<PAGE>   1
 
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
                                   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 SEPTEMBER 30, 1998
 
                                       OR
 
     [ ]  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)
 
<TABLE>
<S>                                            <C>
             SASKATCHEWAN, 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)
</TABLE>
 
                                  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 [ ]
 
                     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 October 31, 1998, Potash Corporation of Saskatchewan Inc. (the
"Company") had 54,240,509 Common Shares outstanding.
 
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<PAGE>   2
 
PART I. FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
     These interim consolidated financial statements do not include all
disclosures normally provided in annual financial statements. In management's
opinion, the unaudited 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 INCOME AND RETAINED EARNINGS
                         (IN THOUSANDS OF U.S. DOLLARS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED        NINE MONTHS ENDED
                                                   SEPTEMBER 30              SEPTEMBER 30
                                               --------------------    ------------------------
                                                 1998        1997         1998          1997
                                               --------    --------    ----------    ----------
<S>                                            <C>         <C>         <C>           <C>
Net sales....................................  $521,368    $573,773    $1,765,622    $1,715,255
Cost of goods sold...........................   381,180     424,307     1,288,130     1,266,610
                                               --------    --------    ----------    ----------
GROSS MARGIN.................................   140,188     149,466       477,492       448,645
                                               --------    --------    ----------    ----------
Selling and administrative...................    28,247      25,580        86,547        72,769
Provincial mining and other taxes............    23,517      20,574        68,288        45,543
Other income.................................    (7,151)     (5,539)      (29,617)      (23,745)
                                               --------    --------    ----------    ----------
                                                 44,613      40,615       125,218        94,567
                                               --------    --------    ----------    ----------
OPERATING INCOME.............................    95,575     108,851       352,274       354,078
INTEREST EXPENSE.............................    15,831      22,749        52,940        60,127
                                               --------    --------    ----------    ----------
INCOME BEFORE INCOME TAXES...................    79,744      86,102       299,334       293,951
INCOME TAXES.................................    25,040      14,684        92,504        69,188
                                               --------    --------    ----------    ----------
NET INCOME...................................  $ 54,704    $ 71,418       206,830       224,763
                                               ========    ========
RETAINED EARNINGS, BEGINNING OF PERIOD.......                             680,356       438,526
DIVIDENDS....................................                             (38,817)      (41,738)
                                                                       ----------    ----------
RETAINED EARNINGS, END OF PERIOD.............                          $  848,369    $  621,551
                                               ========    ========    ==========    ==========
NET INCOME PER SHARE (NOTE 5)................  $   1.01    $   1.33    $     3.82    $     4.34
                                               ========    ========    ==========    ==========
DIVIDENDS PER SHARE (NOTE 6).................  $   0.22    $   0.26    $     0.72    $     0.78
                                               ========    ========    ==========    ==========
</TABLE>
 
              (See Notes to the Consolidated Financial Statements)
                                        2
<PAGE>   3
 
                    POTASH CORPORATION OF SASKATCHEWAN INC.
 
                 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
                         (IN THOUSANDS OF U.S. DOLLARS)
 
<TABLE>
<CAPTION>
                                                              SEPTEMBER 30,    DECEMBER 31,
                                                                  1998             1997
                                                              -------------    ------------
                                                               (UNAUDITED)
<S>                                                           <C>              <C>
ASSETS
Current Assets
  Cash and cash equivalents.................................   $   35,682       $    8,756
  Accounts receivable.......................................      285,470          351,154
  Inventories (Note 4)......................................      348,531          353,425
  Prepaid expenses..........................................       35,021           21,131
                                                               ----------       ----------
                                                                  704,704          734,466
Property, plant and equipment...............................    2,971,979        2,995,625
Goodwill....................................................      563,289          574,296
Other assets................................................      120,888          123,205
                                                               ----------       ----------
                                                               $4,360,860       $4,427,592
                                                               ==========       ==========
LIABILITIES
Current Liabilities
  Short-term debt...........................................   $  107,910       $  101,928
  Accounts payable and accrued charges......................      338,376          348,103
  Current portion of long-term debt.........................          340            2,740
                                                               ----------       ----------
                                                                  446,626          452,771
Long-term debt..............................................      840,930        1,129,964
Deferred income tax liability...............................      385,849          338,431
Accrued post-retirement/post-employment benefits............      129,564          123,418
Accrued reclamation costs...................................      129,093          139,105
Other non-current liabilities and deferred credits..........       16,632           16,012
                                                               ----------       ----------
                                                                1,948,694        2,199,701
                                                               ----------       ----------
SHAREHOLDERS' EQUITY
Share Capital...............................................    1,227,311        1,211,049
Contributed Surplus.........................................      336,486          336,486
Retained Earnings...........................................      848,369          680,356
                                                               ----------       ----------
                                                                2,412,166        2,227,891
                                                               ----------       ----------
                                                               $4,360,860       $4,427,592
                                                               ==========       ==========
</TABLE>
 
              (See Notes to the Consolidated Financial Statements)
                                        3
<PAGE>   4
 
                    POTASH CORPORATION OF SASKATCHEWAN INC.
 
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                         (IN THOUSANDS OF U.S. DOLLARS)
                                  (UNAUDITED)
 
<TABLE>
<CAPTION>
                                                                 NINE MONTHS ENDED
                                                                    SEPTEMBER 30
                                                              ------------------------
                                                                1998          1997
                                                              ---------    -----------
<S>                                                           <C>          <C>
OPERATING ACTIVITIES
Net income..................................................  $ 206,830    $   224,763
Items not affecting cash
  Depreciation and amortization.............................    145,810        122,661
  Loss (gain) on disposal of fixed assets...................         45         (1,368)
  Provision for deferred income tax.........................     74,708         34,357
  Provision for post-retirement/post-employment benefits....      5,233          4,933
                                                              ---------    -----------
                                                                432,626        385,346
CHANGES IN NON-CASH OPERATING WORKING CAPITAL
  Accounts receivable.......................................     66,255         44,777
  Inventories...............................................      5,219         10,564
  Prepaid expenses..........................................    (12,785)        (2,331)
  Accounts payable and accrued charges......................    (23,388)       (64,571)
Accrued reclamation costs...................................     (5,737)        (5,620)
Other non-current liabilities and deferred credits..........     (1,291)        (7,718)
                                                              ---------    -----------
CASH PROVIDED BY OPERATING ACTIVITIES.......................    460,899        360,447
                                                              ---------    -----------
INVESTING ACTIVITIES
Acquisition of Arcadian Corporation.........................         --     (1,039,858)
Additions to property, plant and equipment..................    (89,959)       (87,126)
Proceeds from disposal of fixed assets......................      1,312          8,597
Additions to other assets...................................     (3,014)       (15,470)
                                                              ---------    -----------
CASH USED IN INVESTING ACTIVITIES...........................    (91,661)    (1,133,857)
                                                              ---------    -----------
CASH (DEFICIENCY) BEFORE FINANCING ACTIVITIES...............    369,238       (773,410)
                                                              ---------    -----------
FINANCING ACTIVITIES
(Repayment of) proceeds from long-term obligations..........   (325,739)       553,259
Proceeds from short-term debt...............................      5,982        140,000
Repayment of Senior Notes...................................         --       (374,526)
Dividends...................................................    (38,817)       (41,738)
Issuance of shares..........................................     16,262        576,943
                                                              ---------    -----------
CASH (USED IN ) PROVIDED BY FINANCING ACTIVITIES............   (342,312)       853,938
                                                              ---------    -----------
INCREASE IN CASH............................................     26,926         80,528
CASH AND CASH EQUIVALENTS (BANK INDEBTEDNESS), BEGINNING OF
  PERIOD....................................................      8,756         (6,330)
                                                              ---------    -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD....................  $  35,682    $    74,198
                                                              =========    ===========
Supplemental cash flow disclosure
  Interest paid.............................................  $  46,221    $    48,564
  Income taxes paid.........................................  $  17,358    $    39,436
                                                              =========    ===========
</TABLE>
 
              (See Notes to the Consolidated Financial Statements)
                                        4
<PAGE>   5
 
                    POTASH CORPORATION OF SASKATCHEWAN INC.
 
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                         (IN THOUSANDS OF U.S. DOLLARS)
                                  (UNAUDITED)
 
 1. SIGNIFICANT ACCOUNTING POLICIES
 
     The Company's accounting policies are in accordance with accounting
principles generally accepted in Canada. These policies are consistent with
accounting principles generally accepted in the United States except as outlined
in Note 7.
 
BASIS OF PRESENTATION
 
     The consolidated financial statements include the accounts of Potash
Corporation of Saskatchewan Inc. (PCS) and its principal operating subsidiaries
(the "Company" except to the extent the context otherwise requires):
     -- PCS Sales (Canada) Inc.
          -- PCS Sales (Iowa), Inc.
          -- PCS Sales (Indiana), Inc.
          -- Potash Corporation of Saskatchewan (Florida) Inc.
     -- Potash Corporation of Saskatchewan Transport Limited
     -- PCS Sales (USA), Inc.
     -- PCS Phosphate Company, Inc.
          -- Albright & Wilson Company (proportionately consolidated)
     -- White Springs Agricultural Chemicals, Inc.
     -- PCS Nitrogen, Inc.
          -- PCS Nitrogen Fertilizer, L.P.
          -- PCS Nitrogen Ohio, L.P.
          -- PCS Nitrogen Limited
          -- PCS Nitrogen Fertilizer Limited
          -- PCS Nitrogen Trinidad Limited
     -- PCS Cassidy Lake Company (PCS Cassidy Lake)
 
 2. CHANGE IN ACCOUNTING POLICY
 
     The Company has adopted the provisions of section 3465 of the Canadian
Institute of Chartered Accountants Handbook "Income Taxes". Under this
accounting policy, deferred income taxes are determined based on the difference
between the financial reporting and tax bases of assets and liabilities using
the enacted rates expected to apply to taxable income in the years in which
those temporary differences are expected to reverse. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense for the period is the tax payable for the
period and the change during the period in deferred tax assets and liabilities.
The effect of this change on prior period financial statements and current
period results is not significant.
 
 3. ACQUISITION OF POTASH COMPANY OF CANADA LIMITED
 
     On March 3, 1998, the Company acquired all the outstanding shares of Potash
Company of Canada Limited for cash of $9,280 (subject to adjustment). Concurrent
with the closing, the name Potash Company of Canada Limited was changed to PCS
Cassidy Lake Limited and this company was subsequently wound up. The acquisition
has been accounted for by the purchase method of accounting and, accordingly,
the results of operations of PCS Cassidy Lake have been included in the
consolidated financial statements from March 4, 1998.
 
     The consolidated financial statements are based on a preliminary allocation
of the purchase price (which is subject to adjustment). Changes to the
consolidated financial statements are expected as the purchase price is
adjusted, evaluations of assets and liabilities are completed, and additional
information becomes available.
 
                                        5
<PAGE>   6
 
Accordingly, the final allocated values may differ from the amounts set forth in
the consolidated financial statements.
 
     Due to the cessation of mining activities at PCS Cassidy Lake prior to
acquisition, no pro forma information is being presented.
 
 4. INVENTORIES
 
   
<TABLE>
<CAPTION>
                                                       SEPTEMBER 30   DECEMBER 31
                                                           1998          1997
                                                       ------------   -----------
                                                       (UNAUDITED)
<S>                                                    <C>            <C>
Finished product.....................................    $166,234      $162,181
Materials and supplies...............................     106,258       107,518
Raw materials........................................      54,576        59,689
Work in process......................................      21,463        24,037
                                                         --------      --------
                                                         $348,531      $353,425
                                                         ========      ========
</TABLE>
    
 
 5. NET INCOME PER SHARE (EARNINGS PER SHARE)
 
     Net income per share for the year to date is calculated on the weighted
average shares issued and outstanding during the nine months ended September 30,
1998 of 54,155,000 (1997 -- 51,765,000). Third quarter net income per share is
calculated on the weighted average shares issued and outstanding during the
three months ended September 30, 1998 of 54,235,000 (1997 -- 53,724,000).
 
 6. DIVIDENDS
 
     The Company declares its dividends in Canadian dollars.
 
 7. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
 
     A description of the accounting principles which differ significantly in
certain respects from generally accepted accounting principles in the United
States (US GAAP) follows:
 
     Foreign currency translation adjustment: The foreign currency translation
adjustment results from the restatement of prior periods so that all periods
presented are in the same reporting currency. US GAAP requires that the
comparative Consolidated Statements of Income and the Consolidated Statements of
Cash Flow be translated using weighted average exchange rates for the applicable
periods. In contrast, the Consolidated Statements of Financial Position are
translated using the exchange rates at the end of the applicable periods. The
difference in these exchange rates gives rise to the foreign currency
translation adjustment.
 
     Net sales: Sales are recorded net of freight costs (less related revenues)
and transportation and distribution expenses. US GAAP would require that net
freight costs be included in cost of goods sold and transportation and
distribution expenses be included in selling and administrative expenses.
 
     Non-cash financing and investing activities: Non-cash financing and
investing activities are included in the statement of cash flow. US GAAP
requires that non-cash financing and investing activities be disclosed
supplementally rather than being included in the statement of cash flow.
 
     In 1995, the Financial Accounting Standards Board issued Statement No. 123
"Accounting for Stock-Based Compensation". The Company has decided to continue
to apply APB Opinion 25 for measurement of compensation of employees.
 
     The application of US GAAP, as described above, would not have significant
effects on net income, net income per share, total assets or shareholders'
equity.
 
 8. COMPARATIVE FIGURES
 
     Certain of the prior period's comparative figures have been reclassified to
conform with the current period's presentation. Results for the first two months
of 1997 do not include the operations of PCS Nitrogen (formerly Arcadian
Corporation) acquired March 6, 1997.
 
                                        6
<PAGE>   7
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
 
OVERVIEW
 
     With the exception of purchased product, nitrogen data for 1997 is only for
the period subsequent to the acquisition of PCS Nitrogen (formerly Arcadian
Corporation) on March 6, 1997. Phosphate data since March 6, 1997 includes
phosphate produced by the acquired Geismar operation.
 
  Third Quarter
 
     Net sales and net income for the three months ended September 30, 1998
declined 9 percent and 23 percent, respectively, over the same period in 1997.
Net income for the three months ended September 30, 1998 was $54.7 million
(1997 -- $71.4 million) on net sales of $521.4 million (1997 -- $573.8 million),
or $1.01 per share (1997 -- $1.33 per share). Third quarter gross margin and
operating income were $140.2 million and $95.6 million, respectively, compared
to a gross margin of $149.5 million and operating income of $108.9 million for
the same period in 1997.
 
     For the three months ended September 30, 1998, North American and offshore
net sales revenue was $361.4 million (1997 -- $405.8 million) and $160.0 million
(1997 -- $168.0 million), respectively. North American net sales revenue
represented 69 percent (1997 -- 71 percent) of total net sales revenue, whereas
offshore sales represented 31 percent of net sales revenue (1997 -- 29 percent).
 
     Potash, phosphate and nitrogen net sales revenue for the third quarter of
1998 was $136.9 million (1997 -- $123.1 million), $245.0 million (1997 -- $235.2
million), and $139.5 million (1997 -- $215.5 million), respectively.
 
     Gross margin for the three months ended September 30, 1998 decreased $9.3
million or 6 percent over the same period in 1997. Gross margin for potash
products was $79.5 million, an increase of $11.5 million when compared to the
third quarter of 1997. Gross margin for phosphate products was $48.1 million, a
decrease of $3.6 million when compared to the same period in 1997. Gross margin
for nitrogen products was $12.6 million, a decrease of $17.2 million when
compared to the third quarter of 1997.
 
  Year to date
 
     Net sales and net income for the nine months ended September 30, 1998
improved 3 percent and declined by 8 percent, respectively, over the same period
in 1997. Net income for the nine months ended September 30, 1998 was $206.8
million (1997 -- $224.8 million) on net sales of $1,765.6 million (1997 --
$1,715.3 million), or $3.82 per share (1997 -- $4.34 per share). Gross margin
and operating income for the nine months ended September 30, 1998 were $477.5
million and $352.3 million, respectively, compared to a gross margin of $448.6
million and operating income of $354.1 million for the same period in 1997 (an
increase of 6 percent in gross margin and a marginal decrease in operating
income).
 
     For the nine months ended September 30, 1998, North American and offshore
net sales revenue was $1,264.5 million (1997 -- $1,234.9 million) and $501.1
million (1997 -- $480.4 million), respectively. North American net sales revenue
represented 72 percent (1997 -- 72 percent) of total net sales revenue, whereas
offshore sales represented 28 percent of net sales revenue (1997 -- 28 percent).
 
     Potash, phosphate and nitrogen net sales revenue for the first nine months
of 1998 was $441.7 million (1997 -- $367.4 million), $741.7 million
(1997 -- $705.8 million), and $582.2 million (1997 -- $642.1 million),
respectively.
 
     Gross margin for the first nine months of 1998 increased $28.9 million or 6
percent over the same period in 1997. Gross margin for potash products was
$255.8 million, an increase of $77.5 million when compared to the first nine
months of 1997. Gross margin for phosphate products was $161.1 million, an
increase of $15.4 million when compared to the same period in 1997. Gross margin
for nitrogen products was $60.6 million, a decrease of $64.0 million when
compared to 1997.
 
                                        7
<PAGE>   8
 
POTASH
 
  Third Quarter
 
     Potash net sales revenue for the three months ended September 30, 1998 was
$136.9 million (1997 -- $123.1 million) representing 26 percent (1997 -- 21
percent) of consolidated net sales revenue. Gross margin for potash was $79.5
million (1997 -- $68.0 million) or 57 percent of consolidated gross margin
(1997 -- 47 percent).
 
     In the third quarter of 1998, North American sales volumes increased 9
percent (0.065 million tonnes) as compared to third quarter sales in 1997
(1998 -- 0.780 million tonnes; 1997 -- 0.715 million tonnes). In 1998 an
anticipated price increase fueled domestic sales in the latter half of the third
quarter. Potash prices were 21 percent higher in the domestic market compared to
the third quarter of 1997 as a result of successive price increases that held
due primarily to tighter supply throughout the year. Offshore sales volumes
decreased by 14 percent compared to the third quarter of 1997 due to large
volume sales to China and Brazil in the second quarter of 1998 that the Company
believes had the effect of shifting sales tonnes from the third quarter. Prices
realized in the offshore markets increased 13 percent compared to the third
quarter of 1997 due to a combination of increased prices, sales mix and Canpotex
adjustments to interim pricing.
 
     North American net sales revenue from potash operations represented 49
percent of the potash net sales revenue of the Company during this year's third
quarter. In the three months ended September 30, 1998, the increase in North
American potash sales volumes and an increase in North American prices resulted
in a $16.1 million increase in North American potash net sales revenue over the
same period in 1997.
 
     Third quarter offshore net sales revenue from potash operations represented
51 percent of potash net sales revenue of the Company. The decrease in offshore
sales volumes and increase in offshore selling price resulted in a $2.3 million
decrease in offshore potash net sales revenue over the same period in 1997. In
the offshore market, the Company sold 0.739 million potash tonnes during the
third quarter of 1998 (1997 -- 0.863 million tonnes). Of the 0.739 million
tonnes, 0.604 million tonnes were sold through Canpotex and the remaining 0.135
million tonnes were produced by the New Brunswick divisions and sold and
delivered to offshore markets by PCS Sales.
 
  Year to Date
 
     Potash net sales revenue for the nine months ended September 30, 1998 was
$441.7 million (1997 -- $367.4 million) representing 25 percent (1997 -- 21
percent) of consolidated net sales revenue. Gross margin for potash was $255.8
million (1997 -- $178.3 million) or 54 percent of consolidated gross margin
(1997 -- 40 percent).
 
     In the first nine months of 1998, North American sales volumes decreased 4
percent (0.096 million tonnes) over the same period in 1997 (1998 -- 2.157
million tonnes; 1997 -- 2.253 million tonnes). Potash prices were 26 percent
higher in the domestic market compared to the third quarter of 1997 as a result
of successive price increases that held due primarily to tighter supply
throughout the year. Offshore sales volumes increased by 9 percent primarily due
to large volume sales to China and Brazil. Prices realized in the offshore
markets increased 10 percent as prices in China, Japan, Brazil and Malaysia were
higher than last year.
 
     North American net sales revenue from potash operations represented 41
percent of the Company's potash net sales revenue during this year's first nine
months. In the first nine months of 1998, the decrease in North American potash
sales volumes and an increase in North American prices resulted in a $30.5
million increase in North American potash net sales revenue over the same period
in 1997.
 
     In the first nine months of 1998, offshore net sales revenue from potash
operations represented 59 percent of potash net sales revenue of the Company. In
the third quarter of 1998, the increase in offshore sales volumes and offshore
selling price resulted in a $43.8 million increase in offshore potash net sales
revenue over the same period in 1997. In the offshore market, the Company sold
3.004 million potash tonnes (1997 -- 2.758 million tonnes). Of the 3.004 million
tonnes, 2.555 million tonnes were sold through Canpotex and the remaining 0.449
million tonnes were produced by the New Brunswick divisions and sold and
delivered to offshore markets by PCS Sales.
 
                                        8
<PAGE>   9
 
PHOSPHATE
 
  Third Quarter
 
     Phosphate net sales revenue for the three months ended September 30, 1998
was $245.0 million representing 47 percent of consolidated net sales revenue
(1997 -- 41 percent). The distribution of this revenue was as follows: liquid
phosphates $87.4 million (36 percent); solid phosphates $95.6 million (39
percent); feed supplements $42.7 million (17 percent); industrial products $18.9
million (8 percent) and phosphate rock $0.4 million. For the same three months
of 1997 net sales revenue was $235.2 million (41 percent of consolidated net
sales revenue); liquid phosphates $75.7 million (32 percent); solid phosphates
$91.2 million (39 percent); feed supplements $45.6 million (19 percent) and
industrial products $22.7 million (10 percent). Gross margin for phosphate was
$48.1 million (1997 -- $51.8 million) or 34 percent of consolidated gross margin
(1997 -- 35 percent).
 
     For the three months ended September 30, 1998 net sales revenue from liquid
and solid phosphates was $183.0 million (1997 -- $166.9 million) with sales
volumes of 0.915 million tonnes (1997 -- 0.856 million tonnes). Solid phosphates
(substantially all DAP) accounted for 39 percent (1997 -- 39 percent) of the
total phosphate net sales revenue. Liquid phosphate prices increased by 4
percent (due to a large percentage of higher priced domestic sales in the sales
mix) and sales volumes increased by 11 percent, resulting in additional net
sales revenue of $11.7 million over the third quarter of 1997. Third quarter
sales to India and Brazil are ahead of last year, with higher prices being
realized in Brazil. Solid phosphate prices increased marginally and sales
volumes increased by 4 percent as compared to the third quarter of 1997. China
took above contract volumes and India also took good volumes. This resulted in
additional net sales revenue of $4.4 million compared to the same period of
1997.
 
     Net sales revenue from feed supplements and industrial products during the
third quarter was $61.6 million (1997 -- $68.3 million) with sales volumes of
0.222 million tonnes (1997 -- 0.238 million tonnes). Feed supplement prices
decreased 3 percent and volumes decreased 4 percent as compared to the third
quarter of 1997 primarily due to adverse financial conditions in Asia. This
resulted in a decrease in net sales revenue of $2.9 million. Industrial product
prices declined by 2 percent while sales volumes decreased by 15 percent. Lower
prices were principally the result of product mix while the lower volumes were
primarily the result of a strike at a significant customers facility which
reduced sales. This resulted in a reduction of net sales revenue of $3.8
million. Non-fertilizer products represented 28 percent of phosphate sales
volumes but accounted for 45 percent of the phosphate gross margin.
 
  Year to Date
 
     Phosphate net sales revenue for the nine months ended September 30, 1998
was $741.7 million representing 42 percent of consolidated net sales revenue.
The distribution of this revenue was as follows: liquid phosphates $263.7
million (36 percent); solid phosphates $275.8 million (37 percent); feed
supplements $137.6 million (19 percent); industrial products $64.0 million (8
percent) and phosphate rock $0.6 million. For the comparable nine months of 1997
net sales revenue was $705.8 million (41 percent of consolidated net sales
revenue); liquid phosphates $225.2 million (32 percent); solid phosphates $272.1
million (39 percent); feed supplements $140.2 million (20 percent); industrial
products $67.0 million (9 percent) and phosphate rock $1.3 million. Gross margin
for phosphate was $161.1 million (1997 -- $145.7 million) or 34 percent of
consolidated gross margin (1997 -- 32 percent).
 
     For the nine months ended September 30, 1998 net sales revenue from liquid
and solid phosphates was $539.5 million (1997 -- $497.3 million) with sales
volumes of 2.667 million tonnes (1997 -- 2.533 million tonnes). Solid phosphates
(substantially all DAP) accounted for 37 percent (1997 -- 39 percent) of the
total phosphate net sales revenue. Liquid phosphate prices increased by 5
percent (due to a large percentage of higher priced domestic sales in the sales
mix) and sales volumes increased by 11 percent, resulting in additional net
sales revenue of $38.5 million compared to the first nine months of 1997.
Overall, solid phosphate prices and volumes in the first nine months of 1998
were consistent with the first nine months of 1997.
 
     Net sales revenue from feed supplements and industrial products during the
first nine months was $201.6 million (1997 -- $207.2 million) with sales volumes
of 0.716 million tonnes (1997 -- 0.727 million
                                        9
<PAGE>   10
 
tonnes). Feed supplement prices and volumes were generally steady as compared to
the first nine months of 1997. Industrial product prices declined by 3 percent
while sales volumes declined marginally. Non-fertilizer products represented 30
percent of phosphate sales volumes but accounted for 45 percent of the phosphate
gross margin.
 
NITROGEN
 
     With the exception of purchased product, nitrogen data for 1997 is only for
the period subsequent to the acquisition of PCS Nitrogen, Inc. (formerly
Arcadian Corporation) on March 6, 1997.
 
  Third Quarter
 
     Nitrogen net sales revenue for the three months ended September 30, 1998
was $139.5 million (1997 -- $215.5 million) representing 27 percent (1997 -- 38
percent) of consolidated net sales revenue. Net sales revenue includes $4.9
million (1997 -- $57.8 million) of purchased nitrogen products for resale. The
overall gross margin was impacted negatively by reductions in sales prices.
Manufactured nitrogen net sales revenue for the three months ended September 30,
1998 was $134.6 million. The distribution of this revenue was as follows:
ammonia $53.7 million (40 percent); urea $37.0 million (27 percent); nitrogen
solutions $12.7 million (9 percent) and other nitrogen products $31.2 million
(23 percent). Third quarter 1997 manufactured nitrogen net sales revenue was
$157.7 million as follows: ammonia $46.0 million (29 percent); urea $53.1
million (34 percent); nitrogen solutions $26.2 million (17 percent) and other
nitrogen products $32.4 million (20 percent). Gross margin for nitrogen products
was $12.6 million or 9 percent of consolidated gross margin.
 
     Sales tonnes for manufactured nitrogen products in the third quarter of
1998 were as follows: ammonia 0.410 million tonnes; urea 0.255 million tonnes;
nitrogen solutions 0.155 million tonnes and other nitrogen products 0.247
million tonnes. After large sales of nitrogen solutions in the second quarter,
volumes were down 50 percent in the third quarter on a year-over-year basis.
Sales of ammonia for fertilizer were slow but the strong DAP market supported
healthy sales to DAP producers. Agricultural urea sales came under pressure as
buyers delayed purchases based on expectations of declining prices in the US
Gulf. Sales tonnes for manufactured nitrogen products for the third quarter of
1997 were: ammonia 0.273 million tonnes; urea 0.335 million tonnes; nitrogen
solutions 0.311 million tonnes and other nitrogen products 0.255 million tonnes.
Purchased nitrogen products sales tonnes for the three months ended September
30, 1998 were 0.041 million tonnes (1997 -- 0.345 million tonnes).
 
     The nitrogen market has been under pressure since last year when China
stopped buying urea, depressing prices. Less ammonia was then upgraded to urea,
which pulled ammonia prices down. The market for nitrogen solutions was also
affected. However, the Company continued to sell a large portion of its North
American nitrogen production to the more stable industrial market
(non-fertilizer products represented 52 percent of nitrogen sales volumes and
provided 87 percent of the nitrogen gross margin).
 
  Year to Date
 
     Nitrogen net sales revenue for the first nine months was $582.2 million
(1997 -- $642.1 million) representing 33 percent (1997 -- 38 percent) of
consolidated net sales revenue. Net sales revenue includes $45.6 million (1997
-- $155.4 million) of purchased nitrogen products for resale. The overall gross
margin was impacted negatively by lower sales prices. Manufactured nitrogen net
sales revenue for the nine months ended September 30, 1998 was $536.6 million.
The distribution of this revenue was as follows: ammonia $153.8 million (29
percent); urea $156.5 million (29 percent); nitrogen solutions $124.9 million
(23 percent) and other nitrogen products $101.4 million (19 percent). For the
seven months of 1997 manufactured nitrogen net sales revenue was $486.7 million
as follows: ammonia $134.7 million (28 percent); urea $153.2 million (31
percent); nitrogen solutions $112.8 million (23 percent) and other nitrogen
products $86.0 million (18 percent). Gross margin for nitrogen products was
$60.6 million or 12 percent of consolidated gross margin.
 
     For the first nine months of 1998 sales tonnes for manufactured nitrogen
products were as follows: ammonia 1.143 million tonnes; urea 1.085 million
tonnes; nitrogen solutions 1.601 million tonnes and other nitrogen products
0.807 million tonnes. Sales tonnes for manufactured nitrogen products for the
seven months
                                       10
<PAGE>   11
 
of 1997 were as follows: ammonia 0.745 million tonnes; urea 0.876 million
tonnes; nitrogen solutions 1.124 million tonnes and other nitrogen products
0.650 million tonnes. Purchased nitrogen products sales tonnes for the nine
months ended September 30, 1998 were 0.386 million tonnes (1997 -- 0.864 million
tonnes).
 
     Non-fertilizer products (which are subject to contractual prices)
represented 35 percent of nitrogen sales volumes in the first nine months of
1998 and provided 86 percent of the nitrogen gross margin.
 
COST OF GOODS SOLD
 
  Third Quarter
 
   
     For the three months ended September 30, 1998, the Company produced 1.259
million potassium chloride (KCl) tonnes, compared to 1.297 million tonnes in the
third quarter of 1997, a decrease of 0.038 million tonnes (3 percent). For the
three months ended September 30, 1998, the Company produced 0.585 million
phosphoric acid (P(2)0(5)) tonnes from its phosphate operations, compared to
0.599 million tonnes in 1997. Nitrogen production was 0.781 million nitrogen (N)
tonnes in the third quarter of 1998 compared to 0.722 million tonnes in the same
period in 1997.
    
 
     Potash unit cost of sales increased by 8 percent in the third quarter of
1998 compared to the same period in 1997 due primarily to four more shutdown
weeks and the additional costs associated with locating and managing a saturated
brine inflow at the Company's Sussex mine (including costs that had previously
been deferred).
 
     Overall phosphate unit cost of sales in the third quarter of 1998 increased
3 percent compared to the same period in 1997. Preparations for Hurricane Bonnie
required the plant at Aurora to shut down for three days. Lower ammonia costs
were offset primarily by unexpectedly higher rock costs.
 
   
     In nitrogen, U.S. natural gas market prices were flat compared to the same
period in 1997. The per unit natural gas cost included in cost of sales
decreased approximately 13 percent from the same period in 1997. This saving was
partially offset by production problems at Lima following a turnaround. Overall,
per unit cost of sales of manufactured products decreased by 4 percent as
compared with the third quarter of 1997.
    
 
     Depreciation and amortization expense (including amortization of goodwill
of $3.7 million included in selling and administrative expenses) for the three
months ended September 30, 1998 was $48.2 million compared to $44.7 million in
1997.
 
  Year to Date
 
   
     For the nine months ended September 30, 1998, the Company produced 5.301
million KCl tonnes, compared to 4.636 million tonnes in the same period in 1997,
an increase of 0.665 million tonnes (14 percent). For the nine months ended
September 30, 1998, the Company produced 1.750 million P(2)0(5) tonnes from its
phosphate operations, compared to 1.720 million tonnes in 1997, an increase of
0.030 million tonnes (2 percent). Nitrogen production was 2.317 million N tonnes
in the first nine months of 1998 compared to 1.685 million N tonnes in seven
months of 1997.
    
 
   
     Potash unit cost of sales decreased by 5 percent in the first nine months
of 1998 compared to the same period in 1997 due primarily to higher production
volumes and fourteen fewer shutdown weeks in 1998. Reduced cost of sales
combined with domestic and offshore price increases resulted in a 39 percent
increase in the per unit gross margin realized on potash products on a
year-over-year basis. The Company's mine at Sussex, New Brunswick continues to
experience saturated brine inflow at the rate of approximately 200 gallons per
minute. Mining operations have not been affected by this inflow and efforts to
locate and control it continue. Costs associated with locating and managing this
inflow are being expensed as incurred and to date have not been material.
    
 
     Overall phosphate unit cost of sales in the first nine months of 1998 were
essentially flat compared to the same period of 1997. On an overall basis the
per unit gross margin on phosphate products increased by 7 percent on a year
over year basis, primarily due to improved prices.
 
     In nitrogen, U.S. natural gas market prices have decreased from the same
period in 1997. The per unit natural gas cost included in cost of sales
decreased approximately 7 percent from the same period in 1997.
                                       11
<PAGE>   12
 
This contributed to a reduction in the overall per unit cost of sales of
manufactured products of 4 percent as compared with the same period of 1997.
 
     Depreciation and amortization expense (including amortization of goodwill
of $11.0 million included in selling and administrative expenses) for the first
nine months of 1998 was $145.8 million compared to $122.7 million in 1997, an
increase of $23.1 million or 19 percent. The increase was largely attributable
to $17.5 million of additional depreciation and amortization due to a full nine
months of nitrogen operations.
 
SELLING AND ADMINISTRATIVE
 
  Third Quarter
 
     Selling and administrative expenses during the third quarter of 1998 were
$28.2 million as compared to $25.6 million in 1997, an increase of $2.6 million.
This increase was largely attributable to the combination of a settlement
relating to a Revenue Canada audit, increased compensation and an increase in
bad debt expense.
 
  Year to Date
 
     Selling and administrative expenses (which includes amortization of
goodwill) during the first nine months of 1998 were $86.5 million as compared to
$72.8 million in 1997, an increase of $13.7 million. The increase was
attributable to the inclusion of nitrogen operations for nine months in 1998
versus seven months in 1997 and to general increases in supplies, compensation
and benefits.
 
PROVINCIAL MINING AND OTHER TAXES
 
     Saskatchewan's Potash Production Tax is comprised of a base tax per tonne
of product sold and an additional tax based on mine-by-mine profits. PCS New
Brunswick Division and the Saskatchewan divisions pay a provincial crown
royalty, which is accounted for under cost of goods sold.
 
  Third Quarter
 
     For the third quarter of 1998, provincial mining and other taxes were $23.5
million ($15.64 per tonne on an overall basis) as compared to $20.6 million
($13.04 per tonne on an overall basis) in the third quarter of 1997, an increase
of $2.9 million. Potash Production Tax for the third quarter of 1998 was $18.6
million compared to $16.3 million in the same period in 1997, an increase of
$2.3 million. Although the Province of Saskatchewan has reduced the top marginal
rate of the profits portion of the Potash Production Tax from 50 percent to 35
percent effective January 1, 1998, the combination of higher prices and
increased volumes for potash increased the amount of tax paid in the third
quarter of 1998. Corporate capital tax was $4.9 million in the three months
ended September 30, 1998 compared to $4.3 million in the same period in 1997, an
increase of $0.6 million.
 
  Year to Date
 
     For the first nine months of 1998, provincial mining and other taxes were
$68.3 million ($13.34 per tonne on an overall basis) as compared to $45.5
million ($9.09 per tonne on an overall basis) in the first nine months of 1997,
an increase of $22.8 million. Potash Production Tax for the first nine months of
1998 was $52.9 million compared to $33.1 million in the same period in 1997, an
increase of $19.8 million. Although the Province of Saskatchewan has reduced the
top marginal rate of the profits portion of the Potash Production Tax from 50
percent to 35 percent effective January 1, 1998, the combination of higher
prices and increased volumes for potash increased the amount of tax paid in the
first nine months of 1998. Corporate capital tax was $15.4 million in the nine
months ended September 30, 1998 compared to $12.3 million in the same period in
1997, an increase of $3.1 million.
 
INTEREST EXPENSE
 
  Third Quarter
 
     For the third quarter of 1998, interest expense was $15.8 million as
compared to $22.7 million in the same period in 1997. The reduction in interest
expense is a result of the Company using its cash flow to pay down debt. Average
long-term debt outstanding during the third quarter of 1998 was $340.4 million
less than in the same period in 1997.
 
                                       12
<PAGE>   13
 
  Year to Date
 
     For the first nine months of 1998, interest expense was $52.9 million as
compared to $60.1 million in the same period in 1997. The 1998 amounts include
interest for the full nine months on the debt incurred in connection with the
acquisition of PCS Nitrogen in March 1997. This additional interest is more than
offset by the reduction in interest expense resulting from the Company using its
cash flow to pay down debt. Average long-term debt outstanding during the first
nine months of 1998 was $284.0 million less than the average long-term debt
outstanding from March 7, 1997 to September 30, 1997.
 
INCOME TAXES
 
  Third Quarter
 
     Income taxes in the third quarter of 1998 were $25.0 million, compared to
$14.7 million in the same period of 1997, an increase of $10.3 million. The
increase was principally attributable to the recording of a deferred income tax
provision relating to the Company's Canadian operations due to the strong
results generated by potash. The effective consolidated tax rate for the third
quarter of 1998 was 31 percent (1997 -- 17 percent), of which 3 percentage
points represented cash income taxes and 28 percentage points represented
deferred income taxes.
 
  Year to Date
 
     Income taxes in the first nine months of 1998 were $92.5 million, compared
to $69.2 million in the same period of 1997, an increase of $23.3 million. The
increase was attributable to the recording of a deferred income tax provision
relating to the Company's Canadian operations due to the strong results
generated by potash. The effective consolidated tax rate for the first nine
months of 1998 was 31 percent (1997 -- 24 percent) of which 6 percentage points
represented cash income taxes and 25 percentage points represented deferred
income taxes.
 
ANALYSIS OF FINANCIAL CONDITION AND CASH FLOW
 
     Working capital for the first nine months of 1998 decreased by $23.6
million. Cash flow from operations in the first nine months was $460.9 million
(1997 -- $360.4 million), a new record. Quick and current ratios were .72 and
1.58 at September 30, 1998, respectively (.79 and 1.62 at December 31, 1997).
The Company paid down its long-term debt by $325.7 million and paid dividends of
$38.8 million (1997 -- $41.7 million). Capital expenditures for the nine months
ended September 30, 1998 were $90.0 million (1997 -- $87.1 million). At the end
of the first nine months of 1998, the debt to capital ratio was at 28 percent
(36 percent at December 31, 1997) and the interest coverage ratio was 6.7 to 1
(5.5 to 1 at December 31, 1997). The net long-term debt to market capitalization
at September 30, 1998 was 28 percent (25 percent at December 31, 1997).
 
YEAR 2000 UPDATE
 
   
     The year 2000 poses a risk that computer systems or devices containing
microchips will give erroneous results if the year 2000 is stored as 00. The
Year 2000 problem, if not remedied, could result in a system failure or
miscalculations causing what are expected to be temporary disruptions of
operations, including, among other things, an inability to process transactions,
send invoices or engage in similar normal business activities. The Company
defines year 2000 compliance as computer systems or devices which will function
accurately before, on, and after January 1, 2000 without business or operational
interruptions, or repercussions, due to any date-related functions.
    
 
     The Company has a Year 2000 committee composed of executive and senior
management to oversee and direct the Company's efforts to identify and resolve
Year 2000 issues. The Company anticipated Year 2000 requirements for its
corporate, potash and sales administrative systems in the early 1990s by
implementing four digit century standards. Testing to confirm compliance is
substantially complete. Based on testing and investigations to date the Company
believes that these systems will not give rise to material Year 2000 problems.
Phosphate and nitrogen subsidiaries are conducting routine compliant upgrades of
their packaged administrative systems. The last such upgrade is expected to be
completed by mid-1999.
 
                                       13
<PAGE>   14
 
     The Company has completed the assessment of its operational systems, with
the exception of two nitrogen plants, the assessment of which it expects to
complete in the fourth quarter of 1998. The completed assessments have not
disclosed issues that cause the Company to believe that such operational systems
will give rise to material Year 2000 problems.
 
     The Company has formally communicated with critical customers, suppliers
and other external parties to determine the extent to which the Company may be
vulnerable to such parties' failure to resolve their Year 2000 issues. Written
assurances received to date have not identified any matters which are expected
to materially affect the Company. However, the effect, if any, on the Company's
results of operations or financial condition from the failure of these entities
to be Year 2000 ready is uncertain.
 
   
     The Company is primarily utilizing internal resources to identify, upgrade
and test its systems for Year 2000 compliance. The use of internal resources for
Year 2000 issues has not deferred any other material projects. The Company
anticipates that these efforts will be completed by mid-1999 and that the total
estimated costs will approximate $2.0 million. To date $0.2 million has been
expended. These costs have been and are expected to continue to be financed from
internally generated cash flows.
    
 
     At this time, the Company believes its most reasonably likely worst case
scenario is that there may be temporary disruptions of power to certain of its
plants and/or that there may be temporary disruptions of certain transportation
services. In either case, the Company does not believe that these disruptions
would have a material adverse effect on its results of operations or financial
condition. This is principally due to the fact that inventory levels would be
building in anticipation of the spring fertilizer season; fertilizer sales are
seasonally low at the beginning of the year and the disruptions, if any, would
be expected to be temporary.
 
   
     The Company does not currently have formal contingency plans documented but
continues to evaluate the circumstances in which such plans may be appropriate.
    
 
OUTLOOK
 
     The statements in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations" including those in the "Year 2000 Update"
and in this "Outlook" section, relating to the period after September 30, 1998,
are forward-looking statements subject to a number of risks and uncertainties. A
number of factors could cause actual results to differ materially from those in
the forward-looking statements, including, but not limited to, fluctuations in
supply and demand in fertilizer, sulphur and petrochemical markets, changes in
capital markets, changes in currency exchange rates, unexpected geological or
environmental conditions, imprecision in reserve estimates, and changes in
government policy. The Company sells to a diverse group of customers both by
geography and by end product. Market conditions by country will vary on a
year-over-year basis and sales shifts can be expected to occur from one period
to another. With respect to the Year 2000, factors that may cause these
differences include, but are not limited to, the ability to identify and
remediate all date sensitive lines of computer code or to replace embedded
computer chips in affected systems or equipment; the ability to develop and
implement contingency plans if necessary and the actions of customers, suppliers
and other external parties with respect to Year 2000 problems.
 
     The rising world population and the demand for more food and better diets,
with meat as a protein source, will continue to drive consumption for fertilizer
products over the long term. Over the short term, there should be increased
fertilizer usage as governments around the world are focusing on increasing food
production. While the consumption trend line is expected to continue to climb
over the long term, there will be, at times, fluctuations in demand.
 
     North American fertilizer demand is generally considered mature but is
expected to fluctuate from year to year, as a function of acres planted and
application rates per acre which are influenced by crop prices and weather.
 
     The Company sells a significant amount of potash and phosphate for
fertilizer use in the offshore markets. To date, the currency devaluation and
financial crises in Asian countries have not significantly affected these sales
(with the exception of potash sales to Indonesia). These countries purchase
fertilizer to grow cash crops for export and to grow food for internal use and
are making fertilizer purchases a priority in spending plans.
 
                                       14
<PAGE>   15
 
However, the persistence of the financial crises could affect the growth trend.
The United States Congress has passed a bill which exempts fertilizers from
trade sanctions against India and Pakistan.
 
     The Company also sells products in non-fertilizer markets which are
affected by domestic economic growth. Domestic economic conditions will impact
demand for these upgraded products. Demand for fertilizer and non-fertilizer
products will also be impacted by the degree that additional capacity,
particularly for nitrogen products, comes on stream.
 
     During the fourth quarter of 1998, sales volumes in the domestic potash
market are expected to be lower than the comparable period in 1997. The Company
announced a $6 per ton price increase effective September 14, 1998 which will be
fully tested when dealers begin to refill tonnage for the fall application
period.
 
   
     Potash sales volumes in the offshore markets in the fourth quarter of 1998
are expected to decline from the same period in 1997 due to reduced Canpotex
sales. Realized export prices are expected to remain higher on a year-over-year
basis. A price increase with Malaysia went into effect on October 1. Due to
changes in productive capacity of some Canpotex shareholder's mines, Canpotex is
currently reviewing a modest reallocation of sales tonnage amongst the members.
    
 
     The Company continues to operate its potash mines by matching production to
anticipated sales demand. Shutdowns at potash mines for inventory correction
will influence potash production costs on a quarter over quarter comparative
basis. The Company is currently planning ten shutdown weeks in the fourth
quarter of 1998, compared to six in the fourth quarter of 1997, which is
expected to impact fourth quarter production costs. Provincial mining and other
taxes in the fourth quarter, on a per tonne basis, are expected to be lower than
those in the third quarter of 1998 and the September 30 year-to-date amount.
 
     In the near-term phosphate prices are expected to remain firm. Worldwide
phosphoric acid capacity utilization continues to operate at historically high
levels. Liquid phosphate sales volumes in the fourth quarter of 1998 are
expected to be higher than the fourth quarter of 1997 as sales are on track for
the 1999 spring season.
 
     As two-thirds of U.S. DAP is exported, a strong offshore market is required
to maintain upward pressure on prices. To date in 1998, China, the biggest
offshore buyer, has purchased above contract sales volumes from PhosChem. India
is also buying good volumes and Pakistan is now back in the market which should
help fourth quarter volumes and prices. In addition, Mulberry Phosphates has
joined PhosChem, further strengthening the association's offshore sales
position.
 
     Feed supplement sales prices in the fourth quarter are expected to remain
at third quarter 1998 levels but decline slightly on a year-over-year basis.
 
     Urea prices continue to deteriorate below last year's levels. The urea
market is influenced by China where buyers remain inactive. The Company's
overall urea price realizations have been aided by higher priced industrial
product. The difficult urea market carries over into the nitrogen solutions
market, where prices continue to be disappointing. Fourth quarter prices are
expected to decline from the third quarter of 1998 and on a year-over-year basis
due to continued pressure from offshore suppliers.
 
     Production at the new ammonia plant in Trinidad, dedicated in August, will
reduce the Company's requirements for purchased product and increase its sales
of higher margin manufactured ammonia. This is expected to enhance the Company's
overall cost position. However, a water supply problem in Trinidad closed the
facility for twelve days which is expected to increase fourth quarter costs.
 
     Nitric acid sales volumes should increase late in the fourth quarter of
1998 or early in the first quarter of 1999 as new production comes on stream to
meet increased contractual commitments. Stable to increased volumes of this high
margin product are expected to contribute positively to nitrogen gross margin.
However, lower prices, generally, for all nitrogen products is expected to
result in a fourth quarter gross margin approximately the same as the gross
margin of the comparable period in 1997.
 
     Phosphate processing costs will continue to be affected by ammonia costs,
one of the key inputs. Ammonia costs in the fourth quarter are expected to be
lower than in the third quarter of 1998 (as ammonia costs tend to lag the market
by one quarter) and the comparable period in 1997. PCS can use approximately
 
                                       15
<PAGE>   16
 
one-quarter of the ammonia it produces and sells as ammonia at its own phosphate
plants. The Company manages its natural gas costs through a combination of fixed
price contracts, hedges and the Trinidad gas contracts. As the most flexible
producer, the Company will continue to allocate its nitrogen and phosphate feed
stock to production of the products that it expects will result in the best
margins.
 
     The narrative included under this Management's Discussion and Analysis of
Financial Condition and Results of Operations has been prepared with reference
to the consolidated financial statements reported under accounting principles
generally accepted in Canada.
 
                                       16
<PAGE>   17
 
PART II. OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
AGREEMENT SUSPENDING POTASH DUMPING INVESTIGATION
 
     In March 1987, the U.S. International Trade Commission made a preliminary
determination that there was a reasonable indication that the U.S. potash
producers had been injured by imports of Canadian potash, assuming that Canadian
potash had been "dumped" into the U.S. market at less than "fair value". On
August 26, 1987, the U.S. Department of Commerce ("Commerce") determined on a
preliminary basis that Canadian potash was, or was likely to be, sold in the
United States at less than "fair value".
 
     On January 8, 1988, Commerce signed a suspension agreement with all of the
potash producers in Canada, suspending the dumping investigation by Commerce.
The agreement stipulates that each producer's minimum price for potash sold in
the United States is to be based upon a formula determined by Commerce for each
producer that is designed to limit any dumping by that producer in the future.
Compliance with the agreement is monitored by Commerce. The agreement can be
terminated without termination of the suspended investigation if Commerce
determines that sales are made below the price determined under the formula,
producers having 15% or more of the total Canadian volume or value exported into
the United States withdraw from the agreement, or the conditions of the
agreement are otherwise not being met, in which case the suspended investigation
could be resumed by Commerce.
 
   
     In accordance with procedures established by the Uruguay Round Agreements
Act, Commerce and the U.S. International Trade Commission will initiate a
"sunset" review of the suspended investigation in April 1999 to determine
whether the suspended investigation and suspension agreement should be
terminated or should remain in effect.
    
 
LAKE CHARLES PLANT
 
     In connection with a 1992 incident at PCS Nitrogen's Lake Charles plant,
three groups of former employees of the Lake Charles plant filed three lawsuits
in July 1993 alleging that they were wrongfully terminated following the
incident. On August 11, 1998 judgment was entered in favor of the Company with
respect to all claims following an appeal to the United States Court of Appeals
for the Fifth Circuit on the basis that all three claims asserted were preempted
by federal labor law. The plaintiffs' Motion for Reconsideration was denied by
the Fifth Circuit on October 5, 1998.
 
FORMER ARCADIAN EXECUTIVE PROCEEDINGS
 
     On May 7, 1997, J. Douglas Campbell, Alfred L. Williams, Peter H. Kesser,
and David Alyea, former officers of Arcadian, filed lawsuits against the Company
in the United States District Court for the Western District of Tennessee. The
complaints allege that the Company breached employment agreements between
Arcadian and the officers and breached the related assumption agreement among
the Company, PCS Nitrogen, and Arcadian. In addition, Mr. Alyea's complaint
names Charles Childers, John Gugulyn, and John Hampton as additional defendants
and alleges that the defendants interfered with and conspired to interfere with
his employment agreement, and did not accurately state their intentions in
entering into the assumption agreement. The complaints of Mr. Campbell, Mr.
Williams, Mr. Kesser, and Mr. Alyea seek damages in excess of $22.2 million,
$6.2 million, $3.7 million, and $4.2 million, respectively. In addition, on
October 14, 1997, Charles Lance, a former officer of Arcadian Corporation, filed
a lawsuit in the same court against the Company also alleging breaches of his
employment agreement and the related assumption agreement. Mr. Lance seeks
damages in an amount exceeding $3.0 million. Each complaint also seeks certain
additional unspecified damages. On August 11, 1998, the Court ruled that the
employment agreements were enforceable against the Company and that equitable
claims and defenses against the executives for breaches of fiduciary duties,
corporate waste, and self-dealing should be asserted by PCS Nitrogen in the
state court action described below. Trial with respect to the claims of Mr.
Campbell, Mr. Williams and Mr. Kesser commenced on August 17, 1998 and concluded
on August 25, 1998. The parties' post-trial submissions, including written
Closing Arguments and responses thereto, were submitted by October 5, 1998.
Trial dates for the claims of Mr. Lance and Mr. Alyea have yet to be set by the
court. Management of the Company, having consulted with legal counsel, believes
that the lawsuits will not have a material adverse effect on the Company.
                                       17
<PAGE>   18
 
     On September 15, 1997, the Company and PCS Nitrogen filed an action in the
Circuit Court of Tennessee for Thirtieth Judicial District at Memphis against J.
Douglas Campbell, Peter H. Kesser, Alfred L. Williams, Charles W. Lance, Jr.,
and David L. Alyea, for declaratory relief and damages. The Company and PCS
Nitrogen allege that the defendants, all former executives of Arcadian,
committed breaches of their fiduciary duties in the negotiation of, obtaining
approval for, and execution of the employment agreements each of them had with
Arcadian. In addition, the Company has sought a declaratory judgment with
respect to the unenforceability of the employment agreements. On October 14,
1997, the defendants removed this action from the Circuit Court of Tennessee to
the United States District Court for the Western District of Tennessee. On
October 21, 1997, the five defendants filed counterclaims: (i) under the
Employee Retirement Income Security Act of 1974, as amended (ERISA), against PCS
Nitrogen, (ii) alleging that the Company and PCS Nitrogen unlawfully interfered
with their attainment of benefits under their employment agreements, and (iii)
incorporating by reference all claims asserted in their individually filed
complaints. The damages sought by the defendants in these counterclaims appear
substantially equivalent to the damages sought in their individually filed suits
as plaintiffs. On July 20, 1998 the federal court dismissed all of the former
executives' claims under ERISA and granted the Company's motion to remand the
case to state court, where it remains pending.
 
PORT AUTHORITY PROCEEDINGS
 
     On March 13, 1996, PCS Nitrogen, two other nitrogen producers, and up to 30
unidentified parties were named as defendants in a lawsuit filed in the name of
the Port Authority of New York and New Jersey (the "Port Authority") in New
Jersey state court. The lawsuit was actually filed by attorneys hired by the
Port Authority's subrogated insurance carriers. The Port Authority's insurers
are seeking to recover damages allegedly incurred as a result of the explosion
at the World Trade Center in New York City on February 26, 1993. The Port
Authority's insurers allege in their complaint that the two other named
defendants and one or more unidentified parties (as manufacturers of ammonium
nitrate), PCS Nitrogen and one or more unidentified parties (as producers of
urea), and one or more unidentified makers of nitric acid are liable under
various tort theories for unspecified property damages, business interruption
losses, lost rent and other damages allegedly incurred by the Port Authority as
a result of the World Trade Center explosion. The lawsuit was removed to federal
court in New Jersey. On February 7, 1997, the defendants filed a motion to
dismiss the suit for failure to state a claim upon which relief could be
granted. On December 19, 1997, that motion was granted and the complaint was
dismissed with prejudice. On January 15, 1998, the Port Authority appealed the
dismissal to the United States Court of Appeals for the Third Circuit. The case
was fully briefed and oral argument was heard on September 17, 1998. Although
neither the Port Authority nor its subrogated insurers have alleged or otherwise
revealed the amount of damages sought from PCS Nitrogen in the lawsuit, the Port
Authority stated in an affidavit submitted to the court in support of its motion
to disqualify its insurers' counsel that as of April 9, 1996, the Port Authority
had submitted to its insurers claims relating to the explosion totaling
approximately $340 million, of which the insurers had paid approximately $160
million. PCS Nitrogen is unaware of any basis for liability and intends to
continue to vigorously defend the lawsuit.
 
                                       18
<PAGE>   19
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
  (a) EXHIBITS
 
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                     DESCRIPTION OF DOCUMENT
    -------                    -----------------------
    <S>      <C>
     2       Agreement and Plan of Merger dated September 2, 1996, as
             amended, by and among the registrant, Arcadian Corporation
             and PCS Nitrogen, Inc., incorporated by reference to Exhibit
             2(a) to Amendment Number 2 to the registrant's Form S-4
             (File No. 333-17841).
     3(a)    Restated Articles of Incorporation of the registrant dated
             October 31, 1989, as amended May 11, 1995, incorporated by
             reference to Exhibit 3(i) to the registrant's report on Form
             10-K for the year ended December 31, 1995 (the "1995 Form
             10-K").
     3(b)    Bylaws of the registrant dated March 2, 1995, incorporated
             by reference to Exhibit 3(ii) to the 1995 Form 10-K.
     4(a)    Term Credit Agreement between The Bank of Nova Scotia and
             other financial institutions and the registrant dated
             October 4, 1996, incorporated by reference to Exhibit 4(b)
             to the registrant's Form S-4 (File No. 333-17841).
     4(b)    First Amending Agreement to Term Credit Agreement between
             The Bank of Nova Scotia and other financial institutions and
             the registrant dated November 6, 1997, incorporated by
             reference to Exhibit 4(b) to the registrant's report on Form
             10-K for the year ended December 31, 1997 (the "1997 Form
             10-K").
     4(c)    Second Amending Agreement to Term Credit Agreement between
             the Bank of Nova Scotia and other financial institutions and
             the registrant dated December 15, 1997, incorporated by
             reference to Exhibit 4(c) to the 1997 Form 10-K.
     4(d)    Third Amending Agreement to Term Credit Agreement between
             the Bank of Nova Scotia and other financial institutions and
             the registrant dated October 2, 1998.
     4(e)    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.
    10(a)    Suspension Agreement concerning Potassium Chloride from
             Canada dated January 7, 1988, among U.S. Department of
             Commerce, the registrant, International Minerals and
             Chemical (Canada) Limited, Noranda, Inc. (Central Canada
             Potash Co.), Potash Company of America, a Division of Rio
             Algom Limited, S & P Canada, II (Kalium Chemicals), Cominco
             Ltd., Potash Company of Canada Limited, Agent for
             Denison-Potacan Potash Co. and Saskterra Fertilizers Ltd.,
             incorporated by reference to Exhibit 10(a) to the
             registrant's registration statement on Form F-1 (File No.
             33-31303) (the "F-1 Registration Statement").
    10(b)    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 F-1 Registration
             Statement.
    10(c)    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(d)    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.
</TABLE>
 
                                       19
<PAGE>   20
 
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                     DESCRIPTION OF DOCUMENT
    -------                    -----------------------
    <S>      <C>
    10(e)    Agreement of Limited Partnership of Arcadian Fertilizer,
             L.P. dated as of March 3, 1992 (form), 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(f)    Geismar Complex Services Agreement dated June 4, 1984,
             between Allied Corporation 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(g)    Canpotex/PCS Amending Agreement, dated with effect October
             1, 1992, incorporated by reference to Exhibit 10(f) to the
             1995 Form 10-K.
    10(h)    Canpotex PCA Collateral Withdrawing/PCS Amending Agreement,
             dated with effect October 7, 1993, incorporated by reference
             to Exhibit 10(g) to the 1995 Form 10-K.
    10(i)    Esterhazy Restated Mining and Processing Agreement dated
             January 31, 1978, between International Minerals and
             Chemical Corporation (Canada) Limited and the registrant's
             predecessor, incorporated by reference to Exhibit 10(e) to
             the F-1 Registration Statement.
    10(j)    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(k)    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.
             ("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(l)    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) to the 1997 Form 10-K.
    10(m)    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(n)    First Amendment to Manufacturing Support Agreement between
             BP Chemicals and Arcadian Ohio, L.P., dated as of November
             25, 1996, incorporated by reference to Exhibit 10(l) to the
             1997 Form 10-K.
    10(o)    Amended and Restated Agreement for Lease dated as of May 16,
             1997, between Trinidad Ammonia Company, Limited Partnership,
             and PCS Nitrogen Fertilizer, L.P., incorporated by reference
             to Exhibit 10(n) to the registrant's report on Form 10-Q for
             the quarterly period ended June 30, 1997 (the "Second
             Quarter 1997 Form 10-Q").
    10(p)    Amended and Restated Lease Agreement dated as of May 16,
             1997, between Trinidad Ammonia Company, Limited Partnership,
             and PCS Nitrogen Fertilizer, L.P., incorporated by reference
             to Exhibit 10(o) to the Second Quarter 1997 Form 10-Q.
    10(q)    Amended and Restated Agreement for Lease dated as of May 16,
             1997, between Nitrogen Leasing Company, Limited Partnership,
             and PCS Nitrogen Fertilizer, L.P., incorporated by reference
             to Exhibit 10(p) to the Second Quarter 1997 Form 10-Q.
    10(r)    Amended and Restated Lease Agreement dated as of May 16,
             1997, between Nitrogen Leasing Company, Limited Partnership,
             and PCS Nitrogen Fertilizer, L.P., incorporated by reference
             to Exhibit 10(q) to the Second Quarter 1997 Form 10-Q.
</TABLE>
 
                                       20
<PAGE>   21
 
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                     DESCRIPTION OF DOCUMENT
    -------                    -----------------------
    <S>      <C>
    10(s)    Amended and Restated Purchase Option Agreement dated as of
             May 16, 1997, between Nitrogen Leasing Company, Limited
             Partnership, and PCS Nitrogen Fertilizer Operations, Inc.,
             incorporated by reference to Exhibit 10(r) to the Second
             Quarter 1997 Form 10-Q.
    10(t)    Amended and Restated Purchase Option Agreement dated as of
             May 16, 1997, between Trinidad Ammonia Company, Limited
             Partnership and PCS Nitrogen Fertilizer Operations, Inc.,
             incorporated by reference to Exhibit 10(s) to the Second
             Quarter 1997 Form 10-Q.
    10(u)    Agreement dated January 1, 1997 between the registrant and
             Charles E. Childers, incorporated by reference to Exhibit
             10(s) to the 1997 Form 10-K.
    10(v)    Potash Corporation of Saskatchewan Inc. Stock Option Plan --
             Directors, incorporated by reference to Exhibit 4(b) to the
             registrant's Post-effective Amendment No. 1 to Form S-8
             (File No. 333-19215).
    10(w)    The registrant's Stock Option Plan -- Officers and Key
             Employees, incorporated by reference to Schedule D to the
             registrant's proxy circular for the annual and special
             meeting of shareholders held on May 7, 1998.
    10(x)    Short-Term Incentive Plan of the registrant, as amended May
             7, 1997, incorporated by reference to Exhibit 10(w) to the
             Second Quarter 1997 Form 10-Q.
    10(y)    Long-Term Incentive Plan of the registrant, as amended May
             7, 1997, incorporated by reference to Exhibit 10(x) to the
             Second Quarter 1997 Form 10-Q.
    10(z)    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(aa)   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(bb)   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(cc)   Employment Agreement between Arcadian Corporation and Gary
             E. Carlson, dated as of September 5, 1996, incorporated by
             reference to Exhibit 10(cc) to the registrant's report on
             Form 10-Q for the period ended March 31, 1997.
    10(dd)   Deferred Compensation Plan, for certain officers of PCS
             Phosphate Company, Inc., incorporated by reference to
             Exhibit 10(r) to the 1995 Form 10-K.
    10(ee)   Supplemental Retirement Benefits Plan, for eligible
             employees of PCS Phosphate Company, Inc., incorporated by
             reference to Exhibit 10(s) to the 1995 Form 10-K.
    10(ff)   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(gg)   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(hh)   General Partnership Agreement forming Albright & Wilson
             Company, dated July 29, 1988 and amended January 31, 1995,
             between Texasgulf Inc. and Albright & Wilson Americas, Inc.,
             incorporated by reference to Exhibit 10(v) to the 1995 Form
             10-K.
    10(ii)   Royalty Agreement dated October 7, 1993, by and between the
             registrant and Rio Algom Limited, incorporated by reference
             to Exhibit 10(x) to the 1995 Form 10-K.
</TABLE>
 
                                       21
<PAGE>   22
 
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                     DESCRIPTION OF DOCUMENT
    -------                    -----------------------
    <S>      <C>
    10(jj)   Amending Resolution and revised forms of agreement regarding
             Supplemental Retirement Income Plan of the registrant,
             incorporated by reference to Exhibit 10(x) to the
             registrant's report on Form 10-Q for the quarterly period
             ended June 30, 1996.
    10(kk)   Employment Agreement dated January 21, 1998, by and between
             PCS Phosphate Company, Inc. and Thomas J. Wright,
             incorporated by reference to Exhibit 10(ii) to the 1997 Form
             10-K.
    10(ll)   Shareholder Rights Agreement as amended and restated on
             March 2, 1998, incorporated by reference to Schedule B to
             the registrant's proxy circular for the annual and special
             meeting of shareholders held on May 7, 1998.
    11       Statement re Computation of Per Share Earnings.
    27       Financial Data Schedule
</TABLE>
 
     (b) REPORTS ON FORM 8-K
 
         There were no reports on Form 8-K filed by the registrant during the
         quarterly period covered by this Report.
 
CAUTIONARY STATEMENT
 
     This report contains forward looking statements. A number of factors could
cause actual results to differ materially from those in the forward looking
statements, including, but not limited to, fluctuation in supply and demand in
fertilizer markets, fluctuation in supply and demand in sulfur and petrochemical
markets, changes in capital markets, changes in currency exchange rates,
unexpected geological or environmental conditions, imprecision in reserve
estimates and changes in governmental policy.
 
                                       22
<PAGE>   23
 
                                   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.
 
November 5, 1998                          By: /s/ JOHN L.M. HAMPTON
                                          --------------------------------------
                                          John L.M. Hampton
                                          Senior Vice President, General Counsel
                                          and Secretary
 
November 5, 1998                          By: /s/ BARRY E. HUMPHREYS
                                          --------------------------------------
                                          Barry E. Humphreys
                                          Sr. Vice President, Finance and
                                          Treasurer
                                          (Principal Financial and Accounting
                                          Officer)
 
                                       23
<PAGE>   24
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                     DESCRIPTION OF DOCUMENT
    -------                    -----------------------
    <S>      <C>                                                           <C>
     2       Agreement and Plan of Merger dated September 2, 1996, as
             amended, by and among the registrant, Arcadian Corporation
             and PCS Nitrogen, Inc., incorporated by reference to Exhibit
             2(a) to Amendment Number 2 to the registrant's Form S-4
             (File No. 333-17841).
     3(a)    Restated Articles of Incorporation of the registrant dated
             October 31, 1989, as amended May 11, 1995, incorporated by
             reference to Exhibit 3(i) to the registrant's report on Form
             10-K for the year ended December 31, 1995 (the "1995 Form
             10-K").
     3(b)    Bylaws of the registrant dated March 2, 1995, incorporated
             by reference to Exhibit 3(ii) to the 1995 Form 10-K.
     4(a)    Term Credit Agreement between The Bank of Nova Scotia and
             other financial institutions and the registrant dated
             October 4, 1996, incorporated by reference to Exhibit 4(b)
             to the registrant's Form S-4 (File No. 333-17841).
     4(b)    First Amending Agreement to Term Credit Agreement between
             The Bank of Nova Scotia and other financial institutions and
             the registrant dated November 6, 1997, incorporated by
             reference to Exhibit 4(b) to the registrant's report on Form
             10-K for the year ended December 31, 1997 (the "1997 Form
             10-K").
     4(c)    Second Amending Agreement to Term Credit Agreement between
             the Bank of Nova Scotia and other financial institutions and
             the registrant dated December 15, 1997, incorporated by
             reference to Exhibit 4(c) to the 1997 Form 10-K.
     4(d)    Third Amending Agreement to Term Credit Agreement between
             the Bank of Nova Scotia and other financial institutions and
             the registrant dated October 2, 1998.
     4(e)    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.
    10(a)    Suspension Agreement concerning Potassium Chloride from
             Canada dated January 7, 1988, among U.S. Department of
             Commerce, the registrant, International Minerals and
             Chemical (Canada) Limited, Noranda, Inc. (Central Canada
             Potash Co.), Potash Company of America, a Division of Rio
             Algom Limited, S & P Canada, II (Kalium Chemicals), Cominco
             Ltd., Potash Company of Canada Limited, Agent for
             Denison-Potacan Potash Co. and Saskterra Fertilizers Ltd.,
             incorporated by reference to Exhibit 10(a) to the
             registrant's registration statement on Form F-1 (File No.
             33-31303) (the "F-1 Registration Statement").
    10(b)    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 F-1 Registration
             Statement.
    10(c)    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.
</TABLE>
 
                                       24
<PAGE>   25
 
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                     DESCRIPTION OF DOCUMENT
    -------                    -----------------------
    <S>      <C>                                                           <C>
    10(d)    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(e)    Agreement of Limited Partnership of Arcadian Fertilizer,
             L.P. dated as of March 3, 1992 (form), 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(f)    Geismar Complex Services Agreement dated June 4, 1984,
             between Allied Corporation 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(g)    Canpotex/PCS Amending Agreement, dated with effect October
             1, 1992, incorporated by reference to Exhibit 10(f) to the
             1995 Form 10-K.
    10(h)    Canpotex PCA Collateral Withdrawing/PCS Amending Agreement,
             dated with effect October 7, 1993, incorporated by reference
             to Exhibit 10(g) to the 1995 Form 10-K.
    10(i)    Esterhazy Restated Mining and Processing Agreement dated
             January 31, 1978, between International Minerals and
             Chemical Corporation (Canada) Limited and the registrant's
             predecessor, incorporated by reference to Exhibit 10(e) to
             the F-1 Registration Statement.
    10(j)    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(k)    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.
             ("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(l)    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) to the 1997 Form 10-K.
    10(m)    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(n)    First Amendment to Manufacturing Support Agreement between
             BP Chemicals and Arcadian Ohio, L.P., dated as of November
             25, 1996, incorporated by reference to Exhibit 10(l) to the
             1997 Form 10-K.
</TABLE>
 
                                       25
<PAGE>   26
 
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                     DESCRIPTION OF DOCUMENT
    -------                    -----------------------
    <S>      <C>                                                           <C>
    10(o)    Amended and Restated Agreement for Lease dated as of May 16,
             1997, between Trinidad Ammonia Company, Limited Partnership,
             and PCS Nitrogen Fertilizer, L.P., incorporated by reference
             to Exhibit 10(n) to the registrant's report on Form 10-Q for
             the quarterly period ended June 30, 1997 (the "Second
             Quarter 1997 Form 10-Q").
    10(p)    Amended and Restated Lease Agreement dated as of May 16,
             1997, between Trinidad Ammonia Company, Limited Partnership,
             and PCS Nitrogen Fertilizer, L.P., incorporated by reference
             to Exhibit 10(o) to the Second Quarter 1997 Form 10-Q.
    10(q)    Amended and Restated Agreement for Lease dated as of May 16,
             1997, between Nitrogen Leasing Company, Limited Partnership,
             and PCS Nitrogen Fertilizer, L.P., incorporated by reference
             to Exhibit 10(p) to the Second Quarter 1997 Form 10-Q.
    10(r)    Amended and Restated Lease Agreement dated as of May 16,
             1997, between Nitrogen Leasing Company, Limited Partnership,
             and PCS Nitrogen Fertilizer, L.P., incorporated by reference
             to Exhibit 10(q) to the Second Quarter 1997 Form 10-Q.
    10(s)    Amended and Restated Purchase Option Agreement dated as of
             May 16, 1997, between Nitrogen Leasing Company, Limited
             Partnership, and PCS Nitrogen Fertilizer Operations, Inc.,
             incorporated by reference to Exhibit 10(r) to the Second
             Quarter 1997 Form 10-Q.
    10(t)    Amended and Restated Purchase Option Agreement dated as of
             May 16, 1997, between Trinidad Ammonia Company, Limited
             Partnership and PCS Nitrogen Fertilizer Operations, Inc.,
             incorporated by reference to Exhibit 10(s) to the Second
             Quarter 1997 Form 10-Q.
    10(u)    Agreement dated January 1, 1997 between the registrant and
             Charles E. Childers, incorporated by reference to Exhibit
             10(s) to the 1997 Form 10-K.
    10(v)    Potash Corporation of Saskatchewan Inc. Stock Option Plan --
             Directors, incorporated by reference to Exhibit 4(b) to the
             registrant's Post-effective Amendment No. 1 to Form S-8
             (File No. 333-19215).
    10(w)    The registrant's Stock Option Plan -- Officers and Key
             Employees, incorporated by reference to Schedule D to the
             registrant's proxy circular for the annual and special
             meeting of shareholders held on May 7, 1998.
    10(x)    Short-Term Incentive Plan of the registrant, as amended May
             7, 1997, incorporated by reference to Exhibit 10(w) to the
             Second Quarter 1997 Form 10-Q.
    10(y)    Long-Term Incentive Plan of the registrant, as amended May
             7, 1997, incorporated by reference to Exhibit 10(x) to the
             Second Quarter 1997 Form 10-Q.
    10(z)    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(aa)   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(bb)   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.
</TABLE>
 
                                       26
<PAGE>   27
 
<TABLE>
<CAPTION>
    EXHIBIT
    NUMBER                     DESCRIPTION OF DOCUMENT
    -------                    -----------------------
    <S>      <C>                                                           <C>
    10(cc)   Employment Agreement between Arcadian Corporation and Gary
             E. Carlson, dated as of September 5, 1996, incorporated by
             reference to Exhibit 10(cc) to the registrant's report on
             Form 10-Q for the period ended March 31, 1997.
    10(dd)   Deferred Compensation Plan, for certain officers of PCS
             Phosphate Company, Inc., incorporated by reference to
             Exhibit 10(r) to the 1995 Form 10-K.
    10(ee)   Supplemental Retirement Benefits Plan, for eligible
             employees of PCS Phosphate Company, Inc., incorporated by
             reference to Exhibit 10(s) to the 1995 Form 10-K.
    10(ff)   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(gg)   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(hh)   General Partnership Agreement forming Albright & Wilson
             Company, dated July 29, 1988 and amended January 31, 1995,
             between Texasgulf Inc. and Albright & Wilson Americas, Inc.,
             incorporated by reference to Exhibit 10(v) to the 1995 Form
             10-K.
    10(ii)   Royalty Agreement dated October 7, 1993, by and between the
             registrant and Rio Algom Limited, incorporated by reference
             to Exhibit 10(x) to the 1995 Form 10-K.
    10(jj)   Amending Resolution and revised forms of agreement regarding
             Supplemental Retirement Income Plan of the registrant,
             incorporated by reference to Exhibit 10(x) to the
             registrant's report on Form 10-Q for the quarterly period
             ended June 30, 1996.
    10(kk)   Employment Agreement dated January 21, 1998, by and between
             PCS Phosphate Company, Inc. and Thomas J. Wright,
             incorporated by reference to Exhibit 10(ii) to the 1997 Form
             10-K.
    10(ll)   Shareholder Rights Agreement as amended and restated on
             March 2, 1998, incorporated by reference to Schedule B to
             the registrant's proxy circular for the annual and special
             meeting of shareholders held on May 7, 1998.
    11       Statement re Computation of Per Share Earnings.
    27       Financial Data Schedule
</TABLE>
 
                                       27