##### Table of Contents





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

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended June 30,
    2010ORo

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(Address of principal executive offices)

S7K 7G3(Zip Code)    306-933-8500
 (Registrants telephone number, including area code)
    þ o
  Regulation S-T
  o o
  Rule 12b-2
  Large accelerated filer þ

Accelerated filer o

Non-accelerated filero

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




---





TABLE OF CONTENTS  PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTSCondensed Consolidated Statements of Financial PositionCondensed Consolidated Statements of Operations and Retained EarningsCondensed Consolidated Statements of Cash FlowCondensed Consolidated Statements of Comprehensive (Loss) IncomeCondensed Consolidated Statements of Accumulated Other Comprehensive IncomeNotes to the Condensed Consolidated Financial StatementsITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKITEM 4. CONTROLS AND PROCEDURESPART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSITEM 6. EXHIBITSSIGNATURESEXHIBIT INDEXExhibit 11Exhibit 31(a)Exhibit 31(b)Exhibit 32    Table of Contents  
  PART I.  FINANCIAL
    INFORMATION
 
  ITEM 1.
    FINANCIAL
    STATEMENTS  Potash
    Corporation of Saskatchewan Inc.

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


December 31,2010


2009(1)AssetsCurrent assetsCash and cash equivalents

$
366.7


$
385.4Receivables (Note 2)


787.4



1,137.9Inventories (Note 3)


661.9



623.5Prepaid expenses and other current assets


151.2



124.91,967.2



2,271.7Property, plant and equipment


7,139.8



6,413.3Investments


3,481.3



3,760.3Other assets


359.2



359.9Intangible assets


19.3



20.0Goodwill


97.0



97.0$
13,063.8


$
12,922.2LiabilitiesCurrent liabilitiesShort-term debt and current portion of long-term debt

$
996.3


$
728.8Payables and accrued charges


959.4



796.8Current portion of derivative instrument liabilities


79.4



51.82,035.1



1,577.4Long-term debt (Note 4)


2,720.6



3,319.3Derivative instrument liabilities


165.2



123.2Future income tax liability


1,009.1



962.4Accrued pension and other post-retirement benefits


289.5



280.8Accrued environmental costs and asset retirement obligations


269.9



215.1Other non-current liabilities and deferred credits


5.1



4.26,494.5



6,482.4Contingencies and Guarantees(Notes 15 and 16,
    respectively)Shareholders EquityShare capital


1,449.4



1,430.3Unlimited authorization of common shares without par value;
    issued and outstanding 296,581,476 and 295,975,550 at
    June 30, 2010 and December 31, 2009, respectivelyUnlimited authorization of first preferred shares; none
    outstandingContributed surplus


164.1



149.5Accumulated other comprehensive income


882.7



1,648.8Retained earnings


4,073.1



3,211.26,569.3



6,439.8$
13,063.8


$
12,922.2   (1)
    
    Corrected as described in
    Note 18.   2




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##### Table of Contents



Potash
    Corporation of Saskatchewan Inc.

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


Six Months EndedJune 30


June 302010


2009(1)


2010


2009(1)Sales(Note 6)

$
1,437.8


$
856.0


$
3,151.4


$
1,778.5Less: Freight


64.1



38.9



169.3



76.5Transportation
    and distribution


35.0



37.7



84.9



64.7Cost of
    goods sold


755.1



610.3



1,598.5



1,240.1Gross Margin


583.6



169.1



1,298.7



397.2Selling and administrative


45.0



53.4



94.5



96.8Provincial mining and other taxes


17.2



(18.1
)


39.7



14.9Foreign exchange (gain) loss


(0.3
)


37.9



8.9



7.7Other income (Note 9)


(147.3
)


(188.4
)


(175.5
)


(223.4
)(85.4
)


(115.2
)


(32.4
)


(104.0
)Operating Income


669.0



284.3



1,331.1



501.2Interest Expense(Note 10)


22.7



26.5



53.2



49.7Income Before Income Taxes


646.3



257.8



1,277.9



451.5Income Taxes(Note 11)


174.3



71.6



356.7



(42.1
)Net Income

$
472.0


$
186.2



921.2



493.6Retained Earnings, Beginning of Period










3,211.2



2,348.5Dividends










(59.3
)


(59.2
)Retained Earnings, End of Period









$
4,073.1


$
2,782.9Net Income Per Share(Note 12)Basic

$
1.59


$
0.63


$
3.11


$
1.67Diluted

$
1.55


$
0.61


$
3.02


$
1.63Dividends Per Share

$
0.10


$
0.10


$
0.20


$
0.20   (1)
    
    Corrected as described in
    Note 18.   3




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##### Table of Contents



Potash
    Corporation of Saskatchewan Inc.

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


Six Months EndedJune 30


June 302010


2009(1)


2010


2009(1)Operating ActivitiesNet income

$
472.0


$
186.2


$
921.2


$
493.6Adjustments to reconcile net income to cash provided by
    operating activitiesDepreciation and amortization


99.9



70.1



201.0



144.1Stock-based compensation


16.3



20.1



18.6



22.6Loss (gain) on disposal of property, plant and equipmentand long-term investments


3.3



(114.4
)


3.3



(113.9
)Foreign exchange on future income tax and miscellaneous items


-



11.7



2.1



(2.1
)Provision for (recovery of) future income tax


23.7



40.8



60.8



(76.3
)Undistributed earnings of equity investees


(1.3
)


69.1



(27.5
)


31.2Derivative instruments


10.2



3.5



13.5



(41.8
)Other long-term liabilities


18.2



17.6



37.2



30.2Subtotal of adjustments


170.3



118.5



309.0



(6.0
)Changes in non-cash operating working capitalReceivables


264.5



54.5



349.4



191.9Inventories


(72.0
)


0.5



(29.7
)


61.1Prepaid expenses and other current assets


(22.7
)


(26.8
)


(31.9
)


(53.6
)Payables and accrued charges


94.7



(396.6
)


177.3



(652.0
)Subtotal of changes in non-cash operating working capital


264.5



(368.4
)


465.1



(452.6
)Cash provided by (used in) operating activities


906.8



(63.7
)


1,695.3



35.0Investing ActivitiesAdditions to property, plant and equipment


(436.5
)


(399.6
)


(889.5
)


(765.7
)Purchase of long-term investments


-



-



(422.3
)


-Proceeds from disposal of property, plant and equipment


0.2



15.5



0.3



15.8Proceeds from disposal of auction rate securities


-



132.5



-



132.5Other assets and intangible assets


(10.1
)


0.7



(25.5
)


(10.5
)Cash used in investing activities


(446.4
)


(250.9
)


(1,337.0
)


(627.9
)Cash before financing activities


460.4



(314.6
)


358.3



(592.9
)Financing ActivitiesProceeds from long-term debt obligations


-



1,795.0



400.0



2,555.0Repayment of and finance costs on long-term debt obligations


(250.4
)


(1,538.8
)


(400.4
)


(2,229.2
)(Repayment of) proceeds from short-term debt obligations


(117.6
)


196.4



(332.4
)


411.5Dividends


(29.5
)


(29.0
)


(59.2
)


(58.7
)Issuance of common shares


5.0



7.2



15.0



8.8Cash (used in) provided by financing activities


(392.5
)


430.8



(377.0
)


687.4Increase (Decrease) in Cash and Cash Equivalents


67.9



116.2



(18.7
)


94.5Cash and Cash Equivalents, Beginning of Period


298.8



255.1



385.4



276.8Cash and Cash Equivalents, End of Period

$
366.7


$
371.3


$
366.7


$
371.3Cash and cash equivalents comprised of:Cash

$
55.1


$
56.1


$
55.1


$
56.1Short-term investments


311.6



315.2



311.6



315.2$
366.7


$
371.3


$
366.7


$
371.3Supplemental cash flow disclosureInterest paid

$
35.8


$
30.5


$
53.7


$
46.0Income taxes (recovered) paid

$
(161.8
)

$
589.0


$
(140.3
)

$
736.2   (1)
    
    Corrected as described in
    Note 18.   4




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##### Table of Contents



Potash
    Corporation of Saskatchewan Inc.

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


Six Months EndedJune 30


June 30(Net of related income taxes)

2010


2009(1)


2010


2009(1)Net Income

$
472.0


$
186.2


$
921.2


$
493.6Other comprehensive (loss) incomeNet (decrease) increase in unrealized gains on
    available-for-sale
    securities(2)


(848.1
)


363.9



(722.0
)


437.6Net (losses) gains on derivatives designated as cash flow
    hedges(3)


(10.7
)


16.4



(63.9
)


(28.8
)Reclassification to income of net losses on cash flow
    hedges(4)


14.6



16.8



23.6



25.4Unrealized foreign exchange (losses) gains on translation ofself-sustaining foreign operations


(0.2
)


7.4



(1.4
)


7.3Share of other comprehensive loss of equity investees


(2.4
)


-



(2.4
)


-Other Comprehensive (Loss) Income


(846.8
)


404.5



(766.1
)


441.5Comprehensive (Loss) Income

$
(374.8
)

$
590.7


$
155.1


$
935.1   (1)
    
    Corrected as described in
    Note 18.(2)
    
    Available-for-sale
    securities are comprised of shares in Israel Chemicals Ltd. and
    Sinofert Holdings Limited and investments in auction rate
    securities. The amounts are net of income taxes of $NIL
    (2009  $(0.3)) for the three months ended
    June 30, 2010 and $NIL (2009  $26.5) for the six
    months ended June 30, 2010.(3)
    
    Cash flow hedges are comprised of
    natural gas derivative instruments, and are net of income taxes
    of $(6.5) (2009  $10.0) for the three months ended
    June 30, 2010 and $(38.7) (2009  $(17.5)) for
    the six months ended June 30, 2010.(4)
    
    Net of income taxes of $8.8
    (2009  $10.1) for the three months ended
    June 30, 2010 and $14.3 (2009  $15.4) for the
    six months ended June 30, 2010. 
  Condensed
    Consolidated Statements of Accumulated Other Comprehensive
    Income
    (in millions of US dollars)
    (unaudited)
  June 30,


December 31,(Net of related income taxes)

2010


2009(1)Unrealized gains on
    available-for-sale
    securities(2)

$
1,028.4


$
1,750.4Net unrealized losses on derivatives designated as cash flow
    hedges(3)


(151.7
)


(111.4
)Unrealized foreign exchange gains on self-sustaining foreign
    operations(4)


8.4



9.8Share of other comprehensive loss of equity
    investees(5)


(2.4
)


-Accumulated other comprehensive income


882.7



1,648.8Retained earnings


4,073.1



3,211.2Accumulated Other Comprehensive Income and Retained
    Earnings

$
4,955.8


$
4,860.0   (1)
    
    Corrected as described in
    Note 18.(2)
    
    $1,178.8 before income taxes
    (2009  $1,900.8).(3)
    
    $(242.3) before income taxes
    (2009  $(177.6)).(4)
    
    $8.4 before income taxes
    (2009  $9.8).(5)
    
    $(2.4) before income taxes
    (2009  $NIL).   5




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##### Table of Contents



Potash
    Corporation of Saskatchewan Inc.

    Notes to the Condensed Consolidated Financial Statements
    For the Three and Six Months Ended June 30, 2010
    (in millions of US dollars except share, per-share, percentage
    and ratio amounts)
    (unaudited)
  1.
    Significant
    Accounting Policies  Basis
    of Presentation
      Recent
    Accounting Pronouncements
  IFRSs
    Business
    Combinations
    Noncontrolling
    Interests in Consolidated Financial Statements
   6




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##### Table of Contents



2.
    Receivables  June 30,


December 31,2010


2009Trade accounts  Canpotex Limited
    (Canpotex)

$
212.3


$
164.3 Other


362.4



264.4Less allowance for doubtful accounts


(8.3
)


(8.4
)566.4



420.3Margin deposits on derivative instruments


155.0



108.9Income taxes receivable


17.8



287.4Provincial mining and other taxes receivable


-



234.6Other non-trade accounts


48.2



86.7$
787.4


$
1,137.9   3.
    Inventories  June 30,


December 31,2010


2009Finished products

$
318.5


$
303.1Intermediate products


162.7



158.9Raw materials


62.2



50.6Materials and supplies


118.5



110.9$
661.9


$
623.5   Three Months Ended


Six Months EndedJune 30


June 30Items affecting cost of goods
    sold

2010


2009


2010


2009Expensed inventories

$
678.6


$
484.0


$
1,486.4


$
1,001.8Writedowns of finished products


2.2



27.7



4.5



40.2Writedowns of intermediate products


0.3



-



0.3



-Writedowns of raw materials


-



-



-



-Reserves for obsolete materials and supplies


0.5



0.7



1.0



1.3Reversals of writedowns


-



-



(1.7
)


(5.7
)$
681.6


$
512.4


$
1,490.5


$
1,037.6     4.
    Long-Term
    Debt     7




---



##### Table of Contents



5.
    Capital
    Management      June 30,


December 31,2010


2009Short-term debt and current portion of long-term debt

$
996.3


$
728.8Long-term debt


2,720.6



3,319.3Total debt


3,716.9



4,048.1Less: cash and cash equivalents


366.7



385.4Net debt


3,350.2



3,662.7Shareholders equity


6,569.3



6,439.8Less: accumulated other comprehensive income


882.7



1,648.8Adjusted shareholders equity


5,686.6



4,791.0Adjusted
    capital(1)

$
9,036.8


$
8,453.7   (1)
    
    Adjusted capital = (total debt
     cash and cash equivalents) + (shareholders equity
     accumulated other comprehensive income).  12-month
  As At or For the12 Months EndedJune 30,


December 31,2010


2009Components of ratiosAdjusted EBITDA (12 months ended)

$
2,379.7


$
1,377.6Net debt

$
3,350.2


$
3,662.7Adjusted interest expense (12 months ended)

$
213.6


$
189.1Adjusted capital

$
9,036.8


$
8,453.7RatiosAdjusted EBITDA to adjusted interest
    expense(1)


11.1



7.3Net debt to adjusted
    EBITDA(2)


1.4



2.7Net debt to adjusted
    capital(3)


37.1%



43.3%   (1)
    
    Adjusted EBITDA to adjusted
    interest expense = adjusted EBITDA (12 months ended) /
    adjusted interest expense (12 months ended).(2)
    
    Net debt to adjusted EBITDA =
    (total debt  cash and cash equivalents) / adjusted EBITDA
    (12 months ended).(3)
    
    Net debt to adjusted capital =
    (total debt  cash and cash equivalents) / (total debt
     cash and cash equivalents + shareholders equity
     accumulated other comprehensive income).   8




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##### Table of Contents



Twelve














TwelveMonths Ended


Three Months Ended


Months EndedJune 30,


June 30,


March 31,


December 31,


September 30,


December 31,2010


2010


2010


2009


2009


2009Net income

$
1,408.3


$
472.0


$
449.2


$
239.2


$
247.9


$
980.7Income taxes


478.0



174.3



182.4



43.4



77.9



79.2Interest expense


124.4



22.7



30.5



40.1



31.1



120.9Depreciation and amortization


369.0



99.9



101.1



84.6



83.4



312.1Gain on disposal of auction rate securities


-



-



-



-



-



(115.3
)Adjusted EBITDA

$
2,379.7


$
768.9


$
763.2


$
407.3


$
440.3


$
1,377.6   Twelve














TwelveMonths Ended


Three Months Ended


Months EndedJune 30,


June 30,


March 31,


December 31,


September 30,


December 31,2010


2010


2010


2009


2009


2009Interest expense

$
124.4


$
22.7


$
30.5


$
40.1


$
31.1


$
120.9Interest capitalized to property, plant and equipment


89.2



30.3



20.7



21.4



16.8



68.2Adjusted interest expense

$
213.6


$
53.0


$
51.2


$
61.5


$
47.9


$
189.1   6.
    Segment
    Information    Three Months Ended June 30, 2010Potash


Phosphate


Nitrogen


All Others


ConsolidatedSales

$
641.0


$
363.5


$
433.3


$
-


$
1,437.8Freight


35.5



19.0



9.6



-



64.1Transportation and distribution


15.9



8.0



11.1



-



35.0Net sales  third party


589.6



336.5



412.6



-Cost of goods sold


193.0



274.5



287.6



-



755.1Gross margin


396.6



62.0



125.0



-



583.6Depreciation and amortization


28.1



45.5



24.3



2.0



99.9Inter-segment sales


-



-



27.7



-



-   9




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##### Table of Contents



Three Months Ended June 30, 2009Potash


Phosphate


Nitrogen


All Others


ConsolidatedSales

$
210.7


$
324.7


$
320.6


$
-


$
856.0Freight


10.6



15.8



12.5



-



38.9Transportation and distribution


11.6



12.5



13.6



-



37.7Net sales  third party


188.5



296.4



294.5



-Cost of goods sold


82.3



277.4



250.6



-



610.3Gross margin


106.2



19.0



43.9



-



169.1Depreciation and amortization


5.9



37.9



23.9



2.4



70.1Inter-segment sales


-



-



15.0



-



-   Six Months Ended June 30, 2010Potash


Phosphate


Nitrogen


All Others


ConsolidatedSales

$
1,533.2


$
764.8


$
853.4


$
-


$
3,151.4Freight


102.8



44.6



21.9



-



169.3Transportation and distribution


44.5



17.8



22.6



-



84.9Net sales  third party


1,385.9



702.4



808.9



-Cost of goods sold


472.9



574.3



551.3



-



1,598.5Gross margin


913.0



128.1



257.6



-



1,298.7Depreciation and amortization


57.6



90.4



49.0



4.0



201.0Inter-segment sales


-



-



53.5



-



-   Six Months Ended June 30, 2009Potash


Phosphate


Nitrogen


All Others


ConsolidatedSales

$
479.9


$
654.6


$
644.0


$
-


$
1,778.5Freight


17.3



34.0



25.2



-



76.5Transportation and distribution


15.2



20.9



28.6



-



64.7Net sales  third party


447.4



599.7



590.2



-Cost of goods sold


174.6



573.4



492.1



-



1,240.1Gross margin


272.8



26.3



98.1



-



397.2Depreciation and amortization


13.4



76.9



49.2



4.6



144.1Inter-segment sales


-



-



20.8



-



-   Assets

Potash


Phosphate


Nitrogen


All Others


ConsolidatedAssets at June 30, 2010

$
5,005.0


$
2,489.8


$
1,706.3


$
3,862.7


$
13,063.8Assets at December 31, 2009


4,708.3



2,356.8



1,688.6



4,168.5



12,922.2Change in assets


296.7



133.0



17.7



(305.8
)


141.6Additions to property, plant and equipment


742.5



108.1



37.2



1.7



889.5     7.
    Stock-Based
    Compensation   10




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##### Table of Contents



Expected dividend

$
0.40Expected volatility


50%Risk-free interest rate


2.61%Expected life of options


5.9 years   8.
    Pension
    and Other Post-Retirement Expenses  Three Months


Six MonthsEnded June 30


Ended June 30Defined Benefit Pension
    Plans

2010


2009


2010


2009Service cost

$
5.0


$
4.3


$
10.0


$
8.6Interest cost


11.7



11.1



23.4



22.2Expected return on plan assets


(11.6
)


(9.6
)


(23.2
)


(19.2
)Net amortization and change in valuation allowance


5.8



7.3



12.4



14.4Net expense

$
10.9


$
13.1


$
22.6


$
26.0   Three Months


Six MonthsEnded June 30


Ended June 30Other Post-Retirement
    Plans

2010


2009


2010


2009Service cost

$
1.8


$
1.6


$
3.5


$
3.1Interest cost


4.0



4.2



8.0



8.3Net amortization


(0.5
)


0.2



(1.0
)


0.3Net expense

$
5.3


$
6.0


$
10.5


$
11.7     9.
    Other
    Income  Three Months


Six MonthsEnded June 30


Ended June 302010


2009


2010


2009Share of earnings of equity investees

$
44.4


$
29.8


$
70.6


$
67.7Dividend income


114.4



40.4



114.4



40.4Gain on disposal of auction rate securities


-



115.3



-



115.3Other


(11.5
)


2.9



(9.5
)


-$
147.3


$
188.4


$
175.5


$
223.4  11




---



##### Table of Contents



10.
    Interest
    Expense  Three Months


Six MonthsEnded June 30


Ended June 302010


2009


2010


2009Interest expense onShort-term debt

$
1.8


$
9.4


$
3.9


$
13.7Long-term debt


52.0



40.1



105.6



73.8Interest capitalized to property, plant and equipment


(30.3
)


(17.2
)


(51.0
)


(30.0
)Interest income


(0.8
)


(5.8
)


(5.3
)


(7.8
)$
22.7


$
26.5


$
53.2


$
49.7   11.
    Income
    Taxes      
    To adjust the 2009 income tax provision to the income tax
    returns filed, a current income tax expense of $18.2 was
    recorded during the first quarter along with a current income
    tax expense of $19.7 and a future income tax recovery of $11.2
    during the second quarter.
    A future income tax expense of $6.3 as a result of US
    legislative changes to Medicare Part D adopted during the
    first quarter.
    A current income tax expense of $8.2 for international tax
    issues pertaining to transfer pricing during the second quarter.
    A future income tax recovery of $4.1 related to a second-quarter
    functional currency tax election by a subsidiary company for
    Canadian income tax purposes.    
    A future income tax recovery of $119.2 for a tax rate reduction
    resulting from an internal restructuring during the first
    quarter.
    A current income tax recovery of $47.6 recorded in the first
    quarter that related to an increase in permanent deductions in
    the US from prior years, which had a positive impact on cash.
    A future income tax expense of $24.4 related to a second-quarter
    functional currency tax election by the parent company for
    Canadian income tax purposes.
    The benefit of a lower proportion of consolidated income earned
    in the higher-tax jurisdictions.  12.
    Net
    Income Per Share     12




---



##### Table of Contents



period-to-date
  13.
    Financial
    Instruments and Related Risk Management  Financial
    Risks
    Credit
    Risk
    June 30,


December 31,2010


2009Cash and cash equivalents

$
366.7


$
385.4Receivables


769.6



615.9Derivative instrument assets


0.3



9.0     June 30,


December 31,2010


20091  30 days

$
9.8


$
20.131  60 days


0.2



0.7Greater than 60 days


0.3



0.7$
10.3


$
21.5     As At and For the


As At and For theSix Months Ended


Year EndedJune 30,


December 31,2010


2009Balance, beginning of period

$
8.4


$
7.7Provision for receivables impairment


-



1.3Receivables written off during the period as uncollectible


(0.1
)


(0.6
)Balance, end of period

$
8.3


$
8.4     Liquidity
    Risk
   13




---



##### Table of Contents



June 30, 2010Total


Amount Outstanding


AmountAmount


and Committed


AvailableCredit
    facilities(1)

$
3,250.0


$
394.6


$
2,855.4Line of credit


75.0



38.6
(2)


36.4   (1)
    
    The company increased the amount
    available under its commercial paper program from $750.0 to
    $1,500.0 in the second quarter. The amount available under the
    commercial paper program is limited to the availability of
    backup funds under the credit facilities. Included in the amount
    outstanding and committed is $394.6 of commercial paper. Per the
    terms of the agreements, the commercial paper outstanding and
    committed, as applicable, is based on the US dollar balance or
    equivalent thereof in lawful money of other currencies at the
    time of issue; therefore, subsequent changes in the exchange
    rate applicable to Canadian dollar denominated commercial paper
    have no impact on this balance.(2)
    
    Letters of credit committed.        CarryingAmount ofLiability atJune 30,


Contractual


Within








Over2010


Cash Flows


1 year


1 to 3 years


3 to 5 years


5 yearsShort-term debt
    obligations(1)

$
394.5


$
394.9


$
394.9


$
-


$
-


$
-Payables and accrued
    charges(2)


641.7



641.7



641.7



-



-



-Long-term debt
    obligations(1)


3,357.7



4,978.3



796.2



550.8



737.5



2,893.8Foreign currency derivatives


5.1Outflow






325.0



325.0



-



-



-Inflow






(319.9
)


(319.9
)


-



-



-Natural gas derivative
    liabilities(3)


239.4



249.3



74.1



75.7



47.3



52.2$
4,638.4


$
6,269.3


$
1,912.0


$
626.5


$
784.8


$
2,946.0   (1)
    
    Contractual cash flows include
    contractual interest payments related to debt obligations.
    Interest rates on variable rate debt are based on prevailing
    rates at June 30, 2010.(2)
    
    Excludes taxes, accrued interest,
    deferred revenues and current portions of accrued environmental
    costs and asset retirement obligations and accrued pension and
    other post-retirement benefits. This also excludes derivative
    financial instrument liabilities which have been presented
    separately.(3)
    
    Natural gas derivatives are subject
    to master netting agreements. Each counterparty has margin
    requirements that may require the company to post collateral
    against liability balances. 14




---



##### Table of Contents



Market
    Risk
    Foreign
    Exchange Risk
    Foreign Exchange Risk5% increase in


5% decrease inCarrying Amount


US$


US$of Asset (Liability)


Income


OCI


Income


OCIJune 30, 2010Available-for-sale
    investmentsIsrael Chemicals Ltd. (New Israeli Shekels)

$
1,845.9


$
-


$
(92.3
)

$
-


$
92.3Sinofert Holdings Limited (Hong Kong dollars)


612.1



-



(30.6
)


-



30.6Short-term debt (CDN)


(44.9
)


2.2



-



(2.2
)


-Payables (CDN)


(140.7
)


7.0



-



(7.0
)


-Foreign currency derivatives


(5.1
)


(16.0
)


-



16.0



-December 31, 2009Available-for-sale
    investmentsIsrael Chemicals Ltd. (New Israeli Shekels)


1,895.7



-



(94.8
)


-



94.8Sinofert Holdings Limited (Hong Kong dollars)


864.2



-



(43.2
)


-



43.2Short-term debt (CDN)


(262.5
)


13.1



-



(13.1
)


-Payables (CDN)


(167.2
)


8.4



-



(8.4
)


-Foreign currency derivatives


5.0



(20.4
)


-



20.4



-       Interest
    Rate Risk
   15




---



##### Table of Contents



Price
    Risk
    Price RiskCarrying Amount


Effect of 10% decrease


Effect of 10% increaseof Asset (Liability)


in prices on OCI


in prices on OCIJune 30,


December 31,


June 30,


December 31,


June 30,


December 31,2010


2009


2010


2009


2010


2009Derivative instrumentsNatural gas derivatives

$
(239.2
)

$
(171.0
)

$
(67.6
)

$
(72.6
)

$
67.9


$
72.8Available-for-sale
    investments


2,458.0



2,759.9



(245.8
)


(276.0
)


245.8



276.0     Fair
    Value
  point-in-time
    June 30, 2010


December 31, 2009Carrying





CarryingAmount


Fair Value


Amount


Fair Valueof Asset


of Asset


of Asset


of Asset(Liability)


(Liability)


(Liability)


(Liability)Derivative instrument assetsNatural gas derivatives

$
0.2


$
0.2


$
3.7


$
3.7Foreign currency derivatives


0.1



0.1



5.3



5.3Available-for-sale
    investments


2,458.0



2,458.0



2,759.9



2,759.9Derivative instrument liabilitiesNatural gas derivatives


(239.4
)


(239.4
)


(174.7
)


(174.7
)Foreign currency derivatives


(5.2
)


(5.2
)


(0.3
)


(0.3
)Long-term debtSenior notes


(3,350.0
)


(3,628.7
)


(3,350.0
)


(3,505.6
)Other


(7.6
)


(7.6
)


(8.0
)


(8.0
)      16




---



##### Table of Contents



Carrying


Fair Value Measurements at Reporting Date Using:Amount of


Quoted Prices in


Significant Other


SignificantAsset (Liability)


Active Markets for


Observable


Unobservableat June 30,


Identical Assets


Inputs


InputsDescription

2010


(Level 1)


(Level 2)


(Level 3)Derivative instrument assetsNatural gas derivatives

$
0.2


$
-


$
-


$
0.2Foreign currency derivatives


0.1



-



0.1



-Available-for-sale
    investments


2,458.0



2,458.0



-



-Derivative instrument liabilitiesNatural gas derivatives


(239.4
)


-



(54.0
)


(185.4
)Foreign currency derivatives


(5.2
)


-



(5.2
)


-   Carrying


Fair Value Measurements at Reporting Date Using:Amount of


Quoted Prices in


Significant Other


SignificantAsset (Liability)


Active Markets for


Observable


Unobservableat December 31,


Identical Assets


Inputs


InputsDescription

2009


(Level 1)


(Level 2)


(Level 3)Derivative instrument assetsNatural gas derivatives

$
3.7


$
-


$
1.2


$
2.5Foreign currency derivatives


5.3



-



5.3



-Available-for-sale
    investments


2,759.9



2,759.9



-



-Derivative instrument liabilitiesNatural gas derivatives


(174.7
)


-



(53.2
)


(121.5
)Foreign currency derivatives


(0.3
)


-



(0.3
)


-   Fair
    Value Measurements Using Significant Unobservable Inputs
    (Level 3)
  Natural Gas DerivativesJune 30,


December 31,2010


2009Balance, beginning of period

$
(119.0
)

$
(110.8
)Total losses (realized and unrealized) before income taxesIncluded in earnings


(14.9
)


(48.6
)Included in other comprehensive income


(71.3
)


(49.4
)Other


-



-Purchases


-



-Sales


-



-Issues


-



-Settlements


20.0



66.0Transfer out of Level 3


-



23.8Balance, end of period

$
(185.2
)

$
(119.0
)   Six


TwelveMonths


MonthsEnded


EndedJune 30,


December 31,2010


2009Amount of total losses for the period included in earnings
    attributable to the change in unrealized gains or losses
    relating to instruments still held at the reporting date

$
-


$
(0.4
)Losses, realized and unrealized, included in earnings for the
    period, reported in cost of goods sold

$
(14.9
)

$
(48.6
)  17




---



##### Table of Contents



14.
    Seasonality    15.
    Contingencies  Canpotex
    Mining
    Risk
    Legal
    and Other Matters
  and/or
  
    The company, along with other parties, has been notified by the
    US Environmental Protection Agency (USEPA) of
    potential liability under the US Comprehensive Environmental
    Response, Compensation and Liability Act of 1980
    (CERCLA) with respect to certain soil and
    groundwater conditions at a PCS Joint Venture blending facility
    in Lakeland, Florida and a certain adjoining former property. A
    Record of Decision (ROD) was issued on
    September 27, 2007 and provides for a remedy that requires
    excavation of impacted soils and interim treatment of
    groundwater. The total remedy cost is estimated in the ROD to be
    $8.5. Implementation of the ROD remedy has begun as the
    performing parties submitted a Remedial Design Report to address
    the soil contamination to the USEPA in July 2010.
    The USEPA has identified PCS Nitrogen, Inc. (PCS
    Nitrogen) as a potentially responsible party with respect
    to a former fertilizer blending operation in Charleston, South
    Carolina, known as the Planters Property or Columbia Nitrogen
    site, formerly owned by a company from which PCS Nitrogen
    acquired certain other assets. The USEPA has requested
    reimbursement of $3.0 of previously incurred response costs and
    the performance or financing of future site investigation and
    response activities from PCS Nitrogen and other named
    potentially responsible parties. In September 2005,
    Ashley II of Charleston, L.L.C., the current owner of the
    Planters Property, filed a complaint in the United States
    District Court for the District of South Carolina seeking a
    declaratory judgment that PCS Nitrogen is liable to pay
    environmental response costs that Ashley II of Charleston,
    L.L.C. alleges it has incurred and will incur in connection with
    response activities at the site. Until the district court
    proceedings and any subsequent appeals are concluded, PCS
    Nitrogen is unable to evaluate with reasonable certainty the
    extent of any liability it may have in this matter.
    PCS Phosphate has agreed to participate, on a non-joint and
    several basis, with parties to an Administrative Settlement
    Agreement with the USEPA (Settling Parties) in the
    performance of a removal action and the payment of certain other
    costs associated with PCB soil contamination at the Ward
    Superfund Site in Raleigh, North Carolina (Site),
    including reimbursement of the USEPAs past costs. The
    removal activities commenced at the Site in August 2007. The
    cost of performing the removal action at the Site is estimated
    at $70.0. The Settling Parties have initiated CERCLA cost
    recovery litigation against PCS 18




---



##### Table of Contents



Phosphate and more than 100 other entities. PCS Phosphate filed
    crossclaims and counterclaims seeking cost recovery. In addition
    to the removal action at the Site, investigation of sediments
    downstream of the Site in what is called Operable Unit
    1 has occurred. In September 2008, the USEPA issued a
    final remedy for Operable Unit 1, with an estimated cost of
    $6.1. In response to a special notice letter from the USEPA, PCS
    Phosphate and the Settling Parties made a good-faith offer to
    perform
    and/or pay
    for certain actions described in the special notice letter. At
    this time, the company is unable to evaluate the extent of any
    exposure that it may have for the matters addressed in the
    special notice letter.  
    Pursuant to the 1996 Corrective Action Consent Order (the
    Order) executed between PCS Nitrogen Fertilizer,
    L.P., formerly known as Arcadian Fertilizer, L.P. (PCS
    Nitrogen Fertilizer) and Georgia Department of Natural
    Resources, Environmental Protection Division (GEPD)
    in conjunction with PCS Nitrogen Fertilizers purchase of
    real property located in Augusta, Georgia, PCS Nitrogen
    Fertilizer agreed to perform certain activities including a
    facility investigation and, if necessary, a corrective action.
    PCS Nitrogen Fertilizer has performed an investigation of
    environmental site conditions, has documented its findings in
    several successive facility investigation reports submitted to
    GEPD and has conducted a pilot study to evaluate the viability
    of in-situ bioremediation of groundwater at the site. In May
    2009, PCS Nitrogen Fertilizer submitted a Corrective Action Plan
    (CAP) to GEPD proposing to utilize in-situ
    bioremediation of groundwater at the site. In the event GEPD
    approves the CAP, a full-scale bioremediation remedy will be
    implemented.
    In December 2009, during a routine inspection of a gypsum stack
    at the White Springs, Florida facility a sinkhole was discovered
    that resulted in the loss of approximately 84 million
    gallons of water from the stack. The company is sampling
    production and monitoring wells on its property and drinking
    water wells on neighboring property to assess impacts. The
    company incurred costs of $2.4 to address the sinkhole between
    the time of discovery and the end of the second quarter of 2010.
    The Florida Department of Environmental Protection
    (FDEP) issued a notice to the company stating that
    the release may constitute an unauthorized discharge. The
    company is negotiating an order with the FDEP in an effort to
    address the situation. The company entered into an order on
    consent with the USEPA that requires the company to complete a
    study of available feasible measures to reduce the possibility
    and impacts of any future sinkholes. Depending on the outcome of
    this study, the order will require the implementation of certain
    mitigation measures, although the scope and timing for the
    implementation of any such measures cannot be ascertained at the
    current time. The company is unable at this time to estimate
    with certainty the total costs that may be incurred to address
    this matter.  and/or
    
    The USEPA has notified the company of various alleged violations
    of the US Resource Conservation and Recovery Act
    (RCRA) at its Aurora, North Carolina, White Springs,
    Florida and Geismar, Louisiana plants. The company has entered
    into RCRA 3013 Administrative Orders on Consent and has
    performed certain site assessment activities at its White
    Springs, Aurora and Geismar plants. The company is uncertain if
    any resolution will be possible without litigation, or, if
    litigation occurs, what the outcome would be. At this time, the
    company is unable to evaluate the extent of any exposure that it
    may have in these matters.
    The USEPA has notified the company of various alleged violations
    of the Clean Air Act at its Lima, Ohio and Geismar, Louisiana
    plants. With respect to the Lima matter, the company met with
    representatives of the USEPA and received, and responded to, a
    subsequent information request from the USEPA. With respect to
    the Geismar matter, the government has demanded process changes
    and penalties that would cost a total of approximately $27.0,
    but the company denies that it has any liability for the Geismar
    matter. Although the company is proceeding with planning and
    permitting for the process changes demanded by the government,
    the company is uncertain if any resolution will be possible
    without litigation, or, if 19




---



##### Table of Contents




    Significant portions of the companys phosphate reserves in
    Aurora, North Carolina are located in wetlands. Under the Clean
    Water Act, the company must obtain a permit from the US Army
    Corps of Engineers (the Corps) before mining in the
    wetlands. On January 15, 2009, the Division of Water
    Quality of the North Carolina Department of Natural Resources
    issued a certification under Section 401 of the Clean Water
    Act, that mining of phosphate in excess of thirty years from
    lands owned or controlled by the company, including some
    wetlands, would not degrade water quality. Thereafter, on
    June 10, 2009, the Corps issued the company a permit that
    will allow the company to mine the phosphate deposits identified
    in the 401 certification. USEPA decided not to seek additional
    review of the permit. On March 12, 2009, four environmental
    organizations (Pamlico-Tar River Foundation, North Carolina
    Coastal Federation, Environmental Defense Fund and Sierra Club)
    filed a Petition for a Contested Case Hearing before the North
    Carolina Office of Administrative Hearings challenging the 401
    certification. The company has intervened in this proceeding.
    Petitioners filed a motion for partial summary judgment on
    February 5, 2010 and the company filed a response and
    cross-motion for summary judgment on March 18, 2010. The
    Division of Water Quality also filed a response to
    Petitioners motion for partial summary judgment on
    March 18, 2010. At this time, the company is unable to
    evaluate the extent of any exposure that it may have in this
    matter.
    In May 2009, the Canadian government announced that its new
    industrial greenhouse gas emissions policies will be coordinated
    with policies that may be implemented in the US. In July 2009,
    the Canadian government adopted rules requiring the reporting of
    specified greenhouse gas emissions from sources that emit more
    than 50,000 tons of carbon dioxide equivalents. In September
    2009, the USEPA promulgated rules requiring the reporting of
    greenhouse gas emissions for all fuel combustion sources
    emitting more than 25,000 tons of carbon dioxide equivalents and
    certain other listed sources. The company does not believe that
    compliance with these emission reporting regulations will have a
    material adverse effect on its consolidated financial position.
    In December 2009, the USEPA issued a finding that greenhouse gas
    emissions from mobile sources endanger public health and
    welfare. In 2010, the USEPA issued rules regulating greenhouse
    gas emissions from model year 2012 vehicles sold after
    January 2, 2011. On that date, the USEPA also will begin
    phasing in requirements for all new stationary
    sources, such as power plants, that emit 100,000 tons of
    greenhouse gases per year or modified sources that increase
    emissions by 75,000 tons per year to obtain permits
    incorporating the best available control technology
    for such emissions. The company is not currently aware of any
    projects at its facilities that would be subject to these
    requirements when they become effective. The company is
    monitoring these developments and, except as indicated above,
    their effect on its operations cannot be determined with
    certainty at this time.
    On January 26, 2010, the USEPA proposed nutrient criteria
    for Florida lakes and flowing waters. These criteria are
    currently scheduled to be promulgated in October 2010. The
    criteria will become part of Floridas water quality
    standards sixty days after the final criteria are issued. The
    company, along with other phosphate companies, is participating
    in the USEPA rulemaking process. If the USEPA rule is adopted as
    proposed, projected capital costs resulting from the rule could
    be in excess of $100.0 for the companys White Springs
    plant, and there is no guarantee that controls can be
    implemented that are capable of achieving compliance with the
    proposed rule under all flow conditions. This assumes that the
    rule is adopted as proposed and that none of the site specific
    criteria mechanisms are available to the White Springs plant.
    There has been significant comment on the proposed rule by
    government and industry groups. The prospects for a rule to be
    adopted and become enforceable without significant change from
    the proposal are uncertain. The company is uncertain if any
    resolution will be possible without litigation, or, if
    litigation occurs, what the outcome would be.
    The company, having been unable to agree with Mosaic Potash
    Esterhazy Limited Partnership (Mosaic) on the
    remaining amount of potash that the company is entitled to
    receive from Mosaic pursuant to the mining and processing
    agreement in respect of the companys rights at the
    Esterhazy mine, issued a 20




---



##### Table of Contents



Statement of Claim in the Saskatchewan Court of Queens
    Bench against Mosaic on May 27, 2009. In the Statement of
    Claim, the company has asserted that it has the right under the
    mining and processing agreement to receive potash from Mosaic
    until at least 2012, and seeks an order from the Court declaring
    the amount of potash which the company has the right to receive.
    Mosaic in its Statement of Defence dated June 16, 2009
    asserts that at a delivery rate of 1.24 million tons of
    product per year, the companys entitlement to receive
    potash under the mining and processing agreement will terminate
    by August 30, 2010. Also, on June 16, 2009, Mosaic
    commenced a counterclaim against the company asserting that the
    company has breached the mining and processing agreement due to
    its refusal to take delivery of potash product under the
    agreement based on an event of force majeure. The company will
    continue to assert its position in these proceedings vigorously
    and it denies liability to Mosaic in connection with its
    counterclaim.  
    Between September 11 and October 2, 2008, the company and
    PCS Sales (USA), Inc. were named as defendants in eight very
    similar antitrust complaints filed in federal courts. Other
    potash producers are also defendants in these cases. Each of the
    separate complaints alleges conspiracy to fix potash prices, to
    divide markets, to restrict supply and to fraudulently conceal
    the conspiracy, all in violation of Section 1 of the
    Sherman Act. The company and PCS Sales (USA), Inc. believe each
    of these eight private antitrust law lawsuits is without merit
    and intend to defend them vigorously.        16.
    Guarantees    back-to-back
 21




---



##### Table of Contents



17.
    Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles    (a) Inventory valuation:
  (b) Long-term investments:
 22




---



##### Table of Contents



(c) Property, plant and equipment and
    goodwill: first-day-of-the-month
  (d) Depreciation and amortization:
  (e) Exploration costs:
  (f) Pension and other post-retirement
    benefits:
    (g) Foreign currency translation
    adjustment:
  (h) Offsetting of certain amounts:
  (i) Stock-based compensation:
 23




---



##### Table of Contents



Service Period CommencedPerformance Option Plan Year

Canadian GAAP


US GAAP2007


January 1, 2007



May 3, 20072008


January 1, 2008



May 8, 20082009


January 1, 2009



May 7, 20092010


January 1, 2010



May 6, 2010     (j) Stripping costs:
  (k) Income taxes related to the above adjustments:
  (l) Income tax consequences of stock-based employee
    compensation:
  (m) Income taxes related to uncertain income tax
    positions:
  (n) Cash flow statements:
 24




---



##### Table of Contents



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


Six MonthsEnded June 30


Ended June 302010


2009(1)


2010


2009(1)Net income as reported  Canadian GAAP

$
472.0


$
186.2


$
921.2


$
493.6Items increasing (decreasing) reported net incomeInventory valuation (a)


1.2



5.4



1.2



(0.3
)Share of earnings of equity investees (b)


0.9



0.6



0.3



-Asset write-down (c)


(32.8
)


-



(32.8
)


-Depreciation and amortization (d)


2.1



2.1



4.2



4.2Exploration costs (e)


(0.3
)


-



(0.6
)


-Pension and other post-retirement benefits (f)


-



0.3



-



0.6Stock-based compensation (i)


1.5



4.5



(0.7
)


4.1Stripping costs (j)


(6.0
)


(2.5
)


(14.9
)


(2.8
)Deferred income taxes relating to the above adjustments (k)


8.3



(2.5
)


11.1



1.4Income taxes related to US GAAP effective income tax rate (k, m)


5.8



(0.6
)


1.9



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


(0.8
)


(3.8
)


(8.0
)


(4.4
)Income taxes related to uncertain income tax positions (m)


(10.8
)


4.2



16.2



(3.9
)Net income  US GAAP

$
441.1


$
193.9


$
899.1


$
492.5Basic weighted average shares outstanding  US GAAP


296,376,000



295,443,000



296,248,000



295,338,000Diluted weighted average shares outstanding  US GAAP
    (i)


304,459,000



304,066,000



304,589,000



303,736,000Basic net income per share  US GAAP

$
1.49


$
0.66


$
3.03


$
1.67Diluted net income per share  US GAAP

$
1.45


$
0.64


$
2.95


$
1.62   (1)
    
    Corrected as described in
    Note 18.  June 30,


December 31,2010


2009Total assets as reported  Canadian GAAP

$
13,063.8


$
12,922.2Items increasing (decreasing) reported total assetsInventory (a)


(0.5
)


(1.7
)Investment in equity investees (b)


(4.7
)


(4.0
)Property, plant and equipment (c)


(113.0
)


(84.4
)Goodwill (c)


(46.7
)


(46.7
)Exploration costs (e)


(14.0
)


(13.4
)Pension and other post-retirement benefits (f)


(170.3
)


(180.9
)Margin deposits associated with derivative instruments (h)


(155.0
)


(108.9
)Stripping costs (j)


(62.0
)


(47.1
)Income tax asset related to uncertain income tax positions (m)


52.5



33.7Total assets  US GAAP

$
12,550.1


$
12,468.8   25




---



##### Table of Contents



June 30,


December 31,2010


2009(1)Total shareholders equity as reported  Canadian
    GAAP

$
6,569.3


$
6,439.8Items increasing (decreasing) reported shareholders equityAccumulated other comprehensive incomeShare of accumulated other comprehensive income of equity
    investees (b)


(1.8
)


(1.9
)Pension and other post-retirement benefits (f)


(221.8
)


(229.7
)Foreign currency translation adjustment (g)


(20.9
)


(20.9
)Income taxes related to uncertain income tax positions (m)


(1.2
)


(1.2
)Inventory valuation (a)


(0.5
)


(1.7
)Share of other comprehensive income of equity investees (b)


0.4



0.1Asset write-down (c)


(32.8
)


-Provision for asset impairment (c)


(218.0
)


(218.0
)Depreciation and amortization (d)


91.1



86.9Exploration costs (e)


(14.0
)


(13.4
)Foreign currency translation adjustment (g)


20.9



20.9Stock-based compensation (i)


1.2



2.4Stripping costs (j)


(62.0
)


(47.1
)Deferred income taxes relating to the above adjustments (k)


50.3



39.2Income taxes related to US GAAP effective income tax rate (k, m)


(58.3
)


(60.2
)Income taxes related to uncertain income tax positions (m)


106.0



89.8Shareholders equity  US GAAP

$
6,207.9


$
6,085.0   (1)
    
    Corrected as described in
    Note 18.  Supplemental
    US GAAP Disclosures
  Disclosures
    About Derivative Instruments and Activities
  Fair Values of Derivative Instruments in the Consolidated
    Statements of Financial Position
  June 30,


December 31,Derivative instrument assets
    (liabilities)(1)

Balance Sheet Location

2010


2009Derivatives designated as hedging instrumentsNatural gas derivatives

Prepaid expenses and other current assets

$
-


$
0.5Natural gas derivatives

Other assets


0.1



3.2Natural gas derivatives

Current portion of derivative instrument liabilities


(74.2
)


(51.5
)Natural gas derivatives

Derivative instrument liabilities


(165.2
)


(123.2
)Total derivatives designated as hedging instruments


(239.3
)


(171.0
)Derivatives not designated as hedging instrumentsNatural gas derivatives

Prepaid expenses and other current assets


0.1



-Foreign currency derivatives

Prepaid expenses and other current assets


0.1



5.3Foreign currency derivatives

Current portion of derivative instrument liabilities


(5.2
)


(0.3
)Total derivatives not designated as hedging instruments

$
(5.0
)

$
5.0   (1)
    
    All fair value amounts are gross
    and exclude netted cash collateral balances. 26




---



##### Table of Contents



The Effect of Derivative Instruments on the Consolidated
    Statements of Operations for the Three Months Ended June 30
 Amount of LossRecognized inAmount of Loss




IncomeReclassified from


Location of Loss

(IneffectiveAccumulated


Recognized in

Portion andAmount of (Loss)


Location of Loss

OCI


Income (Ineffective

AmountGain Recognized


Reclassified

into Income


Portion and Amount

Excluded fromin OCI


from Accumulated

(Effective


Excluded from

EffectivenessDerivatives in Cash

(Effective Portion)


OCI into Income

Portion)


Effectiveness

Testing)Flow Hedging Relationships

2010


2009


(Effective Portion)

2010


2009


Testing)

2010


2009Natural gas derivatives

$
(17.2
)

$
26.4


Cost of goods sold

$
(23.4
)

$
(26.9
)

Cost of goods sold

$
-


$
-   Amount of (Loss)Gain RecognizedDerivatives Not Designated



in Incomeas Hedging Instruments

Location of (Loss) Gain Recognized in Income

2010


2009Foreign currency derivatives

Foreign exchange loss

$
(7.2
)

$
(18.9
)Natural gas derivatives

Cost of goods sold


(0.1
)


0.6   The Effect of Derivative Instruments on the Consolidated
    Statements of Operations for the Six Months Ended June 30
 Amount of LossRecognized inAmount of Loss




IncomeReclassified from


Location of Loss

(IneffectiveAccumulated


Recognized in

Portion andAmount of Loss


Location of Loss

OCI


Income (Ineffective

AmountRecognized


Reclassified

into Income


Portion and Amount

Excluded fromin OCI


from Accumulated

(Effective


Excluded from

EffectivenessDerivatives in Cash

(Effective Portion)


OCI into Income

Portion)


Effectiveness

Testing)Flow Hedging Relationships

2010


2009


(Effective Portion)

2010


2009


Testing)

2010


2009Natural gas derivatives

$
(102.6
)

$
(46.1
)

Cost of goods sold

$
(37.9
)

$
(40.6
)

Cost of goods sold

$
-


$
(0.2
)   Amount of (Loss)Gain RecognizedDerivatives Not Designated



in Incomeas Hedging Instruments

Location of (Loss) Gain Recognized in Income

2010


2009Foreign currency derivatives

Foreign exchange loss

$
(8.7
)

$
(22.5
)Natural gas derivatives

Cost of goods sold


(0.2
)


1.1   Uncertainty
    in Income Taxes
    Recent
    Accounting Pronouncements
  Variable
    Interest Entities
   27




---



##### Table of Contents



Fair
    Value Disclosures
    18.
    Comparative
    Figures    2006


2007


2008


2009As








As








As








AsPreviously





As


Previously





As


Previously





As


Previously





AsReported


Adjustment


Corrected


Reported


Adjustment


Corrected


Reported


Adjustment


Corrected


Reported


Adjustment


CorrectedConsolidated Statements of Financial Position and Accumulated
    Other Comprehensive Income and Retained Earnings (as applicable)At December 31:Payables and accrued charges


545.2



-



545.2



911.7



-



911.7



1,183.6



7.6



1,191.2



779.3



17.5



796.8Accrued environmental costs andasset retirement obligations


110.3



40.7



151.0



121.0



39.8



160.8



133.4



78.8



212.2



134.8



80.3



215.1Future income tax liability


632.1



(15.8
)


616.3



988.1



(15.3
)


972.8



794.2



(32.6
)


761.6



999.3



(36.9
)


962.4Retained earnings


1,286.4



(24.9
)


1,261.5



2,279.6



(24.5
)


2,255.1



2,402.3



(53.8
)


2,348.5



3,272.1



(60.9
)


3,211.2Accumulated other comprehensive income and retained earnings


n/a



n/a



n/a



4,458.5



(24.5
)


4,434.0



3,060.2



(53.8
)


3,006.4



4,920.9



(60.9
)


4,860.0Consolidated Statements of Operations and Retained Earnings and
    Comprehensive Income (as applicable)For the Year Ended December 31:Cost of goods sold


2,374.8



40.7



2,415.5



2,882.8



(0.9
)


2,881.9



4,081.8



46.6



4,128.4



2,631.6



11.4



2,643.0Income taxes


158.1



(15.8
)


142.3



416.2



0.5



416.7



1,077.1



(17.3
)


1,059.8



83.5



(4.3
)


79.2Net income


631.8



(24.9
)


606.9



1,103.6



0.4



1,104.0



3,495.2



(29.3
)


3,465.9



987.8



(7.1
)


980.7Net income per share  basic


2.03



(0.08
)


1.95



3.50



-



3.50



11.37



(0.10
)


11.27



3.34



(0.02
)


3.32Net income per share  diluted


1.98



(0.08
)


1.90



3.40



-



3.40



11.01



(0.09
)


10.92



3.25



(0.02
)


3.23Comprehensive income


n/a



n/a



n/a



2,413.5



0.4



2,413.9



1,974.2



(29.3
)


1,944.9



1,978.7



(7.1
)


1,971.6Consolidated Statements of Cash FlowFor the Year Ended December 31:Net income


631.8



(24.9
)


606.9



1,103.6



0.4



1,104.0



3,495.2



(29.3
)


3,465.9



987.8



(7.1
)


980.7Provision for future income tax


50.0



(15.8
)


34.2



119.6



0.5



120.1



82.2



(17.3
)


64.9



203.2



(4.3
)


198.9Other long-term liabilities


13.4



40.7



54.1



(57.9
)


(0.9
)


(58.8
)


2.3



46.6



48.9



(8.0
)


11.4



3.4Cash provided by operating activities


696.8



-



696.8



1,688.9



-



1,688.9



3,013.2



-



3,013.2



923.9



-



923.9    n/a = not applicable since the
    company did not begin to report accumulated other comprehensive
    income and comprehensive income for Canadian GAAP purposes until
    2007
      
    statements of operations and retained earnings: increase cost of
    goods sold by $1.5, reduce income tax expense by $0.6; there was
    no impact on basic earnings per share while diluted earnings per
    share was reduced $0.01
    statements of cash flow: reduce net income by $0.9, increase
    adjustments to reconcile net income to cash provided by
    operating activities through reduction in provision for future
    income tax of $0.6 and increase in other long-term liabilities
    of $1.5; there was no net impact on cash flow for the period 28




---



##### Table of Contents




    statements of comprehensive (loss) income: reduce net income and
    comprehensive (loss) income by $0.9.    
    statements of operations and retained earnings: increase cost of
    goods sold by $3.0, increase income tax recovery by $1.2, reduce
    opening retained earnings by $53.8; there was no impact on
    diluted earnings per share while basic earnings per share was
    reduced $0.01
    statements of cash flow: reduce net income by $1.8, increase
    adjustments to reconcile net income to cash provided by
    operating activities through increase in recovery of future
    income tax of $1.2 and increase in other long-term liabilities
    of $3.0; there was no net impact on cash flow for the period
    statements of comprehensive (loss) income: reduce net income and
    comprehensive (loss) income by $1.8. 29




---



##### Table of Contents



ITEM 2.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  Form 10-K,
  POTASHCORP
    AND OUR BUSINESS ENVIRONMENT
        POTASHCORP
    STRATEGY
       30




---



##### Table of Contents



KEY
    PERFORMANCE DRIVERS  PERFORMANCE COMPARED TO
    GOALS
     Representative


PerformanceGoal


2010 Annual
    Target


to June 30,
    2010Achieve no harm to people.


Reduce total site severity injury rate by 35 percent from
    2008 levels by the end of 2012.


Total site severity injury rate was 58 percent below the
    2008 annual level for the first six months of 2010. The total
    site severity injury rate was 10 percent below the 2008
    annual level for the first six months of 2009 and
    25 percent below the 2008 annual level by the end of 2009.Achieve no damage to the environment.


Reduce total reportable releases, permit excursions and spills
    by 30 percent from 2009 levels.


Reportable release rate on an annualized basis increased
    33 percent, annualized permit excursions were down
    14 percent and annualized spills were up 11 percent
    during the first six months of 2010 compared to 2009 annual
    levels. There were five spills, three permit excursions and four
    reportable releases in the first six months of 2010 compared to
    three spills, one permit excursion and one reportable release
    for the same period in 2009.Maximize long-term shareholder value.


Exceed total shareholder return for our sector and companies on
    the DAXglobal Agribusiness Index for 2010.


PotashCorps total shareholder return was -20 percent
    in the first six months of 2010 compared to our sector weighted
    average return (based on market capitalization) of
    -23 percent and the DAXglobal Agribusiness Index weighted
    average return (based on market capitalization) of
    -17 percent.   FINANCIAL
    OVERVIEW
  Form 10-Q.
    Earnings
    Guidance  Second Quarter 2010
  Company Guidance

Actual ResultsEarnings per share

$1.00 - $1.30

$1.55Effective tax rate, including discrete items

25% - 27%

27%  31




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##### Table of Contents



Overview
    of Actual Results
  Operations
  Three Months Ended June 30


Six Months Ended June 30%








Dollar


%Dollars (millions)  except per-share amounts

2010


2009


Change


Change


2010


2009


Change


ChangeSales

$
1,437.8


$
856.0


$
581.8



68


$
3,151.4


$
1,778.5


$
1,372.9



77Gross Margin


583.6



169.1



414.5



245



1,298.7



397.2



901.5



227Operating Income


669.0



284.3



384.7



135



1,331.1



501.2



829.9



166Net Income


472.0



186.2



285.8



153



921.2



493.6



427.6



87Net Income Per Share  Diluted


1.55



0.61



0.94



154



3.02



1.63



1.39



85Other Comprehensive (Loss) Income


(846.8
)


404.5



(1,251.3
)


n/m



(766.1
)


441.5



(1,207.6
)


n/m       five-year 2004-2008) 2004-2008) just-in-time
   32




---



##### Table of Contents



Balance
    Sheet
   Changes in Balances  December 31, 2009 to
    June 30, 2010 (in $ millions)
  
       33




---



##### Table of Contents



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


Tonnes (thousands)


Average per
    Tonne(1)2010


2009


% Change


2010


2009


% Change


2010


2009


% ChangeSales

$
641.0


$
210.7



204Freight


35.5



10.6



235Transportation and distribution


15.9



11.6



37Net sales

$
589.6


$
188.5



213Manufactured productNet salesNorth American

$
212.5


$
115.1



85



575



200



188


$
369.82


$
576.29



(36
)Offshore


375.3



71.2



427



1,329



194



585


$
282.20


$
366.70



(23
)587.8



186.3



216



1,904



394



383


$
308.64


$
473.05



(35
)Cost of goods sold


199.3



78.7



153














$
104.60


$
199.95



(48
)Gross margin


388.5



107.6



261














$
204.04


$
273.10



(25
)Other miscellaneous and purchased productNet sales


1.8



2.2



(18
)Cost of goods sold


(6.3
)


3.6



n/mGross margin


8.1



(1.4
)


n/mGross Margin

$
396.6


$
106.2



273














$
208.30


$
269.54



(23
)   (1)
    
    Rounding differences may occur due
    to the use of whole dollars in per-tonne calculations.  n/m = not meaningful.
  34




---



##### Table of Contents



Six Months Ended June 30Dollars (millions)


Tonnes (thousands)


Average per
    Tonne(1)2010


2009


% Change


2010


2009


% Change


2010


2009


% ChangeSales

$
1,533.2


$
479.9



219Freight


102.8



17.3



494Transportation and distribution


44.5



15.2



193Net sales

$
1,385.9


$
447.4



210Manufactured productNet salesNorth American

$
662.3


$
200.5



230



1,841



333



453


$
359.76


$
601.75



(40
)Offshore


717.2



239.2



200



2,527



535



372


$
283.75


$
447.19



(37
)1,379.5



439.7



214



4,368



868



403


$
315.80


$
506.54



(38
)Cost of goods sold


472.7



167.2



183














$
108.20


$
192.60



(44
)Gross margin


906.8



272.5



233














$
207.60


$
313.94



(34
)Other miscellaneous and purchased productNet sales


6.4



7.7



(17
)Cost of goods sold


0.2



7.4



(97
)Gross margin


6.2



0.3



n/mGross Margin

$
913.0


$
272.8



235














$
209.02


$
314.29



(33
)   (1)
    
    Rounding differences may occur due
    to the use of whole dollars in per-tonne calculations.n/m
    
    = not meaningful.  Potash
    gross margin variance attributable to:
  Three Months Ended June 30



Six Months Ended June 30Dollars (millions)

2010 vs. 2009



2010 vs. 2009Change in











Change inPrices/Costs











Prices/CostsChange in Sales






Cost of







Change in






Cost ofVolumes



Net Sales


Goods Sold



Total



Sales Volumes



Net Sales


Goods Sold



TotalManufactured productNorth American

$
156.0



$
(85.0
)

$
9.4



$
80.4



$
758.2



$
(445.5
)

$
34.6



$
347.3Offshore


389.5




(164.5
)


(24.6
)



200.4




742.2




(413.1
)


(42.1
)



287.0Change in market mix


54.6




(58.8
)


4.3




0.1




(15.1
)



25.4



(10.3
)



-Total manufactured product

$
600.1



$
(308.3
)

$
(10.9
)


$
280.9



$
1,485.3



$
(833.2
)

$
(17.8
)


$
634.3Other miscellaneous and purchased product
















9.5


















5.9Total















$
290.4

















$
640.2   35




---



##### Table of Contents



(PERFORMANCE GRAPH)

(PERFORMANCE GRAPH)   
  (PERFORMANCE GRAPH)

(PERFORMANCE GRAPH)     Three Months Ended June 30


Six Months Ended June 30%











%2010


2009


Change


Change


2010


2009


Change


ChangeChina


8



5



3



60



12



14



(2
)


(14
)India


20



5



15



300



14



23



(9
)


(39
)Asia (excluding China and India)


47



67



(20
)


(30
)


49



49



-



-Latin America


18



21



(3
)


(14
)


18



8



10



125Oceania, Europe and Other


7



2



5



250



7



6



1



17100



100











100



100  36




---



##### Table of Contents



(1)
  Net Sales Prices

Sales Volumes

Cost of Goods Soldâ The
    lower average realized price for the quarter reflected new
    pricing levels established in major markets following the
    unprecedented decline in potash demand in 2009.á North
    American customers prefer premium priced granular product over
    standard product more typically consumed offshore.

á Farmers
    increased applications and fertilizer dealers increased
    purchases due to supportive crop prices and the need to address
    potash nutrient shortfalls (soil and distribution chain
    inventories fell significantly during 2009 and have not been
    replenished in 2010).á Canpotex
    shipments to offshore markets increased due to supportive crop
    prices, higher demand for potash and blended fertilizers, low
    customer potash inventory positions, and renewed farmer/dealer
    confidence.á Canpotex
    signed a spot contract with India for the quarter whereas in
    2009 it had not yet settled a contract, resulting in that
    countrys proportion of total offshore sales increasing the
    most.

â Personnel
    costs higher due to higher staff levels (anticipating the ramp
    up to expansion levels) and higher wages (lower in 2009 as new
    contracts at Lanigan and Rocanville were not ratified until
    second quarter and third quarter 2009, respectively).á Fewer
    shutdown costs incurred (5 weeks in 2010 compared to 50 in
    2009).á Royalty
    costs lower due to lower average North American listed sales
    prices per tonne.â The
    Canadian dollar strengthened relative to the US dollar.  Offshore
    cost of goods sold variance was negative due to less product
    from Rocanville (lower cost mine) being sold to offshore
    markets. North American cost of goods sold variance was
    positive as more agricultural product than industrial (more
    costly to produce) was sold year over year.       (1) Direction
    of arrows refer to impact on gross margin while
    the  symbol signifies a neutral impact.
 37




---



##### Table of Contents



(1)
  Net Sales Prices

Sales Volumes

Cost of Goods Soldâ  Substantial
    decline in consumption throughout 2009 pressured pricing into
    the first quarter of 2010.á  North
    American prices increased compared to the trailing quarter due
    to previously announced price increases being
    realized.

á In
    the first quarter of 2010, North American markets increased more
    than offshore markets while the opposite was true in the second
    quarter due to North American dealers working through
    record purchases made in the first quarter of 2010 with the
    desire to finish the planting season without inventory.á Volumes
    were up significantly due to positive farm economics and the
    need to address potash-depleted soil.  Buyers
    continued to purchase just-in-time, indicating that shipments
    were intended for consumption rather than inventory
    restocking.á Canpotex
    reached quarterly agreements with major customers in China and
    India in the first half of 2010 (no agreements with either
    country in the same period last year) but increases in volumes
    to those countries were not as high (on a percentage basis) as
    the increases to other regions around the world.á Latin
    Americas proportion of total volumes increased more than
    any other market due to low opening inventories and more product
    being purchased in the first quarter of 2010 than India (which
    did not have a contract at the time and purchased proportionally
    more than Latin America in 2009).

â Personnel
    costs higher due to higher wages.â The
    Canadian dollar strengthened relative to the US dollar.â Increased
    maintenance costs with higher production levels.á Royalty
    costs lower due to lower average North American listed sales
    prices per tonne.  North
    American cost of goods sold variance was positive as our lowest
    cost mine, Rocanville, comprised a larger proportion of
    production while offshore cost of goods sold variance was
    negative due to more of that product coming from our other
    mines.     (1) Direction
    of arrows refer to impact on gross margin while
    the  symbol signifies a neutral impact.
 38




---



##### Table of Contents



Phosphate
  Three Months Ended June 30Dollars (millions)


Tonnes (thousands)


Average per
    Tonne(1)2010


2009


% Change


2010


2009


% Change


2010


2009


% ChangeSales

$
363.5


$
324.7



12Freight


19.0



15.8



20Transportation and distribution


8.0



12.5



(36
)Net sales

$
336.5


$
296.4



14Manufactured productNet salesFertilizer  liquids

$
81.6


$
43.6



87



219



177



24


$
371.82


$
246.54



51Fertilizer  solids


98.0



80.3



22



215



273



(21
)

$
456.16


$
294.11



55Feed


67.9



72.2



(6
)


146



139



5


$
464.21


$
517.47



(10
)Industrial


82.1



96.2



(15
)


139



134



4


$
591.29


$
717.46



(18
)329.6



292.3



13



719



723



(1
)

$
458.15


$
403.96



13Cost of goods sold


271.9



276.2



(2
)













$
377.90


$
381.69



(1
)Gross margin


57.7



16.1



258














$
80.25


$
22.27



260Other miscellaneous and  purchased productNet sales


6.9



4.1



68Cost of goods sold


2.6



1.2



117Gross margin


4.3



2.9



48Gross Margin

$
62.0


$
19.0



226














$
86.23


$
26.28



228   (1)
    
    Rounding differences may occur due
    to the use of whole dollars in per-tonne calculations.  Six Months Ended June 30Dollars (millions)


Tonnes (thousands)


Average per
    Tonne(1)2010


2009


% Change


2010


2009


% Change


2010


2009


% ChangeSales

$
764.8


$
654.6



17Freight


44.6



34.0



31Transportation and distribution


17.8



20.9



(15
)Net sales

$
702.4


$
599.7



17Manufactured productNet salesFertilizer  liquids

$
162.9


$
87.7



86



467



273



71


$
348.50


$
320.94



9Fertilizer  solids


223.4



172.9



29



508



543



(6
)

$
440.09


$
318.29



38Feed


139.1



140.7



(1
)


313



253



24


$
443.96


$
556.03



(20
)Industrial


164.1



190.8



(14
)


291



250



16


$
564.54


$
763.81



(26
)689.5



592.1



16



1,579



1,319



20


$
436.65


$
448.79



(3
)Cost of goods sold


569.4



570.2



-














$
360.59


$
432.19



(17
)Gross margin


120.1



21.9



448














$
76.06


$
16.60



358Other miscellaneous and  purchased productNet sales


12.9



7.6



70Cost of goods sold


4.9



3.2



53Gross margin


8.0



4.4



82Gross Margin

$
128.1


$
26.3



387














$
81.13


$
19.94



307   (1)
    
    Rounding differences may occur due
    to the use of whole dollars in per-tonne calculations. 39




---



##### Table of Contents



Phosphate
    gross margin variance attributable to:
  Three Months Ended June 30



Six Months Ended June 30Dollars (millions)

2010 vs. 2009



2010 vs. 2009Change in











Change inPrices/Costs











Prices/CostsChange in Sales






Cost of







Change in Sales






Cost ofVolumes



Net Sales


Goods Sold



Total



Volumes



Net Sales


Goods Sold



TotalManufactured productFertilizer  liquids

$
(16.8
)


$
45.1


$
(12.8
)


$
15.5



$
5.6



$
12.9


$
5.1



$
23.6Fertilizer  solids


(11.5
)



36.7



6.1




31.3




(21.6
)



61.8



47.4




87.6Feed


3.5




(5.5
)


22.0




20.0




20.2




(35.1
)


50.6




35.7Industrial


1.5




(15.8
)


(11.0
)



(25.3
)



22.0




(57.9
)


(12.7
)



(48.6
)Change in market mix


7.0




(6.9
)


-




0.1




0.7




(0.8
)


-




(0.1
)Total manufactured product

$
(16.3
)


$
53.6


$
4.3



$
41.6



$
26.9



$
(19.1
)

$
90.4



$
98.2Other miscellaneous and purchased product
















1.4


















3.6Total















$
43.0

















$
101.8      
 40




---



##### Table of Contents



(1)
  Net Sales Prices

Sales Volumes

Cost of Goods Soldá Liquid
    and solid fertilizer prices increased, reflecting stronger
    market conditions as compared to 2009 when prices deteriorated
    due to the global economic downturn.â Feed
    prices are typically set on a short-term contract basis and
    therefore lag current market conditions.â Certain
    industrial products are priced on a cost plus or market-index
    scale and trail market conditions, which resulted in a decline
    from last years second quarter.

â Solid
    fertilizers were affected by offshore vessel delays at the end
    of the quarter. Liquid fertilizers increased as farmers returned
    to more traditional application rates due to favorable crop
    economics.á Feed
    volumes increased due to better economics.á Industrial
    sales volumes increased due to an improvement in demand for
    purified phosphoric acid used in downstream food and other
    commercial markets.

á Lower
    sulfur costs (down 10 percent as a result of higher cost
    inventory sold in 2009) were almost offset by: higher ammonia
    costs (21 percent), increased asset retirement obligations
    and higher costs of mining phosphate rock (due to distance from
    the mills and a transition in the mining approach at Aurora).â A
    revision to estimates of asset retirement obligations increased
    cost of goods sold at White Springs.â Liquid
    fertilizer variance was negative due to higher freight on
    ammonia and increased rock costs at Aurora and White Springs.â Industrial
    variance was negative due to higher rock costs at Geismar
    (demurrage charges incurred due to weather delays at rock
    shipping points which also resulted in production delays) and a
    turnaround.     (1) Direction
    of arrows refer to impact on gross margin.
 41




---



##### Table of Contents



(1)
  Net Sales Prices

Sales Volumes

Cost of Goods Soldá Liquid
    and solid fertilizer and feed prices increased from the trailing
    quarter (reflecting tightening supply) and dramatically fell in
    2009 compared to 2008 (reflecting low demand).â Industrial
    prices decreased as a result of certain contracts being based on
    prior year input costs which were significantly lower in 2009 as
    compared to being higher in 2008.

á Volumes
    for all major product categories, except solid fertilizer,
    increased due to favorable commodity prices, low inventories
    throughout the supply chain, improved buyer sentiment and
    limited perceived pricing risk.â Solid
    fertilizer sales were mainly impacted by vessel delays.á North
    American liquid fertilizer volumes increased substantially due
    to expected record combined US corn and soybean planting.
    Offshore liquid fertilizer shipments rose significantly in
    response to improved demand from India.á Demand
    for feed products improved due to better economics in the beef,
    pork and poultry industries.á Industrial
    sales volumes increased due to an improvement in demand as a
    result of a recovering US economy.

á Significantly
    lower sulfur costs (49 percent) were offset in part by
    higher ammonia costs (6 percent) and increased costs of
    mining phosphate rock (drag-line moves, change in mining
    practice and distance from the mills).â Industrial
    variance negative due to higher rock costs at Geismar (demurrage
    charges) and was higher than the trailing quarter due to more
    higher-cost rock being consumed in the second quarter.     (1) Direction
    of arrows refer to impact on gross margin.
 42




---



##### Table of Contents



Nitrogen
  Three Months Ended June 30Dollars (millions)


Tonnes (thousands)


Average per
    Tonne(1)2010


2009


% Change


2010


2009


% Change


2010


2009


% ChangeSales

$
433.3


$
320.6



35Freight


9.6



12.5



(23
)Transportation and distribution


11.1



13.6



(18
)Net sales

$
412.6


$
294.5



40Manufactured productNet salesAmmonia

$
177.0


$
123.9



43



461



450



2


$
383.47


$
275.07



39Urea


100.6



92.9



8



324



330



(2
)

$
310.37


$
281.30



10Nitrogen solutions/Nitric acid/Ammonium nitrate


100.9



69.2



46



532



418



27


$
189.60


$
165.64



14378.5



286.0



32



1,317



1,198



10


$
287.22


$
238.67



20Cost of goods sold


258.4



242.0



7














$
196.03


$
201.94



(3
)Gross margin


120.1



44.0



173














$
91.19


$
36.73



148Other miscellaneous and purchased productNet sales


34.1



8.5



301Cost of goods sold


29.2



8.6



240Gross margin


4.9



(0.1
)


n/mGross Margin

$
125.0


$
43.9



185














$
94.91


$
36.64



159   (1)
    
    Rounding differences may occur due
    to the use of whole dollars in per-tonne calculations.  n/m
    
    = not meaningful.  Six Months Ended June 30Dollars (millions)


Tonnes (thousands)


Average per
    Tonne(1)2010


2009


% Change


2010


2009


% Change


2010


2009


% ChangeSales

$
853.4


$
644.0



33Freight


21.9



25.2



(13
)Transportation and distribution


22.6



28.6



(21
)Net sales

$
808.9


$
590.2



37Manufactured productNet salesAmmonia

$
324.4


$
214.8



51



891



929



(4
)

$
364.11


$
231.10



58Urea


221.4



214.5



3



668



725



(8
)

$
331.43


$
295.89



12Nitrogen solutions/Nitric acid/Ammonium nitrate


199.5



142.2



40



1,080



804



34


$
184.68


$
177.01



4745.3



571.5



30



2,639



2,458



7


$
282.40


$
232.53



21Cost of goods sold


499.6



478.6



4














$
189.30


$
194.74



(3
)Gross margin


245.7



92.9



164














$
93.10


$
37.79



146Other miscellaneous and purchased productNet sales


63.6



18.7



240Cost of goods sold


51.7



13.5



283Gross margin


11.9



5.2



129Gross Margin

$
257.6


$
98.1



163














$
97.61


$
39.91



145   (1)
    
    Rounding differences may occur due
    to the use of whole dollars in per-tonne calculations. 43




---



##### Table of Contents



Nitrogen
    gross margin variance attributable to:
  Three Months Ended June 30



Six Months Ended June 30Dollars (millions)

2010 vs. 2009



2010 vs. 2009Change in











Change inPrices/Costs











Prices/CostsChange in Sales






Cost of







Change in






Cost ofVolumes



Net Sales


Goods Sold



Total



Sales Volumes



Net Sales


Goods Sold



TotalManufactured productAmmonia

$
(0.7
)


$
52.5


$
(10.2
)


$
41.6



$
(3.7
)


$
118.5


$
(27.0
)


$
87.8Urea


(0.1
)



8.9



(5.0
)



3.8




(7.6
)



23.7



2.0




18.1Solutions, NA, AN


9.9




13.4



5.0




28.3




21.8




8.3



15.5




45.6Hedge


-




-



2.4




2.4




-




-



1.3




1.3Change in market mix


10.5




(10.5
)


-




-




18.9




(18.9
)


-




-Total manufactured product

$
19.6



$
64.3


$
(7.8
)


$
76.1



$
29.4



$
131.6


$
(8.2
)


$
152.8Other miscellaneous and purchased product
















5.0


















6.7Total















$
81.1

















$
159.5   (LINE GRAPH)

(BAR GRAPH)(BAR GRAPH)

(BAR GRAPH)   Three Months Ended June 30


Six Months Ended June 30Sales Tonnes





Sales Tonnes(Thousands)


Price per Tonne


(Thousands)


Price per Tonne2010


2009


2010


2009


2010


2009


2010


2009Fertilizer


527



474


$
282.50


$
257.40



1,025



1,054


$
271.28


$
252.62Feed


6



6


$
380.38


$
389.24



14



14


$
402.17


$
411.38Industrial


784



718


$
289.68


$
225.15



1,600



1,390


$
288.50


$
215.441,317



1,198


$
287.22


$
238.67



2,639



2,458


$
282.40


$
232.53  44




---



##### Table of Contents



(1)
  Net Sales Prices

Sales Volumes

Cost of Goods Soldá Ammonia
    increase was the result of recovering demand for both industrial
    and fertilizer products. Prices for urea similarly rose against
    a backdrop of higher natural gas prices and increased downstream
    industrial demand for resins, adhesives, etc.á Nitrogen
    solutions, nitric acid and ammonium nitrate all increased due to
    tighter supply.

  Ammonia
    and urea volumes were flat as increased demand in the US was
    tempered by higher prices.á Nitrogen
    solutions volumes increased due to strong customer demand caused
    by comparatively-favorable spring planting conditions.á Nitric
    acid volumes increased substantially, largely as a result of
    strengthened industrial demand associated with a recovering
    economy.

â Average
    natural gas costs in production, including hedge, increased
    27 percent.  Natural gas costs in Trinidad production
    increased 58 percent (contract prices primarily indexed to
    ammonia prices) while our US spot costs for natural gas in
    production increased 21 percent.á Plants
    were more efficient as fewer shutdowns occurred.  Ammonia
    and urea cost of goods sold variances were negative due to
    higher natural gas prices used in production while the other
    product lines were positive due to relatively lower-cost ammonia
    (which is purchased or transferred and not produced) being used
    at Geismar.     (1) Direction
    of arrows refer to impact on gross margin while
    the  symbol signifies a neutral impact.
  (1)
  Net Sales Prices

Sales Volumes

Cost of Goods Soldá Realized
    prices increased as a result of higher natural gas prices and
    stronger industrial demand in 2010 compared to lower natural gas
    prices and weaker industrial demand in 2009.

â Ammonia
    volumes declined due to higher internal consumption which
    resulted in fewer tonnes being available for external sales.â US
    produced urea volumes decreased due to less supply being
    available for sale (lost production from an interruption at
    Augusta, reduced production at Lima in 2010 and lower
    inventories) and offshore urea sales declining in favor of other
    nitrogen products.á Nitrogen
    solutions volumes increased as a result of better planting
    conditions.á Nitric
    acid volumes increased as a result of a stronger US economy and
    improved industrial demand for downstream
    products.

â Average
    natural gas costs in production, including hedge, increased
    31 percent.  Natural gas costs in Trinidad production
    increased 71 percent while our US spot costs for natural
    gas in production increased 19 percent.á Reliability
    of all nitrogen plants improved in 2010 while turnaround costs
    were significantly higher in 2009 and a fire occurred at one of
    our Trinidad ammonia plants last year, impacting the cost
    variance in ammonia which was unfavorable compared to favorable
    for the other products.     (1) Direction
    of arrows refer to impact on gross margin.
 45




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##### Table of Contents



Expenses
    and Other Income
  Three Months Ended June 30


Six Months Ended June 30%











%Dollars (millions)

2010


2009


Change


Change


2010


2009


Change


ChangeSelling and administrative

$
45.0


$
53.4


$
(8.4
)


(16
)

$
94.5


$
96.8


$
(2.3
)


(2
)Provincial mining and other taxes


17.2



(18.1
)


35.3



n/m



39.7



14.9



24.8



166Foreign exchange (gain) loss


(0.3
)


37.9



(38.2
)


n/m



8.9



7.7



1.2



16Other income


147.3



188.4



(41.1
)


(22
)


175.5



223.4



(47.9
)


(21
)Interest expense


22.7



26.5



(3.8
)


(14
)


53.2



49.7



3.5



7Income taxes


174.3



71.6



102.7



143



356.7



(42.1
)


398.8



n/m               Three Months Ended June 30


Six Months Ended June 30Dollars (millions) 










%











%except percentage amounts

2010


2009


Change


Change


2010


2009


Change


ChangeLong-term debt obligations, including current portionWeighted average outstanding

$
3,430.1


$
3,032.3


$
397.8



13


$
3,465.0


$
2,694.5


$
770.5



29Weighted average interest rate


5.6%



4.8%



0.8%



17



5.5%



4.6%



0.9%



20Short-term debt obligationsWeighted average outstanding

$
451.2


$
638.6


$
(187.4)



(29)


$
532.1


$
583.0


$
(50.9)



(9)Weighted average interest rate


0.5%



1.5%



(1.0)%



(67)



0.5%



1.7%



(1.2)%



(71)    46




---



##### Table of Contents



LIQUIDITY
    AND CAPITAL RESOURCES
  Cash
    Requirements
    Contractual
    Obligations and Other Commitments
    June 30, 2010Changes To Payments Due By PeriodDollars (millions)

Total

Within 1 Year


1 to 3 Years

3 to 5 Years

Over 5 YearsLong-term debt obligations

$
(0.3)

$
600.0


$
(350.3)

$
(250.0)

$
-Purchase commitments


(198.7)


(89.1
)


(73.2)


(9.2)


(27.2)Capital commitments


321.1


196.3



122.4


2.4


-Other long-term
    liabilities(1)


106.0


17.3



(8.8)


(18.4)


115.9Total

$
228.1

$
724.5


$
(309.9)

$
(275.2)

$
88.7   (1)
    
    Commitments originally reported on
    page 56 of our 2009 financial review annual report were
    corrected for the adjustments outlined in Note 18 to the
    unaudited interim condensed consolidated Financial Statements
    included in Item 1 of this Quarterly Report on
    Form 10-Q.  Capital
    Expenditures
   47




---



##### Table of Contents



Expected
    Completion(1)

ForecastedCDN Dollars (millions)

2010 Forecast


Total Forecast


Started


(Description)

Remaining SpendingAllan, Saskatchewan

$
190


$
550



2008


2012 (general expansion)

$
420Cory I, Saskatchewan

$
470


$
1,435



2007


2010 (red potash mill)

$
290Cory II,
    Saskatchewan(2)










2008


2012 (general expansion)Picadilly, New Brunswick

$
490


$
1,660



2007


2012 (mine shaft and mill)

$
850Rocanville, Saskatchewan

$
420


$
2,800



2008


2014 (mine shaft and mill)

$
2,200    (1)
    
    Excludes ramp up time. We expect
    these projects will be fully ramped up by the end of 2015,
    provided market conditions warrant.(2)
    
    2010 forecast, total forecast and
    forecasted remaining spending included in Cory I.    Sources
    and Uses of Cash
    Three Months Ended June 30


Six Months Ended June 30%











%Dollars (millions)

2010


2009


Change


Change


2010


2009


Change


ChangeCash provided by (used in) operating activities

$
906.8


$
(63.7
)

$
970.5



n/m


$
1,695.3


$
35.0


$
1,660.3



n/mCash used in investing activities


(446.4
)


(250.9
)


(195.5
)


78



(1,337.0
)


(627.9
)


(709.1
)


113Cash (used in) provided by financing activities


(392.5
)


430.8



(823.3
)


n/m



(377.0
)


687.4



(1,064.4
)


n/m       %Dollars (millions)  except ratio amounts

June 30, 2010


December 31, 2009


Change


ChangeCurrent assets

$
1,967.2


$
2,271.7


$
(304.5
)


(13
)Current liabilities

$
(2,035.1
)

$
(1,577.4
)

$
(457.7
)


29Working capital

$
(67.9
)

$
694.3


$
(762.2
)


n/mCurrent ratio


0.97



1.44



(0.47
)


(33
)        48




---



##### Table of Contents



Principal
    Debt Instruments
  June 30, 2010Total


Amount Outstanding


AmountDollars (millions)

Amount


and Committed


AvailableCredit
    facilities(1)

$
3,250.0


$
394.6


$
2,855.4Line of credit


75.0



38.6
(2)


36.4    (1)
    
    The company increased the amount
    available under its commercial paper program from
    $750.0 million to $1,500.0 million in the second
    quarter. The amount available under the commercial paper program
    is limited to the availability of backup funds under the credit
    facilities. Included in the amount outstanding and committed is
    $394.6 million of commercial paper. Per the terms of the
    agreements, the commercial paper outstanding and committed, as
    applicable, is based on the US dollar balance or equivalent
    thereof in lawful money of other currencies at the time of
    issue; therefore, subsequent changes in the exchange rate
    applicable to Canadian dollar denominated commercial paper have
    no impact on this balance.(2)
    
    Letters of credit committed.           49




---



##### Table of Contents



A-1(Low)
    Outstanding
    Share Data
    Off-Balance
    Sheet Arrangements
  Form 10-Q
  QUARTERLY
    FINANCIAL HIGHLIGHTS
  Dollars (millions) 


June 30,



March 31,



December 31,



September 30,



June 30,



March 31,



December 31,



September 30,except per-share amounts


2010



2010



2009



2009



2009



2009



2008



2008Sales


$
1,437.8



$
1,713.6



$
1,099.1



$
1,099.1



$
856.0



$
922.5



$
1,870.6



$
3,064.3Gross margin



583.6




715.1




272.7




344.7




169.1




228.1




828.1




1,740.4Net income



472.0




449.2




239.2




247.9




186.2




307.4




759.8




1,235.7Net income per share  basic



1.59




1.52




0.81




0.84




0.63




1.04




2.53




4.06Net income per share  diluted



1.55




1.47




0.79




0.82




0.61




1.01




2.47




3.93       RELATED
    PARTY TRANSACTIONS
   50




---



##### Table of Contents



CRITICAL
    ACCOUNTING ESTIMATES
  Form 10-Q.
      RECENT
    ACCOUNTING CHANGES
  Form 10-Q
  International
    Financial Reporting Standards
         51




---



##### Table of Contents



10-Q
  Key Activities


Milestones


StatusAccounting policies and procedures: Identify differences between IFRSs and the companys existing policies and procedures
 Analyze and select ongoing policies where alternatives are permitted
 Analyze and determine which IFRS 1 exemptions will be taken on transition to IFRSs
 Revise accounting policy and procedures manuals


 Senior management approval and audit committee review of policy decisions by Q1 2010
 Revised accounting policy and procedures manuals in place by changeover date


 Certain major accounting policy decisions were preliminarily approved by senior management and reviewed by the audit committee of the Board of Directors in Q1 2010. Some accounting policy choices are still being analyzed and not all decisions have been made where accounting policy choices are available
 Revisions to accounting and procedures manuals are being drafted as work on each area of IFRSs progressesFinancial statement preparation: Prepare financial statements and note disclosures in compliance with IFRSs
 Quantify the effects of converting to IFRSs
 Prepare first-time adoption reconciliations required under IFRS 1


 Senior management approval and audit committee review of preliminary pro forma financial statements and disclosures by Q1 2010
 Senior management approval and audit committee review of full proforma financial statements prior to changeover


 Preliminary pro forma 2009 financial statements were reviewed by the audit committee in Q1 2010. To prepare for the possible early adoption of IFRSs in 2010, rather than at January 1, 2011, restated MD&A, financial statements and note disclosures for Q1 2010 are being drafted and reviewed internally
 Draft note disclosures have been prepared for most areas of IFRSs
 Effects of the conversion are being quantified as work on each area of IFRSs progresses  see summaries of estimated adjustments at the end of this sectionTraining and communication: Provide topic-specific training to key employees involved with implementation
 Develop awareness of the likely impacts of the transition throughout the company
 Provide company-specific training on revised policies and procedures to affected personnel
 Provide timely communication of the impacts of converting to IFRSs to our external stakeholders


 Training for IFRSs work stream members provided as work on each IFRSs topic commences
 Company-specific detailed training implemented prior to changeover date
 Impacts of converting to IFRSs communicated prior to changeover


 Key employees involved with implementation have completed or are in the process of completing topic-specific training
 Regular awareness presentations are provided at various forums to prepare personnel for the changeover
 Training is being conducted using a three-tiered approach with more detailed training provided for practitioners and higher-level training provided for other personnel. Detailed training is approximately one-third complete with the remainder planned to be completed by the end of Q3 2010. Development of group training is in progress and is planned to be delivered between September and November 2010
 Communication to external stakeholders has been ongoing through our MD&A disclosures. Further refinement of expected impacts of the IFRSs conversion will occur in each period up to adoption of IFRSs 52




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##### Table of Contents



Key Activities


Milestones


StatusBusiness impacts: Identify impacts of conversion on contracts including financial covenants and compensation arrangements
 Identify impacts of conversion on taxation


 Impacts on contracts identified by Q4 2009
 Taxation impacts identified prior to changeover


 Identification of impacts on contracts is complete. Adoption of IFRSs is not expected to have any material impact on the companys contracts
 Income tax accounting impacts have been identified, however quantification of all differences has not yet been finalized. Impacts of the IFRSs conversion on the companys tax compliance processes are still being assessedIT systems: Identify changes required to IT systems and implement solutions
 Determine and implement solution for capturing financial information under Canadian GAAP, US GAAP and IFRSs during the year of transition to IFRSs (for comparative information)


 Necessary changes to IT systems implemented by changeover date
 Solution for capturing financial information under multiple sets of GAAP implemented by 2009


 Required changes to IT systems have been identified and are being addressed in conjunction with an upgrade to the companys financial information system
 IFRSs record-keeping has been implemented within the companys financial information system to enable the capturing of financial information under multiple sets of accounting principlesControl environment: For all changes to policies and procedures identified, assess effectiveness of internal controls over financial reporting and disclosure controls and procedures and implement any necessary changes
 Design and implement internal controls over the IFRSs changeover process


 Sign-off by internal controls group on effectiveness of internal controls prior to changeover
 Internal controls over IFRSs changeover process in place by 2009


 Assessments and sign-offs have been provided for completed work streams and will continue as the remaining work streams progress
 Specific controls have been established and documented in relation to the IFRSs changeover process  53




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##### Table of Contents



First-Time
    Adoption of IFRSs
    Expected
    Areas of Significance
    Form 10-Q
  Accounting Policy
    Area


Impact of Policy
    AdoptionShare-Based Payments


Differences from existing Canadian GAAP: IFRS 2,
    Share-Based Payments, requires an estimate of
    compensation cost to be recognized in relation to performance
    options for which service has commenced but which have not yet
    been granted. The compensation cost recognized would then be
    trued up once options have been granted. Under Canadian GAAP,
    compensation cost is first recognized when the options are
    granted. This will create a timing difference between IFRSs and
    Canadian GAAP, in terms of when compensation cost relating to
    employee service provided in the first quarter of the year is
    recognizedExpected transition impact: In 2010, net income will
    decrease in Q1 and increase in Q2 by $13 million
    (2009  decrease in Q1 and increase in Q2 by $16
    million). Net income for annual periods will not be affectedExpected future impact: In each future year, compensation
    expense relating to performance options for which service has
    commenced but which have not yet been granted will be recognized
    commencing in Q1. Net income for annual periods will not be
    affected 54




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##### Table of Contents



Accounting Policy
    Area


Impact of Policy
    AdoptionHedge Accounting (Updated from 2009 financial review annual
    report)


Differences from existing Canadian GAAP: Under Canadian
    GAAP, a short-cut method for assessing hedge effectiveness is
    permitted if the critical terms of the hedged item and hedging
    instrument match. This method is not permitted under IFRSs. The
    company has certain deferred amounts relating to the previous
    use of this method under Canadian GAAP. However, because the
    previously designated hedging relationship was of a type that
    would have qualified for hedge accounting under IFRSs, the
    provisions of IFRS 1, First-Time Adoption of International
    Financial Reporting Standards, allow the company to
    discontinue hedge accounting prospectively. Because hedge
    accounting had already been discontinued prospectively under
    Canadian GAAP, no adjustment will be necessary as a result of
    adopting IFRSsExpected transition impact: NoneExpected future impact: None      55




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##### Table of Contents



Estimated
    Adjustments to Net Income on Adoption of IFRSs
  (Unaudited)In millions of US dollarsFor the Year Ended December 31

2009Net Income Under Canadian GAAP


$987.8IFRSs adjustments to net income (based on differences identified
    to date):Policy choicesEmployee benefits  Actuarial gains and losses


28.6Provisions  Changes in decommissioning liabilities


TBDOtherEmployee benefits  Past service costs


17.3Employee benefits  Canadian GAAP transition amounts


0.2Borrowing costs


(8.4
)Impairment of assets


(1.0
)Share-based payments


2.4Income taxes  Tax effect of above differences


(14.8
)Income tax related GAAP differences  Quantified
    differences


(125.1
) Not yet quantified


TBD       Estimated
    Adjustments to Shareholders Equity on Adoption of
    IFRSs
    (Unaudited)In millions of US dollarsAs at December 31

2009


2008Shareholders Equity Under Canadian GAAP

$
6,500.7


$
4,588.9IFRSs adjustments to shareholders equity (based on
    differences identified to date):Policy choicesEmployee benefits  Actuarial gains and losses


(364.7
)


(369.3
)Provisions  Changes in decommissioning liabilities


TBD



TBDOtherEmployee benefits  Past service costs


14.2



(3.1
)Employee benefits  Canadian GAAP transition amounts


(2.6
)


(2.8
)Borrowing costs


(14.8
)


(6.4
)Impairment of assets


9.4



10.4Share-based payments


2.4



-Income taxes  Tax effect of above differences


130.9



137.4Income tax related GAAP differences  Quantified
    differences


16.6



15.4 Not yet quantified


TBD



TBD      56




---



##### Table of Contents



RISK
    MANAGEMENT
    and/or
  Form 10-K.
        OUTLOOK
   57




---



##### Table of Contents



50-million-tonne
          FORWARD-LOOKING
    STATEMENTS
  Form 10-Q,
 58




---



##### Table of Contents



Form 10-Q, Form 10-K
 
  ITEM 3.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Form 10-Q.
 
  ITEM 4.
    CONTROLS
    AND PROCEDURES  Securities Exchange Act of 1934
   59




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##### Table of Contents



PART II.
    OTHER INFORMATION
 
  ITEM 1.
    LEGAL
    PROCEEDINGS  Form 10-Q.
 
  ITEM 6.
    EXHIBITS    Incorporated byReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)3(a)

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

10-Q

6/30/20023(b)

Bylaws of the registrant effective May 15, 2002.

10-Q

6/30/20024(a)

Term Credit Agreement between The Bank of Nova Scotia and other
    financial institutions and the registrant dated
    September 25, 2001.

10-Q

6/30/20094(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.

10-Q

6/30/20094(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.

8-K

6/30/20094(d)

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

8-K

9/22/2005

4(a)4(e)

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

10-Q

9/30/20064(f)

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

8-K

10/22/2007

4(a)4(g)

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

8-K

6/18/1997

4(a)4(h)

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

10-K

12/31/2002

4(c)4(i)

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

8-K

5/17/2001

44(j)

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

8-K

2/28/2003

4 60




---



##### Table of Contents



Incorporated byReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)4(k)

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

8-K

11/30/2006

4(a)4(l)

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

8-K

5/1/2009

4(a)4(m)

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

8-K

5/1/2009

4(b)4(n)

Form of Note relating to the registrants offering of
    $500,000,000 principal amount of 3.75% Notes due
    September 30, 2015.

8-K

9/25/2009

4(a)4(o)

Form of Note relating to the registrants offering of
    $500,000,000 principal amount of 4.875% Notes due
    March 30, 2020.

8-K

9/25/2009

4(b)4(p)

Revolving Term Credit Facility Agreement between the Bank of
    Nova Scotia and other financial institutions and the registrant
    dated December 11, 2009.

8-K

12/15/2009

4(a)     Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10(a)

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

F-1 
    (File No.
    33-31303)

9/28/1989

10(f)10(b)

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

F-1
    (File No.
    33-31303)

9/28/1989

10(g)10(c)

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

F-1
    (File No.
    33-31303)

9/28/1989

10(h)10(d)

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

10-K

12/31/1995

10(f) 61




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##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10(e)

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

10-K

12/31/1995

10(g)10(f)

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

10-Q

6/30/2004

10(g)10(g)

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

F-1
    (File No.
    33-31303)

9/28/1989

10(e)10(h)

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

10-K

12/31/1990

10(p)10(i)

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

10-K

12/31/1998

10(l)10(j)

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

10-K

12/31/1998

10(m)10(k)

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

10-K

12/31/2006

10(l)10(l)

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

10-K

12/31/2006

10(m)10(m)

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

10-Q

9/30/200910(n)

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

10-K

12/31/1995

10(o)10(o)

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

10-Q

6/30/1996

10(x)10(p)

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

10-Q

9/30/2000

10(mm) 62




---



##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10(q)

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

10-K

12/31/2008

10(r)10(r)

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

10-K

12/31/2002

10(cc)10(s)

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

10-K

12/31/200610(t)

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

10-K

12/31/2008

10(u)10(u)

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

10-K

12/31/2008

10(v)10(v)

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

10-K

12/31/2008

10(w)10(w)

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

10-K

12/31/2008

10(x)10(x)

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

10-Q

6/30/2002

10(aa)10(y)

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

10-K

12/31/2008

10(z)10(z)

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

10-K

12/31/2008

10(aa)10(aa)

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

10-K

12/31/1995

10(p)10(bb)

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

10-K

12/31/1995

10(q)10(cc)

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

10-K

12/31/2000

10(ii)10(dd)

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

10-Q

6/30/2004

10(ii)10(ee)

Chief Executive Officer Medical and Dental Benefits.

10-K

12/31/2004

10(jj) 63




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##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10(ff)

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

10-Q

3/31/2008

10(bb)10(gg)

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

10-K

12/31/2008

10(jj)10(hh)

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

10-K

12/31/2006

10(cc)10(ii)

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

10-K

12/31/2006

10(dd)10(jj)

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

10-Q

3/31/2007

10(ee)10(kk)

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

10-Q

3/31/2008

10(ff)10(ll)

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

10-Q

3/31/2009

10(mm)10(mm)

Potash Corporation of Saskatchewan Inc. 2010 Performance Option
    Plan and Form of Option Agreement.

8-K

5/7/2010

10.110(nn)

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

10-K

12/31/2008

10(qq)11

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

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

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

Certification pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.  64




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##### Table of Contents



SIGNATURES
    
   By:
    /s/  Joseph
    Podwika   Senior Vice President, General Counsel and
 Secretary
     By:
    /s/  Wayne
    R. Brownlee  Executive Vice President, Treasurer and
 Chief Financial Officer
    (Principal Financial and Accounting Officer)
 65




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##### Table of Contents



EXHIBIT
INDEX
  Incorporated byReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)3(a)

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

10-Q

6/30/20023(b)

Bylaws of the registrant effective May 15, 2002.

10-Q

6/30/20024(a)

Term Credit Agreement between The Bank of Nova Scotia and other
    financial institutions and the registrant dated
    September 25, 2001.

10-Q

6/30/20094(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.

10-Q

6/30/20094(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.

8-K

6/30/20094(d)

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

8-K

9/22/2005

4(a)4(e)

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

10-Q

9/30/20064(f)

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

8-K

10/22/2007

4(a)4(g)

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

8-K

6/18/1997

4(a)4(h)

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

10-K

12/31/2002

4(c)4(i)

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

8-K

5/17/2001

44(j)

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

8-K

2/28/2003

4




---



##### Table of Contents



Incorporated byReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)4(k)

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

8-K

11/30/2006

4(a)4(l)

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

8-K

5/1/2009

4(a)4(m)

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

8-K

5/1/2009

4(b)4(n)

Form of Note relating to the registrants offering of
    $500,000,000 principal amount of 3.75% Notes due
    September 30, 2015.

8-K

9/25/2009

4(a)4(o)

Form of Note relating to the registrants offering of
    $500,000,000 principal amount of 4.875% Notes due
    March 30, 2020.

8-K

9/25/2009

4(b)4(p)

Revolving Term Credit Facility Agreement between the Bank of
    Nova Scotia and other financial institutions and the registrant
    dated December 11, 2009.

8-K

12/15/2009

4(a)     Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10(a)

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

F-1 
    (File No.
    33-31303)

9/28/1989

10(f)10(b)

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

F-1
    (File No.
    33-31303)

9/28/1989

10(g)10(c)

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

F-1
    (File No.
    33-31303)

9/28/1989

10(h)10(d)

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

10-K

12/31/1995

10(f)




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##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10(e)

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

10-K

12/31/1995

10(g)10(f)

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

10-Q

6/30/2004

10(g)10(g)

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

F-1
    (File No.
    33-31303)

9/28/1989

10(e)10(h)

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

10-K

12/31/1990

10(p)10(i)

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

10-K

12/31/1998

10(l)10(j)

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

10-K

12/31/1998

10(m)10(k)

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

10-K

12/31/2006

10(l)10(l)

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

10-K

12/31/2006

10(m)10(m)

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

10-Q

9/30/200910(n)

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

10-K

12/31/1995

10(o)10(o)

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

10-Q

6/30/1996

10(x)10(p)

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

10-Q

9/30/2000

10(mm)




---



##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10(q)

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

10-K

12/31/2008

10(r)10(r)

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

10-K

12/31/2002

10(cc)10(s)

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

10-K

12/31/200610(t)

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

10-K

12/31/2008

10(u)10(u)

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

10-K

12/31/2008

10(v)10(v)

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

10-K

12/31/2008

10(w)10(w)

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

10-K

12/31/2008

10(x)10(x)

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

10-Q

6/30/2002

10(aa)10(y)

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

10-K

12/31/2008

10(z)10(z)

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

10-K

12/31/2008

10(aa)10(aa)

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

10-K

12/31/1995

10(p)10(bb)

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

10-K

12/31/1995

10(q)10(cc)

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

10-K

12/31/2000

10(ii)10(dd)

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

10-Q

6/30/2004

10(ii)10(ee)

Chief Executive Officer Medical and Dental Benefits.

10-K

12/31/2004

10(jj)




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##### Table of Contents



Incorporated ByReferenceExhibit





Filing Date/

Exhibit NumberNumber

Description of
    Document

Form

Period End Date

(if different)10(ff)

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

10-Q

3/31/2008

10(bb)10(gg)

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

10-K

12/31/2008

10(jj)10(hh)

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

10-K

12/31/2006

10(cc)10(ii)

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

10-K

12/31/2006

10(dd)10(jj)

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

10-Q

3/31/2007

10(ee)10(kk)

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

10-Q

3/31/2008

10(ff)10(ll)

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

10-Q

3/31/2009

10(mm)10(mm)

Potash Corporation of Saskatchewan Inc. 2010 Performance Option
    Plan and Form of Option Agreement.

8-K

5/7/2010

10.110(nn)

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

10-K

12/31/2008

10(qq)11

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

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

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

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