.                                                                                                                                                                                                                                                                                                                                         
|10(t)   |  | First Amendment to Manufacturing Support Agreement dated as of
    November 25, 1996, between BP Chemicals, Inc. and
    Arcadian Ohio, L.P., incorporated by reference to
    Exhibit 10(l) to the 1997 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                      
|10(u)   |  | Letter of amendment to the Manufacturing Support Agreement and
    Operating Agreement dated September 8, 2003, between BP
    Chemicals Inc. and PCS Nitrogen Ohio, L.P.,
    incorporated by reference to Exhibit 10(s) to the Third
    Quarter 2003 Form 10-Q.                                                                                                                                                                                                                                                                                                                                       
|10(v)   |  | Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Directors, as amended January 23, 2001,
    incorporated by reference to Exhibit 10(bb) to the Second
    Quarter 2001 Form 10-Q.                                                                                                                                                                                                                                                                                                                                                                                                        
|10(w)   |  | Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Officers and Employees, as amended
    January 23, 2001, incorporated by reference to
    Exhibit 10(aa) to the 2000 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                          
|10(x)   |  | Short-Term Incentive Plan of the registrant effective January
    2000, as amended March 10, 2005, incorporated by reference
    to Exhibit 10(x) to the registrants report on
    Form 10-K for the year ended December 31, 2004 (the
    2004 Form 10-K).                                                                                                                                                                                                                                                                                                                                           
|10(y)   |  | Long-Term Incentive Plan of the registrant effective January
    2000, incorporated by reference to Exhibit 10(aa) to the
    registrants report on Form 10-Q for the quarterly
    period ended June 30, 2000 (the Second Quarter 2000
    Form 10-Q).                                                                                                                                                                                                                                                                                                                                               
|10(z)   |  | Long-Term Incentive Plan of the registrant effective January
    2003, incorporated by reference to Exhibit 10(y) to the
    2002 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|10(aa)  |  | Resolution and Forms of Agreement for Supplemental Retirement
    Income Plan, for officers and key employees of the registrant,
    incorporated by reference to Exhibit 10(o) to the 1995
    Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                               



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##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                                  
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                  
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                  
|10(bb)  |  | Amending Resolution and revised forms of agreement regarding
    Supplemental Retirement Income Plan of the registrant,
    incorporated by reference to Exhibit 10(x) to the
    registrants report on Form 10-Q for the quarterly
    period ended June 30, 1996.                                                                             
|10(cc)  |  | Amended and restated Supplemental Retirement Income Plan of the
    registrant and text of amendment to existing supplemental income
    plan agreements, incorporated by reference to
    Exhibit 10(mm) to the registrants report on
    Form 10-Q for the quarterly period ended September 30,
    2000 (the Third Quarter 2000 Form 10-Q).
|10(dd)  |  | Form of Letter of amendment to existing supplemental income plan
    agreements of the registrant dated November 4, 2002,
    incorporated by reference to Exhibit 10(cc) to the 2002
    Form 10-K.                                                                                                                                             
|10(ee)  |  | Supplemental Retirement Benefits Plan for U.S. Executives
    dated effective January 1, 1999, incorporated by reference
    to Exhibit 10(aa) to the Second Quarter 2002 Form 10-Q.                                                                                                                                                             
|10(ff)  |  | Forms of Agreement dated December 30, 1994, between the
    registrant and certain officers of the registrant, concerning a
    change in control of the registrant, incorporated by reference
    to Exhibit 10(p) to the 1995 Form 10-K.                                                                                                       
|10(gg)  |  | Form of Agreement of Indemnification dated August 8, 1995,
    between the registrant and certain officers and directors of the
    registrant, incorporated by reference to Exhibit 10(q) to
    the 1995 Form 10-K.                                                                                                                            
|10(hh)  |  | Resolution and Form of Agreement of Indemnification dated
    January 24, 2001, incorporated by reference to
    Exhibit 10(ii) to the 2000 Form 10-K.                                                                                                                                                                                           
|10(ii)  |  | Resolution and Form of Agreement of Indemnification 
    July 21, 2004, incorporated by reference to
    Exhibit 10(ii) to the Second Quarter 2004 Form 10-Q.                                                                                                                                                                                   
|10(jj)  |  | Chief Executive Officer Medical and Dental Benefits,
    incorporated by reference to Exhibit 10(jj) to the 2004
    Form 10-K.                                                                                                                                                                                                                  
|10(kk)  |  | Second Amended and Restated Membership Agreement dated
    January 1, 1995, among Phosphate Chemicals Export
    Association, Inc. and members of such association,
    including Texasgulf Inc., incorporated by reference to
    Exhibit 10(t) to the 1995 Form 10-K.                                                                          
|10(ll)  |  | International Agency Agreement dated January 1, 1995,
    between Phosphate Chemicals Export Association, Inc. and
    Texasgulf Inc. establishing Texasgulf Inc. as
    exclusive marketing agent for such associations wet
    phosphatic materials, incorporated by reference to
    Exhibit 10(u) to the 1995 Form 10-K.                    
|10(mm)  |  | Deferred Share Unit Plan for Non-Employee Directors,
    incorporated by reference to Exhibit 4.1 to the
    registrants Form S-8 (File No. 333-75742) filed
    December 21, 2001.                                                                                                                                                             
|10(nn)  |  | Potash Corporation of Saskatchewan Inc. 2005 Performance Option
    Plan and Form of Option Agreement, incorporated by reference to
    Exhibit 10(nn) to the registrants report on
    Form 10-Q for the quarterly period ended March 31,
    2005 (the First Quarter 2005 Form 10-Q).                                                       
|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.