Exhibit 13
 (IMAGE) 
 The Next Stage of Growth2010 Financial Review Annual Report




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Inside:
 IntroductionCEO Letter
    
    
    2Key Financial Results
    
    
    5Comparison to Peers
    
    
    7Managements Discussion & AnalysisThe Basics: Global Development Story
    
    
    8Overview of Our Nutrients
    
    
    10Six Keys to Understanding Our Business
    
    
    11Factors That Shaped Our Business in 2010
    
    
    142011 Outlook
    
    
    17PotashUnderstanding the Potash Business
    
    
    19Our Potash Business
    
    
    20Our Potash Strategy
    
    
    21Our Potash Advantage
    
    
    23Our Capability to Deliver
    
    
    24Risks to Our Potash Business
    
    
    25Potash Results and Performance
    
    
    26PhosphateUnderstanding the Phosphate Business
    
    
    29Our Phosphate Business
    
    
    30Our Phosphate Strategy
    
    
    30Our Phosphate Advantage
    
    
    30Our Capability to Deliver
    
    
    31Risk to Our Phosphate Business
    
    
    31Phosphate Results and Performance
    
    
    32NitrogenUnderstanding the Nitrogen Business
    
    
    35Our Nitrogen Business
    
    
    36Our Nitrogen Strategy
    
    
    37Our Nitrogen Advantage
    
    
    37Our Capability to Deliver
    
    
    37Risk to Our Nitrogen Business
    
    
    37Nitrogen Results and Performance
    
    
    38
 Key Performance Drivers
    
    
    41Rewarding Results
    
    
    43Risk Management
    
    
    452010 Financial Overview
    
    
    47Expenses & Other Income
    
    
    49Quarterly Results
    
    
    52Key Earnings Sensitivities
    
    
    54Financial StructureFinancial Condition Review
    
    
    54Liquidity & Capital Resources
    
    
    55Capital Structure & Management
    
    
    58Market Risks
    
    
    60Related Party Transactions
    
    
    60Critical Accounting Estimates
    
    
    60Recent
Accounting Changes, Adoption of IFRSs
    
    
    65Forward-Looking Statements
    
    
    78Non-GAAP Financial Measures
    
    
    7811 Year Report
    
    
    79FinancialsFinancial Performance Indicators
    
    
    80Managements Responsibility for
Financial Reporting
    
    
    83Independent Registered Chartered
Accountants Reports
    
    
    84Consolidated Financial Statements
    
    
    86Shareholder Information
    
    
    142Appendix
    
    
    143
 Financial data in this report are
stated in US dollars unless otherwise noted.
 Share and per-share data have been adjusted to
reflect our three-for-one stock split in
February 2011.




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The Next Stage of GrowthAfter a period of global economic uncertainty, we at PotashCorp
believe the worlds attention has returned to the long-term challenge of
meeting rising demand for food. The crop nutrient requirements to
fulfill this need are expected to fuel the next stage of growth for our
products. As the worlds largest fertilizer company by capacity, with
the majority of brownfield potash expansions under construction, we
believe we are uniquely positioned to deliver on this opportunity.Learn
more online:
PotashCorp2010AR.com watch for Keywords to guide you(IMAGE)
 
 Now available
 Financial Review Annual Report
  Now available
 Summary Accountability Report
  Spring 2011
 Online Sustainability Report
  Summer 2011
 Overview of PotashCorp and Its Markets
  Visit PotashCorp.comto view our four annual publications, plus our 10-K, Proxy Circular and more.




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CEO Letter FEBRUARY 22, 2011
 
 William J. Doyle,
President and Chief Executive Officer
 Opportunity Awaits
      (BAR GRAPH)
    
    (BAR GRAPH)
 2




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The Next Stage of Growth  is fueled by the need to increase global crop production
   A Transition to Stronger Performance
       The Next Stage of Growth
     (BAR GRAPH)
    
    (BAR GRAPH)
 3




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The growing demand for potash is more than just a next-year story or a one-time event.
          Delivering on Our Promise
       
 William J. Doyle
 4




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Key Financial Results
 ($ millions, except per-share data)
    
    2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Financial PositionCurrent assets
    
    
    2,139.9
    
    
    
    2,271.7
    
    
    
    2,267.2
    
    
    
    1,811.3
    
    
    
    1,310.2Property, plant and equipment
    
    
    8,062.7
    
    
    
    6,413.3
    
    
    
    4,812.2
    
    
    
    3,887.4
    
    
    
    3,525.8Other long-term assets
    
    
    5,416.7
    
    
    
    4,237.2
    
    
    
    3,169.4
    
    
    
    4,017.9
    
    
    
    1,381.0Total assets
    
    
    15,619.3
    
    
    
    12,922.2
    
    
    
    10,248.8
    
    
    
    9,716.6
    
    
    
    6,217.0Current liabilities
    
    
    3,191.8
    
    
    
    1,577.4
    
    
    
    2,623.4
    
    
    
    1,001.9
    
    
    
    1,103.5Long-term debt
    
    
    3,707.2
    
    
    
    3,319.3
    
    
    
    1,739.5
    
    
    
    1,339.4
    
    
    
    1,357.1Other long-term liabilities
    
    
    1,916.1
    
    
    
    1,585.7
    
    
    
    1,350.8
    
    
    
    1,381.1
    
    
    
    1,001.0Shareholders equity
    
    
    6,804.2
    
    
    
    6,439.8
    
    
    
    4,535.1
    
    
    
    5,994.2
    
    
    
    2,755.4Total liabilities and shareholders equity
    
    
    15,619.3
    
    
    
    12,922.2
    
    
    
    10,248.8
    
    
    
    9,716.6
    
    
    
    6,217.0Financial ResultsSales
    
    
    6,538.6
    
    
    
    3,976.7
    
    
    
    9,446.5
    
    
    
    5,234.2
    
    
    
    3,766.7Gross margin  Potash
    
    
    1,796.0
    
    
    
    730.4
    
    
    
    3,055.5
    
    
    
    912.3
    
    
    
    561.1Gross margin  Phosphate
    
    
    319.2
    
    
    
    92.4
    
    
    
    1,067.9
    
    
    
    433.7
    
    
    
    84.6Gross margin  Nitrogen
    
    
    509.8
    
    
    
    191.8
    
    
    
    737.4
    
    
    
    536.1
    
    
    
    315.6Total gross margin
    
    
    2,625.0
    
    
    
    1,014.6
    
    
    
    4,860.8
    
    
    
    1,882.1
    
    
    
    961.3Net income
    
    
    1,806.2
    
    
    
    980.7
    
    
    
    3,465.9
    
    
    
    1,104.0
    
    
    
    606.9Net income per share  diluted (post-split)
    
    
    1.98
    
    
    
    1.08
    
    
    
    3.64
    
    
    
    1.13
    
    
    
    0.63Cash provided by operating activities
    
    
    2,999.0
    
    
    
    923.9
    
    
    
    3,013.2
    
    
    
    1,688.9
    
    
    
    696.8Additions to property, plant and equipment
    
    
    1,978.3
    
    
    
    1,763.8
    
    
    
    1,198.3
    
    
    
    607.2
    
    
    
    508.6
 Gross Margin Contributors
 (BAR GRAPH)
    
    (BAR GRAPH)
    
    (BAR GRAPH)
 Keyword:Financial
 5




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(BAR GRAPH)
    
    (BAR GRAPH)(BAR GRAPH)
    
    (BAR GRAPH)(BAR GRAPH)
    
    (BAR GRAPH)
 
 1
    
    See reconciliation and description of non-GAAP measures on Pages 80-82*
    
    Earnings Before Interest, Taxes, Depreciation and Amortization  6




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Comparison to Peers
 Peers in Our Industry
  
 Comparability of peer information
 *
    
    Capital expenditures = additions to property, plant and equipment1
    
    Year ended December 31, 20102
    
    Most recent four fiscal quarters ended November 30, 20103
    
    Most recent four fiscal quarters ended September 30, 20104
    
    Most recent two fiscal halfs ended June 30, 2010 7




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Managements Discussion & Analysis
 of Financial Condition and Results of Operations (in US Dollars)
   The Basics: Global Development Story
  Countries with rising populations are also
gaining economic strength
   
 
 Keyword:Our Business
 8




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Rising demand strains grain supplies
  Fertilizer is needed more than ever
   9




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Overview of Our Nutrients
  How Produced:
  How Used:
  Fertilizer:
  Feed:
  Industrial:
  How Produced:
  How Used:
  Fertilizer:
  Feed:
  Industrial:
  How Produced:
  How Used:
  Fertilizer:
  Feed:
  Industrial:
   2010
    
    2010
    
    2010Share of Gross Margin
    
    Share of Gross Margin
    
    Share of Gross Margin68.4%
    
    12.2%
    
    19.4%Sales Volumes by Segment
    
    Sales Volumes by Segment
    
    Sales Volumes by Segment(PIE CHART)
    
    (PIE CHART)
    
    (PIE CHART)Sales Volumes by Region
    
    Sales Volumes by Region
    
    Sales Volumes by Region(PIE CHART)
    
    (PIE CHART)
    
    (PIE CHART)
 10




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(IMAGE)
Six keys to Understanding Our Business
  1The World Needs More Fertilizer  We Have More Than Anyone
   2We Consider Potash The Best Fertilizer Business
    A Comparison View of Our Nutrients
 Potash (KCl)
    
    Phosphate (P2O5)
    
    Nitrogen (NH3)PotashCorp % of World Capacity 1
    
    20% (#1 in world)
    
    5% (#3 in world)
    
    2% (#3 in world)# of
Producing Countries
    
    12
    
    ~ 40
    
    ~ 60Raw Material Cost Volatility
    
    Low
    
    Moderate-High
    
    Low-High% of Government Control
    
    20%
    
    52%
    
    40%Time for Greenfield (including ramp-up)
    
    Minimum 7 years 2
    
    3-4 years
    
    3 yearsCost of Greenfield (excluding infrastructure)
    
    CDN $4.1 billion 22 million tonnes KCl
    
    US $1.6 billion
3
1 million tonnes P2O5
    
    US $1.6 billion
4
1 million tonnes NH3Cost of Greenfield (including infrastructure)5
    
    CDN $4.7-$6.3 billion 2
million tonnes KCl
    
    US $2.1-$2.3 billion 1 million tonnes
P2O5
    
    US $1.7-$1.9 billion 1 million
tonnes NH3
 1
    
    Based on nameplate capacity, which may exceed operational capability (estimated annual achievable production level)2
    
    Estimated time and cost for a conventional greenfield mine in Saskatchewan3
    
    Phosphate rock mine, sulfuric acid plant, phosphoric acid plant and DAP/MAP granulation plant4
    
    Ammonia/urea complex5
    
    Includes rail, utility systems, port facilities and, if applicable, cost of depositSource: Fertecon, CRU, AMEC, PotashCorp
 Keyword:Our Business
 11




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The Next Stage of Growth
   3Potash Is the Core of Our Business
   4
Our Strategies Focus on Earnings Growth
and Quality
  Growth with reduced volatility enhances earnings quality in potash
   Phosphate and nitrogen add value and strength
    (BAR GRAPH)
    
    (BAR GRAPH)
 12




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Unique attributes support our vision and strategy
  
    
    An experienced management team that can conceive, develop and implement long-term
strategies and commit the company to them;
    
    A skilled and productive workforce, motivated sales teams and an extensive transportation
network to serve our target markets;
    
    Substantial cash flow, which is both the result and the cause of our success.
 5We Are Uniquely Positioned to Benefit From Rising Demand for Potash
 Investing in our capacity, investing in our future
   Returning value to shareholders
  6Our Core Values Are Ingrained in All We Do
   (BAR GRAPH)
    
    (BAR GRAPH)
 13




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Factors That Shaped Our Business in 2010
 
 
 
 1Agriculture
 Thriving economies in developing
countries drove rising demand for
agricultural products
  Despite third-largest crop produced, record
demand tightened grain supplies
   Significant rise in crop prices and margins
encouraged efforts to increase production
  Keyword:Our Business
 14




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2Potash
 Strong recovery in demand in most major markets
  Depleted inventories, renewed demand tightened market and pushed up prices
   
 
 
 JR Voykin, Electrical Instrumentation General
Foreman shows how modern technology and human skill work together at Patience Lake.
 15




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3Phosphate
 Strong demand, led by the US and India, sharply tightened global supply
  Demand-driven market supported higher prices
  4Nitrogen
 Both industry and agriculture raised their nitrogen purchases
  Lower-cost producers benefited from higher prices
   16




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2011 Outlook
 1Agriculture
    2Potash
   
 
 
 Keyword:Our Business
 17




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3Phosphate
     4Nitrogen
    
 
 
 18




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(IMAGE) Potash
  #1
 52%
 $10b




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K
 STRENGTHS
 
    
    Can substantially raise capacity at a significant discount to and in less time than
comparable greenfield capacity
    
    Low-cost, flexible production with small percentage of fixed costs when operating at
close to capacity
    
    Per-tonne fixed costs decrease as sales volumes increase
    
    Existing operations have significant reserves and are located in geopolitically stable
environments
    
    Offshore investments add global reach and profitability
    
    Depth and tested experience of management team
    
    Substantial barriers to entry: economically mineable deposits are rare, capital costs are
high and lead times are long
    
    No known substitutes for potash
 WEAKNESSES
 
    
    Production costs exposed to Canadian dollar volatility
    
    Water inflow at our New Brunswick mine, and at Esterhazy where our mineral
rights are mined by another company, increases costs and risks loss of production
    
    High rail and ocean freight costs for Saskatchewan potash; potential for
transportation bottlenecks
    
    High Saskatchewan resource taxes and federal and provincial income taxes
relative to global competitors
 OPPORTUNITIES
 
    
    Rising global demand for food, coupled with the need to address nutrient imbalances in
developing nations, could accelerate long-term growth expectations for potash consumption
    
    Capacity additions could give us a larger share of a growing market
    
    Expansion of granular capacity to meet increasing demand for blended fertilizer in developing
markets
 THREATS
 
    
    Upward pricing trend may attract competitor greenfield projects
    
    Demand can be temporarily affected by volatile crop prices causing changes in consumption
patterns
    
    Our strategy of matching production to market demand means PotashCorp can be
disproportionately affected by market weakness




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Potash
 Understanding the Potash Business
 Economically mineable deposits are rare, and producers are few
  Major consumers have little or no indigenous potash supply
  New capacity requires significant capital investment and time
  New supply needed to meet expected long-term growth in demand
  (MAP)
    
    (BAR GRAPH)
 Keyword:Potash
 19




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Our Potash Business
   Offshore markets
        
    
    Sinofert, Chinas largest potash importer and distributor, purchases
under six-month pricing contracts beginning in 2011 (historically,
12-month) with minimum annual volume commitments;
    
    Indian customers historically buy under annual volume and price commitments;
    
    Customers in other Asian countries buy under short-term price and volume contracts, or on the
spot market;
 (PIE CHART)
    
    (BAR GRAPH)
 20




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
    
    Latin American customers buy on the spot market from Canpotex and PCS Sales.
  North American market
    Our Potash Strategy
    Standard Capacity*Expansions/
    
    
    InvestmentFacility
    
    Debottlenecking
    
    
    (CDN$ Billions)Construction Projects Completed (2005-2010)Rocanville
    
    0.75 MMT
    
    $
    0.13Allan
    
    0.40 MMT
    
    $
    0.21Lanigan
    
    1.50 MMT
    
    $
    0.41Patience Lake
    
    0.36 MMT
    
    $
    0.11Cory I
    
    1.20 MMT
    
    $
    0.90Total
    
    4.21 MMT
    
    $
    1.76Projects in ProgressNew Brunswick**
    
    1.20 MMT
    
    $
    1.66Cory II
    
    1.00 MMT
    
    $
    0.54Allan
    
    1.00 MMT
    
    $
    0.55Rocanville
    
    2.70 MMT
    
    $
    2.80Total
    
    5.90 MMT
    
    $
    5.55
 
 *
    
    Includes, as applicable, both bringing back previously idled capacity and expansions to
capacity
and does not necessarily reflect current operational capability**
    
    Net
capacity increase assuming closure of existing 0.8 MMT mine (BAR GRAPH)
    
    (BAR GRAPH)
 21




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The Next Stage of Growth
  
 Our expansion project at Rocanville includes construction of two potash storage facilities that
together will hold more than 500,000 tonnes. That is enough to fill 4,854 potash railcars, which
would stretch for 69 km (43 miles) across the prairie.
 Snapshot of Potash
 Strategies
    
    Capability to Deliver
    
    Risks
    
    MitigationMatch production to market demand to enhance stability
    
    Of total potash operating costs, approximately 70 percent are
variable when producing at close to operational capability
    
    Lost production, higher per-tonne operating costs
    
    Structure operations so majority of costs are variable, and
production can be varied economicallyEnhance potash position through brownfield projects and equity investments
    
    Brownfield projects expected to increase our operational
capability to 17.1 MMT by 2015
Canpotex and PotashCorp expanding distribution system capability
    
    Potential for reduced prices if demand is insufficient to
consume new capacity
Short-term distribution problems could adversely affect sales
    
    Pace internal growth to rising market demand, and match production
to demand
Work with partners to ensure adequate transportation infrastructure
 22




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Our Potash Advantage
 Unique potash leverage
   Price appreciation
  Volume growth
  Cost savings
  Offshore investments
  PotashCorps Strategic Potash Investments
 SQM, Chile
    
    APC, Jordan
    
    ICL, Israel
    
    Sinofert, ChinaCompany Profile
    
    Worlds leading producer of specialty
plant nutrition products, lithium and
iodine
    
    Low-cost potash
producer, with
logistical advantage
in delivering to
India, China and
other Asian countries
    
    Low-cost potash producer, with logistical
advantage in delivering into key Asian markets
Major producer of phosphate, bromine and magnesium
    
    Largest fertilizer importer and distributor in China
Typically distributes more than half of the potash
used in ChinaPotash Capacity*
    
    1.6 million tonnes KCl
    
    2.5 million tonnes KCl
    
    6.0 million tonnes KCl
    
    No primary potash capacity
Holds 18.5 percent of Qinghai Salt Lake PotashPotashCorp Ownership
    
    32 percent
    
    28 percent
    
    14 percent
    
    22 percentBoard Representation
    
    Right to designate three of eight directors
    
    Right to designate
three of 13 board
members and the top
four management
positions
    
    No board seats
    
    Right to designate two of seven board seatsMarket Value**
    
    US $4.7 billion
    
    US $1.4 billion
    
    US $3.0 billion
    
    US $0.8 billion
 
 *
    
    Based on reported capacity on December 31, 2010.**
    
    Market value of PotashCorp investment as at December 31, 2010.Source:
    
    Fertecon, CRU, Bloomberg, Public filings, PotashCorp 23




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Our Capability to Deliver
 Expanding operational capability to meet rising demand
      Investing in transportation and distribution
      (BAR GRAPH)
    
    (BAR GRAPH)
 24




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We rely on skilled labor to ensure our production
   Risks to Our Potash Business
  New supply creates market imbalance
  Global demand insufficient to consume PotashCorp capacity
  Lack of adequate transportation and distribution infrastructure
  
 The
smooth flow of  potash at Lanigan is observed by Courtney Rohachuk, Process Engineer.
  Underground mines face particular risks
   25




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% Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % IncreaseDollars (millions)
    
    
    (Decrease)
    
    
    Tonnes (thousands)
    
    
    (Decrease)
    
    
    Average per Tonne1
    
    
    (Decrease)2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Sales
    
    $
    3,000.6
    
    
    $
    1,315.8
    
    
    $
    4,068.1
    
    
    
    128
    
    
    
    (68
    )Freight
    
    
    189.4
    
    
    
    58.5
    
    
    
    167.3
    
    
    
    224
    
    
    
    (65
    )Transportation and distribution
    
    
    69.1
    
    
    
    35.3
    
    
    
    42.1
    
    
    
    96
    
    
    
    (16
    )Net sales
    
    $
    2,742.1
    
    
    $
    1,222.0
    
    
    $
    3,858.7
    
    
    
    124
    
    
    
    (68
    )Manufactured productNet salesNorth America
    
    $
    1,222.3
    
    
    $
    506.8
    
    
    $
    1,307.5
    
    
    
    141
    
    
    
    (61
    )
    
    
    3,355
    
    
    
    1,093
    
    
    
    2,962
    
    
    
    207
    
    
    
    (63
    )
    
    $
    364.30
    
    
    $
    463.74
    
    
    $
    441.38
    
    
    
    (21
    )
    
    
    5Offshore
    
    
    1,505.7
    
    
    
    698.9
    
    
    
    2,526.8
    
    
    
    115
    
    
    
    (72
    )
    
    
    5,289
    
    
    
    1,895
    
    
    
    5,585
    
    
    
    179
    
    
    
    (66
    )
    
    $
    284.67
    
    
    $
    368.84
    
    
    $
    452.43
    
    
    
    (23
    )
    
    
    (18
    )2,728.0
    
    
    
    1,205.7
    
    
    
    3,834.3
    
    
    
    126
    
    
    
    (69
    )
    
    
    8,644
    
    
    
    2,988
    
    
    
    8,547
    
    
    
    189
    
    
    
    (65
    )
    
    $
    315.57
    
    
    $
    403.56
    
    
    $
    448.60
    
    
    
    (22
    )
    
    
    (10
    )Cost of goods sold
    
    
    938.9
    
    
    
    466.2
    
    
    
    783.8
    
    
    
    101
    
    
    
    (41
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    108.59
    
    
    $
    156.07
    
    
    $
    91.69
    
    
    
    (30
    )
    
    
    70Gross margin
    
    
    1,789.1
    
    
    
    739.5
    
    
    
    3,050.5
    
    
    
    142
    
    
    
    (76
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    206.98
    
    
    $
    247.49
    
    
    $
    356.91
    
    
    
    (16
    )
    
    
    (31
    )Other miscellaneous and purchased productNet sales
    
    
    14.1
    
    
    
    16.3
    
    
    
    24.4
    
    
    
    (13
    )
    
    
    (33
    )Cost of goods sold
    
    
    7.2
    
    
    
    25.4
    
    
    
    19.4
    
    
    
    (72
    )
    
    
    31Gross margin
    
    
    6.9
    
    
    
    (9.1
    )
    
    
    5.0
    
    
    
    n/m
    
    
    
    n/mGross Margin
    
    $
    1,796.0
    
    
    $
    730.4
    
    
    $
    3,055.5
    
    
    
    146
    
    
    
    (76
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    207.77
    
    
    $
    244.44
    
    
    $
    357.49
    
    
    
    (15
    )
    
    
    (32
    )
 
 Note 18 to the consolidated financial statements provides information pertaining to our business
segments.1
    
    Rounding differences may occur due to the use of whole dollars in per-tonne
calculations.n/m = not meaningful Potash gross margin variance attributable to:
  2010 vs 2009Change in
    
    Change in Prices/CostsSales Volumes
    
    Net Sales
    
    Cost of Goods Sold
    
    TotalManufactured productNorth America
    
    $
    881.6
    
    
    $
    (333.6
    )
    
    $
    4.7
    
    
    $
    552.7Offshore
    
    
    1,046.6
    
    
    
    (445.2
    )
    
    
    (104.6
    )
    
    
    496.8Change in market mix
    
    
    (18.2
    )
    
    
    18.3
    
    
    
    
    
    
    
    0.1Total manufactured product
    
    $
    1,910.0
    
    
    $
    (760.5
    )
    
    $
    (99.9
    )
    
    
    1,049.6Other miscellaneous and purchased product
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16.0Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1,065.6
  Percentage of Annual Sales Volumes
    
    
    Increase (Decrease)
    
    
    % Increase (Decrease)2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009China
    
    
    14
    
    
    
    6
    
    
    
    13
    
    
    
    8
    
    
    
    (7
    )
    
    
    133
    
    
    
    (54
    )India
    
    
    14
    
    
    
    32
    
    
    
    16
    
    
    
    (18
    )
    
    
    16
    
    
    
    (56
    )
    
    
    100Other Asian countries 1
    
    
    41
    
    
    
    43
    
    
    
    39
    
    
    
    (2
    )
    
    
    4
    
    
    
    (5
    )
    
    
    10Latin America
    
    
    25
    
    
    
    13
    
    
    
    25
    
    
    
    12
    
    
    
    (12
    )
    
    
    92
    
    
    
    (48
    )Other countries
    
    
    6
    
    
    
    6
    
    
    
    7
    
    
    
    
    
    
    
    (1
    )
    
    
    
    
    
    
    14100
    
    
    
    100
    
    
    
    100
 
 1
    
    All Asian countries except China and India 26




---



##### 



Potash Performance: 2010 vs 2009
 
 Net sales pricesê
    
    Substantial decline in consumption attributable to the global financial downturn resulted in
lower pricing levels being established at the beginning of 2010, which more than offset increases
announced near the end of the year.Sales volumesé
    
    Volumes were up significantly as customers globally responded to favorable crop economics and
the need to address potash-depleted soils. In 2009, unprecedented low levels were primarily the
result of the global financial downturn.é
    
    Canpotex reached short-term agreements with major customers in China and India throughout 2010
(China did not have a contract in 2009 while India did not have a contract in the first half of
2009).
    
    The proportion of total volumes sold to Latin America and China increased more than any other
market due to favorable crop economics and the need to address nutrient deficiencies. Indias share
of purchases was lower in 2010 due to the strength of other markets.
    
    Most buyers purchased for consumption rather than inventory restocking.Cost of goods soldé
    
    Royalty costs declined due to lower average North America listed sales prices per tonne.é
    
    Fewer shutdown costs incurred (40 weeks in 2010 compared to 153 weeks in 2009).ê
    
    Personnel costs higher due to higher wages.ê
    
    The Canadian dollar strengthened relative to the US dollar.ê
    
    Increased maintenance costs with higher production levels.
    
    North America cost of goods sold variance was positive as our lowest cost mine, Rocanville,
comprised a larger proportion of production while offshore cost of goods sold variance was negative
due to more of that product coming from our other mines.
 
 
 
 27




---



##### 



2009 vs 2008
  Net sales pricesê
    
    Price increases in key offshore markets carried over from 2008 to the first half of 2009 were
more than offset by price declines in many markets subsequent to the contract settlement with India
in the third quarter of 2009.é
    
    Average North America realized prices up as 2008 price increases largely carried over into the
first half of 2009 and US list price reductions were not introduced until the third quarter.ê
    
    Substantial drop in consumption pressured pricing, and fixed transportation and distribution
costs were spread over fewer sales tonnes.ê
    
    North America prices affected by the high proportion of industrial volumes relative to
fertilizer.Sales volumesê
    
    Worldwide volumes were weak. Customers continued to be cautious, resulting in an unprecedented
decline in potash sales volumes. Buyers purchased primarily just-in-time, working through
inventories and reducing fertilizer applications.ê
    
    Canpotex did not sign a contract with China in 2009. Chinas imports from international potash
suppliers declined by an estimated 60 percent year over year due to higher opening inventories,
reduced consumption and higher domestic production. Although imports and consumption declined from
2008, India began restocking mid-2009 and took more tonnes from Canpotex than any other region.Cost of goods soldé
    
    Reduced brine inflow management costs with stable brine inflow rate at New Brunswick caused
offshore cost variance to be positive (production mainly sold in the offshore markets).ê
    
    All per-tonne costs were exacerbated by fewer production tonnes over which to allocate costs.ê
    
    Labor costs higher due to increased staffing levels, and due to increased wages that resulted
from new union contracts signed at the end of 2008.é
    
    Strike-related costs incurred in 2008, not in 2009.ê
    
    Royalty costs increased due to higher average North America list prices per tonne for much of
the year.é
    
    The Canadian dollar weakened relative to the US dollar.
 
 Potash Production
  Nameplate
    
    Operational
    
    Operational
    


    ProductionCapacity 1
    
    Capability (2011) 2
    
    Capability (2010) 2
    
    2010
    
    2009
    
    2008
    
    EmployeesLanigan SK
    
    
    3.828
    
    
    
    3.400
    
    
    
    3.600
    
    
    
    2.368
    
    
    
    0.702
    
    
    
    2.141
    
    
    
    565Rocanville SK
    
    
    3.044
    
    
    
    2.800
    
    
    
    2.800
    
    
    
    2.183
    
    
    
    0.949
    
    
    
    2.834
    
    
    
    454Allan SK
    
    
    1.885
    
    
    
    1.400
    
    
    
    1.800
    
    
    
    1.104
    
    
    
    0.686
    
    
    
    1.093
    
    
    
    404Cory SK
    
    
    1.361
    
    
    
    1.500
    
    
    
    0.800
    
    
    
    0.551
    
    
    
    0.416
    
    
    
    0.420
    
    
    
    430Patience Lake SK
    
    
    1.033
    
    
    
    0.500
    
    
    
    0.500
    
    
    
    0.372
    
    
    
    0.101
    
    
    
    0.282
    
    
    
    92Esterhazy SK 3
    
    
    1.313
    
    
    
    0.943
    
    
    
    0.943
    
    
    
    0.855
    
    
    
    0.276
    
    
    
    1.125
    
    
    
    New Brunswick NB
    
    
    0.800
    
    
    
    0.800
    
    
    
    0.800
    
    
    
    0.645
    
    
    
    0.275
    
    
    
    0.802
    
    
    
    377Total
    
    
    13.264
    
    
    
    11.343
    
    
    
    11.243
    
    
    
    8.078
    
    
    
    3.405
    
    
    
    8.697
    
    
    
    2,322
 
 1
    
    Includes, where applicable, previously idled capacity that can be brought into
operation with capital investment (debottlenecking projects).2
    
    Estimated annual achievable production level.3
    
    PotashCorps mineral rights at Esterhazy are mined by Mosaic Potash Esterhazy Limited
Partnership under a mining and processing agreement. In 2010, the
company received less than its nominated amount due to force majeure
conditions. For calendar year 2011, the companys nominated
amount of finished product is 0.943 million tonnes. 28




---



##### 



(IMAGE) Phosphate #1  Worlds leading producer offeed
and industrial phosphates
 30+  Years of permitted reserves
at our Aurora facility
 34%  Feed and industrial customers
proportion of 2010 sales volumes




---



##### 



P
 STRENGTHS
 
    
    High-quality, low-cost phosphate rock in significant quantity provides cost advantage over
non-integrated producers
    
    Permit to mine for more than 30 years at Aurora, North Carolina
    
    Mining near processing facilities provides cost advantage over North American competitors
    
    Ability to direct rock with low levels of impurities to diversified product line to optimize
margins and reduce volatility
    
    Strong position in North American purified acid, feed phosphate and liquid fertilizer markets
 WEAKNESSES
 
    
    Transporting ammonia to solid fertilizer plants is becoming more difficult and costly
    
    Higher sulfur and ammonia costs can negatively impact margins
    
    Plants with high fixed costs may not perform profitably at lower operating rates
 OPPORTUNITIES
 
    
    Balanced phosphate rock, phosphoric acid and solid fertilizer fundamentals expected in the near
term
    
    Few companies with rock of sufficient quality to profitably produce purified acid
    
    Potential for non-integrated producers to curtail production due to higher rock costs
 THREATS
 
    
    Significant government control in global phosphate supply and consumption decisions
    
    High barriers to exit because of significant environmental restoration and remediation costs
    
    Extensive environmental and permitting requirements




---



##### 



Phosphate
 Understanding the Phosphate Business
 Access to lower-cost rock is key, high quality adds flexibility
    Raw material costs can be volatile
  Indias rising demand is a major driver of world trade
  Tight or balanced phosphate markets likely in the near term
  (PI CHART)
    
    (BAR CHART)
 Keyword:Phosphate
 PotashCorp
2010 Financial Review 29




---



##### 



Our Phosphate Business
  Products and markets
       Our Phosphate Strategy
  Our Phosphate Advantage
 Leverage lower-cost, high-quality permitted rock supply
   (PI CHART)
    
    (BAR CHART)
 30




---



##### 



A
dragline works to mine phosphate ore at our White Springs facility.
 Our Capability to Deliver
   Risk to Our Phosphate Business
 Cyclicality
   Snapshot of Phosphate
 Strategy
    
    Capability to Deliver
    
    Risk
    
    MitigationOptimize product
mix to maximize
gross margin and
reduce volatility
    
    New permits at
Aurora allow for
more than 30 years
of mining
In 2010, Aurora
commissioned a new
sulfuric acid plant
and invested in
truck-and-shovel
mining equipment
    
    Short-term
cyclicality due to
fluctuations in
demand, changes in available supply, cost
volatility and
government
involvement in the
industry
    
    Leverage strengths
in less-cyclical
industrial and feed
products; optimize
fertilizer
operations to
minimize production
costs
 31




---



##### 



% Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % IncreaseDollars (millions)
    
    
    (Decrease)
    
    
    Tonnes (thousands)
    
    
    (Decrease)
    
    
    Average per Tonne 1
    
    
    (Decrease)2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Sales
    
    $
    1,821.6
    
    
    $
    1,374.4
    
    
    $
    2,880.7
    
    
    
    33
    
    
    
    (52
    )Freight
    
    
    102.2
    
    
    
    83.4
    
    
    
    101.1
    
    
    
    23
    
    
    
    (18
    )Transportation
and distribution
    
    
    41.2
    
    
    
    37.9
    
    
    
    39.4
    
    
    
    9
    
    
    
    (4
    )Net sales
    
    $
    1,678.2
    
    
    $
    1,253.1
    
    
    $
    2,740.2
    
    
    
    34
    
    
    
    (54
    )Manufactured productNet salesFertilizer  liquids
    
    $
    416.5
    
    
    $
    235.2
    
    
    $
    734.6
    
    
    
    77
    
    
    
    (68
    )
    
    
    1,111
    
    
    
    791
    
    
    
    893
    
    
    
    40
    
    
    
    (11
    )
    
    $
    374.80
    
    
    $
    297.53
    
    
    $
    823.17
    
    
    
    26
    
    
    
    (64
    )Fertilizer  solids
    
    
    596.6
    
    
    
    354.2
    
    
    
    996.8
    
    
    
    68
    
    
    
    (64
    )
    
    
    1,291
    
    
    
    1,182
    
    
    
    1,069
    
    
    
    9
    
    
    
    11
    
    
    $
    461.94
    
    
    $
    299.51
    
    
    $
    932.44
    
    
    
    54
    
    
    
    (68
    )Feed
    
    
    288.7
    
    
    
    260.0
    
    
    
    492.9
    
    
    
    11
    
    
    
    (47
    )
    
    
    622
    
    
    
    531
    
    
    
    654
    
    
    
    17
    
    
    
    (19
    )
    
    $
    464.03
    
    
    $
    489.78
    
    
    $
    753.90
    
    
    
    (5
    )
    
    
    (35
    )Industrial
    
    
    351.0
    
    
    
    386.6
    
    
    
    471.0
    
    
    
    (9
    )
    
    
    (18
    )
    
    
    608
    
    
    
    551
    
    
    
    706
    
    
    
    10
    
    
    
    (22
    )
    
    $
    577.48
    
    
    $
    701.62
    
    
    $
    666.97
    
    
    
    (18
    )
    
    
    51,652.8
    
    
    
    1,236.0
    
    
    
    2,695.3
    
    
    
    34
    
    
    
    (54
    )
    
    
    3,632
    
    
    
    3,055
    
    
    
    3,322
    
    
    
    19
    
    
    
    (8
    )
    
    $
    454.98
    
    
    $
    404.60
    
    
    $
    811.50
    
    
    
    12
    
    
    
    (50
    )Cost of goods sold
    
    
    1,348.9
    
    
    
    1,155.5
    
    
    
    1,637.9
    
    
    
    17
    
    
    
    (29
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    371.31
    
    
    $
    378.25
    
    
    $
    493.20
    
    
    
    (2
    )
    
    
    (23
    )Gross margin
    
    
    303.9
    
    
    
    80.5
    
    
    
    1,057.4
    
    
    
    278
    
    
    
    (92
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    83.67
    
    
    $
    26.35
    
    
    $
    318.30
    
    
    
    218
    
    
    
    (92
    )Other miscellaneous
and purchased productNet sales
    
    
    25.4
    
    
    
    17.1
    
    
    
    44.9
    
    
    
    49
    
    
    
    (62
    )Cost of goods sold
    
    
    10.1
    
    
    
    5.2
    
    
    
    34.4
    
    
    
    94
    
    
    
    (85
    )Gross margin
    
    
    15.3
    
    
    
    11.9
    
    
    
    10.5
    
    
    
    29
    
    
    
    13Gross Margin
    
    $
    319.2
    
    
    $
    92.4
    
    
    $
    1,067.9
    
    
    
    245
    
    
    
    (91
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    87.89
    
    
    $
    30.25
    
    
    $
    321.46
    
    
    
    191
    
    
    
    (91
    )
 
 Note 18 to the consolidated financial statements provides information pertaining to our
business segments.1
    
    Rounding differences may occur due to the use of whole dollars in
per-tonne calculations. Phosphate gross margin variance attributable to:
  2010 vs 2009Change in
    
    Change in Prices/CostsSales Volumes
    
    Net Sales
    
    
    Cost of Goods Sold
    
    TotalManufactured productFertilizer  liquids
    
    $
    46.6
    
    
    $
    85.8
    
    
    $
    (52.6
    )
    
    $
    79.8Fertilizer  solids
    
    
    9.3
    
    
    
    211.1
    
    
    
    (38.4
    )
    
    
    182.0Feed
    
    
    32.0
    
    
    
    (16.5
    )
    
    
    33.5
    
    
    
    49.0Industrial
    
    
    31.4
    
    
    
    (75.5
    )
    
    
    (43.4
    )
    
    
    (87.5
    )Change in product mix
    
    
    21.8
    
    
    
    (21.8
    )
    
    
    0.1
    
    
    
    0.1Total manufactured product
    
    $
    141.1
    
    
    $
    183.1
    
    
    $
    (100.8
    )
    
    
    223.4Miscellaneous and purchased product
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.4Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    226.8
 32




---



##### 



Phosphate Performance: 2010 vs 2009
  Net sales pricesé
    
    Liquid and solid fertilizer prices increased due to strong demand, tightening supply and higher
input prices.ê
    
    The reduction of feed prices in 2009 carried into 2010 and more than offset price increases
introduced in the second half of 2010.ê
    
    Industrial prices decreased as a result of certain contracts being based on prior-year input
costs, which were significantly lower in 2009 as compared to 2008.Sales volumesé
    
    Volumes for fertilizer products increased due to favorable crop commodity prices and low
inventories throughout the supply chain.é
    
    Demand for feed products improved due to better economics in the beef, pork and poultry
industries in 2010, while in 2009 customers worked down inventories.Cost of goods soldê
    
    Dragline moves and a change in mining practice increased costs of mining phosphate rock. Reduced
costs are expected in future periods.é
    
    Lower sulfur costs impacted all product lines (down 6 percent as higher-priced sulfur impacted
cost of goods sold in 2009).ê
    
    Liquid and solid fertilizer were negative due to higher ammonia costs (up 24 percent).é
    
    The cost variance for feed was positive due to a lower allocation of fixed costs (a result of
liquid fertilizer production volumes increasing significantly in 2010), while in 2009, feed was the
highest volume product at our White Springs, Florida plant, where production was curtailed for a
significant portion of that year.ê
    
    Industrial variance was negatively affected by higher rock costs at Geismar, Louisiana
(demurrage charges).
 2009 vs 2008
  Net sales pricesê
    
    All major phosphate product prices, except industrial, decreased due to lower demand and input
costs throughout 2009.é
    
    Industrial prices increased as a result of certain contracts based on prior-year input costs,
which were significantly higher in 2008.
 
 
 
 33




---



##### 



Phosphate Production
  Aurora NC
    
    
    
    White Springs FL
    
    
    
    Geismar LAAnnual
    
    
    
    
    
    
    Production
    
    
    
    Annual
    
    
    
    
    
    
    Production
    
    
    
    Annual
    
    
    
    
    
    
    ProductionCapacity
    
    
    
    
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    
    Capacity
    
    
    
    
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    
    Capacity
    
    
    
    
    
    
    2010
    
    
    2009
    
    
    2008Liquids: MGA 1
    
    
    1.835
    
    
    
    
    
    
    
    1.859
    
    
    
    1.486
    
    
    
    1.739
    
    
    
    
    1.908
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.337
    
    
    
    
    
    
    
    0.226
    
    
    
    0.233
    
    
    
    0.245SPA
    
    
    0.676
    
    
    
    
    
    
    
    0.206
    
    
    
    0.166
    
    
    
    0.191
    
    
    
    
    1.138
    
    
    
    
    
    
    
    0.691
    
    
    
    0.476
    
    
    
    0.704
    
    
    
    
    0.196
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Solids (total)
    
    
    1.247
    
    
    DAP
    
    
    0.542
    
    
    
    0.532
    
    
    
    0.445
    
    
    
    
    0.710
    2
    
    DAP
    
    
    
    
    
    
    
    
    
    
    0.226
    
    
    
    
    
    
    
    DAP
    
    
    
    
    
    
    
    
    
    
    MAP
    
    
    0.374
    
    
    
    0.304
    
    
    
    0.395
    
    
    
    
    
    
    
    MAP
    
    
    0.374
    
    
    
    0.184
    
    
    
    0.208
    
    
    
    
    
    
    
    MAP
    
    
    
    
    
    
    
    
    
    
    DAP/MAP (total)
    
    
    
    
    
    
    
    
    
    
    0.916
    
    
    
    0.836
    
    
    
    0.840
    
    
    
    
    
    
    
    
    
    
    
    
    0.374
    
    
    
    0.184
    
    
    
    0.434
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 
 1
    
    A substantial portion is consumed internally in the production of downstream
products. The balance is exported to phosphate fertilizer producers and sold domestically to
dealers who custom-mix liquid fertilizer.2
    
    Solids granulation capacity increased due to restart of a granulation train. Rock and Acid Production
 Phosphate Rock Production (million tonnes)
    
    
    Phosphoric Acid (million tonnes P2O5)Annual
    
    
    
    Production
    
    
    Annual
    
    
    
    ProductionCapacity
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    Capacity
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    EmployeesAurora NC
    
    
    6.000
    
    
    
    4.068
    
    
    
    4.198
    
    
    
    4.027
    
    
    
    1.202
    
    
    
    1.146
    
    
    
    0.932
    
    
    
    1.054
    
    
    
    1,071White Springs FL
    
    
    3.600
    
    
    
    1.783
    
    
    
    2.499
    
    
    
    3.025
    
    
    
    0.966
    
    
    
    0.705
    
    
    
    0.433
    
    
    
    0.741
    
    
    
    702Geismar LA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.202
    
    
    
    0.136
    
    
    
    0.140
    
    
    
    0.147
    
    
    
    77Total
    
    
    9.600
    
    
    
    5.851
    
    
    
    6.697
    
    
    
    7.052
    
    
    
    2.370
    
    
    
    1.987
    
    
    
    1.505
    
    
    
    1.942
    
    
    
    1,850
 Sales volumesé
    
    Fertilizer sales volumes fell markedly during the first three quarters of 2009 due to customer
uncertainty about prices, planting decisions, weather delays and a late-fall harvest. North
American solid and liquid fertilizer customers managed purchases and worked through inventory
levels, buying only as much as needed in an effort to minimize risk. Solid and liquid fertilizer
demand rebounded in the fourth quarter of 2009 as North American and offshore customers began to
restock, supported by increased farmer application rates and constructive commodity prices.ê
    
    Demand for feed products declined in 2009 due to weak
economics in the beef, pork and poultry industries and increased use of substitute feed
supplements.ê
    
    Industrial sales volumes fell in 2009 due to a slowdown in demand for purified phosphoric acid
used for food (e.g., soft drinks, vegetable oils, salad dressings) and other commercial purposes
(e.g., cleaning compounds, metal finishing, aluminum brightening).Cost of goods soldé
    
    Lower sulfur costs (61 percent) and lower ammonia costs

(19 percent) were partially offset by fixed costs being allocated over fewer tonnes (due to reduced
operating rates at both our White Springs, Florida and Aurora, North Carolina operations).ê
    
    Feed had a negative cost variance due to a higher allocation of fixed costs (as a result of
liquid fertilizer production volumes falling significantly and feed being the highest volume
product at our White Springs, Florida plant, which was shuttered for a portion of 2009), partially
offset by a reversal of previously written-down finished product.
 Purified Acid Production
 2 5
 Annual
    
    
    
    
    
    
    ProductionCapacity
    
    
    2010
    
    
    2009
    
    
    2008Aurora NC
    
    
    0.333
    
    
    
    0.233
    
    
    
    0.173
    
    
    
    0.254
  Phosphate Products for Food and Technical Applications
 Cincinnati OH
    
    2010
    
    
    2009
    
    
    2008Purified acid feedstock utilized (tonnes P2O5)
    
    
    12,719
    
    
    
    10,107
    
    
    
    13,459Product tonnes processed:Acid phosphates
    
    
    17,448
    
    
    
    14,345
    
    
    
    18,308Specialty phosphates
    
    
    9,259
    
    
    
    6,494
    
    
    
    9,425
 Phosphate Feed Production
  Annual
    
    
    ProductionCapacity
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    EmployeesMarseilles IL
    
    
    0.278
    
    
    
    0.211
    
    
    
    0.137
    
    
    
    0.117
    
    
    
    30White Springs FL (Monocal) 1
    
    
    0.272
    
    
    
    
    
    
    
    
    
    
    
    0.153
    
    
    
    Weeping Water NE
    
    
    0.209
    
    
    
    0.077
    
    
    
    0.079
    
    
    
    0.100
    
    
    
    36Joplin MO
    
    
    0.163
    
    
    
    0.053
    
    
    
    0.058
    
    
    
    0.065
    
    
    
    25Aurora NC (DFP)
    
    
    0.159
    
    
    
    0.068
    
    
    
    0.058
    
    
    
    0.095
    
    
    
    30Fosfatos do Brasil 2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.043
    
    
    
    Total
    
    
    1.081
    
    
    
    0.409
    
    
    
    0.332
    
    
    
    0.573
    
    
    
    121
 
 1
    
    Ceased production January 1, 20092
    
    Divested ownership September 29, 2008 34




---



##### 



(GRAPHICS) Nitrogen
  #1
 63%
 61%




---



##### 



N
 STRENGTHS
 
    
    Longer-term natural gas contracts in Trinidad primarily indexed to ammonia prices
    
    Lower-cost exporter to the US market, the worlds largest nitrogen importer
    
    Development of shale gas has resulted in a favorable cost position for our US nitrogen plants
    
    Geographic location of US-manufactured ammonia operations relatively insulated from competitive
US Gulf imports
    
    Almost 80 percent of our ammonia sales from US plants is sold to less cyclical industrial
customers
 WEAKNESSES
 
    
    US plants can be affected by variable natural gas prices
    
    Contractual commitments to US industrial customers may force us to temporarily operate
unprofitably amid rising gas prices
 OPPORTUNITIES
 
    
    Ukraine and Western Europe suppliers have higher gas costs, supporting a higher floor for US
nitrogen prices
    
    LNG projects in low-cost gas regions provide alternatives for monetizing gas, reducing new supply
pressures in nitrogen
    
    Higher construction costs and geopolitical risk in many low-cost gas regions discourage
greenfield plants
 THREATS
 
    
    Significant government ownership could lead to political rather than market-driven decisions
    
    Extensive availability of natural gas and shorter construction period means new capacity can
impact the market more quickly than for other nutrients
    
    Changes in transport regulations in North America could substantially increase the cost of
shipping ammonia and create difficulty in getting permits for terminals
    
    US natural gas prices could be impacted by potential environmental opposition to shale gas
extraction methods or increased demand due to fuel switching




---



##### 



Nitrogen
 Understanding the Nitrogen Business
 Lower-cost natural gas is key to nitrogen success
   Proximity to ammonia markets is important
   In nitrogen markets, volatility is common
  Steady demand growth and limited new supply expected in the near term
   (BAR CHART)
    
    (BAR CHART)
 Keyword:Nitrogen
 35




---



##### 



Paul
Eppenbrock is a process operator at our Augusta facility.
 Our Nitrogen Business
  Products and markets
      (BAR CHART)
    
    (BAR CHART)
 36




---



##### 



Our Nitrogen Strategy
  Our Nitrogen Advantage
 Lower delivered cost supplier to the US market
   Leading supplier to industrial markets
  Our Capability to Deliver
   Risk to Our Nitrogen Business
 Cyclicality
  Snapshot of Nitrogen
 Strategies
    
    Capability to Deliver
    
    Risks
    
    MitigationFocus on being a
lower delivered
cost supplier to
the US market
    
    Multi-year gas
contracts in
Trinidad provide
long-term advantageEnhancing our US
nitrogen supply capability,
including plans to
resume production at our Geismar
ammonia plant
    
    Countries with
surplus low-cost
natural gas may
monetize it by
converting it to
nitrogen without
considering demand
    
    Maintain Trinidads
cost advantage
through gas
contractsDirect sales to
less-cyclical
industrial
customers
    
    Industrial customers
 many linked by
pipeline  take the
majority of our
ammonia sales from
our US plants
    
    Competition from
low-cost imports
through the US Gulf
    
    Focus on customers
that rely on
long-term, secure
supply
 37




---



##### 



% Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % Increase
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    % IncreaseDollars (millions)
    
    
    (Decrease)
    
    
    Tonnes (thousands)
    
    
    (Decrease)
    
    
    Average per Tonne 1
    
    
    (Decrease)2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009
    
    
    2008
    
    
    2010
    
    
    2009Sales
    
    $
    1,716.4
    
    
    $
    1,286.5
    
    
    $
    2,497.7
    
    
    
    33
    
    
    
    (48
    )Freight
    
    
    44.2
    
    
    
    49.1
    
    
    
    56.5
    
    
    
    (10
    )
    
    
    (13
    )Transportation
and distribution
    
    
    41.5
    
    
    
    54.9
    
    
    
    50.9
    
    
    
    (24
    )
    
    
    8Net sales
    
    $
    1,630.7
    
    
    $
    1,182.5
    
    
    $
    2,390.3
    
    
    
    38
    
    
    
    (51
    )Manufactured productNet SalesAmmonia
    
    $
    669.9
    
    
    $
    425.3
    
    
    $
    999.5
    
    
    
    58
    
    
    
    (57
    )
    
    
    1,765
    
    
    
    1,740
    
    
    
    1,794
    
    
    
    1
    
    
    
    (3
    )
    
    $
    379.59
    
    
    $
    244.43
    
    
    $
    557.05
    
    
    
    55
    
    
    
    (56
    )Urea
    
    
    418.5
    
    
    
    416.6
    
    
    
    633.1
    
    
    
    
    
    
    
    (34
    )
    
    
    1,237
    
    
    
    1,433
    
    
    
    1,186
    
    
    
    (14
    )
    
    
    21
    
    
    $
    338.32
    
    
    $
    290.64
    
    
    $
    533.77
    
    
    
    16
    
    
    
    (46
    )Nitrogen solutions, 

nitric acid, 

ammonium nitrate
    
    
    422.4
    
    
    
    284.3
    
    
    
    577.9
    
    
    
    49
    
    
    
    (51
    )
    
    
    2,204
    
    
    
    1,794
    
    
    
    2,062
    
    
    
    23
    
    
    
    (13
    )
    
    $
    191.63
    
    
    $
    158.50
    
    
    $
    280.34
    
    
    
    21
    
    
    
    (43
    )1,510.8
    
    
    
    1,126.2
    
    
    
    2,210.5
    
    
    
    34
    
    
    
    (49
    )
    
    
    5,206
    
    
    
    4,967
    
    
    
    5,042
    
    
    
    5
    
    
    
    (1
    )
    
    $
    290.20
    
    
    $
    226.73
    
    
    $
    438.43
    
    
    
    28
    
    
    
    (48
    )Cost of goods sold
    
    
    1,027.8
    
    
    
    947.8
    
    
    
    1,485.1
    
    
    
    8
    
    
    
    (36
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    197.42
    
    
    $
    190.81
    
    
    $
    294.56
    
    
    
    3
    
    
    
    (35
    )Gross margin
    
    
    483.0
    
    
    
    178.4
    
    
    
    725.4
    
    
    
    171
    
    
    
    (75
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    92.78
    
    
    $
    35.92
    
    
    $
    143.87
    
    
    
    158
    
    
    
    (75
    )Other miscellaneous
and purchased productNet sales
    
    
    119.9
    
    
    
    56.3
    
    
    
    179.8
    
    
    
    113
    
    
    
    (69
    )Cost of goods sold
    
    
    93.1
    
    
    
    42.9
    
    
    
    167.8
    
    
    
    117
    
    
    
    (74
    )Gross margin
    
    
    26.8
    
    
    
    13.4
    
    
    
    12.0
    
    
    
    100
    
    
    
    12Gross Margin
    
    $
    509.8
    
    
    $
    191.8
    
    
    $
    737.4
    
    
    
    166
    
    
    
    (74
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    97.93
    
    
    $
    38.61
    
    
    $
    146.25
    
    
    
    154
    
    
    
    (74
    )
 
 Note 18 to the consolidated financial statements provides information pertaining to our
business segments.1
    
    Rounding differences may occur due to the use of whole dollars in per-tonne
calculations. Sales Tonnes (thousands)
    
    Average Net Sales Price per Tonne2010
    
    2009
    
    2008
    
    2010
    
    2009
    
    2008Fertilizer
    
    
    1,997
    
    
    
    2,084
    
    
    
    1,794
    
    
    $
    277.21
    
    
    $
    236.25
    
    
    $
    451.19Feed
    
    
    27
    
    
    
    31
    
    
    
    35
    
    
    $
    404.95
    
    
    $
    395.61
    
    
    $
    638.26Industrial
    
    
    3,182
    
    
    
    2,852
    
    
    
    3,213
    
    
    $
    297.39
    
    
    $
    217.95
    
    
    $
    429.145,206
    
    
    
    4,967
    
    
    
    5,042
    
    
    $
    290.20
    
    
    $
    226.73
    
    
    $
    438.43
 Nitrogen gross margin variance attributable to:
  2010 vs 2009Change in
    
    Change in Prices/CostsSales Volumes
    
    Net Sales
    
    Cost of Goods Sold
    
    TotalManufactured productAmmonia
    
    $
    9.8
    
    
    $
    238.5
    
    
    $
    (81.5
    )
    
    $
    166.8Urea
    
    
    (11.3
    )
    
    
    59.0
    
    
    
    (18.7
    )
    
    
    29.0Solutions, nitric acid, ammonium nitrate
    
    
    24.1
    
    
    
    73.0
    
    
    
    15.6
    
    
    
    112.7Hedge
    
    
    
    
    
    
    
    
    
    
    (0.6
    )
    
    
    (0.6
    )Change in product mix
    
    
    40.2
    
    
    
    (40.1
    )
    
    
    (3.4
    )
    
    
    (3.3
    )Total manufactured product
    
    $
    62.8
    
    
    $
    330.4
    
    
    $
    (88.6
    )
    
    
    304.6Other miscellaneous and purchased product
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13.4Total
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    318.0
 38




---



##### 



Nitrogen Performance: 2010 vs 2009
  Net sales prices
 é
    
    Realized prices increased as a result of tight global supplies, higher production costs in key
producing regions (Ukraine and Western Europe) and stronger agriculture and industrial demand in
2010.
 Sales volumes
 é
    
    Ammonia rose slightly due to improved industrial demand. Further volume increases were limited as
ammonia was used internally to upgrade to other nitrogen and phosphate products.ê
    
    Urea decreased due to less supply being available for sale (59-day turnaround at our Lima,
Ohio facility in 2010, an interruption at Augusta, Georgia and lower inventories).é
    
    Nitrogen solutions increased as a result of better crop economics and our ability to increase
production at our Geismar, Louisiana facility to meet demand.é
    
    Nitric acid increased as a result of a stronger US economy and improved industrial demand for
downstream products.
 Cost of goods sold
 ê
    
    Average natural gas costs in production, including our hedge, increased 32 percent. Natural gas
costs in Trinidad production rose 69 percent while our US spot costs for natural gas in production
increased 15 percent.ê
    
    Ammonia and urea cost of goods sold variances were negative while the other product lines were
positive due to relatively lower-cost ammonia being used in the other product lines at our Geismar,
Louisiana facility.
  2009 vs 2008
  Net sales prices
 ê
    
    Realized prices decreased sharply due to declining crop commodity prices, lower energy costs and
weak industrial and agricultural demand that resulted from cautious customer buying behavior during
the global economic crisis.
 
 
 
 39




---



##### 



Sales volumes
 é
    
    Fertilizer sales tonnes increased in 2009 due to more Trinidad production available this year.ê
    
    Non-fertilizer sales tonnes decreased, largely as a result of weakened industrial demand associated
with the global economic crisis.é
    
    Urea sales were up due to higher shipments to offshore markets.ê
    
    Ammonia sales were down due to soft industrial demand, the redirection of Trinidad production
to higher-margin urea and decreased demand from North American customers for direct application and
solid phosphate fertilizers.ê
    
    Nitrogen solutions sales volumes were down 5 percent in 2009 due to weak customer demand
caused by late spring and compressed fall application seasons. We also curtailed production due to
poor market conditions.ê
    
    Nitric acid and ammonium nitrate sales volumes decreased 23 percent and 11 percent,
respectively, due to reduced industrial demand in the US. Some customers facilities operated at
substantially lower rates due to the effects of the weak economy on consumer goods and durables and
commercial explosives businesses.
 Cost of goods sold
 é
    
    Cost of goods sold was lower mainly due to the decrease in average natural gas costs in
production, including hedge. Natural gas costs in Trinidad production decreased 62 percent while
our US spot costs for natural gas in production decreased 55 percent.ê
    
    Losses from our US natural gas hedging activities were incurred in 2009 while gains were
realized in 2008.é
    
    Lower natural gas costs were offset somewhat by higher turnaround costs in 2009 that were not
incurred in 2008, and additional costs associated with a fire at one of our Trinidad plants in
March 2009.
 
 Nitrogen Production
  Annual
    
    
    
    
    
    ProductionCapacity
    
    2010
    
    2009
    
    2008Ammonia1Trinidad
    
    
    2.177
    
    
    
    2.194
    
    
    
    1.858
    
    
    
    1.785Augusta GA
    
    
    0.713
    
    
    
    0.693
    
    
    
    0.690
    
    
    
    0.674Lima OH
    
    
    0.599
    
    
    
    0.482
    
    
    
    0.555
    
    
    
    0.538Total
    
    
    3.489
    
    
    
    3.369
    
    
    
    3.103
    
    
    
    2.997Urea SolidsTrinidad
    
    
    0.709
    
    
    
    0.709
    
    
    
    0.674
    
    
    
    0.633Augusta GA
    
    
    0.471
    
    
    
    0.335
    
    
    
    0.382
    
    
    
    0.358Lima OH
    
    
    0.353
    
    
    
    0.253
    
    
    
    0.353
    
    
    
    0.314Geismar LA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1.533
    
    
    
    1.297
    
    
    
    1.409
    
    
    
    1.305Nitrogen Solutions2Trinidad
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Augusta GA
    
    
    0.581
    
    
    
    0.358
    
    
    
    0.254
    
    
    
    0.317Lima OH
    
    
    0.227
    
    
    
    0.084
    
    
    
    0.105
    
    
    
    0.078Geismar LA
    
    
    1.028
    
    
    
    0.524
    
    
    
    0.291
    
    
    
    0.477Total
    
    
    1.836
    
    
    
    0.966
    
    
    
    0.650
    
    
    
    0.872Nitric Acid1,3Trinidad
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Augusta GA
    
    
    0.604
    
    
    
    0.580
    
    
    
    0.503
    
    
    
    0.592Lima OH
    
    
    0.117
    
    
    
    0.096
    
    
    
    0.080
    
    
    
    0.097Geismar LA
    
    
    0.844
    
    
    
    0.639
    
    
    
    0.440
    
    
    
    0.599Total
    
    
    1.565
    
    
    
    1.315
    
    
    
    1.023
    
    
    
    1.288Ammonium Nitrate SolidsTrinidad
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Augusta GA
    
    
    0.576
    
    
    
    0.504
    
    
    
    0.511
    
    
    
    0.576Lima OH
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Geismar LA
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    0.576
    
    
    
    0.504
    
    
    
    0.511
    
    
    
    0.576EmployeesTrinidad
    
    
    423Augusta GA
    
    
    126Lima OH
    
    
    132Geismar LA
    
    
    64Total
    
    
    745
    4
 
 1
    
    A substantial portion is upgraded to value-added products.2
    
    Based on 32% N content3
    
    As 100% HNO3 tonnes4
    
    406 contract employees work at the nitrogen plants, for a total workforce of 1,151. 40




---



##### 



Key Performance Drivers
 Create superior long-term shareholder value
 2010 Performance
 Targets
    
    Exceed total shareholder return (TSR) performance for our sector* and the DAXglobal Agribusiness Index
    
    Achieved●
    
    Our TSR of 43 percent exceeded the 40 percent return of our sector* and the 20.6 percent of the DAXglobal Agribusiness IndexExceed cash flow return (CFR)** on investment for our sector*
    
    Not 
Achieved◐
    
    CFR was 18.2 percent, slightly below that of our sector*Remain in the top quartile of governance practices as measured by predetermined external reviews
    
    Achieved●
    
    We ranked in the top quartile in all predetermined reviews2011 Targets
    
    Exceed total shareholder return performance for our sector* and the DAXglobal Agribusiness IndexExceed cash flow return on investment for our sector*Remain in the top quartile of governance practices as measured by predetermined external reviews
 Be the supplier of choice to the markets we serve
 2010 Performance
 Target
    
    Outperform competitors on quality and service as measured by independent customer surveys
    
    Achieved●
    
    We outperformed our competitors in all quality and service categories2011 Targets
    
    Outperform competitors overall on quality and service as measured by independent customer surveysReduce the number of product tonnes involved in customer complaints below the average of the prior three years
 Build strong relationships with and improve the socioeconomic well-being of our communities
 2010 Performance
 Targets
    
    Achieve 4 (performing well) out of 5 on community leaders surveys
    
    Not 
Achieved ○
    
    We scored 4 or better on all community surveys with the exception of SaskatoonAchieve a 10 percent increase in employee participation in the matching gift program and a 10 percent increase in matching
gift donations from 2009 levels
    
    Partially Achieved◐
    
    Employee participation and matching gift donations exceeded 2009 levels by 9 percent and 14 percent, respectivelyInvest up to 1 percent of after-tax earnings (on a five-year rolling average) in communities and other philanthropic programs
    
    Achieved●
    
    Our annual philanthropic donations were
1.3 percent of the five-year average of after-tax
earnings2011 Targets
    
    Achieve 4 (performing well) out of 5 on community leaders surveysAchieve a 10 percent increase in employee participation in the matching gift programInvest 1 percent of consolidated income before income taxes (on a 5-year rolling average) in community initiativesAchieve 60 percent local purchasing, excluding major expansions, energy, raw materials and transportation
 
 *
    
    Sector: Weighted average (based on market capitalization) for Agrium, APC, CF Industries, ICL,
Intrepid, K+S, Mosaic, SQM, Uralkali and Yara for most recent four fiscal quarters available.**
    
    See reconciliation and description of certain non-GAAP measures on Page 78. 41




---



##### 



Attract and retain talented, motivated and productive employees who are committed to our long-term goals
 2010 Performance
 Targets
    
    Achieve an average employee engagement score of at least 75 percent on the annual survey
    
    Not 
Achieved○
    
    The average employee engagement score was 73 percentFill at least 75 percent of senior staff openings with internal candidates
    
    Achieved●
    
    We filled 94 percent of our senior staff openings with internal candidatesAchieve an acceptance rate of 85 percent on all external staff-level employment offers made
    
    Achieved●
    
    We had an acceptance rate of 86 percent for all external staff-level employment offers made2011 Targets
    
    Achieve an average employee engagement score of at least 75 percent on the annual surveyFill at least 75 percent of senior staff openings with internal candidatesAchieve an acceptance rate of 85 percent on all external staff-level employment offers made
 Achieve no harm to people and no damage to the environment
 2010 Performance
 Targets
    
    Reduce total site* severity injury rate** by
35 percent from 2008 levels by the end of 2012
    
    Achieved●
    
    On track. We have achieved a 62 percent reduction from 2008 through 2010Achieve zero life-altering injuries at our sites
    
    Achieved●
    
    We had no life-altering injuries at our sites in 2010Reduce company-wide greenhouse gas
(GHG) emissions per tonne of product by 10 percent by the end of 2012, compared to 2007
    
    Achieved●
    
    On track. We have plans in place to install GHG controls at one of the nitric acid plants in 2011 to meet our target in 2012Reduce total reportable incidents (releases, permit excursions and spills) by 30 percent from our 2009 levels
    
    Not 
Achieved○
    
    We achieved a 9 percent reduction from 2009 levels2011 Targets
    
    Reduce total site* severity injury rate** by 35 percent from 2008 levels by the end of 2012Achieve zero life-altering injuries at our sitesReduce company-wide greenhouse gas emissions per tonne of product by 10 percent by end of 2012, compared to 2007Reduce total reportable releases, permit excursions and spills by 10 percent from 2010 levelsMaintain or reduce company-wide water usage per tonne of product from 2010 levels
 
 *
    
    Total site includes PotashCorp employees, contract employees and all others on site.**
    
    Severity injury rate is the total of lost-time injuries and modified work injuries for
every 200,000 hours worked. 42




---



##### 



Rewarding Results
 Our Philosophy
  
    
    Attracts, retains and motivates world-class talent;
    
    Links much of executive compensation to performance that drives long-term shareholder value;
    
    Aligns executive interests with shareholders through stock ownership requirements; and
    
    Does not promote a higher corporate risk profile.This program is discussed in depth in the Compensation Discussion and Analysis section of our 2011
Proxy Circular.
 Our Compensation Structure
    Compensation
    
    
    
    
    
    PerformanceCategory
    
    Element
    
    Form
    
    Eligibility
    
    Period
    
    DeterminationBase Salary
    
    Salary
    
    Cash
    
    All salaried employees
    
    Annual
    
         For executive officers, targets are set to the median of comparator companies, adjusted to reflect individual responsibility and performance.At Risk 
  Compensation
    
    Short-term incentives (STIP)
    
    Cash
    
    All executives, most
salaried staff and hourly union and
non-union employees
    
    1 year
    
         Based on achieving board-established cash flow return metric; our operating sites STIP programs also require achievement of certain safety and
environmental targets.     No
payout for achieving less than 50 percent of target; maximum
payout is capped at two times target regardless of cash flow return
achieved, subject to adjustment (+/-30 percent) based on individual
 performance.Medium-term incentives (MTIP)
    
    Performance share units
    
    All executives and
senior management (74 people)
    
    3 years
    
         One-half of payout based on absolute total shareholder return1and half based on our TSR relative to peer group index2.     No payout if minimum performance objectives are not achieved; maximum payout on each component is capped at 150 percent of target; maximum price
escalation is capped at three times the starting price over the three-year performance period.Long-term incentives
(Performance Option Plan)
    
    Performance options
    
    All executives, senior
management and other selected management (270 people)
    
    3 years (vesting) 
10 years (option term)
    
         Performance options incorporate a performance-based vesting schedule measuring the three-year average excess of cash flow return over our
weighted average cost of capital.     Value of options based on share price appreciation over 10-year option period.     Awarded once per year, following shareholder approval; no off-cycle option grants during the year.
 
 1
    
    TSR is the total shareholder return on an investment in PotashCorp stock from the time
the investment is made. It has two components: (1) growth in share price and (2) related dividend
income on the shares.2
    
    January 1, 2009-December 31, 2011: DAXglobal Agribusiness Index 43




---



##### 



Aligning Compensation With Company Goals
  Goal
    
    Discussion1. Create superior long-term shareholder value
    
    All at-risk incentive compensation plans are based on TSR or a highly correlated measure.2. Be the supplier of choice to the markets we serve
    
    The STIP is based on annual board-approved goals for sales, productivity and profitability. Achieving them requires us to meet the needs of customers throughout the period.3. Build strong relationships with and improve the socioeconomic well-being of our communities
    
    The companys new policy of investing 1 percent of pre-tax earnings on a five-year rolling average in the communities in which we work and other philanthropic programs requires strong,
sustained earnings.4. Attract and retain talented, motivated and productive employees who are committed to our long-term goals
    
    Target compensation is competitive with the industry average. Executives are motivated to achieve strong results through opportunities to earn above target based on company and individual
performance.5. Achieve no harm to people and no damage to the environment
    
    At all plant locations, one-half of the annual STIP payout depends on performance in relation to local metrics, a significant portion of which relates to safety and environmental performance.
 Managing Risk
  Shareholder Engagement
 www.potashcorp.com
 44




---



##### 



Risk Management
 Managing Risks to Our Fertilizer Enterprise
  Global Risk Environment
 
   Risk Methodology and Ranking Matrix
  A Extreme:
 B Major:
 C Acceptable:
 D Low:
 E Negligible:
   PotashCorp Risk Management Ranking Methodology
 Risk Ranking Matrix
    
    
    SEVERITY OF CONSEQUENCE1
    
    
    2
    
    
    3
    
    
    4
    
    
    5Negligible
    
    
    Low
    
    
    Acceptable
    
    
    Major
    
    
    ExtremeLIKELIHOOD OR FREQUENCY
    
    
    
    5
    
    
    
    Probable(0-6 months)
    
    
    C
    
    
    B
    
    
    B
    
    
    A
    
    
    A4
    
    
    
    High(6 months-2 years)
    
    
    D
    
    
    C
    
    
    B
    
    
    B
    
    
    A3
    
    
    
    Medium(2-10 years)
    
    
    D
    
    
    D
    
    
    C
    
    
    B
    
    
    B2
    
    
    
    Low(10-50 years)
    
    
    E
    
    
    D
    
    
    D
    
    
    C
    
    
    B1
    
    
    
    Remote(> 50 years)
    
    
    E
    
    
    E
    
    
    D
    
    
    D
    
    
    C
 45




---



##### 



Risk Governance
  Board of Directors:
 
    
    Oversees the risk management process primarily through its
committees:
 -
    
    The audit committee monitors the company risk management process quarterly, or more
frequently if required, focusing primarily on financial and regulatory compliance risk.-
    
    The safety, health and environment committee and corporate governance and nominating
committee focus primarily on risks in their areas of oversight.-
    
    The compensation committee focuses on risks in its area of oversight, including assessment
of compensation programs to ensure they do not incentivize increased corporate risk (See
Rewarding Results, Page 43).
 Risk management committee:
 
    
    Comprised of senior management, this committee ensures that our overall risk profile
associated with our corporate strategy and business goals is being addressed.
    
    Establishes the risk management process to identify, measure, manage, monitor and disclose
risks.
    
    Maintains our company-wide risk management framework, and regularly reviews our risk
management policy and regulatory requirements.
    
    Reports quarterly, or more frequently if required, to the CEO and the audit committee on all
significant risks, including new or increased risks resulting from changes in operations or
external factors.
    
    Reports to the Board of Directors at an annual presentation and discussion on risk
management.
 Internal audit:
 
    
    Provides independent and objective assurance and consulting
services to evaluate and report to management and the audit
committee on the effectiveness of governance, risk management
and control processes.
 Internal control compliance team:
 
    
    Ensures identification and management of risks related to
internal controls over financial reporting by reviewing and testing
such controls.
 Business segments:
 
    
    Identify and manage risks within their areas of responsibility.
 Risk governance structure
 
 Key Risks by Operating Segments
  Segment
    
    Risk
    
    PagePotash
    
    Excess supply
    
    
    25Insufficient demand
    
    
    25Inadequate transportation and
distribution infrastructure
    
    
    25Underground mine hazards
    
    
    25Phosphate
    
    Cyclicality
    
    
    31Nitrogen
    
    Cyclicality
    
    
    37
 46




---



##### 



2010 Financial
    Overview
         Dollars (millions), except per-share and percentage amounts% Increase (Decrease)2010


2009


2008


2010


2009Sales

$
6,538.6


$
3,976.7


$
9,446.5



64



(58
)Gross Margin


2,625.0



1,014.6



4,860.8



159



(79
)Operating Income


2,548.1



1,180.8



4,588.5



116



(74
)Net Income


1,806.2



980.7



3,465.9



84



(72
)Net Income per Share


1.98



1.08



3.64



83



(70
)Other Comprehensive Income (Loss)


595.5



990.9



(1,521.0
)


(40
)


n/m   n/m = not meaningful
   PotashCorp 2010 Financial
    Review 47




---



##### 



2010
    Earnings Compared to Guidance
    Cause

Effect on EPSPotash offshore realized prices

$
(0.05
)Potash North America realized prices


0.05Potash offshore sales volumes


0.16Potash North America sales volumes


0.10Increased potash royalties


(0.01
)Decreased potash costs due to foreign exchange


0.02Increased brine inflow and other potash costs


(0.03
)Increased provincial mining taxes


(0.01
)Subtotal potash


0.23Phosphate realized prices


0.17Phosphate sales volumes


0.01Decreased sulfur input costs


0.03Increased ammonia input costs


(0.06
)Increased rock costs


(0.03
)Decreased other phosphate costs


0.01Subtotal phosphate


0.13Nitrogen realized prices


0.12Manufactured nitrogen sales volumes


0.01Increased cost of natural gas


(0.06
)Decreased other nitrogen costs (exclusive of cost of natural gas)


0.08Subtotal nitrogen


0.15BHP response costs


(0.07
)Increase in other income


0.10Increase in selling and administrative


(0.01
)Increase in interest expense


(0.02
)Foreign exchange variance


(0.01
)Subtotal other


(0.01
)Subtotal of the above


0.50Reduction in weighted average number of shares outstanding


0.02Lower income tax rate on ordinary income


0.03Discrete items impacting income taxes


(0.07
)Total variance from 2010 EPS guidance

$
0.48
   2010
    Earnings Compared to 2009
  
  Cause

Effect on EPSPotash offshore realized prices

$
(0.41
)Potash North America realized prices


(0.30
)Potash offshore sales volumes


0.93Potash North America sales volumes


0.77Increased potash royalties


(0.03
)Increased potash costs due to foreign exchange


(0.07
)Decreased brine inflow and other potash costs


0.03Increased provincial mining taxes


(0.04
)Subtotal potash


0.88Phosphate realized prices


0.16Phosphate sales volumes


0.12Decreased sulfur input costs


0.02Increased ammonia input costs


(0.01
)Increased rock costs


(0.04
)Increased other phosphate costs


(0.05
)Subtotal phosphate


0.20Nitrogen realized prices


0.29Manufactured nitrogen sales volumes


0.05Increased cost of natural gas


(0.07
)Decreased other nitrogen costs (exclusive of cost of natural gas)


0.01Subtotal nitrogen


0.28BHP response costs


(0.06
)Decrease in other income


(0.03
)Increase in selling and administrative


(0.04
)Decrease in interest expense


0.02Foreign exchange variance


(0.05
)Subtotal other


(0.16
)Subtotal of the above


1.20Reduction in weighted average number of shares outstanding


Higher income tax rate on ordinary income


(0.08
)Discrete items impacting income taxes


(0.22
)Total variance from 2009 EPS

$
0.90
    48 PotashCorp
    2010 Financial Review




---



##### 



Expenses &
    Other Income
  Dollars (millions), except percentage amounts





% Increase (Decrease)2010


2009


2008


2010


2009Selling and administrative

$
228.1


$
183.6


$
188.4



24



(3
)Provincial mining and other taxes


76.5



29.0



543.4



164



(95
)Foreign exchange loss (gain)


16.8



(35.4
)


(126.0
)


n/m



(72
)Other income


244.5



343.4



333.5



(29
)


3Interest expense


99.1



120.9



62.8



(18
)


93Income taxes


642.8



79.2



1,059.8



712



(93
)Other comprehensive income (loss)


595.5



990.9



(1,521.0
)


(40
)


n/m   n/m = not meaningful
   2010
    vs 2009
 Selling and administrative expenses
  Provincial mining and other taxes
  Foreign exchange losses
  Other income
  interest expense
  Dollars (millions), except percentage amounts2010


2009


Change


% ChangeLong-term debt obligations, including current portionWeighted average outstanding

$
3,496.4


$
3,002.2


$
494.2



16Weighted average interest rate


5.7%



4.6%



1.1%



24Short-term debt obligationsWeighted average outstanding

$
536.2


$
603.5


$
(67.3
)


(11
)Weighted average interest rate


0.5%



1.6%



(1.1%
)


(69
)       Income taxes
  
    In 2010, a current tax expense of $81.4 million and a
    future tax recovery of $45.7 million to adjust the
    2009 income tax provision to the income tax returns filed during
    2010;
    In 2009, a future tax recovery of $119.2 million for a tax
    rate reduction resulting from an internal restructuring;  PotashCorp 2010 Financial
    Review 49




---



##### 




    A current tax recovery of $47.6 million in 2009 that
    related to an increase in permanent deductions in the US from
    prior years;
    In 2009, a future tax expense of $24.4 million related to a
    functional currency election by the parent company for Canadian
    income tax purposes.    Other comprehensive income
  2009
    vs 2008
 Selling and administrative
  Provincial mining and other taxes
  Foreign exchange gain
  Other income other-than-temporary
  interest expense
  Dollars (millions), except percentage amounts2009


2008


Change


% ChangeLong-term debt obligations, including current portionWeighted average outstanding

$
3,002.2


$
1,387.8


$
1,614.4



116Weighted average interest rate


4.6%



6.5%



(1.9%
)


(29
)Short-term debt obligationsWeighted average outstanding

$
603.5


$
798.5


$
(195.0
)


(24
)Weighted average interest rate


1.6%



2.4%



(0.8%
)


(33
)      Income taxes
  
    In 2009, a future tax recovery of $119.2 million for a tax
    rate reduction resulting from an internal restructuring;
    A current tax recovery of $47.6 million in 2009 that
    related to an increase in permanent deductions in the US from
    prior years. In 2008, income tax recoveries of
    $71.1 million that related to an increase in permanent
    deductions in the US from prior years;
    In 2009, a future tax expense of $24.4 million related to a
    functional currency election by the parent company for Canadian
    tax purposes.     50 PotashCorp
    2010 Financial Review




---



##### 



Other comprehensive income
  Impact
    of Foreign Exchange
        Impact
    on Net Income
  Dollars (millions), except per-share amounts2010


2009Foreign exchange impact on operating costs before income taxes
    1

$
(15.7
)

$
(42.1
)Foreign exchange impact on conversion of balance sheet and
    treasury activities before income taxes


(16.8
)


35.4Net income decrease before income taxes


(32.5
)


(6.7
)Diluted net income per share decrease before income taxes


(0.04
)



   1
    Assumes the 2010 exchange rate had remained at the
    2009 year-end rate of 1.0466 (compared to 0.9946 at
    December 31, 2010), and the 2009 exchange rate had remained
    at the 2008 year-end rate of 1.2246.   PotashCorp 2010 Financial
    Review 51




---



##### 



Quarterly Results
   Quarterly
    Results and Review of Fourth-Quarter Performance
  (unaudited, in millions of US dollars except per-share amounts)2010


2009Q1


Q2


Q3


Q4


Total


Q1


Q2


Q3


Q4


TotalSales

$
1,713.6


$
1,437.8


$
1,575.0


$
1,812.2


$
6,538.6


$
922.5


$
856.0


$
1,099.1


$
1,099.1


$
3,976.7Less: Freight


105.2



64.1



81.1



85.4



335.8



37.6



38.9



53.7



60.8



191.0Transportation
    and distribution


49.9



35.0



37.9



29.0



151.8



27.0



37.7



36.3



27.1



128.1Cost of
    goods sold


843.4



755.1



892.7



934.8



3,426.0



629.8



610.3



664.4



738.5



2,643.0Gross margin


715.1



583.6



563.3



763.0



2,625.0



228.1



169.1



344.7



272.7



1,014.6Operating income


662.1



669.0



539.2



677.8



2,548.1



216.9



284.3



356.9



322.7



1,180.8Net income


449.2



472.0



402.7



482.3



1,806.2



307.4



186.2



247.9



239.2



980.7Other comprehensive income (loss)


80.7



(846.8
)


880.2



481.4



595.5



37.0



404.5



123.9



425.5



990.9Net income per share


0.49



0.52



0.44



0.54



1.98



0.34



0.20



0.27



0.26



1.08       
        
    Potash sales volumes moved higher as buyers returned to
    historical purchasing patterns after the unprecedented decline
    in demand during the global financial crisis in 2009. Our
    sales increased 63 percent to North American markets and
    157 percent to offshore markets. Canpotex sold
    20 percent of its volumes to China,
    37 percent to other Asian countries, 27 percent to
    Latin America and 12 percent to India; the remaining
    volumes were sold to other regions. Average total potash prices
    were down from the fourth quarter of 2009 although price
    increases announced near the end of 2010 were starting to be
    realized. Total potash cost of goods sold was lower due to
    overhead costs being allocated over higher production tonnes and
    partially offset by a stronger Canadian dollar that increased
    costs. In 2009, cost of goods sold was impacted by lower
    production and a stronger Canadian dollar.
    Phosphate fourth-quarter gross margin increased due to improved
    agricultural fundamentals. Tight supplies and strong demand
    pushed prices higher through the fourth quarter of 2010. Prices
    for fertilizer and feed products were higher in 2010s
    fourth quarter while our industrial segment prices, which are
    tied to cost-plus or market index provisions that lag current
    market conditions, declined. Sales volumes exceeded those in the
    fourth quarter of 2009, primarily due to improved demand for
    liquid and solid fertilizers. Cost of goods sold increased,
    mainly due to higher costs of sulfur and ammonia.
    Improved demand for agricultural and industrial nitrogen
    products resulted in nitrogen sales volumes increasing compared
    to the same period of the previous year for all products except
    urea, which declined due to turnarounds and the allocation of
    available nitrogen production to products providing higher gross
    margin. Favorable agricultural fundamentals and improving
    industrial demand pushed average realized prices higher for all
    nitrogen products. Our total average cost of natural gas used
    in production, including our hedge, was $5.62 per MMBtu
    compared to $4.55 per MMBtu in 2009, resulting in an increase in
    cost of goods sold. With our Trinidad gas costs primarily
    indexed to the Tampa ammonia price, the increase in this  52 PotashCorp
    2010 Financial Review




---



##### 



benchmark raised our costs for this key input, while improved
    demand for natural gas since the fourth quarter of 2009 has
    driven prices higher for our US production facilities.  
    Selling and administrative expenses were higher in
    fourth-quarter 2010 due mainly to an increase in community and
    public affairs expenses.
    Provincial mining and other taxes rose, due primarily to higher
    revenues which resulted in an increase to the resource surcharge
    paid.
    Foreign exchange losses in 2010 were the result of our net
    monetary liabilities being translated at a higher Canadian
    dollar exchange rate. A foreign exchange gain resulted in 2009
    primarily from the impact of a strengthening Canadian dollar on
    the companys excess income tax instalment payments for the
    year in Canada.
    Other income was lower as costs were incurred to respond to the
    BHP Offer in the current year, and a recovery on a pension
    valuation in 2009 did not repeat in 2010.
    Interest expense decreased due to a higher proportion of
    interest being capitalized. Lower interest expense on short-term
    debt obligations (fewer issuances of commercial paper) more than
    offset higher interest expense on long-term debt obligations
    (senior notes issued in fourth-quarter 2010 at higher rates).
    The effective tax rate, including discrete items, was
    26 percent (2009  15 percent). Included in
    this rate in fourth-quarter 2010 was an expense of
    $8.9 million to adjust historical amounts related primarily
    to purchase accounting, inventory and goodwill as well as a
    $1.6 million expense to adjust the 2009 income tax
    provision to the income tax returns filed during the quarter. In
    2009, the rate included an expense of $8.6 million recorded
    during the fourth quarter related to currency fluctuations on
    the repayment of intercompany debt and a cumulative adjustment
    for a reduction in the tax rate.
    Other comprehensive income increased as a result of increases in
    the fair value of our investment in ICL (partially offset by
    decreases in the fair value of our investment in Sinofert) and
    gains in natural gas hedging derivatives (improved natural gas
    prices during the fourth quarter) in 2010 compared to losses in
    2009.  Three Months Ended December 31Tonnes (thousands)


Average Net Sales Price per MT% Increase








% Increase2010


2009


(Decrease)


2010


2009


(Decrease)PotashManufactured ProductNorth America


804



494



63


$
383.68


$
395.54



(3
)Offshore


1,575



612



157


$
292.25


$
287.63



2Manufactured Product


2,379



1,106



115


$
323.14


$
335.83



(4
)PhosphateManufactured ProductFertilizer  Liquids


320



263



22


$
409.82


$
302.22



36Fertilizer  Solids


346



305



13


$
525.06


$
300.95



74Feed


139



135



3


$
505.37


$
434.50



16Industrial


160



151



6


$
593.08


$
659.90



(10
)Manufactured Product


965



854



13


$
495.37


$
386.23



28NitrogenManufactured ProductAmmonia


415



354



17


$
441.07


$
300.27



47Urea


267



341



(22
)

$
396.16


$
297.25



33Nitrogen solutions, Nitric acid, Ammonium nitrate


595



437



36


$
212.87


$
152.00



40Manufactured Product


1,277



1,132



13


$
325.28


$
242.14



34    PotashCorp 2010 Financial
    Review 53




---



##### 



Key Earnings
    Sensitivities
     EffectInput Cost Sensitivities


on EPSNYMEX gas price increases by $1/MMBtu


Nitrogen



± 0.03Potash



− 0.01Sulfur changes by $20/long ton


Phosphate



± 0.03Canadian to US dollar strengthens by $0.01


Canadian operating expenses net of provincial taxes



− 0.00Translation gain/loss



− 0.01   EffectPrice and Volume Sensitivities


on EPSPrice


Potash changes by $20/tonne



± 0.15DAP/MAP changes by $20/tonne



± 0.02Ammonia increases by $20/tonne   Nitrogen



± 0.02   Phosphate



− 0.00Urea changes by $20/tonne



± 0.02Volume


Potash changes by 100,000 tonnes



± 0.02Nitrogen changes by 50,000 N tonnes



± 0.02Phosphate changes by 50,000
    P2O5
    tonnes



± 0.02   Financial
    Condition Review
  
      54 PotashCorp
    2010 Financial Review




---



##### 



Liquidity &
    Capital Resources
       Cash
    Requirements
   Contractual Obligations and
    Other Commitments
  Dollars (millions)December 31, 2010Payments Due by PeriodTotal


Within 1 Year


1 to 3 Years


3 to 5 Years


Over 5 YearsLong-term debt obligations

$
4,357.7


$
601.8


$
255.9


$
1,000.0


$
2,500.0Estimated interest payments on long-term debt obligations


2,480.8



215.0



375.8



313.1



1,576.9Operating leases


588.4



88.4



161.8



138.9



199.3Purchase commitments


778.8



398.4



137.4



107.8



135.2Capital commitments


621.1



447.9



172.7



0.5



Other commitments


112.3



44.3



40.4



8.0



19.6Environmental costs and asset retirement obligations


356.5



26.6



49.8



37.9



242.2Other long-term liabilities


1,385.8



67.1



90.9



70.1



1,157.7Total

$
10,681.4


$
1,889.5


$
1,284.7


$
1,676.3


$
5,830.9    PotashCorp 2010 Financial
    Review 55




---



##### 



Long-term
    debt
 back-to-back
      Operating
    leases
   Purchase
    commitments
       Capital
    commitments
     Other
    commitments
   Asset retirement
    obligations
   Other long-term
    liabilities
     56 PotashCorp
    2010 Financial Review




---



##### 



Sources
    and Uses of Cash
   Dollars (millions), except percentage amounts


% Increase (Decrease)2010


2009


2008


2010


2009Cash provided by operating activities

$
2,999.0


$
923.9


$
3,013.2



225



(69)Cash used in investing activities


(2,440.1
)


(1,669.2
)


(1,647.3
)


46



1Cash (used in) provided by financing activities


(532.4
)


853.9



(1,808.6
)


n/m



n/mIncrease (decrease) in cash and cash equivalents

$
26.5


$
108.6


$
(442.7
)


(76)



n/m   n/m = not meaningful
   Dollars (millions), except ratio and percentage amountsDecember 31


December 31


December 31


% Increase (Decrease)2010


2009


2008


2010


2009Current assets

$
2,139.9


$
2,271.7


$
2,267.2



(6)



Current liabilities


(3,191.8
)


(1,577.4
)


(2,623.4
)


102



(40)Working capital


(1,051.9
)


694.3



(356.2
)


n/m



n/mCurrent ratio


0.67



1.44



0.86



(53)



67   n/m = not meaningful
             PotashCorp 2010 Financial
    Review 57




---



##### 



Capital
    Structure & Management
   Capital
    Structure
  Dollars (millions), except as notedDecember 31


December 312010


2009Cash and cash equivalents

$
411.9


$
385.4Short-term debt obligations


1,273.9



727.0Current portion of long-term debt obligations


601.8



1.8Long-term debt obligations


3,755.9



3,356.2Deferred debt costs and swap gains


(53.1
)


(36.9
)Total debt


5,578.5



4,048.1Shareholders equity

$
6,804.2


$
6,439.8Total debt to capital
    1


45%



39%Fixed-rate debt obligations as a percentage of total debt
    obligations


77%



82%Common shares outstanding


853,122,693



887,926,650Stock options outstanding


32,121,309



38,128,275Dividend payout ratio
    2


6%



12%
   1
    Total debt to capital calculated as total debt/(total debt +
    shareholders equity).2
    Dividend payout ratio calculated as dividends per share divided
    by basic net income per share.  Principal
    Debt Instruments
  Dollars (millions) at December 31, 2010Total


Amount Outstanding


AmountAmount


and Committed


AvailableCredit facilities
    1

$
3,250.0


$
1,272.4


$
1,977.6Line of credit


75.0



8.8
2


66.2
   1
    The company increased the authorized amount under its commercial
    paper program from $750.0 million to $1,500.0 million
    in 2010. The amount available under the commercial paper program
    is limited to the availability of backup funds under the
    credit facilities. Included in the amount outstanding and
    committed is $1,272.4 million of commercial paper. Per the
    terms of the agreements, the commercial paper outstanding
    and committed, as applicable, is based on the US dollar balance
    or equivalent thereof in lawful money of other currencies at the
    time of issue; therefore, subsequent changes in
    the exchange rate applicable to Canadian dollar-denominated
    commercial paper have no impact on this balance.2
    Letters of credit committed.       58 PotashCorp
    2010 Financial Review




---



##### 



same-day
        Outstanding
    Share Data
       Off-Balance
    Sheet Arrangements
   Contingencies
   Guarantee
    contracts
   Derivative
    instruments
 marked-to-market
  Leases and
    long-term contracts
 and/or
  PotashCorp 2010 Financial
    Review 59




---



##### 



Market Risks
    Associated With Financial Instruments
     Related Party
    Transactions
     Critical
    Accounting Estimates
         Variable
    Interest Entities
   60 PotashCorp
    2010 Financial Review




---



##### 



Financial
    Instruments, Derivatives and Hedging
     available-for-sale; point-in-time
  over-the-counter
      marked-to-market
  Pension
    and Other Post-Retirement Costs
   
  PotashCorp 2010 Financial
    Review 61




---



##### 



Impact of a 0.5%
    change in key assumptions
   Dollars
    (millions)
  Pension Plans


Other PlansObligation


Expense


Obligation


ExpenseDiscount rateDecrease in assumption

$
60.8


$
4.8


$
25.6


$
2.3Increase in assumption


(54.7
)


(4.0
)


(22.6
)


(2.2
)Expected long-term rate of returnDecrease in assumption


n/a



3.3



n/a



n/aIncrease in assumption


n/a



(2.7
)


n/a



n/aRate of compensation increaseDecrease in assumption


(11.7
)


(1.9
)


n/a



n/aIncrease in assumption


12.4



2.0



n/a



n/aMedical trend rateDecrease in assumption


n/a



n/a



(19.8
)


(3.6
)Increase in assumption


n/a



n/a



23.4



4.5   n/a = not applicable
   Asset
    Retirement Obligations and Other Environmental Costs
 clean-up
      Impact of a
    change in key assumptions
   Dollars
    (millions)
  Undiscounted


Discounted


Discount Rate


Inflation RateCash Flows


Cash Flows


+0.5%


-0.5%


+0.5%


-0.5%Potash ARO
    1

$
3,842.5
2

$
35.2


$
29.9


$
43.5


$
46.3


$
30.3Phosphate ARO


3,111.4



294.0



272.5



318.3



318.9



271.9Nitrogen ARO


62.2



1.8



1.4



2.4



2.4



1.4   1
    Stated in Canadian dollars2
    Represents total undiscounted cash flows in the first year of
    decommissioning. Excludes subsequent years of tailings
    dissolution and final decommissioning, which takes between an
    additional 125 and 630 years.   62 PotashCorp
    2010 Financial Review




---



##### 



Income
    Taxes
     Asset
    Impairment
     available-for-sale, other-than-temporary other-than-temporarily,
    Contingencies
   PotashCorp 2010 Financial
    Review 63




---



##### 



Stock-Based
    Compensation
     Restructuring
    Charges
   Capitalization,
    Depreciation and Amortization
     units-of-production
  units-of-production
    64 PotashCorp
    2010 Financial Review




---



##### 



Recent Accounting
    Changes, Effective Dates and Adoption of IFRSs
             Key Activities


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


   The
    differences between IFRSs and the companys existing
    policies and procedures have been identified. Accounting policy
    choices (both for ongoing policies where alternatives are
    permitted and for IFRS 1 exemptions) have been analyzed and
    decisions made.   Revisions
    to accounting and procedures manuals have been drafted and are
    in the review and approval
    process.   Implement
    revisions to accounting and procedures manualsFinancial statement preparation:   Prepare
    financial statements and note disclosures in compliance with
    IFRSs


   Preliminary
    pro forma 2009 financial statements were reviewed by the audit
    committee in the first quarter of
    2010.   Quantify
    the effects of converting to
    IFRSs


   Draft
    note disclosures have been prepared for each area of
    IFRSs   Prepare
    first-time adoption reconciliations required under
    IFRS 1


   The
    effects of converting to IFRSs have been quantified as disclosed
    in the tables at the end of this section; however, a number of
    the quantified adjustments are still subject to review. Further,
    the adjustments are based on our current expectations, which
    could change due to changes in IFRSs, interpretations of IFRSs
    or accounting policy choices prior to the company filing our
    2011 consolidated annual financial
    statements.   We
    are in the process of preparing our first interim financial
    statements under IFRSs, including first-time adoption
    reconciliations required under IFRS 1, for the quarter ending
    March 31, 2011.Training and communication:   Provide
    topic-specific training to key employees involved with
    implementation   Develop
    awareness of the likely impacts of the transition throughout the
    company   Provide
    company-specific training on revised policies and procedures to
    affected personnel   Provide
    timely communication of the impacts of converting to IFRSs to
    our external
    stakeholders


   Key
    employees involved with implementation have completed
    topic-specific training.   Regular
    awareness presentations are provided at various forums to
    prepare personnel for the
    changeover.   Training
    is being conducted using a three-tiered approach with more
    detailed training provided for practitioners and higher-level
    training provided for other personnel. Approximately
    85 percent of identified detailed training requirements
    have been completed with the remainder planned for completion in
    the first quarter of 2011. Group training content has been
    developed and is planned to be delivered in the first quarter of
    2011.   The
    Board of Directors and audit committee have received IFRSs
    education.   Communication
    to external stakeholders has been ongoing through our Management
    Discussion & Analysis disclosures.  PotashCorp 2010 Financial
    Review 65




---



##### 



Key Activities


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


   Identification
    of impacts on contracts is complete. Adoption of IFRSs is not
    expected to have any material impact on the companys
    contracts.   Income
    tax accounting impacts have been identified and quantified.
    Impacts of the IFRSs conversion on the companys tax
    compliance processes are still being
    assessed.IT systems:   Identify
    changes required to IT systems and implement
    solutions   Required
    changes to IT systems were identified and addressed in
    conjunction with an upgrade to the companys financial
    information
    system.


   Determine
    and implement solution for capturing financial information under
    Canadian GAAP, US GAAP and IFRSs during the year of transition
    to IFRSs (for comparative
    information)   IFRSs
    record-keeping has been implemented within the companys
    financial information system to enable the capturing of
    financial information under multiple sets of accounting
    principles.Control environment:   For
    all changes to policies and procedures identified, assess
    effectiveness of internal controls over financial reporting and
    disclosure controls and procedures and implement any necessary
    changes   Design
    and implement internal controls over the IFRSs changeover
    process


   Assessments
    and sign-offs have been provided for most work streams and will
    be completed prior to the company filing its Q1 2011 interim
    financial statements.   Specific
    controls have been established and documented in relation to the
    IFRSs changeover
    process.     First-time
    adoption of IFRSs
   Area of IFRSs


Summary of Exemption
    AvailableBusiness
    Combinations


Choices:The company may elect, on transition to IFRSs,
    to either restate all past business combinations in accordance
    with IFRS 3, Business Combinations, or to apply an
    elective exemption from applying IFRS 3 to past business
    combinations.Policy selection:If the
    elective exemption is chosen, specific requirements must be met,
    such as: maintaining the classification of the acquirer and the
    acquiree, recognizing or derecognizing certain acquired assets
    or liabilities as required under IFRSs and remeasuring certain
    assets and liabilities at fair value. The company will elect, on
    transition to IFRSs, to apply the elective exemption such that
    transactions entered into prior to the transition date will not
    be restated.Expected transition impact:None.Expected future impact:None.  66 PotashCorp
    2010 Financial Review




---



##### 



Area of IFRSs


Summary of Exemption
    AvailableProperty, Plant
    and Equipment


Choices:The company may elect to report items of
    property, plant and equipment in its opening balance sheet on
    the transition date at a deemed cost instead of the actual cost
    that would be determined under IFRSs. The deemed cost of an item
    may be either its fair value at the date of transition to IFRSs
    or an amount determined by a previous revaluation under Canadian
    GAAP (as long as that amount was close to either its fair value,
    cost or adjusted cost). The exemption can be applied on an
    asset-by-asset basis.Policy selection:The
    company will report the items at actual cost.Expected transition impact:None.Expected future impact:None.Share-Based
    Payments


Choices:The company may elect not to apply IFRS 2,
    Share-Based Payments, to equity instruments granted
    on or before November 7, 2002 or which vested before the
    companys date of transition to IFRSs. The company may also
    elect not to apply IFRS 2 to liabilities arising from
    share-based payment transactions which settled before the date
    of transition to IFRSs.Policy selection: The
    company will elect not to apply IFRS 2 to equity instruments
    granted on or before November 7, 2002 or which vested
    before the companys date of transition to IFRSs. The
    company will also elect not to apply IFRS 2 to liabilities
    arising from share-based payment transactions which settled
    before the date of transition to IFRSs.Expected transition impact:None.Expected future impact:None.Employee
    Benefits


Choices:The company may elect to recognize all
    cumulative actuarial gains and losses through opening retained
    earnings at the date of transition to IFRSs. Actuarial gains and
    losses would have to be recalculated under IFRSs from the
    inception of each defined benefit plan if the exemption is not
    taken. The companys choice must be applied to all defined
    benefit plans consistently.Policy selection: As the
    company intends to adopt an ongoing policy of recognizing all
    actuarial gains and losses immediately in other comprehensive
    income, all cumulative actuarial gains and losses at the date of
    transition to IFRSs will be recognized at the date of transition
    to IFRSs. Therefore, the company does not intend to specifically
    make use of this exemption.Expected transition impact:See Employee Benefits under Expected Areas of
    Significance on Page 69.Expected future impact:See
    Employee Benefits under Expected Areas of
    Significance on Page 69.Foreign
    Exchange


Choices:On transition, cumulative translation gains or
    losses in accumulated other comprehensive income can be
    reclassified to retained earnings at the companys
    election. If not elected, all cumulative translation differences
    must be recalculated under IFRSs from inception.Policy selection: The
    company has recalculated the cumulative foreign exchange
    translation gains or losses in other comprehensive income under
    IFRSs retrospectively.Expected transition impact:None.Expected future impact:None.  PotashCorp 2010 Financial
    Review 67




---



##### 



Area of IFRSs


Summary of Exemption
    AvailableDecommissioning Liabilities


Choices:In accounting for changes in obligations to
    dismantle, remove and restore items of property, plant and
    equipment, the guidance in IFRSs requires changes in such
    obligations to be added to or deducted from the cost of the
    asset to which it relates. The adjusted depreciable amount of
    the asset is then depreciated prospectively over its remaining
    useful life. Rather than recalculating the effect of all such
    changes throughout the life of the obligation, the company may
    elect to measure the liability and the related depreciation
    effects at the date of transition to IFRSs.Policy selection: The
    company will elect to measure any decommissioning liabilities
    and the related depreciation effects at the date of transition
    to IFRSs.Expected transition impact:See Provisions under Expected Areas of
    Significance on Page 70.Expected future impact: See
    Provisions under Expected Areas of Significance on
    Page 70.Oil and Gas Properties


Choices:For a first-time adopter that has previously
    employed the full cost method in accounting for oil and natural
    gas exploration and development expenditures, IFRS 1 provides an
    exemption which allows entities to measure those assets at the
    transition date at amounts determined under the entitys
    previous GAAP.Policy selection:The
    company will elect to measure its oil and gas assets at their
    Canadian GAAP carrying value at the date of transition to IFRSs.Expected transition impact:None.Expected future impact:None.  Expected areas of
    significance
   AccountingPolicy Area


Impact of Policy Adoption(a) Impairment
    of Assets


Choices:There are no policy choices available under IFRSs.Differences from existing Canadian GAAP:International Accounting Standard (IAS) 36, Impairment of Assets, uses a one-step approach for both testing for and measurement of impairment, with asset carrying values compared directly with the higher of fair value less costs to sell and value in use (which uses discounted future cash flows). Canadian GAAP generally uses a two-step approach to impairment testing, first comparing asset carrying values with undiscounted future cash flows to determine whether impairment exists, and then measuring any impairment by comparing asset carrying values with fair values. This difference may potentially result in more writedowns where carrying values of assets were previously supported under Canadian GAAP on an undiscounted cash flow basis, but could not be supported on a discounted cash flow basis.The company has determined that the
    reporting level to analyze whether an impairment exists may be
    higher for IFRSs than the level required by Canadian GAAP. As a
    result, fewer impairments may result under IFRSs as losses from
    a specific plant, which may have been impaired under Canadian
    standards, may now be grouped with other profitable plants
    (together representing a cash-generating unit).In addition, the extent of any new
    writedowns may be partially offset by the requirement under IAS
    36 to reverse any previous impairment losses where circumstances
    have changed such that the impairments have been reduced.
    Canadian GAAP prohibits reversal of impairment losses.Expected transition impact:The company has identified certain assets for which
    impairment losses have been previously recognized, but which are
    no longer impaired. The previously recognized impairment loss
    will need to be reversed on transition to IFRSs, which will
    result in an increase in the carrying amount of property, plant
    and equipment at December 31, 2010 of $8 million (January 1,
    2010  $9 million). Net income for 2010 will decrease
    by $1 million. The company has also identified items which are
    regarded as impaired under IFRSs, but not under Canadian GAAP.
    As a result, equity at December 31, 2010 will decrease by
    $4 million (January 1, 2010  $2 million).
    Net income for 2010 will decrease by $2 million.Expected future impact:Dependent upon future circumstances, as described above.  68 PotashCorp
    2010 Financial Review




---



##### 



AccountingPolicy Area


Impact of Policy Adoption(b) Employee
    Benefits


Choices:Actuarial gains and losses are permitted under
    IAS 19, Employee Benefits, to be recognized directly
    in other comprehensive income rather than through profit or loss.Policy selection:Actuarial
    gains and losses will be recognized in other comprehensive
    income.Differences from existing
    Canadian GAAP:IAS 19 requires the past service cost element
    of defined benefit plans to be expensed on an accelerated basis,
    with vested past service costs expensed immediately and unvested
    past service costs recognized on a straight-line basis until the
    benefits become vested. Under Canadian GAAP, past service costs
    are generally amortized on a straight-line basis over the
    average remaining service period of active employees expected
    under the plan.As noted in the previous section on
    first-time adoption of IFRSs, the company intends to apply the
    requirements of IAS 19 retrospectively. Under Canadian
    GAAP, certain gains and losses which were unrecognized at the
    time of adopting the current Canadian accounting standard were
    permitted to be amortized over a period under transitional
    provisions of the current standards. Those amounts will not be
    permitted to remain unrecognized and must be recognized on
    transition to IFRSs.Expected transition impact:
    Equity at December 31, 2010 will be reduced by $365 million
    (January 1, 2010  $353 million). Net income for
    2010 will increase by $24 million.Expected future impact:The
    effect of actuarial gains and losses will no longer affect net
    income under the companys accounting policy choice.
    Shareholders equity is expected to be subject to greater
    variability as the effects of actuarial gains and losses will be
    recognized immediately, rather than being deferred and amortized
    over a period of time.(c) Share-Based
    Payments


Choices:There are no policy choices available under
    IFRSs.Differences from existing
    Canadian GAAP:IFRS 2, Share-Based Payments,
    requires that cash-settled share-based payments to employees be
    measured (both initially and at each reporting date) based on
    fair value of the awards. Canadian GAAP requires that such
    payments be measured based on intrinsic value of the awards.
    This difference is expected to impact the accounting measurement
    of some of our cash-settled employee incentive plans, such as
    our performance unit incentive plan.IFRS 2 requires an estimate of
    compensation cost to be recognized in relation to performance
    options for which service has commenced but which have not yet
    been granted. The compensation cost recognized would then be
    trued up once options have been granted. Under Canadian GAAP,
    compensation cost is first recognized when the options are
    granted. This will create a timing difference between IFRSs and
    Canadian GAAP, in terms of when compensation cost relating to
    employee service provided in the first quarter of the year is
    recognized. In relation to stock option costs in 2010, net
    income will decrease in the first quarter and increase in the
    second quarter by $13 million. Net income and equity for
    annual periods are not affected.Expected transition impact:In relation to the companys cash-settled share-based
    payments, equity at December 31, 2010 will be increased by
    $1 million (January 1, 2010  $3 million). Net income
    for 2010 will decrease by $2 million.Expected future impact:Any
    future significant difference between the fair value and
    intrinsic value of outstanding units under the companys
    performance unit incentive plan will result in different
    measurements under IFRSs and Canadian GAAP in any particular
    year; however, this will be a timing difference only. The total
    future compensation expense relating to these awards will be the
    same under IFRSs and Canadian GAAP over the duration of each
    incentive plan cycle. In relation to stock option cost, a timing
    difference will exist between IFRSs and Canadian GAAP, whereby
    net income under IFRSs will decrease in the first quarter and
    increase in the second quarter of each year by offsetting
    amounts. Net income and equity for annual periods are not
    affected.  PotashCorp 2010 Financial
    Review 69




---



##### 



AccountingPolicy Area


Impact of Policy Adoption(d) Provisions
     (including Asset
     Retirement
     Obligations)


Choices:There are no policy choices available under
    IFRSs.Differences from existing
    Canadian GAAP: IAS 37, Provisions, Contingent
    Liabilities and Contingent Assets, requires a provision to
    be recognized when: there is a present obligation as a result of
    a past transaction or event; it is probable that an outflow of
    resources will be required to settle the obligation; and a
    reliable estimate can be made of the obligation.
    Probable in this context means more likely than not.
    Under Canadian GAAP, the criterion for recognition in the
    financial statements is likely, which is a higher
    threshold than probable. Therefore, it is possible
    that there may be some contingent liabilities not recognized
    under Canadian GAAP which would require a provision under IFRSs.Other differences between IFRSs and
    Canadian GAAP exist in relation to the measurement of
    provisions, such as the methodology for determining the best
    estimate where there is a range of equally possible outcomes
    (IFRSs uses the mid-point of the range, whereas Canadian GAAP
    uses the low end), and the requirement under IFRSs for
    provisions to be discounted where material.In relation to asset retirement
    obligations, measurement under IFRSs will be based on
    managements best estimate, while measurement under
    Canadian GAAP is based on the fair value of the obligation
    (which takes market assumptions into account). Under IFRSs, the
    full asset retirement obligation is remeasured each period using
    the current discount rate. Under Canadian GAAP, cash flow
    estimates associated with asset retirement obligations are
    discounted using historical discount rates. Changes in the
    discount rate alone do not result in a remeasurement of the
    liability. Changes in estimates that decrease the liability are
    discounted using the discount rate applied upon initial
    recognition of the liability. When changes in estimates increase
    the liability, the additional liability is discounted using the
    current discount rate.IFRSs require the companys
    asset retirement obligations to be discounted using a risk-free
    rate. Under Canadian GAAP, asset retirement obligations are
    discounted using a credit-adjusted risk-free rate.Under IFRSs, the increase in the
    measurement of an asset retirement obligation due to the passage
    of time (unwinding of the discount) is classified as a finance
    expense. Under Canadian GAAP, this amount is classified as an
    operating expense.Expected transition impact:Equity at December 31, 2010 will be reduced by $79 million
    (January 1, 2010  $65 million). Net income for
    2010 will decrease by $14 million.Expected future impact:Measurement of provisions may fluctuate more under IFRSs and
    a change in the discount rate will have a more significant
    impact on the obligation as well as the companys assets
    and expenses.(e) Income
     Taxes


Choices:Where exchange rate differences on deferred
    income tax liabilities or assets are recognized in the income
    statement, such differences may be classified as either foreign
    exchange gains/losses or deferred tax expense/income under IFRSs.Interest and penalties on income
    tax deficiencies may be classified as either financing expenses
    or operating expenses under IFRSs.Policy selection: Exchange
    rate differences on deferred income tax liabilities or assets
    will be classified as foreign exchange gains/losses. This is
    consistent with the companys accounting policy under
    Canadian GAAP.Interest and penalties on income
    tax deficiencies will be classified as finance expenses. Under
    Canadian GAAP, these were classified as either operating expense
    or income tax expense depending on their nature. In future
    periods, interest expense will be higher under IFRSs with a
    corresponding reduction in operating expenses or income tax
    expense.Differences from existing
    Canadian GAAP, expected transition impact and expected future
    impact of each:Under IFRSs, the guidance in IAS 12,
    Income Taxes, will be used to determine the benefit
    to be received in relation to uncertain tax positions. This
    differs from the methodology used under Canadian GAAP. Equity at
    December 31, 2010 will be increased by $51 million
    (January 1, 2010  $44 million). Net income for
    2010 will increase by $7 million. Impacts in future periods
    will depend on the particular circumstances existing in those
    periods.Under IFRSs, deferred tax assets
    recognized in relation to share-based payment arrangements (for
    example, the companys employee stock option plan in the
    US) are adjusted each period to reflect the amount of future tax
    deductions that the company expects to receive based on the
    current market price of the shares. The benefit of such amounts
    is recognized in contributed surplus, and never impacts net
    income. Under the companys current Canadian GAAP policy,
    tax deductions for its employee stock option plan in the US are
    recognized as reductions to tax expense, within net income, in
    the period that the deduction is allowed. This difference will
    result in a decrease to net income in 2010 of $45 million.
    Equity at December 31, 2010 will increase by $137 million
    (January 1, 2010  $111 million). In future periods,
    current tax expense will be higher and the balance of the
    companys deferred tax liability is expected to be more
    volatile under IFRSs.  70 PotashCorp
    2010 Financial Review




---



##### 



AccountingPolicy Area


Impact of Policy Adoption(e) Income Taxescontinued


Under IFRSs, adjustments relating to a change in tax rates are
    recognized in the same category of comprehensive income as the
    original amounts were recognized. Under Canadian GAAP, such
    adjustments are recognized in net income, regardless of the
    category in which the original amounts were recognized. This
    difference will result in $119 million related to an internal
    restructuring that occurred in 2009 being
    re-categorized
    at the date of transition to IFRSs from retained earnings to
    accumulated other comprehensive income. There will be no future
    impacts resulting from this item.Under IFRSs, deferred income taxes
    are classified as long-term. Under Canadian GAAP, future income
    taxes are separated between current and long-term on the balance
    sheet. This will result in a decrease in 2010 of
    $28 million (January 1, 2010  $18 million) in
    current assets and non-current liabilities on the statement of
    financial position. This classification difference will continue
    to exist in future periods; however, the size and direction of
    the difference will depend on circumstances existing in those
    periods.Under IFRSs, unrealized profits
    resulting from intragroup transactions are eliminated from the
    carrying amount of assets, but no equivalent adjustment is made
    for tax purposes. The difference between the tax rates of the
    two entities will result in an impact on net income. This
    differs from Canadian GAAP, where current tax payable in
    relation to such profits is recorded as a current asset until
    the transaction is realized by the group. As a result,
    2010 net income will decrease by $14 million. Equity at
    December 31, 2010 will increase by $6 million (January 1,
    2010  $20 million). In future periods, the tax impact
    of intragroup transactions will be recognized earlier under
    IFRSs; however, the size and direction of the difference will
    depend on circumstances existing in those periods.Under Canadian GAAP, deferred tax
    assets relating to losses in one of the companys foreign
    subsidiaries is recognized as a reduction in the cost of one of
    the companys equity investments prior to the date of
    transition to IFRSs. Under IFRSs, this amount will be recognized
    in net income. As a result, equity at December 31, 2010 will
    increase by $10 million (January 1, 2010  $10
    million). There will be no impact on 2010 net income. There
    will also be no future impacts resulting from this item.(f) Consolidation


Choices:There are no policy choices available under
    IFRSs.Differences from existing
    Canadian GAAP:The IFRSs approach to consolidation is
    principles-based whereby consolidation is required for all
    entities which are controlled. Unlike the Canadian GAAP two-step
    model which first requires consideration as to whether an entity
    is a VIE, the IFRSs guidance on consolidation is a single-step
    model  the control model. IFRSs do bring in the
    concepts of risk and rewards where the existence of control is
    not apparent, although not in the same rules-based manner as
    under current Canadian GAAP.Expected transition impact:None.Expected future impact:None.(g) Property,
     Plant and
     Equipment


Choices:Either a historical cost model or a revaluation
    model can be used to value property, plant and equipment.Policy selection:The
    company will value property, plant and equipment using the
    historical cost model.Differences from existing
    Canadian GAAP:Under IFRSs, where part of an item of
    property, plant and equipment has a cost that is significant in
    relation to the cost of the item as a whole, it must be
    depreciated separately from the remainder of the item. Canadian
    GAAP is similar in this respect; however, the componentization
    concept has often not been applied to the same extent due to
    practicality and/or materiality.Under IFRSs, the cost of major
    overhauls on items of property, plant and equipment is
    capitalized as a component of the related item of property,
    plant and equipment and amortized over the period until the next
    major overhaul. Under Canadian GAAP, these costs were expensed
    in the year incurred.Expected transition impact:Equity at December 31, 2010 will be increased by $54 million
    (January 1, 2010  $22 million). Net income for
    2010 will increase by $32 million.Expected future impact:The
    cost of future replacement of components of property, plant and
    equipment (including the cost of major overhauls) will be
    capitalized and amortized over several years rather than being
    expensed in the year incurred. This will result in a difference
    in timing between IFRSs and Canadian GAAP in terms of when such
    costs are recognized as expenses.  PotashCorp 2010 Financial
    Review 71




---



##### 



AccountingPolicy Area


Impact of Policy Adoption(h) Inventories


Choices:Either first-in, first-out (FIFO) or weighted
    average can be used to value inventories.Policy selection:The
    weighted average method will be used to value inventories.Differences from existing
    Canadian GAAP:None.Expected transition impact:None.Expected future impact:None.(i) Borrowing Costs


Choices:There are no policy choices available under
    IFRSs.Differences from existing
    Canadian GAAP:Under IFRSs, borrowing costs will be
    capitalized to assets which take a substantial time to develop
    or construct using a capitalization rate based on the weighted
    average interest rate on all of the companys outstanding
    third-party debt. Under the companys current policy, the
    interest capitalization rate is based only on the weighted
    average interest rate on third-party long-term debt.Expected transition impact:Equity will be reduced by $25 million in 2010 (January 1,
    2010  $14 million). Net income for 2010 will
    decrease by $11 million.Expected future impact:There will be an ongoing difference based on the difference
    in capitalization rates.(j) Financial
    Instruments


Choices:Trade date or settlement date can be used.Policy selection:The
    company will recognize regular-way purchases and sales of
    financial assets at the trade date.Differences from existing
    Canadian GAAP:None.Expected transition impact:None.Expected future impact:None.(k) Definition of a Derivative


Choices:There are no policy choices available under
    IFRSs.Differences from existing
    Canadian GAAP: Derivatives usually have a notional amount
    (that is, an amount of currency, a number of shares or other
    number of units specified in the contract). Under IFRSs, the
    definition of a derivative does not specifically require an
    instrument to have a notional amount, and the lack of a notional
    does not result in an exemption from treatment of the contract
    as a derivative. Under Canadian GAAP, when the quantity of a
    non-financial asset or liability to be purchased or sold is not
    specified and is not otherwise determinable (for example, by
    reference to anticipated quantities to be used in the
    calculation of penalty amounts in the event of non-performance),
    the contract is not accounted for as a derivative, since the
    standard setters conclude its fair value would not be reliably
    determinable. As a result, a notional amount is also required
    implicitly for such a contract to meet the definition of a
    derivative under Canadian GAAP. Whereas under Canadian GAAP such
    an instrument would not be accounted for as a derivative, under
    IFRSs it is necessary to analyze all other features to determine
    whether the contract is a derivative. If so, it is necessary to
    determine a reasonable estimation of what a notional amount
    could be, and measure the instrument at fair value as a
    derivative or embedded derivative based on such.Expected transition impact:None.Expected future impact:More
    contracts may be categorized as derivatives (either assets or
    liabilities) than under Canadian GAAP.(l) Embedded
    Derivatives


Choices:There are no policy choices available under
    IFRSs.Differences from existing
    Canadian GAAP:For transitional purposes under Canadian
    GAAP, the company elected to record embedded derivatives only
    for contracts entered into or substantively modified on or after
    January 1, 2003. This transitional option does not exist under
    IFRSs and therefore additional potential embedded derivatives
    were considered within contracts previously not reviewed in this
    context to conclude whether bifurcation and recording were
    necessary.Expected transition impact:None.Expected future impact:None.  72 PotashCorp
    2010 Financial Review




---



##### 



AccountingPolicy Area


Impact of Policy Adoption(m) Hedge
    Accounting


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


Choices:Either the direct or indirect method may be
    presented. Dividends paid, interest paid, interest received and
    dividends received can be presented as either operating or
    financing activities.Policy selection:The
    company will use the indirect method.Differences from existing
    Canadian GAAP:None.Expected transition impact:None.Expected future impact:None.         Standard


Description of ChangeIFRS 9, Financial Instruments


In November 2009, the International Accounting Standards Board
    (IASB) issued guidance relating to the classification and
    measurement of financial assets. Financial assets will generally
    be measured initially at fair value plus particular transaction
    costs. Financial assets will subsequently be measured at either
    amortized cost or fair value. In October 2010, the IASB issued
    amendments to IFRS 9 relating to the accounting for financial
    liabilities. Under the new requirements, an entity choosing to
    measure a financial liability at fair value will present the
    portion of any change in its fair value due to changes in the
    entitys own credit risk in other comprehensive income,
    rather than within profit or loss. The standard must be applied
    retrospectively and is effective for periods commencing on or
    after January 1, 2013. The company is currently reviewing the
    standard to determine the potential impact, if any, on its
    consolidated financial statements.  PotashCorp 2010 Financial
    Review 73




---



##### 



Standard


Description of ChangeAmendments to IFRIC 14, Prepayments of a Minimum Funding
    Requirement


In November 2009, the International Financial Reporting
    Interpretations Committee (IFRIC) issued amendments to IFRIC 14
    relating to the prepayments of a minimum funding requirement for
    an employee defined benefit plan. The amendments apply when an
    entity is subject to minimum funding requirements and makes an
    early payment of contributions to cover those requirements. The
    amendments permit such an entity to treat the benefit of such an
    early payment as an asset. The amendment must be applied from
    the beginning of the first comparative period presented in the
    first financial statements in which the amendment is applied and
    is effective for periods commencing on or after January 1, 2011.
    The company is currently reviewing the amendments to determine
    the potential impact, if any, on its consolidated financial
    statements.Amendments to IFRS 3, Business Combinations


In May 2010, the IASB issued amendments to IFRS 3 as part of its
    annual improvements process. The amendments clarified certain
    issues related to business combinations, including: limiting the
    scope of the choice to measure non-controlling interests at fair
    value or the proportionate share of the acquirees net
    assets; and clarifying the accounting treatment for share-based
    payment transactions that are part of a business combination.
    The amendments must be applied prospectively and are effective
    for periods commencing on or after July 1, 2010. As the company
    intends to make use of the exemption in IFRS 1 to not apply IFRS
    3 to business combinations occurring prior to the date of
    transition to IFRSs, these amendments will not impact accounting
    for any of its historical business combinations.Amendments to IFRS 7, Financial Instruments: Disclosures


In May 2010, the IASB issued amendments to IFRS 7 as part of its
    annual improvements process. The amendments addressed various
    requirements relating to the disclosure of financial
    instruments. They are effective for periods commencing on or
    after January 1, 2011, with earlier application permitted. The
    company is currently reviewing the amendments to determine the
    potential impact, if any, on its consolidated financial
    statements.Amendments to IFRS 7, Disclosures  Transfers of
    Financial Assets


In October 2010, the IASB issued amendments to IFRS 7,
    Financial Instruments: Disclosures. The amendments
    require entities to provide additional disclosures to assist
    users of financial statements in evaluating the risk exposures
    relating to transfers of financial assets which are not
    derecognized or for which the entity has a continuing
    involvement in the transferred asset. As the company does not
    typically retain any continuing involvement in financial assets
    once transferred, these amendments are not expected to have a
    significant impact. The amendments are effective for annual
    periods beginning on or after July 1, 2011, with earlier
    application permitted.Amendments to IAS 1, Presentation of Financial Statements


In May 2010, the IASB issued amendments to IAS 1 as part of its
    annual improvements process. The amendments clarify that
    entities may present the required reconciliation of changes in
    each component of other comprehensive income either in the
    statement of changes in equity or in the notes to the financial
    statements. The amendments are effective for periods commencing
    on or after January 1, 2011, with earlier application permitted.
    The company is currently reviewing the amendments to determine
    the potential impact on its consolidated financial statements.Transition Requirements for Amendments Arising as a Result of
    IAS 27, Consolidated and Separate Financial Statements


In May 2010, as part of its annual improvements process, the
    IASB issued consequential amendments to IAS 21, The
    Effects of Changes in Foreign Exchange Rates, IAS 28,
    Investments in Associates and IAS 31,
    Interest in Joint Ventures. The amendments provide
    that certain requirements of these standards are to be applied
    prospectively and are effective for periods commencing on or
    after July 1, 2010, with earlier application permitted. The
    company is currently reviewing the amendments to determine the
    potential impact, if any, on its consolidated financial
    statements.Amendments to IAS 34, Interim Financial Reporting


In May 2010, the IASB issued amendments to IAS 34 as part of its
    annual improvements process. The amendments provided
    clarification of the disclosures required by IAS 34 when
    considered against the disclosure requirements of other IFRSs
    and are effective for periods commencing on or after January 1,
    2011, with earlier application permitted. The company is
    currently reviewing the amendments to determine the potential
    impact, if any, on its consolidated financial statements.   74 PotashCorp
    2010 Financial Review




---



##### 



Estimated
    Adjustments to Net Income on Adoption of IFRSs
  For the Year Ended
    December 31
    (unaudited) 
    in millions of US dollars  2010Net Income Under Canadian GAAP

$
1,806.2IFRSs adjustments to net income (based on differences identified
    to date):Policy choicesEmployee benefits  Actuarial gains and
    losses (b)


26.1OtherProperty, plant and
    equipment (g)


32.2Provisions  Changes in decommissioning
    liabilities (d)


(13.4
)Employee benefits  Past service
    costs (b)


(2.1
)Employee benefits  Canadian GAAP transition
    amounts (b)


0.2Borrowing
    costs (i)


(11.1
)Impairment of
    assets (a)


(3.2
)Share-based
    payments (c)


(2.0
)Income taxes  Tax effect of above differences


(9.4
)Income tax related GAAP
    differences (e)


(51.4
)Expected Net Income under IFRSs

$
1,772.1     Estimated
    Adjustments to Shareholders Equity on Adoption of
    IFRSs
  As at
    (unaudited) 
    in millions of US dollars  December 31,


January 1,2010


2010Shareholders Equity Under Canadian GAAP

$
6,804.2


$
6,439.8IFRSs adjustments to shareholders equity (based on
    differences identified to date):Policy choicesEmployee benefits  Actuarial gains and
    losses (b)


(375.4
)


(364.8
)OtherProperty, plant and
    equipment (g)


54.1



21.9Provisions  Changes in decommissioning
    liabilities (d)


(78.8
)


(65.4
)Employee benefits  Past service
    costs (b)


12.4



14.5Employee benefits  Canadian GAAP transition
    amounts (b)


(2.4
)


(2.6
)Borrowing
    costs (i)


(24.9
)


(13.8
)Impairment of
    assets (a)


4.6



7.8Share-based
    payments (c)


0.5



2.5Income taxes  Tax effect of above differences


149.8



147.2Income tax related GAAP
    differences (e)


204.8



184.8Expected Shareholders Equity under IFRSs

$
6,748.9


$
6,371.9       PotashCorp 2010 Financial
    Review 75




---



##### 



Expected
    Adjustments to Consolidated Statements of Financial
    Position
  As at
    (unaudited)   December 31, 2010


January 1, 2010IFRSs








IFRSsCDN


Adjust-





CDN


Adjust-GAAP


ments


IFRSs


GAAP


ments


IFRSsAssetsCurrent assetsCash and cash equivalents

$
411.9






$
411.9


$
385.4






$
385.4Receivables


1,043.7







1,043.7



1,137.9







1,137.9Inventories


569.9







569.9



623.5







623.5Prepaid expenses and other current
    assets (e)


114.4



(60.3
)


54.1



124.9



(55.6
)


69.32,139.9



(60.3
)


2,079.6



2,271.7



(55.6
)


2,216.1Property, plant and
    equipment (a,

    d, g, i)


8,062.7



79.6



8,142.3



6,413.3



35.1



6,448.4Investments (e)


4,938.0



10.3



4,948.3



3,760.3



10.3



3.770.6Other
    assets (b,

    e)


363.1



(97.1
)


266.0



359.9



(100.8
)


259.1Intangible assets


18.6







18.6



20.0







20.0Goodwill


97.0







97.0



97.0







97.0$
15,619.3



(67.5
)

$
15,551.8


$
12,922.2



(111.0
)

$
12,811.2LiabilitiesCurrent liabilitiesShort-term debt and current portion of long-term debt

$
1,871.3






$
1,871.3


$
728.8






$
728.8Payables and accrued
    charges (c,

    e)


1,245.7



(73.8
)


1,171.9



796.8



(65.4
)


731.4Current portion of derivative instrument liabilities


74.8







74.8



51.8







51.83,191.8



(73.8
)


3,118.0



1,577.4



(65.4
)


1,512.0Long-term debt


3,707.2







3,707.2



3,319.3







3,319.3Derivative instrument liabilities


203.7







203.7



123.2







123.2Future income tax
    liabilities (e)


1,078.4



(353.1
)


725.3



962.4



(333.2
)


629.2Accrued pension and other post-retirement
    benefits (b)


298.5



169.5



468.0



280.8



173.9



454.7Accrued environmental costs and asset retirement
    obligations (d)


329.9



124.6



454.5



215.1



84.6



299.7Other non-current liabilities and deferred credits


5.6



120.6



126.2



4.2



97.0



101.28,815.1



(12.2
)


8,802.9



6,482.4



(43.1
)


6,439.3Shareholders EquityShare capital


1,430.7







1,430.7



1,430.3







1,430.3Contributed
    surplus (e)


160.3



142.6



302.9



149.5



117.9



267.4Accumulated other comprehensive
    income (e)


2,244.3



119.2



2,363.5



1,648.8



119.2



1,768.0Retained earnings


2,968.9



(317.1
)


2,651.8



3,211.2



(305.0
)


2,906.26,804.2



(55.3
)


6,748.9



6,439.8



(67.9
)


6,371.9$
15,619.3



(67.5
)

$
15,551.8


$
12,922.2



(111.0
)

$
12,811.2     76 PotashCorp
    2010 Financial Review




---



##### 



Expected
    Adjustments to Consolidated Statement of Operations and Retained
    Earnings
  For the year ended
    December 31, 2010
    (unaudited)   IFRSsCDN


Adjust-GAAP


ments


IFRSsSales

$
6,538.6






$
6,538.6Less:  Freight


335.8







335.8Transportation and distribution


151.8







151.8Cost of goods
    sold (a,

    b, c, d, g, i)


3,426.0



(46.5
)


3,379.5Gross Margin


2,625.0



46.5



2,671.5Selling and
    administrative (b,

    c)


228.1



(2.8
)


225.3Provincial mining and other taxes


76.5







76.5Foreign exchange loss (gain)


16.8







16.8Other income


(244.5
)






(244.5
)76.9



(2.8
)


74.1Operating Income


2,548.1



49.3



2,597.4Interest
    Expense (d,

    e, i)


99.1



41.9



141.0Income Before Income Taxes


2,449.0



7.4



2,456.4Income
    Taxes (e)


642.8



(41.5
)


684.3Net Income


1,806.2



(34.1
)


1,772.1Retained Earnings, Beginning of Year


3,211.2



(305.0
)


2,906.2Repurchase of Common Shares


(1,930.8
)


46.7



(1,884.1
)Dividends Declared


(117.7
)






(117.7
)Post-employment Benefits Closed Out from Other Comprehensive
    Income (b)






(24.7
)


(24.7
)Retained Earnings, End of Year

$
2,968.9



(317.1
)

$
2,651.8Net Income per Share  Basic (Post-split)

$
2.04



(0.04
)

$
2.00Net Income per Share  Diluted (Post-split)

$
1.98



(0.03
)

$
1.95Dividends per Share (Post-split)

$
0.13






$
0.13     PotashCorp 2010 Financial
    Review 77




---



##### 



Forward-Looking
    Statements
   Form 10-K
  Non-GAAP Financial
    Measures
         (in millions of US dollars except percentage amounts)2010


2009


2008


2007


2006


2005


2004


2003


2002


2001


2000Net income (loss)


1,806.2



980.7



3,465.9



1,104.0



606.9



542.9



298.6



(84.0
)


55.2



94.6



183.9Total assets


15,619.3



12,922.2



10,248.8



9,716.6



6,217.0



5,357.9



5,126.8



4,567.3



4,622.6



4,531.7



4,121.8Return on assets


11.6%



7.6%



33.8%



11.4%



9.8%



10.1%



5.8%



(1.8%
)


1.2%



2.1%



4.5%Net income (loss)


1,806.2



980.7



3,465.9



1,104.0



606.9



542.9



298.6



(84.0
)


55.2



94.6



183.9Income taxes


642.8



79.2



1,059.8



416.7



142.3



267.4



131.7



0.1



31.2



53.1



62.0Change in unrealized loss (gain) on derivatives included in net
    income






(56.4
)


68.8



(16.9
)


























Interest expense


99.1



120.9



62.8



68.7



85.6



82.3



84.0



91.3



83.1



80.3



61.6Current income taxes


(494.0
)


119.7



(994.9
)


(296.6
)


(108.1
)


(227.3
)


(105.4
)






(24.2
)


(20.5
)


(32.6
)Depreciation and amortization


410.7



312.1



327.5



291.3



242.4



242.4



240.0



227.4



216.5



185.7



187.0Cash flow


2,464.8



1,556.2



3,989.9



1,567.2



969.1



907.7



648.9



234.8



361.8



393.2



461.9Total assets


15,619.3



12,922.2



10,248.8



9,716.6



6,217.0



5,357.9



5,126.8



4,567.3



4,622.6



4,531.7



4,121.8Cash and cash equivalents


(411.9
)


(385.4
)


(276.8
)


(719.5
)


(325.7
)


(93.9
)


(458.9
)


(4.7
)


(24.5
)


(45.3
)


(100.0
)Fair value of derivative assets


(5.3
)


(9.0
)


(17.9
)


(135.0
)


























Accumulated depreciation of property, plant and equipment


2,993.7



2,711.7



2,526.6



2,280.7



2,073.8



1,927.7



1,754.9



1,576.2



1,454.7



1,274.3



1,111.8Net unrealized gains on
    available-for-sale
    securities


(2,562.7
)


(1,900.8
)


(885.7
)


(2,284.1
)


























Accumulated amortization of other assets and intangible assets


67.3



50.0



73.4



59.0



72.6



66.4



65.1



70.1



56.5



42.0



38.0Accumulated amortization of goodwill


7.3



7.3



7.3



7.3



7.3



7.3



7.3



7.3



7.3



7.3



4.3Payables and accrued charges


(1,245.7
)


(796.8
)


(1,191.2
)


(911.5
)


(545.2
)


(842.7
)


(599.9
)


(380.3
)


(347.0
)


(271.4
)


(525.9
)Adjusted assets


14,462.0



12,599.2



10,484.5



8,013.5



7,499.8



6,422.7



5,895.3



5,835.9



5,769.6



5,538.6



4,650.0Average adjusted assets


13,530.6



11,541.9



9,249.0



7,756.7



6,961.3



6,159.0



5,865.6



5,802.8



5,654.1



5,094.3



4,581.8Cash flow return


18.2%



13.5%



43.1%



20.2%



13.9%



14.7%



11.1%



4.0%



6.4%



7.7%



10.1%
    78 PotashCorp
    2010 Financial Review




---



##### 



11 Year Report
   Financial
    Data
   (in millions of US dollars except share, per-share and
    percentage amounts)2010


2009
    6


2008
    6


2007
    6


2006
    6


2005


2004


2003


2002


2001


2000SalesPotash


3,000.6



1,315.8



4,068.1



1,797.2



1,227.5



1,341.1



1,056.1



758.7



669.0



670.1



715.2Phosphate


1,821.6



1,374.4



2,880.7



1,637.1



1,255.1



1,137.3



977.9



883.9



714.0



732.1



868.1Nitrogen


1,716.4



1,286.5



2,497.7



1,799.9



1,284.1



1,368.8



1,210.4



1,156.4



841.4



993.5



964.5Total sales


6,538.6



3,976.7



9,446.5



5,234.2



3,766.7



3,847.2



3,244.4



2,799.0



2,224.4



2,395.7



2,547.85-year CAGR
    1


11.2%10-year CAGR
    1


9.9%Gross marginPotash


1,796.0



730.4



3,055.5



912.3



561.1



707.4



422.8



203.7



220.6



206.4



293.2Phosphate


319.2



92.4



1,067.9



433.7



84.6



98.9



15.8



(16.5
)


41.9



64.5



76.8Nitrogen


509.8



191.8



737.4



536.1



315.6



318.7



242.8



193.2



47.4



94.7



104.7Total gross margin


2,625.0



1,014.6



4,860.8



1,882.1



961.3



1,125.0



681.4



380.4



309.9



365.6



474.75-year CAGR
    1


18.5%10-year CAGR
    1


18.7%Depreciation and amortizationPotash


120.8



40.1



82.0



71.7



58.3



64.5



66.4



52.4



43.7



34.1



40.9Phosphate


185.8



163.9



140.5



121.1



94.6



95.6



84.4



78.9



76.8



72.0



68.1Nitrogen


95.7



99.2



97.1



88.2



77.6



72.0



79.7



86.4



88.0



72.8



66.1Other


8.4



8.9



7.9



10.3



11.9



10.3



9.5



9.7



8.0



6.8



11.9Total depreciation and amortization


410.7



312.1



327.5



291.3



242.4



242.4



240.0



227.4



216.5



185.7



187.0Operating income


2,548.1



1,180.8



4,588.5



1,589.4



834.8



892.6



514.3



7.4



169.5



228.0



307.5Net income (loss)
    *2


1,806.2



980.7



3,465.9



1,104.0



606.9



542.9



298.6



(84.0
)


55.2



94.6



183.95-year CAGR
    1


27.2%10-year CAGR
    1


25.7%Net income (loss) per share  basic
    3


2.04



1.11



3.76



1.17



0.65



0.56



0.31



(0.09
)


0.06



0.10



0.19Net income (loss) per share  diluted
    3


1.98



1.08



3.64



1.13



0.63



0.54



0.30



(0.09
)


0.06



0.10



0.19Dividends per share
    3


0.13



0.13



0.13



0.12



0.07



0.07



0.06



0.06



0.06



0.06



0.06Cash provided by operating activities


2,999.0



923.9



3,013.2



1,688.9



696.8



865.1



658.3



385.5



316.4



34.0



461.1Working capital


(1,051.9
)


694.3



(356.2
)


809.4



206.7



14.7



539.9



176.1



8.6



47.1



(148.7
)Total assets


15,619.3



12,922.2



10,248.8



9,716.6



6,217.0



5,357.9



5,126.8



4,567.3



4,622.6



4,531.7



4,121.8Long-term debt obligations
    4


3,755.9



3,356.2



1,758.0



1,358.3



1,357.1



1,257.6



1,258.6



1,268.6



1,019.9



1,013.7



413.7Shareholders equity


6,804.2



6,439.8



4,535.1



5,994.2



2,755.4



2,132.5



2,385.6



1,973.8



2,050.2



2,042.6



1,994.8Shares outstanding at the end
    of the year (thousands)
    3,5


853,123



887,927



885,603



949,233



943,209



932,346



995,679



956,016



937,404



935,136



933,138
   Operating
    Data
  (thousands)2010


2009


2008


2007


2006


2005


2004


2003


2002


2001


2000Employees at year-end (actual #)


5,486



5,136



5,301



5,003



4,871



4,879



4,906



4,904



5,199



4,997



5,338Potash production (KCI) tonnage


8,078



3,405



8,697



9,159



7,018



8,816



7,914



7,094



6,447



6,128



7,149Phosphate production
    (P2O5)
    tonnage


1,987



1,505



1,942



2,164



2,108



2,097



1,962



1,861



1,512



1,573



2,042Nitrogen production (N) tonnage


2,767



2,551



2,780



2,986



2,579



2,600



2,558



2,619



2,990



3,032



2,706Potash sales  manufactured KCI tonnes


8,644



2,988



8,547



9,400



7,196



8,164



8,276



7,083



6,327



6,243



6,912Phosphate sales  manufactured product tonnes


3,632



3,055



3,322



4,151



3,970



3,860



3,675



3,560



2,809



2,987



3,861Nitrogen sales  manufactured product tonnes


5,206



4,967



5,042



5,731



4,675



4,843



4,738



5,370



5,943



5,753



5,864
   1
    Compound annual growth rate expressed as a percentage.2
    There were no extraordinary items or discontinued operations in
    any of the accounting periods.3
    All share and per-share data have been retroactively restated to
    reflect the stock dividend of two common shares for each share
    owned by shareholders of record at the close of business on
    February 16, 2011.4
    Represents long-term debt obligations and does not include
    unamortized costs. (See Note 13 to the companys
    consolidated financial statements for description of such
    amounts.)5
    Common shares were repurchased in 2010, 2008, 2005, 2000 and
    1999 in the amounts of 42.190 million, 68.547 million,
    85.500 million, 18.630 million and 5.670 million,
    respectively.6
    Figures have been restated to reflect the impact of an
    adjustment to asset retirement obligations from 2006 to 2009
    (see Note 32 to the companys consolidated financial
    statements).    After-tax effects of items affecting net income* Additional Information:


(in millions of US dollars)

2010


2009


2008


2007


2006


2004


2003


2000Takeover response costs

$
55.5


$



$



$



$



$



$



$
Loss (gain) on sale of assets


7.5



6.1



(15.6
)










(37.0
)






(16.3
)(Recovery) impairment of auction rate securities






(91.1
)


66.6



18.6















Impairment of property, plant and equipment


















4.5







89.7



14.5Plant shutdown and closure and office consolidation






















6.2



113.5



3.3Total after-tax effects on net income

$
63.0


$
(85.0
)

$
51.0


$
18.6


$
4.5


$
(30.8
)

$
203.2


$
1.5    PotashCorp 2010 Financial
    Review 79




---



##### 



Financial
    Performance Indicators
   Summary
  (in millions of US dollars except share, per-share and tonnage
    amounts)2010


2009
    10


2008
    10


2007
    10


2006
    10


2005


2004


2003


2002


2001


2000Net income (loss)
    1


1,806.2



980.7



3,465.9



1,104.0



606.9



542.9



298.6



(84.0
)


55.2



94.6



183.9Net income (loss) per share  diluted
    2


1.98



1.08



3.64



1.13



0.63



0.54



0.30



(0.09
)


0.06



0.10



0.19EBITDA 3


2,958.8



1,492.9



4,916.0



1,880.7



1,077.2



1,135.0



754.3



234.8



386.0



413.7



494.5Net income as percentage of sales


27.6%



24.7%



36.7%



21.1%



16.1%



14.1%



9.2%



(3.0%
)


2.5%



3.9%



7.2%EBITDA margin
    4


48.9%



40.8%



54.7%



39.5%



31.9%



32.7%



26.0%



9.5%



20.0%



19.7%



22.1%Cash flow prior to working capital changes
    5


2,355.8



1,350.9



3,780.7



1,525.3



940.8



860.3



538.3



368.5



289.2



304.1



385.8Cash provided by operating activities


2,999.0



923.9



3,013.2



1,688.9



696.8



865.1



658.3



385.5



316.4



34.0



461.1Return on assets
    see page

    78


11.6%



7.6%



33.8%



11.4%



9.8%



10.1%



5.8%



(1.8%
)


1.2%



2.1%



4.5%Cash flow return
    see page

    78


18.2%



13.5%



43.1%



20.2%



13.9%



14.7%



11.1%



4.0%



6.4%



7.7%



10.1%Weighted average cost of capital


10.2%



10.1%



12.0%



10.0%



8.8%



8.3%



8.4%



7.3%



7.3%



7.7%



8.7%Total shareholder return


43.0%



48.7%



(48.9%
)


201.8%



79.7%



(2.7%
)


93.5%



37.7%



5.3%



(20.2%
)


64.6%Total debt to capital


45.1%



38.6%



40.3%



19.3%



41.0%



41.5%



36.4%



42.3%



42.2%



42.6%



31.3%Net debt to capital
    6


43.2%



36.3%



38.1%



10.6%



36.6%



39.9%



27.5%



42.2%



41.8%



41.8%



28.8%Total debt to net income (loss)


3.1



4.1



0.9



1.3



3.2



2.8



4.6



(17.2
)


27.1



16.0



4.9Net debt to EBITDA
    7


1.7



2.5



0.6



0.4



1.5



1.2



1.2



6.1



3.8



3.6



1.6
   Reconciliations
    and
    Calculations
  (in millions of US dollars except share, per-share and tonnage
    amounts)2010


2009
    10


2008
    10


2007
    10


2006
    10


2005


2004


2003


2002


2001


2000Net income (loss)
    1


1,806.2



980.7



3,465.9



1,104.0



606.9



542.9



298.6



(84.0
)


55.2



94.6



183.9Interest expense


99.1



120.9



62.8



68.7



85.6



82.3



84.0



91.3



83.1



80.3



61.6Income taxes


642.8



79.2



1,059.8



416.7



142.3



267.4



131.7



0.1



31.2



53.1



62.0Depreciation and amortization


410.7



312.1



327.5



291.3



242.4



242.4



240.0



227.4



216.5



185.7



187.0EBITDA 3


2,958.8



1,492.9



4,916.0



1,880.7



1,077.2



1,135.0



754.3



234.8



386.0



413.7



494.55-year CAGR
    8


21.1%10-year CAGR
    8


19.6%Net income as percentage of sales


27.6%



24.7%



36.7%



21.1%



16.1%



14.1%



9.2%



(3.0%
)


2.5%



3.9%



7.2%EBITDA margin
    4


48.9%



40.8%



54.7%



39.5%



31.9%



32.7%



26.0%



9.5%



20.0%



19.7%



22.1%Cash flow prior to working capital changes
    5


2,355.8



1,350.9



3,780.7



1,525.3



940.8



860.3



538.3



368.5



289.2



304.1



385.8Receivables


109.4



53.1



(593.7
)


(154.6
)


11.0



(107.6
)


(51.9
)


(39.5
)


(11.1
)


69.9



(52.2
)Inventories


66.5



88.2



(324.4
)


60.3



13.9



(119.9
)


(10.5
)


11.8



(18.2
)


(76.1
)


(27.4
)Prepaid expenses and other current assets


(6.3
)


21.2



(23.7
)


7.0



0.2



(5.8
)


(6.3
)


11.4



(3.9
)


2.3



(3.1
)Payables and accrued charges


473.6



(589.5
)


174.3



250.9



(269.1
)


238.1



188.7



33.3



60.4



(266.2
)


158.0Changes in non-cash operating working capital


643.2



(427.0
)


(767.5
)


163.6



(244.0
)


4.8



120.0



17.0



27.2



(270.1
)


75.3Cash provided by operating activities


2,999.0



923.9



3,013.2



1,688.9



696.8



865.1



658.3



385.5



316.4



34.0



461.1Net income (loss)


1,806.2



980.7



3,465.9



1,104.0



606.9



542.9



298.6



(84.0
)


55.2



94.6



183.9Total assets


15,619.3



12,922.2



10,248.8



9,716.6



6,217.0



5,357.9



5,126.8



4,567.3



4,622.6



4,531.7



4,121.8Return on assets


11.6%



7.6%



33.8%



11.4%



9.8%



10.1%



5.8%



(1.8%
)


1.2%



2.1%



4.5%Weighted average cost of capital


10.2%



10.1%



12.0%



10.0%



8.8%



8.3%



8.4%



7.3%



7.3%



7.7%



8.7%End of year closing price (dollars)


51.61



36.17



24.41



47.99



15.94



8.91



9.23



4.80



3.53



3.41



4.35Beginning of year opening price (dollars)


36.17



24.41



47.99



15.94



8.91



9.23



4.80



3.53



3.41



4.35



2.68Change in share price (dollars)


15.44



11.76



(23.58
)


32.05



7.03



(0.32
)


4.43



1.27



0.12



(0.94
)


1.67Dividends paid per share (dollars)


0.13



0.13



0.13



0.12



0.07



0.07



0.06



0.06



0.06



0.06



0.06Total shareholder return


43.0%



48.7%



(48.9%
)


201.8%



79.7%



(2.7%
)


93.5%



37.7%



5.3%



(20.2%
)


64.6%Short-term debt


1,273.9



727.0



1,323.9



90.0



157.9



252.2



93.5



176.2



473.0



501.1



488.8Current portion of long-term debt


601.8



1.8



0.2



0.2



400.4



1.2



10.3



1.3



3.4







5.7Long-term debt


3,702.8



3,319.3



1,739.5



1,339.4



1,357.1



1,257.6



1,258.6



1,268.6



1,019.9



1,013.7



413.7Total debt


5,578.5



4,048.1



3,063.6



1,429.6



1,915.4



1,511.0



1,362.4



1,446.1



1,496.3



1,514.8



908.2Cash and cash equivalents


(411.9
)


(385.4
)


(276.8
)


(719.5
)


(325.7
)


(93.9
)


(458.9
)


(4.7
)


(24.5
)


(45.3
)


(100.0
)Net debt 6


5,166.6



3,662.7



2,786.8



710.1



1,589.7



1,417.1



903.5



1,441.4



1,471.8



1,469.5



808.2Shareholders equity


6,804.2



6,439.8



4,535.1



5,994.2



2,755.4



2,132.5



2,385.6



1,973.8



2,050.2



2,042.6



1,994.8Total debt to capital


45.1%



38.6%



40.3%



19.3%



41.0%



41.5%



36.4%



42.3%



42.2%



42.6%



31.3%Net debt to capital
    6


43.2%



36.3%



38.1%



10.6%



36.6%



39.9%



27.5%



42.2%



41.8%



41.8%



28.8%Total debt to net income (loss)


3.1



4.1



0.9



1.3



3.2



2.8



4.6



(17.2
)


27.1



16.0



4.9Net debt to EBITDA
    7


1.7



2.5



0.6



0.4



1.5



1.2



1.2



6.1



3.8



3.6



1.6
    80 PotashCorp
    2010 Financial Review




---



##### 



Reconciliations
    and Calculations
    continued
  (in millions of US dollars except share, per-share and tonnage
    amounts)2010


2009
    10


2008
    10


2007
    10


2006
    10


2005


2004


2003


2002


2001


2000Current assets


2,139.9



2,271.7



2,267.2



1,811.3



1,310.2



1,110.8



1,243.6



733.9



832.0



819.6



871.7Current liabilities


(3,191.8
)


(1,577.4
)


(2,623.4
)


(1,001.9
)


(1,103.5
)


(1,096.1
)


(703.7
)


(557.8
)


(823.4
)


(772.5
)


(1,020.4
)Working capital


(1,051.9
)


694.3



(356.2
)


809.4



206.7



14.7



539.9



176.1



8.6



47.1



(148.7
)Cash and cash equivalents


(411.9
)


(385.4
)


(276.8
)


(719.5
)


(325.7
)


(93.9
)


(458.9
)


(4.7
)


(24.5
)


(45.3
)


(100.0
)Short-term debt


1,273.9



727.0



1,323.9



90.0



157.9



252.2



93.5



176.2



473.0



501.1



488.8Current portion of long-term debt


601.8



1.8



0.2



0.2



400.4



1.2



10.3



1.3



3.4







5.7Non-cash operating working capital


411.9



1,037.7



691.1



180.1



439.3



174.2



184.8



348.9



460.5



502.9



245.8Sales


6,538.6



3,976.7



9,446.5



5,234.2



3,766.7



3,847.2



3,244.4



2,799.0



2,224.4



2,395.7



2,547.8Freight


335.8



191.0



324.9



346.1



255.8



249.7



238.7



234.5



215.2



216.7



222.1Transportation and distribution


151.8



128.1



132.4



124.1



134.1



121.9



104.3



98.7



80.5



83.3



83.1Net sales
    9


6,051.0



3,657.6



8,989.2



4,764.0



3,376.8



3,475.6



2,901.4



2,465.8



1,928.7



2,095.7



2,242.6Potash net salesNorth America


1,222.3



506.8



1,307.5



656.9



470.5



495.6



347.5



230.6



215.3



232.1



237.8Offshore


1,505.7



698.9



2,526.8



909.6



576.0



668.3



504.6



336.2



300.7



293.4



340.9Miscellaneous and purchased product


14.1



16.3



24.4



13.5



11.7



13.0



42.7



52.3



28.5



21.2



8.3Total


2,742.1



1,222.0



3,858.7



1,580.0



1,058.2



1,176.9



894.8



619.1



544.5



546.7



587.0Potash sales (thousands KCl tonnes)North America


3,355



1,093



2,962



3,471



2,785



3,144



3,246



2,870



2,780



2,894



2,939Offshore


5,289



1,895



5,585



5,929



4,411



5,020



5,030



4,213



3,547



3,349



3,973Total


8,644



2,988



8,547



9,400



7,196



8,164



8,276



7,083



6,327



6,243



6,912Weighted average shares outstandingBasic (thousands)
    2


886,371



886,740



922,439



946,923



935,640



977,112



971,703



940,140



936,378



933,822



943,380Diluted (thousands)
    2


911,093



911,828



952,313



972,924



956,067



999,702



996,651



940,140



941,688



939,348



948,654
    Non-GAAP Financial
    Measures and Footnotes to Reconciliations and
    Calculations
        1
    After-tax effects of items affecting net income are as follows:  2010


2009


2008


2007


2006


2004


2003


2000Takeover response costs

$
55.5


$



$



$



$



$



$



$
Loss (gain) on sale of assets


7.5



6.1



(15.6
)










(37.0
)






(16.3
)(Recovery) impairment of auction rate securities






(91.1
)


66.6



18.6















Impairment of property, plant and equipment


















4.5







89.7



14.5Plant shutdown and closure and office consolidation






















6.2



113.5



3.3Total after-tax effects on net income

$
63.0


$
(85.0
)

$
51.0


$
18.6


$
4.5


$
(30.8
)

$
203.2


$
1.5
     2
    All share and per-share data have been retroactively restated to
    reflect the stock dividend of two common shares for each share
    owned by shareholders of record at the close of business on
    February 16, 2011.3
    PotashCorp uses EBITDA and adjusted EBITDA as supplemental
    financial measures of its operational performance. Management
    believes EBITDA and adjusted EBITDA to be important measures as
    they exclude the effects of items which primarily reflect the
    impact of long-term investment decisions, rather than the
    performance of the companys
    day-to-day
    operations. As compared to net income (loss) according to GAAP,
    these measures are limited in that they do not reflect the
    periodic costs of certain capitalized tangible and intangible
    assets used in generating revenues in the companys
    business, or the non-cash charges associated with impairments,
    costs associated with takeover response and certain gains and
    losses on disposal of assets. Management evaluates such items
    through other financial measures such as capital expenditures
    and cash flow provided by operating activities. The company
    believes that these measurements are useful to measure a
    companys ability to service debt and to meet other payment
    obligations or as a valuation measurement.  PotashCorp 2010 Financial
    Review 81




---



##### 



Non-GAAP Financial
    Measures and Footnotes to Reconciliations and Calculations continued
    2010


2009


2008


2007


2006


2004


2003


2000Takeover response costs

$
73.0


$



$



$



$



$



$



$
Loss (gain) on sale of assets


9.9



7.7



(21.4
)










(37.0
)






(20.1
)(Recovery) impairment of auction rate securities






(115.3
)


88.8



26.5















Impairment of property, plant and equipment


















6.3







132.4



14.5Plant shutdown and closure and office consolidation






















6.2



113.5



Total non-cash items included in EBITDA


82.9



(107.6
)


67.4



26.5



6.3



(30.8
)


245.9



(5.6
)EBITDA


2,958.8



1,492.9



4,916.0



1,880.7



1,077.2



754.3



234.8



494.5Adjusted EBITDA

$
3,041.7


$
1,385.3


$
4,983.4


$
1,907.2


$
1,083.5


$
723.5


$
480.7


$
488.9


4
    EBITDA margin is calculated as EBITDA divided by net sales
    (sales less freight and transportation and distribution).
    Management believes comparing the companys operations
    (excluding the impact of long-term investment decisions) to net
    sales earned (net of costs to deliver product) is an important
    indicator of efficiency. In addition to the limitations given
    above in using EBITDA as compared to net income, EBITDA margin
    as compared to net income as a percentage of sales is also
    limited in that freight and transportation and distribution
    costs are incurred and valued independently of sales. Management
    evaluates these expenses individually on the consolidated
    statements of operations.5
    Cash flow prior to working capital changes is defined as the
    cash provided by operating activities, exclusive of changes in
    non-cash operating working capital. PotashCorp uses cash flow
    prior to working capital changes as a supplemental financial
    measure in its evaluation of liquidity. Management believes that
    adjusting principally for the swings in non-cash working capital
    items due to seasonality assists management in making long-term
    liquidity assessments. The company also believes that this
    measurement is useful as a measure of liquidity or as a
    valuation measurement.6
    Management believes that net debt and net-debt-to-capital ratio
    are useful to investors because they are helpful in determining
    the companys leverage. It also believes that, since the
    company has the ability to and may elect to use a portion of
    cash and cash equivalents to retire debt or to incur additional
    expenditures without increasing debt, it is appropriate to apply
    cash and cash equivalents to debt in calculating net debt and
    net debt to capital. PotashCorp believes that this measurement
    is useful as a financial leverage measure.7
    Net debt to EBITDA shows the maximum number of years it would
    take to retire the companys net debt using the current
    years EBITDA and helps PotashCorp evaluate the
    appropriateness of current debt levels relative to earnings
    generated by operations. In addition to the limitation of using
    EBITDA discussed above, net debt to EBITDA is limited in that
    this measure assumes all earnings are used to repay principal
    and no interest payments or taxes.8
    Compound annual growth rate expressed as a percentage.9
    Management includes net sales in its segment disclosures in the
    consolidated financial statements pursuant to Canadian GAAP,
    which requires segmentation based upon the companys
    internal organization and reporting of revenue and profit
    measures derived from internal accounting methods. As a
    component of gross margin, net sales (and related per-tonne
    amounts and other ratios) are primary revenue measures it uses
    and reviews in making decisions about operating matters on a
    business segment basis. These decisions include assessments
    about potash, phosphate and nitrogen performance and the
    resources to be allocated to these segments. It also uses net
    sales (and related per-tonne amounts and other ratios) for
    business segment planning and monthly forecasting. Net sales are
    calculated as sales revenues less freight, transportation and
    distribution expenses. Net sales presented on a consolidated
    basis rather than by business segment is considered a non-GAAP
    financial measure.10
    Figures have been restated to reflect the impact of an
    adjustment to asset retirement obligations from 2006 to 2009
    (see Note 32 to the companys consolidated financial
    statements).   Financial Terms
  Adjusted EBITDA
  Average adjusted assets
  Cash flow
  Cash flow return available-for-sale
  Current income taxes
  EBITDA
  EBITDA margin
  Market value of total
    capital
  Net debt to capital
  Net debt to EBITDA
  Net sales
  Return on assets
  Total debt to capital
  Total debt to net income or
    loss
  Total shareholder return
  Weighted average cost of
    capital
   82 PotashCorp
    2010 Financial Review




---



##### 



Managements
    Responsibility
   Managements
    Responsibility for Financial Reporting
  Managements
    report on financial statements
             Managements
    report on internal control over financial reporting
   W. DoylePresident and
    Chief Executive Officer

W. BrownleeExecutive Vice President and
    Chief Financial OfficerFebruary 22, 2011   Keyword:
    Financial
    PotashCorp
    2010 Financial Review 83




---



##### 



Report of
    Independent Registered Chartered Accountants
   To the Board of
    Directors and Shareholders of Potash Corporation of Saskatchewan
    Inc.
 Internal Control 
    Integrated Framework
        Internal Control  Integrated Framework
    
 Independent Registered Chartered Accountants
     84 PotashCorp
    2010 Financial Review




---



##### 



Report of
    Independent Registered Chartered Accountants
   To the Board of
    Directors and Shareholders of Potash Corporation of Saskatchewan
    Inc.
       Internal Control  Integrated Framework
  
 Independent Registered Chartered Accountants
     PotashCorp 2010 Financial
    Review 85




---



##### 



Consolidated
    Financial Statements
   Consolidated
    Statements of Financial Position
  As at December 31
    In millions of US
    dollars except share amounts  Notes



2010


2009 1AssetsCurrent assetsCash and cash equivalents

$
411.9


$
385.4Note 3

Receivables


1,043.7



1,137.9Note 4

Inventories


569.9



623.5Note 5

Prepaid expenses and other current assets


114.4



124.92,139.9



2,271.7Note 6

Property, plant and equipment


8,062.7



6,413.3Note 7

Investments


4,938.0



3,760.3Note 8

Other assets


363.1



359.9Note 9

Intangible assets


18.6



20.0Note 9

Goodwill


97.0



97.0$
15,619.3


$
12,922.2LiabilitiesCurrent liabilitiesNote 10, 13

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

$
1,871.3


$
728.8Note 11

Payables and accrued charges


1,245.7



796.8Note 12

Current portion of derivative instrument liabilities


74.8



51.83,191.8



1,577.4Note 13

Long-term debt


3,707.2



3,319.3Note 12

Derivative instrument liabilities


203.7



123.2Note 22

Future income tax liabilities


1,078.4



962.4Note 14

Accrued pension and other post-retirement benefits


298.5



280.8Note 15

Accrued environmental costs and asset retirement obligations


329.9



215.1Other non-current liabilities and deferred credits


5.6



4.28,815.1



6,482.4Shareholders EquityNote 16, 33

Share capital


1,430.7



1,430.3Unlimited authorization of common shares without par value; issued and outstanding 853,122,693 and 887,926,650 shares at December 31, 2010 and 2009, respectivelyUnlimited authorization of first preferred shares; none outstandingNote 17

Contributed surplus


160.3



149.5Accumulated other comprehensive income


2,244.3



1,648.8Retained earnings


2,968.9



3,211.26,804.2



6,439.8$
15,619.3


$
12,922.2Note 27

CommitmentsNote 28

ContingenciesNote 29

Guarantees   1

    Corrected as described in Note 32.  (See Notes to the Consolidated
    Financial Statements)
    -s- signatureDirector

Director   86 PotashCorp
    2010 Financial Review




---



##### 



Consolidated
    Statements of Operations and Retained Earnings
  For the years ended
    December 31
    In millions of US
    dollars except per-share amounts  Notes



2010


2009 1


2008 1Note 18

Sales

$
6,538.6


$
3,976.7


$
9,446.5Less: Freight


335.8



191.0



324.9Transportation
    and distribution


151.8



128.1



132.4Cost of
    goods sold


3,426.0



2,643.0



4,128.4Gross Margin


2,625.0



1,014.6



4,860.8Selling and administrative


228.1



183.6



188.4Note 19

Provincial mining and other taxes


76.5



29.0



543.4Foreign exchange loss (gain)


16.8



(35.4
)


(126.0
)Note 20

Other income


(244.5
)


(343.4
)


(333.5
)76.9



(166.2
)


272.3Operating Income


2,548.1



1,180.8



4,588.5Note 21

Interest Expense


99.1



120.9



62.8Income Before Income Taxes


2,449.0



1,059.9



4,525.7Note 22

Income Taxes


642.8



79.2



1,059.8Net Income


1,806.2



980.7



3,465.9Retained Earnings, Beginning of Year


3,211.2



2,348.5



2,255.1Repurchase of Common Shares


(1,930.8
)






(3,250.3
)Dividends Declared


(117.7
)


(118.0
)


(122.2
)Retained Earnings, End of Year

$
2,968.9


$
3,211.2


$
2,348.5Note 23, 33

Net Income per Share  Basic

$
2.04


$
1.11


$
3.76Note 23, 33

Net Income per Share  Diluted

$
1.98


$
1.08


$
3.64Note 33

Dividends per Share

$
0.13


$
0.13


$
0.13   1

    Corrected as described in Note 32.    PotashCorp 2010 Financial
    Review 87




---



##### 



Consolidated
    Statements of Cash Flow
  For the years ended
    December 31
    In millions of US
    dollars  2010





2009 1





2008 1Operating ActivitiesNet income





$
1,806.2






$
980.7






$
3,465.9Adjustments to reconcile net income to cash provided by
    operating activitiesDepreciation and amortization


410.7







312.1







327.5Stock-based compensation


24.3







29.5







36.2Loss (gain) on disposal of property, plant and equipment and
    long-term investments


9.9







(107.6
)






61.7Foreign exchange on future income tax and miscellaneous items


(0.1
)






(1.3
)






(106.4
)Provision for future income tax


148.8







198.9







64.9Undistributed earnings of equity investees


(95.8
)






(2.8
)






(166.7
)Derivative instruments


1.2







(62.0
)






48.7Other long-term liabilities


50.6







3.4







48.9Subtotal of adjustments






549.6







370.2







314.8Changes in non-cash operating working capitalReceivables


109.4







53.1







(593.7
)Inventories


66.5







88.2







(324.4
)Prepaid expenses and other current assets


(6.3
)






21.2







(23.7
)Payables and accrued charges


473.6







(589.5
)






174.3Subtotal of changes in non-cash operating working capital






643.2







(427.0
)






(767.5
)Cash provided by operating activities






2,999.0







923.9







3,013.2Investing ActivitiesAdditions to property, plant and equipment






(1,978.3
)






(1,763.8
)






(1,198.3
)Purchase of long-term investments






(422.3
)






(3.2
)






(445.6
)Proceeds from disposal of property, plant and equipment and
    long-term investments






1.6







151.9







43.2Other assets and intangible assets






(41.1
)






(54.1
)






(46.6
)Cash used in investing activities






(2,440.1
)






(1,669.2
)






(1,647.3
)Cash before financing activities






558.9







(745.3
)






1,365.9Financing ActivitiesProceeds from long-term debt obligations






1,793.8







4,108.7







400.0Repayment of and finance costs on long-term debt obligations






(810.5
)






(3,561.3
)






(0.2
)Proceeds from short-term debt obligations






546.9







403.2







1,233.9Dividends






(118.7
)






(116.9
)






(122.6
)Repurchase of common shares






(1,999.7
)














(3,356.4
)Issuance of common shares






55.8







20.2







36.7Cash (used in) provided by financing activities






(532.4
)






853.9







(1,808.6
)Increase (Decrease) in Cash and Cash Equivalents






26.5







108.6







(442.7
)Cash and Cash Equivalents, Beginning of Year






385.4







276.8







719.5Cash and Cash Equivalents, End of Year





$
411.9






$
385.4






$
276.8Cash and cash equivalents comprised of:Cash





$
114.5






$
121.6






$
29.9Short-term investments






297.4







263.8







246.9$
411.9






$
385.4






$
276.8Supplemental cash flow disclosureInterest paid





$
93.0






$
115.4






$
82.8Income taxes (recovered) paid





$
(45.1
)





$
640.3






$
669.9   1

    Corrected as described in Note 32.    88 PotashCorp
    2010 Financial Review




---



##### 



Consolidated
    Statements of Comprehensive Income
  For the years ended
    December 31
    In millions of US
    dollars  (Net of related income taxes)

2010


2009 1


2008 1Net Income

$
1,806.2


$
980.7


$
3,465.9Other comprehensive income (loss)Net increase (decrease) in unrealized gains on
    available-for-sale
    securities 2


661.9



988.6



(1,336.9
)Net losses on derivatives designated as cash flow hedges
    3


(118.4
)


(63.9
)


(166.0
)Reclassification to income of net losses (gains) on cash flow
    hedges 4


52.5



53.1



(8.1
)Other


(0.5
)


13.1



(10.0
)Other Comprehensive Income (Loss)

$
595.5


$
990.9


$
(1,521.0
)Comprehensive Income

$
2,401.7


$
1,971.6


$
1,944.9   1
    Corrected as described in Note 32.2
    Available-for-sale
    securities are comprised of shares in Israel Chemicals Ltd. and
    Sinofert Holdings Limited and investments in auction rate
    securities. The amounts are net of income taxes of $NIL
    (2009  $26.5, 2008  $(61.5)).3
    Cash flow hedges are comprised of natural gas derivative
    instruments, and are net of income taxes of $(71.7)
    (2009  $(38.7), 2008  $(100.8)).4
    Net of income taxes of $31.8 (2009  $32.2,
    2008  $(4.8)).  Consolidated
    Statements of Accumulated Other Comprehensive Income
  As at December 31
    In millions of US
    dollars  (Net of related income taxes)

2010


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

$
2,412.3


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


(177.3
)


(111.4
)Other 4


9.3



9.8Accumulated other comprehensive income


2,244.3



1,648.8Retained earnings


2,968.9



3,211.2Accumulated Other Comprehensive Income and Retained
    Earnings

$
5,213.2


$
4,860.0   1
    Corrected as described in Note 32.2
    $2,562.7 before income taxes (2009  $1,900.8).3
    $(283.4) before income taxes (2009  $(177.6)).4
    $9.3 before income taxes (2009  $9.8).    PotashCorp 2010 Financial
    Review 89




---



##### 



Note 1Description of Business
    
    
    90Note 2Basis of Presentation
    
    
    90Note 3Receivables
    
    
    92Note 4Inventories
    
    
    92Note 5Prepaid Expenses and Other Current Assets
    
    
    93Note 6Property, Plant and Equipment
    
    
    93Note 7Investments
    
    
    94Note 8Other Assets
    
    
    95Note 9Intangible Assets and Goodwill
    
    
    95Note 10Short-Term Debt
    
    
    95Note 11Payables and Accrued Charges
    
    
    96Note 12Derivative Instruments
    
    
    96Note 13Long-Term Debt
    
    
    97Note 14Pension and Other Post-Retirement Benefits
    
    
    98Note 15Environmental Costs and Asset Retirement Obligations
    
    
    103Note 16Share Capital
    
    
    105Note 17Contributed Surplus
    
    
    105Note 18Segment Information
    
    
    106Note 19Provincial Mining and Other Taxes
    
    
    109Note 20Other Income
    
    
    109Note 21Interest Expense
    
    
    109Note 22Income Taxes
    
    
    110Note 23Net Income per Share
    
    
    112Note 24Stock-Based Compensation
    
    
    112Note 25Financial Instruments and Related Risk Management
    
    
    115Note 26Capital Management
    
    
    121Note 27Commitments
    
    
    122Note 28Contingencies
    
    
    122Note 29Guarantees
    
    
    125Note 30Related Party Transactions
    
    
    126Note 31Reconciliation of Canadian and United States Generally Accepted Accounting Principles
    
    
    126Note 32Comparative Figures
    
    
    140Note 33Subsequent Event
    
    
    141




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts    NOTE 1DESCRIPTION
    OF BUSINESS     
    Potash    
    Phosphate       
    Nitrogen      NOTE 2BASIS
    OF PRESENTATION           Principles
    of Consolidation
   
    PCS Sales (Canada) Inc. 
    PCS Joint Venture, Ltd. (PCS Joint Venture) 
    PCS Sales (USA), Inc.
    PCS Phosphate Company, Inc. (PCS Phosphate) 
    PCS Purified Phosphates 
    White Springs Agricultural Chemicals, Inc. (White
    Springs)
    PCS Nitrogen Fertilizer, L.P.
    PCS Nitrogen Ohio, L.P.
    PCS Nitrogen Trinidad Limited
    PCS Cassidy Lake Company (PCS Cassidy Lake)    Foreign
    Exchange Transactions
     90 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 2 Basis
    of
    Presentation continued
    Cash
    Equivalents
   Asset
    Impairment
       Selling
    and Administrative
   Additional
    Accounting Policies
   Note

Topic

Page3


Receivables


924


Inventories


925


Prepaid Expenses


936


Property, Plant and Equipment


937


Investments


948


Other Assets


959


Intangible Assets


959


Goodwill


9512


Derivative Instruments


9613


Long-Term Debt


9714


Pension and Other Post-Retirement Benefits


9815


Environmental Costs and Asset Retirement Obligations


10318


Revenue Recognition


10618


Cost of Goods Sold


10622


Income Taxes


11024


Stock-Based Compensation


11225


Fair Value of Financial Instruments


11527


Commitments


122   Recent
    Accounting Pronouncements
  IFRSs
     PotashCorp 2010 Financial
    Review 91




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 3RECEIVABLES     2010


2009Trade accounts  Canpotex

$
297.9


$
164.3 Other


448.7



264.4Less allowance for doubtful accounts


(8.2
)


(8.4
)738.4



420.3Margin deposits on derivative instruments


197.8



108.9Income taxes receivable


30.3



287.4Provincial mining and other taxes receivable






234.6Other non-trade accounts


77.2



86.7$
1,043.7


$
1,137.9
   NOTE 4INVENTORIES     2010


2009Finished products

$
254.9


$
303.1Intermediate products


126.7



158.9Raw materials


65.1



50.6Materials and supplies


123.2



110.9$
569.9


$
623.5
    Items affecting cost of goods
    sold

2010


2009


2008Expensed inventories

$
3,152.5


$
2,170.2


$
3,803.9Writedowns of finished products


4.5



49.2



89.9Writedowns of intermediate products


0.3



5.4



Writedowns of raw materials






1.4



Reserves for obsolete materials and supplies


2.2



2.7



3.2Reversals of writedowns


(2.1
)


(8.4
)


$
3,157.4


$
2,220.5


$
3,897.0
      92 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 5PREPAID
    EXPENSES AND OTHER CURRENT ASSETS     2010


2009Prepaid freight

$
19.4


$
31.2Prepaid transportation and distribution


8.2



17.5Other prepaid expenses


21.1



14.848.7



63.5Income taxes on inventory transfers (Note 22)


32.0



38.0Current portion of future income tax assets (Note 22)


28.4



17.6Current portion of derivative instrument assets (Note 12)


5.3



5.8$
114.4


$
124.9
   NOTE 6PROPERTY,
    PLANT AND EQUIPMENT       units-of-production units-of-production
   2010AccumulatedDepreciation and

Net BookCost

Amortization

ValueLand and improvements

$
504.2


$
85.3


$
418.9Buildings and improvements


2,174.7



266.9



1,907.8Machinery and equipment


8,064.0



2,542.9



5,521.1Mine development costs


313.5



98.6



214.9$
11,056.4


$
2,993.7


$
8,062.7
   2009AccumulatedDepreciation and

Net BookCost

Amortization

ValueLand and improvements

$
494.6


$
76.0


$
418.6Buildings and improvements


1,546.1



236.4



1,309.7Machinery and equipment


6,754.4



2,307.4



4,447.0Mine development costs


329.9



91.9



238.0$
9,125.0


$
2,711.7


$
6,413.3
            PotashCorp 2010 Financial
    Review 93




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 7INVESTMENTS   available-for-sale other-than-temporary
  other-than-temporary. other-than-temporary,
  2010


2009Investments at equitySociedad Quimica y Minera de Chile S.A.
    (SQM)  32 percent ownership; quoted
    market value of $4,702.1

$
693.8


$
631.8Arab Potash Company Ltd. (APC) 
    28 percent ownership; quoted market value of $1,433.7


381.9



348.8Other


20.4



19.8Available-for-sale
    investmentsIsrael Chemicals Ltd. (ICL) 
    14 percent ownership


3,045.5



1,895.7Sinofert Holdings Limited (Sinofert) 
    22 percent ownership


796.4



864.2$
4,938.0


$
3,760.3
   Investments
    at Equity
 units-of-production units-of-production
        
   94 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 8OTHER
    ASSETS       2010


2009Accrued pension benefit asset (Note 14)

$
220.6


$
207.6Investment tax credits


40.8



46.4Ammonia catalysts  net of accumulated amortization of
    $16.8 (2009  $9.3)


37.1



44.1Future income tax assets (Note 22)


25.1



16.8Upfront lease costs  net of accumulated amortization
    of $5.5 (2009  $4.4)


21.4



22.5Deferred charges  net of accumulated amortization of
    $5.8 (2009  $5.7)


5.3



1.8Derivative instrument assets (Note 12)






3.2Other  net of accumulated amortization of $4.8
    (2009  $NIL)


12.8



17.5$
363.1


$
359.9
     NOTE 9INTANGIBLE
    ASSETS AND GOODWILL   Intangible
    Assets
   Goodwill
   2010


2009Intangible assets  net of accumulated
    amortization of $34.4 (2009  $30.6)

$
18.6


$
20.0Goodwill net of accumulated  amortization of
    $7.3 (2009  $7.3)

$
97.0


$
97.0
       NOTE 10SHORT-TERM
    DEBT   2010


2009Commercial paper

$
1,273.9


$
727.0
       debt-to-capital
   PotashCorp 2010 Financial
    Review 95




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 11PAYABLES
    AND ACCRUED CHARGES    2010


2009Trade accounts

$
587.0


$
506.8Income taxes (Note 22)


218.7



1.2Accrued compensation


120.4



47.4Deferred revenue


53.2



33.9Accrued interest


48.7



42.9Other taxes


47.5



8.9Accrued deferred share units


29.6



20.1Dividends


28.5



29.6Current portion of accrued environmental costs and asset
    retirement obligations (Note 15)


26.6



40.1Current portion of accrued pension and other post-retirement
    benefits (Note 14)


8.9



8.3Other payables and other accrued charges


76.6



57.6$
1,245.7


$
796.8
    NOTE 12DERIVATIVE
    INSTRUMENTS           
    Natural gas futures, swaps and option agreements to manage the
    cost of natural gas, generally designated as cash flow
    hedges of anticipated transactions. The portion of gain or loss
    on derivative instruments designated as cash flow hedges that is
    deferred in AOCI is reclassified into cost of goods sold when
    the product containing the hedged item impacts earnings. Any
    hedge ineffectiveness is recorded in cost of goods sold in the
    current period.
    Foreign currency forward contracts for the primary purpose of
    limiting exposure to exchange rate fluctuations relating to
    expenditures denominated in currencies other than the US dollar
    and foreign currency swap contracts to limit exposure to
    exchange rate fluctuations relating to Canadian
    dollar-denominated commercial paper. These contracts are not  96 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 12 Derivative
    Instruments continued
  designated as hedging instruments for accounting purposes.
    Accordingly, they are
    marked-to-market
    with changes in fair value recognized through foreign exchange
    gain or loss in earnings.  
    Agreement for the forward purchase of shares of Sinofert in 2007
    at a fixed Hong Kong dollar amount per share. This contract was
    not designated as a hedging instrument for accounting purposes.
    Accordingly, changes in fair value were recognized through other
    income in 2008 earnings.
    Interest rate swaps designated as fair value hedges to manage
    the interest rate mix of the companys total debt portfolio
    and related overall cost of borrowing. Hedge accounting
    treatment resulted in interest expense on the related debt being
    reflected at hedged rates rather than original contractual
    interest rates.  2010Assets

Liabilities

NetNatural gas hedging derivatives

$



$
278.5


$
(278.5
)Foreign currency derivatives


5.3







5.3Total


5.3



278.5



(273.2
)Less current portion


(5.3
)


(74.8
)


69.5Long-term portion

$



$
203.7


$
(203.7
)
   2009Assets

Liabilities

NetNatural gas hedging derivatives

$
3.7


$
174.7


$
(171.0
)Foreign currency derivatives


5.3



0.3



5.0Total


9.0



175.0



(166.0
)Less current portion


(5.8
)


(51.8
)


46.0Long-term portion

$
3.2


$
123.2


$
(120.0
)
     NOTE 13LONG-TERM
    DEBT     2010


2009Senior notes
    17.750% notes due May 31, 2011

$
600.0


$
600.04.875% notes due March 1, 2013


250.0



250.05.250% notes due May 15, 2014


500.0



500.03.750% notes due September 30, 2015


500.0



500.03.250% notes due December 1, 2017


500.0



6.500% notes due May 15, 2019


500.0



500.04.875% notes due March 30, 2020


500.0



500.05.875% notes due December 1, 2036


500.0



500.05.625% notes due December 1, 2040


500.0



Other


7.7



8.04,357.7



3,358.0Less net unamortized debt costs


(53.8
)


(42.4
)Add unamortized interest rate swap gains


0.7



2.44,304.6



3,318.0Less current maturities


(601.8
)


(1.8
)Add current portion of amortization


4.4



3.1$
3,707.2


$
3,319.3
   1

    Each series of senior notes is unsecured and has no sinking fund
    requirements prior to maturity. Each series of notes is
    redeemable, in whole or in part, at the companys option at
    any time prior to maturity for a price not less than the
    principal amount of the notes to be redeemed, plus accrued and
    unpaid interest. Under certain conditions related to a change in
    control, the company is required to make an offer to purchase
    all, or any part, of the senior notes due 2014, 2015, 2017,
    2019, 2020, 2036 and 2040 at 101 percent of the principal
    amount of the notes repurchased, plus accrued and unpaid
    interest.      PotashCorp 2010 Financial
    Review 97




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 13 Long-Term
    Debt continued
     back-to-back
  back-to-back
    2011

$
601.82012


5.92013


250.02014


500.02015


500.0Subsequent years


2,500.0$
4,357.7    NOTE 14PENSION
    AND OTHER POST-RETIREMENT BENEFITS           Pension
    Plans
  Canada
      United
    States
    Trinidad
     98 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 14 Pension
    and Other Post-Retirement
    Benefits continued
   Other
    Post-Retirement Plans
   Defined
    Benefit Plans
   Pension

2010

2009

2008Incurred

Matching

Recognized

Incurred

Matching

Recognized

Incurred

Matching

Recognizedin Year

Adjustments
    1

in Year

in Year

Adjustments 1

in Year

in Year

Adjustments
    1

in YearCurrent service cost for benefits earned during the year

$
20.1


$



$
20.1


$
17.3


$



$
17.3


$
15.1


$



$
15.1Interest cost on projected benefit obligation


46.9







46.9



44.7







44.7



39.9







39.9(Gain) loss on plan assets


(83.7
)


37.1



(46.6
)


(94.2
)


60.5



(33.7
)


157.7



(208.8
)


(51.1
)Actuarial loss (gain)


65.0



(42.4
)


22.6



57.5



(32.1
)


25.4



46.7



(42.8
)


3.9Termination benefits














0.2







0.2











Plan amendments






2.2



2.2







2.5



2.5



8.1



(5.9
)


2.2Settlements


(0.9
)






(0.9
)


(0.3
)






(0.3
)










Change in valuation allowance














(15.8
)






(15.8
)


(0.3
)






(0.3
)Amortization of transitional obligation






0.3



0.3







0.3



0.3







1.6



1.6$
47.4


$
(2.8
)

$
44.6


$
9.4


$
31.2


$
40.6


$
267.2


$
(255.9
)

$
11.3   1

    Accounting adjustments to allocate costs to different periods so
    as to recognize the long-term nature of employee future benefits.  Other

2010

2009

2008Incurred

Matching

Recognized

Incurred

Matching

Recognized

Incurred

Matching

Recognizedin Year

Adjustments
    1

in Year

in Year

Adjustments
    1

in Year

in Year

Adjustments
    1

in YearCurrent service cost for benefits earned during the year

$
7.0


$



$
7.0


$
6.1


$



$
6.1


$
5.7


$



$
5.7Interest cost on projected benefit obligation


16.1







16.1



16.6







16.6



15.9







15.9Actuarial loss (gain)


7.0



(3.5
)


3.5



24.1



(19.2
)


4.9



3.1



(0.1
)


3.0Plan amendments






(5.6
)


(5.6
)


(29.1
)


26.3



(2.8
)


1.4



(4.2
)


(2.8
)Curtailments














(1.6
)






(1.6
)










Amortization of transitional obligation






























0.4



0.4$
30.1


$
(9.1
)

$
21.0


$
16.1


$
7.1


$
23.2


$
26.1


$
(3.9
)

$
22.2   1

    Accounting adjustments to allocate costs to different periods so
    as to recognize the long-term nature of employee future benefits.  PotashCorp 2010 Financial
    Review 99




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 14 Pension
    and Other Post-Retirement
    Benefits continued
     Pension

Other2010

2009

2008

2010

2009

2008Discount rate  obligation, %


5.45



5.85



6.25



5.45



5.85



6.25Discount rate  expense, %


5.85



6.25



6.50



5.85



6.25



6.50Long-term rate of return on assets, %


7.00



7.50



8.00



n/a



n/a



n/aRate of increase in compensation levels, %


4.00



4.00



4.00



n/a



n/a



n/a   n/a = not applicable
      2010


2009


2008Health-care cost trend rates  assumed for next year, %


6.00



6.00



6.00Ultimate health-care cost trend rate assumed, %


6.00



6.00



6.00Year that the rate reaches the ultimate trend rate


2010



2009



2008
          100 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 14 Pension
    and Other Post-Retirement
    Benefits continued
     Pension


Other


Total2010


2009


2010


2009


2010


2009Change in benefit obligationsBalance, beginning of year

$
792.4


$
698.0


$
275.9


$
266.0


$
1,068.3


$
964.0Service cost


20.1



17.3



7.0



6.1



27.1



23.4Interest cost


46.9



44.7



16.1



16.6



63.0



61.3Actuarial loss


65.0



57.5



7.0



22.8



72.0



80.3Foreign exchange rate changes


3.7



6.5



1.5



3.6



5.2



10.1Plan amendments














(29.1
)






(29.1
)Benefits paid


(34.8
)


(31.5
)


(9.2
)


(8.5
)


(44.0
)


(40.0
)Termination benefits






0.2















0.2Curtailments/Settlements


(0.9
)


(0.3
)






(1.6
)


(0.9
)


(1.9
)Balance, end of year


892.4



792.4



298.3



275.9



1,190.7



1,068.3Change in plan assetsFair value, beginning of year


649.1



479.7











649.1



479.7Actual gain on plan assets


83.7



94.2











83.7



94.2Employer contributions


53.9



106.0



9.2



8.5



63.1



114.5Foreign exchange rate changes


1.3



1.0











1.3



1.0Settlements


(0.9
)


(0.3
)










(0.9
)


(0.3
)Benefits paid


(34.8
)


(31.5
)


(9.2
)


(8.5
)


(44.0
)


(40.0
)Fair value, end of year


752.3



649.1











752.3



649.1Funded status


(140.1
)


(143.3
)


(298.3
)


(275.9
)


(438.4
)


(419.2
)Unamortized net actuarial loss


311.2



304.6



63.9



60.1



375.1



364.7Unamortized prior service cost


5.6



7.6



(31.5
)


(37.2
)


(25.9
)


(29.6
)Unamortized transitional obligation


2.4



2.6











2.4



2.6Accrued pension and other post-retirement benefit asset
    (liability)

$
179.1


$
171.5


$
(265.9
)

$
(253.0
)

$
(86.8
)

$
(81.5
)Amounts included in:Other assets (Note 8)

$
220.4


$
207.3


$
0.2


$
0.3


$
220.6


$
207.6LiabilitiesCurrent (Note 11)










(8.9
)


(8.3
)


(8.9
)


(8.3
)Long-term


(41.3
)


(35.8
)


(257.2
)


(245.0
)


(298.5
)


(280.8
)$
179.1


$
171.5


$
(265.9
)

$
(253.0
)

$
(86.8
)

$
(81.5
)       PotashCorp 2010 Financial
    Review 101




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 14 Pension
    and Other Post-Retirement
    Benefits continued
     2010


2009Projected benefit obligation

$
818.4


$
730.6Accumulated benefit obligation


737.3



658.3Fair value of plan assets


654.8



559.9
   Sensitivity
    of Assumptions
   2010


2009


2008As reported:Benefit obligation

$
298.3


$
275.9


$
266.0Aggregate of service and interest cost


23.1



22.7



21.6Impact of 1.0 percentage point increase:Benefit obligation


48.5



42.8



41.1Aggregate of service and interest cost


4.9



4.3



3.8Impact of 1.0 percentage point decrease:Benefit obligation


(38.3
)


(34.1
)


(32.9
)Aggregate of service and interest cost


(3.5
)


(3.3
)


(3.0
)
     Plan
    Assets
   Asset Category

Target


2010


2009Equity securities


65%



63%



59%Debt securities


35%



37%



41%Real estate










Other










Total


100%



100%



100%       Defined
    Contribution Plans
       Cash
    Payments
   102 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 14 Pension
    and Other Post-Retirement
    Benefits continued
   Estimated
    Future Benefit Payments
   OtherReduction due toPension

Gross

Medicare Part D
    Subsidy

Net2011

$
37.3


$
10.8


$
0.7


$
10.12012


38.6



11.5



0.8



10.72013


42.2



12.4



0.8



11.62014


45.5



13.4



0.9



12.52015


48.7



14.5



1.0



13.52016-2020


296.3



88.3



7.0



81.3   
  NOTE 15ENVIRONMENTAL
    COSTS AND ASSET RETIREMENT OBLIGATIONS            PotashCorp 2010 Financial
    Review 103




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 15 Environmental
    Costs and Asset Retirement
    Obligations continued
       Site
    Assessment and Remediation Costs
    Environmental
    Operating Costs and Capital Expenditures
        2010


2009Asset retirement obligations, beginning of year

$
224.5


$
213.9Liabilities incurred


2.3



4.8Liabilities settled


(28.0
)


(8.9
)Accretion expense


11.6



6.3Revisions in timing and amount of estimated cash flows


121.1



8.4Asset retirement obligations, end of year


331.5



224.5Other environmental liabilities


25.0



30.7Less current portion (Note 11)


(26.6
)


(40.1
)$
329.9


$
215.1
    104 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 16SHARE
    CAPITAL   Authorized
   Issued
 2010

2009

2008Consideration

Consideration

ConsiderationIssued, beginning of year

$
1,430.3


$
1,402.5


$
1,461.3Shares issued under option plans


67.6



26.5



45.4Shares issued for dividend reinvestment plan


1.7



1.3



1.9Shares repurchased


(68.9
)






(106.1
)Issued, end of year

$
1,430.7


$
1,430.3


$
1,402.52010

2009

2008Number of

Number of

Number ofCommon
    Shares

Common Shares

Common SharesIssued, beginning of year


887,926,650



885,602,961



949,233,627Shares issued under option plans


7,339,116



2,280,393



4,882,134Shares issued for dividend reinvestment plan


46,947



43,296



34,800Shares repurchased


(42,190,020
)






(68,547,600
)Issued, end of year


853,122,693



887,926,650



885,602,961
    Share
    Repurchase Program
     NOTE 17CONTRIBUTED
    SURPLUS   2010


2009


2008Balance, beginning of year

$
149.5


$
126.2


$
98.9Stock-based compensation


10.8



23.3



27.3Balance, end of year

$
160.3


$
149.5


$
126.2   PotashCorp 2010 Financial
    Review 105




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 18SEGMENT
    INFORMATION         
  2010Potash


Phosphate


Nitrogen


All
    others


ConsolidatedSales

$
3,000.6


$
1,821.6


$
1,716.4


$



$
6,538.6Freight


189.4



102.2



44.2







335.8Transportation and distribution


69.1



41.2



41.5







151.8Net sales  third party


2,742.1



1,678.2



1,630.7



Cost of goods sold


946.1



1,359.0



1,120.9







3,426.0Gross margin


1,796.0



319.2



509.8







2,625.0Inter-segment sales










119.2







Depreciation and amortization


120.8



185.8



95.7



8.4



410.7Goodwill










96.6



0.4



97.0Assets


5,810.3



2,468.8



1,847.3



5,492.9



15,619.3Additions to property, plant and equipment


1,633.1



189.0



106.6



49.6



1,978.3   2009Potash


Phosphate


Nitrogen


All others


ConsolidatedSales

$
1,315.8


$
1,374.4


$
1,286.5


$



$
3,976.7Freight


58.5



83.4



49.1







191.0Transportation and distribution


35.3



37.9



54.9







128.1Net sales  third party


1,222.0



1,253.1



1,182.5



Cost of goods sold


491.6



1,160.7



990.7







2,643.0Gross margin


730.4



92.4



191.8







1,014.6Inter-segment sales










66.0







Depreciation and amortization


40.1



163.9



99.2



8.9



312.1Goodwill










96.6



0.4



97.0Assets


4,708.3



2,356.8



1,688.6



4,168.5



12,922.2Additions to property, plant and equipment


1,282.9



339.9



134.9



6.1



1,763.8   106 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 18 Segment
    Information continued
   2008Potash


Phosphate


Nitrogen


All others


ConsolidatedSales

$
4,068.1


$
2,880.7


$
2,497.7


$



$
9,446.5Freight


167.3



101.1



56.5







324.9Transportation and distribution


42.1



39.4



50.9







132.4Net sales  third party


3,858.7



2,740.2



2,390.3



Cost of goods sold


803.2



1,672.3



1,652.9







4,128.4Gross margin


3,055.5



1,067.9



737.4







4,860.8Inter-segment sales






23.1



173.6







Depreciation and amortization


82.0



140.5



97.1



7.9



327.5Goodwill










96.6



0.4



97.0Assets


3,350.0



2,283.0



1,593.6



3,022.2



10,248.8Additions to property, plant and equipment


831.1



268.5



94.5



4.2



1,198.3     2010

Country of OriginCanada


United
    States


Trinidad


Other


ConsolidatedSales to customers outside the companyCanada

$
138.5


$
103.0


$



$



$
241.5United States


1,315.4



2,073.6



637.5







4,026.5Canpotex (Canpotexs 2010 sales volumes were made to: Latin
    America 25%, India 14%, China 14%, other Asian countries 41%,
    other countries 6%)


1,272.6















1,272.6PhosChem (PhosChems 2010 sales volumes were made to: India
    58%, Latin America 20%, China 2%, other countries 11%, other
    Asian countries 9%)






395.5











395.5Mexico


19.3



75.6



2.6







97.5Brazil


133.5



34.5











168.0Colombia


38.1



13.3



69.5







120.9Other Latin America


78.9



36.9



65.9







181.7Other


4.3



22.0



8.1







34.4$
3,000.6


$
2,754.4


$
783.6


$



$
6,538.6Operating income

$
1,595.7


$
612.3


$
303.0


$
37.1


$
2,548.1Capital assets and goodwill

$
5,158.1


$
2,374.7


$
595.5


$
31.4


$
8,159.7   PotashCorp 2010 Financial
    Review 107




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 18 Segment
    Information continued
   2009

Country of OriginCanada


United States


Trinidad


Other


ConsolidatedSales to customers outside the companyCanada

$
64.0


$
120.1


$



$



$
184.1United States


538.3



1,559.0



427.5







2,524.8Canpotex (Canpotexs 2009 sales volumes were made to: India
    32%, Latin America 13%, China 6%, other Asian countries 43%,
    other countries 6%)


613.7















613.7PhosChem (PhosChems 2009 sales volumes were made to: India
    61%, Latin America 19%, China 1%, other countries 10%, other
    Asian countries 9%)






242.0











242.0Mexico






93.0



9.4







102.4Brazil


39.0



11.7



10.3







61.0Colombia


20.8



24.4



36.5







81.7Other Latin America


40.0



32.6



47.0







119.6Other






31.8



15.6







47.4$
1,315.8


$
2,114.6


$
546.3


$



$
3,976.7Operating income

$
555.4


$
252.3


$
100.2


$
272.9


$
1,180.8Capital assets and goodwill

$
3,635.7


$
2,241.4


$
601.1


$
32.1


$
6,510.3   2008

Country of OriginCanada


United States


Trinidad


Other


ConsolidatedSales to customers outside the companyCanada

$
150.6


$
210.2


$



$



$
360.8United States


1,353.1



2,992.3



899.4







5,244.8Canpotex (Canpotexs 2008 sales volumes were made to: Latin
    America 25%, India 16%, China 13%, other Asian countries 39%,
    other countries 7%)


2,257.1















2,257.1PhosChem (PhosChems 2008 sales volumes were made to: India
    57%, Latin America 21%, other Asian countries 11%, other
    countries 11%)






713.6











713.6Mexico


51.2



145.0



10.5







206.7Brazil


105.3



14.9







47.5



167.7Colombia


47.0



10.9



66.5







124.4Other Latin America


100.8



73.3



62.7







236.8Other


3.0



68.2



63.4







134.6$
4,068.1


$
4,228.4


$
1,102.5


$
47.5


$
9,446.5Operating income

$
2,684.2


$
1,232.7


$
366.3


$
305.3


$
4,588.5Capital assets and goodwill

$
2,307.2


$
1,993.4


$
577.0


$
31.6


$
4,909.2   108 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 19PROVINCIAL
    MINING AND OTHER TAXES   2010


2009


2008Saskatchewan resource surcharge and other

$
76.5


$
37.7


$
112.1Potash Production Tax






(8.7
)


431.3$
76.5


$
29.0


$
543.4    NOTE 20OTHER
    INCOME   2010


2009


2008Share of earnings of equity investees

$
174.3


$
133.7


$
255.8Dividend income


162.6



71.7



107.0Takeover response costs


(73.0
)






Gain on disposal of (provision for) auction rate securities






115.3



(88.8
)Gain on forward purchase contract for shares in Sinofert










25.3Other


(19.4
)


22.7



34.2$
244.5


$
343.4


$
333.5       
   NOTE 21INTEREST
    EXPENSE   2010


2009


2008Interest expense onShort-term debt

$
7.8


$
26.5


$
28.5Long-term debt


217.6



173.1



94.9Interest capitalized to property, plant and equipment


(118.6
)


(68.2
)


(42.9
)Interest income


(7.7
)


(10.5
)


(17.7
)$
99.1


$
120.9


$
62.8   PotashCorp 2010 Financial
    Review 109




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 22INCOME
    TAXES     year-end,
     2010


2009


2008Income before income taxesCanada

$
1,343.3


$
506.1


$
2,579.7United States


463.5



249.7



1,313.1Trinidad


287.7



80.4



341.2Other


354.5



223.7



291.7$
2,449.0


$
1,059.9


$
4,525.7Federal and provincial statutory income tax rates


29.94%



31.06%



32.07%Income tax at statutory rates

$
733.2


$
329.2


$
1,451.4Adjusted for the effect of:Non-taxable income


(95.0
)


(63.9
)


(107.8
)Production-related deductions


(35.3
)


(24.4
)


(96.1
)Adjustment to prior years production-related deductions






(47.6
)


(71.1
)Stock-based compensation


(34.2
)


(1.8
)


(22.8
)Tax rate differential on temporary differences


(18.2
)


(19.0
)


(26.7
)Additional tax deductions


(12.5
)


(12.9
)


(13.4
)Foreign exchange adjustment


(1.5
)


21.9



(84.7
)Prior year provision to income tax returns filed


35.7







Impact of foreign tax rates


22.6



(10.0
)


50.5Withholding taxes


10.7



6.2



15.3Change in valuation allowance


3.5



(35.4
)


62.5Other


33.8



56.1



(97.3
)Tax reduction resulting from internal restructuring






(119.2
)


Income tax expense

$
642.8


$
79.2


$
1,059.8    110 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 22 Income
    Taxes continued
     2010


2009


2008CanadaCurrent

$
333.2


$
31.0


$
516.3Future


144.8



13.3



137.5United States  FederalCurrent


46.2



(161.6
)


303.7Future


(7.5
)


163.2



(65.0
)United States  StateCurrent


2.0



(20.5
)


45.9Future


12.8



13.2



(15.8
)Trinidad and otherCurrent


112.6



31.4



129.0Future


(1.3
)


9.2



8.2Income tax expense

$
642.8


$
79.2


$
1,059.8      2010


2009Future income tax assets:Tax loss and other carryforwards





$
126.4


$
101.8Accrued environmental costs and asset retirement obligations






115.6



74.1Derivative instrument liabilities






105.7



64.1Post-retirement benefits and stock-based compensation






39.9



44.1Other






41.9



31.3Valuation allowance






(41.0
)


(37.5
)Total future income tax assets






388.5



277.9Future income tax liabilities:Property, plant and equipment






1,356.2



1,151.5Long-term debt






28.8



28.8Investments






20.0



16.6Other






8.4



9.0Total future income tax liabilities






1,413.4



1,205.9Net future income tax liabilities





$
1,024.9


$
928.0Amounts included in:Prepaid expenses and other current assets (Note 5)





$
(28.4
)

$
(17.6
)Other assets (Note 8)






(25.1
)


(16.8
)Future income tax liabilities






1,078.4



962.4$
1,024.9


$
928.0        PotashCorp 2010 Financial
    Review 111




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 23NET
    INCOME PER SHARE   2010


2009


2008Basic net income per share
    1Net income available to common shareholders

$
1,806.2


$
980.7


$
3,465.9Weighted average number of common shares


886,371,000



886,740,000



922,439,000Basic net income per share

$
2.04


$
1.11


$
3.76Diluted net income per share
    1Net income available to common shareholders

$
1,806.2


$
980.7


$
3,465.9Weighted average number of common shares


886,371,000



886,740,000



922,439,000Dilutive effect of stock options


24,722,000



25,088,000



29,874,000Weighted average number of diluted common shares


911,093,000



911,828,000



952,313,000Diluted net income per share

$
1.98


$
1.08


$
3.64   1

    Net income per share calculations are based on rounded dollar
    and rounded share amounts.   period-to-date
    
  NOTE 24STOCK-BASED
    COMPENSATION          112 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 24 Stock-Based
    Compensation continued
   Stock
    Option Plans
 Plan

Options Outstanding

Vesting Period

SettlementDirectors Plan

243,000

2 Years

SharesOfficers and Employees Plan

10,406,229

2 Years

Shares2005 Performance Option Plan

6,353,205

3 Years

Shares2006 Performance Option Plan

5,989,500

3 Years

Shares2007 Performance Option Plan

4,445,025

3 Years

Shares2008 Performance Option Plan

1,441,050

3 Years

Shares2009 Performance Option Plan

1,909,200

3 Years

Shares2010 Performance Option Plan

1,334,100

3 Years

Shares           Number of
    shares subject to option
  Performance Option Plans


Officers, Employees and Directors Plans2010


2009


2008


2010


2009


2008Outstanding, beginning of year


22,804,755



22,629,642



23,689,800



15,323,520



15,918,426



18,331,152Granted


1,334,100



1,924,200



1,459,350











Exercised


(2,664,825
)


(1,685,487
)


(2,469,408
)


(4,674,291
)


(594,906
)


(2,412,726
)Forfeited


(1,950
)


(63,600
)


(50,100
)










Expired






















Outstanding, end of year


21,472,080



22,804,755



22,629,642



10,649,229



15,323,520



15,918,426   Weighted average
    exercise price
  Performance Option Plans


Officers, Employees and Directors Plans2010


2009


2008


2010


2009


2008Outstanding, beginning of year

$
18.52


$
16.00


$
13.36


$
4.41


$
4.10


$
4.49Granted


33.82



31.96



66.02











Exercised


13.62



10.64



10.31



4.20



3.67



4.21Forfeited


64.62



32.62



19.14











Expired






















Outstanding, end of year

$
20.40


$
18.52


$
16.00


$
4.63


$
4.41


$
4.10   PotashCorp 2010 Financial
    Review 113




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 24 Stock-Based
    Compensation continued
       Options Outstanding

Options ExercisableRange of



Weighted Average

Weighted Average



Weighted AverageExercise Prices

Number

Remaining Life in Years

Exercise Price

Number

Exercise PriceOfficers and Employees and Directors Plans$3.50 to $4.70


6,394,392



2


$
3.91



6,394,392


$
3.91$4.71 to $5.90


4,254,837



2


$
5.72



4,254,837


$
5.7210,649,229



2


$
4.63



10,649,229


$
4.63Performance Option Plans$9.00 to $14.00


12,342,705



5


$
11.03



12,342,705


$
11.03$20.00 to $25.00


4,445,025



6


$
21.60



4,445,025


$
21.60$30.00 to $40.00


3,243,300



9


$
33.93






$
$65.00 to $70.00


1,441,050



7


$
66.45






$
21,472,080



6


$
20.40



16,787,730


$
13.8332,121,309



5


$
15.17



27,436,959


$
10.26       Year of Grant2010


2009


2008


2007


2006Expected dividend

$
0.13


$
0.13


$
0.13


$
0.13


$
0.07Expected volatility


50%



48%



34%



29%



30%Risk-free interest rate


2.61%



2.53%



3.30%



4.48%



4.90%Expected life of options in years


5.9



5.9



5.8



6.4



6.5        Number of

Weighted AverageShares Subject

Grant-Dateto Option

Fair ValueNonvested at January 1, 2010


8,459,250


$
12.01Granted


1,334,100



15.96Vested


(5,107,050
)


7.56Forfeited


(1,950
)


25.40Nonvested at December 31, 2010


4,684,350


$
17.97       114 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 24 Stock-Based
    Compensation continued
   Other
    Plans
     NOTE 25FINANCIAL
    INSTRUMENTS AND RELATED RISK MANAGEMENT     Financial
    Risks
   Credit
    Risk
   2010


2009Cash and cash equivalents

$
411.9


$
385.4Receivables


1,013.4



615.9Derivative instrument assets


5.3



9.0
     
    Acceptable minimum counterparty credit ratings relating to the
    natural gas and foreign currency derivative instrument assets,
    and cash and cash equivalents;
    Daily counterparty settlement on natural gas derivative
    instruments based on prescribed credit thresholds;
    Exposure thresholds by counterparty on cash and cash equivalents.    12-18 months. and/or
    PotashCorp 2010 Financial
    Review 115




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 25 Financial
    Instruments and Related Risk
    Management continued
      2010


20091-30 days

$
33.1


$
20.131-60 days


0.4



0.7Greater than 60 days


1.1



0.7$
34.6


$
21.5
     2010


2009Balance, beginning of year

$
8.4


$
7.7Provision for receivables impairment


0.1



1.3Receivables written off during the year as uncollectible


(0.3
)


(0.6
)Balance, end of year

$
8.2


$
8.4
     Liquidity
    Risk
   
    Maintain an optimal capital structure;
    Maintain an optimal credit rating that provides ease of access
    to the debt capital markets;
    Maintain an optimal balance of short- and long-term maturities;
    Maintain an optimal mix of exposure to fixed and floating
    interest rates.      AmountTotal

Outstanding

AmountAmount

and Committed

AvailableCredit
    facilities 1

$
3,250.0


$
1,272.4


$
1,977.6Line of credit


75.0



8.8
2


66.2   1
    The company increased the authorized amount available under its
    commercial paper program from $750.0 to $1,500.0 in 2010. The
    amount available under the commercial paper program is limited
    to the availability of backup funds under the credit facilities.
    Included in the amount outstanding and committed is $1.272.4 of
    commercial paper. Per the terms of the agreements, the
    commercial paper outstanding and committed, as applicable, is
    based on the US dollar balance or equivalent thereof in lawful
    money of other currencies at the time of issue; therefore,
    subsequent changes in the exchange rate applicable to Canadian
    dollar-denominated commercial paper have no impact on this
    balance.2
    Letters of credit as described in Note 10.         116 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 25 Financial
    Instruments and Related Risk
    Management continued
     Carrying Amountof Liability (Asset)at December 31,

Contractual

Within 1

1 to 3

3 to 5

Over 52010

Cash Flows

Year

Years

Years

YearsShort-term debt
    obligations 1

$
1,273.9


$
1,274.5


$
1,274.5


$



$



$
Payables and accrued charges 2


833.7



833.7



833.7











Long-term debt
    obligations 1


4,357.7



6,838.5



816.8



631.7



1,313.1



4,076.9Foreign currency derivatives


(5.3
)Outflow






238.5



238.5











Inflow






(243.8
)


(243.8
)










Natural gas
    derivatives 3


278.5



293.1



74.5



84.4



63.6



70.6$
6,738.5


$
9,234.5


$
2,994.2


$
716.1


$
1,376.7


$
4,147.5    1
    Contractual cash flows include contractual interest payments
    related to debt obligations. Interest rates on variable rate
    debt are based on prevailing rates at December 31, 2010.2
    Excludes taxes, accrued interest, deferred revenues and current
    portions of accrued environmental costs and asset retirement
    obligations and accrued pension and other post-retirement
    benefits.3
    Natural gas derivatives are subject to master netting
    agreements. Each counterparty has margin requirements that may
    require the company to post collateral against liability
    balances.  Market
    Risk
   Foreign exchange
    risk
     available-for-sale
  PotashCorp 2010 Financial
    Review 117




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 25 Financial
    Instruments and Related Risk
    Management continued
     Foreign Exchange RiskCarrying Amount


5% increase in US$

5% decrease in US$of Asset (Liability)


Income

OCI

Income

OCI2010Available-for-sale
    investmentsICL (New Israeli shekels)

$
3,045.5



$



$
(152.3
)

$



$
152.3Sinofert (Hong Kong dollars)


796.4








(39.8
)






39.8Short-term debt (CDN)


(68.5
)



3.4







(3.4
)


Payables (CDN)


(204.9
)



10.2







(10.2
)


Foreign currency derivatives


5.3




(12.2
)






12.2



2009Available-for-sale
    investmentsICL (New Israeli shekels)

$
1,895.7



$



$
(94.8
)

$



$
94.8Sinofert (Hong Kong dollars)


864.2








(43.2
)






43.2Short-term debt (CDN)


(262.5
)



13.1







(13.1
)


Payables (CDN)


(167.2
)



8.4







(8.4
)


Foreign currency derivatives


5.0




(20.4
)






20.4



    Interest rate
    risk
       Price
    risk
   available-for-sale
   118 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 25 Financial
    Instruments and Related Risk
    Management continued
    Price RiskCarrying Amount of


Effect of 10% decrease


Effect of 10% increaseAsset (Liability)


in prices on OCI


in prices on OCI2010


2009


2010


2009


2010


2009Natural gas derivatives

$
(278.5
)

$
(171.0
)

$
(49.8
)

$
(72.6
)

$
49.9


$
72.8Investments in ICL and Sinofert


3,841.9



2,759.9



(384.2
)


(276.0
)


384.2



276.0      Fair
    Value
 point-in-time
    2010

2009Carrying Amount

Fair Value of

Carrying Amount

Fair Value ofof Asset
    (Liability)

Asset
    (Liability)

of Asset (Liability)

Asset (Liability)Derivative instrument assetsNatural gas derivatives

$



$



$
3.7


$
3.7Foreign currency derivatives


5.3



5.3



5.3



5.3Investments in ICL and Sinofert


3,841.9



3,841.9



2,759.9



2,759.9Derivative instrument liabilitiesNatural gas derivatives


(278.5
)


(278.5
)


(174.7
)


(174.7
)Foreign currency derivatives










(0.3
)


(0.3
)Long-term debtSenior notes


(4,350.0
)


(4,524.6
)


(3,350.0
)


(3,505.6
)Other


(7.7
)


(7.7
)


(8.0
)


(8.0
)        over-the-counter Over-the-counter
   PotashCorp 2010 Financial
    Review 119




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 25 Financial
    Instruments and Related Risk
    Management continued
   available-for-sale
    Fair Value Measurements at Reporting Date Using:Quoted Prices in



SignificantActive Markets for

Significant Other

UnobservableCarrying Amount of

Identical Assets

Observable Inputs

InputsDescription

Asset (Liability)

(Level 1)

(Level 2)

(Level 3)2010Derivative instrument assetsForeign currency derivatives

$
5.3


$



$
5.3
1

$
Investments in ICL and Sinofert


3,841.9



3,841.9
1






Derivative instrument liabilitiesNatural gas derivatives


(278.5
)






(54.9
)  2


(223.6
)  22009Derivative instrument assetsNatural gas derivatives

$
3.7


$



$
1.2


$
2.5Foreign currency derivatives


5.3







5.3



Investments in ICL and Sinofert


2,759.9



2,759.9







Derivative instrument liabilitiesNatural gas derivatives


(174.7
)






(53.2
)


(121.5
)Foreign currency derivatives


(0.3
)






(0.3
)


    1
    During 2010, there were no transfers between Level 1 and
    Level 2.2
    During 2010, there were no transfers into Level 3 and $10.8
    was transferred out of Level 3 into Level 2 as the
    terms of certain natural gas derivatives now mature within
    36 months. Our policy is to recognize transfers at the end
    of the reporting period.  Fair value
    measurements using significant unobservable inputs
    (Level 3)
 Natural Gas Hedging Derivatives2010


2009Balance, beginning of year

$
(119.0
)

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


(36.1
)


(48.6
)Included in other comprehensive income


(125.4
)


(49.4
)Purchases






Sales






Issues






Settlements


46.1



66.0Transfers out of Level 3


10.8



23.8Balance, end of year

$
(223.6
)

$
(119.0
)Amount of total losses for the year included in earnings
    attributable to the change in unrealized gains or losses
    relating to instruments still held at the reporting date

$



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

$
(36.1
)

$
(48.6
)     120 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 26CAPITAL
    MANAGEMENT       2010


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

$
1,871.3


$
728.8Long-term debt


3,707.2



3,319.3Total debt


5,578.5



4,048.1Less: cash and cash equivalents


411.9



385.4Net debt


5,166.6



3,662.7Shareholders equity


6,804.2



6,439.8Less: accumulated other comprehensive income


2,244.3



1,648.8Adjusted shareholders equity


4,559.9



4,791.0Adjusted
    capital 1

$
9,726.5


$
8,453.7
   1

    Adjusted capital = (total debt  cash and cash
    equivalents) + (shareholders equity 
    accumulated other comprehensive income).  12-month
  2010


2009Components of ratiosAdjusted EBITDA

$
3,031.8


$
1,377.6Net debt

$
5,166.6


$
3,662.7Adjusted interest expense

$
217.7


$
189.1Adjusted capital

$
9,726.5


$
8,453.7RatiosAdjusted EBITDA to adjusted interest
    expense 1


13.9



7.3Net debt to adjusted
    EBITDA 2


1.7



2.7Net debt to adjusted
    capital 3


53.1%



43.3%
   1
    Adjusted EBITDA to adjusted interest expense = adjusted EBITDA
    (12 months ended) / adjusted interest expense
    (12 months ended).2
    Net debt to adjusted EBITDA = (total debt  cash and
    cash equivalents) / adjusted EBITDA (12 months ended).3
    Net debt to adjusted capital = (total debt  cash and
    cash equivalents) / (total debt  cash and cash
    equivalents + shareholders equity  accumulated
    other comprehensive income).      2010


2009Net income

$
1,806.2


$
980.7Interest expense


99.1



120.9Income taxes


642.8



79.2Depreciation and amortization


410.7



312.1Takeover response costs


73.0



Gain on disposal of auction rate securities






(115.3
)Adjusted EBITDA

$
3,031.8


$
1,377.62010


2009Interest expense

$
99.1


$
120.9Interest capitalized to property, plant and equipment


118.6



68.2Adjusted interest expense

$
217.7


$
189.1
    PotashCorp 2010 Financial
    Review 121




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 27COMMITMENTS     Lease
    Commitments
   Purchase
    Commitments
       Capital
    Commitments
   Other
    Commitments
     Operating

Purchase

Capital

OtherLeases

Commitments

Commitments

Commitments

Total2011

$
88.4


$
398.4


$
447.9


$
44.3


$
979.02012


84.1



74.8



158.6



29.1



346.62013


77.7



62.6



14.1



11.3



165.72014


73.9



53.4



0.5



4.0



131.82015


65.0



54.4







4.0



123.4Thereafter


199.3



135.2







19.6



354.1Total

$
588.4


$
778.8


$
621.1


$
112.3


$
2,100.6     NOTE 28CONTINGENCIES   Canpotex
   Mining
    Risk
   Legal
    and Other Matters
 and/or
  
    The company, along with other parties, has been notified by the
    US Environmental Protection Agency (USEPA) of
    potential liability under the US Comprehensive Environmental
    Response, Compensation and Liability Act of 1980
    (CERCLA) with respect to certain soil and
    groundwater conditions at a site in Lakeland, Florida which
    includes a former PCS Joint Venture fertilizer blending facility
    and certain surrounding properties. A Record of Decision
    (ROD) was issued in September 2007 and provides for
    a remedy that requires excavation of impacted soils and interim
    treatment of groundwater. The total remedy cost is estimated in
    the ROD to be $8.5. In September 2010, the USEPA approved the
    Remedial Design Report to address the soil contamination and the
    work to implement it is expected to begin in 2011.
    The USEPA has identified PCS Nitrogen, Inc. (PCS
    Nitrogen) as a potentially responsible party with respect
    to a former fertilizer blending  122 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 28 Contingencies continued
  operation in Charleston, South Carolina, known as the Planters
    Property or Columbia Nitrogen site, formerly owned by a
    company from which PCS Nitrogen acquired certain other
    assets. The USEPA has requested reimbursement of $3.0 of
    previously incurred response costs and the performance or
    financing of future site investigation and response activities
    from PCS Nitrogen and other named potentially responsible
    parties. In September 2005, Ashley II of Charleston,
    L.L.C., the current owner of the Planters Property, filed a
    complaint in the United States District Court for the District
    of South Carolina seeking a declaratory judgment that PCS
    Nitrogen is liable to pay environmental response costs that
    Ashley II of Charleston, L.L.C. alleges it has incurred and
    will incur in connection with response activities at the site.
    After the Phase II trial, the district court allocated
    30 percent of the liability for response costs at the site
    to PCS Nitrogen, as well as a proportional share of any costs
    that cannot be recovered from another responsible party. PCS
    Nitrogen has filed a motion for amendment of this decision. If
    that request is denied, the decision may be appealed, along with
    a previous decision imposing successor liability on PCS
    Nitrogen. The ultimate amount of liability for PCS Nitrogen, if
    any, depends upon the amount needed for remedial activities, the
    ability of other parties to pay and on the availability of
    insurance.  
    PCS Phosphate has agreed to participate, on a non-joint and
    several basis, with parties to an Administrative Settlement
    Agreement with the USEPA (Settling Parties) in the
    performance of a removal action and the payment of certain other
    costs associated with PCB soil contamination at the Ward
    Superfund Site in Raleigh, North Carolina (Site),
    including reimbursement of the USEPAs past costs. The
    removal activities commenced at the Site in August 2007. The
    cost of performing the removal action at the Site is estimated
    at $73.0. The Settling Parties have initiated CERCLA cost
    recovery litigation against PCS Phosphate and more than 100
    other entities. PCS Phosphate filed crossclaims and
    counterclaims seeking cost recovery. In addition to the removal
    action at the Site, investigation of sediments downstream of the
    Site in what is called Operable Unit 1 has occurred.
    In September 2008, the USEPA issued a final remedy for
    Operable Unit 1, with an estimated cost of $6.1. In response to
    a special notice letter from the USEPA, PCS Phosphate and the
    Settling Parties made a good-faith offer to perform
    and/or pay
    for certain actions described in the special notice letter. At
    this time, the company is unable to evaluate the extent of any
    exposure that it may have for the matters addressed in the
    special notice letter.
    Pursuant to the 1996 Corrective Action Consent Order (the
    Order) executed between PCS Nitrogen Fertilizer,
    L.P., formerly known as Arcadian Fertilizer, L.P. (PCS
    Nitrogen Fertilizer) and Georgia Department of Natural
    Resources, Environmental Protection Division (GEPD)
    in conjunction with PCS Nitrogen Fertilizers purchase of
    real property located in Augusta, Georgia, PCS Nitrogen
    Fertilizer agreed to perform certain activities including a
    facility investigation and, if necessary, a corrective action.
    PCS Nitrogen Fertilizer has performed investigations of
    environmental site conditions and has documented its findings in
    several reports submitted to GEPD. PCS Nitrogen Fertilizer
    received written comments from GEPD and, to address certain of
    these comments, PCS Nitrogen Fertilizer is conducting additional
    groundwater investigation. PCS Nitrogen Fertilizer also has
    conducted a pilot study to evaluate the viability of in-situ
    bioremediation of groundwater at the site. In May 2009, PCS
    Nitrogen Fertilizer submitted a Corrective Action Plan
    (CAP) to GEPD proposing to utilize in-situ
    bioremediation of groundwater at the site. It is uncertain what
    effect, if any, the additional groundwater investigation will
    have on the proposed CAP.
    In December 2009, during a routine inspection of a gypsum stack
    at the White Springs, Florida facility, a sinkhole was
    discovered that resulted in the loss of approximately
    84 million gallons of water from the stack. The company is
    sampling production and monitoring wells on its property
    and drinking water wells on neighboring property to assess
    impacts. The company incurred costs of $6.2 to address the
    sinkhole between the time of discovery and the end of
    2010. The Florida Department of Environmental Protection
    (FDEP) issued a notice to the company stating that
    the release may constitute an unauthorized discharge. In
    December 2010, the company entered into a consent order with the
    FDEP pursuant to which the company agreed to, among other
    things, remediate the sinkhole and perform additional monitoring
    of the groundwater quality and hydrogeologic conditions related
    to the sinkhole collapse. The company also entered into an order
    on consent with the USEPA that requires the company to complete
    a study of available feasible measures to reduce the possibility
    and impacts of any future sinkholes. In December 2010, the
    company submitted to the USEPA a study and a proposal to
    implement certain mitigation measures to meet the goals of the
    USEPA order on consent. Pending the USEPA review of the
    proposal, the company is unable at this time to estimate with
    certainty the total costs that may be incurred to address this
    matter. The impact of the actions required by the USEPA consent
    order on the asset retirement obligation for the White Springs
    gypsum stacks also cannot be determined with certainty at this
    time. The company will review the asset retirement obligation
    for the White Springs gypsum stacks to reflect actions required
    by the USEPA consent order after the USEPA approves a plan
    pursuant to the consent order and senior company management and
    the Board of Directors give authorization to proceed with the
    approved plan.  and/or
   PotashCorp 2010 Financial
    Review 123




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 28 Contingencies continued
     
    The USEPA has an ongoing initiative to evaluate implementation
    within the phosphate industry of a particular exemption for
    mineral processing wastes under the hazardous waste program. In
    connection with this industry-wide initiative, the USEPA
    conducted inspections at numerous phosphate operations and
    notified the company of various alleged violations of the US
    Resource Conservation and Recovery Act (RCRA) at its
    plants in Aurora, North Carolina; Geismar, Louisiana; and White
    Springs, Florida. The company has entered into RCRA 3013
    Administrative Orders on Consent and has performed certain site
    assessment activities at all three plants. The company is
    uncertain if any resolution will be possible without litigation,
    or, if litigation occurs, what the outcome would be. At this
    time, the company is unable to evaluate the extent of any
    exposure that it may have in these matters.
    The USEPA has also begun an initiative to evaluate compliance
    with the Clean Air Act at sulfuric and nitric acid plants. In
    connection with this industry-wide initiative, the USEPA has
    sent requests for information to numerous facilities, including
    the companys plants in Augusta, Georgia; Aurora, North
    Carolina; Geismar, Louisiana; Lima, Ohio; and
    White Springs, Florida. The USEPA has notified the company
    of various alleged violations of the Clean Air Act at its
    Geismar, Louisiana plant. The government has demanded process
    changes and penalties that would cost a total of approximately
    $27.0, but the company denies that it has any liability for the
    Geismar, Louisiana matter. Although the company is proceeding
    with planning and permitting for the process changes demanded by
    the government, the company is uncertain if any resolution will
    be possible without litigation, or, if litigation occurs, what
    the outcome would be. In July 2010, without alleging any
    specific violation of the Clean Air Act, the USEPA requested
    that the company meet and demonstrate compliance with the Clean
    Air Act for specified projects undertaken at the White Springs,
    Florida sulfuric acid plants. The company participated in such
    meeting but, at this time, is unable to evaluate if it has any
    exposure.
    Significant portions of the companys phosphate reserves in
    Aurora, North Carolina are located in wetlands. Under the Clean
    Water Act, the company must obtain a permit from the US Army
    Corps of Engineers (the Corps) before mining in the
    wetlands. In January 2009, the Division of Water Quality of the
    North Carolina Department of Natural Resources issued a
    certification under Section 401 of the Clean Water Act that
    mining of phosphate in excess of 30 years from lands owned
    or controlled by the company, including some wetlands, would not
    degrade water quality. Thereafter, in June 2009, the Corps
    issued the company a permit that will allow the company to mine
    the phosphate deposits identified in the Section 401
    certification. The USEPA decided not to seek additional review
    of the permit. In March 2009, four environmental organizations
    (Pamlico-Tar River Foundation, North Carolina Coastal
    Federation, Environmental Defense Fund and Sierra Club) filed a
    Petition for a Contested Case Hearing before the North Carolina
    Office of Administrative Hearings (OAH) challenging
    the Section 401 certification. The company has intervened
    in this proceeding. Cross motions for summary judgment by the
    Petitioners and the company have been filed, briefed and argued.
    The OAH has not issued a decision on them. At this time, the
    company is unable to evaluate the extent of any exposure that it
    may have in this matter.
    In May 2009, the Canadian government announced that its new
    industrial greenhouse gas emissions policies will be coordinated
    with policies that may be implemented in the US. The Province of
    Saskatchewan is considering the adoption of greenhouse gas
    emission control requirements. Regulations pursuant to the
    Management and Reduction of Greenhouse Gases Act in
    Saskatchewan, which impose a type of carbon tax to achieve a
    goal of a 20 percent reduction in greenhouse gas emissions
    by 2020 compared to 2006 levels, may become effective in 2011.
    There is no certainty as to the scope or timing of any final,
    effective provincial requirements. In July 2009, the Canadian
    government adopted rules requiring the reporting of specified
    greenhouse gas emissions from sources that emit more than 50,000
    tons of carbon dioxide equivalents. In September 2009, the USEPA
    promulgated rules requiring the reporting of greenhouse gas
    emissions for all fuel combustion sources emitting more than
    25,000 tons of carbon dioxide equivalents and certain other
    listed sources. The company does not believe that compliance
    with these emission reporting regulations will have a material
    adverse effect on its consolidated financial position. Although
    the US Congress has not passed any greenhouse gas emission
    control laws, the USEPA has adopted several rules to control
    greenhouse gas emissions using authority under existing
    environmental laws. In January 2011, the USEPA began phasing in
    requirements for all stationary sources, such as the
    companys plants, to obtain permits incorporating the
    best available control technology for greenhouse gas
    emissions at a source if it is a new source that could emit
    100,000 tons of greenhouse gases per year or if it is a modified
    source that increases such emissions by 75,000 tons per year.
    The company is not currently aware of any projects at its
    facilities that would be subject to these requirements. The
    company is monitoring these developments, and, except as
    indicated above, their effect on its operations cannot be
    determined with certainty at this time.
    In December 2010, the USEPA issued a final rule to restrict
    nutrient concentrations in surface waters in Florida to levels
    below those currently permitted at the companys White
    Springs, Florida plant. The revised nutrient criteria will
    become part of Floridas water quality standards in March
    2012. Projected capital costs resulting from the rule could be
    in excess of $100.0 for the companys White Springs,
    Florida plant, and there is no guarantee that controls can be
    implemented that are capable of achieving compliance with the
    revised nutrient standards under all flow conditions. This
    estimate assumes that the rule survives court challenges and
    that none of the site specific mechanisms for relief from the
    revised nutrient criteria are available to the White Springs,
    Florida plant. Various judicial challenges to the rule have been
    filed, including one lawsuit by The Fertilizer Institute and
    White Springs. The prospects for a rule to be implemented as
    issued by the USEPA and the availability of the site specific
    mechanisms are uncertain.  124 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 28 Contingencies continued
   
    The company, having been unable to agree with Mosaic Potash
    Esterhazy Limited Partnership (Mosaic) on the
    remaining amount of potash that the company is entitled to
    receive from Mosaic pursuant to the mining and processing
    agreement in respect of the companys rights at the
    Esterhazy mine, issued a Statement of Claim in the Saskatchewan
    Court of Queens Bench (Court) against Mosaic
    on May 27, 2009 and the claim was amended on
    January 19, 2010. In the Amended Statement of Claim, the
    company has asserted that it has the right under the mining and
    processing agreement to receive potash from Mosaic until at
    least 2012 and potentially much later, and seeks an order from
    the Court declaring the amount of potash which the company has
    the right to receive. Mosaic, in its Statement of Defence,
    asserts that at a delivery rate of 1.24 million tons of
    product per year, the companys entitlement to receive
    potash under the mining and processing agreement would terminate
    August 30, 2010. Mosaic has reported in its
    Form 10-Q
    for the quarterly period ending November 30, 2010, that it
    believes that at May 31, 2010 there were approximately
    1.1 million tonnes of potash product due to the company
    under the agreement.        
    Between September and October 2008, the company and PCS Sales
    (USA), Inc. were named as defendants in eight very similar
    antitrust complaints filed in US federal courts. Other potash
    producers are also defendants in these cases. Each of the
    separate complaints alleges conspiracy to fix potash prices, to
    divide markets, to restrict supply and to fraudulently conceal
    the conspiracy, all in violation of Section 1 of the
    Sherman Act. The company and PCS Sales (USA), Inc. believe each
    of these eight private antitrust lawsuits is without merit and
    intend to defend them vigorously.        NOTE 29GUARANTEES     back-to-back
  PotashCorp 2010 Financial
    Review 125




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 29 Guarantees continued
      agreed-upon
         NOTE 30RELATED
    PARTY TRANSACTIONS     NOTE 31RECONCILIATION
    OF CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING
    PRINCIPLES     (a) Inventory valuation:
  (b) Long-term investments:
    126 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
    (c) Property, plant and equipment and
    goodwill: first-day-of-the-month
  (d) Depreciation and amortization:
  (e) Exploration costs:
  (f) Pension and other post-retirement
    benefits:
    (g) Foreign currency translation
    adjustment:
  (h) Offsetting of certain amounts:
  (i) Stock-based compensation:
    Performance


Service Period CommencedOption Plan Year


CDN GAAP

US GAAP2006



January 1, 2006



May 4, 20062007



January 1, 2007



May 3, 20072008



January 1, 2008



May 8, 20082009



January 1, 2009



May 7, 20092010



January 1, 2010



May 6, 2010
     (j) Stripping costs:
  (k) Income taxes related to the above
    adjustments:
  PotashCorp 2010 Financial
    Review 127




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
   (l) Income tax consequences of stock-based employee
    compensation:
  (m) Income taxes related to uncertain income tax
    positions:
  (n) Cash flow statements:
    2010


2009 1


2008 1Net income as reported  Canadian GAAP

$
1,806.2


$
980.7


$
3,465.9Items increasing (decreasing) reported net incomeInventory
    valuation (a)


1.5



(1.7
)


Share of earnings of equity
    investees (b)


(0.9
)


(1.2
)


(1.0
)Asset
    writedown (c)


(32.8
)






Depreciation and
    amortization (d)


8.4



8.4



8.4Exploration
    costs (e)


(1.0
)


(0.4
)


(6.6
)Pension and other post-retirement
    benefits (f)






(15.8
)


(0.3
)Stock-based
    compensation (i)


(2.4
)


2.0



2.2Stripping
    costs (j)


(14.5
)


(10.4
)


(4.0
)Deferred income taxes relating to the above
    adjustments (k)


11.3



9.1



(0.3
)Income taxes related to US GAAP effective income tax
    rate (k,

    m)


10.4



22.1



(52.0
)Income taxes related to stock-based
    compensation (l)


(50.3
)


(7.1
)


(32.7
)Income taxes related to uncertain income tax
    positions (m)


(8.1
)


3.3



(13.7
)Net income  US GAAP

$
1,727.8


$
989.0


$
3,365.9Basic weighted average shares outstanding  US GAAP


886,371,000



886,740,000



922,439,000Diluted weighted average shares outstanding  US
    GAAP (i)


911,059,000



911,829,000



952,302,000Basic net income per share  US GAAP

$
1.95


$
1.12


$
3.65Diluted net income per share  US GAAP

$
1.90


$
1.08


$
3.53   1

    Corrected as described in Note 32.   128 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
  2010


2009 1


2008 1Total assets as reported  Canadian GAAP

$
15,619.3


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


(0.2
)


(1.7
)Investment in equity
    investees (b)


(5.0
)


(4.0
)Property, plant and
    equipment (c,

    d)


(108.8
)


(84.4
)Goodwill (c)


(46.7
)


(46.7
)Exploration
    costs (e)


(14.4
)


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


(197.9
)


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


(197.8
)


(108.9
)Stripping
    costs (j)


(61.6
)


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






33.7Total assets  US GAAP

$
14,986.9


$
12,468.8Total shareholders equity as reported  Canadian
    GAAP

$
6,804.2


$
6,439.8


$
4,535.1Items increasing (decreasing) reported shareholders equityAccumulated other comprehensive incomeShare of accumulated other comprehensive income of equity
    investees (b)


(2.2
)


(1.9
)


Pension and other post-retirement
    benefits (f)


(236.3
)


(229.7
)


(246.6
)Foreign currency translation
    adjustment (g)


(20.9
)


(20.9
)


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






(1.2
)


(1.2
)Inventory
    valuation (a)


(0.2
)


(1.7
)


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


(0.8
)


0.1



1.3Provision for asset impairment and asset
    writedown (c)


(250.8
)


(218.0
)


(218.0
)Depreciation and
    amortization (d)


95.3



86.9



78.5Exploration
    costs (e)


(14.4
)


(13.4
)


(13.0
)Pension and other post-retirement
    benefits (f)










15.8Foreign currency translation
    adjustment (g)


20.9



20.9



20.9Stock-based
    compensation (i)


0.4



2.4



Stripping
    costs (j)


(61.6
)


(47.1
)


(36.7
)Deferred income taxes relating to the above
    adjustments (k)


50.5



39.2



30.1Income taxes related to US GAAP effective income tax
    rate (k,

    m)


(49.8
)


(60.2
)


(82.3
)Income taxes related to uncertain income tax
    positions (m)


81.7



89.8



86.5Shareholders equity  US GAAP

$
6,416.0


$
6,085.0


$
4,149.5   1

    Corrected as described in Note 32.  PotashCorp 2010 Financial
    Review 129




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
   Supplemental
    US GAAP Disclosure
  Recent
    Accounting Pronouncements
  Variable interest
    entities
    Fair value
    disclosures
    Stock-based
    compensation
    Investments
    at Equity
   2010


2009Current assets





$
2,956.3


$
2,635.7Non-current assets






2,444.0



2,266.7Current liabilities






1,303.3



1,217.6Non-current liabilities






1,269.0



1,238.5Minority interest






48.0



46.4
   2010


2009


2008Sales

$
5,598.8


$
3,698.4


$
7,630.2Gross profit


1,022.1



827.4



1,340.1Income from continuing operations and net income


634.9



517.0



956.6
   Uncertainty
    in Income Taxes
   2010


2009Balance, beginning of year

$
26.1


$
29.6Additions based on tax positions related to the current year


0.9



0.4Additions for tax positions of prior years


12.6



11.2Reductions for tax positions of prior years


(15.8
)


(11.7
)Settlements


(10.1
)


(3.4
)Balance, end of year

$
13.7


$
26.1
     YearsCanada

2005-presentUS

2007-presentTrinidad

2005-presentBarbados

2002-present
    130 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
   Disclosures
    About Derivative Instruments and Hedging Activities
 Fair values of
    derivative instruments in the Consolidated Statements of
    Financial Position
  Derivative instrument assets (liabilities)
    1

Balance Sheet Location

2010


2009Derivatives designated as hedging instrumentsNatural gas derivatives

Prepaid expenses and other current assets

$



$
0.5Natural gas derivatives

Other assets






3.2Natural gas derivatives

Current portion of derivative instrument liabilities


(74.8
)


(51.5
)Natural gas derivatives

Derivative instrument liabilities


(203.7
)


(123.2
)Total derivatives designated as hedging instruments


(278.5
)


(171.0
)Derivatives not designated as hedging instrumentsForeign currency derivatives

Prepaid expenses and other current assets


5.3



5.3Foreign currency derivatives

Current portion of derivative instrument liabilities






(0.3
)Total derivatives not designated as hedging instruments

$
5.3


$
5.0
  1
    All fair value amounts are gross
    and exclude netted cash collateral balances.  The effect of
    derivative instruments on the Consolidated Statements of
    Operations for the year ended December 31
  Derivatives in
    cash flow hedging relationships
 Amount of (Loss) Gain Recognized in OCI(Effective Portion)2010


2009


2008Natural gas derivatives




$
(190.1
)

$
(102.5
)

$
(256.9
)Amount of (Loss) Gain Reclassified FromLocation of (Loss) Gain Reclassified From


Accumulated OCI Into Income (Effective Portion)Accumulated OCI Into Income (Effective Portion)


2010


2009


2008Cost of goods sold




$
(84.3
)

$
(85.0
)

$
22.8Amount of (Loss) Gain Recognized in Income(Ineffective Portion and AmountLocation of (Loss) Gain Recognized in Income


Excluded From Effectiveness Testing)(Ineffective Portion and Amount Excluded From Effectiveness
    Testing)


2010


2009


2008Cost of goods sold




$
(0.3
)

$
(0.2
)

$
(9.9
)Derivatives not designated as hedging instrumentsAmount of Gain (Loss) Recognized in IncomeLocation of Gain (Loss) Recognized in Income


2010


2009


2008Foreign currency derivatives

Foreign exchange


$
4.5


$
0.1


$
(86.5
)Natural gas derivatives

Cost of goods sold







0.9



(0.1
)      PotashCorp 2010 Financial
    Review 131




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
   Pension
    Plan Asset Disclosure
     2010


2009US


Canada


Trinidad


Total


US


Canada


Trinidad


TotalInvestments  at fair valueCash equivalents

$
40.4


$



$
5.9


$
46.3


$
10.3


$



$
5.5


$
15.8Government and agency securitiesUS


88.7







2.5



91.2



90.1







3.5



93.6International


4.1







30.3



34.4



2.3







26.7



29.0Corporate debt instrumentsUS


49.7











49.7



49.0











49.0International


20.8







5.7



26.5



11.5







4.9



16.4Mortgage backed securities


20.8







0.2



21.0



17.3







0.3



17.6EquitiesUS


107.6







8.9



116.5



81.7







7.9



89.6International


13.0







15.1



28.1



7.6







15.8



23.4Mutual/commingled funds
    1


317.1



54.1



1.9



373.1



266.8



43.4



5.0



315.2Other


6.8











6.8



4.7











4.7Total Investments  at fair value


669.0



54.1



70.5



793.6



541.3



43.4



69.6



654.3Cash










2.6



2.6











0.5



0.5Accrued interest and dividends


1.5







1.3



2.8



1.5







0.9



2.4Unsettled tradeReceivables


64.7











64.7



3.6











3.6Payables


(111.4
)










(111.4
)


(11.7
)










(11.7
)Total pension plan assets

$
623.8


$
54.1


$
74.4


$
752.3


$
534.7


$
43.4


$
71.0


$
649.1   1

    In 2010, the US defined benefit plan was invested in US equities
    (49%), US bonds (36%), International equities (14%) and other
    (1%) while the Canadian defined benefit plan was invested in
    Canadian equities (37%), Canadian bonds (29%), US equities
    (13%), International equities (14%) and cash (7%).  In 2009, the US defined benefit
    plan was invested in US equities (53%), US bonds (34%),
    International equities (12%) and other (1%) while the Canadian
    defined benefit plan was invested in Canadian equities (37%),
    Canadian bonds (33%), US equities (14%), International equities
    (11%), cash (4%) and other (1%).
   The following investments
    represent 5 percent or more of the pension plan
    assets

2010


2009Vanguard Equity Index Fund

$
92.2


$
95.9Intech Risk-Managed Large Cap Growth Fund LLC


89.0



63.7Standard Life Balanced Fund (Greystone)


54.1



43.4GMO International Opportunities Equity


44.2



31.3Artio International Equity Fund


43.6



31.6
   132 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
     Quoted Prices in

Significant

SignificantTotal at

Active Markets for

Observable

UnobservableDecember 31,

Identical Assets

Inputs

InputsAsset Category

2010

(Level
    1)

(Level
    2)

(Level
    3)AssetsCash

$
2.6


$
2.6


$



$
Accrued interest and dividends


2.8



2.8







Unsettled trade receivables


64.7



64.7







InvestmentsCash equivalents


46.3



46.3







Government and agency securitiesUS


91.2







91.2



International


34.4







34.4



Corporate debt instrumentsUS


49.7







49.0



0.7International


26.5







26.5



EquitiesUS


116.5



116.4



0.1



International


28.1



13.0



15.1



Mutual/commingled funds


373.1



88.4



284.7



Mortgage backed securities


21.0







20.0



1.0Other


7.3



1.7



3.8



1.8Total assets at fair value

$
864.2


$
335.9


$
524.8


$
3.5LiabilitiesUnsettled trade payables


111.4



111.4







Other


0.5







0.5



Total liabilities at fair value

$
111.9


$
111.4


$
0.5


$
Total pension plan assets

$
752.3


$
224.5


$
524.3


$
3.5    PotashCorp 2010 Financial
    Review 133




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
  Quoted Prices in

Significant

SignificantTotal at

Active Markets for

Observable

UnobservableDecember 31,

Identical Assets

Inputs

InputsAsset Category

2009

(Level 1)

(Level 2)

(Level 3)AssetsCash

$
0.5


$
0.5


$



$
Accrued interest and dividends


2.4



2.4







Unsettled trade receivables


3.6



3.6







InvestmentsCash equivalents


15.8



15.8







Government and agency securitiesUS


93.6







93.6



International


29.0







29.0



Corporate debt instrumentsUS


49.0







48.1



0.9International


16.4







16.2



0.2EquitiesUS


89.6



89.5



0.1



International


23.4



7.6



15.8



Mutual/commingled funds


315.2



77.9



237.3



Mortgage backed securities


17.6







15.7



1.9Other


4.8



2.5



2.3



Total assets at fair value

$
660.9


$
199.8


$
458.1


$
3.0LiabilitiesUnsettled trade payables


11.7



11.7







Other


0.1







0.1



Total liabilities at fair value

$
11.8


$
11.7


$
0.1


$
Total pension plan assets

$
649.1


$
188.1


$
458.0


$
3.0   Fair value
    measurements using significant unobservable inputs
    (Level 3)
  Corporate Debt, Mortgage Loansand Other2010


2009Balance, beginning of year

$
3.0


$
3.7Actual return on plan assetsRelating to assets still held at December 31


(0.1
)


1.1Relating to assets sold during the year ended December 31


0.2



0.1Purchases


2.5



Sales


(1.4
)


(1.7
)Transfers out of Level 3


(0.7
)


(0.2
)Balance, end of year

$
3.5


$
3.0   134 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
     Stock-Based
    Compensation
         Derivative
    Instruments and Hedging Activities
     Pension
    and Other Post-Retirement Benefits
   Related
    Party Transactions
    PotashCorp 2010 Financial
    Review 135




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
   Supplemental
    Schedules
   Supplemental
    Schedules of Consolidated Financial Position
    2010


2009 1AssetsCurrent assetsCash and cash
    equivalents (b)


$
411.3


$
385.2Receivables (b,

    h)



850.0



1,028.8Inventories (a,

    j)



567.5



631.5Prepaid expenses and other current
    assets (b)



113.9



124.71,942.7



2,170.2Property, plant and
    equipment (b,

    c, d, e, j)



7,872.2



6,251.9Investments (b)



4,937.9



3,763.7Other
    assets (f)



165.2



179.0Income taxes on uncertain income tax
    positions (k,

    m)







33.7Intangible assets



18.6



20.0Goodwill (c)



50.3



50.3$
14,986.9


$
12,468.8LiabilitiesCurrent liabilitiesShort-term debt and current portion of long-term debt


$
1,871.3


$
728.8Payables and accrued
    charges (b,

    i, k)



1,203.6



764.0Current portion of derivative instrument
    liabilities (h)



10.2



19.13,085.1



1,511.9Long-term debt



3,707.2



3,319.3Derivative instrument
    liabilities (h)



70.5



47.0Deferred income tax
    liabilities (k,

    l)



884.3



786.9Income taxes on uncertain income tax
    positions (k,

    m)



37.0



63.8Accrued pension and other post-retirement
    benefits (f)



452.2



437.6Accrued environmental costs and asset retirement obligations



329.9



215.1Other non-current liabilities and deferred credits
    (b)



4.7



2.28,570.9



6,383.8Shareholders EquityShare capital



1,430.7



1,430.3Additional paid-in
    capital (i)



168.1



258.4Accumulated other comprehensive income



1,984.9



1,395.1Retained earnings



2,832.3



3,001.26,416.0



6,085.0$
14,986.9


$
12,468.8
   1

    Corrected as described in Note 32.  136 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
  Supplemental
    Schedules of Consolidated Operations and Retained
    Earnings
   2010


2009 1


2008 1Sales


$
6,538.6


$
3,976.7


$
9,446.5Less: Freight



335.8



191.0



324.9Transportation and distribution



151.8



128.1



132.4Cost of goods
    sold (a,

    c, d, f, j)



3,463.5



2,662.7



4,124.4Gross Margin



2,587.5



994.9



4,864.8Selling and
    administrative (f,

    i)



230.4



181.4



186.1Provincial mining and other taxes



76.5



29.0



543.4Foreign exchange loss (gain)



16.8



(35.4
)


(126.0
)Share of earnings of equity
    investees (b)



(173.4
)


(132.5
)


(254.8
)Other
    income (e)



(69.2
)


(209.3
)


(71.1
)81.1



(166.8
)


277.6Operating Income



2,506.4



1,161.7



4,587.2Interest Expense



99.1



120.9



62.8Income before Income Taxes



2,407.3



1,040.8



4,524.4Income
    Taxes(k,

    l, m)



679.5



51.8



1,158.5Net Income



1,727.8



989.0



3,365.9Retained Earnings, Beginning of Year



3,001.2



2,130.2



2,136.8Repurchase of Common Shares



(1,779.0
)






(3,250.3
)Dividends Declared



(117.7
)


(118.0
)


(122.2
)Retained Earnings, End of Year


$
2,832.3


$
3,001.2


$
2,130.2Net Income per Share  Basic


$
1.95


$
1.12


$
3.65Net Income per Share  Diluted


$
1.90


$
1.08


$
3.53Dividends per Share


$
0.13


$
0.13


$
0.13
   1

    Corrected as described in Note 32.  PotashCorp 2010 Financial
    Review 137




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
  Supplemental
    Schedules of Consolidated Comprehensive Income
 
  2010


2009 1


2008 1Net Income

$
1,727.8


$
989.0


$
3,365.9Other comprehensive income (loss)Net increase (decrease) in unrealized gains on
    available-for-sale
    securities


661.9



1,015.1



(1,398.4
)Net losses on derivatives designated as cash flow hedges


(190.1
)


(102.6
)


(266.8
)Reclassification to income of net losses (gains) on cash flow
    hedges


84.3



85.3



(12.9
)Pension and other post-retirement
    benefits 2,

    (f)


(13.9
)


32.0



(257.9
)Other


0.4



11.0



(10.0
)Deferred income taxes related to other comprehensive
    income (k)


47.2



(34.9
)


264.0Other Comprehensive Income (Loss)


589.8



1,005.9



(1,682.0
)Comprehensive Income

$
2,317.6


$
1,994.9


$
1,683.9   1
    Corrected as described in Note 32.2
    2010 comprised of amortization of net actuarial loss of $(8.8),
    amortization of prior service costs of $(1.3) and amortization
    of transitional obligation of $0.3.
    2009 comprised of amortization of net actuarial loss of $9.2,
    amortization of prior service costs of $28.8 and amortization of
    transitional obligation of $0.3.
    2008 comprised of amortization of net actuarial loss of
    $(251.7), amortization of prior service costs of $(10.1) and
    amortization of transitional obligation of $1.6.  Supplemental
    Schedules of Consolidated Accumulated Other Comprehensive
    Income
   2010


2009


2008Accumulated other comprehensive income, beginning of year

$
1,395.1


$
389.2


$
2,071.2Other comprehensive income (loss), net of related income taxes


589.8



1,005.9



(1,682.0
)Accumulated other comprehensive income, end of year

$
1,984.9


$
1,395.1


$
389.2     2010


2009


2008Unrealized gains on
    available-for-sale
    securities

$
2,412.3


$
1,750.4


$
761.8Net unrealized losses on derivatives designated as cash flow
    hedges


(177.3
)


(111.4
)


(100.6
)Pension and other post-retirement benefits
    1, (f)


(236.3
)


(229.7
)


(246.6
)Other


7.1



6.7



(4.5
)Foreign currency translation
    adjustment (g)


(20.9
)


(20.9
)


(20.9
)Accumulated other comprehensive income, end of year

$
1,984.9


$
1,395.1


$
389.2   1

    2010 comprised of unamortized net actuarial loss of $(252.0),
    unamortized prior service costs of $17.3 and unamortized
    transitional obligation of $(1.6).
    2009 comprised of unamortized net actuarial loss of $(248.0),
    unamortized prior service costs of $20.1 and unamortized
    transitional obligation of $(1.8).
    2008 comprised of unamortized net actuarial loss of $(246.2),
    unamortized prior service costs of $1.4 and unamortized
    transitional obligation of $(1.8).  138 PotashCorp
    2010 Financial Review




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 31 Reconciliation
    of Canadian and United States Generally Accepted Accounting
    Principles continued
  Supplemental
    Schedules of Consolidated Cash Flow
 
  2010


2009 1


2008 1Operating ActivitiesNet income

$
1,727.8


$
989.0


$
3,365.9Adjustments to reconcile net income to cash provided by
    operating activitiesDepreciation and
    amortization (d)


402.3



303.7



319.1Stock-based
    compensation (i)


26.7



27.5



34.0Loss (gain) on disposal of property, plant and equipment and
    long-term investments


9.9



(107.6
)


61.7Asset writedown


32.8







Foreign exchange on deferred income tax and miscellaneous items


(0.1
)


(1.3
)


(106.4
)Provision for deferred income
    tax (k, l,

    m)


145.6



186.5



130.9Undistributed earnings of equity investees
    (b)


(92.6
)


(7.1
)


(165.7
)Derivative
    instruments (h)


(83.4
)


(62.0
)


48.7Other long-term
    liabilities (e)


50.6



19.2



49.2Changes in non-cash operating working capitalReceivables (b,

    h)


190.4



53.3



(593.7
)Inventories (a,

    j)


76.9



80.6



(324.1
)Prepaid expenses and other current
    assets (b)


(6.0
)


21.4



(23.7
)Payables and accrued
    charges (b,

    k)


462.6



(613.5
)


174.3Cash provided by operating activities


2,943.5



889.7



2,970.2Investing ActivitiesAdditions to property, plant and
    equipment (e,

    j)


(1,973.5
)


(1,736.9
)


(1,188.0
)Purchase of long-term investments


(422.3
)


(3.2
)


(445.6
)Proceeds from disposal of property, plant and equipment and
    long-term investments


1.6



151.9



43.2Other assets and intangible assets


(41.1
)


(54.1
)


(46.6
)Cash used in investing activities


(2,435.3
)


(1,642.3
)


(1,637.0
)Financing ActivitiesProceeds from long-term debt obligations


1,793.8



4,108.7



400.0Repayment of and finance costs on long-term debt obligations


(810.5
)


(3,561.3
)


(0.2
)Proceeds from short-term debt obligations


546.9



403.2



1,233.9Dividends


(118.7
)


(116.9
)


(122.6
)Repurchase of common shares


(1,999.7
)






(3,356.4
)Issuance of common shares


55.8



20.2



36.7Income taxes related to stock-based
    compensation (l)


50.3



7.1



32.7Cash (used in) provided by financing activities


(482.1
)


861.0



(1,775.9
)Increase (Decrease) in Cash and Cash Equivalents


26.1



108.4



(442.7
)Cash and Cash Equivalents, Beginning of Year


385.2



276.8



719.5Cash and Cash Equivalents, End of Year
    (b)

$
411.3


$
385.2


$
276.8Supplemental cash flow disclosureIncome taxes
    paid (n)

$
180.7


$
751.1


$
677.1   1

    Corrected as described in Note 32.   PotashCorp 2010 Financial
    Review 139




---



##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 32COMPARATIVE
    FIGURES     2006


2007


2008


2009As






As






As






AsPreviously

Adjust-

As


Previously

Adjust-

As


Previously

Adjust-

As


Previously

Adjust-

AsReported

ment

Corrected


Reported

ment

Corrected


Reported

ment

Corrected


Reported

ment

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


545.2







545.2




911.5







911.5




1,183.6



7.6



1,191.2




779.3



17.5



796.8Future income tax liability


632.1



(15.8
)


616.3




988.1



(15.3
)


972.8




794.2



(32.6
)


761.6




999.3



(36.9
)


962.4Accrued environmental costs and asset retirement obligations


110.3



40.7



151.0




121.0



39.8



160.8




133.4



78.8



212.2




134.8



80.3



215.1Retained earnings


1,286.4



(24.9
)


1,261.5




2,279.6



(24.5
)


2,255.1




2,402.3



(53.8
)


2,348.5




3,272.1



(60.9
)


3,211.2Accumulated other comprehensive income and retained earnings


n/a



n/a



n/a




4,458.5



(24.5
)


4,434.0




3,060.2



(53.8
)


3,006.4




4,920.9



(60.9
)


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


2,374.8



40.7



2,415.5




2,882.8



(0.9
)


2,881.9




4,081.8



46.6



4,128.4




2,631.6



11.4



2,643.0Income taxes


158.1



(15.8
)


142.3




416.2



0.5



416.7




1,077.1



(17.3
)


1,059.8




83.5



(4.3
)


79.2Net income


631.8



(24.9
)


606.9




1,103.6



0.4



1,104.0




3,495.2



(29.3
)


3,465.9




987.8



(7.1
)


980.7Net income per share  basic


0.68



(0.03
)


0.65




1.17







1.17




3.79



(0.03
)


3.76




1.11







1.11Net income per share  diluted


0.66



(0.03
)


0.63




1.13







1.13




3.67



(0.03
)


3.64




1.08







1.08Comprehensive income


n/a



n/a



n/a




2,413.5



0.4



2,413.9




1,974.2



(29.3
)


1,944.9




1,978.7



(7.1
)


1,971.6Consolidated Statements of Cash FlowFor the years ended December 31:Net income


631.8



(24.9
)


606.9




1,103.6



0.4



1,104.0




3,495.2



(29.3
)


3,465.9




987.8



(7.1
)


980.7Provision for future income tax


50.0



(15.8
)


34.2




119.6



0.5



120.1




82.2



(17.3
)


64.9




203.2



(4.3
)


198.9Other long-term liabilities


13.4



40.7



54.1




(57.9
)


(0.9
)


(58.8
)



2.3



46.6



48.9




(8.0
)


11.4



3.4Cash provided by operating activities


696.8







696.8




1,688.9







1,688.9




3,013.2







3,013.2




923.9







923.9
   n/a = not applicable since the
    company did not begin to report accumulated other comprehensive
    income and comprehensive income for Canadian GAAP purposes until
    2007
       140 PotashCorp
    2010 Financial Review




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##### 



Notes to the
    PotashCorp 2010 Consolidated Financial Statements
    In millions of US dollars except
    share and per-share amounts     NOTE 33SUBSEQUENT
    EVENT   three-for-one
  PotashCorp 2010 Financial
    Review 141




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##### 



Annual meeting
    Dividends
   Ownership
  Corporate headquarters
 Common share prices and volumes
   Toronto Stock Exchange 1
    
    New York Stock ExchangeHigh*
    
    Low*
    
    Volume
    
    High*
    
    Low*
    
    Volume2008      Q1
    
    
    55.93
    
    
    
    36.33
    
    
    
    103,153,851
    
    
    
    55.00
    
    
    
    35.17
    
    
    
    481,399,952Q2
    
    
    82.10
    
    
    
    51.68
    
    
    
    118,100,762
    
    
    
    80.54
    
    
    
    50.15
    
    
    
    725,191,906Q3
    
    
    77.09
    
    
    
    43.81
    
    
    
    111,838,148
    
    
    
    76.65
    
    
    
    42.16
    
    
    
    783,581,966Q4
    
    
    47.33
    
    
    
    20.60
    
    
    
    165,047,982
    
    
    
    44.48
    
    
    
    15.85
    
    
    
    1,153,295,676Year   2008
    
    
    82.10
    
    
    
    20.60
    
    
    
    498,140,743
    
    
    
    80.54
    
    
    
    15.85
    
    
    
    3,143,469,5002009      Q1
    
    
    38.80
    
    
    
    27.39
    
    
    
    118,600,823
    
    
    
    31.82
    
    
    
    21.22
    
    
    
    784,178,478Q2
    
    
    45.00
    
    
    
    31.75
    
    
    
    78,997,282
    
    
    
    40.45
    
    
    
    25.71
    
    
    
    531,709,327Q3
    
    
    38.17
    
    
    
    31.24
    
    
    
    64,778,808
    
    
    
    34.10
    
    
    
    26.95
    
    
    
    483,185,272Q4
    
    
    43.33
    
    
    
    30.36
    
    
    
    65,168,682
    
    
    
    41.37
    
    
    
    27.92
    
    
    
    454,388,084Year   2009
    
    
    45.00
    
    
    
    27.39
    
    
    
    327,545,595
    
    
    
    41.37
    
    
    
    21.22
    
    
    
    2,253,461,1612010      Q1
    
    
    43.56
    
    
    
    35.04
    
    
    
    59,846,960
    
    
    
    42.81
    
    
    
    32.76
    
    
    
    414,242,057Q2
    
    
    40.49
    
    
    
    30.49
    
    
    
    53,124,967
    
    
    
    40.04
    
    
    
    28.63
    
    
    
    327,715,148Q3
    
    
    53.55
    
    
    
    30.00
    
    
    
    79,895,445
    
    
    
    51.10
    
    
    
    27.95
    
    
    
    431,641,486Q4
    
    
    51.67
    
    
    
    45.32
    
    
    
    55,814,374
    
    
    
    51.68
    
    
    
    44.22
    
    
    
    344,494,881Year   2010
    
    
    53.55
    
    
    
    30.00
    
    
    
    258,681,746
    
    
    
    51.68
    
    
    
    27.95
    
    
    
    1,518,093,572
 1Trading prices are in CDN$
    
    Source: Thomson Reuters
 NYSE corporate governance
  
 
 *
    
    Data are adjusted for a two-for-one stock split in August 2004, a three-for-one stock split
in May 2007 and a three-for-one stock split in February 2011. Keyword:Shareholder Info
 142




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##### 



Appendix
 Market and Industry Data Statement
   Abbreviated Company Names and Sources*
 Agrifos
    
    Agrifos Fertilizer Inc., USAAgrium
    
    Agrium Inc. (TSX and NYSE: AGU), CanadaAMEC
    
    AMEC Americas Limited, CanadaAPC
    
    Arab Potash Company Ltd. (Amman: ARPT), JordanBelaruskali
    
    PA Belaruskali, BelarusBloomberg
    
    Bloomberg L.P., USABlue, Johnson
    
    Blue, Johnson & Associates, USACanpotex
    
    Canpotex Limited, CanadaCF Industries
    
    CF Industries, Inc. (NYSE: CF), USACP Rail
    
    Canadian Pacific Railway (TSX: CP), CanadaCRU
    
    CRU International Ltd, UKDoane
    
    Doane Advisory Services, USAFAI
    
    Fertilizer Association of India, IndiaFAO
    
    Food and Agriculture Organization of the United NationsFertecon
    
    Fertecon Limited and Fertecon Research Centre Limited, UKICL
    
    Israel Chemicals Ltd. (Tel Aviv: ICL), IsraelIFA
    
    International Fertilizer Industry Association, FranceIMF
    
    International Monetary Fund, USAInnophos
    
    Innophos Holdings, Inc. (NASDAQ: IPHS), USAIntrepid
    
    Intrepid Potash (NYSE: IPI), USAIPNI
    
    International Plant Nutrition Institute, USAK+S
    
    K+S Group (Xetra: SDF), GermanyKoch
    
    Koch Industries, Inc., USAMississippi Phosphates
    
    Mississippi Phosphates Corporation, USAMoodys
    
    Moodys Corporation (NYSE: MCO), USAMosaic
    
    The Mosaic Company (NYSE: MOS), USANYMEX
    
    New York Mercantile Exchange, USANYSE
    
    New York Stock Exchange, USAOCP
    
    Office Cherifien des Phosphates, MoroccoOMS
    
    Overseas Marine Service, USAPhosChem
    
    Phosphate Chemicals Export Association, Inc., USARabobank
    
    Rabobank GroupSAFRAS
    
    Editora SAFRAS Ltda, BrazilSilvinit
    
    JSC Silvinit, RussiaSimplot
    
    J.R. Simplot Company, USASinofert
    
    Sinofert Holdings Limited (HKSE, 0297.HK), ChinaSQM
    
    Sociedad Quimica y Minera de Chile S.A. (Santiago Bolsa de Comercio Exchange, NYSE: SQM), ChileTFI
    
    The Fertilizer Institute, USATogliatti
    
    OAO Togliatti Azot, RussiaTSX
    
    Toronto Stock Exchange, CanadaUralkali
    
    JSC Uralkali (LSE and RTS: URKA), RussiaUSDA
    
    US Department of Agriculture, USAUSDOC
    
    US Department of Commerce, USAVale
    
    Companhia Vale do Rio Doce (Bovespa: Vale), BrazilYara
    
    Yara International (Oslo: YAR), Norway
 
 *
    
    Where PotashCorp is listed as a source in conjunction with external sources, we have
supplemented the external data with internal analysis. 143




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##### 



Glossary of terms2010E
    
    2010 Estimated2011F
    
    2011 ForecastBrownfield capacity
    
    Increase in operational capability at existing operationCAGR
    
    Compound Annual Growth RateCanpotex
    
    An export company owned by all Saskatchewan
producers of potash (PotashCorp, Mosaic and Agrium)Consumption vs Demand
    
    Product applied vs product purchasedEU
    
    European UnionFOB
    
    Free on Board  cost of goods on board at point
of shipmentGDP
    
    Gross Domestic ProductGovernment
Control Production
    
    State-controlled: Operational control in the hands
of the stateSubsidy-controlled: The state provides subsidies
which control the economic viability of the operationGreenfield capacity
    
    New operation built on undeveloped siteLatin America
    
    South America, Central America, Caribbean
and MexicoLNG
    
    Liquefied Natural GasMMBtu
    
    Million British thermal unitsMT
    
    Metric tonneMMT
    
    Million tonnesNorth America
    
    The North American market includes Canada
and the United States.Offshore
    
    Offshore markets include all markets except Canada
and the US.Operational Capability
    
    Estimated annual achievable production levelPhosChem
    
    An association formed under the Webb-Pomerene
Act for US exports of phosphate fertilizer products.
Members are PotashCorp and Mosaic. PCS Sales is
responsible for export sales of liquid fertilizers for all
PhosChem members while Mosaic is responsible for
sales of solid fertilizers for members.PotashCorp
    
    Potash Corporation of Saskatchewan Inc. (PCS) and
its direct or indirect subsidiaries, individually or in any
combination, as applicableScientific termsNitrogen
    
    NH3
    
    ammonia (anhydrous), 82.2% NHNO3
    
    nitric acid, 22% N (liquid)UAN
    
    nitrogen solutions, 28-32% N (liquid)Phosphate
    
    MGA
    
    merchant grade acid, 54% P2O5 (liquid)DAP
    
    diammonium phosphate, 46% P2O5 (solid)MAP
    
    monoammonium phosphate, 52% P2O5 (solid)SPA
    
    superphosphoric acid, 70% P2O5 (liquid)Monocal
    
    monocalcium phosphate, 48.1% P2O5 (solid)Dical
    
    dicalcium phosphate, 42.4% P2O5 (solid)DFP
    
    defluorinated phosphate, 41.2% P2O5 (solid)STF
    
    silicon tetrafluoridePotash
    
    KCl
    
    potassium chloride, 60-63.2% K2O (solid)Fertilizer measuresK2O tonne
    
    Measures the potassium content of fertilizers having different chemical analysesP2O5 tonne
    
    Measures the phosphorus content of fertilizers having different chemical analysesN tonne
    
    Measures the nitrogen content of fertilizers having different chemical analysesProduct tonne
    
    Standard measure of the weights of all types of potash, phosphate and nitrogen
productsCurrency abbreviationsCDN
    
    Canadian dollarEUR
    
    EuroJOD
    
    Jordanian dinarNOK
    
    Norwegian kroneRUB
    
    Russian rubleUSD
    
    United States dollar
 144




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##### 



This past
year highlighted again the long-term challenge of meeting world demands for more and better food.
Our unique ability to meet the rising demands for crop nutrients is expected to drive our financial
performance in the years ahead. We believe, however, that the success of our company goes beyond achieving
and maintaining strong financial results. We recognize a broader responsibility to build long-term
value for all our stakeholders and set clear goals that help us address these needs.
 This, we believe,
 will support
 The Next Stage
of Growth
 To learn more, visit us online at PotashCorp2010AR.com




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#####