##### 



Exhibit 13

(COVER PAGE GRAPHIC)



---



##### 



(World population is growing...)



---



##### 



(Potash Corporation of Saskatchewan Inc., ...)



---



##### 





|                    |                                                           
|------------------- | ----------------------------------------------------------
|2001 At a Glance... | All financial data in this report are stated in US dollars



|Financial Highlights
|--------------------

($ millions except per share amounts)

|                                           |  |   |         | 
|------------------------------------------ |  | - | ------- | 
|                                          
|Net sales                                  |  | $ | 2,072.7 | 
|                                          
|Net income per share  diluted             |  | $ | 2.32    | 
|                                          
|Gross margin                               |  | $ | 399.2   | 
|                                          
|EBITDA*                                    |  | $ | 455.4   | 
|                                          
|Cash flow prior to working capital changes |  | $ | 357.1   | 
|                                          
|*See Financial Terms on inside back cover  |  |   |         | 
|                                          

|                      |  |                                                                                                                                       |  |                                                                                                                                                           |  |                                                                                                                                                            
|--------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|                      |  | Potash (K)                                                                                                                            |  | Phosphate (P)                                                                                                                                             |  | Nitrogen (N)                                                                                                                                               
|                      |  |                                                                                                                                       |  |                                                                                                                                                           |  |                                                                                                                                                            
|Net Sales             |  | 25% of total                                                                                                                          |  | 32% of total                                                                                                                                              |  | 43% of total                                                                                                                                               
|                      |  |                                                                                                                                       |  |                                                                                                                                                           |  |                                                                                                                                                            
|Gross Margin          |  | 60% of total                                                                                                                          |  | 16% of total                                                                                                                                              |  | 24% of total                                                                                                                                               
|                      |  |                                                                                                                                       |  |                                                                                                                                                           |  |                                                                                                                                                            
|Customer Location     |  | 46% North America
54% offshore                                                                                                        |  | 75% North America
25% offshore                                                                                                                            |  | 90% North America
10% offshore                                                                                                                             
|                      |  |                                                                                                                                       |  |                                                                                                                                                           |  |                                                                                                                                                            
|Customer Type         |  | 91% fertilizer
  9% feed/industrial                                                                                                   |  | 55% fertilizer
45% feed/industrial                                                                                                                        |  | 45% fertilizer
55% feed/industrial                                                                                                                         
|                      |  |                                                                                                                                       |  |                                                                                                                                                           |  |                                                                                                                                                            
|PotashCorp Capacity   |  | No. 1 in world potash                                                                                                                 |  | No. 3 in world phosphate                                                                                                                                  |  | No. 3 in world nitrogen                                                                                                                                    
|                      |  |                                                                                                                                       |  |                                                                                                                                                           |  |                                                                                                                                                            
|PotashCorp Strengths  |  | Own 59% of world excess
capacity; leading global player;
capable of producing more
potash than any other company
at lower cost        |  | Low-cost production;
long-term rock reserves;
flexible production with
widest range of products
in the industry                                           |  | Large percentage of
industrial sales; hedged
natural gas in the US;
ammonia production in
Trinidad with low-cost gas                                       
|                      |  |                                                                                                                                       |  |                                                                                                                                                           |  |                                                                                                                                                            
|PotashCorp Strategy   |  | Match supply to demand to
minimize inventory overhang
and grow earnings, bringing
on excess capacity as
demand increases              |  | Maximize production of products
with a market premium; focus
on increasing industrial and
feed production to enhance
diversified position                 |  | Stabilize earnings by
emphasizing industrial sales
from North American production
base and controlling input
costs through hedging and
Trinidad production 
|                      |  |                                                                                                                                       |  |                                                                                                                                                           |  |                                                                                                                                                            
|PotashCorp Highlights |  | In spite of lower world demand
and intense competition, we
stuck to our long-held
operating strategy and
maintained our profitability |  | As part of our efforts to refocus
our capital into more
rewarding sectors, we are
expanding our purified acid
plant and building a new
poultry feed plant |  | Our natural gas hedge
maintained our US costs when
gas prices were high. Our
margins were supported by our
Trinidad gas contracts when
nitrogen prices fell

2



---



##### 



The apple is amazing

Its abundant; more than 7,500 varieties are grown worldwide. Its versatile and can be squeezed into juice,
baked in pies, eaten whole. Its healthy, packed with vitamins, minerals, protein and fiber, free of fat and
cholesterol. No wonder people believe a daily apple will keep the doctor away and eat more than 40 million
tonnes a year. The apple promises good health, and it delivers.

(WILLIAM J. DOYAL, PRESIDENT AND CHIEF EXECUTIVE OFFICER)

PotashCorp has many similarities with the apple. We make the
fertilizer that feeds the worlds crops and our supplies are abundant.
Were versatile, delivering products for animal feed and industry as
well as fertilizer. We contribute to health, providing the soil with
essential nutrients while focusing on safe workplaces and an ever-smaller environmental footprint. We take our responsibilities seriously;
like the apple, we keep our promises.

Successful apple orchards demand innovative, careful and strategic
management; so do successful companies. Those qualities were
needed in 2001, when startling tragedy in the United States dragged
down the slumping world economy. Fertilizer, however, was already
enduring another in a series of tough years. Companies with only a
fertilizer focus and a cost structure higher than ours suffered badly.

We have learned that such rough weather requires particular care and
stewardship of our assets. While 2001 earnings were lower than
expected, efforts to diversify the company within our three nutrients
and their many products continued and will pay off in the long run.

Your Company in a Year of Challenges

Nitrogen and phosphate were under pressure throughout 2001 as
their supply/demand equations were unbalanced by new world
capacity and North American restarts. Potash experienced
competitive pressures but remained comparatively stable because we
increased our shutdown weeks. Worldwide, sales were affected by low
crop prices that also influenced farmers fertilizer application patterns. In North America, consumption was
down in all three nutrients. However, nitrogen conditions were the worst; after starting 2001 with high prices,
it was pulled down by rapidly falling natural gas costs and unprecedented levels of imports.

Nonetheless, PotashCorp achieved net sales of $2.1 billion and EPS of $2.32 on a diluted basis, compared
to $2.2 billion and $3.76, respectively, in 2000. Eliminating the effects of the 2000 gas bubble, our
performance in 2001 was much like the two preceding years. Our earnings trough has continued.

Our cash flow fared significantly better, however, at $6.84 a share. Year-over-year on a per-share basis, earnings
were down 38 percent but cash flow only 15 percent as we book significant non-cash charges. Our net debt to
capital went from 29 percent to 41 percent as we purchased $384 million in off-balance-sheet leases in Trinidad
and invested $130.4 million in a leading specialty fertilizer company, Sociedad Quimica y Minera de Chile (SQM).

Managing Strategically

How did we achieve this amid an industry depression? Unlike traditional commodity companies, we are not
content to be just a price taker waiting for the next up cycle. We examined our natural strengths in each
nutrient and implemented a strategy to decommoditize each as much as possible.

3



---



##### 



The biggest influence on nitrogen is natural gas prices. Thanks to our North American gas hedging policy, our
focus on industrial customers and our perseverance in negotiating beneficial long-term gas contracts in
Trinidad in 2000, we fared better than most nitrogen producers.

While phosphate producers were struggling through a third brutal year for the solid fertilizer DAP, we shifted
more of our production into more profitable non-fertilizer products. DAP lost money for us on a gross margin
basis. As a result, we made the difficult decision to reduce staff at White Springs and Aurora to provide
stability and job security for our remaining employees. We also took a large step toward our goal of having
half our phosphate go to feed and industrial products by beginning construction of new low-cost feed and
purified acid capacity. PotashCorp is the only North American phosphate producer investing significantly in
new plants. We can do so because our superior rock allows us to produce on a low-cost basis, giving us a
distinct and defined advantage in this nutrient.

(PIE CHARTS)

|A trough year for fertilizer, 2001 demonstrated the success of
PotashCorps  decommoditizing strategy. Feed, industrial and potash
fertilizer continued to provide positive gross margin.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Offshore potash sales were down as we
expected entering 2001, because many
customers were working off inventory after
buying large volumes in 2000. Along with
lower demand in North America and
increased competition from IPC in Russia,
this raised the ante in potash competition.
PotashCorp benefits most when demand
jumps, as it did in 2000, but we take the
biggest hit when demand falls. However, our
long-held strategy of matching supply to
demand served us well. Another positive
factor was the successful first year of
marketing for Russian producer Uralkali.

In 2001, our board of directors approached
corporate governance with new vigor. Our
shareholders elected three new board members  Jeffrey McCaig, Mary Mogford and Frederick Blesi  who
quickly demonstrated their value. Long-time directors Isabel Anderson, Willard Estey and Daryl Seaman
retired in 2001, and we will long appreciate their many contributions to the company. We were saddened by
the death of our friend, Judge Estey, in January 2002 and continue to miss him.

After some changes in top management in 2000, our experienced, imaginative PotashCorp team jelled in
2001 with a firm focus on our guiding principles: Leadership in our industry, our communities, our business
methods; adding value for customers and shareholders; working safely; stewardship of our neighborhoods,
environment and corporate reputation; continuous improvement. As always, employees throughout the
company contributed daily to our efforts, and their achievements are found throughout this report.

Last year, we outlined four specific goals for 2001 and we can report firm progress on each:



|1. |  | Outperform our peer group in profitability and total shareholder return, through corporate growth and strategic
use of capital.                                                                                                                                                                                                                                                                                                                           
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Among publicly traded North American fertilizer companies, PotashCorp was the only one to make a profit
in 2001, and our cash flow was greater than the rest of the sector combined. While we didnt outperform
our sector in shareholder return this year, our long-term investors have enjoyed a cumulative return of
428 percent in the 12 full years since we became publicly traded, compared to the industry average of
47 percent over that period.
|  
|2. |  | Solidify our position as the industrys preferred supplier by improving service to customers through all phases
of the transaction.                                                                                                                                                                                                                                                                                                                       
|  
|   |  | When an independent research firm asked 120 randomly selected customers to evaluate PotashCorp on nine
customer service criteria, we outperformed our peers in every category in every market in which we operate.                                                                                                                                                                                                                                        

4



---



##### 





|3. |  | Develop consistent programs throughout the company that reflect best practices.                                                                                                                                                                                                                                                                                                                                   
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Following our US consolidation, we introduced new systems throughout the company in safety, health and
environment management, finance and crisis management and communications. For the first time we
brought together operations people from all three nutrients to share best practices success stories and
learn from one another. Many facilities have adopted best practices pioneered at sister operations.
|  
|4. |  | Focus on raising public awareness of the importance and benefit of fertilizer to the world community.                                                                                                                                                                                                                                                                                                             
|  
|   |  | In July, we launched an educational initiative we call Fertile Minds. We are educating people about the
benefits of fertilizer, including policymakers in Washington, D.C. At the same time, we are arming the
agriculture community with educational tools designed to raise grassroots awareness. You can see these
efforts at www.fertile-minds.org.                                                           

Looking Ahead

Fertilizer has always been a volatile industry and it can turn around quickly as grain prices improve. Demand
for industrial products will increase with an economic rebound while more industry rationalization could
correct areas of oversupply. However, it will be hard to match the first half of 2001. The nitrogen business
remains under pressure and with low gas prices, we are unlikely to reap the earnings gain our hedges gave
us early last year. China will begin importing DAP and urea under the tariff rate quota system agreed to in its
accession to the WTO; it should also take more potash. We see 2002 as a transition year and dont anticipate
any real upside until at least the second half.

We are committed to making a profit each year but our main long-term goal is the sustainable and profitable
development of our business. During this downturn we have been working hard to strengthen the company.
While we continue to review potential acquisition opportunities, we do so with discipline. In 2001, we proved
we can perform on the downside. We look forward to the opportunity to demonstrate just how fruitful these
efforts will be as markets recover.

We have important goals for 2002:



|1. |  | Over the business cycle, provide superior return on investment that exceeds cost of capital, outperforming
our peer group and other basic materials companies in total shareholder return.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Continue to work to align our people practices with our business goals, emphasizing consistency, fairness,
shared responsibility and rewards.                                             
|  
|3. |  | Achieve a competitive advantage in all three nutrients by improving our cost positions while utilizing our
efficient transportation system to be a low-cost supplier on a delivered basis.
|  
|4. |  | Deliver top-quality products with superior customer service to remain the preferred supplier to existing
customers while developing new markets for our expanded production base.         

We will use best practices to meet these goals so PotashCorp continues to profit for the benefit of our
shareholders, our customers, our employees and our communities.

(-s- WILLIAM J. DOYLE)William J. Doyle,
President and Chief Executive Officer
February 27, 2002

5



---



##### 



(GLOBAL LEADER SECTION COVER PAGE)



---



##### 





|The PotashCorp Story
|--------------------

Three Nutrients, Three Market Segments:At PotashCorp, we make fertilizer,
feed supplements and products for industry in nitrogen, phosphate and
potash. We are the worlds largest producer of nutrients that help farmers
grow abundant, nutritious crops. We have the most capacity in feed
supplements that promote size and quality in livestock and poultry. As the
worlds largest industrial nitrogen producer and one of three North American
industrial phosphate producers, we supply base products used in making a
wide variety of items that enhance daily living.

However, fertilizer remains key to our business, as it is to the world.
Fertilizers are made of natural products from earth and air changed by
companies like ours into a form that plants can use. By restoring soil energy
and vitality, they add one-third to the worlds food production each year.

Nitrogen, phosphate and potash fertilizers work together. Nitrogen builds
protein and makes plants green. Phosphate develops strong roots and
improves yield and quality. Potash raises food value and disease resistance of
plants, as well as improving crop handling and storage qualities. No wonder
150 countries use significant amounts of fertilizer.

More People, More Demand for Protein:Continued growth in food production
is crucial, for world population rises by about 85 million each year. Most of
that growth is in developing nations, while population is comparatively stable
in the developed world. The transitional nations are also growing
economically and their people demand better diets, especially protein-rich
foods such as meat and dairy products. That means increased production
of poultry, hogs and cattle. These are all big grain consumers, eating two to
seven pounds of grain per pound of meat produced. Together, rising
population and growing demand for meat make it imperative that the world
produce more grain    which translates into ever greater demand for
fertilizer, with historical growth of more than 3 percent a year.



|Potash Powerhouse
|-----------------

Our name says it all. PotashCorp produces potash, the major source of potassium.
We are No. 1 in potash with more capacity than any other world producer.

Our mines in Saskatchewan and New Brunswick contain nearly one-quarter
of world potash capacity and 59 percent of excess capacity. If we operated
flat out, we could almost double our production and supply nearly 30 percent
of annual world potash consumption.

Low-Cost Production:Ore quality and grade make all potash mines in
Saskatchewan low-cost, but our Rocanville mine is recognized as the low-cost
leader in a recent British Sulphur study of the industry. Lanigan was awarded
the No. 2 spot, with Allan close behind.

Widespread Markets:We sell to the world. Since there are only seven major
potash producers, 80 percent of world production and 95 percent of our
own production crosses borders. The largest consumers are also the largest
importers. We sell to the stable North American market and were a major
supplier to developing nations, where demand grows by approximately
4 percent a year, compared to about 2 percent worldwide. We sell offshore
from our New Brunswick properties and for Mississippi Chemical. Our
Saskatchewan product goes abroad through Canpotex, the export sales

(POTASHCORP PROPERTIES, BAR GRAPH)

7



---



##### 



(TOMATOES...)

(BAR GRAPHS)

agency for the provinces producers. PotashCorp is its largest member, with 56 percent of
sales volumes. Canpotex provides more than one-quarter of the potash sold to developing
nations, and in 2001 began marketing there for the Russian producer Uralkali.

We produce the specialty fertilizers potassium nitrate and sodium nitrate at Yumbes in Chiles
Atacama Desert. We own 9 percent of Israel Chemicals, which is an important global fertilizer
producer, and 18 percent of specialty Chilean producer Sociedad Quimica y Minera (SQM).

Potash has many industrial uses, ranging from TV and computer screens to soaps and
perfumes, water softeners and de-icers.

Effective Strategy:We match supply to demand, bringing on our excess capacity as global
consumption grows. This will bring our costs down still further, and present opportunities
for increased prices and margins. New world capacity might threaten this strategy, but
entering the potash business is expensive and world reserves are limited, making new
capacity unlikely.

|                       |  |  | 
|---------------------- |  |  | 
|High-Quality Phosphate

PotashCorp is, by capacity, the third largest company in the world producing phosphate,
the natural source of phosphorus. Phosphate rock is extracted from ore mined at our
Aurora, North Carolina and White Springs, Florida properties. The rock is combined with
sulfuric acid to make phosphoric acid, the feedstock for manufactured phosphate
products. All the sulfuric acid is expended during this process; the only thing spread on
farmers crops is a very soluble form of phosphate. Thirty major phosphoric acid producers
account for about two-thirds of world production, which is widely traded.

Wealth of Reserves:Phosphate rock is in limited supply around the world. Successful
phosphate companies must have quality reserves; this reduces production costs and
enables them to make a wide range of phosphate products. Our Aurora and White Springs
facilities together have reserves that will last for more than 50 years at current production
rates, and we have multi-year permits to draw on those reserves. We are entering a new
mining area at Aurora, the NCPC property, which is of exceptional quality. By 2003, all
production at Aurora will be from this rich deposit. If we are operating at capacity, this will
lower our costs by approximately $20 million a year. Meanwhile, our competitors will be
spending more to transport lower-quality rock longer distances to their plants.

Product Diversification:Our high-quality rock ensures product flexibility and low-cost
phosphoric acid  making possible economic production of upgraded solid and liquid
fertilizers, feed supplements for livestock and poultry, and purified acid for industry. This has
been a tremendous advantage for us over the last few years as adverse conditions affected
the solid fertilizer DAP (diammonium phosphate).

One of our many products is SPA (superphosphoric acid), used primarily in the increasingly
popular and environmentally responsible minimum till agriculture. Sales of SPA are rising
and we have an enviable position, with 52 percent of US capacity. We produce a variety
of feed products; our high-quality rock allows us to make a special product for poultry,
DFP (defluorinated phosphate), at low cost.

The purity of our high-quality rock and our use of the modern wet acid process also make us
the worlds lowest-cost producer of purified acid, which has both food and technical grades.

8



---



##### 



Matching Strategy to Strengths section cover page



---



##### 



(DID YOU KNOW? ICE CREAM)

(BAR GRAPH)

Food-grade acid is used in making pharmaceuticals, soft drinks, foods and yeast while
technical-grade goes into electro-polishing, rustproofing, adhesives and fireproofing.

Industry consultants forecast annual growth of 2 percent in each of the phosphate
products: fertilizers, feed supplements and industrial phosphates.

Most of our phosphate products are sold through PCS Sales, but offshore sales of our fertilizer
products are handled through PhosChem, a US association for exports of phosphate fertilizers.

Specialized Strategy:In phosphate, the purity and longevity of our reserves and the resulting
product diversification capability provide a competitive advantage. They let us pursue specialty
markets in which we can achieve the critical mass that allows us to maximize profitability.



|Nitrogen Flexibility
|--------------------

PotashCorp is the worlds third largest producer of nitrogen. The base product, ammonia,
is the feedstock for upgraded nitrogen products as well as a fertilizer for direct application.
We are the most flexible producer. Our ammonia, nitric acid, urea and ammonium nitrate
are used in fertilizer and industry; industrial uses range from plastics and adhesives to
pharmaceuticals, humulin for diabetics, carpets, photography, paints and tires. We also
make nitrogen solutions fertilizer and micro prilled urea for feed.

Ammonia can be produced wherever natural gas reserves exist, so the nitrogen business
is much more local than potash and phosphate. In the last few years, developing nations
have been monetizing their natural gas by producing and exporting nitrogen products. New
capacity can come on stream in two to three years, making supply/demand in nitrogen a
moving picture. Demand is rising at 2 percent a year from a large base, however, so new
capacity is quickly consumed.

Natural Gas Leverage:Natural gas makes up approximately three-quarters of the US cash
costs of producing ammonia, so a nitrogen companys success depends on controlling its
gas costs. PotashCorp has the advantage of producing in Trinidad with long-term natural gas
contracts tied to the price of ammonia while, at the same time, hedging our US gas costs.
Hedging increases our margins when the gas price rises and our unhedged competition
shuts down, tightening the supply/demand dynamic and raising nitrogen prices.

Industrial Customer Advantage:Much of our US production is upgraded for industrial
customers, many of whom have operations adjacent to our plants, linked to us by pipeline.
They depend on quality product and timely service, and are willing to pay a premium to
ensure they get both.

Stabilizing Strategy:Our strategy is built on stabilizing our earnings by emphasizing
industrial sales from our North American production base and controlling input costs
through our US hedges and Trinidad gas contracts.

10



---



##### 





|What Happened in 2001?
|----------------------

Many factors worked together to make 2001 a difficult and volatile year for the global
fertilizer industry. It was characterized by rapidly declining natural gas prices, lower North
American and world fertilizer consumption, lower world trade and historically low prices for
the major crop commodities.

Low Grain Prices:Most important is the price of corn, a staple crop grown worldwide.
Compared to the record prices of 1995-96, the benchmark US corn price was down
40 percent in 2001. Wheat, another important staple, was also down 40 percent, and
soybeans and cotton by one-third. Prices for major crops grown offshore weakened in
2001 compared to 2000. Rice was down by 30 percent, coffee by 50 percent, palm oil by
a third and cocoa by 6 percent.

Fortunately, grain is a self-correcting commodity. When prices fall, farmers cut their
plantings, and planted acreage in the US fell to the lowest level since the 1996 Farm Bill
was passed. At the same time, more grain is consumed when prices fall, especially to feed
animals. Then the supply/demand equation is tightened and prices begin edging up. If
there is a supply shock, such as a major drought in an important producing country, prices
will move rapidly.

(GRAINS)

(POTATO CHIPS)

Falling Gas Prices:Natural gas, a key nitrogen input, began the year with prices above
$10 per million British thermal units (Btu), shutting down more than half of North American
nitrogen production. With this reduced supply, nitrogen prices rose dramatically and there
was concern about a shortage during the spring season. However, the drop in domestic
production was replaced faster than expected by an unprecedented level of imports. In the
first half of the year, while spring demand was weak, total imports of ammonia, urea and
nitrogen solutions were two-thirds above the same period of 2000. By mid-year, gas prices
were below $4 and most of the shutdown nitrogen plants re-opened. In the second half,
gas and nitrogen prices fell, as did imports. Ammonia and urea imports were down
10 percent from second-half 2000 and inventories returned to normal. Imports of nitrogen
solutions slowed but were still 13 percent higher than in the second half of 2000. By year-end, spot gas prices had sunk to $2, the nitrogen industry was operating flat out, and
product prices hit their bottom for the year.

Depressed North American Consumption:These nitrogen gyrations, as well as weather
problems, were a main factor in reduced North American fertilizer consumption. With strict

(BAR CHART)



|N, P, K Consumption and Trade
|-----------------------------

2001 compared to 2000

|          |  |             |    |                |  |            |    |   |  |  |    |  
|--------- |  | ----------- | -- | -------------- |  | ---------- | -- | - |  |  | -- | -
|         
|          |  | World       |    | North American |  | World     
|          |  | Consumption |    | Consumption    |  | Trade     
|          |  | (estimate)  |    | (estimate)     |  | (estimate)
|         
|Nitrogen  |  |             | -2 | %              |  |            | -4 | % |  |  | -4 | %
|         
|Phosphate |  |             | 0  | %              |  |            | -5 | % |  |  | -4 | %
|         
|Potash    |  |             | -2 | %              |  |            | -2 | % |  |  | -3 | %
|         

Source: Fertecon, PotashCorp

11



---



##### 



(DID YOU KNOW?, BATTERIES, BAR CHART, TOOTHPASTE)

budgets for fertilizer, many North American farmers used less nitrogen than usual in the
spring but allocated more of their total fertilizer budget to this nutrient, reducing demand
for phosphate and potash. With nitrogen prices falling so significantly by summer, buying
confidence was hurt and many postponed phosphate and potash purchases, expecting
those prices could also decline. A mild fall allowed late fertilizer application, however, and
many farmers played catch-up, increasing fertilizer consumption levels.

Reduced World Consumption:Low crop prices and weather were factors in lower world
consumption. In China, floods and drought reduced usage of all three nutrients. Low prices
for coffee, one of Brazils main exports and an important fertilizer user, reduced
consumption there. Similarly, low prices for palm oil, a big potash user, affected sales to
Malaysia. India used 3 percent more phosphate, offsetting declines elsewhere and making
world consumption of this nutrient flat for the year. The weak world economy affected
consumption of nitrogen for industrial purposes.

Less World Trade:Trade in all three nutrients for all purposes was down 4 percent in 2001,
but fertilizer was hit the hardest. China and India together took only about half the
8.2 million tonnes of DAP they imported at their peak in 1999. Higher internal production
and a decision to reduce inventories before entering the World Trade Organization affected
Chinas DAP purchases. India imported less since it now produces significant amounts of
DAP internally, and subsidies for its domestic product exceed those for imports, making it
more difficult to import DAP there. China and Brazil had taken large potash volumes in
2000, when world sales were up by 3 percent. Their high inventories reduced their
purchases in first-quarter 2001. Brazils imports were also affected by a 21-percent
depreciation of its currency against the US dollar.

Poor DAP Supply/Demand Fundamentals:New DAP production in Australia and India
ramped up while demand was down. This simultaneous pressure on supply and demand
hit hardest on producers in the US, the major supplier to China and India from capacity
built to service those markets. With nowhere to ship their DAP, producers kept more at
home, pulling US prices down. Then the return of idle DAP capacity in the US hit the
market. The combination of new offshore capacity, lower North American demand and
restarts in domestic production depressed prices for all phosphate fertilizers.

Rising Feed Demand:Sales of feed phosphates, the major animal feed products, were
affected by livestock diseases in several countries. Customers turned away from meat and
bone meal in feed, due to consumers apprehension about food safety; this boosted
demand for phosphate feed supplements. New production came on stream in several
areas, notably China and the Philippines, increasing supply. Markets in Brazil and Mexico
continued strong.

Industrial Decline:Through the year, the slowing economy gradually affected industrial
markets, and the sharp US economic decline after September 11 took a toll on nitrogen
sales to industry. Demand for ammonia for industry was down 4 percent globally and
9 percent in the US, while food-grade and technical-grade phosphoric acid products were
more insulated from the economic cycle.



|Our 2001 Potash Report
|----------------------

Reduced Production in Response to Markets:When world potash demand fell in 2001, we
followed our long-term strategy of matching supply to demand and produced 14 percent
less than our 2000 record. We operated at 50 percent of capacity. All operations took
shutdowns and managed the ups and downs efficiently, but fewer operating weeks meant
higher gross production costs.

Rising natural gas costs early in the year also pushed up the cost per tonne through the
first half of 2001, but that influence waned markedly in the second half.

12



---



##### 



(Long-Term Reserves section cover page)



---



##### 



(COFFEE)

(POTASH PRODUCTION, BAR GRAPHS)

Our Cassidy Lake property in New Brunswick, which is a mill that compacts standard
grade potash into granular product, compacted 234,000 tonnes from Rocanville. As part
of the production process, our New Brunswick mine produced 598,000 tonnes of salt in
addition to potash.

Yumbes produced 98,000 tonnes of potassium nitrate, 3,000 tonnes of sodium nitrate
and 146 tonnes of iodine. The plant spent much of 2001 in start-up mode and will
demonstrate its design capacity in the first half of 2002 while continuing to introduce
product into the marketplace.

Despite a small, controlled brine inflow that continued all year, our New Brunswick facility
operated at 78 percent of capacity. Expensing these brine inflow costs has raised its
production costs. With Corridor Resources Ltd., we continued to explore prospects for the
natural gas discovery near this facility. We believe we will be able to use the gas produced
to supply our fuel requirements at New Brunswick.

Lower Sales but Stable Prices:Our potash sales in 2001 were naturally affected by the
drop in world demand, but we were down more than the market. Prices ended the year
flat in North America and up 2 percent offshore.

Our export sales fell by 16 percent from the record set in 2000. High inventories in several
key consuming countries, depressed prices for many crops that use potash and
aggressive selling by Russian marketing agency IPC put pressure on volumes and prices
in 2001. Sales were down to China, Brazil, Malaysia and Korea and up to Japan and
Taiwan. Sales to Brazil from our New Brunswick facility were down by 17 percent as the
South American country was working off high inventories early in the year and had
currency problems later that exacerbated the situation.

Total North American demand fell and imports increased. Weak demand in the United
States, where we make 89 percent of our North American sales, pulled our sales there
down by 2 percent. We retained 32 percent of the market. Other companies attempted
to find a short-term solution to their poor earnings position by moving more potash to
capitalize on its profitability. This kept prices under pressure throughout the year.

We sold 36,000 tonnes of our specialty fertilizers from Yumbes, with the US, Spain,
Mexico and Argentina the major markets. Currently specialty fertilizers are oversupplied
and prices are weak. Yumbes also sold 139 tonnes of iodine.



|2001 Production(million tonnes KCl)
|-----------------------------------

|                 |  |          |         |            |  |            |       |                    |  |  |        |  |  |  |       | 
|---------------- |  | -------- | ------- | ---------- |  | ---------- | ----- | ------------------ |  |  | ------ |  |  |  | ----- | 
|                
|                 |  | Annual   |         | 2001       |  | 2000       |       | Mine Site         
|                 |  | Capacity |         | Production |  | Production |       | Employees
(active)
|                
|Lanigan SK       |  |          | 3.828   |            |  |            | 1.354 |                    |  |  | 1.720  |  |  |  | 330   | 
|                
|Rocanville SK    |  |          | 2.295   |            |  |            | 1.593 |                    |  |  | 1.852  |  |  |  | 323   | 
|                
|Allan SK         |  |          | 1.885   |            |  |            | .768  |                    |  |  | 1.047  |  |  |  | 279   | 
|                
|Cory SK          |  |          | 1.361   |            |  |            | .747  |                    |  |  | .725   |  |  |  | 177   | 
|                
|Patience Lake SK |  |          | 1.033   |            |  |            | .241  |                    |  |  | .262   |  |  |  | 67    | 
|                
|Esterhazy SK1    |  |          | .953    |            |  |            | .816  |                    |  |  | .726   |  |  |  | 0     | 
|                
|New Brunswick NB |  |          | .785    |            |  |            | .609  |                    |  |  | .800   |  |  |  | 328   | 
|                
|TOTAL            |  |          | 12.140* |            |  |            | 6.128 |                    |  |  | 7.132* |  |  |  | 1,504 | 
|                



|* |  | Totals do not include the potash mine at Moab UT, which was sold in February 2000.                                                                                                                
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| 
| 
| 
|1 |  | Production at Esterhazy is mined from PotashCorp reserves by IMC Esterhazy Canada Limited Partnership under a
long-term agreement. For calendar year 2002, its allocation is 0.953 million tonnes.

14



---



##### 



(Low-Cost Producer section cover page)



---



##### 



(DID YOU KNOW?, POPCORN, CHINA..., PHOSPHORIC ACID PRODUCTION)

Our sales of potash products for industrial purposes continued to climb in 2001. They were
5 percent higher than in 2000, when they rose by 8 percent. Nearly 60 percent goes
offshore through Canpotex. Demand for water softening and high-purity product has been
steady and growing. Pricing was generally flat.

In a year when demand held steady, we sold 28,000 tonnes of potash for animal feed
supplements, at higher prices.



|Our 2001 Phosphate Report
|-------------------------

Reconfigured Production:In 2001, we took a giant step toward our goal of having half our
phosphoric acid go to phosphate fertilizers and half to higher-margin feed and industrial
products, ending the year at 55 percent/45 percent. Our production diversity was a major
advantage when market conditions for fertilizer DAP were weak.

We mined 27 percent less phosphate rock than in 2000 and produced 23 percent less
phosphoric acid, operating at 63 percent of our capacity. High ammonia costs in the first
half of the year increased DAP production costs. Our DAP plants and associated facilities
at White Springs were mothballed and we cut back production at Aurora. In total, we
reduced DAP output by 50 percent from 2000, making only the minimum required to
produce our purified phosphoric acid. By year-end, we were operating at less than
30 percent of our DAP capacity, while the rest of the industry operated at 80 percent. The
reduced production increased our unit costs.

In response to markets, we cut liquid fertilizer production by 21 percent. Markets also
influenced our decision to change our product split and produce the solid fertilizer MAP
(monoammonium phosphate) for the first time in some years.

We better utilized our existing phosphate feed capacity in 2001 by producing 4 percent
more than in 2000 from fewer plants, lowering our costs. We closed our Davenport facility
on January 15, switching customers to Weeping Water and Marseilles; both set annual
production records.

In 2001, we had the advantage of a full year of PCS Purified Phosphates, which we created
in March 2000 by purchasing the other half of our Albright &
Wilson joint venture. We produced 168,000 P2O5 tonnes of purified acid, 100 percent of the new rated capacity and
an annual record for food-grade and technical-grade acid.

Recognizing that our purified acid plants at Aurora and Cincinnati had excess product
capacity, we consolidated these operations at Aurora in January 2002. Aurora produces
the acid for both plants, has the mixing capacity to meet all our needs and its efficiencies



|2001 Rock and Acid Production
|-----------------------------

|                 |  |                                 |     |                                       |  |            |       |          |  |            |       |            |  |           |       |  |  |  |       |  |  |  |       |  |  |  |       | 
|---------------- |  | ------------------------------- | --- | ------------------------------------- |  | ---------- | ----- | -------- |  | ---------- | ----- | ---------- |  | --------- | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | ----- | 
|                
|                 |  | Phosphate Rock (million tonnes) |     | Phosphoric Acid (million tonnes P2O5) |  |            |       |         
|                 |  | Annual                          |     | 2001                                  |  | 2000       |       | Annual   |  | 2001       |       | 2000       |  | Employees
|                 |  | Capacity                        |     | Production                            |  | Production |       | Capacity |  | Production |       | Production |  | (active) 
|                
|Aurora NC        |  |                                 | 6.0 |                                       |  |            | 3.900 |          |  |            | 4.734 |            |  |           | 1.202 |  |  |  | .916  |  |  |  | 1.097 |  |  |  | 1,144 | 
|                
|White Springs FL |  |                                 | 3.6 |                                       |  |            | 1.677 |          |  |            | 2.870 |            |  |           | 1.093 |  |  |  | .473  |  |  |  | .767  |  |  |  | 569   | 
|                
|Geismar LA       |  |                                 |    |                                       |  |            |      |          |  |            |      |            |  |           | .202  |  |  |  | .184  |  |  |  | .178  |  |  |  | 82    | 
|                
|TOTAL            |  |                                 | 9.6 |                                       |  |            | 5.577 |          |  |            | 7.604 |            |  |           | 2.497 |  |  |  | 1.573 |  |  |  | 2.042 |  |  |  | 1,795 | 
|                



|2001 Phosphate Production(million tonnes product)
|-------------------------------------------------

|                |     |  |          |      |            |  |            |      |          |  |               |      |            |  |          |       |            |  |            |      |  |  |       |      |  |  |      |      |  |  |      |      |  |  |      |      | 
|--------------- | --- |  | -------- | ---- | ---------- |  | ---------- | ---- | -------- |  | ------------- | ---- | ---------- |  | -------- | ----- | ---------- |  | ---------- | ---- |  |  | ----- | ---- |  |  | ---- | ---- |  |  | ---- | ---- |  |  | ---- | ---- | 
|               
|                |     |  |          |      | Aurora     |  |            |      |          |  | White
Springs |      |            |  |          |       | Geismar    |  | 2000      
|                |     |  | Annual   |      | 2001       |  | 2000       |      | Annual   |  | 2001          |      | 2000       |  | Annual   |       | 2001       |  | 2000      
|                |     |  | Capacity |      | Production |  | Production |      | Capacity |  | Production    |      | Production |  | Capacity |       | Production |  | Production
|               
|Liquids:   MGA1 |     |  | 1.835    |      |            |  | 1.377      |      |          |  | 1.609         |      |            |  | 1.908    |       |            |  | .834       |      |  |  | 1.230 |      |  |  | .337 |      |  |  | .332 |      |  |  | .321 |     
|               
|                | SPA |  |          | .676 |            |  |            | .219 |          |  |               | .451 |            |  |          | 1.138 |            |  |            | .662 |  |  |       | .774 |  |  |      | .196 |  |  |      | .116 |  |  |      | .117 | 
|               
|Solids:     DAP |     |  | 1.247    |      |            |  | .791       |      |          |  | 1.125         |      |            |  | .710     |       |            |  |           |      |  |  | .448  |      |  |  |     |      |  |  |     |      |  |  |     |     
|               
|                | MAP |  |          | .273 |            |  |            | .071 |          |  |               |     |            |  |          |      |            |  |            |     |  |  |       |     |  |  |      |     |  |  |      |     |  |  |      |     | 
|               



|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
that custom-mix liquid fertilizer.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

16



---



##### 



(Flexible Range of Products section cover page)



---



##### 



(PORK, BAR CHART, DID YOU KNOW?, MINERAL FERTILIZERS)

make it a low-cost producer. Cincinnati will continue to produce potassium phosphate to
meet existing customer obligations, with a reduced workforce.

New Feed and Industrial Plants: Despite current difficulties in DAP, we are optimistic about
specialty markets in the phosphate business. In fact, were taking advantage of our
superior rock quality and Auroras vertical integration, which offers inherent cost savings,
to invest in new plants. Were the only North American producer to do so.



| |  | In an $80-million project, we are expanding our purified phosphoric acid plant at Aurora
by nearly 50 percent. It will be the worlds largest producer when it opens in 2003, using
the economical wet acid process. This expansion will result in even lower production
costs at a plant that is already the worlds lowest-cost producer. Much of the new output
will be sold under contract to Astaris.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | We are building a $51-million plant at Aurora to produce 159,000 tonnes a year of the
poultry feed ingredient DFP. This plant will make the lowest-cost DFP in the world and
is well situated to serve the growing offshore market. It will start up in mid-2002.                                                                                                                                         



|2001 Phosphate Feed Production(million tonnes)
|----------------------------------------------

|                                     |  |          |       |            |  |            |      |           |  |  |      |  |  |  |     | 
|------------------------------------ |  | -------- | ----- | ---------- |  | ---------- | ---- | --------- |  |  | ---- |  |  |  | --- | 
|                                    
|                                     |  | Annual   |       | 2001       |  | 2000       |      | Employees
|                                     |  | Capacity |       | Production |  | Production |      | (active) 
|                                    
|Davenport IA*                        |  |          | .280  |            |  |            | .003 |           |  |  | .088 |  |  |  | 1   | 
|                                    
|Marseilles IL                        |  |          | .278  |            |  |            | .192 |           |  |  | .140 |  |  |  | 36  | 
|                                    
|White Springs FL (monocal)           |  |          | .218  |            |  |            | .154 |           |  |  | .135 |  |  |  | 23  | 
|                                    
|Weeping Water NE                     |  |          | .209  |            |  |            | .170 |           |  |  | .142 |  |  |  | 45  | 
|                                    
|Kinston NC                           |  |          | .141  |            |  |            | .063 |           |  |  | .076 |  |  |  | 23  | 
|                                    
|White Springs FL (DFP)               |  |          | .100  |            |  |            | .089 |           |  |  | .083 |  |  |  | 35  | 
|                                    
|Fosfatos do Brasil                   |  |          | .070  |            |  |            | .053 |           |  |  | .034 |  |  |  | 82  | 
|                                    
|TOTAL                                |  |          | 1.296 |            |  |            | .724 |           |  |  | .698 |  |  |  | 245 | 
|                                    
|* Ceased production January 15, 2001
|                                    

Lower Fertilizer Sales, Stable Feed and Industrial:In 2001, our overall phosphate sales fell
by 22 percent due to lower sales in both domestic and offshore markets for liquids and
DAP. Feed and industrial were major contributors throughout the year with more stable
volumes and prices. Three-quarters of our total phosphate sales were domestic.

Our offshore DAP sales were down by 52 percent, but still represented 45 percent of the
DAP we sold. China, India and New Zealand were the major markets. By the third quarter,
we had pulled back from low DAP prices in offshore markets. Domestic sales were down
31 percent and represented 12 percent of the North American DAP market. Prices in both
markets fell through the first three quarters of 2001, recovering slightly late in the year. We
sold 45,000 tonnes of MAP domestically.

Our sales of liquid phosphate fertilizers were down by one-quarter from 2000, and
79 percent went to domestic markets. The major product was SPA. Offshore sales of liquid
phosphates fell by 39 percent; amber MGA (merchant grade phosphoric acid) was the
major product. The biggest decline was in sales to India, which previously imported MGA
to make most of its DAP and now produces more MGA domestically from imported rock.
PotashCorp continued to market PhosChems liquid products offshore, supplying
73 percent of this tonnage. India was still the largest market while sales to Brazil were down
sharply. Liquid fertilizer prices tend to follow DAP but are not as volatile. Consistent with
historical patterns, they declined throughout the year but fell less than DAP prices.

18



---



##### 



(PHOSPHORUS)

We sold 4 percent less phosphate feed products than in 2000, with monocal making up
41 percent of the total, liquids 23 percent, dical 21 percent, DFP 12 percent, feed mineral
salts 2 percent and MAP/DAP 1 percent. Three-quarters of sales were domestic and we had
36 percent of the North American market. Volumes were down from 2000; US demand for
monocal, dical and DFP declined, due to more efficient feed formulation, even as meat
consumption rose. Sales to Asia were down with new offshore capacity coming on stream,
but Mexico with its rising meat consumption continued to be a strong market for our
products. Our Fosfatos plant in Brazil responded to a six-year period of double-digit growth
in that market, with sales 30 percent higher than in 2000. North American pricing improved
slightly on most products, while offshore prices were down due to soft demand in Asia and
oversupply from new capacity.

Most industrial products are sold directly to customers under contract or supply
agreement. All sales were domestic and they jumped 5 percent over 2000. Prices were up
5 percent. Geismar sold 153,000 tonnes of phosphoric acid solution under contract to
Rhodia, Inc., a 5-percent increase. The economic downturn affected phosphoric acid
markets less; PotashCorp experienced a smaller impact than other companies due to
increased demand for our wet process industrial acid.



|Our 2001 Nitrogen Report
|------------------------

Production Benefited from Gas Hedges:In a year when natural gas prices fluctuated sharply,
directly affecting the cost of manufacturing ammonia, we benefited significantly from our
hedges in North America and our low-cost production in Trinidad. We hedge to lock in
costs, not to speculate, and enter each year 50 percent hedged. In 2001, our hedge
contributed $63 million in reduced natural gas costs, compared to the spot market.

We operated our full complement of Trinidad plants for the entire year, whereas in 2000 two
of the four were shut down for six months while a new natural gas contract was negotiated.
Our ammonia production was up by 12 percent for a new annual record, and half of it came
from Trinidad. When gas prices were high, we reduced our US ammonia production and
upgraded lower-cost Trinidad ammonia in the US for our industrial customers. We produced
88,000 tonnes of micro prilled urea, 25 percent less than in 2000.

Augusta established a world record for 1,393 days of continuous production, meaning
production occurred in every 24-hour period, before it shut down for a planned turnaround
in October. Its ammonia, nitric acid and urea capacities were increased. Our newest
Trinidad plant, 04, operated for 501 days continuously to December 31 and confirmed its
position as the best-running plant in the world using the gas-efficient Kellogg Advanced
Ammonia Process.

As a result of industry problems of excess supply, lower demand and competition from
low-cost imports, we took some maintenance shutdowns, cutting production of nitric acid,
urea, ammonium nitrate and nitrogen solutions. These actions increased unit costs, as did
higher natural gas costs in the United States.

Lower Overall Sales, Higher Industrial Sales:In 2001, we sold a total of 5 percent less
nitrogen product than in 2000. In the more regional nitrogen business, the United States
is PotashCorps largest market, and we made 90 percent of our sales there. We met our
customer commitments with more manufactured and less purchased product because we
had the advantage of our Trinidad production for the entire year.

(BAR CHART, DID YOU KNOW? FERTILIZER)

19



---



##### 





|2001 Nitrogen Production(million tonnes product)
|------------------------------------------------

|           |  |          |       |            |  |            |       |          |  |                |       |            |  |          |       |             |  |            |       |                         |  |                     |       |            |  |          |       |            |  |            |       |           |  |  |       |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  |       |  |  |  |       |  |  |  |       |  |  |  |     |  
|---------- |  | -------- | ----- | ---------- |  | ---------- | ----- | -------- |  | -------------- | ----- | ---------- |  | -------- | ----- | ----------- |  | ---------- | ----- | ----------------------- |  | ------------------- | ----- | ---------- |  | -------- | ----- | ---------- |  | ---------- | ----- | --------- |  |  | ----- |  |  |  | ---- |  |  |  | ---- |  |  |  | ---- |  |  |  | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | --- | -
|          
|           |  |          |       | Ammonia1   |  |            |       |          |  | Nitric Acid1,2 |       |            |  |          |       | Urea Solids |  |            |       | Ammonium Nitrate Solids |  | Nitrogen Solutions3 |      
|           |  | Annual   |       | 2001       |  | 2000       |       | Annual   |  | 2001           |       | 2000       |  | Annual   |       | 2001        |  | 2000       |       | Annual                  |  | 2001                |       | 2000       |  | Annual   |       | 2001       |  | 2000       |       | Employees
|           |  | Capacity |       | Production |  | Production |       | Capacity |  | Production     |       | Production |  | Capacity |       | Production  |  | Production |       | Capacity                |  | Production          |       | Production |  | Capacity |       | Production |  | Production |       | (active) 
|          
|Trinidad   |  |          | 1.851 |            |  |            | 1.835 |          |  |                | 1.277 |            |  |          |      |             |  |            |      |                         |  |                     |      |            |  |          | .602  |            |  |            | .514  |           |  |  | .565  |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  | 336 |  
|          
|Augusta GA |  |          | .680  |            |  |            | .612  |          |  |                | .650  |            |  |          | .541  |             |  |            | .515  |                         |  |                     | .540  |            |  |          | .381  |            |  |            | .335  |           |  |  | .381  |  |  |  | .490 |  |  |  | .473 |  |  |  | .489 |  |  |  | .581  |  |  |  | .292  |  |  |  | .322  |  |  |  | 120 |  
|          
|Lima OH    |  |          | .542  |            |  |            | .488  |          |  |                | .539  |            |  |          | .097  |             |  |            | .096  |                         |  |                     | .098  |            |  |          | .370  |            |  |            | .191  |           |  |  | .314  |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  | .227  |  |  |  | .113  |  |  |  | .144  |  |  |  | 5   | 4
|          
|Geismar LA |  |          | .483  |            |  |            | .475  |          |  |                | .502  |            |  |          | .844  |             |  |            | .706  |                         |  |                     | .788  |            |  |          |      |            |  |            |      |           |  |  |      |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  | 1.028 |  |  |  | .807  |  |  |  | .918  |  |  |  | 121 |  
|          
|Memphis TN |  |          | .371  |            |  |            | .288  |          |  |                | .332  |            |  |          |      |             |  |            |      |                         |  |                     |      |            |  |          | .409  |            |  |            | .295  |           |  |  | .372  |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |      |  |  |  |      |  |  |  |      |  |  |  | 131 |  
|          
|TOTAL      |  |          | 3.927 |            |  |            | 3.698 |          |  |                | 3.300 |            |  |          | 1.482 |             |  |            | 1.317 |                         |  |                     | 1.426 |            |  |          | 1.762 |            |  |            | 1.335 |           |  |  | 1.632 |  |  |  | .490 |  |  |  | .473 |  |  |  | .489 |  |  |  | 1.836 |  |  |  | 1.212 |  |  |  | 1.384 |  |  |  | 713 | 5
|          



|1 |  | A substantial portion of ammonia and nitric acid is upgraded to value-added products.     
|- |  | ------------------------------------------------------------------------------------------
| 
| 
| 
| 
|2 |  | HNO3 tonnes.                                                                              
| 
| 
| 
| 
|3 |  | Capacity and production are based on 32% N content.                                       
| 
| 
| 
| 
|4 |  | BP Chemicals operates the Lima facility under an operational agreement with PCS Nitrogen. 
| 
| 
| 
| 
|5 |  | 421 contract employees work at the nitrogen plants, for a total active workforce of 1,134.

(BAR CHART)



|Did you know?
When crops go off to market, they take along the nutrients that were once in the soil.
Replacing those nutrients is the difference between exploiting natural resources and
managing them responsibly. PotashCorp helps farmers sustain soil fertility.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Sales of manufactured ammonia jumped by 45 percent. All other nitrogen products were
down: urea, 14 percent; nitrogen solutions, 27 percent; ammonium nitrate, 1 percent;
nitric acid, 7 percent; other sales, 3 percent. We had 20 percent of the total US
market for nitrogen.

Industrial products made up 55 percent of our nitrogen sales. Eighty-five percent of the
ammonia produced in our US plants and sold in the US went to industry, reflecting our
strategy of emphasizing sales to industrial customers who pay for quality and just-in-time
delivery. Those sales were 5 percent higher than in 2000, as we filled the supply gap when
other producers were shut down earlier in the year. Our industrial sales of ammonia
represented 29 percent of the US industrial market for ammonia. Our urea sales were
43 percent of the industrial urea market and our share of the ammonium nitrate and nitric
acid markets was 17 percent and 41 percent, respectively.

Our nitrogen sales included 71,000 tonnes of feed products, 36 percent less than in 2000.
Prilled urea was the main product, and most sales were made in the US and Canada. They
were affected when high natural gas costs opened the door to low-priced imports.

Prices for all nitrogen products were spurred early in the year by high natural gas prices,
and they fluctuated with gas prices throughout the year. Ammonia prices in the US Gulf
reached their peak of $290 per tonne in January and by July had fallen by more than half.
From the first quarter to the fourth, our industrial prices dropped by 33 percent while
fertilizer prices fell 47 percent.

(WILD TIGERS GRAPHIC AND SIDEBAR)

20



---



##### 



(DIVERSIFIED CUSTOMERS SECTION COVER PAGE)



---



##### 



(TRUST AND RESPONSIBILITY SECTION COVER PAGE)



---



##### 





|Stewardship
|-----------



|People and Community Connections
|--------------------------------

Employees in Five Countries:We recognize that our people are key to our success and so
we offer programs such as succession planning, skills training, safety, competitive
compensation and benefits.

An initiative to implement a company-wide human resources and payroll system to replace
legacy and inherited systems from past acquisitions began in 2001. This new system will
help us to consistently manage our current widespread human resource operations and
facilitate future growth.

Human resources practices and policies are reviewed regularly to determine their
alignment with competitive practices and our business objectives. In 2001, a company-wide policy, Respect in the Workplace, was developed and continues to be implemented,
including employee training. The tuition reimbursement plan was improved to include
certain advanced degrees for courses related to an employees current or potential position
with the company. The Canadian staff flexible benefits program and the US health care and
long-term disability plans were redesigned to maintain competitiveness and value to
employees in line with company cost considerations. Our Canadian and US retirement
savings plans allow employees to invest in company stock if they choose. The company
contributes to these plans in the form of cash.

Negotiations with US and Canadian unions were successfully completed over the last two
years. Talks at the Lanigan potash operation reached stalemate and the union issued a
strike notice, resulting in the company locking out the employees on December 2. Both
sides thereafter returned to the bargaining table and negotiated an agreement that was
ratified on December 19.

The 800 long-service awards presented in 2001, along with 162 spouse awards, illustrate
the long-term commitment employees have made to the company. Looking to tomorrow,
the PotashCorp College Scholarship Program awarded 40 new and 35 continuing
scholarships to sons and daughters of employees.

Sharing with Neighbors:Through continuing commitment by PotashCorp and our
employees, our connection with the many communities in which we operate is
strengthened and broadened. Both time and money are expended on a wide range of
causes. Our Matching Gift Program enables us to match employees personal donations to
their favorite charities. Following the terrorist attacks of September 11, we opened this
program to include donations to disaster relief agencies.

In Saskatoon, we assist many agencies, particularly those working in education and
health. In 2001, our global interests were reflected in our major contribution to the
Saskatoon Zoo Foundation to build quarters for exotic animals from many countries.
We sponsored Saskatchewans largest air show, the Canada Remembers International
Air Show. We became a sponsor of the Progressive Farmer Farm Safety Day Camp
program in the US, which strives to reduce the incidence of injuries, illnesses and
deaths related to agriculture.

Corporate office employees and those at many PotashCorp operations contribute
significantly to their local United Way. Employees at corporate headquarters received the
Saskatoon United Ways Gold Award and Campaign Super Star Award. Augusta employees
surpassed their goal and set a plant record for contributions to their local United Way,
which operates in 15 counties of Georgia and South Carolina.

Employees at White Springs work with the Florida Disabled Outdoor Association to provide
opportunities to hunt deer, ducks and turkey on both reclaimed and unmined land.

(PIE CHART)

23



---



##### 



(BAR CHART-DONATIONS 2001)

Wheelchair-accessible blinds have been built for deer hunting in this excellent wildlife habitat.
Lodging, camper connections and meals are provided for the weekend excursions.

Trinidad helped organize the second annual Terry Fox Run with the Canadian High
Commission, raising funds for the National Cancer Register. Aurora employees participated
in the American Cancer Societys Relay for Life. Aurora also sponsors the YMCA Pamlico
County Day Camp for children in grades one to eight. Many of our divisions have close
connections to schools and students; several have adopted schools. Geismar is deeply
involved in the annual ChemFriends exhibition, which introduces children to the joys and
challenges of modern science.

Many of the companys outdated but still useful computers have been donated to
schools and other community agencies. During Chicagos cold winter of 2000-01,
we donated 1 billion Btu of natural gas to Peoples Energy Company for the Share the
Warmth Program administered by the Salvation Army. In the health area, Yumbes
contributed to the Teleton campaign, which gives medical support to disabled children.



|Fertilizer and the World Community
|----------------------------------

Fertilizers Environmental Benefit:Healthy apples dont just happen. They require water, air
and the soil nutrients that fertilizer provides. Other crops, too, need fertilizer so they can
nourish people and animals. Every crop removes nutrients from the soil, which fertilizer
replenishes to maintain yield and quality.

Globally, crop yields are higher than theyve ever been, and fertilizer contributes one-third of
that increase. Without fertilizer, crop production could never keep up to the rising population.
Arable land is lost every day and even plowing up parks, forests, wetlands and wildlife habitat
would not provide enough land to properly feed the world. Fertilizer is key.

Fertilizer has strong environmental benefits, too. It helps farmers secure the soil and water
resources they depend upon. Together with improved crop and soil management
technologies, proper fertilization has proved critical for reducing soil erosion.

(CROPS SIDEBAR)

(BAR CHART)

This is the core of the fertilizer story, the core of the apple, you might say. The worm in that
apple is the misconceptions and myths about the need for crop nutrients and their impact
on ecosystems and the environment.

Its time to set the record straight.

Planting Seeds for Fertile Minds:In 2001, PotashCorp began doing just that with our Fertile
Minds campaign. We held a symposium that brought together scientists and industry
people, and have initiated a campaign that gives the facts about fertilizer and its vital role.
Its all on our informative web site, www.fertile-minds.org.

As a world producer of all three major crop nutrients, we want people to understand how
essential it is that farmers return nutrients to the soil with fertilizer. Through Fertile Minds,
we are planting the seeds of knowledge that the environment and people benefit when
nutrients are in adequate, balanced supply  and suffer when they are not. Were fighting
against misinformation and misconceptions about fertilizer; together with our many
friends around the world, we will speak with one powerful voice. Our goal is an informed
public that understands the need for fertilizer and appreciates the care with which it is
produced and applied.

24



---



##### 





|Safety, Health and Environment
|------------------------------

Our Goal  No Harm to People, No Accidents, No Damage to the Environment:In 2001, we
developed a comprehensive Safety, Health and Environmental (SHE) Management System
and implemented it throughout the company. The cornerstone of the system is our pledge to
work to achieve our goal of causing no harm while demonstrating respect for the natural
environment. We consult with and listen to our employees, customers, neighbors and public
interest groups, and work with our partners, suppliers, regulators and competitors to
continuously improve the standards of our industry. Everyone who works for PotashCorp
anywhere is responsible for our safety, health and environmental performance. We recognize
that good performance in these areas is critical to our success.

We developed our SHE Management System by utilizing best practices applied to regulatory
compliance and safety, health and environmental management in the various countries in
which our facilities are located. The system guides line managers, who are accountable for
the SHE performance at their facilities. It helps them focus their organizations on critical
safety, health and environment needs, forecast and allocate resources, set direction for
activities and consistently deliver improved SHE performance. We are confident that our
emphasis on these areas will result in enhanced performance, protect our reputation and
make us a leader in all areas of our business around the world.

Safety Performance:Continuous improvement in safety performance is fundamental to each
facilitys annual goals. All of us believe one injury is one too many. Throughout the company
there were 18 lost-time injuries in 2001, one less than in 2000. The year-over-year lost-time
frequency rate increased slightly because production cutbacks meant fewer hours were
worked. In addition to the SHE Management System introduced, significant effort was made
to enhance the potash division safety program.

Most tragically, a fatal injury occurred at our Allan potash mine. In 2000, our Aurora phosphate
facility reached an industry record of 9.9 million hours worked without a lost-time injury, but
its safety performance in 2001 was hampered by four lost-time injuries.

Facilities in all three divisions reached significant milestones in 2001, led by Geismar, which
passed 12 years and 5 million hours without a lost-time injury. Such major safety
achievements are recognized with special ceremonies and awards presented by senior
management. White Springs had no lost-time injuries in 2001, and experienced the fewest
recordable injuries (requiring medical treatment) since operations began in 1965.

Augusta, one of our facilities using a behavior-based safety program, completed 8,224
behavior safety observations of employees at their workstations, resulting in personal safety
contacts with more than 16,000 people regarding their work practices. Its overall safe work
performance, using this safety program, was measured at 97 percent, including observations
taken during the facilitys major turnaround period.

The training of mine rescue teams and emergency response teams is essential to protect the
workforce, customers, public, environment and PotashCorps reputation. To enhance this
training, competitions are held each year among all types of mines across Canada. Patience
Lake won the surface competition at the Saskatchewan Mine Rescue Competition, while Cory
was runner-up in the underground competition. The Town of Lanigan team that won the 21st
annual PCS Potash Firefighters Competition included three members and two coaches from
our Lanigan mine. Teams compete in events demanding a range of firefighting skills.

PotashCorp and Environmental Custodianship:We recognize that environmentally safe facilities
depend on technically sound plants and equipment and on competent people with an active
safety, health and environmental culture. No activity is so important that it cannot be done
safely without creating undue environmental risk.

(RECENT SAFETY MILESTONES, POTASHCORP)

25



---



##### 





|Numerous research studies have shown that conservation tillage practices reduce soil erosion. Our superphosphoric acid
and nitrogen solutions fertilizers are crucial in minimum till agriculture, the most popular and environmentally responsible
form of conservation tillage.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(BAR GRAPHS WITH SIDEBAR)

Unit managers assure themselves and senior management that all environmental processes
are in place and working effectively to manage environmental risks associated with their
activities. Assurance is achieved through regular risk assessment and risk management
programs, peer reviews, self-assessments and reviews of performance indicators against
agreed targets. This process is supplemented by internal and external periodic environmental
audits directed by company SHE staff. During the year, all potash, phosphate and nitrogen
operating facilities were internally audited and found to be in material compliance with
applicable environmental regulations.

One of the measures of environmental performance is emission rate, which is a calculation of
pounds of Toxic Release Inventory listed chemicals released divided by the sum of all final
products plus intermediate products such as ammonia and phosphate rock. Between 1998
and 2000, the most recent reporting year, our nitrogen and phosphate plants helped reduce
the companys overall emission rate by more than one-third. Reductions in production,
favorable climatic conditions and improvements in plant operations affected the decrease.

PCS Joint Venture, a Florida general partnership, continued in 2001 to address an
environmental issue at its fertilizer and distribution center at Lakeland, Florida. The remedial
investigation and feasibility study is continuing on schedule and is projected to be completed
in June 2003.

The federal grand jury investigation of environmental matters at our Geismar facility continues.

Our web site at www.potashcorp.com provides in-depth information on our safety, health and
environmental activities.

Potash and Its Environment:PotashCorp does environmental research both internally and
through the Saskatchewan Potash Producers Association (SPPA) to find ways to minimize the
environmental impact of potash waste. In 2001, an attempt to establish salt-tolerant
indigenous vegetation on test sites at several mines was successful despite difficult drought
conditions. The SPPA is also studying ways to maximize the lives of tailing storage areas and
minimize the land required. PotashCorp is researching the conversion of part of potash waste
into a material that can be managed with reduced environmental impact.

Saskatchewan potash producers are developing plans to decommission the mines in
the distant future when the ore may be exhausted. Interim plans for each mine have
been approved by Saskatchewan Environment and Resource Management, and financial
assurance for the interim period is in place and approved. The plans are to be revised by
2005 and will include a cost-benefit analysis of alternative decommissioning solutions.

Lanigan began restoring a wildlife area near its offices that attracts waterfowl, shorebirds and
small mammals. A pipeline was built to carry supplementary water to existing sloughs and
indigenous vegetation will be planted. Cory and Lanigan completed upgrades of their tailings
management areas.

Phosphate and Its Environment:Aurora installed a $2.5-million scrubber on a stack to reduce
fine particulate emissions and will install other units when satisfactory testing is completed.
Through a plant-wide program of environmental training, strict waste minimization and
recycling, it has reduced its solid waste output by 74 percent since 1990.

White Springs improved water treatment capabilities and reduced treatment costs by installing
lime slakers at its Suwannee River complex. In 2002, it will begin testing its innovative water
treatment and management system, which combines existing technologies with land
reclamation areas. The Florida Department of Environmental Protection views this system as
a model for voluntary pollution prevention, and approved testing.

26



---



##### 





|In 2001, more than 15 million tonnes of PotashCorp products were transported from our facilities to our customers. Much of that
tonnage travelled by rail, and again we received railway company awards for safe handling. Since September 11, we have worked
with suppliers and customers to implement new security measures at our plants and on road, rail and ship.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Feed plants at Weeping Water and Kinston replaced old dust collectors with modern units,
helping protect the environment while reducing operating costs.

Dry weather delayed Auroras plan to plant 200,000 trees on reclaimed land, but 18,500 were
planted. Its idled No. 2 gypsum stack was reclaimed by capping it with topsoil and seeding it.
The facility increased its total successful wetland mitigation acres by 61 to 1,718. White
Springs reclaimed 1,100 acres, almost three times the acreage it mined in 2001.

Florida legislation passed in 1975 requires phosphate companies to reclaim lands they
mine. PotashCorp is a leader in such reclamation, but our commitment to restoring
mined lands to economic and environmental productivity goes further. White Springs is
participating in a state program that encourages reclamation of lands mined before 1975.
This allowed us to maintain our skilled reclamation workforce during a difficult year for the
phosphate business.

Nitrogen and Its Environment:All facilities have formal annual environmental training for all
employees. Interviews of randomly selected employees during internal environmental audits
demonstrated a high level of knowledge about environmental regulations and procedures.

Several audits and inspections were conducted at Augusta by state and federal environmental
protection staff, who found no violations. New pollution prevention equipment cut emissions
of oxides of nitrogen (NOx) from the facilitys ammonia plant.

The Trinidad and Tobago government is currently implementing new environmental rules and
regulations. In anticipation of these rules, our Trinidad facility has been improving its
environmental management and monitoring programs. On-line ambient air monitors for
ammonia were installed in 2001 and extensive stack testing during the year has shown full
compliance with the proposed air emission regulations. Ammonia emissions to the atmosphere
were 34 percent below 2000 levels.

Lima, which is operated for PotashCorp by BP Chemicals, received a Return on Environment
Partnership Award from BetzDearborn for a chlorine reduction program that improved
wastewater quality. As well as exceeding new permit requirements for the discharge of
chlorine, the program saved $220,000 in operating costs and extended the life expectancy of
critical carbon steel heat exchangers by five years. BetzDearborn supplies chemicals and
engineered programs for treatment of water, wastewater and industrial process systems.

Geismar continues to install impervious liners in its gypsum stack area to enhance
groundwater protection, further improve discharge water quality and minimize space
required for stacking. It also added a $2-million water scrubber for an ammonium nitrate
plant that improves nitrogen operations and reduces emissions. The installation of the new
UAN mix tank reduced ammonia, nitric acid and particulate matter emissions.

Memphis initiated a water balance engineering study that should result in reducing the
ammonia in water going to the municipal sewage treatment plant.

At the Clinton plant in Iowa that we closed in 1999, we have broken new ground by building
a wetland to cleanse nitrates from groundwater. Nitrogen compounds have been reduced by
more than 90 percent in this unique project praised by state environmental officials.





|Corporate Governance
|--------------------

Focus on Best Practices:In 2001, the PotashCorp board of directors renewed its focus on and
commitment to corporate governance, seeking to achieve best practices in this area as
elsewhere in the companys operations. At the same time, the board recognized that the acid
test of best practices corporate governance is that it defines and strengthens processes while
enhancing management efforts to maintain and increase shareholder value.



|Awards received in 2001
|-----------------------

|Aurora
Norfolk Southerns Thoroughbred
Award for no hazardous material
shipping violationsGeismar
Canadian National Illinois Central
Railway Award for 2000 safe shipping
Lima
BetzDearborn Return on Environment
Partnership AwardMemphis
Canadian National Illinois Central
Railway Award for 2000 safe shippingNew Brunswick
Canadian Institute of Mining New
Brunswick branch trophy for lowest
severity and frequency rate in the
provinces mining industryWeeping Water
Nebraska Safety Councils Safety
Merit Award

Safety and Health Council of
Greater Omaha Gold Award of
Honor (sixth year)White Springs
Florida Commissioner of Education
Business Recognition Award for
support of education in its area

Shelby County Education Associations
Bill Colvert Friend of Education Award
for 2000-01

Audubon Society Award for Corporate
Partnership

Norfolk Southerns Thoroughbred
Award for no hazardous material
shipping violations
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(White Springs facility)

27



---



##### 





|Did you know?
|-------------

|Food grown with mineral
fertilizers is not only nutritious; it
also is safe. Independent scientific
risk assessments conducted by
the US Environmental Protection
Agency, State of California and the
Weinberg Group all concluded that
fertilizers and their possible trace
metal content pose no threat to
human health or the environment.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|The fertilizer industry is a strong
force in keeping its products secure
for their intended use. Industry-sponsored awareness programs
encourage retailers to know their
customers, protect their product,
and make the right call when
suspicious activity is observed.                                                                     

(PIE CHART)

Through the year, the boards corporate governance and nominating committee examined
PotashCorp practices, the Toronto Stock Exchange corporate governance guidelines and the
interim and final recommendations of the Joint Committee on Corporate Governance (the
Saucier Commission). Then it went to work to build an approach to corporate governance
that combines the best of these, recognizing that moving to best practices will always be a
work in progress. Effective corporate governance is a moving target.

Important changes were implemented in these areas:



| |  | Board evaluation, orientation and continuing education                                                                                                                                                            
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Director recruitment that recognizes the need for a breadth and depth of talent                                                                                                                                   
| 
| |  | Ensuring directors have an ongoing stake in the company by reworking director
compensation to include deferred share units, thus tying a portion of each directors
remuneration to the value of PotashCorp shares
| 
| |  | Risk management                                                                                                                                                                                                   

The board is refining its existing strategic planning process, and reviewing its approach to
succession planning. More details of this years corporate governance initiatives can be
found in the proxy circular.

The corporate governance and nominating committee met three times during 2001 to review
and develop these practices, and between meetings the committee chair devoted
considerable energy to the corporate governance initiative.

Directors continue to meet without management present at the beginning of regularly
scheduled board meetings. The board annually reviews the status of directors as
independent or non-independent, applying the New York Stock Exchange standard. Ten of
12 directors are currently independent; the non-independent directors are William Doyle
and Thomas Wright. No substantial shareholders are represented.

Committees of the Board of Directors:Board committees play a significant role in the
discharge of board duties and obligations; committee chairs submit items for board agendas
and report on activities. The audit committee is empowered to retain outside advisors and
individual directors may engage outside advisors at the companys expense upon
authorization of the executive committee.

The executive committee has five directors. Between meetings of the board it has, with
certain limitations, all the powers vested in the board.

All audit committee members must be, and are, independent. The four-member committee
meets with the companys financial management personnel and auditors at least once each
quarter to review financial reporting practices, procedures and standards and to review and
authorize the release of unaudited quarterly financial statements. The committee reviews the
annual financial statements before their submission to the board for approval.

The compensation committee of five independent directors recommends to the board on
compensation issues relating to directors and senior management and on corporate salary
and benefits policy. In consultation with the CEO, it considers and reports to the board on
corporate succession matters.

The five-member corporate governance and nominating committee examines and reports to
the board on all aspects of governance, oversees the director recruitment process and
recommends nominees to the board for election as directors.

The safety, health and environment committee of four directors works to ensure that the company
fulfills its commitment in these areas. It approved a new safety, health and environmental
policy in 2001 and presented it to the board before it was implemented at all operations.

Management meets regularly with institutional shareholders, and quarterly conference calls
are available live on the PotashCorp web site. Shareholder questions, comments and
concerns about corporate governance may be directed to the Senior Vice President,
Corporate Relations, who is responsible for implementing the companys disclosure policy;
the Corporate Secretary; or the companys transfer agent.

28



---



##### 



(APPLE GRAPHIC)



|Managements
Discussion & Analysis
|----------------------------------

of Financial Condition and Results of Operations (in US Dollars)

The following discussion should be read in conjunction with the companys audited
consolidated financial statements and the notes thereto included elsewhere in this
annual report.



|Gross Margin
|------------

|          |  |                    |       |      |  |      |       |      |  |      |       |            |    |              |       |  |  |   |       |  |  |   |       |   |  |  |     |  
|--------- |  | ------------------ | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ---------- | -- | ------------ | ----- |  |  | - | ----- |  |  | - | ----- | - |  |  | --- | -
|          |  | Dollars (millions)
|          |  |                   
|          |  | 2001               |       | 2000 |  | 1999 |       | 1998 |  | 1997 |       | 2001Change | vs | 2000% Change
|          |  |                    |       |      |  |      |       |      |  |      |       |            |    |             
|Potash    |  | $                  | 241.8 |      |  | $    | 304.0 |      |  | $    | 301.9 |            |    | $            | 316.3 |  |  | $ | 257.6 |  |  | $ | (62.2 | ) |  |  | (20 | )
|Phosphate |  |                    | 62.7  |      |  |      | 74.1  |      |  |      | 127.8 |            |    |              | 228.2 |  |  |   | 194.4 |  |  |   | (11.4 | ) |  |  | (15 | )
|Nitrogen  |  |                    | 94.7  |      |  |      | 104.7 |      |  |      | (21.4 | )          |    |              | 64.8  |  |  |   | 133.2 |  |  |   | (10.0 | ) |  |  | (10 | )
|          |  |                    |       |      |  |      |       |      |  |      |       |            |    |              |       |  |  |   |       |  |  |   |       |   |  |  |     |  
|          |  | $                  | 399.2 |      |  | $    | 482.8 |      |  | $    | 408.3 |            |    | $            | 609.3 |  |  | $ | 585.2 |  |  | $ | (83.6 | ) |  |  | (17 | )
|          |  |                    |       |      |  |      |       |      |  |      |       |            |    |              |       |  |  |   |       |  |  |   |       |   |  |  |     |  



|2001 vs 2000
|------------



| |  | lower offshore sales volumes and higher unit costs contributed to reduced potash
gross margin                                            
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | in phosphate, reduced production tonnes and higher ammonia costs in the first half of
the year drove up unit costs, reducing gross margin
| 
| |  | lower DAP prices also contributed to reduced phosphate gross margin                                                                      
| 
| |  | nitrogen gross margin decreased year-over-year, unit costs of production increased                                                       



|2000 vs 1999
|------------



| |  | record potash sales volumes were offset by lower product prices, resulting in a slight
increase in potash gross margin                                    
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | increased worldwide phosphate capacity caused excess product supply, lower fertilizer
sales and lower product prices, which reduced phosphate gross margin
| 
| |  | dramatic positive turnaround in nitrogen prices increased gross margin                                                                                    

(BAR GRAPHS)

29



---



##### 





|Overview
|--------

|                                                      |  |                          |         |                       |  |      |         |      |  |      |         |   |  |  |     |   |  |  |     |  
|----------------------------------------------------- |  | ------------------------ | ------- | --------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  |  | --- | - |  |  | --- | -
|                                                     
|                                                      |  | Dollars (millions)       |         |                       |  |      |         |      |  |     
|                                                      |  | except per share amounts |         | % Increase (Decrease)
|                                                      |  | 2001                     |         | 2000                  |  | 1999 |         | 2001 |  | 2000
|                                                     
|Net Sales                                             |  | $                        | 2,072.7 |                       |  | $    | 2,231.6 |      |  | $    | 2,061.1 |   |  |  | (7  | ) |  |  | 8   |  
|                                                     
|Gross Margin                                          |  | $                        | 399.2   |                       |  | $    | 482.8   |      |  | $    | 408.3   |   |  |  | (17 | ) |  |  | 18  |  
|                                                     
|Provision for Plant Closures and Office Consolidation |  |                          |        |                       |  | $    | 24.3    |      |  | $    | 65.0    |   |  |  |    |   |  |  | (63 | )
|                                                     
|Provision for Asset Impairment                        |  |                          |        |                       |  |      |        |      |  | $    | 526.6   |   |  |  |    |   |  |  |    |  
|                                                     
|Operating Income (Loss)                               |  | $                        | 269.7   |                       |  | $    | 326.8   |      |  | $    | (353.0  | ) |  |  | (17 | ) |  |  |    |  
|                                                     
|Net Income (Loss)                                     |  | $                        | 121.2   |                       |  | $    | 198.0   |      |  | $    | (412.0  | ) |  |  | (39 | ) |  |  |    |  
|                                                     
|Net Income (Loss) Per Share  Basic                   |  | $                        | 2.34    |                       |  | $    | 3.78    |      |  | $    | (7.60   | ) |  |  | (38 | ) |  |  |    |  
|                                                     
|Net Income (Loss) Per Share  Diluted                 |  | $                        | 2.32    |                       |  | $    | 3.76    |      |  | $    | (7.60   | ) |  |  | (38 | ) |  |  |    |  
|                                                     

(BAR GRAPHS)



|2001 vs 2000
|------------



| |  | potash sales volumes decreased, primarily in offshore markets                                                                          
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | phosphate fertilizers, particularly DAP, were plagued by reduced import demand in the
two largest offshore markets, China and India    
| 
| |  | increased worldwide phosphate capacity further pressured sales volumes and prices
for phosphate fertilizer                             
| 
| |  | strong phosphate industrial business helped mitigate the effects of reduced fertilizer sales                                           
| 
| |  | nitrogen fertilizer prices fell throughout 2001, due to falling gas prices in the United
States and record imports of nitrogen products
| 
| |  | selling and administrative expenses declined for the second year in a row                                                              
| 
| |  | fewer Saskatchewan-based sales tonnes resulted in decreased provincial mining taxes                                                    
| 
| |  | other income decreased due to the one-time gain on sale of Moab Salt Inc.
(Moab) in 2000                                             
| 
| |  | in May 2001, the company issued $600.0 million of 10-year 7.75 percent notes, which
increased interest expense                         
| 
| |  | effective consolidated income tax rate increased from 27 percent in 2000 to
36 percent in 2001                                         



|2000 vs 1999
|------------



| |  | net sales increased due to dramatic positive turnaround in nitrogen prices and record
potash sales volumes             
|- |  | -----------------------------------------------------------------------------------------------------------------------
| 
| |  | other income increased, primarily due to the $16.3 million gain on the sale of Moab                                    
| 
| |  | a weaker Canadian dollar versus the United States dollar resulted in foreign currency
translation improvement over 1999
| 
| |  | interest expense increased due to higher interest rates and increased short-term borrowings                            
| 
| |  | profitability increased, resulting in higher income tax expense                                                        

30



---



##### 





|Potash
|------

|                   |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  |            |     |      |  |      |    |      |  |       |       |      |  |       |       |            |  |       |       |  |  |     |     |   |  |   |    |  |   |            |       |  |   |       |       |  |   |       |       |  |  |     |    |   |  |    |    |  
|------------------ | ----------------------------- | - | ------------------ | ----- | ---------- | - | ------------------ | ----- | ---------- | - | -------------- | ----- | ---------- |  | ---------- | --- | ---- |  | ---- | -- | ---- |  | ----- | ----- | ---- |  | ----- | ----- | ---------- |  | ----- | ----- |  |  | --- | --- | - |  | - | -- |  | - | ---------- | ----- |  | - | ----- | ----- |  | - | ----- | ----- |  |  | --- | -- | - |  | -- | -- | -
|                  
|                   |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  | % Increase |     |      |  |      |    |      |  |       |       |      |  |       |       | % Increase |  |       |       |  |  |     |     |   |  |   |    |  |   | % Increase
|                   |                               |   | Dollars (millions) |       | (Decrease) |   | Tonnes (thousands) |       | (Decrease) |   | Average per MT |       | (Decrease)
|                   |                               |   | 2001               |       | 2000       |   | 1999               |       | 2001       |   | 2000           |       | 2001       |  | 2000       |     | 1999 |  | 2001 |    | 2000 |  | 2001  |       | 2000 |  | 1999  |       | 2001       |  | 2000 
|                  
|Net Sales          |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  |            |     |      |  |      |    |      |  |       |       |      |  |       |       |            |  |       |       |  |  |     |     |   |  |   |    |  |   |            |       |  |   |       |       |  |   |       |       |  |  |     |    |   |  |    |   
|                   | North American                |   | $                  | 232.1 |            |   | $                  | 237.8 |            |   | $              | 237.4 |            |  |            | (2  | )    |  |      |   |      |  |       | 2,894 |      |  |       | 2,939 |            |  |       | 2,870 |  |  |     | (2  | ) |  |   | 2  |  |   | $          | 80.21 |  |   | $     | 80.92 |  |   | $     | 82.71 |  |  |     | (1 | ) |  |    | (2 | )
|                   | Offshore                      |   |                    | 293.4 |            |   |                    | 340.9 |            |   |                | 325.9 |            |  |            | (14 | )    |  |      | 5  |      |  |       | 3,349 |      |  |       | 3,973 |            |  |       | 3,604 |  |  |     | (16 | ) |  |   | 10 |  |   | $          | 87.62 |  |   | $     | 85.79 |  |   | $     | 90.42 |  |  |     | 2  |   |  |    | (5 | )
|                  
|                   |                               |   | 525.5              |       |            |   | 578.7              |       |            |   | 563.3          |       |            |  | (9         | )   |      |  | 3    |    |      |  | 6,243 |       |      |  | 6,912 |       |            |  | 6,474 |       |  |  | (10 | )   |   |  | 7 |    |  | $ | 84.18      |       |  | $ | 83.72 |       |  | $ | 87.00 |       |  |  | 1   |    |   |  | (4 | ) 
|                  
|Cost of Goods Sold |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  |            |     |      |  |      |    |      |  |       |       |      |  |       |       |            |  |       |       |  |  |     |     |   |  |   |    |  |   |            |       |  |   |       |       |  |   |       |       |  |  |     |    |   |  |    |   
|                   | Cash Costs                    |   |                    | 249.8 |            |   |                    | 233.8 |            |   |                | 224.2 |            |  |            | 7   |      |  |      | 4  |      |  |       |       |      |  |       |       |            |  |       |       |  |  |     |     |   |  |   |    |  |   | $          | 40.01 |  |   | $     | 33.82 |  |   | $     | 34.63 |  |  |     | 18 |   |  |    | (2 | )
|                   | Depreciation and Amortization |   |                    | 33.9  |            |   |                    | 40.9  |            |   |                | 37.2  |            |  |            | (17 | )    |  |      | 10 |      |  |       |       |      |  |       |       |            |  |       |       |  |  |     |     |   |  |   |    |  |   | $          | 5.43  |  |   | $     | 5.92  |  |   | $     | 5.75  |  |  |     | (8 | ) |  |    | 3  |  
|                  
|                   |                               |   | 283.7              |       |            |   | 274.7              |       |            |   | 261.4          |       |            |  | 3          |     |      |  | 5    |    |      |  |       |       |      |  |       |       |            |  |       |       |  |  |     |     |   |  |   |    |  | $ | 45.44      |       |  | $ | 39.74 |       |  | $ | 40.38 |       |  |  | 14  |    |   |  | (2 | ) 
|                  
|Gross Margin       |                               | $ | 241.8              |       |            | $ | 304.0              |       |            | $ | 301.9          |       |            |  | (20        | )   |      |  | 1    |    |      |  |       |       |      |  |       |       |            |  |       |       |  |  |     |     |   |  |   |    |  | $ | 38.74      |       |  | $ | 43.98 |       |  | $ | 46.62 |       |  |  | (12 | )  |   |  | (6 | ) 
|                  



|2001 vs 2000
|------------

Net sales for potash decreased in 2001. Results were significantly affected by conditions in the offshore market as
record offshore sales volumes in 2000 led to high inventories in several key consuming countries at the beginning
of 2001. These customers did not purchase product until their inventories were reduced. Depressed prices for
several offshore crops that use potash lowered world consumption. In addition, aggressive selling by Russian
marketing agency IPC resulted in lower offshore sales volumes in 2001 as compared to 2000. North American sales
tonnes were down slightly, due primarily to reduced consumption. Average realized sales prices were up slightly in
offshore markets due to lower freight costs but down slightly in the North American market, principally due to
competitive pressures.

The company continued to match supply with demand and as a result, the number of shutdown weeks increased
significantly over those in 2000 (63 weeks in 2001 compared to 38 in 2000). The increase in shutdown weeks, high
natural gas prices in the first half of 2001 and a stronger Canadian dollar in the first half of the year resulted in higher
unit production costs for the year.



|2000 vs 1999
|------------

Potash performance was highlighted by record offshore sales volumes, primarily as a result of healthy demand from
China and Brazil. North American sales volumes were close to the record established in 1997. The combination of these
factors resulted in a new record for total sales tonnes. Average domestic and offshore sales prices were down due to
competitive pressures. In the offshore market, 83 percent of sales volumes (1999  82 percent) were sold
through Canpotex.

Potash unit cost of sales decreased, due primarily to record production volumes and fewer shutdown weeks.



---

(BAR GRAPHS)

31



---



##### 





|Phosphate
|---------

|                   |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  |            |     |      |  |      |     |      |  |       |     |      |  |       |       |            |  |       |       |  |  |     |     |   |  |    |    |   |   |            |        |  |   |        |        |  |   |        |        |  |  |   |    |   |  |     |     |  
|------------------ | ----------------------------- | - | ------------------ | ----- | ---------- | - | ------------------ | ----- | ---------- | - | -------------- | ----- | ---------- |  | ---------- | --- | ---- |  | ---- | --- | ---- |  | ----- | --- | ---- |  | ----- | ----- | ---------- |  | ----- | ----- |  |  | --- | --- | - |  | -- | -- | - | - | ---------- | ------ |  | - | ------ | ------ |  | - | ------ | ------ |  |  | - | -- | - |  | --- | --- | -
|                  
|                   |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  | % Increase |     |      |  |      |     |      |  |       |     |      |  |       |       | % Increase |  |       |       |  |  |     |     |   |  |    |    |   |   | % Increase
|                   |                               |   | Dollars (millions) |       | (Decrease) |   | Tonnes (thousands) |       | (Decrease) |   | Average per MT |       | (Decrease)
|                   |                               |   | 2001               |       | 2000       |   | 1999               |       | 2001       |   | 2000           |       | 2001       |  | 2000       |     | 1999 |  | 2001 |     | 2000 |  | 2001  |     | 2000 |  | 1999  |       | 2001       |  | 2000 
|                  
|Net Sales          |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  |            |     |      |  |      |     |      |  |       |     |      |  |       |       |            |  |       |       |  |  |     |     |   |  |    |    |   |   |            |        |  |   |        |        |  |   |        |        |  |  |   |    |   |  |     |    
|                   | Fertilizer  liquids          |   | $                  | 145.0 |            |   | $                  | 192.3 |            |   | $              | 215.5 |            |  |            | (25 | )    |  |      | (11 | )    |  |       | 741 |      |  |       | 986   |            |  |       | 1,034 |  |  |     | (25 | ) |  |    | (5 | ) |   | $          | 195.56 |  |   | $      | 195.10 |  |   | $      | 208.47 |  |  |   |   |   |  |     | (6  | )
|                   | Fertilizer  solids           |   |                    | 130.1 |            |   |                    | 222.9 |            |   |                | 278.4 |            |  |            | (42 | )    |  |      | (20 | )    |  |       | 927 |      |  |       | 1,523 |            |  |       | 1,645 |  |  |     | (39 | ) |  |    | (7 | ) |   | $          | 140.30 |  |   | $      | 146.31 |  |   | $      | 169.26 |  |  |   | (4 | ) |  |     | (14 | )
|                   | Feed                          |   |                    | 208.6 |            |   |                    | 215.4 |            |   |                | 216.8 |            |  |            | (3  | )    |  |      | (1  | )    |  |       | 874 |      |  |       | 907   |            |  |       | 898   |  |  |     | (4  | ) |  |    | 1  |   |   | $          | 238.79 |  |   | $      | 237.44 |  |   | $      | 241.30 |  |  |   |   |   |  |     | (2  | )
|                   | Industrial                    |   |                    | 168.1 |            |   |                    | 151.9 |            |   |                | 133.1 |            |  |            | 11  |      |  |      | 14  |      |  |       | 503 |      |  |       | 477   |            |  |       | 439   |  |  |     | 5   |   |  |    | 9  |   |   | $          | 334.32 |  |   | $      | 318.48 |  |   | $      | 303.21 |  |  |   | 5  |   |  |     | 5   |  
|                  
|                   |                               |   | 651.8              |       |            |   | 782.5              |       |            |   | 843.8          |       |            |  | (17        | )   |      |  | (7   | )   |      |  | 3,045 |     |      |  | 3,893 |       |            |  | 4,016 |       |  |  | (22 | )   |   |  | (3 | )  |   | $ | 214.06     |        |  | $ | 201.00 |        |  | $ | 210.12 |        |  |  | 7 |    |   |  | (4  | )  
|                  
|Cost of Goods Sold |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  |            |     |      |  |      |     |      |  |       |     |      |  |       |       |            |  |       |       |  |  |     |     |   |  |    |    |   |   |            |        |  |   |        |        |  |   |        |        |  |  |   |    |   |  |     |    
|                   | Cash Costs                    |   |                    | 517.5 |            |   |                    | 640.9 |            |   |                | 654.7 |            |  |            | (19 | )    |  |      | (2  | )    |  |       |     |      |  |       |       |            |  |       |       |  |  |     |     |   |  |    |    |   |   | $          | 169.95 |  |   | $      | 164.63 |  |   | $      | 163.02 |  |  |   | 3  |   |  |     | 1   |  
|                   | Depreciation and Amortization |   |                    | 71.6  |            |   |                    | 67.5  |            |   |                | 61.3  |            |  |            | 6   |      |  |      | 10  |      |  |       |     |      |  |       |       |            |  |       |       |  |  |     |     |   |  |    |    |   |   | $          | 23.52  |  |   | $      | 17.34  |  |   | $      | 15.27  |  |  |   | 36 |   |  |     | 14  |  
|                  
|                   |                               |   | 589.1              |       |            |   | 708.4              |       |            |   | 716.0          |       |            |  | (17        | )   |      |  | (1   | )   |      |  |       |     |      |  |       |       |            |  |       |       |  |  |     |     |   |  |    |    |   | $ | 193.47     |        |  | $ | 181.97 |        |  | $ | 178.29 |        |  |  | 6 |    |   |  | 2   |    
|                  
|Gross Margin       |                               | $ | 62.7               |       |            | $ | 74.1               |       |            | $ | 127.8          |       |            |  | (15        | )   |      |  | (42  | )   |      |  |       |     |      |  |       |       |            |  |       |       |  |  |     |     |   |  |    |    |   | $ | 20.59      |        |  | $ | 19.03  |        |  | $ | 31.83  |        |  |  | 8 |    |   |  | (40 | )  
|                  

(BAR GRAPH)



|2001 vs 2000
|------------

Overall, phosphate net sales decreased in 2001. The phosphate fertilizer market was weak
due to poor world supply/demand fundamentals caused chiefly by new production
capacity in Australia and India and reduced purchases by major importers, primarily China
and India. Solid fertilizers lost money in 2001 on a gross margin basis, primarily due to
lower prices. The company cut production during the year and by year-end was operating
only the solid fertilizer capacity required to produce its higher-margin products, which is
less than 30 percent of its total solid fertilizer capacity. That production was being used to
supply North American customers. North American fertilizer sales volumes also declined,
affected by reduced North American phosphate consumption, down an estimated
5 percent in 2001. The industrial market continued to provide good margins during the
year. Sales volumes were up as compared to 2000, primarily due to the additional sales
provided by the purchase of the remaining 50-percent interest in Albright & Wilson
Company (A&W) near the end of the first quarter of 2000. New customers also added
to sales volumes. Higher average prices on a year-over-year basis are also due to the A&W
acquisition as the company now sells an upgraded product that is higher priced.
PotashCorps wet acid production, which is expanding, provided shelter from the downturn
in certain phosphoric acid markets. Feed sales volumes were flat in the offshore market but down in the North American
market due to decreased demand. Sales prices for feed products were flat overall.

The price of sulfur, a key phosphate input, decreased significantly as compared to 2000 due to reduced demand as
domestic DAP producers cut back production. The price of ammonia (another key input) increased in the first part of
the year due to the higher natural gas prices. As the price of natural gas fell during the year, ammonia prices tracked
this decline, ending the year at levels lower than at the end of 2000. The increase in
ammonia prices in the first part of the year more than offset the savings on sulfur and,
combined with lower production volumes (which spread fixed costs over fewer tonnes),
increased per-tonne production costs.

(BAR GRAPH)



|2000 vs 1999
|------------

Overall, phosphate net sales declined in 2000, due primarily to lower fertilizer sales
volumes and prices.

Higher industrial net sales compared to 1999 were principally due to securing new
business, the companys purchase of the remaining half-interest in A&W and changes
in product and customer mix.

Offshore liquid fertilizer sales volumes decreased compared to 1999, chiefly due to lower
sales to India and Australia. North American sales volumes were down, due primarily to
customer inventory carryover from the previous season. Offshore DAP sales volumes
decreased, mainly due to reduced purchases by China and India and new production in
Australia and India. North American sales volumes were also down.

32



---



##### 





|Nitrogen
|--------

|                   |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  |            |     |      |  |      |     |      |  |       |       |      |  |       |       |            |  |       |       |  |  |    |     |   |  |    |     |   |   |            |        |  |   |        |        |  |   |       |        |  |  |    |    |   |  |    |    |  
|------------------ | ----------------------------- | - | ------------------ | ----- | ---------- | - | ------------------ | ----- | ---------- | - | -------------- | ----- | ---------- |  | ---------- | --- | ---- |  | ---- | --- | ---- |  | ----- | ----- | ---- |  | ----- | ----- | ---------- |  | ----- | ----- |  |  | -- | --- | - |  | -- | --- | - | - | ---------- | ------ |  | - | ------ | ------ |  | - | ----- | ------ |  |  | -- | -- | - |  | -- | -- | -
|                  
|                   |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  | % Increase |     |      |  |      |     |      |  |       |       |      |  |       |       | % Increase |  |       |       |  |  |    |     |   |  |    |     |   |   | % Increase
|                   |                               |   | Dollars (millions) |       | (Decrease) |   | Tonnes (thousands) |       | (Decrease) |   | Average per MT |       | (Decrease)
|                   |                               |   | 2001               |       | 2000       |   | 1999               |       | 2001       |   | 2000           |       | 2001       |  | 2000       |     | 1999 |  | 2001 |     | 2000 |  | 2001  |       | 2000 |  | 1999  |       | 2001       |  | 2000 
|                  
|Net Sales          |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  |            |     |      |  |      |     |      |  |       |       |      |  |       |       |            |  |       |       |  |  |    |     |   |  |    |     |   |   |            |        |  |   |        |        |  |   |       |        |  |  |    |    |   |  |    |   
|                   | Urea                          |   | $                  | 215.4 |            |   | $                  | 236.3 |            |   | $              | 180.2 |            |  |            | (9  | )    |  |      | 31  |      |  |       | 1,346 |      |  |       | 1,572 |            |  |       | 1,614 |  |  |    | (14 | ) |  |    | (3  | ) |   | $          | 160.01 |  |   | $      | 150.33 |  |   | $     | 111.63 |  |  |    | 6  |   |  |    | 35 |  
|                   | Ammonia                       |   |                    | 313.6 |            |   |                    | 217.5 |            |   |                | 198.6 |            |  |            | 44  |      |  |      | 10  |      |  |       | 1,993 |      |  |       | 1,377 |            |  |       | 1,915 |  |  |    | 45  |   |  |    | (28 | ) |   | $          | 157.35 |  |   | $      | 157.99 |  |   | $     | 103.69 |  |  |    |   |   |  |    | 52 |  
|                   | Nitrogen Solutions            |   |                    | 114.9 |            |   |                    | 135.7 |            |   |                | 110.4 |            |  |            | (15 | )    |  |      | 23  |      |  |       | 1,156 |      |  |       | 1,593 |            |  |       | 1,681 |  |  |    | (27 | ) |  |    | (5  | ) |   | $          | 99.34  |  |   | $      | 85.15  |  |   | $     | 65.65  |  |  |    | 17 |   |  |    | 30 |  
|                   | Other1                        |   |                    | 158.1 |            |   |                    | 145.1 |            |   |                | 117.6 |            |  |            | 9   |      |  |      | 23  |      |  |       | 2,227 |      |  |       | 2,265 |            |  |       | 2,307 |  |  |    | (2  | ) |  |    | (2  | ) |   | $          | 71.06  |  |   | $      | 64.04  |  |   | $     | 50.98  |  |  |    | 11 |   |  |    | 26 |  
|                  
|                   |                               |   | 802.0              |       |            |   | 734.6              |       |            |   | 606.8          |       |            |  | 9          |     |      |  | 21   |     |      |  | 6,722 |       |      |  | 6,807 |       |            |  | 7,517 |       |  |  | (1 | )   |   |  | (9 | )   |   | $ | 119.31     |        |  | $ | 107.92 |        |  | $ | 80.72 |        |  |  | 11 |    |   |  | 34 |   
|                   | Purchased                     |   |                    | 93.4  |            |   |                    | 135.8 |            |   |                | 47.2  |            |  |            | (31 | )    |  |      | 187 |      |  |       | 628   |      |  |       | 896   |            |  |       | 434   |  |  |    | (30 | ) |  |    | 106 |   |   | $          | 148.55 |  |   | $      | 151.55 |  |   | $     | 108.81 |  |  |    | (2 | ) |  |    | 39 |  
|                  
|                   |                               | $ | 895.4              |       |            | $ | 870.4              |       |            | $ | 654.0          |       |            |  | 3          |     |      |  | 33   |     |      |  | 7,350 |       |      |  | 7,703 |       |            |  | 7,951 |       |  |  | (5 | )   |   |  | (3 | )   |   | $ | 121.82     |        |  | $ | 112.99 |        |  | $ | 82.25 |        |  |  | 8  |    |   |  | 37 |   
|                  
|                   | Fertilizer                    |   | $                  | 424.7 |            |   | $                  | 463.2 |            |   | $              | 345.5 |            |  |            | (8  | )    |  |      | 34  |      |  |       | 3,282 |      |  |       | 3,772 |            |  |       | 4,087 |  |  |    | (13 | ) |  |    | (8  | ) |   | $          | 129.39 |  |   | $      | 122.78 |  |   | $     | 84.52  |  |  |    | 5  |   |  |    | 45 |  
|                   | Feed and Industrial           |   |                    | 470.7 |            |   |                    | 407.2 |            |   |                | 308.5 |            |  |            | 16  |      |  |      | 32  |      |  |       | 4,068 |      |  |       | 3,931 |            |  |       | 3,864 |  |  |    | 3   |   |  |    | 2   |   |   | $          | 115.71 |  |   | $      | 103.59 |  |   | $     | 79.84  |  |  |    | 12 |   |  |    | 30 |  
|                  
|                   |                               |   | 895.4              |       |            |   | 870.4              |       |            |   | 654.0          |       |            |  | 3          |     |      |  | 33   |     |      |  | 7,350 |       |      |  | 7,703 |       |            |  | 7,951 |       |  |  | (5 | )   |   |  | (3 | )   |   | $ | 121.82     |        |  | $ | 112.99 |        |  | $ | 82.25 |        |  |  | 8  |    |   |  | 37 |   
|                  
|Cost of Goods Sold |                               |   |                    |       |            |   |                    |       |            |   |                |       |            |  |            |     |      |  |      |     |      |  |       |       |      |  |       |       |            |  |       |       |  |  |    |     |   |  |    |     |   |   |            |        |  |   |        |        |  |   |       |        |  |  |    |    |   |  |    |   
|                   | Cash Costs                    |   |                    | 730.8 |            |   |                    | 702.9 |            |   |                | 604.4 |            |  |            | 4   |      |  |      | 16  |      |  |       |       |      |  |       |       |            |  |       |       |  |  |    |     |   |  |    |     |   |   | $          | 99.43  |  |   | $      | 91.25  |  |   | $     | 76.02  |  |  |    | 9  |   |  |    | 20 |  
|                   | Depreciation and
Amortization |   |                    | 69.9  |            |   |                    | 62.8  |            |   |                | 71.0  |            |  |            | 11  |      |  |      | (11 | )    |  |       |       |      |  |       |       |            |  |       |       |  |  |    |     |   |  |    |     |   |   | $          | 9.51   |  |   | $      | 8.15   |  |   | $     | 8.92   |  |  |    | 17 |   |  |    | (9 | )
|                  
|                   |                               |   | 800.7              |       |            |   | 765.7              |       |            |   | 675.4          |       |            |  | 5          |     |      |  | 13   |     |      |  |       |       |      |  |       |       |            |  |       |       |  |  |    |     |   |  |    |     |   | $ | 108.94     |        |  | $ | 99.40  |        |  | $ | 84.94 |        |  |  | 10 |    |   |  | 17 |   
|                  
|Gross Margin       |                               | $ | 94.7               |       |            | $ | 104.7              |       |            | $ | (21.4          | )     |            |  | (10        | )   |      |  |     |     |      |  |       |       |      |  |       |       |            |  |       |       |  |  |    |     |   |  |    |     |   | $ | 12.88      |        |  | $ | 13.59  |        |  | $ | (2.69 | )      |  |  | (5 | )  |   |  |   |   
|                  



|1 |  | Sales volumes of Other nitrogen products include tonnes for the byproduct carbon dioxide.
|- |  | -----------------------------------------------------------------------------------------



|2001 vs 2000
|------------

Overall, nitrogen net sales increased in 2001. The nitrogen fertilizer market was
volatile. High natural gas prices at the beginning of the year resulted in higher sales
prices for all nitrogen fertilizer products as there were significant domestic production
curtailments. With a significant portion of its gas costs locked in,
PotashCorp was a
major beneficiary of those higher prices. However, as natural gas prices fell, more
domestic production came back on stream and nitrogen sales prices fell. In addition,
the high North American prices at the beginning of the year attracted imports from
offshore competitors. By year-end, most import activity had declined, with the
exception of nitrogen solutions where import levels remained high. Sales volumes of
manufactured ammonia increased significantly as the companys plants in Trinidad
were operational for the full year, thereby reducing the need to supplement production
with purchased product. Urea and nitrogen solutions sales volumes were down
primarily due to competition from offshore producers and reduced consumption.
While sales in the nitrogen feed and industrial markets were affected by the slowing
economy, PotashCorps nitrogen feed and industrial volumes were up. Average prices
for feed and industrial products also increased as compared to 2000.

The unit cost of production increased during the year as a result of higher natural gas
prices in the United States. Unexpected plant outages and some plant idling also
contributed to increased costs. The average cost of natural gas in Trinidad was lower in
2001 than in 2000 due to renegotiation of certain of the companys gas contracts in 2000.



|2000 vs 1999
|------------

Prices for all nitrogen products were higher than in 1999. Healthy demand and tight
supply were a result of temporary and permanent plant shutdowns as North American
nitrogen producers responded to a spike in natural gas prices. The significant increase
in US prices accelerated industry rationalization in North America. The companys
significant hedged natural gas position for its US plants and its indexed natural gas
contracts in Trinidad provided an advantage to PotashCorp versus its competitors.
Closure of high-cost nitrogen plants in 1999 and renegotiation of a Trinidad natural gas
contract in 2000 helped the company capitalize on these industry conditions.

Sales volumes of manufactured products decreased compared to 1999, primarily
due to the permanent closure of two of the companys plants in the third quarter of
1999 and the temporary shutdown of two ammonia plants in Trinidad during the first

(BAR GRAPHS)



33



---



##### 



half of 2000 while a new gas contract was being negotiated. Sales volumes of purchased products increased to
replace the loss of Trinidad volumes.

The company sold a larger portion of its North American nitrogen production to the more stable feed and industrial
market. Feed and industrial products represented 51 percent (1999  49 percent) of nitrogen sales volumes and
47 percent (1999  47 percent) of net sales. Exclusive of carbon dioxide, the average non-fertilizer price in 2000 was
$128.34 per tonne, compared to $108.43 in 1999.

In the production of ammonia, the average unit natural gas input cost increased by 37 percent compared to 1999.
Higher unit production costs, due to plant shutdown costs and reduced production, also contributed to the increase in
unit cost of sales.



|Expenses
|--------

|                                  |  |                    |      |                       |  |      |       |      |  |      |       |  |  |  |     |   |  |  |     |  
|--------------------------------- |  | ------------------ | ---- | --------------------- |  | ---- | ----- | ---- |  | ---- | ----- |  |  |  | --- | - |  |  | --- | -
|                                 
|                                  |  | Dollars (millions) |      | % Increase (Decrease)
|                                  |  | 2001               |      | 2000                  |  | 1999 |       | 2001 |  | 2000
|                                 
|Selling and Administrative        |  | $                  | 99.7 |                       |  | $    | 111.0 |      |  | $    | 116.3 |  |  |  | (10 | ) |  |  | (5  | )
|                                 
|Provincial Mining and Other Taxes |  |                    | 70.0 |                       |  |      | 77.2  |      |  |      | 77.1  |  |  |  | (9  | ) |  |  |    |  
|                                 
|Interest                          |  |                    | 80.3 |                       |  |      | 61.6  |      |  |      | 51.5  |  |  |  | 30  |   |  |  | 20  |  
|                                 
|Income Taxes                      |  |                    | 68.2 |                       |  |      | 67.2  |      |  |      | 7.5   |  |  |  | 1   |   |  |  | 796 |  
|                                 



|2001 vs 2000
|------------

Selling and administrative expenses declined from 2000 due to a combination of reduced compensation expense,
decreased lease expense after the office consolidation in 2000 and reductions in relocation costs in 2001.

Fewer Saskatchewan-based sales tonnes as compared to 2000 and lower per-tonne margins resulted in a reduction of
provincial mining taxes. The provincial mining tax rate per tonne was flat on a year-over-year basis.

In May 2001, the company issued $600.0 million of 10-year 7.75 percent notes under its shelf registration statement,
the proceeds of which were used to finance the buyout of the Trinidad plant leases (at a cost of approximately
$384.0 million) and pay down short-term debt. This had the effect of bringing additional debt on to the balance sheet,
removing lease expense from nitrogen cost of sales (which was primarily offset by increased depreciation) and
increasing interest expense for the year. Weighted average total debt outstanding increased from $916.4 million in 2000
to $1,205.7 million in 2001. The weighted average interest rate on total debt outstanding during the year was
6.2 percent (2000  6.8 percent).

The amount of the provision for income taxes was flat as compared to 2000. However, the effective consolidated income
tax rate increased from 27 percent (exclusive of the gain on sale of Moab for which there was no tax effect) of income
before income taxes in 2000 to 36 percent in 2001. This increase was primarily due to a reduction in additional tax
deductions and the geographic mix of earnings. The current/future income tax split in 2001 approximated 30 percent
current and 70 percent future. In 2000, the current/future split approximated 49 percent current and 51 percent future.
The change in this split is primarily due to lower earnings in Canada in 2001.

(LINE GRAPHS)

34



---



##### 





|2000 vs 1999
|------------

Selling and administrative expenses decreased in 2000, primarily due to the reduction in the amortization of goodwill
which was partially offset by one-time relocation costs relating to the Northbrook, Illinois office.

Provincial mining and other taxes were flat compared to 1999.

During 2000, the company accessed the commercial paper market (in part to finance the share repurchase program)
due to lower borrowing costs, rather than draw down its term credit facility, resulting in an increase in short-term debt
and a reduction in long-term debt. Overall, interest expense increased by$10.1 million. Weighted average total debt
outstanding increased from $826.8 million in 1999 to $916.4 million in 2000. The weighted average interest rate on
total debt outstanding during the year was 6.8 percent (1999  5.8 percent).

The provision for income taxes in 1999 contained a future tax recovery in the amount of $48.6 million relating to the
plant closures and asset impairment charge. In 2000, the future tax recovery related to the plant closure charge was
only $6.6 million. The balance of the increase in the provision was due to higher earnings before tax (exclusive of the
gain on sale of Moab).

The effective consolidated tax rate for 2000 was 27 percent (1999  30 percent) of pre-tax income.

Provision for Plant Closures

On January 19, 2001, the company announced that it was suspending all DAP production at its White Springs, Florida
operations, and that it permanently closed its Davenport, Iowa phosphate feed plant on January 15, 2001. In the fourth
quarter of 2000, the company recorded a provision of $24.3 million for asset writedown, severance, inventory allowance,
decommissioning and other expenses attributable to these actions.

The shutdown at White Springs brought the companys total cutback in DAP production in Florida to 0.710 million
tonnes on an annualized basis. Production from Davenport, which had an annual capacity of 0.280 million tonnes of
monocal and dical, was transferred to Feed Division plants in Marseilles, Illinois and Weeping Water, Nebraska. This
allowed these plants to operate at higher operating rates, thereby reducing overall feed plant operating costs by
approximately $2.0 million on an annualized basis.



|Analysis of Financial Condition and Cash Flow
|---------------------------------------------

The following table summarizes certain of the companys financial ratios and cash flow data as calculated from the
consolidated financial statements (see Financial Terms on inside back cover):



|Financial Ratios and Cash Flow Data
|-----------------------------------

|                                                             |  |      |      |      |  |          |   |      |     |  |  |  |      |  
|------------------------------------------------------------ |  | ---- | ---- | ---- |  | -------- | - | ---- | --- |  |  |  | ---- | -
|                                                            
|                                                             |  | 2001 |      | 2000 |  | % Change
|                                                            
|Total Shareholder Return                                     |  |      | (20  | )%   |  |          |   | 65   | %   |  |  |  | (131 | )
|                                                            
|Book Value per Share                                         |  | $    | 40   | .16  |  |          | $ | 38   | .81 |  |  |  | 3    |  
|                                                            
|Net Debt to Capital                                          |  |      | 41   | %    |  |          |   | 29   | %   |  |  |  | 41   |  
|                                                            
|Cash Flow Return                                             |  |      | 8    | %    |  |          |   | 11   | %   |  |  |  | (27  | )
|                                                            
|Cash Provided by Operating Activities ($ millions)           |  | $    | 75   | .7   |  |          | $ | 480  | .4  |  |  |  | (84  | )
|                                                            
|Cash Used in Investing Activities ($ millions)               |  | $    | (690 | .0)  |  |          | $ | (265 | .4) |  |  |  | 160  |  
|                                                            
|Cash Provided by (Used in) Financing Activities
($ millions) |  | $    | 559  | .6   |  |          | $ | (159 | .0) |  |  |  |     |  
|                                                            

The reduction in gross margin, increased investment in inventories and repayment of certain of the companys natural
gas margin calls to counterparties (due to declining natural gas prices) resulted in a significant decline in cash provided
by operating activities. The increase in inventories was primarily due to an increase in wet concentrate inventory in the
phosphate operation at Aurora as the company prepares for the move to the NCPC area, and an increase in natural gas
margin account deposits (due to lower natural gas prices).

Additions to property, plant and equipment included the buyout of the Trinidad plant leases of approximately
$384.0 million and $32.1 million for the new DFP plant at Aurora. The company also invested $130.4 million in
Sociedad Quimica y Minera de Chile S.A. (SQM), a Chilean producer of specialty fertilizers, iodine and lithium, and
$40.1 million in pre-operating costs at PCS Yumbes S.C.M.



35



---



##### 



(PIE CHARTS)

In May 2001, the company issued $600.0 million of 10-year 7.75 percent notes under its shelf registration statement,
the proceeds of which were used to finance the buyout of the Trinidad plant leases (approximately $384.0 million) and
pay down short-term debt. In December 2001, $5.7 million of other long-term debt was repaid. During the year the
company paid dividends of $51.9 million (2000  $51.9 million).



|Contractual Obligations and Other Commitments
|---------------------------------------------

|                                  |  |                    |       |              |  |              |       |       |  |  |         |  |  |  |         | 
|--------------------------------- |  | ------------------ | ----- | ------------ |  | ------------ | ----- | ----- |  |  | ------- |  |  |  | ------- | 
|                                 
|                                  |  | Dollars (millions)
|                                  |  | 1 to 3 years       |       | 4 to 5 years |  | Over 5 years |       | Total
|                                 
|Long-Term Debt                    |  |                    | 3.2   |              |  |              | 10.5  |       |  |  | 1,000.0 |  |  |  | 1,013.7 | 
|Operating Leases                  |  |                    | 116.9 |              |  |              | 72.2  |       |  |  | 155.3   |  |  |  | 344.4   | 
|Raw Material Purchase
Commitments |  |                    | 285.0 |              |  |              | 185.0 |       |  |  | 725.0   |  |  |  | 1,195.0 | 
|                                 
|Total                             |  |                    | 405.1 |              |  |              | 267.7 |       |  |  | 1,880.3 |  |  |  | 2,553.1 | 
|                                 

Long-term debt primarily consists of $1,000.0 million of notes payable that were issued under the shelf registration
statement and $13.6 million Adjustable Rate Industrial Revenue and Pollution Control Obligations. The notes payable are
unsecured, bear interest at rates between 7.125 percent ($400.0 million) and 7.75 percent ($600.0 million) and have
no sinking fund requirements. The notes are subject to covenants and events of default, including an event of default for
acceleration of other debt in excess of $50.0 million. The Adjustable Rate Industrial Revenue and Pollution Control
Obligations bear interest at varying rates, are secured by bank letters of credit and have no sinking fund requirements.

Operating leases consist primarily of three items. The first is railcars that are used to transport finished goods and raw
materials. These leases extend out to approximately 2020. The second is the lease of port facilities at the Port of Saint
John for shipping New Brunswick potash offshore. This lease runs until 2018. The company leases two vessels for
transporting ammonia from Trinidad. These leases extend to 2008.

(PIE CHART)

The company has long-term agreements for the purchase of sulfur for use in the
production of phosphoric acid. These agreements provide for minimum purchase
quantities and prices based on market rates at the time of delivery. The commitments
included in the above table are based on the market prices for the first quarter of 2002.

PotashCorps Trinidad subsidiaries have entered into long-term natural gas contracts
with the National Gas Company of Trinidad. The contracts provide for prices which vary
with ammonia market prices, escalating floor prices and minimum purchase quantities.
The commitments included in the above table are based on floor prices and minimum
purchase quantities.

The company also has a long-term agreement for the purchase of phosphate rock used
at the Geismar facility. This agreement sets base price (less volume discounts) for the
first three years. Prices in subsequent years are subject to renegotiation. The
commitments included in the above table are based on the expected purchase quantity
and the set base price (less applicable discounts).

The company has a syndicated credit facility, renewable annually, which provides for
unsecured advances. The amount available is the total committed amount less the

36



---



##### 





|Liquidity
|---------

|                           |  |            |       |                   |  |                    |       |  |  |  |       | 
|-------------------------- |  | ---------- | ----- | ----------------- |  | ------------------ | ----- |  |  |  | ----- | 
|                          
|                           |  |            |       |                   |  | Dollars (millions) |       |  |  | 
|                           |  | Total      |       | Available at      |  | Outstanding at    
|                           |  | Commitment |       | December 31, 2001 |  | December 31, 2001 
|                          
|Syndicated Credit Facility |  |            | 650.0 |                   |  |                    | 256.9 |  |  |  |      | 
|                          
|Lines of Credit            |  |            | 149.1 |                   |  |                    | 133.3 |  |  |  | 108.0 | 
|                          
|Commercial Paper           |  |            | 500.0 |                   |  |                    | 500.0 |  |  |  | 393.1 | 
|                          

amount of commercial paper outstanding. The lines of credit are also renewable annually
and the amount available is reduced by outstanding letters of credit. Both the
syndicated credit facility and the lines of credit have financial and other covenants which
the company must comply with at each quarter end. The principal covenants require
debt to capital of less than 0.55:1, long-term debt to EBITDA of less than 3.5:1, tangible
net worth greater than $1,250.0 million and debt of subsidiaries less than $250.0 million.
The company was in compliance with these covenants at December 31, 2001.

The company also has a commercial paper program which has been authorized by the
Board of Directors. Access to this source of short-term financing depends primarily on
the companys rating by Dominion Bond Rating Service (DBRS) and conditions in the
money markets. The company is currently rated by DBRS as R1 Low which should allow
unrestricted access to the money markets.

The company believes that internally generated cash flow, supplemented by borrowing
from existing financing sources, will be sufficient to meet its anticipated capital
expenditures and other cash requirements, exclusive of any possible acquisitions, in 2002.

(PIE CHART)

Fair Value of Gas Hedging Contracts

In addition to physical spot and term purchases, PotashCorp employs futures, swaps and option agreements to
establish the cost on a portion of its natural gas requirements. These instruments are intended to hedge the future cost
of the committed and anticipated natural gas purchases for its US nitrogen and phosphate plants. The maximum period
for these hedges cannot exceed five years. PotashCorp uses these instruments to reduce price risk, not for speculative
or trading purposes.

The fair value of the companys gas hedging contracts at December 31, 2001 was $8.9 million ($218.4 million at
December 31, 2000). The companys futures contracts are exchange-traded and fair value was determined based on
exchange prices. Swaps and option agreements are traded in the over-the-counter market and fair value was calculated
based on a price that was converted to an exchange-equivalent price. (See Note 24 to the consolidated financial
statements for a discussion of the companys financial instruments and risk management.)



|Related Party Transactions
|--------------------------

The company sells potash from its Saskatchewan mines for use outside of North America
exclusively to Canpotex Limited, a potash export, sales and marketing company owned in
equal shares by the three potash producers in the Province of Saskatchewan. Sales to
Canpotex Limited are at prevailing market prices and are settled on normal trade terms.
The company has no other significant related party transactions.



|Critical Accounting Policies
|----------------------------

The companys accounting policies are in accordance with accounting principles
generally accepted in Canada. These differ in some respects from accounting principles
generally accepted in the United States. These differences are explained and quantified
in Note 30 of the companys consolidated financial statements.

The accounting policies followed by PotashCorp will affect the reported amount
of assets, liabilities, revenues and expenses. The company believes that the following
policies are most significant in determining the results of operations and financial position.

(PIE CHART)

37



---



##### 



(BAR GRAPH)

Revenue Recognition

Sales revenue is recognized when there is a firm sales order for product and the product
has been physically shipped from the companys location to the customer. There are no
significant product returns as the companys quality control procedures ensure that
product meets customer specifications prior to shipment. Revenue is recorded based on
the F.O.B. mine, plant, warehouse or terminal price. Transportation and distribution costs
and freight costs recovered from customers are netted against sales revenue.

Financial Instruments

The company enters into forward exchange contracts and natural gas futures, swaps
and option agreements to manage its exposure to exchange rate and commodity price
fluctuations. These activities have been designated as hedging activities by the
company. Gains or losses on foreign currency exchange contracts are recognized
monthly and included in foreign exchange in the statement of income and retained
earnings. Gains or losses resulting from changes in the fair value of natural gas hedging
transactions which have not yet been settled are not recognized, as they generally relate
to changes in the spot price of anticipated natural gas purchases. Gains or losses from
settled transactions are deferred as a component of inventory until the product
containing the hedged item is sold, at which time both the natural gas purchase cost
and the related hedging deferral are recorded as cost of sales.

Depreciation and Amortization

The company utilizes the units of production method of depreciation for all mine assets and the potash mills. This
method uses depreciation rates that are based on estimates of proven and probable reserves. There may be imprecision
in these reserve estimates. In periods when there is no production from a mine or potash mill, there is no charge for
depreciation. The companys other assets are depreciated on a straight-line basis which results in a level charge for
depreciation that is approximately the same whether producing or not.

Other Assets

Costs, net of revenues earned, incurred to obtain commercial production levels at new plants are capitalized as deferred
preproduction costs and then amortized over 10 years. Rotational plant maintenance costs which consist of planned
major maintenance projects are also capitalized when incurred and amortized over the period until the next scheduled
rotational plant maintenance, which ranges from two to four years.

(LINE GRAPH)

Inventories

Inventories of finished product, raw materials and work in process are valued at the lower
of cost and net realizable value, with cost determined using the first in, first out method.
Certain inventories of materials and supplies are valued at the lower of average cost and
replacement cost and certain inventories are valued at the lower of cost and market.



|Outlook
|-------

PotashCorp believes it is well placed to generate strong cash flow and earnings over the
long term due to the high quality of its assets. Fertilizer products, which represent the
majority of its sales, are a bulk commodity where lowest delivered cost is the
underpinning of a companys long-term competitive position. Rising world population and
the demand for more food and better diets, with meat as a protein source, will drive
fertilizer consumption growth over the long term. The companys excess potash capacity,
contrasted with the high capital cost of developing new capacity with limited world potash
reserves, should secure the future for potash. Similarly, its low-cost, extensive phosphate
rock reserves, particularly in North Carolina, provide a firm foundation for its phosphate
business. The companys growing phosphate product diversification also provides some
protection against new capacity developments, the world opportunities for which are
more extensive than with potash. Long-term, the companys extensive nitrogen
production base in Trinidad, with lower-priced, indexed natural gas, should provide



38



---



##### 



positive earnings support in the face of cheap offshore gas nitrogen capacity that is displacing higher-cost gas nitrogen
plants in North America. Utilizing its superior asset base to grow earnings over time, the challenge for the company is to
minimize short-term earnings volatility as a result of fluctuations in demand, particularly with potash sales in offshore
markets, and to fend off the impact of new capacity additions around the world, particularly in phosphate and nitrogen.

Long-term prospects are positive. For fertilizer the future is promising. The recommended nutrient application ratios
of nitrogen:phosphate:potash
(N:P2O5:K2O in grain-based agriculture are 1:0.5:0.5 and few countries have achieved
that. Even the US  now 1:0.4:0.4  has fallen behind with its recent practice of mining the soils. China and India
both now have a ratio of 1:0.4:0.1. Agronomists and government officials in developing nations understand the
need to improve their ratios and are committed to increasing fertilizer consumption. Government ministers in
both India and China have spoken publicly about the need to better balance consumption patterns. Farmers
everywhere must balance their fertilizer application to maintain soil fertility so a growing world population can be fed
from the current arable land base.

Although the outlook for 2002 is uncertain, a rebound in North American consumption
is anticipated, as farmers know they need to replenish their soil nutrients. More acres
are expected to be planted and application rates should be up. The new US Farm
Bill, which affects farm income, has been passed by the senate but is not yet final.
This creates uncertainty.

Generally, corn prices appear to have bottomed out. Global food production will lag
behind consumption again this year. Corn stocks, a leading indicator, are projected
to be down, a situation that has historically supported higher prices.

Nitrogen prices are much lower than a year ago and new Latin American production
tempers any immediate upside unless gas prices rise, shutting down North American
production. It will be difficult to match earnings from the first half of 2001. With low
gas prices, the company is unlikely to reap the earnings gain its gas hedges provided
last year. In fact, its present hedge position, when compared to the current NYMEX
futures price for natural gas, would increase annual costs by approximately
$20 million, with half of that loss expected in the first quarter. Though imports are
generally reduced, they continue to be higher in nitrogen solutions, putting pressure
on this product. However, lower prices should encourage consumption.

The growth in world demand for phosphate fertilizers will take some time to surge
ahead of the new capacity in India and Australia, keeping a lid on DAP prices. US
DAP inventories are manageable and China will likely import more. Chinas entry to
the WTO gives exporters better access to that market but provides no guarantees
regarding purchase levels. It is improbable that China will reach its full quota potential
in 2002, keeping DAP prices from increasing significantly and underscoring the
problem of depressed world demand weighing on the recovery of the DAP market.
Gross margin from DAP is expected to be negative.

On the cost side, ammonia, a key phosphate input, is lower than a year ago, which
will reduce operating costs, but sulfur costs are rising. Curtailed operating rates will
also increase costs.



|  |  | Fertilizer Indicators to Watch                                
|- |  | --------------------------------------------------------------
| 
| |  | North American natural gas prices                             
| 
| |  | Indias subsidies and DAP
production                          
| 
| |  | Chinas implementation of WTO
agreement and fertilizer imports
| 
| |  | Crop prices                                                   
| 
| |  | US Farm Bill developments                                     
| 
| |  | US acreage planted                                            
| 
| |  | Industry consolidation                                        





|  |  | Non-Fertilizer Indicators to Watch                                                                                        
|- |  | --------------------------------------------------------------------------------------------------------------------------
| 
| |  | Health of US and world
economies                                                                                          
| 
| |  | Effect of livestock diseases on
meat consumption and shift in
demand to phosphate feed
supplements from meat and
bone meal
| 
| |  | Industrial inventories                                                                                                    
| 
| |  | Closure of furnace-grade
phosphoric acid plants                                                                           

Potash demand is expected to improve in North America but the offshore picture is more cloudy. On the negative side,
China ended 2001 with high inventories, which could affect its 2002 first-half purchases. In spite of this, sales
volumes should improve in 2002, although the record levels of 2000 are not expected to be reached. On the positive
side, IPC raised prices there in early 2002. Thus, offshore prices are expected to remain stable although North
American prices may be under pressure as other companies continue to seek in potash a short-term solution to their
poor earnings in other nutrients.

Increased sales volumes, if realized, will reduce shutdowns at the potash mines for inventory correction, which would
influence production costs on a year-over-year basis. Fewer shutdown weeks are expected than the 63 incurred in 2001.

Demand for nitrogen industrial products should increase with an economic rebound and further industry
rationalization could correct areas of oversupply. Phosphate industrial sales are expected to continue to be good, with
steady prices and volumes.

39



---



##### 



Improving demand is anticipated for PotashCorps phosphate feed supplements in 2002 and for its Fosfatos production,
thanks to the growing Brazilian market. Prices should be stable for all feed products. Long-term, demand will be driven
by the desire of more and more people worldwide to add meat, poultry and dairy products to their diets, so continued
growth is expected in this area. In addition, as consumers apprehension about food safety increases, they are expected
to turn away from meat and bone meal in feed which should boost demand for inorganic phosphate in animal feed.

Capital expenditures in 2002 for property, plant and equipment are expected to approximate $225.0 million, including
$83.0 million for finishing the construction of a feed plant and expansion of purified acid production at Aurora.
Depreciation and amortization are expected to approximate $220.0 million due to full-year depreciation charges in
Trinidad, the start-up of the PCS Yumbes plant (from which the company does not anticipate a positive earnings
contribution in 2002) and accelerated amortization of nitrogen turnaround costs.

The effective consolidated income tax rate for 2002 is expected to approximate 36 percent with the current/future split
estimated as 80 percent current and 20 percent future. The increase in the cash component of income tax expense is
primarily due to increased earnings in Canada (which are subject to cash taxes). The actual annual rate will be highly
dependent on the source of earnings, with higher potash earnings increasing the current component and higher
nitrogen and phosphate earnings increasing the future component.

Overall, the company is projecting earnings in the range of $2.00 per share in 2002 and cash flow from operations (before
changes in non-cash operating working capital) in the range of $6.00 per share. As evidenced by the earnings decline in
2001 relative to PotashCorps initial guidance, unpredicted intervening events such as the reduction in natural gas prices in
2001 or changes in purchasing practices of major importing countries can materially affect the accuracy of such projections.



|Key Earnings Sensitivities
|--------------------------

Earnings of the companys three nutrient segments are sensitive to a number of factors. The key factors by segment
and their approximate effect on earnings per share (EPS) based on assumptions comparable to 2001 actuals are:

|                                                   |  |  |        | 
|-------------------------------------------------- |  |  | ------ | 
|Potash                                             |  |  |        | 
| Price changes by $5.00 per tonne                 |  |  | ±$0.30 | 
| Sales volumes changes by 100,000 tonnes          |  |  | ±$0.05 | 
|Phosphate                                          |  |  |        | 
| DAP/MAP price changes by $5.00 per tonne         |  |  | ±$0.05 | 
|Nitrogen                                           |  |  |        | 
| Urea or ammonia price changes by $5.00 per tonne |  |  | ±$0.10 | 

Due to the large volumes of potash sold as compared to DAP/MAP or urea/ammonia, the change in potash prices has
a much larger effect on EPS than do the products with lower sales volumes. Changes in potash sales volumes have
much less impact due to the additional cost of sales associated with the extra tonnes sold.



|Forward-Looking Statements
|--------------------------

Certain statements in this annual report and this Managements Discussion and Analysis of Financial Condition and
Results of Operations, including those in the Outlook section, relating to the period after December 31, 2001, are
forward-looking statements subject to risks and uncertainties. A number of factors could cause actual results to differ
materially from those expressed in the forward-looking statements, including, but not limited to: fluctuation in supply
and demand in fertilizer, sulfur and petrochemical markets; changes in competitive pressures, including pricing
pressures; risks associated with natural gas and other hedging activities; changes in capital markets; changes in
currency and exchange rates; unexpected geological or environmental conditions; imprecision in reserve estimates; the
outcome of legal proceedings; changes in government policy and regulation; and acquisitions the company may
undertake in the future. The company sells to a diverse group of customers both by geography and by end product.
Market conditions will vary on a year-over-year basis and sales can be expected to shift from one period to another. The
company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result
of new information, future events or otherwise.

40



---



##### 



11 Year Report

for the years ended December 31

|                                                   |  |      |         |      |  |      |         |      |  |         |         |      |  |         |         |         |  |         |         |      |  |      |         |  |  |  |         |  |  |  |         |  |  |  |         |  |  |  |       |  |  |  |       | 
|-------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | ---- |  | ------- | ------- | ---- |  | ------- | ------- | ------- |  | ------- | ------- | ---- |  | ---- | ------- |  |  |  | ------- |  |  |  | ------- |  |  |  | ------- |  |  |  | ----- |  |  |  | ----- | 
|                                                   |  | 2001 |         | 2000 |  | 1999 |         | 1998 |  | 1997(4) |         | 1996 |  | 1995(3) |         | 1994(2) |  | 1993(1) |         | 1992 |  | 1991
|Financial Data($millions except per share amounts) |  |      |         |      |  |      |         |      |  |         |         |      |  |         |         |         |  |         |         |      |  |      |         |  |  |  |         |  |  |  |         |  |  |  |         |  |  |  |       | 
|Net Sales                                          |  |      | 2,072.7 |      |  |      | 2,231.6 |      |  |         | 2,061.1 |      |  |         | 2,307.8 |         |  |         | 2,325.9 |      |  |      | 1,403.9 |  |  |  | 856.1   |  |  |  | 363.1   |  |  |  | 212.2   |  |  |  | 214.1 |  |  |  | 206.8 | 
|Operating Income (Loss)                            |  |      | 269.7   |      |  |      | 326.8   |      |  |         | (353.0  | )    |  |         | 442.3   |         |  |         | 442.0   |      |  |      | 297.4   |  |  |  | 219.6   |  |  |  | 97.5    |  |  |  | 56.9    |  |  |  | 50.6  |  |  |  | 39.1  | 
|Net Income (Loss)*(5)                              |  |      | 121.2   |      |  |      | 198.0   |      |  |         | (412.0  | )    |  |         | 261.0   |         |  |         | 297.1   |      |  |      | 209.0   |  |  |  | 159.5   |  |  |  | 91.2    |  |  |  | 44.7    |  |  |  | 39.8  |  |  |  | 31.3  | 
|Net Income (Loss) per Share Basic                 |  |      | 2.34    |      |  |      | 3.78    |      |  |         | (7.60   | )    |  |         | 4.82    |         |  |         | 5.68    |      |  |      | 4.59    |  |  |  | 3.68    |  |  |  | 2.12    |  |  |  | 1.13    |  |  |  | 1.03  |  |  |  | 0.81  | 
|Net Income (Loss) per Share Diluted               |  |      | 2.32    |      |  |      | 3.76    |      |  |         | (7.60   | )    |  |         | 4.79    |         |  |         | 5.63    |      |  |      | 4.54    |  |  |  | 3.64    |  |  |  | 2.12    |  |  |  | 1.12    |  |  |  | 1.02  |  |  |  | 0.81  | 
|Dividends per Share                                |  |      | 1.00    |      |  |      | 0.99    |      |  |         | 0.99    |      |  |         | 0.96    |         |  |         | 1.03    |      |  |      | 1.06    |  |  |  | 1.06    |  |  |  | 0.77    |  |  |  | 0.53    |  |  |  | 0.51  |  |  |  | 0.51  | 
|Cash Provided by Operating Activities              |  |      | 75.7    |      |  |      | 480.4   |      |  |         | 343.6   |      |  |         | 578.0   |         |  |         | 467.8   |      |  |      | 296.2   |  |  |  | 233.5   |  |  |  | 150.7   |  |  |  | 49.8    |  |  |  | 57.4  |  |  |  | 53.8  | 
|Working Capital                                    |  |      | 47.1    |      |  |      | (148.7  | )    |  |         | (104.8  | )    |  |         | 329.2   |         |  |         | 281.7   |      |  |      | 278.8   |  |  |  | 136.1   |  |  |  | 103.3   |  |  |  | 37.0    |  |  |  | 70.9  |  |  |  | 47.4  | 
|Total Assets                                       |  |      | 4,597.3 |      |  |      | 4,145.7 |      |  |         | 3,916.8 |      |  |         | 4,534.3 |         |  |         | 4,427.6 |      |  |      | 2,494.4 |  |  |  | 2,581.8 |  |  |  | 1,027.8 |  |  |  | 1,036.4 |  |  |  | 915.0 |  |  |  | 898.8 | 
|Total Long-Term Debt                               |  |      | 1,013.7 |      |  |      | 413.7   |      |  |         | 437.0   |      |  |         | 933.3   |         |  |         | 1,130.0 |      |  |      | 620.0   |  |  |  | 714.5   |  |  |  | 2.0     |  |  |  | 20.1    |  |  |  | 48.9  |  |  |  | 54.4  | 
|Shareholders Equity                               |  |      | 2,086.5 |      |  |      | 2,012.1 |      |  |         | 1,962.4 |      |  |         | 2,453.8 |         |  |         | 2,227.9 |      |  |      | 1,405.5 |  |  |  | 1,241.9 |  |  |  | 964.3   |  |  |  | 903.7   |  |  |  | 809.5 |  |  |  | 788.9 | 
|Operating Data(thousands)                          |  |      |         |      |  |      |         |      |  |         |         |      |  |         |         |         |  |         |         |      |  |      |         |  |  |  |         |  |  |  |         |  |  |  |         |  |  |  |       |  |  |  |       | 
|Employees at Year-End(Actual Numbers)              |  |      | 4,997   |      |  |      | 5,338   |      |  |         | 5,498   |      |  |         | 5,744   |         |  |         | 5,751   |      |  |      | 4,490   |  |  |  | 4,579   |  |  |  | 1,781   |  |  |  | 1,818   |  |  |  | 1,415 |  |  |  | 1,227 | 
|Potash Production(KCl) Tonnage                     |  |      | 6,128   |      |  |      | 7,149   |      |  |         | 6,388   |      |  |         | 6,995   |         |  |         | 6,483   |      |  |      | 5,782   |  |  |  | 6,071   |  |  |  | 5,298   |  |  |  | 3,902   |  |  |  | 3,850 |  |  |  | 4,030 | 
|Phosphate
Production(P2O5) Tonnage                 |  |      | 1,573   |      |  |      | 2,042   |      |  |         | 2,124   |      |  |         | 2,363   |         |  |         | 2,282   |      |  |      | 2,096   |  |  |  | 1,008   |  |  |  |        |  |  |  |        |  |  |  |      |  |  |  |      | 
|Nitrogen Production(N) Tonnage                     |  |      | 3,032   |      |  |      | 2,706   |      |  |         | 3,138   |      |  |         | 3,121   |         |  |         | 2,349   |      |  |      |        |  |  |  |        |  |  |  |        |  |  |  |        |  |  |  |      |  |  |  |      | 
|Potash Sales KCl Tonnes                           |  |      | 6,243   |      |  |      | 6,912   |      |  |         | 6,474   |      |  |         | 6,283   |         |  |         | 6,640   |      |  |      | 5,612   |  |  |  | 5,848   |  |  |  | 5,569   |  |  |  | 3,795   |  |  |  | 3,737 |  |  |  | 3,909 | 
|Phosphate Sales Product Tonnes                    |  |      | 3,045   |      |  |      | 3,893   |      |  |         | 4,016   |      |  |         | 4,627   |         |  |         | 4,434   |      |  |      | 4,305   |  |  |  | 2,206   |  |  |  |        |  |  |  |        |  |  |  |      |  |  |  |      | 
|Nitrogen Sales Product Tonnes                     |  |      | 7,350   |      |  |      | 7,703   |      |  |         | 7,951   |      |  |         | 7,825   |         |  |         | 6,775   |      |  |      | 535     |  |  |  | 115     |  |  |  |        |  |  |  |        |  |  |  |      |  |  |  |      | 
|Net Sales($ millions)                              |  |      |         |      |  |      |         |      |  |         |         |      |  |         |         |         |  |         |         |      |  |      |         |  |  |  |         |  |  |  |         |  |  |  |         |  |  |  |       |  |  |  |       | 
|Potash                                             |  |      | 525.5   |      |  |      | 578.7   |      |  |         | 563.3   |      |  |         | 545.5   |         |  |         | 504.2   |      |  |      | 403.2   |  |  |  | 421.0   |  |  |  | 363.1   |  |  |  | 212.2   |  |  |  | 214.1 |  |  |  | 206.8 | 
|Phosphate                                          |  |      | 651.8   |      |  |      | 782.5   |      |  |         | 843.8   |      |  |         | 1,011.0 |         |  |         | 953.6   |      |  |      | 892.0   |  |  |  | 412.1   |  |  |  |        |  |  |  |        |  |  |  |      |  |  |  |      | 
|Nitrogen                                           |  |      | 895.4   |      |  |      | 870.4   |      |  |         | 654.0   |      |  |         | 751.3   |         |  |         | 868.1   |      |  |      | 108.7   |  |  |  | 23.0    |  |  |  |        |  |  |  |        |  |  |  |      |  |  |  |      | 
|                                                  
|Total Net Sales                                    |  |      | 2,072.7 |      |  |      | 2,231.6 |      |  |         | 2,061.1 |      |  |         | 2,307.8 |         |  |         | 2,325.9 |      |  |      | 1,403.9 |  |  |  | 856.1   |  |  |  | 363.1   |  |  |  | 212.2   |  |  |  | 214.1 |  |  |  | 206.8 | 
|                                                  



|(1) |  | Data for 1993 and thereafter reflect the acquisition of Potash Company of America assets on October 7, 1993.                                                                                                                                                                                                                                      
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | The financial statements of the company for 1994 and prior years have been restated to US dollars in accordance with accounting principles generally accepted in Canada using
the Translation of Convenience Method. The Canadian dollar amounts for these periods have been converted to US dollars at the exchange rate of US$1.00 = CDN$1.4028.
|   
|   
|   
|   
|(3) |  | Data for 1995 and thereafter reflect the acquisition of Texasgulf Inc. on April 10, 1995 and the acquisition of White Springs Agricultural Chemicals, Inc. on October 31, 1995.                                                                                                                                                                   
|   
|   
|   
|   
|(4) |  | Data for 1997 and thereafter reflect the acquisition of Arcadian Corporation on March 6, 1997.                                                                                                                                                                                                                                                    
|   
|   
|   
|   
|(5) |  | There were no extraordinary items nor were there any discontinued operations in any of the accounting periods.                                                                                                                                                                                                                                    



|                                 |  |  |       |   |  |  |       |  |  |  |       |   |  |  |       |   |  |  |       |   |  |  |       |  |  |  |       |  |  |  |       |  |  |  |      |  |  |  |      |  |  |  |      | 
|-------------------------------- |  |  | ----- | - |  |  | ----- |  |  |  | ----- | - |  |  | ----- | - |  |  | ----- | - |  |  | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | ---- |  |  |  | ---- |  |  |  | ---- | 
|Financial Performance Indicators
|EBITDA ($ millions)              |  |  | 455.4 |   |  |  | 524.5 |  |  |  | 401.8 |   |  |  | 633.2 |   |  |  | 612.0 |   |  |  | 387.5 |  |  |  | 290.6 |  |  |  | 136.8 |  |  |  | 86.8 |  |  |  | 80.0 |  |  |  | 67.0 | 
|Cash Flow Return (%)             |  |  | 8     |   |  |  | 11    |  |  |  | (4    | ) |  |  | 13    |   |  |  | 13    |   |  |  | 12    |  |  |  | 14    |  |  |  | 10    |  |  |  | 7    |  |  |  | 7    |  |  |  | 6    | 
|Total Shareholder Return (%)     |  |  | (20   | ) |  |  | 65    |  |  |  | (23   | ) |  |  | (22   | ) |  |  | (1    | ) |  |  | 21    |  |  |  | 112   |  |  |  | 36    |  |  |  | 29   |  |  |  | 15   |  |  |  | 33   | 
|Net Debt to Capital (%)          |  |  | 41    |   |  |  | 29    |  |  |  | 31    |   |  |  | 28    |   |  |  | 35    |   |  |  | 31    |  |  |  | 40    |  |  |  |      |  |  |  | 9    |  |  |  | 7    |  |  |  | 9    | 

The company has included the above data because such data are used by certain investors and analysts as either a measure of liquidity, a measure of a companys ability to service debt or
as a valuation measurement. Such data are included for convenience only. These data are not a measure of financial performance under either Canadian GAAP or US GAAP. In evaluating
such data, investors should consider that the methodology applied in calculating the data may differ among companies and analysts. (See Financial Terms on inside back cover.)

The consolidated financial statements of the company have been prepared in accordance with Canadian generally accepted accounting principles. These principles differ in some
respects from those applicable in the United States (see Note 30 to the companys consolidated financial statements).

Additional Information



|* |  | Data for 1999 include the effects of charges for plant closures and office consolidation and asset impairments of $591.6 million. Net income in 2000 and 1999, exclusive of
one-time charges, was $199.5 million and $135.1 million respectively.
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41



---



##### 



Managements Responsibility



|For Financial Reporting
|-----------------------

The accompanying consolidated financial statements and related financial information are the responsibility of PotashCorp
management and have been prepared in accordance with accounting principles generally accepted in Canada and include amounts based
on estimates and judgments. Financial information included elsewhere in this report is consistent with the consolidated financial statements.

To meet managements responsibility for financial reporting and to obtain reasonable assurance for the integrity and reliability of
the financial reports, the companys accounting and internal control systems are designed to safeguard assets and to properly record
transactions and events. Policies and procedures are maintained to support the accounting and internal control systems.

Our independent auditors, Deloitte & Touche LLP, provide an objective, independent audit of the consolidated financial
statements. Their report for 2001 is included.

The Board of Directors, through the audit committee composed exclusively of outside directors, meets regularly with the
independent auditors  both jointly and separately  to review significant accounting, reporting and internal control matters. The
audit committee also recommends to the Board the independent auditors to be proposed to the shareholders for appointment at the
annual meeting. Interim consolidated financial statements are reviewed by the audit committee prior to release to shareholders.

The consolidated financial statements are approved by the Board of Directors on the recommendation of the audit committee.

|                                                                               |  |                                                                                
|------------------------------------------------------------------------------ |  | -------------------------------------------------------------------------------
|(-s- W. DOYLE)
W. Doyle
President and
Chief Executive Officer
February 8, 2002 |  | (-s- W. BROWNLEE)
W. Brownlee
Senior Vice President and
Chief Financial Officer



---

Auditors Report



|To The Shareholders of Potash Corporation of Saskatchewan Inc.
|--------------------------------------------------------------

We have audited the consolidated statements of financial position of Potash Corporation of Saskatchewan Inc. as at
December 31, 2001 and 2000 and the consolidated statements of income and retained earnings and of cash flow for each of the years
in the three-year period ended December 31, 2001. These financial statements are the responsibility of the companys management.
Our responsibility is to express an opinion on these financial statements based on our audits.

With respect to the consolidated financial statements for each of the years in the two-year period ended December 31, 2001, we
conducted our audits in accordance with Canadian generally accepted auditing standards and United States generally accepted auditing
standards. With respect to the consolidated financial statements for the period ended December 31, 1999, we conducted our audit in
accordance with Canadian generally accepted auditing standards. These standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the company
as at December 31, 2001 and 2000, and the results of its operations and its cash flows for each of the years in the three-year period
ended December 31, 2001 in accordance with Canadian generally accepted accounting principles.

|                                         |  |                                                  
|---------------------------------------- |  | -------------------------------------------------
|Saskatoon, Saskatchewan
February 8, 2002 |  | (-s- DELOITTE & TOUCHE LLP)
Chartered Accountants

Comments by Auditor on Canada-United States Reporting Difference

In the United States, reporting standards for auditors require the addition of an explanatory paragraph (following the opinion
paragraph) outlining changes in accounting principles that have been implemented in the financial statements. The company has
adopted the provisions of Section 3500 of the Canadian Institute of Chartered Accountants Handbook Earnings Per Share. The
impact of this change in accounting policy is set out in Note 3 to the consolidated financial statements.

42



---



##### 



Consolidated Statements of Financial Position

|                  |  |                          
|----------------- |  | -------------------------
|as at December 31 |  | in millions of US Dollars

|                                                                                                                                                   |                                                |   |         |       |      |   |         |       | 
|-------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | - | ------- | ----- | ---- | - | ------- | ----- | 
|                                                                                                                                                  
|                                                                                                                                                   |                                                |   | 2001    |       | 2000
|                                                                                                                                                  
|Assets                                                                                                                                             |                                                |   |         |       |      |   |         |      
|Current Assets                                                                                                                                     |                                                |   |         |       |      |   |         |      
|                                                                                                                                                   | Cash and cash equivalents                      |   | $       | 45.3  |      |   | $       | 100.0 | 
|                                                                                                                                                   | Accounts receivable (Note 4)                   |   |         | 256.7 |      |   |         | 326.6 | 
|                                                                                                                                                   | Inventories (Note 5)                           |   |         | 481.1 |      |   |         | 406.2 | 
|                                                                                                                                                   | Prepaid expenses                               |   |         | 36.5  |      |   |         | 38.9  | 
|                                                                                                                                                  
|                                                                                                                                                   |                                                |   | 819.6   |       |      |   | 871.7   |      
|Property, plant and equipment (Note 6)                                                                                                             |                                                |   | 3,245.6 |       |      |   | 2,910.1 |      
|Goodwill (Note 7)                                                                                                                                  |                                                |   | 97.0    |       |      |   | 106.4   |      
|Other assets (Note 8)                                                                                                                              |                                                |   | 435.1   |       |      |   | 257.5   |      
|                                                                                                                                                  
|                                                                                                                                                   |                                                | $ | 4,597.3 |       |      | $ | 4,145.7 |      
|                                                                                                                                                  
|Liabilities                                                                                                                                        |                                                |   |         |       |      |   |         |      
|Current Liabilities                                                                                                                                |                                                |   |         |       |      |   |         |      
|                                                                                                                                                   | Short-term debt (Note 9)                       |   | $       | 501.1 |      |   | $       | 488.8 | 
|                                                                                                                                                   | Accounts payable and accrued charges (Note 10) |   |         | 271.4 |      |   |         | 525.9 | 
|                                                                                                                                                   | Current portion of long-term debt (Note 11)    |   |         |      |      |   |         | 5.7   | 
|                                                                                                                                                  
|                                                                                                                                                   |                                                |   | 772.5   |       |      |   | 1,020.4 |      
|Long-term debt (Note 11)                                                                                                                           |                                                |   | 1,013.7 |       |      |   | 413.7   |      
|Future income tax liability (Note 21)                                                                                                              |                                                |   | 457.6   |       |      |   | 435.1   |      
|Accrued post-retirement/post-employment benefits (Note 13)                                                                                         |                                                |   | 177.3   |       |      |   | 175.1   |      
|Accrued reclamation costs (Note 14)                                                                                                                |                                                |   | 83.0    |       |      |   | 83.0    |      
|Other non-current liabilities and deferred credits                                                                                                 |                                                |   | 6.7     |       |      |   | 6.3     |      
|                                                                                                                                                  
|                                                                                                                                                   |                                                |   | 2,510.8 |       |      |   | 2,133.6 |      
|                                                                                                                                                  
|Contingencies(Note 25)                                                                                                                             |                                                |   |         |       |      |   |         |      
|Shareholders Equity                                                                                                                               |                                                |   |         |       |      |   |         |      
|Share Capital (Note 15)                                                                                                                            |                                                |   | 1,182.5 |       |      |   | 1,177.4 |      
|Unlimited authorization of common shares without par value;
issued and outstanding 51,952,482 and 51,840,572 shares
in 2001 and 2000, respectively |                                                |   |         |       |      |   |         |      
|Unlimited authorization of first preferred shares; none outstanding                                                                                |                                                |   |         |       |      |   |         |      
|Contributed Surplus                                                                                                                                |                                                |   | 264.2   |       |      |   | 264.2   |      
|Retained Earnings                                                                                                                                  |                                                |   | 639.8   |       |      |   | 570.5   |      
|                                                                                                                                                  
|                                                                                                                                                   |                                                |   | 2,086.5 |       |      |   | 2,012.1 |      
|                                                                                                                                                  
|                                                                                                                                                   |                                                | $ | 4,597.3 |       |      | $ | 4,145.7 |      
|                                                                                                                                                  

(See Notes to the Consolidated Financial Statements)

Approved by the Board,

|                           |  |                                
|-------------------------- |  | -------------------------------
|(-s- DALLAS HOWE)
Director |  | (-s- ROBERT STROMBERG)
Director

43



---



##### 



Consolidated Statements of Income and Retained Earnings

|                                |  |                                                   
|------------------------------- |  | --------------------------------------------------
|for the years ended December 31 |  | in millions of US Dollars except per share amounts

|                                                                |  |      |         |      |  |      |         |   |  |   |         |  
|--------------------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                               
|                                                                |  | 2001 |         | 2000 |  | 1999
|                                                               
|Net sales(Note 16)                                              |  | $    | 2,072.7 |      |  | $    | 2,231.6 |   |  | $ | 2,061.1 |  
|Cost of goods sold                                              |  |      | 1,673.5 |      |  |      | 1,748.8 |   |  |   | 1,652.8 |  
|                                                               
|Gross Margin                                                    |  |      | 399.2   |      |  |      | 482.8   |   |  |   | 408.3   |  
|                                                               
|Selling and administrative                                      |  |      | 99.7    |      |  |      | 111.0   |   |  |   | 116.3   |  
|Provincial mining and other taxes (Note 17)                     |  |      | 70.0    |      |  |      | 77.2    |   |  |   | 77.1    |  
|Provision for plant closures and
office consolidation (Note 18) |  |      |        |      |  |      | 24.3    |   |  |   | 65.0    |  
|Provision for asset impairment (Note 19)                        |  |      |        |      |  |      |        |   |  |   | 526.6   |  
|Foreign exchange                                                |  |      | (13.7   | )    |  |      | (8.1    | ) |  |   | 8.5     |  
|Other income                                                    |  |      | (26.5   | )    |  |      | (48.4   | ) |  |   | (32.2   | )
|                                                               
|                                                                |  |      | 129.5   |      |  |      | 156.0   |   |  |   | 761.3   |  
|                                                               
|Operating Income (Loss)                                         |  |      | 269.7   |      |  |      | 326.8   |   |  |   | (353.0  | )
|Interest Expense(Note 20)                                       |  |      | 80.3    |      |  |      | 61.6    |   |  |   | 51.5    |  
|                                                               
|Income (Loss) Before Income Taxes                               |  |      | 189.4   |      |  |      | 265.2   |   |  |   | (404.5  | )
|Income Taxes(Note 21)                                           |  |      | 68.2    |      |  |      | 67.2    |   |  |   | 7.5     |  
|                                                               
|Net Income (Loss)                                               |  |      | 121.2   |      |  |      | 198.0   |   |  |   | (412.0  | )
|Retained Earnings, Beginning of Year                            |  |      | 570.5   |      |  |      | 424.4   |   |  |   | 889.7   |  
|Dividends                                                       |  |      | (51.9   | )    |  |      | (51.9   | ) |  |   | (53.3   | )
|                                                               
|Retained Earnings, End of Year                                  |  | $    | 639.8   |      |  | $    | 570.5   |   |  | $ | 424.4   |  
|                                                               
|Net Income (Loss) per Share  Basic(Note 22)                    |  | $    | 2.34    |      |  | $    | 3.78    |   |  | $ | (7.60   | )
|                                                               
|Net Income (Loss) per Share  Diluted(Note 22)                  |  | $    | 2.32    |      |  | $    | 3.76    |   |  | $ | (7.60   | )
|                                                               
|Dividends per Share(Note 23)                                    |  | $    | 1.00    |      |  | $    | 0.99    |   |  | $ | 0.99    |  
|                                                               

(See Notes to the Consolidated Financial Statements)

44



---



##### 



Consolidated Statements of Cash Flow

|                                |  |                          
|------------------------------- |  | -------------------------
|for the years ended December 31 |  | in millions of US Dollars

|                                                              |                                                        |   |        |        |      |   |        |       |   |   |        |       |  
|------------------------------------------------------------- | ------------------------------------------------------ | - | ------ | ------ | ---- | - | ------ | ----- | - | - | ------ | ----- | -
|                                                             
|                                                              |                                                        |   | 2001   |        | 2000 |   | 1999  
|                                                             
|Operating Activities                                          |                                                        |   |        |        |      |   |        |       |   |   |        |      
|Net income (loss)                                             |                                                        | $ | 121.2  |        |      | $ | 198.0  |       |   | $ | (412.0 | )    
|Items not affecting cash                                      |                                                        |   |        |        |      |   |        |       |   |   |        |      
|                                                              | Depreciation and amortization                          |   |        | 185.7  |      |   |        | 187.0 |   |   |        | 191.1 |  
|                                                              | Loss (gain) on disposal of assets                      |   |        | 0.4    |      |   |        | (17.9 | ) |   |        | 0.5   |  
|                                                              | Provision for future income tax                        |   |        | 47.7   |      |   |        | 34.6  |   |   |        | (7.2  | )
|                                                              | Provision for plant closures and office consolidation  |   |        |       |      |   |        | 10.7  |   |   |        | 37.1  |  
|                                                              | Provision for asset impairment                         |   |        |       |      |   |        |      |   |   |        | 526.6 |  
|                                                              | Provision for post-retirement/post-employment benefits |   |        | 2.1    |      |   |        | 10.9  |   |   |        | 7.4   |  
|                                                             
|                                                              |                                                        |   | 357.1  |        |      |   | 423.3  |       |   |   | 343.5  |      
|Changes in non-cash operating working capital                 |                                                        |   |        |        |      |   |        |       |   |   |        |      
|                                                              | Accounts receivable                                    |   |        | 69.9   |      |   |        | (52.2 | ) |   |        | 33.8  |  
|                                                              | Inventories                                            |   |        | (76.1  | )    |   |        | (27.4 | ) |   |        | (16.1 | )
|                                                              | Prepaid expenses                                       |   |        | 2.3    |      |   |        | (3.1  | ) |   |        | 3.2   |  
|                                                              | Accounts payable and accrued charges                   |   |        | (244.6 | )    |   |        | 137.4 |   |   |        | (5.0  | )
|                                                              | Current income taxes                                   |   |        | (29.8  | )    |   |        | 15.1  |   |   |        | 8.1   |  
|Accrued reclamation costs                                     |                                                        |   | (3.7   | )      |      |   | (2.4   | )     |   |   | (20.7  | )    
|Other non-current liabilities and deferred credits            |                                                        |   | 0.6    |        |      |   | (10.3  | )     |   |   | (3.2   | )    
|                                                             
|Cash provided by operating activities                         |                                                        |   | 75.7   |        |      |   | 480.4  |       |   |   | 343.6  |      
|                                                             
|Investing Activities                                          |                                                        |   |        |        |      |   |        |       |   |   |        |      
|Additions to property, plant and equipment                    |                                                        |   | (513.7 | )      |      |   | (185.6 | )     |   |   | (118.8 | )    
|Acquisition of Minera Yolanda S.C.M.                          |                                                        |   |       |        |      |   |       |       |   |   | (36.9  | )    
|Acquisition of Albright & Wilson Company                      |                                                        |   |       |        |      |   | (32.0  | )     |   |   |       |      
|Investment in Sociedad Quimica y Minera
de Chile S.A. (SQM) |                                                        |   | (130.4 | )      |      |   |       |       |   |   |       |      
|Proceeds from disposal of assets                              |                                                        |   |       |        |      |   | 8.6    |       |   |   | 1.9    |      
|Additions to other assets                                     |                                                        |   | (45.9  | )      |      |   | (56.4  | )     |   |   | (23.9  | )    
|                                                             
|Cash used in investing activities                             |                                                        |   | (690.0 | )      |      |   | (265.4 | )     |   |   | (177.7 | )    
|                                                             
|Cash (deficiency) before financing activities                 |                                                        |   | (614.3 | )      |      |   | 215.0  |       |   |   | 165.9  |      
|                                                             
|Financing Activities                                          |                                                        |   |        |        |      |   |        |       |   |   |        |      
|Proceeds from long-term obligations                           |                                                        |   | 600.0  |        |      |   | 11.1   |       |   |   |       |      
|Repayment of long-term obligations                            |                                                        |   | (5.8   | )      |      |   | (36.1  | )     |   |   | (490.1 | )    
|Proceeds from short-term debt                                 |                                                        |   | 12.2   |        |      |   | 169.5  |       |   |   | 379.6  |      
|Repayment of short-term debt                                  |                                                        |   |       |        |      |   | (155.2 | )     |   |   |       |      
|Dividends                                                     |                                                        |   | (51.9  | )      |      |   | (51.9  | )     |   |   | (53.3  | )    
|Repurchase of shares                                          |                                                        |   |       |        |      |   | (104.2 | )     |   |   | (29.3  | )    
|Issuance of shares                                            |                                                        |   | 5.1    |        |      |   | 7.8    |       |   |   | 3.2    |      
|                                                             
|Cash provided by (used in) financing activities               |                                                        |   | 559.6  |        |      |   | (159.0 | )     |   |   | (189.9 | )    
|                                                             
|(Decrease) Increase in Cash and Cash Equivalents              |                                                        |   | (54.7  | )      |      |   | 56.0   |       |   |   | (24.0  | )    
|Cash and Cash Equivalents, Beginning of Year                  |                                                        |   | 100.0  |        |      |   | 44.0   |       |   |   | 68.0   |      
|                                                             
|Cash and Cash Equivalents, End of Year                        |                                                        | $ | 45.3   |        |      | $ | 100.0  |       |   | $ | 44.0   |      
|                                                             
|Supplemental cash flow disclosure                             |                                                        |   |        |        |      |   |        |       |   |   |        |      
|Interest paid                                                 |                                                        | $ | 79.3   |        |      | $ | 66.4   |       |   | $ | 57.7   |      
|Income taxes paid                                             |                                                        | $ | 41.5   |        |      | $ | 13.4   |       |   | $ | 5.8    |      
|                                                             

(See Notes to the Consolidated Financial Statements)

45



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

1. DESCRIPTION OF BUSINESS

Potash Corporation of Saskatchewan Inc. (PotashCorp) and its
operating subsidiaries (the company except to the extent the
context otherwise requires) form an integrated fertilizer and related
industrial and feed products company. The company has producing
assets in the following locations:



| |  | Potash
|- |  | ------

| |  |  | five mines and mills and mining rights to potash reserves at a
sixth location, all in the province of Saskatchewan
| | - |  | ------------------------------------------------------------------------------------------------------------------
| |  |  | one mine and two mills in the province of New Brunswick                                                           
| |  |  | one plant in Chile that produces sodium nitrate, potassium
nitrate and other products                             



| |  | Phosphate
|- |  | ---------

| |  |  | vertically integrated phosphate mine and processing plant in the
state of North Carolina
| | - |  | ----------------------------------------------------------------------------------------
| |  |  | phosphate feed plants in four states and one in Brazil                                  
| |  |  | two industrial phosphoric acid plants                                                   
| |  |  | a mine and two processing plant complexes in the state of
Florida                       
| |  |  | processing plant complex in the state of Louisiana                                      



| |  | Nitrogen
|- |  | --------

| |  |  | four domestic plants located in the states of Georgia, Louisiana,
Ohio and Tennessee
| | - |  | ------------------------------------------------------------------------------------
| |  |  | large-scale operations in Trinidad                                                  

The company owns or leases in excess of 130 terminal and
warehouse facilities strategically located in Canada and the United
States, and services customers with a fleet of approximately 5,000
rail cars.

PotashCorp sells potash from its Saskatchewan mines for use
outside North America exclusively to Canpotex Limited (Canpotex).
Canpotex, a potash export, sales and marketing company owned in
equal shares by the three potash producers in the Province of
Saskatchewan (including the company), resells potash to offshore
customers. PCS Sales (Canada) Inc. and PCS Sales (USA), Inc.,
wholly-owned subsidiaries of PotashCorp, execute marketing and
sales for the companys potash, phosphate and nitrogen products in
North America. PCS Sales (Canada) Inc. executes offshore marketing
and sales for the companys New Brunswick potash. PCS Sales
(USA), Inc. generally executes offshore marketing and sales for the
companys nitrogen, potassium nitrate and sodium nitrate products.
Phosphate Chemicals Export Association, Inc. (PhosChem), an
unrelated phosphate export association established under United
States law, is the principal vehicle through which the company
executes offshore marketing and sales for its phosphate fertilizers.

2. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The companys accounting policies are in accordance with
Canadian generally accepted accounting principles (Canadian
GAAP). These policies are consistent with accounting principles
generally accepted in the United States (US GAAP) in all material
respects except as outlined in Note 30. The preparation of financial
statements in accordance with generally accepted accounting
principles requires management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates. The following policies are
considered to be significant:

Principles of Consolidation

The consolidated financial statements include the accounts of
PotashCorp and its principal operating subsidiaries:



| |  | PCS Sales (Canada) Inc.
|- |  | -----------------------

| |  |  | PCS Joint Venture, L.P.
| | - |  | -----------------------

| |  | PCS Sales (USA), Inc.      
|- |  | ---------------------------
| |  | PCS Phosphate Company, Inc.

| |  |  | PCS Purified Phosphates
| | - |  | -----------------------

| |  | White Springs Agricultural Chemicals, Inc. (White Springs)
|- |  | ------------------------------------------------------------
| |  | PCS Nitrogen, Inc.                                          

| |  |  | PCS Nitrogen Fertilizer, L.P.
| | - |  | -----------------------------
| |  |  | PCS Nitrogen Ohio, L.P.      
| |  |  | PCS Nitrogen Limited         
| |  |  | PCS Nitrogen Trinidad Limited

| |  | PCS Cassidy Lake Company (PCS Cassidy Lake)
|- |  | ---------------------------------------------
| |  | PCS Yumbes S.C.M.                            
| |  | PCS Fosfatos do Brasil Ltda.                 

All significant intercompany balances and transactions have
been eliminated.

Cash Equivalents

Highly liquid investments with an original maturity of three months
or less are considered to be cash equivalents.

Inventories

Inventories of finished product, raw materials and work in process
are valued at the lower of cost and net realizable value. Cost for
substantially all finished product, raw materials and work in process
inventories is determined using the first in, first out (FIFO) method.
Certain inventories of materials and supplies are valued at the lower
of average cost and replacement cost and certain inventories of
materials and supplies are valued at the lower of cost and market.

Prepaid Expenses

Prepaid expenses include prepaid freight relating to product
inventory stored at warehouse and terminal facilities, which is
invoiced to customers at the time of sale of the inventory.

Property, Plant and Equipment

Property, plant and equipment (which includes mine development
costs) are carried at cost, except for mineral properties, which are
carried at the lower of cost or fair value. Costs of additions,
betterments, renewals and interest during construction are
capitalized. The company periodically reviews property, plant and
equipment for indicators of potential impairment, which would be
measured by comparing book value against the estimated
undiscounted future cash flows. Any such impairment loss is
included in the statement of income.

Maintenance and repair expenditures, which do not improve or
extend productive life, are expensed as incurred.

Depreciation and Amortization

Depreciation and amortization are provided for on a basis and at
rates calculated to amortize the cost of the property, plant and
equipment over their estimated useful lives. Depreciation and
amortization rates for all mine assets (including mine development
costs) and potash mills are determined using the units of
production method based on estimates of proven and probable
reserves. Other asset classes are depreciated or amortized on a
straight-line basis as follows: land improvements 5 to 30 years,
buildings and improvements 6 to 30 years and machinery and
equipment 5 to 25 years.

46



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Goodwill

Goodwill represents the excess of the purchase price and related
costs over the value assigned to the net tangible assets of businesses
acquired and is carried at cost. Goodwill is being amortized on a
straight-line basis over a period of 40 years. The company assesses
impairment based on the estimated undiscounted future cash flows.
Impairment is measured by comparing book value against the
estimated undiscounted future cash flows and any such impairment
is included in the statement of income.

Other Assets

Issue costs of long-term obligations are capitalized to deferred
charges and are amortized to interest expense over the term of the
related liability.

Preproduction costs are capitalized to deferred charges and
represent costs incurred prior to obtaining commercial production at
new milling facilities, net of revenue earned, and are amortized on
either a straight-line or units of production basis over 10 years.

The costs of constructing bases for gypsum stacks and settling
ponds are capitalized to deferred charges and are amortized on a
straight-line basis over their estimated useful lives of 3 to 5 years.

Land held for sale is stated at the lower of cost or net
realizable value.

Investments in which the company exercises significant influence
(but does not control) are accounted for using the equity method.
Other investments are stated at cost.

Rotational plant maintenance costs, which consist primarily of
planned major maintenance projects (also known as turnarounds),
are capitalized when incurred and are amortized over the anticipated
periods until the next scheduled rotational plant maintenance, which
ranges from 2 to 4 years.

Leases

Leases entered into are classified as either capital or operating
leases. Leases that transfer substantially all of the benefits and risks
of ownership of property to the company are accounted for as capital
leases. At the time a capital lease is entered into, an asset is recorded
together with the related long-term obligation. Equipment acquired
under capital leases is being depreciated on the same basis as other
property, plant and equipment. Gains or losses resulting from sale-leaseback transactions are deferred and amortized in proportion to
the amortization of the leased asset. Rental payments under
operating leases are charged to expense as incurred.

Post-Employment and Post-Retirement Benefits

Accrual of the costs of the companys defined benefit pension
plans are recorded monthly and adjusted annually based on
actuaries reports. Pension expense includes the net of
managements best estimate of the cost of benefits provided, interest
cost of projected benefits, return on pension plan assets and
amortization of experience gains or losses and plan amendments.
Adjustments arising from plan amendments, experience gains or
losses and changes in assumptions are amortized on a straight-line
basis over the expected average remaining service life of the
employee group covered by the plan. Pension fund assets are valued
at market values.

Accrual of the costs of providing certain post-retirement benefits,
including medical and life insurance coverage, during the active
service period of the employee is recorded monthly and adjusted
annually as actuaries reports become available.

Accrual during periods of active employment, for the expected
cost of certain benefits payable to former or inactive employees, is
also recorded monthly and adjusted annually. These benefits include
long-term disability income payments and related medical and
insurance costs.

Environmental Costs

Environmental expenditures that relate to current operations are
expensed or capitalized as appropriate. Expenditures that relate to
existing conditions caused by past operations and that do not
contribute to current or future revenue generation are expensed.
Provisions for estimated costs are recorded when environmental
remedial efforts are likely and the costs can be reasonably estimated.
In determining the provisions, the company uses the most current
information available, including similar past experiences, available
technology, regulations in effect, the timing of remediation and cost-sharing arrangements.

Stock-Based Compensation Plans

The company has two stock-based compensation plans, which
are described in Note 15. No compensation expense is recognized
for these plans when stock options are issued, as the exercise price
is the quoted market closing price of the companys common shares
on the last trading day immediately preceding the date of the grant.
Any consideration paid on exercise of stock options is credited to
share capital.

Foreign Exchange Transactions

PotashCorp and its operating subsidiaries have the US dollar as
their functional currency.

Canadian dollar operating transactions are translated to US dollars
at the average exchange rate for the previous month. Trinidad dollar
operating transactions are translated to US dollars at the average
exchange rate for the period. Monetary assets and liabilities are
translated at period-end exchange rates. Non-monetary assets
owned at December 31, 1994 have been translated under the
Translation of Convenience Method at the December 31, 1994 year-end exchange rate of US $1.00 = CDN $1.4028. Additions
subsequent to December 31, 1994 are translated at the exchange
rate prevailing at the time of the transaction.

Financial Instruments

The company enters into forward exchange contracts and natural
gas futures, swaps and option agreements to manage its exposure to
exchange rate and commodity price fluctuations. These activities
have been designated as hedging activities by the company.

Gains or losses on foreign currency exchange contracts are
recognized monthly and are included in other income.

Gains or losses resulting from changes in the fair value of natural
gas hedging transactions which have not yet been settled are not
recognized, as they generally relate to changes in the spot price of
anticipated natural gas purchases. Gains or losses arising from
settled hedging transactions are deferred as a component of
inventory until the product containing the hedged item is sold, at
which time both the natural gas purchase cost and the related
hedging deferral are recorded as cost of sales.

The company regularly evaluates its unrecognized or deferred gains
and losses on these derivatives from a net realizable value of inventory
perspective and establishes appropriate provisions, if necessary.

Revenue Recognition

Sales revenue is recognized when the product is shipped or a
service is performed. Revenue is recorded based on the F.O.B. mine,
plant, warehouse or terminal price. Transportation costs are
recovered from the customer through sales pricing.

47



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

3. CHANGE IN ACCOUNTING POLICY

The company has adopted the provisions of section 3500 of the
Canadian Institute of Chartered Accountants Handbook, Earnings
Per Share. This pronouncement requires that diluted earnings per
share be calculated using the treasury stock method rather than the
imputed earnings method. The effect of this change on diluted
earnings per share is not significant in any of the periods presented.

4. ACCOUNTS RECEIVABLE

|                                     |  |      |       |      |  |   |       | 
|------------------------------------ |  | ---- | ----- | ---- |  | - | ----- | 
|                                     |  | 2001 |       | 2000
|                                    
|Trade accounts  Canpotex            |  | $    | 41.3  |      |  | $ | 31.4  | 
| Other                              |  |      | 220.3 |      |  |   | 268.8 | 
|Non-trade accounts                   |  |      | 2.1   |      |  |   | 34.1  | 
|                                    
|                                     |  |      | 263.7 |      |  |   | 334.3 | 
|Less allowance for doubtful accounts |  |      | 7.0   |      |  |   | 7.7   | 
|                                    
|                                     |  | $    | 256.7 |      |  | $ | 326.6 | 
|                                    

5. INVENTORIES

|                       |  |      |       |      |  |   |       | 
|---------------------- |  | ---- | ----- | ---- |  | - | ----- | 
|                       |  | 2001 |       | 2000
|                      
|Finished product       |  | $    | 144.7 |      |  | $ | 176.6 | 
|Materials and supplies |  |      | 113.9 |      |  |   | 114.5 | 
|Raw materials          |  |      | 65.6  |      |  |   | 16.9  | 
|Work in process        |  |      | 156.9 |      |  |   | 98.2  | 
|                      
|                       |  | $    | 481.1 |      |  | $ | 406.2 | 
|                      

6. PROPERTY, PLANT AND EQUIPMENT

|                           |  |      |         |              |  |                  |         |          |  |   |         | 
|-------------------------- |  | ---- | ------- | ------------ |  | ---------------- | ------- | -------- |  | - | ------- | 
|                           |  | 2001
|                          
|                           |  |      |         |              |  | Accumulated      |         |          |  |  
|                           |  |      |         |              |  | Depreciation and |         | Net Book
|                           |  | Cost |         | Amortization |  | Value           
|                          
|Land and improvements      |  | $    | 215.7   |              |  | $                | 31.3    |          |  | $ | 184.4   | 
|Buildings and improvements |  |      | 448.7   |              |  |                  | 196.9   |          |  |   | 251.8   | 
|Machinery and equipment    |  |      | 3,744.2 |              |  |                  | 999.9   |          |  |   | 2,744.3 | 
|Mine development costs     |  |      | 111.3   |              |  |                  | 46.2    |          |  |   | 65.1    | 
|                          
|                           |  | $    | 4,519.9 |              |  | $                | 1,274.3 |          |  | $ | 3,245.6 | 
|                          

|                           |  |      |         |              |  |                  |         |          |  |   |         | 
|-------------------------- |  | ---- | ------- | ------------ |  | ---------------- | ------- | -------- |  | - | ------- | 
|                           |  | 2000
|                          
|                           |  |      |         |              |  | Accumulated      |         |          |  |  
|                           |  |      |         |              |  | Depreciation and |         | Net Book
|                           |  | Cost |         | Amortization |  | Value           
|                          
|Land and improvements      |  | $    | 221.7   |              |  | $                | 30.2    |          |  | $ | 191.5   | 
|Buildings and improvements |  |      | 448.8   |              |  |                  | 139.4   |          |  |   | 309.4   | 
|Machinery and equipment    |  |      | 3,219.4 |              |  |                  | 896.0   |          |  |   | 2,323.4 | 
|Mine development costs     |  |      | 132.0   |              |  |                  | 46.2    |          |  |   | 85.8    | 
|                          
|                           |  | $    | 4,021.9 |              |  | $                | 1,111.8 |          |  | $ | 2,910.1 | 
|                          

Depreciation and amortization of property, plant and equipment
included in Cost of Goods Sold and in Selling and Administrative was
$170.4 (2000  $170.6; 1999  $161.1).

7. GOODWILL

|                         |  |      |       |      |  |   |       | 
|------------------------ |  | ---- | ----- | ---- |  | - | ----- | 
|                         |  | 2001 |       | 2000
|                        
|Cost                     |  | $    | 104.3 |      |  | $ | 110.7 | 
|Accumulated amortization |  |      | 7.3   |      |  |   | 4.3   | 
|                        
|                         |  | $    | 97.0  |      |  | $ | 106.4 | 
|                        

Amortization of goodwill included in Selling and Administrative was
$3.0 (2000  $3.0; 1999  $11.7).

8. OTHER ASSETS

|                                                                     |  |      |       |      |  |   |       | 
|-------------------------------------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | 
|                                                                     |  | 2001 |       | 2000
|                                                                    
|Deferred charges  net of
accumulated amortization                   |  | $    | 129.3 |      |  | $ | 90.2  | 
|Prepaid pension costs                                                |  |      | 25.3  |      |  |   | 26.5  | 
|Land held for sale                                                   |  |      | 2.6   |      |  |   | 3.5   | 
|Investments, at equity                                               |  |      | 17.8  |      |  |   | 20.7  | 
|Investments, at cost                                                 |  |      | 223.2 |      |  |   | 92.8  | 
|Rotational plant maintenance costs
 net of accumulated amortization |  |      | 30.3  |      |  |   | 18.3  | 
|Other                                                                |  |      | 6.6   |      |  |   | 5.5   | 
|                                                                    
|                                                                     |  | $    | 435.1 |      |  | $ | 257.5 | 
|                                                                    

Amortization of deferred charges and rotational plant maintenance
costs included in Cost of Goods Sold and in Selling and
Administrative was $12.3 (2000  $13.4; 1999  $18.3).

9. SHORT-TERM DEBT

Short-term debt was $501.1 at December 31, 2001 (2000 
$488.8). The weighted average interest rate on this debt was 2.29%
(2000  6.98%). The company had available lines of credit for short-term financing (net of letters of credit of $15.8) in the amount of
$133.3 at December 31, 2001 (2000  $162.6). The lines of credit
are unsecured. In addition, the company is authorized to borrow a
further $106.9 under the commercial paper program.

10. ACCOUNTS PAYABLE AND ACCRUED CHARGES

|                                               |  |      |       |      |  |   |       | 
|---------------------------------------------- |  | ---- | ----- | ---- |  | - | ----- | 
|                                               |  | 2001 |       | 2000
|                                              
|Trade accounts                                 |  | $    | 166.1 |      |  | $ | 255.0 | 
|Cash margins collected                         |  |      |      |      |  |   | 105.9 | 
|Accrued reclamation                            |  |      | 20.3  |      |  |   | 22.3  | 
|Accrued interest                               |  |      | 6.7   |      |  |   | 5.7   | 
|Accrued compensation                           |  |      | 31.5  |      |  |   | 22.5  | 
|Accrued integration                            |  |      |      |      |  |   | 40.0  | 
|Accrued plant closure and
office consolidation |  |      |      |      |  |   | 26.0  | 
|Income taxes                                   |  |      | 33.8  |      |  |   | 35.6  | 
|Dividends                                      |  |      | 13.0  |      |  |   | 12.9  | 
|                                              
|                                               |  | $    | 271.4 |      |  | $ | 525.9 | 
|                                              

During the year, the company paid severance and other related
costs in the amount of $32.6 (2000  $0.5), which were charged
against accrued integration. $6.4 of the accrued integration was
reversed against the cost of goodwill.

48



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

11. LONG-TERM DEBT

|                                 |                                                                                                                                                                                                                                                                                                                                                                            |         |       |      |      |       |       |      | 
|-------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------- | ----- | ---- | ---- | ----- | ----- | ---- | 
|                                 |                                                                                                                                                                                                                                                                                                                                                                            |         | 2001  |      | 2000
|                                
|Industrial Revenue and Pollution |                                                                                                                                                                                                                                                                                                                                                                            |         |       |      |      |       |       |     
|                                 | Control Obligations                                                                                                                                                                                                                                                                                                                                                        |         | $     | 13.6 |      |       | $     | 13.6 | 
|                                 | Adjustable Rate Industrial Revenue
and Pollution Control Obligations with
varying interest rates and with
maturity dates ranging from 2003 to
2005. No sinking fund requirements
prior to maturity. The Adjustable Rate
Industrial Revenue and Pollution
Control Obligations bear interest at an
average rate of 1.45%. These loans
are secured by bank letters of credit. |         |       |      |      |       |       |      | 
|Notes Payable                    |                                                                                                                                                                                                                                                                                                                                                                            |         |       |      |      |       |       |     
|                                 | 7.125% notes payable June 15, 2007.                                                                                                                                                                                                                                                                                                                                        |         | 400.0 |      |      |       | 400.0 |     
|                                 | 7.75% notes payable May 31, 2011.                                                                                                                                                                                                                                                                                                                                          |         | 600.0 |      |      |       |      |     
|                                 | No sinking fund requirements prior to
maturity. These notes were issued
under a shelf registration statement
covering up to $1,000 of debt
securities. The notes are unsecured.                                                                                                                                                                                            |         |       |      |      |       |       |     
|Other                            |                                                                                                                                                                                                                                                                                                                                                                            | 0.1     |       |      |      | 5.8   |      
|                                
|                                 |                                                                                                                                                                                                                                                                                                                                                                            | 1,013.7 |       |      |      | 419.4 |      
|Less current maturities          |                                                                                                                                                                                                                                                                                                                                                                            |        |       |      |      | 5.7   |      
|                                
|                                 | $                                                                                                                                                                                                                                                                                                                                                                          | 1,013.7 |       |      | $    | 413.7 |      
|                                

The fair values of all long-term obligations (except the Notes
Payable whose approximate fair value at December 31, 2001 was
$1,050.5) are approximated by their face values.

Long-term debt at December 31, 2001 will mature as follows:

|     |  |   |         | 
|---- |  | - | ------- | 
|2002 |  | $ |        | 
|2003 |  |   | 2.9     | 
|2004 |  |   | 0.3     | 
|2005 |  |   | 9.3     | 
|2006 |  |   | 1.2     | 
|2007 |  |   | 400.0   | 
|2011 |  |   | 600.0   | 
|    
|     |  | $ | 1,013.7 | 
|    

12. COMMITMENTS

Lease Commitments

The company has long-term lease agreements for buildings, port
facilities, equipment, ocean-going transportation vessels and rail
cars, the latest of which expires in 2020 (excluding mineral leases).

Future minimum lease payments under these operating leases will
be approximately as follows:

|                 |  |   |       | 
|---------------- |  | - | ----- | 
|2002             |  | $ | 41.2  | 
|2003             |  |   | 39.7  | 
|2004             |  |   | 36.0  | 
|2005             |  |   | 40.0  | 
|2006             |  |   | 32.2  | 
|Subsequent years |  |   | 155.3 | 

Rental expense for operating leases for the years ended
December 31, 2001, 2000 and 1999 was $56.7, $86.4 and
$94.1, respectively.

Other Commitments

The company has a long-term sulfur contract based upon market
rates at the time of delivery.

The companys Trinidad subsidiaries have entered into long-term
natural gas contracts with a gas company in Trinidad. The contracts
provide for prices which vary with ammonia market prices, escalating
floor prices and minimum purchase quantities.

The company also has a long-term agreement for the purchase of
phosphate rock used at its Geismar facility. This agreement sets base
price (less volume discounts) for the first three years. Prices in
subsequent years are subject to renegotiation.

The annual commitment under the above-mentioned long-term
contracts approximates $95.0 million.

The company is also committed under construction contracts for
the completion of a DFP plant and expansion of purified acid
production at Aurora, totalling approximately $93.0.

13. POST-RETIREMENT/POST-EMPLOYMENT BENEFITS

Canada

Substantially all employees of the company are participants in
either a defined contribution or a defined benefit pension plan. The
companys obligations under the defined contribution plans are
limited to making regular payments to the plan to match
contributions made by the employees for current services (to a
maximum of 5.5 percent of salary).

The company has established a supplemental retirement
income plan for senior management which is unfunded and non-contributory and provides a supplementary pension benefit. The plan
is provided for by charges to earnings sufficient to meet the projected
benefit obligation.

United States

The company has defined benefit pension plans that cover
a substantial majority of its employees. Benefits are based on a
combination of years of service and compensation levels, depending
on the plan. Generally, contributions to the US plans are made to
meet minimum funding requirements of the Employee Retirement
Income Security Act of 1974 (ERISA). Assets of both US funded
plans consist mainly of corporate equity, US government and
corporate debt securities and units of participation in a collective
short-term investment fund.

Trinidad

The company has contributory defined benefit pension plans that
cover a substantial majority of its employees. Benefits are based on
service. The plans assets consist mainly of local government and
other bonds, local mortgage and mortgage-backed securities, fixed
income deposits and cash.

49



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

13. POST-RETIREMENT/POST-EMPLOYMENT BENEFITS (CONTINUED)

All Pension Plans

The components of net pension expense for the companys
pension plans, computed actuarially, were as follows:

|                                                 |  |      |       |      |  |      |       |   |  |   |       |  
|------------------------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- | - |  | - | ----- | -
|                                                 |  | 2001 |       | 2000 |  | 1999
|                                                
|Service cost for benefits
earned during the year |  | $    | 10.2  |      |  | $    | 12.0  |   |  | $ | 13.7  |  
|Interest cost on projected
benefit obligations   |  |      | 27.6  |      |  |      | 25.7  |   |  |   | 23.3  |  
|Expected return on plan assets                   |  |      | (30.1 | )    |  |      | (20.8 | ) |  |   | (35.9 | )
|Net amortization and deferral                    |  |      |      |      |  |      | 1.3   |   |  |   | 2.5   |  
|                                                
|Net pension expense                              |  | $    | 7.7   |      |  | $    | 18.2  |   |  | $ | 3.6   |  
|                                                

Significant actuarial assumptions used in calculating the net
pension expense for the companys funded plans were as follows:

|                                        |  |      |      |      |  |      |      |   |  |  |      |  
|--------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                                        |  | 2001 |      | 2000 |  | 1999
|                                       
|Discount rate                           |  |      | 7.25 | %    |  |      | 7.50 | % |  |  | 7.75 | %
|Long-term rate of
return on assets      |  |      | 9.00 | %    |  |      | 9.00 | % |  |  | 9.00 | %
|Rate of increase in
compensation levels |  |      | 4.50 | %    |  |      | 5.00 | % |  |  | 5.00 | %

Other Post-Retirement Plans

The company provides certain contributory health care plans and
non-contributory life insurance benefits for retired employees. These
plans contain certain cost-sharing features such as deductibles and
coinsurance, and are unfunded with benefits subject to change.

Although the company prepares its financial statements under
Canadian GAAP, it has continued to apply the treatment prescribed
by SFAS No. 106 under US GAAP Employers Accounting for
Postretirement Benefits Other Than Pensions and SFAS No.132
Employers Disclosures about Pensions and Other Postretirement
Benefits. These statements require the accrual of the cost of
providing other post-retirement benefits, including medical and life
insurance coverage, during the active service period of the employee,
and prescribe certain disclosure requirements.

The components of this expense, computed actuarially, were
as follows:

|                                                 |  |      |      |      |  |      |      |  |  |   |      | 
|------------------------------------------------ |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                                 |  | 2001 |      | 2000 |  | 1999
|                                                
|Service cost for benefits
earned during the year |  | $    | 3.6  |      |  | $    | 3.3  |  |  | $ | 3.9  | 
|Interest cost on projected
benefit obligations   |  |      | 11.1 |      |  |      | 10.2 |  |  |   | 9.3  | 
|                                                
|Net post-retirement expense                      |  | $    | 14.7 |      |  | $    | 13.5 |  |  | $ | 13.2 | 
|                                                

The significant actuarial assumptions used in determining post-retirement benefit expense were as follows:

|                            |  |      |      |      |  |      |      |   |  |  |      |  
|--------------------------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  |  | ---- | -
|                            |  | 2001 |      | 2000 |  | 1999
|                           
|Discount rate               |  |      | 7.25 | %    |  |      | 7.50 | % |  |  | 7.75 | %
|Health care cost trend rate |  |      | 9.00 | %    |  |      | 6.00 | % |  |  | 6.00 | %

If the health care
cost trend rate was increased by 1.0 percent, the
accumulated post-retirement benefit obligation and the aggregate of
service and interest cost would have increased as follows:

|                                               |  |      |      |      |  |      |      |  |  |   |      | 
|---------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                               |  | 2001 |      | 2000 |  | 1999
|                                              
|Accumulated post-retirement
benefit obligation |  | $    | 30.1 |      |  | $    | 21.1 |  |  | $ | 15.5 | 
|Aggregate of service and
interest cost         |  |      | 2.7  |      |  |      | 2.0  |  |  |   | 2.9  | 

If the health care cost trend rate was decreased by 1.0 percent,
the accumulated post-retirement benefit obligation and the
aggregate of service and interest cost would have decreased as
follows:

|                                               |  |      |      |      |  |      |      |  |  |   |      | 
|---------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                               |  | 2001 |      | 2000 |  | 1999
|                                              
|Accumulated post-retirement
benefit obligation |  | $    | 24.7 |      |  | $    | 17.2 |  |  | $ | 19.4 | 
|Aggregate of service and
interest cost         |  |      | 2.1  |      |  |      | 1.9  |  |  |   | 0.4  | 

The company has applied Canadian GAAP to prepare its financial
statements but continues to apply SFAS No.112 under US GAAP
Employers Accounting for Postemployment Benefits. This
statement requires the company to accrue, during periods of active
employment, the expected cost of certain benefits payable to former
or inactive employees. These benefits include long-term disability
income payments and related medical and insurance costs.

The effect of these costs on income before income taxes and the
recorded liability for these costs were not significant for any of the
years presented.

All of the companys US employees may participate in defined
contribution savings plans. These plans are subject to US federal tax
limitations and provide for voluntary employee salary deduction
contributions of up to 15 percent of salary and company matching
contributions of up to 5 percent of salary. The companys matching
contributions were $4.6 and $4.8 for 2001 and 2000, respectively.
All of the companys Canadian salaried employees participate in the
PCS Inc. Savings Plan. The company contributes 5 percent of salary
to the plan and employees may make voluntary contributions. The
companys contributions in 2001 were $1.4 (2000  $1.4).

50



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

13. POST-RETIREMENT/POST-EMPLOYMENT BENEFITS (CONTINUED)

The change in benefit obligations and change in plan assets for the above pension and post-retirement/post-employment plans
were as follows:

|                                                                       |                               |   |         |       |                 |   |      |       |      |   |                  |        |   |   |        |        |  
|---------------------------------------------------------------------- | ----------------------------- | - | ------- | ----- | --------------- | - | ---- | ----- | ---- | - | ---------------- | ------ | - | - | ------ | ------ | -
|                                                                       |                               |   |         |       |                 |   |      |       |      |   | Post-retirement/
|                                                                       |                               |   | Pension |       | Post-employment
|                                                                      
|                                                                       |                               |   | 2001    |       | 2000            |   | 2001 |       | 2000
|                                                                      
|Change in Benefit Obligations                                          |                               |   |         |       |                 |   |      |       |      |   |                  |        |   |   |        |       
|                                                                       | Balance, beginning of year    |   | $       | 375.8 |                 |   | $    | 347.2 |      |   | $                | 150.2  |   |   | $      | 135.3  |  
|                                                                       | Service cost                  |   |         | 10.2  |                 |   |      | 12.0  |      |   |                  | 3.6    |   |   |        | 3.3    |  
|                                                                       | Interest cost                 |   |         | 27.6  |                 |   |      | 25.7  |      |   |                  | 11.1   |   |   |        | 10.2   |  
|                                                                       | Participants contributions   |   |         | 0.4   |                 |   |      | 0.3   |      |   |                  |       |   |   |        |       |  
|                                                                       | Actuarial gain (loss)         |   |         | 2.5   |                 |   |      | (5.6  | )    |   |                  | 24.2   |   |   |        | 5.6    |  
|                                                                       | Amendments                    |   |         | 0.7   |                 |   |      | 15.0  |      |   |                  |       |   |   |        |       |  
|                                                                       | Benefits paid                 |   |         | (25.2 | )               |   |      | (18.8 | )    |   |                  | (6.3   | ) |   |        | (4.2   | )
|                                                                      
|                                                                       | Balance, end of year          |   |         | 392.0 |                 |   |      | 375.8 |      |   |                  | 182.8  |   |   |        | 150.2  |  
|                                                                      
|Change in Plan Assets                                                  |                               |   |         |       |                 |   |      |       |      |   |                  |        |   |   |        |       
|                                                                       | Fair value, beginning of year |   |         | 373.9 |                 |   |      | 373.0 |      |   |                  |       |   |   |        |       |  
|                                                                       | Actual return on plan assets  |   |         | (3.7  | )               |   |      | 20.8  |      |   |                  |       |   |   |        |       |  
|                                                                       | Employer contributions        |   |         | 7.5   |                 |   |      | 3.9   |      |   |                  | 6.3    |   |   |        | 4.2    |  
|                                                                       | Participants contributions   |   |         | 0.4   |                 |   |      | 0.3   |      |   |                  |       |   |   |        |       |  
|                                                                       | Valuation allowance           |   |         | (0.2  | )               |   |      | (5.3  | )    |   |                  |       |   |   |        |       |  
|                                                                       | Benefits paid                 |   |         | (25.2 | )               |   |      | (18.8 | )    |   |                  | (6.3   | ) |   |        | (4.2   | )
|                                                                      
|                                                                       | Fair value, end of year       |   |         | 352.7 |                 |   |      | 373.9 |      |   |                  |       |   |   |        |       |  
|                                                                      
|Funded Status                                                          |                               |   | (39.3   | )     |                 |   | (1.9 | )     |      |   | (182.8           | )      |   |   | (150.2 | )     
|Unrecognized Net Loss                                                  |                               |   | 29.9    |       |                 |   |     |       |      |   | 44.7             |        |   |   | 9.2    |       
|Unrecognized Prior Service Cost                                        |                               |   | 0.3     |       |                 |   |     |       |      |   | (4.8             | )      |   |   | (5.7   | )     
|                                                                      
|Accrued Post-retirement/Post-employment Benefits                       |                               | $ | (9.1    | )     |                 | $ | (1.9 | )     |      | $ | (142.9           | )      |   | $ | (146.7 | )     
|                                                                      
|Amounts recognized in the statements of financial
position consist of: |                               |   |         |       |                 |   |      |       |      |   |                  |        |   |   |        |       
|                                                                       | Long-term liability           |   | $       | (34.4 | )               |   | $    | (28.4 | )    |   | $                | (142.9 | ) |   | $      | (146.7 | )
|                                                                       | Prepaid pension costs         |   |         | 25.3  |                 |   |      | 26.5  |      |   |                  |       |   |   |        |       |  
|                                                                      
|                                                                       |                               | $ | (9.1    | )     |                 | $ | (1.9 | )     |      | $ | (142.9           | )      |   | $ | (146.7 | )     
|                                                                      

The aggregate pension accumulated benefit obligations and
aggregate fair value of plan assets for pension plans
with accumulated benefit
obligations in excess of plan assets are as follows:

|                               |  |         |       |                 |  |      |  |      |  |  |      |  |  |                  |       |  |  |   |       | 
|------------------------------ |  | ------- | ----- | --------------- |  | ---- |  | ---- |  |  | ---- |  |  | ---------------- | ----- |  |  | - | ----- | 
|                               |  |         |       |                 |  |      |  |      |  |  |      |  |  | Post-retirement/
|                               |  | Pension |       | Post-employment
|                              
|                               |  | 2001    |       | 2000            |  | 2001 |  | 2000
|                              
|Accumulated benefit obligation |  | $       | 377.1 |                 |  | $    |  |      |  |  | 93.4 |  |  | $                | 142.9 |  |  | $ | 146.7 | 
|Fair value of plan assets      |  | $       | 330.0 |                 |  | $    |  |      |  |  | 61.9 |  |  | $                |      |  |  | $ |      | 

14. ENVIRONMENTAL COSTS

Reclamation and Restoration Costs

Site restoration and reclamation costs have been accrued for
various sites. At December 31, 2001, the company has accrued
$28.1 (2000  $27.3) for the Aurora, North Carolina facility, $52.6
(2000  $54.9) for the White Springs, Florida facility, $0.3 (2000 
$0.3) for various sulfur facilities, $18.4 (2000  $18.6) for certain
PCS Joint Venture facilities and $3.9 (2000  $4.2) for the Cassidy
Lake facility. The current portion of restoration and reclamation
accrued in 2001 totalled $20.3 (2000  $22.3). These amounts
represent the companys current estimate of potential site restoration
and reclamation costs which were last assessed in December 2001.
These expenditures are generally incurred over an extended period
of time.

Annual environmental expenditures for reclamation and
restoration during the years ended December 31, 2001, 2000 and
1999 were $64.3, $59.9 and $79.3 respectively. Of the 2001
amount, $49.7 (2000  $55.2; 1999  $70.3) was charged to
operations, $13.7 (2000  $2.7; 1999  $3.1) was capitalized and
$0.9 (2000  $2.0; 1999  $5.9) was charged against accrued
reclamation costs.

Capping of Byproduct Gypsum Stacks

Various jurisdictions have established programs that require
companies to reduce the potential environmental impact associated
with gypsum stacks. In Florida, the regulations implementing this
legislation require companies to cap the gypsum stacks in order to
reduce seepage into the groundwater, when such stacks reach their
design capacity (for the company, in approximately 35 years at
current operating rates) or if groundwater standards are not being
met. At December 31, 2001, a balance of $35.4 (2000  $35.4) was
included in accrued reclamation costs for this gypsum stack capping
requirement. The obligation of White Springs regarding the gypsum
stacks is guaranteed by PotashCorp.

51



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

14. ENVIRONMENTAL COSTS (CONTINUED)

In North Carolina, on expiry of the mines phosphate reserves,
capping of the remaining gypsum stacks must comply with the laws
in place at that time. Under Louisiana regulations, capping of
gypsum stacks will be required when the stacks are no longer active.

Other Environmental Costs

Other than reclamation, restoration and gypsum stack capping
costs discussed above, no significant costs relating to existing
conditions caused by past operations were incurred by the company
during 2001. At December 31, 2001, there were no significant
environmental provisions recorded by the company, other than those
related to reclamation, restoration and gypsum stack capping, as
discussed above.

The companys estimated operating expenses, other than
reclamation, restoration and gypsum stack capping, relating to
compliance with environmental laws and regulations governing
ongoing operations were approximately $21.8 for the year ended
December 31, 2001 (2000  $23.0; 1999  $20.2). In addition,
capital expenditures for other environmental compliance were
approximately $14.5 for the year ended December 31, 2001 (2000 
$11.7; 1999  $5.1).

15. SHARE CAPITAL

Authorized:

The company is authorized to issue an unlimited number of
common shares without par value and an unlimited number of first
preferred shares. The first preferred shares may be issued in one or
more series with rights and conditions to be determined by the Board
of Directors.

|                                             |  |               |         |  |               |   |         |               |  |   |         |  
|-------------------------------------------- |  | ------------- | ------- |  | ------------- | - | ------- | ------------- |  | - | ------- | -
|Issued:                                      |  | 2001          |         |  | 2000          |   |         | 1999         
|                                             |  | Consideration |         |  | Consideration |   |         | Consideration
|                                            
|Issued, beginning of year                    |  | $             | 1,177.4 |  |               | $ | 1,216.5 |               |  | $ | 1,227.6 |  
|Shares issued under option                   |  |               | 4.9     |  |               |   | 7.0     |               |  |   | 1.4     |  
|Shares issued for dividend
reinvestment plan |  |               | 0.2     |  |               |   | 0.8     |               |  |   | 1.8     |  
|Shares repurchased                           |  |               |        |  |               |   | (46.9   | )             |  |   | (14.3   | )
|                                            
|Issued, end of year                          |  | $             | 1,182.5 |  |               | $ | 1,177.4 |               |  | $ | 1,216.5 |  
|                                            

|                                             |  |           |            |  |           |  |            |           |  |  |            |  
|-------------------------------------------- |  | --------- | ---------- |  | --------- |  | ---------- | --------- |  |  | ---------- | -
|Issued:                                      |  | 2001      |            |  | 2000      |  |            | 1999     
|                                             |  | Number of |            |  | Number of |  |            | Number of
|                                             |  | Common    |            |  | Common    |  |            | Common   
|                                             |  | Shares    |            |  | Shares    |  |            | Shares   
|                                            
|Issued, beginning of year                    |  |           | 51,840,572 |  |           |  | 53,694,209 |           |  |  | 54,243,795 |  
|Shares issued under option                   |  |           | 108,400    |  |           |  | 202,000    |           |  |  | 46,450     |  
|Shares issued for dividend
reinvestment plan |  |           | 3,510      |  |           |  | 14,363     |           |  |  | 33,964     |  
|Shares repurchased                           |  |           |           |  |           |  | (2,070,000 | )         |  |  | (630,000   | )
|                                            
|Issued, end of year                          |  |           | 51,952,482 |  |           |  | 51,840,572 |           |  |  | 53,694,209 |  
|                                            

Stock Options

The company has two option plans. Under the Officers and
Employees Plan, the company may, after February 3, 1998, issue up
to 6,926,125 common shares pursuant to the exercise of options.
Under the Directors Plan, the company may, after January 24, 1995,
issue up to 456,000 common shares pursuant to the exercise of
options. Under both plans, the exercise price is the quoted market
closing price of the companys common shares on the last trading day
immediately preceding the date of the grant, and an options
maximum term is 10 years. All options granted to date have provided
that one-half of the options granted in a year will vest one year from
the date of the grant, with the other half of the options vesting the
following year.

A summary of the status of the plans as of December 31, 2001,
2000 and 1999 and changes during the years ending on those dates
is presented below:

Number of Shares Subject to Option

|                               |  |      |           |      |  |      |           |   |  |  |           |  
|------------------------------ |  | ---- | --------- | ---- |  | ---- | --------- | - |  |  | --------- | -
|                               |  | 2001 |           | 2000 |  | 1999
|                              
|Outstanding,
beginning of year |  |      | 4,236,275 |      |  |      | 3,745,975 |   |  |  | 2,947,075 |  
|Granted                        |  |      | 922,200   |      |  |      | 929,400   |   |  |  | 857,100   |  
|Exercised                      |  |      | (108,400  | )    |  |      | (202,000  | ) |  |  | (46,450   | )
|Cancelled                      |  |      | (5,800    | )    |  |      | (237,100  | ) |  |  | (11,750   | )
|                              
|Outstanding, end of year       |  |      | 5,044,275 |      |  |      | 4,236,275 |   |  |  | 3,745,975 |  
|                              

Weighted Average Exercise Price

|                               |  |      |       |      |  |      |       |  |  |   |       | 
|------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ----- | 
|                               |  | 2001 |       | 2000 |  | 1999
|                              
|Outstanding,
beginning of year |  | $    | 65.04 |      |  | $    | 64.72 |  |  | $ | 70.35 | 
|Granted                        |  |      | 62.81 |      |  |      | 61.27 |  |  |   | 43.69 | 
|Exercised                      |  |      | 44.77 |      |  |      | 34.72 |  |  |   | 30.34 | 
|Cancelled                      |  |      | 60.59 |      |  |      | 65.83 |  |  |   | 77.62 | 
|Outstanding, end of year       |  |      | 65.21 |      |  |      | 65.04 |  |  |   | 64.72 | 

The weighted-average grant-date fair value of options granted
during the year was $19.1 (2000  $20.0; 1999  $11.6).

52



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

15. SHARE CAPITAL (CONTINUED)

The following table summarizes information about stock options outstanding at December 31, 2001:

|                  |  |                     |         |                     |  |                  |  |        |       |                |  |                  |         |  |  |   |       |  |  | 
|----------------- |  | ------------------- | ------- | ------------------- |  | ---------------- |  | ------ | ----- | -------------- |  | ---------------- | ------- |  |  | - | ----- |  |  | 
|                  |  | Options Outstanding |         | Options Exercisable
|                 
|Range of Exercise |  | Number              |         | Weighted Average    |  | Weighted Average |  |        |       |                |  | Weighted Average
|Prices            |  | Outstanding         |         | Remaining Life      |  | Exercise Price   |  | Number |       | Exercise Price
|                 
|$20.00 to $25.38  |  |                     | 75,250  |                     |  | 2 years          |  | $      | 21.95 |                |  |                  | 75,250  |  |  | $ | 21.95 | 
|$32.25            |  |                     | 126,250 |                     |  | 3 years          |  |        | 32.25 |                |  |                  | 126,250 |  |  |   | 32.25 | 
|$43.69            |  |                     | 560,950 |                     |  | 8 years          |  |        | 43.69 |                |  |                  | 560,950 |  |  |   | 43.69 | 
|$61.27            |  |                     | 924,600 |                     |  | 9 years          |  |        | 61.27 |                |  |                  | 459,900 |  |  |   | 61.27 | 
|$58.08 to $65.38  |  |                     | 922,200 |                     |  | 10 years         |  |        | 62.81 |                |  |                  |        |  |  |   |      | 
|$67.88            |  |                     | 752,500 |                     |  | 7 years          |  |        | 67.88 |                |  |                  | 752,500 |  |  |   | 67.88 | 
|$70.38 to $74.75  |  |                     | 884,775 |                     |  | 5 years          |  |        | 72.43 |                |  |                  | 884,775 |  |  |   | 72.43 | 
|$81.75 to $86.75  |  |                     | 797,750 |                     |  | 6 years          |  |        | 86.44 |                |  |                  | 797,750 |  |  |   | 86.44 | 

The foregoing options have expiry dates ranging from November 5, 2002 to November 20, 2011.

16. SEGMENT INFORMATION

The company has three reportable business segments: potash, phosphate and nitrogen. All three segments produce fertilizers for sale to
agricultural customers. In addition, in 2001, approximately 53 percent of nitrogen net sales and 58 percent of phosphate net sales was from
feed and industrial products. These business segments are differentiated by the chemical nutrient contained in the product that each produces.
Inter-segment net sales are made under terms that approximate market value.

|                                        |  |        |         |           |  |          |         |            |  |              |         |  |  |   |       |  |  |   |         | 
|--------------------------------------- |  | ------ | ------- | --------- |  | -------- | ------- | ---------- |  | ------------ | ------- |  |  | - | ----- |  |  | - | ------- | 
|                                       
|                                        |  | 2001  
|                                       
|                                        |  | Potash |         | Phosphate |  | Nitrogen |         | All others |  | Consolidated
|                                       
|Net sales  third party                 |  | $      | 525.5   |           |  | $        | 651.8   |            |  | $            | 895.4   |  |  | $ |      |  |  | $ | 2,072.7 | 
|Inter-segment net sales                 |  |        | 7.1     |           |  |          | 6.0     |            |  |              | 37.6    |  |  |   |      |  |  |   |        | 
|Gross margin                            |  |        | 241.8   |           |  |          | 62.7    |            |  |              | 94.7    |  |  |   |      |  |  |   | 399.2   | 
|Depreciation and amortization           |  |        | 34.1    |           |  |          | 72.0    |            |  |              | 72.8    |  |  |   | 6.8   |  |  |   | 185.7   | 
|Assets                                  |  |        | 1,203.3 |           |  |          | 1,471.2 |            |  |              | 1,640.0 |  |  |   | 282.8 |  |  |   | 4,597.3 | 
|Expenditures for segment capital assets |  |        | 34.7    |           |  |          | 61.1    |            |  |              | 436.9   |  |  |   | 4.1   |  |  |   | 536.8   | 

|                                                      |  |        |         |           |  |          |         |            |  |              |         |  |  |   |       |  |  |   |         | 
|----------------------------------------------------- |  | ------ | ------- | --------- |  | -------- | ------- | ---------- |  | ------------ | ------- |  |  | - | ----- |  |  | - | ------- | 
|                                                      |  | 2000  
|                                                     
|                                                      |  | Potash |         | Phosphate |  | Nitrogen |         | All others |  | Consolidated
|                                                     
|Net sales  third party                               |  | $      | 578.7   |           |  | $        | 782.5   |            |  | $            | 870.4   |  |  | $ |      |  |  | $ | 2,231.6 | 
|Inter-segment net sales                               |  |        | 8.4     |           |  |          | 7.9     |            |  |              | 60.1    |  |  |   |      |  |  |   |        | 
|Gross margin                                          |  |        | 304.0   |           |  |          | 74.1    |            |  |              | 104.7   |  |  |   |      |  |  |   | 482.8   | 
|Depreciation and amortization                         |  |        | 40.9    |           |  |          | 68.1    |            |  |              | 66.1    |  |  |   | 11.9  |  |  |   | 187.0   | 
|Provision for plant closures and
office consolidation |  |        |        |           |  |          | 24.3    |            |  |              |        |  |  |   |      |  |  |   | 24.3    | 
|Assets                                                |  |        | 1,165.4 |           |  |          | 1,522.9 |            |  |              | 1,250.9 |  |  |   | 206.5 |  |  |   | 4,145.7 | 
|Expenditures for segment capital assets               |  |        | 45.5    |           |  |          | 136.5   |            |  |              | 34.2    |  |  |   | 12.6  |  |  |   | 228.8   | 

|                                                      |  |        |         |           |  |          |         |            |  |              |         |   |  |   |       |  |  |   |         | 
|----------------------------------------------------- |  | ------ | ------- | --------- |  | -------- | ------- | ---------- |  | ------------ | ------- | - |  | - | ----- |  |  | - | ------- | 
|                                                      |  | 1999  
|                                                     
|                                                      |  | Potash |         | Phosphate |  | Nitrogen |         | All others |  | Consolidated
|                                                     
|Net sales  third party                               |  | $      | 563.3   |           |  | $        | 843.8   |            |  | $            | 654.0   |   |  | $ |      |  |  | $ | 2,061.1 | 
|Inter-segment net sales                               |  |        | 8.7     |           |  |          | 1.6     |            |  |              | 47.7    |   |  |   |      |  |  |   |        | 
|Gross margin                                          |  |        | 301.9   |           |  |          | 127.8   |            |  |              | (21.4   | ) |  |   |      |  |  |   | 408.3   | 
|Depreciation and amortization                         |  |        | 37.2    |           |  |          | 61.8    |            |  |              | 83.5    |   |  |   | 8.6   |  |  |   | 191.1   | 
|Provision for plant closures and office consolidation |  |        | 1.3     |           |  |          | 8.2     |            |  |              | 55.5    |   |  |   |      |  |  |   | 65.0    | 
|Provision for asset impairment                        |  |        |        |           |  |          | 7.6     |            |  |              | 519.0   |   |  |   |      |  |  |   | 526.6   | 
|Assets                                                |  |        | 1,036.9 |           |  |          | 1,388.5 |            |  |              | 1,324.5 |   |  |   | 166.9 |  |  |   | 3,916.8 | 
|Expenditures for segment capital assets               |  |        | 78.0    |           |  |          | 41.7    |            |  |              | 40.6    |   |  |   | 5.7   |  |  |   | 166.0   | 

53



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

16. SEGMENT INFORMATION (CONTINUED)

Financial information by geographic area is summarized in the following table:

|                                           |               |   |                   |       |               |   |          |         |       |   |              |       |  |   |      |      |  |   |         |         | 
|------------------------------------------ | ------------- | - | ----------------- | ----- | ------------- | - | -------- | ------- | ----- | - | ------------ | ----- |  | - | ---- | ---- |  | - | ------- | ------- | 
|                                           |               |   | Country of Origin
|                                          
|                                           |               |   | Canada            |       | United States |   | Trinidad |         | Other |   | Consolidated
|                                          
|2001                                       |               |   |                   |       |               |   |          |         |       |   |              |       |  |   |      |      |  |   |         |        
|Net sales to customers outside the company |               |   |                   |       |               |   |          |         |       |   |              |       |  |   |      |      |  |   |         |        
|                                           | Canada        |   | $                 | 24.0  |               |   | $        | 62.8    |       |   | $            |      |  |   | $    |     |  |   | $       | 86.8    | 
|                                           | United States |   |                   | 208.2 |               |   |          | 1,074.1 |       |   |              | 239.3 |  |   |      |     |  |   |         | 1,521.6 | 
|                                           | PhosChem      |   |                   |      |               |   |          | 65.3    |       |   |              |      |  |   |      |     |  |   |         | 65.3    | 
|                                           | Canpotex      |   |                   | 237.6 |               |   |          |        |       |   |              |      |  |   |      |     |  |   |         | 237.6   | 
|                                           | Other         |   |                   | 55.7  |               |   |          | 60.0    |       |   |              | 33.8  |  |   |      | 11.9 |  |   |         | 161.4   | 
|                                          
|                                           |               | $ | 525.5             |       |               | $ | 1,262.2  |         |       | $ | 273.1        |       |  | $ | 11.9 |      |  | $ | 2,072.7 |        
|                                          
|Operating income                           |               | $ | 175.4             |       |               | $ | 34.0     |         |       | $ | 59.8         |       |  | $ | 0.5  |      |  | $ | 269.7   |        
|                                          
|Capital assets and goodwill                |               | $ | 783.4             |       |               | $ | 1,843.1  |         |       | $ | 662.5        |       |  | $ | 83.9 |      |  | $ | 3,372.9 |        
|                                          
|2000                                       |               |   |                   |       |               |   |          |         |       |   |              |       |  |   |      |      |  |   |         |        
|Net sales to customers outside the company |               |   |                   |       |               |   |          |         |       |   |              |       |  |   |      |      |  |   |         |        
|                                           | Canada        |   | $                 | 28.0  |               |   | $        | 52.9    |       |   | $            |      |  |   | $    |     |  |   | $       | 80.9    | 
|                                           | United States |   |                   | 209.4 |               |   |          | 1,195.2 |       |   |              | 133.9 |  |   |      |     |  |   |         | 1,538.5 | 
|                                           | PhosChem      |   |                   |      |               |   |          | 146.3   |       |   |              |      |  |   |      |     |  |   |         | 146.3   | 
|                                           | Canpotex      |   |                   | 268.9 |               |   |          |        |       |   |              |      |  |   |      |     |  |   |         | 268.9   | 
|                                           | Other         |   |                   | 72.4  |               |   |          | 53.3    |       |   |              | 58.9  |  |   |      | 12.4 |  |   |         | 197.0   | 
|                                          
|                                           |               | $ | 578.7             |       |               | $ | 1,447.7  |         |       | $ | 192.8        |       |  | $ | 12.4 |      |  | $ | 2,231.6 |        
|                                          
|Operating income (loss)                    |               | $ | 216.2             |       |               | $ | 96.0     |         |       | $ | 15.4         |       |  | $ | (0.8 | )    |  | $ | 326.8   |        
|                                          
|Capital assets and goodwill                |               | $ | 794.4             |       |               | $ | 1,862.6  |         |       | $ | 294.3        |       |  | $ | 83.5 |      |  | $ | 3,034.8 |        
|                                          
|1999                                       |               |   |                   |       |               |   |          |         |       |   |              |       |  |   |      |      |  |   |         |        
|Net sales to customers outside the company |               |   |                   |       |               |   |          |         |       |   |              |       |  |   |      |      |  |   |         |        
|                                           | Canada        |   | $                 | 21.4  |               |   | $        | 29.3    |       |   | $            |      |  |   | $    |     |  |   | $       | 50.7    | 
|                                           | United States |   |                   | 209.7 |               |   |          | 1,080.7 |       |   |              | 122.1 |  |   |      |     |  |   |         | 1,412.5 | 
|                                           | PhosChem      |   |                   |      |               |   |          | 186.5   |       |   |              |      |  |   |      |     |  |   |         | 186.5   | 
|                                           | Canpotex      |   |                   | 254.7 |               |   |          |        |       |   |              |      |  |   |      |     |  |   |         | 254.7   | 
|                                           | Other         |   |                   | 71.2  |               |   |          | 39.2    |       |   |              | 46.3  |  |   |      |     |  |   |         | 156.7   | 
|                                          
|                                           |               | $ | 557.0             |       |               | $ | 1,335.7  |         |       | $ | 168.4        |       |  | $ |     |      |  | $ | 2,061.1 |        
|                                          
|Operating income (loss)                    |               | $ | 179.1             |       |               | $ | (511.9   | )       |       | $ | (20.2        | )     |  | $ |     |      |  | $ | (353.0  | )      
|                                          
|Capital assets and goodwill                |               | $ | 796.6             |       |               | $ | 1,871.7  |         |       | $ | 301.7        |       |  | $ | 32.5 |      |  | $ | 3,002.5 |        
|                                          

17. PROVINCIAL MINING AND OTHER TAXES

Provincial mining taxes and other taxes consist of:

|                                               |  |      |      |      |  |      |      |  |  |   |      | 
|---------------------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                               |  | 2001 |      | 2000 |  | 1999
|                                              
|Potash Production Tax                          |  | $    | 47.9 |      |  | $    | 55.6 |  |  | $ | 58.0 | 
|Saskatchewan corporate capital taxes and other |  |      | 22.1 |      |  |      | 21.6 |  |  |   | 19.1 | 
|                                              
|                                               |  | $    | 70.0 |      |  | $    | 77.2 |  |  | $ | 77.1 | 
|                                              

18. PROVISION FOR PLANT CLOSURES AND OFFICE CONSOLIDATION

2000

On January 19, 2001, the company announced it was suspending all DAP production at its White Springs, Florida operations and that it
permanently closed its Davenport, Iowa phosphate feed plant on January 15, 2001.

1999

In the third quarter of 1999, the Board of Directors of the company approved a plan to close nitrogen plants at Clinton, Iowa and LaPlatte,
Nebraska; a phosphate feed plant at Saltville, Virginia; and a phosphate terminal at Jacksonville, Florida.

The decision to close these facilities triggered an assessment of the fair value of these assets, with fair value being determined based on
estimated sales proceeds less costs to sell.

The company also consolidated its Raleigh, North Carolina and Memphis, Tennessee administrative offices with its office in
Northbrook, Illinois.

54



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

18. PROVISION FOR PLANT CLOSURES AND OFFICE CONSOLIDATION (CONTINUED)

Charges associated with these plant closures and office consolidation are as follows:

|                                                    |  |               |      |             |  |          |       |             |  |               |       |   |  |            |      |   |  |   |      | 
|--------------------------------------------------- |  | ------------- | ---- | ----------- |  | -------- | ----- | ----------- |  | ------------- | ----- | - |  | ---------- | ---- | - |  | - | ---- | 
|                                                    |  | Balance at    |      |             |  |          |       | Reserve     |  |               |       |   |  | Balance at
|                                                    |  | Dec. 31, 2000 |      | Amount Paid |  | Utilized |       | Adjustments |  | Dec. 31, 2001
|                                                   
|Plant Closures                                      |  |               |      |             |  |          |       |             |  |               |       |   |  |            |      |   |  |   |      | 
|Severance                                           |  | $             | 9.2  |             |  | $        | (9.2  | )           |  | $             |      |   |  | $          |     |   |  | $ |     | 
|Decommissioning                                     |  |               | 4.3  |             |  |          | (4.3  | )           |  |               |      |   |  |            |     |   |  |   |     | 
|Environmental remediation                           |  |               | 0.5  |             |  |          | (0.5  | )           |  |               |      |   |  |            |     |   |  |   |     | 
|Non-cash parts inventory writedown                  |  |               | 1.8  |             |  |          |      |             |  |               | (0.9  | ) |  |            |     |   |  |   | 0.9  | 
|Non-cash writedown of property,
plant and equipment |  |               | 36.6 |             |  |          |      |             |  |               | (10.9 | ) |  |            |     |   |  |   | 25.7 | 
|
|                                                   
|                                                    |  |               | 52.4 |             |  |          | (14.0 | )           |  |               | (11.8 | ) |  |            |     |   |  |   | 26.6 | 
|Office Consolidation                                |  |               |      |             |  |          |       |             |  |               |       |   |  |            |      |   |  |   |      | 
|Severance                                           |  |               | 1.0  |             |  |          |      |             |  |               |      |   |  |            | (1.0 | ) |  |   |     | 
|                                                   
|                                                    |  | $             | 53.4 |             |  | $        | (14.0 | )           |  | $             | (11.8 | ) |  | $          | (1.0 | ) |  | $ | 26.6 | 
|                                                   

19. PROVISION FOR ASSET IMPAIRMENT

1999

Due to operating losses primarily caused by reduced product
prices and increased gas costs relative to certain current and
expected future competition, the company assessed the
recoverability of the tangible and intangible assets related to the
nitrogen operations. The company projected the undiscounted future
net cash flows from use together with the residual value of these
assets and determined that in certain cases they were less than the
carrying amount. Third party forecasts of future nitrogen prices
indicate that they would not reach the levels experienced in 1997
when the nitrogen operations were purchased. These circumstances
were the primary cause of a permanent impairment in the value of
certain nitrogen assets. Accordingly, the company recorded a
provision for asset impairment of $519.0, of which $438.5 relates to
goodwill, $79.5 relates to property, plant and equipment at the
Memphis, Tennessee plant and $1.0 relates to other assets. The
provision for asset impairment for the nitrogen operations was
calculated as the difference between the carrying amount and the
undiscounted future net cash flows from use together with residual
values. Estimates of such undiscounted future net cash flows from
use together with residual values are subject to significant
uncertainties and assumptions. Accordingly, actual results could vary
significantly from such estimates.

Due to a history of operating losses and a projection of continuing
operating losses, the company assessed the recoverability of the
tangible and intangible assets related to the PCS Joint Venture
operations. The company estimated the undiscounted future net cash
flows from use together with the residual value of these assets and
determined that in certain cases they were less than the carrying
amount. Accordingly, the company recorded a provision for asset
impairment of $7.6, of which $6.4 relates to property, plant and
equipment primarily at the Lakeland, Florida and Moultrie, Georgia
locations and $1.2 relates to intangibles. The provision for asset
impairment for the PCS Joint Venture operations was calculated as
the difference between third party sales offers and the carrying
amount of the various properties. This provision relates to the
phosphate business segment.

These writedowns will result in a reduction of amortization expense
of approximately $11.7 and a reduction of depreciation expense of
approximately $4.9 on an annualized basis.

20. INTEREST EXPENSE

|            |                 |   |      |      |      |   |      |      |  |   |      |      | 
|----------- | --------------- | - | ---- | ---- | ---- | - | ---- | ---- |  | - | ---- | ---- | 
|            |                 |   | 2001 |      | 2000 |   | 1999
|           
|Interest on |                 |   |      |      |      |   |      |      |  |   |      |     
|            | Short-term debt |   | $    | 21.9 |      |   | $    | 29.7 |  |   | $    | 8.1  | 
|            | Long-term debt  |   |      | 58.4 |      |   |      | 31.9 |  |   |      | 43.4 | 
|           
|            |                 | $ | 80.3 |      |      | $ | 61.6 |      |  | $ | 51.5 |     
|           

21. INCOME TAXES

As the company operates in a specialized industry and in several
tax jurisdictions, its income is subject to various rates of taxation.

The provision for income taxes differs from the amount that would
have resulted from applying the Canadian statutory income tax rates
to income (loss) before income taxes as follows:

|                                           |                                                                                          |   |       |       |      |   |       |       |   |   |        |       |  
|------------------------------------------ | ---------------------------------------------------------------------------------------- | - | ----- | ----- | ---- | - | ----- | ----- | - | - | ------ | ----- | -
|                                           |                                                                                          |   | 2001  |       | 2000 |   | 1999 
|                                          
|Income (loss) before income taxes          |                                                                                          |   |       |       |      |   |       |       |   |   |        |      
|Canada                                     |                                                                                          | $ | 96.8  |       |      | $ | 155.4 |       |   | $ | 126.2  |      
|United States                              |                                                                                          |   | 32.1  |       |      |   | 95.0  |       |   |   | (509.0 | )    
|Trinidad                                   |                                                                                          |   | 59.8  |       |      |   | 15.4  |       |   |   | (21.7  | )    
|Other                                      |                                                                                          |   | 0.7   |       |      |   | (0.6  | )     |   |   |       |      
|                                          
|                                           |                                                                                          | $ | 189.4 |       |      | $ | 265.2 |       |   | $ | (404.5 | )    
|                                          
|Federal and Provincial
Statutory tax rates |                                                                                          |   | 46.12 | %     |      |   | 46.12 | %     |   |   | 46.12  | %    
|                                          
|Tax at statutory rates                     |                                                                                          | $ | 87.3  |       |      | $ | 122.3 |       |   | $ | (186.6 | )    
|Adjusted for the effect of:                |                                                                                          |   |       |       |      |   |       |       |   |   |        |      
|                                           | Net non-deductible provincial
taxes and royalties and
resource allowances                |   |       | 12.7  |      |   |       | 16.4  |   |   |        | 20.6  |  
|                                           | Additional tax deductions                                                                |   |       | (33.7 | )    |   |       | (43.2 | ) |   |        | (43.6 | )
|                                           | Difference between Canadian
rate and rates applicable to
subsidiaries in other countries |   |       | (1.6  | )    |   |       | (5.2  | ) |   |        | 5.2   |  
|                                           | Goodwill impairment                                                                      |   |       |      |      |   |       |      |   |   |        | 207.7 |  
|                                           | Other                                                                                    |   |       | 3.5   |      |   |       | (23.1 | ) |   |        | 4.2   |  
|                                          
|Income tax expense                         |                                                                                          | $ | 68.2  |       |      | $ | 67.2  |       |   | $ | 7.5    |      
|                                          

55



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

21. INCOME TAXES (CONTINUED)

Details of income tax expense are as follows:

|                        |         |   |      |      |      |   |      |      |   |   |      |       |  
|----------------------- | ------- | - | ---- | ---- | ---- | - | ---- | ---- | - | - | ---- | ----- | -
|                        |         |   | 2001 |      | 2000 |   | 1999
|                       
|Canada                  |         |   |      |      |      |   |      |      |   |   |      |      
|                        | Current |   | $    | 19.2 |      |   | $    | 23.2 |   |   | $    | 9.4   |  
|                        | Future  |   |      | 19.9 |      |   |      | 30.2 |   |   |      | 68.4  |  
|United States  Federal |         |   |      |      |      |   |      |      |   |   |      |      
|                        | Current |   |      | (1.2 | )    |   |      |     |   |   |      | 3.4   |  
|                        | Future  |   |      | 16.7 |      |   |      | 7.4  |   |   |      | (70.8 | )
|United States  State   |         |   |      |      |      |   |      |      |   |   |      |      
|                        | Current |   |      | 0.2  |      |   |      | 7.1  |   |   |      | 1.1   |  
|                        | Future  |   |      | 2.9  |      |   |      | 1.5  |   |   |      | 2.7   |  
|Trinidad and other      |         |   |      |      |      |   |      |      |   |   |      |      
|                        | Current |   |      | 2.3  |      |   |      | 2.3  |   |   |      | 0.8   |  
|                        | Future  |   |      | 8.2  |      |   |      | (4.5 | ) |   |      | (7.5  | )
|                       
|Income tax expense      |         | $ | 68.2 |      |      | $ | 67.2 |      |   | $ | 27.5 |      
|                       

The tax effects of temporary differences that give rise to significant
portions of the net future income tax liability are:

|                                    |                                          |   |       |       |      |   |       |       | 
|----------------------------------- | ---------------------------------------- | - | ----- | ----- | ---- | - | ----- | ----- | 
|                                    |                                          |   | 2001  |       | 2000
|                                   
|Future income tax assets:           |                                          |   |       |       |      |   |       |      
|                                    | Loss and credit carryforwards            |   | $     | 248.2 |      |   | $     | 263.8 | 
|                                    | Post-retirement/post-employment benefits |   |       | 33.5  |      |   |       | 58.7  | 
|                                    | Accrued reclamation costs                |   |       | 55.0  |      |   |       | 29.1  | 
|                                    | Other                                    |   |       | 10.9  |      |   |       | 5.2   | 
|                                   
|Total future income tax assets      |                                          |   | 347.6 |       |      |   | 356.8 |      
|                                   
|Future income tax liabilities:      |                                          |   |       |       |      |   |       |      
|                                    | Basis difference in fixed assets         |   |       | 778.4 |      |   |       | 751.2 | 
|                                    | Other                                    |   |       | 26.8  |      |   |       | 40.7  | 
|                                   
|Total future income tax liabilities |                                          |   | 805.2 |       |      |   | 791.9 |      
|                                   
|Net future income tax liability     |                                          | $ | 457.6 |       |      | $ | 435.1 |      
|                                   

At December 31, 2001, the company has income tax losses carried
forward of approximately $640.2 which will begin to expire in 2010.
The benefit relating to these loss carryforwards has been recognized
by reducing future income tax liabilities. In addition, the company
has alternative minimum tax credits of approximately $22.7 which
carry forward indefinitely.

22. NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share was calculated on the weighted
average number of shares issued and outstanding during the
12 months ended December 31, 2001 of 51,879,000 (2000 -
52,410,000; 1999  54,230,000). Weighted average diluted shares
outstanding during 2001 were 52,186,000 (2000  52,703,000;
1999  54,230,000).

23. DIVIDENDS PER SHARE

Prior to June 30, 1999, the company declared its dividends in
Canadian dollars. Subsequent to that date, the company has
declared its dividends in US dollars.

24. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The company uses financial instruments, including forward
exchange contracts, futures, swaps and option agreements, to hedge
foreign exchange and commodity price risk. The company does not
hold or issue financial instruments for trading purposes.

At December 31, 2001, the company had commitments in the
form of foreign exchange contracts to sell US dollars in the amount
of $32.0 (2000  $18.0).

The companys exposure to interest rate risk is limited to its long-term debt. The effective interest rate on the long-term debt
approximates the stated rate because there are no significant
premiums or discounts.

In addition to physical spot and term purchases, the company at
times employs futures, swaps and option agreements to establish the
cost on a portion of its natural gas requirements. These instruments are
intended to hedge the future cost of the committed and anticipated
natural gas purchases for its US nitrogen and phosphate plants. Under
these arrangements, the company receives or makes payments based
on the differential between a specified price and the actual spot price
of natural gas. The company has certain available lines of credit which
are utilized to reduce cash margin requirements to maintain the
derivatives. Cash margin requirements which have been advanced as
at December 31, 2001 totalled $9.6 and are included in inventory. At
December 31, 2000, the company had collected cash margin
requirements of $105.9 which were included in accounts payable.

As at December 31, 2001, the company had derivatives qualifying
for deferral in the form of futures and swaps. The futures represented
a notional amount of 13.5 million MMBtu of natural gas with
maturities in 2002 through 2003. The swaps represented a notional
amount of 59.3 million MMBtu with maturities in 2002 through 2006.
As at December 31, 2001, net losses arising from settled hedging
transactions, which are included as a component of finished goods
inventory, were $10.8 (2000  gains of $11.5).

The company is exposed to credit-related losses in the event of
non-performance by counterparties to derivative financial
instruments. The company anticipates, however, that counterparties
will be able to fully satisfy their obligations under the contracts.

The major concentration of credit risk arises from the companys
receivables. A majority of the companys sales are in North America
and are primarily for use in the agricultural industry. The company
seeks to manage the credit risk relating to these sales through a
credit management program. Internationally, the companys products
are sold primarily through two export associations whose accounts
receivable are either insured or secured by letters of credit.

The carrying amount of the companys cash and cash equivalents,
accounts receivable, short-term debt and accounts payable and
accrued charges approximates fair values because of short-term
maturities. The carrying amount of the companys long-term
debt (except the Notes Payable whose approximate fair value at
December 31, 2001 was $1,050.5) approximates estimated fair value.

25. CONTINGENCIES

PotashCorp is a shareholder in Canpotex which markets potash
offshore. Should any operating losses or other liabilities be incurred
by Canpotex, the shareholders have contractually agreed to
reimburse Canpotex for such losses or liabilities in proportion to their
productive capacity. There were no such operating losses or other
liabilities in 2001.

In common with other companies in the industry, the company is
unable to acquire insurance for underground assets.

On May 11 and 12, 1999, representatives of the United States
Environmental Protection Agency (EPA), Federal Bureau of
Investigation and other state and local agencies executed a search
warrant on the companys Geismar facility in connection with a grand
jury investigation. The grand jury investigation is continuing. The

56



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

25. CONTINGENCIES (CONTINUED)

company cannot predict at this time what may result from the government investigation, or whether any such result would have a material
adverse effect on the company.

In 1998, the company, along with other parties, was notified by EPA of potential liability under 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 on Consent with EPA 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. In 2000, PCS Joint
Venture and another party entered into a second Administrative Order on Consent pursuant to which they conducted certain interim response
activities at the site. PCS Joint Venture continues to assess and evaluate the nature and extent of the impacts at the site. No final determination
has yet been made of the nature, timing or cost of remedial action that may be needed nor to what extent costs incurred may be recoverable
from third parties.

Various other claims and lawsuits are pending against the company. While it is not possible to determine the ultimate outcome of such
actions at this time, it is managements opinion that the ultimate resolution of such actions, including those pertaining to environmental
matters, will not have a material effect on the companys financial condition or results of operations.

26. RELATED PARTY TRANSACTIONS

The company has a one-third interest in Canpotex which markets potash offshore. Sales to Canpotex are at prevailing market prices. Sales
for the year ended December 31, 2001 were $237.6 (2000  $268.9; 1999  $254.7).

Account balances resulting from the Canpotex transactions are included in the Consolidated Statements of Financial Position and settled
on normal trade terms.

27. QUARTERLY RESULTS (UNAUDITED)

The following quarterly information in managements opinion includes all adjustments (consisting solely of normal recurring adjustments)
necessary for fair presentation.

|                               |  |               |       |                |  |               |       |                |  |   |       |  |  |   |       | 
|------------------------------ |  | ------------- | ----- | -------------- |  | ------------- | ----- | -------------- |  | - | ----- |  |  | - | ----- | 
|                               |  | First Quarter |       | Second Quarter |  | Third Quarter |       | Fourth Quarter
|2001                           |  |               |       |                |  |               |       |                |  |   |       |  |  |   |       | 
|Net sales                      |  | $             | 602.4 |                |  | $             | 575.8 |                |  | $ | 460.2 |  |  | $ | 434.3 | 
|                              
|Gross Margin                   |  | $             | 136.1 |                |  | $             | 132.8 |                |  | $ | 67.6  |  |  | $ | 62.7  | 
|                              
|Operating Income               |  | $             | 116.5 |                |  | $             | 84.4  |                |  | $ | 39.8  |  |  | $ | 29.0  | 
|                              
|Net Income                     |  | $             | 62.4  |                |  | $             | 43.1  |                |  | $ | 11.1  |  |  | $ | 4.6   | 
|                              
|Net Income per Share  Basic   |  | $             | 1.20  |                |  | $             | 0.83  |                |  | $ | 0.21  |  |  | $ | 0.09  | 
|                              
|Net Income per Share  Diluted |  | $             | 1.19  |                |  | $             | 0.83  |                |  | $ | 0.21  |  |  | $ | 0.09  | 
|                              
|                              
|2000                           |  |               |       |                |  |               |       |                |  |   |       |  |  |   |       | 
|Net sales                      |  | $             | 590.6 |                |  | $             | 560.8 |                |  | $ | 542.7 |  |  | $ | 537.5 | 
|                              
|Gross Margin                   |  | $             | 133.7 |                |  | $             | 122.4 |                |  | $ | 120.6 |  |  | $ | 106.1 | 
|                              
|Operating Income               |  | $             | 106.6 |                |  | $             | 97.2  |                |  | $ | 80.1  |  |  | $ | 42.9  | 
|                              
|Net Income                     |  | $             | 71.6  |                |  | $             | 60.1  |                |  | $ | 46.4  |  |  | $ | 19.9  | 
|                              
|Net Income per Share  Basic   |  | $             | 1.34  |                |  | $             | 1.15  |                |  | $ | 0.89  |  |  | $ | 0.39  | 
|                              
|Net Income per Share  Diluted |  | $             | 1.33  |                |  | $             | 1.14  |                |  | $ | 0.89  |  |  | $ | 0.38  | 
|                              

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.

28. SEASONALITY

The companys sales of fertilizer are seasonal. Typically, the second quarter of the year is when fertilizer sales will be highest, due to the
North American spring planting season. However, planting conditions and the timing of customer purchases will vary each year and sales can
be expected to shift from one quarter to another.

29. COMPARATIVE FIGURES

Certain of the prior years figures have been reclassified to conform with the current years presentation.

30. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

A description of certain significant differences between Canadian GAAP and US GAAP follows:

Marketable securities: The companys investments in Israel Chemicals Ltd. (ICL) and SQM are stated at cost. US GAAP would require
that this investment be classified as available-for-sale and be stated at market value, with the difference between market value and cost
reported as Other Comprehensive Income (OCI).

Property, plant and equipment and goodwill: The net book value of property, plant and equipment and goodwill under Canadian GAAP is
higher than under US GAAP as provisions for asset impairment under Canadian GAAP were measured based on the undiscounted cash flow
from use together with the residual value of assets, whereas under US GAAP they were measured based on fair value, which was lower than
the undiscounted cash flow from use together with the residual value of the assets.

57



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

30. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

Pre-operating costs: Operating costs incurred during the start-up phase of new projects are deferred until commercial production levels are
reached, at which time they are amortized over the estimated life of the project. US GAAP would require that these costs be expensed as incurred.

Foreign currency translation adjustment: The foreign currency translation adjustment results from the restatement of prior periods so
that all periods presented are in the same reporting currency. US GAAP requires that the comparative Consolidated Statements of Income
and the Consolidated Statements of Cash Flow be translated using weighted average exchange rates for the applicable periods. In contrast,
the Consolidated Statements of Financial Position are translated using the exchange rates at the end of the applicable periods in
accordance with Canadian GAAP. The difference in these exchange rates is what gives rise to the foreign currency translation adjustment.

Derivative instruments and hedging activities: The companys derivative instruments which have not yet been settled are not recognized in
the financial statements and gains or losses arising from settled hedging transactions are deferred as a component of inventory until the product
containing the hedged item is sold, at which time both the natural gas purchase cost and the related hedging deferral are recorded as cost of
sales. US GAAP would require that derivative instruments be recorded at fair value in the balance sheet with the change in fair value of
instruments designated as cash flow hedges recorded as OCI.

Net sales: Sales are recorded net of freight costs (less related revenues) and transportation and distribution expenses. US GAAP would
require that net freight costs be included in cost of sales and transportation, and distribution expenses be reported as an operating expense.

Comprehensive income: Comprehensive income is not recognized under Canadian GAAP. US GAAP would require the recognition of
comprehensive income.

Provision for asset impairment: The provision for asset impairment under Canadian GAAP is measured based on the undiscounted cash
flow from use together with the residual value of the asset. US GAAP would require that the provision for asset impairment be measured based
on fair value, which resulted in additional writedowns of property, plant and equipment and goodwill for US GAAP purposes.

Provision for plant closures: The provision for plant closures under Canadian GAAP includes the non-cash parts inventory writedown. US
GAAP would require that this writedown be included in selling and administrative expenses.

The provision for plant closures under Canadian GAAP also includes severance expense, which was accrued when management
having the appropriate authority approved the plan. US GAAP would require that severance not be accrued until the plan was announced to
the employees.

Depreciation and amortization: Depreciation and amortization under Canadian GAAP is higher than under US GAAP as the net book
values of property, plant and equipment and goodwill under Canadian GAAP are higher than under US GAAP.

Stock-based
compensation: In 1995, the Financial Accounting Standards Board
issued SFAS No. 123 Accounting for Stock-Based
Compensation. The company has decided to continue to apply APB Opinion 25 (APB 25) for measurement of compensation of employees.

The application of US GAAP, as described above, would have had the following approximate effects on net income (loss), net income (loss)
per share, total assets and shareholders equity:

|                                                            |                                                       |   |            |        |      |   |            |        |   |   |            |        |  
|----------------------------------------------------------- | ----------------------------------------------------- | - | ---------- | ------ | ---- | - | ---------- | ------ | - | - | ---------- | ------ | -
|                                                            |                                                       |   | 2001       |        | 2000 |   | 1999      
|                                                           
|Net income (loss) as reported  Canadian GAAP               |                                                       | $ | 121.2      |        |      | $ | 198.0      |        |   | $ | (412.0     | )     
|Items increasing (decreasing) reported net income (loss)    |                                                       |   |            |        |      |   |            |        |   |   |            |       
|                                                            | Provision for plant closures                          |   |            | (9.0   | )    |   |            | 9.0    |   |   |            |       |  
|                                                            | Provision for asset impairment                        |   |            |       |      |   |            |       |   |   |            | (218.0 | )
|                                                            | Pre-operating costs                                   |   |            | (41.7  | )    |   |            | (19.3  | ) |   |            | (4.6   | )
|                                                            | Depreciation and amortization                         |   |            | 9.7    |      |   |            | 9.8    |   |   |            |       |  
|                                                            | Future income taxes                                   |   |            | 14.4   |      |   |            | 0.3    |   |   |            | 52.0   |  
|                                                           
|Approximate net income (loss)  US GAAP                     |                                                       | $ | 94.6       |        |      | $ | 197.8      |        |   | $ | (582.6     | )     
|                                                           
|Weighted average shares outstanding  US GAAP               |                                                       |   | 51,879,000 |        |      |   | 52,410,000 |        |   |   | 54,230,000 |       
|                                                           
|Approximate net income (loss) per share  US GAAP           |                                                       | $ | 1.82       |        |      | $ | 3.77       |        |   | $ | (10.74     | )     
|                                                           
|Total assets as reported  Canadian GAAP                    |                                                       | $ | 4,597.3    |        |      | $ | 4,145.7    |        |   | $ | 3,916.8    |       
|Items increasing (decreasing) reported total assets         |                                                       |   |            |        |      |   |            |        |   |   |            |       
|                                                            | Available-for-sale security (unrealized holding gain) |   |            | 34.9   |      |   |            | 41.7   |   |   |            | 26.2   |  
|                                                            | Fair value of natural gas hedging contracts           |   |            | 8.9    |      |   |            |       |   |   |            |       |  
|                                                            | Property, plant and equipment                         |   |            | (151.8 | )    |   |            | (160.2 | ) |   |            | (168.6 | )
|                                                            | Pre-operating costs                                   |   |            | (65.6  | )    |   |            | (23.9  | ) |   |            | (4.6   | )
|                                                            | Goodwill                                              |   |            | (46.7  | )    |   |            | (48.0  | ) |   |            | (49.3  | )
|                                                           
|Approximate total assets  US GAAP                          |                                                       | $ | 4,377.0    |        |      | $ | 3,955.3    |        |   | $ | 3,720.5    |       
|                                                           
|Total shareholders equity as reported  Canadian GAAP      |                                                       | $ | 2,086.5    |        |      | $ | 2,012.1    |        |   | $ | 1,962.4    |       
|Items increasing (decreasing) reported shareholders equity |                                                       |   |            |        |      |   |            |        |   |   |            |       
|                                                            | Accumulated other comprehensive income, net of tax    |   |            | 29.8   |      |   |            | 28.1   |   |   |            | 16.9   |  
|                                                            | Provision for plant closures                          |   |            |       |      |   |            | 9.0    |   |   |            |       |  
|                                                            | Provision for asset impairment                        |   |            | (218.0 | )    |   |            | (218.0 | ) |   |            | (218.0 | )
|                                                            | Depreciation and amortization                         |   |            | 19.5   |      |   |            | 9.8    |   |   |            |       |  
|                                                            | Pre-operating costs                                   |   |            | (65.6  | )    |   |            | (23.9  | ) |   |            | (4.6   | )
|                                                            | Future income taxes                                   |   |            | 66.7   |      |   |            | 52.3   |   |   |            | 52.0   |  
|                                                           
|Approximate shareholders equity  US GAAP                  |                                                       | $ | 1,918.9    |        |      | $ | 1,869.4    |        |   | $ | 1,808.7    |       
|                                                           

58



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

30. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

Supplemental US GAAP Disclosure

Available-for-Sale Security

The companys investments in ICL and SQM are classified as available-for-sale. The fair market value of these investments at
December 31, 2001 was $258.1 and the unrealized holding gain was $34.9.

New Accounting Pronouncements

Effective January 1, 2001, the company adopted Financial Accounting Standards Board (FASB) Statement No. 133. The adoption of this
pronouncement has not had a significant impact on the results of operations as the companys hedges have been highly effective. The impact
of SFAS 133 on the statement of financial position has been significant and is set out in the above tables under the caption Fair Value of
Natural Gas Hedging Contracts.

The company also adopted SEC Staff Accounting Bulletin (SAB) No. 101 Revenue Recognition in Financial Statements. This SAB did
not have a significant effect on the companys results of operations or financial position.

During 2001, FASB issued SFAS 142 Goodwill and Other Intangible Assets which was effective January 1, 2002. This standard requires
that goodwill not be amortized but rather an impairment test be applied and, if there is impairment, an adjustment recorded. The effect of
the adoption of this standard will be to reduce goodwill amortization in 2002 by $3.0. The company does not anticipate any impairment
charges at this time.

SFAS 141 Business Combinations was effective for all business combinations initiated after June 30, 2001 (of which the company had
none). This standard precludes the use of the pooling of interests method of accounting for business combinations. The adoption of this
standard should not have a significant effect on the results of operations or financial position of the company.

FASB also issued SFAS 143 Accounting for Asset Retirement Obligations. This standard will be effective for the company on January 1,
2003. This standard requires that asset retirement obligations be recorded in the financial statements. As the company currently records
these obligations (under the caption Accrued Reclamation Costs in the Consolidated Statement of Financial Position), the adoption of this
standard should not have a significant effect on the results of operations or financial position of the company.

SFAS 133 Disclosures

The companys natural gas purchase strategy is based on diversification of price for its total gas requirements. Its objective is to acquire a
reliable supply of natural gas feedstock and fuel on a location-adjusted, cost-competitive basis in a manner that minimizes volatility without
undue risk. It employs derivative instruments including futures, swaps and option agreements in order to establish the cost on a portion of
its natural gas requirements. These instruments are intended to hedge the future cost of the committed and anticipated natural gas purchase
for its US nitrogen and phosphate plants. The maximum period for these hedges cannot exceed five years. The company uses these
instruments to reduce price risk, not for speculative or trading purposes.

The company has designated its natural gas derivative instruments as cash flow hedges. The gain or loss of an effective cash flow hedge
is deferred in OCI until such time as the natural gas it relates to is used in production, at which time the gain or loss is reclassified from OCI
to cost of sales. During the year, $43.9 of gains was recognized in cost of sales. Of the deferred amount at year-end, approximately $3.6 will
be reclassified to cost of sales within the next year.

Stock Compensation Plans

The company has two stock-based compensation plans which are described in Note 15. The company applies APB 25 and related
interpretations in accounting for its plans. No compensation cost has been recognized under APB 25 as the exercise price is the quoted
market closing price of the companys common shares on the last trading day immediately preceding the date of the grant. Had compensation
cost for the companys plans been determined based on the fair value at the grant dates for awards under the plans consistent with the
method of SFAS No. 123, the companys net income (loss) and net income (loss) per share for the years ending December 31, 2001, 2000
and 1999 would have been reduced to the pro forma amounts indicated below:

|                            |  |             |      |           |  |             |      |           |  |             |       |           |  |   |       |  |  |   |        |   |  |   |        |  
|--------------------------- |  | ----------- | ---- | --------- |  | ----------- | ---- | --------- |  | ----------- | ----- | --------- |  | - | ----- |  |  | - | ------ | - |  | - | ------ | -
|                            |  | 2001        |      | 2000      |  | 1999       
|                           
|                            |  | As Reported |      | Pro Forma |  | As Reported |      | Pro Forma |  | As Reported |       | Pro Forma
|                           
|Net income (loss)           |  | $           | 94.6 |           |  | $           | 76.7 |           |  | $           | 197.8 |           |  | $ | 184.6 |  |  | $ | (582.6 | ) |  | $ | (602.5 | )
|Net income (loss) per share |  | $           | 1.82 |           |  | $           | 1.48 |           |  | $           | 3.77  |           |  | $ | 3.52  |  |  | $ | (10.74 | ) |  | $ | (11.11 | )

In calculating the foregoing pro forma amounts, the fair value of each option grant was estimated as of the date of grant using the Modified
Black-Scholes option-pricing model with the following weighted average assumptions:

|                        |  |         |      |         |  |         |      |   |  |   |      |  
|----------------------- |  | ------- | ---- | ------- |  | ------- | ---- | - |  | - | ---- | -
|                        |  | 2001    |      | 2000    |  | 1999   
|                       
|Expected dividend       |  | $       | 1.00 |         |  | $       | 1.00 |   |  | $ | 0.99 |  
|Expected volatility     |  |         | 32   | %       |  |         | 31   | % |  |   | 28   | %
|Risk-free interest rate |  |         | 4.54 | %       |  |         | 5.76 | % |  |   | 6.03 | %
|Expected life of option |  | 8 years |      | 8 years |  | 8 years
|Expected forfeitures    |  |         | 10   | %       |  |         | 10   | % |  |   | 10   | %

59



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

30. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

The following supplemental schedules present the Consolidated Financial Position, Income and Retained Earnings, Cash Flow and
Comprehensive Income in accordance with US GAAP as adjusted for the GAAP differences described in this note.

Supplemental Schedule of Consolidated Financial Position

As at December 31

|                                                   |                                             |   |         |       |      |   |         |       | 
|-------------------------------------------------- | ------------------------------------------- | - | ------- | ----- | ---- | - | ------- | ----- | 
|                                                   |                                             |   | 2001    |       | 2000
|                                                  
|Assets                                             |                                             |   |         |       |      |   |         |      
|Current Assets                                     |                                             |   |         |       |      |   |         |      
|                                                   | Cash and cash equivalents                   |   | $       | 45.3  |      |   | $       | 100.0 | 
|                                                   | Accounts receivable                         |   |         | 256.7 |      |   |         | 326.6 | 
|                                                   | Inventories                                 |   |         | 481.1 |      |   |         | 406.2 | 
|                                                   | Prepaid expenses                            |   |         | 36.5  |      |   |         | 38.9  | 
|                                                   | Fair value of natural gas hedging contracts |   |         | 8.9   |      |   |         |      | 
|                                                  
|                                                   |                                             |   | 828.5   |       |      |   | 871.7   |      
|Property, plant and equipment                      |                                             |   | 3,093.8 |       |      |   | 2,749.9 |      
|Goodwill                                           |                                             |   | 50.3    |       |      |   | 58.4    |      
|Other assets                                       |                                             |   | 404.4   |       |      |   | 275.3   |      
|                                                  
|                                                   |                                             | $ | 4,377.0 |       |      | $ | 3,955.3 |      
|                                                  
|Liabilities                                        |                                             |   |         |       |      |   |         |      
|Current Liabilities                                |                                             |   |         |       |      |   |         |      
|                                                   | Short-term debt                             |   | $       | 501.1 |      |   | $       | 488.8 | 
|                                                   | Accounts payable and accrued charges        |   |         | 280.4 |      |   |         | 516.8 | 
|                                                   | Current portion of long-term debt           |   |         |      |      |   |         | 5.7   | 
|                                                  
|                                                   |                                             |   | 781.5   |       |      |   | 1,011.3 |      
|Long-term debt                                     |                                             |   | 1,013.7 |       |      |   | 413.7   |      
|Future income tax liability                        |                                             |   | 395.9   |       |      |   | 396.5   |      
|Accrued post-retirement/post-employment benefits   |                                             |   | 177.3   |       |      |   | 175.1   |      
|Accrued reclamation costs                          |                                             |   | 83.0    |       |      |   | 83.0    |      
|Other non-current liabilities and deferred credits |                                             |   | 6.7     |       |      |   | 6.3     |      
|                                                  
|                                                   |                                             |   | 2,458.1 |       |      |   | 2,085.9 |      
|                                                  
|Shareholders Equity                               |                                             |   |         |       |      |   |         |      
|Share Capital                                      |                                             |   | 1,182.5 |       |      |   | 1,177.4 |      
|Contributed Surplus                                |                                             |   | 264.2   |       |      |   | 264.2   |      
|Retained Earnings                                  |                                             |   | 463.3   |       |      |   | 420.6   |      
|Foreign Currency Translation Adjustment            |                                             |   | (20.9   | )     |      |   | (20.9   | )    
|Accumulated Other Comprehensive Income             |                                             |   | 29.8    |       |      |   | 28.1    |      
|                                                  
|                                                   |                                             |   | 1,918.9 |       |      |   | 1,869.4 |      
|                                                  
|                                                   |                                             | $ | 4,377.0 |       |      | $ | 3,955.3 |      
|                                                  

60



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

30. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

Supplemental Schedule of Consolidated Income and Retained Earnings

For the Years Ended December 31

|                                                      |  |      |         |      |  |      |         |   |  |   |         |  
|----------------------------------------------------- |  | ---- | ------- | ---- |  | ---- | ------- | - |  | - | ------- | -
|                                                      |  | 2001 |         | 2000 |  | 1999
|                                                     
|Net sales                                             |  | $    | 2,387.0 |      |  | $    | 2,541.0 |   |  | $ | 2,350.1 |  
|Cost of goods sold                                    |  |      | 1,938.2 |      |  |      | 1,981.4 |   |  |   | 1,869.7 |  
|                                                     
|Gross Margin                                          |  |      | 448.8   |      |  |      | 559.6   |   |  |   | 480.4   |  
|                                                     
|Selling, distribution and administrative              |  |      | 181.3   |      |  |      | 198.7   |   |  |   | 201.2   |  
|Provincial mining and other taxes                     |  |      | 70.0    |      |  |      | 77.2    |   |  |   | 77.1    |  
|Provision for plant closures and office consolidation |  |      | 9.0     |      |  |      | 13.9    |   |  |   | 56.7    |  
|Provision for asset impairment                        |  |      |        |      |  |      |        |   |  |   | 744.6   |  
|Foreign exchange                                      |  |      | (13.7   | )    |  |      | (8.1    | ) |  |   | 8.5     |  
|Other income                                          |  |      | (26.5   | )    |  |      | (48.4   | ) |  |   | (32.2   | )
|                                                     
|                                                      |  |      | 220.1   |      |  |      | 233.3   |   |  |   | 1,055.9 |  
|                                                     
|Operating Income (Loss)                               |  |      | 228.7   |      |  |      | 326.3   |   |  |   | (575.5  | )
|Interest Expense                                      |  |      | 80.3    |      |  |      | 61.6    |   |  |   | 51.5    |  
|                                                     
|Income (Loss) Before Income Taxes                     |  |      | 148.4   |      |  |      | 264.7   |   |  |   | (627.0  | )
|Income Taxes (Recovery)                               |  |      | 53.8    |      |  |      | 66.9    |   |  |   | (44.4   | )
|                                                     
|Net Income (Loss)                                     |  |      | 94.6    |      |  |      | 197.8   |   |  |   | (582.6  | )
|Retained Earnings, Beginning of Year                  |  |      | 420.6   |      |  |      | 274.7   |   |  |   | 910.6   |  
|Dividends                                             |  |      | (51.9   | )    |  |      | (51.9   | ) |  |   | (53.3   | )
|                                                     
|Retained Earnings, End of Year                        |  | $    | 463.3   |      |  | $    | 420.6   |   |  | $ | 274.7   |  
|                                                     
|Net Income (Loss) Per Share  Basic                   |  | $    | 1.82    |      |  | $    | 3.77    |   |  | $ | (10.74  | )
|                                                     
|Net Income (Loss) Per Share  Diluted                 |  | $    | 1.81    |      |  | $    | 3.77    |   |  | $ | (10.74  | )
|                                                     
|Dividends Per Share                                   |  | $    | 1.00    |      |  | $    | 0.99    |   |  | $ | 0.99    |  
|                                                     

Supplemental Schedule of Consolidated Comprehensive Income

For the Years Ended December 31

|                                  |                                                                    |   |        |        |      |   |       |      |   |   |        |      |  
|--------------------------------- | ------------------------------------------------------------------ | - | ------ | ------ | ---- | - | ----- | ---- | - | - | ------ | ---- | -
|                                  |                                                                    |   | 2001   |        | 2000 |   | 1999 
|                                 
|Net income (loss)                 |                                                                    | $ | 94.6   |        |      | $ | 197.8 |      |   | $ | (582.6 | )   
|                                 
|Other comprehensive (loss) income |                                                                    |   |        |        |      |   |       |      |   |   |        |     
|                                  | Change in unrealized holding gain on available-for-sale securities |   |        | (6.8   | )    |   |       | 15.5 |   |   |        | 11.3 |  
|                                  | Reduction in fair market value of natural gas hedging contracts    |   |        | (165.6 | )    |   |       |     |   |   |        |     |  
|                                  | Future income taxes related to other Comprehensive Income          |   |        | 62.4   |      |   |       | (4.3 | ) |   |        | (3.3 | )
|                                 
|                                  |                                                                    |   | (110.0 | )      |      |   | 11.2  |      |   |   | 8.0    |     
|                                 
|Comprehensive (loss) income       |                                                                    | $ | (15.4  | )      |      | $ | 209.0 |      |   | $ | (574.6 | )   
|                                 

Consolidated Schedule of Accumulated Other Comprehensive Income

For the Years Ended December 31

|                                                              |  |      |        |      |  |      |      |  |  |   |      | 
|------------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                                              |  | 2001 |        | 2000 |  | 1999
|                                                             
|Accumulated other comprehensive income, beginning of year     |  | $    | 28.1   |      |  | $    | 16.9 |  |  | $ | 8.9  | 
|SFAS 133 cumulative effect transition adjustment net of tax   |  |      | 139.8  |      |  |      |     |  |  |   |     | 
|Natural gas hedging gains reclassified to earnings net of tax |  |      | (28.1  | )    |  |      |     |  |  |   |     | 
|Other comprehensive (loss) income net of tax                  |  |      | (110.0 | )    |  |      | 11.2 |  |  |   | 8.0  | 
|                                                             
|Accumulated other comprehensive income, end of year           |  | $    | 29.8   |      |  | $    | 28.1 |  |  | $ | 16.9 | 
|                                                             

61



---



##### 



Notes to the Consolidated Financial Statements



|in millions of US Dollars except per share amounts
|--------------------------------------------------

30. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (CONTINUED)

Supplemental Schedule of Consolidated Cash Flow

For the Years Ended December 31

|                                                   |                                                        |   |        |        |      |   |        |       |   |   |        |       |  
|-------------------------------------------------- | ------------------------------------------------------ | - | ------ | ------ | ---- | - | ------ | ----- | - | - | ------ | ----- | -
|                                                   |                                                        |   | 2001   |        | 2000 |   | 1999  
|                                                  
|Operating Activities                               |                                                        |   |        |        |      |   |        |       |   |   |        |      
|Net income (loss)                                  |                                                        | $ | 94.6   |        |      | $ | 197.8  |       |   | $ | (582.6 | )    
|Items not affecting cash                           |                                                        |   |        |        |      |   |        |       |   |   |        |      
|                                                   | Depreciation and amortization                          |   |        | 176.0  |      |   |        | 177.2 |   |   |        | 191.1 |  
|                                                   | Loss (gain) on disposal of assets                      |   |        | 0.4    |      |   |        | (17.9 | ) |   |        | 0.5   |  
|                                                   | Provision for plant closures and office consolidation  |   |        |       |      |   |        | 10.7  |   |   |        | 37.1  |  
|                                                   | Provision for asset impairment                         |   |        |       |      |   |        |      |   |   |        | 744.6 |  
|                                                   | Provision for future income tax                        |   |        | 33.3   |      |   |        | 34.2  |   |   |        | (59.2 | )
|                                                   | Provision for post-retirement/post-employment benefits |   |        | 2.1    |      |   |        | 10.9  |   |   |        | 7.4   |  
|Changes in non-cash operating working capital      |                                                        |   |        |        |      |   |        |       |   |   |        |      
|                                                   | Accounts receivable                                    |   |        | 69.9   |      |   |        | (52.2 | ) |   |        | 33.8  |  
|                                                   | Inventories                                            |   |        | (76.1  | )    |   |        | (27.4 | ) |   |        | (16.1 | )
|                                                   | Prepaid expenses                                       |   |        | 2.3    |      |   |        | (3.1  | ) |   |        | 3.2   |  
|                                                   | Accounts payable and accrued charges                   |   |        | (235.6 | )    |   |        | 128.4 |   |   |        | (5.0  | )
|                                                   | Current income taxes                                   |   |        | (29.8  | )    |   |        | 15.1  |   |   |        | 8.1   |  
|Accrued reclamation costs                          |                                                        |   | (3.7   | )      |      |   | (2.4   | )     |   |   | (20.7  | )    
|Other non-current liabilities and deferred credits |                                                        |   | 0.6    |        |      |   | (10.3  | )     |   |   | (3.2   | )    
|                                                  
|Cash provided by operating activities              |                                                        |   | 34.0   |        |      |   | 461.0  |       |   |   | 339.0  |      
|                                                  
|Investing Activities                               |                                                        |   |        |        |      |   |        |       |   |   |        |      
|Additions to property, plant and equipment         |                                                        |   | (513.7 | )      |      |   | (185.6 | )     |   |   | (118.8 | )    
|Acquisition of Minera Yolanda S.C.M.               |                                                        |   |       |        |      |   |       |       |   |   | (36.9  | )    
|Acquisition of Albright & Wilson Company           |                                                        |   |       |        |      |   | (32.0  | )     |   |   |       |      
|Investment in SQM                                  |                                                        |   | (130.4 | )      |      |   |       |       |   |   |       |      
|Proceeds from disposal of assets                   |                                                        |   |       |        |      |   | 8.6    |       |   |   | 1.9    |      
|Additions to other assets                          |                                                        |   | (4.2   | )      |      |   | (37.0  | )     |   |   | (19.3  | )    
|                                                  
|Cash used in investing activities                  |                                                        |   | (648.3 | )      |      |   | (246.0 | )     |   |   | (173.1 | )    
|                                                  
|Financing Activities                               |                                                        |   |        |        |      |   |        |       |   |   |        |      
|Proceeds from long-term obligations                |                                                        |   | 600.0  |        |      |   | 11.1   |       |   |   |       |      
|Repayment of long-term obligations                 |                                                        |   | (5.8   | )      |      |   | (36.1  | )     |   |   | (490.1 | )    
|Proceeds from short-term debt                      |                                                        |   | 12.2   |        |      |   | 169.5  |       |   |   | 379.6  |      
|Repayment of short-term debt                       |                                                        |   |       |        |      |   | (155.2 | )     |   |   |       |      
|Dividends                                          |                                                        |   | (51.9  | )      |      |   | (51.9  | )     |   |   | (53.3  | )    
|Repurchase of shares                               |                                                        |   |       |        |      |   | (104.2 | )     |   |   | (29.3  | )    
|Issuance of shares                                 |                                                        |   | 5.1    |        |      |   | 7.8    |       |   |   | 3.2    |      
|                                                  
|Cash provided by (used in) financing activities    |                                                        |   | 559.6  |        |      |   | (159.0 | )     |   |   | (189.9 | )    
|                                                  
|(Decrease) Increase in Cash and Cash Equivalents   |                                                        |   | (54.7  | )      |      |   | 56.0   |       |   |   | (24.0  | )    
|Cash and Cash Equivalents, Beginning of Year       |                                                        |   | 100.0  |        |      |   | 44.0   |       |   |   | 68.0   |      
|                                                  
|Cash and Cash Equivalents, End of Year             |                                                        | $ | 45.3   |        |      | $ | 100.0  |       |   | $ | 44.0   |      
|                                                  

62



---



##### 





|Board of Directors
|------------------

|                                       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(PICTURE OF FREDERICK J. BLESI)        |  | Frederick J. Blesi,of Glenview, Illinois, is a retired Chairman and CEO of the
Phosphate Chemicals Export Association Inc. (PhosChem), principal exporter of US
phosphate chemicals. Before joining PhosChem, he was Vice President,
International with International Minerals and Chemical Corporation. He joined
the PCS Board in 2001.3,5                                                                                                                              
|                                      
|(PICTURE OF DOUGLAS J. BOURNE)         |  | Douglas J. Bourne,of Houston, Texas, is former Chairman and CEO of Battle
Mountain Gold Company and of Duval Corporation, the mining subsidiary of
Pennzoil Company. He has held many positions in various fertilizer and mining
associations. He joined the PCS Board in 1990.1,4                                                                                                                                                                                        
|                                      
|(PICTURE OF WILLIAM J. DOYLE)          |  | William J. Doyle,of Saskatoon, Saskatchewan, is President and CEO of Potash
Corporation of Saskatchewan Inc. He became President of PCS Sales in 1987, after
a career with International Minerals and Chemical Corporation. He was elected
Chairman of Canpotex Limited in 2001, is a board member of the Potash and
Phosphate Institute and The Fertilizer Institute, and is on the College Board of
Advisors at Georgetown University. He joined the PCS Board in 1989.1
|                                      
|(PICTURE OF DALLAS J. HOWE)            |  | Dallas J. Howe,of Calgary, Alberta, is President and CEO of Advanced
DataSystems Ltd. and BDM Information Systems Group of Companies. President, CEO
and founder of high technology information and data systems companies over 25
years, he served on the Board of the PCS Crown corporation from 1982 to 1989 and
on the PCS Board since 1991.2,3                                                                                                                       
|                                      
|(PICTURE OF JEFFREY J. MCCAIG)         |  | Jeffrey J. McCaig,of Calgary, Alberta, is President, CEO and a director of
Trimac Corporation, a bulk trucking and third-party logistics company. Prior to
that, he practiced law, specializing in corporate financing and securities. He
is a director of BOVAR Corporation. He joined the PCS Board in 2001.3,5                                                                                                                                                         
|                                      
|(PICTURE OF MARY MOGFORD)              |  | Mary Mogford,of Newcastle, Ontario, is a Corporate Director and Partner in
Mogford Campbell Inc., a strategic business and financial consulting company. A
former Deputy Minister of Finance in Ontario, she is a director of Falconbridge
Ltd., MDS Inc., Sears Canada Inc., Teranet Inc. and The Hospital for Sick
Children Foundation, Toronto. She joined the PCS Board in 2001.2,5                                                                                   
|                                      
|(PICTURE OF DONALD E. PHILLIPS)        |  | Donald E. Phillips,of Brandon, Mississippi, is Chairman of the Board of Potash
Corporation of Saskatchewan Inc. Former President and CEO of Pitman-Moore Inc.
and former Chairman of the board of directors of Synbiotics Inc., San Diego,
California, he is a director of Great Lakes REIT Inc., Oak Brook, Illinois. He
serves on the boards of trustees of three colleges. He joined the PCS Board in 1991.1,2                                                         
|                                      
|(PICTURE OF PAUL J. SCHOENHALS)        |  | Paul J. Schoenhals,of Calgary, Alberta, President of Petroleum Industry
Training Service, was Chairman of Potash Corporation of Saskatchewan, the Crown
corporation, from 1987 to 1989. He is a former Member of the Legislative
Assembly and Cabinet Minister in Saskatchewan. He joined the PCS Board in
1992.3,4                                                                                                                                                       
|                                      
|(PICTURE OF E. ROBERT STROMBERG, Q.C.) |  | E. Robert Stromberg, Q.C.,of Saskatoon, Saskatchewan, is associated with the
Saskatchewan law firm Robertson Stromberg. He is a director of NorSask Forest
Products Inc. and Hitachi Canadian Industries Ltd., a member of the Provincial
Court Commission and Chairman of the Saskatoon Airport Authority. He joined the
PCS Board in 1991.1,4                                                                                                                           
|                                      
|(PICTURE OF JACK G. VICQ)              |  | Jack G. Vicq,Professor Emeritus of Accounting, University of Saskatchewan, was
formerly Associate Dean of Commerce and responsible for the Centre for
International Business Studies. A member of the professional conduct committee
of the Saskatchewan Institute of Chartered Accountants, he holds the A.W.
Johnson Distinguished Chair in Public Policy in the Saskatchewan Finance
Department. He joined the PCS Board in 1989.1,5                                   
|                                      
|(PICTURE OF BARRIE A. WIGMORE)         |  | Barrie A. Wigmore,a Retired Partner with New York investment banking firm
Goldman, Sachs Group, Inc., headed its corporate finance activities in the
electric, gas, pipelines and telecommunications industries. He writes on
financial history and current financial markets. He joined the PCS Board in
1989.2,3                                                                                                                                                        
|                                      
|(PICTURE OF THOMAS J. WRIGHT)          |  | Thomas J. Wright,of Raleigh, North Carolina, retired as President of PCS
Phosphate in 1999. Formerly President and CEO of Texasgulf Inc., the predecessor
to PCS Phosphate, he has been active in many fertilizer industry associations.
He joined the PCS Board in 1999.2,4                                                                                                                                                                                              



---

|
|
|
|

63



---



##### 





|Shareholder Information
|-----------------------

Annual MeetingThe Annual Shareholders meeting will be held at 10:30 a.m. Central Standard Time
May 9, 2002 in the Adam Ballroom, Delta Bessborough Hotel, 601 Spadina Crescent
East, Saskatoon, Saskatchewan.

It will be carried live on the companys web site, www.potashcorp.com.

Holders of common shares as of March 21, 2002, are entitled to vote at the
meeting and are encouraged to participate.

DividendsDividend amounts paid to shareholders resident in Canada are adjusted by the
exchange rate applicable on the dividend record date. Dividends are normally
paid in February, May, August and November, with record dates normally set
approximately three weeks earlier.

Future cash dividends will be paid out of, and are conditioned upon, the
companys available earnings. Shareholders who wish to have their dividends
deposited directly in their bank accounts should contact the transfer agent and
registrar, CIBC Mellon Trust Company.

Registered shareholders can have dividends reinvested in newly-issued common
shares of PotashCorp at prevailing market rates.

Information for Shareholders Outside CanadaDividends paid to residents in countries with which Canada has bilateral tax
treaties are generally subject to the 15 percent Canadian non-resident
withholding tax. There is no Canadian tax on gains from the sale of shares or
debt instruments owned by non- residents not carrying on business in Canada. No
government in Canada levies estate taxes or succession duties.

OwnershipOn February 28, 2002, there were 2,243 holders of record of the companys common
shares.

Common Share Transfer AgentIn Canada:
CIBC Mellon Trust Company
Suite 750  One Lombard Place
Winnipeg, Manitoba R3B 0X3
Phone:  (204) 987-2490
             (800) 387-0825
Web site: www.cibcmellon.com

In the United States:
Mellon Investor Services, L.L.C.
85 Challenger Road, Overpeck Center
Ridgefield Park, New Jersey 07660
Phone: (800) 526-0801
Web site: www.melloninvestor.com

Shareholders with address changes or those with inquiries concerning their
Potash Corporation of Saskatchewan Inc. stock are invited to contact:
CIBC Mellon Trust (address above), or
John Hampton, Corporate Secretary
PotashCorp
Suite 500, 122 - 1st Avenue South
Saskatoon, Saskatchewan S7K 7G3.

Investor InquiriesBetty-Ann Heggie, Senior Vice President,
Corporate Relations
Canada:  (800) 667-0403
US:         (800) 667-3930
e-mail: corporate.relations@potashcorp.com

Visit us at www.potashcorp.com

Interim Reports, News Releases and Form 10-KNon-registered shareholders who wish to receive quarterly reports should contact
the Corporate Relations department. News releases are available via fax and
e-mail.

Copies of the companys most recent Form 10-K are available upon request or on
our web site.

Shares ListedToronto Stock Exchange
New York Stock Exchange

Ticker Symbol: POT

(BAR CHART)

(LINE GRAPH)



---

Common Share Prices and Volumes

The adjacent table sets forth the high and low prices, as well as the volumes,
of the companys common shares as traded on the Toronto Stock Exchange and the
New York Stock Exchange (composite transactions) on a quarterly basis. Potash
Corporation of Saskatchewan Inc. is on the S&P/TSE 60 index and the TSE 100.

|               |  |                         |        |                         |  |        |       |      |  |     |            |        |  |  |       |  |  |  |       |  |  |  |            | 
|-------------- |  | ----------------------- | ------ | ----------------------- |  | ------ | ----- | ---- |  | --- | ---------- | ------ |  |  | ----- |  |  |  | ----- |  |  |  | ---------- | 
|               |  | Toronto Stock Exchange1 |        | New York Stock Exchange
|              
|               |  | High                    |        | Low                     |  | Volume |       | High |  | Low |            | Volume
|              
|2001           |  |                         |        |                         |  |        |       |      |  |     |            |        |  |  |       |  |  |  |       |  |  |  |            | 
|First Quarter  |  |                         | 115.55 |                         |  |        | 84.60 |      |  |     | 9,733,001  |        |  |  | 76.81 |  |  |  | 54.50 |  |  |  | 12,196,600 | 
|Second Quarter |  |                         | 98.55  |                         |  |        | 81.00 |      |  |     | 8,030,290  |        |  |  | 62.73 |  |  |  | 53.10 |  |  |  | 7,783.400  | 
|Third Quarter  |  |                         | 101.67 |                         |  |        | 81.25 |      |  |     | 6,807,762  |        |  |  | 65.30 |  |  |  | 52.23 |  |  |  | 9,002,800  | 
|Fourth Quarter |  |                         | 103.98 |                         |  |        | 85.05 |      |  |     | 4,396,052  |        |  |  | 64.89 |  |  |  | 54.40 |  |  |  | 6,233,200  | 
|              
|Year 2001      |  |                         | 115.55 |                         |  |        | 81.00 |      |  |     | 28,967,105 |        |  |  | 76.81 |  |  |  | 52.23 |  |  |  | 35,216,000 | 
|              
|2000           |  |                         |        |                         |  |        |       |      |  |     |            |        |  |  |       |  |  |  |       |  |  |  |            | 
|First Quarter  |  |                         | 87.45  |                         |  |        | 61.00 |      |  |     | 8,375,483  |        |  |  | 59.69 |  |  |  | 42.00 |  |  |  | 10,064,200 | 
|Second Quarter |  |                         | 89.90  |                         |  |        | 70.00 |      |  |     | 8,665,148  |        |  |  | 60.06 |  |  |  | 48.25 |  |  |  | 13,076,400 | 
|Third Quarter  |  |                         | 84.00  |                         |  |        | 72.50 |      |  |     | 5,966,751  |        |  |  | 57.00 |  |  |  | 48.75 |  |  |  | 7,960,100  | 
|Fourth Quarter |  |                         | 120.40 |                         |  |        | 72.50 |      |  |     | 11,509,256 |        |  |  | 80.12 |  |  |  | 48.00 |  |  |  | 11,572,100 | 
|              
|Year 2000      |  |                         | 120.40 |                         |  |        | 61.00 |      |  |     | 34,516,638 |        |  |  | 80.12 |  |  |  | 42.00 |  |  |  | 42,672,800 | 
|              



|1 |  | Trading prices are in CDN$
|- |  | --------------------------

64



---



##### 



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|Corporate Information
Corporate Officers and Key ManagementPotash Corporation of Saskatchewan Inc.William J. Doyle
President and Chief Executive OfficerJames F. Dietz
Executive Vice President and Chief Operating OfficerWayne R. Brownlee
Senior Vice President, Treasurer and Chief Financial OfficerJohn L. M. Hampton
Senior Vice President, General Counsel and SecretaryBetty-Ann L. Heggie
Senior Vice President, Corporate RelationsBarry E. Humphreys
Senior Vice President and Chief Information OfficerBarbara Jane Irwin
Senior Vice President, AdministrationG. David Delaney
President, PCS SalesGarth W. Moore
President, PCS PotashThomas J. Regan, Jr.
President, PCS PhosphateKaren G. Chasez
Vice President, ProcurementRobert A. Jaspar
Vice President, Internal AuditDonald R. Roberts
Vice President, Safety, Health and EnvironmentDenis A. Sirois
Vice President and Corporate ControllerCorporate OfficesPotash Corporation of Saskatchewan Inc.
Suite 500, 122 -1st Avenue South
Saskatoon, SK S7K 7G3
Phone: (306) 933-8500PotashCorp
1101 Skokie Boulevard, Suite 400
Northbrook, IL 60062
Phone: (847) 849-4200 | Financial TermsTotal shareholder return= (change in market
price per common share + dividends per
share) ÷ beginning market price per
common shareBook value per share= total shareholders
equity ÷ number of common shares
outstandingNet debt to capital= (total debt  cash and
cash equivalents) ÷ (total debt  cash and
cash equivalents + total shareholders equity)Cash flow return= (operating income  cash
taxes paid + depreciation and amortization)
÷ weighted average (assets + accumulated
depreciation and amortization  non-interest
bearing current liabilities)EBITDArepresents Earnings (net income)
Before Interest, Taxes, Depreciation
and Amortization and non-cash plant
closures and office consolidation and asset
impairment chargesThese financial terms are included because
certain investors and analysts use them as a
measure of liquidity or of a companys ability to
service debt, or as a valuation measurement. They
are included for convenience only. They are not a
measure of financial performance under Canadian
GAAP or US GAAP. In evaluating them, investors
should consider that the methodology applied in
calculating them may differ among companies
and analysts | Glossary
Fertilizer MeasuresMetric tonne
2204.6 pounds, used for sales outside the
United States; to convert to short tons,
multiply by 1.1023Short ton
2000 pounds, used for sales in the
United States; to convert to metric tonnes,
divide by 1.1023K2O tonne
Measures the potassium content of fertilizers
having different chemical analyses; to
convert to a KCl tonne, divide by 0.61P2O5 tonne
Measures the phosphorus content of
fertilizers having different chemical analysesN tonne
Measures the nitrogen content of fertilizers
having different chemical analysesNutrient tonne
Measures the nutrient weight of potassium,
phosphate and nitrogen fertilizers; consists of
K2O tonnes, P2O5 tonnes and N tonnesProduct tonne
Standard measure of the weights of all types
of potash, phosphate and n
itrogen productsMarkets
North America      United States and Canada
Offshore                Rest of the world

|                 |              |                                          |                             |                           |                                                                                                                                                                                                                                                                                              
|---------------- | ------------ | ---------------------------------------- | --------------------------- | ------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Scientific Terms |              |                                          | Nitrogen Production Factors
|                 |              |                                         
|Potash           | KCl          | potassium chloride                       |                             | To produce                |                                                                                                                                                                                                                                                                                              
|                 | K2O          | potassium oxide                          |                             | 1 short ton of:           | Requires:                                                                                                                                                                                                                                                                                    
|                 | KNOP3        | potassium nitrate                        |                             |                          
|                 | NaNO3        | sodium nitrate                           |                             | Ammonia                   | 33.5 million Btu of natural gas                                                                                                                                                                                                                                                              
|                 |              |                                         
|Phosphate        | P2O5         | phosphoric acid                          |                             | Urea solution             | 0.58 tons of ammonia                                                                                                                                                                                                                                                                         
|                 | MGA          | merchant grade acid, 54% P2O5 (liquid)   |                             |                           | 0.78 tons of carbon dioxide (CO2)                                                                                                                                                                                                                                                            
|                 | DAP          | diammonium phosphate, 46% P2O5 (solid)   |                             |                          
|                 | MAP          | monoammonium phosphate, 52% P2O5 (solid) |                             | Urea prills (46% N)       | 1.01 tons of urea solution                                                                                                                                                                                                                                                                   
|                 | SPA          | superphosphoric acid, 70% P2O5 (liquid)  |                             |                          
|                 |              | Nitric acid (22% N)                      | 0.29 tons of ammonia       
|Nitrogen         | NH3          | anhydrous ammonia, 82% N (gas, liquid)   |                             |                          
|                 | HNO3         | nitric acid (liquid)                     |                             | Ammonium nitrate solution | 0.80 tons of nitric acid                                                                                                                                                                                                                                                                     
|                 | NH4NO3       | ammonium nitrate, 34% N (solid, liquid)  |                             |                           | 0.22 tons of ammonia                                                                                                                                                                                                                                                                         
|                 | CO(NH2)2     | urea, 46% N (solid)                      |                             |                          
|                 | UAN solution | nitrogen solution, 28-32% N (liquid)     |                             | UAN solution (32% N)      | 0.45 tons of ammonium nitrate solution                                                                                                                                                                                                                                                       
|                 |              |                                          |                             |                           | 0.35 tons of urea solution                                                                                                                                                                                                                                                                   
|                 |              |                                         
|                 |              |                                          |                             | (RECYCLE LOGO)            | It is the policy of PotashCorp to manage its operations responsibly in order to safeguard
those natural resources related to or affected by its activities. In keeping with this
policy, the Annual Report uses paper containing at least 10% post-consumer recycled
fiber and is recyclable.



---



##### 



(NO MATTER HOW YOU SLICE IT . . .)

Suite 500, 122 - 1st Avenue South
   Saskatoon     Saskatchewan
   Canada S7K 7G3
   www.potashcorp.com