##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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FORM 10-Q

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

For the Quarterly Period Ended March 31,
2004

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              |  | (I.R.S. Employer   
|incorporation or organization)               |  | Identification No.)
|                                            
|122  1st Avenue South                       |  | S7K 7G3            
|Saskatoon, Saskatchewan, Canada              |  | (Zip Code)         
|(Address of principal executive
    offices) |  |                    

306-933-8500

(Registrants telephone number, including
area code)


Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days.

YES x  NO o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act
Rule 12b-2).

YES x  NO o

APPLICABLE ONLY TO CORPORATE
ISSUERS:

Indicate the number
of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

As at
April 30, 2004, Potash Corporation of Saskatchewan Inc. had
53,494,713 Common Shares outstanding.





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TABLE OF CONTENTS



|                                      |                                                                                               |  |  |  |  |  |  | 
|------------------------------------- | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I. FINANCIAL INFORMATION        
|                                      | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                      | Notes to the Consolidated Financial Statements                                               
|                                      | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                      | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                      | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II. OTHER INFORMATION           
|                                      | ITEM 1. LEGAL PROCEEDINGS.                                                                   
|                                      | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|SIGNATURES                           
|Computation Re. Earnings Per Share   
|Certification of CEO                 
|Certification of CFO                 
|Certification pursuant to Section 906



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##### Table of Contents






PART I.     FINANCIAL
INFORMATION






ITEM 1.FINANCIAL
STATEMENTS


These interim consolidated financial statements
do not include all disclosures normally provided in annual
consolidated financial statements and should be read in
conjunction with the most recent annual consolidated financial
statements. In managements opinion, the unaudited
consolidated financial information includes all adjustments
(consisting solely of normal recurring adjustments) necessary to
present fairly such information. Interim results are not
necessarily indicative of the results expected for the fiscal
year.

Potash Corporation of Saskatchewan
Inc.

Consolidated Statements of Operations and
Retained Earnings

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


(unaudited)


|                                           |         |                    |       |      |  |   |       |      | 
|------------------------------------------ | ------- | ------------------ | ----- | ---- |  | - | ----- | ---- | 
|                                           |         |                   
|                                           |         | Three Months Ended
|                                           |         | March 31          
|                                           |         | 2004               |       | 2003
|                                          
|                                          
|Sales                                      |         | $                  | 728.4 |      |  | $ | 661.8 |     
|Less: Freight                              |         |                    | 58.1  |      |  |   | 64.4  |     
|Transportation
    and distribution        |         |                    | 23.0  |      |  |   | 23.0  |     
|Cost
    of goods sold                     |         |                    | 523.3 |      |  |   | 493.3 |     
|                                          
|Gross Margin                               |         |                    | 124.0 |      |  |   | 81.1  |     
|                                          
|Selling and administrative                 |         |                    | 26.2  |      |  |   | 23.7  |     
|Provincial mining and other taxes          |         |                    | 15.1  |      |  |   | 18.1  |     
|Provision for plant shutdowns              |         |                    |      |      |  |   | 2.2   |     
|Foreign exchange (gain) loss               |         |                    | (8.2  | )    |  |   | 16.9  |     
|Other income                               |         |                    | (6.9  | )    |  |   | (4.5  | )   
|                                          
|                                           |         |                    | 26.2  |      |  |   | 56.4  |     
|                                          
|Operating Income                           |         |                    | 97.8  |      |  |   | 24.7  |     
|Interest Expense                           |         |                    | 22.1  |      |  |   | 19.4  |     
|                                          
|Income Before Income Taxes                 |         |                    | 75.7  |      |  |   | 5.3   |     
|Income Taxes (Note 7)                      |         |                    | 25.0  |      |  |   | 2.1   |     
|                                          
|Net Income                                 |         |                    | 50.7  |      |  |   | 3.2   |     
|Retained Earnings, Beginning of
    Period |         |                    | 462.8 |      |  |   | 641.4 |     
|Dividends                                  |         |                    | (13.5 | )    |  |   | (13.0 | )   
|                                          
|Retained Earnings, End of Period           |         | $                  | 500.0 |      |  | $ | 631.6 |     
|                                          
|Net Income Per Share (Note 8)              |         |                    |       |      |  |   |       |     
|                                           | Basic   |                    | $     | 0.95 |  |   | $     | 0.06 | 
|                                           | Diluted |                    | $     | 0.94 |  |   | $     | 0.06 | 
|                                          
|Dividends Per Share                        |         | $                  | 0.25  |      |  | $ | 0.25  |     
|                                          

(See Notes to the Consolidated Financial
Statements)

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Potash Corporation of Saskatchewan
Inc.

Consolidated Statements of Financial
Position

(in millions of US dollars except share
amounts)


|                                                                                                                                                                               |                                      |             |         |              |  |   |         |       | 
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------ | ----------- | ------- | ------------ |  | - | ------- | ----- | 
|                                                                                                                                                                               |                                      | March 31,   |         | December 31,
|                                                                                                                                                                               |                                      | 2004        |         | 2003        
|                                                                                                                                                                              
|                                                                                                                                                                              
|                                                                                                                                                                               |                                      | (unaudited) |         |             
|Assets                                                                                                                                                                         |                                      |             |         |              |  |   |         |      
|Current assets                                                                                                                                                                 |                                      |             |         |              |  |   |         |      
|                                                                                                                                                                               | Cash and cash equivalents            |             | $       | 11.2         |  |   | $       | 4.7   | 
|                                                                                                                                                                               | Accounts receivable                  |             |         | 272.1        |  |   |         | 305.0 | 
|                                                                                                                                                                               | Inventories (Note 3)                 |             |         | 420.5        |  |   |         | 395.2 | 
|                                                                                                                                                                               | Prepaid expenses                     |             |         | 40.3         |  |   |         | 29.0  | 
|                                                                                                                                                                              
|                                                                                                                                                                               |                                      |             | 744.1   |              |  |   | 733.9   |      
|Property, plant and equipment                                                                                                                                                  |                                      |             | 3,074.3 |              |  |   | 3,108.1 |      
|Other assets                                                                                                                                                                   |                                      |             | 623.1   |              |  |   | 628.3   |      
|Goodwill                                                                                                                                                                       |                                      |             | 97.0    |              |  |   | 97.0    |      
|                                                                                                                                                                              
|                                                                                                                                                                               |                                      | $           | 4,538.5 |              |  | $ | 4,567.3 |      
|                                                                                                                                                                              
|Liabilities                                                                                                                                                                    |                                      |             |         |              |  |   |         |      
|Current liabilities                                                                                                                                                            |                                      |             |         |              |  |   |         |      
|                                                                                                                                                                               | Short-term debt                      |             | $       | 57.9         |  |   | $       | 176.2 | 
|                                                                                                                                                                               | Accounts payable and accrued charges |             |         | 392.7        |  |   |         | 380.3 | 
|                                                                                                                                                                               | Current portion of long-term debt    |             |         | 1.3          |  |   |         | 1.3   | 
|                                                                                                                                                                              
|                                                                                                                                                                               |                                      |             | 451.9   |              |  |   | 557.8   |      
|Long-term debt                                                                                                                                                                 |                                      |             | 1,268.4 |              |  |   | 1,268.6 |      
|Future income tax liability                                                                                                                                                    |                                      |             | 496.3   |              |  |   | 484.2   |      
|Accrued post-retirement/post-employment benefits                                                                                                                               |                                      |             | 200.0   |              |  |   | 194.5   |      
|Accrued reclamation costs and asset retirement
    obligations                                                                                                                 |                                      |             | 82.4    |              |  |   | 81.3    |      
|Other non-current liabilities and deferred credits                                                                                                                             |                                      |             | 5.9     |              |  |   | 7.1     |      
|                                                                                                                                                                              
|                                                                                                                                                                               |                                      |             | 2,504.9 |              |  |   | 2,593.5 |      
|                                                                                                                                                                              
|Shareholders Equity                                                                                                                                                           |                                      |             |         |              |  |   |         |      
|Share capital                                                                                                                                                                  |                                      |             | 1,265.6 |              |  |   | 1,245.8 |      
|Unlimited authorization of common shares without
    par value;
    Issued and outstanding 53,398,713 and 53,112,216 at
    March 31, 2004 and December 31, 2003, respectively |                                      |             |         |              |  |   |         |      
|Contributed surplus                                                                                                                                                            |                                      |             | 268.0   |              |  |   | 265.2   |      
|Retained earnings                                                                                                                                                              |                                      |             | 500.0   |              |  |   | 462.8   |      
|                                                                                                                                                                              
|                                                                                                                                                                               |                                      |             | 2,033.6 |              |  |   | 1,973.8 |      
|                                                                                                                                                                              
|                                                                                                                                                                               |                                      | $           | 4,538.5 |              |  | $ | 4,567.3 |      
|                                                                                                                                                                              

(See Notes to the Consolidated Financial
Statements)

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Potash Corporation of Saskatchewan
Inc.

Consolidated Statements of Cash Flow

(in millions of US dollars)


(unaudited)


|                                                          |                                                                |                    |        |       |   |   |        |       |  
|--------------------------------------------------------- | -------------------------------------------------------------- | ------------------ | ------ | ----- | - | - | ------ | ----- | -
|                                                          |                                                                |                   
|                                                          |                                                                | Three Months Ended
|                                                          |                                                                | March 31          
|                                                          |                                                                | 2004               |        | 2003 
|                                                         
|                                                         
|Operating Activities                                      |                                                                |                    |        |       |   |   |        |      
|Net income                                                |                                                                | $                  | 50.7   |       |   | $ | 3.2    |      
|                                                         
|Items not affecting cash                                  |                                                                |                    |        |       |   |   |        |      
|                                                          | Depreciation and amortization                                  |                    |        | 59.7  |   |   |        | 59.0  |  
|                                                          | Stock-based compensation                                       |                    |        | 2.8   |   |   |        |      |  
|                                                          | Foreign exchange on future income tax                          |                    |        | (2.9  | ) |   |        | 11.8  |  
|                                                          | Provision for future income tax                                |                    |        | 15.0  |   |   |        | 2.1   |  
|                                                          | Share of earnings of equity investees                          |                    |        | (3.8  | ) |   |        | (2.3  | )
|                                                          | Provision for post-retirement/post-employment
    benefits     |                    |        | 5.5   |   |   |        | 11.0  |  
|                                                          | Accrued reclamation costs and asset retirement
    obligations |                    |        | 1.1   |   |   |        | 0.3   |  
|                                                          | Other non-current liabilities and deferred credits             |                    |        | (1.2  | ) |   |        | 0.1   |  
|                                                         
|                                                          | Subtotal of items not affecting cash                           |                    |        | 76.2  |   |   |        | 82.0  |  
|                                                         
|Changes in non-cash operating working
    capital         |                                                                |                    |        |       |   |   |        |      
|                                                          | Accounts receivable                                            |                    |        | 32.9  |   |   |        | (50.3 | )
|                                                          | Inventories                                                    |                    |        | (26.6 | ) |   |        | (27.9 | )
|                                                          | Prepaid expenses                                               |                    |        | (11.3 | ) |   |        | (5.9  | )
|                                                          | Accounts payable and accrued charges                           |                    |        | 9.5   |   |   |        | 54.7  |  
|                                                          | Current income taxes                                           |                    |        | 2.9   |   |   |        | (11.7 | )
|                                                         
|                                                          | Subtotal of changes in non-cash operating
    working capital  |                    |        | 7.4   |   |   |        | (41.1 | )
|                                                         
|Cash provided by operating
    activities                 |                                                                |                    | 134.3  |       |   |   | 44.1   |      
|                                                         
|Investing Activities                                      |                                                                |                    |        |       |   |   |        |      
|Additions to property, plant and equipment                |                                                                |                    | (16.4  | )     |   |   | (17.0  | )    
|Proceeds from disposal of (additions to) other
    assets |                                                                |                    | 0.8    |       |   |   | (8.4   | )    
|                                                         
|Cash used in investing activities                         |                                                                |                    | (15.6  | )     |   |   | (25.4  | )    
|                                                         
|Cash before financing activities                          |                                                                |                    | 118.7  |       |   |   | 18.7   |      
|                                                         
|Financing Activities                                      |                                                                |                    |        |       |   |   |        |      
|Proceeds from long-term debt                              |                                                                |                    |       |       |   |   | 250.0  |      
|Repayment of long-term debt                               |                                                                |                    | (0.2   | )     |   |   | (0.2   | )    
|Repayment of short-term debt                              |                                                                |                    | (118.3 | )     |   |   | (208.8 | )    
|Dividends                                                 |                                                                |                    | (13.5  | )     |   |   | (13.0  | )    
|Issuance of shares                                        |                                                                |                    | 19.8   |       |   |   | 0.5    |      
|                                                         
|Cash (used in) provided by financing
    activities       |                                                                |                    | (112.2 | )     |   |   | 28.5   |      
|                                                         
|Increase in Cash and Cash
    Equivalents                 |                                                                |                    | 6.5    |       |   |   | 47.2   |      
|Cash and Cash Equivalents, Beginning of
    Period        |                                                                |                    | 4.7    |       |   |   | 24.5   |      
|                                                         
|Cash and Cash Equivalents, End of
    Period              |                                                                | $                  | 11.2   |       |   | $ | 71.7   |      
|                                                         
|Supplemental cash flow disclosure                         |                                                                |                    |        |       |   |   |        |      
|                                                          | Interest paid                                                  |                    | $      | 13.4  |   |   | $      | 1.4   |  
|                                                          | Income taxes paid                                              |                    | $      | 6.2   |   |   | $      | 15.9  |  
|                                                         

(See Notes to the Consolidated Financial
Statements)

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Potash Corporation of Saskatchewan
Inc.






Notes to the Consolidated Financial
Statements

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


(unaudited)


1.   Significant Accounting
Policies

Basis of Presentation

With its subsidiaries, Potash Corporation of
Saskatchewan Inc. (PCS)  together known
as PotashCorp or the company except to
the extent the context otherwise requires  forms an
integrated fertilizer and related industrial and feed products
company. The companys accounting policies are in
accordance with accounting principles generally accepted in
Canada (Canadian GAAP). These policies are
consistent with accounting principles generally accepted in the
United States (US GAAP) except as outlined in Note
15. The accounting policies used in preparing these interim
consolidated financial statements are consistent with those used
in the preparation of the 2003 annual consolidated financial
statements, except as disclosed in Note 2.

In 2003, the company approved plans to
restructure certain operations. Those plans required significant
estimates to be made of: (i) the recoverability of the
carrying value of certain assets based on their capacity to
generate future cash flows, and (ii) employee termination,
contract termination and other exit costs. Because restructuring
activities are complex processes that can take several months to
complete, they involve periodically reassessing estimates. As a
result, the company may have to change originally reported
estimates as actual payments are made or activities are
completed.

Principles of Consolidation

The consolidated financial statements include the
accounts of the company and its principal operating subsidiaries:

 PCS
Sales (Canada) Inc.

 PCS
Joint Venture, L.P.


 PCS
Sales (USA), Inc.


 PCS
Phosphate Company, Inc.


 PCS
Purified Phosphates


 White
Springs Agricultural Chemicals, Inc.


 PCS
Nitrogen, Inc.


 PCS
Nitrogen Fertilizer, L.P.


 PCS
Nitrogen Ohio, L.P.


 PCS
Nitrogen Trinidad Limited


 PCS
Cassidy Lake Company


 PCS
Yumbes S.C.M. (PCS Yumbes)


 PCS
Fosfatos do Brasil Ltda.


2.   Changes in Accounting
Policy

Sources of GAAP

Effective January 1, 2004, the company
prospectively adopted new accounting requirements of the
Canadian Institute of Chartered Accountants (CICA)
as issued in Section 1100, Generally Accepted
Accounting Principles. This section establishes standards
for financial reporting in accordance with GAAP and provides
guidance on sources to consult when selecting accounting
policies and determining appropriate disclosures when a matter
is not dealt with explicitly in the primary sources of GAAP. In
light of the new Section 1100 provisions, the company
reviewed the application of its accounting policies and changed
the consolidated financial statement presentation of sales
revenue, freight costs and transportation and distribution

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expenses, without any effect on gross margin or
net income. All comparative information has been appropriately
reclassified.


In prior years, the company reported sales
revenues (net of discounts, and including amounts recoverable
from customers for freight, transportation and distribution) net
of related freight, transportation and distribution expenses.
The company now reports sales revenues (net of discounts, and
including amounts recoverable from customers for freight,
transportation and distribution), freight costs, and
transportation and distribution expenses as separate line items
on the Consolidated Statements of Operations and Retained
Earnings.

Asset Retirement Obligations

On January 1, 2004, the company adopted CICA
Section 3110, Accounting for Asset Retirement
Obligations, which requires the company to record an asset
and related liability for the costs associated with the
retirement of long-lived tangible assets when a legal liability
to retire such assets exists. This includes obligations incurred
as a result of acquisition, construction, or normal operation of
a long-lived asset. The provisions of Section 3110 require
the asset retirement obligation to be recorded at fair value at
the time the liability is incurred. Accretion expense is
recognized as an operating expense using the credit-adjusted
risk-free interest rate in effect when the liability was
recognized. The associated asset retirement obligations are
capitalized as part of the carrying amount of the long-lived
asset and depreciated over the estimated remaining useful life
of the asset. The company has recorded asset retirement
obligations primarily associated with certain closure,
reclamation, and restoration costs for its potash and phosphate
operations.

The adoption of Section 3110 did not have a
significant effect on the results of operations or financial
position of the company. Had the provisions of Section 3110
been applied as of January 1, 2003, the pro forma effects
for the year ended December 31, 2003 on net loss would not
have been material. As required under the standard, the company
will make periodic assessments as to the reasonableness of its
asset retirement obligation estimates and revise those estimates
accordingly. The respective asset and liability balances will be
adjusted, which will correspondingly increase or decrease the
amounts expensed in future periods.

Hedging Relationships

Effective January 1, 2004, the company
adopted CICA Accounting Guideline 13 Hedging
Relationships. This guideline sets out the criteria that
must be met in order to apply hedge accounting for derivatives
and is based on many of the principles outlined in the US
standards relating to derivative instruments and hedging
activities. Specifically, the guideline provides detailed
guidance on the identification, designation, documentation and
effectiveness of hedging relationships, for purposes of applying
hedge accounting, and the discontinuance of hedge accounting.
Income and expenses on derivative instruments designated and
qualifying as hedges under this guideline are recognized in
earnings in the same period as the related hedged item.
Ineffective hedging relationships and hedges not designated in a
hedging relationship are carried at fair value on the
Consolidated Statement of Financial Position, and subsequent
changes in their fair value are recorded in earnings. The
adoption of this accounting guideline did not have a material
impact on the consolidated financial statements for the quarter.

3.   Inventories

|                       |  |             |       |              |  |   |       | 
|---------------------- |  | ----------- | ----- | ------------ |  | - | ----- | 
|                       |  | March 31,   |       | December 31,
|                       |  | 2004        |       | 2003        
|                      
|                      
|                       |  | (unaudited) |       |             
|Finished product       |  | $           | 200.8 |              |  | $ | 160.7 | 
|Materials and supplies |  |             | 107.9 |              |  |   | 108.0 | 
|Raw materials          |  |             | 44.0  |              |  |   | 54.1  | 
|Work in process        |  |             | 67.8  |              |  |   | 72.4  | 
|                      
|                       |  | $           | 420.5 |              |  | $ | 395.2 | 
|                      

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4.   Long-Term Debt

In January and February 2004, the company entered
into interest rate swap contracts designated as fair value
hedges that effectively converted a notional amount of $300.0 of
fixed rate debt (due 2011) into floating rate debt based on
six-month US dollar LIBOR rates. Net settlements on the swap
instruments are recorded as adjustments to interest expense. The
company did not enter into any interest rate swap contracts in
2003.

5.   Provision for Plant
Shutdowns

Memphis and Geismar Nitrogen
Operations

In June 2003, the company indefinitely shut down
its Memphis, Tennessee plant and suspended production of ammonia
and nitrogen solutions at its Geismar, Louisiana facilities due
to high US natural gas costs and low product margins. The plants
have not been re-started since that time.

The company determined that all employee
positions pertaining to the affected operations would be
eliminated and recorded $4.8 in connection with costs of special
termination benefits in the third quarter of 2003. The number of
employees terminated as a result of the shutdowns was 187, of
which 185 had left the company as of March 31, 2004. The
company has made payments relating to the terminations totaling
$3.5. All remaining workforce reduction costs pertaining to the
187 employees are expected to be paid by December 31,
2004.

In connection with the shutdowns, management had
determined that the carrying amounts of the long-lived assets at
the Memphis and Geismar nitrogen facilities were not fully
recoverable, and an impairment loss of $101.6, equal to the
amount by which the carrying amount of the facilities
asset groups exceeded their respective fair values, was
recognized. Of the total impairment charge, $100.6 related to
property, plant and equipment and $1.0 related to other assets.
As part of its review, management also wrote down certain parts
inventories at these plants in the amount of $12.4.

In addition to the costs described above,
management expects to incur other shutdown-related costs of
approximately $11.1 and nominal annual expenditures for site
security and other maintenance costs. These amounts have not
been recorded in the consolidated financial statements as of
March 31, 2004. Such costs will be recognized and recorded
in the period in which they are incurred.

Kinston Phosphate Feed Plant

The phosphate feed plant at Kinston, North
Carolina ceased operations in the first quarter of 2003. In that
quarter, the company recorded $0.6 for costs of special
termination benefits for Kinston employees, $0.3 for parts
inventory writedowns, and $1.3 for long-lived asset impairment
charges. In lieu of full plant closure, the company continued to
operate the facility as a warehouse. In the third quarter of
2003, company management determined that the cost of operating
Kinston as a stand-alone warehouse was uneconomical. This
decision triggered a further review by management of the
carrying amounts of the plants long-lived assets. As a
result of this review, management determined that the carrying
amounts of the long-lived assets were not recoverable, and an
additional impairment charge of $2.7, equal to the amount by
which the carrying amount of the plants long-lived assets
exceeded their fair value, was recognized.

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No additional costs were incurred in connection
with the plant shutdowns in the first quarter of 2004. The
following table summarizes, by reportable segment, the total
amount of costs incurred to date and the total costs expected to
be incurred in connection with the plant shutdowns described
above:

|                                          |  |             |       |             |  |   |       | 
|----------------------------------------- |  | ----------- | ----- | ----------- |  | - | ----- | 
|                                          |  | 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                  |  |             |      |             |  |   | 11.1  | 
|                                         
|                                          |  |             | 118.8 |             |  |   | 129.9 | 
|                                         
|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 |             |  | $ | 134.8 | 
|                                         

The following table summarizes, by reportable
segment, the costs accrued as of March 31, 2004 in
connection with the plant shutdowns described above:

|                                          |  |              |     |          |  |           |      |   |  |   |     | 
|----------------------------------------- |  | ------------ | --- | -------- |  | --------- | ---- | - |  | - | --- | 
|                                          |  | Accrued      |     |          |  | Accrued  
|                                          |  | Balance      |     |          |  | Balance  
|                                          |  | December 31, |     | Cash     |  | March 31,
|                                          |  | 2003         |     | Payments |  | 2004     
|                                         
|                                         
|Nitrogen Segment                          |  |              |     |          |  |           |      |   |  |   |     | 
|Employee termination and related benefits |  | $            | 2.1 |          |  | $         | (0.8 | ) |  | $ | 1.3 | 
|                                         
|Phosphate Segment                         |  |              |     |          |  |           |      |   |  |   |     | 
|Employee termination and related benefits |  |              | 0.5 |          |  |           | (0.1 | ) |  |   | 0.4 | 
|                                         
|                                          |  | $            | 2.6 |          |  | $         | (0.9 | ) |  | $ | 1.7 | 
|                                         

The accrued balance is included in accounts
payable and accrued charges in the Consolidated Statements of
Financial Position as at March 31, 2004.

6.   Provision for PCS Yumbes
S.C.M.

In November 2003, the company entered into a
share purchase agreement with Sociedad Quimica y Minera de Chile
S.A. (SQM), whereby SQM is to acquire the shares of
PCS Yumbes for an aggregate purchase price of $35.0, subject to
adjustments. Under the terms of the share purchase agreement,
and prior to the sale closing, PCS Yumbes will continue to
operate the facility and expeditiously liquidate the inventory
of nitrates. All other working capital is to be fully realized
or discharged (as applicable) by the company prior to the
closing. It is expected that the closing will occur no later
than the end of 2004.

In 2003, management conducted an assessment of
the recoverability of the long-lived assets of the PCS Yumbes
operations. As a result of its review, management determined
that the carrying amounts of PCS Yumbes long-lived assets
were not recoverable and recorded an impairment charge of $77.4,
equal to the amount by which the carrying amount of the asset
group exceeded fair value. Of the total impairment charge, $13.0
related to property, plant and equipment, $63.9 related to
deferred pre-production costs, and $0.5 related to deferred
acquisition costs. As part of the review, management also wrote
down certain non-parts inventory

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by $50.2 due to the need to liquidate all
inventories that would not be transferred to SQM under the
agreement.


The company plans to eliminate all employee
positions at PCS Yumbes by December 31, 2004 and has
recorded a provision of $1.8 pertaining to contractual
termination benefits to be paid, primarily under Chilean law. As
of March 31, 2004, 124 of the employees had left the
company. The remaining 100 employees are expected to leave the
company by December 31, 2004, and all remaining workforce
reduction costs are expected to be paid by that date.

The company had incurred early termination
penalties in respect of certain PCS Yumbes contractual
arrangements. The company recorded a provision of $11.1 in the
third quarter of 2003 for these contract termination costs and
$0.5 remained to be paid at March 31, 2004.

No costs were incurred in connection with the
above in the first quarter of 2004. The following table
summarizes the total amount of costs incurred to date and the
total costs expected to be incurred in connection with PCS
Yumbes:

|                                          |  |             |       |             |  |   |       | 
|----------------------------------------- |  | ----------- | ----- | ----------- |  | - | ----- | 
|                                          |  | Cumulative  |       | Total Costs
|                                          |  | Costs       |       | Expected   
|                                          |  | Incurred to |       | to be      
|                                          |  | Date        |       | Incurred   
|                                         
|                                         
|Potash Segment                            |  |             |       |             |  |   |       | 
|Contract termination costs                |  | $           | 11.1  |             |  | $ | 11.1  | 
|Employee termination and related benefits |  |             | 1.8   |             |  |   | 1.8   | 
|Writedown of non-parts inventory          |  |             | 50.2  |             |  |   | 50.2  | 
|Asset impairment charges                  |  |             | 77.4  |             |  |   | 77.4  | 
|                                         
|                                          |  | $           | 140.5 |             |  | $ | 140.5 | 
|                                         

The following table summarizes the costs accrued
as of March 31, 2004 in connection with PCS Yumbes as
described above:

|                                          |  |              |     |          |  |             |      |           |  |   |      |   |  |   |     | 
|----------------------------------------- |  | ------------ | --- | -------- |  | ----------- | ---- | --------- |  | - | ---- | - |  | - | --- | 
|                                          |  | Accrued      |     |          |  |             |      | Accrued  
|                                          |  | Balance      |     |          |  |             |      | Balance  
|                                          |  | December 31, |     | Cash     |  |             |      | March 31,
|                                          |  | 2003         |     | Payments |  | Adjustments |      | 2004     
|                                         
|                                         
|Potash Segment                            |  |              |     |          |  |             |      |           |  |   |      |   |  |   |     | 
|Contract termination costs                |  | $            | 0.6 |          |  | $           | (0.1 | )         |  | $ |     |   |  | $ | 0.5 | 
|Employee termination and related benefits |  |              | 1.2 |          |  |             | (0.1 | )         |  |   | (0.2 | ) |  |   | 0.9 | 
|                                         
|                                          |  | $            | 1.8 |          |  | $           | (0.2 | )         |  | $ | (0.2 | ) |  | $ | 1.4 | 
|                                         

The accrued balance is included in accounts
payable and accrued charges in the Consolidated Statements of
Financial Position as at March 31, 2004.

7.   Income Taxes

The companys consolidated income tax rate
for the current period approximates 33 percent. In the
first quarter of 2003, this rate approximated 40 percent.
The decrease in rate is due primarily to the impact of
Saskatchewan resource tax incentives and changes to the Canadian
federal resource allowance, plus the scheduled Canadian federal
statutory rate reduction.

8.   Net Income Per
Share

Basic net income per share for the quarter is
calculated on the weighted average shares issued and outstanding
for the three months ended March 31, 2004 of 53,343,000
(2003  52,089,000). Diluted net income per share is
calculated based on the weighted average shares issued and
outstanding during the period, adjusted by the total of the
additional common shares that would have been issued assuming
exercise of all

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stock options with exercise prices at or below
the average market price for the period. For periods in which
there was a loss applicable to common shares, stock options with
exercise prices at or below the average market price for the
period were excluded for the calculations of diluted loss per
share, as inclusion of these securities would have been
anti-dilutive to the net loss per share. Weighted average shares
outstanding for the diluted net income per share calculation for
the three months ended March 31, 2004 were 54,023,000
(2003  52,312,000).


9.   Segment
Information

The company has three reportable business
segments: potash, phosphate and nitrogen. These business
segments are differentiated by the chemical nutrient contained
in the product that each produces. Inter-segment sales are made
under terms which approximate market prices.

|                                |  |                                   |       |           |  |          |       |            |  |              |       |  |  |   |     |  |  |   |       | 
|------------------------------- |  | --------------------------------- | ----- | --------- |  | -------- | ----- | ---------- |  | ------------ | ----- |  |  | - | --- |  |  | - | ----- | 
|                                |  |                                  
|                                |  | Three Months Ended March 31, 2004
|                               
|                               
|                                |  | Potash                            |       | Phosphate |  | Nitrogen |       | All Others |  | Consolidated
|                               
|                               
|Sales                           |  | $                                 | 223.7 |           |  | $        | 217.6 |            |  | $            | 287.1 |  |  | $ |    |  |  | $ | 728.4 | 
|Freight                         |  |                                   | 33.5  |           |  |          | 15.7  |            |  |              | 8.9   |  |  |   |    |  |  |   | 58.1  | 
|Transportation and distribution |  |                                   | 8.7   |           |  |          | 5.3   |            |  |              | 9.0   |  |  |   |    |  |  |   | 23.0  | 
|Net sales  third party         |  |                                   | 181.5 |           |  |          | 196.6 |            |  |              | 269.2 |  |  |   |    |  |  |   |       | 
|Cost of goods sold              |  |                                   | 114.8 |           |  |          | 197.5 |            |  |              | 211.0 |  |  |   |    |  |  |   | 523.3 | 
|Gross Margin                    |  |                                   | 66.7  |           |  |          | (0.9  | )          |  |              | 58.2  |  |  |   |    |  |  |   | 124.0 | 
|Depreciation and amortization   |  |                                   | 16.9  |           |  |          | 20.5  |            |  |              | 19.9  |  |  |   | 2.4 |  |  |   | 59.7  | 
|Inter-segment sales             |  |                                   | 2.9   |           |  |          | 3.1   |            |  |              | 21.8  |  |  |   |    |  |  |   |      | 

|                                |  |                                   |       |           |  |          |       |            |  |              |       |  |  |   |     |  |  |   |       | 
|------------------------------- |  | --------------------------------- | ----- | --------- |  | -------- | ----- | ---------- |  | ------------ | ----- |  |  | - | --- |  |  | - | ----- | 
|                                |  |                                  
|                                |  | Three Months Ended March 31, 2003
|                               
|                               
|                                |  | Potash                            |       | Phosphate |  | Nitrogen |       | All Others |  | Consolidated
|                               
|                               
|Sales                           |  | $                                 | 201.2 |           |  | $        | 191.1 |            |  | $            | 269.5 |  |  | $ |    |  |  | $ | 661.8 | 
|Freight                         |  |                                   | 32.7  |           |  |          | 17.9  |            |  |              | 13.8  |  |  |   |    |  |  |   | 64.4  | 
|Transportation and distribution |  |                                   | 8.0   |           |  |          | 4.8   |            |  |              | 10.2  |  |  |   |    |  |  |   | 23.0  | 
|Net sales  third party         |  |                                   | 160.5 |           |  |          | 168.4 |            |  |              | 245.5 |  |  |   |    |  |  |   |       | 
|Cost of goods sold              |  |                                   | 111.1 |           |  |          | 166.5 |            |  |              | 215.7 |  |  |   |    |  |  |   | 493.3 | 
|Gross Margin                    |  |                                   | 49.4  |           |  |          | 1.9   |            |  |              | 29.8  |  |  |   |    |  |  |   | 81.1  | 
|Depreciation and amortization   |  |                                   | 15.3  |           |  |          | 18.6  |            |  |              | 23.2  |  |  |   | 1.9 |  |  |   | 59.0  | 
|Inter-segment sales             |  |                                   | 2.4   |           |  |          | 2.7   |            |  |              | 11.6  |  |  |   |    |  |  |   |      | 

10.   Stock-Based
Compensation

The company has two stock option plans. Prior to
2003, the company applied the intrinsic value based method of
accounting for the plans.

Effective December 15, 2003, the company
adopted the fair value based method of accounting for stock
options prospectively to all employee awards granted, modified,
or settled after January 1, 2003. Prospective application
of the fair value method did not have an impact on the first
three fiscal quarters of 2003 since the company did not grant
any options during those periods. Since the companys stock
option awards vest over two years, the compensation cost
included in the determination of net income for the first
quarter of 2004 and 2003 is less than that which would have been
recognized if the fair value based method had been applied to
all awards since the original effective date of CICA
Section 3870, Stock-based Compensation and Other
Stock-

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based Payments. The following table
illustrates the effect on net income (loss) and net income
(loss) per share if the fair value based method had been
applied to all outstanding and unvested awards in each period.


|                                     |  |                                                                                                                                             |      |                    |      |      |      |   |      |  
|------------------------------------ |  | ------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ------------------ | ---- | ---- | ---- | - | ---- | -
|                                     |  |                                                                                                                                             |      |                   
|                                     |  |                                                                                                                                             |      | Three Months Ended
|                                     |  |                                                                                                                                             |      | March 31          
|                                     |  |                                                                                                                                             |      | 2004               |      | 2003
|                                    
|                                    
|Net income  as reported             |  | $                                                                                                                                           | 50.7 |                    |      | $    | 3.2  |  
|Add:                                 |  | Stock-based employee compensation expense
    included in reported net income, net of related tax effects                                   |      |                    | 2.2  |      |      |   |     |  
|Less:                                |  | Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |      |                    | (3.2 | )    |      |   | (3.7 | )
|                                    
|Net income (loss)  pro
    forma(1) |  | $                                                                                                                                           | 49.7 |                    |      | $    | (0.5 | )
|                                    



|    |                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 (loss) per share   |             |  |   |      |  |  |   |      
|                                    | As reported |  | $ | 0.95 |  |  | $ | 0.06  |  
|                                    | Pro forma   |  | $ | 0.93 |  |  | $ | (0.01 | )
|                                   
|Diluted net income (loss) per share |             |  |   |      |  |  |   |      
|                                    | As reported |  | $ | 0.94 |  |  | $ | 0.06  |  
|                                    | Pro forma   |  | $ | 0.92 |  |  | $ | (0.01 | )

In calculating the foregoing pro forma amounts,
the fair value of each option grant was estimated as of the date
of grant using the Modified Black-Scholes option-pricing model
with the following weighted average assumptions:

|                         |  |      |         |      |  |      |         |  |  |   |         | 
|------------------------ |  | ---- | ------- | ---- |  | ---- | ------- |  |  | - | ------- | 
|                         |  | 2003 |         | 2002 |  | 2001
|                        
|                        
|Expected dividend        |  | $    | 1.00    |      |  | $    | 1.00    |  |  | $ | 1.00    | 
|Expected volatility      |  |      | 27%     |      |  |      | 32%     |  |  |   | 32%     | 
|Risk-free interest rate  |  |      | 4.06%   |      |  |      | 4.13%   |  |  |   | 4.54%   | 
|Expected life of options |  |      | 8 years |      |  |      | 8 years |  |  |   | 8 years | 
|Expected forfeitures     |  |      | 16%     |      |  |      | 10%     |  |  |   | 10%     | 

The fair value of options granted in the fourth
quarter of 2003 was $15.7 (2002  $20.1).

11. Post-Retirement/ Post-Employment
Expenses

|                               |  |                    |      |      |  |   |      |  
|------------------------------ |  | ------------------ | ---- | ---- |  | - | ---- | -
|                               |  |                   
|                               |  | Three Months Ended
|                               |  | March 31          
|Pension Plans                  |  | 2004               |      | 2003
|                              
|                              
|Service cost                   |  | $                  | 3.5  |      |  | $ | 3.0  |  
|Interest cost                  |  |                    | 7.5  |      |  |   | 7.4  |  
|Expected return on plan assets |  |                    | (8.4 | )    |  |   | (7.6 | )
|Amortization of net loss       |  |                    | 1.1  |      |  |   | 1.3  |  
|                              
|Net expense                    |  | $                  | 3.7  |      |  | $ | 4.1  |  
|                              

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|                            |  |                    |     |      |  |   |     | 
|--------------------------- |  | ------------------ | --- | ---- |  | - | --- | 
|                            |  |                   
|                            |  | Three Months Ended
|                            |  | March 31          
|Other Post-retirement Plans |  | 2004               |     | 2003
|                           
|                           
|Service cost                |  | $                  | 1.4 |      |  | $ | 1.4 | 
|Interest cost               |  |                    | 3.5 |      |  |   | 3.2 | 
|Amortization of net loss    |  |                    | 0.4 |      |  |   | 0.5 | 
|                           
|Net expense                 |  | $                  | 5.3 |      |  | $ | 5.1 | 
|                           

Pension plan contributions to be paid by the
company during 2004 are not expected to differ significantly
from the amounts previously disclosed in the consolidated
financial statements for the year ended December 31, 2003.

12. Seasonality

The companys sales of fertilizer are
seasonal. Typically, the second quarter of the year is when
fertilizer sales will be highest, due to the North American
spring planting season. However, planting conditions and the
timing of customer purchases will vary each year and sales can
be expected to shift from one quarter to another.

13. Contingencies

PotashCorp is a shareholder in Canpotex which
markets potash offshore. Should any operating losses or other
liabilities be incurred by Canpotex, the shareholders have
contractually agreed to reimburse Canpotex for such losses or
liabilities in proportion to their productive capacity. There
were no such operating losses or other liabilities during the
first three months of 2004.

In common with other companies in the industry,
the company is unable to acquire insurance for underground
assets.

The terms of a shareholders agreement with Jordan
Investment Company (JIC) provide that, from
October 17, 2006 to October 16, 2009, JIC may seek to
exercise a put option (the Put) to require the
company to purchase JICs remaining common shares in Arab
Potash Company (APC). If the Put were exercised, the
companys purchase price would be calculated in accordance
with a specified formula based, in part, on future earnings of
APC. The amount, if any, which the company may have to pay for
JICs remaining common shares if there was to be a valid
exercise of the Put is not presently determinable.

In 1998, the company, along with other parties,
was notified by EPA of potential liability under CERCLA with
respect to certain soil and groundwater conditions at a PCS
Joint Venture blending facility in Lakeland, Florida and certain
adjoining property. In 1999, PCS Joint Venture signed an
Administrative Order on Consent with EPA pursuant to which PCS
Joint Venture agreed to conduct a Remedial Investigation and
Feasibility Study (RI/ FS) of these conditions. PCS
Joint Venture and another party are sharing the costs of the RI/
FS. PCS Joint Venture continues to assess and evaluate the
nature and extent of the impacts at the site. No final
determination has yet been made of the nature, timing or cost of
remedial action that may be needed nor to what extent costs
incurred may be recoverable from third parties.

Various other claims and lawsuits are pending
against the company. While it is not possible to determine the
ultimate outcome of such actions at this time, it is
managements opinion that the ultimate resolution of such
actions, including those pertaining to environmental matters,
will not have a material adverse effect on the companys
financial condition or results of operations.

14. Guarantees

The company enters into agreements in the normal
course of business that may contain features which meet the
definition of a guarantee. Various debt obligations (such as
overdrafts, lines of credit with counterparties for derivatives,
and back-to-back loan arrangements) related to certain
subsidiaries have been directly guaranteed by the company under
agreements with third parties. The company would be required to

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perform on these guarantees in the event of
default by the guaranteed parties. No material loss is
anticipated by reason of such agreements and guarantees. At
March 31, 2004, the maximum potential amount of future
(undiscounted) payments under significant guarantees
provided to third parties approximated $73.4, representing the
maximum risk of loss if there were a total default by the
guaranteed parties, without consideration of possible recoveries
under recourse provisions or from collateral held or pledged. At
March 31, 2004, no subsidiary balances subject to
guarantees were outstanding in connection with the
companys cash management facilities, and the company had
no liabilities recorded for other obligations other than
subsidiary bank borrowings of approximately $5.9, which are
reflected in other long-term debt and cash margin requirements
of approximately $13.0 to maintain derivatives, which are
included in accounts payable and accrued charges.


Refer to Note 29 of our 2003 Annual Report for a
description of other guarantees relating to the company. There
have been no significant changes to these guarantees during the
first three months of 2004.

15. Reconciliation of Canadian and United
States Generally Accepted Accounting Principles

Canadian GAAP varies in certain significant
respects from US GAAP. As required by the United States
Securities and Exchange Commission (SEC), the effect
of these principal differences on the companys interim
consolidated financial statements is described and quantified
below. For a complete discussion of US and Canadian GAAP
differences, see Note 34 to the consolidated financial
statements for the year ended December 31, 2003 in our 2003
Annual Report.

Long-term investments:The companys investment in
Israel Chemicals Limited (ICL) is stated at cost. US
GAAP requires that this investment be classified as
available-for-sale and be stated at market value with the
difference between market value and cost reported as a component
of Other Comprehensive Income (OCI).

Property, plant and equipment and goodwill:The net book value of property, plant
and equipment and goodwill under Canadian GAAP is higher than
under US GAAP, as past provisions for asset impairment under
Canadian GAAP were measured based on the undiscounted cash flow
from use together with the residual value of the assets. Under
US GAAP they were measured based on fair value, which was lower
than the undiscounted cash flow from use together with the
residual value of the assets.

Pre-operating costs:Operating costs incurred during the
start-up phase of new projects are deferred under Canadian GAAP
until commercial production levels are reached, at which time
they are amortized over the estimated life of the project. US
GAAP requires that these costs be expensed as incurred.

Post-retirement and post-employment benefits:Under Canadian GAAP, when a defined
benefit plan gives rise to an accrued benefit asset, a company
must recognize a valuation allowance for the excess of the
adjusted benefit asset over the expected future benefit to be
realized from the plan asset. Changes in the pension valuation
allowance are recognized in income. US GAAP does not
specifically address pension valuation allowances, and the US
regulators have interpreted this to be a difference between
Canadian and US GAAP. In light of these developments, a
difference between Canadian and US GAAP has been recorded for
the effects of recognizing a pension valuation allowance and the
changes therein under Canadian GAAP.

The companys accumulated benefit obligation
for its US pension plans exceeds the fair value of plan assets.
US GAAP requires the recognition of an additional minimum
pension liability in the amount of the excess of the unfunded
accumulated benefit obligation over the recorded pension
benefits liability. An offsetting intangible asset is recorded
equal to the unrecognized prior service costs, with any
difference recorded as a reduction of accumulated OCI. No
similar requirement exists under Canadian GAAP.

Foreign currency translation adjustment:The company adopted the US dollar as
its functional and reporting currency on January 1, 1995.
At that time, the consolidated financial statements were
translated into US dollars at the December 31,
1994 year-end exchange rate using the translation of
convenience method under Canadian GAAP. This translation method
was not permitted under US GAAP. US GAAP required the
comparative Consolidated Statements of Income and Consolidated
Statements of Cash Flow to be translated at applicable
weighted-average exchange rates; whereas, the Consolidated
Statements of Financial Position were permitted to be translated
at the December 31, 1994 year-end exchange rate. The use of
disparate

13



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exchange rates under US GAAP gave rise to a
foreign currency translation adjustment. Under US GAAP, this
adjustment is reported as a component of accumulated OCI.


Derivative instruments and hedging activities:Under Canadian GAAP, income and
expenses on derivative instruments designated as and qualifying
as effective fair value hedges or cash flow hedges are
recognized in earnings in the same period as the related hedged
item. Gains or losses arising from settled natural gas hedging
transactions are deferred as a component of inventory until the
product containing the hedged item is sold, at which time both
the natural gas purchase cost and the related hedging deferral
are recorded as cost of goods sold. Derivatives associated with
ineffective hedging relationships and hedges not designated in a
hedging relationship are carried at fair value on the
Consolidated Statement of Financial Position, and subsequent
changes in their fair value are recorded in earnings. In
accordance with SFAS No. 133 Accounting for
Derivative Instrument and Hedging Activities and its
related interpretations and amendments under US GAAP, the
company records all derivatives as either assets or liabilities
on the Consolidated Statements of Financial Position and
measures those instruments at fair value. For derivatives that
are designated as and qualify as effective cash flow hedges, the
portion of gain or loss on the derivative instrument effective
at offsetting changes in the hedged item is reported as a
component of accumulated OCI and reclassified into earnings as
cost of goods sold when the hedged transaction affects earnings.
For derivative instruments that are designated as and qualify as
effective fair value hedges, the gain or loss on the derivative
instrument as well as the offsetting gain or loss on the hedged
item attributable to the hedged risk is recognized in earnings
as interest expense in the period the changes in fair value
occur. Ineffective portions of cash flow or fair value hedges
are recorded in earnings in the current period. Derivatives not
designated as hedging instruments are marked to market through
earnings in the period the changes in fair value occur.

Freight, transportation and distribution:The company has changed its accounting
policy regarding consolidated financial statement presentation
of freight costs and transportation and distribution expenses
under US GAAP. In prior years, the company included freight
costs in cost of goods sold and transportation and distribution
expenses in operating expenses under US GAAP. Effective
January 1, 2004, the company discloses freight costs and
transportation and distribution expenses under US GAAP as
separate line items within gross margin on the Consolidated
Statements of Operations and Retained Earnings. This
presentation is consistent with the new Canadian GAAP
presentation described in Note 2. All comparative information
has been appropriately reclassified.

Depreciation and amortization:Depreciation and amortization under
Canadian GAAP is higher than under US GAAP, as a result of
differences in the carrying amounts of property, plant and
equipment and goodwill under Canadian and US GAAP.

Comprehensive income:Comprehensive income is recognized and
measured under US GAAP pursuant to SFAS No. 130
Reporting Comprehensive Income. This standard
defines comprehensive income as all changes in equity other than
those resulting from investments by owners and distributions to
owners. Comprehensive income is comprised of two components, net
income and OCI. OCI refers to amounts that are recorded as an
element of shareholders equity but are excluded from net
income because these transactions or events were attributed to
changes from non-owner sources. The concept of comprehensive
income does not yet exist under Canadian GAAP.

Income taxes:The
income tax adjustment reflects the impact on income taxes of the
US GAAP adjustments described above. Accounting for income taxes
under Canadian and US GAAP is similar, except that income tax
rates of enacted or substantively enacted tax law must be used
to calculate future income tax assets and liabilities under
Canadian GAAP; whereas only income tax rates of enacted tax law
can be used under US GAAP.

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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
other comprehensive income:

|                                                   |                                           |                    |            |      |   |   |            |      |  
|-------------------------------------------------- | ----------------------------------------- | ------------------ | ---------- | ---- | - | - | ---------- | ---- | -
|                                                   |                                           |                   
|                                                   |                                           | Three Months Ended
|                                                   |                                           | March 31          
|                                                   |                                           | 2004               |            | 2003
|                                                  
|                                                  
|                                                   |                                           |                   
|                                                   |                                           | (unaudited)       
|Net income as reported  Canadian GAAP             |                                           | $                  | 50.7       |      |   | $ | 3.2        |     
|Items increasing or decreasing reported net income |                                           |                    |            |      |   |   |            |     
|                                                   | Pre-operating costs                       |                    |            |     |   |   |            | 1.3  |  
|                                                   | Depreciation and amortization             |                    |            | 2.1  |   |   |            | 2.1  |  
|                                                   | Accretion of asset retirement obligations |                    |            | 3.3  |   |   |            | (0.8 | )
|                                                   | Future income taxes                       |                    |            | (2.0 | ) |   |            | (1.0 | )
|                                                  
|Net income  US GAAP                               |                                           | $                  | 54.1       |      |   | $ | 4.8        |     
|                                                  
|Weighted average shares outstanding 
    US GAAP  |                                           |                    | 53,343,000 |      |   |   | 52,089,000 |     
|                                                  
|Basic net income per share 
    US GAAP           |                                           | $                  | 1.01       |      |   | $ | 0.09       |     
|                                                  
|Diluted net income per share 
    US GAAP         |                                           | $                  | 1.00       |      |   | $ | 0.09       |     
|                                                  

|                                                                      |                                                                       |             |         |              |   |   |         |        |  
|--------------------------------------------------------------------- | --------------------------------------------------------------------- | ----------- | ------- | ------------ | - | - | ------- | ------ | -
|                                                                      |                                                                       | March 31,   |         | December 31,
|                                                                      |                                                                       | 2004        |         | 2003        
|                                                                     
|                                                                     
|                                                                      |                                                                       | (unaudited) |         |             
|Total assets as reported  Canadian GAAP                              |                                                                       | $           | 4,538.5 |              |   | $ | 4,567.3 |       
|Items increasing (decreasing) reported total
    assets
    Inventory |                                                                       |             | (3.6    | )            |   |   | (2.7    | )     
|                                                                      | Available-for-sale securities (unrealized holding
    gain)           |             |         | 61.1         |   |   |         | 35.0   |  
|                                                                      | Fair value of derivative instruments                                  |             |         | 79.0         |   |   |         | 59.8   |  
|                                                                      | Property, plant and equipment                                         |             |         | (132.8       | ) |   |         | (134.9 | )
|                                                                      | Post-retirement and post-employment benefits                          |             |         | 13.9         |   |   |         | 13.9   |  
|                                                                      | Intangible asset relating to additional minimum
    pension liability |             |         | 2.7          |   |   |         | 2.7    |  
|                                                                      | Goodwill                                                              |             |         | (46.7        | ) |   |         | (46.7  | )
|                                                                     
|Total assets  US GAAP                                                |                                                                       | $           | 4,512.1 |              |   | $ | 4,494.4 |       
|                                                                     

|                                                                |                                                                         |             |         |              |   |   |         |        |  
|--------------------------------------------------------------- | ----------------------------------------------------------------------- | ----------- | ------- | ------------ | - | - | ------- | ------ | -
|                                                                |                                                                         | March 31,   |         | December 31,
|                                                                |                                                                         | 2004        |         | 2003        
|                                                               
|                                                               
|                                                                |                                                                         | (unaudited) |         |             
|Total shareholders equity as
    reported  Canadian GAAP      |                                                                         | $           | 2,033.6 |              |   | $ | 1,973.8 |       
|Items increasing (decreasing) reported
    shareholders equity |                                                                         |             |         |              |   |   |         |       
|                                                                | Accumulated other comprehensive income, net of
    related income taxes |             |         | 40.8         |   |   |         | 14.8   |  
|                                                                | Foreign currency translation adjustment                                 |             |         | 20.9         |   |   |         | 20.9   |  
|                                                                | Accretion of asset retirement obligations                               |             |         |             |   |   |         | (3.3   | )
|                                                                | Provision for asset impairment                                          |             |         | (218.0       | ) |   |         | (218.0 | )
|                                                                | Depreciation and amortization                                           |             |         | 38.5         |   |   |         | 36.4   |  
|                                                                | Post-retirement and post-employment benefits                            |             |         | 13.9         |   |   |         | 13.9   |  
|                                                                | Future income taxes                                                     |             |         | 32.7         |   |   |         | 34.7   |  
|                                                               
|Shareholders equity  US GAAP                                  |                                                                         | $           | 1,962.4 |              |   | $ | 1,873.2 |       
|                                                               

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|                               |                                                                              |                    |      |       |   |   |      |       |  
|------------------------------ | ---------------------------------------------------------------------------- | ------------------ | ---- | ----- | - | - | ---- | ----- | -
|                               |                                                                              |                   
|                               |                                                                              | Three Months Ended
|                               |                                                                              | March 31          
|                               |                                                                              | 2004               |      | 2003 
|                              
|                              
|                               |                                                                              |                   
|                               |                                                                              | (unaudited)       
|Net income  US GAAP           |                                                                              | $                  | 54.1 |       |   | $ | 4.8  |      
|                              
|Other comprehensive income     |                                                                              |                    |      |       |   |   |      |      
|                               | Change in unrealized holding gain on
    available-for-sale securities       |                    |      | 26.1  |   |   |      | 1.0   |  
|                               | Change in gains and losses on derivatives
    designated as cash flow hedges |                    |      | 23.2  |   |   |      | 43.8  |  
|                               | Reclassification to income of gains and losses on
    cash flow hedges       |                    |      | (10.5 | ) |   |      | (27.0 | )
|                               | Future income taxes related to other
    comprehensive income                |                    |      | (12.8 | ) |   |      | (7.1  | )
|                              
|                               | Other comprehensive income, net of related income
    taxes                  |                    |      | 26.0  |   |   |      | 10.7  |  
|                              
|Comprehensive income  US GAAP |                                                                              | $                  | 80.1 |       |   | $ | 15.5 |      
|                              

The balances related to each component of
accumulated other comprehensive income, net of related income
taxes, are as follows:

|                                                                   |  |             |       |              |  |   |       |  
|------------------------------------------------------------------ |  | ----------- | ----- | ------------ |  | - | ----- | -
|                                                                   |  | March 31,   |       | December 31,
|                                                                   |  | 2004        |       | 2003        
|                                                                  
|                                                                  
|                                                                   |  | (unaudited) |       |             
|Unrealized gains and losses on available-for-sale
    securities   |  | $           | 40.0  |              |  | $ | 22.6  |  
|Gains and losses on derivatives designated as
    cash flow hedges |  |             | 51.7  |              |  |   | 43.1  |  
|Additional minimum pension liability                               |  |             | (30.0 | )            |  |   | (30.0 | )
|Foreign currency translation adjustment                            |  |             | (20.9 | )            |  |   | (20.9 | )
|                                                                  
|Accumulated other comprehensive
    income  US GAAP               |  | $           | 40.8  |              |  | $ | 14.8  |  
|                                                                  

Supplemental US GAAP
Disclosures

Recent Accounting Pronouncements

In December 2003, the FASB revised
FIN No. 46 Consolidation of Variable Interest
Entities, which clarifies the application of Accounting
Research Bulletin No. 51 Consolidated Financial
Statements to those entities (defined as Variable Interest
Entities (VIEs)) in which either the equity at risk
is not sufficient to permit that entity to finance its
activities without additional subordinated financial support
from other parties, or equity investors lack voting control, an
obligation to absorb expected losses or the right to receive
expected residual returns. FIN No. 46 requires
consolidation by a business of VIEs in which it is the primary
beneficiary. The primary beneficiary is defined as the party
that has exposure to the majority of the expected losses and/or
expected residual returns of the VIE. FIN No. 46 was
effective for the company in the first quarter, and there was no
material impact on its financial position, results of operations
or cash flows from adoption. In Canada, Accounting
Guideline 15 Consolidation of Variable Interest
Entities has harmonized with FIN No. 46 and is
effective for the company no later than December 31, 2004.
The company expects no material impact on its financial
position, results of operations or cash flows from adoption.

In December 2003, the SEC issued Staff Accounting
Bulletin (SAB) No. 104 Revenue
Recognition, which supersedes SAB No. 101. The
primary purpose of SAB No. 104 is to rescind
accounting guidance contained in SAB No. 101 and the
SECs Revenue Recognition in Financial Statements
Frequently Asked Questions and Answers related to multiple
element revenue arrangements. The changes noted in
SAB No. 104 did not have a material impact on the
companys financial position, results of operations, or
cash flows.

In December 2003, the Medicare Prescription Drug
Improvement and Modernization Act of 2003 (the Act)
was signed into law. The Act introduces a prescription drug
benefit beginning in 2006 under Medicare (Medicare Part D)
as well as a federal subsidy to sponsors of retiree health care
benefit plans that provide a benefit that is at least
actuarially equivalent to Medicare Part D. At this point,
the companys analysis regarding the impact of the
legislation is preliminary, as it awaits guidance from various
governmental and

16



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##### Table of Contents



regulatory agencies concerning the requirements
that must be met to obtain these cost reductions, as well as the
manner in which such savings should be measured. Based on this
preliminary analysis, the company expects that the legislation
will eventually reduce its costs for some of its programs;
however, the benefit derived is not expected to be material to
its consolidated financial position, results of operations or
cash flows. Some of the companys retiree medical plans may
need to be modified in order to qualify for beneficial treatment
under the Act. Because of the various uncertainties related to
this legislation and the appropriate accounting treatment, the
company elected to defer financial recognition until final
accounting guidance is issued by FASB. When issued, the final
guidance could require the company to change previously reported
information. This deferral election is permitted under
FSP No. 106-1, Accounting and Disclosure
Requirements Related to the Medicare Prescription Drug,
Improvement and Modernization Act of 2003. FASB has issued
a proposed FSP on the accounting treatment that, if approved,
would be effective in the companys third quarter.


Available-For-Sale Security

The companys investment in ICL is
classified as available-for-sale. The fair market value of this
investment at March 31, 2004 was $179.5 and the unrealized
holding gain was $86.7.

Stock-Based Compensation

Prior to 2003, the company applied the intrinsic
value based method of accounting for its stock option plans
under US GAAP. Effective December 15, 2003, the
company adopted the fair value based method of accounting for
stock options prospectively to all employee awards granted,
modified or settled after January 1, 2003 pursuant to the
transitional provisions of SFAS No. 148
Accounting for Stock-Based Compensation 
Transition and Disclosure. Prospective application of the
fair value method did not have an impact on the first three
fiscal quarters of 2003 since the company did not grant any
options during those periods. Since the companys stock
option awards vest over two years, the compensation cost
included in the determination of net income for 2004 and 2003 is
less than that which would have been recognized if the fair
value based method had been applied to all awards since the
original effective date of SFAS No. 123
Accounting for Stock-Based Compensation. The
following table illustrates the effect on net income and net
income per share under US GAAP if the fair value based
method had been applied to all outstanding and unvested awards
in each period.

|                                            |  |                                                                                                                                             |      |                    |      |      |     |  |      |  
|------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------- | ---- | ------------------ | ---- | ---- | --- |  | ---- | -
|                                            |  |                                                                                                                                             |      |                   
|                                            |  |                                                                                                                                             |      | Three Months Ended
|                                            |  |                                                                                                                                             |      | March 31          
|                                            |  |                                                                                                                                             |      | 2004               |      | 2003
|                                           
|                                           
|                                            |  |                                                                                                                                            
|                                            |  | (unaudited)                                                                                                                                
|Net income  as reported under
    US GAAP  |  | $                                                                                                                                           | 54.1 |                    |      | $    | 4.8 | 
|Add:                                        |  | Stock-based employee compensation expense
    included in reported net income, net of related tax effects                                   |      |                    | 2.2  |      |     |  |     |  
|Less:                                       |  | Total stock-based employee compensation expense
    determined under fair value based method for all awards, net of
    related tax effects |      |                    | (3.2 | )    |     |  | (3.7 | )
|                                           
|Net income  pro forma under
    US GAAP(1) |  | $                                                                                                                                           | 53.1 |                   
|                                           



|    |                                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 |  | $ | 1.01 |  |  | $ | 0.09 | 
|                                           | Pro forma   |  | $ | 1.00 |  |  | $ | 0.02 | 
|                                          
|Diluted net income per share under US GAAP |             |  |   |      |  |  |   |     
|                                           | As reported |  | $ | 1.00 |  |  | $ | 0.09 | 
|                                           | Pro forma   |  | $ | 0.98 |  |  | $ | 0.02 | 

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Derivative Instruments and Hedging
Activities

The company formally documents all relationships
between hedging instruments and hedged items, as well as its
risk-management objective and strategy for undertaking various
hedge transactions. This process includes attributing
derivatives that are designated as cash flow hedges to floating
rate assets or liabilities or forecasted transactions and
attributing derivatives that are designated as fair value hedges
to fixed rate assets or liabilities. The company also formally
assesses, both at the inception of the hedge and on an ongoing
basis, whether each derivative is highly effective in offsetting
changes in cash flows or fair value of the hedged item.
Fluctuations in the value of the derivative instruments are
generally offset by changes in the hedged item; however, if it
is determined that a derivative is not highly effective as a
hedge or if a derivative is sold, expires or ceases to be a
highly effective hedge, the company will discontinue hedge
accounting prospectively for the affected derivative.

Cash Flow
Hedges

The company has designated its natural gas
derivative instruments as cash flow hedges. The companys
natural gas purchase strategy is based on diversification of
price for its total gas requirements. The objective is to
acquire a reliable supply of natural gas feedstock and fuel on a
location-adjusted, cost-competitive basis in a manner that
minimizes volatility without undue risk. The company employs
derivative instruments including futures, swaps and option
agreements in order to manage the cost on a portion of its
natural gas requirements. These instruments are intended to
hedge the future cost of the committed and anticipated natural
gas purchases primarily for its US nitrogen plants. The maximum
period for these hedges cannot exceed five years. The company
uses these instruments to reduce price risk, not for speculative
purposes.

The portion of gain or loss on derivative
instruments designated as cash flow hedges that are effective at
offsetting changes in the hedged item is reported as a component
of accumulated OCI and then is reclassified into cost of goods
sold when the product containing the hedged item is sold. Any
hedge ineffectiveness is recorded in cost of goods sold in the
current period. During the quarter, a gain of $10.5 was
recognized in cost of goods sold. Of the deferred gains at
quarter-end, approximately $42.3 will be reclassified to cost of
goods sold within the next 12 months. The fair value of the
companys gas hedging contracts at March 31, 2004 was
$73.5. The ineffectiveness of hedges on existing derivative
instruments for the quarter ended March 31, 2004 was not
material.

Fair Value
Hedges

The company primarily uses interest rate swaps to
manage the interest rate mix of the total debt portfolio and
related overall cost of borrowing. At March 31, 2004, the
company had entered into interest rate swap agreements with
total notional amounts of $300.0, whereby the company, over the
remaining terms of the underlying notes, will receive a fixed
rate payment equivalent to the fixed interest rate of the
underlying note and pay a floating rate of interest that is
based on six-month US dollar LIBOR. The fair value of the
swaps outstanding at March 31, 2004 was an asset of $5.5.
All interest rate swaps qualify for the shortcut method of hedge
accounting, thus there is no ineffectiveness related to these
hedges. Changes in the fair value of derivatives that hedge
interest rate risk are recorded in interest expense each period.
The offsetting changes in the fair values of the related debt
are also recorded in interest expense. The company does not
maintain any other fair value hedges.

16. Comparative Figures

Certain of the prior periods figures have
been reclassified to conform with the current periods
presentation.

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##### Table of Contents








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

The following discussion and analysis is the
responsibility of management. The Board of Directors carries out
its responsibility for review of this disclosure principally
through its audit committee, comprised exclusively of
independent directors. The audit committee reviews and, prior to
its publication, approves, pursuant to the authority delegated
to it by the Board of Directors, this disclosure. The term
PCS refers to Potash Corporation of Saskatchewan
Inc. and the terms we, us,
our, PotashCorp and the
company refer to PCS and, as applicable, PCS and its
direct and indirect subsidiaries as a group. Additional
information relating to the company, including our Annual Report
on Form 10-K, can be found on SEDAR at www.sedar.com and on
EDGAR at www.sec.gov/edgar.shtml.

POTASHCORP AND OUR BUSINESS
ENVIRONMENT

PotashCorp has built a global business on the
natural nutrients potash, phosphate and nitrogen, which are used
primarily in fertilizer. We sell to North American retailers,
cooperatives and distributors that provide storage and
application services to farmers, the end users. Our offshore
customers are governments and private importers that tend to buy
under contract, while spot sales are more prevalent in North
America. Fertilizers are sold primarily for spring and fall
application in both northern and southern hemispheres.

Since transportation is an important part of the
final selling price, producers usually sell to the closest
customers. In North America, we sell mainly on a delivered basis
and use rail, barge, truck and pipeline. Offshore customers
purchase product either at the port or with freight included.

Potash, phosphate and nitrogen are also used as
inputs for the production of animal feed and industrial
products. Currently, both are produced primarily in North
America and Europe but other regions are increasing both
production and consumption. Feed and industrial sales are more
evenly distributed throughout the year than fertilizer sales and
are primarily by contract.

POTASHCORP VISION

We see PotashCorp as a long-term business
enterprise and we aim to be the sustainable gross margin leader
in the products we sell and the markets we serve. Through our
strategy, we attempt to minimize the natural volatility of our
business. We also strive for increased earnings, and to
outperform our peer group and other basic materials companies in
total shareholder return, a key measure in any companys
value.

POTASHCORP STRATEGY

PotashCorps strategy is based on our
commitment to seek earnings growth and quality. The company
intends to be the industrys low-cost global potash
supplier on a delivered basis and to complement that by
leveraging the strengths of our low-cost gas in Trinidad and our
specialty phosphate products.

Day-to-day, we aim to maximize gross margin by
focusing on the right blend of price, volumes and asset
utilization, growing our business by becoming the supplier of
choice. At the same time, we strive to build on our strengths by
acquiring and maintaining low-cost, high-quality capacity that
complements our existing assets and adds strategic value. We
make decisions based on our determination to have our returns on
cash flow materially exceed our cost of capital.

KEY PERFORMANCE DRIVERS

While being a supplier of choice and
strengthening and increasing stakeholder engagement are key to
our long-term performance, our immediate profitability is driven
by lower production costs and higher realized prices, which
contribute to increased gross margin. We achieve lower per-unit
production costs through higher operating rates, which are
generated by tightened supply.

We do not view PotashCorp as a typical commodity
company that merely endures low prices and waits for them to
rise. We have a decommoditizing strategy designed to moderate
the highs and lows and

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##### Table of Contents



outperform at both ends of the cycle. Our success
is influenced by many variables that are beyond our control.
While some factors like our levels of production and sales
volumes are within our control, all must be balanced with one
another to optimize our asset base.


In our 2003 Annual Report, we identified four key
performance drivers for the company: (i) value and
valuation, (ii) gross margin, (iii) supplier of
choice, and (iv) stakeholder engagement. Each key
performance driver has an associated annual measurement target.
Our interim performance relating to key financial measures,
including gross margin and earnings growth, is provided in the
section titled Financial Overview below.

FINANCIAL OVERVIEW

This discussion and analysis is based on the
companys unaudited interim consolidated financial
statements reported under generally accepted accounting
principles in Canada (Canadian GAAP). These
principles differ in certain significant respects from
accounting principles generally accepted in the United States.
These differences are described and quantified in Note 15
to the unaudited interim consolidated financial statements
included in Item 1 of this Quarterly Report on
Form 10-Q. All references to per-share amounts pertain to
diluted net income per share. Diluted net income per share is
calculated based on the weighted average shares issued and
outstanding during the period, adjusted by the total of the
additional common shares that would have been issued assuming
exercise of all stock options with exercise prices at or below
the average market price for the period.

Effective January 1, 2004, the company
prospectively adopted new accounting requirements of the
Canadian Institute of Chartered Accountants (CICA)
as issued in Section 1100, Generally Accepted
Accounting Principles, as described in Note 2 to the
unaudited interim consolidated financial statements. In light of
the new provisions, the company changed the consolidated
financial statement presentation of sales revenue, freight costs
and transportation and distribution expenses, without any effect
on gross margin or net income. All comparative information has
been appropriately reclassified. In prior years, the company
reported sales revenues (net of discounts, and including amounts
recoverable from customers for freight, transportation and
distribution) net of related freight, transportation and
distribution expenses. The company now reports sales revenues
(net of discounts, and including amounts recoverable from
customers for freight, transportation and distribution), freight
costs, and transportation and distribution expenses as separate
line items on the Consolidated Statements of Operations and
Retained Earnings.

Earnings Guidance Review

The companys guidance for earnings per
share for first-quarter 2004 was in the range of $0.60 to $0.80.
The final result was net income of $50.7 million, or $0.94 per
share. Our earnings guidance anticipated a strong Canadian
dollar during the first three months of 2004 based on the 2003
year-end exchange rate of 1.2924; however, the actual average
exchange rate impacting potash operating costs for the period
was 1.3126 and the quarter-end exchange rate was 1.3105.
Additionally, our guidance contemplated an effective
consolidated income tax rate of 35 percent, which has been
revised downward slightly to 33 percent. These factors
favorably impacted earnings for the quarter by approximately
$0.10 per share. We also experienced stronger potash results
during the quarter.

20



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##### Table of Contents



Overview of Actual Results

|                                              |  |                             |       |      |  |        |       |        |  |   |      |   |  |  |     |  
|--------------------------------------------- |  | --------------------------- | ----- | ---- |  | ------ | ----- | ------ |  | - | ---- | - |  |  | --- | -
|                                              |  |                            
|                                              |  | Three Months Ended March 31
|                                             
|                                             
|                                              |  | Dollar                      |       | %   
|(Dollars millions  except per-share amounts) |  | 2004                        |       | 2003 |  | Change |       | Change
|                                             
|                                             
|Sales                                         |  | $                           | 728.4 |      |  | $      | 661.8 |        |  | $ | 66.6 |   |  |  | 10  |  
|                                             
|Freight                                       |  | $                           | 58.1  |      |  | $      | 64.4  |        |  | $ | (6.3 | ) |  |  | (10 | )
|                                             
|Transportation and Distribution               |  | $                           | 23.0  |      |  | $      | 23.0  |        |  | $ |     |   |  |  |    |  
|                                             
|Cost of Goods Sold                            |  | $                           | 523.3 |      |  | $      | 493.3 |        |  | $ | 30.0 |   |  |  | 6   |  
|                                             
|Gross Margin                                  |  | $                           | 124.0 |      |  | $      | 81.1  |        |  | $ | 42.9 |   |  |  | 53  |  
|                                             
|Operating Income                              |  | $                           | 97.8  |      |  | $      | 24.7  |        |  | $ | 73.1 |   |  |  | 296 |  
|                                             
|Net Income                                    |  | $                           | 50.7  |      |  | $      | 3.2   |        |  | $ | 47.5 |   |  |  | n/m |  
|                                             
|Net Income Per Share  Basic                  |  | $                           | 0.95  |      |  | $      | 0.06  |        |  | $ | 0.89 |   |  |  | n/m |  
|                                             
|Net Income Per Share  Diluted                |  | $                           | 0.94  |      |  | $      | 0.06  |        |  | $ | 0.88 |   |  |  | n/m |  
|                                             

n/m = not meaningful


Market conditions in the fertilizer industry
continue to improve as the worlds grain inventories as a
percentage of consumption are reaching the lowest levels on
record. This tends to drive up prices for many crop commodities.
Palm oil, rubber, coffee, wheat, corn and soybeans are showing
year-over-year improvement, which encourages more planted
acreage and higher application rates. While markets are more
buoyant, the fertilizer industry is contending with logistical
challenges created by high ocean freight rates and a surge in
rail demand.

Gross margin of $124.0 million for the
quarter was more than 50 percent higher than the
$81.1 million for the first quarter last year. Potash, the
cornerstone of the companys business and the basis for our
long-term strategy, provided the greatest contribution with
gross margin of $66.7 million, up $17.3 million over the
$49.4 million in the first quarter of 2003. Overall potash
sales volumes and prices increased 4 percent and
8 percent, respectively, on a quarter-over-quarter basis
and product costs remained flat despite a significant
strengthening of the Canadian dollar relative to the US dollar
during the period under review.

Conditions in phosphate continued to be a
challenge as this sector of the company showed negative gross
margin of $0.9 million in the first quarter of this year
compared to last years gross margin of $1.9 million.
Sales volumes and sales prices on a delivered basis increased
10 percent and 6 percent, respectively. However, cost
of sales per tonne increased by 8 percent over the same
period last year.

Nitrogen gross margin experienced the most
significant quarter over quarter improvement, contributing
$28.4 million more gross margin than the first quarter of
2003. Although total sales volumes declined by 19 percent,
overall average realized prices increased by 36 percent,
led by a 48 percent increase in ammonia prices. Nitrogen cost of
sales per tonne increased 21 percent compared to
first-quarter 2003, primarily due to higher natural gas input
costs.

Expenses for the quarter declined by
$30.2 million, or 54 percent, from the prior year due
primarily to a favorable change in foreign exchange of $25.1
million arising principally from currency translation.

Total assets were $4,538.5 million at
March 31, 2004, down $28.8 million, or less than
1 percent, from December 31, 2003. This small decline
was due primarily to depreciation and amortization of the
companys long-lived assets, offset in part by additions to
property, plant and equipment of $16.4 million and an
increase in current assets of $10.2 million.

Business Segment Review

Note 9 to the unaudited interim consolidated
financial statements provides information pertaining to our
business segments. Management includes net sales in its segment
disclosures in the notes to the consolidated financial
statements pursuant to CICA Section 1701 Segment
Disclosures. This standard is founded on a management
approach, which requires segmentation based upon our internal
organization and reporting of

21



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##### Table of Contents



revenue and profit measures derived from internal
accounting methods. Net sales (and the related per tonne
amounts) are primary revenue measures used and reviewed by the
companys management in making decisions about operating
matters on a business segment basis. These decisions include
assessments about potash, phosphate and nitrogen performance and
the resources to be allocated to these segments. Management also
uses net sales (and the related per tonne amounts) for business
planning and monthly forecasting purposes. Net sales are
calculated as sales revenues less freight costs and
transportation and distribution expenses. The discussion and
analysis below is based on the segment measures used and
reviewed by management.


Potash

|                                |                |                             |       |                    |  |                      |       |      |  |      |    |        |  |      |       |       |  |        |       |       |  |  |   |    |   |   |       |       |  |   |       |       |  |  |    |    |  
|------------------------------- | -------------- | --------------------------- | ----- | ------------------ |  | -------------------- | ----- | ---- |  | ---- | -- | ------ |  | ---- | ----- | ----- |  | ------ | ----- | ----- |  |  | - | -- | - | - | ----- | ----- |  | - | ----- | ----- |  |  | -- | -- | -
|                                |                |                            
|                                |                | Three Months Ended March 31
|                               
|                               
|                                |                |                             |       |                    |  |                     
|                                |                | Dollars (millions)          |       | Tonnes (thousands) |  | Average Price per MT
|                               
|                               
|                                |                | %                           |       |                    |  | %                    |       |      |  | %   
|                                |                | 2004                        |       | 2003               |  | Change               |       | 2004 |  | 2003 |    | Change |  | 2004 |       | 2003  |  | Change
|                               
|                               
|Sales                           |                | $                           | 223.7 |                    |  | $                    | 201.2 |      |  |      | 11 |        |  |      |       |       |  |        |       |       |  |  |   |    |   |   |       |       |  |   |       |       |  |  |    |   
|Freight                         |                |                             | 33.5  |                    |  |                      | 32.7  |      |  |      | 2  |        |  |      |       |       |  |        |       |       |  |  |   |    |   |   |       |       |  |   |       |       |  |  |    |   
|Transportation and distribution |                |                             | 8.7   |                    |  |                      | 8.0   |      |  |      | 9  |        |  |      |       |       |  |        |       |       |  |  |   |    |   |   |       |       |  |   |       |       |  |  |    |   
|                               
|                                |                |                             | 181.5 |                    |  |                      | 160.5 |      |  |      | 13 |        |  |      |       |       |  |        |       |       |  |  |   |    |   |   |       |       |  |   |       |       |  |  |    |   
|                               
|Net Sales                       |                |                             |       |                    |  |                      |       |      |  |      |    |        |  |      |       |       |  |        |       |       |  |  |   |    |   |   |       |       |  |   |       |       |  |  |    |   
|                                | North American |                             | $     | 74.1               |  |                      | $     | 62.4 |  |      |    | 19     |  |      |       | 782   |  |        |       | 829   |  |  |   | (6 | ) |   | $     | 94.76 |  |   | $     | 75.31 |  |  |    | 26 |  
|                                | Offshore       |                             |       | 91.3               |  |                      |       | 84.5 |  |      |    | 8      |  |      |       | 1,166 |  |        |       | 1,039 |  |  |   | 12 |   |   | $     | 78.29 |  |   | $     | 81.31 |  |  |    | (4 | )
|                               
|                                |                |                             | 165.4 |                    |  |                      | 146.9 |      |  |      | 13 |        |  |      | 1,948 |       |  |        | 1,868 |       |  |  | 4 |    |   | $ | 84.91 |       |  | $ | 78.65 |       |  |  | 8  |   
|                                | Miscellaneous  |                             |       | 16.1               |  |                      |       | 13.6 |  |      |    | 18     |  |      |       |      |  |        |       |      |  |  |   |   |   |   |       |      |  |   |       |      |  |  |    |   |  
|                               
|                                |                |                             | 181.5 |                    |  |                      | 160.5 |      |  |      | 13 |        |  |      | 1,948 |       |  |        | 1,868 |       |  |  | 4 |    |   | $ | 93.17 |       |  | $ | 85.92 |       |  |  | 8  |   
|Cost of goods sold              |                |                             | 114.8 |                    |  |                      | 111.1 |      |  |      | 3  |        |  |      |       |       |  |        |       |       |  |  |   |    |   | $ | 58.93 |       |  | $ | 59.47 |       |  |  | (1 | ) 
|                               
|Gross Margin                    |                | $                           | 66.7  |                    |  | $                    | 49.4  |      |  |      | 35 |        |  |      |       |       |  |        |       |       |  |  |   |    |   | $ | 34.24 |       |  | $ | 26.45 |       |  |  | 29 |   
|                               

Gross margin increased by $17.3 million on a
quarter-over-quarter basis as the company benefited from higher
offshore sales volumes and higher domestic prices.

Sales increased $22.5 million and net sales
increased $21.0 million compared to first-quarter 2003.
Domestic price increases sustained from July 2003, September
2003 and February 2004 contributed approximately
$14.7 million to the net sales growth. First-quarter
domestic volumes were down 6 percent, or approximately
$3.0 million, for two primary reasons: (i) orders were
filled in the fourth quarter of 2003 in advance of price
increases, and (ii) we supported our terminal system by
refusing to participate in low-priced barge movement on the
Mississippi River.

Although Saskatchewan-sourced offshore sales
prices were also up, the net realized benefit to PotashCorp was
offset by rising ocean freight rates, resulting in an
unfavorable price variance of $4.4 million. This began to
change by the end of the quarter, when gross prices offshore
improved enough to cover the rise in freight. The impact of
higher offshore prices should begin to be seen in the second
quarter of 2004. Rail car supply and rail power issues
restricted movement of potash to the port in Vancouver; however,
offshore volumes for Saskatchewan still increased
21 percent, favorably impacting net sales by
$13.3 million. The increase was led by strong shipments to
China, Indonesia and Malaysia. The company anticipates the rail
car supply and rail power issues experienced in the first
quarter will improve, which should result in increased second
quarter shipments. New Brunswick offshore net sales declined by
$2.1 million on a quarter-over-quarter basis, mainly due to
lower sales volumes and minimal inventory levels carried over
from 2003.

The stronger Canadian dollar in 2004 compared to
first-quarter 2003 negatively impacted the cost of potash
operations by approximately $14.5 million. This impact,
however, was substantially offset by lower natural gas costs and
lower conversion costs resulting from higher operating rates,
pulling potash from our larger mines and capitalizing on
economies of scale. As a result, cost of sales per tonne were
flat compared to the same quarter last year. Our improved
results also reflect a significantly lower negative margin from
PCS

22



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##### Table of Contents



Yumbes ($0.3 million loss in the first
quarter of 2004 compared to $5.2 million loss in the first
quarter of 2003) as we liquidate inventory in preparation for
closing the sale to Sociedad Quimica y Minera de Chile S.A.
(SQM) later this year.


Phosphate

|                                |                      |                             |       |                    |  |                      |       |       |  |      |      |        |   |      |     |      |  |        |     |     |  |  |    |     |   |   |        |        |  |   |        |        |  |  |      |    |  
|------------------------------- | -------------------- | --------------------------- | ----- | ------------------ |  | -------------------- | ----- | ----- |  | ---- | ---- | ------ | - | ---- | --- | ---- |  | ------ | --- | --- |  |  | -- | --- | - | - | ------ | ------ |  | - | ------ | ------ |  |  | ---- | -- | -
|                                |                      |                            
|                                |                      | Three Months Ended March 31
|                               
|                               
|                                |                      |                             |       |                    |  |                     
|                                |                      | Dollars (millions)          |       | Tonnes (thousands) |  | Average Price per MT
|                               
|                               
|                                |                      | %                           |       |                    |  | %                    |       |       |  | %   
|                                |                      | 2004                        |       | 2003               |  | Change               |       | 2004  |  | 2003 |      | Change |   | 2004 |     | 2003 |  | Change
|                               
|                               
|Sales                           |                      | $                           | 217.6 |                    |  | $                    | 191.1 |       |  |      | 14   |        |   |      |     |      |  |        |     |     |  |  |    |     |   |   |        |        |  |   |        |        |  |  |      |   
|Freight                         |                      |                             | 15.7  |                    |  |                      | 17.9  |       |  |      | (12  | )      |   |      |     |      |  |        |     |     |  |  |    |     |   |   |        |        |  |   |        |        |  |  |      |   
|Transportation and distribution |                      |                             | 5.3   |                    |  |                      | 4.8   |       |  |      | 10   |        |   |      |     |      |  |        |     |     |  |  |    |     |   |   |        |        |  |   |        |        |  |  |      |   
|                               
|                                |                      |                             | 196.6 |                    |  |                      | 168.4 |       |  |      | 17   |        |   |      |     |      |  |        |     |     |  |  |    |     |   |   |        |        |  |   |        |        |  |  |      |   
|                               
|Net Sales                       |                      |                             |       |                    |  |                      |       |       |  |      |      |        |   |      |     |      |  |        |     |     |  |  |    |     |   |   |        |        |  |   |        |        |  |  |      |   
|                                | Fertilizer  liquids |                             | $     | 30.7               |  |                      | $     | 42.0  |  |      |      | (27    | ) |      |     | 136  |  |        |     | 176 |  |  |    | (23 | ) |   | $      | 225.36 |  |   | $      | 239.39 |  |  |      | (6 | )
|                                | Fertilizer  solids  |                             |       | 71.4               |  |                      |       | 38.5  |  |      |      | 85     |   |      |     | 355  |  |        |     | 234 |  |  |    | 52  |   |   | $      | 200.91 |  |   | $      | 164.54 |  |  |      | 22 |  
|                                | Feed                 |                             |       | 44.4               |  |                      |       | 47.5  |  |      |      | (7     | ) |      |     | 207  |  |        |     | 232 |  |  |    | (11 | ) |   | $      | 215.18 |  |   | $      | 204.43 |  |  |      | 5  |  
|                                | Industrial           |                             |       | 47.8               |  |                      |       | 39.1  |  |      |      | 22     |   |      |     | 145  |  |        |     | 122 |  |  |    | 19  |   |   | $      | 329.71 |  |   | $      | 320.92 |  |  |      | 3  |  
|                               
|                                |                      |                             | 194.3 |                    |  |                      | 167.1 |       |  |      | 16   |        |   |      | 843 |      |  |        | 764 |     |  |  | 10 |     |   | $ | 230.49 |        |  | $ | 218.72 |        |  |  | 5    |   
|                                | Miscellaneous        |                             |       | 2.3                |  |                      |       | 1.3   |  |      |      | 77     |   |      |     |     |  |        |     |    |  |  |    |    |   |   |        |       |  |   |        |       |  |  |      |   |  
|                               
|                                |                      | $                           | 196.6 |                    |  | $                    | 168.4 |       |  |      | 17   |        |   |      | 843 |      |  |        | 764 |     |  |  | 10 |     |   | $ | 233.21 |        |  | $ | 220.41 |        |  |  | 6    |   
|                               
|                                | North American       |                             | $     | 163.6              |  |                      | $     | 154.4 |  |      |      | 6      |   |      |     | 669  |  |        |     | 682 |  |  |    | (2  | ) |   | $      | 240.96 |  |   | $      | 226.39 |  |  |      | 6  |  
|                                | Offshore             |                             |       | 33.0               |  |                      |       | 14.0  |  |      |      | 136    |   |      |     | 174  |  |        |     | 82  |  |  |    | 112 |   |   | $      | 190.36 |  |   | $      | 170.73 |  |  |      | 11 |  
|                               
|                                |                      |                             | 196.6 |                    |  |                      | 168.4 |       |  |      | 17   |        |   |      | 843 |      |  |        | 764 |     |  |  | 10 |     |   | $ | 233.21 |        |  | $ | 220.41 |        |  |  | 6    |   
|                               
|Cost of goods sold              |                      |                             | 197.5 |                    |  |                      | 166.5 |       |  |      | 19   |        |   |      |     |      |  |        |     |     |  |  |    |     |   | $ | 234.28 |        |  | $ | 217.92 |        |  |  | 8    |   
|                               
|Gross Margin                    |                      | $                           | (0.9  | )                  |  | $                    | 1.9   |       |  |      | (147 | )      |   |      |     |      |  |        |     |     |  |  |    |     |   | $ | (1.07  | )      |  | $ | 2.49   |        |  |  | (143 | ) 
|                               

In phosphate, our high quality ore enables us to
economically produce specialty products, which are the most
stable area of the phosphate business, and our first quarter
results proved the effectiveness of this strategy. Industrial
products provided $9.5 million gross margin in this
years first quarter; however, this was more than offset by
losses in the other phosphate products, primarily due to higher
costs of ammonia and sulfur. Market prices increased for most
phosphate products, but it remains uncertain whether this was
due to market demand or to a pass-through of costs to customers,
as higher input costs for sulfur and ammonia eroded any price
gains. Some of this uncertainty will be resolved if the current
prices for the solid fertilizer DAP are maintained, even though
ammonia prices have decreased.

Phosphate sales increased $26.5 million and
net sales increased $28.2 million quarter over quarter. Higher
sales volumes and average realized prices of DAP and MAP solid
fertilizers favorably impacted net sales by $32.9 million.
Nearly 100,000 more tonnes of dry phosphates were sold into the
offshore market compared to 2003. DAP volumes increased
72 percent from the same quarter last year, contributing
$17.1 million to the growth in net sales. The total
increase in volumes resulted from the restart of DAP capacity at
the White Springs Suwannee River plant (and the ability to
convert this additional production into domestic and offshore
sales) and the fact that a wet spring did not permit first
quarter movement of dry phosphates into the southeastern United
States last year. Higher delivered prices for both DAP and MAP
favorably impacted net sales by $12.7 million quarter over
quarter.

Net sales of liquid fertilizers declined
$11.3 million from the same quarter last year. The decrease
resulted principally from 23 percent lower sales volumes,
as dealers purchased last fall for this years spring
season. Strong demand is anticipated this spring, which should
result in low season ending inventories. Conditions should also
modestly improve as negotiations with India over phosphoric acid
pricing at the end of April were positive.

23



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##### Table of Contents



Feed prices, up 5 percent over last
years same quarter, were more than offset by a
$3.8 million decrease in sales volumes as the industry
faced decreased demand due to tightening feed formulations and
an abundance of meat and bone meal resulting from restricted
exports due to BSE and the avian influenza. Coronet Industries,
Inc., one of our competitors, is exiting the business, which
should create the opportunity for feed sales volume improvement.

A 19 percent increase in industrial volumes
favorably impacted net sales compared to last years same
quarter and prices were up 3 percent due to the combination
of more product being available from the expansion at Aurora and
the virtual disappearance of imports.

While overall phosphate prices and volumes were
up over the same quarter last year, product costs continued to
be a challenge. Costs of goods sold increased 19 percent
from first-quarter 2003 primarily as a result of higher raw
material costs and higher phosphate operating costs. Quarter
over quarter, sulfur costs per tonne increased 13 percent
and ammonia costs per tonne increased 63 percent,
negatively impacting margins by $3.5 million and
$11.4 million, respectively. Phosphate rock costs were
essentially unchanged from last years same quarter.

Nitrogen

|                                |                                  |                             |       |                    |  |                      |       |      |  |      |     |        |   |      |       |      |  |        |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |     |    | 
|------------------------------- | -------------------------------- | --------------------------- | ----- | ------------------ |  | -------------------- | ----- | ---- |  | ---- | --- | ------ | - | ---- | ----- | ---- |  | ------ | ----- | --- |  |  | --- | --- | - | - | ------ | ------ |  | - | ------ | ------ |  |  | --- | -- | 
|                                |                                  |                            
|                                |                                  | Three Months Ended March 31
|                               
|                               
|                                |                                  |                             |       |                    |  |                     
|                                |                                  | Dollars (millions)          |       | Tonnes (thousands) |  | Average Price per MT
|                               
|                               
|                                |                                  | %                           |       |                    |  | %                    |       |      |  | %   
|                                |                                  | 2004                        |       | 2003               |  | Change               |       | 2004 |  | 2003 |     | Change |   | 2004 |       | 2003 |  | Change
|                               
|                               
|Sales                           |                                  | $                           | 287.1 |                    |  | $                    | 269.5 |      |  |      | 7   |        |   |      |       |      |  |        |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |     |   
|Freight                         |                                  |                             | 8.9   |                    |  |                      | 13.8  |      |  |      | (36 | )      |   |      |       |      |  |        |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |     |   
|Transportation and distribution |                                  |                             | 9.0   |                    |  |                      | 10.2  |      |  |      | (12 | )      |   |      |       |      |  |        |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |     |   
|                               
|                                |                                  |                             | 269.2 |                    |  |                      | 245.5 |      |  |      | 10  |        |   |      |       |      |  |        |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |     |   
|                               
|Net Sales                       |                                  |                             |       |                    |  |                      |       |      |  |      |     |        |   |      |       |      |  |        |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |     |   
|                                | Ammonia                          |                             | $     | 111.7              |  |                      | $     | 79.0 |  |      |     | 41     |   |      |       | 412  |  |        |       | 433 |  |  |     | (5  | ) |   | $      | 270.77 |  |   | $      | 182.37 |  |  |     | 48 | 
|                                | Urea                             |                             |       | 55.0               |  |                      |       | 73.0 |  |      |     | (25    | ) |      |       | 255  |  |        |       | 418 |  |  |     | (39 | ) |   | $      | 215.84 |  |   | $      | 174.66 |  |  |     | 24 | 
|                                | Nitrogen Solutions               |                             |       | 10.6               |  |                      |       | 20.5 |  |      |     | (48    | ) |      |       | 77   |  |        |       | 194 |  |  |     | (60 | ) |   | $      | 136.59 |  |   | $      | 105.96 |  |  |     | 29 | 
|                                | Nitric Acid and Ammonium Nitrate |                             |       | 46.7               |  |                      |       | 38.8 |  |      |     | 20     |   |      |       | 356  |  |        |       | 355 |  |  |     |    |   |   | $      | 131.34 |  |   | $      | 109.37 |  |  |     | 20 | 
|                                | Purchased                        |                             |       | 40.5               |  |                      |       | 29.9 |  |      |     | 35     |   |      |       | 153  |  |        |       | 155 |  |  |     | (1  | ) |   | $      | 265.65 |  |   | $      | 193.18 |  |  |     | 38 | 
|                               
|                                |                                  |                             | 264.5 |                    |  |                      | 241.2 |      |  |      | 10  |        |   |      | 1,253 |      |  |        | 1,555 |     |  |  | (19 | )   |   | $ | 211.09 |        |  | $ | 155.11 |        |  |  | 36  |   
|                                | Miscellaneous                    |                             |       | 4.7                |  |                      |       | 4.3  |  |      |     | 9      |   |      |       |     |  |        |       |    |  |  |     |    |   |   |        |       |  |   |        |       |  |  |     |   | 
|                               
|                                |                                  | $                           | 269.2 |                    |  | $                    | 245.5 |      |  |      | 10  |        |   |      | 1,253 |      |  |        | 1,555 |     |  |  | (19 | )   |   | $ | 214.84 |        |  | $ | 157.88 |        |  |  | 36  |   
|                               
|Fertilizer                      |                                  | $                           | 104.3 |                    |  | $                    | 101.8 |      |  |      | 2   |        |   |      | 491   |      |  |        | 675   |     |  |  | (27 | )   |   | $ | 212.27 |        |  | $ | 151.10 |        |  |  | 40  |   
|Non-fertilizer                  |                                  |                             | 164.9 |                    |  |                      | 143.7 |      |  |      | 15  |        |   |      | 762   |      |  |        | 880   |     |  |  | (13 | )   |   | $ | 216.46 |        |  | $ | 163.17 |        |  |  | 33  |   
|                               
|                                |                                  |                             | 269.2 |                    |  |                      | 245.5 |      |  |      | 10  |        |   |      | 1,253 |      |  |        | 1,555 |     |  |  | (19 | )   |   | $ | 214.84 |        |  | $ | 157.88 |        |  |  | 36  |   
|                               
|Cost of goods sold              |                                  |                             | 211.0 |                    |  |                      | 215.7 |      |  |      | (2  | )      |   |      |       |      |  |        |       |     |  |  |     |     |   | $ | 168.39 |        |  | $ | 138.71 |        |  |  | 21  |   
|                               
|Gross Margin                    |                                  | $                           | 58.2  |                    |  | $                    | 29.8  |      |  |      | 95  |        |   |      |       |      |  |        |       |     |  |  |     |     |   | $ | 46.45  |        |  | $ | 19.17  |        |  |  | 142 |   
|                               

Markedly higher prices for nitrogen products led
to a gross margin increase of 95 percent from the same
quarter last year, even though sales volumes were
19 percent lower. We benefited from our ability to produce
nitrogen with low-cost gas in Trinidad as ammonia prices
achieved record levels in February and gross margin rose to
$58.2 million from $29.8 million in last years
same quarter. Nearly 60 percent of this years gross
margin came from Trinidad and the remainder from our US
facilities, which included a natural gas hedging gain of
$10.5 million. The hedging gain was $27.0 million in
last years same quarter.

24



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##### Table of Contents



Ammonia prices have historically followed gas
prices. When natural gas prices rise, some North American
nitrogen production is often forced to shut down. The
supply/demand balance then tends to tighten, which often leads
to higher nitrogen prices. PotashCorp benefits when gas prices
are high in North America, as we receive higher prices for our
products. Meanwhile, our ammonia is produced with low-cost gas
in Trinidad, capitalizing on a freight advantage to the large US
market. In the last half of 2003, ammonia prices decoupled from
natural gas and enjoyed a spike, but the traditional
relationship returned by February this year. We entered the
first quarter at the crest of the price wave and benefited from
record Tampa ammonia prices. This was followed by a correction
of approximately $140 per tonne by the second half of April. A
number of factors contributed to this correction, including:
(i) several North American producers were operating at high
rates and restarted US production that had previously been shut
down, (ii) increased volumes were experienced from Arab
Gulf countries and the Former Soviet Union, and
(iii) producers sold ammonia in lieu of upgrading to urea
due to better margins. Prices for ammonia and natural gas
reconnected during the quarter, with some competitors announcing
shutdowns in response to rising natural gas prices.

Overall sales volumes were down 19 percent
compared to the first quarter of 2003, due to the decision to
keep production shut down at Memphis and Geismar as well as a
25,000 tonne ammonia outage at Trinidad. The continued shutdowns
contributed to a 60 percent reduction in US nitrogen
solutions sales volumes, a 49 percent decline in US urea
volumes, and a 32 percent decline in US ammonia volumes
compared to last years same quarter, negatively impacting
net sales by $12.4 million, $24.8 million, and
$8.2 million respectively. These volume reductions,
however, were more than offset by the substantial rise in
realized prices. Trinidads ammonia and urea prices
increased 55 percent and 28 percent, favorably impacting
net sales by $32.1 million and $4.3 million,
respectively. At our US plants, improved prices for ammonia and
urea contributed to net sales growth by $7.6 million and
$6.4 million, respectively. Net sales of purchased products
increased $10.6 million due to a 38 percent rise in
realized prices.

Costs for nitrogen production continued to climb
in tandem with natural gas prices. Between the US and Trinidad,
our average gas costs were up 26 percent over last years
first quarter ($3.69 per MMBtu compared to $2.92 per MMBtu).
However, we are a net beneficiary of high-priced natural gas, as
our Trinidad facility operates with long-term, low-cost natural
gas contracts with sheltered margins.

Expenses and Other Income

|                                  |  |                             |      |      |  |        |      |  |  |  |      |  
|--------------------------------- |  | --------------------------- | ---- | ---- |  | ------ | ---- |  |  |  | ---- | -
|                                  |  |                            
|                                  |  | Three Months Ended March 31
|                                 
|                                 
|                                  |  | %                          
|Dollars (millions)                |  | 2004                        |      | 2003 |  | Change
|                                 
|                                 
|Selling and Administrative        |  | $                           | 26.2 |      |  | $      | 23.7 |  |  |  | 11   |  
|Provincial Mining and Other Taxes |  |                             | 15.1 |      |  |        | 18.1 |  |  |  | (17  | )
|Provision for Plant Shutdowns     |  |                             |     |      |  |        | 2.2  |  |  |  | (100 | )
|Foreign Exchange (Gain) Loss      |  |                             | (8.2 | )    |  |        | 16.9 |  |  |  | (149 | )
|Other Income                      |  |                             | 6.9  |      |  |        | 4.5  |  |  |  | 53   |  
|Interest Expense                  |  |                             | 22.1 |      |  |        | 19.4 |  |  |  | 14   |  
|Income Tax Expense                |  |                             | 25.0 |      |  |        | 2.1  |  |  |  | n/m  |  

n/m = not meaningful


Selling and administrative expenses increased
$2.5 million on a quarter-over-quarter basis. This increase
was primarily due to the recording of $2.1 million in
compensation expense relating to stock options. This non-cash
expense arose on prospective adoption of a new provision of
Canadian GAAP in late 2003. As such, no corresponding amounts
were recorded in first-quarter 2003.

Provincial Mining and Other Taxes decreased by
$3.0 million from first-quarter 2003. Saskatchewans
Potash Production Tax is comprised of a base tax per tonne of
product sold and an additional tax based on mine profits.
Effective January 2003, the provincial government reduced the
profits tax on all incremental sales tonnes above the 2001 and
2002 average of 5.722 million tonnes. In addition, to the
extent that net capital spending is greater than 90 percent
of 2002 net expenditures, the excess is fully deductible in the
current year. These changes have allowed the company to begin
expanding capacity at Rocanville while also increasing

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granular production. The company benefited from a
profits tax reduction of $4.1 million compared to
first-quarter 2003 (after considering the effect of the stronger
Canadian dollar), substantially due to this revised tax
structure. These savings were offset in part by increases in
base payment and capital taxes on a quarter over quarter basis.
The Saskatchewan divisions and the New Brunswick division also
pay a provincial Crown royalty, which is accounted for in cost
of goods sold.


Refer to the section titled Status of
Restructuring Activities for a discussion of the provision
for plant shutdowns.

The company experienced net foreign exchange
gains of $8.2 million in first-quarter 2004 compared to net
foreign exchange losses of $16.9 million in the prior year.
Of the first quarters gain, $4.3 million arose from
the period-end translation of Canadian-dollar denominated
monetary items on the Consolidated Statement of Financial
Position, and the residual related primarily to corporate
treasury activities. The foreign exchange gain increased
significantly quarter over quarter due to the weakening of the
Canadian dollar relative to the US dollar at the most recent
applicable fiscal year-end. As at March 31, 2004, the
Canadian dollar was $0.02 weaker than at December 31, 2003.
This compares to the significant strengthening of the Canadian
dollar (by $0.11) from December 31, 2002 to March 31,
2003, which contributed $16.1 million to the 2003 quarterly loss.

Other income increased $2.4 million from
last years same quarter due primarily to equity earnings
of Arab Potash Company (APC) and SQM.

Interest expense increased $2.7 million
quarter over quarter, with substantially all of the increase
attributable to the issuance of $250.0 million of
4.875 percent ten-year notes in March 2003 under one of our
US shelf registration statements. These notes replaced
lower-cost commercial paper. Weighted average long-term debt
outstanding in the first quarter of 2004 was
$1,269.9 million (2003  $1,106.4 million)
with a weighted average interest rate of 6.9 percent
(2003  7.2 percent). The weighted average
interest rate on short-term debt outstanding in the first
quarter of 2004 was 1.3 percent (2003 
1.6 percent).

The companys effective consolidated income
tax rate for the current period approximated 33 percent. In
the first quarter of 2003, this rate approximated
40 percent. The decrease in rate is due primarily to the
impact of Saskatchewan resource tax incentives, changes to the
Canadian federal resource allowance, and the scheduled Canadian
federal statutory rate reduction. Notwithstanding the reduction
in effective rate, income tax expense increased substantially
quarter over quarter, driven by the rise in operating income
levels. In 2004, 40 percent of the effective rate pertained
to current income taxes and 60 percent related to future
income taxes. The increase in the current tax provision from
zero percent in 2003 is primarily due to increases in potash
operating income in Canada.

Status of Restructuring
Activities

Memphis and Geismar Nitrogen
Operations

In June 2003, the company indefinitely shut down
its Memphis, Tennessee plant and suspended production of ammonia
and nitrogen solutions at its Geismar, Louisiana facilities due
to high US natural gas costs and low product margins. The plants
have not been re-started since that time.

The company determined that all employee
positions pertaining to the affected operations would be
eliminated and recorded $4.8 million in connection with
costs of special termination benefits in the third quarter of
2003. The number of employees terminated as a result of the
shutdowns was 187, of which 185 had left the company as of
March 31, 2004. The company has made payments relating to
the terminations totaling $3.5 million. All remaining
workforce reduction costs pertaining to the 187 employees are
expected to be paid by December 31, 2004.

In connection with the shutdowns, management had
determined that the carrying amounts of the long-lived assets at
the Memphis and Geismar nitrogen facilities were not fully
recoverable, and an impairment loss of $101.6 million, equal to
the amount by which the carrying amount of the facilities
asset groups exceeded their respective fair values, was
recognized. Of the total impairment charge, $100.6 million
related to property,

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plant and equipment and $1.0 million related
to other assets. As part of its review, management also wrote
down certain parts inventories at these plants in the amount of
$12.4 million.


In addition to the costs described above,
management expects to incur other shutdown-related costs of
approximately $11.1 million and nominal annual expenditures
for site security and other maintenance costs. These amounts
have not been recorded in the consolidated financial statements
as of March 31, 2004. Such costs will be recognized and
recorded in the period in which they are incurred.

No additional costs were incurred in connection
with the nitrogen plant shutdowns in the first quarter of 2004.

Kinston Phosphate Feed Plant

The phosphate feed plant at Kinston, North
Carolina ceased operations in the first quarter of 2003. In that
quarter, the company recorded $0.6 million for costs of
special termination benefits for Kinston employees,
$0.3 million for parts inventory writedowns, and
$1.3 million for long-lived asset impairment charges. In
lieu of full plant closure, the company continued to operate the
facility as a warehouse. In the third quarter of 2003, company
management determined that the cost of operating Kinston as a
stand-alone warehouse was uneconomical. This decision triggered
a further review by management of the carrying amounts of the
plants long-lived assets. As a result of this review,
management determined that the carrying amounts of the
long-lived assets were not recoverable, and an additional
impairment charge of $2.7 million, equal to the amount by
which the carrying amount of the plants long-lived assets
exceeded their fair value, was recognized.

No additional costs were incurred in connection
with the phosphate plant shutdown in the first quarter of 2004.

PCS Yumbes S.C.M.

In November 2003, the company entered into a
share purchase agreement with SQM, whereby SQM is to acquire the
shares of PCS Yumbes for an aggregate purchase price of
$35.0 million, subject to adjustments. Under the terms of
the share purchase agreement, and prior to the sale closing, PCS
Yumbes will continue to operate the facility and expeditiously
liquidate the inventory of nitrates. All other working capital
is to be fully realized or discharged (as applicable) by the
company prior to the closing. It is expected that the closing
will occur no later than the end of 2004.

In 2003, management conducted an assessment of
the recoverability of the long-lived assets of the PCS Yumbes
operations. As a result of its review, management determined
that the carrying amounts of PCS Yumbes long-lived assets
were not recoverable and recorded an impairment charge of
$77.4 million, equal to the amount by which the carrying
amount of the asset group exceeded fair value. Of the total
impairment charge, $13.0 million related to property, plant
and equipment, $63.9 million related to deferred
pre-production costs and $0.5 million related to deferred
acquisition costs. As part of the review, management also wrote
down certain non-parts inventory by $50.2 million due to
the need to liquidate all inventories that would not be
transferred to SQM under the agreement.

The company plans to eliminate all employee
positions at PCS Yumbes by December 31, 2004 and has
recorded a provision of $1.8 million pertaining to
contractual termination benefits to be paid, primarily under
Chilean law. As of March 31, 2004, 124 of the employees had
left the company. The remaining 100 employees are expected to
leave the company by December 31, 2004, and all remaining
workforce reduction costs are expected to be paid by that date.

The company had incurred early termination
penalties in respect of certain PCS Yumbes contractual
arrangements. The company recorded a provision of $11.1 million
in the third quarter of 2003 for these contract termination
costs and $0.5 million remained to be paid at
March 31, 2004.

No additional costs were incurred in connection
with PCS Yumbes in the first quarter of 2004.

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LIQUIDITY AND CAPITAL RESOURCES

Cash Requirements

The following aggregated information about our
contractual obligations and other commitments aims to provide
insight into our short- and long-term liquidity and capital
resource needs and demands. The information presented in the
table below does not include obligations that have original
maturities of less than one year or planned capital expenditures.

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              |  | $                      | 1,269.7 |               |  | $            | 1.3   |              |  | $            | 11.6  |  |  | $ | 400.6 |  |  | $ | 856.2   | 
|Operating Leases            |  |                        | 389.8   |               |  |              | 69.3  |              |  |              | 115.9 |  |  |   | 61.4  |  |  |   | 143.2   | 
|Purchase Obligations        |  |                        | 1,006.5 |               |  |              | 137.6 |              |  |              | 188.3 |  |  |   | 168.7 |  |  |   | 511.9   | 
|Other Commitments           |  |                        | 64.5    |               |  |              | 17.7  |              |  |              | 19.0  |  |  |   | 17.3  |  |  |   | 10.5    | 
|Other Long-term Liabilities |  |                        | 316.3   |               |  |              | 33.9  |              |  |              | 43.8  |  |  |   | 33.8  |  |  |   | 204.8   | 
|                           
|Total                       |  | $                      | 3,046.8 |               |  | $            | 259.8 |              |  | $            | 378.6 |  |  | $ | 681.8 |  |  | $ | 1,726.6 | 
|                           

Long-Term
Debt

Long-term debt consists of $1,250.0 million
of notes payable that were issued under our US shelf
registration statements, $9.0 million of Adjustable Rate
Industrial Revenue and Pollution Control Obligations, a net of
$5.9 million under a back-to-back loan arrangement
(described in Note 11 to the 2003 annual consolidated
financial statements) and other commitments of $4.8 million
payable over the next five years. The notes payable are
unsecured. Of the notes outstanding, $400.0 million bear
interest at 7.125 percent and mature in 2007,
$600.0 million bear interest at 7.750 percent and
mature in 2011 and $250.0 million bear interest at
4.875 percent and mature in 2013. There are no sinking fund
requirements. The Adjustable Rate Industrial Revenue and
Pollution Control Obligations bear interest at varying rates,
are secured by bank letters of credit and have no sinking fund
requirements. The notes payable are not subject to any financial
test covenants but are subject to certain customary covenants
(including limitations on liens and sale and leaseback
transactions) and events of default, including an event of
default for acceleration of other debt in excess of
$50.0 million. Neither the Industrial Revenue and Pollution
Control Obligations nor the other long-term debt instruments are
subject to any financial test covenants but each is subject to
certain customary covenants and events of default, including,
for other long-term debt, an event of default for acceleration
of other debt of $25.0 million or more. Non-compliance with
any of the above covenants could result in accelerated payment
of the related debt. The company was in compliance with all
covenants as at March 31, 2004.

In January and February 2004, the company entered
into interest rate swap contracts that effectively converted a
notional amount of $300.0 million of fixed rate debt (due
2011) into floating rate debt based on six-month US dollar LIBOR
rates. The company did not enter into any interest rate swap
contracts in 2003.

Operating
Leases

We have long-term operating lease agreements for
buildings, port facilities, equipment, ocean-going
transportation vessels and railcars, the latest of which expires
in 2020 (excluding mineral leases).

The most significant operating leases consist
primarily of three items. The first is our lease of railcars
used to transport finished goods and raw materials. These leases
extend to approximately 2020. The second is the lease of port
facilities at the Port of Saint John for shipping New Brunswick
potash offshore. This lease runs until 2018. The third is the
lease of three vessels for transporting ammonia from Trinidad,
which extends to 2011.

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Purchase
Obligations

We have long-term agreements for the purchase of
sulfur for use in the production of phosphoric acid. These
agreements provide for minimum purchase quantities, and certain
prices are based on market rates at the time of delivery. The
commitments included in the above table are based on the market
prices at March 31, 2004.

Our Trinidad subsidiaries have entered into
long-term natural gas contracts with the National Gas company of
Trinidad. The contracts provide for prices that vary with
ammonia market prices, escalating floor prices and minimum
purchase quantities. The commitments included in the above table
are based on floor prices and minimum purchase quantities.

We also have a long-term agreement through 2010
for the purchase of phosphate rock used at our Geismar facility.
This agreement set base prices (less volume discounts) through
December 2003. Prices for 2004 and 2005 are currently being
renegotiated. The commitments included in the above table are
based on the expected purchase quantity and the set base prices
(less applicable discounts).

Other
Commitments

Other operating commitments consist of amounts
relating to an acid storage agreement that is in effect until
2004, our Rocanville expansion and compactor upgrade project
through 2005, contracts to purchase limestone that run through
2007 and various rail freight contracts, the latest of which
expire in 2010.

Other
Long-Term Liabilities

Other long-term liabilities consist primarily of
accrued post-retirement/ post-employment benefits and accrued
reclamation costs.

Capital
Expenditures

During 2004, we expect to incur capital
expenditures of approximately $95.0 million for opportunity
capital and approximately $110.0 million for sustaining
capital. The most significant single project relates to the
expansion and increase of granular production capacity at
Rocanville.

We have also exercised an option agreement to
purchase certain corporate office facilities for approximately
$8.0 million in 2005.

We anticipate that all capital spending will be
financed by internally generated cash flows supplemented, if and
as necessary, by borrowing from existing financing sources.

Sources and Uses of Cash

The companys cash flows from operating,
investing and financing activities, as reflected in the
Consolidated Statements of Cash Flow, are summarized in the
following table:

|                                                |  |                    |        |      |  |   |       |  
|----------------------------------------------- |  | ------------------ | ------ | ---- |  | - | ----- | -
|                                                |  |                   
|                                                |  | Three Months Ended
|                                                |  | March 31          
|                                               
|                                               
|Dollars (millions)                              |  | 2004               |        | 2003
|                                               
|                                               
|Cash Provided by Operating Activities           |  | $                  | 134.3  |      |  | $ | 44.1  |  
|Cash Used in Investing Activities               |  | $                  | (15.6  | )    |  | $ | (25.4 | )
|Cash (Used in) Provided by Financing Activities |  | $                  | (112.2 | )    |  | $ | 28.5  |  

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The following table presents summarized working
capital information as at March 31, 2004 compared to
December 31, 2003:

|                                        |  |           |        |              |  |   |        |  
|--------------------------------------- |  | --------- | ------ | ------------ |  | - | ------ | -
|                                        |  | March 31, |        | December 31,
|Dollars (millions) except ratio amounts |  | 2004      |        | 2003        
|                                       
|                                       
|Current Assets                          |  | $         | 744.1  |              |  | $ | 733.9  |  
|Current Liabilities                     |  | $         | (451.9 | )            |  | $ | (557.8 | )
|Working Capital                         |  | $         | 292.2  |              |  | $ | 176.1  |  
|Current Ratio                           |  |           | 1.65   |              |  |   | 1.32   |  

PotashCorps principal sources of funds
include the cash generated from our operations, short-term
borrowings against our line of credit and commercial paper
program, and long-term debt issued under our US shelf
registration statements and drawn down under our syndicated
credit facility. Our primary uses of funds are operational
expenses, sustaining and opportunity capital spending,
dividends, and interest and principal payments on our debt
securities.

Cash provided by operating activities was
$134.3 million, up $90.2 million from the first
quarter last year. Stronger gross margin in potash and nitrogen
($17.3 million and $28.4 million, respectively)
contributed significantly to the upsurge. In addition, working
capital requirements were lower by $48.5 million, largely
due to the collection of higher receivable amounts outstanding
at December 31, 2003 compared to December 31, 2002
offset by reductions in natural gas accruals. (Fourth-quarter
2003 net sales were 26 percent higher than the same period
in 2002 and accounts receivable as at December 31, 2003 was
14 percent higher than the balance outstanding as at
December 31, 2002). Our customer credit policies have
remained substantially consistent with 2003.

Cash used in investing activities was
$15.6 million, a decrease of $9.8 million over the
same quarter last year. Additions to property, plant and
equipment totaled $16.4 million compared with
$17.0 million quarter over quarter. Cash outlays in
connection with other assets declined $9.2 million mainly
due to lower spending during first-quarter 2004, nominal cash
proceeds received from the disposal of surplus property and the
fact that first-quarter 2003 included $3.9 million of
issuance costs associated with the $250.0 million note
offering.

Cash used in financing activities during the
quarter was $112.2 million, $140.7 million more than
the same quarter last year. In March 2003, we issued
$250.0 million of 4.875 percent notes due in 2013,
under our US shelf registration statement. The net proceeds from
the notes were used to make short-term debt repayments of
$208.8 million in that quarter. Using cash generated from
operations, the company paid down short-term debt by
$118.3 million in first-quarter 2004. The company has
historically paid quarterly dividends to shareholders, and such
payments were made in the first quarter of each of 2004 and 2003
at a rate of $0.25 per share. Cash received from share issuances
(largely from the exercise of stock options) contributed
$19.8 million in financing activities, compared to
$0.5 million in first-quarter 2003.

PotashCorp believes that internally generated
cash flow, supplemented by borrowing from existing financing
sources if necessary, will be sufficient to meet our anticipated
capital expenditures and other cash requirements in 2004,
exclusive of any possible acquisitions, as was the case in 2003.
At this time, the company does not reasonably expect any
presently known trend or uncertainty to affect our ability to
access our historical sources of cash.

Debt Instruments

|                           |  |                    |         |                       |  |                |         |  |  |   |       | 
|-------------------------- |  | ------------------ | ------- | --------------------- |  | -------------- | ------- |  |  | - | ----- | 
|                           |  |                   
|                           |  | Dollars (millions)
|                          
|                          
|                           |  | Amount            
|                           |  | Total              |         | Amount Outstanding at |  | Available at  
|                           |  | Amount             |         | March 31, 2004        |  | March 31, 2004
|                          
|                          
|Syndicated Credit Facility |  | $                  | 750.0   |                       |  | $              |        |  |  | $ | 692.1 | 
|Line of Credit             |  |                    | 75.0    |                       |  |                | 0.1     |  |  |   | 59.6  | 
|Commercial Paper           |  |                    | 500.0   |                       |  |                | 57.9    |  |  |   | 442.1 | 
|US Shelf Registration      |  |                    | 2,000.0 |                       |  |                | 1,250.0 |  |  |   | 750.0 | 

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PotashCorp has a syndicated credit facility,
renewable annually, which provides for unsecured advances.
During third-quarter 2003, it was increased to
$750.0 million from $650.0 million. The amount
available is the total committed amount less direct borrowings
and commercial paper outstanding. The line of credit is also
renewable annually and outstanding letters of credit and direct
borrowings reduce the amount available. Both the line of credit
and the syndicated credit facility have financial tests and
other covenants with which the company must comply at each
quarter-end. Principal covenants under the credit facility and
line of credit require debt to capital of less than or equal to
0.55:1, long-term debt to EBITDA (defined in the respective
agreements as earnings before interest, income taxes, provincial
mining and other taxes, depreciation, amortization and other
non-cash expenses) of less than or equal to 3.5:1, tangible net
worth greater than or equal to $1,250.0 million and debt of
subsidiaries less than $590.0 million. The line of credit
is also subject to other customary covenants and events of
default, including an event of default for non-payment of other
debt in excess of Cdn $40.0 million. Non-compliance with
any of the above covenants could result in accelerated payment
of the related debt and termination of the line of credit. The
company was in compliance with all covenants as at
March 31, 2004.

We also have a commercial paper program of up to
$500.0 million. Access to this source of short-term
financing depends primarily on our rating by Dominion Bond
Rating Service (DBRS) and conditions in the money markets.
PotashCorps commercial paper is currently rated by DBRS as
R1 low, which should allow unrestricted access to the money
markets. Our other ratings did not change from December 31,
2003 (Moodys: Baa2, with a positive outlook; Standard and
Poors: BBB+).

We have a US shelf registration statement under
which we may issue up to an additional $750.0 million in
unsecured debt securities.

At the end of March 2004, our weighted average
cost of capital was 7.7 percent (2003 
7.2 percent), of which 25 percent represented debt and
75 percent equity. The increase was principally due to a
shift in mix to equity  which carries a higher cost
than debt  as the stock price closed 35 percent
higher this quarter-end compared to last.

Off-Balance Sheet
Arrangements

In the normal course of operations, PotashCorp
engages in a variety of transactions that, under Canadian GAAP,
are either not recorded on our balance sheet or are recorded on
our balance sheet in amounts that differ from the full contract
amounts. Principal off-balance sheet activities we undertake
include issuance of guarantee contracts, certain derivative
instruments and long-term fixed price contracts. We do not
reasonably expect any presently known trend or uncertainty to
affect our ability to continue using these arrangements. These
types of arrangements are discussed below.

Guarantee Contracts

The company enters into agreements in the normal
course of business that may contain features which meet the
definition of a guarantee. Various debt obligations (such as
overdrafts, lines of credit with counterparties for derivatives,
and back-to-back loan arrangements) related to certain
subsidiaries have been directly guaranteed by the company under
agreements with third parties. The company would be required to
perform on these guarantees in the event of default by the
guaranteed parties. No material loss is anticipated by reason of
such agreements and guarantees. At March 31, 2004, the
maximum potential amount of future (undiscounted) payments
under significant guarantees provided to third parties
approximated $73.4 million, representing the maximum risk
of loss if there were a total default by the guaranteed parties,
without consideration of possible recoveries under recourse
provisions or from collateral held or pledged. At March 31,
2004, no subsidiary balances subject to guarantees were
outstanding in connection with the companys cash
management facilities, and the company had no liabilities
recorded for other obligations other than subsidiary bank
borrowings of approximately $5.9 million, which are
reflected in other long-term debt and cash margin requirements
of approximately $13.0 million to maintain derivatives,
which are included in accounts payable and accrued charges.

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Refer to Note 29 of our 2003 Annual Report
for a description of other guarantees relating to the company.
There have been no significant changes to these guarantees
during the first three months of 2004.

Derivative Instruments

Under Canadian GAAP, the company does not record
the fair value of derivatives designated (and qualifying) as
effective hedges on its balance sheet.

The company has designated its natural gas
derivative instruments as cash flow hedges. The companys
natural gas purchase strategy is based on diversification of
price for its total gas requirements. The objective is to
acquire a reliable supply of natural gas feedstock and fuel on a
location-adjusted, cost-competitive basis in a manner that
minimizes volatility without undue risk. In addition to physical
spot and term purchases, PotashCorp employs futures, swaps and
option agreements to manage the cost on a portion of our natural
gas requirements. These instruments are intended to hedge the
future cost of the committed and anticipated natural gas
purchases primarily for its US nitrogen plants. The maximum
period for these hedges cannot exceed five years. The company
uses these instruments to reduce price risk, not for speculative
purposes. The fair value of the companys gas hedging
contracts at March 31, 2004 was $73.5 million. The
companys futures contracts are exchange-traded and fair
value was determined based on exchange prices. Swaps and option
agreements are traded in the over-the-counter market and fair
value was calculated based on a price that was converted to an
exchange-equivalent price.

The company primarily uses interest rate swaps to
manage the interest rate mix of the total debt portfolio and
related overall cost of borrowing. At March 31, 2004, the
company had entered into interest rate swap agreements with
total notional amounts of $300.0 million, whereby the
company, over the remaining terms of the underlying notes, will
receive a fixed rate payment equivalent to the fixed interest
rate of the underlying note and pay a floating rate of interest
that is based on six-month US dollar LIBOR. The fair value of
the swaps outstanding at March 31, 2004 was an asset of
$5.5 million.

Refer to Note 27 of our 2003 Annual Report
for detailed information regarding the nature of our financial
instruments. Other than as described above, there have been no
significant changes to these instruments during the first three
months of 2004.

Long-Term Fixed Price Contracts

Certain of our long-term raw materials agreements
contain fixed price components. Our significant agreements, and
the related obligations under such agreements, are discussed in
Contractual Obligations and Other Commitments.

OUTSTANDING SHARE DATA

The company had, at March 31, 2004,
53,398,713 common shares issued and outstanding, compared to
53,112,216 common shares issued and outstanding at
December 31, 2003. At March 31, 2004, there were
5,118,172 options to purchase common shares outstanding, as
compared to 5,438,011 at December 31, 2003.

RELATED PARTY TRANSACTIONS

The company sells potash from its Saskatchewan
mines for use outside of North America exclusively to Canpotex
Limited, a potash export, sales and marketing company owned in
equal shares by the three potash producers in the Province of
Saskatchewan. Sales to Canpotex for the quarter ended
March 31, 2004 were $72.6 million (2003 
$63.7 million). Sales to Canpotex are at prevailing market
prices and are settled on normal trade terms.

In connection with entering into the option
agreement with SQM in 2003, PCS Yumbes has agreed to purchase
potash from SQM at a negotiated price that approximates market
value. In addition, PCS Yumbes has agreed to sell to SQM all of
its potassium nitrate production at a negotiated price that
approximates market value. Both agreements are in effect until
no later than December 31, 2004. Potash purchases from

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SQM for the quarter were $3.2 million
(2003  $0.2 million). Potassium nitrate sales to SQM
for the quarter were $8.6 million (2003 
$5.0 million). All transactions with SQM are settled on
normal trade terms.


CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial
condition and results of operations is based upon our unaudited
interim consolidated financial statements, which have been
prepared in accordance with Canadian GAAP. These principles
differ in certain significant respects from accounting
principles generally accepted in the United States. These
differences are described and quantified in Note 15 to the
unaudited interim consolidated financial statements included in
Item 1 of this Quarterly Report on Form 10-Q.

The accounting policies used in preparing the
unaudited interim consolidated financial are consistent with
those used in the preparation of the 2003 annual consolidated
financial statements, except as disclosed in Note 2 to the
unaudited interim consolidated financial statements. Certain of
these policies involve critical accounting estimates because
they require us to make particularly subjective or complex
judgments about matters that are inherently uncertain and
because of the likelihood that materially different amounts
could be reported under different conditions or using different
assumptions. There has been no material change in the
companys critical accounting estimates since
December 31, 2003.

We have discussed the development, selection and
application of our key accounting policies, and the critical
accounting estimates and assumptions they involve, with the
audit committee of the Board of Directors, and our audit
committee has reviewed the disclosures described in this section.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2003, the FASB revised
FIN No. 46 Consolidation of Variable Interest
Entities, which clarifies the application of Accounting
Research Bulletin No. 51 Consolidated Financial
Statements to those entities (defined as Variable Interest
Entities (VIEs)) in which either the equity at risk
is not sufficient to permit that entity to finance its
activities without additional subordinated financial support
from other parties, or equity investors lack voting control, an
obligation to absorb expected losses or the right to receive
expected residual returns. FIN No. 46 requires
consolidation by a business of VIEs in which it is the primary
beneficiary. The primary beneficiary is defined as the party
that has exposure to the majority of the expected losses and/or
expected residual returns of the VIE. FIN No. 46 was
effective for us in the first quarter, and there was no material
impact on our financial position, results of operations or cash
flows from adoption. In Canada, Accounting Guideline 15
Consolidation of Variable Interest Entities has
harmonized with FIN No. 46 and is effective for the
company no later than December 31, 2004. We expect no
material impact on our financial position, results of operations
or cash flows from adoption.

In December 2003, the SEC issued Staff Accounting
Bulletin (SAB) No. 104 Revenue
Recognition, which supersedes SAB No. 101. The
primary purpose of SAB No. 104 is to rescind accounting
guidance contained in SAB No. 101 and the SECs
Revenue Recognition in Financial Statements Frequently
Asked Questions and Answers related to multiple element
revenue arrangements. The changes noted in SAB No. 104 did
not have a material impact on our financial position, results of
operations, or cash flows.

In December 2003, the Medicare Prescription Drug
Improvement and Modernization Act of 2003 (the Act)
was signed into law. The Act introduces a prescription drug
benefit beginning in 2006 under Medicare (Medicare Part D)
as well as a federal subsidy to sponsors of retiree health care
benefit plans that provide a benefit that is at least
actuarially equivalent to Medicare Part D. At this point,
our analysis regarding the impact of the legislation is
preliminary, as it awaits guidance from various governmental and
regulatory agencies concerning the requirements that must be met
to obtain these cost reductions, as well as the manner in which
such savings should be measured. Based on this preliminary
analysis, we expect that the legislation will eventually reduce
our costs for some of our programs; however, the benefit derived
is not expected to be material to our consolidated financial
position, results of operations or cash flows. Some of our
retiree medical plans may need to be modified in order to
qualify for beneficial treatment under the Act. Because of the
various uncertainties related to this legislation and the
appropriate accounting treatment, we elected to defer financial
recognition until final accounting guidance is issued by FASB.
When issued, the final guidance could

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require us to change previously reported
information. This deferral election is permitted under FSP
No. 106-1, Accounting and Disclosure Requirements
Related to the Medicare Prescription Drug, Improvement and
Modernization Act of 2003. FASB has issued a proposed FSP
on the accounting treatment that, if approved, would be
effective in third quarter 2004.


RISK MANAGEMENT

An important part of PotashCorps strategic
planning process is understanding and managing risk. Our
approach to this responsibility begins with our identification
and analysis of the specific risks we face. We then rank them in
order of importance, according to their likelihood of occurring
and the significance of the consequences, and determine the most
effective ways to manage them. Tier I risks are ranked the
highest with Tier II considered less likely and with less
consequence.

In 2002, management reported to the Board on our
most significant risks, our risk response options and our risk
administration. In 2003, we updated the Board on the progress
made on those risks, and reported on the next tier of risks.
Refer to our 2003 Annual Report for detailed information
regarding managements assessments of the companys
Tier I and Tier II risks. The identification and
management of risk is an ongoing process because circumstances
change and risks change with them. There have been no
significant changes to managements assessments during the
first three months of 2004.

OUTLOOK

Solid fundamentals for fertilizer are creating
optimism. Potash demand is robust. Canpotex has further
increased its 2004 forecast for offshore sales from a record
7.0 million tonnes to 7.5 million tonnes. This is
1.2 million tonnes higher than 2003 volumes. As Canpotex
believes this new demand will be sustained, PotashCorp, over the
next few weeks, will add another shift at its Lanigan potash
facility to begin to utilize its excess capacity and to provide
additional flexibility in product mix. In 2003, PotashCorp
produced 7.1 million tonnes KCl. Apart from the previously
announced Rocanville expansion, we believe we can bring on
2.5 million tonnes of our excess capacity in short order
with little or no new capital expense. We also believe an
additional 2.5 million tonnes could be brought on stream
with an investment over several years, currently estimated to
approximate $300 million.

PotashCorp currently supplies 54.2 percent
of Canpotexs requirements. If Canpotexs revised
forecast is achieved, these higher volumes are expected to lower
production costs, which should expand margins. The rise in ocean
freight rates has begun to ease while potash pricing continues
to improve. By the end of the first quarter, offshore potash
price increases were finally outpacing freight increases. This,
along with tight supply/demand fundamentals in the offshore
market, should support higher realized offshore prices for the
company. Along with anticipated price increases in North
America, this should increase potash earnings.

Phosphate fertilizers are expected to remain
under pressure, as India and China continue to build their
domestic industries and limit imports from the United States.
Following the pattern of the past few years, this will reduce
trade and increase competition from other world suppliers. This
will continue to keep DAP prices under pressure, although lower
ammonia prices will help on the cost side. Until DAP operating
rates improve, phosphate will remain a challenging business. The
positive resolution of the phosphoric acid pricing negotiations
in India should modestly improve liquid product fundamentals.
The continued absence of imports and expected growth in the
world economy should keep demand strong for industrial products.
In feed, the closure of a DFP competitor provides the potential
for higher DFP volumes.

In nitrogen, prices fell back by the end of the
first quarter and the traditional relationship between natural
gas and ammonia prices returned. Current high gas prices are
expected to lead to the shutdown of some North American
capacity. That would tighten supply/demand and create a
potential for nitrogen price increases. From April to December
2004, the company is approximately 75 percent hedged at
$2.30 per MMBtu. At current gas prices, the 2004 hedge portfolio
is valued at approximately $30.0 million.

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Annual capital expenditures are expected to
approximate $205.0 million. This is up from
$150.7 million in 2003, due primarily to opportunity
capital set aside for the expansion of granular production
capacity at Rocanville. Depreciation and amortization are
expected to approximate $220.0 million, similar to 2003
levels.

The companys earnings guidance for the year
of $2.70 to $3.50 per share remains unchanged. This assumes a
Canadian dollar exchange rate of 1.2924, which was the rate in
effect at December 31, 2003. Assuming this flat exchange
rate, PotashCorp anticipates earnings of $0.70 to $0.90 per
share for the second quarter, noting that the exchange rate at
April 30, 2004 was 1.3707. Additional factors that could
result in second-quarter earnings being at the lower or upper
end of the range include changes in ocean freight rates,
domestic potash consumption trends, input prices for sulfur and
natural gas, and product prices for DAP and nitrogen. While the
revised Canpotex forecast is expected to have a positive impact
on potash earnings, the company is not updating its earnings
guidance at this time, and will do so when appropriate.

In the current trading range of the Canadian
dollar relative to the US dollar, a $0.01 change in the
Canadian dollar is expected to have an approximate $0.03 impact
on earnings per share in respect of unrealized foreign exchange
translation gains/losses and an approximate $0.02 impact on
earnings per share relating to Canadian operating costs, net of
provincial mining taxes.

FORWARD LOOKING STATEMENTS

Certain statements in this quarterly report on
Form 10-Q and this Managements Discussion and
Analysis of Financial Condition and Results of Operations,
including those in the Outlook section relating to
the period after March 31, 2004, are forward-looking
statements subject to risks and uncertainties. A number of
factors could cause actual results to differ materially from
those expressed in the forward-looking statements, including,
but not limited to: fluctuation in supply and demand in
fertilizer, sulfur and petrochemical markets; changes in
competitive pressures, including pricing pressures; risks
associated with natural gas and other hedging activities;
changes in capital markets; changes in currency and exchange
rates; unexpected geological or environmental conditions;
imprecision in reserve estimates; the outcome of legal
proceedings; changes in government policy and regulation; and
acquisitions the company may undertake in the future. The
company sells to a diverse group of customers both by geography
and by end product. Market conditions will vary on a
quarter-over-quarter and year-over-year basis and sales can be
expected to shift from one period to another. The company
disclaims any intention or obligation to update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise, except as otherwise
required by applicable law.




ITEM 3.     QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Risk

PotashCorps nitrogen operations are
significantly affected by the price of natural gas. We employ
derivative commodity instruments related to a portion of our
natural gas requirements (primarily futures, swaps and options)
for the purpose of managing our exposure to commodity price risk
in the purchase of natural gas. Changes in the market value of
these derivative instruments have a high correlation to changes
in the spot price of natural gas. Gains or losses arising from
settled hedging transactions are deferred as a component of
inventory until the product containing the hedged item is sold.
Changes in the market value of open hedging transactions are not
recognized as they generally relate to changes in the spot price
of anticipated natural gas purchases.

A sensitivity analysis has been prepared to
estimate our market risk exposure arising from derivative
commodity instruments. The fair value of such instruments is
calculated by valuing each position using quoted market prices.
Market risk is estimated as the potential loss in fair value
resulting from a hypothetical 10 percent adverse change in
such prices. The results of this analysis indicate that as of
March 31, 2004, our estimated derivative commodity
instruments market risk exposure was $26.9 million
(2003  $33.0 million). Actual results may differ
from this estimate. Changes in the fair value of such derivative
instruments, with maturities in 2004 through 2009, will
generally relate to changes in the spot price of anticipated
natural gas purchases.

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Foreign Exchange Risk

We also enter into forward exchange contracts for
the sole purpose of limiting exposure to exchange rate
fluctuations relating to certain trade accounts. These contracts
are not designated as hedging instruments for accounting
purposes. Gains or losses resulting from foreign exchange
contracts are recognized in earnings in the period in which
changes in fair value occur.

As at March 31, 2004, we had entered into
forward exchange contracts to sell US dollars and receive
Canadian dollars in the notional amount of $34.5 million
(2003  $42.0 million) at an average exchange
rate of 1.3175 (2003  1.4930). Expected maturity
dates for all forward contracts are within fiscal 2004.

Interest Rate Risk

We address interest rate risk by using a
diversified portfolio of fixed and floating rate instruments. We
are exposed to risk resulting from changes in interest rates as
a result of the issuance of variable rate debt and commercial
paper. The company manages this exposure by aligning current and
long-term assets with variable and fixed rate debt, limiting
variable rate and fixed rate exposures to percentages of total
capitalization and by monitoring the effects of market changes
in interest rates.

As at March 31, 2004, our short-term debt
(comprised of commercial paper) was $57.9 million, our
current portion of long-term debt was $1.3 million and our
long-term debt was $1,268.4 million. Long-term debt is
comprised primarily of $1,250.0 million of notes payable
that were issued under our US shelf registration statements
at a fixed interest rate. In January and February 2004, we
entered into contracts that exchanged a notional amount of
$300.0 million of our 7.75 percent fixed rate notes
into floating rate debt based on six-month US LIBOR rates.

One means of assessing exposure to interest rate
changes is a duration-based analysis that measures the potential
loss in net earnings and cash flow resulting from a hypothetical
10 percent change in interest rates across interest rate
sensitive maturities. Under this model, it is estimated that,
all else constant, such a change would not materially impact our
2004 net earnings or cash flows based on the same level of
borrowing. If interest rates changed significantly, management
would likely take actions to manage our exposure to the change.
However, due to the uncertainty of the specific actions that
would be taken and their possible effects, the sensitivity
analysis assumes no changes in our financial structure.




ITEM 4.     CONTROLS
AND PROCEDURES

As of March 31, 2004, we carried out an
evaluation under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief
Financial Officer, of the effectiveness of the design and
operation of our disclosure controls and procedures. There are
inherent limitations to the effectiveness of any system of
disclosure controls and procedures, including the possibility of
human error and the circumvention or overriding of the controls
and procedures. Accordingly, even effective disclosure controls
and procedures can only provide reasonable assurance of
achieving their control objectives. Based upon that evaluation
and as of March 31, 2004, the Chief Executive Officer and
Chief Financial Officer concluded that the disclosure controls
and procedures were effective to provide reasonable assurance in
all material respects to ensure that information required to be
disclosed in the reports the company files and submits under the
Securities Exchange Act of 1934 is recorded, processed,
summarized and reported as and when required.

There has been no change in our internal control
over financial reporting during the quarter ended March 31,
2004 that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

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PART II.     OTHER
INFORMATION






ITEM 1.LEGAL
PROCEEDINGS.


Nitrochem

On May 1, 2003, Nitrochem Distribution, Ltd.
filed an action in U.S. District Court for the Southern District
of New York against our subsidiary, PCS Sales (USA), Inc.
(Sales (USA)). Nitrochem alleged that Sales (USA)
entered into a contract for ammonia in 2001 that contained an
automatic renewal provision for 2002. Nitrochem further alleged
that Sales (USA) failed to take delivery of a specified amount
of ammonia in 2002. Sales (USA) denied all of Nitrochems
substantive allegations. Nitrochem was seeking damages in the
amount of $12 million. The matter proceeded to trial on
March 31 and April 1, 2004. On May 3, 2004 a
judgment was issued declaring that Sales (USA) had no
contractual obligation to purchase ammonia from Nitrochem in
2002 and denying Nitrochems claim for breach of contract.
Nitrochem has thirty days from the date final judgment is
entered in favour of Sales (USA) to file a notice of appeal.




ITEM 6.     EXHIBITS
AND REPORTS ON FORM 8-K

(a) 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) |                         |  | 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(d) |                         |  | 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(e) |                         |  | 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(f) |                         |  | Form of Notes relating to the registrants
    offering of $600,000,000 principal amount of 7 3/4% 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(g) |                         |  | 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.                                                                                                                           

The registrant hereby undertakes to file with the
Securities and Exchange Commission, upon request, copies of any
constituent instruments defining the rights of holders of
long-term debt of the registrant or its subsidiaries that have
not been filed herewith because the amounts represented thereby
are less than 10% of the total assets of the registrant and its
subsidiaries on a consolidated basis.

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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) |                         |  | 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(h) |                         |  | 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(i) |                         |  | 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(j) |                         |  | 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(k) |                         |  | 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.                                                                                                                                                                              
|        | 10(l) |                         |  | 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(m) |                         |  | 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.                                                                                                                                          

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|        |       |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- | ----- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                        
|Number  |       | Description of Document
|        |       |                        
|        | 10(n) |                         |  | 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(o) |                         |  | 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(p) |                         |  | 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(q) |                         |  | 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(r) |                         |  | 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(s) |                         |  | 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(t) |                         |  | 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(u) |                         |  | 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(v) |                         |  | Short-Term Incentive Plan of the registrant
    effective January 2000, incorporated by reference to
    Exhibit 10(z) to the registrants report on
    Form 10Q for the quarterly period ended March 31, 2000
    (the First Quarter 2000 Form 10-Q).                                                                                                                                                                                                                                                                                                                                                
|        | 10(w) |                         |  | 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(x) |                         |  | Long-Term Incentive Plan of the registrant
    effective January 2003, incorporated by reference to
    Exhibit 10(y) to the 2002 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10(y) |                         |  | 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.                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10(z) |                         |  | 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.                                                                                                                                                                                                                                                                                                                                     

39



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|        |        |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|------- | ------ | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |                        
|Number  |        | Description of Document
|        |        |                        
|        | 10(aa) |                         |  | 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(bb) |                         |  | 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(cc) |                         |  | 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(dd) |                         |  | 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(ee) |                         |  | 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(ff) |                         |  | 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(gg) |                         |  | Chief Executive Officer Medical and Dental Plan,
    incorporated by reference to Exhibit 10(jj) to the 2000
    Form 10-K.                                                                                                                                                                                                                      
|        | 10(hh) |                         |  | 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(ii) |                         |  | 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(jj) |                         |  | 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.                                                                                                                                                             
|        | 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.                                                                                                                                                                                                                                                                     

(b) REPORTS
ON FORM 8-K

None filed.

40



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##### Table of Contents






SIGNATURES

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



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

May 6, 2004

| |     |                      
| | --- | ---------------------
| | By: | /s/ JOHN L.M. HAMPTON

| |                                                         
| | --------------------------------------------------------
| |                                                         
| | John L.M. Hampton                                       
| | Senior Vice President, General Counsel and
    Secretary

May 6, 2004

| |     |                      
| | --- | ---------------------
| | By: | /s/ WAYNE R. BROWNLEE

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

41



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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) |                         |  | 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(d) |                         |  | 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(e) |                         |  | 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(f) |                         |  | Form of Notes relating to the registrants
    offering of $600,000,000 principal amount of 7 3/4% 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(g) |                         |  | 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.                                                                                                                           

The registrant hereby undertakes to file with the
Securities and Exchange Commission, upon request, copies of any
constituent instruments defining the rights of holders of
long-term debt of the registrant or its subsidiaries that have
not been filed herewith because the amounts represented thereby
are less than 10% of the total assets of the registrant and its
subsidiaries on a consolidated basis.



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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) |                         |  | 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(h) |                         |  | 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(i) |                         |  | 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(j) |                         |  | 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(k) |                         |  | 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.                                                                                                                                                                              
|        | 10(l) |                         |  | 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(m) |                         |  | 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.                                                                                                                                          



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|        |       |                         |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------- | ----- | ----------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |                        
|Number  |       | Description of Document
|        |       |                        
|        | 10(n) |                         |  | 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(o) |                         |  | 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(p) |                         |  | 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(q) |                         |  | 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(r) |                         |  | 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(s) |                         |  | 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(t) |                         |  | 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(u) |                         |  | 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(v) |                         |  | Short-Term Incentive Plan of the registrant
    effective January 2000, incorporated by reference to
    Exhibit 10(z) to the registrants report on
    Form 10Q for the quarterly period ended March 31, 2000
    (the First Quarter 2000 Form 10-Q).                                                                                                                                                                                                                                                                                                                                                
|        | 10(w) |                         |  | 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(x) |                         |  | Long-Term Incentive Plan of the registrant
    effective January 2003, incorporated by reference to
    Exhibit 10(y) to the 2002 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|        | 10(y) |                         |  | 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.                                                                                                                                                                                                                                                                                                                                                                                               
|        | 10(z) |                         |  | 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.                                                                                                                                                                                                                                                                                                                                     



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|        |        |                         |  |                                                                                                                                                                                                                                                                                                                                                  
|------- | ------ | ----------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |                        
|Number  |        | Description of Document
|        |        |                        
|        | 10(aa) |                         |  | 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(bb) |                         |  | 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(cc) |                         |  | 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(dd) |                         |  | 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(ee) |                         |  | 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(ff) |                         |  | 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(gg) |                         |  | Chief Executive Officer Medical and Dental Plan,
    incorporated by reference to Exhibit 10(jj) to the 2000
    Form 10-K.                                                                                                                                                                                                                      
|        | 10(hh) |                         |  | 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(ii) |                         |  | 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(jj) |                         |  | 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.                                                                                                                                                             
|        | 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.