##### 



EXHIBIT 99.3
 AGRIUM INC.
 2007
 AUDITED ANNUAL FINANCIAL
STATEMENTS AND NOTES




---



##### 



Agrium  2007 annual report
 
    Financial Reporting Responsibilities
    96




---



##### 



Agrium  2007 annual report
  Managements Report on Internal Control Over Financial Reporting
  Internal ControlIntegrated
Framework
  -s- Michael M. Wilson
    
    -s- Bruce G. WatermanMichael M. Wilson
    
    Bruce G. WatermanPresident & Chief Executive Officer
    
    Senior Vice President, Finance & Chief Financial OfficerCalgary, CanadaFebruary 27, 2008
    97




---



##### 



Agrium  2007 annual report
  Report of Independent Registered Public Accounting Firm
     Internal
ControlIntegrated Framework
 Chartered Accountants
    98




---



##### 



Agrium  2007 annual report
   Report of Independent Registered Public Accounting Firm
  Internal
ControlIntegrated Framework
    Internal ControlIntegrated Framework
  
 Chartered Accountants
    99




---



##### 



Agrium  2007 annual report
 
    Years ended December 31
    
    
    2007
    
    
    
    2006
    
    
    2005(millions of U.S. dollars, except per share amounts)Sales
    
    
    
    5,491
    
    
    
    
    4,373
    
    
    
    3,491Direct freight
    
    
    
    221
    
    
    
    
    180
    
    
    
    197Net sales
    
    
    
    5,270
    
    
    
    
    4,193
    
    
    
    3,294Cost of product
    
    

    
    3,672
    
    
    
    
    3,237
    
    
    
    2,256Gross profit
    
    
    
    1,598
    
    
    
    
    956
    
    
    
    1,038ExpensesSelling
    
    
    
    471
    
    
    
    
    390
    
    
    
    254General and administrative
    
    
    
    125
    
    
    
    
    96
    
    
    
    79Depreciation and amortization
    
    
    
    173
    
    
    
    
    169
    
    
    
    146Royalties and other taxes
    
    
    
    43
    
    
    
    
    20
    
    
    
    45Asset impairment (note 9)
    
    
    
    -
    
    
    
    
    136
    
    
    
    -Other expenses (note 4)
    
    
    
    71
    
    
    
    
    73
    
    
    
    14Earnings before interest expense and income taxes
    
    
    
    715
    
    
    
    
    72
    
    
    
    500Interest on long-term debt
    
    
    
    52
    
    
    
    
    47
    
    
    
    47Other interest
    
    
    
    18
    
    
    
    
    16
    
    
    
    2Earnings before income taxes
    
    
    
    645
    
    
    
    
    9
    
    
    
    451Current income taxes
    
    
    
    85
    
    
    
    
    78
    
    
    
    113Future income taxes
    
    
    
    119
    
    
    
    
    (102
    )
    
    
    55Income taxes (note 5)
    
    
    
    204
    
    
    
    
    (24
    )
    
    
    168Net earnings
    
    
    
    441
    
    
    
    
    33
    
    
    
    283Retained earnings - beginning of year
    
    
    
    602
    
    
    
    
    584
    
    
    
    392Transition adjustment (note 2)
    
    
    
    (3
    )
    
    
    
    -
    
    
    
    -Common share dividends declared
    
    
    
    (16
    )
    
    
    
    (15
    )
    
    
    (14
    )Common share repurchases
    
    

    
    -
    
    
    
    
    -
    
    
    
    (77
    )Retained earnings - end of year
    
    
    
    1,024
    
    
    
    
    602
    
    
    
    584Earnings per share (note 6)Basic
    
    

    
    3.28
    
    
    
    
    0.25
    
    
    
    2.14Diluted
    
    
    
    3.25
    
    
    
    
    0.25
    
    
    
    2.12
    100




---



##### 




 
  
 Years ended December 31
    
          
          2007
    
    
    
    2006
    
    
    2005(millions of U.S. dollars, except per share amounts)OperatingNet earnings
    
          
    
    441
    
    
    
    
    33
    
    
    
    283Items not affecting cashDepreciation and amortization
    
          
    
    173
    
    
    
    
    169
    
    
    
    146Gain on disposal of assets and investments
    
          
    
    (4
    )
    
    
    
    (14
    )
    
    
    (4
    )Future income taxes
    
          
    
    119
    
   
    
    
    (102
    )
    
    
    55Stock-based compensation
    
          
    
    113
    
    
    
    
    30
    
    
    
    13Unrealized loss on derivative contracts
    
          
    
    6
    
    
    
    
    6
    
    
    
    -Unrealized foreign exchange (gain) loss
    
          
    
    (50
    )
    
    
    
    6
    
    
    
    (6
    )Asset impairment
    
          
    
    -
    
    
    
    
    136
    
    
    
    -Other
    
          
    
    48
    
    
    
    
    (56
    )
    
    
    33Net changes in non-cash working capital (net of changes from acquisitions)Accounts receivable
    
          
    
    (65
    )
    
    
    
    (50
    )
    
    
    (50
    )Inventories
    
          
    
    (184
    )
    
    
    
    180
    
    
    
    (76
    )Prepaid expenses and deposits
    
          
    
    (146
    )
    
    
    
    (32
    )
    
    
    (35
    )Accounts payable and accrued liabilities
    
          
    
    137
    
    
    
    
    (94
    )
    
    
    122Income and other taxes payable
    
          
    
    (43
    )
    
    
    
    (29
    )
    
    
    (18
    )Other
    
          
    
    (51
    )
    
    
    
    (28
    )
    
    
    (13
    )Cash provided by operating activities
    
          
    
    494
    
    
    
    
    155
    
    
    
    450InvestingAcquisitions, net of cash acquired
    
          
    
    -
    
    
    
    
    (651
    )
    
    
    (10
    )Capital expenditures
    
          
    
    (454
    )
    
    
    
    (209
    )
    
    
    (175
    )Investment in equity investee
    
          
    
    (63
    )
    
    
    
    -
    
    
    
    -(Increase) decrease in other assets
    
          
    
    (61
    )
    
    
    
    28
    
    
    
    (40
    )Proceeds from disposal of assets and investments
    
          
    
    17
    
    
    
    
    93
    
    
    
    13Cash used in investing activities
    
          
    
    (561
    )
    
    
    
    (739
    )
    
    
    (212
    )FinancingCommon shares issued, net of issuance costs
    
          
    
    1,337
    
    
    
    
    33
    
    
    
    50Common share repurchases
    
          
    
    -
    
    
    
    
    -
    
    
    
    (98
    )(Repayment of) bank indebtedness
    
          
    
    (61
    )
    
    
    
    212
    
    
    
    -Long-term debt issued
    
          
    
    132
    
    
    
    
    296
    
    
    
    -Long-term debt repayment
    
          
    
    -
    
    
    
    
    (137
    )
    
    
    (126
    )Transaction costs on long-term debt
    
          
    
    (13
    )
    
    
    
    -
    
    
    
    -Common share dividends paid
    
          
    
    (15
    )
    
    
    
    (14
    )
    
    
    (14
    )Issue of common shares by subsidiary to non-controlling interest
    
          
    
    87
    
    
    
    
    3
    
    
    
    -Preferred security repayment
    
          
    
    -
    
    
    
    
    -
    
    
    
    (175
    )Cash provided by (used in) financing activities
    
          
    
    1,467
    
    
    
    
    393
    
    
    
    (363
    )Increase (decrease) in cash and cash equivalents
    
          
    
    1,400
    
    
    
    
    (191
    )
    
    
    (125
    )Cash and cash equivalents  beginning of year
    
          
    
    109
    
    
    
    
    300
    
    
    
    425Cash and
cash equivalents  end of year
    
          
    
    1,509
    
    
    
    
    109
    
    
    
    300Dividends per common share for the year
    
          
    
    0.11
    
    
    
    
    0.11
    
    
    
    0.11Supplemental cash flow disclosureInterest paid
    
          
    
    69
    
    
    
    
    61
    
    
    
    49Income taxes paid
    
          
    
    123
    
    
    
    
    97
    
    
    
    132




---



##### 




 
    As at December 31
    
          
          2007
          
    
    
    2006(millions of U.S. dollars)ASSETSCurrent assetsCash and cash equivalents
    
          
    
    1,509
    
    
    
    
    109Accounts receivable (note 7)
    
          
    
    821
    
    
    
    
    566Inventories (note 8)
    
          
    
    961
    
    
    
    
    747Prepaid expenses and deposits
    
          
    
    297
    
    
    
    
    1373,588
    
    
    
    
    1,559Property, plant and equipment(note 9)
    
          
    
    1,779
    
    
    
    
    1,332Intangibles(note 10)
    
          
    
    73
    
    
    
    
    75Goodwill(note 11)
    
          
    
    178
    
    
    
    
    174Other assets(note 12)
    
          
    
    221
    
    
    
    
    103Future income tax assets(note 5)
    
          
    
    -
    
    
    
    
    225,839
    
    
    
    
    3,265LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesBank indebtedness (note 13)
    
          
    
    166
    
    
    
    
    227Accounts payable and accrued liabilities (note 14)
    
          
    
    1,100
    
    
    
    
    715Current portion of long-term debt (note 15)
    
          
    
    1
    
    
    
    
    11,267
    
    
    
    
    943Long-term debt(note 15)Recourse
    
          
    
    664
    
    
    
    
    669Non-recourse
    
          
    
    119
    
    
    
    
    -783
    
    
    
    
    669Other liabilities(note 16)
    
          
    
    358
    
    
    
    
    282Future income tax liabilities(note 5)
    
          
    
    237
    
    
    
    
    131Non-controlling interests
    
          
    
    102
    
    
    
    
    72,747
    
    
    
    
    2,032Commitments, guarantees, and contingencies(notes 20, 21, and 22 respectively)Shareholders equityShare capitalAuthorized: unlimited common sharesIssued and outstanding: 2007  158 million (2006  133 million)
    
          
    
    1,972
    
    
    
    
    617Contributed surplus
    
          
    
    8
    
    
    
    
    5Retained earnings
    
          
    
    1,024
    
    
    
    
    602Accumulated other comprehensive income
    
          
    
    88
    
    
    
    
    93,092
    
    
    
    
    1,2335,839
    
    
    
    
    3,265
   -s- Michael M. Wilson
    
    -s- Victor J. ZaleschukMichael M. Wilson
    
    Victor J. ZaleschukDirector
    
    Director




---



##### 



Agrium  2007 annual report
  
    AccumulatedMillions of
    
    
    Common
    
    
    
    
    
    
    
    
    
    
    other
    
    
    Totalcommon
    
    
    share
    
    
    Contributed
    
    
    Retained
    
    
    comprehensive
    
    
    shareholdersshares
    
    
    capital
    
    
    surplus
    
    
    earnings
    
    
    income
    
    
    equityDecember 31, 2004
    
    
    132
    
    
    
    553
    
    
    
    2
    
    
    
    392
    
    
    
    1
    
    
    
    948Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    283
    
    
    
    
    
    
    
    283Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    9Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    292Common share dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    (14
    )Common share repurchases
    
    
    (5
    )
    
    
    (21
    )
    
    
    
    
    
    
    (77
    )
    
    
    
    
    
    
    (98
    )Stock compensation exercise and grants
    
    
    4
    
    
    
    51
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    52December 31, 2005
    
    
    131
    
    
    
    583
    
    
    
    3
    
    
    
    584
    
    
    
    10
    
    
    
    1,180Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    33Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32Common share dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    (15
    )Stock compensation exercise and grants
    
    
    2
    
    
    
    34
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    36December 31, 2006
    
    
    133
    
    
    
    617
    
    
    
    5
    
    
    
    602
    
    
    
    9
    
    
    
    1,233Transition adjustments for net deferred
gains on cash flow hedges (net of tax)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    5
    
    
    
    2January 1, 2007
    
    
    133
    
    
    
    617
    
    
    
    5
    
    
    
    599
    
    
    
    14
    
    
    
    1,235Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    441
    
    
    
    
    
    
    
    441Unrealized gains on cash flow hedges (a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    10Realized gains on cash flow hedges (b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    9Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    55Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    515Common share dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (16
    )Share issuance (note 15)
    
    
    24
    
    
    
    1,338
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,338Stock compensation exercise and grants
    
    
    1
    
    
    
    17
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    20December 31, 2007
    
    
    158
    
    
    
    1,972
    
    
    
    8
    
    
    
    1,024
    
    
    
    88
    
    
    
    3,092
 (a)
    
    Net of non-controlling interests of $7-million.(b)
    
    Net of tax and non-controlling interests of $2-million and $3-million, respectively.
    103




---



##### 



Agrium  2007 annual report
  
  
    1. Description of Business
  2. Significant Accounting Policies
    104




---



##### 



Agrium  2007 annual report
   Intangibles
 Goodwill
 Impairment of long-lived assets
 Other assets
   Employee future benefits
    105




---



##### 



Agrium  2007 annual report
   Environmental remediation
 Asset retirement obligations
 Income taxes
 Revenue recognition
  Stock-based compensation
   Foreign currency translation
    106




---



##### 



Agrium  2007 annual report
   Financial instruments  Financial assets and liabilities
 Financial 
instrument classification
    
    As classified by Agrium
    
    Subsequent measurement of
gains or losses at each period-endAssets or liabilities held for trading
    
    Cash and cash equivalents and
derivatives that are not cash flow hedges
    
    Fair value; unrealized gains or
losses recognized in net incomeAvailable for sale financial assets
    
    Other assets  long-term investments
    
    Fair value; unrealized gains
and losses recognized in other
comprehensive income (OCI);
recognized in net income on sale
of the asset or when asset is
written down as impairedHeld to maturity investments
    
    NoneAmortized cost using the effective
interest rate method; recognized
in net income, if asset/liability is
derecognized or asset is impairedLoans and receivables
    
    Accounts receivableOther financial liabilities
    
    Bank indebtedness, accounts payable,
long-term debt
  Derivative financial instruments
  Hedges
    107




---



##### 



Agrium  2007 annual report
  
 Description
    
    Date and method of adoption
    
    ImpactComprehensive
Incomeconsists of
net income and
other comprehensive
income. OCI
represents changes
in shareholders
equity during a
period arising from
transactions and
other events with
non-owner sources.
The Corporations
OCI consists of
gains and losses on
translation of
self-sustaining
foreign operations
and gains and
losses on the
effective portion
of cash flow
hedges. OCI is
presented net of
related income
taxes. Cumulative
changes in OCI are
included in
accumulated other
comprehensive
income, which is
presented as a new
category of
shareholders
equity on the
consolidated
balance sheets.
Foreign currency
translation
adjustments at
December 31, 2007
of $64-million
(December 31, 2006
 $9-million)
consisting of gains
and losses on
translation of
self-sustaining
foreign operations,
previously
segregated as a
separate component
of shareholders
equity, are now
included in AOCI.
    
    January 1, 2007;
prospective, except for
retrospective application
of reclassification of
foreign currency
translation adjustments.
    
    Material
prospective impactFinancial
Instruments 
Recognition and
Measurement
establishes that
all financial
assets and
financial
liabilities must be
initially recorded
at fair value on
the consolidated
balance sheet.
Subsequent
measurement is
determined by the
classification of
each financial
asset and
liability,
according to the
categories
described under
Financial assets
and liabilities
above.
    
    January 1, 2007; prospective
    
    Material
prospective impactPursuant to this
new standard,
certain deferred
debt issuance costs
previously reported
in other assets
have been
reclassified
prospectively and
are now reported as
a reduction of debt
obligations.
Retroactive
adoption of the
effective interest
rate method did not
have a material
impact.Hedgesestablishes
when and how hedge
accounting may be
applied, as well as
certain disclosure
requirements. The
standard specifies
three types of
hedging
relationships: fair
value hedges, cash
flow hedges, and
hedges of a net
investment in
self-sustaining
foreign operations.
Application of
hedge accounting is
optional. The
Corporation elected
to apply hedge
accounting to
certain derivatives
consisting of gas,
interest rate and
foreign exchange
cash flow hedge
contracts.
    
    January 1, 2007; prospective
    
    See table below
  IncomeBalance sheet category (millions of U.S. dollars)
    
    Gross
    
    
    Taxes
    
    
    NetRetained earningsIneffective portion of qualifying cash flow hedges
    
    
    (4
    )
    
    
    1
    
    
    
    (3
    )Accumulated other comprehensive incomeUnrealized gains on effective cash flow hedges
    
    
    8
    
    
    
    (3
    )
    
    
    5
 
   108




---



##### 



Agrium  2007 annual report
  
 Description
    
    Date and method of adoption
    
    ImpactStripping Costs
Incurred in the
Production Phase of
a Mining Operation
requires that costs
of removing
overburden and
mineral waste
materials should be
accounted for
according to the
benefit received by
the entity and
recorded as either a
component of
inventory or
betterment to the
mineral property,
depending on the
benefit received.
    
    January 1, 2007; prospective
    
    No material impactChanges in
Accounting Policies,
Estimates and
Corrections of
Errorsprovides
guidance as to the
application of
voluntary changes in
accounting policy,
and provides for
retrospective
application of
changes in
accounting policy
and error.
    
    January 1, 2007; prospective
    
    No material impactDetermining
Variability to be
Considered in
Consolidation of
Variable Interest
Entitiesprovides
guidance in
determining the
application of
accounting standards
regarding
consolidation of
variable interest
entities based on
analysis of the
design of the
entity, including
its purpose and the
nature of risks in
the entity.
    
    January 1, 2007; prospective
    
    No material impactIncome Taxes the
Corporation changed
its method of
accounting for
income tax
uncertainties
whereby a tax
benefit will be
recognized if it is
more likely than not
that the position
would be sustained
on examination.
Previously, a tax
benefit was
recognized only when
it was probable that
the position would
be sustained on
examination. The
Corporation believes
that the threshold
of more likely than
not is more widely
understood than
probable and,
consequently, the
new accounting
policy provides more
reliable and
relevant
information.
    
    April 1, 2007; retrospective
    
    No material impactAccounting Policy
Choice for
Transaction Costs
requires the same
accounting policy
choice for all
similar financial
instruments or
groups of financial
instruments
classified as other
than held for
trading.
    
    September 30, 2007; retrospective
    
    No material impact
  Description
    
    Date and method of adoption
    
    ImpactFinancial Instruments  Disclosures, Financial
Instruments  Presentation and Capital
Disclosuresrequires the Corporation to provide
additional disclosures relating to its
financial instruments, hedging arrangements,
and share capital.
    
    January 1, 2008; prospective
    
    Currently being
reviewedInventoriesestablishes standards for the
measurement and disclosure of inventories
including guidance on the determination of
cost.
    
    January 1, 2008;
prospective or
retrospective
    
    Currently being
reviewed
 3. Business Acquisitions
 
   109




---



##### 



Agrium 2007 annual report
  Fair value of net assets acquired
    
    Nu-Gro
    
    
    Royster-Clark
    
    
    Pursell
    
    
    TotalWorking capital
    
    
    24
    
    
    
    144
    
    
    
    6
    
    
    
    174Property, plant and equipment
    
    
    23
    
    
    
    178
    
    
    
    12
    
    
    
    213Future income taxes and other long-term assets
    
    
    -
    
    
    
    70
    
    
    
    -
    
    
    
    70Intangibles
    
    
    21
    
    
    
    7
    
    
    
    51
    
    
    
    79Goodwill (a)
    
    
    27
    
    
    
    121
    
    
    
    22
    
    
    
    170Future income taxes and other long-term liabilities
    
    
    (9
    )
    
    
    (11
    )
    
    
    -
    
    
    
    (20
    )Long-term debt
    
    
    -
    
    
    
    (35
    )
    
    
    -
    
    
    
    (35
    )Total consideration
    
    
    86
    
    
    
    474
    
    
    
    91
    
    
    
    651
 (a)
    
    Goodwill in the Nu-Gro and Royster-Clark acquisitions is not deductible for tax purposes.
 4. Other Expenses
 2007
    
    
    
    2006
    
    
    2005Interest income
    
    
    
    (30
    )
    
    
    
    (16
    )
    
    
    (22
    )Stock-based compensation
    
    
    
    113
    
    
    
    
    30
    
    
    
    13Environmental remediation and accretion of asset retirement obligations
    
    
    
    5
    
    
    
    
    12
    
    
    
    9Realized and unrealized loss on derivative contracts
    
    
    
    20
    
    
    
    
    35
    
    
    
    21Foreign exchange (gain) loss
    
    
    
    (41
    )
    
    
    
    3
    
    
    
    (5
    )Litigation and contract settlements
    
    
    
    -
    
    
    
    
    -
    
    
    
    (25
    )Other
    
    
    
    4
    
    
    
    
    9
    
    
    
    2371
    
    
    
    
    73
    
    
    
    14
 5. Income Taxes
  2007
    
    
    
    2006
    
    
    2005Earnings (loss) before income taxesCanadian
    
    
    
    239
    
    
    
    
    (168
    )
    
    
    140Foreign
    
    
    
    406
    
    
    
    
    177
    
    
    
    311645
    
    
    
    
    9
    
    
    
    451Statutory rate (%)
    
    
    
    37
    
    
    
    
    38
    
    
    
    41Income taxes at statutory rates
    
    
    
    236
    
    
    
    
    4
    
    
    
    183Foreign exchange gains relating to Canadian operations
    
    
    
    18
    
    
    
    
    -Differences in foreign tax rates
    
    
    
    (26
    )
    
    
    
    (24
    )
    
    
    (19
    )Canadian tax rate adjustment
    
    
    
    (9
    )
    
    
    
    (18
    )
    
    
    -Manufacturing and processing allowance
    
    
    
    (16
    )
    
    
    
    14
    
    
    
    (3
    )Other
    
    
    
    1
    
    
    
    
    -
    
    
    
    7Income taxes
    
    
    
    204
    
    
    
    
    (24
    )
    
    
    168CurrentCanadian
    
    
    
    (5
    )
    
    
    
    79
    
    
    
    15Foreign
    
    
    
    90
    
    
    
    
    (1
    )
    
    
    9885
    
    
    
    
    78
    
    
    
    113FutureCanadian
    
    
    
    83
    
    
    
    
    (148
    )
    
    
    42Foreign
    
    
    
    36
    
    
    
    
    46
    
    
    
    13119
    
    
    
    
    (102
    )
    
    
    55204
    
    
    
    
    (24
    )
    
    
    168
    110




---



##### 



Agrium  2007 annual report
   2007
    
    
    
    2006Future income tax liabilitiesDepreciation and amortization
    
    
    
    160
    
    
    
    
    172Deferred income
    
    
    
    141
    
    
    
    
    24Other
    
    
    
    77
    
    
    
    
    68Total future income tax liabilities
    
    
    
    378
    
    
    
    
    264Future income tax assetsLoss carry-forwards expiring through 2027
    
    
    
    7
    
    
    
    
    46Asset retirement obligations and environmental liabilities
    
    
    
    60
    
    
    
    
    64Employee future benefits and incentives
    
    
    
    67
    
    
    
    
    38Other
    
    
    
    13
    
    
    
    
    27Future income tax assets before valuation allowance
    
    
    
    147
    
    
    
    
    175Valuation allowance
    
    
    
    (6
    )
    
    
    
    (20
    )Total future income tax assets, net of valuation allowance
    
    
    
    141
    
    
    
    
    155Net future income tax liabilities
    
    
    
    237
    
    
    
    
    109Future income tax assets
    
    
    
    -
    
    
    
    
    (22
    )Future income tax liabilities
    
    
    
    237
    
    
    
    
    131Net future income tax liabilities
    
    
    
    237
    
    
    
    
    109
 6. Earnings per Share
 2007
    
    
    
    2006
    
    
    2005NumeratorNet earnings
    
    
    
    441
    
    
    
    
    33
    
    
    
    283DenominatorWeighted-average number of shares outstanding for basic earnings per share
    
    
    
    135
    
    
    
    
    132
    
    
    
    132Dilutive instruments (a)Stock options (b)
    
    
    
    1
    
    
    
    
    1
    
    
    
    1Weighted-average number of shares outstanding for diluted earnings per share
    
    
    
    136
    
    
    
    
    133
    
    
    
    133Basic earnings per share
    
    
    
    3.28
    
    
    
    
    0.25
    
    
    
    2.14Diluted earnings per share
    
    
    
    3.25
    
    
    
    
    0.25
    
    
    
    2.12
 (a)
    
    For diluted earnings per share, conversion or exercise is assumed only if the effect is
dilutive to basic earnings per share.(b)
    
    Stock options, using the treasury stock method, with an average share price less than
or equal to the average price during the year are considered dilutive and potential
common share equivalents are considered outstanding. At December 31, 2007, there were one
million dilutive stock options (December 31, 2006  two million, December 31, 2005 
five million).
 7. Accounts Receivable
 2007
    
    
    
    2006Trade accounts
    
    
    
    723
    
    
    
    
    534Allowance for doubtful accounts
    
    
    
    (19
    )
    
    
    
    (17
    )Rebates and other non-trade accounts
    
    
    
    43
    
    
    
    
    35Derivative contracts
    
    
    
    40
    
    
    
    
    14Income and other taxes
    
    
    
    34
    
    
    
    
    -821
    
    
    
    
    566
    111




---



##### 



Agrium  2007 annual report
   8. Inventories
 2007
    
    
    
    2006Advanced
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AdvancedRetail
    
    
    Wholesale
    
    
    Technologies
    
    
    Total
    
    
    
    Retail
    
    
    Wholesale

    
    
    Technologies
    
    
    TotalRaw materials
    
    
    
    -
    
    
    
    148
    
    
    
    12
    
    
    
    160
    
    
    
    
    -
    
    
    
    114
    
    
    
    9
    
    
    
    123Finished goods
    
    
    
    -
    
    
    
    114
    
    
    
    33
    
    
    
    147
    
    
    
    
    -
    
    
    
    157
    
    
    
    32
    
    
    
    189Product for resale
    
    
    
    544
    
    
    
    110
    
    
    
    -
    
    
    
    654
    
    
    
    
    374
    
    
    
    61
    
    
    
    -
    
    
    
    435544
    
    
    
    372
    
    
    
    45
    
    
    
    961
    
    
    
    
    374
    
    
    
    332
    
    
    
    41
    
    
    
    747
 9. Property, Plant and Equipment
 2007
    
    
    
    2006Accumulated
    
    
    Net Book
    
    
    
    
    
    
    
    Accumulated
    
    
    Net BookCost
    
    
    Depreciation
    
    
    Value
    
    
    
    Cost
    
    
    Depreciation
    
    
    ValueLand (a)
    
    
    
    64
    
    
    
    -
    
    
    
    64
    
    
    
    
    51
    
    
    
    -
    
    
    
    51Building and improvements
    
    
    
    478
    
    
    
    243
    
    
    
    235
    
    
    
    
    443
    
    
    
    221
    
    
    
    222Machinery and equipment
    
    
    
    2,588
    
    
    
    1,578
    
    
    
    1,010
    
    
    
    
    2,178
    
    
    
    1,289
    
    
    
    889Assets under construction (a)
    
    
    
    424
    
    
    
    -
    
    
    
    424
    
    
    
    
    60
    
    
    
    -
    
    
    
    60Other
    
    
    
    98
    
    
    
    52
    
    
    
    46
    
    
    
    
    153
    
    
    
    43
    
    
    
    1103,652
    
    
    
    1,873
    
    
    
    1,779
    
    
    
    
    2,885
    
    
    
    1,553
    
    
    
    1,332
 (a)
    
    At December 31, 2007 assets under construction of $346-million and land of
$7-million relating to the Egypt nitrogen project are pledged as security on the
non-recourse debt.
  10. Intangibles
 2007
    
    
    
    2006Accumulated
    
    
    Net Book
    
    
    
    
    
    
    
    Accumulated
    
    
    Net BookCost
    
    
    Amortization
    
    
    Value
    
    
    
    Cost
    
    
    Amortization
    
    
    ValueTrade names (a)
    
    
    
    25
    
    
    
    -
    
    
    
    25
    
    
    
    
    25
    
    
    
    -
    
    
    
    25Customer relationships (b)
    
    
    
    32
    
    
    
    6
    
    
    
    26
    
    
    
    
    27
    
    
    
    1
    
    
    
    26Technology (b)
    
    
    
    23
    
    
    
    4
    
    
    
    19
    
    
    
    
    23
    
    
    
    1
    
    
    
    22Other (b)
    
    
    
    5
    
    
    
    2
    
    
    
    3
    
    
    
    
    2
    
    
    
    -
    
    
    
    285
    
    
    
    12
    
    
    
    73
    
    
    
    
    77
    
    
    
    2
    
    
    
    75
 (a)
    
    The Corporation has determined that trade names have indefinite lives for accounting
purposes and accordingly are not amortized. The Corporation completed its annual test for
impairment of indefinite-lived intangibles in the third quarter of 2007 and determined that
there was no impairment.(b)
    
    Amortization expense of finite-lived intangibles for 2007 was $10-million, and over the next
five years is estimated to be approximately $7-million annually.
 11. Goodwill
 2007
    
    
    
    2006Advanced
    
    
    
    
    
    
    
    
    
    
    
    AdvancedRetail
    
    
    Technologies
    
    
    Total
    
    
    
    Retail
    
    
    Technologies
    
    
    TotalBalance, beginning of year
    
    
    
    129
    
    
    
    45
    
    
    
    174
    
    
    
    
    8
    
    
    
    -
    
    
    
    8Acquired during the year
    
    
    
    -
    
    
    
    -
    
    
    
    -
    
    
    
    
    121
    
    
    
    45
    
    
    
    166Purchase price allocation adjustments
    
    
    
    (2
    )
    
    
    4
    
    
    
    2
    
    
    
    
    -
    
    
    
    -
    
    
    
    -Foreign exchange translation
    
    
    
    -
    
    
    
    2
    
    
    
    2
    
    
    
    
    -
    
    
    
    -
    
    
    
    -Balance, end of year (a)
    
    
    
    127
    
    
    
    51
    
    
    
    178
    
    
    
    
    129
    
    
    
    45
    
    
    
    174
 (a)
    
    The Corporation completed its annual test for impairment of goodwill during the third quarter
of 2007 and determined that there was no impairment.
    112




---



##### 



Agrium  2007 annual report
   12. Other Assets
 2007
    
    
    
    2006Long-term investments
    
    
    
    34
    
    
    
    
    37Long-term receivables
    
    
    
    23
    
    
    
    
    21Long-term derivative contracts
    
    
    
    28
    
    
    
    
    10Deferred costs(a)
    
    
    
    30
    
    
    
    
    13Employee future benefits
    
    
    
    4
    
    
    
    
    5Investment in equity investee(b)
    
    
    
    78
    
    
    
    
    -Other
    
    
    
    24
    
    
    
    
    17221
    
    
    
    
    103
 (a)
    
    Amortization expense of $26-million was included in Cost of product in 2007 (2006 
$25-million).(b)
    
    During the second quarter of 2007, the Corporation acquired a 19.6 percent equity
position in Hanfeng Evergreen Inc. (Hanfeng) a corporation listed on the Toronto Stock
Exchange (TSX), for $63-million. As at December 31, 2007 the allocation of the cost of the
investment for the identifiable assets and liabilities based on their proportionate fair
value at the date of acquisition was not finalized. Fair market value of the Corporations
investment in Hanfeng was $175-million at December 31, 2007.
 13. Bank Indebtedness
       14. Accounts Payable and Accrued Liabilities
 2007
    
    
    
    2006Trade
    
    
    
    601
    
    
    
    
    409Non-trade
    
    
    
    10
    
    
    
    
    54Accrued liabilities
    
    
    
    458
    
    
    
    
    211Income and other taxes
    
    
    
    -
    
    
    
    
    10Accrued interest
    
    
    
    11
    
    
    
    
    14Dividends
    
    
    
    9
    
    
    
    
    7Derivative contracts
    
    
    
    11
    
    
    
    
    101,100
    
    
    
    
    715
    113




---



##### 



Agrium  2007 annual report
   15. Long-term Debt
 2007
    
    
    
    2006Recourse debtUnsecured(a)7.125% debentures due May 23, 2036
    
    
    
    300
    
    
    
    
    3007.7% debentures due February 1, 2017
    
    
    
    100
    
    
    
    
    1007.8% debentures due February 1, 2027
    
    
    
    125
    
    
    
    
    1258.25% debentures due February 15, 2011
    
    
    
    125
    
    
    
    
    125SecuredOther (b)
    
    
    
    22
    
    
    
    
    20672
    
    
    
    
    670Transaction costs (c)
    
    
    
    (7
    )
    
    
    
    -Principal repayments due within one year
    
    
    
    (1
    )
    
    
    
    (1
    )664
    
    
    
    
    669Non-recourse debtSecured term credit facilities due June 30, 2022 (d)
    
    
    
    132
    
    
    
    
    -Transaction costs (c)
    
    
    
    (13
    )
    
    
    
    -119
    
    
    
    
    -783
    
    
    
    
    669
 (a)
    
    These debentures require the Corporation to meet certain financial ratios and
covenants. Failure to comply with these covenants may trigger early repayment
provisions. The Corporation was in compliance with these covenants at December 31, 2007.(b)
    
    Includes a capital lease of $19-million with an annual payment of $2-million with the final
installment due 2019, relating to land and building with a carrying value of $13-million.(c)
    
    The Corporation began prospectively offsetting transaction costs against the associated debt in
accordance with changes in accounting standards that became effective January 1, 2007.(d)
    
    The Corporation has credit facilities available to a subsidiary to finance the Egypt nitrogen
project. The credit facilities are secured by the assets of the subsidiary.
The credit facilities are repayable semi-annually over 12 years beginning in 2010, bearing
interest at LIBOR plus 1.02 percent. The project is required to maintain certain financial
ratios and other covenants. The principal financial covenant requires maintaining a maximum
ratio of project debt to equity of 2:1 throughout the construction period. At December 31,
2007, $808-million was available under this facility. The project was in compliance with
all covenants at December 31, 2007.
  16. Other Liabilities
 2007
    
    
    
    2006Environmental remediation
    
    
    
    117
    
    
    
    
    117Asset retirement obligations
    
    
    
    84
    
    
    
    
    71Stock-based compensation
    
    
    
    56
    
    
    
    
    17Employee future benefitsPensions
    
    
    
    6
    
    
    
    
    12Post-retirement benefits
    
    
    
    57
    
    
    
    
    41Derivative contracts
    
    
    
    29
    
    
    
    
    9Other
    
    
    
    9
    
    
    
    
    15358
    
    
    
    
    282
    114




---



##### 



Agrium  2007 annual report
  17. Employee Future Benefits
 Obligations and assets
    
    
    Defined Benefit Pension Plans
    
    
    
    Post-retirement Benefit Plans2007
    
    
    
    2006
    
    
    2005
    
    
    
    2007
    
    
    
    2006
    
    
    2005Change in accrued benefit obligationsBalance, beginning of year
    
    
    
    184
    
    
    
    
    177
    
    
    
    145
    
    
    
    
    82
    
    
    
    
    44
    
    
    
    48Obligations associated
with acquisitions (a)
    
    
    
    -
    
    
    
    
    4
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Foreign exchange on
Canadian obligations
    
    
    
    18
    
    
    
    
    -
    
    
    
    2
    
    
    
    
    10
    
    
    
    
-
    
    
    
    -Interest cost
    
    
    
    12
    
    
    
    
    10
    
    
    
    9
    
    
    
    
    6
    
    
    
    
    3
    
    
    
    2Service cost
    
    
    
    8
    
    
    
    
    7
    
    
    
    5
    
    
    
    
    5
    
    
    
    
    3
    
    
    
    2Actuarial (gain) loss
    
    
    
    (8
    )
    
    
    
    (11
    )
    
    
    23
    
    
    
    
    (11
    )
    
    
    
    32
    
    
    
    6Amendments
    
    
    
    -
    
    
    
    
    4
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    (12
    )Transfer from other plans
    
    
    
    -
    
    
    
    
    1
    
    
    
    -
    
    
    
    
    (1
    )
    
    
    
    1
    
    
    
    -Curtailment gain (b)
    
    
    
    (13
    )
    
    
    
    -
    
    
    
    -
    
    
    
    
    -
    
    
    
    

    -
    
    
    
    -Benefits paid
    
    
    
    (9
    )
    
    
    
    (8
    )
    
    
    (7
    )
    
    
    
    (2
    )
    
    
    
    (1
    )
    
    
    (2
    )Balance, end of year
    
    
    
    192
    
    
    
    
    184
    
    
    
    177
    
    
    
    
    89
    
    
    
    
    82
    
    
    
    44Change in plan assetsFair value, beginning of year
    
    
    
    140
    
    
    
    
    126
    
    
    
    106
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Assets associated
with acquisitions (a)
    
    
    
    -
    
    
    
    
    3
    
    
    
    -
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Foreign exchange on
Canadian assets
    
    
    
    13
    
    
    
    
    -
    
    
    
    2
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Actual return on plan assets
    
    
    
    13
    
    
    
    
    10
    
    
    
    12
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Employer contributions
    
    
    
    9
    
    
    
    
    9
    
    
    
    13
    
    
    
    
    2
    
    
    
    
    -
    
    
    
    -Benefits paid
    
    
    
    (9
    )
    
    
    
    (8
    )
    
    
    (7
    )
    
    
    
    (2
    )
    
    
    

    -
    
    
    
    -Fair value, end of year
    
    
    
    166
    
    
    
    
    140
    
    
    
    126
    
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Unfunded status
    
    
    
    26
    
    
    
    
    44
    
    
    
    51
    
    
    
    
    89
    
    
    
    
    82
    
    
    
    44Unrecognized net loss
    
    
    
    (19
    )
    
    
    
    (31
    )
    
    
    (46
    )
    
    
    
    (42
    )
    
    
    
    (48
    )
    
    
    (17
    )Unrecognized prior service cost
    
    
    
    (5
    )
    
    
    
    (5
    )
    
    
    -
    
    
    
    
    10
    
    
    
    
    9
    
    
    
    11Accrued employee future
benefit liability
    
    
    
    2
    
    
    
    
    8
    
    
    
    5
    
    
    
    
    57
    
    
    
    
    43
    
    
    
    38Amounts recognized in the
consolidated balance sheets
consist of:Other assets: Prepaid employee
future benefits
    
    
    
    (4
    )
    
    
    
    (5
    )
    
    
    (5
    )
    
    
    
    -
    
    
    
    
    -
    
    
    
    -Current liabilities
    
    
    
    -
    
    
    
    
    1
    
    
    
    2
    
    
    
    
    -
    
    
    
    
    2
    
    
    
    1Other liabilities
    
    
    
    6
    
    
    
    
    12
    
    
    
    8
    
    
    
    
    57
    
    
    
    
    41
    
    
    
    372
    
    
    
    
    8
    
    
    
    5
    
    
    
    
    57
    
    
    
    
    43
    
    
    
    38
 (a)
    
    Obligations and assets associated with acquisitions relate to the Corporations acquisition of
Royster-Clark Ltd.(b)
    
    During the third quarter the Corporation recognized a curtailment gain of $10-million relating
to its U.S. defined benefit pension plan.
    115




---



##### 



Agrium  2007 annual report
  Defined
    
    
    
    Post-Benefit
    
    
    
    retirementPension
    
    
    
    BenefitExpected benefit payments
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plans
    
    
    
    Plans
    
    
    Total2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    2
    
    
    
    112009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    2
    
    
    
    112010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    
    2
    
    
    
    112011
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    2
    
    
    
    122012
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    3
    
    
    
    142013 through 2017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62
    
    
    
    
    21
    
    
    
    83Actuarial calculations of expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    2007
    
    
    
    2006
    
    
    2005Defined benefit pension plansService cost for benefits earned during the year
    
    
    
    
    
    
    8
    
    
    
    
    7
    
    
    
    5Interest cost on accrued benefit obligations
    
    
    
    
    
    
    12
    
    
    
    
    10
    
    
    
    9Expected return on plan assets
    
    
    
    
    
    
    (10
    )
    
    
    
    (9
    )
    
    
    (8
    )Net amortization and deferral
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    3
    
    
    
    1Curtailment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10
    )
    
    
    
    -
    
    
    
    -Net expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    11
    
    
    
    7Post-retirement benefit plansService cost for benefits earned during the year
    
    
    
    
    
    
    5
    
    
    
    
    3
    
    
    
    2Interest cost on accrued benefit obligations
    
    
    
    
    
    
    6
    
    
    
    
    3
    
    
    
    2Net amortization and deferral
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    -
    
    
    
    1Net expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    6
    
    
    
    5Defined contribution pension plans
    
    
    
    
    
    
    18
    
    
    
    
    14
    
    
    
    11Total expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    
    31
    
    
    
    23Actuarial assumptions (percent)
    
    
    Future Benefits Obligation
    
    
    
    Future Benefits Expense2007
    
    
    
    2006
    
    
    2005
    
    
    
    2007
    
    
    
    2006
    
    
    2005Defined benefit pension plansDiscount rate
    
    
    
    6
    
    
    
    
    5
    
    
    
    5
    
    
    
    
    5
    
    
    
    
    5
    
    
    
    6Long-term rate of return on assets
    
    
    
    -
    
    
    
    
    -
    
    
    
    -

    
    
    
    
    7
    
    
    
    
    7
    
    
    
    8Rate of increase in
compensation levels
    
    
    
    4
    
    
    
    
    4
    
    
    
    4
    
    
    
    
    4
    
    
    
    
    4
    
    
    
    4Post-retirement benefit plansDiscount rate
    
    
    
    5
    
    
    
    
    5
    
    
    
    5
    
    
    
    
    5
    
    
    
    
    5
    
    
    
    6Assumed and ultimate health care cost trend rates
    
    
    
    
    2007
    
    
    
    2006
    
    
    2005Health care cost trend rate assumed for the next fiscal year
    
    
    
    
    
    
    8
    
    
    
    
    9
    
    
    
    11Ultimate health care cost trend rate
    
    
    
    
    
    
    5
    
    
    
    
    5
    
    
    
    5Fiscal year the rate reaches the ultimate trend rate
    
    
    
    
    
    
    2014
    
    
    
    
    2014
    
    
    
    2009
    116




---



##### 




 
 One
    
    
    OnePercentage
    
    
    PercentagePoint
    
    
    PointEffect on assumed health care cost trend rate
    
    Increase
    
    
    DecreaseEffect on accumulated post-retirement benefit

obligation as of September 30, 2007
    
    
    15
    
    
    
    (11
    )Effect on total of service and interest cost
    
    
    2
    
    
    
    (1
    )
 Asset allocation and investment strategy
  Defined benefit plans  asset allocation
    
    Target allocation
    
    
    Plan assetsAsset categories (percent), at September 30,
    
    
    2008
    
    
    
    2007
    
    
    
    2006Equity securities
    
    
    50 to 74
    
    
    
    65
    
    
    
    67Debt securities
    
    
    26 to 50
    
    
    
    32
    
    
    
    30Cash and other
    
    
    0 to 10
    
    
    
    3
    
    
    
    3
   18. Asset Retirement Obligations
 2007
          
          
          
          2006Balance, beginning
              of year
          
          
          
          71
          
          
          
          
          60Accretion, included
              in Other expenses
          
          
          
          5
          
          
          
          
          5Additions
          
          
          
          -
          
          
          
          
          8Settlements
          
          
          
          (1
          )
          
          
          
          (2
          )Foreign exchange
          
          
          
          9
          
          
          
          
          -Balance, end of year
          
          
          
          84
          
          
          
          
          71
  19. Stock-based Compensation
 Stock Options and Tandem Stock Appreciation Rights Plan (TSARs)




---



##### 




 
 2007
          
          
          
          2006
          
          
          2005Weighted-
          
          
          
          
          
          
          
          Weighted-
          
          
          
          
          
          
          Weighted-avg.
          
          
          
          
          
          
          
          avg.
          
          
          
          
          
          
          avg.Options
          
          
          exercise
          
          
          
          Options
          
          
          exercise
          
          
          Options
          
          
          exerciseoutstanding
          
          
          price
          
          
          
          outstanding
          
          
          price
          
          
          outstanding
          
          
          price(millions)
          
          
          (C$)
          
          
          
          (millions)
          
          
          (C$)
          
          
          (millions)
          
          
          (C$)Outstanding,beginning of year
          
          
          
          4
          
          
          
          18.85
          
          
          
          
          6
          
          
          
          17.26
          
          
          
          8
          
          
          
          16.62Granted
          
          
          
          -
          
          
          
          46.15
          
          
          
          
          1
          
          
          
          28.06
          
          
          
          2
          
          
          
          19.99Exercised
          
          
          
          (1
          )
          
          
          17.82
          
          
          
          
          (3
          )
          
          
          17.21
          
          
          
          (4
          )
          
          
          16.79Outstanding, end
              of year
          
          
          
          3
          
          
          
          23.65
          
          
          
          
          4
          
          
          
          18.85
          
          
          
          6
          
          
          
          17.26Exercisable, end
              of year
          
          
          
          2
          
          
          
          17.43
          
          
          
          
          3
          
          
          
          16.69
          
          
          
          4
          
          
          
          16.72
 At
            December 31, 2007
          
          
          Options
            Outstanding
          
          
          Options
            ExercisableWeighted-avg.
          
          
          Weighted-
          
          
          
          
          
          
          Weighted-Number
          
          
          remaining
          
          
          avg.
          
          
          Number
          
          
          avg.outstanding
          
          
          contractual
          
          
          exercise
          
          
          exercisable
          
          
          exerciseat
            year-end
          
          
          life
          
          
          price
          
          
          at
            year-end
          
          
          priceRange of Exercise Prices (C$)
          
          
          (millions)
          
          
          (years)
          
          
          (C$)
          
          
          (millions)
          
          
          (C$)Less than 11.86
          
          
          
          -
          
          
          
          2
          
          
          
          11.76
          
          
          
          -
          
          
          
          11.7611.86 to 15.85
          
          
          
          1
          
          
          
          4
          
          
          
          14.76
          
          
          
          1
          
          
          
          14.7615.86 to 20.15
          
          
          
          1
          
          
          
          6
          
          
          
          18.18
          
          
          
          1
          
          
          
          17.6220.16 to 28.46
          
          
          
          1
          
          
          
          7
          
          
          
          25.02
          
          
          
          -
          
          
          
          22.8928.47 to 50.60
          
          
          
          -
          
          
          
          9
          
          
          
          46.14
          
          
          
          -
          
          
          
          -3
          
          
          
          6
          
          
          
          23.65
          
          
          
          2
          
          
          
          17.43
  Stock Appreciation Rights Plan (SARs)
  Performance Share Unit Plan (PSUs)




---



##### 



Agrium  2007 annual report
  Directors Deferred Share Unit Plans (DSUs)
    20. Commitments
 2008
    
    
    2009
    
    
    2010
    
    
    2011
    
    
    2012Cost of productOperating lease commitments
    
    
    35
    
    
    
    26
    
    
    
    21
    
    
    
    14
    
    
    
    11Natural gas
and other (a)
    
    
    633
    
    
    
    46
    
    
    
    47
    
    
    
    50
    
    
    
    52Power, sulphuric acid and other
    
    
    147
    
    
    
    33
    
    
    
    31
    
    
    
    29
    
    
    
    27OtherEgypt nitrogen facilities construction
(a)
    
    
    627
    
    
    
    205
    
    
    
    16
    
    
    
    -
    
    
    
    -Long-term debt and capital lease repayments
(b)
    
    
    51
    
    
    
    51
    
    
    
    102
    
    
    
    273
    
    
    
    143Total
    
    
    1,493
    
    
    
    361
    
    
    
    217
    
    
    
    366
    
    
    
    233
 (a)
    
    Commitments related to the Egypt
nitrogen project are stated at 100 percent.(b)
    
    Payments include interest.
    119




---



##### 



Agrium  2007 annual report
  21. Guarantees
  22. Contingencies  Environmental remediation
 Litigation
  Other
  23. Financial Instruments  Fair Value
    120




---



##### 



Agrium  2007 annual report
  Hedges
  Hedges of future foreign currency obligations
  2007



    
    

    
    
    
    2006Foreign
    
    
    
    
    
    
    Fair value
    
    

    Foreign
    
    
    
    
    
    
    Fair valuecurrencies
    
    
    
    
    
    
    assets
    
    

    currencies
    
    
    
    
    
    
    assetsbought (sold)
    
    
    Maturities
    
    
    (liabilities)
    
    
    bought (sold)
    
    
    Maturities
    
    
    (liabilities)USD/CAD
Forwards (a)

    
    
    -
    
    
    
    -
    
    
    
    -
    
    


    USD (86)

    
    

    

    2007
    
    
    
    (1
    )EUR/CAD
Forwards (b)
    
    EUR 1
    

    

    
    2008
    
    
    
    -
    
    


    EUR 4
    

    
    
    2007
    
    
    
    1USD/EUR
Forwards (c)
    
    EUR 476
    
    

    
    2010
    
    
    
    47
    
    

    
    -
    
    
    
    -
    
    
    
    -USD/CAD
Options (d)
    
    
    -
    
    
    
    -
    
    
    
    -
    
    

    USD (3)
    
    

    
    2007
    
    
    
    -47
    
    

    
    
    
    
    
    
    
    
    
    -
 Contract
Rates:(a)
    
    2007: n/a; 2006: 1.1464 to 1.1510.(b)
    
    2007: 1.4554 to 1.4758; 2006: 1.3790 to 1.4194.(c)
    
    2007: 1.3492 to 1.3730; 2006: n/a (this contract relates to construction costs of the Egypt nitrogen project).(d)
    
    2007: n/a; 2006: 1.1300 to 1.1530.
  Hedges of interest rates
  Risk management - commodity prices
    121




---



##### 




   a) Natural gas
  Natural
            gas derivative contracts outstanding at December 312007
          
          
          
          2006Fair
            value
          
          
          
          
          
          
          
          
          
          
          
          Fair valueNotional
          
          
          
          
          
          
          assets
          
          
          
          Notional
          
          
          
          
          
          
          assets(BCF)
          
          
          Maturities
          
          
          (liabilities)
          
          
          
          (BCF)
          
          
          Maturities
          
          
          (liabilities)NYMEX contractsSwaps (a)
          
          
          
          41
          
          
          
          2008 to 
2011
          
          
          
          (8
          )
          
          
          
          13
          
          
          
          2007 to 2010
          
          
          
          (12
          )Collars (swap with
              options) (b)
          
          
          
          5
          
          
          
          2008 to 2009
          
          
          
          -
          
          
          
          
          21
          
          
          
          2007 to 2009
          
          
          
          5Call spreads (c)
          
          
          
          9
          
          
          
          2008 to 2009
          
          
          
          11
          
          
          
          
          17
          
          
          
          2007 to 2009
          
          
          
          14AECO contractsSwaps (d)
          
          
          
          7
          
          
          
          2008
          
          
          
          1
          
          
          
          
          8
          
          
          
          2007
          
          
          
          (5
          )Collars (swap with
              options) (e)
          
          
          
          -
          
          
          
          -
          
          
          
          -
          
          
          
          
          2
          
          
          
          2007
          
          
          
          -62
          
          
          
          
          
          
          
          4
          
          
          
          
          61
          
          
          
          
          
          
          
          2
 Contract Rates:(a)
    
    2007: 7.320 to 9.475; 2006: 8.095 to 9.475.(b)
    
    Swap - 2007: 8.400 to 9.400; 2006: 8.400 to 9.875. Put
strike - 2007: 8.400 to 9.400; 2006: 8.400 to 9.875. Call
strike - 2007: 9.950 to 10.900; 2006: 9.950 to 11.700.(c)
    
    Lower floor strike price - 2007: 5.410 to 5.820; 2006: 5.410 to 6.175.
Upper floor strike price - 2007: 7.050 to 7.920; 2006: 7.050 to 8.680.(d)
    
    2007: 6.070 to 6.645; 2006 - 7.213 to 9.034.(e)
    
    Put strike - 2007: n/a; 2006: 8.472 to 8.497. Call strike - 2007: n/a; 2006: 11.003 to 11.247.
 b) Power
 Power
            derivative contracts outstanding at December 312007
          
          
          
          2006Fair
            value
          
          
          
          
          
          
          
          
          
          
          
          Fair valueNotional
          
          
          
          
          
          
          assets
          
          
          
          Notional
          
          
          
          
          
          
          assets(GWh)
          
          
          Maturities
          
          
          (liabilities)
          
          
          
          (GWh)
          
          
          Maturities
          
          
          (liabilities)Swaps (a)
          
          
          
          141
          
          
          
          2008
          
          
          
          4
          
          
          
          
          281
          
          
          
          2007 to 2008
          
          
          
          6
 Contract Rates:(a)
    
    2007: 47.35 to 61.41; 2006: 47.35 to 68.50.




---



##### 




   Interest Rate Risk
  Credit Risk
  24. Segmentation
    2007AdvancedRetail
          
          
          Wholesale
          
          
          Technologies
          
          
          Other
          
          
          TotalNet sales -
              external
          
          
          
          2,458
          
          
          
          2,595
          
          
          
          217
          
          
          
          -
          
          
          
          5,270- inter-segment
          
          
          
          8
          
          
          
          250
          
          
          
          32
          
          
          
          (290
          )
          
          
          -Total net sales
          
          
          
          2,466
          
          
          
          2,845
          
          
          
          249
          
          
          
          (290
          )
          
          
          5,270Cost of product
          
          
          
          1,790
          
          
          
          1,971
          
          
          
          194
          
          
          
          (283
          )
          
          
          3,672Gross profit
          
          
          
          676
          
          
          
          874
          
          
          
          55
          
          
          
          (7
          )
          
          
          1,598ExpensesSelling
          
          
          
          442
          
          
          
          27
          
          
          
          10
          
          
          
          (8
          )
          
          
          471General and administrative
          
          
          
          21
          
          
          
          22
          
          
          
          18
          
          
          
          64
          
          
          
          125Depreciation and
              amortization
          
          
          
          33
          
          
          
          119
          
          
          
          16
          
          
          
          5
          
          
          
          173Royalties and other
              taxes
          
          
          
          14
          
          
          
          29
          
          
          
          -
          
          
          
          -
          
          
          
          43Other (income) expenses
          
          
          
          (11
          )
          
          
          10
          
          
          
          (2
          )
          
          
          74
          
          
          
          71Earnings (loss) before
              interest expense and income taxes
          
          
          
          177
          
          
          
          667
          
          
          
          13
          
          
          
          (142
          )
          
          
          715Net working capital
          
          
          
          435
          
          
          
          931
          
          
          
          44
          
          
          
          911
          
          
          
          2,321Property, plant and
              equipment
          
          
          
          181
          
          
          
          1,448
          
          
          
          103
          
          
          
          47
          
          
          
          1,779Total assets
          
          
          
          1,850
          
          
          
          4,305
          
          
          
          372
          
          
          
          (688
          )
          
          
          5,839Capital expenditures
          
          
          
          41
          
          
          
          458
          
          
          
          3
          
          
          
          2
          
          
          
          504




---



##### 




   2006AdvancedRetail
    
    
    Wholesale
    
    
    Technologies
    
    
    Other
    
    
    TotalNet sales - external
    
    
    
    1,975
    
    
    
    2,126
    
    
    
    92
    
    
    
    -
    
    
    
    4,193- inter-segment
    
    
    
    -
    
    
    
    143
    
    
    
    9
    
    
    
    (152
    )
    
    
    -Total net sales
    
    
    
    1,975
    
    
    
    2,269
    
    
    
    101
    
    
    
    (152
    )
    
    
    4,193Cost of product
    
    
    
    1,480
    
    
    
    1,834
    
    
    
    82
    
    
    
    (159
    )
    
    
    3,237Gross profit
    
    
    
    495
    
    
    
    435
    
    
    
    19
    
    
    
    7
    
    
    
    956ExpensesSelling
    
    
    
    361
    
    
    
    30
    
    
    
    5
    
    
    
    (6
    )
    
    
    390General and administrative
    
    
    
    23
    
    
    
    29
    
    
    
    7
    
    
    
    37
    
    
    
    96Depreciation and amortization
    
    
    
    30
    
    
    
    125
    
    
    
    8
    
    
    
    6
    
    
    
    169Asset impairment
    
    
    
    -
    
    
    
    136
    
    
    
    -
    
    
    
    -
    
    
    
    136Royalties and other taxes
    
    
    
    11
    
    
    
    8
    
    
    
    -
    
    
    
    1
    
    
    
    20Other (income) expenses
    
    
    
    (25
    )
    
    
    16
    
    
    
    -
    
    
    
    82
    
    
    
    73Earnings (loss) before interest expense and income taxes
    
    
    
    95
    
    
    
    91
    
    
    
    (1
    )
    
    
    (113
    )
    
    
    72Net working capital
    
    
    
    284
    
    
    
    559
    
    
    
    (29
    )
    
    
    (198
    )
    
    
    616Property, plant and equipment
    
    
    
    176
    
    
    
    1,019
    
    
    
    99
    
    
    
    38
    
    
    
    1,332Total assets
    
    
    
    1,104
    
    
    
    2,911
    
    
    
    277
    
    
    
    (1,027
    )
    
    
    3,265Capital expenditures
    
    
    
    22
    
    
    
    164
    
    
    
    1
    
    
    
    22
    
    
    
    209
 2005AdvancedRetail
    
    
    Wholesale
    
    
    Technologies
    
    
    Other
    
    
    TotalNet sales - external
    
    
    
    1,242
    
    
    
    2,052
    
    
    
    -
    
    
    
    -
    
    
    
    3,294- inter-segment
    
    
    
    -
    
    
    
    144
    
    
    
    -
    
    
    
    (144
    )
    
    
    -Total net sales
    
    
    
    1,242
    
    
    
    2,196
    
    
    
    -
    
    
    
    (144
    )
    
    
    3,294Cost of product
    
    
    
    895
    
    
    
    1,501
    
    
    
    -
    
    
    
    (140
    )
    
    
    2,256Gross profit
    
    
    
    347
    
    
    
    695
    
    
    
    -
    
    
    
    (4
    )
    
    
    1,038ExpensesSelling
    
    
    
    239
    
    
    
    20
    
    
    
    -
    
    
    
    (5
    )
    
    
    254General and administrative
    
    
    
    10
    
    
    
    25
    
    
    
    -
    
    
    
    44
    
    
    
    79Depreciation and amortization
    
    
    
    17
    
    
    
    122
    
    
    
    -
    
    
    
    7
    
    
    
    146Royalties and other taxes
    
    
    
    7
    
    
    
    35
    
    
    
    -
    
    
    
    3
    
    
    
    45Other (income) expenses
    
    
    
    (22
    )
    
    
    1
    
    
    
    -
    
    
    
    35
    
    
    
    14Earnings (loss) before interest expense and income taxes
    
    
    
    96
    
    
    
    492
    
    
    
    -
    
    
    
    (88
    )
    
    
    500Net working capital
    
    
    
    418
    
    
    
    660
    
    
    
    -
    
    
    
    (322
    )
    
    
    756Property, plant and equipment
    
    
    
    85
    
    
    
    1,175
    
    
    
    -
    
    
    
    25
    
    
    
    1,285Total assets
    
    
    
    753
    
    
    
    2,739
    
    
    
    -
    
    
    
    (707
    )
    
    
    2,785Capital expenditures
    
    
    
    18
    
    
    
    151
    
    
    
    -
    
    
    
    6
    
    
    
    175




---



##### 



Agrium  2007 annual report
  2007
    
    
    
    2006
    
    
    2005Net
    
    
    Cost of
    
    
    Gross
    
    
    
    Net
    
    
    Cost of
    
    
    Gross
    
    
    Net
    
    
    Cost of
    
    
    GrossSales
    
    
    Product
    
    
    Profit
    
    
    
    Sales
    
    
    Product
    
    
    Profit
    
    
    Sales
    
    
    Product
    
    
    ProfitRetailCrop nutrients
    
    
    
    1,453
    
    
    
    1,118
    
    
    
    335
    
    
    
    
    1,065
    
    
    
    848
    
    
    
    217
    
    
    
    626
    
    
    
    485
    
    
    
    141Crop
protection products
    
    
    
    619
    
    
    
    438
    
    
    
    181
    
    
    
    
    591
    
    
    
    437
    
    
    
    154
    
    
    
    458
    
    
    
    328
    
    
    
    130Seed,
services and other
    
    
    
    394
    
    
    
    234
    
    
    
    160
    
    
    
    
    319
    
    
    
    195
    
    
    
    124
    
    
    
    158
    
    
    
    82
    
    
    
    762,466
    
    
    
    1,790
    
    
    
    676
    
    
    
    
    1,975
    
    
    
    1,480
    
    
    
    495
    
    
    
    1,242
    
    
    
    895
    
    
    
    347WholesaleNitrogenAmmonia
    
    
    
    508
    
    
    
    383
    
    
    
    125
    
    
    
    
    440
    
    
    
    387
    
    
    
    53
    
    
    
    613
    
    
    
    471
    
    
    
    142Urea
    
    
    
    765
    
    
    
    439
    
    
    
    326
    
    
    
    
    681
    
    
    
    484
    
    
    
    197
    
    
    
    732
    
    
    
    459
    
    
    
    273UAN solutions,
sulphate, other
    
    
    
    462
    
    
    
    352
    
    
    
    110
    
    
    
    
    255
    
    
    
    214
    
    
    
    41
    
    
    
    277
    
    
    
    213
    
    
    
    64Total Nitrogen
    
    
    
    1,735
    
    
    
    1,174
    
    
    
    561
    
    
    
    
    1,376
    
    
    
    1,085
    
    
    
    291
    
    
    
    1,622
    
    
    
    1,143
    
    
    
    479Phosphate
    
    
    
    466
    
    
    
    348
    
    
    
    118
    
    
    
    
    298
    
    
    
    271
    
    
    
    27
    
    
    
    319
    
    
    
    260
    
    
    
    59Potash
    
    
    
    305
    
    
    
    138
    
    
    
    167
    
    
    
    
    213
    
    
    
    115
    
    
    
    98
    
    
    
    255
    
    
    
    98
    
    
    
    157Product purchased
for resale
    
    
    
    339
    
    
    
    311
    
    
    
    28
    
    
    
    
    382
    
    
    
    363
    
    
    
    19
    
    
    
    -
    
    
    
    -
    
    
    
    -2,845
    
    
    
    1,971
    
    
    
    874
    
    
    
    
    2,269
    
    
    
    1,834
    
    
    
    435
    
    
    
    2,196
    
    
    
    1,501
    
    
    
    695Advanced Technologies
Controlled-
release products
    
    
    
    208
    
    
    
    162
    
    
    
    46
    
    
    
    
    68
    
    
    
    56
    
    
    
    12
    
    
    
    -
    
    
    
    -
    
    
    
    -Other
    
    
    
    41
    
    
    
    32
    
    
    
    9
    
    
    
    
    33
    
    
    
    26
    
    
    
    7
    
    
    
    -
    
    
    
    -
    
    
    
    -249
    
    
    
    194
    
    
    
    55
    
    
    
    
    101
    
    
    
    82
    
    
    
    19
    
    
    
    -
    
    
    
    -
    
    
    
    -Other inter-segment
eliminations
    
    
    
    (290
    )
    
    
    (283
    )
    
    
    (7
    )
    
    
    
    (152
    )
    
    
    (159
    )
    
    
    7
    
    
    
    (144
    )
    
    
    (140
    )
    
    
    (4
    )Total
    
    
    
    5,270
    
    
    
    3,672
    
    
    
    1,598
    
    
    
    
    4,193
    
    
    
    3,237
    
    
    
    956
    
    
    
    3,294
    
    
    
    2,256
    
    
    
    1,0382007
    
    
    
    2006
    
    
    2005Net
    
    
    
    
    
    
    
    
    
    
    
    Net
    
    
    
    
    
    
    
    
    
    
    NetSales
    
    
    PP&E
    
    
    Goodwill
    
    
    
    Sales
    
    
    PP&E
    
    
    Goodwill
    
    
    Sales
    
    
    PP&E
    
    
    GoodwillCanada
    
    
    
    1,033
    
    
    
    824
    
    
    
    17
    
    
    
    
    652
    
    
    
    706
    
    
    
    17
    
    
    
    745
    
    
    
    760
    
    
    
    -United States
    
    
    
    3,659
    
    
    
    381
    
    
    
    161
    
    
    
    
    2,954
    
    
    
    400
    
    
    
    157
    
    
    
    1,846
    
    
    
    293
    
    
    
    8Argentina
    
    
    
    373
    
    
    
    221
    
    
    
    -
    
    
    
    
    251
    
    
    
    226
    
    
    
    -
    
    
    
    222
    
    
    
    232
    
    
    
    -Other
    
    
    
    205
    
    
    
    353
    
    
    
    -
    
    
    
    
    336
    
    
    
    -
    
    
    
    -
    
    
    
    481
    
    
    
    -
    
    
    
    -5,270
    
    
    
    1,779
    
    
    
    178
    
    
    
    
    4,193
    
    
    
    1,332
    
    
    
    174
    
    
    
    3,294
    
    
    
    1,285
    
    
    
    8
    125




---



##### 



Agrium  2007 annual report
  25. Joint Ventures
   Balance Sheets
    
    
    2007
    
    
    
    2006Current assets
    
    
    
    82
    
    
    
    
    43Long-term assets
    
    
    
    210
    
    
    
    
    217292
    
    
    
    
    260Current liabilities
    
    
    
    59
    
    
    
    
    32Long-term liabilities
    
    
    
    4
    
    
    
    
    663
    
    
    
    
    38Proportionate share of net assets of the
joint ventures
    
    
    
    229
    
    
    
    
    222Statements of Operations
    
    
    2007
    
    
    
    2006
    
    
    2005Net sales
    
    
    
    261
    
    
    
    
    183
    
    
    
    169Expenses
    
    
    
    173
    
    
    
    
    85
    
    
    
    93Income taxes
    
    
    
    32
    
    
    
    
    36
    
    
    
    31Proportionate share of net earnings of the joint ventures
    
    
    
    56
    
    
    
    
    62
    
    
    
    45Statements of Cash Flows
    
    
    2007
    
    
    
    2006
    
    
    2005Operating activities
    
    
    
    51
    
    
    
    
    60
    
    
    
    85Investing activities
    
    
    
    (5
    )
    
    
    
    (6
    )
    
    
    (4
    )Financing activities
    
    
    
    (47
    )
    
    
    
    (67
    )
    
    
    (139
    )Proportionate share of decrease in cash and cash equivalents of joint ventures
    
    
    
    (1
    )
    
    
    
    (13
    )
    
    
    (58
    )
   26. Related Party Transactions
    126