##### Table of Contents









UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





FORM 10-Q


|   |  |                                                                                             
|-- |  | --------------------------------------------------------------------------------------------
|þ  |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934 
|  
|   |  | For the Quarterly Period Ended March 31, 2006                                               
|  
|OR
|  
|o  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934

Commission File
Number 1-10351


POTASH CORPORATION OF SASKATCHEWAN INC.


(Exact name of registrant as specified in its charter)


|                                                                   |  |                                         
|------------------------------------------------------------------ |  | ----------------------------------------
|Canada                                                             |  | N/A                                     
|(State or other jurisdiction of
    incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

|                                         |  |           
|---------------------------------------- |  | ----------
|122  1st Avenue South                   |  |           
|Saskatoon, Saskatchewan, Canada          |  | S7K 7G3   
|(Address of principal executive offices) |  | (Zip Code)

306-933-8500


(Registrants telephone number, including area code)




þ o


12b-2).


þ o




o þ












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TABLE OF CONTENTS



|                                                                                             |  |  |  |  |  |  |  | 
|-------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I.FINANCIAL INFORMATION                                                                
|ITEM 1.FINANCIAL STATEMENTS                                                                 
|Condensed Consolidated Statements of Financial Position                                     
|Condensed Consolidated Statements of Operations and Retained Earnings                       
|Condensed Consolidated Statements of Cash Flow                                              
|ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|QUARTERLY FINANCIAL HIGHLIGHTS                                                              
|ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|ITEM 4.CONTROLS AND PROCEDURES                                                              
|PART II.OTHER INFORMATION                                                                   
|ITEM 5.OTHER INFORMATION                                                                    
|ITEM 6.EXHIBITS                                                                             
|SIGNATURES                                                                                  
|EXHIBIT INDEX                                                                               
|2006 Performance Option Plan                                                                
|Computation of Per Share Earnings Three Months Ended March 31                               
|Certification of William J Doyle                                                            
|Certification of Wayne R Brownlee                                                           
|Sarbanes-Oxley Certification                                                                



---



##### Table of Contents






PART I.       FINANCIAL
INFORMATION







ITEM 1.       FINANCIAL
STATEMENTS


Potash Corporation of Saskatchewan Inc.







Condensed Consolidated Statements of Financial Position


(in millions of US dollars except share amounts)


(unaudited)


|                                                                |                                                                                                                                                                              |           |         |              |  |   |         |       | 
|--------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------- | ------- | ------------ |  | - | ------- | ----- | 
|                                                                |                                                                                                                                                                              | March 31, |         | December 31,
|                                                                |                                                                                                                                                                              | 2006      |         | 2005        
|                                                               
|Assets                                                          |                                                                                                                                                                              |           |         |              |  |   |         |      
|Current assets                                                  |                                                                                                                                                                              |           |         |              |  |   |         |      
|                                                                | Cash and cash equivalents                                                                                                                                                    |           | $       | 172.7        |  |   | $       | 93.9  | 
|                                                                | Accounts receivable                                                                                                                                                          |           |         | 390.0        |  |   |         | 453.3 | 
|                                                                | Inventories (Note 2)                                                                                                                                                         |           |         | 513.4        |  |   |         | 522.5 | 
|                                                                | Prepaid expenses and other current assets                                                                                                                                    |           |         | 68.1         |  |   |         | 41.1  | 
|                                                               
|                                                                |                                                                                                                                                                              |           | 1,144.2 |              |  |   | 1,110.8 |      
|                                                               
|Property, plant and equipment                                   |                                                                                                                                                                              |           | 3,327.2 |              |  |   | 3,262.8 |      
|Other assets (Note 3)                                           |                                                                                                                                                                              |           | 989.8   |              |  |   | 852.8   |      
|Intangible assets                                               |                                                                                                                                                                              |           | 33.9    |              |  |   | 34.5    |      
|Goodwill                                                        |                                                                                                                                                                              |           | 97.0    |              |  |   | 97.0    |      
|                                                               
|                                                                |                                                                                                                                                                              | $         | 5,592.1 |              |  | $ | 5,357.9 |      
|                                                               
|                                                               
|Liabilities                                                     |                                                                                                                                                                              |           |         |              |  |   |         |      
|Current liabilities                                             |                                                                                                                                                                              |           |         |              |  |   |         |      
|                                                                | Short-term debt                                                                                                                                                              |           | $       | 604.9        |  |   | $       | 252.2 | 
|                                                                | Accounts payable and accrued charges                                                                                                                                         |           |         | 591.4        |  |   |         | 842.7 | 
|                                                                | Current portion of long-term debt                                                                                                                                            |           |         | 1.2          |  |   |         | 1.2   | 
|                                                               
|                                                                |                                                                                                                                                                              |           | 1,197.5 |              |  |   | 1,096.1 |      
|                                                               
|Long-term debt                                                  |                                                                                                                                                                              |           | 1,257.3 |              |  |   | 1,257.6 |      
|Future income tax liability                                     |                                                                                                                                                                              |           | 561.5   |              |  |   | 543.3   |      
|Accrued pension and other post-retirement benefits              |                                                                                                                                                                              |           | 213.0   |              |  |   | 213.9   |      
|Accrued environmental costs and asset retirement obligations    |                                                                                                                                                                              |           | 100.1   |              |  |   | 97.3    |      
|Other non-current liabilities and deferred credits              |                                                                                                                                                                              |           | 15.3    |              |  |   | 17.2    |      
|                                                               
|                                                                |                                                                                                                                                                              |           | 3,344.7 |              |  |   | 3,225.4 |      
|                                                               
|                                                               
|Contingencies and Guarantees(Notes 10 and 11,
    respectively) |                                                                                                                                                                              |           |         |              |  |   |         |      
|Shareholders Equity                                            |                                                                                                                                                                              |           |         |              |  |   |         |      
|Share capital                                                   |                                                                                                                                                                              |           | 1,383.0 |              |  |   | 1,379.3 |      
|                                                                | Unlimited authorization of common shares without par value;
    issued and outstanding 103,672,170 and 103,593,792 at
    March 31, 2006 and December 31, 2005, respectively |           |         |              |  |   |         |       | 
|                                                                | Unlimited authorization of first preferred shares; none
    outstanding                                                                                                      |           |         |              |  |   |         |       | 
|Contributed surplus                                             |                                                                                                                                                                              |           | 37.3    |              |  |   | 36.3    |      
|Retained earnings                                               |                                                                                                                                                                              |           | 827.1   |              |  |   | 716.9   |      
|                                                               
|                                                                |                                                                                                                                                                              |           | 2,247.4 |              |  |   | 2,132.5 |      
|                                                               
|                                                                |                                                                                                                                                                              | $         | 5,592.1 |              |  | $ | 5,357.9 |      
|                                                               



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Potash Corporation of Saskatchewan Inc.







Condensed Consolidated Statements of Operations and Retained
Earnings


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


(unaudited)


|                                       |         |                    |       |      |  |   |       |      | 
|-------------------------------------- | ------- | ------------------ | ----- | ---- |  | - | ----- | ---- | 
|                                       |         | Three Months Ended
|                                       |         | March 31          
|                                       |         | 2006               |       | 2005
|                                      
|Sales(Note 6)                          |         | $                  | 861.6 |      |  | $ | 921.4 |     
|Less: Freight                          |         |                    | 54.9  |      |  |   | 67.2  |     
|Transportation
    and distribution    |         |                    | 31.2  |      |  |   | 28.9  |     
|Cost of
    goods sold                 |         |                    | 572.0 |      |  |   | 566.8 |     
|                                      
|Gross Margin                           |         |                    | 203.5 |      |  |   | 258.5 |     
|                                      
|Selling and administrative             |         |                    | 30.8  |      |  |   | 29.3  |     
|Provincial mining and other taxes      |         |                    | 14.2  |      |  |   | 38.4  |     
|Foreign exchange gain                  |         |                    | (2.4  | )    |  |   | (5.9  | )   
|Other income (Note 8)                  |         |                    | (31.2 | )    |  |   | (20.0 | )   
|                                      
|                                       |         |                    | 11.4  |      |  |   | 41.8  |     
|                                      
|Operating Income                       |         |                    | 192.1 |      |  |   | 216.7 |     
|Interest Expense                       |         |                    | 23.2  |      |  |   | 20.7  |     
|                                      
|Income Before Income Taxes             |         |                    | 168.9 |      |  |   | 196.0 |     
|Income Taxes(Note 4)                   |         |                    | 43.4  |      |  |   | 64.7  |     
|                                      
|Net Income                             |         |                    | 125.5 |      |  |   | 131.3 |     
|Retained Earnings, Beginning of Period |         |                    | 716.9 |      |  |   | 701.5 |     
|Dividends                              |         |                    | (15.3 | )    |  |   | (16.8 | )   
|                                      
|Retained Earnings, End of Period       |         | $                  | 827.1 |      |  | $ | 816.0 |     
|                                      
|Net Income Per Share(Note 5)           |         |                    |       |      |  |   |       |     
|                                       | Basic   |                    | $     | 1.21 |  |   | $     | 1.18 | 
|                                       | Diluted |                    | $     | 1.19 |  |   | $     | 1.15 | 
|                                      
|Dividends Per Share                    |         | $                  | 0.15  |      |  | $ | 0.15  |     
|                                      



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Potash Corporation of Saskatchewan Inc.







Condensed Consolidated Statements of Cash Flow


(in millions of US dollars)


(unaudited)


|                                                                                           |                                                           |                    |        |        |   |   |       |       |  
|------------------------------------------------------------------------------------------ | --------------------------------------------------------- | ------------------ | ------ | ------ | - | - | ----- | ----- | -
|                                                                                           |                                                           | Three Months Ended
|                                                                                           |                                                           | March 31          
|                                                                                           |                                                           | 2006               |        | 2005  
|                                                                                          
|Operating Activities                                                                       |                                                           |                    |        |        |   |   |       |      
|Net income                                                                                 |                                                           | $                  | 125.5  |        |   | $ | 131.3 |      
|                                                                                          
|Adjustments to reconcile net income to cash (used in) provided
    by operating activities |                                                           |                    |        |        |   |   |       |      
|                                                                                           | Depreciation and amortization                             |                    |        | 58.8   |   |   |       | 59.6  |  
|                                                                                           | Stock-based compensation                                  |                    |        | 1.5    |   |   |       | 1.0   |  
|                                                                                           | Loss on disposal of long-term assets                      |                    |        | 0.3    |   |   |       | 2.0   |  
|                                                                                           | Foreign exchange on future income tax                     |                    |        | (0.2   | ) |   |       | (1.2  | )
|                                                                                           | Provision for future income tax                           |                    |        | 13.9   |   |   |       | 6.5   |  
|                                                                                           | Undistributed earnings of equity investees                |                    |        | (12.4  | ) |   |       | (13.1 | )
|                                                                                           | Other long-term liabilities                               |                    |        | 2.0    |   |   |       | 5.2   |  
|                                                                                          
|                                                                                           | Subtotal of adjustments                                   |                    |        | 63.9   |   |   |       | 60.0  |  
|                                                                                          
|                                                                                           | Changes in non-cash operating working capital             |                    |        |        |   |   |       |       |  
|                                                                                           | Accounts receivable                                       |                    |        | 63.3   |   |   |       | (63.5 | )
|                                                                                           | Inventories                                               |                    |        | 8.9    |   |   |       | (1.7  | )
|                                                                                           | Prepaid expenses and other current assets                 |                    |        | (27.0  | ) |   |       | (6.2  | )
|                                                                                           | Accounts payable and accrued charges                      |                    |        | (247.1 | ) |   |       | 1.8   |  
|                                                                                          
|                                                                                           | Subtotal of changes in non-cash operating working capital |                    |        | (201.9 | ) |   |       | (69.6 | )
|                                                                                          
|Cash (used in) provided by operating activities                                            |                                                           |                    | (12.5  | )      |   |   | 121.7 |      
|                                                                                          
|Investing Activities                                                                       |                                                           |                    |        |        |   |   |       |      
|Additions to property, plant and equipment                                                 |                                                           |                    | (120.0 | )      |   |   | (63.0 | )    
|Purchase of long-term investments                                                          |                                                           |                    | (126.3 | )      |   |   |      |      
|Proceeds from disposal of property, plant and equipment                                    |                                                           |                    | 2.0    |        |   |   | 4.4   |      
|Proceeds from sale of long-term investments                                                |                                                           |                    |       |        |   |   | 5.2   |      
|Other assets and intangible assets                                                         |                                                           |                    | (4.5   | )      |   |   | 3.0   |      
|                                                                                          
|Cash used in investing activities                                                          |                                                           |                    | (248.8 | )      |   |   | (50.4 | )    
|                                                                                          
|Cash before financing activities                                                           |                                                           |                    | (261.3 | )      |   |   | 71.3  |      
|                                                                                          
|Financing Activities                                                                       |                                                           |                    |        |        |   |   |       |      
|Repayment of long-term debt obligations                                                    |                                                           |                    | (0.3   | )      |   |   | (0.2  | )    
|Proceeds from short-term debt obligations                                                  |                                                           |                    | 352.7  |        |   |   | 0.8   |      
|Dividends                                                                                  |                                                           |                    | (15.3  | )      |   |   | (16.5 | )    
|Repurchase of common shares                                                                |                                                           |                    |       |        |   |   | (82.3 | )    
|Issuance of common shares                                                                  |                                                           |                    | 3.0    |        |   |   | 47.0  |      
|                                                                                          
|Cash provided by (used in) financing activities                                            |                                                           |                    | 340.1  |        |   |   | (51.2 | )    
|                                                                                          
|Increase in Cash and Cash Equivalents                                                      |                                                           |                    | 78.8   |        |   |   | 20.1  |      
|Cash and Cash Equivalents, Beginning of Period                                             |                                                           |                    | 93.9   |        |   |   | 458.9 |      
|                                                                                          
|Cash and Cash Equivalents, End of Period                                                   |                                                           | $                  | 172.7  |        |   | $ | 479.0 |      
|                                                                                          
|Supplemental cash flow disclosure                                                          |                                                           |                    |        |        |   |   |       |      
|                                                                                           | Interest paid                                             |                    | $      | 16.3   |   |   | $     | 11.2  |  
|                                                                                           | Income taxes paid                                         |                    | $      | 142.0  |   |   | $     | 75.5  |  
|                                                                                          



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Potash Corporation of Saskatchewan Inc.


Notes to the Condensed Consolidated Financial Statements


For the Three Months Ended March 31, 2006


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


(unaudited)




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

Basis of Presentation






Significant Accounting Policies


Implicit Variable Interests


AcG-15 (EIC-157).


Recent Accounting Pronouncements


Comprehensive Income, Equity, Financial Instruments and
Hedges






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Financial assets will be classified as either held-to-maturity,
    held-for-trading or available-for-sale. Held-to-maturity
    classification will be restricted to fixed maturity instruments
    that the company intends and is able to hold to maturity and
    will be accounted for at amortized cost. Held-for-trading
    instruments will be recorded at fair value with realized and
    unrealized gains and losses reported in net income. The
    remaining financial assets will be classified as
    available-for-sale. These will be recorded at fair value with
    unrealized gains and losses reported in a new category of the
    Consolidated Statements of Financial Position under
    shareholders equity called other comprehensive income
    (OCI); and

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Derivatives will be classified as held-for-trading unless
    designated as hedging instruments. All derivatives, including
    embedded derivatives that must be separately accounted for, will
    be recorded at fair value on the Consolidated Statements of
    Financial Position. For derivatives that hedge the changes in
    fair value of an asset or liability, changes in the
    derivatives fair value will be reported in net income and
    be substantially offset by changes in the fair value of the
    hedged asset or liability attributable to the risk being hedged.
    For derivatives that hedge variability in cash flows, the
    effective portion of the changes in the derivatives fair
    value will be initially recognized in OCI and the ineffective
    portion will be recorded in net income. The amounts temporarily
    recorded in OCI will subsequently be reclassified to net income
    in the periods when net income is affected by the variability in
    the cash flows of the hedged item.



Conditional Asset Retirement Obligations




Stripping Costs Incurred in the Production Phase of a Mining
Operation




2.   Inventories


|                       |  |           |       |              |  |   |       | 
|---------------------- |  | --------- | ----- | ------------ |  | - | ----- | 
|                       |  | March 31, |       | December 31,
|                       |  | 2006      |       | 2005        
|                      
|Finished product       |  | $         | 261.2 |              |  | $ | 268.5 | 
|Intermediate products  |  |           | 96.0  |              |  |   | 94.9  | 
|Raw materials          |  |           | 57.8  |              |  |   | 59.9  | 
|Materials and supplies |  |           | 98.4  |              |  |   | 99.2  | 
|                      
|                       |  | $         | 513.4 |              |  | $ | 522.5 | 
|                      

3.   Other Assets




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4.   Income Taxes






5.   Net Income Per Share






6.   Segment Information




|                                |  |                                   |       |          |  |           |       |            |  |              |       |  |  |   |     |  |  |   |       | 
|------------------------------- |  | --------------------------------- | ----- | -------- |  | --------- | ----- | ---------- |  | ------------ | ----- |  |  | - | --- |  |  | - | ----- | 
|                                |  | Three Months Ended March 31, 2006
|                                |  | Potash                            |       | Nitrogen |  | Phosphate |       | All Others |  | Consolidated
|                               
|Sales                           |  | $                                 | 225.8 |          |  | $         | 331.9 |            |  | $            | 303.9 |  |  | $ |    |  |  | $ | 861.6 | 
|Freight                         |  |                                   | 25.0  |          |  |           | 9.6   |            |  |              | 20.3  |  |  |   |    |  |  |   | 54.9  | 
|Transportation and distribution |  |                                   | 7.4   |          |  |           | 13.3  |            |  |              | 10.5  |  |  |   |    |  |  |   | 31.2  | 
|Net sales  third party         |  |                                   | 193.4 |          |  |           | 309.0 |            |  |              | 273.1 |  |  |   |    |  |  |   |       | 
|Cost of goods sold              |  |                                   | 102.6 |          |  |           | 229.6 |            |  |              | 239.8 |  |  |   |    |  |  |   | 572.0 | 
|Gross margin                    |  |                                   | 90.8  |          |  |           | 79.4  |            |  |              | 33.3  |  |  |   |    |  |  |   | 203.5 | 
|Depreciation and amortization   |  |                                   | 11.8  |          |  |           | 19.3  |            |  |              | 24.3  |  |  |   | 3.4 |  |  |   | 58.8  | 
|Inter-segment sales             |  |                                   | 4.0   |          |  |           | 31.9  |            |  |              | 2.2   |  |  |   |    |  |  |   |      | 

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|                                |  |                                   |       |          |  |           |       |            |  |              |       |  |  |   |     |  |  |   |       | 
|------------------------------- |  | --------------------------------- | ----- | -------- |  | --------- | ----- | ---------- |  | ------------ | ----- |  |  | - | --- |  |  | - | ----- | 
|                                |  | Three Months Ended March 31, 2005
|                                |  | Potash                            |       | Nitrogen |  | Phosphate |       | All Others |  | Consolidated
|                               
|Sales                           |  | $                                 | 352.1 |          |  | $         | 304.8 |            |  | $            | 264.5 |  |  | $ |    |  |  | $ | 921.4 | 
|Freight                         |  |                                   | 37.2  |          |  |           | 10.2  |            |  |              | 19.8  |  |  |   |    |  |  |   | 67.2  | 
|Transportation and distribution |  |                                   | 9.1   |          |  |           | 11.7  |            |  |              | 8.1   |  |  |   |    |  |  |   | 28.9  | 
|Net sales  third party         |  |                                   | 305.8 |          |  |           | 282.9 |            |  |              | 236.6 |  |  |   |    |  |  |   |       | 
|Cost of goods sold              |  |                                   | 129.6 |          |  |           | 217.6 |            |  |              | 219.6 |  |  |   |    |  |  |   | 566.8 | 
|Gross margin                    |  |                                   | 176.2 |          |  |           | 65.3  |            |  |              | 17.0  |  |  |   |    |  |  |   | 258.5 | 
|Depreciation and amortization   |  |                                   | 18.1  |          |  |           | 16.9  |            |  |              | 22.3  |  |  |   | 2.3 |  |  |   | 59.6  | 
|Inter-segment sales             |  |                                   | 2.0   |          |  |           | 19.8  |            |  |              | 4.2   |  |  |   |    |  |  |   |      | 

7.   Pension and Other Post-Retirement
Expenses


|                               |  |                |      |      |  |   |      |  
|------------------------------ |  | -------------- | ---- | ---- |  | - | ---- | -
|                               |  | Three Months  
|                               |  | Ended March 31
|Defined Benefit Pension Plans  |  | 2006           |      | 2005
|                              
|Service cost                   |  | $              | 3.6  |      |  | $ | 3.6  |  
|Interest cost                  |  |                | 8.4  |      |  |   | 7.8  |  
|Expected return on plan assets |  |                | (9.6 | )    |  |   | (8.9 | )
|Net amortization               |  |                | 2.9  |      |  |   | 1.7  |  
|                              
|Net expense                    |  | $              | 5.3  |      |  | $ | 4.2  |  
|                              

|                            |  |                |      |      |  |   |     | 
|--------------------------- |  | -------------- | ---- | ---- |  | - | --- | 
|                            |  | Three Months  
|                            |  | Ended March 31
|Other Post-Retirement Plans |  | 2006           |      | 2005
|                           
|Service cost                |  | $              | 1.2  |      |  | $ | 1.4 | 
|Interest cost               |  |                | 3.0  |      |  |   | 3.3 | 
|Net amortization            |  |                | (0.1 | )    |  |   | 0.4 | 
|                           
|Net expense                 |  | $              | 4.1  |      |  | $ | 5.1 | 
|                           



8.   Other Income


|                                      |  |                |      |      |  |   |      | 
|------------------------------------- |  | -------------- | ---- | ---- |  | - | ---- | 
|                                      |  | Three Months  
|                                      |  | Ended March 31
|                                      |  | 2006           |      | 2005
|                                     
|Share of earnings of equity investees |  | $              | 12.4 |      |  | $ | 13.1 | 
|Dividend income                       |  |                | 9.1  |      |  |   | 3.1  | 
|Other                                 |  |                | 9.7  |      |  |   | 3.8  | 
|                                     
|                                      |  | $              | 31.2 |      |  | $ | 20.0 | 
|                                     

9.   Seasonality




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10. Contingencies


Canpotex




Mining Risk




Investment in APC




Legal and Other Matters








9



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11. Guarantees




10



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




(a) Long-term investments:




11



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(b) Property, plant and equipment and goodwill:


(c) Depreciation and amortization:


(d) Exploration costs:


(e) Pre-operating costs: start-up


(f) Pension and other post-retirement benefits:




(g) Foreign currency translation adjustment:


(h) Derivative instruments and hedging activities: non-trading


12



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(i) Comprehensive income: non-owner


(j) Stock-based compensation: 04-6


(k) Stripping costs


(l) Income taxes related to the above adjustments:


(m) Income tax consequences of stock-based employee
compensation: paid-in


(n) Cash flow statements:


13



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The application of US GAAP, as described above, would have
had the following effects on net income, net income per share,
total assets, shareholders equity, comprehensive income
and accumulated other comprehensive income.


|                                                          |                                                        |                    |             |      |   |   |             |       |  
|--------------------------------------------------------- | ------------------------------------------------------ | ------------------ | ----------- | ---- | - | - | ----------- | ----- | -
|                                                          |                                                        | Three Months Ended
|                                                          |                                                        | March 31          
|                                                          |                                                        | 2006               |             | 2005
|                                                         
|Net income as reported  Canadian GAAP                    |                                                        | $                  | 125.5       |      |   | $ | 131.3       |      
|Items increasing (decreasing) reported net income         |                                                        |                    |             |      |   |   |             |      
|                                                          | Cash flow hedge ineffectiveness                        |                    |             | 0.4  |   |   |             | 0.2   |  
|                                                          | Depreciation and amortization                          |                    |             | 2.1  |   |   |             | 2.1   |  
|                                                          | Stripping costs                                        |                    |             | 1.5  |   |   |             |      |  
|                                                          | Deferred income taxes related to the above adjustments |                    |             | (1.4 | ) |   |             | (0.7  | )
|                                                          | Income taxes related to stock-based compensation       |                    |             | (0.8 | ) |   |             | (10.8 | )
|                                                         
|Net income  US GAAP                                      |                                                        | $                  | 127.3       |      |   | $ | 122.1       |      
|                                                         
|Basic weighted average shares outstanding 
    US GAAP   |                                                        |                    | 103,641,000 |      |   |   | 111,110,000 |      
|                                                         
|Diluted weighted average shares outstanding 
    US GAAP |                                                        |                    | 105,825,000 |      |   |   | 114,265,000 |      
|                                                         
|Basic net income per share  US GAAP                      |                                                        | $                  | 1.23        |      |   | $ | 1.10        |      
|                                                         
|Diluted net income per share  US GAAP                    |                                                        | $                  | 1.20        |      |   | $ | 1.07        |      
|                                                         

|                                                    |                                                                   |           |         |              |   |   |         |        |  
|--------------------------------------------------- | ----------------------------------------------------------------- | --------- | ------- | ------------ | - | - | ------- | ------ | -
|                                                    |                                                                   | March 31, |         | December 31,
|                                                    |                                                                   | 2006      |         | 2005        
|                                                   
|Total assets as reported  Canadian GAAP            |                                                                   | $         | 5,592.1 |              |   | $ | 5,357.9 |       
|Items increasing (decreasing) reported total assets |                                                                   |           |         |              |   |   |         |       
|                                                    | Inventory                                                         |           |         | 0.2          |   |   |         | (7.2   | )
|                                                    | Available-for-sale securities (unrealized holding gain)           |           |         | 429.8        |   |   |         | 355.2  |  
|                                                    | Fair value of derivative instruments                              |           |         | 208.1        |   |   |         | 277.1  |  
|                                                    | Property, plant and equipment                                     |           |         | (116.0       | ) |   |         | (118.1 | )
|                                                    | Exploration costs                                                 |           |         | (6.4         | ) |   |         | (6.4   | )
|                                                    | Stripping costs                                                   |           |         | (22.9        | ) |   |         |       |  
|                                                    | Pension and other post-retirement benefits                        |           |         | 14.1         |   |   |         | 14.1   |  
|                                                    | Intangible asset relating to additional minimum pension liability |           |         | 11.1         |   |   |         | 11.1   |  
|                                                    | Investment in equity investees                                    |           |         | 4.8          |   |   |         | 4.8    |  
|                                                    | Goodwill                                                          |           |         | (46.7        | ) |   |         | (46.7  | )
|                                                   
|Total assets  US GAAP                              |                                                                   | $         | 6,068.2 |              |   | $ | 5,841.8 |       
|                                                   

14



---



##### Table of Contents



|                                                            |                                                                                     |           |         |              |   |   |         |        |  
|----------------------------------------------------------- | ----------------------------------------------------------------------------------- | --------- | ------- | ------------ | - | - | ------- | ------ | -
|                                                            |                                                                                     | March 31, |         | December 31,
|                                                            |                                                                                     | 2006      |         | 2005        
|                                                           
|Total shareholders equity as reported  Canadian
    GAAP  |                                                                                     | $         | 2,247.4 |              |   | $ | 2,132.5 |       
|Items increasing (decreasing) reported shareholders equity |                                                                                     |           |         |              |   |   |         |       
|                                                            | Accumulated other comprehensive income, net of related income
    taxes             |           |         | 396.4        |   |   |         | 343.2  |  
|                                                            | Foreign currency translation adjustment                                             |           |         | 20.9         |   |   |         | 20.9   |  
|                                                            | Provision for asset impairment                                                      |           |         | (218.0       | ) |   |         | (218.0 | )
|                                                            | Depreciation and amortization                                                       |           |         | 55.3         |   |   |         | 53.2   |  
|                                                            | Exploration costs                                                                   |           |         | (6.4         | ) |   |         | (6.4   | )
|                                                            | Stripping costs                                                                     |           |         | 1.5          |   |   |         |       |  
|                                                            | Cash flow hedge ineffectiveness                                                     |           |         | 5.3          |   |   |         | 4.9    |  
|                                                            | Pension and other post-retirement benefits                                          |           |         | 14.1         |   |   |         | 14.1   |  
|                                                            | Share of earnings of equity investees                                               |           |         | 3.7          |   |   |         | 3.7    |  
|                                                            | Deferred income taxes relating to the above adjustments                             |           |         | 25.6         |   |   |         | 27.0   |  
|                                                            | Cumulative-effect adjustment to retained earnings in respect of
    stripping costs |           |         | (16.3        | ) |   |         |       |  
|                                                           
|Shareholders equity  US GAAP                              |                                                                                     | $         | 2,529.5 |              |   | $ | 2,375.1 |       
|                                                           

|                               |                                                                              |                    |       |       |   |   |       |       |  
|------------------------------ | ---------------------------------------------------------------------------- | ------------------ | ----- | ----- | - | - | ----- | ----- | -
|                               |                                                                              | Three Months Ended
|                               |                                                                              | March 31          
|                               |                                                                              | 2006               |       | 2005 
|                              
|Net income  US GAAP           |                                                                              | $                  | 127.3 |       |   | $ | 122.1 |      
|                              
|Other comprehensive income     |                                                                              |                    |       |       |   |   |       |      
|                               | Change in unrealized holding gain on available-for-sale
    securities       |                    |       | 74.6  |   |   |       | 42.4  |  
|                               | Change in gains and losses on derivatives designated as cash
    flow hedges |                    |       | (40.7 | ) |   |       | 94.0  |  
|                               | Reclassification to income of gains and losses on cash
    flow hedges       |                    |       | (21.3 | ) |   |       | (8.6  | )
|                               | Deferred income taxes related to other comprehensive income                  |                    |       | 40.6  |   |   |       | (42.2 | )
|                              
|                               | Other comprehensive income, net of related income taxes                      |                    |       | 53.2  |   |   |       | 85.6  |  
|                              
|Comprehensive income  US GAAP |                                                                              | $                  | 180.5 |       |   | $ | 207.7 |      
|                              



|                                                                        |  |           |       |              |  |   |       |  
|----------------------------------------------------------------------- |  | --------- | ----- | ------------ |  | - | ----- | -
|                                                                        |  | March 31, |       | December 31,
|                                                                        |  | 2006      |       | 2005        
|                                                                       
|Unrealized gains and losses on available-for-sale securities            |  | $         | 330.9 |              |  | $ | 236.3 |  
|Gains and losses on derivatives designated as cash
    flow hedges      |  |           | 141.0 |              |  |   | 182.4 |  
|Additional minimum pension liability                                    |  |           | (55.4 | )            |  |   | (55.4 | )
|Share of accumulated other comprehensive income of equity
    investees |  |           | 0.8   |              |  |   | 0.8   |  
|Foreign currency translation adjustment                                 |  |           | (20.9 | )            |  |   | (20.9 | )
|                                                                       
|Accumulated other comprehensive
    income(1) 
    US GAAP             |  | $         | 396.4 |              |  | $ | 343.2 |  
|                                                                       



|    |                                                                                                          
|--- | ---------------------------------------------------------------------------------------------------------
|(1) | Accumulated other comprehensive income is a separate component
    of shareholders equity under US GAAP.

Supplemental US GAAP Disclosures


Recent Accounting Pronouncements




15



---



##### Table of Contents



Available-for-Sale Security




Stock-based Compensation






Stock Option Plans










16



---



##### Table of Contents





|                               |  |                         |           |                                                   |  |              |       |           |  |            |   |           |  |              |   |           |  |  |           |   |  |   |       |  |  |  |   |  |  |   |       | 
|------------------------------ |  | ----------------------- | --------- | ------------------------------------------------- |  | ------------ | ----- | --------- |  | ---------- | - | --------- |  | ------------ | - | --------- |  |  | --------- | - |  | - | ----- |  |  |  | - |  |  | - | ----- | 
|                               |  | Performance Option Plan |           | Officers and Employees and Directors Option Plans
|                              
|                               |  | Weighted-               |           |                                                   |  | Weighted-    |       |          
|                               |  | Number of               |           | Weighted-                                         |  | Average      |       | Aggregate |  | Number of  |   | Weighted- |  | Average      |   | Aggregate
|                               |  | Shares                  |           | Average                                           |  | Remaining    |       | Intrinsic |  | Shares     |   | Average   |  | Remaining    |   | Intrinsic
|                               |  | Subject to              |           | Exercise                                          |  | Contractual  |       | Value (in |  | Subject to |   | Exercise  |  | Contractual  |   | Value (in
|                               |  | Option                  |           | Price                                             |  | Term (Years) |       | millions) |  | Option     |   | Price     |  | Term (Years) |   | millions)
|                              
|Outstanding at January 1, 2006 |  |                         | 1,186,000 |                                                   |  | $            | 90.08 |           |  |            |   |           |  |              |   |           |  |  | 3,895,756 |   |  | $ | 38.41 |  |  |  |   |  |  |   |       | 
|Granted                        |  |                         |          |                                                   |  |              |      |           |  |            |   |           |  |              |   |           |  |  |          |   |  |   |      |  |  |  |   |  |  |   |       | 
|Exercised                      |  |                         |          |                                                   |  |              |      |           |  |            |   |           |  |              |   |           |  |  | (76,531   | ) |  |   | 39.45 |  |  |  |   |  |  |   |       | 
|Cancelled                      |  |                         | (6,500    | )                                                 |  |              | 90.88 |           |  |            |   |           |  |              |   |           |  |  |          |   |  |   |      |  |  |  |   |  |  |   |       | 
|                               |  |                         |           |                                                   |  |              |       |           |  |            |   |           |  |              |   |           |  |  |           |  
|Outstanding at March 31, 2006  |  |                         | 1,179,500 |                                                   |  | $            | 90.04 |           |  |            | 9 |           |  | $            |  |           |  |  | 3,819,225 |   |  | $ | 38.37 |  |  |  | 6 |  |  | $ | 189.9 | 
|                              
|Exercisable at March 31, 2006  |  |                         |          |                                                   |  | $            |      |           |  |            |  |           |  | $            |  |           |  |  | 3,819,225 |   |  | $ | 38.37 |  |  |  | 6 |  |  | $ | 189.9 | 
|                              



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

risk-free




|                             |  |           |           |            |  |   |       | 
|---------------------------- |  | --------- | --------- | ---------- |  | - | ----- | 
|                             |  |           |           | Weighted- 
|                             |  |           |           | Average   
|                             |  | Number of |           | Grant-Date
|                             |  | Shares    |           | Fair Value
|                            
|Nonvested at January 1, 2006 |  |           | 1,186,000 |            |  | $ | 88.25 | 
|Granted                      |  |           |          |            |  |   |      | 
|Vested                       |  |           |          |            |  |   |      | 
|Cancelled                    |  |           | (6,500    | )          |  |   | 88.25 | 
|                            
|Nonvested at March 31, 2006  |  |           | 1,179,500 |            |  | $ | 88.25 | 
|                            



17



---



##### Table of Contents





Deferred Share Unit and Other Plans










Derivative Instruments and Hedging Activities


Cash Flow Hedges




18



---



##### Table of Contents



Fair Value Hedges




13. Comparative Figures









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

10-K,


POTASHCORP AND OUR BUSINESS ENVIRONMENT








POTASHCORP VISION






POTASHCORP STRATEGY




19



---



##### Table of Contents









KEY PERFORMANCE DRIVERS  PERFORMANCE COMPARED TO
GOALS






|  |                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------
| | management will focus on the most important things, which will
    be reinforced by having the relevant results readily accessible;
| | employees will understand and be able to effectively monitor
    their contribution to the achievement of corporate goals; and     
| | we will be even more effective in meeting our targets.                                                                             



|                                                                                                          |  |                                                                                                            |  |                                                                                                                                                                                                                  |  | 
|--------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|                                                                                                          |  | Representative                                                                                             |  | Performance                                                                                                                                                                                                      |  | 
|Goal                                                                                                      |  | 2006 Annual Target                                                                                         |  | to March 31, 2006                                                                                                                                                                                                |  | 
|                                                                                                         
|To continue to outperform our sector and other basic materials
    companies in total shareholder return. |  | Exceed total shareholder return performance for our sector and
    companies on the DJUSBMI for 2006.      |  | PotashCorps total shareholder return in the first quarter
    of 2006 was 10 percent, exceeding the DJUSBMI return of
    6 percent and our sector average return of 8 percent.                                 |  | 
|                                                                                                          |  |                                                                                                           
|                                                                                                          |  | Carry a higher multiple than the average of other fertilizer
    companies on both earnings and cash flow. |  | The companys multiple at March 31, 2006 was 15.7 on
    earnings and 10.3 on cash flow versus the average of other
    fertilizer companies in our sector of 19.1 on earnings and 9.2
    on cash flow.         |  | 
|                                                                                                         
|To remain the leader and preferred supplier of potash, nitrogen
    and phosphate products worldwide.     |  | Increase North American realized prices for potash by
    10 percent.                                      |  | North American realized potash prices were 11 percent higher in
    the first quarter of 2006 compared to the 2005 annual average.                                                                               |  | 
|                                                                                                          |  |                                                                                                           
|                                                                                                          |  | Increase North American realized feed prices by 20 percent.                                                |  | Compared to the 2005 annual average, North American realized
    feed prices increased as follows in the quarter ended
    March 31, 2006: Monocal by 24 percent, Dical by
    25 percent and DFP by 32 percent. |  | 
|                                                                                                          |  |                                                                                                           
|                                                                                                          |  | Increase realized nitric acid prices by 5 percent.                                                         |  | Realized nitric acid prices increased 26 percent during the
    three months ended March 31, 2006 compared to the average
    prices realized during 2005.                                                       |  | 
|                                                                                                         

20



---



##### Table of Contents



|                                                                                                 |  |                                                                                                  |  |                                                                                                                                                                                                                                                                                                                                          |  | 
|------------------------------------------------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 
|                                                                                                 |  | Representative                                                                                   |  | Performance                                                                                                                                                                                                                                                                                                                              |  | 
|Goal                                                                                             |  | 2006 Annual Target                                                                               |  | to March 31, 2006                                                                                                                                                                                                                                                                                                                        |  | 
|                                                                                                
|To be the low-cost supplier in our industry.                                                     |  | Achieve rock costs at Aurora and White Springs 3 percent
    below 2005.                         |  | Rock costs at Aurora decreased 8 percent while White
    Springs increased 8 percent during the first quarter of
    2006 compared to the corresponding quarter in 2005. Compared to
    the 2005 annual average, rock costs for the first three months
    of 2006 were down 2 percent at Aurora and up 5 percent
    at White Springs. |  | 
|                                                                                                 |  |                                                                                                 
|                                                                                                 |  | Achieve 5-percent reduction in per-tonne potash conversion costs
    on a Canadian dollar basis. |  | When compared to the 2005 annual average, Canadian dollar potash
    conversion costs increased 57 percent per tonne during the
    first quarter of 2006, largely as a result of the 222 days
    of production shutdowns during the quarter as the company
    matched production with demand.                                         |  | 
|                                                                                                 |  |                                                                                                 
|                                                                                                 |  | Improve energy efficiency in Trinidad by 10 percent from
    2005.                               |  | Trinidad energy efficiency rate improved 2 percent during
    the first three months of 2006 compared to the 2005 annual
    average.                                                                                                                                                                                                    |  | 
|                                                                                                
|To move closer to our goal of no harm to people, no accidents,
    no damage to the environment. |  | Reduce recordable and lost- time injury rates by 30 percent
    from 2005 levels.                |  | Recordable and lost-time injury rates were 1.47 and 0.15,
    respectively, as compared to the targets of 1.60 and 0.19,
    respectively.                                                                                                                                                                                               |  | 
|                                                                                                 |  |                                                                                                 
|                                                                                                 |  | Reduce reportable releases and permit excursions by
    30 percent from 2005 levels.             |  | Reportable release annualized rates declined 40 percent
    while permit excursions were down 64 percent during the
    first quarter of 2006 compared to 2005 annual levels.                                                                                                                                                            |  | 
|                                                                                                

FINANCIAL OVERVIEW


10-Q.




Earnings Guidance




21



---



##### Table of Contents



Overview of Actual Results


Operations


|                                              |  |                             |       |      |  |        |       |        |  |   |       |   |  |  |     |  
|--------------------------------------------- |  | --------------------------- | ----- | ---- |  | ------ | ----- | ------ |  | - | ----- | - |  |  | --- | -
|                                              |  | Three Months Ended March 31
|                                             
|                                              |  | Dollar                      |       | %   
|(Dollars millions  except per-share amounts) |  | 2006                        |       | 2005 |  | Change |       | Change
|                                             
|Sales                                         |  | $                           | 861.6 |      |  | $      | 921.4 |        |  | $ | (59.8 | ) |  |  | (6  | )
|Freight                                       |  |                             | 54.9  |      |  |        | 67.2  |        |  |   | (12.3 | ) |  |  | (18 | )
|Transportation and distribution               |  |                             | 31.2  |      |  |        | 28.9  |        |  |   | 2.3   |   |  |  | 8   |  
|Cost of goods sold                            |  |                             | 572.0 |      |  |        | 566.8 |        |  |   | 5.2   |   |  |  | 1   |  
|                                             
|Gross margin                                  |  | $                           | 203.5 |      |  | $      | 258.5 |        |  | $ | (55.0 | ) |  |  | (21 | )
|                                             
|Operating income                              |  | $                           | 192.1 |      |  | $      | 216.7 |        |  | $ | (24.6 | ) |  |  | (11 | )
|                                             
|Net income                                    |  | $                           | 125.5 |      |  | $      | 131.3 |        |  | $ | (5.8  | ) |  |  | (4  | )
|                                             
|Net income per share  basic                  |  | $                           | 1.21  |      |  | $      | 1.18  |        |  | $ | 0.03  |   |  |  | 3   |  
|                                             
|Net income per share  diluted                |  | $                           | 1.19  |      |  | $      | 1.15  |        |  | $ | 0.04  |   |  |  | 3   |  
|                                             











22



---



##### Table of Contents



Balance Sheet










Business Segment Review




23



---



##### Table of Contents





Potash


|                                |                        |                             |       |                    |  |                            |       |       |  |      |     |          |   |      |       |      |  |          |       |       |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |    | 
|------------------------------- | ---------------------- | --------------------------- | ----- | ------------------ |  | -------------------------- | ----- | ----- |  | ---- | --- | -------- | - | ---- | ----- | ---- |  | -------- | ----- | ----- |  |  | --- | --- | - | - | ------ | ------ |  | - | ------ | ------ |  |  | -- | -- | 
|                                |                        | Three Months Ended March 31
|                               
|                                |                        | Dollars (millions)          |       | Tonnes (thousands) |  | Average Price per Tonne(1)
|                               
|                                |                        | 2006                        |       | 2005               |  | % Change                   |       | 2006  |  | 2005 |     | % Change |   | 2006 |       | 2005 |  | % Change
|                               
|Sales                           |                        | $                           | 225.8 |                    |  | $                          | 352.1 |       |  |      | (36 | )        |   |      |       |      |  |          |       |       |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |   
|Freight                         |                        |                             | 25.0  |                    |  |                            | 37.2  |       |  |      | (33 | )        |   |      |       |      |  |          |       |       |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |   
|Transportation and distribution |                        |                             | 7.4   |                    |  |                            | 9.1   |       |  |      | (19 | )        |   |      |       |      |  |          |       |       |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |   
|                               
|                                |                        | $                           | 193.4 |                    |  | $                          | 305.8 |       |  |      | (37 | )        |   |      |       |      |  |          |       |       |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |   
|                               
|Net Sales                       |                        |                             |       |                    |  |                            |       |       |  |      |     |          |   |      |       |      |  |          |       |       |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |   
|                                | North American         |                             | $     | 91.9               |  |                            | $     | 128.9 |  |      |     | (29      | ) |      |       | 527  |  |          |       | 922   |  |  |     | (43 | ) |   | $      | 174.31 |  |   | $      | 139.86 |  |  |    | 25 | 
|                                | Offshore               |                             |       | 97.2               |  |                            |       | 172.8 |  |      |     | (44      | ) |      |       | 732  |  |          |       | 1,401 |  |  |     | (48 | ) |   | $      | 132.90 |  |   | $      | 123.35 |  |  |    | 8  | 
|                               
|                                |                        |                             | 189.1 |                    |  |                            | 301.7 |       |  |      | (37 | )        |   |      | 1,259 |      |  |          | 2,323 |       |  |  | (46 | )   |   | $ | 150.24 |        |  | $ | 129.90 |        |  |  | 16 |   
|                                | Miscellaneous products |                             |       | 4.3                |  |                            |       | 4.1   |  |      |     | 5        |   |      |       |     |  |          |       |      |  |  |     |    |   |   |        |       |  |   |        |       |  |  |    |   | 
|                               
|                                |                        |                             | 193.4 |                    |  |                            | 305.8 |       |  |      | (37 | )        |   |      | 1,259 |      |  |          | 2,323 |       |  |  | (46 | )   |   | $ | 153.61 |        |  | $ | 131.64 |        |  |  | 17 |   
|Cost of goods sold              |                        |                             | 102.6 |                    |  |                            | 129.6 |       |  |      | (21 | )        |   |      |       |      |  |          |       |       |  |  |     |     |   | $ | 81.49  |        |  | $ | 55.79  |        |  |  | 46 |   
|                               
|Gross margin                    |                        | $                           | 90.8  |                    |  | $                          | 176.2 |       |  |      | (48 | )        |   |      |       |      |  |          |       |       |  |  |     |     |   | $ | 72.12  |        |  | $ | 75.85  |        |  |  | (5 | ) 
|                               



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

Highlights




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | As a result of reduced sales volumes, potash gross margin was
    substantially lower than the first quarter of 2005.                                                                                                                                                                                                                                                                                          
|
| |  | Potash demand slowed as many offshore customers delayed
    purchasing while new pricing agreements with China were
    negotiated. Despite North American and offshore volumes being
    down 43 and 48 percent, respectively, compared to the first
    quarter of 2005, North American realized prices were
    25 percent higher and offshore prices were up
    8 percent over the same quarter last year.
|
| |  | We continued our approach of producing only what the market
    needs and as such, took 31.7 mine shutdown weeks during the
    quarter as compared to none in the first quarter of 2005. Potash
    production declined from 2.4 million tonnes to
    1.3 million tonnes quarter over quarter and increased
    our costs.                                                                                   
|
| |  | Our potash inventories of 1.15 million tonnes were flat
    from the end of the fourth quarter of 2005, but higher than the
    abnormally low levels at the end of the first quarter of
    that year.                                                                                                                                                                                                        

|                                              |  |               |       |       |  |         |      |          |  |   |       |   |  |   |       |  
|--------------------------------------------- |  | ------------- | ----- | ----- |  | ------- | ---- | -------- |  | - | ----- | - |  | - | ----- | -
|Potash gross margin variance attributable to:
|                                             
|Dollars (millions)                           
|                                              |  | 2006 vs. 2005 |       |      
|                                             
|                                              |  | Change in     |       |      
|                                              |  | Prices/Costs  |       |      
|                                              |  |               |       | Total
|                                              |  | Change in     |       |       |  | Cost of |      | Gross   
|                                              |  | Sales         |       | Net   |  | Goods   |      | Margin  
|                                              |  | Volumes       |       | Sales |  | Sold    |      | Variance
|                                             
|Domestic                                      |  | $             | (37.6 | )     |  | $       | 18.6 |          |  | $ | (1.7  | ) |  | $ | (20.7 | )
|Offshore                                      |  |               | (55.6 | )     |  |         | 5.0  |          |  |   | (14.5 | ) |  |   | (65.1 | )
|Other                                         |  |               | 0.3   |       |  |         | (0.6 | )        |  |   | 0.7   |   |  |   | 0.4   |  
|                                             
|Total                                         |  | $             | (92.9 | )     |  | $       | 23.0 |          |  | $ | (15.5 | ) |  | $ | (85.4 | )
|                                             

24



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##### Table of Contents



Sales and Cost of Goods Sold






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Offshore volumes were down 48 percent as sales by Canpotex
    Limited (Canpotex), the offshore marketing company
    for Saskatchewan potash producers, dropped from
    1.18 million to 0.13 million tonnes in the most
    significant markets of China, India and Brazil. China was
    virtually absent from the market during the quarter as the
    country waited to conclude new pricing contracts with suppliers,
    including Canpotex, before coming back into the market for new
    tonnage. Brazil continued to be affected by strengthening of the
    Brazilian real relative to the US dollar accompanied by lower
    soybean prices which continued to pressure margins for Brazilian
    farmers and limited their credit availability, leading to fewer
    acres being planted and in turn a decrease in imports. This
    slowdown was not global, as volumes to many smaller
    potash-consuming countries such as the Philippines, Taiwan,
    Vietnam, Ecuador and Mexico were up from the same period
    last year.
|
| |  | North American sales volumes also dropped as dealer fill and
    field application of potash was weaker than expected due to low
    commodity prices, high energy input costs, uncertainty about
    planting decisions and, to a lesser degree, weather. We believe
    dealers want to end the fertilizer year with low inventories of
    all fertilizers. They are therefore managing their purchasing
    and exposure cautiously which also negatively impacted sales
    volumes during the quarter.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |  | Realized prices in the North American market were higher as
    price increases announced through 2005 held into the first
    quarter of 2006. Prices in the North American market were $41
    per tonne, or 31 percent, higher than offshore prices. The
    gap between the two markets is partly due to offshore customers
    purchasing under long-term contracts that lag behind North
    American spot-market increases. The difference also reflects
    product mix, as North American customers prefer granular product
    that commands a premium over standard product, which is more
    typically consumed offshore.                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Higher cost of goods sold negatively impacted the change in
    gross margin due to the combination of higher unit costs
    associated with plant shutdowns, increasing natural gas prices
    and higher electrical rates. Costs associated with the
    31.7 weeks of mine production shutdowns were
    $12.4 million. Higher natural gas prices raised the cost of
    potash production. Further, a stronger Canadian dollar
    negatively impacted cost of goods sold by
    $2.00 per tonne.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

25



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##### Table of Contents



Nitrogen


|                                |                                                  |                             |       |                    |  |                            |       |      |  |      |    |          |   |      |       |      |  |          |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |    | 
|------------------------------- | ------------------------------------------------ | --------------------------- | ----- | ------------------ |  | -------------------------- | ----- | ---- |  | ---- | -- | -------- | - | ---- | ----- | ---- |  | -------- | ----- | --- |  |  | --- | --- | - | - | ------ | ------ |  | - | ------ | ------ |  |  | -- | -- | 
|                                |                                                  | Three Months Ended March 31
|                               
|                                |                                                  | Dollars (millions)          |       | Tonnes (thousands) |  | Average Price per Tonne(1)
|                               
|                                |                                                  | 2006                        |       | 2005               |  | % Change                   |       | 2006 |  | 2005 |    | % Change |   | 2006 |       | 2005 |  | % Change
|                               
|Sales                           |                                                  | $                           | 331.9 |                    |  | $                          | 304.8 |      |  |      | 9  |          |   |      |       |      |  |          |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |   
|Freight                         |                                                  |                             | 9.6   |                    |  |                            | 10.2  |      |  |      | (6 | )        |   |      |       |      |  |          |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |   
|Transportation and distribution |                                                  |                             | 13.3  |                    |  |                            | 11.7  |      |  |      | 14 |          |   |      |       |      |  |          |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |   
|                               
|                                |                                                  | $                           | 309.0 |                    |  | $                          | 282.9 |      |  |      | 9  |          |   |      |       |      |  |          |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |   
|                               
|Net Sales                       |                                                  |                             |       |                    |  |                            |       |      |  |      |    |          |   |      |       |      |  |          |       |     |  |  |     |     |   |   |        |        |  |   |        |        |  |  |    |   
|                                | Ammonia                                          |                             | $     | 123.0              |  |                            | $     | 98.9 |  |      |    | 24       |   |      |       | 364  |  |          |       | 406 |  |  |     | (10 | ) |   | $      | 337.69 |  |   | $      | 243.78 |  |  |    | 39 | 
|                                | Urea                                             |                             |       | 81.4               |  |                            |       | 90.3 |  |      |    | (10      | ) |      |       | 281  |  |          |       | 359 |  |  |     | (22 | ) |   | $      | 289.81 |  |   | $      | 251.43 |  |  |    | 15 | 
|                                | Nitrogen solutions/Nitric acid/ Ammonium nitrate |                             |       | 81.0               |  |                            |       | 65.2 |  |      |    | 24       |   |      |       | 382  |  |          |       | 450 |  |  |     | (15 | ) |   | $      | 211.96 |  |   | $      | 144.76 |  |  |    | 46 | 
|                                | Purchased                                        |                             |       | 17.0               |  |                            |       | 23.2 |  |      |    | (27      | ) |      |       | 54   |  |          |       | 93  |  |  |     | (42 | ) |   | $      | 316.85 |  |   | $      | 250.68 |  |  |    | 26 | 
|                               
|                                |                                                  |                             | 302.4 |                    |  |                            | 277.6 |      |  |      | 9  |          |   |      | 1,081 |      |  |          | 1,308 |     |  |  | (17 | )   |   | $ | 279.74 |        |  | $ | 212.23 |        |  |  | 32 |   
|                                | Miscellaneous                                    |                             |       | 6.6                |  |                            |       | 5.3  |  |      |    | 25       |   |      |       |     |  |          |       |    |  |  |     |    |   |   |        |       |  |   |        |       |  |  |    |   | 
|                               
|                                |                                                  |                             | 309.0 |                    |  |                            | 282.9 |      |  |      | 9  |          |   |      | 1,081 |      |  |          | 1,308 |     |  |  | (17 | )   |   | $ | 285.81 |        |  | $ | 216.31 |        |  |  | 32 |   
|Cost of goods sold              |                                                  |                             | 229.6 |                    |  |                            | 217.6 |      |  |      | 6  |          |   |      |       |      |  |          |       |     |  |  |     |     |   | $ | 212.36 |        |  | $ | 166.39 |        |  |  | 28 |   
|                               
|Gross margin                    |                                                  | $                           | 79.4  |                    |  | $                          | 65.3  |      |  |      | 22 |          |   |      |       |      |  |          |       |     |  |  |     |     |   | $ | 73.45  |        |  | $ | 49.92  |        |  |  | 47 |   
|                               



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

Highlights




| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Price increases were realized in all nitrogen products quarter
    over quarter. Supply/demand fundamentals remained tight and
    ammonia prices stayed firm despite a drop in the North American
    spot price for natural gas compared to fourth-quarter 2005. The
    combination of high Western European natural gas prices and high
    ocean freight costs for specialized ammonia vessels led to
    higher-priced imports. Increases in ammonia and urea imports did
    not offset US production curtailments.
|
| |  | Higher ammonia and urea prices were beneficial for
    PotashCorps Trinidad facility due to our long-term
    lower-cost natural gas price contracts. Our Trinidad facility
    provided $50.4 million or 63 percent of first-quarter
    gross margin compared to $43.2 million in the first quarter
    of 2005.                                                                                                                                                                                                       
|
| |  | US nitrogen operations generated $8.1 million in gross
    margin in the quarter.                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | We are capitalizing on our competitive advantage in Trinidad
    with debottlenecking projects at our 01 and 02 plants that will
    add 138,000 tonnes of annual capacity. One of these was
    completed during the first quarter, giving us the ability to
    produce another 70,000 tonnes per year. The second is
    scheduled to wrap up in May. With the completion of these
    projects, 62 percent of our total nitrogen production will
    be supplied from Trinidad.                                       

|                                                |  |               |       |       |  |         |      |          |  |   |       |   |  |   |      |  
|----------------------------------------------- |  | ------------- | ----- | ----- |  | ------- | ---- | -------- |  | - | ----- | - |  | - | ---- | -
|Nitrogen gross margin variance attributable to:
|                                               
|Dollars (millions)                             
|                                                |  | 2006 vs. 2005 |       |      
|                                               
|                                                |  | Change in     |       |      
|                                                |  | Prices/Costs  |       |      
|                                                |  |               |       | Total
|                                                |  | Change in     |       |       |  | Cost of |      | Gross   
|                                                |  | Sales         |       | Net   |  | Goods   |      | Margin  
|                                                |  | Volumes       |       | Sales |  | Sold    |      | Variance
|                                               
|Ammonia                                         |  | $             | (3.5  | )     |  | $       | 33.3 |          |  | $ | (23.0 | ) |  | $ | 6.8  |  
|Urea                                            |  |               | (9.1  | )     |  |         | 11.8 |          |  |   | (11.2 | ) |  |   | (8.5 | )
|Solutions, NA, AN                               |  |               | (2.4  | )     |  |         | 23.1 |          |  |   | (16.6 | ) |  |   | 4.1  |  
|Purchased                                       |  |               | (5.9  | )     |  |         | 4.7  |          |  |   | 0.7   |   |  |   | (0.5 | )
|Hedge gains                                     |  |               |      |       |  |         |     |          |  |   | 12.3  |   |  |   | 12.3 |  
|Other                                           |  |               | (0.9  | )     |  |         | 2.8  |          |  |   | (2.0  | ) |  |   | (0.1 | )
|                                               
|Total                                           |  | $             | (21.8 | )     |  | $       | 75.7 |          |  | $ | (39.8 | ) |  | $ | 14.1 |  
|                                               

26



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##### Table of Contents



Sales and Cost of Goods Sold






| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Hurricanes that struck the US Gulf region during 2005 and cold
    weather in the US late in the year led to high natural gas
    prices sustained at more than $13 per MMBtu during the
    fourth quarter. This caused ammonia prices to climb rapidly in
    late 2005 and led North American producers to curtail half of
    their ammonia operating capacity by year-end, tightening market
    supply. Though North American natural gas spot prices dropped
    significantly during the first quarter of 2006, high ammonia
    prices continued and as a result we realized ammonia prices
    39 percent higher than first-quarter 2005. Production
    curtailments at our Augusta and Lima facilities, which began in
    late 2005 as a result of high natural gas prices, continued into
    2006 and caused our supply of urea to be tight. We focused on
    higher-margin sales and backed away from some lower-priced
    business, contributing to the 15 percent increase in urea
    realized prices. Our urea prices increased $38 per tonne as
    compared to the NOLA benchmark increase of $8 per tonne.
    Realized prices for nitrogen solutions, nitric acid and ammonium
    nitrate generally followed the rise in ammonia and urea prices,
    as a number of our customer contracts are tied to either natural
    gas prices or the NOLA ammonia price.
|
| |  | Total nitrogen sales volumes declined 17 percent. Nitrogen
    fertilizer sales represented the significant portion of this
    drop, down 30 percent primarily due to US farmers
    purchasing less in first-quarter 2006 as we believe they were
    hoping for lower prices. Therefore, approximately
    70 percent of total nitrogen volumes, including both North
    American and Trinidad production, were sold to our more stable
    industrial customer base outside the fertilizer cycles.
    Approximately 78 percent of our North American nitrogen
    production was sold to industrial customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| |  | Cost of goods sold increased 28 percent per tonne. This was
    due to higher natural gas costs combined with reduced production
    during the quarter resulting from more plant shutdowns for
    turnarounds in the first three months of 2006 and the
    continuation of production curtailments at our Augusta and Lima
    facilities. Natural gas costs continue to be the single most
    important contributor to cost of goods sold, typically
    representing between 80 and 95 percent of the cash cost of
    producing one tonne of ammonia. The companys total average
    natural gas cost, including the benefit of the companys
    hedge and lower-cost Trinidad gas contracts, was $4.34 per
    MMBtu, 17 percent higher than the same period in 2005 but
    25 percent lower than the fourth quarter of 2005. The
    companys US natural gas hedging activities contributed
    $20.9 million to the gross margin compared to
    $8.6 million in the corresponding period last year.                                                                                                                                                                                                                                                                                                                                                                         

27



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##### Table of Contents



Phosphate


|                                |                      |                             |       |                    |  |                            |       |      |  |      |    |          |   |      |     |      |  |          |     |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |    | 
|------------------------------- | -------------------- | --------------------------- | ----- | ------------------ |  | -------------------------- | ----- | ---- |  | ---- | -- | -------- | - | ---- | --- | ---- |  | -------- | --- | --- |  |  | - | --- | - | - | ------ | ------ |  | - | ------ | ------ |  |  | -- | -- | 
|                                |                      | Three Months Ended March 31
|                               
|                                |                      | Dollars (millions)          |       | Tonnes (thousands) |  | Average Price per Tonne(1)
|                               
|                                |                      | 2006                        |       | 2005               |  | % Change                   |       | 2006 |  | 2005 |    | % Change |   | 2006 |     | 2005 |  | % Change
|                               
|Sales                           |                      | $                           | 303.9 |                    |  | $                          | 264.5 |      |  |      | 15 |          |   |      |     |      |  |          |     |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |   
|Freight                         |                      |                             | 20.3  |                    |  |                            | 19.8  |      |  |      | 3  |          |   |      |     |      |  |          |     |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |   
|Transportation and distribution |                      |                             | 10.5  |                    |  |                            | 8.1   |      |  |      | 30 |          |   |      |     |      |  |          |     |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |   
|                               
|                                |                      | $                           | 273.1 |                    |  | $                          | 236.6 |      |  |      | 15 |          |   |      |     |      |  |          |     |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |   
|                               
|Net Sales                       |                      |                             |       |                    |  |                            |       |      |  |      |    |          |   |      |     |      |  |          |     |     |  |  |   |     |   |   |        |        |  |   |        |        |  |  |    |   
|                                | Fertilizer  liquids |                             | $     | 61.9               |  |                            | $     | 52.6 |  |      |    | 18       |   |      |     | 260  |  |          |     | 250 |  |  |   | 4   |   |   | $      | 238.13 |  |   | $      | 210.61 |  |  |    | 13 | 
|                                | Fertilizer  solids  |                             |       | 93.1               |  |                            |       | 71.3 |  |      |    | 31       |   |      |     | 377  |  |          |     | 327 |  |  |   | 15  |   |   | $      | 246.86 |  |   | $      | 217.89 |  |  |    | 13 | 
|                                | Feed                 |                             |       | 52.3               |  |                            |       | 55.1 |  |      |    | (5       | ) |      |     | 165  |  |          |     | 230 |  |  |   | (28 | ) |   | $      | 317.20 |  |   | $      | 239.25 |  |  |    | 33 | 
|                                | Industrial           |                             |       | 63.2               |  |                            |       | 54.7 |  |      |    | 16       |   |      |     | 173  |  |          |     | 155 |  |  |   | 12  |   |   | $      | 364.04 |  |   | $      | 353.44 |  |  |    | 3  | 
|                               
|                                |                      |                             | 270.5 |                    |  |                            | 233.7 |      |  |      | 16 |          |   |      | 975 |      |  |          | 962 |     |  |  | 1 |     |   | $ | 277.44 |        |  | $ | 242.93 |        |  |  | 14 |   
|                                | Miscellaneous        |                             |       | 2.6                |  |                            |       | 2.9  |  |      |    | (10      | ) |      |     |     |  |          |     |    |  |  |   |    |   |   |        |       |  |   |        |       |  |  |    |   | 
|                               
|                                |                      |                             | 273.1 |                    |  |                            | 236.6 |      |  |      | 15 |          |   |      | 975 |      |  |          | 962 |     |  |  | 1 |     |   | $ | 279.94 |        |  | $ | 245.87 |        |  |  | 14 |   
|Cost of goods sold              |                      |                             | 239.8 |                    |  |                            | 219.6 |      |  |      | 9  |          |   |      |     |      |  |          |     |     |  |  |   |     |   | $ | 245.79 |        |  | $ | 228.20 |        |  |  | 8  |   
|                               
|Gross margin                    |                      | $                           | 33.3  |                    |  | $                          | 17.0  |      |  |      | 96 |          |   |      |     |      |  |          |     |     |  |  |   |     |   | $ | 34.15  |        |  | $ | 17.67  |        |  |  | 93 |   
|                               



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

Highlights




| |   |                                                                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Gross margin of $33.3 million marked the best first-quarter
    gross margin for phosphate in 7 years, driven by higher
    prices across virtually all products in response to continuing
    high input costs and reasonably tight supply/demand fundamentals.                                                          
|
| |  | Feed phosphate provided $16.0 million of the phosphate
    gross margin for the quarter, capitalizing on higher prices even
    as volumes declined.                                                                                                                                                                      
|
| |  | Higher-margin industrial phosphate, long the foundation of our
    phosphate business, added gross margin of $14.8 million for
    the first quarter of 2006. Within industrial, purified acid was
    again the most profitable product, generating gross margin of
    $14.3 million, which was 32 percent of net sales.

|                                                 |  |               |      |       |  |         |      |          |  |   |       |   |  |   |      |  
|------------------------------------------------ |  | ------------- | ---- | ----- |  | ------- | ---- | -------- |  | - | ----- | - |  | - | ---- | -
|Phosphate gross margin variance attributable to:
|                                                
|Dollars (millions)                              
|                                                 |  | 2006 vs. 2005 |      |      
|                                                
|                                                 |  | Change in     |      |      
|                                                 |  | Prices/Costs  |      |      
|                                                 |  |               |      | Total
|                                                 |  | Change in     |      |       |  | Cost of |      | Gross   
|                                                 |  | Sales         |      | Net   |  | Goods   |      | Margin  
|                                                 |  | Volumes       |      | Sales |  | Sold    |      | Variance
|                                                
|Fertilizer  liquids                             |  | $             | 2.4  |       |  | $       | 6.3  |          |  | $ | (2.5  | ) |  | $ | 6.2  |  
|Fertilizer  solids                              |  |               | 5.8  |       |  |         | 10.4 |          |  |   | (18.0 | ) |  |   | (1.8 | )
|Feed                                             |  |               | (7.9 | )     |  |         | 12.8 |          |  |   | 6.8   |   |  |   | 11.7 |  
|Industrial                                       |  |               | 1.6  |       |  |         | 3.6  |          |  |   | (2.4  | ) |  |   | 2.8  |  
|Other                                            |  |               | (0.3 | )     |  |         | (0.1 | )        |  |   | (2.2  | ) |  |   | (2.6 | )
|                                                
|Total                                            |  | $             | 1.6  |       |  | $       | 33.0 |          |  | $ | (18.3 | ) |  | $ | 16.3 |  
|                                                

Sales and Cost of Goods Sold






| |   |                                                                                                                                                                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Higher industrial realized prices were a result of price
    increases implemented during 2005. Additionally, higher cost
    rock at our Geismar facility was a factor for certain customers.
    Production cutbacks and increased demand from export markets
    raised the realized price for fertilizer products.

28



---



##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Sales volumes were relatively flat, though there was a marked
    change in product mix. North American solid fertilizer sales
    volumes were 7 percent higher due to an earlier spring
    planting season in the Southeastern US in 2006, and export sales
    volumes rose 43 percent. These were more than offset by a
    28-percent decline in feed sales volumes resulting from the
    companys decision to remain firm on pricing, while certain
    of our competitors reduced prices to gain market share.             
|
| |  | Cost of goods sold increased $20.2 million though sales
    volumes remained relatively flat. Cost of goods sold per tonne
    increased 8 percent as higher raw material input costs more
    than offset the positive effect of operating rate efficiencies
    and change in product mix. The company benefited from operating
    rate efficiencies as
    P2O5
    production levels increased 2 percent; however,
    38 percent higher ammonia prices and 20 percent higher
    sulfur prices combined to reduce gross margin.

Expenses and Other Income


|                                  |  |                    |      |      |  |        |      |        |  |   |       |   |  |  |     |  
|--------------------------------- |  | ------------------ | ---- | ---- |  | ------ | ---- | ------ |  | - | ----- | - |  |  | --- | -
|                                  |  | Three Months Ended
|                                  |  | March 31          
|                                 
|                                  |  | Dollar             |      | %   
|Dollars (millions)                |  | 2006               |      | 2005 |  | Change |      | Change
|                                 
|Selling and administrative        |  | $                  | 30.8 |      |  | $      | 29.3 |        |  | $ | 1.5   |   |  |  | 5   |  
|Provincial mining and other taxes |  |                    | 14.2 |      |  |        | 38.4 |        |  |   | (24.2 | ) |  |  | (63 | )
|Foreign exchange gain             |  |                    | 2.4  |      |  |        | 5.9  |        |  |   | (3.5  | ) |  |  | (59 | )
|Other income                      |  |                    | 31.2 |      |  |        | 20.0 |        |  |   | 11.2  |   |  |  | 56  |  
|Interest expense                  |  |                    | 23.2 |      |  |        | 20.7 |        |  |   | 2.5   |   |  |  | 12  |  
|Income tax expense                |  |                    | 43.4 |      |  |        | 64.7 |        |  |   | (21.3 | ) |  |  | (33 | )











29



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LIQUIDITY AND CAPITAL RESOURCES


Cash Requirements




Contractual Obligations and Other Commitments


|                                              |  |                        |         |               |  |              |       |              |  |              |       |  |  |   |       |  |  |   |         | 
|--------------------------------------------- |  | ---------------------- | ------- | ------------- |  | ------------ | ----- | ------------ |  | ------------ | ----- |  |  | - | ----- |  |  | - | ------- | 
|                                              |  | Payments Due By Period
|                                              |  | Dollars (millions)    
|                                             
|                                              |  | Total                  |         | Within 1 year |  | 1 to 3 years |       | 3 to 5 years |  | Over 5 years
|                                             
|Long-term debt                                |  | $                      | 1,258.5 |               |  | $            | 1.2   |              |  | $            | 400.4 |  |  | $ | 0.6   |  |  | $ | 856.3   | 
|Estimated interest payments on long-term debt |  |                        | 386.7   |               |  |              | 87.7  |              |  |              | 132.6 |  |  |   | 118.4 |  |  |   | 48.0    | 
|Operating leases                              |  |                        | 691.4   |               |  |              | 82.4  |              |  |              | 138.5 |  |  |   | 129.4 |  |  |   | 341.1   | 
|Purchase obligations                          |  |                        | 916.3   |               |  |              | 124.0 |              |  |              | 218.4 |  |  |   | 184.3 |  |  |   | 389.6   | 
|Other commitments                             |  |                        | 46.5    |               |  |              | 18.7  |              |  |              | 17.3  |  |  |   | 10.5  |  |  |   |        | 
|Other long-term liabilities                   |  |                        | 868.3   |               |  |              | 43.2  |              |  |              | 79.7  |  |  |   | 68.2  |  |  |   | 677.2   | 
|                                             
|Total                                         |  | $                      | 4,167.7 |               |  | $            | 357.2 |              |  | $            | 986.9 |  |  | $ | 511.4 |  |  | $ | 2,312.2 | 
|                                             

Long-term Debt






30



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Operating Leases






Purchase Obligations








Other Commitments




Other Long-term Liabilities






Capital Expenditures






31



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Sources and Uses of Cash




|                                                |  |                    |        |      |  |        |       |   |  |  |      |  
|----------------------------------------------- |  | ------------------ | ------ | ---- |  | ------ | ----- | - |  |  | ---- | -
|                                                |  | Three Months Ended
|                                                |  | March 31          
|                                               
|                                                |  | %                 
|Dollars (millions)                              |  | 2006               |        | 2005 |  | Change
|                                               
|Cash (used in) provided by operating activities |  | $                  | (12.5  | )    |  | $      | 121.7 |   |  |  | (110 | )
|Cash used in investing activities               |  | $                  | (248.8 | )    |  | $      | (50.4 | ) |  |  | 394  |  
|Cash provided by (used in) financing activities |  | $                  | 340.1  |      |  | $      | (51.2 | ) |  |  | n/m  |  





|                                        |  |           |          |              |  |        |          |   |  |  |     |  
|--------------------------------------- |  | --------- | -------- | ------------ |  | ------ | -------- | - |  |  | --- | -
|                                        |  | March 31, |          | December 31, |  | %     
|Dollars (millions) except ratio amounts |  | 2006      |          | 2005         |  | Change
|                                       
|Current assets                          |  | $         | 1,144.2  |              |  | $      | 1,110.8  |   |  |  | 3   |  
|Current liabilities                     |  | $         | (1,197.5 | )            |  | $      | (1,096.1 | ) |  |  | 9   |  
|Working capital                         |  | $         | (53.3    | )            |  | $      | 14.7     |   |  |  | n/m |  
|Current ratio                           |  |           | 0.96     |              |  |        | 1.01     |   |  |  | (5  | )











| |   |                                                                                                                                                                                                                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In February 2006, the company acquired an additional
    10 percent interest in the ordinary shares of Sinofert for
    cash consideration of $126.3 million. The purchase price
    was financed by short-term debt.                                                                                                                  
|
| |  | The companys spending on property, plant and equipment
    increased $57.0 million as compared to the same three-month
    period last year, largely due to major capital expansion
    projects in potash. These activities, totaling
    $120.0 million for the quarter, were also financed by our
    short-term credit facilities.



32



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Principal Debt Instruments


|                           |  |                |         |             |  |           |         |           |  |   |       |  |  |   |       | 
|-------------------------- |  | -------------- | ------- | ----------- |  | --------- | ------- | --------- |  | - | ----- |  |  | - | ----- | 
|                           |  | March 31, 2006
|                          
|                           |  | Total          |         | Amount      |  | Amount    |         | Amount   
|Dollars (millions)         |  | Amount         |         | Outstanding |  | Committed |         | Available
|                          
|Syndicated credit facility |  | $              | 750.0   |             |  | $         |        |           |  | $ | 604.9 |  |  | $ | 145.1 | 
|Line of credit             |  |                | 75.0    |             |  |           |        |           |  |   | 18.7  |  |  |   | 56.3  | 
|Commercial paper           |  |                | 750.0   |             |  |           | 604.9   |           |  |   |      |  |  |   | 145.1 | 
|US shelf registration      |  |                | 2,000.0 |             |  |           | 1,250.0 |           |  |   |      |  |  |   | 750.0 | 









Outstanding Share Data




33



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Off-Balance Sheet Arrangements




Guarantee Contracts










34



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Derivative Instruments










Long-term Fixed Price Contracts







QUARTERLY FINANCIAL HIGHLIGHTS


|                               |  |           |       |  |              |  |               |       |          |  |           |       |  |              |   |               |  |          |   |       |  |  |  |   |       |  |  |   |       |  |  |   |       | 
|------------------------------ |  | --------- | ----- |  | ------------ |  | ------------- | ----- | -------- |  | --------- | ----- |  | ------------ | - | ------------- |  | -------- | - | ----- |  |  |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                               |  |           |       |  |              | 
|Dollars (millions)             |  | March 31, |       |  | December 31, |  | September 30, |       | June 30, |  | March 31, |       |  | December 31, |   | September 30, |  | June 30,
|except per-share amounts       |  | 2006      |       |  | 2005         |  | 2005          |       | 2005     |  | 2005      |       |  | 2004         |   | 2004          |  | 2004    
|                               |  |           |       |  |              | 
|Sales                          |  | $         | 861.6 |  |              |  | $             | 930.5 |          |  | $         | 938.0 |  |              | $ | 1,057.3       |  |          | $ | 921.4 |  |  |  | $ | 866.6 |  |  | $ | 815.7 |  |  | $ | 833.7 | 
|                               |  |           |       |  |              | 
|Gross margin                   |  |           | 203.5 |  |              |  |               | 242.2 |          |  |           | 279.5 |  |              |   | 344.8         |  |          |   | 258.5 |  |  |  |   | 197.3 |  |  |   | 189.4 |  |  |   | 170.7 | 
|                               |  |           |       |  |              | 
|Net income                     |  |           | 125.5 |  |              |  |               | 117.1 |          |  |           | 130.3 |  |              |   | 164.2         |  |          |   | 131.3 |  |  |  |   | 100.1 |  |  |   | 75.2  |  |  |   | 72.6  | 
|                               |  |           |       |  |              | 
|Net income per share  basic   |  |           | 1.21  |  |              |  |               | 1.11  |          |  |           | 1.20  |  |              |   | 1.50          |  |          |   | 1.18  |  |  |  |   | 0.91  |  |  |   | 0.69  |  |  |   | 0.68  | 
|                               |  |           |       |  |              | 
|Net income per share  diluted |  |           | 1.19  |  |              |  |               | 1.09  |          |  |           | 1.17  |  |              |   | 1.46          |  |          |   | 1.15  |  |  |  |   | 0.88  |  |  |   | 0.68  |  |  |   | 0.67  | 
|                               |  |           |       |  |              | 



35



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RELATED PARTY TRANSACTIONS




CRITICAL ACCOUNTING ESTIMATES


10-Q.






RECENT ACCOUNTING CHANGES


Significant Accounting Policies


AcG-15 (EIC-157). EIC-157


36



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Recent Accounting Pronouncements


Canada


Comprehensive Income, Equity, Financial Instruments and
Hedges






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



Conditional Asset Retirement Obligations




Stripping Costs Incurred in the Production Phase of a
Mining Operation




37



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United States






RISK MANAGEMENT










OUTLOOK




38



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one-cent non-cash


39



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FORWARD LOOKING STATEMENTS







ITEM
3.       QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK




Commodity Risk






10-percent


40



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Interest Rate Risk






10-percent


Foreign Exchange Risk









ITEM 4.       CONTROLS
AND PROCEDURES






41



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PART II.       OTHER
INFORMATION







ITEM 5.       OTHER
INFORMATION


10-Q.







ITEM
6.       EXHIBITS


(a)       EXHIBITS


|        |  |                                                                                                                                                                                                                                                                                                                                                                         
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                         
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                         
|3(a)    |  | Articles of Continuance of the registrant dated May 15,
    2002, incorporated by reference to Exhibit 3(a) to the
    registrants report on Form 10-Q for the quarterly
    period ended June 30, 2002 (the Second Quarter 2002
    Form 10-Q).                                                                                                                     
|3(b)    |  | Bylaws of the registrant effective May 15, 2002,
    incorporated by reference to Exhibit 3(b) to the Second
    Quarter 2002 Form 10-Q.                                                                                                                                                                                                                                
|4(a)    |  | Term Credit Agreement between The Bank of Nova Scotia and other
    financial institutions and the registrant dated
    September 25, 2001, incorporated by reference to
    Exhibit 4(a) to the registrants report on
    Form 10-Q for the quarterly period ended September 30,
    2001.                                                                            
|4(b)    |  | Syndicated Term Credit Facility Amending Agreement between The
    Bank of Nova Scotia and other financial institutions and the
    registrant dated as of September 23, 2003, incorporated by
    reference to Exhibit 4(b) to the registrants report
    on Form 10-Q for the quarterly period ended
    September 30, 2003 (the Third Quarter 2003
    Form 10-Q).
|4(c)    |  | Syndicated Term Credit Facility Second Amending Agreement
    between The Bank of Nova Scotia and other financial institutions
    and the registrant dated as of September 21, 2004,
    incorporated by reference to Exhibit 4(c) to the
    registrants report on Form 8-K dated
    September 21, 2004.                                                            
|4(d)    |  | Syndicated Term Credit Facility Third Amending Agreement between
    The Bank of Nova Scotia and other financial institutions and the
    registrant dated as of September 20, 2005, incorporated by
    reference to Exhibit 4(a) to the registrants report
    on Form 8-K dated September 22, 2005.                                                                 
|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 (the 1997 Form 8-K).                                                                                                          
|4(f)    |  | Indenture dated as of February 27, 2003, between the
    registrant and The Bank of Nova Scotia Trust Company of New
    York, incorporated by reference to Exhibit 4(c) to the
    registrants report on Form 10-K for the year ended
    December 31, 2002 (the 2002 Form 10-K).                                                                                   

42



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|        |  |                                                                                                                                                                                                                                              
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                              
|Number  |  | Description of Document                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                              
|4(g)    |  | Form of Notes relating to the registrants offering of
    $400,000,000 principal amount of 7.125% Notes due June 15,
    2007, incorporated by reference to Exhibit 4(b) to the 1997
    Form 8-K.                                          
|4(h)    |  | Form of Notes relating to the registrants offering of
    $600,000,000 principal amount of 7.75% Notes due May 31,
    2011, incorporated by reference to Exhibit 4 to the
    registrants report on Form 8-K dated May 17,
    2001.      
|4(i)    |  | Form of Note relating to the registrants offering of
    $250,000,000 principal amount of 4.875% Notes due March 1,
    2013, incorporated by reference to Exhibit 4 to the
    registrants report on Form 8-K dated
    February 28, 2003.



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                                                                                        
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10(a)   |  | Sixth Voting Agreement dated April 22, 1978, between
    Central Canada Potash, Division of Noranda, Inc., Cominco Ltd.,
    International Minerals and Chemical Corporation (Canada)
    Limited, PCS Sales and Texasgulf Inc., incorporated by reference
    to Exhibit 10(f) to the registrants registration
    statement on Form F-1 (File No. 33-31303) (the
    F-1 Registration Statement).                                                         
|10(b)   |  | Canpotex Limited Shareholders Seventh Memorandum of Agreement
    effective April 21, 1978, between Central Canada Potash,
    Division of Noranda Inc., Cominco Ltd., International Minerals
    and Chemical Corporation (Canada) Limited, PCS Sales, Texasgulf
    Inc. and Canpotex Limited as amended by Canpotex S&P
    amending agreement dated November 4, 1987, incorporated by
    reference to Exhibit 10(g) to the F-1 Registration
    Statement.
|10(c)   |  | Producer Agreement dated April 21, 1978, between Canpotex
    Limited and PCS Sales, incorporated by reference to
    Exhibit 10(h) to the F-1 Registration Statement.                                                                                                                                                                                                                                                                                         
|10(d)   |  | Canpotex/PCS Amending Agreement, dated as of October 1,
    1992, incorporated by reference to Exhibit 10(f) to the
    registrants report on Form 10-K for the year ended
    December 31, 1995 (the 1995 Form 10-K).                                                                                                                                                                                                                                      
|10(e)   |  | Canpotex PCA Collateral Withdrawing/PCS Amending Agreement,
    dated as of October 7, 1993, incorporated by reference to
    Exhibit 10(g) to the 1995 Form 10-K.                                                                                                                                                                                                                                                                                             
|10(f)   |  | Canpotex Producer Agreement amending agreement dated as of
    January 1, 1999, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 2000 (the
    2000 Form 10-K).                                                                                                                                                                                                                    
|10(g)   |  | Canpotex Producer Agreement amending agreement dated as of
    July 1, 2002, incorporated by reference to
    Exhibit 10(g) to the registrants report on
    Form 10-Q for the quarterly period ended June 30, 2004
    (the Second Quarter 2004 Form 10-Q).                                                                                                                                                                                                
|10(h)   |  | Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978, between International Minerals &
    Chemical Corporation (Canada) Limited and the registrants
    predecessor, incorporated by reference to Exhibit 10(e) to
    the F-1 Registration Statement.                                                                                                                                                                              
|10(i)   |  | Agreement dated December 21, 1990, between International
    Minerals & Chemical Corporation (Canada) Limited and
    the registrant, amending the Esterhazy Restated Mining and
    Processing Agreement dated January 31, 1978, incorporated
    by reference to Exhibit 10(p) to the registrants
    report on Form 10-K for the year ended December 31,
    1990.                                                                                         

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10(j)   |  | Agreement effective August 27, 1998, between International
    Minerals & Chemical (Canada) Global Limited and the
    registrant, amending the Esterhazy Restated Mining and
    Processing Agreement dated January 31, 1978 (as amended),
    incorporated by reference to Exhibit 10(l) to the 1998
    Form 10-K.                                                                                                                                                                                                                                  
|10(k)   |  | Agreement effective August 31, 1998, among International
    Minerals & Chemical (Canada) Global Limited,
    International Minerals & Chemical (Canada) Limited
    Partnership and the registrant assigning the interest in the
    Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978 (as amended) held by International
    Minerals & Chemical (Canada) Global Limited to
    International Minerals & Chemical (Canada) Limited
    Partnership, incorporated by reference to Exhibit 10(m) to
    the 1998 Form 10-K.
|10(l)   |  | Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Directors, as amended January 23, 2001,
    incorporated by reference to Exhibit 10(bb) to the Second
    Quarter 2001 Form 10-Q.                                                                                                                                                                                                                                                                                                                                                      
|10(m)   |  | Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Officers and Employees, as amended
    January 23, 2001, incorporated by reference to
    Exhibit 10(aa) to the 2000 Form 10-K.                                                                                                                                                                                                                                                                                                                                                        
|10(n)   |  | Short-Term Incentive Plan of the registrant effective January
    2000, as amended March 10, 2005, incorporated by reference
    to Exhibit 10(x) to the registrants report on
    Form 10-K for the year ended December 31, 2004.                                                                                                                                                                                                                                                                                                                    
|10(o)   |  | Long-Term Incentive Plan of the registrant effective January
    2003, incorporated by reference to Exhibit 10(y) to the
    2002 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                           
|10(p)   |  | 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(q)   |  | 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(r)   |  | Amended and restated Supplemental Retirement Income Plan of the
    registrant and text of amendment to existing supplemental income
    plan agreements, incorporated by reference to
    Exhibit 10(mm) to the registrants report on
    Form 10-Q for the quarterly period ended September 30,
    2000 (the Third Quarter 2000 Form 10-Q).                                                                                                                                                                                                      
|10(s)   |  | Form of Letter of amendment to existing supplemental income plan
    agreements of the registrant dated November 4, 2002,
    incorporated by reference to Exhibit 10(cc) to the 2002
    Form 10-K.                                                                                                                                                                                                                                                                                                                                                   
|10(t)   |  | Supplemental Retirement Benefits Plan for U.S. Executives
    dated effective January 1, 1999, incorporated by reference
    to Exhibit 10(aa) to the Second Quarter 2002 Form 10-Q.                                                                                                                                                                                                                                                                                                                                                                   
|10(u)   |  | 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(v)   |  | 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(w)   |  | Resolution and Form of Agreement of Indemnification dated
    January 24, 2001, incorporated by reference to
    Exhibit 10(ii) to the 2000 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                 
|10(x)   |  | Resolution and Form of Agreement of Indemnification 
    July 21, 2004, incorporated by reference to
    Exhibit 10(ii) to the Second Quarter 2004 Form 10-Q.                                                                                                                                                                                                                                                                                                                                                                                         
|10(y)   |  | Chief Executive Officer Medical and Dental Benefits,
    incorporated by reference to Exhibit 10(jj) to the
    Form 10-K for the year ended December 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                        

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|        |  |                                                                                                                                                                                                                                                                                                                              
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                              
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                              
|10(z)   |  | 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(aa)  |  | 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(bb)  |  | Deferred Share Unit Plan for Non-Employee Directors,
    incorporated by reference to Exhibit 4.1 to the
    registrants Form S-8 (File No. 333-75742) filed
    December 21, 2001.                                                                                                                                         
|10(cc)  |  | Potash Corporation of Saskatchewan Inc. 2005 Performance Option
    Plan and Form of Option Agreement, incorporated by reference to
    Exhibit 10(nn) to the registrants report on
    Form 10-Q for the quarterly period ended March 31,
    2005 (the First Quarter 2005 Form 10-Q).                                   
|10(dd)  |  | Potash Corporation of Saskatchewan Inc. 2006 Performance Option
    Plan and Form of Option Agreement.                                                                                                                                                                                                                       
|10(ee)  |  | Medium Term Incentive Plan of the registrant effective January
    2006, incorporated by reference to Exhibit 10(dd) to the
    2005 Form 10-K.                                                                                                                                                                              
|11      |  | Statement re Computation of Per Share Earnings.                                                                                                                                                                                                                                                                              
|31(a)   |  | Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.                                                                                                                                                                                                                                                 
|31(b)   |  | Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.                                                                                                                                                                                                                                                 
|32      |  | Certification pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.                                                                                                                                                                                                                                                 

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SIGNATURES






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





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

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



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

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

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EXHIBIT INDEX


|        |  |                                                                                                                                                                                                                                                                                                                                                                         
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                         
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                                                 
|        |  |                                                                                                                                                                                                                                                                                                                                                                         
|3(a)    |  | Articles of Continuance of the registrant dated May 15,
    2002, incorporated by reference to Exhibit 3(a) to the
    registrants report on Form 10-Q for the quarterly
    period ended June 30, 2002 (the Second Quarter 2002
    Form 10-Q).                                                                                                                     
|3(b)    |  | Bylaws of the registrant effective May 15, 2002,
    incorporated by reference to Exhibit 3(b) to the Second
    Quarter 2002 Form 10-Q.                                                                                                                                                                                                                                
|4(a)    |  | Term Credit Agreement between The Bank of Nova Scotia and other
    financial institutions and the registrant dated
    September 25, 2001, incorporated by reference to
    Exhibit 4(a) to the registrants report on
    Form 10-Q for the quarterly period ended September 30,
    2001.                                                                            
|4(b)    |  | Syndicated Term Credit Facility Amending Agreement between The
    Bank of Nova Scotia and other financial institutions and the
    registrant dated as of September 23, 2003, incorporated by
    reference to Exhibit 4(b) to the registrants report
    on Form 10-Q for the quarterly period ended
    September 30, 2003 (the Third Quarter 2003
    Form 10-Q).
|4(c)    |  | Syndicated Term Credit Facility Second Amending Agreement
    between The Bank of Nova Scotia and other financial institutions
    and the registrant dated as of September 21, 2004,
    incorporated by reference to Exhibit 4(c) to the
    registrants report on Form 8-K dated
    September 21, 2004.                                                            
|4(d)    |  | Syndicated Term Credit Facility Third Amending Agreement between
    The Bank of Nova Scotia and other financial institutions and the
    registrant dated as of September 20, 2005, incorporated by
    reference to Exhibit 4(a) to the registrants report
    on Form 8-K dated September 22, 2005.                                                                 
|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 (the 1997 Form 8-K).                                                                                                          
|4(f)    |  | Indenture dated as of February 27, 2003, between the
    registrant and The Bank of Nova Scotia Trust Company of New
    York, incorporated by reference to Exhibit 4(c) to the
    registrants report on Form 10-K for the year ended
    December 31, 2002 (the 2002 Form 10-K).                                                                                   
|4(g)    |  | Form of Notes relating to the registrants offering of
    $400,000,000 principal amount of 7.125% Notes due June 15,
    2007, incorporated by reference to Exhibit 4(b) to the 1997
    Form 8-K.                                                                                                                                                                     
|4(h)    |  | Form of Notes relating to the registrants offering of
    $600,000,000 principal amount of 7.75% Notes due May 31,
    2011, incorporated by reference to Exhibit 4 to the
    registrants report on Form 8-K dated May 17,
    2001.                                                                                                                                 
|4(i)    |  | Form of Note relating to the registrants offering of
    $250,000,000 principal amount of 4.875% Notes due March 1,
    2013, incorporated by reference to Exhibit 4 to the
    registrants report on Form 8-K dated
    February 28, 2003.                                                                                                                           



|        |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                               
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                       
|10(a)   |  | Sixth Voting Agreement dated April 22, 1978, between
    Central Canada Potash, Division of Noranda, Inc., Cominco Ltd.,
    International Minerals and Chemical Corporation (Canada)
    Limited, PCS Sales and Texasgulf Inc., incorporated by reference
    to Exhibit 10(f) to the registrants registration
    statement on Form F-1 (File No. 33-31303) (the
    F-1 Registration Statement).

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|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|10(b)   |  | Canpotex Limited Shareholders Seventh Memorandum of Agreement
    effective April 21, 1978, between Central Canada Potash,
    Division of Noranda Inc., Cominco Ltd., International Minerals
    and Chemical Corporation (Canada) Limited, PCS Sales, Texasgulf
    Inc. and Canpotex Limited as amended by Canpotex S&P
    amending agreement dated November 4, 1987, incorporated by
    reference to Exhibit 10(g) to the F-1 Registration
    Statement.                                                                                        
|10(c)   |  | Producer Agreement dated April 21, 1978, between Canpotex
    Limited and PCS Sales, incorporated by reference to
    Exhibit 10(h) to the F-1 Registration Statement.                                                                                                                                                                                                                                                                                                                                                                                 
|10(d)   |  | Canpotex/PCS Amending Agreement, dated as of October 1,
    1992, incorporated by reference to Exhibit 10(f) to the
    registrants report on Form 10-K for the year ended
    December 31, 1995 (the 1995 Form 10-K).                                                                                                                                                                                                                                                                                                                              
|10(e)   |  | Canpotex PCA Collateral Withdrawing/PCS Amending Agreement,
    dated as of October 7, 1993, incorporated by reference to
    Exhibit 10(g) to the 1995 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                     
|10(f)   |  | Canpotex Producer Agreement amending agreement dated as of
    January 1, 1999, incorporated by reference to
    Exhibit 10(f) to the registrants report on
    Form 10-K for the year ended December 31, 2000 (the
    2000 Form 10-K).                                                                                                                                                                                                                                                                                                            
|10(g)   |  | Canpotex Producer Agreement amending agreement dated as of
    July 1, 2002, incorporated by reference to
    Exhibit 10(g) to the registrants report on
    Form 10-Q for the quarterly period ended June 30, 2004
    (the Second Quarter 2004 Form 10-Q).                                                                                                                                                                                                                                                                                        
|10(h)   |  | Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978, between International Minerals &
    Chemical Corporation (Canada) Limited and the registrants
    predecessor, incorporated by reference to Exhibit 10(e) to
    the F-1 Registration Statement.                                                                                                                                                                                                                                                                      
|10(i)   |  | Agreement dated December 21, 1990, between International
    Minerals & Chemical Corporation (Canada) Limited and
    the registrant, amending the Esterhazy Restated Mining and
    Processing Agreement dated January 31, 1978, incorporated
    by reference to Exhibit 10(p) to the registrants
    report on Form 10-K for the year ended December 31,
    1990.                                                                                                                                                                                 
|10(j)   |  | Agreement effective August 27, 1998, between International
    Minerals & Chemical (Canada) Global Limited and the
    registrant, amending the Esterhazy Restated Mining and
    Processing Agreement dated January 31, 1978 (as amended),
    incorporated by reference to Exhibit 10(l) to the 1998
    Form 10-K.                                                                                                                                                                                                                                  
|10(k)   |  | Agreement effective August 31, 1998, among International
    Minerals & Chemical (Canada) Global Limited,
    International Minerals & Chemical (Canada) Limited
    Partnership and the registrant assigning the interest in the
    Esterhazy Restated Mining and Processing Agreement dated
    January 31, 1978 (as amended) held by International
    Minerals & Chemical (Canada) Global Limited to
    International Minerals & Chemical (Canada) Limited
    Partnership, incorporated by reference to Exhibit 10(m) to
    the 1998 Form 10-K.
|10(l)   |  | Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Directors, as amended January 23, 2001,
    incorporated by reference to Exhibit 10(bb) to the Second
    Quarter 2001 Form 10-Q.                                                                                                                                                                                                                                                                                                                                                      
|10(m)   |  | Potash Corporation of Saskatchewan Inc. Stock Option
    Plan  Officers and Employees, as amended
    January 23, 2001, incorporated by reference to
    Exhibit 10(aa) to the 2000 Form 10-K.                                                                                                                                                                                                                                                                                                                                                        
|10(n)   |  | Short-Term Incentive Plan of the registrant effective January
    2000, as amended March 10, 2005, incorporated by reference
    to Exhibit 10(x) to the registrants report on
    Form 10-K for the year ended December 31, 2004.                                                                                                                                                                                                                                                                                                                    
|10(o)   |  | Long-Term Incentive Plan of the registrant effective January
    2003, incorporated by reference to Exhibit 10(y) to the
    2002 Form 10-K.                                                                                                                                                                                                                                                                                                                                                                                                           
|10(p)   |  | Resolution and Forms of Agreement for Supplemental Retirement
    Income Plan, for officers and key employees of the registrant,
    incorporated by reference to Exhibit 10(o) to the 1995
    Form 10-K.                                                                                                                                                                                                                                                                                                                                             

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##### Table of Contents



|        |  |                                                                                                                                                                                                                                                                                                                                                  
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                  
|Number  |  | Description of Document                                                                                                                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                  
|10(q)   |  | 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(r)   |  | Amended and restated Supplemental Retirement Income Plan of the
    registrant and text of amendment to existing supplemental income
    plan agreements, incorporated by reference to
    Exhibit 10(mm) to the registrants report on
    Form 10-Q for the quarterly period ended September 30,
    2000 (the Third Quarter 2000 Form 10-Q).
|10(s)   |  | Form of Letter of amendment to existing supplemental income plan
    agreements of the registrant dated November 4, 2002,
    incorporated by reference to Exhibit 10(cc) to the 2002
    Form 10-K.                                                                                                                                             
|10(t)   |  | Supplemental Retirement Benefits Plan for U.S. Executives
    dated effective January 1, 1999, incorporated by reference
    to Exhibit 10(aa) to the Second Quarter 2002 Form 10-Q.                                                                                                                                                             
|10(u)   |  | 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(v)   |  | 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(w)   |  | Resolution and Form of Agreement of Indemnification dated
    January 24, 2001, incorporated by reference to
    Exhibit 10(ii) to the 2000 Form 10-K.                                                                                                                                                                                           
|10(x)   |  | Resolution and Form of Agreement of Indemnification 
    July 21, 2004, incorporated by reference to
    Exhibit 10(ii) to the Second Quarter 2004 Form 10-Q.                                                                                                                                                                                   
|10(y)   |  | Chief Executive Officer Medical and Dental Benefits,
    incorporated by reference to Exhibit 10(jj) to the
    Form 10-K for the year ended December 31, 2004.                                                                                                                                                                                  
|10(z)   |  | 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(aa)  |  | 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(bb)  |  | Deferred Share Unit Plan for Non-Employee Directors,
    incorporated by reference to Exhibit 4.1 to the
    registrants Form S-8 (File No. 333-75742) filed
    December 21, 2001.                                                                                                                                                             
|10(cc)  |  | Potash Corporation of Saskatchewan Inc. 2005 Performance Option
    Plan and Form of Option Agreement, incorporated by reference to
    Exhibit 10(nn) to the registrants report on
    Form 10-Q for the quarterly period ended March 31,
    2005 (the First Quarter 2005 Form 10-Q).                                                       
|10(dd)  |  | Potash Corporation of Saskatchewan Inc. 2006 Performance Option
    Plan and Form of Option Agreement.                                                                                                                                                                                                                                           
|10(ee)  |  | Medium Term Incentive Plan of the registrant effective January
    2006, incorporated by reference to Exhibit 10(dd) to the
    2005 Form 10-K.                                                                                                                                                                                                  
|11      |  | Statement re Computation of Per Share Earnings.                                                                                                                                                                                                                                                                                                  
|31(a)   |  | Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.                                                                                                                                                                                                                                                                     
|31(b)   |  | Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002.                                                                                                                                                                                                                                                                     
|32      |  | Certification pursuant to Section 906 of the Sarbanes-Oxley
    Act of 2002.                                                                                                                                                                                                                                                                     

49