EXHIBIT 99.3
 AGRIUM INC.
 2008
 AUDITED ANNUAL FINANCIAL
STATEMENTS AND NOTES




---



##### 



2008 Annual Report / Agrium
    
    95
  Financial Reporting Responsibilities
   Managements Report on Internal Control Over Financial Reporting
    -s- Michael M. Wilson
    
    -s- Bruce G. WatermanMichael M. Wilson
    
    Bruce G. WatermanPresident & Chief Executive Officer
    
    Senior Vice President, Finance & Chief Financial OfficerCalgary, CanadaFebruary 25, 2009




---



##### 



96
    
    Agrium / 2008 Annual Report
 Reports of Independent Registered Public Accounting Firm
 To the Shareholders and Board of Directors of Agrium Inc.




---



##### 



2008 Annual Report / Agrium
    
    97
 To the Shareholders and Board of Directors of Agrium Inc.




---



##### 



98
    
    Agrium / 2008 Annual Report
  2008
    
    
    
    2007
    
    
    2006Years ended December 31(millions of U.S. dollars, except per share amounts)Sales
    
    
    
    10,268
    
    
    
    
    5,491
    
    
    
    4,373Direct freight
    
    
    
    237
    
    
    
    
    221
    
    
    
    180Net sales
    
    
    
    10,031
    
    
    
    
    5,270
    
    
    
    4,193Cost of product
    
    
    
    6,592
    
    
    
    
    3,672
    
    
    
    3,237Inventory and purchase commitment write-down
    
    
    
    216
    
    
    
    
    
    
    
    
    Gross profit
    
    
    
    3,223
    
    
    
    
    1,598
    
    
    
    956ExpensesSelling
    
    
    
    815
    
    
    
    
    471
    
    
    
    390General and administrative
    
    
    
    192
    
    
    
    
    125
    
    
    
    96Depreciation and amortization
    
    
    
    110
    
    
    
    
    173
    
    
    
    169Potash profit and capital tax
    
    
    
    162
    
    
    
    
    28
    
    
    
    8Asset impairment (note 4)
    
    
    
    87
    
    
    
    
    
    
    
    
    136Other (income) expenses (note 5)
    
    
    
    (129
    )
    
    
    
    89
    
    
    
    85Earnings
before interest, income taxes and non-controlling interests
    
    
    
    1,986
    
    
    
    
    712
    
    
    
    72Interest on long-term debt
    
    
    
    82
    
    
    
    
    52
    
    
    
    47Other interest
    
    
    
    23
    
    
    
    
    18
    
    
    
    16Earnings
before income taxes and non-controlling interests
    
    
    
    1,881
    
    
    
    
    642
    
    
    
    9Income taxes (note 6)
    
    
    
    589
    
    
    
    
    204
    
    
    
    (24
    )Non-controlling interests
    
    
    
    (30
    )
    
    
    
    (3
    )
    
    
    Net earnings
    
    
    
    1,322
    
    
    
    
    441
    
    
    
    33Earnings per share (note 7)Basic
    
    
    
    8.39
    
    
    
    
    3.28
    
    
    
    0.25Diluted
    
    
    
    8.34
    
    
    
    
    3.25
    
    
    
    0.25




---



##### 



2008 Annual Report / Agrium
    
    99
  2008
    
    
    
    2007
    
    
    2006Years ended December 31(millions of U.S. dollars)OperatingNet earnings
    
    
    
    1,322
    
    
    
    
    441
    
    
    
    33Items not affecting cashInventory and purchase commitment write-down
    
    
    
    216
    
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    
    218
    
    
    
    
    173
    
    
    
    169Asset impairment
    
    
    
    87
    
    
    
    
    
    
    
    
    136Stock-based compensation
    
    
    
    (25
    )
    
    
    
    113
    
    
    
    30Unrealized loss on derivative contracts
    
    
    
    77
    
    
    
    
    6
    
    
    
    6Unrealized foreign exchange (gain) loss
    
    
    
    (6
    )
    
    
    
    (50
    )
    
    
    6Future income taxes
    
    
    
    363
    
    
    
    
    119
    
    
    
    (102
    )Non-controlling interests
    
    
    
    (30
    )
    
    
    
    (3
    )
    
    
    Other
    
    
    
    (81
    )
    
    
    
    47
    
    
    
    (70
    )Net changes in non-cash working capital (note 8)
    
    
    
    (1,097
    )
    
    
    
    (352
    )
    
    
    (53
    )Cash provided by operating activities
    
    
    
    1,044
    
    
    
    
    494
    
    
    
    155InvestingAcquisitions, net of cash acquired
    
    
    
    (2,740
    )
    
    
    
    
    
    
    
    (651
    )Capital expenditures
    
    
    
    (506
    )
    
    
    
    (454
    )
    
    
    (209
    )Proceeds from disposal of property, plant, equipment
and investments
    
    
    
    27
    
    
    
    
    17
    
    
    
    93Investment in equity investee
    
    
    
    
    
    
    
    
    (63
    )
    
    
    Other
    
    
    
    (156
    )
    
    
    
    (61
    )
    
    
    28Cash used in investing activities
    
    
    
    (3,375
    )
    
    
    
    (561
    )
    
    
    (739
    )FinancingBank indebtedness
    
    
    
    261
    
    
    
    
    (61
    )
    
    
    212Long-term debt issued
    
    
    
    1,620
    
    
    
    
    132
    
    
    
    296Transaction costs on long-term debt
    
    
    
    (12
    )
    
    
    
    (13
    )
    
    
    Repayment of long-term debt
    
    
    
    (795
    )
    
    
    
    
    
    
    
    (137
    )Contributions from non-controlling interests
    
    
    
    171
    
    
    
    
    86
    
    
    
    3Share dividends paid
    
    
    
    (18
    )
    
    
    
    (15
    )
    
    
    (14
    )Shares issued, net of issuance costs
    
    
    
    4
    
    
    
    
    1,337
    
    
    
    33Shares repurchased
    
    
    
    (35
    )
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    1
    
    
    
    Cash provided by financing activities
    
    
    
    1,196
    
    
    
    
    1,467
    
    
    
    393(Decrease) increase in cash and cash equivalents
    
    
    
    (1,135
    )
    
    
    
    1,400
    
    
    
    (191
    )Cash and cash equivalents  beginning of year
    
    
    
    1,509
    
    
    
    
    109
    
    
    
    300Cash and
cash equivalents  end of year
    
    
    
    374
    
    
    
    
    1,509
    
    
    
    109




---



##### 



100
    
    Agrium / 2008 Annual Report
  2008
    
    
    
    2007As at December 31(millions of U.S. dollars, except share data)ASSETSCurrent assetsCash and cash equivalents (note 8)
    
    
    
    374
    
    
    
    
    1,509Accounts receivable (note 9)
    
    
    
    1,223
    
    
    
    
    821Inventories (note 10)
    
    
    
    3,047
    
    
    
    
    961Prepaid expenses and deposits
    
    
    
    475
    
    
    
    
    2975,119
    
    
    
    
    3,588Property, plant and equipment (note 11)
    
    
    
    2,036
    
    
    
    
    1,772Intangibles (note 12)
    
    
    
    653
    
    
    
    
    73Goodwill (note 13)
    
    
    
    1,783
    
    
    
    
    178Investment in equity investee (note 14)
    
    
    
    71
    
    
    
    
    78Other assets (note 15)
    
    
    
    156
    
    
    
    
    1439,818
    
    
    
    
    5,832LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilitiesBank indebtedness (note 16)
    
    
    
    610
    
    
    
    
    166Accounts payable and accrued liabilities (note 17)
    
    
    
    2,200
    
    
    
    
    1,100Current portion of long-term debt
    
    
    
    1
    
    
    
    
    12,811
    
    
    
    
    1,267Long-term debt (note 16)
    
    
    
    1,621
    
    
    
    
    783Other liabilities (note 18)
    
    
    
    328
    
    
    
    
    358Future income tax liabilities (note 6)
    
    
    
    706
    
    
    
    
    237Non-controlling interests
    
    
    
    242
    
    
    
    
    995,708
    
    
    
    
    2,744Commitments, guarantees and contingencies (notes 23, 24 and 25)Shareholders equityShare capitalAuthorized: unlimited common sharesIssued and outstanding: 2008  157 million (2007  158 million)
    
    
    
    1,961
    
    
    
    
    1,972Contributed surplus
    
    
    
    8
    
    
    
    
    81,969
    
    
    
    
    1,980Retained earnings
    
    
    
    2,313
    
    
    
    
    1,024Accumulated other comprehensive income (note 19)
    
    
    
    (172
    )
    
    
    
    842,141
    
    
    
    
    1,1084,110
    
    
    
    
    3,0889,818
    
    
    
    
    5,832
 
 Approved on behalf of the Board:-s- Michael M. Wilson
    
    -s- Victor J. ZaleschukMichael M. Wilson
    
    Victor J. ZaleschukDirector
    
    Director




---



##### 



2008 Annual Report / Agrium
    
    101
  Accumulatedother
    
    
    Total(millions of U.S. dollars,
    
    
    Millions of
    
    
    
    Share
    
    
    Contributed
    
    
    Retained
    
    
    comprehensive
    
    
    shareholders'except share data)
    
    
    common shares
    
    
    
    capital
    
    
    surplus
    
    
    earnings
    
    
    income (note 19)
    
    
    equityDecember 31, 2005
    
    
    
    131
    
    
    
    
    583
    
    
    
    3
    
    
    
    584
    
    
    
    10
    
    
    
    1,180Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    33Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (1
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15
    )
    
    
    
    
    
    
    (15
    )Stock compensation exercise and
grants
    
    
    
    2
    
    
    
    
    34
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    36December 31, 2006
    
    
    
    133
    
    
    
    
    617
    
    
    
    5
    
    
    
    602
    
    
    
    9
    
    
    
    1,233Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    441
    
    
    
    
    
    
    
    441Cash flow hedges(a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3
    )
    
    
    20
    
    
    
    17Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    55Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    513Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16
    )
    
    
    
    
    
    
    (16
    )Shares issued
    
    
    
    24
    
    
    
    
    1,338
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,338Stock compensation exercise and
grants
    
    
    
    1
    
    
    
    
    17
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    20December 31, 2007
    
    
    
    158
    
    
    
    
    1,972
    
    
    
    8
    
    
    
    1,024
    
    
    
    84
    
    
    
    3,088Transition adjustment(b)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4158
    
    
    
    
    1,972
    
    
    
    8
    
    
    
    1,028
    
    
    
    84
    
    
    
    3,092Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,322
    
    
    
    
    
    
    
    1,322Cash flow hedges(c)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14
    )
    
    
    (14
    )Foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (242
    )
    
    
    (242
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,066Dividends
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (17
    )
    
    
    
    
    
    
    (17
    )Shares repurchased (note 27)
    
    
    
    (1
    )
    
    
    
    (15
    )
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    (35
    )Stock compensation exercise
and grants
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4December 31, 2008
    
    
    
    157
    
    
    
    
    1,961
    
    
    
    8
    
    
    
    2,313
    
    
    
    (172
    )
    
    
    4,110
 (a)
    Net of tax and non-controlling interests of $5-million and $7-million.(b)
    Adjustment at January 1, 2008 for adoption of accounting
standards for inventory. Net of tax of $1-million.(c)
    Net of tax and
non-controlling interest of $2-million and $7-million.




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##### 



102
    
    Agrium / 2008 Annual Report
  1. Description Of Business
  
    
    Wholesaleoperates in North and South America and Europe producing, marketing and
distributing three primary groups of nutrients: nitrogen, potash and phosphate for
agricultural and industrial customers around the world.
    
    Retailoperates in North and South America and sells crop nutrients, crop protection
products, seed and services directly to growers.
    
    Advanced Technologiesproduces and markets controlled-release nutrients, micronutrients and
plant protection products for sale to the agriculture, professional turf and ornamental
markets primarily in North America.
 2. Significant Accounting Policies
 Principles of consolidation and preparation of financial statements
    Cash and cash equivalents
  Accounts receivable and allowance for doubtful accounts
  Inventories




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##### 



2008 Annual Report / Agrium
    
    103
  Property, plant and equipment
  Intangibles
  Impairment of long-lived assets
  Goodwill
  Deferred costs
  Employee future benefits
   Environmental remediation




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##### 



104
    
    Agrium / 2008 Annual Report
  Asset retirement obligations
  Income taxes
  Revenue recognition
   Rebates
   Stock-based compensation
    Foreign currency translation




---



##### 



2008 Annual Report / Agrium
    
    105
  Hedge accounting
    Financial instruments
  Financial instrument
    
    As classified by Agrium
    

Subsequent measurement of gains or losses at each period-endclassificationAssets 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 earningsAvailable for sale financial assets
and liabilities
    
    Other assets  long-term investments;
derivatives that are cash flow hedges
    
    Fair value;
unrealized gains
and losses
recognized in OCI;
recognized
in net earnings in
the same period
that the hedged
item impacts net
earnings, on sale
of the asset or
when asset is
written down as
impairedHeld to maturity investments
    
    NoneLoans and receivables
    
    Accounts receivable
    
    Amortized cost
using the effective
interest rate
method; recognized
in net earnings, if
asset/liability is
derecognized or
asset is impairedOther financial liabilities
    
    Bank indebtedness, accounts payable,
long-term debt
  Significant accounting standard and policy changes
 Description
    
    Date and method
    
    Impactof adoptionFinancial Instruments  Disclosures requires enhanced disclosures of
the significance
of financial instruments on financial position and performance, and
the nature and
extent of financial instrument risk exposure and risk management
strategy.
    
    January 1, 2008;
prospective
    
    Additional disclosure providedFinancial Instruments  various amendments were made to existing
standards to
permit reclassification of financial assets in specified circumstances
    
    Effective for
reclassifications
made on
or after
July 1, 2008
    
    No material impact on earnings
or financial positionCapital Disclosures requires disclosure of objectives, policies and
processes for
managing capital and quantitative data about capital.
    
    January 1, 2008;
prospective
    
    Additional disclosure providedInventories provides enhanced guidance for the measurement, costing,
and
disclosures of inventories. Specifically, the standard requires
measurement of
inventories at the lower of cost and net realizable value, requires
write-ups of
subsequent
increases in net realizable value of previously impaired
inventories,
and prohibits the use of the last in, first out costing method. On
adoption, and in
accordance with the transitional provisions of the standard, the
Company reclassified
depreciation related to assets employed directly in production to
inventory.
    
    January 1, 2008;
prospective
    
    No material impact on earnings
or financial position on adoptionPension and Postretirement Benefits  Measurement Date  The
Company voluntarily
changed
the measurement date of its defined benefit pension and
postretirement
benefit plans from September 30 to December 31.
    
    January 1, 2008;
retrospective
    
    No material impact on earnings
or financial position




---



##### 



106
    
    Agrium / 2008 Annual Report
  Recent accounting pronouncements not yet adopted
 Description
    
    Date and method
    
    Impactof adoptionGoodwill and Intangible Assets establishes guidance for the
recognition, measurement,
presentation and disclosure of goodwill and intangible assets,
including guidance
on
pre-production and start-up costs, requiring that these costs be
expensed as
incurred. The current goodwill standards are carried forward unchanged.
    
    January 1, 2009; prospective
    
    No material impact on earnings
or financial positionInternational Financial Reporting Standards (IFRS)  the Canadian
Institute of
Chartered Accountants Accounting Standards Board has published its
strategic plan
for convergence of Canadian generally accepted accounting standards
with IFRS
as
issued
by the International Accounting Standards Board. The
changeover date
for Canadian publicly accountable enterprises is January 1, 2011 and
will require
restatement of comparative figures.
    
    January 1, 2011 or
earlier; in
accordance
with
IFRS 1
    
    Currently being reviewedBusiness Combinations, Consolidated Financial Statements and
Non-controlling
Interests amend previously existing standards on accounting for and
reporting
business
acquisitions
and non-controlling interests. The new standards
change
the recognition of assets and liabilities in purchase price
allocations and require
expensing of certain acquisition-related costs.
    
    January 1, 2011 or
earlier; in
accordance with IFRS 1
    
    Impact depends on nature of
acquisitions
 3. Business Acquisitions
 UAP Holding Corp.
   Fair values of assets acquired and liabilities assumedCurrent assets
    
    
    2,281Property, plant and equipment
    
    
    158Customer relationship intangibles(a)
    
    
    500Other finite-lived intangibles(a)
    
    
    106Indefinite-lived intangibles
    
    
    8Goodwill(b)
    
    
    1,605Bank indebtedness
    
    
    (246
    )Current liabilities
    
    
    (1,603
    )Long-term debt
    
    
    (396
    )Other liabilities
    
    
    (68
    )Future income tax liabilities
    
    
    (187
    )2,158Amounts repaid on closingBank indebtedness
    
    
    246Long-term debt
    
    
    396Other liabilities
    
    
    28670Cash
    
    
    (87
    )2,741
 Consideration and acquisition costsCash
    
    
    190Bank indebtedness
    
    
    199Long-term debt
    
    
    1,015Cash proceeds from share offering in December 2007
    
    
    1,322Transaction costs
    
    
    152,741
 
 (a)
    Customer relationship intangibles are amortized over 15 years and other finite-lived
intangibles are amortized over five to 10 years. Amortization expense from the date of acquisition
for customer relationships and other finite-lived intangibles is $22-million and $8-million.(b)
    Goodwill of $1,582-million is not deductible for income tax purposes.




---



##### 



2008 Annual Report / Agrium
    
    107
  Common Market Fertilizers S.A.
  4. Egypt Nitrogen Project
   5. Other (Income) Expenses
 2008
    
    
    
    2007
    
    
    2006Stock-based compensation
    
    
    
    (25
    )
    
    
    
    113
    
    
    
    30Loss on derivative contracts
    
    
    
    
    
    
    
    
    20
    
    
    
    35Environmental remediation and accretion of asset retirement obligations
    
    
    
    15
    
    
    
    
    5
    
    
    
    12Interest income
    
    
    
    (57
    )
    
    
    
    (30
    )
    
    
    (16
    )Foreign exchange (gain) loss
    
    
    
    (119
    )
    
    
    
    (41
    )
    
    
    3Bad debt expense
    
    
    
    23
    
    
    
    
    7
    
    
    
    4Other taxes
    
    
    
    22
    
    
    
    
    15
    
    
    
    11Gain on disposal of property, plant, equipment and investments
    
    
    
    (8
    )
    
    
    
    (4
    )
    
    
    (14
    )Other
    
    
    
    20
    
    
    
    
    4
    
    
    
    20(129
    )
    
    
    
    89
    
    
    
    85




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##### 



108
    
    Agrium / 2008 Annual Report
  6. Income Taxes
 Major factors that caused variations from the expected combinedCanadian federal and provincial statutory income tax rates
    
    
    2008
    
    
    
    2007
    
    
    2006Earnings (loss) before income taxes and non-controlling interestsCanadian
    
    
    
    1,180
    
    
    
    
    239
    
    
    
    (168
    )Foreign
    
    
    
    701
    
    
    
    
    403
    
    
    
    1771,881
    
    
    
    
    642
    
    
    
    9Statutory rate (%)
    
    
    
    30
    
    
    
    
    33
    
    
    
    35Income taxes at statutory rates
    
    
    
    571
    
    
    
    
    212
    
    
    
    3Foreign exchange (losses) gains relating to Canadian operations
    
    
    
    (36
    )
    
    
    
    16
    
    
    
    Differences in foreign tax rates
    
    
    
    16
    
    
    
    
    (17
    )
    
    
    (15
    )Canadian tax rate adjustment
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (18
    )Change in valuation allowance
    
    
    
    26
    
    
    
    
    
    
    
    
    Other
    
    
    
    12
    
    
    
    
    2
    
    
    
    6Income taxes
    
    
    
    589
    
    
    
    
    204
    
    
    
    (24
    )CurrentCanadian
    
    
    
    42
    
    
    
    
    (5
    )
    
    
    79Foreign
    
    
    
    184
    
    
    
    
    90
    
    
    
    (1
    )226
    
    
    
    
    85
    
    
    
    78FutureCanadian
    
    
    
    291
    
    
    
    
    83
    
    
    
    (148
    )Foreign
    
    
    
    72
    
    
    
    
    36
    
    
    
    46363
    
    
    
    
    119
    
    
    
    (102
    )589
    
    
    
    
    204
    
    
    
    (24
    )
 Significant components of future income tax liabilities and assets
    
    
    2008
    
    
    
    2007Future income tax liabilitiesDepreciation and amortization
    
    
    
    371
    
    
    
    
    160Deferred income
    
    
    
    363
    
    
    
    
    141Other
    
    
    
    87
    
    
    
    
    77Total future income tax liabilities
    
    
    
    821
    
    
    
    
    378Future income tax assetsLoss carry-forwards expiring through 2028
    
    
    
    12
    
    
    
    
    7Asset retirement obligations and environmental remediation
    
    
    
    72
    
    
    
    
    60Employee future benefits and incentives
    
    
    
    42
    
    
    
    
    67Other
    
    
    
    21
    
    
    
    
    13Future income tax assets before valuation allowance
    
    
    
    147
    
    
    
    
    147Valuation allowance
    
    
    
    (32
    )
    
    
    
    (6
    )Total future income tax assets, net of valuation allowance
    
    
    
    115
    
    
    
    
    141Net future income tax liabilities
    
    
    
    706
    
    
    
    
    237




---



##### 



2008 Annual Report / Agrium
    
    109
  7. Earnings Per Share
 2008
    
    
    
    2007
    
    
    2006NumeratorNet earnings
    
    
    
    1,322
    
    
    
    
    441
    
    
    
    33DenominatorWeighted-average number of shares outstanding for basic earnings per share
    
    
    
    158
    
    
    
    
    135
    
    
    
    132Dilutive instruments(a)Stock options(b)
    
    
    
    1
    
    
    
    
    1
    
    
    
    1Weighted-average number of shares outstanding for diluted earnings per share
    
    
    
    159
    
    
    
    
    136
    
    
    
    133Basic earnings per share
    
    
    
    8.39
    
    
    
    
    3.28
    
    
    
    0.25Diluted earnings per share
    
    
    
    8.34
    
    
    
    
    3.25
    
    
    
    0.25
 
 (a)
    For diluted earnings per share, conversion or exercise is assumed only if the effect is
dilutive to basic earnings per share.(b)
    Using the treasury stock method, stock options with an average grant price less than or equal
to the average share price during the year are considered dilutive and potential common share
equivalents are considered outstanding. At December 31, 2008, there were one million dilutive stock
options (December 31, 2007  one million, December 31, 2006  two million). 8. Additional Cash Flow Information
 2008
    
    
    
    2007Cash
    
    
    
    319
    
    
    
    
    53Short-term investments
    
    
    
    55
    
    
    
    
    1,456374
    
    
    
    
    1,509
 Net changes in non-cash working capital
    
    
    2008
    
    
    
    2007
    
    
    2006Accounts receivable
    
    
    
    434
    
    
    
    
    (65
    )
    
    
    (50
    )Inventories
    
    
    
    (911
    )
    
    
    
    (184
    )
    
    
    180Prepaid expenses and deposits
    
    
    
    (114
    )
    
    
    
    (146
    )
    
    
    (32
    )Accounts payable and accrued liabilities
    
    
    
    (458
    )
    
    
    
    137
    
    
    
    (94
    )Income and other taxes receivable/payable
    
    
    
    (48
    )
    
    
    
    (43
    )
    
    
    (29
    )Other
    
    
    
    
    
    
    
    
    (51
    )
    
    
    (28
    )(1,097
    )
    
    
    
    (352
    )
    
    
    (53
    )Supplemental cash flow disclosureInterest paid
    
    
    
    92
    
    
    
    
    69
    
    
    
    61Income taxes paid
    
    
    
    293
    
    
    
    
    123
    
    
    
    97Dividends per share
    
    
    
    0.11
    
    
    
    
    0.11
    
    
    
    0.11
 9. Accounts Receivable
 2008
    
    
    
    2007Trade accounts
    
    
    
    963
    
    
    
    
    723Allowance for doubtful accounts
    
    
    
    (36
    )
    
    
    
    (19
    )Rebates and other non-trade accounts
    
    
    
    124
    
    
    
    
    43Derivative contracts
    
    
    
    5
    
    
    
    
    40Income and other taxes
    
    
    
    167
    
    
    
    
    341,223
    
    
    
    
    821




---



##### 



110
    
    Agrium / 2008 Annual Report
  10. Inventories
 2008
    
    
    
    2007Advanced
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AdvancedRetail
    
    
    Wholesale
    
    
    Technologies
    
    
    Total
    
    
    
    Retail
    
    
    Wholesale
    
    
    Technologies
    
    
    TotalRaw materials
    
    
    
    27
    
    
    
    172
    
    
    
    17
    
    
    
    216
    
    
    
    
    
    
    
    
    148
    
    
    
    12
    
    
    
    160Finished goods
    
    
    
    52
    
    
    
    329
    
    
    
    41
    
    
    
    422
    
    
    
    
    
    
    
    
    114
    
    
    
    33
    
    
    
    147Product for resale
    
    
    
    1,976
    
    
    
    433
    
    
    
    
    
    
    
    2,409
    
    
    
    
    544
    
    
    
    110
    
    
    
    
    
    
    
    6542,055
    
    
    
    934
    
    
    
    58
    
    
    
    3,047
    
    
    
    
    544
    
    
    
    372
    
    
    
    45
    
    
    
    961
  11. Property, Plant And Equipment
 2008
    
    
    
    
    
    
    
    
    
    
    
    2007Estimateduseful life
    
    
    
    
    
    
    Accumulated
    
    
    Net book
    
    
    
    
    
    
    
    Accumulated
    
    
    Net book(years)
    
    
    Cost
    
    
    depreciation
    
    
    value
    
    
    
    Cost
    
    
    depreciation
    
    
    valueLand
    
    
    
    
    
    
    
    73
    
    
    
    
    
    
    
    73
    
    
    
    
    64
    
    
    
    
    
    
    
    64Building and improvements
    
    
    
    3-25
    
    
    
    568
    
    
    
    267
    
    
    
    301
    
    
    
    
    478
    
    
    
    243
    
    
    
    235Machinery and equipment
    
    
    
    3-25
    
    
    
    2,414
    
    
    
    1,469
    
    
    
    945
    
    
    
    
    2,588
    
    
    
    1,578
    
    
    
    1,010Assets under construction
    
    
    
    
    
    
    
    691
    
    
    
    
    
    
    
    691
    
    
    
    
    417
    
    
    
    
    
    
    
    417Other
    
    
    
    3-25
    
    
    
    66
    
    
    
    40
    
    
    
    26
    
    
    
    
    98
    
    
    
    52
    
    
    
    463,812
    
    
    
    1,776
    
    
    
    2,036
    
    
    
    
    3,645
    
    
    
    1,873
    
    
    
    1,772
 12. Intangibles
 2008
    
    
    
    
    
    
    
    
    
    
    
    2007Estimateduseful life
    
    
    
    
    
    
    Accumulated
    
    
    Net book
    
    
    
    Cost
    
    
    Accumulated
    
    
    Net book(years)(c)
    
    
    Cost
    
    
    amortization
    
    
    value
    
    
    
    
    
    
    
    amortization
    
    
    valueTrade names(a)
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    30
    
    
    
    
    25
    
    
    
    
    
    
    
    25Customer relationships(b)
    
    
    
    5-15
    
    
    
    532
    
    
    
    35
    
    
    
    497
    
    
    
    
    32
    
    
    
    6
    
    
    
    26Technology(b)
    
    
    
    7-10
    
    
    
    23
    
    
    
    6
    
    
    
    17
    
    
    
    
    23
    
    
    
    4
    
    
    
    19Other(b)
    
    
    
    3-20
    
    
    
    124
    
    
    
    15
    
    
    
    109
    
    
    
    
    5
    
    
    
    2
    
    
    
    3709
    
    
    
    56
    
    
    
    653
    
    
    
    
    85
    
    
    
    12
    
    
    
    73
 
 (a)
    Trade names have indefinite lives for accounting purposes and accordingly are not
amortized. The Company completed its annual test for impairment of indefinite-lived intangibles in
the third quarter of 2008 and determined that there was no impairment.(b)
    Amortization expense of finite-lived intangibles for 2008 was $42-million (2007  $10-million)
and over the next five years is estimated to be approximately $53-million annually.(c)
    At December 31, 2008 the weighted-average amortization period for finite-lived intangibles is 13 years. 13. Goodwill
 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2007Advanced
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AdvancedRetail
    
    
    Wholesale
    
    
    Technologies
    
    
    Total
    
    
    
    Retail
    
    
    Wholesale
    
    
    Technologies
    
    
    TotalBalance, beginning
of year
    
    
    
    127
    
    
    
    
    
    
    
    51
    
    
    
    178
    
    
    
    
    129
    
    
    
    
    
    
    
    45
    
    
    
    174Acquired during
the year
    
    
    
    1,605
    
    
    
    4
    
    
    
    
    
    
    
    1,609
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchase price
allocation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    
    
    
    
    4
    
    
    
    2Foreign exchange
translation
    
    
    
    
    
    
    
    
    
    
    
    (4
    )
    
    
    (4
    )
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Balance, end of year(a)
    
    
    
    1,732
    
    
    
    4
    
    
    
    47
    
    
    
    1,783
    
    
    
    
    127
    
    
    
    
    
    
    
    51
    
    
    
    178
 
 (a)
    The Company completed its annual test for impairment of goodwill during the third quarter
of 2008 and determined that there was no impairment. Due to changes in market conditions, the
Company completed an additional test for impairment of goodwill during the fourth quarter of 2008
and determined that there was no impairment.




---



##### 



2008 Annual Report / Agrium
    
    111
  14. Investment In Equity Investee
   15. Other Assets
 2008
    
    
    
    2007Investments
    
    
    
    27
    
    
    
    
    34Receivables
    
    
    
    27
    
    
    
    
    23Derivative contracts
    
    
    
    16
    
    
    
    
    28Deferred costs(a)
    
    
    
    61
    
    
    
    
    30Other
    
    
    
    25
    
    
    
    
    28156
    
    
    
    
    143
 
 (a)
    Amortization expense of $42-million was included in cost of product in 2008 (2007 
$26-million). 16. Debt
 2008
    
    
    
    2007Rate (%)(a)
    
    
    Total
    
    
    Unutilized
    
    
    Utilized
    
    
    
    UtilizedBank indebtednessRevolving credit facilities expiring 2012(b)(c)
    
    
    
    1.93
    
    
    
    775
    
    
    
    475
    
    
    
    300
    
    
    
    
    82Accounts receivable securitization(d)
    
    
    
    1.71
    
    
    
    200
    
    
    
    
    
    
    
    n/a
    
    
    
    
    n/aTotal domestic short-term credit facilities
    
    
    
    
    
    
    
    975
    
    
    
    475
    
    
    
    300
    
    
    
    
    82CMF credit facilities expiring in 2009(e)
    
    
    
    4.65
    
    
    
    264
    
    
    
    144
    
    
    
    120
    
    
    
    
    South American credit facilities expiring 2009
to 2012(f)
    
    
    
    5.24
    
    
    
    226
    
    
    
    156
    
    
    
    70
    
    
    
    
    84EAgrium bridge loan(g)
    
    
    
    4.74
    
    
    
    120
    
    
    
    
    
    
    
    120
    
    
    
    
    1,585
    
    
    
    775
    
    
    
    610
    
    
    
    
    166
 Long-term debt
    
    
    2008
    
    
    
    2007RecourseUnsecuredFloating rate bank loans due May 5, 2013(h)
    
    
    
    460
    
    
    
    
    6.75% debentures due January 15, 2019(i)(j)
    
    
    
    500
    
    
    
    
    7.125% debentures due May 23, 2036(j)
    
    
    
    300
    
    
    
    
    3007.7% debentures due February 1, 2017(j)
    
    
    
    100
    
    
    
    
    1007.8% debentures due February 1, 2027(j)
    
    
    
    125
    
    
    
    
    1258.25% debentures due February 15, 2011(j)
    
    
    
    125
    
    
    
    
    125SecuredOther(k)
    
    
    
    24
    
    
    
    
    221,634
    
    
    
    
    672Transaction costs(l)
    
    
    
    (12
    )
    
    
    
    (7
    )Current portion of long-term debt
    
    
    
    (1
    )
    
    
    
    (1
    )1,621
    
    
    
    
    664Non-recourseEAgrium secured credit facilities
    
    
    
    
    
    
    
    
    132Transaction costs
    
    
    
    
    
    
    
    
    (13
    )
    
    
    
    
    1191,621
    
    
    
    
    783Accounts receivable securitizationProceeds from sales of receivables(d)
    
    
    
    200
    
    
    
    
    184Receivables being serviced at end of year(d)
    
    
    
    200
    
    
    
    nil




---



##### 



112
    
    Agrium / 2008 Annual Report
  (a)
    Weighted average rates at December 31, 2008.(b)
    On May 5, 2008, the Company increased its syndicated revolving credit facility to $775-million.
Interest rates are at Canadian or U.S. prime plus a variable margin, U.S. base rate established by
a bank plus a variable margin, LIBOR plus a variable margin or bankers acceptance rate plus a
variable margin.(c)
    The Company has issued letters of credit under its revolving credit
facilities. Outstanding letters of credit at December 31, 2008 of $66-million reduce credit
available under the facilities to $409-million.(d)
    The Company has a revolving purchase and sale agreement to sell, with limited recourse,
accounts receivable to a maximum of $200-million (2007  $200-million). The receivables are sold to
an unrelated financial institution. The Company provides a security interest to the financial
institution in the form of accounts receivable in excess of the net cash proceeds received. The
agreement expires in December 2012.(e)
    The Company has access to additional credit facilities as a result of the acquisition of 70
percent of CMF on July 8, 2008. Of the total, $207-million is secured. Inventory, accounts
receivable and other items with a total carrying value of $125-million are pledged as security for
the utilized balance. The facilities bear interest at various base rates plus a fixed or variable
margin. Includes Euro debt of $62-million.(f)
    For the facilities utilized, $8-million (2007  $37-million) is denominated in Argentine peso.
Of the total, $130-million is uncommitted of which $54-million has been utilized.(g)
    On August 25,
2008, EAgrium entered into a loan agreement for $120-million that bears interest at LIBOR plus a
fixed margin. Agrium has pledged its interest in EAgrium as security for the loan. The loan is
guaranteed by MOPCO and by a MOPCO shareholder. Effective January 26, 2009, MOPCO assumed this
debt.(h)
    Pursuant to the UAP acquisition the Company borrowed $1,015-million at LIBOR plus 0.55%. On
September 11, 2008, the Company repaid $497-million of the loans from proceeds of a public
debenture offering and in October 2008 repaid $58-million. The remaining balance of $460-million is
repayable on May 5, 2013.(i)
    On September 8, 2008, the Company issued $500-million of 6.75% debentures for
proceeds of $495-million net of related expenses.(j)
    Debentures have various provisions
that allow the Company to redeem debt prior to maturity, at the Companys option, at
specified prices.(k)
    Includes a capital lease of $14-million with an annual payment of $2-million with the final
installment due 2019, relating to land and building with a carrying value of $10-million.(l)
    The
Company began prospectively offsetting transaction costs against the associated debt in accordance
with changes in accounting standards that became effective January 1, 2007.(m)
    The Company also maintains a $24-million irrevocable standby letter of credit facility in favor
of a subsidiary. At December 31, 2008, $22-million was outstanding, which does not reduce
availability under the Companys other credit facilities.(n)
    The revolving credit facilities require the Company maintain specific covenants described in
our Capital Management note.
 17. Accounts Payable And Accrued Liabilities
 2008
    
    
    
    2007Trade
    
    
    
    828
    
    
    
    
    357Customer prepayments
    
    
    
    480
    
    
    
    
    235Non-trade
    
    
    
    35
    
    
    
    
    10Accrued liabilities
    
    
    
    654
    
    
    
    
    464Income and other taxes
    
    
    
    86
    
    
    
    
    Accrued interest
    
    
    
    26
    
    
    
    
    11Dividends
    
    
    
    9
    
    
    
    
    9Derivative contracts
    
    
    
    82
    
    
    
    
    142,200
    
    
    
    
    1,100
 18. Other Liabilities
 2008
    
    
    
    2007Environmental remediation
    
    
    
    135
    
    
    
    
    117Asset retirement obligations
    
    
    
    86
    
    
    
    
    84Stock-based compensation
    
    
    
    15
    
    
    
    
    56Employee future benefitsPensions
    
    
    
    6
    
    
    
    
    6Post-retirement benefits
    
    
    
    59
    
    
    
    
    57Derivative contracts
    
    
    
    11
    
    
    
    
    29Other
    
    
    
    16
    
    
    
    
    9328
    
    
    
    
    358
 19. Accumulated Other Comprehensive Income
 2008
    
    
    
    2007Cash flow hedges, net of tax
    
    
    
    6
    
    
    
    
    20Foreign currency translation
    
    
    
    (178
    )
    
    
    
    64(172
    )
    
    
    
    84




---



##### 



2008 Annual Report / Agrium
    
    113
  20. Employee Future Benefits
 Obligations and assets
    
    
    
    
    
    
    
    Defined benefit pension plans
    
    
    
    
    
    
    
    
    Post-retirement benefit plans2008
    
    
    
    2007
    
    
    2006
    
    
    
    2008
    
    
    
    2007
    
    
    2006Change in accrued benefit obligationsBalance, beginning of year
    
    
    
    192
    
    
    
    
    184
    
    
    
    177
    
    
    
    
    89
    
    
    
    
    82
    
    
    
    44Obligations
associated with acquisitions(a)
    
    
    
    4
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign exchange on Canadian
obligations
    
    
    
    (26
    )
    
    
    
    18
    
    
    
    
    
    
    
    
    (16
    )
    
    
    
    10
    
    
    
    Interest cost
    
    
    
    12
    
    
    
    
    12
    
    
    
    10
    
    
    
    
    5
    
    
    
    
    6
    
    
    
    3Service cost
    
    
    
    4
    
    
    
    
    8
    
    
    
    7
    
    
    
    
    3
    
    
    
    
    5
    
    
    
    3Actuarial (gain) loss
    
    
    
    (8
    )
    
    
    
    (8
    )
    
    
    (11
    )
    
    
    
    (16
    )
    
    
    
    (11
    )
    
    
    32Amendments
    
    
    
    2
    
    
    
    
    
    
    
    
    4
    
    
    
    
    (3
    )
    
    
    
    
    
    
    
    Transfer from other plans
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    1Curtailment gain(b)
    
    
    
    
    
    
    
    
    (13
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Benefits paid
    
    
    
    (10
    )
    
    
    
    (9
    )
    
    
    (8
    )
    
    
    
    (2
    )
    
    
    
    (2
    )
    
    
    (1
    )Balance, end of year
    
    
    
    170
    
    
    
    
    192
    
    
    
    184
    
    
    
    
    60
    
    
    
    
    89
    
    
    
    82Change in plan assetsFair value, beginning of year
    
    
    
    166
    
    
    
    
    140
    
    
    
    126
    
    
    
    
    
    
    
    
    
    
    
    
    
    Assets from acquisitions(a)
    
    
    
    4
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    
    
    
    
    
    
    Foreign exchange on Canadian
assets
    
    
    
    (16
    )
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Amendments
    
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Actual return on plan assets
    
    
    
    (27
    )
    
    
    
    13
    
    
    
    10
    
    
    
    
    
    
    
    
    
    
    
    
    
    Employer contributions
    
    
    
    3
    
    
    
    
    9
    
    
    
    9
    
    
    
    
    1
    
    
    
    
    2
    
    
    
    Benefits paid
    
    
    
    (10
    )
    
    
    
    (9
    )
    
    
    (8
    )
    
    
    
    (1
    )
    
    
    
    (2
    )
    
    
    Fair value, end of year
    
    
    
    113
    
    
    
    
    166
    
    
    
    140
    
    
    
    
    
    
    
    
    
    
    
    
    
    Unfunded status
    
    
    
    57
    
    
    
    
    26
    
    
    
    44
    
    
    
    
    60
    
    
    
    
    89
    
    
    
    82Unrecognized net loss
    
    
    
    (52
    )
    
    
    
    (19
    )
    
    
    (31
    )
    
    
    
    (9
    )
    
    
    
    (42
    )
    
    
    (48
    )Unrecognized prior service cost
    
    
    
    (3
    )
    
    
    
    (5
    )
    
    
    (5
    )
    
    
    
    8
    
    
    
    
    10
    
    
    
    9Accrued employee future
benefit liability
    
    
    
    2
    
    
    
    
    2
    
    
    
    8
    
    
    
    
    59
    
    
    
    
    57
    
    
    
    43Amounts recognized in the
consolidated balance sheets
consist of:Other assets: Prepaid employee
future benefits
    
    
    
    (4
    )
    
    
    
    (4
    )
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    
    
    Accounts payable and
accrued liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Other liabilities
    
    
    
    6
    
    
    
    
    6
    
    
    
    12
    
    
    
    
    59
    
    
    
    
    57
    
    
    
    412
    
    
    
    
    2
    
    
    
    8
    
    
    
    
    59
    
    
    
    
    57
    
    
    
    43
 
 (a)
    Obligations and assets associated with acquisitions in 2008 relate to the
Companys acquisition of UAP (2006  Royster-Clark Ltd.)(b)
    During 2007, the Company recognized a curtailment gain of $10-million from its U.S. defined benefit pension
plan.  Defined benefit
    
    
    Post-retirementExpected benefit payments
    
    pension plans
    
    
    benefit plans
    
    
    Total2009
    
    
    8
    
    
    
    2
    
    
    
    102010
    
    
    15
    
    
    
    2
    
    
    
    172011
    
    
    9
    
    
    
    2
    
    
    
    112012
    
    
    10
    
    
    
    2
    
    
    
    122013
    
    
    10
    
    
    
    2
    
    
    
    122014 through 2018
    
    
    56
    
    
    
    17
    
    
    
    73




---



##### 



114
    
    Agrium / 2008 Annual Report
  Actuarial calculations of expense
    
    
    2008
    
    
    
    2007
    
    
    2006Defined benefit pension plansService cost for benefits earned during the year
    
    
    
    4
    
    
    
    
    8
    
    
    
    7Interest cost on accrued benefit obligations
    
    
    
    12
    
    
    
    
    12
    
    
    
    10Expected return on plan assets
    
    
    
    (12
    )
    
    
    
    (10
    )
    
    
    (9
    )Net amortization and deferral
    
    
    
    1
    
    
    
    
    2
    
    
    
    3Curtailment gain
    
    
    
    
    
    
    
    
    (10
    )
    
    
    Net expense
    
    
    
    5
    
    
    
    
    2
    
    
    
    11Post-retirement benefit plansService cost for benefits earned during the year
    
    
    
    3
    
    
    
    
    5
    
    
    
    3Interest cost on accrued benefit obligations
    
    
    
    5
    
    
    
    
    6
    
    
    
    3Net amortization and deferral
    
    
    
    1
    
    
    
    
    1
    
    
    
    Net expense
    
    
    
    9
    
    
    
    
    12
    
    
    
    6Defined contribution pension plans
    
    
    
    29
    
    
    
    
    18
    
    
    
    14Total expense
    
    
    
    43
    
    
    
    
    32
    
    
    
    31
 Actuarial assumptions
    
    
    
    
    
    
    
    Future benefits obligation
    
    
    
    
    
    
    
    
    Future benefits expense(percent)
    
    
    2008
    
    
    
    2007
    
    
    2006
    
    
    
    2008
    
    
    
    2007
    
    
    2006Defined benefit pension plansDiscount rate
    
    
    
    6
    
    
    
    
    6
    
    
    
    5
    
    
    
    
    6
    
    
    
    
    5
    
    
    
    5Long-term rate of return on
assets
    
    
    
    n/a
    
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    
    7
    
    
    
    
    7
    
    
    
    7Rate of increase in
compensation levels
    
    
    
    3
    
    
    
    
    4
    
    
    
    4
    
    
    
    
    4
    
    
    
    
    4
    
    
    
    4Post-retirement benefit plansDiscount rate
    
    
    
    6
    
    
    
    
    5
    
    
    
    5
    
    
    
    
    6
    
    
    
    
    5
    
    
    
    5
 Assumed and ultimate health care cost trend rates
    
    
    2008
    
    
    
    2007
    
    
    2006Health care cost trend rate assumed for the next fiscal year
    
    
    
    8
    
    
    
    
    8
    
    
    
    9Ultimate health care cost trend rate
    
    
    
    5
    
    
    
    
    5
    
    
    
    5Fiscal year the rate reaches the ultimate trend rate
    
    
    
    2017
    
    
    
    
    2014
    
    
    
    2014
   One percentage
    
    
    One percentageEffect on assumed health care cost trend rate
    
    point increase
    
    
    point decreaseEffect on accumulated post-retirement benefit obligation as of December 31, 2008
    
    
    12
    
    
    
    (9
    )Effect on total of service and interest cost
    
    
    2
    
    
    
    (1
    )
 Asset allocation and investment strategy




---



##### 



2008 Annual Report / Agrium
    
    115
  Defined benefit plans  asset allocation
    
    
    Target allocation
    
    
    
    
    
    
    
    Plan assetsAsset categories (percent)
    
    
    2009
    
    
    
    2008
    
    
    2007Equity securities
    
    
    
    50  74
    
    
    
    
    61
    
    
    
    65Debt securities
    
    
    
    26  50
    
    
    
    
    37
    
    
    
    30Cash and other
    
    
    
    0  10
    
    
    
    
    2
    
    
    
    5
   21. Asset Retirement Obligations
  2008
    
    
    
    2007Balance, beginning of year
    
    
    
    84
    
    
    
    
    71Accretion, included in other (income) expenses
    
    
    
    5
    
    
    
    
    5Additions
    
    
    
    12
    
    
    
    
    Settlements
    
    
    
    (2
    )
    
    
    
    (1
    )Foreign exchange translation
    
    
    
    (13
    )
    
    
    
    9Balance, end of year
    
    
    
    86
    
    
    
    
    84
  22. Stock-based Compensation
 Plan
    
    Eligibility
    
    Granted
    
    Vesting period
    
    Term
    
    SettlementStock Options and Tandem
Stock Appreciation Rights
(TSAR)
    
    Officers and
employees
    
    Annually
    
    25% per year over four years
    
    10 years
    
    Cash or sharesStock Appreciation Rights (SAR)
    
    Certain employees outside Canada
    
    Annually
    
    25% per year over four years
    
    10 years
    
    CashPerformance Share Units (PSU)
    
    Executive officers
and other eligible
employees
    
    Annually
    
    On the third anniversary
of the grant date
    
    n/a
    
    CashDirectors Deferred Share Units (DSU)
    
    Directors
    
    At the discretion of
the Board of Directors
    
    Fully vested upon grant
    
    n/a
    
    In cash on directors departure from the Board




---



##### 



116
    
    Agrium / 2008 Annual Report
  Stock Options and Tandem Stock Appreciation Rights Plan
    (number of options in thousands; weighted average price in U.S. dollars)
 2008
    
    
    
    
    
    
    
    2007
    
    
    
    
    
    
    2006Options and TSAR
    
    
    Options
    
    
    Price
    
    
    
    Options
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding, beginning of year
    
    
    
    3,041
    
    
    
    23.93
    
    
    
    
    3,860
    
    
    
    16.18
    
    
    
    5,671
    
    
    
    14.80Granted
    
    
    
    297
    
    
    
    74.88
    
    
    
    
    493
    
    
    
    42.96
    
    
    
    565
    
    
    
    24.73Exercised
    
    
    
    (432
    )
    
    
    16.05
    
    
    
    
    (1,312
    )
    
    
    16.59
    
    
    
    (2,376
    )
    
    
    15.17Outstanding, end of year
    
    
    
    2,906
    
    
    
    25.95
    
    
    
    
    3,041
    
    
    
    23.93
    
    
    
    3,860
    
    
    
    16.18Exercisable, end of year
    
    
    
    1,920
    
    
    
    16.59
    
    
    
    
    1,878
    
    
    
    17.64
    
    
    
    2,414
    
    
    
    14.32Maximum available for
future grants, end of year
    
    
    
    4,395
    
    
    
    
    
    
    
    
    4,639
    
    
    
    
    
    
    
    4,610Cash received from equity
settled awards
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    33Tax benefit from equity
settled awards
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    1
  (number of options in thousands; weighted average remaining contractual life in years; weighted
average exercise price in U.S. dollars)
 At December 31, 2008
    
    
    
    
    
    Options Outstanding
    
    
    Options ExercisableRemainingcontractual
    
    
    ExerciseRange of Exercise Prices
    
    Options
    
    
    life
    
    
    price
    
    
    Options
    
    
    Exercise priceLess than 9.69
    
    
    50
    
    
    
    1
    
    
    
    9.57
    
    
    
    50
    
    
    
    9.579.69 to 12.88
    
    
    702
    
    
    
    3
    
    
    
    12.18
    
    
    
    702
    
    
    
    12.1812.89 to 15.71
    
    
    745
    
    
    
    5
    
    
    
    14.69
    
    
    
    656
    
    
    
    14.5515.72 to 24.87
    
    
    647
    
    
    
    6
    
    
    
    22.80
    
    
    
    395
    
    
    
    21.8224.88 to 51.14
    
    
    467
    
    
    
    8
    
    
    
    39.88
    
    
    
    117
    
    
    
    39.8851.15 to 112.45
    
    
    295
    
    
    
    9
    
    
    
    74.88
    
    
    
    
    
    
    
    2,906
    
    
    
    6
    
    
    
    25.95
    
    
    
    1,920
    
    
    
    16.59
 Stock Appreciation Rights Plan




---



##### 



2008 Annual Report / Agrium
    
    117
  At December 31, 2008
    
    
    
    
    
    
    
    
    
    SAR Outstanding
    
    
    
    
    
    
    SAR ExercisableRemainingRange of Exercise Prices
    
    
    Units
    
    
    contractual
    
    
    Exercise price
    
    
    Units
    
    
    Exercise pricelifeLess than 22.79
    
    
    51
    
    
    
    5
    
    
    
    15.35
    
    
    
    51
    
    
    
    15.3522.79 to 29.95
    
    
    110
    
    
    
    7
    
    
    
    24.52
    
    
    
    55
    
    
    
    24.5229.96 to 39.73
    
    
    128
    
    
    
    8
    
    
    
    39.59
    
    
    
    32
    
    
    
    39.5939.74 to 84.51
    
    
    78
    
    
    
    9
    
    
    
    74.07
    
    
    
    
    
    
    
    367
    
    
    
    8
    
    
    
    39.06
    
    
    
    138
    
    
    
    24.64
 Performance Share Unit Plan
   Directors Deferred Share Unit Plans
   Compensation (recovery) expense by plan
    
    
    2008
    
    
    
    2007
    
    
    2006Stock options and TSAR
    
    
    
    (11
    )
    
    
    
    40
    
    
    
    10SAR
    
    
    
    (7
    )
    
    
    
    10
    
    
    
    1PSU
    
    
    
    (4
    )
    
    
    
    56
    
    
    
    16DSU
    
    
    
    (3
    )
    
    
    
    7
    
    
    
    3(25
    )
    
    
    
    113
    
    
    
    30




---



##### 



118
    
    Agrium / 2008 Annual Report
  23. Commitments
 2009
    
    
    2010
    
    
    2011
    
    
    2012
    
    
    2013Cost of productOperating lease commitments
    
    
    151
    
    
    
    37
    
    
    
    28
    
    
    
    23
    
    
    
    16Natural gas and other
    
    
    508
    
    
    
    75
    
    
    
    81
    
    
    
    59
    
    
    
    32Power, sulfuric acid and other
    
    
    88
    
    
    
    50
    
    
    
    32
    
    
    
    30
    
    
    
    32OtherLong-term debt and capital lease repayments(a)
    
    
    91
    
    
    
    91
    
    
    
    207
    
    
    
    81
    
    
    
    537838
    
    
    
    253
    
    
    
    348
    
    
    
    193
    
    
    
    617
 
 (a)
    Payments include interest.     24. Guarantees




---



##### 



2008 Annual Report / Agrium
    
    119
  25. Contingencies
 Environmental remediation
  Litigation
   Other




---



##### 



120
    
    Agrium / 2008 Annual Report
  26. Financial Instruments
 Risk management
  Item
    
    Affected by
    
    Risk management policiesSales
    
    Product prices, Foreign currency exchange rates:
USD vs. CAD, ARS (Argentine peso), Euro, GBP
    
    Foreign currency forward and option contractsCost of product  natural gas and power
    
    Price of natural gas and power
    
    Natural gas forward, swap and option contracts
and heat rate swap contractsCost of product  product purchased for resale
    
    Price of nutrients purchased for resale
    
    Nutrient swaps and product purchase
commitmentsSelling, general and administrative, and other
    
    Currency exchange rates: USD vs. CAD, ARS,
    
    Foreign currency forward and option contractsexpenses denominated in local currencies
    
    Euro, GBPCapital expenditures
    
    Currency exchange rates: USD vs. CAD, ARS,
Euro
    
    Foreign currency forward and option contractsInterest expense
    
    USD and Euro interest rates
    
    Maintaining a combination of fixed and floating
rate debt; interest rate swaps to manage risk for
up to 10 yearsFinancial instrumentsMarket risk  currency risk
    
    USD balances in Canadian and European
subsidiaries; Foreign currencies held in USD
denominated subsidiaries
    
    Foreign currency forward and option contracts
to manage risk for up to three yearsMarket risk  natural gas, power and nutrient
price risk
    
    Market prices of natural gas, power and
nutrients
    
    Natural gas forward, swap and option contracts
and heat rate swap contracts to manage power
price risk for up to five yearsMarket risk  interest rate risk
    
    Changes in market interest rates
    
    Maintaining a combination of fixed and floating
rate debt; interest rate swaps to manage risk for
up to 10 yearsCredit risk
    
    Ability of customers or counterparties to
financial instruments to meet obligations
    
    Credit approval and monitoring practices;
counterparty policiesLiquidity risk
    
    Fluctuations in cash flows
    
    Preparation and monitoring of detailed forecasts
of cash flows; maintenance of cash balances and
uncommitted, multiple year credit facilities




---



##### 



2008 Annual Report / Agrium
    
    121
  a) Currency risk
  Foreign exchange derivative
    
    
    
    
    
    
    
    
    
    
    2008
    
    
    
    
    
    
    
    
    
    
    
    2007financial instruments outstanding
    
    
    Notional
    
    
    
    
    
    
    Fair value
    
    
    
    Notional
    
    
    
    
    
    
    Fair value(millions, buy
    
    
    Maturities
    
    
    assets
    
    
    
    (millions, buy
    
    
    Maturities
    
    
    assetsSell/Buy
    
    
    currency)
    
    
    
    
    
    
    (liabilities)
    
    
    
    currency)
    
    
    
    
    
    
    (liabilities)CAD/EUR forwards(a)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    EUR 1
    
    
    
    2008
    
    
    
    USD/EUR forwards(b)
    
    
    EUR 15
    
    
    
    2009
    
    
    
    
    
    
    
    EUR 476
    
    
    
    2010
    
    
    
    47EUR/USD forwards(c)
    
    
    USD 33
    
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    GBP/USD forwards(d)
    
    
    USD 5
    
    
    
    2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    USD/CAD put options purchased(e)
    
    
    CAD 195
    
    
    
    2009
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    USD/CAD call options sold(f)
    
    
    CAD 206
    
    
    
    2009
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    
    47
 
 Contract Rates:(a)
    2008: n/a; 2007: 0.6871 to 0.6776(b)
    2008: 0.6843 to 0.7446; 2007: 0.7412 to 0.7283(c)
    2008: 1.2590 to 1.4279; 2007: n/a(d)
    2008: 1.4657 to 1.5324; 2007: n/a(e)
    2008: 1.0413 to 1.0700; 2007: n/a(f)
    2008: 1.0900 to 1.1420; 2007: n/a 
 2008
    
    
    
    
    
    
    
    2007Balances in non-U.S. dollar subsidiaries (in U.S. dollar equivalent)
    
    
    Canadian dollars
    
    
    Euro
    
    
    
    Canadian dollars
    
    
    EuroCash and cash equivalents
    
    
    
    211
    
    
    
    2
    
    
    
    
    740
    
    
    
    Accounts receivable
    
    
    
    115
    
    
    
    69
    
    
    
    
    241
    
    
    
    Bank indebtedness
    
    
    
    
    
    
    
    (62
    )
    
    
    
    
    
    
    
    Accounts payable and accrued liabilities
    
    
    
    (338
    )
    
    
    (87
    )
    
    
    
    (493
    )
    
    
    (12
    )
    
    
    (78
    )
    
    
    
    488
    
    
    
    
 b) Commodity price risk




---



##### 



122
    
    Agrium / 2008 Annual Report
  Natural gas, power and nutrient
    
    
    
    
    
    
    
    
    
    
    2008
    
    
    
    
    
    
    
    
    
    
    
    2007derivative financial instruments
    
    
    
    
    
    
    
    
    
    
    Fair value assets
    
    
    
    
    
    
    
    
    
    
    
    Fair value assetsOutstanding
    
    
    Notional
    
    
    Maturities
    
    
    (liabilities)
    
    
    
    Notional
    
    
    Maturities
    
    
    (liabilities)Natural gas (BCF)NYMEX contractsSwaps(a)
    
    
    
    33
    
    
    2009 to 2013
    
    
    
    (61
    )
    
    
    
    41
    
    
    
    2008 to 2011
    
    
    
    (8
    )Collars (swap with options)(b)
    
    
    
    25
    
    
    2009 to 2012
    
    
    
    13
    
    
    
    
    5
    
    
    
    2008 to 2009
    
    
    
    Call spreads(c)
    
    
    
    4
    
    
    
    2009
    
    
    
    2
    
    
    
    
    9
    
    
    
    2008 to 2009
    
    
    
    11El Paso swaps(d)
    
    
    
    2
    
    
    
    2009
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    AECO contractsSwaps(e)
    
    
    
    1
    
    
    
    2009
    
    
    
    (1
    )
    
    
    
    7
    
    
    
    2008
    
    
    
    1Options(f)
    
    
    
    13
    
    
    
    2009
    
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    
    78
    
    
    
    
    
    
    
    (58
    )
    
    
    
    62
    
    
    
    
    
    
    
    4Power  Swaps(g)(GWh)
    
    
    
    666
    
    
    2009 to 2012
    
    
    
    6
    
    
    
    
    141
    
    
    
    2008
    
    
    
    4Nutrient  Urea swaps(h)(short tons)
    
    
    
    18,000
    
    
    
    2009
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    (54
    )
    
    
    
    
    
    
    
    
    
    
    
    8
 
 Contract Rates:(a)
    2008: 6.96 to 9.70; 2007: 7.32 to 9.48(b)
    Swap  2008: 8.08 to 8.60; 2007: 8.40 to 9.40. Put strike  2008: 8.08 to 8.60; 2007:
8.40 to 9.40. Call strike  2008: 9.95 to 18.25; 2007: 9.95 to 10.90(c)
    Lower floor strike price
 2008: 5.41 to 5.51; 2007: 5.41 to 5.82. Upper floor strike price  2008: 7.05 to 7.31; 2007:
7.05 to 7.92.(d)
    2008: 5.58 to 5.73; 2007: n/a(e)
    2008: 6.08 to 6.10; 2007: 6.07 to 6.65(f)
    Call option strike 
2008: 7.05 to 8.30; 2007: n/a(g)
    2008: 74.40 to 77.75; 2007:
47.35 to 61.41(h)
    2008: 340.00 to 350.00; 2007: n/a c) Interest rate risk




---



##### 



2008 Annual Report / Agrium
    
    123
  Maximum credit exposure based on derivative contracts in an asset position
    
    
    2008
    
    
    
    2007Foreign exchange contracts
    
    
    
    
    
    
    
    
    47Natural gas, power and nutrient contracts
    
    
    
    21
    
    
    
    
    2121
    
    
    
    
    68
   Fair values




---



##### 



124
    
    Agrium / 2008 Annual Report
  Fair value of derivative financial instruments
    
    
    2008
    
    
    
    2007Foreign exchange derivative contractsAccounts receivable
    
    
    
    
    
    
    
    
    28Other assets
    
    
    
    
    
    
    
    
    19Accounts payable and accrued liabilities
    
    
    
    (18
    )
    
    
    
    (18
    )
    
    
    
    47Interest rate derivative contractsAccounts payable and accrued liabilities
    
    
    
    
    
    
    
    
    (4
    )Other liabilities
    
    
    
    
    
    
    
    
    (26
    )
    
    
    
    
    (30
    )Natural gas, power and nutrient derivative contractsAccounts receivable
    
    
    
    5
    
    
    
    
    12Other assets
    
    
    
    16
    
    
    
    
    9Accounts payable and accrued liabilities
    
    
    
    (64
    )
    
    
    
    (10
    )Other liabilities
    
    
    
    (11
    )
    
    
    
    (3
    )(54
    )
    
    
    
    8
 27. Capital Management
   2008
    
    
    
    2007
    
    
    2006Net debt to net debt plus equity (%)
    
    
    
    31
    
    
    
    
    (22
    )
    
    
    39EBITDA interest coverage (multiple)
    
    
    
    22.1
    
    
    
    
    12.7
    
    
    
    6.0
   Normal course issuer bid




---



##### 



2008 Annual Report / Agrium
    
    125
  28. Segmentation
 2008
    
    
    
    2007
    
    
    2006Net salesRetailCrop nutrients
    
    
    
    2,718
    
    
    
    
    1,453
    
    
    
    1,065Crop protection products
    
    
    
    2,115
    
    
    
    
    619
    
    
    
    591Seed, services and other
    
    
    
    683
    
    
    
    
    394
    
    
    
    3195,516
    
    
    
    
    2,466
    
    
    
    1,975WholesaleNitrogen
    
    
    
    1,815
    
    
    
    
    1,535
    
    
    
    1,280Potash
    
    
    
    816
    
    
    
    
    305
    
    
    
    213Phosphate
    
    
    
    847
    
    
    
    
    466
    
    
    
    298Product purchased for resale
    
    
    
    971
    
    
    
    
    339
    
    
    
    382Other
    
    
    
    237
    
    
    
    
    200
    
    
    
    964,686
    
    
    
    
    2,845
    
    
    
    2,269Advanced Technologies
    
    
    
    352
    
    
    
    
    249
    
    
    
    101Other
    
    
    
    (523
    )
    
    
    
    (290
    )
    
    
    (152
    )10,031
    
    
    
    
    5,270
    
    
    
    4,193Net earnings before income taxesRetail
    
    
    
    480
    
    
    
    
    177
    
    
    
    95Wholesale
    
    
    
    1,478
    
    
    
    
    667
    
    
    
    91Advanced Technologies
    
    
    
    33
    
    
    
    
    13
    
    
    
    (1
    )Other
    
    
    
    25
    
    
    
    
    (142
    )
    
    
    (113
    )2,016
    
    
    
    
    715
    
    
    
    72Interest on long-term debt
    
    
    
    82
    
    
    
    
    52
    
    
    
    47Other interest
    
    
    
    23
    
    
    
    
    18
    
    
    
    161,911
    
    
    
    
    645
    
    
    
    9Total assetsRetail
    
    
    
    6,951
    
    
    
    
    1,850
    
    
    
    1,104Wholesale
    
    
    
    8,851
    
    
    
    
    4,298
    
    
    
    2,911Advanced Technologies
    
    
    
    340
    
    
    
    
    372
    
    
    
    277Other
    
    
    
    (6,324
    )
    
    
    
    (688
    )
    
    
    (1,027
    )9,818
    
    
    
    
    5,832
    
    
    
    3,265




---



##### 



126
    
    Agrium / 2008 Annual Report
  2008
    
    
    
    
    
    
    
    
    
    
    
    2007
    
    
    
    
    
    
    
    
    
    
    2006Net Sales
    
    
    PP&E
    
    
    Goodwill
    
    
    
    Net Sales
    
    
    PP&E
    
    
    Goodwill
    
    
    Net Sales
    
    
    PP&E
    
    
    GoodwillCanada
    
    
    
    1,704
    
    
    
    682
    
    
    
    17
    
    
    
    
    1,033
    
    
    
    824
    
    
    
    17
    
    
    
    652
    
    
    
    706
    
    
    
    17United States
    
    
    
    7,296
    
    
    
    535
    
    
    
    1,762
    
    
    
    
    3,659
    
    
    
    381
    
    
    
    161
    
    
    
    2,954
    
    
    
    400
    
    
    
    157Argentina
    
    
    
    477
    
    
    
    230
    
    
    
    
    
    
    
    
    373
    
    
    
    221
    
    
    
    
    
    
    
    251
    
    
    
    226
    
    
    
    Europe
    
    
    
    480
    
    
    
    4
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Egypt
    
    
    
    
    
    
    
    585
    
    
    
    
    
    
    
    
    
    
    
    
    346
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    74
    
    
    
    
    
    
    
    
    
    
    
    
    205
    
    
    
    
    
    
    
    
    
    
    
    336
    
    
    
    
    
    
    
    10,031
    
    
    
    2,036
    
    
    
    1,783
    
    
    
    
    5,270
    
    
    
    1,772
    
    
    
    178
    
    
    
    4,193
    
    
    
    1,332
    
    
    
    174
 29. Joint Ventures
   Statements of operations
    
    
    2008
    
    
    
    2007
    
    
    2006Net sales
    
    
    
    408
    
    
    
    
    261
    
    
    
    183Expenses
    
    
    
    322
    
    
    
    
    173
    
    
    
    85Income taxes
    
    
    
    27
    
    
    
    
    32
    
    
    
    36Proportionate share of net earnings of the joint ventures
    
    
    
    59
    
    
    
    
    56
    
    
    
    62
 Statements of cash flows
    
    
    2008
    
    
    
    2007
    
    
    2006Operating activities
    
    
    
    61
    
    
    
    
    51
    
    
    
    60Investing activities
    
    
    
    (13
    )
    
    
    
    (5
    )
    
    
    (6
    )Financing activities
    
    
    
    (28
    )
    
    
    
    (47
    )
    
    
    (67
    )Proportionate share of increase (decrease) in cash and cash equivalents of joint ventures
    
    
    
    20
    
    
    
    
    (1
    )
    
    
    (13
    )
 Balance sheets
    
    
    2008
    
    
    
    2007Current assets
    
    
    
    138
    
    
    
    
    82Long-term assets
    
    
    
    213
    
    
    
    
    210351
    
    
    
    
    292Current liabilities
    
    
    
    104
    
    
    
    
    59Long-term liabilities
    
    
    
    9
    
    
    
    
    4113
    
    
    
    
    63Proportionate share of net assets of the joint ventures
    
    
    
    238
    
    
    
    
    229