Exhibit 13




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Supplying the Worlds Need for More Potash
 
   INSIDE
 IntroductionLetter from the CFO
    
    
    2Comparison to Peers
    
    
    3Managements Discussion & AnalysisThe Global Story
    
    
    4Company Overview
    
    
    6Factors That Shaped Our Business in 2008
    
    
    10PotashOverview
    
    
    13Strategy
    
    
    16Capability
to Deliver
    
    
    17Risks
    
    
    18Performance
    
    
    18PhosphateOverview
    
    
    21Strategy
    
    
    22Capability
to Deliver
    
    
    24Risks
    
    
    24Performance
    
    
    24NitrogenOverview
    
    
    27Strategy
    
    
    30Capability
to Deliver
    
    
    30Risks
    
    
    30Performance
    
    
    30
 2009 Outlook
    
    
    33Key Performance Drivers
    
    
    35Rewarding Results
    
    
    38Risk Management
    
    
    392008 Financial Overview
    
    
    41Expenses & Other Income
    
    
    42Quarterly Results
    
    
    45Key Earnings Sensitivities
    
    
    47Financial StructureFinancial Condition Review
    
    
    47Liquidity & Capital Resources
    
    
    49Capital Structure & Management
    
    
    52Market Risks
    
    
    54Related Party Transactions
    
    
    54Critical Accounting Estimates
    
    
    54Recent Accounting Changes
    
    
    5811 Year Report
    
    
    61FinancialsFinancial Performance Indicators
    
    
    62Managements Responsibility for Financial Reporting


    65Independent Registered Chartered Accountants Reports


    66Consolidated Financial Statements
    
    
    68Appendix
    
    
    119
 LEARN MORE ONLINE
 PotashCorp2008AR.com watch for our Keywords to guide you




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2
    
    Letter from the CFO
  WAYNE BROWNLEE
EXECUTIVE VICE PRESIDENT AND CFO




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##### 



Comparison to Peers
    
    
    
    
    3
 Peers in Our Industry
  
 Comparability of Peer Information
 Sources: Company financial reports
  *
    
    Capital expenditures = additions to property, plant and equipment1
    
    Year ended December 31, 20082
    
    Most recent four fiscal quarters ended November 30, 20083
    
    Most recent four fiscal quarters ended September 30, 20084
    
    Most recent two fiscal halfs ended June 30, 2008 Uralkali net income, cash flow from
operations and capital expenditures translated by half at: 2nd Half 2007 1 USD = RUB 25.0766;
1st Half 2008 1 USD = RUB 23.9366; average exchange rates in each half per Bloomberg5
    
    Yara net income, cash flow from
operations and capital expenditures
translated at 1 USD = NOK 5.6502, average
exchange rate for 2008 as provided from
company reports6
    
    K+S net income, cash flow from
operations and capital expenditures
translated by quarter at: Q4 2007 1 USD =
EUR 0.6910; Q1 2008 1 USD = EUR 0.6678; Q2
2008 1 USD = EUR 0.6399; and Q3 2008 1 USD =
EUR 0.6659; average exchange rates in each
quarter per Bloomberg




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4
    
    Managements Discussion & Analysisof Financial Condition and Results of Operations (in US Dollars)
  The Global Story
 Helping Produce More per Acre
 The Long-Term Picture Does Not Change
   Need for More Fertilizer on the Horizon
   More People and Less Land Require
More Food and More Fertilizer
 1. Rising Population Parallels Income Growth
 POTASHCORP 2008 FINANCIAL REVIEW
    
Keyword Online: Our Business




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The
following discussion and analysis is the responsibility of management
and is as of February 20, 2009. The Board of Directors carries out its
responsibility for review of this disclosure principally through its audit
committee, comprised exclusively of independent directors. The audit committee
reviews this disclosure and recommends its approval by the Board of Directors.
Additional information relating to PotashCorp (which is not incorporated by reference
herein) can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
    
    5
  2. More and Better Food Is Wanted
  3. Arable Land per Capita Is Shrinking
  4. Grain Stocks-to-Use Ratio Remains Below Average
  5. Strong Crop Prices Will Encourage Farmers
  6. Fertilizer Is Needed More than Ever, and It Pays




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6
    
    Company Overview
  The Company With More
 The World Needs More Fertilizer, and Fertilizer Is Our Business
 Keyword Online: Our Business




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7
 The Potash Business Has More Advantages
 Higher Barriers to Entry, Less Government Involvement Are Important
   Potash Is the Core of Our Business
 We Have Built the Worlds Largest Fertilizer Company
 Our Strategies Focus on Earnings Quality
 Emphasize Potash Growth, Minimize Volatility
   More
long-term growth, better earnings quality.
 2008 At A Glance: The Potash Advantage
 Our Potash First strategy is based on factors that give the nutrient a superior position in the fertilizer universe.Potash
    
    
    Phosphate
    
    
    NitrogenBase Product
    
    
    Potassium chloride (KCl)
    
    
    Phosphoric Acid (P2O5)
    
    
    Ammonia (NH3)Availability of Raw Materials 1
    
    
    Very limited
    
    
    Limited (phosphate rock)
    
    
    Abundant (natural gas)Cost of New Capacity 2
(excluding infrastructure outside plant gate)
    
    
    CDN $2.8 billion* / 2 MMT KCl
    
    
    $1.5 billion / 1 MMT P2O5
    
    
    $1.4 billion** / 1 MMT NH3Greenfield 3 Development Time 4
(including ramp-up)
    
    
    Minimum
7 years*
    
    
    3-4 years
    
    
    3 yearsProducing Countries 5
    
    
    12
    
    
    ~ 40 (based on phosphoric acid)
    
    
    ~ 60State- or Subsidy-Controlled Capacity 6
    
    
    19%
    
    
    46%
    
    
    57%Industry Operating Rate 7
    
    
    86%
    
    
    77%
    
    
    83%PotashCorp % of World Capacity 8
    
    
    22
    
    
    5
    
    
    2PotashCorp World Position by Capacity 9
    
    
    #1
    
    
    #3
    
    
    #3*
Conventional greenfield mine in Saskatchewan** Ammonia/urea complex1-9, See Appendix  Footnotes, Page 119




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8
    
    Company Overview
  Phosphate and Nitrogen Add Strength and Depth
    We Are Uniquely Prepared to Meet Rising Potash Demand
 Capability to Deliver on Our Strategy




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9
  Our Assets Let Us Deliver
  
    
    An experienced management team able to conceive, develop and implement long-term strategies and
commit the company to them
 
    
    Balance sheet strength over two decades that enables us to take advantage of
opportunities and withstand short-term business fluctuations
 
    
    Substantial cash flow, which is both the result and the cause of our success
 
    
    A productive workforce, motivated sales teams and a coordinated transportation network to serve
our target markets.
 More potash to respond to world demand.
 We Live by Our Core Values




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10
    
    Factors That Shaped Our Business in 2008
 A Year of Crisis in Food and Finance
 1. Economic Crisis Slowed Strongest Global Growth in 30 Years
  2. Commodity Prices Were Highly Volatile
 3. Highest Global Grain Demand  and Production  in History
  4. Farmers Postponed Fall Fertilizer Applications
  5. Record Net Income Contributed to US Farmers Strong Balance Sheets




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##### 



11
 6. Tight Global Potash Market Continued
  7. Potash Prices Rose Significantly
  8. Food Security Concerns Led to Chinese Agriculture Programs
  9. India Was Major Buyer in Phosphate Markets




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12
    
    Factors That Shaped Our Business in 2008
  10. Sulfur Market Was Volatile
  11. High Gas Costs Reduced Western Europe, Ukraine Competitiveness in Nitrogen
  12. In Troubled Environment, Potash Prices Held Firm




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Highlights#
    1
    
    IN GLOBAL PRODUCTION AND CAPACITY10.1
    

MMT CAPACITY
CONSTRUCTED THROUGH DEBOTTLENECK/EXPANSION PROJECTS
FROM 2005 TO END OF 2012$
    7
    
    BILLION (CDN)
CAPITAL EXPENDITURES
ON THESE PROJECTS




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Potash
    

OVERVIEW
    
    
    13
  OVERVIEW: More Potash Than Any Other Company
 The Potash Leader
   Potash: The Ideal Fertilizer Enterprise
 Greenfield Production At Least Seven Years Away
   SNAPSHOT OF POTASHStrategies
    
    
    Risks
    
    
    Mitigation
    
    
    Capability to DeliverAs offshore demand
grows, bring on
capacity at much
lower cost than
greenfield
    
    
    Reduced prices if
supply rises faster
than consumption or
demand insufficient
to consume new
capacity
    
    
    Pace internal
growth to rising
market demand, and
match production to
demandWork with partners
to ensure adequate transportation
infrastructure
    
    
    Three expansion
projects completed,
five underway,
providing 18 MMT of
capacity constructed
by end of 2012Short-term
distribution
problems could
cause loss of sales
    
    

    
    
    Canpotex and
PotashCorp
increasing
distribution system
capabilityMatch production to
market demand to
enhance stability
    
    
    Lost production,
higher operating
costs
    
    
    Structure
operations so
majority of costs
are variable, and
production costs
can be varied
economically
    
    
    Of total potash
operating costs, 70%
are variable
 Keyword
Online: Potash

    
POTASHCORP 2008 FINANCIAL REVIEW




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14
    
    Potash OVERVIEW
  More Long-Term Growth
  Offshore Sales and Logistics
   
    
    China buys from Canpotex under three-year memoranda of understanding, with pricing and volumes
negotiated annually. The current memorandum expires at the end of 2009;
 
    
    Japan and Korea buy from Canpotex under six-month price and volume contracts;
 
    
    India has traditionally bought from Canpotex as needed under six- to 12-month price and volume
contracts;
 
    
    Brazil buys from Canpotex and PCS Sales, and Southeast Asian countries from Canpotex, on the spot
market.
  North America Sales and Logistics
  Global and North American Competitors




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Potash
    
    SWOT
    
    
    15
  STRENGTHS
 
    
    Can substantially raise capacity in less time than and at a significant discount to comparable
greenfield capacity
 
    
    Low-cost, flexible production with small percentage of fixed costs
 
    
    Per-tonne fixed costs and mining taxes decrease as production increases
 
    
    Existing operations have significant reserves and mine lives
 
    
    Offshore investments add considerable global reach and profitability
 
    
    Depth and tested experience of management team
 
    
    Substantial barriers to entry, with high capital costs and long lead times
 
    
    Few world producers, little government ownership
 
    
    No known substitutes for potash
 WEAKNESSES
 
    
    High rail and ocean freight delivery costs for Saskatchewan potash, potential for transportation
bottlenecks
 
    
    Water inflow at New Brunswick increases costs, and risks loss of production
 
    
    Production costs exposed to Canadian dollar volatility
 
    
    High Saskatchewan resource taxes and federal and provincial income taxes relative to global
competitors
 OPPORTUNITIES
 
    
    Substantial and rising global demand for food and biofuels is accelerating long-term growth
expectations for potash consumption
 
    
    Planned capacity additions could give us a larger share of a growing market, since competitors
have limited expansion potential and regions with long-term capacity growth potential may be
affected by heightened geopolitical risk and reduced access to credit
 THREATS
 
    
    Demand can be temporarily affected by changes in consumption patterns in offshore markets
 
    
    Our strategy of matching production to market demand means PotashCorp can be disproportionately
affected by market weakness, particularly in the short term
 
    
    Potash demand growth could exceed the companys logistical capability to deliver in the short term
 
    
    Substantial upward pricing trend may attract greenfield projects




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16
    
    Potash
    
    OVERVIEW  |   STRATEGY
 Strategic Investments Broaden Our Potash Enterprise
   More global exposure through offshore investments.
 POTASHCORPS STRATEGY
 Increase Capacity as Demand Grows
   Matching Our Added Capacity to Offshore Growth
  Produce to Meet Market Demand




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Potash
    
    DELIVERING RESULTS
    
    
    17
 CAPABILITY TO DELIVER
 We Can Deliver, Today and Tomorrow
 Preparing for the Rising World Need for Potash
 Skilled Labor Important to Production
   Preparing
the Transportation and 
Distribution Infrastructure




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18
    
    Potash
    
    RISKS  |  PERFORMANCE
 RISKS TO OUR POTASH STRATEGY
  New Supply Creates Market Imbalance
  Global Demand Insufficient to Consume
PotashCorp Capacity
 Lack of Adequate Transportation and Distribution Infrastructure
   Underground Mines Face Particular Risks
   POTASH PERFORMANCE: 2008 VS 2007
  
    
    Record gross margin of $3,055.5 million, 235 percent higher than 2007
    
    Record 169 percent increase in realized sales prices caused by tight market supply and higher crop
commodity prices for most of 2008
    
    Due mainly to Canpotex price increases to China, Brazil, India and Southeast Asia, average
realized offshore prices were up 195 percent over 2007. Average realized North American prices rose
133 percent
    
    Average annual offshore prices surpassed North American prices for the first time since 2002.
Driven by low global
 grain stocks and record-setting crop prices in key emerging markets, offshore
price increases outpaced those in North America, particularly in the first half of the year
    
    Sales volumes declined due to limited supply caused by labor disputes at three of our mines and
reduced demand amidst uncertainty caused by the growing world economic crisis
    
    Canpotex shipped 9.3 million tonnes in both 2008 and 2007. Sales to China were 13 percent of 2008
total (2007  26 percent), Brazil 20 percent (2007
 21 percent) and India 16 percent (2007  10
percent). Our New Brunswick operations shipped 0.5 million tonnes offshore in 2008




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##### 



Potash
    
    PERFORMANCE
    
    
    19
  (31 percent to Brazil) vs 0.7 million tonnes in 2007 (44 percent to Brazil)
    
    The pattern of offshore potash shipments was altered in 2008 by a late contract settlement between
Canpotex and China. India benefited from Chinas late entry to the market, receiving nearly 60
percent more potash from Canpotex than it had in the prior year
    
    North American sales volumes fell 15 percent as farmers mostly passed on a normal fall application
due to the late harvest and unfolding global financial concerns
 
    
    Due to reduced fourth-quarter demand, inventories rose to 844,000 tonnes, 24 percent higher than
last year but 3 percent lower than the five-year average
    
    Cost of goods sold rose due to: increased royalties caused by higher sales prices ($5.50 per tonne
or $47.0 million), increased brine inflow costs at New Brunswick ($3.50 per tonne or $29.3
million), strike-related costs ($2.00 per tonne or $19.6 million), a stronger Canadian dollar
($5.00 per tonne or $43.4 million) and increased fixed costs being distributed over fewer tonnes
sold
   Potash Results
 % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % IncreaseDollars (millions)
    
    
    
    (Decrease)
    
    
    
    
    Tonnes (thousands)
    
    
    
    (Decrease)
    
    
    
    Average per Tonne

    
    
    (Decrease)2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    
    2008
    
    
    
    2007
    
    
    
    
    2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    
    2008
    
    
    
    2007
    
    
    
    
    2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    
    2008
    
    
    
    2007Sales
    
    $
    4,068.1
    
    
    $
    1,797.2
    
    
    $
    1,227.5
    
    
    
    
    126
    
    
    
    46Freight
    
    
    167.3
    
    
    
    178.1
    
    
    
    130.5
    
    
    
    
    (6
    )
    
    
    36Transportation and distribution
    
    
    42.1
    
    
    
    39.1
    
    
    
    38.8
    
    
    
    
    8
    
    
    
    1Net sales
    
    $
    3,858.7
    
    
    $
    1,580.0
    
    
    $
    1,058.2
    
    
    
    
    144
    
    
    
    49Manufactured productNet salesNorth American
    
    $
    1,307.5
    
    
    $
    656.9
    
    
    $
    470.5
    
    
    
    
    99
    
    
    
    40
    
    
    
    
    2,962
    
    
    
    3,471
    
    
    
    2,785
    
    
    
    
    (15
    )
    
    
    25
    
    
    
    $
    441.38
    
    
    $
    189.26
    
    
    $
    168.95
    
    
    
    
    133
    
    
    
    12Offshore
    
    
    2,526.8
    
    
    
    909.6
    
    
    
    576.0
    
    
    
    
    178
    
    
    
    58
    
    
    
    
    5,585
    
    
    
    5,929
    
    
    
    4,411
    
    
    
    
    (6
    )
    
    
    34
    
    
    
    $
    452.43
    
    
    $
    153.41
    
    
    $
    130.56
    
    
    
    
    195
    
    
    
    183,834.3
    
    
    
    1,566.5
    
    
    
    1,046.5
    
    
    
    
    145
    
    
    
    50
    
    
    
    
    8,547
    
    
    
    9,400
    
    
    
    7,196
    
    
    
    
    (9
    )
    
    
    31
    
    
    
    $
    448.60
    
    
    $
    166.65
    
    
    $
    145.42
    
    
    
    
    169
    
    
    
    15Cost of goods sold
    
    
    783.8
    
    
    
    658.8
    
    
    
    489.3
    
    
    
    
    19
    
    
    
    35
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    91.69
    
    
    $
    70.09
    
    
    $
    67.99
    
    
    
    
    31
    
    
    
    3Gross margin
    
    
    3,050.5
    
    
    
    907.7
    
    
    
    557.2
    
    
    
    
    236
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    356.91
    
    
    $
    96.56
    
    
    $
    77.43
    
    
    
    
    270
    
    
    
    25Other miscellaneous and
purchased productNet sales
    
    
    24.4
    
    
    
    13.5
    
    
    
    11.7
    
    
    
    
    81
    
    
    
    15Cost of goods sold
    
    
    19.4
    
    
    
    8.9
    
    
    
    7.8
    
    
    
    
    118
    
    
    
    14Gross margin
    
    
    5.0
    
    
    
    4.6
    
    
    
    3.9
    
    
    
    
    9
    
    
    
    18Gross Margin
    
    $
    3,055.5
    
    
    $
    912.3
    
    
    $
    561.1
    
    
    
    
    235
    
    
    
    63
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    357.49
    
    
    $
    97.05
    
    
    $
    77.97
    
    
    
    
    268
    
    
    
    24
 
 Note 19 to the consolidated financial statements provides information pertaining to our business segments. Potash gross margin variance attributable to: Dollars (millions)
 2008 vs 2007Change in
    
    
    
    Change in Prices/CostsSales Volumes
    
    
    
    Net Sales
    
    
    Cost of Goods Sold
    
    
    
    TotalManufactured productNorth American
    
    $
    (74.5
    )
    
    
    $
    746.9
    
    
    $
    (63.6
    )
    
    
    $
    608.8Offshore
    
    
    (37.2
    )
    
    
    
    1,670.0
    
    
    
    (98.8
    )
    
    
    
    1,534.0Change in market mix
    
    
    7.0
    
    
    
    
    (7.0
    )
    
    
    
    
    
    
    
    Total manufactured product
    
    $
    (104.7
    )
    
    
    $
    2,409.9
    
    
    $
    (162.4
    )
    
    
    
    2,142.8Other miscellaneous and purchased product
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.4TOTAL
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,143.2




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##### 



20
    
    Potash
    
    PERFORMANCE
  HIGHLIGHTS OF 2007 VS 2006
 
    
    Record gross margin of $912.3 million, 63 percent higher than 2006 and 29 percent above the 2005
record
    
    Record sales volumes of 9.4 million tonnes, 31 percent above 2006, due to exceptionally tight
market conditions
    
    Products sold on allocation for most of the last half of 2007 (sold as ordered in 2006)
    
    Offshore sales up 34 percent from 2006, reflecting higher demand as farmers worked to correct
decades of under-application and took advantage of higher commodity prices (grains, soybeans, corn
and palm oil)
    
    Canpotex shipped 9.3 million tonnes in 2007 and 6.7 million tonnes in 2006 (PotashCorps share 55
percent); sales to Brazil were 21 percent (2006  15 percent) while China and India were 26 percent
(2006  19 percent) and 10 percent (2006  10 percent), respectively. Our New Brunswick operation
shipped 0.7 million tonnes offshore in both years with 44 percent to Brazil in 2007 and 53 percent
in 2006
    
    North American sales up due to stronger dealer fill and field application caused by higher
commodity prices and more acreage planted
    
    Year-end inventories of approximately 680,000 tonnes, 27 percent below 2006 and second lowest
since 1991
    
    Offshore prices up 18 percent as Canpotex agreed to total per-tonne price increases with China
($5), Brazil ($175), India ($50) and Southeast Asia ($195) by the end of 2007
 
    
    North American prices up 12 percent due to price increases that totaled $82 per tonne by the end
of 2007
    
    Gap between North American spot prices and contracted offshore prices due, in part, to lag between
spot market and termed pricing in contracts, and different product mix
    
    Cost of goods sold up compared to 2006 because of higher production levels, higher brine inflow
costs ($5.50 per tonne or $51.5 million), a stronger Canadian dollar ($3.00 per tonne) and 47 fewer
shutdown weeks (2006 shutdown weeks higher due to matching production with demand)
  Potash Production (million tonnes KCl)
 Production
    
    
    Mine SiteCapacity
    
    
    2008
    
    2007
    
    2006
    
    
    EmployeesLanigan SK
    
    
    
    3.828
    
    
    
    
    2.141
    
    
    
    1.907
    
    
    
    1.471
    
    
    
    
    519Rocanville SK
    
    
    
    3.044
    
    
    
    
    2.834
    
    
    
    2.647
    
    
    
    1.897
    
    
    
    
    406Allan SK
    
    
    
    1.885
    
    
    
    
    1.093
    
    
    
    1.744
    
    
    
    0.992
    
    
    
    
    347Cory SK
    
    
    
    1.361
    
    
    
    
    0.420
    
    
    
    0.768
    
    
    
    0.772
    
    
    
    
    271Patience Lake SK
    
    
    
    1.033
    
    
    
    
    0.282
    
    
    
    0.257
    
    
    
    0.190
    
    
    
    
    75Esterhazy SK *
    
    
    
    1.313
    
    
    
    
    1.125
    
    
    
    1.043
    
    
    
    0.953
    
    
    
    
    0New Brunswick NB
    
    
    
    0.785
    
    
    
    
    0.802
    
    
    
    0.793
    
    
    
    0.743
    
    
    
    
    339Total
    
    
    
    13.249
    
    
    
    
    8.697
    
    
    
    9.159
    
    
    
    7.018
    
    
    
    
    1,957
 
 *
    
    PotashCorps mineral rights at Esterhazy are mined by Mosaic Potash Esterhazy
Canada Limited Partnership under a mining and processing long-term agreement.
For calendar year 2009, our production allocation is 1.125 million tonnes.




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##### 








---



##### 



Highlights#
    
    3
    
    IN GLOBAL CAPACITY#
    
    1
    

WORLD PRODUCER OFSPECIALTY PHOSPHATE
PRODUCTSLARGEST, LOWEST-COSTUS ROCK DEPOSITS




---



##### 



Phosphate
    
    OVERVIEW
    
    
    21
  OVERVIEW: The Flexible Phosphate Producer
 Offering More Diversity in the Phosphate World
  Good Rock Is the Basis of Success in Phosphate
  Industry Enjoys Strong 2008 After 2007 Turnaround
  More high-quality phosphate rock means greater flexibility.
 Extreme Volatility in Raw Material Costs in 2008
   Market Structure Can Lead to Higher Volatility
  Limited New DAP Capacity Underway
   SNAPSHOT OF PHOSPHATEStrategy
    
    
    Risk
    
    
    Mitigation
    
    
    Capability to DeliverOptimize product
mix to maximize
gross margin and
reduce volatility
    
    
    Short-term
cyclicality due
to fluctuations in
demand, competitive
costs, availability
of supply and
government
involvement in the
industry
    
    
    Leverage strengths in less-cyclical
 industrial
and
feed products, optimize
fertilizer
operations to
minimize production
costs
    
    
    New permits expected
at Aurora to allow
for 37 years
of mining
Commissioning a new sulfuric acid plant in 2009
that will enable productive capability to meet
stated phosphoric acid capacities
 Keyword Online: Phosphate

    
POTASHCORP 2008 FINANCIAL REVIEW




---



##### 



22
    
    Phosphate
    
    OVERVIEW  |  STRATEGY
 Benefiting from Diversification
 2 5
 Feed and Industrial Provide Stability
 Phosphate Sales and Logistics
  Global and North American Competitors
  POTASHCORP STRATEGY
 Maximize Returns and Stability Through Product Flexibility




---



##### 



Phosphate
    
    SWOT
    
    
    23
  STRENGTHS
 
    
    Significant high-quality, low-cost phosphate rock reserves provide cost advantage over
non-integrated producers
    
    Ability to direct rock with low levels of impurities to diversified product line to optimize
margins
    
    Mining near processing facilities provides cost advantage over North American competitors
    
    Access to lower-cost North American liquid sulfur
    
    Strong position in North American purified acid, feed phosphate and liquid fertilizer markets
 WEAKNESSES
 
    
    Transporting ammonia to solid fertilizer plants is becoming more difficult and costly
    
    Higher sulfur and ammonia costs can negatively impact margins
    
    Plants with high fixed costs may not perform profitably at lower operating rates
    
    Long-term sales contracts for industrial and some liquid fertilizer products can cause a lag in
pricing in times of rising input costs, temporarily impacting margins
 OPPORTUNITIES
 
    
    Balanced to tight phosphate rock, phosphoric acid and solid fertilizer fundamentals expected in
the medium term
    
    Few companies globally with rock of sufficient quality to profitably produce purified acid
    
    Few greenfield projects give at least a three-year window on solid fertilizer supply, until Saudi
Arabias Maaden project comes on stream
 THREATS
 
    
    Significant government control in global phosphate supply and consumption decisions
    
    High barriers to exit because of significant environmental restoration and remediation costs
    
    Extensive environmental and permitting requirements




---



##### 



24
    
    Phosphate
    
    DELIVERING  RESULTS  |  RISKS  |  PERFORMANCE
 CAPABILITY TO DELIVER
 Delivering Product Diversity
 RISK TO OUR PHOSPHATE STRATEGY
 Risk of Cyclicality
   More diversity means more options in difficult phosphate markets.
 PHOSPHATE PERFORMANCE: 2008 VS 2007
  
    
    Record gross margin of $1,114.5 million exceeded 2007 record of $432.8 million
    
    Solid fertilizers generated $438.9 million of 2008 gross margin, liquid fertilizers $366.7
million, feed $203.0 million, industrial products $95.4 million
    
    Realized prices were up in all major product categories due to strong agricultural demand, a
higher Chinese export tax and the global impact of higher costs for inputs such as sulfur,
phosphate rock and ammonia
    
    Price increases in the industrial market trailed those of other markets because certain contracts
have pricing that resets annually
    
    Sales volumes of all phosphate fertilizers declined. Poor weather delayed North American plantings
and harvest; and both domestic and offshore demand fell significantly in the fourth quarter as the
global economic crisis unfolded and buyers
deferred purchases in anticipation of producers around the world dropping prices to move product or
acquire cash
 
    
    Gross margin reduced by: $501.9 million in higher sulfur costs (caused by  greater demand for most of 2008); $59.3 million in higher ammonia costs impacting
solid fertilizers (caused by increased agricultural demand); and a 22 percent increase in rock
costs caused by rock quality issues at White Springs and higher maintenance costs at Aurora




---



##### 



Phosphate
    
    PERFORMANCE
    
    
    25
  Phosphate Results
 % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % IncreaseDollars (millions)
    
    
    
    (Decrease)
    
    
    
    Tonnes (thousands)
    
    
    
    (Decrease)
    
    
    
    Average per Tonne

    
    
    (Decrease)2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    
    2008
    
    
    
    2007
    
    
    
    
    2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    
    2008
    
    
    
    2007
    
    
    
    
    2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    
    2008
    
    
    
    2007Sales
    
    $
    2,880.7
    
    
    $
    1,637.1
    
    
    $
    1,255.1
    
    
    
    
    76
    
    
    
    30Freight
    
    
    101.1
    
    
    
    112.4
    
    
    
    88.5
    
    
    
    
    (10
    )
    
    
    27Transportation
and distribution
    
    
    39.4
    
    
    
    33.4
    
    
    
    43.1
    
    
    
    
    18
    
    
    
    (23
    )Net sales
    
    $
    2,740.2
    
    
    $
    1,491.3
    
    
    $
    1,123.5
    
    
    
    
    84
    
    
    
    33Manufactured productNet salesFertilizer  liquids
    
    $
    734.6
    
    
    $
    283.4
    
    
    $
    206.6
    
    
    
    
    159
    
    
    
    37
    
    
    
    
    893
    
    
    
    983
    
    
    
    911
    
    
    
    
    (9
    )
    
    
    8
    
    
    
    $
    823.17
    
    
    $
    288.37
    
    
    $
    226.89
    
    
    
    
    185
    
    
    
    27Fertilizer  solids
    
    
    996.8
    
    
    
    607.5
    
    
    
    391.6
    
    
    
    
    64
    
    
    
    55
    
    
    
    
    1,069
    
    
    
    1,623
    
    
    
    1,634
    
    
    
    
    (34
    )
    
    
    (1
    )
    
    
    $
    932.44
    
    
    $
    374.22
    
    
    $
    239.64
    
    
    
    
    149
    
    
    
    56Feed
    
    
    492.9
    
    
    
    272.7
    
    
    
    238.4
    
    
    
    
    81
    
    
    
    14
    
    
    
    
    654
    
    
    
    814
    
    
    
    778
    
    
    
    
    (20
    )
    
    
    5
    
    
    
    $
    753.90
    
    
    $
    335.03
    
    
    $
    306.63
    
    
    
    
    125
    
    
    
    9Industrial
    
    
    471.0
    
    
    
    277.4
    
    
    
    239.7
    
    
    
    
    70
    
    
    
    16
    
    
    
    
    706
    
    
    
    731
    
    
    
    647
    
    
    
    
    (3
    )
    
    
    13
    
    
    
    $
    666.97
    
    
    $
    379.47
    
    
    $
    370.33
    
    
    
    
    76
    
    
    
    22,695.3
    
    
    
    1,441.0
    
    
    
    1,076.3
    
    
    
    
    87
    
    
    
    34
    
    
    
    
    3,322
    
    
    
    4,151
    
    
    
    3,970
    
    
    
    
    (20
    )
    
    
    5
    
    
    
    $
    811.50
    
    
    $
    347.14
    
    
    $
    271.14
    
    
    
    
    134
    
    
    
    28Cost of goods sold


    1,591.3
    
    
    
    1,019.5
    
    
    
    958.7
    
    
    
    
    56
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    479.17
    
    
    $
    245.60
    
    
    $
    241.52
    
    
    
    
    95
    
    
    
    2Gross margin
    
    
    1,104.0
    
    
    
    421.5
    
    
    
    117.6
    
    
    
    
    162
    
    
    
    258
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    332.33
    
    
    $
    101.54
    
    
    $
    29.62
    
    
    
    
    227
    
    
    
    243Other miscellaneousand purchased productNet sales
    
    
    44.9
    
    
    
    50.3
    
    
    
    47.2
    
    
    
    
    (11
    )
    
    
    7Cost of goods sold


    34.4
    
    
    
    39.0
    
    
    
    39.5
    
    
    
    
    (12
    )
    
    
    (1
    )Gross margin
    
    
    10.5
    
    
    
    11.3
    
    
    
    7.7
    
    
    
    
    (7
    )
    
    
    47Gross Margin
    
    $
    1,114.5
    
    
    $
    432.8
    
    
    $
    125.3
    
    
    
    
    158
    
    
    
    245
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    335.49
    
    
    $
    104.26
    
    
    $
    31.56
    
    
    
    
    222
    
    
    
    230
 
 Note 19 to the consolidated financial statements provides information pertaining to our business segments. Phosphate gross margin variance attributable to: Dollars (millions)
 2008 vs 2007Change in
    
    
    
    Change in Prices/CostsSales Volumes
    
    
    
    Net Sales
    
    
    Cost of Goods Sold
    
    
    
    TotalManufactured productFertilizer  liquids
    
    $
    (18.0
    )
    
    
    $
    477.5
    
    
    $
    (181.1
    )
    
    
    $
    278.4Fertilizer  solids
    
    
    (128.9
    )
    
    
    
    596.4
    
    
    
    (232.6
    )
    
    
    
    234.9Feed
    
    
    (33.5
    )
    
    
    
    273.9
    
    
    
    (104.4
    )
    
    
    
    136.0Industrial
    
    
    (4.7
    )
    
    
    
    203.0
    
    
    
    (164.0
    )
    
    
    
    34.3Change in product mix
    
    
    8.7
    
    
    
    
    (8.4
    )
    
    
    (1.4
    )
    
    
    
    (1.1
    )Total manufactured product
    
    $
    (176.4
    )
    
    
    $
    1,542.4
    
    
    $
    (683.5
    )
    
    
    
    682.5Miscellaneous and purchased product
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.8
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    681.7
 Phosphate Production (million tonnes product)
 Aurora
    
    
    White Springs
    
    
    GeismarAnnual
    
    
    
    
    
    Production
    
    
    Annual
    
    
    
    
    
    Production
    
    
    Annual
    
    
    
    
    
    ProductionCapacity
    
    
    
    
    
    2008
    
    2007
    
    2006
    
    
    Capacity
    
    
    
    
    
    2008
    
    2007
    
    2006
    
    
    Capacity
    
    
    
    
    
    2008
    
    2007
    
    2006Liquids: MGA 1
    
    
    1.835
    
    
    
    
    
    
    
    1.739
    
    
    
    1.740
    
    
    
    1.722
    
    
    
    
    1.908
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.337
    
    
    
    
    
    
    
    0.245
    
    
    
    0.258
    
    
    
    0.241SPA
    
    
    0.676
    
    
    
    
    
    
    
    0.191
    
    
    
    0.203
    
    
    
    0.188
    
    
    
    
    1.138
    
    
    
    
    
    
    
    0.704
    
    
    
    0.793
    
    
    
    0.655
    
    
    
    
    0.196
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.015Solids (total)
    
    
    1.247
    
    
    DAP
    
    
    0.445
    
    
    
    0.548
    
    
    
    0.609
    
    
    
    
    0.710
    
    
    DAP
    
    
    0.226
    
    
    
    0.375
    
    
    
    0.495
    
    
    
    
    
    
    
    DAP
    
    
    
    
    
    
    
    
    
    
    MAP
    
    
    0.395
    
    
    
    0.389
    
    
    
    0.372
    
    
    
    
    
    
    
    MAP
    
    
    0.208
    
    
    
    0.286
    
    
    
    0.159
    
    
    
    
    
    
    
    MAP
    
    
    
    
    
    
    
    
    
    
    DAP/MAP (total)
    
    
    
    
    
    
    
    
    
    
    0.840
    
    
    
    0.937
    
    
    
    0.981
    
    
    
    
    
    
    
    
    
    
    
    
    0.434
    
    
    
    0.661
    
    
    
    0.654
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 1
    
    A substantial portion is consumed internally in the production of downstream
products. The balance is exported to phosphate fertilizer producers and sold
domestically to dealers who custom-mix liquid fertilizer.




---



##### 



26
    
    Phosphate
    
    PERFORMANCE
 HIGHLIGHTS OF 2007 VS 2006
 
    
    Phosphate gross margin a record of $432.8 million, 245 percent higher than 2006
    
    Solid fertilizers generated $205.8 million of 2007 gross margin, liquid fertilizers $88.2 million,
feed $67.3 million, industrial products $60.2 million
    
    Realized prices up in all major product categories due to strong agricultural demand and global
impact of high demand for inputs
    
    Manufactured solid fertilizer sales volumes down 1 percent due to switch to high-demand liquid
fertilizers, where sales volumes rose 8 percent
 
    
    Limited global sulfur supply, more demand for ammonia, higher rock costs, higher electrical and
chemical processing costs at Aurora and White Springs and two planned dragline turnarounds at
Aurora negatively impacted cost of goods sold
    
    Higher maintenance costs impacted feed and industrial; industrial was further impacted by higher
electricity costs and a larger share of Geismar fixed costs allocated to it after the 2006 shutdown
of two product lines there
    
    Transportation and distribution costs down 23 percent despite increased sales, due to focus on
North American market
    Rock and Acid Production
 Phosphate Rock Production (million tones)
    
    
    
    Phosphoric Acid (million tones P2O5)Annual
    
    Production
    
    
    
    Annual
    
    ProductionCapacity
    
    2008
    
    
    2007
    
    
    2006
    
    
    
    Capacity
    
    2008
    
    
    2007
    
    
    2006
    
    
    
    EmployeesAurora NC
    
    
    6.000
    
    
    
    4.027
    
    
    
    4.086
    
    
    
    4.577
    
    
    
    
    1.202
    
    
    
    1.054
    
    
    
    1.083
    
    
    
    1.080
    
    
    
    
    1,064White Springs FL
    
    
    3.600
    
    
    
    3.025
    
    
    
    3.226
    
    
    
    3.114
    
    
    
    
    .966
    
    
    
    0.741
    
    
    
    .925
    
    
    
    .881
    
    
    
    
    901Geismar LA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    .202
    
    
    
    0.147
    
    
    
    .156
    
    
    
    .147
    
    
    
    
    75Total
    
    
    9.600
    
    
    
    7.052
    
    
    
    7.312
    
    
    
    7.691
    
    
    
    
    2.370
    
    
    
    1.942
    
    
    
    2.164
    
    
    
    2.108
    
    
    
    
    2,040
  Phosphate
Feed Production (million tones)
 ProductionCapacity
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    
    EmployeesMarseilles IL
    
    
    0.278
    
    
    
    
    0.117
    
    
    
    0.132
    
    
    
    0.119
    
    
    
    
    26White Springs FL
(Monocal)
    
    
    0.272
    
    
    
    
    0.153
    
    
    
    0.191
    
    
    
    0.192
    
    
    
    
    26Weeping Water NE
    
    
    0.209
    
    
    
    
    0.100
    
    
    
    0.110
    
    
    
    0.117
    
    
    
    
    35Joplin MO
    
    
    0.163
    
    
    
    
    0.065
    
    
    
    0.071
    
    
    
    0.082
    
    
    
    
    25Aurora NC (DFP)
    
    
    0.159
    
    
    
    
    0.095
    
    
    
    0.084
    
    
    
    0.085
    
    
    
    
    30White 
Springs 
FL
(DFP) 1
    
    
    .100
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0Fosfatos do
Brasil 2
    
    
    0.110
    
    
    
    
    0.043
    
    
    
    0.056
    
    
    
    0.049
    
    
    
    
    0Total
    
    
    1.291
    
    
    
    
    0.573
    
    
    
    0.644
    
    
    
    0.644
    
    
    
    
    142
 
 1
    
    Ceased production July 31, 20052
    
    Divested ownership September 29, 2008 Purified
Acid Production (million tonnes P2O5)
 Annual
    
    
    
    ProductionCapacity
    
    
    
    2008
    
    
    2007
    
    
    2006Aurora NC
    
    
    0.333
    
    
    
    
    0.254
    
    
    
    0.268
    
    
    
    0.245
 Phosphate Products for Food and Technical Applications
 Cincinnati, OH
    
    
    2008
    
    
    
    2007
    
    
    
    2006Purified acid feedstock
utilized (tonnes P2O5)
    
    
    13,459
    
    
    
    13,465
    
    
    
    13,303Product tonnes processed:Acid phosphates
    
    
    18,308
    
    
    
    17,473
    
    
    
    17,253Specialty phosphates
    
    
    9,425
    
    
    
    11,281
    
    
    
    11,201




---



##### 








---



##### 



Highlights#
    3
    
    IN WORLDAMMONIA CAPACITY93
    
    %
AVERAGE TRINIDAD NATURAL
GAS VOLUMES LOCKED IN THROUGH 2012,71% THROUGH 201860
    
    %OF AMMONIAPRODUCED IN TRINIDAD




---



##### 



Nitrogen
    
    OVERVIEW
    
    
    27
 OVERVIEW: PotashCorp Thrives on Trinidad Advantage
  Offering More in the Nitrogen World
  Low-Cost Natural Gas, Market Proximity
Keys to Success
   Low-Cost Gas Regions Potentially Impact Markets
 Nitrogen Is Widely Produced and Used
  Governments Are Significantly Involved
  Nitrogen Markets Were Volatile
   SNAPSHOT
OF NITROGENStrategies
    
    
    Risks
    
    
    Mitigation
    
    
    Capability to DeliverMaximize, leverage
benefits of
lower-cost Trinidad
production
    
    
    Governments with
surplus low-cost
natural gas may
monetize it by
converting it to
nitrogen without
considering demand
    
    
    Maintain Trinidads
cost advantage
through gas
contracts
    
    
    Multi-year
lower-cost gas
contracts provide
long-term advantage
Long-term vessel
leases secure
delivery to US
marketsDirect sales of US
production
to less-cyclical
industrial
customers
    
    
    Competition from
low-cost imports
through the Gulf
    
    
    Focus on customers
that rely
on long-term,
secure supply
    
    
    Industrial customers  some linked by
pipeline  take more than 80% of US manufactured ammonia
 Keyword Online: Nitrogen
    
POTASHCORP 2008 FINANCIAL REVIEW




---



##### 



28
    
    Nitrogen
    
    SWOT
 STRENGTHS
 
    
    Long-term, lower-cost natural gas contracts in Trinidad
    
    60 percent of our ammonia production in Trinidad, close to the US, the worlds largest importer
    
    US-manufactured ammonia operations somewhat geographically insulated, and make more than 80
percent of sales to less cyclical industrial customers
 WEAKNESSES
 
    
    40 percent of our ammonia production is in the US, using higher-cost natural gas
    
    Contractual commitments to US industrial customers may force us to temporarily operate
unprofitably amid rising gas prices
 OPPORTUNITIES
 
    
    Narrowing gap in global gas prices is raising floor price for nitrogen
    
    Europe now the swing supplier with higher gas costs, supporting a higher floor for US nitrogen
prices
    
    LNG projects in low-cost gas regions provide alternatives for monetizing gas, reducing new supply
pressures in nitrogen
    
    Higher construction costs, limited credit availability and geopolitical risk in most low-cost gas
regions discourage greenfield plants
 THREATS
 
    
    Low-cost natural gas in developing countries may be monetized as nitrogen products
    
    Significant government ownership and influence worldwide could lead to political rather than
market-driven decisions
    
    Shorter construction period means new capacity can impact the market more quickly than for other
nutrients
    
    Pending changes in transport regulations in North America could substantially increase the cost
of shipping ammonia and difficulty in getting permits for terminals




---



##### 



Nitrogen
    
    OVERVIEW
    
    
    29
 Nitrogen Offers Farmers Choices
   PotashCorp, Emphasizing Trinidad and Industrial
 Nitrogen Sales and Logistics
    More lower-cost nitrogen through Trinidad operations.




---



##### 



30
    
    Nitrogen
    
    STRATEGY  |  DELIVERING  RESULTS  |  RISKS  |  PERFORMANCE
 POTASHCORPS STRATEGY
 Minimize Volatility Through Trinidad
   CAPABILITY TO DELIVER
 Delivering Products Efficiently
   RISK TO OUR NITROGEN STRATEGY
 Risk of Cyclicality
 NITROGEN PERFORMANCE: 2008 VS 2007
 
    
    Nitrogen gross margin a record of $737.4 million, 38 percent higher than 2007
    
    2008 gross margin consists of Trinidad ($372.4 million), US ($352.2 million) and natural gas
hedging program ($12.8 million)
    
    Record prices were driven by strong agricultural demand for most of 2008, rising Chinese export
taxes, higher energy costs and ammonia supply disruptions for major non-US producers. Market prices
for nitrogen products fell sharply in the fourth quarter. The international ammonia market weakened
considerably as large-scale cutbacks were made to operating rates in the phosphate and industrial
sectors, leading to sizable curtailments in ammonia export supply, including a portion of our
Trinidad operations
    
    Manufactured fertilizer sales volumes were down 13 percent as: (1) demand dropped off in the
fourth quarter due to some US farmers foregoing normal fall application due, in part, to a late
harvest and expectations that nitrogen prices would fall against a backdrop of declining raw
material prices and growing inventories in uncertain economic conditions; and (2) less Trinidad
product was available than in 2007 due to turnarounds during the year
    
    Manufactured cost of goods sold was up 41 percent as our average natural gas cost was $7.54 per MMBtu, or 75
percent higher than 2007. In the production of ammonia, our natural gas prices in Trinidad are
linked to the ammonia sales price and, combined with inefficiencies arising from lower production
rates compared to 2007, led to the price variance in cost of goods sold for ammonia being higher
than other products




---



##### 



Nitrogen
    
    PERFORMANCE
    
    
    31
  Nitrogen Results
 % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % IncreaseDollars (millions)
    
    
    
    (Decrease)
    
    
    
    Tonnes (thousands)
    
    
    
    (Decrease)
    
    
    
    Average per Tonne
    
    
    
    (Decrease)2008
    
    
    2007
    
    
    2006
    
    
    
    2008
    
    
    2007
    
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    
    2008
    
    
    2007
    
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    
    2008
    
    
    2007Sales
    
    $
    2,497.7
    
    
    $
    1,799.9
    
    
    $
    1,284.1
    
    
    
    
    39
    
    
    
    40Freight
    
    
    56.5
    
    
    
    55.6
    
    
    
    36.8
    
    
    
    
    2
    
    
    
    51Transportation and distribution
    
    
    50.9
    
    
    
    51.6
    
    
    
    52.2
    
    
    
    
    (1
    )
    
    
    (1
    )Net sales
    
    $
    2,390.3
    
    
    $
    1,692.7
    
    
    $
    1,195.1
    
    
    
    
    41
    
    
    
    42Manufactured productNet salesAmmonia
    
    $
    999.5
    
    
    $
    664.3
    
    
    $
    499.7
    
    
    
    
    50
    
    
    
    33
    
    
    
    
    1,794
    
    
    
    2,132
    
    
    
    1,695
    
    
    
    
    (16
    )
    
    
    26
    
    
    
    $
    557.05
    
    
    $
    311.55
    
    
    $
    294.84
    
    
    
    
    79
    
    
    
    6Urea
    
    
    633.1
    
    
    
    468.6
    
    
    
    317.8
    
    
    
    
    35
    
    
    
    47
    
    
    
    
    1,186
    
    
    
    1,333
    
    
    
    1,199
    
    
    
    
    (11
    )
    
    
    11
    
    
    
    $
    533.77
    
    
    $
    351.63
    
    
    $
    264.97
    
    
    
    
    52
    
    
    
    33Nitrogen solutions,
nitric acid,
ammonium nitrate
    
    
    577.9
    
    
    
    437.8
    
    
    
    305.4
    
    
    
    
    32
    
    
    
    43
    
    
    
    
    2,062
    
    
    
    2,266
    
    
    
    1,781
    
    
    
    
    (9
    )
    
    
    27
    
    
    
    $
    280.34
    
    
    $
    193.21
    
    
    $
    171.45
    
    
    
    
    45
    
    
    
    132,210.5
    
    
    
    1,570.7
    
    
    
    1,122.9
    
    
    
    
    41
    
    
    
    40
    
    
    
    
    5,042
    
    
    
    5,731
    
    
    
    4,675
    
    
    
    
    (12
    )
    
    
    23
    
    
    
    $
    438.43
    
    
    $
    274.07
    
    
    $
    240.16
    
    
    
    
    60
    
    
    
    14Cost of goods sold
    
    
    1,485.1
    
    
    
    1,055.6
    
    
    
    821.2
    
    
    
    
    41
    
    
    
    29
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    294.56
    
    
    $
    184.19
    
    
    $
    175.63
    
    
    
    
    60
    
    
    
    5Gross margin
    
    
    725.4
    
    
    
    515.1
    
    
    
    301.7
    
    
    
    
    41
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    143.87
    
    
    $
    89.88
    
    
    $
    64.53
    
    
    
    
    60
    
    
    
    39Other miscellaneous
and purchased productNet sales
    
    
    179.8
    
    
    
    122.0
    
    
    
    72.2
    
    
    
    
    47
    
    
    
    69Cost of goods sold
    
    
    167.8
    
    
    
    101.0
    
    
    
    58.3
    
    
    
    
    66
    
    
    
    73Gross margin
    
    
    12.0
    
    
    
    21.0
    
    
    
    13.9
    
    
    
    
    (43
    )
    
    
    51Gross Margin
    
    $
    737.4
    
    
    $
    536.1
    
    
    $
    315.6
    
    
    
    
    38
    
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    146.25
    
    
    $
    93.54
    
    
    $
    67.51
    
    
    
    
    56
    
    
    
    39
  Nitrogen gross margin variance attributable to: Dollars (millions)
 2008 vs 2007Change in
    
    
    
    Change in Prices/CostsSales Volumes
    
    
    Net Sales
    
    
    Cost of Goods Sold
    
    
    TotalManufactured productAmmonia
    
    $
    (53.6
    )
    
    
    $
    439.7
    
    
    $
    (248.0
    )
    
    
    $
    138.1Urea
    
    
    (38.4
    )
    
    
    
    216.0
    
    
    
    (111.0
    )
    
    
    
    66.6Solutions, nitric acid, ammonium nitrate
    
    
    (19.7
    )
    
    
    
    179.4
    
    
    
    (110.6
    )
    
    
    
    49.1Hedge
    
    
    
    
    
    
    
    
    
    
    
    (46.2
    )
    
    
    
    (46.2
    )Change in product mix
    
    
    7.5
    
    
    
    
    (6.3
    )
    
    
    1.5
    
    
    
    
    2.7Total manufactured product
    
    $
    (104.2
    )
    
    
    $
    828.8
    
    
    $
    (514.3
    )
    
    
    
    210.3Other miscellaneous and purchased product
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9.0
    )Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    201.3




---



##### 



32
    
    Nitrogen
    
    PERFORMANCE
 HIGHLIGHTS OF 2007 VS 2006
 
    
    Nitrogen gross margin a record $536.1 million, 70 percent higher than 2006
    
    Trinidad generated $298.9 million in 2007 gross margin, US facilities $178.2 million, natural gas
hedging program $59.0 million
    
    Prices increased for all major products except ammonium nitrate. Realized prices for: urea were up
33 percent on strong agricultural demand, production disruption in the Middle East and delays in
new capacity early in 2007; ammonia and nitrogen solutions were up due to strong agricultural
demand and low inventories; ammonium nitrate prills were down 9 percent because of a time lag in
natural gas price changes being reflected in price contracts with certain customers
    
    Manufactured fertilizer sales volumes up by 39 percent with higher demand and more product
available from the completion of debottlenecking projects
    
    North American sales volumes rose, particularly ammonia and urea
    
    Transportation and distribution costs declined despite higher sales, due to change in sales
volumes with certain customers
    
    Manufactured cost of goods sold rose 29 percent due to higher natural gas prices, including hedge,
production start-ups in Trinidad and mechanical problems in Lima
 Nitrogen Production (million tonnes)
 Annual
    
    
    
    ProductionCapacity
    
    
    
    2008
    
    
    2007
    
    
    2006Ammonia 1Trinidad
    
    
    2.177
    
    
    
    
    1.785
    
    
    
    2.077
    
    
    
    1.932Augusta GA
    
    

0.7132
    
    
    
    
    0.674
    
    
    
    0.610
    
    
    
    0.633Lima OH
    
    
    0.588
    
    
    
    
    0.538
    
    
    
    0.531
    
    
    
    0.339TOTAL
    
    
    3.478
    
    
    
    
    2.997
    
    
    
    3.218
    
    
    
    2.904Urea SolidsTrinidad
    
    
    0.709
    
    
    
    
    0.633
    
    
    
    0.710
    
    
    
    0.688Augusta GA
    
    
    0.431
    
    
    
    
    0.358
    
    
    
    0.312
    
    
    
    0.323Lima OH
    
    
    0.353
    
    
    
    
    0.314
    
    
    
    0.292
    
    
    
    0.186Geismar LA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TOTAL
    
    
    1.493
    
    
    
    
    1.305
    
    
    
    1.314
    
    
    
    1.197Nitrogen
Solutions 3Trinidad
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Augusta GA
    
    
    0.581
    
    
    
    
    0.317
    
    
    
    0.239
    
    
    
    0.197Lima OH
    
    
    0.227
    
    
    
    
    0.078
    
    
    
    0.082
    
    
    
    0.071Geismar LA
    
    
    1.028
    
    
    
    
    0.477
    
    
    
    0.520
    
    
    
    0.098TOTAL
    
    
    1.836
    
    
    
    
    0.872
    
    
    
    0.841
    
    
    
    0.366Nitric
Acid 1,4Trinidad
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Augusta GA
    
    
    0.592
    
    
    
    
    0.592
    
    
    
    0.525
    
    
    
    0.529Lima OH
    
    
    0.100
    
    
    
    
    0.097
    
    
    
    0.100
    
    
    
    0.098Geismar LA
    
    
    0.844
    
    
    
    
    0.599
    
    
    
    0.699
    
    
    
    0.531TOTAL
    
    
    1.536
    
    
    
    
    1.288
    
    
    
    1.324
    
    
    
    1.158Ammonium
Nitrate SolidsTrinidad
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Augusta GA
    
    
    0.576
    
    
    
    
    0.576
    
    
    
    0.540
    
    
    
    0.536Lima OH
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Geismar LA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    TOTAL
    
    
    0.576
    
    
    
    
    0.576
    
    
    
    0.540
    
    
    
    0.536EmployeesTrinidad
    
    
    418Augusta GA
    
    
    124Lima OH
    
    
    119Geismar LA
    
    
    64TOTAL
    
    

7255
 1
    
    A substantial portion is upgraded to value-added products.2
    
    Ammonia capacity increased by 25,000 tonnes3
    
    Based on 32% N content.4
    
    As 100% HNO3 tonnes.5
    
    413 contract employees work at the nitrogen plants, for a total workforce of 1,138.




---



##### 



2009 Outlook
    
    
    
    
    33
 The World Needs More Food from Every Acre
  1. Economy
  2. Agriculture
  3. Crop Prices
   Keyword
Online: Outlook
    
POTASHCORP 2008 FINANCIAL REVIEW




---



##### 



34
    
    2009 Outlook
 4. Potash
  5. Phosphate
 6. Natural Gas
  7. Nitrogen
  8. N, P and K




---



##### 



Key Performance Drivers
    
    
    
    
    35
  Goals, Targets and Results
  
 Goal
    
    Be the preferred supplier to the markets we serve
 2008 Target
    
    
    2008 ResultsOutperform competitors on quality
and service as measured by
customer surveys.
    
    
    ()
    
    We outperformed competitors in both
quality and overall customer service
in all four product groups surveyed.
 2009 Target
 1
    
    Outperform competitors on quality and service as measured by customer surveys.
 Goal
    
    Maximize long-term shareholder value
 2008 Targets
    
    2008 ResultsExceed total shareholder return for
our sector** and companies on the
DJUSBM* for 2008.
    
    
    ()
    
    We achieved total shareholder return in
2008 of 
-49 percent, below the -41 percent
generated by our sector** and above the -52
percent return of the DJUSBM.Remain in the top quartile of
governance practices as
measured by external reviews.
    
    
    ()
    
    We achieved this target and also tied
for the highest ranking in the Globe and Mails annual
corporate governance review of Canadian companies.
 2009 Targets
 1
    
    Exceed total shareholder return performance for our sector*** and the DAXglobal Agribusiness Index.2
    
    Exceed cash flow return on investment for our sector***.3
    
    Remain in the top quartile of governance practices as measured by predetermined external reviews.
  *
    
    Dow Jones US Basic Materials Index**
    
    Sector (2008): Market weighted average for Agrium, ICL, K+S, Mosaic, SQM and Yara***
    
    Sector (2009): Market weighted average for Agrium, APC, CF Industries, ICL, Intrepid, K+S, Mosaic, SQM, Terra, Uralkali and Yara
 Keyword
Online: KPD
    
POTASHCORP 2008 FINANCIAL REVIEW




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##### 



36
    
    Key Performance Drivers
  
 Goal
    
    Build strong relationships with and improve the socioeconomic well-being of our communities
 2008 Targets
    
    
    2008 ResultsAchieve 4 out of 5 on each
community leaders survey.
    
    
    ()
    
    4 out of 5 achieved in two of
the three community leaders surveys.Achieve a 10 percent increase in
individual participation in the
matching gift program and a 20
percent increase in total donations
from 2007 levels. Meet our
annual philanthropic donations
target of 1 percent of after-tax
earnings on a five-year rolling average.
    
    
    ()
    
    Achieved a 2 percent increase in
individual participation in
the matching gift program and a
66 percent increase in total matching donations.
Our annual philanthropic donations
exceeded 1 percent of the rolling
five-year average of after-tax earnings.Achieve a local purchasing level of 60
percent, excluding purchases of
energy, transportation and
raw materials.
    
    
    ()
    
    Achieved a level of 59 percent,
excluding purchases of energy, transportation and raw materials.
 2009 Targets
 1
    
    Achieve 4 (performing well) out of 5 on community leaders surveys.2
    
    Achieve a 10 percent increase in employee participation in the matching gift program and a 10
percent increase in matching gift donations from 2008 levels.3
    
    Invest up to 1 percent of after-tax earnings (on a five-year rolling average) in communities and
other philanthropic programs.4
    
    Achieve a local spending level of 60 percent on competitive terms, excluding purchases for major
expansions, energy, transportation and raw materials.
 Goal
    
    Attract and retain talented, motivated and productive employees who are committed to our long-term goals
 2008 Targets
    
    
    2008 ResultsAchieve an average employee engagement
score that is in the top quartile as
determined by the
annual employee engagement survey.
    
    
    ()
    
    Engagement survey score in the top quartile
(79 percent), meaning that all employees surveyed had
an average engagement with the company of 79 percent.Fill at least 75 percent of senior
staff openings with internal candidates.
    
    
    ()
    
    73 percent of senior staff openings were
filled with internal candidates.
 2009 Targets
 1
    
    Achieve an employee engagement score of at least 75 percent on the annual survey.2
    
    Fill at least 75 percent of senior staff openings with internal candidates.3
    
    Fill all staff-level job openings within an average of 30 days.




---



##### 



Key Performance Drivers
    
    
    
    
    37
  
  Goal
    
Prevent harm to people and damage to the environment
 2008 Targets
    
    
    2008 ResultsContinue safety initiatives to reduce
severity and lost-time injury rates to zero.
Reduce recordable injury rates by 15 percent
from 2007 level. Reduce lost-time injury
rates by 20 percent from 2007 level.
    
    
    ()
    
    Recordable injury rate increased by 9 percent and lost-time injury rate was up 84 percent.Reduce company-wide greenhouse gas emissions
per tonne of product by 10 percent by the
end of 2012, compared to 2007.
    
    
    ()
    
    On schedule. We have committed to installing
greenhouse gas emissions controls at our Geismar
facility, which are expected to reduce company-wide emissions by about 7 percent. We are also evaluating other opportunities.Maintain energy usage per tonne of
product produced at 2007 levels.
    
    
    ()
    
    Energy usage per tonne of product increased by 2 percent in 2008 due to temporary shutdowns at production facilities.Reduce reportable releases and permit
excursions by 15 percent from 2007 levels.
    
    
    ()
    
    Total reportable releases and permit excursions were reduced 35 percent.
 2009 Targets
 1
    
    Reduce total site* severity injury rate** by 25 percent by the end of 2011 from 2008 levels.2
    
    Achieve zero life-altering injuries at our sites*.3
    
    Reduce company-wide greenhouse gas emissions per tonne of product by 10 percent by end of 2012,
compared to 2007.4
    
    Reduce total reportable releases, permit excursions and spills by 15 percent from 2008 levels.
 
 *
    
    Total site includes PotashCorp employees, contract employees and all others on site.**
    
    Severity injury rate is total of lost-time injuries and modified work injuries for every 200,000
hours worked.




---



##### 



38
    
    Rewarding Results
 Our Philosophy, Reward Structure and Oversight
   COMPENSATION ELEMENT
    
    
    FORM
    
    
    ELIGIBILITY
    
    
    PERFORMANCEPERIOD
    
    
    DETERMINATIONBase salary
    
    
    Cash
    
    
    All salaried
employees
    
    
    Annual
    
    
         For executive officers, targets are set to the median of comparable companies, adjusted to reflect individual responsibility and performance.Short-term
 incentives
    
    
    Cash
    
    
    All executives,
most salaried staff
and hourly union
and non-union
employees
    
    
    1 year
    
    
         Based on achieving predetermined goals for corporate performance or a combination of corporate and operating group performance.
     Can be adjusted (± 20%) to recognize individual performance.
     Beginning January 1, 2008, this annual cash bonus plan was extended to all Canadian and US hourly employees (union and non-union), providing a strong incentive for them to focus on achieving operational and corporate goals.Medium-term 
incentives
    
    
    Performance share
units
    
    
    All executives and
senior management
(66 people)
    
    
    3 years
    
    
         Units issued at our 30-day average share price on award date.
     Units vest and are paid out at the end of the three-year performance period, calculated whereby half the units vest based on total shareholder return (TSR)1and half based on our TSR relative to the TSR of a selected peer group2.
     Payout value is equal to the number of vested units multiplied by our 30-day average share price at the end of the performance period (subject to a maximum of three times the initial unit price).Long-term 
incentives
    
    
    Performance options
    
    
    All executives,
senior management
and other selected
management (258
people)
    
    
    3 years (vesting)
10 years (option term)
    
    
         Performance options incorporate a performance-based vesting schedule measuring the three-year average excess of cash flow return over our weighted average cost of capital.
     Vested share value is based on our share price appreciation within the option term.
See Performance Options on next page.
 
 1
    
    TSR is the total shareholder return on an investment in PotashCorp stock from the time the investment is made.TSR has two components: (1) growth in share price and (2) related dividend income on the shares.2
    
    January 1, 2006 - December 31, 2008: Dow Jones US Basic Materials IndexJanuary 1, 2009 - December 31, 2011: DAXglobal Agribusiness Index




---



##### 



Rewarding Results
    
    
    
    
    39
 Performance Options: Aligning Executive Compensation, Shareholder Interests
 Performance Measure
    
    
    Vesting Scale3-Year Average Excess of Cash Flow
Return on Investment over Weighted
Average Cost of Capital
    
    
    Percentage of
Stock Option
Grant Vesting<0%
    
    
    0%0.20%
    
    
    30%1.20%
    
    
    70%2.20%
    
    
    90%2.50%
    
    
    100%
   
 Risk Management
 Managing Risks to Our Fertilizer Enterprise
 Risk to Reputation
   POTASHCORPS GLOBAL RISK ENVIRONMENT




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##### 



40
    
    Risk Management
  Risk Management Methodology
  Matrix for Ranking Risks
   A
    
    Extreme: Initiate risk mitigation activities immediately to reduce risk. If such activities
cannot sufficiently reduce risk level,consider discontinuation of the applicable business
operation to avoid the risk.B
    
    Major:Initiate risk mitigation activities at next available opportunity to reduce risk. If
such activities cannot sufficientlyreduce risk level, board approval is required to confirm
acceptance of this major risk level.C
    
    Acceptable:Level of risk is acceptable within tolerances of the Risk Management Policy.
Additional risk mitigationactivities may be considered if benefits significantly exceed cost.D
    
    Low:Monitor risk according to Risk Management Policy requirements, but no additional
activities required.E
    
    Negligible:Consider discontinuing any related risk mitigation activities in order to direct
resources to higher-valueactivities, providing such discontinuance does not adversely affect any
other risk areas.
   
 A Continual and Dynamic Risk Management Process




---



##### 



2008 Financial Overview
    
    
    
    
    41
  
 Dollars (millions, except per-share amounts)
    
    
    % Increase2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2008
    
    
    
    2007Sales
    
    $
    9,446.5
    
    
    $
    5,234.2
    
    
    $
    3,766.7
    
    
    
    80
    
    
    
    39Gross Margin
    
    
    4,907.4
    
    
    
    1,881.2
    
    
    
    1,002.0
    
    
    
    161
    
    
    
    88Operating Income
    
    
    4,635.1
    
    
    
    1,588.5
    
    
    
    875.5
    
    
    
    192
    
    
    
    81Net Income
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8
    
    
    
    217
    
    
    
    75Net Income
per Share  Diluted
    
    
    11.01
    
    
    
    3.40
    
    
    
    1.98
    
    
    
    224
    
    
    
    72
  2008 Earnings Compared to Guidance
  Cause
    
    Effect on EPSPotash offshore realized prices
    
    $
    2.21Potash North American realized prices
    
    
    0.47Potash sales volumes
    
    
    (0.93
    )Decreased potash costs due to foreign exchange
    
    
    0.07Increased royalties and brine inflow costs
    
    
    (0.09
    )Increased other potash costs
    
    
    (0.19
    )Higher provincial mining taxes
    
    
    (0.53
    )Subtotal potash
    
    
    1.01Phosphate realized prices
    
    
    2.21Phosphate sales volumes
    
    
    (0.43
    )Increased input costs for sulfur
    
    
    (0.27
    )Increased input costs for ammonia
    
    
    (0.09
    )Increased input costs for rock
    
    
    (0.09
    )Increased other phosphate costs
    
    
    (0.03
    )Subtotal phosphate
    
    
    1.30Nitrogen realized prices
    
    
    1.20Manufactured nitrogen sales volumes
    
    
    (0.18
    )Increased cost of natural gas
    
    
    (0.51
    )Increased other nitrogen costs (exclusive of cost of natural gas)
    
    
    (0.21
    )Subtotal nitrogen
    
    
    0.30Increase in other income
    
    
    0.33Decrease in selling and administrative
    
    
    0.03Increase in interest expense
    
    
    (0.10
    )Foreign exchange variance
    
    
    0.27Subtotal other
    
    
    0.53Subtotal of the above
    
    
    3.14Reduction in weighted average number of shares outstanding
    
    
    0.37Lower  effective income tax rate
    
    
    0.75Total variance from 2008 diluted EPS guidance
    
    $
    4.26
 2008 Earnings Compared to 2007
 
 Cause
    
    Effect on EPSPotash offshore realized prices
    
    $
    3.75Potash North American realized prices
    
    
    1.69Potash sales volumes
    
    
    (0.25
    )Increased potash costs due to foreign exchange
    
    
    (0.10
    )Increased royalties
    
    
    (0.09
    )Increased brine inflow costs
    
    
    (0.04
    )Increased other potash costs
    
    
    (0.16
    )Higher provincial mining taxes
    
    
    (0.91
    )Subtotal potash
    
    
    3.89Phosphate realized prices
    
    
    3.50Phosphate sales volumes
    
    
    (0.42
    )Increased input costs for sulfur
    
    
    (1.18
    )Increased input costs for ammonia
    
    
    (0.12
    )Increased input costs for rock
    
    
    (0.07
    )Increased other phosphate costs
    
    
    (0.18
    )Subtotal phosphate
    
    
    1.53Nitrogen realized prices
    
    
    1.84Manufactured nitrogen sales volumes
    
    
    (0.22
    )Increased cost of natural gas
    
    
    (0.89
    )Increased other nitrogen costs (exclusive of cost of natural gas)
    
    
    (0.28
    )Subtotal nitrogen
    
    
    0.45Increase in other income
    
    
    0.48Decrease in selling and administrative
    
    
    0.05Foreign exchange variance
    
    
    0.44Subtotal other
    
    
    0.97Subtotal of the above
    
    
    6.84Reduction in weighted average number of shares outstanding
    
    
    0.22Lower effective income tax rate
    
    
    0.55Total variance from 2007 diluted EPS
    
    $
    7.61




---



##### 



42
    
    Expenses & Other Income
  Dollars (millions)
    
    
    % Increase (Decrease)2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2008
    
    
    
    2007Selling and administrative
    
    $
    188.4
    
    
    $
    212.6
    
    
    $
    158.4
    
    
    
    (11
    )
    
    
    34Provincial mining and other taxes
    
    
    543.4
    
    
    
    135.4
    
    
    
    66.5
    
    
    
    301
    
    
    
    104Foreign exchange (gain) loss
    
    
    (126.0
    )
    
    
    70.2
    
    
    
    (4.4
    )
    
    
    n/m
    
    
    
    n/mOther income
    
    
    333.5
    
    
    
    125.5
    
    
    
    94.0
    
    
    
    166
    
    
    
    34Interest expense
    
    
    62.8
    
    
    
    68.7
    
    
    
    85.6
    
    
    
    (9
    )
    
    
    (20
    )Income tax expense
    
    
    1,077.1
    
    
    
    416.2
    
    
    
    158.1
    
    
    
    159
    
    
    
    163
 
 n/m = not meaningful  2008 vs 2007
 %2008
    
    
    2007
    
    
    Change
    
    
    ChangeLong-term debt obligations,
including current portionWeighted average outstanding
    
    $
    1,387.8
    
    
    $
    1,557.3
    
    
    $
    (169.5
    )
    
    
    (11
    )Weighted average interest rate
    
    
    6.5%
    
    
    
    6.6%
    
    
    
    (0.1%)
    
    
    
    (2
    )Short-term debt obligations
Weighted average outstanding
    
    $
    798.5
    
    
    $
    95.7
    
    
    $
    702.8
    
    
    
    734Weighted average interest rate
    
    
    2.4%
    
    
    
    5.4%
    
    
    
    (3.0%)
    
    
    
    (56
    )




---



##### 



Expenses & Other Income
    
    
    
    
    43
  
    
    In 2008, income tax recoveries of $71.1 million (of which $29.1 million was current and
$42.0 million was future) were recorded that related to an increase in permanent deductions in the
US from prior years.
    
    Future income tax assets were written down by $11.0 million during 2008.
    
    The $25.3 million gain that was recognized in 2008 as a result of the change in fair value of the
forward purchase contract for shares in Sinofert was not taxable.
    
    During the fourth quarter of 2007, the Government of Canada enacted a reduction of the federal
corporate income tax rate from 21 percent in 2007 to 15 percent by 2012. In addition, a small
change was enacted in the second quarter of 2007. The federal corporate income tax changes reduced
the companys future income tax liability by $40.1 million in 2007.
 2007 vs 2006




---



##### 



44
    
    Expenses & Other Income
  %2007
    
    
    2006
    
    
    Change
    
    
    ChangeLong-term debt obligations,
including current portionWeighted average outstanding
    
    $
    1,557.3
    
    
    $
    1,296.7
    
    
    $
    260.6
    
    
    
    20Weighted average interest rate
    
    
    6.6%
    
    
    
    6.9%
    
    
    
    (0.3%)
    
    
    
    (4
    )Short-term debt obligations
Weighted averageoutstanding
    
    $
    95.7
    
    
    $
    518.8
    
    
    $
    (423.1
    )
    
    
    (82
    )Weighted average interest rate
    
    
    5.4%
    
    
    
    5.2%
    
    
    
    0.2%
    
    
    
    4
 
    
    During the fourth quarter of 2007, the Government of Canada enacted a reduction of the federal
corporate income tax rate from 21 percent in 2007 to 15 percent by 2012. In addition, there was a
small change enacted in the second quarter of 2007. The federal corporate income tax changes
reduced the companys future income tax liability by $40.1 million. In 2006, changes were enacted
by the Government of Canada to reduce
the federal corporate income tax rate and the federal corporate surtax, reducing our future income
tax liability by $22.9 million at that time.
    
    During 2006, the Province of Saskatchewan enacted changes to the corporate income tax that
resulted in a $21.9 million reduction in our future income tax liability in that year.
    
    In 2006, income tax refunds totaling $34.1 million were recorded.
   Impact of Foreign Exchange
 Impact on net income
  2008
    
    
    
    2007Foreign
exchange impact on operating costs before income
taxes1
    
    $
    (28.1
    )
    
    $
    40.5Foreign
exchange impact on conversion of balance sheet and treasury activities
before income taxes
    
    
    (126.0
    )
    
    
    70.2Net income (decrease) increase
    
    
    (154.1
    )
    
    
    110.7Diluted net income per share
(decrease) increase
    
    
    (0.49
    )
    
    
    0.34 1
    
    Assumes the 2008 exchange rate had remained at the 2007
year-end rate of 0.9881 (compared to 1.2246 at December 31, 2008),
and the 2007 exchange rate remained at the 2006 year-end rate of
1.1653.




---



##### 



Quarterly Results
    
    
    
    
    45
  Quarterly Results and Review of Fourth-Quarter Performance
  2008
    
    
    
    2007Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    Total
    
    
    
    Q1
    
    
    Q2
    
    
    Q3
    
    
    Q4
    
    
    TotalSales
    
    $
    1,890.6
    
    
    $
    2,621.0
    
    
    $
    3,064.3
    
    
    $
    1,870.6
    
    
    $
    9,446.5
    
    
    
    $
    1,154.7
    
    
    $
    1,353.1
    
    
    $
    1,295.0
    
    
    $
    1,431.4
    
    
    $
    5,234.2Less: Freight
    
    
    102.4
    
    
    
    103.4
    
    
    
    81.4
    
    
    
    37.7
    
    
    
    324.9
    
    
    
    
    81.9
    
    
    
    92.3
    
    
    
    80.6
    
    
    
    91.3
    
    
    
    346.1Transportation and distribution
    
    
    32.3
    
    
    
    33.3
    
    
    
    31.6
    
    
    
    35.2
    
    
    
    132.4
    
    
    
    
    31.0
    
    
    
    32.6
    
    
    
    31.0
    
    
    
    29.5
    
    
    
    124.1Cost of goods sold
    
    
    899.9
    
    
    
    1,047.0
    
    
    
    1,210.3
    
    
    
    924.6
    
    
    
    4,081.8
    
    
    
    
    672.1
    
    
    
    726.8
    
    
    
    708.3
    
    
    
    775.6
    
    
    
    2,882.8Gross margin
    
    
    856.0
    
    
    
    1,437.3
    
    
    
    1,741.0
    
    
    
    873.1
    
    
    
    4,907.4
    
    
    
    
    369.7
    
    
    
    501.4
    
    
    
    475.1
    
    
    
    535.0
    
    
    
    1,881.2Operating income
    
    
    749.0
    
    
    
    1,296.0
    
    
    
    1,714.7
    
    
    
    875.4
    
    
    
    4,635.1
    
    
    
    
    308.3
    
    
    
    422.3
    
    
    
    406.2
    
    
    
    451.7
    
    
    
    1,588.5Net income
    
    
    566.0
    
    
    
    905.1
    
    
    
    1,236.1
    
    
    
    788.0
    
    
    
    3,495.2
    
    
    
    
    198.0
    
    
    
    285.7
    
    
    
    243.1
    
    
    
    376.8
    
    
    
    1,103.6Net income per share  basic
    
    
    1.79
    
    
    
    2.91
    
    
    
    4.07
    
    
    
    2.63
    
    
    
    11.37
    
    
    
    
    0.63
    
    
    
    0.91
    
    
    
    0.77
    
    
    
    1.19
    
    
    
    3.50Net income per share  diluted
    
    
    1.74
    
    
    
    2.82
    
    
    
    3.93
    
    
    
    2.56
    
    
    
    11.01
    
    
    
    
    0.62
    
    
    
    0.88
    
    
    
    0.75
    
    
    
    1.16
    
    
    
    3.40Potash gross margin
    
    
    514.6
    
    
    
    886.4
    
    
    
    909.7
    
    
    
    744.8
    
    
    
    3,055.5
    
    
    
    
    174.2
    
    
    
    260.4
    
    
    
    221.3
    
    
    
    256.4
    
    
    
    912.3Phosphate gross margin
    
    
    156.0
    
    
    
    340.9
    
    
    
    507.2
    
    
    
    110.4
    
    
    
    1,114.5
    
    
    
    
    64.2
    
    
    
    96.8
    
    
    
    129.9
    
    
    
    141.9
    
    
    
    432.8Nitrogen gross margin
    
    
    185.4
    
    
    
    210.0
    
    
    
    324.1
    
    
    
    17.9
    
    
    
    737.4
    
    
    
    
    131.3
    
    
    
    144.2
    
    
    
    123.9
    
    
    
    136.7
    
    
    
    536.1
 
 Net income per share for each quarter has been computed based on the weighted
average number of shares issued and outstanding during the respective quarter;
therefore, quarterly amounts may not add to the annual total. Per-share
calculations are based on full dollar and share amounts.Certain aspects of our business can be impacted by seasonal factors.
Fertilizers are sold primarily for spring and fall application in both Northern
and Southern hemispheres. However, planting conditions and the timing of
customer purchases will vary each year and fertilizer sales can be expected to
shift from one quarter to another. Most feed and industrial sales are by
contract and are more evenly distributed throughout the year. 
    
    Potash gross margin of $744.8 million was almost three times higher than the $256.4 million
generated in the same quarter last year. Total realized prices climbed to $625 per tonne, a 235
percent increase over fourth-quarter 2007 levels. The offshore realized price of $583 per tonne was
242 percent higher than in last years fourth quarter, and reflected a larger proportion of sales
directed to contract markets with lower netbacks based on prices established earlier in the year.
Realized prices in the North American spot market reached $740 per tonne, up 246 percent from last
year and 32 percent from the trailing quarter, as a September 2008 price increase
 was realized. Potash sales volumes of 1.4 million tonnes were 37 percent lower than in the same period last year.
Our offshore sales volumes of 1.1 million tonnes were down 27 percent compared to the same quarter
last year. During the quarter, Canpotex shipped approximately 340,000 tonnes to China and 475,000
tonnes to India, the two largest contract markets; 45 percent lower and 107 percent higher,
respectively, than shipments in the same quarter last year. Spot market sales volumes to Brazil
declined 91 percent in the fourth quarter of 2008 versus the same quarter last year. North American
potash volumes were down 54 percent from last years fourth quarter. Potash cost of goods sold was
$33 per tonne higher quarter over quarter, primarily the result of increased royalties paid in
Saskatchewan and New Brunswick, as well as strike and other labor costs that mainly resulted from
work stoppages. A total of 20 mine shutdown weeks were taken in the quarter as a result of strikes
at our Allan, Cory and Patience Lake facilities.
    
    Due to substantially lower sales volumes, phosphate gross margin of $110.4 million was 22 percent
below the $141.9 million of last years fourth quarter. However, our unique ability to allocate
phosphoric acid feedstock to higher-netback downstream products proved beneficial in




---



##### 



46
    
    Quarterly Results
  the quarters
difficult market conditions. Liquid fertilizers generated $92.9 million of phosphate gross margin,
industrial products added $20.0 million and feed phosphate $18.2 million. With rapidly
deteriorating market demand and prices, solid fertilizers incurred a loss of $21.8 million,
inclusive of a writedown of $52.9 million of inventory on hand at year-end that was produced
earlier in the quarter with higher-cost sulfur and ammonia. Higher-priced sales early in the
quarter led to increases in quarter-over-quarter realized prices for liquid fertilizer
(+220 percent), solid fertilizers (+145 percent), feed (+153 percent) and industrial products (+91
percent). By the end of the quarter, prices for all products were negatively affected by market
conditions, including rapidly declining spot prices for raw material inputs. Weakened prices were
especially evident in the solid fertilizer sector, demonstrating the importance of our diverse
phosphate product mix. Solid fertilizer sales volumes fell 81 percent, while liquid fertilizer
sales volumes dropped 42 percent. Feed sales volumes declined 53 percent as the beef, pork and
poultry industries continued to suffer, distillers dried
grains with solubles was
used as a substitute and many feed mills remained shut down. Sales volumes for
industrial products, traditionally a more stable area of the phosphate business, declined a
comparatively small 17 percent.
    
    Nitrogen contributed $17.9 million of gross margin in the fourth quarter, compared to $136.7
million in the fourth quarter of 2007, reflecting the rapid decline in sales volumes, along with a
$36.0 million writedown of inventories produced with higher-cost natural gas early in the quarter.
Market prices for nitrogen products fell dramatically over the quarter. However, with most of our
fourth-quarter nitrogen volumes sold early in the quarter when prices were at their peak, realized
prices for ammonia were 42 percent above the same quarter last year. Urea prices were flat while
prices for nitrogen solutions rose 78 percent on early fourth-quarter business. The international
ammonia market weakened considerably during the fourth quarter as large-scale cutbacks were made to
operating rates in the phosphate and industrial sectors, which account for a significant portion of
global ammonia import demand. Our ammonia sales volumes fell 23 percent from the same quarter last
year, while urea sales volumes were 14 percent lower. Sales volumes for nitrogen solutions were
down 59 percent from the fourth quarter of 2007. Our total average natural gas cost, including our
hedge, was $6.16 per MMBtu, a 40 percent increase over last year.
 
    
    Selling and administrative expenses were lower in 2008, due primarily to reduced medium-term
incentive plan accruals and valuation of deferred share units that were directly impacted by the
significant downward movement in our share price during the quarter.
    
    Provincial mining and other taxes increased $68.9 million year over year due primarily to a $64.3
million increase in Saskatchewan Potash Production Tax, which was attributable to potash profit per
tonne increasing substantially from the prior year.
    
    Approximately $62.8 million of foreign exchange gains resulted from the Canadian dollar weakening
significantly against the US dollar during the fourth quarter of 2008, gains on the translation of
Canadian dollar denominated monetary items and offset by foreign exchange forward contract losses.
A foreign exchange loss of $2.8 million resulted last year when the Canadian dollar marginally
strengthened.
    
    Other income increased $64.1 million over 2007 as dividend income increased $32.4 million and our
share of earnings from equity investees contributed an additional $44.8 million. Also included in
other income was an $88.8 million provision for other-than-temporary impairment in auction rate
securities, compared to a provision of $26.5 million in the fourth quarter of 2007.
    
    Interest expense more than doubled compared to 2007 due to a significant increase in short-term
debt.
    
    The effective income tax rate was 8 percent (2007  15 percent) due to the cumulative adjustment
for a reduction in the rate during the quarter. The decrease was mainly due to lower earnings than
expected from the US operations without a corresponding drop in US permanent deductions.




---



##### 



Key Earnings Sensitivities
    
    
    
    
    47
 Input Cost Sensitivities
    
    
    
    Effect on EPS
    
    
    
    
    Price and Volume Sensitivities
    
    Effect on EPSNYMEX gas price
    
    Nitrogen
    
    + 0.07
    
    
    Price
    
    Potash changes by $20/tonne
    
    ± 0.30increases by
    
    
    
    
    
    
    
    
    DAP/MAP changes by $20/tonne
    
    ± 0.05$1/MMBtu
    
    Potash
    
    - 0.02
    
    
    
    
    Ammonia increases by $20/tonne Nitrogen
 Phosphate
Urea changes by $20/tonne
    
    + 0.06
- 0.01Sulfur changes by 
$20/long ton
    
    Phosphate
    
    ± 0.07
    
    
    
    


    
    ± 0.06Canadian to US dollar
    
    Canadian operatingstrengthens by $0.01
    
    expenses net of
    
    - 0.01provincial taxes
    
    
    
    
    Volume
    
    Potash changes by 100,000 tonnes
    
    ± 0.12Nitrogen changes by 50,000 N tonnes
    
    ± 0.02Translation gain/loss
    
    - 0.02
    
    
    
    
    Phosphate changes by 50,000 P2O5 tonnes
    
    ± 0.08
 
 The above sensitivities affect cash flow as well, except the translation gain/loss which is primarily non-cash.
 
 Financial Condition Review




---



##### 



48
    
    Financial Condition Review




---



##### 



Liquidity & Capital Resources
    
    
    
    
    49
 Cash Requirements
  Contractual Obligations and Other Commitments Dollars (millions)
 December 31, 2008Payments Due by PeriodTotal
    
    Within 1 year
    
    1 to 3 years
    
    3 to 5 years
    
    Over 5 yearsLong-term debt obligations
    
    $
    1,758.2
    
    
    $
    0.2
    
    
    $
    782.1
    
    
    $
    475.9
    
    
    $
    500.0Estimated interest payments
on long-term debt obligations
    
    
    1,046.7
    
    
    
    102.7
    
    
    
    175.7
    
    
    
    90.5
    
    
    
    677.8Operating leases
    
    
    678.4
    
    
    
    102.6
    
    
    
    169.2
    
    
    
    143.9
    
    
    
    262.7Purchase obligations
    
    
    773.4
    
    
    
    150.6
    
    
    
    244.1
    
    
    
    135.7
    
    
    
    243.0Other commitments
    
    
    55.6
    
    
    
    17.7
    
    
    
    17.6
    
    
    
    6.1
    
    
    
    14.2Other long-term liabilities
    
    
    1,201.4
    
    
    
    128.4
    
    
    
    128.4
    
    
    
    106.8
    
    
    
    837.8Total
    
    $
    5,513.7
    
    
    $
    502.2
    
    
    $
    1,517.1
    
    
    $
    958.9
    
    
    $
    2,535.5
 Long-Term Debt




---



##### 



50
    
    Liquidity & Capital Resources
  Operating Leases
  Purchase Obligations
 Other Commitments
  Other Long-Term Liabilities
   Capital Expenditures
   Investment Liquidity
 Investments
  Face Value  Dollars (millions)
    
    $
    5.0
    
    
    $
    20.0
    
    
    $
    28.3
    
    
    $
    25.0
    
    
    $
    34.4
    
    
    $
    19.8Carrying Value  Dollars (millions)

(December 31, 2008)
    
    
    0.6
    
    
    
    4.8
    
    
    
    7.2
    
    
    
    1.2
    
    
    
    2.0
    
    
    
    1.4Credit Rating Agency 1

(February 20, 2009)
    
    Aa3, C/W
    
    BBB
    
    BBB-
    
    Caa3, C/W
    
    Caa2, C/W
    
    CaCredit Rating Agency 2

(February 20, 2009)
    
    AAA
    
    A
    
    BBB
    
    CC
    
    AAA, C/W
    
    CC
 
 C/W = on Credit Watch with negative implications




---



##### 



Liquidity & Capital Resources
    
    
    
    
    51
  Sources and Uses of Cash
  Dollars (millions) except percentage amounts% Increase (Decrease)2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2008
    
    
    
    2007Cash provided by operating activities
    
    $
    3,013.2
    
    
    $
    1,688.9
    
    
    $
    696.8
    
    
    
    78
    
    
    
    142Cash used in investing activities
    
    
    (1,647.3
    )
    
    
    (758.1
    )
    
    
    (839.7
    )
    
    
    117
    
    
    
    (10
    )Cash (used in) provided by financing activities
    
    
    (1,808.6
    )
    
    
    (537.0
    )
    
    
    374.7
    
    
    
    237
    
    
    
    n/m(Decrease) increase in cash and cash equivalents
    
    $
    (442.7
    )
    
    $
    393.8
    
    
    $
    231.8
    
    
    
    (212
    )
    
    
    70n/m = not meaningfulDollars (millions) except ratio and percentage amountsDecember 31
    
    
    December 31
    
    
    December 31
    
    
    % Increase (Decrease)2008
    
    
    2007
    
    
    2006
    
    
    2008
    
    
    2007Current assets
    
    $
    2,267.2
    
    
    $
    1,811.3
    
    
    $
    1,310.2
    
    
    
    25
    
    
    
    38Current liabilities
    
    
    (2,615.8
    )
    
    
    (1,001.9
    )
    
    
    (1,103.5
    )
    
    
    161
    
    
    
    (9
    )Working capital
    
    
    (348.6
    )
    
    
    809.4
    
    
    
    206.7
    
    
    
    (143
    )
    
    
    292Current ratio
    
    
    0.87
    
    
    
    1.81
    
    
    
    1.19
    
    
    
    (52
    )
    
    
    52
 
  
 
    
    Our spending on property, plant and equipment was $1,198.3 million in 2008, an increase of $591.1
million over 2007. Approximately 69 percent (2007  56 percent) of our consolidated capital
expenditures related to the potash segment.
    
    During 2008, $173.7 million was paid to settle the companys forward purchase contract for shares
of Sinofert. During 2008, we purchased an additional 191,620,000 shares of Sinofert for cash
consideration of $145.3 million. Net of the ownership interest
dilution that resulted from the issuance of shares of Sinofert, the acquisitions increased our
ownership interest in Sinofert to 22 percent. Also in 2008, we
purchased an additional 14,288,705
shares of Israel Chemicals Ltd. for cash consideration of $116.4 million, which increased our
ownership interest to 11 percent.




---



##### 



52
    
    Capital Structure & Management
  Capital Structure Dollars (millions), except as noted
 December 31
    
    December 312008
    
    
    
    2007Short-term debt obligations
    
    $
    1,324.8
    
    
    $
    90.0Current portion of long-term debt
    
    
    0.2
    
    
    
    0.2Long-term debt obligations
    
    
    1,758.0
    
    
    
    1,358.3Deferred debt costs and swap gains
    
    
    (19.4
    )
    
    
    (18.9
    )Total debt
    
    
    3,063.6
    
    
    
    1,429.6Shareholders equity
    
    $
    4,588.9
    
    
    $
    6,018.7Total debt to capital
    
    
    40%
    
    
    
    19%Fixed rate debt obligations as a percentage of total debt obligations
    
    
    44%
    
    
    
    93%Common shares outstanding
    
    
    295,200,987
    
    
    
    316,411,209Stock options outstanding
    
    
    12,849,356
    
    
    
    14,006,984Dividend payout ratio
    
    
    4%
    
    
    
    10%
 Principal Debt Instruments Dollars (millions) at December 31, 2008
 Total
    
    
    Amount Outstanding
    
    
    AmountAmount
    
    
    and Committed
    
    
    AvailableCredit facilities
    
    $
    1,930.0
    1,2
    
    $
    1,724.6
    1
    
    $
    205.4
    1Line of credit
    
    
    75.0
    
    
    
    20.0
    3
    
    
    55.0
 
 1
    
    The amount available under the $750.0 million commercial
paper program is limited to the availability of backup funds under the credit facilities. Included in the amount outstanding and committed is $324.6 million of commercial paper. Per the terms of the agreements, the commercial paper outstanding and committed, as
applicable, is based on the US dollar balance or equivalent thereof in lawful money of
other currencies at the time of issue; therefore, subsequent changes in the exchange rate
applicable to Canadian dollar denominated commercial paper have no impact on this
balance.2
    
    Subsequent to year-end, effective January 21, 2009, $500.0 million of capacity was added to the 364-day facility.3
    
    Letters of credit committed.




---



##### 



Capital Structure & Management
    
    
    
    
    53
 Outstanding Share Data
 Off-Balance Sheet Arrangements
  Guarantee Contracts
  Derivative Instruments
  Long-Term Fixed Price Contracts




---



##### 



54
    
    Market Risks
  Market Risks Associated with Financial Instruments
   
 Related Party Transactions
 
   
 Critical Accounting Estimates
 Variable Interest Entities




---



##### 



Critical Accounting Estimates
    
    
    
    
    55
  Pension and Other Post-Retirement Costs
 Impact of a 0.5% Change in Key Assumptions
 Dollars (millions)Pension Plans
    
    
    Other PlansObligation
    
    
    Expense
    
    
    Obligation
    
    
    ExpenseDiscount rateDecrease in assumption
    
    $
    43.9
    
    
    $
    4.1
    
    
    $
    19.8
    
    
    $
    2.0Increase in assumption
    
    
    (39.8
    )
    
    
    (4.7
    )
    
    
    (18.3
    )
    
    
    (1.9
    )Expected long-term rate of returnDecrease in assumption
    
    
    n/a
    
    
    
    2.4
    
    
    
    n/a
    
    
    
    n/aIncrease in assumption
    
    
    n/a
    
    
    
    (2.4
    )
    
    
    n/a
    
    
    
    n/aRate of compensation increaseDecrease in assumption
    
    
    (8.1
    )
    
    
    (1.6
    )
    
    
    (0.1
    )
    
    
    Increase in assumption
    
    
    8.3
    
    
    
    1.6
    
    
    
    0.1
    
    
    
    0.1Medical trend rateDecrease in assumption
    
    
    n/a
    
    
    
    n/a
    
    
    
    (17.0
    )
    
    
    (3.0
    )Increase in assumption
    
    
    n/a
    
    
    
    n/a
    
    
    
    19.9
    
    
    
    3.5
 
 n/a = not applicable Asset Retirement Obligations and Other Environmental Costs




---



##### 



56
    
    Critical Accounting Estimates
  Fair Value
 Income Taxes




---



##### 



Critical Accounting Estimates
    
    
    
    
    57
  Asset Impairment
 Stock-Based Compensation




---



##### 



58
    
    Critical Accounting Estimates
  Depreciation and Amortization
   
 Recent Accounting Changes
 Recent Accounting Changes and Effective Dates
 
    
    Scoping and diagnostic phase  This phase involves performing a high-level impact assessment to
identify key areas that may be impacted by the transition to IFRSs. As a result of these
procedures, the potentially affected areas are ranked as high, medium or low priority.
    
    Impact analysis, evaluation and design phase  In this phase, each area identified from the
scoping and diagnostic phase will be addressed in order of descending priority, with project teams
established as deemed necessary. This phase involves specification of changes required to existing




---



##### 



Recent Accounting Changes
    
    
    
    
    59
  accounting policies, information systems and business processes, together with an analysis of
policy alternatives allowed under IFRSs and development of draft IFRSs financial statement content.
    
    Implementation and review phase  This phase includes execution of changes to information systems
and business processes, completing formal authorization processes to approve recommended accounting
policy changes and training programs for the companys finance and other staff, as necessary. It
will culminate in the collection of financial information necessary to compile IFRSs-compliant
financial statements, embedding IFRSs in business processes, elimination of any unnecessary data
collection processes and audit committee approval of IFRSs financial statements. Implementation
also involves delivery of further training to staff as revised systems begin to take effect.
 Impairment of Assets
   Employee Benefits




---



##### 



60
    
    Recent Accounting Changes
  Share-Based Payments
  Provisions (Including Asset Retirement Obligations)
 Income Taxes
   
 Forward-Looking Statements




---



##### 



11 Year Report
    
    
    
    
    61
  FINANCIAL DATA (in millions of US dollars except share, per-share and percentage amounts)2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2005
    
    
    
    2004
    
    
    
    2003
    
    
    
    2002
    
    
    
    2001
    
    
    
    2000
    
    
    
    1999
    
    
    
    1998Sales

Potash
    
    
    4,068.1
    
    
    
    1,797.2
    
    
    
    1,227.5
    
    
    
    1,341.1
    
    
    
    1,056.1
    
    
    
    758.7
    
    
    
    669.0
    
    
    
    655.2
    
    
    
    710.3
    
    
    
    688.6
    
    
    
    663.3Phosphate
    
    
    2,880.7
    
    
    
    1,637.1
    
    
    
    1,255.1
    
    
    
    1,137.3
    
    
    
    977.9
    
    
    
    883.9
    
    
    
    714.0
    
    
    
    732.1
    
    
    
    868.1
    
    
    
    922.3
    
    
    
    1,099.5Nitrogen
    
    
    2,497.7
    
    
    
    1,799.9
    
    
    
    1,284.1
    
    
    
    1,368.8
    
    
    
    1,210.4
    
    
    
    1,156.4
    
    
    
    841.4
    
    
    
    993.5
    
    
    
    964.5
    
    
    
    744.7
    
    
    
    844.2Total sales
    
    
    9,446.5
    
    
    
    5,234.2
    
    
    
    3,766.7
    
    
    
    3,847.2
    
    
    
    3,244.4
    
    
    
    2,799.0
    
    
    
    2,224.4
    
    
    
    2,380.8
    
    
    
    2,542.9
    
    
    
    2,355.6
    
    
    
    2,607.05-year CAGR 1
    
    
    27.5%10-year CAGR 1
    
    
    13.7%Gross marginPotash
    
    
    3,055.5
    
    
    
    912.3
    
    
    
    561.1
    
    
    
    707.4
    
    
    
    422.8
    
    
    
    203.7
    
    
    
    218.0
    
    
    
    248.1
    
    
    
    307.4
    
    
    
    304.2
    
    
    
    319.2Phosphate
    
    
    1,114.5
    
    
    
    432.8
    
    
    
    125.3
    
    
    
    98.9
    
    
    
    15.8
    
    
    
    (16.5
    )
    
    
    41.9
    
    
    
    64.5
    
    
    
    76.8
    
    
    
    130.5
    
    
    
    230.1Nitrogen
    
    
    737.4
    
    
    
    536.1
    
    
    
    315.6
    
    
    
    318.7
    
    
    
    242.8
    
    
    
    193.2
    
    
    
    47.4
    
    
    
    94.7
    
    
    
    104.7
    
    
    
    (21.4
    )
    
    
    64.8Total gross margin
    
    
    4,907.4
    
    
    
    1,881.2
    
    
    
    1,002.0
    
    
    
    1,125.0
    
    
    
    681.4
    
    
    
    380.4
    
    
    
    307.3
    
    
    
    407.3
    
    
    
    488.9
    
    
    
    413.3
    
    
    
    614.15-year CAGR 1
    
    
    66.8%10-year CAGR 1
    
    
    23.1%Depreciation and amortizationPotash
    
    
    82.0
    
    
    
    71.7
    
    
    
    58.3
    
    
    
    64.5
    
    
    
    66.4
    
    
    
    52.4
    
    
    
    46.3
    
    
    
    34.1
    
    
    
    40.9
    
    
    
    37.2
    
    
    
    36.2Phosphate
    
    
    140.5
    
    
    
    121.1
    
    
    
    94.6
    
    
    
    95.6
    
    
    
    84.4
    
    
    
    78.9
    
    
    
    76.8
    
    
    
    72.0
    
    
    
    68.1
    
    
    
    61.8
    
    
    
    59.1Nitrogen
    
    
    97.1
    
    
    
    88.2
    
    
    
    77.6
    
    
    
    72.0
    
    
    
    79.7
    
    
    
    86.4
    
    
    
    88.0
    
    
    
    72.8
    
    
    
    66.1
    
    
    
    83.5
    
    
    
    86.7Other
    
    
    7.9
    
    
    
    10.3
    
    
    
    11.9
    
    
    
    10.3
    
    
    
    9.5
    
    
    
    9.7
    
    
    
    8.0
    
    
    
    6.8
    
    
    
    11.9
    
    
    
    8.6
    
    
    
    8.9Total depreciation and amortization
    
    
    327.5
    
    
    
    291.3
    
    
    
    242.4
    
    
    
    242.4
    
    
    
    240.0
    
    
    
    227.4
    
    
    
    219.1
    
    
    
    185.7
    
    
    
    187.0
    
    
    
    191.1
    
    
    
    190.9Operating income (loss)
    
    
    4,635.1
    
    
    
    1,588.5
    
    
    
    875.5
    
    
    
    892.6
    
    
    
    514.3
    
    
    
    (55.6
    )
    
    
    166.9
    
    
    
    269.7
    
    
    
    326.8
    
    
    
    (353.0
    )
    
    
    442.3Net income (loss)* 2
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8
    
    
    
    542.9
    
    
    
    298.6
    
    
    
    (126.3
    )
    
    
    53.6
    
    
    
    121.2
    
    
    
    198.0
    
    
    
    (412.0
    )
    
    
    261.06-year CAGR 1,3
    
    
    100.6%10-year CAGR 1
    
    
    29.6%Net income (loss) per share  basic
    
    
    11.37
    
    
    
    3.50
    
    
    
    2.03
    
    
    
    1.67
    
    
    
    0.92
    
    
    
    (0.40
    )
    
    
    0.17
    
    
    
    0.39
    
    
    
    0.63
    
    
    
    (1.27
    )
    
    
    0.80Net income (loss) per share  diluted
    
    
    11.01
    
    
    
    3.40
    
    
    
    1.98
    
    
    
    1.63
    
    
    
    0.90
    
    
    
    (0.40
    )
    
    
    0.17
    
    
    
    0.39
    
    
    
    0.63
    
    
    
    (1.27
    )
    
    
    0.80Dividends per share
    
    
    0.40
    
    
    
    0.35
    
    
    
    0.20
    
    
    
    0.20
    
    
    
    0.18
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.16Cash provided by operating activities
    
    
    3,013.2
    
    
    
    1,688.9
    
    
    
    696.8
    
    
    
    865.1
    
    
    
    658.3
    
    
    
    385.5
    
    
    
    316.4
    
    
    
    75.7
    
    
    
    480.4
    
    
    
    343.6
    
    
    
    578.0Working capital
    
    
    (348.6
    )
    
    
    809.4
    
    
    
    206.7
    
    
    
    14.7
    
    
    
    539.9
    
    
    
    176.1
    
    
    
    8.6
    
    
    
    47.1
    
    
    
    (148.7
    )
    
    
    (104.8
    )
    
    
    329.2Total assets
    
    
    10,248.8
    
    
    
    9,716.6
    
    
    
    6,217.0
    
    
    
    5,357.9
    
    
    
    5,126.8
    
    
    
    4,567.3
    
    
    
    4,685.6
    
    
    
    4,597.3
    
    
    
    4,145.7
    
    
    
    3,916.8
    
    
    
    4,534.3Long-term debt obligations 4
    
    
    1,758.0
    
    
    
    1,358.3
    
    
    
    1,357.1
    
    
    
    1,257.6
    
    
    
    1,258.6
    
    
    
    1,268.6
    
    
    
    1,019.9
    
    
    
    1,013.7
    
    
    
    413.7
    
    
    
    437.0
    
    
    
    933.3Shareholders equity
    
    
    4,588.9
    
    
    
    6,018.7
    
    
    
    2,780.3
    
    
    
    2,132.5
    
    
    
    2,385.6
    
    
    
    1,973.8
    
    
    
    2,092.5
    
    
    
    2,086.5
    
    
    
    2,012.1
    
    
    
    1,962.4
    
    
    
    2,453.8Shares outstanding at the end
of the year (thousands) 5
    
    
    295,201
    
    
    
    316,411
    
    
    
    314,403
    
    
    
    310,782
    
    
    
    331,893
    
    
    
    318,672
    
    
    
    312,468
    
    
    
    311,712
    
    
    
    311,046
    
    
    
    322,164
    
    
    
    325,464OPERATING DATA (thousands)2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2005
    
    
    
    2004
    
    
    
    2003
    
    
    
    2002
    
    
    
    2001
    
    
    
    2000
    
    
    
    1999
    
    
    
    1998Employees at year-end (actual #)
    
    
    5,301
    
    
    
    5,003
    
    
    
    4,871
    
    
    
    4,879
    
    
    
    4,906
    
    
    
    4,904
    
    
    
    5,199
    
    
    
    4,997
    
    
    
    5,338
    
    
    
    5,498
    
    
    
    5,744Potash production (KCI) tonnage
    
    
    8,697
    
    
    
    9,159
    
    
    
    7,018
    
    
    
    8,816
    
    
    
    7,914
    
    
    
    7,094
    
    
    
    6,447
    
    
    
    6,128
    
    
    
    7,149
    
    
    
    6,388
    
    
    
    6,995Phosphate production (P2O5) tonnage
    
    
    1,942
    
    
    
    2,164
    
    
    
    2,108
    
    
    
    2,097
    
    
    
    1,962
    
    
    
    1,861
    
    
    
    1,512
    
    
    
    1,573
    
    
    
    2,042
    
    
    
    2,124
    
    
    
    2,363Nitrogen production (N) tonnage
    
    
    2,780
    
    
    
    2,986
    
    
    
    2,579
    
    
    
    2,600
    
    
    
    2,558
    
    
    
    2,619
    
    
    
    2,990
    
    
    
    3,032
    
    
    
    2,706
    
    
    
    3,138
    
    
    
    3,121Potash sales  manufactured
KCI tonnes
    
    
    8,547
    
    
    
    9,400
    
    
    
    7,196
    
    
    
    8,164
    
    
    
    8,276
    
    
    
    7,083
    
    
    
    6,327
    
    
    
    6,243
    
    
    
    6,912
    
    
    
    6,474
    
    
    
    6,283Phosphate sales  manufactured
product tonnes
    
    
    3,322
    
    
    
    4,151
    
    
    
    3,970
    
    
    
    3,860
    
    
    
    3,675
    
    
    
    3,560
    
    
    
    2,809
    
    
    
    2,987
    
    
    
    3,861
    
    
    
    4,002
    
    
    
    4,627Nitrogen sales  manufactured
product tonnes
    
    
    5,042
    
    
    
    5,731
    
    
    
    4,675
    
    
    
    4,843
    
    
    
    4,734
    
    
    
    5,367
    
    
    
    5,911
    
    
    
    5,753
    
    
    
    5,864
    
    
    
    6,271
    
    
    
    6,032
  1
    
    Compound annual growth rate expressed as a percentage.2
    
    There were no extraordinary items or discontinued operations in any of the accounting periods.3
    
    2003 result was negative, therefore six-year CAGR used.4
    
    Represents long-term debt obligations and does not include unamortized costs. (See Note 13 to the companys consolidated financial statements for description of such amounts.)5
    
    Common shares were repurchased in 2008, 2005, 2000 and 1999 in the amounts of 22.849 million, 28.500 million, 6.210 million and 1.890 million, respectively.The consolidated financial statements of the company have been prepared in accordance with
Canadian generally accepted accounting principles. These principles differ in certain material
respects from those applicable in the United States. (See Note 33 to the companys consolidated
financial statements.) Certain of the prior years figures have been reclassified to conform with
the current years presentation. *Additional Information:
    
    After-tax effects of items affecting net income
    
    2008
    
    
    2007
    
    
    2006
    
    
    2004
    
    
    2003
    
    
    2000
    
    
    1999Impairment of property, plant and equipment
    
    $
    
    
    
    $
    
    
    
    $
    4.5
    
    
    $
    
    
    
    $
    89.7
    
    
    $
    14.5
    
    
    $
    513.8Impairment of auction rate securities
    
    
    66.6
    
    
    
    18.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plant shutdown and closure
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.2
    
    
    
    113.5
    
    
    
    
    
    
    
    24.1Office consolidation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    9.2Gain
on sale of assets
    
    
    (15.6
    )
    
    
    
    
    
    
    
    
    
    
    (37.0
    )
    
    
    
    
    
    
    (16.3
    )
    
    
    Total after-tax effects on net income
    
    $
    51.0
    
    
    $
    18.6
    
    
    $
    4.5
    
    
    $
    (30.8
    )
    
    $
    203.2
    
    
    $
    1.5
    
    
    $
    547.1
 Keyword
Online : Financials
    
POTASHCORP 2008 FINANCIAL REVIEW




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##### 



62
    
    Financial Performance Indicators
  SUMMARY (in millions of US dollars except share, per-share and percentage amounts)2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2005
    
    
    
    2004
    
    
    
    2003
    
    
    
    2002
    
    
    
    2001
    
    
    
    2000
    
    
    
    1999
    
    
    
    1998Net income (loss) 1
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8
    
    
    
    542.9
    
    
    
    298.6
    
    
    
    (126.3
    )
    
    
    53.6
    
    
    
    121.2
    
    
    
    198.0
    
    
    
    (412.0
    )
    
    
    261.0Net income (loss) per share  diluted
    
    
    11.01
    
    
    
    3.40
    
    
    
    1.98
    
    
    
    1.63
    
    
    
    0.90
    
    
    
    (0.40
    )
    
    
    0.17
    
    
    
    0.39
    
    
    
    0.63
    
    
    
    (1.27
    )
    
    
    0.80EBITDA 2
    
    
    4,962.6
    
    
    
    1,879.8
    
    
    
    1,117.9
    
    
    
    1,135.0
    
    
    
    754.3
    
    
    
    171.8
    
    
    
    386.0
    
    
    
    455.4
    
    
    
    513.8
    
    
    
    (161.9
    )
    
    
    633.2Cash flow prior to
working capital changes 3
    
    
    3,780.7
    
    
    
    1,525.3
    
    
    
    940.8
    
    
    
    860.3
    
    
    
    538.3
    
    
    
    368.5
    
    
    
    289.2
    
    
    
    345.8
    
    
    
    405.1
    
    
    
    319.6
    
    
    
    556.2Cash provided by operating activities
    
    
    3,013.2
    
    
    
    1,688.9
    
    
    
    696.8
    
    
    
    865.1
    
    
    
    658.3
    
    
    
    385.5
    
    
    
    316.4
    
    
    
    75.7
    
    
    
    480.4
    
    
    
    343.6
    
    
    
    578.0Return on assets
    
    
    34.1%
    
    
    
    11.4%
    
    
    
    10.2%
    
    
    
    10.1%
    
    
    
    5.8%
    
    
    
    (2.8%
    )
    
    
    1.1%
    
    
    
    2.6%
    
    
    
    4.8%
    
    
    
    (10.5%
    )
    
    
    5.8%Cash flow return 4
    
    
    43.5%
    
    
    
    20.2%
    
    
    
    14.5%
    
    
    
    14.7%
    
    
    
    11.1%
    
    
    
    2.9%
    
    
    
    6.3%
    
    
    
    8.5%
    
    
    
    10.5%
    
    
    
    (3.7%
    )
    
    
    12.6%Weighted average cost of capital
    
    
    12.0%
    
    
    
    10.0%
    
    
    
    8.8%
    
    
    
    8.3%
    
    
    
    8.4%
    
    
    
    7.3%
    
    
    
    7.3%
    
    
    
    7.7%
    
    
    
    8.7%
    
    
    
    8.7%
    
    
    
    8.3%Total shareholder return
    
    
    (48.9%
    )
    
    
    201.6%
    
    
    
    79.6%
    
    
    
    (2.7%
    )
    
    
    93.4%
    
    
    
    37.5%
    
    
    
    5.2%
    
    
    
    (20.4%
    )
    
    
    64.6%
    
    
    
    (23.0%
    )
    
    
    (21.9%
    )Total debt to capital
    
    
    40.0%
    
    
    
    19.2%
    
    
    
    40.8%
    
    
    
    41.5%
    
    
    
    36.4%
    
    
    
    42.3%
    
    
    
    41.7%
    
    
    
    42.1%
    
    
    
    31.1%
    
    
    
    31.9%
    
    
    
    29.5%Net debt to capital 5
    
    
    37.8%
    
    
    
    10.6%
    
    
    
    36.4%
    
    
    
    39.9%
    
    
    
    27.5%
    
    
    
    42.2%
    
    
    
    41.3%
    
    
    
    41.3%
    
    
    
    28.7%
    
    
    
    30.8%
    
    
    
    28.1%RECONCILIATIONS AND CALCULATIONS (in millions of US dollars except share, per-share and tonnage amounts)2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2005
    
    
    
    2004
    
    
    
    2003
    
    
    
    2002
    
    
    
    2001
    
    
    
    2000
    
    
    
    1999
    
    
    
    1998Net income (loss) 1
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8
    
    
    
    542.9
    
    
    
    298.6
    
    
    
    (126.3
    )
    
    
    53.6
    
    
    
    121.2
    
    
    
    198.0
    
    
    
    (412.0
    )
    
    
    261.0Income taxes
    
    
    1,077.1
    
    
    
    416.2
    
    
    
    158.1
    
    
    
    267.4
    
    
    
    131.7
    
    
    
    (20.6
    )
    
    
    30.2
    
    
    
    68.2
    
    
    
    67.2
    
    
    
    7.5
    
    
    
    117.5Interest expense
    
    
    62.8
    
    
    
    68.7
    
    
    
    85.6
    
    
    
    82.3
    
    
    
    84.0
    
    
    
    91.3
    
    
    
    83.1
    
    
    
    80.3
    
    
    
    61.6
    
    
    
    51.5
    
    
    
    63.8Depreciation and amortization
    
    
    327.5
    
    
    
    291.3
    
    
    
    242.4
    
    
    
    242.4
    
    
    
    240.0
    
    
    
    227.4
    
    
    
    219.1
    
    
    
    185.7
    
    
    
    187.0
    
    
    
    191.1
    
    
    
    190.9EBITDA 2
    
    
    4,962.6
    
    
    
    1,879.8
    
    
    
    1,117.9
    
    
    
    1,135.0
    
    
    
    754.3
    
    
    
    171.8
    
    
    
    386.0
    
    
    
    455.4
    
    
    
    513.8
    
    
    
    (161.9
    )
    
    
    633.25-year CAGR 7
    
    
    95.9%10-year CAGR 7
    
    
    22.9%Cash flow prior to
working capital changes 3
    
    
    3,780.7
    
    
    
    1,525.3
    
    
    
    940.8
    
    
    
    860.3
    
    
    
    538.3
    
    
    
    368.5
    
    
    
    289.2
    
    
    
    345.8
    
    
    
    405.1
    
    
    
    319.6
    
    
    
    556.2Accounts receivable
    
    
    (593.7
    )
    
    
    (154.6
    )
    
    
    11.0
    
    
    
    (107.6
    )
    
    
    (51.9
    )
    
    
    (39.5
    )
    
    
    (11.1
    )
    
    
    69.9
    
    
    
    (52.2
    )
    
    
    33.8
    
    
    
    48.8Inventories
    
    
    (324.4
    )
    
    
    60.3
    
    
    
    13.9
    
    
    
    (119.9
    )
    
    
    (10.5
    )
    
    
    11.8
    
    
    
    (18.2
    )
    
    
    (76.1
    )
    
    
    (27.4
    )
    
    
    (16.1
    )
    
    
    (7.9
    )Prepaid expenses and other current assets
    
    
    (23.7
    )
    
    
    7.0
    
    
    
    0.2
    
    
    
    (5.8
    )
    
    
    (6.3
    )
    
    
    11.4
    
    
    
    (3.9
    )
    
    
    2.3
    
    
    
    (3.1
    )
    
    
    3.2
    
    
    
    (16.6
    )Accounts payable and accrued charges
    
    
    174.3
    
    
    
    250.9
    
    
    
    (269.1
    )
    
    
    238.1
    
    
    
    188.7
    
    
    
    33.3
    
    
    
    60.4
    
    
    
    (266.2
    )
    
    
    158.0
    
    
    
    3.1
    
    
    
    (2.5
    )Changes in non-cash operating
working capital
    
    
    (767.5
    )
    
    
    163.6
    
    
    
    (244.0
    )
    
    
    4.8
    
    
    
    120.0
    
    
    
    17.0
    
    
    
    27.2
    
    
    
    (270.1
    )
    
    
    75.3
    
    
    
    24.0
    
    
    
    21.8Cash provided by operating activities
    
    
    3,013.2
    
    
    
    1,688.9
    
    
    
    696.8
    
    
    
    865.1
    
    
    
    658.3
    
    
    
    385.5
    
    
    
    316.4
    
    
    
    75.7
    
    
    
    480.4
    
    
    
    343.6
    
    
    
    578.0Net income (loss)
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8
    
    
    
    542.9
    
    
    
    298.6
    
    
    
    (126.3
    )
    
    
    53.6
    
    
    
    121.2
    
    
    
    198.0
    
    
    
    (412.0
    )
    
    
    261.0Total assets
    
    
    10,248.8
    
    
    
    9,716.6
    
    
    
    6,217.0
    
    
    
    5,357.9
    
    
    
    5,126.8
    
    
    
    4,567.3
    
    
    
    4,685.6
    
    
    
    4,597.3
    
    
    
    4,145.7
    
    
    
    3,916.8
    
    
    
    4,534.3Return on assets
    
    
    34.1%
    
    
    
    11.4%
    
    
    
    10.2%
    
    
    
    10.1%
    
    
    
    5.8%
    
    
    
    (2.8%
    )
    
    
    1.1
    
    
    
    2.6%
    
    
    
    4.8%
    
    
    
    (10.5%
    )
    
    
    5.8Net income (loss)
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8
    
    
    
    542.9
    
    
    
    298.6
    
    
    
    (126.3
    )
    
    
    53.6
    
    
    
    121.2
    
    
    
    198.0
    
    
    
    (412.0
    )
    
    
    261.0Income taxes
    
    
    1,077.1
    
    
    
    416.2
    
    
    
    158.1
    
    
    
    267.4
    
    
    
    131.7
    
    
    
    (20.6
    )
    
    
    30.2
    
    
    
    68.2
    
    
    
    67.2
    
    
    
    7.5
    
    
    
    117.5Change in unrealized loss (gain) on
derivatives included in net income
    
    
    68.8
    
    
    
    (16.9
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest expense
    
    
    62.8
    
    
    
    68.7
    
    
    
    85.6
    
    
    
    82.3
    
    
    
    84.0
    
    
    
    91.3
    
    
    
    83.1
    
    
    
    80.3
    
    
    
    61.6
    
    
    
    51.5
    
    
    
    63.8Current income taxes
    
    
    (994.9
    )
    
    
    (296.6
    )
    
    
    (108.1
    )
    
    
    (227.3
    )
    
    
    (105.4
    )
    
    
    
    
    
    
    (24.2
    )
    
    
    (20.5
    )
    
    
    (32.6
    )
    
    
    (14.7
    )
    
    
    (19.4
    )Depreciation and amortization
    
    
    327.5
    
    
    
    291.3
    
    
    
    242.4
    
    
    
    242.4
    
    
    
    240.0
    
    
    
    227.4
    
    
    
    219.1
    
    
    
    185.7
    
    
    
    187.0
    
    
    
    191.1
    
    
    
    190.9Cash flow 4
    
    
    4,036.5
    
    
    
    1,566.3
    
    
    
    1,009.8
    
    
    
    907.7
    
    
    
    648.9
    
    
    
    171.8
    
    
    
    361.8
    
    
    
    434.9
    
    
    
    481.2
    
    
    
    (176.6
    )
    
    
    613.8Total assets
    
    
    10,248.8
    
    
    
    9,716.6
    
    
    
    6,217.0
    
    
    
    5,357.9
    
    
    
    5,126.8
    
    
    
    4,567.3
    
    
    
    4,685.6
    
    
    
    4,597.3
    
    
    
    4,145.7
    
    
    
    3,916.8
    
    
    
    4,534.3Cash and cash equivalents
    
    
    (276.8
    )
    
    
    (719.5
    )
    
    
    (325.7
    )
    
    
    (93.9
    )
    
    
    (458.9
    )
    
    
    (4.7
    )
    
    
    (24.5
    )
    
    
    (45.3
    )
    
    
    (100.0
    )
    
    
    (44.0
    )
    
    
    (68.0
    )Fair value of
derivative assets
    
    
    (17.9
    )
    
    
    (135.0
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated depreciation of
property, plant and equipment
    
    
    2,526.6
    
    
    
    2,280.7
    
    
    
    2,073.8
    
    
    
    1,927.7
    
    
    
    1,754.9
    
    
    
    1,576.2
    
    
    
    1,454.7
    
    
    
    1,274.3
    
    
    
    1,111.8
    
    
    
    951.0
    
    
    
    812.4Net unrealized gains on
available-for-sale securities
    
    
    (885.7
    )
    
    
    (2,284.1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Accumulated amortization of
other assets and intangible assets
    
    
    73.4
    
    
    
    59.0
    
    
    
    72.6
    
    
    
    66.4
    
    
    
    65.1
    
    
    
    70.1
    
    
    
    59.1
    
    
    
    42.0
    
    
    
    38.0
    
    
    
    42.0
    
    
    
    49.2Accumulated amortization of goodwill
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    7.3
    
    
    
    4.3
    
    
    
    1.4
    
    
    
    27.4Accounts payable and accrued charges
    
    
    (1,183.6
    )
    
    
    (911.5
    )
    
    
    (545.2
    )
    
    
    (842.7
    )
    
    
    (599.9
    )
    
    
    (380.3
    )
    
    
    (347.0
    )
    
    
    (271.4
    )
    
    
    (525.9
    )
    
    
    (349.1
    )
    
    
    (349.7
    )Adjusted assets
    
    
    10,492.1
    
    
    
    8,013.5
    
    
    
    7,499.8
    
    
    
    6,422.7
    
    
    
    5,895.3
    
    
    
    5,835.9
    
    
    
    5,835.2
    
    
    
    5,604.2
    
    
    
    4,673.9
    
    
    
    4,518.1
    
    
    
    5,005.6Average adjusted assets
    
    
    9,252.8
    
    
    
    7,756.7
    
    
    
    6,961.3
    
    
    
    6,159.0
    
    
    
    5,865.6
    
    
    
    5,835.6
    
    
    
    5,719.7
    
    
    
    5,139.1
    
    
    
    4,596.0
    
    
    
    4,761.9
    
    
    
    4,884.4Cash flow return 4
    
    
    43.6%
    
    
    
    20.2%
    
    
    
    14.5%
    
    
    
    14.7%
    
    
    
    11.1%
    
    
    
    2.9%
    
    
    
    6.3%
    
    
    
    8.5%
    
    
    
    10.5%
    
    
    
    (3.7%
    )
    
    
    12.6%
 Keyword
Online : Financials
    
POTASHCORP 2008 FINANCIAL REVIEW




---



##### 



Financial Performance Indicators
    
    
    
    
    63
  RECONCILIATIONS AND CALCULATIONS
continued
    (in millions of US dollars except share, per-share and tonnage amounts)2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2005
    
    
    
    2004
    
    
    
    2003
    
    
    
    2002
    
    
    
    2001
    
    
    
    2000
    
    
    
    1999
    
    
    
    1998Weighted average cost of capital
    
    
    12.0%
    
    
    
    10.0%
    
    
    
    8.8%
    
    
    
    8.3%
    
    
    
    8.4%
    
    
    
    7.3%
    
    
    
    7.3%
    
    
    
    7.7%
    
    
    
    8.7%
    
    
    
    8.7%
    
    
    
    8.3%End of year closing price (dollars)
    
    
    73.22
    
    
    
    143.96
    
    
    
    47.83
    
    
    
    26.74
    
    
    
    27.69
    
    
    
    14.41
    
    
    
    10.60
    
    
    
    10.23
    
    
    
    13.05
    
    
    
    8.03
    
    
    
    10.65Beginning of year opening price (dollars)
    
    
    143.96
    
    
    
    47.83
    
    
    
    26.74
    
    
    
    27.69
    
    
    
    14.41
    
    
    
    10.60
    
    
    
    10.23
    
    
    
    13.05
    
    
    
    8.03
    
    
    
    10.65
    
    
    
    13.83Change in share price (dollars)
    
    
    (70.74
    )
    
    
    96.13
    
    
    
    21.09
    
    
    
    (0.95
    )
    
    
    13.28
    
    
    
    3.81
    
    
    
    0.37
    
    
    
    (2.82
    )
    
    
    5.02
    
    
    
    (2.62
    )
    
    
    (3.18
    )Dividends paid per share (dollars)
    
    
    0.40
    
    
    
    0.30
    
    
    
    0.20
    
    
    
    0.20
    
    
    
    0.18
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.17
    
    
    
    0.16Total shareholder return
    
    
    (48.9%
    )
    
    
    201.6%
    
    
    
    79.6%
    
    
    
    (2.7%
    )
    
    
    93.4%
    
    
    
    37.5%
    
    
    
    5.3%
    
    
    
    (20.3%
    )
    
    
    64.6%
    
    
    
    (23.0%
    )
    
    
    (21.8%
    )Short-term debt
    
    
    1,323.9
    
    
    
    90.0
    
    
    
    157.9
    
    
    
    252.2
    
    
    
    93.5
    
    
    
    176.2
    
    
    
    473.0
    
    
    
    501.1
    
    
    
    488.8
    
    
    
    474.5
    
    
    
    94.9Current portion of long-term debt
    
    
    0.2
    
    
    
    0.2
    
    
    
    400.4
    
    
    
    1.2
    
    
    
    10.3
    
    
    
    1.3
    
    
    
    3.4
    
    
    
    
    
    
    
    5.7
    
    
    
    7.4
    
    
    
    0.4Long-term debt
    
    
    1,739.5
    
    
    
    1,339.4
    
    
    
    1,357.1
    
    
    
    1,257.6
    
    
    
    1,258.6
    
    
    
    1,268.6
    
    
    
    1,019.9
    
    
    
    1,013.7
    
    
    
    413.7
    
    
    
    437.0
    
    
    
    933.3Total debt
    
    
    3,063.6
    
    
    
    1,429.6
    
    
    
    1,915.4
    
    
    
    1,511.0
    
    
    
    1,362.4
    
    
    
    1,446.1
    
    
    
    1,496.3
    
    
    
    1,514.8
    
    
    
    908.2
    
    
    
    918.9
    
    
    
    1,028.6Cash and cash equivalents
    
    
    (276.8
    )
    
    
    (719.5
    )
    
    
    (325.7
    )
    
    
    (93.9
    )
    
    
    (458.9
    )
    
    
    (4.7
    )
    
    
    (24.5
    )
    
    
    (45.3
    )
    
    
    (100.0
    )
    
    
    (44.0
    )
    
    
    (68.0
    )Net debt 5
    
    
    2,786.8
    
    
    
    710.1
    
    
    
    1,589.7
    
    
    
    1,417.1
    
    
    
    903.5
    
    
    
    1,441.4
    
    
    
    1,471.8
    
    
    
    1,469.5
    
    
    
    808.2
    
    
    
    874.9
    
    
    
    960.6Shareholders equity
    
    
    4,588.9
    
    
    
    6,018.7
    
    
    
    2,780.3
    
    
    
    2,132.5
    
    
    
    2,385.6
    
    
    
    1,973.8
    
    
    
    2,092.5
    
    
    
    2,086.5
    
    
    
    2,012.1
    
    
    
    1,962.4
    
    
    
    2,453.8Total debt to capital
    
    
    40.0%
    
    
    
    19.2%
    
    
    
    40.8%
    
    
    
    41.5%
    
    
    
    36.4%
    
    
    
    42.3%
    
    
    
    41.7%
    
    
    
    42.1%
    
    
    
    31.1%
    
    
    
    31.9%
    
    
    
    29.5%Net debt to capital 5
    
    
    37.8%
    
    
    
    10.6%
    
    
    
    36.4%
    
    
    
    39.9%
    
    
    
    27.5%
    
    
    
    42.2%
    
    
    
    41.3%
    
    
    
    41.3%
    
    
    
    28.7%
    
    
    
    30.8%
    
    
    
    28.1%Current assets
    
    
    2,267.2
    
    
    
    1,811.3
    
    
    
    1,310.2
    
    
    
    1,110.8
    
    
    
    1,243.6
    
    
    
    733.9
    
    
    
    832.0
    
    
    
    819.6
    
    
    
    871.7
    
    
    
    726.2
    
    
    
    774.2Current liabilities
    
    
    (2,615.8
    )
    
    
    (1,001.9
    )
    
    
    (1,103.5
    )
    
    
    (1,096.1
    )
    
    
    (703.7
    )
    
    
    (557.8
    )
    
    
    (823.4
    )
    
    
    (772.5
    )
    
    
    (1,020.4
    )
    
    
    (831.0
    )
    
    
    (445.0
    )Working capital
    
    
    (348.6
    )
    
    
    809.4
    
    
    
    206.7
    
    
    
    14.7
    
    
    
    539.9
    
    
    
    176.1
    
    
    
    8.6
    
    
    
    47.1
    
    
    
    (148.7
    )
    
    
    (104.8
    )
    
    
    329.2Cash and cash equivalents
    
    
    (276.8
    )
    
    
    (719.5
    )
    
    
    (325.7
    )
    
    
    (93.9
    )
    
    
    (458.9
    )
    
    
    (4.7
    )
    
    
    (24.5
    )
    
    
    (45.3
    )
    
    
    (100.0
    )
    
    
    (44.0
    )
    
    
    (68.0
    )Short-term debt
    
    
    1,323.9
    
    
    
    90.0
    
    
    
    157.9
    
    
    
    252.2
    
    
    
    93.5
    
    
    
    176.2
    
    
    
    473.0
    
    
    
    501.1
    
    
    
    488.8
    
    
    
    474.5
    
    
    
    94.9Current portion of long-term debt
    
    
    0.2
    
    
    
    0.2
    
    
    
    400.4
    
    
    
    1.2
    
    
    
    10.3
    
    
    
    1.3
    
    
    
    3.4
    
    
    
    
    
    
    
    5.7
    
    
    
    7.4
    
    
    
    0.4Non-cash operating working capital
    
    
    698.7
    
    
    
    180.1
    
    
    
    439.3
    
    
    
    174.2
    
    
    
    184.8
    
    
    
    348.9
    
    
    
    460.5
    
    
    
    502.9
    
    
    
    245.8
    
    
    
    333.1
    
    
    
    356.5Sales
    
    
    9,446.5
    
    
    
    5,234.2
    
    
    
    3,766.7
    
    
    
    3,847.2
    
    
    
    3,244.4
    
    
    
    2,799.0
    
    
    
    2,224.4
    
    
    
    2,380.8
    
    
    
    2,542.9
    
    
    
    2,355.6
    
    
    
    2,607.0Freight
    
    
    324.9
    
    
    
    346.1
    
    
    
    255.8
    
    
    
    249.7
    
    
    
    238.7
    
    
    
    234.5
    
    
    
    215.2
    
    
    
    216.7
    
    
    
    222.1
    
    
    
    212.5
    
    
    
    216.5Transportation and distribution
    
    
    132.4
    
    
    
    124.1
    
    
    
    134.1
    
    
    
    121.9
    
    
    
    104.3
    
    
    
    98.7
    
    
    
    80.5
    
    
    
    83.3
    
    
    
    83.1
    
    
    
    77.0
    
    
    
    77.9Net sales 6
    
    
    8,989.2
    
    
    
    4,764.0
    
    
    
    3,376.8
    
    
    
    3,475.6
    
    
    
    2,901.4
    
    
    
    2,465.8
    
    
    
    1,928.7
    
    
    
    2,080.8
    
    
    
    2,237.7
    
    
    
    2,066.1
    
    
    
    2,312.6Potash net sales 

North American
    
    
    1,307.5
    
    
    
    656.9
    
    
    
    470.5
    
    
    
    495.6
    
    
    
    347.5
    
    
    
    230.6
    
    
    
    215.3
    
    
    
    232.1
    
    
    
    237.8
    
    
    
    237.4
    
    
    
    227.6Offshore
    
    
    2,526.8
    
    
    
    909.6
    
    
    
    576.0
    
    
    
    668.3
    
    
    
    504.6
    
    
    
    336.2
    
    
    
    300.7
    
    
    
    293.4
    
    
    
    340.9
    
    
    
    325.9
    
    
    
    317.9Miscellaneous and
purchased product
    
    
    24.4
    
    
    
    13.5
    
    
    
    11.7
    
    
    
    13.0
    
    
    
    42.7
    
    
    
    52.3
    
    
    
    28.5
    
    
    
    6.3
    
    
    
    3.4
    
    
    
    2.3
    
    
    
    2.9Total
    
    
    3,858.7
    
    
    
    1,580.0
    
    
    
    1,058.2
    
    
    
    1,176.9
    
    
    
    894.8
    
    
    
    619.1
    
    
    
    544.5
    
    
    
    531.8
    
    
    
    582.1
    
    
    
    565.6
    
    
    
    548.4Potash sales (thousands KCl tonnes)
North American
    
    
    2,962
    
    
    
    3,471
    
    
    
    2,785
    
    
    
    3,144
    
    
    
    3,246
    
    
    
    2,870
    
    
    
    2,780
    
    
    
    2,894
    
    
    
    2,939
    
    
    
    2,871
    
    
    
    2,702Offshore
    
    
    5,585
    
    
    
    5,929
    
    
    
    4,411
    
    
    
    5,020
    
    
    
    5,030
    
    
    
    4,213
    
    
    
    3,547
    
    
    
    3,349
    
    
    
    3,973
    
    
    
    3,603
    
    
    
    3,581Total
    
    
    8,547
    
    
    
    9,400
    
    
    
    7,196
    
    
    
    8,164
    
    
    
    8,276
    
    
    
    7,083
    
    
    
    6,327
    
    
    
    6,243
    
    
    
    6,912
    
    
    
    6,474
    
    
    
    6,283Weighted average shares outstandingBasic (thousands)
    
    
    307,480
    
    
    
    315,641
    
    
    
    311,880
    
    
    
    325,704
    
    
    
    323,901
    
    
    
    313,380
    
    
    
    312,126
    
    
    
    311,274
    
    
    
    314,460
    
    
    
    325,380
    
    
    
    325,062Diluted (thousands)
    
    
    317,438
    
    
    
    324,308
    
    
    
    318,689
    
    
    
    333,234
    
    
    
    332,217
    
    
    
    313,380
    
    
    
    313,896
    
    
    
    313,116
    
    
    
    316,218
    
    
    
    325,380
    
    
    
    327,009
 See footnotes on Page 64




---



##### 



64
    
    Financial Performance Indicators
  Non-GAAP
Financial Measures and Footnotes to Reconciliations and Calculations
 1
    
    After-tax effects of items affecting net income are as follows: 2008
    
    
    2007
    
    
    2006
    
    
    2004
    
    
    2003
    
    
    2000
    
    
    1999Impairment of property,
plant and equipment
    
    $
    
    
    
    $
    
    
    
    $
    4.5
    
    
    $
    
    
    
    $
    89.7
    
    
    $
    14.5
    
    
    $
    513.8Impairment of
auction rate securities
    
    
    66.6
    
    
    
    18.6
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plant shutdown and closure
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.2
    
    
    
    113.5
    
    
    
    
    
    
    
    24.1Office consolidation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.3
    
    
    
    9.2Gain on sale of
assets
    
    
    (15.6
    )
    
    
    
    
    
    
    
    
    
    
    (37.0
    )
    
    
    
    
    
    
    (16.3
    )
    
    
    Total after-tax effects
on net income
    
    $
    51.0
    
    
    $
    18.6
    
    
    $
    4.5
    
    
    $
    (30.8
    )
    
    $
    203.2
    
    
    $
    1.5
    
    
    $
    547.1
 
 2
    
    PotashCorp uses EBITDA and adjusted EBITDA as supplemental financial measures of its operational
performance. Management believes EBITDA and adjusted EBITDA to be important measures as they
exclude the effects of items which primarily reflect the impact of long-term investment decisions,
rather than the performance of the companys day-to-day operations. As compared to net income
(loss) according to GAAP, these measures are limited in that they do not reflect the periodic costs
of certain capitalized tangible and intangible assets used in generating revenues in the companys
business, or the non-cash charges associated with impairments and shutdown-related costs, or gain
on sale of long-term investments. Management evaluates such items through other financial measures
such as capital expenditures and cash flow provided by operating activities. The company believes
that these measurements are useful to measure a companys ability to service debt and to meet other
payment obligations or as a valuation measurement.EBITDA has not been adjusted for the non-cash effects of the following items: 2008
    
    
    2007
    
    
    2006
    
    
    2004
    
    
    2003
    
    
    2000
    
    
    1999Impairment of property,
plant and equipment
    
    $
    
    
    
    $
    
    
    
    $
    6.3
    
    
    $
    
    
    
    $
    132.4
    
    
    $
    14.5
    
    
    $
    530.4Impairment of
auction-rate securities
    
    
    88.8
    
    
    
    26.5
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Plant shutdown
and closure
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6.2
    
    
    
    113.5
    
    
    
    
    
    
    
    24.1Office consolidation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9.2Gain on sale of
assets
    
    
    (21.4
    )
    
    
    
    
    
    
    
    
    
    
    (37.0
    )
    
    
    
    
    
    
    (20.1
    )
    
    
    Total non-cash items
included in EBITDA
    
    
    67.4
    
    
    
    26.5
    
    
    
    6.3
    
    
    
    (30.8
    )
    
    
    245.9
    
    
    
    (5.6
    )
    
    
    563.7EBITDA
    
    
    4,962.6
    
    
    
    1,879.8
    
    
    
    1,117.9
    
    
    
    754.3
    
    
    
    171.8
    
    
    
    513.8
    
    
    
    (161.9
    )Adjusted EBITDA
    
    $
    5,030.0
    
    
    $
    1,906.3
    
    
    $
    1,124.2
    
    
    $
    723.5
    
    
    $
    417.7
    
    
    $
    508.2
    
    
    $
    401.8
 
 3
    
    Cash flow prior to working capital changes is defined as the cash provided by operating
activities, exclusive of changes in non-cash operating working capital. PotashCorp uses cash flow
prior to working capital changes as a supplemental financial measure in its evaluation of
liquidity. Management believes that adjusting principally for the swings in non-cash working
capital items due to seasonality assists management in making long-term liquidity assessments. The
company also believes that this measurement is useful as a measure of liquidity or as a valuation
measurement.
 4
    
    PotashCorp uses cash flow and cash flow return as supplemental measures to evaluate the
performance of the companys assets in terms of the cash flow they have generated. Calculated on
the total cost basis of the companys assets rather than on the depreciated value, these measures
reflect cash returned on the total investment outlay. The company believes these measures are one
of the best predictors of shareholder value. As such, management believes this information to be
useful to investors.5
    
    Management believes that net debt and net-debt-to-capital ratio are useful to investors because
they are helpful in determining the companys leverage. It also believes that, since the company
has the ability to and may elect to use a portion of cash and cash equivalents to retire debt or to
incur additional expenditures without increasing debt, it is appropriate to apply cash and cash
equivalents to debt in calculating net debt and net debt to capital. PotashCorp believes that this
measurement is useful as a financial leverage measure.6
    
    Management includes net sales in its segment disclosures in the consolidated financial statements
pursuant to Canadian GAAP, which requires segmentation based upon the companys internal
organization and reporting of revenue and profit measures derived from internal accounting methods.
Net sales (and related per-tonne amounts and other ratios) are primary revenue measures it uses and
reviews in making decisions about operating matters on a business segment basis. These decisions
include assessments about potash, nitrogen and phosphate performance and the resources to be
allocated to these segments. It also uses net sales (and related per-tonne amounts and other
ratios) for business segment planning and monthly forecasting. Net sales are calculated as sales
revenues less freight, transportation and distribution expenses. Net sales presented on a
consolidated basis rather than by business segment is considered a non-GAAP financial measure.7
    
    Compound annual growth rate expressed as a percentage. Financial Terms
 Adjusted EBITDA
 Average adjusted assets
 Cash flow
 Cash flow return
 Current income taxes
 EBITDA
 Market value of total capital
 Net debt to capital
 Return on assets
 Total debt to capital
 Total shareholder return
 Weighted average cost of capital




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##### 



Managements Responsibility
    
    
    
    
    65
 MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING
 Managements Report on Financial Statements
       Managements Report on Internal Control over Financial Reporting
 Internal Control  Integrated Framework
  -s- W. Doyle
    

-s- W. BrownleeW. Doyle
    
    W. BrownleePresident and
    
    Executive Vice President andChief Executive Officer
    
    Chief Financial OfficerFebruary 20, 2009
 Keyword
Online:  Financials

    
POTASHCORP 2008 FINANCIAL REVIEW




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##### 



66
    
    Accountants Reports
 REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
 To the Board of Directors and Shareholders of Potash Corporation of Saskatchewan Inc.
 Internal Control  Integrated Framework
    Internal Control
- Integrated Framework
   
 
  POTASHCORP 2008 FINANCIAL REVIEW
Keyword
Online : Financials




---



##### 



Accountants Reports
    
    
    
    
    67
 REPORT OF INDEPENDENT REGISTERED CHARTERED ACCOUNTANTS
 To the Board of Directors and Shareholders of Potash Corporation of Saskatchewan Inc.
    Inventories
 Internal Control  Integrated Framework




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##### 



68
    
    Consolidated Financial Statements
 Consolidated Statements of Financial PositionAs at December 31
    
    in millions of US dollars except share amountsNotes
    
    
    
    
    2008
    
    
    
     2007AssetsCurrent assetsCash and cash equivalents
    
    $
    276.8
    
    
    $
    719.5Note 3
    
    Accounts receivable
    
    
    1,189.9
    
    
    
    596.2Note 4
    
    Inventories
    
    
    714.9
    
    
    
    428.1Note 5
    
    Prepaid expenses and other current assets
    
    
    79.2
    
    
    
    36.7Note 6
    
    Current portion of derivative instrument assets
    
    
    6.4
    
    
    
    30.82,267.2
    
    
    
    1,811.3Note 6
    
    Derivative instrument assets
    
    
    11.5
    
    
    
    104.2Note 7
    
    Property, plant and equipment
    
    
    4,812.2
    
    
    
    3,887.4Note 8
    
    Investments
    
    
    2,750.7
    
    
    
    3,581.5Note 9
    
    Other assets
    
    
    288.7
    
    
    
    210.7Note 10
    
    Intangible assets
    
    
    21.5
    
    
    
    24.5Note 10
    
    Goodwill
    
    
    97.0
    
    
    
    97.0$
    10,248.8
    
    
    $
    9,716.6LiabilitiesCurrent liabilitiesNote 11, 13
    
    Short-term debt and current portion of long-term debt
    
    $
    1,324.1
    
    
    $
    90.2Note 12
    
    Accounts payable and accrued charges
    
    
    1,183.6
    
    
    
    911.5Note 6
    
    Current portion of derivative instrument liabilities
    
    
    108.1
    
    
    
    0.22,615.8
    
    
    
    1,001.9Note 13
    
    Long-term debt
    
    
    1,739.5
    
    
    
    1,339.4Note 6
    
    Derivative instrument liabilities
    
    
    120.4
    
    
    
    Note 25
    
    Future income tax liability
    
    
    794.2
    
    
    
    988.1Note 15
    
    Accrued pension and other post-retirement benefits
    
    
    253.4
    
    
    
    244.8Note 16
    
    Accrued environmental costs and asset retirement obligations
    
    
    133.4
    
    
    
    121.0Other non-current liabilities and deferred credits
    
    
    3.2
    
    
    
    2.75,659.9
    
    
    
    3,697.9Note 14
    
    CommitmentsNote 30
    
    ContingenciesNote 31
    
    GuaranteesShareholders EquityNote 17
    
    Share capital
    
    
    1,402.5
    
    
    
    1,461.3Unlimited authorization of common shares without par value;
issued and outstanding 295,200,987 and 316,411,209 shares
at December 31, 2008 and 2007, respectivelyUnlimited authorization of first preferred shares; none outstandingNote 18
    
    Contributed surplus
    
    
    126.2
    
    
    
    98.9Accumulated other comprehensive income
    
    
    657.9
    
    
    
    2,178.9Retained earnings
    
    
    2,402.3
    
    
    
    2,279.64,588.9
    
    
    
    6,018.7$
    10,248.8
    
    
    $
    9,716.6
 
 (See Notes to the Consolidated Financial Statements)   -s- A. Haberge
    

    -s- Keith MetelDirector
    
    Director
 POTASHCORP 2008 FINANCIAL REVIEW
Keyword
Online : Financials




---



##### 



Consolidated Financial Statements
    
    
    
    
    69
  Consolidated Statements of Operations and Retained EarningsFor the years ended December 31
    
    in millions of US dollars except per-share amountsNotes
    
    
    
    
    2008
    
    
    
    2007
    
    
    
    2006Note 19
    
    Sales
    
    $
    9,446.5
    
    
    $
    5,234.2
    
    
    $
    3,766.7Less:  Freight
    
    
    324.9
    
    
    
    346.1
    
    
    
    255.8Transportation and distribution
    
    
    132.4
    
    
    
    124.1
    
    
    
    134.1Note 20
    
    Cost of goods sold
    
    
    4,081.8
    
    
    
    2,882.8
    
    
    
    2,374.80Gross Margin
    
    
    4,907.4
    
    
    
    1,881.2
    
    
    
    1,002.0Note 21
    
    Selling and administrative
    
    
    188.4
    
    
    
    212.6
    
    
    
    158.4Note 22
    
    Provincial mining and other taxes
    
    
    543.4
    
    
    
    135.4
    
    
    
    66.5Foreign exchange (gain) loss
    
    
    (126.0
    )
    
    
    70.2
    
    
    
    (4.4
    )Note 23
    
    Other income
    
    
    (333.5
    )
    
    
    (125.5
    )
    
    
    (94.0
    )272.3
    
    
    
    292.7
    
    
    
    126.5Operating Income
    
    
    4,635.1
    
    
    
    1,588.5
    
    
    
    875.5Note 24
    
    Interest Expense
    
    
    62.8
    
    
    
    68.7
    
    
    
    85.6Income before Income Taxes
    
    
    4,572.3
    
    
    
    1,519.8
    
    
    
    789.9Note 25
    
    Income Taxes
    
    
    1,077.1
    
    
    
    416.2
    
    
    
    158.1Net Income
    
    
    3,495.2
    
    
    
    1,103.6
    
    
    
    631.8Retained Earnings, Beginning of Year
    
    
    2,279.6
    
    
    
    1,286.4
    
    
    
    716.9Note 17
    
    Repurchase of Common Shares
    
    
    (3,250.3
    )
    
    
    
    
    
    
    Change in Accounting Policy
    
    
    
    
    
    
    0.2
    
    
    
    Dividends
    
    
    (122.2
    )
    
    
    (110.6
    )
    
    
    (62.3
    )Retained Earnings, End of Year
    
    $
    2,402.3
    
    
    $
    2,279.6
    
    
    $
    1,286.4Note 26
    
    Net
Income per Share  Basic
    
    $
    11.37
    
    
    $
    3.50
    
    
    $
    2.03Note 26
    
    Net
Income per Share  Diluted
    
    $
    11.01
    
    
    $
    3.40
    
    
    $
    1.98Dividends per Share
    
    $
    0.40
    
    
    $
    0.35
    
    
    $
    0.20
 
 (See Notes to the Consolidated Financial Statements)




---



##### 



70
    
    Consolidated Financial Statements
 Consolidated Statements of Cash FlowFor the years ended December 31
    
    in millions of US dollars2008
    
    
    
    2007
    
    
    
    2006Operating ActivitiesNet income
    
    $
    3,495.2
    
    
    $
    1,103.6
    
    
    $
    631.8Adjustments to reconcile net income to cash provided by operating activities
 Depreciation and amortization
    
    327.5
    
    
    
    291.3
    
    
    
    242.4Stock-based compensation
    
    36.2
    
    
    
    38.6
    
    
    
    29.5(Gain) loss on disposal of property, plant and equipment
and long-term investments
    
    (27.1
    )
    
    
    7.9
    
    
    
    (8.6
    )Provision for auction rate securities and plant shutdowns
    
    88.8
    
    
    
    26.5
    
    
    
    6.3Foreign exchange on future income tax
    
    (106.4
    )
    
    
    52.4
    
    
    
    0.5Provision for future income tax
    
    82.2
    
    
    
    119.6
    
    
    
    50.0Undistributed earnings of equity investees
    
    (166.7
    )
    
    
    (35.6
    )
    
    
    (24.5
    )Loss (gain) on derivative instruments
    
    48.7
    
    
    
    (21.1
    )
    
    
    Other long-term liabilities
    
    2.3
    
    
    
    (57.9
    )
    
    
    13.4
 Subtotal of adjustments
    
    
    285.5
    
    
    
    421.7
    
    
    
    309.0
 Changes in non-cash operating working capitalAccounts receivable
    
    (593.7
    )
    
    
    (154.6
    )
    
    
    11.0Inventories
    
    (324.4
    )
    
    
    60.3
    
    
    
    13.9Prepaid expenses and other current assets
    
    (23.7
    )
    
    
    7.0
    
    
    
    0.2Accounts payable and accrued charges
    
    174.3
    
    
    
    250.9
    
    
    
    (269.1
    )
 Subtotal of changes in non-cash operating working capital
    
    
    (767.5
    )
    
    
    163.6
    
    
    
    (244.0
    )Cash provided by operating activities
    
    
    3,013.2
    
    
    
    1,688.9
    
    
    
    696.8Investing ActivitiesAdditions to property, plant and equipment
    
    
    (1,198.3
    )
    
    
    (607.2
    )
    
    
    (508.6
    )Purchase of long-term investments
    
    
    (445.6
    )
    
    
    (30.7
    )
    
    
    (352.5
    )Purchase of investments in auction rate securities
    
    
    
    
    
    
    (132.5
    )
    
    
    Proceeds from disposal of property, plant and equipment
and long-term investments
    
    
    43.2
    
    
    
    4.5
    
    
    
    22.0Other assets and intangible assets
    
    
    (46.6
    )
    
    
    7.8
    
    
    
    (0.6
    )Cash used in investing activities
    
    
    (1,647.3
    )
    
    
    (758.1
    )
    
    
    (839.7
    )Cash before financing activities
    
    
    1,365.9
    
    
    
    930.8
    
    
    
    (142.9
    )Financing ActivitiesProceeds from long-term debt obligations
    
    
    400.0
    
    
    
    1.5
    
    
    
    483.9Repayment and issue costs of long-term debt obligations
    
    
    (0.2
    )
    
    
    (403.6
    )
    
    
    (1.3
    )Proceeds from (repayment of) short-term debt obligations
    
    
    1,233.9
    
    
    
    (67.9
    )
    
    
    (94.3
    )Dividends
    
    
    (122.6
    )
    
    
    (93.6
    )
    
    
    (60.9
    )Repurchase of common shares
    
    
    (3,356.4
    )
    
    
    
    
    
    
    Issuance of common shares
    
    
    36.7
    
    
    
    26.6
    
    
    
    47.3Cash (used in) provided by financing activities
    
    
    (1,808.6
    )
    
    
    (537.0
    )
    
    
    374.7(Decrease) Increase in Cash and Cash Equivalents
    
    
    (442.7
    )
    
    
    393.8
    
    
    
    231.8Cash and Cash Equivalents, Beginning of Year
    
    
    719.5
    
    
    
    325.7
    
    
    
    93.9Cash and Cash Equivalents, End of Year
    
    $
    276.8
    
    
    $
    719.5
    
    
    $
    325.7Cash and cash equivalents comprised of:Cash
    
    $
    29.9
    
    
    $
    23.1
    
    
    $
    7.9Short-term investments
    
    
    246.9
    
    
    
    696.4
    
    
    
    317.8$
    276.8
    
    
    $
    719.5
    
    
    $
    325.7Supplemental cash flow disclosureInterest paid
    
    $
    82.8
    
    
    $
    93.9
    
    
    $
    106.8Income taxes paid
    
    $
    669.9
    
    
    $
    221.0
    
    
    $
    226.8
 
 (See Notes to the Consolidated Financial Statements)




---



##### 



Consolidated Financial Statements
    
    
    
    
    71
  Consolidated Statements of Comprehensive (Loss) Income
 For the years ended December 31
    
    in millions of US dollars(Net of related income taxes)
    
    
    2008
    
    
    
    2007Net Income
    
    $
    3,495.2
    
    
    $
    1,103.6Other comprehensive (loss) incomeNet (decrease) increase in unrealized gains on available-for-sale securities 1
    
    
    (1,336.9
    )
    
    
    1,309.1Net (losses) gains on derivatives designated as cash flow hedges 2
    
    
    (166.0
    )
    
    
    34.6Reclassification to income of net gains on cash flow hedges 3
    
    
    (8.1
    )
    
    
    (40.5
    )Unrealized foreign exchange (losses) gains on translation of
self-sustaining foreign operations
    
    
    (10.0
    )
    
    
    6.7Other Comprehensive (Loss) Income
    
    $
    (1,521.0
    )
    
    $
    1,309.9Comprehensive Income
    
    $
    1,974.2
    
    
    $
    2,413.5
 
 1
    
    Available-for-sale securities are comprised of shares in Israel Chemicals Ltd., Sinofert Holdings Limited and investments in auction rate securities, and are net of income taxes of $(61.5) (2007  $87.1).2
    
    Cash flow hedges are comprised of natural gas derivative instruments, and are net of income taxes of $(100.8) (2007  $14.8).3
    
    Net of income taxes of $4.8 (2007  $17.3).  Consolidated Statements of Accumulated Other Comprehensive Income
 As at December 31
    
    in millions of US dollars(Net of related income taxes)
    
    
    2008
    
    
    
    2007Net unrealized gains on available-for-sale securities 1
    
    $
    761.8
    
    
    $
    2,098.7Net unrealized (losses) gains on derivatives designated as cash flow hedges 2
    
    
    (100.6
    )
    
    
    73.5Unrealized foreign exchange (losses) gains on self-sustaining foreign operations 3
    
    
    (3.3
    )
    
    
    6.7Accumulated other comprehensive income
    
    
    657.9
    
    
    
    2,178.9Retained earnings
    
    
    2,402.3
    
    
    
    2,279.6Accumulated Other Comprehensive Income and Retained Earnings
    
    $
    3,060.2
    
    
    $
    4,458.5
 
 1
    
    $885.7 before income taxes (2007  $2,284.1).2
    
    $(160.2) before income taxes (2007  $119.6).3
    
    $(3.3) before income taxes (2007  $6.7).  
 (See Notes to the Consolidated Financial Statements)




---



##### 



Note 1
    
    Description of Business
    
    
    72Note 2
    
    Basis of Presentation
    
    
    72Note 3
    
    Accounts Receivable
    
    
    74Note 4
    
    Inventories
    
    
    74Note 5
    
    Prepaid Expenses andOther Current Assets
    
    
    75Note 6
    
    Derivative Financial Instruments
    
    
    75Note 7
    
    Property, Plant and Equipment
    
    
    77Note 8
    
    Investments
    
    
    77Note 9
    
    Other Assets
    
    
    79Note 10
    
    Intangible Assets and Goodwill
    
    
    80Note 11
    
    Short-Term Debt
    
    
    80Note 12
    
    Accounts Payable andAccrued Charges
    
    
    81Note 13
    
    Long-Term Debt
    
    
    81Note 14
    
    Commitments
    
    
    82Note 15
    
    Pension and OtherPost-Retirement Benefits
    
    
    83Note 16
    
    Environmental Costs and AssetRetirement Obligations
    
    
    87Note 17
    
    Share Capital
    
    
    89Note 18
    
    Contributed Surplus
    
    
    89Note 19
    
    Segment Information
    
    
    90Note 20
    
    Cost of Goods Sold
    
    
    93Note 21
    
    Selling and Administrative
    
    
    93Note 22
    
    Provincial Mining andOther Taxes
    
    
    93Note 23
    
    Other Income
    
    
    93Note 24
    
    Interest Expense
    
    
    93Note 25
    
    Income Taxes
    
    
    94Note 26
    
    Net Income per Share
    
    
    96Note 27
    
    Stock-Based Compensation
    
    
    96Note 28
    
    Financial Instruments andRelated Risk Management
    
    
    99Note 29
    
    Capital Disclosures
    
    
    104Note 30
    
    Contingencies
    
    
    105Note 31
    
    Guarantees
    
    
    107Note 32
    
    Related Party Transactions
    
    
    108Note 33
    
    Reconciliation of Canadian andUnited States Generally AcceptedAccounting Principles
    
    
    108Note 34
    
    Comparative Figures
    
    
    117




---



##### 



72
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 1 DESCRIPTION OF BUSINESS
   
    
    Potash
    
    five mines and mills and mining rights to potash reserves at a sixth location, all in the province of Saskatchewan
    
    one mine and mill in the province of New Brunswick
 
    
    Phosphate
    
    a mine and processing plants in the state of North Carolina
    
    a mine and two processing plants in the state of Florida
    
    a processing plant in the state of Louisiana
    
    phosphate feed plants in five states
    
    an industrial phosphoric acid plant in the state of Ohio
 
    
    Nitrogen
    
    three plants in the states of Georgia, Louisiana and Ohio
    
    large-scale operations in Trinidad
 
   Note 2 BASIS OF PRESENTATION
   
 Principles of Consolidation
  
    
    PCS Sales (Canada) Inc.
 
    
    PCS Joint Venture, Ltd. (PCS Joint Venture)
 
    
    PCS Sales (USA), Inc.
    
    PCS Phosphate Company, Inc. (PCS Phosphate)
 
    
    PCS Purified Phosphates
 
    
    White Springs Agricultural Chemicals, Inc. (White Springs)
    
    PCS Nitrogen Fertilizer, L.P.
    
    PCS Nitrogen Ohio, L.P.
    
    PCS Nitrogen Trinidad Limited
    
    PCS Cassidy Lake Company (PCS Cassidy Lake)




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    73
 Note
2 BASIS OF PRESENTATION
(continued)
   Foreign Exchange Transactions
    Cash Equivalents
  Asset Impairment
 Specific Accounting Policies
  Note

    
    Topic
    
    Page2
    
    
    Basis of Presentation
    
    
    722
    
    
    Cash Equivalents
    
    
    732
    
    
    Asset Impairment
    
    
    734
    
    
    Inventories
    
    
    745
    
    
    Prepaid Expenses
    
    
    756
    
    
    Derivative Financial Instruments
    
    
    756
    
    
    Fair Value of Derivative Financial Instruments
    
    
    767
    
    
    Property, Plant and Equipment
    
    
    778
    
    
    Investments
    
    
    778
    
    
    Fair Value of Investments
    
    
    789
    
    
    Other Assets
    
    
    7910
    
    
    Intangible Assets
    
    
    8010
    
    
    Goodwill
    
    
    8013
    
    
    Long-Term Debt
    
    
    8114
    
    
    Leases
    
    
    8215
    
    
    Pension and Other Post-Retirement Benefits
    
    
    8316
    
    
    Environmental Costs and Asset Retirement Obligations
    
    
    8719
    
    
    Revenue Recognition
    
    
    9025
    
    
    Income Taxes
    
    
    9427
    
    
    Stock-Based Compensation
    
    
    9628
    
    
    Fair Value of Financial Instruments
    
    
    99
 Change in Accounting Policy
 Inventories




---



##### 



74
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 2 BASIS OF PRESENTATION (continued)
   Recent Accounting Pronouncements
 Capital Disclosures
  Financial Instruments
  Goodwill and Intangible Assets
 International Financial Reporting Standards
    Note 3 ACCOUNTS RECEIVABLE
  2008
    
    
    
    2007Trade accounts   Canpotex
    
    $
    691.2
    
    
    $
    124.3 Other
    
    
    342.7
    
    
    
    424.9Non-trade accounts
    
    
    72.6
    
    
    
    52.9Margin deposits on derivative instruments
    
    
    91.1
    
    
    
    1,197.6
    
    
    
    602.1Less allowance for doubtful accounts
    
    
    (7.7
    )
    
    
    (5.9
    )$
    1,189.9
    
    
    $
    596.2
 Note 4 INVENTORIES




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    75
 Note 4 INVENTORIES (continued)
   20081
    
    
    
    2007Finished products
    
    $
    421.8
    
    
    $
    186.6Intermediate products
    
    
    117.1
    
    
    
    70.7Raw materials
    
    
    67.8
    
    
    
    68.0Materials and supplies
    
    
    108.2
    
    
    
    102.8$
    714.9
    
    
    $
    428.1
 
 1
    
    See change in accounting policy (Note 2).
 
   Note 5 PREPAID EXPENSES AND OTHER CURRENT ASSETS
   2008
    
    
    
    2007Prepaid freight
    
    $
    24.3
    
    
    $
    14.2Prepaid transportation and distribution
    
    
    15.4
    
    
    
    7.7Other prepaid expenses
    
    
    20.6
    
    
    
    14.860.3
    
    
    
    36.7Current portion of future income tax asset
    
    
    18.9
    
    
    
    $
    79.2
    
    
    $
    36.7
 Note 6 DERIVATIVE FINANCIAL INSTRUMENTS




---



##### 



76
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 6 DERIVATIVE FINANCIAL INSTRUMENTS (continued)
   
    
    Natural gas futures, swaps and option agreements to manage the cost of natural gas, generally
designated as cash flow hedges of anticipated transactions. The portion of gain or loss on
derivative instruments designated as cash flow hedges that are deferred in accumulated other
comprehensive income (AOCI) is reclassified into cost of goods sold when the product containing
the hedged item impacts earnings. Any hedge ineffectiveness is recorded in cost of goods sold in
the current period.
 
    
    Foreign currency forward contracts for the primary purpose of limiting exposure to exchange rate
fluctuations relating to expenditures denominated in currencies other than the US dollar. These
contracts are not designated as hedging instruments for accounting purposes. Accordingly, they are
marked-to-market with changes in fair value recognized through foreign exchange gain or loss in
earnings.
 
    
    Agreement for the forward purchase of shares of Sinofert Holdings Limited (Sinofert) at a fixed
Hong Kong dollar amount per share. This contract was not designated as a hedging instrument for
accounting purposes. Accordingly, changes in fair value were recognized through other income in
earnings.
 
    
    Interest rate swaps designated as fair value hedges to manage the interest rate mix of the
companys total debt portfolio and related overall cost of borrowing. Hedge accounting treatment
results in interest expense on the related debt being reflected at hedged rates rather than
original contractual interest rates.
 2008Assets
    
    
    Liabilities
    
    
    NetNatural gas hedging
    
    $
    11.6
    
    
    $
    170.6
    
    
    $
    (159.0
    )Natural gas non-hedging
    
    
    
    
    
    
    
    
    
    
    Foreign currency forward
contracts
    
    
    6.3
    
    
    
    57.9
    
    
    
    (51.6
    )Total
    
    
    17.9
    
    
    
    228.5
    
    
    
    (210.6
    )Less current portion
    
    
    (6.4
    )
    
    
    (108.1
    )
    
    
    (101.7
    )Long-term portion
    
    $
    11.5
    
    
    $
    120.4
    
    
    $
    (108.9
    )
 2007Assets
    
    
    Liabilities
    
    
    NetNatural gas hedging
    
    $
    127.6
    
    
    $
    0.1
    
    
    $
    127.5Natural gas non-hedging
    
    
    0.1
    
    
    
    0.1
    
    
    
    Foreign currency and other
forward purchase contracts
    
    
    7.3
    
    
    
    
    
    
    
    7.3Total
    
    
    135.0
    
    
    
    0.2
    
    
    
    134.8Less current portion
    
    
    (30.8
    )
    
    
    (0.2
    )
    
    
    (30.6
    )Long-term portion
    
    $
    104.2
    
    
    $
    
    
    
    $
    104.2




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    77
 Note 7 PROPERTY, PLANT AND EQUIPMENT
   2008 1AccumulatedDepreciation and
    

    Net BookCost
    

    Amortization

    
    ValueLand and improvements
    
    $
    321.6
    
    
    $
    58.1
    
    
    $
    263.5Buildings and improvements
    
    
    950.2
    
    
    
    235.8
    
    
    
    714.4Machinery and equipment
    
    
    5,842.2
    
    
    
    2,160.3
    
    
    
    3,681.9Mine development costs
    
    
    224.8
    
    
    
    72.4
    
    
    
    152.4$
    7,338.8
    
    
    $
    2,526.6
    
    
    $
    4,812.2
 
 1
    
    See change in accounting policy (Note 2). 2007AccumulatedDepreciation and

    
    Net BookCost
    

    Amortization

    
    ValueLand and improvements
    
    $
    248.9
    
    
    $
    53.9
    
    
    $
    195.0Buildings and improvements
    
    
    647.9
    
    
    
    220.5
    
    
    
    427.4Machinery and equipment
    
    
    5,074.5
    
    
    
    1,937.3
    
    
    
    3,137.2Mine development costs
    
    
    196.8
    
    
    
    69.0
    
    
    
    127.8$
    6,168.1
    
    
    $
    2,280.7
    
    
    $
    3,887.4
 
   Note 8 INVESTMENTS




---



##### 



78
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 8 INVESTMENTS (continued)
   2008
    
    
    
    2007Investments at equitySociedad Quimicay Minerade Chile S.A. (SQM) 32 percent ownership; quoted
market value of $1,677.0
    
    $
    647.2
    
    
    $
    550.0Arab Potash Company (APC) 28 percent ownership; quoted
market value of $1,156.3
    
    
    321.6
    
    
    
    231.2Other
    
    
    19.8
    
    
    
    18.8Available-for-sale investmentsSinofert  22 percent ownership
    
    
    746.8
    
    
    
    1,081.2Israel Chemicals Limited (ICL) 11 percent ownership
    
    
    998.1
    
    
    
    1,644.3Auction rate securities
    
    
    17.2
    
    
    
    56.0$
    2,750.7
    
    
    $
    3,581.5




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    79
 Note 8 INVESTMENTS (continued)
  # Investments

    
    Impacts of

    
    Impacts ofConsidered Other-

    
    Impairments

    
    Impairments RecordedThan-Temporarily

    
    Recorded in

    
    in Retained EarningsFair Value

    
    Impaired (of 6 Total)

    
    AOCI and OCI

    
    and Net IncomeBalance, December 31, 2007
    
    $
    56.0
    
    
    
    2
    
    
    $
    50.0
    
    
    $
    26.5Less: Reductions in value of investments considered
temporarily impaired at beginning of year
    
    
    (23.1
    )
    
    
    
    
    
    
    23.1
    
    
    
    Less: Reductions in value of investments considered
other-than-temporarily impaired at beginning of year
    
    
    (15.7
    )
    
    
    
    
    
    
    
    
    
    
    15.7Transfer of investment impairments at end of year from
temporarily impaired to other-than-temporarily impaired
    
    
    
    
    
    
    4
    
    
    
    (73.1
    )
    
    
    73.1Balance, December 31, 2008
    
    $
    17.2
    
    
    
    6
    
    
    $
    
    
    
    $
    115.3
  
 
   Note 9 OTHER ASSETS
   
 2008
    
    
    
    2007Accrued pension benefit asset
    
    $
    131.7
    
    
    $
    111.7Ammonia catalysts  net of accumulated
amortization of $2.7 (2007  $NIL)
    
    
    37.0
    
    
    
    Deferred charges  net of accumulated
amortization of $20.9 (2007  $16.9)
    
    
    36.2
    
    
    
    24.0Upfront lease costs  net of accumulated
amortization of $3.4 (2007  $2.2)
    
    
    23.6
    
    
    
    24.7Other  net of accumulated amortization
of $14.6 (2007  $12.0)
    
    
    60.2
    
    
    
    50.3$
    288.7
    
    
    $
    210.7




---



##### 



80
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 10 INTANGIBLE ASSETS AND GOODWILL
   Intangible Assets
  Goodwill
 2008
    
    
    
    2007Intangible assets  net of accumulated
amortization of $31.8 (2007  $27.9)
    
    $
    21.5
    
    
    $
    24.5Goodwill  net of accumulated
amortization of $7.3 (2007  $7.3)
    
    $
    97.0
    
    
    $
    97.0
   Note 11 SHORT-TERM DEBT
   2008
    
    
    
    2007Commercial paper
    
    $
    324.8
    
    
    $
    90.0Credit facility
    
    
    1,000.0
    
    
    
    1,324.8
    
    
    
    90.0Less net unamortized debt cost
    
    
    (0.9
    )
    
    
    $
    1,323.9
    
    
    $
    90.0




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    81
 Note 12 ACCOUNTS PAYABLE AND ACCRUED CHARGES
  2008
    
    
    
    2007Income taxes
    
    $
    469.1
    
    
    $
    188.4Trade accounts
    
    
    359.5
    
    
    
    371.0Accrued compensation
    
    
    118.9
    
    
    
    94.0Other taxes
    
    
    51.1
    
    
    
    32.2Deferred revenue
    
    
    48.0
    
    
    
    42.1Dividends
    
    
    29.9
    
    
    
    32.0Accrued interest
    
    
    26.8
    
    
    
    29.2Accrued deferred share units
    
    
    13.8
    
    
    
    29.7Current portion accrued environmental costs and asset retirement obligations
    
    
    12.2
    
    
    
    13.7Current portion pension and other post-retirement benefits
    
    
    8.2
    
    
    
    7.9Margin deposits on derivative instruments
    
    
    
    
    
    
    33.9Other payables and other accrued charges
    
    
    46.1
    
    
    
    37.4$
    1,183.6
    
    
    $
    911.5
 Note 13 LONG-TERM DEBT
   2008
    
    2007EffectiveInterest Rate 1Senior Notes7.750% notes due May 31, 2011
    
    $
    600.0
    
    
    7.65%
    
    $
    600.04.875% notes due March 1, 2013
    
    
    250.0
    
    
    5.08%
    
    
    250.05.875% notes due December 1, 2036
    
    
    500.0
    
    
    6.11%
    
    
    500.0The above series of senior notes
are unsecured and there are no sinking
fund requirements prior to maturity.
The 2011, 2013 and 2036 notes are
redeemable, in whole or in part, at the
companys option at any time prior to
maturity for a price not less than the
principal amount of the notes to be
redeemed, plus accrued interest. Under
certain conditions related to a change
in control, the company is required to
make an offer to purchase all, or any
part, of the 2036 notes at 101 percent
of the principal amount of the notes
repurchased, plus accrued interest.Credit facilities
    
    
    400.0
    
    
    1.98%
    
    
    Other
    
    
    8.2
    
    
    5.32%
    
    
    8.51,758.2
    
    
    
    
    
    1,358.5Less net unamortized debt costs
    
    
    (22.8
    )
    
    
    
    
    (24.6
    )Add unamortized interest rate swap gains
    
    
    3.9
    
    
    
    
    
    5.31,739.3
    
    
    
    
    
    1,339.2Less current maturities
    
    
    (0.2
    )
    
    
    
    
    (0.2
    )Add current portion of amortization
    
    
    0.4
    
    
    
    
    
    0.4$
    1,739.5
    
    
    
    
    $
    1,339.4
 
 1
    
    The effective interest rate by instrument includes the impact of swap gains and debt costs.




---



##### 



82
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 13 LONG-TERM DEBT (continued)
  
  
 2009
    
    $
    0.22010
    
    
    181.82011
    
    
    600.32012
    
    
    5.92013
    
    
    470.0Subsequent years
    
    
    500.0$
    1,758.2
   Note 14 COMMITMENTS
   Lease Commitments
 
 Purchase Commitments
 Other Commitments
   Operating
    
    
    Purchase
    
    
    OtherLeases
    
    
    Commitments
    
    
    Commitments
    
    
    Total2009
    
    $
    102.6
    
    
    $
    150.6
    
    
    $
    17.7
    
    
    $
    270.92010
    
    
    89.4
    
    
    
    131.7
    
    
    
    14.2
    
    
    
    235.32011
    
    
    79.8
    
    
    
    112.4
    
    
    
    3.4
    
    
    
    195.62012
    
    
    76.1
    
    
    
    75.4
    
    
    
    3.2
    
    
    
    154.72013
    
    
    67.8
    
    
    
    60.3
    
    
    
    2.9
    
    
    
    131.0Thereafter
    
    
    262.7
    
    
    
    243.0
    
    
    
    14.2
    
    
    
    519.9Total
    
    $
    678.4
    
    
    $
    773.4
    
    
    $
    55.6
    
    
    $
    1,507.4




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    83
 Note 15 PENSION AND OTHER POST-RETIREMENT BENEFITS
   
 Pension Plans
 Canada
   United States
  Trinidad
  Other Post-Retirement Plans
  Defined Benefit Plans




---



##### 



84
    

    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 15 PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)
  Pension
    
    
    Other2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2008
    
    
    
    2007
    
    
    
    2006Costs arising in the periodService cost for benefits earned during the year
    
    $
    15.1
    
    
    $
    15.3
    
    
    $
    14.2
    
    
    $
    5.7
    
    
    $
    6.1
    
    
    $
    4.7Interest cost on projected benefit obligations
    
    
    39.9
    
    
    
    36.5
    
    
    
    33.5
    
    
    
    15.9
    
    
    
    14.9
    
    
    
    12.4Actual loss
(return) on plan assets
    
    
    157.7
    
    
    
    (44.3
    )
    
    
    (42.1
    )
    
    
    
    
    
    
    
    
    
    
    Actuarial loss (gain)
    
    
    46.7
    
    
    
    (33.5
    )
    
    
    8.9
    
    
    
    3.1
    
    
    
    (12.0
    )
    
    
    18.4Plan amendments
    
    
    8.1
    
    
    
    0.3
    
    
    
    1.4
    
    
    
    1.4
    
    
    
    
    
    
    
    (1.7
    )Change in valuation allowance
    
    
    (0.3
    )
    
    
    
    
    
    
    2.0
    
    
    
    
    
    
    
    
    
    
    
    Costs arising in the period
    
    
    267.2
    
    
    
    (25.7
    )
    
    
    17.9
    
    
    
    26.1
    
    
    
    9.0
    
    
    
    33.8Difference between costs arising in the period and
costs recognized in the period in respect of:(Loss) return on plan assets
    
    
    (208.8
    )
    
    
    1.5
    
    
    
    3.9
    
    
    
    
    
    
    
    
    
    
    
    Actuarial (gain) loss
    
    
    (42.8
    )
    
    
    40.8
    
    
    
    (1.7
    )
    
    
    (0.1
    )
    
    
    16.4
    
    
    
    (16.4
    )Plan amendments
    
    
    (5.9
    )
    
    
    1.5
    
    
    
    1.0
    
    
    
    (4.2
    )
    
    
    (2.9
    )
    
    
    (1.1
    )Transitional obligation
    
    
    1.6
    
    
    
    0.9
    
    
    
    1.6
    
    
    
    0.4
    
    
    
    0.2
    
    
    
    0.4Net expense
    
    $
    11.3
    
    
    $
    19.0
    
    
    $
    22.7
    
    
    $
    22.2
    
    
    $
    22.7
    
    
    $
    16.7
  Pension
    
    
    Other2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2008
    
    
    
    2007
    
    
    
    2006Discount rate  obligation, %
    
    
    6.25
    
    
    
    6.50
    
    
    
    5.85
    
    
    
    6.25
    
    
    
    6.50
    
    
    
    5.85Discount rate  expense, %
    
    
    6.50
    
    
    
    5.85
    
    
    
    5.70
    
    
    
    6.50
    
    
    
    5.85
    
    
    
    5.70Long-term rate of return on assets, %

    
    8.00
    
    
    
    8.00
    
    
    
    8.00
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/aRate of increase in compensation levels, %
    
    
    4.00
    
    
    
    4.00
    
    
    
    4.00
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
 
 n/a = not applicable   2008
    
    
    
    2007
    
    
    
    2006Health-care cost trend rates assumed for next year, %
    
    
    6.00
    
    
    
    6.00
    
    
    
    6.00Ultimate health-care cost trend rate assumed, %
    
    
    6.00
    
    
    
    6.00
    
    
    
    6.00Year that the rate reaches the ultimate trend rate
    
    
    2008
    
    
    
    2007
    
    
    
    2006




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS

    
    85
 Note 15 PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)
    Pension
    
    
    Other
    
    
    Total2008
    
    
    
    2007
    
    
    
    2008
    
    
    
    2007
    
    
    
    2008
    
    
    
    2007Change in benefit obligationsBalance, beginning of year
    
    $
    623.4
    
    
    $
    626.4
    
    
    $
    251.8
    
    
    $
    247.4
    
    
    $
    875.2
    
    
    $
    873.8Service cost
    
    
    15.1
    
    
    
    15.3
    
    
    
    5.7
    
    
    
    6.1
    
    
    
    20.8
    
    
    
    21.4Interest cost
    
    
    39.9
    
    
    
    36.5
    
    
    
    15.9
    
    
    
    14.9
    
    
    
    55.8
    
    
    
    51.4Participants contributions
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Actuarial loss (gain)
    
    
    46.7
    
    
    
    (33.5
    )
    
    
    3.1
    
    
    
    (12.0
    )
    
    
    49.8
    
    
    
    (45.5
    )Foreign exchange rate changes
    
    
    (3.5
    )
    
    
    6.4
    
    
    
    (3.4
    )
    
    
    3.6
    
    
    
    (6.9
    )
    
    
    10.0Plan amendments
    
    
    8.1
    
    
    
    0.3
    
    
    
    1.4
    
    
    
    
    
    
    
    9.5
    
    
    
    0.3Benefits paid
    
    
    (31.7
    )
    
    
    (28.3
    )
    
    
    (8.5
    )
    
    
    (8.2
    )
    
    
    (40.2
    )
    
    
    (36.5
    )Balance, end of year
    
    
    698.0
    
    
    
    623.4
    
    
    
    266.0
    
    
    
    251.8
    
    
    
    964.0
    
    
    
    875.2Change in plan assetsFair value, beginning of year
    
    
    638.2
    
    
    
    519.9
    
    
    
    
    
    
    
    
    
    
    
    638.2
    
    
    
    519.9Actual (loss) return on plan assets
    
    
    (157.7
    )
    
    
    44.3
    
    
    
    
    
    
    
    
    
    
    
    (157.7
    )
    
    
    44.3Employer contributions
    
    
    28.0
    
    
    
    99.6
    
    
    
    8.5
    
    
    
    8.2
    
    
    
    36.5
    
    
    
    107.8Participants contributions
    
    
    
    
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Foreign exchange rate changes
    
    
    2.9
    
    
    
    2.4
    
    
    
    
    
    
    
    
    
    
    
    2.9
    
    
    
    2.4Benefits paid
    
    
    (31.7
    )
    
    
    (28.3
    )
    
    
    (8.5
    )
    
    
    (8.2
    )
    
    
    (40.2
    )
    
    
    (36.5
    )Fair value, end of year
    
    
    479.7
    
    
    
    638.2
    
    
    
    
    
    
    
    
    
    
    
    479.7
    
    
    
    638.2Funded status
    
    
    (218.3
    )
    
    
    14.8
    
    
    
    (266.0
    )
    
    
    (251.8
    )
    
    
    (484.3
    )
    
    
    (237.0
    )Valuation allowance
    
    
    (15.8
    )
    
    
    (16.1
    )
    
    
    
    
    
    
    
    
    
    
    (15.8
    )
    
    
    (16.1
    )Unamortized net actuarial loss
    
    
    326.9
    
    
    
    76.9
    
    
    
    42.4
    
    
    
    42.0
    
    
    
    369.3
    
    
    
    118.9Unamortized prior service cost
    
    
    9.4
    
    
    
    3.6
    
    
    
    (11.3
    )
    
    
    (15.0
    )
    
    
    (1.9
    )
    
    
    (11.4
    )Unamortized transitional obligation
    
    
    2.8
    
    
    
    4.2
    
    
    
    
    
    
    
    0.4
    
    
    
    2.8
    
    
    
    4.6Accrued pension and other
post-retirement benefit asset (liability)
    
    $
    105.0
    
    
    $
    83.4
    
    
    $
    (234.9
    )
    
    $
    (224.4
    )
    
    $
    (129.9
    )
    
    $
    (141.0
    )Amounts included in:Other assets (Note 9)
    
    $
    131.4
    
    
    $
    111.4
    
    
    $
    0.3
    
    
    $
    0.3
    
    
    $
    131.7
    
    
    $
    111.7LiabilitiesCurrent (Note 12)
    
    
    
    
    
    
    
    
    
    
    (8.2
    )
    
    
    (7.9
    )
    
    
    (8.2
    )
    
    
    (7.9
    )Long-term
    
    
    (26.4
    )
    
    
    (28.0
    )
    
    
    (227.0
    )
    
    
    (216.8
    )
    
    
    (253.4
    )
    
    
    (244.8
    )$
    105.0
    
    
    $
    83.4
    
    
    $
    (234.9
    )
    
    $
    (224.4
    )
    
    $
    (129.9
    )
    
    $
    (141.0
    )




---



##### 



86
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 15 PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)
   2008
    
    
    
    2007Projected benefit obligation
    
    $
    661.5
    
    
    $
    91.3Accumulated benefit obligation
    
    
    610.0
    
    
    
    85.0Fair value of plan assets
    
    
    416.1
    
    
    
    59.7
 Sensitivity of Assumptions
  2008
    
    
    
    2007
    
    
    
    2006As reported:Benefit obligation
    
    $
    266.0
    
    
    $
    251.8
    
    
    $
    247.4Aggregate of service
and interest cost
    
    
    21.6
    
    
    
    21.0
    
    
    
    17.1Impact of increase of
1.0 percentage point:Benefit obligation
    
    
    41.1
    
    
    
    36.9
    
    
    
    36.7Aggregate of service
and interest cost
    
    
    3.8
    
    
    
    3.9
    
    
    
    2.8Impact of decrease of
1.0 percentage point:Benefit obligation
    
    
    (32.9
    )
    
    
    (29.7
    )
    
    
    (29.2
    )Aggregate of service
and interest cost
    
    
    (3.0
    )
    
    
    (3.0
    )
    
    
    (2.2
    )
 Plan Assets
  Asset Category
    
    Target

    
    2008

    
    2007Equity securities
    
    
    65
    %
    
    
    57
    %
    
    
    64
    %Debt securities
    
    
    35
    %
    
    
    43
    %
    
    
    36
    %Real estate
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
   Defined Contribution Plans




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    87
 Note 15 PENSION AND OTHER POST-RETIREMENT BENEFITS (continued)
   
 Cash Payments
  Estimated Future Benefit Payments
  OtherReduction dueto MedicarePension
    
    
    Gross
    
    
    Part D Subsidy

    
    Net2009
    
    $
    34.6
    
    
    $
    10.8
    
    
    $
    1.1
    
    
    $
    9.72010
    
    
    34.1
    
    
    
    11.9
    
    
    
    1.2
    
    
    
    10.72011
    
    
    36.4
    
    
    
    13.0
    
    
    
    1.4
    
    
    
    11.62012
    
    
    40.4
    
    
    
    13.9
    
    
    
    1.6
    
    
    
    12.32013
    
    
    42.3
    
    
    
    15.0
    
    
    
    1.8
    
    
    
    13.22014-2018
    
    
    258.2
    
    
    
    93.6
    
    
    
    12.2
    
    
    
    81.4
   Note 16 ENVIRONMENTAL COSTS AND ASSET RETIREMENT OBLIGATIONS




---



##### 



88
    


    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 16 ENVIRONMENTAL COSTS AND ASSET RETIREMENT OBLIGATIONS (continued)
   
 Site Assessment and Remediation Costs
  Environmental Operating Costs and Capital Expenditures
    2008
    
    
    
    2007Asset retirement obligations,

beginning of year
    
    $
    116.6
    
    
    $
    100.7Liabilities incurred
    
    
    6.7
    
    
    
    6.8Liabilities settled
    
    
    (7.5
    )
    
    
    (4.5
    )Accretion expense
    
    
    5.7
    
    
    
    4.9Revisions in timing and amount
of estimated cash flows
    
    
    6.0
    
    
    
    8.7Asset retirement obligations, end of year
    
    
    127.5
    
    
    
    116.6Other environmental liabilities
    
    
    18.1
    
    
    
    18.1Less current portion (Note 12)
    
    
    (12.2
    )
    
    
    (13.7
    )$
    133.4
    
    
    $
    121.0




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    89
 Note 17 SHARE CAPITAL
  Authorized
   2008
    
    
    2007
    
    
    2006Issued
    
    Consideration
    
    
    Consideration
    
    
    ConsiderationIssued, beginning of year
    
    $
    1,461.3
    
    
    $
    1,431.6
    
    
    $
    1,379.3Shares issued under option plans
    
    
    45.4
    
    
    
    28.6
    
    
    
    50.9Shares issued for dividend reinvestment plan
    
    
    1.9
    
    
    
    1.1
    
    
    
    1.4Shares repurchased
    
    
    (106.1
    )
    
    
    
    
    
    
    Issued, end of year
    
    $
    1,402.5
    
    
    $
    1,461.3
    
    
    $
    1,431.62008
    
    
    2007
    
    
    2006Number of
    
    
    Number of
    
    
    Number ofCommon Shares
    
    
    Common Shares
    
    
    Common SharesIssued, beginning of year
    
    
    316,411,209
    
    
    
    314,403,147
    
    
    
    310,781,376Shares issued under option plans
    
    
    1,627,378
    
    
    
    1,995,460
    
    
    
    3,581,424Shares issued for dividend reinvestment plan
    
    
    11,600
    
    
    
    12,602
    
    
    
    40,347Shares repurchased
    
    
    (22,849,200
    )
    
    
    
    
    
    
    Issued, end of year
    
    
    295,200,987
    
    
    
    316,411,209
    
    
    
    314,403,147
 Normal Course Issuer Bid
   Note 18 CONTRIBUTED SURPLUS
  2008
    
    
    
    2007
    
    
    
    2006Balance, beginning of year
    
    $
    98.9
    
    
    $
    62.3
    
    
    $
    36.3Stock-based compensation
    
    
    27.3
    
    
    
    36.6
    
    
    
    26.0Balance, end of year
    
    $
    126.2
    
    
    $
    98.9
    
    
    $
    62.3




---



##### 



90
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 19 SEGMENT INFORMATION
   
 
   2008Potash
    
    
    Phosphate
    
    
    Nitrogen
    
    
    All others
    
    
    ConsolidatedSales
    
    $
    4,068.1
    
    
    $
    2,880.7
    
    
    $
    2,497.7
    
    
    $
    
    
    
    $
    9,446.5Freight
    
    
    167.3
    
    
    
    101.1
    
    
    
    56.5
    
    
    
    
    
    
    
    324.9Transportation and distribution
    
    
    42.1
    
    
    
    39.4
    
    
    
    50.9
    
    
    
    
    
    
    
    132.4Net sales  third party
    
    
    3,858.7
    
    
    
    2,740.2
    
    
    
    2,390.3
    
    
    
    Cost of goods sold
    
    
    803.2
    
    
    
    1,625.7
    
    
    
    1,652.9
    
    
    
    
    
    
    
    4,081.8Gross margin
    
    
    3,055.5
    
    
    
    1,114.5
    
    
    
    737.4
    
    
    
    
    
    
    
    4,907.4Inter-segment sales
    
    
    
    
    
    
    23.1
    
    
    
    173.6
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    82.0
    
    
    
    140.5
    
    
    
    97.1
    
    
    
    7.9
    
    
    
    327.5Goodwill
    
    
    
    
    
    
    
    
    
    
    96.6
    
    
    
    0.4
    
    
    
    97.0Assets
    
    
    3,350.0
    
    
    
    2,283.0
    
    
    
    1,593.6
    
    
    
    3,022.2
    
    
    
    10,248.8Additions to property, plant and equipment
    
    
    831.1
    
    
    
    268.5
    
    
    
    94.5
    
    
    
    4.2
    
    
    
    1,198.3
 2007Potash
    
    
    Phosphate
    
    
    Nitrogen
    
    
    All others
    
    
    ConsolidatedSales
    
    $
    1,797.2
    
    
    $
    1,637.1
    
    
    $
    1,799.9
    
    
    $
    
    
    
    $
    5,234.2Freight
    
    
    178.1
    
    
    
    112.4
    
    
    
    55.6
    
    
    
    
    
    
    
    346.1Transportation and distribution
    
    
    39.1
    
    
    
    33.4
    
    
    
    51.6
    
    
    
    
    
    
    
    124.1Net sales  third party
    
    
    1,580.0
    
    
    
    1,491.3
    
    
    
    1,692.7
    
    
    
    Cost of goods sold
    
    
    667.7
    
    
    
    1,058.5
    
    
    
    1,156.6
    
    
    
    
    
    
    
    2,882.8Gross margin
    
    
    912.3
    
    
    
    432.8
    
    
    
    536.1
    
    
    
    
    
    
    
    1,881.2Inter-segment sales
    
    
    
    
    
    
    1.9
    
    
    
    112.3
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    71.7
    
    
    
    121.1
    
    
    
    88.2
    
    
    
    10.3
    
    
    
    291.3Goodwill
    
    
    
    
    
    
    
    
    
    
    96.6
    
    
    
    0.4
    
    
    
    97.0Assets
    
    
    1,809.6
    
    
    
    1,955.4
    
    
    
    1,646.4
    
    
    
    4,305.2
    
    
    
    9,716.6Additions to property, plant and equipment
    
    
    338.2
    
    
    
    176.2
    
    
    
    89.7
    
    
    
    3.1
    
    
    
    607.2




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    91
 Note 19 SEGMENT INFORMATION (continued)
  2006Potash
    
    
    Phosphate
    
    
    Nitrogen
    
    
    All others
    
    
    ConsolidatedSales
    
    $
    1,227.5
    
    
    $
    1,255.1
    
    
    $
    1,284.1
    
    
    $
    
    
    
    $
    3,766.7Freight
    
    
    130.5
    
    
    
    88.5
    
    
    
    36.8
    
    
    
    
    
    
    
    255.8Transportation and distribution
    
    
    38.8
    
    
    
    43.1
    
    
    
    52.2
    
    
    
    
    
    
    
    134.1Net sales  third party
    
    
    1,058.2
    
    
    
    1,123.5
    
    
    
    1,195.1
    
    
    
    Cost of goods sold
    
    
    497.1
    
    
    
    998.2
    
    
    
    879.5
    
    
    
    
    
    
    
    2,374.8Gross margin
    
    
    561.1
    
    
    
    125.3
    
    
    
    315.6
    
    
    
    
    
    
    
    1,002.0Inter-segment sales
    
    
    5.7
    
    
    
    7.2
    
    
    
    112.4
    
    
    
    
    
    
    
    Depreciation and amortization
    
    
    58.3
    
    
    
    94.6
    
    
    
    77.6
    
    
    
    11.9
    
    
    
    242.4Goodwill
    
    
    
    
    
    
    
    
    
    
    96.6
    
    
    
    0.4
    
    
    
    97.0Assets
    
    
    1,478.0
    
    
    
    1,753.9
    
    
    
    1,480.7
    
    
    
    1,504.4
    
    
    
    6,217.0Additions to property, plant and equipment
    
    
    293.2
    
    
    
    119.7
    
    
    
    75.5
    
    
    
    20.2
    
    
    
    508.6
   Country of OriginCanada
    
    
    United States
    
    
    Trinidad
    
    
    Other
    
    
    Consolidated2008Sales to customers outside the companyCanada
    
    $
    150.6
    
    
    $
    210.2
    
    
    $
    
    
    
    $
    
    
    
    $
    360.8United States
    
    
    1,353.1
    
    
    
    2,992.3
    
    
    
    899.4
    
    
    
    
    
    
    
    5,244.8PhosChem (PhosChems 2008 sales were made to:India 73%, China 0%, other Asian countries 10%,
Latin America 14%, other countries 3%)
    
    
    
    
    
    
    713.6
    
    
    
    
    
    
    
    
    
    
    
    713.6Canpotex (Canpotexs 2008 sales were made to:China 13%, India 16%, other Asian countries 39%,
Brazil 20%, other countries 12%)
    
    
    2,257.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,257.1Mexico
    
    
    51.2
    
    
    
    145.0
    
    
    
    10.5
    
    
    
    
    
    
    
    206.7Brazil
    
    
    105.3
    
    
    
    14.9
    
    
    
    
    
    
    
    47.5
    
    
    
    167.7Colombia
    
    
    47.0
    
    
    
    10.9
    
    
    
    66.5
    
    
    
    
    
    
    
    124.4Other Latin America
    
    
    100.8
    
    
    
    73.3
    
    
    
    62.7
    
    
    
    
    
    
    
    236.8Other
    
    
    3.0
    
    
    
    68.2
    
    
    
    63.4
    
    
    
    
    
    
    
    134.6$
    4,068.1
    
    
    $
    4,228.4
    
    
    $
    1,102.5
    
    
    $
    47.5
    
    
    $
    9,446.5Operating income
    
    $
    2,684.2
    
    
    $
    1,279.3
    
    
    $
    366.3
    
    
    $
    305.3
    
    
    $
    4,635.1Capital assets and goodwill
    
    $
    2,307.2
    
    
    $
    1,993.4
    
    
    $
    577.0
    
    
    $
    31.6
    
    
    $
    4,909.2




---



##### 



92
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 19 SEGMENT INFORMATION (continued)
  Country of OriginCanada
    
    
    United States
    
    
    Trinidad
    
    
    Other
    
    
    Consolidated2007Sales to customers outside the companyCanada
    
    $
    88.0
    
    
    $
    127.0
    
    
    $
    
    
    
    $
    
    
    
    $
    215.0United States
    
    
    764.7
    
    
    
    2,065.6
    
    
    
    661.6
    
    
    
    
    
    
    
    3,491.9PhosChem (PhosChems 2007 sales were made to:India 51%, China 6%, other Asian countries 8%,
Latin America 31%, other countries 4%)
    
    
    
    
    
    
    264.6
    
    
    
    
    
    
    
    
    
    
    
    264.6Canpotex (Canpotexs 2007 sales were made to:China 26%, Brazil 21%, India 10%, other
Asian countries 33%, other countries 10%)
    
    
    782.7
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    782.7Mexico
    
    
    23.1
    
    
    
    81.8
    
    
    
    
    
    
    
    
    
    
    
    104.9Brazil
    
    
    70.3
    
    
    
    
    
    
    
    
    
    
    
    23.1
    
    
    
    93.4Colombia
    
    
    26.2
    
    
    
    10.4
    
    
    
    46.8
    
    
    
    
    
    
    
    83.4Other Latin America
    
    
    42.2
    
    
    
    21.5
    
    
    
    63.1
    
    
    
    
    
    
    
    126.8Other
    
    
    
    
    
    
    35.5
    
    
    
    36.0
    
    
    
    
    
    
    
    71.5$
    1,797.2
    
    
    $
    2,606.4
    
    
    $
    807.5
    
    
    $
    23.1
    
    
    $
    5,234.2Operating income
    
    $
    537.8
    
    
    $
    652.5
    
    
    $
    296.9
    
    
    $
    101.3
    
    
    $
    1,588.5Capital assets and goodwill
    
    $
    1,504.3
    
    
    $
    1,848.6
    
    
    $
    587.2
    
    
    $
    44.3
    
    
    $
    3,984.4
 Country of OriginCanada
    
    
    United States
    
    
    Trinidad
    
    
    Other
    
    
    Consolidated2006Sales to customers outside the companyCanada
    
    $
    65.7
    
    
    $
    92.0
    
    
    $
    
    
    
    $
    
    
    
    $
    157.7United States
    
    
    557.5
    
    
    
    1,454.9
    
    
    
    530.2
    
    
    
    
    
    
    
    2,542.6PhosChem (PhosChems 2006 sales were made to:India 40%, China 19%, other Asian countries 14%,
Latin America 22%, other countries 5%)
    
    
    
    
    
    
    232.2
    
    
    
    
    
    
    
    
    
    
    
    232.2Canpotex (Canpotexs 2006 sales were made to:China 19%, India 10%, other Asian countries 41%,
Brazil 15%, other countries 15%)
    
    
    467.1
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    467.1Mexico
    
    
    7.3
    
    
    
    72.1
    
    
    
    5.1
    
    
    
    
    
    
    
    84.5Brazil
    
    
    68.7
    
    
    
    
    
    
    
    
    
    
    
    16.2
    
    
    
    84.9Colombia
    
    
    20.2
    
    
    
    7.5
    
    
    
    32.3
    
    
    
    
    
    
    
    60.0Other Latin America
    
    
    41.0
    
    
    
    19.2
    
    
    
    38.3
    
    
    
    
    
    
    
    98.5Other
    
    
    
    
    
    
    37.9
    
    
    
    1.3
    
    
    
    
    
    
    
    39.2$
    1,227.5
    
    
    $
    1,915.8
    
    
    $
    607.2
    
    
    $
    16.2
    
    
    $
    3,766.7Operating income
    
    $
    426.9
    
    
    $
    216.4
    
    
    $
    171.8
    
    
    $
    60.4
    
    
    $
    875.5Capital assets and goodwill
    
    $
    1,207.7
    
    
    $
    1,761.3
    
    
    $
    610.4
    
    
    $
    43.4
    
    
    $
    3,622.8




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    93
 Note 20 COST OF GOODS SOLD
   Provision for Plant Shutdowns 
Phosphate Segment  2006
 Note 21 SELLING AND ADMINISTRATIVE
   Note 22 PROVINCIAL MINING AND OTHER TAXES
  2008
    
    
    
    2007
    
    
    
    2006Potash Production Tax
    
    $
    431.3
    
    
    $
    84.2
    
    
    $
    28.6Saskatchewan corporate
capital taxes and other
    
    
    112.1
    
    
    
    51.2
    
    
    
    37.9$
    543.4
    
    
    $
    135.4
    
    
    $
    66.5
   Note 23 OTHER INCOME
  2008
    
    
    
    2007
    
    
    
    2006Share of earnings of equity investees
    
    $
    255.8
    
    
    $
    76.2
    
    
    $
    54.4Dividend income
    
    
    107.0
    
    
    
    58.1
    
    
    
    21.1Gain on forward purchase contract for shares in Sinofert (Note 8)
    
    
    25.3
    
    
    
    
    
    
    
    Other
    
    
    34.2
    
    
    
    17.7
    
    
    
    18.5Provision for auction rate securities (Note 8)
    
    
    (88.8
    )
    
    
    (26.5
    )
    
    
    $
    333.5
    
    
    $
    125.5
    
    
    $
    94.0
  Sale of Property, Plant and Equipment 
Phosphate Segment  2008
 
   Note 24 INTEREST EXPENSE
  2008
    
    
    
    2007
    
    
    
    2006Interest expense onShort-term debt
    
    $
    28.5
    
    
    $
    8.7
    
    
    $
    34.5Long-term debt
    
    
    94.9
    
    
    
    111.6
    
    
    
    97.6Interest capitalized to property, plant and equipment
    
    
    (42.9
    )
    
    
    (21.8
    )
    
    
    (19.1
)Interest income
    
    
    (17.7
    )
    
    
    (29.8
    )
    
    
    (27.4
)$
    62.8
    
    
    $
    68.7
    
    
    $
    85.6




---



##### 



94
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 25 INCOME TAXES
      2008
    
    
    
    2007
    
    
    
    2006Income before income taxesCanada
    
    $
    2,579.7
    
    
    $
    495.5
    
    
    $
    338.2United States
    
    
    1,359.7
    
    
    
    589.4
    
    
    
    219.3Trinidad
    
    
    341.2
    
    
    
    268.6
    
    
    
    148.5Other
    
    
    291.7
    
    
    
    166.3
    
    
    
    83.9$
    4,572.3
    
    
    $
    1,519.8
    
    
    $
    789.9Federal and provincial statutory tax rates
    
    
    32.07%
    
    
    
    35.55%
    
    
    
    39.25%Tax at statutory rates
    
    $
    1,466.3
    
    
    $
    540.3
    
    
    $
    310.0Adjusted for the effect of:Recoveries upon Canadian tax rate reductions
    
    
    
    
    
    
    (40.1
    )
    
    
    (44.8
    )Refunds upon deduction of Saskatchewan resource surcharge
    
    
    
    
    
    
    
    
    
    
    (34.1
    )Production-related deductions
    
    
    (96.1
    )
    
    
    (17.6
    )
    
    
    Adjustment to prior years production-related deductions
    
    
    (71.1
    )
    
    
    
    
    
    
    Stock-based compensation
    
    
    (22.8
    )
    
    
    (0.1
    )
    
    
    (5.8
    )Additional tax deductions
    
    
    (13.4
    )
    
    
    (14.8
    )
    
    
    (15.5
    )Difference between Canadian rate and rates applicable to subsidiaries in other countries
    
    
    (27.6
    )
    
    
    (44.8
    )
    
    
    (50.5
    )Foreign exchange adjustment
    
    
    (111.4
    )
    
    
    30.3
    
    
    
    (23.3
    )Other
    
    
    (46.8
    )
    
    
    (37.0
    )
    
    
    22.1Income tax expense
    
    $
    1,077.1
    
    
    $
    416.2
    
    
    $
    158.1




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    95
 Note 25 INCOME TAXES (continued)
   2008
    
    
    
    2007
    
    
    
    2006CanadaCurrent
    
    $
    516.3
    
    
    $
    154.1
    
    
    $
    51.8Future
    
    
    137.5
    
    
    
    (17.6
    )
    
    
    (4.3
)United States  FederalCurrent
    
    
    303.7
    
    
    
    32.4
    
    
    
    2.3Future
    
    
    (49.6
    )
    
    
    137.6
    
    
    
    43.7United States  StateCurrent
    
    
    45.9
    
    
    
    12.8
    
    
    
    2.6Future
    
    
    (13.9
    )
    
    
    0.7
    
    
    
    5.7Trinidad and otherCurrent
    
    
    129.0
    
    
    
    97.3
    
    
    
    51.4Future
    
    
    8.2
    
    
    
    (1.1
    )
    
    
    4.9Income tax expense
    
    $
    1,077.1
    
    
    $
    416.2
    
    
    $
    158.1
  2008
    
    
    
    2007Future income tax assets:Loss and credit carryforwards
    
    $
    68.0
    
    
    $
    92.5Accrued pension and other
post-retirement benefits
    
    
    15.3
    
    
    
    51.5Basis
difference in investments
    
    
    41.1
    
    
    
    26.9Basis difference in cash flow hedges
    
    
    59.1
    
    
    
    Basis
difference in inventories
    
    
    37.8
    
    
    
    4.9Other
    
    
    20.0
    
    
    
    59.8Total future income tax assets
    
    
    241.3
    
    
    
    235.6Future income tax liabilities:Basis difference in fixed assets
    
    
    801.4
    
    
    
    731.3Basis difference in long-term debt
    
    
    41.3
    
    
    
    75.6Basis difference in investments
    
    
    108.7
    
    
    
    213.8Basis difference in cash flow hedges
    
    
    
    
    
    
    50.3Other
    
    
    65.2
    
    
    
    152.7Total future income tax liabilities
    
    
    1,016.6
    
    
    
    1,223.7Net future income tax liability
    
    $
    775.3
    
    
    $
    988.1Amounts included in:Prepaid expenses and other
current assets (Note 5)
    
    $
    (18.9
    )
    
    $
    Future income tax liability
    
    
    794.2
    
    
    
    988.1$
    775.3
    
    
    $
    988.1




---



##### 



96
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 26 NET INCOME PER SHARE
  2008
    
    
    
    2007
    
    
    
    2006Basic net income per share 1Net income available to common shareholders
    
    $
    3,495.2
    
    
    $
    1,103.6
    
    
    $
    631.8Weighted average number of common shares
    
    
    307,480,000
    
    
    
    315,641,000
    
    
    
    311,880,000Basic net income per share
    
    $
    11.37
    
    
    $
    3.50
    
    
    $
    2.03Diluted net income per share 1Net income available to common shareholders
    
    $
    3,495.2
    
    
    $
    1,103.6
    
    
    $
    631.8Weighted average number of common shares
    
    
    307,480,000
    
    
    
    315,641,000
    
    
    
    311,880,000Dilutive effect of stock options
    
    
    9,958,000
    
    
    
    8,667,000
    
    
    
    6,809,000Weighted average number of diluted common shares
    
    
    317,438,000
    
    
    
    324,308,000
    
    
    
    318,689,000Diluted net income per share
    
    $
    11.01
    
    
    $
    3.40
    
    
    $
    1.98
 
 1
    
    Net income per share calculations are based on full dollar and share amounts.  
 
   Note 27 STOCK-BASED COMPENSATION




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    97
 Note 27 STOCK-BASED COMPENSATION (continued)
   Stock Option Plans
 
    Number of Shares Subject to Option
 Performance Option Plans
    
    
    Officers, Employees and Directors Plans2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2008
    
    
    
    2007
    
    
    
    2006Outstanding, beginning of year
    
    
    7,896,600
    
    
    
    6,199,800
    
    
    
    3,558,000
    
    
    
    6,110,384
    
    
    
    8,105,844
    
    
    
    11,687,268Granted
    
    
    486,450
    
    
    
    1,730,550
    
    
    
    2,684,700
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    (823,136
    )
    
    
    
    
    
    
    
    
    
    
    (804,242
    )
    
    
    (1,995,460
    )
    
    
    (3,581,424
    )Forfeited
    
    
    (16,700
    )
    
    
    (33,750
    )
    
    
    (42,900
    )
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, end of year
    
    
    7,543,214
    
    
    
    7,896,600
    
    
    
    6,199,800
    
    
    
    5,306,142
    
    
    
    6,110,384
    
    
    
    8,105,844Weighted Average Exercise PricePerformance Option Plans
    
    
    Officers, Employees and Directors Plans2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2008
    
    
    
    2007
    
    
    
    2006Outstanding, beginning of year
    
    $
    40.08
    
    
    $
    31.38
    
    
    $
    30.03
    
    
    $
    13.48
    
    
    $
    12.68
    
    
    $
    12.80Granted
    
    
    198.07
    
    
    
    62.75
    
    
    
    33.67
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    30.94
    
    
    
    
    
    
    
    
    
    
    
    12.63
    
    
    
    13.31
    
    
    
    13.31Forfeited
    
    
    57.42
    
    
    
    39.26
    
    
    
    30.30
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding, end of year
    
    $
    48.01
    
    
    $
    40.08
    
    
    $
    31.38
    
    
    $
    12.29
    
    
    $
    13.48
    
    
    $
    12.68




---



##### 



98
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 27 STOCK-BASED COMPENSATION (continued)
   Options Outstanding
    
    
    Options ExercisableRange of
    
    
    
    
    
    Weighted Average

    
    Weighted Average

    
    
    
    
    
    Weighted AverageExercise Prices
    
    Number
    
    
    Remaining Life in Years

    
    Exercise Price

    
    Number
    
    
    Exercise PriceOfficers and Employees
and Directors Plans$7.00 to $10.50
    
    
    1,142,790
    
    
    
    2
    
    
    $
    10.21
    
    
    
    1,142,790
    
    
    $
    10.21$10.51 to $14.00
    
    
    3,181,702
    
    
    
    4
    
    
    $
    12.47
    
    
    
    3,181,702
    
    
    $
    12.47$14.01 to $17.50
    
    
    981,650
    
    
    
    4
    
    
    $
    14.15
    
    
    
    981,650
    
    
    $
    14.155,306,142
    
    
    
    4
    
    
    $
    12.29
    
    
    
    5,306,142
    
    
    $
    12.29Performance Option Plans$29.00 to $39.00
    
    
    5,343,664
    
    
    
    7
    
    
    $
    31.10
    
    
    
    2,683,864
    
    
    $
    29.57$55.00 to $65.00
    
    
    1,714,050
    
    
    
    8
    
    
    $
    60.98
    
    
    
    
    
    
    $
    $160.00 to $170.00
    
    
    141,000
    
    
    
    9
    
    
    $
    163.07
    
    
    
    
    
    
    $
    $190.00 to $200.00
    
    
    344,500
    
    
    
    9
    
    
    $
    198.77
    
    
    
    
    
    
    $
    7,543,214
    
    
    
    7
    
    
    $
    48.01
    
    
    
    2,683,864
    
    
    $
    29.5712,849,356
    
    
    
    6
    
    
    $
    33.26
    
    
    
    7,990,006
    
    
    $
    18.09
  Year of Grant2008
    
    
    
    2007
    
    
    
    2006
    
    
    
    2005Expected dividend
    
    $
    0.40
    
    
    $
    0.40
    
    
    $
    0.20
    
    
    $
    0.20Expected volatility
    
    
    34%
    
    
    
    29%
    
    
    
    30%
    
    
    
    28%Risk-free interest rate
    
    
    3.30%
    
    
    
    4.48%
    
    
    
    4.90%
    
    
    
    3.86%Expected life of options in years
    
    
    5.8
    
    
    
    6.4
    
    
    
    6.5
    
    
    
    6.5
 Number of
    
    
    Weighted AverageShares Subject
    
    
    Grant-Dateto Option
    
    
    Fair ValueNon-vested at January 1, 2008
    
    
    7,896,600
    
    
    $
    13.70Granted
    
    
    486,450
    
    
    
    74.76Vested
    
    
    (3,507,000
    )
    
    
    9.94Forfeited
    
    
    (16,700
    )
    
    
    21.26Non-vested at December 31, 2008
    
    
    4,859,350
    
    
    $
    22.50
   Deferred Share Unit and Other Plans




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    99
 Note 27 STOCK-BASED COMPENSATION (continued)
   
 
   Note 28 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT
   Financial Risks
  Credit Risk
  2008Cash and cash equivalents
    
    $
    276.8Accounts receivable
    
    
    1,189.9Derivative instrument assets
    
    
    17.9Available-for-sale securities  auction rate securities
    
    
    17.2
  
    
    Acceptable minimum counterparty credit ratings relating to the natural gas and foreign currency
derivative instrument assets, and cash and cash equivalents
 
    
    Daily counterparty settlement on natural gas derivative instruments based on prescribed credit
thresholds
 
    
    Exposure thresholds by counterparty on cash and cash equivalents




---



##### 



100
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 28 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (continued)
   
 2008
    
    
    
    20071  30 days
    
    $
    33.3
    
    
    $
    40.831  60 days
    
    
    8.7
    
    
    
    0.9Greater than 60 days
    
    
    1.7
    
    
    
    2.6$
    43.7
    
    
    $
    44.3
  2008
    
    
    
    2007Balance  beginning of period
    
    $
    5.9
    
    
    $
    4.7Provision for receivables impairment
    
    
    5.0
    
    
    
    1.9Receivables written off during the
period as uncollectible (primarily
related to offshore receivables)
    
    
    (3.2
    )
    
    
    (0.7
    )$
    7.7
    
    
    $
    5.9
   Liquidity Risk
  Total
    
    
    Amount Outstanding
    
    
    AmountAmount
    
    
    and Committed
    
    
    AvailableCredit facilities
    
    $
    1,930.0
    1,2
    
    
    $ 1,724.6
    1
    
    $
    205.4
    1Line of credit
    
    
    75.0
    
    
    
    20.0
    3
    
    
    55.0
 
 1
    
    The company has $750.0 available under a commercial paper
program which is limited to the availability of back-up funds under the credit facility. Included in the amount outstanding and committed is $324.6 of commercial paper. Per the terms of the agreements, the commercial paper outstanding and committed, as
applicable, is based on the US dollar balance or equivalent thereof in lawful money of
other currencies at the time of issue; therefore, subsequent changes in the exchange rate
applicable to Canadian dollar denominated commercial paper have no impact on this
balance.2
    
    Subsequent to year-end, effective January 21, 2009, $500.0 of capacity was added to the 364-day facility, as described in Note 11.3
    
    Letters of credit as described in Note 11.




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    101
 Note 28 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (continued)
   Carrying Amountof Liability at
    
    Contractual
    
    Within 1
    
    1 to 3
    
    3 to 5
    
    Over 5December 31, 2008
    
    Cash Flows
    
    Year
    
    Years
    
    Years
    
    YearsShort-term debt obligations 1
    
    $
    1,324.8
    
    
    $
    1,337.1
    
    
    $
    1,337.1
    
    
    $
    
    
    
    $
    
    
    
    $
    Accounts payable and accrued charges 2
    
    
    565.3
    
    
    
    565.3
    
    
    
    565.3
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt obligations 1
    
    
    1,758.2
    
    
    
    2,804.9
    
    
    
    102.9
    
    
    
    957.8
    
    
    
    566.4
    
    
    
    1,177.8Derivative financial instrument liabilitiesForeign currency forward contracts
    
    
    57.9Outflow
    
    
    
    
    
    
    720.5
    
    
    
    720.5
    
    
    
    
    
    
    
    
    
    
    
    Inflow
    
    
    
    
    
    
    (662.6
    )
    
    
    (662.6
    )
    
    
    
    
    
    
    
    
    
    
    Natural gas hedging derivatives
    
    
    170.6
    
    
    
    186.0
    
    
    
    50.8
    
    
    
    55.1
    
    
    
    24.7
    
    
    
    55.4
 
 1
    
    Contractual cash flows include contractual interest payments related to debt obligations. Interest rates on variable rate debt are based on prevailing rates at December 31, 2008.2
    
    Excludes taxes, accrued interest, deferred revenues and current portions of accrued
environmental costs and asset retirement obligations and accrued pension and other post-retirement
benefits. This also excludes derivative financial instrument liabilities which have been presented
separately. Market Risk




---



##### 



102
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 28 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (continued)
   Carrying Amount
    
    Foreign Exchange Riskof Asset (Liability)
    
    5% increase in US$
    
    5% decrease in US$2008
    
    Income
    
    OCI
    
    Income
    
    OCICash and cash equivalents denominated in Canadian dollars
    
    $
    (5.3
    )
    
    $
    0.3
    
    
    $
    
    
    
    $
    (0.3
    )
    
    $
    Accounts receivable denominated in Canadian dollars
    
    
    12.0
    
    
    
    (0.6
    )
    
    
    
    
    
    
    0.6
    
    
    
    Available-for-sale investmentsICL denominated in New Israeli shekels
    
    
    998.1
    
    
    
    
    
    
    
    (49.9
    )
    
    
    
    
    
    
    49.9Sinofert denominated in Hong Kong dollars
    
    
    746.8
    
    
    
    
    
    
    
    (37.3
    )
    
    
    
    
    
    
    37.3Short-term debt denominated in Canadian dollars
    
    
    (159.8
    )
    
    
    8.0
    
    
    
    
    
    
    
    (8.0
    )
    
    
    Accounts payable denominated in Canadian dollars
    
    
    (105.1
    )
    
    
    5.3
    
    
    
    
    
    
    
    (5.3
    )
    
    
    Derivative instrumentsForeign currency forward contracts
    
    
    (51.6
    )
    
    
    (41.3
    )
    
    
    
    
    
    
    41.3
    
    
    
    
     Carrying Amount
    
Interest
Rate Riskof Asset (Liability)
    
    1% decrease in interest rates
    
    1% increase in interest rates2008
    
    Income
    
    OCI
    
    Income
    
    OCIFixed-rate instrumentsLong-term debt obligations 1
    
    $
    (1,352.3
    )
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Variable rate instrumentsCash and cash equivalents
    
    
    276.8
    
    
    
    (2.8
    )
    
    
    
    
    
    
    2.8
    
    
    
    Available-for-sale investments  auction rate securities
    
    
    17.2
    
    
    
    (1.3
    )
    
    
    
    
    
    
    1.3
    
    
    
    Long-term debt obligations
    
    
    (405.9
    )
    
    
    4.1
    
    
    
    
    
    
    
    (4.1
    )
    
    
    Short-term debt obligations
    
    
    (1,324.8
    )
    
    
    4.2
    
    
    
    
    
    
    
    (4.2
    )
    
    
    
 
 1
    
    The company does not measure any fixed rate debt at fair value. Therefore, changes in
interest rates will not affect income or OCI as there is no change in
the carrying value of fixed-rate debt, and interest payments are fixed.




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    103
 Note 28 FINANCIAL INSTRUMENTS AND RELATED RISK MANAGEMENT (continued)
     Carrying Amount

    
    Price Riskof Asset (Liability)

    
    10% decrease in prices
    
    
    10% increase in prices2008

    
    Income
    
    
    OCI
    
    
    Income
    
    
    OCIDerivative instrumentsNatural gas hedging derivatives 1
    
    $
    (159.0
    )1
    
    $
    
    
    
    $
    (85.8
    )
    
    $
    
    
    
    $
    85.8Available-for-sale investmentsIntercorporate investments
    
    
    1,744.9
    
    
    
    
    
    
    
    (174.5
    )
    
    
    
    
    
    
    174.5Auction rate securities 2
    
    
    17.2
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
    
    
    
    n/a
 
 1
    
    Amount is net of $11.6 of derivative instrument assets.2
    
    Due to the current lack of an active market for these securities, price sensitivities are not determinable.  Fair Value
   2008
    
    2007Carrying Amount
    
    Fair Value of
    
    Carrying Amount
    
    Fair Value ofof Asset (Liability)
    
    Asset (Liability)
    
    of Asset (Liability)
    
    Asset (Liability)Cash and cash equivalents
    
    $
    276.8
    
    
    $
    276.8
    
    
    $
    719.5
    
    
    $
    719.5Accounts receivable
    
    
    1,189.9
    
    
    
    1,189.9
    
    
    
    596.2
    
    
    
    596.2Derivative financial instruments
    
    
    (210.6
    )
    
    
    (210.6
    )
    
    
    134.8
    
    
    
    134.8Investments
    
    
    2,750.7
    
    
    
    4,615.2
    
    
    
    3,581.5
    
    
    
    5,673.5Short-term debt obligations
    
    
    (1,323.9
    )
    
    
    (1,323.9
    )
    
    
    (90.0
    )
    
    
    (90.0
    )Accounts payable and accrued charges
    
    
    (1,183.6
    )
    
    
    (1,183.6
    )
    
    
    (911.5
    )
    
    
    (911.5
    )Long-term debt
    
    
    (1,758.2
    )
    
    
    (1,730.3
    )
    
    
    (1,358.5
    )
    
    
    (1,364.8
    )




---



##### 



104
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 29 CAPITAL DISCLOSURES
   2008
    
    
    2007Short-term debt and current
portion of long-term debt
    
    $
    1,324.1
    
    
    $
    90.2Long-term debt
    
    
    1,739.5
    
    
    
    1,339.4Total
debt
    
    
    3,063.6
    
    
    
    1,429.6Less: cash and cash equivalents
    
    
    276.8
    
    
    
    719.5Net
debt
    
    
    2,786.8
    
    
    
    710.1Shareholders equity
    
    
    4,588.9
    
    
    
    6,018.7Less: accumulated other comprehensive income
    
    
    657.9
    
    
    
    2,178.9Adjusted
shareholders equity
    
    
    3,931.0
    
    
    
    3,839.8Adjusted
capital
1
    
    $
    6,717.8
    
    
    $
    4,549.9
 
 1
    
    Adjusted capital = (total debt  cash and cash equivalents) + (shareholders equity  accumulated other comprehensive income)
 2008
    
    
    2007Components of ratiosAdjusted EBITDA
    
    $
    5,030.0
    
    
    $
    1,906.3Net debt
    
    $
    2,786.8
    
    
    $
    710.1Adjusted interest expense
    
    $
    105.7
    
    
    $
    90.5Adjusted capital
    
    $
    6,717.8
    
    
    $
    4,549.9RatiosAdjusted EBITDA to adjusted
interest expense 1
    
    
    47.6
    
    
    
    21.1Net debt to adjusted EBITDA 2
    
    
    0.6
    
    
    
    0.4Net debt to adjusted capital 3
    
    
    41.5%
    
    
    
    15.6%
 
 1
    
    Adjusted EBITDA to adjusted interest expense = adjusted EBITDA (twelve months ended) / adjusted interest expense (twelve months ended)2
    
    Net debt to adjusted EBITDA = (total debt  cash and cash equivalents) / adjusted EBITDA (twelve months ended)3
    
    Net debt to adjusted capital = (total debt  cash and cash equivalents) / (total debt  cash and cash equivalents + total shareholders equity  accumulated other comprehensive income)   2008
    
    
    2007Net income
    
    $
    3,495.2
    
    
    $
    1,103.6Income taxes
    
    
    1,077.1
    
    
    
    416.2Interest expense
    
    
    62.8
    
    
    
    68.7Depreciation and amortization
    
    
    327.5
    
    
    
    291.3Provision for auction rate securities
    
    
    88.8
    
    
    
    26.5Gain on sale of assets (Note 23)
    
    
    (21.4
    )
    
    
    Adjusted EBITDA
    
    $
    5,030.0
    
    
    $
    1,906.32008
    
    
    2007Interest expense
    
    $
    62.8
    
    
    $
    68.7Interest capitalized to
property, plant and equipment
    
    
    42.9
    
    
    
    21.8Adjusted interest expense
    
    $
    105.7
    
    
    $
    90.5




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    105
 Note 30 CONTINGENCIES
   Canpotex
  Mining Risk
  Investment in APC
  Legal and Other Matters
  
    
    In 1998, the company, along with other parties, was notified
by the US Environmental Protection Agency (USEPA) of potential liability
under the US federal Comprehensive Environmental Response, Compensation and Liability Act of 1980
(CERCLA) with respect to certain soil and groundwater conditions at a PCS Joint Venture blending
facility in Lakeland, Florida and certain adjoining property. In 1999, PCS Joint Venture signed an
Administrative Order and Consent with the USEPA pursuant to which PCS Joint Venture agreed to
conduct a Remedial Investigation and Feasibility Study (RI/FS) of these conditions. PCS Joint
Venture and another party are sharing the costs of the RI/FS, which is now complete. A Record of
Decision (ROD) based upon the RI/FS was issued on September 27, 2007. The ROD provides for a
remedy that requires excavation of impacted soils and interim treatment of groundwater. The total
remedy cost is estimated in the ROD to be $8.5. Soil excavation activities are expected to begin in
the first quarter of 2009. PCS Joint Venture and additional potentially responsible parties are
negotiating with the USEPA a Remedial Design/Remedial Action Consent Decree, pursuant to which the
parties will perform the ROD remedy. In addition, negotiations are underway regarding the
appropriate share of the cost of the remedy that should be borne by each party. Although PCS Joint
Venture sold the Lakeland property in July 2006, it has retained the above-described
 remediation
responsibilities and has indemnified the third-party purchaser for the costs of remediation and
certain related claims.
    
    The USEPA has identified PCS Nitrogen, Inc. (PCS Nitrogen) as a potentially responsible party
with respect to a former fertilizer blending operation in Charleston, South Carolina, known as the
Planters Property or Columbia Nitrogen site, formerly owned by a company from which PCS Nitrogen
acquired certain other assets. The USEPA has requested reimbursement of $3.0 of previously incurred
response costs and the performance or financing of future site investigation and response
activities from PCS Nitrogen and other named potentially responsible parties. In September 2005,
Ashley II of Charleston, L.L.C., the current owner of the Planters Property, filed a complaint in
the United States District Court for the District of South Carolina (the Court) seeking a
declaratory judgment that PCS Nitrogen is liable to pay environmental response costs that Ashley II
of Charleston, L.L.C. alleges it has incurred and will incur in connection with response activities
at the site. The Court entered an order bifurcating the case into two phases. In the third quarter
of 2007, the Court issued its decision for the first phase of the case, in which it determined that
PCS Nitrogen is the successor to a former owner of the site and may be liable to Ashley II of
Charleston, L.L.C. for its environmental response costs at the site. In the first quarter of 2008,
PCS Nitrogen filed a motion with the Court for certification of an interlocutory appeal of the
Courts order and to stay further proceedings pending a decision on the appeal from the Fourth
Circuit Appellate Court. In April 2008, the Court denied PCS Nitrogens motion for certification.
PCS Nitrogen will have to wait until the Court issues a final ruling before it can appeal the
Courts decision. PCS Nitrogen has filed third-party complaints against owners and operators that
it believes should be responsible parties with respect to the site. PCS Nitrogen is currently
pursuing the complaints that it has filed against the third-party defendants. The Court will enter
a final decision regarding the allocation and amount of liability that PCS Nitrogen and the
third-party defendants may have relating to the Planters Property in the second phase of the case.
PCS Nitrogen denies that it is a potentially responsible party and is vigorously defending its
interests in these actions.
    
    PCS Phosphate, along with several other entities, has received notice from parties to an
Administrative Settlement Agreement (Settling Parties) with the USEPA of alleged contribution
liability under CERCLA for costs incurred and to be incurred addressing PCB soil contamination at
the Ward Superfund Site in Raleigh, North Carolina (Site). PCS Phosphate has agreed to
participate, on a non-joint and several basis, with the Settling Parties in the performance of the
removal action and the payment of certain other costs associated with the Site, including
reimbursement of the USEPAs past costs. The cost of performing the removal at the Site is
estimated at $50.0. The removal activities commenced at the Site in August 2007. The company
anticipates recovering some portion of its expenditures in this matter from other liable parties.
In September 2008, the USEPA




---



##### 



106
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 30 CONTINGENCIES (continued)
   issued a final remedy, with an estimated cost of $6.1, for PCB-impacted sediments downstream of the
Site (Operable Unit 1). In October 2008, the USEPA issued special notice letters to PCS Phosphate
and other alleged potentially responsible parties requiring a good-faith offer to perform and/or
pay for the clean-up of Operable Unit 1, to perform further investigation at the Site and adjacent
properties, and to reimburse USEPA for its past costs. In January 2009, in addition to good-faith
offers made by other potentially responsible parties, PCS Phosphate, along with some of the
Settling Parties, submitted a good-faith offer to the USEPA. The USEPA is reviewing the good-faith
offers. At this time, the company is unable to evaluate the extent of any exposure that it may have
for the matters addressed in the special notice letter.
    
    The USEPA has an ongoing initiative to evaluate implementation within the phosphate industry of a
particular exemption for mineral processing wastes under the hazardous waste program. In connection
with this industry-wide initiative, the USEPA conducted hazardous waste compliance evaluation
inspections at numerous phosphate operations, including the companys plants in Aurora, North
Carolina; Geismar, Louisiana; and White Springs, Florida. The USEPA has notified the company of
various alleged violations of the US Resource Conservation and Recovery Act (RCRA) at its Aurora
and White Springs plants. The company and other industry members have met with representatives of
the US Department of Justice, the USEPA and various state environmental agencies regarding
potential resolutions of these matters. During these meetings, the company was informed that the
USEPA also believes the Geismar plant is in violation of these requirements. As part of the
initiative, the company entered into RCRA 3013 Administrative Orders on Consent to perform certain
site assessment activities at its White Springs, Aurora and Geismar plants. The company is
uncertain if any resolution will be possible without litigation, or, if litigation occurs, what the
outcome would be. At this time, the company is unable to evaluate the extent of any exposure that
it may have in these matters.
    
    The USEPA also has begun an initiative to evaluate compliance with the Clean Air Act at sulfuric
and nitric acid plants. In connection with this industry-wide initiative, the USEPA has sent
requests for information to numerous facilities, including the companys plants in Augusta,
Georgia; Aurora, North Carolina; Geismar, Louisiana; Lima, Ohio; and White Springs, Florida. The
USEPA has notified the company of various alleged violations of the Clean Air Act at its Geismar
and Lima plants. The company has met and will continue to meet with representatives of the USEPA
and the US Department of Justice regarding potential resolutions of these matters. At this time,
the company is unable to evaluate the extent of any exposure that it may have in these matters.
    
    Significant portions of the companys phosphate reserves in Aurora, North Carolina are located in
wetlands. Under the Clean Water Act, the company must obtain a permit from the US Army Corps of
 Engineers (the Corps) before disturbing the wetlands. The company has a permit from the Corps to
mine specified areas. This permit expires in 2017, but the reserves in these areas could be
exhausted before then. The company is seeking a new permit from the Corps to mine additional areas.
This process includes significant public review and comment that could affect current mitigation
and reclamation practices. The company expects to have the necessary approvals for mine
continuation in April 2009. Failure to secure the required approvals for continuation of the
mining operations on acceptable terms would negatively affect the companys reserves and costs.
    
    Pursuant to the 1996 Corrective Action Consent Order (the Order) executed between PCS Nitrogen
Fertilizer, LP, formerly known as Arcadian Fertilizer, LP (PCS Nitrogen Fertilizer) and Georgia
Department of Natural Resources, Environmental Protection Division (GEPD) in conjunction with PCS
Nitrogen Fertilizers purchase of certain real property located in Augusta, Georgia from the entity
from which PCS Nitrogen Fertilizer previously leased such property, PCS Nitrogen Fertilizer agreed
to perform certain activities including a facility investigation and, if necessary, a corrective
action. In accordance with the Order, PCS Nitrogen Fertilizer has performed an investigation of
environmental site conditions and has documented its findings in several successive facility
investigation reports submitted to GEPD. Based on these findings and on the requirements of the
Order, PCS Nitrogen Fertilizer is implementing a pilot study to evaluate the viability of in-situ
bioremediation of groundwater at the site. In the event the technology proves successful and
full-scale implementation is warranted, upon GEPD approval, a full-scale bioremediation remedy will
be implemented. If the pilot study proves unsuccessful or if GEPD does not approve this remedial
strategy, other, more costly remediation alternatives may need to be evaluated and implemented.
    
    Between September 11 and October 2, 2008, the company and PCS Sales (USA), Inc. were named as
defendants in eight very similar antitrust complaints filed in federal courts. Other potash
producers are also defendants in these cases. Each of the separate complaints alleges conspiracy to
fix potash prices, to divide markets, to restrict supply and to fraudulently conceal the
conspiracy, all in violation of Section 1 of the Sherman Act.Five of the eight complaints were brought by plaintiffs who claim to have purchased potash directly
from at least one of the defendants during the period between July 1, 2003 and the present
(collectively, the Direct Purchaser Plaintiffs). All five Direct Purchaser Plaintiffs purport to
sue on behalf of a class of persons who purchased potash in the United States directly from a
defendant. The Direct Purchaser Plaintiffs, who filed a single, consolidated amended complaint on
November 13, 2008, seek unspecified treble damages, injunctive relief, attorneys fees, costs and
pre- and post-judgment interest.




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    107
 Note 30 CONTINGENCIES (continued)
   The other three complaints were brought by plaintiffs who claim to be indirect purchasers of potash
(collectively, the Indirect Purchaser Plaintiffs). The Indirect Purchaser Plaintiffs, who purport
to sue on behalf of all persons who purchased potash indirectly in the United States, filed a
single, consolidated amended complaint on November 13, 2008. In addition to the Sherman Act claim
described above, the Indirect Purchaser Plaintiffs also assert claims for violation of various
state antitrust laws; violations of various state consumer protection statutes; and for unjust
enrichment. The Indirect Purchaser Plaintiffs seek injunctive relief, unspecified damages, treble
damages where allowed, costs, fees and pre- and post-judgment interest.All eight lawsuits have been consolidated into a
Multidistrict Litigation proceeding, or MDL (No. 1996), for coordinated pretrial
proceedings before Judge Ruben Castillo in the United States District Court for the Northern
District of Illinois.The company and PCS Sales (USA), Inc. believe each of these eight private antitrust law lawsuits is
without merit and intend to defend them vigorously.
 
   Note 31 GUARANTEES




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##### 



108
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note
31 GUARANTEES (continued)
   
 
   Note 32 RELATED PARTY TRANSACTIONS
   Note 33 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
   (a) Long-term investments:
 (b) Property, plant and equipment and goodwill:
 (c) Depreciation and amortization:
 (d) Exploration costs:
 (e) Pre-operating costs:
 (f) Pension and other post-retirement benefits:




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##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    109
 Note 33 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)
   (g) Foreign currency translation adjustment:
 (h) Offsetting of certain amounts:
 (i) Stock-based compensation:
 (j) Stripping costs:
 (k) Income taxes related to the above adjustments:
 (l) Income tax consequences of stock-based employee compensation:
 (m) Income taxes related to uncertain income tax positions:
 (n) Cash flow statements:




---



##### 



110
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note 33 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)
  The application of US GAAP, as described above, would have had the following effects on net income,
net income per share, total assets, and shareholders equity and comprehensive income.
 2008
    
    
    
    2007
    
    
    
    2006Net income as reported  Canadian GAAP
    
    $
    3,495.2
    
    
    $
    1,103.6
    
    
    $
    631.8Items increasing (decreasing) reported net incomeCash flow hedge ineffectiveness
    
    
    
    
    
    
    
    
    
    
    (4.5
    )Depreciation and amortization (c)
    
    
    8.4
    
    
    
    8.5
    
    
    
    8.4Stock-based compensation (i)
    
    
    2.2
    
    
    
    (1.7
    )
    
    
    1.3Stripping
costs (j)
    
    
    (4.0
    )
    
    
    (10.9
    )
    
    
    2.6Exploration costs (d)
    
    
    (6.6
    )
    
    
    
    
    
    
    Share of earnings of equity investees (a)
    
    
    (1.0
    )
    
    
    (1.9
    )
    
    
    0.5Pension and other post-retirement benefits (f)
    
    
    (0.3
    )
    
    
    
    
    
    
    2.0Deferred income taxes relating to the above adjustments (k)
    
    
    (0.3
    )
    
    
    (1.9
    )
    
    
    (3.0
    )Income taxes related to US GAAP effective income tax rate (k, l)
    
    
    (52.0
    )
    
    
    (30.3
    )
    
    
    Income taxes related to stock-based compensation (l)
    
    
    (32.7
    )
    
    
    (18.4
    )
    
    
    (13.3
    )Income taxes related to uncertain income tax positions (m)
    
    
    (13.7
    )
    
    
    14.5
    
    
    
    Net income  US GAAP
    
    $
    3,395.2
    
    
    $
    1,061.5
    
    
    $
    625.8Basic weighted average shares outstanding  US GAAP
    
    
    307,480,000
    
    
    
    315,641,000
    
    
    
    311,880,000Diluted weighted average shares outstanding  US GAAP
    
    
    317,434,000
    
    
    
    324,292,000
    
    
    
    318,669,000Basic net income per share  US GAAP
    
    $
    11.04
    
    
    $
    3.36
    
    
    $
    2.01Diluted net income per share  US GAAP
    
    $
    10.70
    
    
    $
    3.27
    
    
    $
    1.96Total assets as reported  Canadian GAAP
    
    $
    10,248.8
    
    
    $
    9,716.6Items increasing (decreasing) reported total assetsProperty, plant and equipment (b)
    
    
    (92.8
    )
    
    
    (101.2
    )Exploration costs (d)
    
    
    (13.0
    )
    
    
    (6.4
    )Stripping costs (j)
    
    
    (36.7
    )
    
    
    (32.7
    )Pension and other post-retirement benefits (f)
    
    
    (105.2
    )
    
    
    (66.7
    )Margin deposits associated with derivative instruments (h)
    
    
    (91.1
    )
    
    
    Investment in equity investees (a)
    
    
    1.3
    
    
    
    2.3Income tax asset related to uncertain income tax positions (m)
    
    
    24.8
    
    
    
    18.4Goodwill (b)
    
    
    (46.7
    )
    
    
    (46.7
    )Total assets  US GAAP
    
    $
    9,889.4
    
    
    $
    9,483.6Total shareholders equity as reported  Canadian GAAP
    
    $
    4,588.9
    
    
    $
    6,018.7
    
    
    $
    2,780.3Items increasing (decreasing) reported shareholders equityAccumulated other comprehensive income, net of related income taxes, consisting of:Unrealized gains and losses on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    792.0Net gains on derivatives designated as cash flow hedges
    
    
    
    
    
    
    
    
    
    
    79.4Cumulative effect adjustment in respect of uncertain income tax positions (m)
    
    
    (1.2
    )
    
    
    (1.2
    )
    
    
    Pension and other post-retirement benefits (f)
    
    
    (246.6
    )
    
    
    (85.6
    )
    
    
    (117.9
    )Share of accumulated other comprehensive income of equity investees (a)
    
    
    
    
    
    
    
    
    
    
    0.9Foreign currency translation adjustment (g)
    
    
    (20.9
    )
    
    
    (20.9
    )
    
    
    (20.9
    )Foreign currency translation adjustment (g)
    
    
    20.9
    
    
    
    20.9
    
    
    
    20.9Provision for asset impairment (b)
    
    
    (218.0
    )
    
    
    (218.0
    )
    
    
    (218.0
    )Depreciation and amortization (c)
    
    
    78.5
    
    
    
    70.1
    
    
    
    61.6Exploration costs (d)
    
    
    (13.0
    )
    
    
    (6.4
    )
    
    
    (6.4
    )Stripping costs (j)
    
    
    (36.7
    )
    
    
    (32.7
    )
    
    
    2.6Cash flow hedge ineffectiveness
    
    
    
    
    
    
    
    
    
    
    0.4Pension and other post-retirement benefits (f)
    
    
    15.8
    
    
    
    16.1
    
    
    
    16.1Share of other comprehensive income of equity investees (a)
    
    
    1.3
    
    
    
    2.3
    
    
    
    4.2Deferred income taxes relating to the above adjustments (k)
    
    
    30.1
    
    
    
    30.4
    
    
    
    24.0Income taxes related to US GAAP effective income tax rate (k, l)
    
    
    (82.3
    )
    
    
    (30.3
    )
    
    
    Income taxes related to uncertain income tax positions (m)
    
    
    86.5
    
    
    
    14.5
    
    
    
    Cumulative effect adjustment to retained earnings in respect of stripping costs
    
    
    
    
    
    
    
    
    
    
    (16.3
    )Cumulative effect adjustment to retained earnings in respect of
uncertain income tax positions
    
    
    
    
    
    
    85.7
    
    
    
    Shareholders equity  US GAAP
    
    $
    4,203.3
    
    
    $
    5,863.6
    
    
    $
    3,402.9




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    111
 Note
33 RECONCILIATION OF CANADIAN AND
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)
   Supplemental US GAAP Disclosure
 Investments at Equity
  2008
    
    
    
    2007Current assets
    
    $
    3,366.5
    
    
    $
    1,647.8Non-current assets
    
    
    1,763.1
    
    
    
    1,432.8Current
liabilities
    
    
    2,124.1
    
    
    
    748.7Non-current liabilities
    
    
    716.2
    
    
    
    678.6Minority interest
    
    
    45.1
    
    
    
    44.02008
    
    
    
    2007
    
    
    
    2006Sales
    
    $
    7,571.1
    
    
    $
    3,624.4
    
    
    $
    2,611.8Gross profit
    
    
    1,328.0
    
    
    
    510.5
    
    
    
    409.7Income from continuing operations and net income
    
    
    949.4
    
    
    
    382.5
    
    
    
    209.1
 Uncertainty in Income Taxes
  2008
    
    
    2007Balance at beginning of year
    
    $
    11.6
    
    
    $
    24.2Additions based on tax positions
related to the current year
    
    
    19.9
    
    
    
    2.8Additions for tax positions of prior years
    
    
    76.8
    
    
    
    12.3Reductions for tax positions of prior years
    
    
    (63.6
    )
    
    
    (18.0
    )Settlements
    
    
    (15.1
    )
    
    
    (9.7
    )Balance at December 31
    
    $
    29.6
    
    
    $
    11.6  YearsCanada
    
    2004-presentUS
    
    2007-presentTrinidad
    
    2003-presentBarbados
    

2000-present
 Recent Accounting Pronouncements
 Framework for Fair Value Measurement
   Level 1
    
    Values based on unadjusted quoted prices in active markets that are accessible at the measurement
date for identical assets or liabilities.
 Level 2
    
    Values based on quoted prices in markets that are not active or model inputs that are observable
either directly or indirectly for substantially the full term of the asset or liability.
 Level 3
    
    Values based on prices or valuation techniques that require inputs that are both unobservable and
significant to the overall fair value measurement.




---



##### 



112
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note
33 RECONCILIATION OF CANADIAN AND
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)
   Fair Value Measurements at Reporting Date Using:Carrying Amount
    
    
    
    Quoted Prices in
    
    
    
    
    
    Significantof Asset (Liability)
    
    Cash
    
    Active Markets for
    
    Significant Other
    
    Unobservableat December 31,
    
    Collateral
    
    Identical Assets
    
    Observable Inputs
    
    InputsDescription
    
    2008
    
    Netting
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Derivative instrument assets
    
    $
    17.9
    
    
    $
    
    
    
    $
    
    
    
    $
    6.3
    
    
    $
    11.6Available-for-sale securities
    
    
    1,762.1
    
    
    
    
    
    
    
    1,744.9
    
    
    
    
    
    
    
    17.2Derivative instrument liabilities
    
    
    (137.4
    )
    
    
    91.1
    1
    
    
    
    
    
    
    (106.1
    )
    
    
    (122.4
    )
 
 1
    
    Amount represents the effect of legally enforceable master
netting arrangements between the company and its counterparties and
the receivable for cash collateral placed with the same counterparties. Derivative Instrument
    
    Available-for-SaleFair Value Measurements Using Significant Unobservable Inputs (Level 3)
    
    Assets (Liabilities)
    
    SecuritiesBeginning balance, December 31, 2007
    
    $
    127.7
    
    
    $
    56.0Total gains or (losses) (realized and unrealized) before income taxesIncluded in earnings
    
    
    17.4
    
    
    
    (88.8
    )Included in other comprehensive income
    
    
    (229.4
    )
    
    
    (23.1
    )Other 1
    
    
    
    
    
    
    73.1Purchases, sales, issuances and settlements
    
    
    (26.5
    )
    
    
    Ending balance, December 31, 2008
    
    $
    (110.8
    )
    
    $
    17.2Amount of total gains or
(losses) for the period included in earnings attributable to
the change in unrealized gains or losses relating to instruments still held at the reporting date
    
    $
    (10.0
    )
    
    $
    (88.8
    )Gains and (losses) (realized and unrealized) included in earnings for the year are reported in:Cost of Goods Sold
    
    $
    17.4
    
    
    $
    Other income
    
    
    
    
    
    
    (88.8
    )
 
 1
    
    Represents unrealized losses transferred from other comprehensive income to earnings as a result of the other-than-temporary impairment of the securities.  Fair Value Option for Financial Assets and Financial Liabilities
  Offsetting of Certain Amounts
 Business Combinations




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    113
 Note 33 RECONCILIATION OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)
   Noncontrolling Interests in Consolidated Financial Statements
  Disclosures about Derivative Instruments and Hedging Activities
  The Hierarchy of Generally Accepted Accounting Principles
 
 Deferred Income Taxes
 Stock-Based Compensation
     Derivative Instruments and Hedging Activities
  Pension and Other Post-Retirement Benefits
  Related Party Transactions




---



##### 



114
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note
33 RECONCILIATION OF CANADIAN AND
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)
  Supplemental Schedules
  SUPPLEMENTAL SCHEDULE OF CONSOLIDATED FINANCIAL POSITION
  2008
    
    
    
    2007AssetsCurrent assetsCash and cash equivalents
    
    $
    276.8
    
    
    $
    719.5Accounts receivable
    
    
    1,098.8
    
    
    
    596.2Inventories
    
    
    715.2
    
    
    
    428.8Prepaid expenses and other current assets
    
    
    79.2
    
    
    
    36.7Current portion of derivative instrument assets
    
    
    6.4
    
    
    
    30.82,176.4
    
    
    
    1,812.0Derivative instrument assets
    
    
    11.5
    
    
    
    104.2Property, plant and equipment
    
    
    4,669.4
    
    
    
    3,746.4Investments
    
    
    2,752.0
    
    
    
    3,583.8Other assets
    
    
    183.5
    
    
    
    144.0Income taxes on uncertain income tax positions
    
    
    24.8
    
    
    
    18.4Intangible assets
    
    
    21.5
    
    
    
    24.5Goodwill
    
    
    50.3
    
    
    
    50.3$
    9,889.4
    
    
    $
    9,483.6LiabilitiesCurrent liabilitiesShort-term debt and current portion of long-term debt
    
    $
    1,324.1
    
    
    $
    90.0Accounts payable and accrued charges
    
    
    1,175.4
    
    
    
    851.5Current portion of derivative instrument liabilities
    
    
    77.7
    
    
    
    0.22,577.2
    
    
    
    941.7Long-term debt
    
    
    1,739.5
    
    
    
    1,339.4Derivative instrument liabilities
    
    
    59.7
    
    
    
    Deferred income tax liability
    
    
    612.6
    
    
    
    903.0Income taxes on uncertain income tax positions
    
    
    58.2
    
    
    
    38.1Accrued pension and other post-retirement benefits
    
    
    502.3
    
    
    
    274.1Accrued environmental costs and asset retirement obligations
    
    
    133.4
    
    
    
    121.0Other non-current liabilities and deferred credits
    
    
    3.2
    
    
    
    2.75,686.1
    
    
    
    3,620.0Shareholders EquityShare capital
    
    
    1,402.5
    
    
    
    1,461.3Additional paid-in capital
    
    
    227.6
    
    
    
    169.8Accumulated other comprehensive income
    
    
    389.2
    
    
    
    2,071.2Retained earnings
    
    
    2,184.0
    
    
    
    2,161.34,203.3
    
    
    
    5,863.6$
    9,889.4
    
    
    $
    9,483.6




---



##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    115
 Note
33 RECONCILIATION OF CANADIAN AND
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)
  SUPPLEMENTAL SCHEDULE OF CONSOLIDATED OPERATIONS AND RETAINED EARNINGS
  2008
    
    
    
    2007
    
    
    
    2006Sales
    
    $
    9,446.5
    
    
    $
    5,234.2
    
    
    $
    3,766.7Less: Freight
    
    
    324.9
    
    
    
    346.1
    
    
    
    255.8Transportation and distribution
    
    
    132.4
    
    
    
    124.1
    
    
    
    134.1Cost of goods sold
    
    
    4,077.8
    
    
    
    2,885.9
    
    
    
    2,365.4Gross Margin
    
    
    4,911.4
    
    
    
    1,878.1
    
    
    
    1,011.4Selling and administrative
    
    
    186.1
    
    
    
    213.6
    
    
    
    158.0Provincial mining and other taxes
    
    
    543.4
    
    
    
    135.4
    
    
    
    66.5Foreign exchange gain (loss)
    
    
    (126.0
    )
    
    
    70.2
    
    
    
    (4.4
    )Share of earnings of equity investees
    
    
    (254.8
    )
    
    
    (74.3
    )
    
    
    (54.9
    )Other income
    
    
    (71.1
    )
    
    
    (49.3
    )
    
    
    (39.6
    )277.6
    
    
    
    295.6
    
    
    
    125.6Operating Income
    
    
    4,633.8
    
    
    
    1,582.5
    
    
    
    885.8Interest Expense
    
    
    62.8
    
    
    
    68.7
    
    
    
    85.6Income before Income Taxes
    
    
    4,571.0
    
    
    
    1,513.8
    
    
    
    800.2Income Taxes
    
    
    1,175.8
    
    
    
    452.3
    
    
    
    174.4Net Income
    
    
    3,395.2
    
    
    
    1,061.5
    
    
    
    625.8Retained Earnings, Beginning of Year
    
    
    2,161.3
    
    
    
    1,124.7
    
    
    
    577.5Repurchase of Common Shares
    
    
    (3,250.3
    )
    
    
    
    
    
    
    Cumulative Effect Adjustment in Respect of Uncertain Income Tax Positions
    
    
    
    
    
    
    85.7
    
    
    
    Cumulative Effect Adjustment in Respect of Stripping Costs
    
    
    
    
    
    
    
    
    
    
    (16.3
    )Dividends
    
    
    (122.2
    )
    
    
    (110.6
    )
    
    
    (62.3
    )Retained Earnings, End of Year
    
    $
    2,184.0
    
    
    $
    2,161.3
    
    
    $
    1,124.7Net Income per Share  Basic
    
    $
    11.04
    
    
    $
    3.36
    
    
    $
    2.01Net Income per Share  Diluted
    
    $
    10.70
    
    
    $
    3.27
    
    
    $
    1.96Dividends per Share
    
    $
    0.40
    
    
    $
    0.35
    
    
    $
    0.20




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##### 



116
    
    IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
 Note
33 RECONCILIATION OF CANADIAN AND
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)
  SUPPLEMENTAL SCHEDULE OF CONSOLIDATED COMPREHENSIVE (LOSS) INCOME
  2008
    
    
    
    2007
    
    
    
    2006Net Income
    
    $
    3,395.2
    
    
    $
    1,061.5
    
    
    $
    625.8Other comprehensive (loss) incomeNet (decrease) increase in unrealized gains on available-for-sale securities
    
    
    (1,398.4
    )
    
    
    1,394.1
    
    
    
    534.7Net (losses) gains on derivatives designated as cash flow hedges
    
    
    (266.8
    )
    
    
    49.4
    
    
    
    (68.2
    )Reclassification to income of net gains on cash flow hedges
    
    
    (12.9
    )
    
    
    (57.8
    )
    
    
    (79.7
    )Pension and other post-retirement benefits 1
    
    
    (257.9
    )
    
    
    56.4
    
    
    
    Unrealized foreign exchange (losses) gains on
translation of self-sustaining foreign operations
    
    
    (10.0
    )
    
    
    6.7
    
    
    
    Adjustment to additional minimum pension liability
    
    
    
    
    
    
    
    
    
    
    11.7Share of other comprehensive income of equity investees
    
    
    
    
    
    
    (1.3
    )
    
    
    0.2Deferred income taxes related to other comprehensive income
    
    
    264.0
    
    
    
    (108.6
    )
    
    
    62.4Other Comprehensive (Loss) Income
    
    
    (1,682.0
    )
    
    
    1,338.9
    
    
    
    461.1Comprehensive Income
    
    $
    1,713.2
    
    
    $
    2,400.4
    
    
    $
    1,086.9
 
 1
    
    2008 comprised of amortization of net actuarial loss of $(250.2), amortization of prior service costs of $(9.4), and amortization of
transitional obligation of $1.7. 2007 comprised of amortization of net actuarial loss of $56.6, amortization of prior service costs of
$(1.4), and amortization of transitional obligation of $1.2. SUPPLEMENTAL SCHEDULE OF CONSOLIDATED ACCUMULATED OTHER COMPREHENSIVE INCOME
  2008
    
    
    2007
    
    
    2006Accumulated other comprehensive  income, beginning of year
    
    $
    2,071.2
    
    
    $
    733.5
    
    
    $
    343.2Other comprehensive (loss) income, net of related income taxes
    
    
    (1,682.0
    )
    
    
    1,338.9
    
    
    
    461.1Cumulative effect adjustment in respect of uncertain income tax positions
    
    
    
    
    
    
    (1.2
    )
    
    
    Cumulative effect adjustment related to pension and
other post-retirement benefits
    
    
    
    
    
    
    
    
    
    
    (70.8
    )Accumulated other comprehensive income, end of year
    
    $
    389.2
    
    
    $
    2,071.2
    
    
    $
    733.5
  2008
    
    
    
    2007
    
    
    
    2006Net unrealized gains on available-for-sale securities
    
    $
    761.8
    
    
    $
    2,098.7
    
    
    $
    792.0Net unrealized (losses) gains on derivatives designated as cash flow hedges
    
    
    (100.6
    )
    
    
    73.5
    
    
    
    79.4Pension and other post-retirement benefits 1
    
    
    (246.6
    )
    
    
    (85.6
    )
    
    
    (117.9
    )Share of other comprehensive income of equity investees
    
    
    
    
    
    
    
    
    
    
    0.9Unrealized foreign exchange (losses) gains on self-sustaining foreign operations
    
    
    (3.3
    )
    
    
    6.7
    
    
    
    Foreign currency translation adjustment
    
    
    (20.9
    )
    
    
    (20.9
    )
    
    
    (20.9
    )Cumulative effect adjustment in respect of uncertain income tax positions
    
    
    (1.2
    )
    
    
    (1.2
    )
    
    
    Accumulated other comprehensive income, end of year
    
    $
    389.2
    
    
    $
    2,071.2
    
    
    $
    733.5
 
 1
    
    2008 comprised of unamortized net actuarial loss of $(246.2), unamortized
prior service costs of $1.4 and unamortized transitional obligation of $(1.8).
2007 comprised of unamortized net actuarial loss of $(91.0), unamortized prior
service costs of $8.7 and unamortized transitional obligation of $(3.3). 2006
comprised of unamortized net actuarial loss of $(122.9), unamortized prior
service costs of $9.0 and unamortized transitional obligation of $(4.0).




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##### 



IN MILLIONS OF US DOLLARS EXCEPT SHARE AND PER-SHARE AMOUNTS
    
    
    117
 Note
33 RECONCILIATION OF CANADIAN AND
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (continued)
  SUPPLEMENTAL SCHEDULE OF CONSOLIDATED CASH FLOW
  2008
    
    
    2007
    
    
    2006Operating
ActivitiesNet income
    
    $
    3,395.2
    
    
    $
    1,061.5
    
    
    $
    625.8Adjustments to reconcile net income to cash provided by operating activitiesDepreciation and amortization
    
    
    319.1
    
    
    
    282.8
    
    
    
    234.0Stock-based compensation
    
    
    34.0
    
    
    
    40.3
    
    
    
    28.5(Gain) loss on disposal of property, plant and equipment and long-term investments
    
    
    (27.1
    )
    
    
    7.9
    
    
    
    (8.6
    )Provision for auction rate securities and plant shutdowns
    
    
    88.8
    
    
    
    26.5
    
    
    
    6.3Foreign exchange on deferred income tax
    
    
    (106.4
    )
    
    
    52.4
    
    
    
    0.5Provision for deferred income tax
    
    
    148.2
    
    
    
    137.3
    
    
    
    52.7Undistributed earnings of equity investees
    
    
    (165.7
    )
    
    
    (33.7
    )
    
    
    (25.0
    )Loss (gain) on derivative instruments
    
    
    48.7
    
    
    
    (21.1
    )
    
    
    Other long-term liabilities
    
    
    2.6
    
    
    
    (57.9
    )
    
    
    13.4Changes in non-cash operating working capitalAccounts receivable
    
    
    (593.7
    )
    
    
    (154.6
    )
    
    
    11.0Inventories
    
    
    (324.1
    )
    
    
    59.6
    
    
    
    15.8Prepaid expenses and other current assets
    
    
    (23.7
    )
    
    
    7.0
    
    
    
    (1.8
    )Accounts payable and accrued charges
    
    
    174.3
    
    
    
    250.9
    
    
    
    (269.1
    )Cash provided by operating activities
    
    
    2,970.2
    
    
    
    1,658.9
    
    
    
    683.5Investing ActivitiesAdditions to property, plant and equipment
    
    
    (1,188.0
    )
    
    
    (595.6
    )
    
    
    (508.6
    )Purchase of long-term investments
    
    
    (445.6
    )
    
    
    (30.7
    )
    
    
    (352.5
    )Purchase of investments in auction rate securities
    
    
    
    
    
    
    (132.5
    )
    
    
    Proceeds from disposal of property, plant and equipment and long-term investments
    
    
    43.2
    
    
    
    4.5
    
    
    
    22.0Other assets and intangible assets
    
    
    (46.6
    )
    
    
    7.8
    
    
    
    (0.6
    )Cash used in investing activities
    
    
    (1,637.0
    )
    
    
    (746.5
    )
    
    
    (839.7
    )Financing ActivitiesProceeds from long-term debt obligations
    
    
    400.0
    
    
    
    1.5
    
    
    
    483.9Repayment and issue costs of long-term debt obligations
    
    
    (0.2
    )
    
    
    (403.6
    )
    
    
    (1.3
    )Proceeds from (repayment of) short-term debt obligations
    
    
    1,233.9
    
    
    
    (67.9
    )
    
    
    (94.3
    )Dividends
    
    
    (122.6
    )
    
    
    (93.6
    )
    
    
    (60.9
    )Repurchase of common shares
    
    
    (3,356.4
    )
    
    
    
    
    
    
    Issuance of common shares
    
    
    36.7
    
    
    
    26.6
    
    
    
    47.3Income taxes related to stock-based compensation
    
    
    32.7
    
    
    
    18.4
    
    
    
    13.3Cash (used in) provided by financing activities
    
    
    (1,775.9
    )
    
    
    (518.6
    )
    
    
    388.0(Decrease) increase in Cash and Cash Equivalents
    
    
    (442.7
    )
    
    
    393.8
    
    
    
    231.8Cash and Cash Equivalents, Beginning of Year
    
    
    719.5
    
    
    
    325.7
    
    
    
    93.9Cash and Cash Equivalents, End of Year
    
    $
    276.8
    
    
    $
    719.5
    
    
    $
    325.7Supplemental cash flow disclosureIncome taxes paid (n)
    
    $
    677.1
    
    
    $
    221.0
    
    
    $
    296.8
 Note 34 COMPARATIVE FIGURES




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##### 



118
    
    Shareholder Information
 Annual Meeting
    Dividends
   Ownership
  Corporate Offices
 Canada:
    
    US:Suite 500, 122 - 1st Ave S
    
    Suite 400, 1101 Skokie BlvdSaskatoon SK S7K 7G3
    
    Northbrook IL 60062Phone: (306) 933-8500
    
    Phone: (847) 849-4200
 Common Share Prices and Volumes
  Toronto Stock Exchange 1
    
    
    New York Stock ExchangeHigh*
    
    
    Low*
    
    
    Volume
    
    
    High*
    
    
    Low*
    
    
    Volume2008
    
    Q1
    
    
    167.80
    
    
    
    109.00
    
    
    
    103,153,851
    
    
    
    165.00
    
    
    
    105.52
    
    
    
    481,399,952Q2
    
    
    246.29
    
    
    
    155.03
    
    
    
    118,100,762
    
    
    
    241.62
    
    
    
    150.44
    
    
    
    725,191,906Q3
    
    
    231.28
    
    
    
    131.43
    
    
    
    111,838,148
    
    
    
    229.95
    
    
    
    126.49
    
    
    
    783,581,966Q4
    
    
    142.00
    
    
    
    61.81
    
    
    
    165,047,982
    
    
    
    133.44
    
    
    
    47.54
    
    
    
    1,153,295,676Year 2008
    
    
    246.29
    
    
    
    61.81
    
    
    
    498,140,743
    
    
    
    241.62
    
    
    
    47.54
    
    
    
    3,143,469,5002007
    
    Q1
    
    
    65.31
    
    
    
    51.92
    
    
    
    51,599,528
    
    
    
    56.35
    
    
    
    44.05
    
    
    
    221,025,369Q2
    
    
    86.21
    
    
    
    61.02
    
    
    
    51,480,129
    
    
    
    80.85
    
    
    
    52.82
    
    
    
    220,781,704Q3
    
    
    108.92
    
    
    
    76.96
    
    
    
    65,980,291
    
    
    
    109.40
    
    
    
    71.50
    
    
    
    189,289,076Q4
    
    
    148.89
    
    
    
    94.30
    
    
    
    67,978,612
    
    
    
    151.90
    
    
    
    97.36
    
    
    
    239,545,310Year 2007
    
    
    148.89
    
    
    
    51.92
    
    
    
    237,038,560
    
    
    
    151.90
    
    
    
    44.05
    
    
    
    870,641,4592006
    
    Q1
    
    
    37.96
    
    
    
    30.50
    
    
    
    63,024,657
    
    
    
    33.08
    
    
    
    26.05
    
    
    
    165,652,500Q2
    
    
    39.00
    
    
    
    28.93
    
    
    
    56,060,451
    
    
    
    35.47
    
    
    
    26.28
    
    
    
    162,390,900Q3
    
    
    39.49
    
    
    
    30.67
    
    
    
    42,424,140
    
    
    
    35.49
    
    
    
    27.34
    
    
    
    123,589,800Q4
    
    
    56.96
    
    
    
    37.75
    
    
    
    58,463,577
    
    
    
    49.06
    
    
    
    33.83
    
    
    
    185,087,100Year 2006
    
    
    56.96
    
    
    
    28.93
    
    
    
    219,972,825
    
    
    
    49.06
    
    
    
    26.05
    
    
    
    636,720,300
 
 1
    
    Trading prices are in Cdn$ NYSE Corporate Governance
   
 POTASHCORP 2008 FINANCIAL REVIEW
    
Keyword Online: Shareholder Info




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##### 



Appendix
    
    
    
    
    119
 MARKET AND INDUSTRY DATA STATEMENT
   FOOTNOTES, SOURCES AND ABBREVIATIONS
 Footnotes
 1
    
    Availability of Raw Materials
    
    Source: Fertecon, EIA2
    
    Cost of New Capacity
    
    Source: Fertecon, PotashCorp3
    
    Greenfield
    
    Definition: New operation built on undeveloped site4
    
    Greenfield Development Time
    
    Source: Fertecon, PotashCorp5
    
    Producing Countries
    
    Source: Fertecon6
    
    State- or Subsidy-Controlled Capacity
    
    Source: Fertecon, British Sulphur, PotashCorp7
    
    Industry Operating Rate
    
    Source: Fertecon, PotashCorp8
    
    PotashCorp % of World  Capacity
    
    Source: Fertecon; PotashCorp9
    
    PotashCorp World Position by Capacity
    
    Source: Fertecon; Blue, Johnson; Agrium; Mosaic; Terra; PotashCorp
 Abbreviated Company Names and Sources *
 AAPFCO
    
    American Association of Plant Food Control Officials, USAAgrifos
    
    Agrifos Fertilizer Inc., USAAgrium
    
    Agrium Inc. (TSX and NYSE: AGU), CanadaAPC
    
    Arab Potash Company Ltd. (Amman: ARPT), JordanBelaruskali
    
    PA Belaruskali, BelarusBloomberg
    
    Bloomberg L.P., USABlue, Johnson
    
    Blue, Johnson & Associates, USABritish Sulphur
    
    British Sulphur Consultants, UKCanadian National Railway
    
    Canadian National Railway Co. (TSX:
CNR, NYSE: CNI), CanadaCanpotex
    
    Canpotex Limited, CanadaCBOT
    
    Chicago Board of Trade, USACF Industries
    
    CF Industries, Inc., (NYSE: CF) USACNC
    
    Caribbean Nitrogen Company, TrinidadCP Rail
    
    Canadian Pacific Railway, (TSX: CP) CanadaDoane
    
    Doane Advisory Services, USAEIA
    
    Energy Information Administration, USAFAI
    
    Fertilizer Association of India, IndiaFAO
    
    Food and Agriculture Organization of the United NationsFertecon
    

Fertecon
Limited and Fertecon Research Centre Limited, UKFMB
    
    FMB Group Limited, UKICL
    
    Israel Chemicals Ltd. (Tel Aviv: ICL), IsraelIFA
    
    International Fertilizer Industry Association, FranceIMF
    
    International Monetary Fund, USAInnophos
    
    Innophos Holdings, Inc. (NASDAQ: IPHS), USAIntrepid
    
    Intrepid Potash, (NYSE: IPI) USA
 IPNI
    
    International Plant Nutrition Institute, USAK+S
    
    K+S Group (Xetra: SDF), GermanyKoch
    
    Koch Industries, Inc., USALME
    
    London Metal Exchange, UKMississippi Phosphate
    
    Mississippi Phosphate Corporation, USAMoodys
    
    Moodys Corporation (NYSE: MCO), USAMosaic
    
    The Mosaic Company (NYSE: MOS), USANYMEX
    
    New York Mercantile Exchange, USANYSE
    
    New York Stock Exchange, USAOCP
    
    Office Cherifien des Phosphates, MoroccoOMS
    
    Overseas Marine Service, USAPemex
    
    Petroleos Mexicanos, MexicoPhosChem
    
    Phosphate Chemicals Export Association, Inc., USAQSLP
    
    Qinghai Salt Lake Potash Co. Ltd., ChinaSilvinit
    
    JSC Silvinit, RussiaSimplot
    
    J.R. Simplot Company, USASinofert
    
    Sinofert Holdings Limited (HKSE, 0297.HK), ChinaSQM
    

Sociedad
Quimica y Minera de Chile S.A. (Santiago Bolsa de Comercio Exchange,
NYSE: SQM), ChileTerra
    
    Terra Industries, Inc. (NYSE: TRA), USATFI
    
    The Fertilizer Institute, USATogliatti
    
    OAO Togliatti Azot, RussiaTringen
    
    Trinidad Nitrogen Co., Limited, TrinidadTSX
    
    Toronto Stock Exchange, CanadaUralkali
    
    JSC Uralkali, (LSE and RTS: URKA) RussiaUSDA
    
    US Department of Agriculture, USAVale
    
    Companhia Vale do Rio Doce (Bovespa: Vale), BrazilYara
    
    Yara International (Oslo: YAR), Norway
    
 *
    
    Where PotashCorp is listed as a source in conjunction with external sources, we have
supplemented the external data with internal analysis.




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##### 



120
    
    Appendix
 TERMS AND MEASURES
 Glossary of Terms
 2008E
    
    2008 Estimated2009F
    
    2009 ForecastCAGR
    
    Compound Annual Growth RateCanpotex
    
    An export company owned by all Saskatchewan producers of potash (PotashCorp, Mosaic and Agrium).Constructed Capacity
    
    Equipment in a state of readiness
to produce. While constructed capacity is increased at mechanical
completion of a project, a period of ramp-up may be required to achieve full operating levels.Consumption vs Demand
    
    Product applied vs product purchasedFOB
    
    Free on Board  cost of goods on board at point of shipmentFSU
    
    The former Soviet UnionGDP
    
    Gross Domestic ProductLatin America
    
    South America, Central America, Caribbean and MexicoLNG
    
    Liquefied Natural GasMMBtu
    
    Million British thermal unitsMMT
    
    Million tonnesNorth America
    
    The North American market includes Canada and the United States.Offshore
    
    Offshore markets include all markets except Canada and the US.PhosChem
    
    An association formed under the Webb-Pomerene Act for US exports of phosphate fertilizer products.
Members are PotashCorp and Mosaic. PCS Sales is responsible for export sales of liquid
fertilizers for all PhosChem members while Mosaic is responsible for sales of solid fertilizers for
members.PotashCorp
    
    Potash Corporation of Saskatchewan Inc. (PCS) and its direct or indirect subsidiaries,
individually or in any combination, as applicableState- or Subsidy-
Controlled Production
    
    State-controlled: Operational control in the hands of the state
Subsidy-controlled:The state provides subsidies which control the economic viability of the operation
 Scientific Terms
 Nitrogen
    
    NH3
    
    ammonia (anhydrous), 82.2% NHNO3
    
    nitric acid, 22% N (liquid)UAN
    
    nitrogen solutions, 28-32% N (liquid)Phosphate
    
    P2O5
    
    phosphoric acid (liquid)MGA
    
    merchant grade acid, 54% P2O5 (liquid)DAP
    
    diammonium phosphate, 46% P2O5 (solid)MAP
    
    monoammonium phosphate, 52% P2O5 (solid)SPA
    
    superphosphoric acid, 70% P2O5 (liquid)Monocal
    
    monocalcium phosphate, 48.1% P2O5 (solid)Dical
    
    dicalcium phosphate, 42.4% P2O5 (solid)DFP
    
    defluorinated phosphate, 41.2% P2O5 (solid)STF
    
    silicon tetrafluoridePotash
    
    KCl
    
    potassium chloride, 60-63.2% K2O (solid)Fertilizer MeasuresK2O tonne
    
    Measures the potassium content of fertilizers having different chemical analysesP2O5 tonne
    
    Measures the phosphorus content of fertilizers having different chemical analysesN tonne
    
    Measures the nitrogen content of fertilizers having different chemical analysesProduct tonne
    
    Standard measure of the weights of all types of potash, phosphate and nitrogen productsCurrency AbbreviationsCDN
    
    Canadian dollarEUR
    
    EuroNOK
    
    Norwegian kroneRUB
    
    Russian rubleUSD
    
    United States dollar




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#####