PotashCorp Reports Fourth-Quarter Earnings of $0.80 per Share

Symbol: POT

Listed: TSX, NYSE

SASKATOON, Jan. 28 /CNW/ - Potash Corporation of Saskatchewan Inc. (PotashCorp) today reported fourth-quarter earnings of $0.80 per share(1) ($243.6 million), which compared to $2.56 per share ($788.0 million) in the same period last year. Full-year 2009 earnings of $3.25 per share ($987.8 million) were the third highest in company history but below the record $11.01 per share ($3.5 billion) earned in 2008, reflecting the impact of the global economic downturn - especially on potash sales volumes and prices for potash, phosphate and nitrogen products.

Despite the lowest potash sales volumes since becoming a publicly traded company in 1989, our core nutrient remained the largest driver of gross margin, contributing 74 percent of the $279.6 million generated in fourth-quarter 2009 and 71 percent of the $1.0 billion for the full year. Earnings before interest, taxes, depreciation and amortization(2) (EBITDA) totaled $414.2 million for this year's fourth quarter and $1.5 billion for the year, while cash flow prior to working capital changes(2) was $503.5 million for the quarter and $1.4 billion for the year. With the substantial decline in global fertilizer demand, both measures trailed the performance of the previous year.

Our offshore investments in Arab Potash Company Ltd. (APC) in Jordan, Sociedad Quimica y Minera de Chile S.A. (SQM) in Chile and Israel Chemicals Ltd. (ICL) in Israel contributed $53.4 million in other income during the fourth quarter of 2009. For the full year, our investments in these companies, along with our position in Sinofert Holdings Limited (Sinofert) in China, provided $205.4 million in other income. The market value of our investments in these publicly traded companies was $7.4 billion as of market close on January 27, 2010, equating to approximately $24 per PotashCorp share.

"The fertilizer industry, like many other businesses, felt the impact of the global economic downturn in 2009," said PotashCorp President and Chief Executive Officer Bill Doyle. "While our earnings were well below our company's potential, we remain committed - as we have been for decades - to strategies that protect the long-term value of our assets. These include the continued expansion of our potash capacity and matching production to market demand. Our approach comes from enduring confidence that the world needs more food for its growing population, and we must be prepared to respond."

Market Conditions

In sharp contrast to the close of 2008, when economic uncertainty led farmers to become extremely cautious, the fourth quarter of 2009 reflected the beginning of the recovery in fertilizers. Strong crop margins - the result of improving commodity prices and lower input costs - appeared to refocus farmers and fertilizer dealers on the need to address nutrient shortfalls in the soils and the distribution chain created by nearly 18 months of limited fertilizer purchasing. This was most apparent in North America as farmers, although limited by a shortened fertilizer application window resulting from a delayed harvest, began returning to more normal application rates.

While demand in potash markets began to show signs of improvement during the quarter, buyers were resistant to commit to inventory restocking and prices moved lower. Domestic shipments from North American producers were up 10 percent over the fourth quarter of 2008, as fertilizer buyers responded to immediate demand from farmers. Offshore, India continued to receive contracted volumes from global potash suppliers and Brazilian customers purchased product to meet their immediate needs. After almost a full year without a contract, China reached a settlement at year-end with a major global potash supplier, and this appeared to renew buyer confidence that further downside pricing risk was limited. As the quarter closed, buyers in several markets were beginning to address their product needs.

Phosphate fourth-quarter sales volumes to North American and offshore markets approached historical levels, due to strong crop economics, low producer inventories and limited perceived pricing risk. In nitrogen, improved demand in the quarter for agricultural and industrial products resulted in US sales volumes increasing compared to the same period last year. Prices for both nutrients remained well below those of the previous year, but were moved up compared to the trailing quarter by higher input costs and strong demand.

Potash

Potash gross margin of $206.2 million for the fourth quarter and $730.4 million for the full year was significantly below the $744.8 million and the record $3.1 billion earned in the same periods of 2008. These results reflected lower prices and an unprecedented decline in sales volumes.

Fourth-quarter sales of 1.1 million tonnes represented more than one-third of our 2009 total of 3.0 million tonnes. This was 23 percent lower on a quarter-over-quarter basis, but reflected an improvement over the 65 percent decline experienced for the full year. We shipped 0.5 million tonnes to North American customers, a 30 percent increase over the same period last year, and 0.6 million tonnes to offshore markets, which was 42 percent below fourth-quarter 2008 levels. Canpotex Limited (Canpotex), the offshore marketing company for Saskatchewan potash producers, sold 36 percent of its volumes to India, 21 percent to Southeast Asia and 9 percent to Brazil; the remaining volumes were sold to other regions.

Average realized prices recalibrated over the course of the year, resulting in a 46 percent decline from the fourth quarter of 2008. Realized prices continued to be impacted by fixed transportation and distribution costs spread over fewer tonnes.

In keeping with our long-held strategy of matching potash production to market demand, we produced 1.1 million tonnes in fourth-quarter 2009, 46 percent less than the 2.1 million tonnes we produced in the same period last year - a comparative total that was unusually low because of work stoppages at three of our Saskatchewan mines in 2008. Potash per-tonne cost of sales in the fourth quarter increased as fixed costs were allocated over fewer tonnes.

Phosphate

Phosphate gross margin of $30.3 million in fourth-quarter 2009 was 73 percent less than the $110.4 million generated in the same quarter of 2008. For the year, phosphate contributed $103.8 million in gross margin, down 91 percent from the record $1.1 billion generated in 2008.

While prices for all product categories were significantly lower in 2009's fourth quarter, our industrial segment continued to benefit from sales tied to cost-plus or market index provisions that lag current market conditions. Industrial and feed products contributed nearly all of phosphate gross margin in both the quarter and the year, reinforcing the value of our product diversification strategy.

Phosphate demand improved near the end of the year. Quarterly sales volumes were 67 percent higher than those in the slow fourth quarter of 2008, primarily due to improved demand for liquid and solid fertilizers. Total 2009 phosphate sales volumes were 8 percent lower than those in 2008.

Phosphate cost of goods sold declined compared to fourth-quarter 2008 due to lower input costs for sulfur and ammonia.

Nitrogen

Nitrogen generated $43.1 million of gross margin in fourth-quarter 2009 compared to the $17.9 million earned in the final quarter of 2008. For the year, gross margin of $191.8 million was well below the record $737.4 million generated in 2008. Our Trinidad operation, which benefits from long-term, lower-cost natural gas contracts and proximity to the US market, generated $27.1 million in fourth-quarter gross margin and $105.3 million for all of 2009.

Total average realized nitrogen prices for fourth-quarter 2009 were 34 percent below the same quarter last year. Sales volumes were up 7 percent quarter-over-quarter, while full-year 2009 sales were essentially flat compared to 2008 levels.

Our total average natural gas cost, including hedge, was $4.55 per MMBtu for fourth-quarter 2009 and $3.86 per MMBtu for the year, 26 percent and 49 percent lower than in the same periods of 2008, respectively.

Financial

With significantly reduced potash sales volumes and lower profitability, provincial mining and other taxes in fourth-quarter 2009 fell to $12.0 million from $109.0 million in the same period of 2008, and totaled $29.0 million for 2009.

Our expenditures on property, plant and equipment were $573.6 million in fourth-quarter 2009, the majority directed to our brownfield potash capacity expansions. This brought our full-year 2009 capital spending to $1.8 billion.

Outlook

Despite the severe global economic downturn of 2009, the long-term drivers of our business - growth in population and stronger economies in developing nations leading to greater demand for food - remain intact. Global grain consumption rose by 2 percent in 2009, demonstrating the power of these trends. Rising demand for food places pressure on the world's grain supplies and, as a result, crop prices remain well above historical levels. This has created a favorable situation for many farmers, whose planting decisions are influenced by the ability to generate a return on their investment. We believe crop prices will remain strong over the coming years, providing farmers with the financial incentive to strive for increased production.

This environment is supportive of our business, as the science of food production is inescapable: balanced fertilization is necessary to support healthy plant growth and optimize crop yields. Nutrients in the food supply come from the soil and, following a year of substantially reduced potash and phosphate applications, we believe that farmers now must address the resulting need to sustain future production. Replenishing nutrients in the soil is a long-term exercise. Recognizing the opportunity that comes with strong margins, farmers appear to be gradually returning to normal fertilization practices and are expected to demand more fertilizer in the years ahead.

At PotashCorp, we are preparing to meet rising demand for potash, and understand the importance of capacity being available to meet the world's growing needs. Developing capacity - brownfield or greenfield - requires significant time, capital and a margin sufficient to justify the investment.

We expect global shipments will be approximately 50 million tonnes in 2010, marking the transition between the historically low levels of 2009 and a return to higher demand in 2011. This will be a significant improvement from 2009 levels but will not address the multi-year process of refilling distributor inventories and soil nutrient levels. Weaker crop margins or delayed buyer engagement could result in potash shipments below the forecast for this year, while stronger crop economics or significant engagement of key markets could raise demand above this level.

Supportive crop prices, improved potash price clarity and an empty supply chain are prompting buyers to begin positioning product in advance of key growing seasons. We expect India to resume potash imports under a new contract in the first half of 2010 and import about 5.5-6.0 million tonnes. In Brazil, where soils are naturally deficient in potassium, the combination of strong crop economics and improved access to credit is expected to push 2010 imports up to 5.5-6.5 million tonnes. Southeast Asian markets are forecast to import 4.0-5.0 million tonnes. We expect China to consume about 8.0-9.0 million tonnes of potash (KCl), including 4.5-5.0 million tonnes of imports. Depending on the extent of farmer engagement in China, buyers there could pursue additional volumes later in 2010.

While these levels would mark an improvement in demand, many of these countries need to further increase food production, especially in light of reduced crop yields in 2009. We believe this will require them to apply more potash to improve the balance with other nutrients.

In North America, our order book suggests a strong start to the year, and spring demand appears to be robust. We anticipate potash demand in the domestic market to be 8.5-9.5 million tonnes.

Based on these conditions, we expect our 2010 potash gross margin to be in the range of $1.4 billion-$1.8 billion and total shipments of 7.0-8.0 million tonnes. With our 2010 potash operational capability expected to be approximately 11.5 million tonnes, we anticipate continued production curtailments.

In our other nutrients, we expect increased demand and higher prices to push 2010 combined phosphate and nitrogen gross margin to $400 million-$500 million.

We expect capital expenditures, excluding capitalized interest, to approximate $1.9 billion in 2010, of which $300 million will be sustaining capital. Depreciation and amortization expense is forecast to be approximately $360 million. Our 2010 annual effective tax rate is expected to be in the range of 24-26 percent. As a result of our significant capital expenditures, provincial mining and other taxes are forecast to approximate 4-6 percent of total potash gross margin for the year. Other income is expected to be in the range of $150 million-$200 million.

With these assumptions, PotashCorp is forecasting 2010 net income per share in the range of $4.00-$5.00, including $0.70-$1.00 in the first quarter.

Conclusion

"We believe the need for more food - and the nutrients to produce it - is irrefutable," said Doyle. "Even though fertilizer demand can be deferred on a short-term basis, as we saw in 2009, the long-term requirement cannot be denied. We enter 2010 with a sense of optimism, as we look ahead to helping fertilizer dealers and farmers begin replenishing nutrients in the soil and supply chain. We believe this is an opportunity to further demonstrate the strength of our assets, this year and for decades to come."

    
    Notes
    -----
    1. All references to per-share amounts pertain to diluted net income per
       share.
    2. See reconciliation and description of non-GAAP measures in the
       attached section titled "Selected Non-GAAP Financial Measures and
       Reconciliations."
    

Potash Corporation of Saskatchewan Inc. is the world's largest fertilizer enterprise producing the three primary plant nutrients and a leading supplier to three distinct market categories: agriculture, with the largest capacity in the world in potash, third largest in each of nitrogen and phosphate; animal nutrition, with the world's largest capacity in phosphate feed ingredients; and industrial chemicals, as the largest global producer of industrial nitrogen products and the world's largest capacity for production of purified industrial phosphoric acid.

This release contains forward-looking statements. These statements are based on certain factors and assumptions including foreign exchange rates, expected growth, results of operations, performance, business prospects and opportunities and effective income tax rates. While the company considers these factors and assumptions to be reasonable based on information currently available, they may prove to be incorrect. Several factors could cause actual results to differ materially from those in the forward-looking statements, including, but not limited to: fluctuations in supply and demand in fertilizer, sulfur, transportation and petrochemical markets; changes in competitive pressures, including pricing pressures; the recent global financial crisis and conditions and changes in credit markets; the results of sales contract negotiations with China and India; timing and amount of capital expenditures; risks associated with natural gas and other hedging activities; changes in capital markets and corresponding effects on the company's investments; changes in currency and exchange rates; unexpected geological or environmental conditions, including water inflow; strikes and other forms of work stoppage or slowdowns; changes in and the effects of, government policy and regulations; and earnings, exchange rates and the decisions of taxing authorities, all of which could affect our effective tax rates. Additional risks and uncertainties can be found in our Form 10-K for the fiscal year ended December 31, 2008 under captions "Forward-Looking Statements" and "Item 1A - Risk Factors" and in our other filings with the US Securities and Exchange Commission and Canadian provincial securities commissions. Forward-looking statements are given only as at the date of this release and the company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

    
     PotashCorp will host a conference call on Thursday, January 28, 2010
                           at 1:00 pm Eastern Time.

          To join the call, dial (412) 317-6578 at least 10 minutes
                           prior to the start time.

                       No reservation ID is required.

                Alternatively, visit www.potashcorp.com for a
                     live webcast of the conference call.

           Webcast participants can submit questions to management
                online from their audio player pop-up window.

             This news release is also available at our website.



                   Potash Corporation of Saskatchewan Inc.
           Condensed Consolidated Statements of Financial Position
              (in millions of US dollars except share amounts)
                                 (unaudited)

                                                   December 31,  December 31,
                                                      2009          2008
    -------------------------------------------------------------------------

    Assets
      Current assets
        Cash and cash equivalents                  $     385.4  $      276.8
        Accounts receivable (Note 2)                   1,137.9       1,189.9
        Inventories                                      623.5         714.9
        Prepaid expenses and other current assets        124.9          85.6
    -------------------------------------------------------------------------
                                                       2,271.7       2,267.2

      Property, plant and equipment                    6,413.3       4,812.2
      Investments                                      3,760.3       2,750.7
      Other assets                                       359.9         300.2
      Intangible assets                                   20.0          21.5
      Goodwill                                            97.0          97.0
    -------------------------------------------------------------------------
                                                   $  12,922.2   $  10,248.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
      Current liabilities
        Short-term debt and current portion
         of long-term debt                         $     728.8  $    1,324.1
        Accounts payable and accrued charges             779.3       1,183.6
        Current portion of derivative
         instrument liabilities                           51.8         108.1
    -------------------------------------------------------------------------
                                                       1,559.9       2,615.8

      Long-term debt (Note 3)                          3,319.3       1,739.5
      Derivative instrument liabilities                  123.2         120.4
      Future income tax liability                        999.3         794.2
      Accrued pension and other post-retirement
       benefits                                          280.8         253.4
      Accrued environmental costs and asset
       retirement obligations                            134.8         133.4
      Other non-current liabilities and
       deferred credits                                    4.2           3.2
    -------------------------------------------------------------------------
                                                       6,421.5       5,659.9
    -------------------------------------------------------------------------

    Shareholders' Equity
      Share capital                                    1,430.3       1,402.5
        Unlimited authorization of common shares
        without par value; issued and outstanding
        295,975,550 and 295,200,987 at December
        31, 2009 and 2008, respectively

      Contributed surplus                                149.5         126.2
      Accumulated other comprehensive income           1,648.8         657.9
      Retained earnings                                3,272.1       2,402.3
    -------------------------------------------------------------------------
                                                       6,500.7       4,588.9
    -------------------------------------------------------------------------
                                                   $  12,922.2   $  10,248.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See Notes to the Condensed Consolidated Financial Statements)



                   Potash Corporation of Saskatchewan Inc.
    Condensed Consolidated Statements of Operations and Retained Earnings
            (in millions of US dollars except per-share amounts)
                                 (unaudited)

                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
                                     2009       2008       2009       2008
    -------------------------------------------------------------------------

    Sales (Note 4)                $ 1,099.1  $ 1,870.6  $ 3,976.7  $ 9,446.5
    Less: Freight                      60.8       37.7      191.0      324.9
          Transportation and
           distribution                27.1       35.2      128.1      132.4
          Cost of goods sold          731.6      924.6    2,631.6    4,081.8
    -------------------------------------------------------------------------
    Gross Margin                      279.6      873.1    1,026.0    4,907.4
    -------------------------------------------------------------------------
    Selling and administrative         50.9       29.8      183.6      188.4
    Provincial mining and other
     taxes                             12.0      109.0       29.0      543.4
    Foreign exchange gain             (34.1)     (62.8)     (35.4)    (126.0)
    Other income (Note 5)             (78.8)     (78.3)    (343.4)    (333.5)
    -------------------------------------------------------------------------
                                      (50.0)      (2.3)    (166.2)     272.3
    -------------------------------------------------------------------------
    Operating Income                  329.6      875.4    1,192.2    4,635.1
    Interest Expense (Note 6)          40.1       20.6      120.9       62.8
    -------------------------------------------------------------------------
    Income Before Income Taxes        289.5      854.8    1,071.3    4,572.3
    Income Taxes (Note 7)              45.9       66.8       83.5    1,077.1
    -------------------------------------------------------------------------
    Net Income                    $   243.6  $   788.0      987.8    3,495.2
                                -----------------------
                                -----------------------
    Retained Earnings,
     Beginning of Year                                    2,402.3    2,279.6
    Repurchase of Common Shares                                 -   (3,250.3)
    Dividends                                              (118.0)    (122.2)
    -------------------------------------------------------------------------
    Retained Earnings, End
     of Year                                            $ 3,272.1  $ 2,402.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net Income Per Share (Note 8)
      Basic                       $    0.82  $    2.63  $    3.34  $   11.37
      Diluted                     $    0.80  $    2.56  $    3.25  $   11.01
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Dividends Per Share           $    0.10  $    0.10  $    0.40  $    0.40
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (See Notes to the Condensed Consolidated Financial Statements)



                   Potash Corporation of Saskatchewan Inc.
               Condensed Consolidated Statements of Cash Flow
                         (in millions of US dollars)
                                 (unaudited)

                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
                                     2009       2008       2009       2008
    -------------------------------------------------------------------------

    Operating Activities
    Net income                    $   243.6  $   788.0  $   987.8  $ 3,495.2
    -------------------------------------------------------------------------

    Adjustments to reconcile net
     income to cash provided by
     operating activities
      Depreciation and
       amortization                    84.6       80.4      312.1      327.5
      Stock-based compensation          3.3        4.1       29.5       36.2
      (Gain) loss on disposal
       of property, plant and
       equipment and long-term
       investments                     (0.7)       1.2        7.7      (27.1)
      Provision for (gain on
       disposal of) auction
       rate securities                    -       17.5     (115.3)      88.8
      Foreign exchange on
       future income tax               (0.3)     (82.5)      (1.3)    (106.4)
      Provision for future
       income tax                     137.4        6.7      203.2       82.2
      Undistributed earnings
       of equity investees             (1.5)     (32.9)      (2.8)    (166.7)
      Derivative instruments            8.0       67.1      (62.0)      48.7
      Other long-term liabilities      29.1       (0.5)      (8.0)       2.3
    -------------------------------------------------------------------------
      Subtotal of adjustments         259.9       61.1      363.1      285.5
    -------------------------------------------------------------------------

    Changes in non-cash operating
     working capital
      Accounts receivable               0.2      183.1       53.1     (593.7)
      Inventories                      17.7       36.1       88.2     (324.4)
      Prepaid expenses and
       other current assets            30.4       10.4       21.2      (23.7)
      Accounts payable and
       accrued charges                 16.3     (315.4)    (589.5)     174.3
    -------------------------------------------------------------------------
      Subtotal of changes in
       non-cash operating
       working capital                 64.6      (85.8)    (427.0)    (767.5)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                       568.1      763.3      923.9    3,013.2
    -------------------------------------------------------------------------

    Investing Activities
    Additions to property,
     plant and equipment             (573.6)    (427.7)  (1,763.8)  (1,198.3)
    Purchase of long-term
     investments                       (3.2)    (116.1)      (3.2)    (445.6)
    Proceeds from disposal
     of property, plant and
     equipment and long-term
     investments                        3.5        2.3       19.4       43.2
    Proceeds from disposal of
     auction rate securities              -          -      132.5          -
    Other assets and intangible
     assets                           (18.0)     (13.5)     (54.1)     (46.6)
    -------------------------------------------------------------------------
    Cash used in investing
     activities                      (591.3)    (555.0)  (1,669.2)  (1,647.3)
    -------------------------------------------------------------------------
    Cash before financing
     activities                       (23.2)     208.3     (745.3)   1,365.9
    -------------------------------------------------------------------------

    Financing Activities
    Proceeds from long-term
     debt obligations                  75.0      400.0    4,108.7      400.0
    Repayments and finance costs
     of long-term debt obligations   (269.9)         -   (3,561.3)      (0.2)
    Proceeds from (repayments of)
     short-term debt obligations      237.9     (352.4)     403.2    1,233.9
    Dividends                         (29.0)     (30.3)    (116.9)    (122.6)
    Repurchase of common shares           -     (453.5)         -   (3,356.4)
    Issuance of common shares           3.4        5.2       20.2       36.7
    -------------------------------------------------------------------------
    Cash provided by (used in)
     financing activities              17.4     (431.0)     853.9   (1,808.6)
    -------------------------------------------------------------------------
    (Decrease) Increase in Cash
     and Cash Equivalents              (5.8)    (222.7)     108.6     (442.7)
    Cash and Cash Equivalents,
     Beginning of Period              391.2      499.5      276.8      719.5
    -------------------------------------------------------------------------
    Cash and Cash Equivalents,
     End of Period                $   385.4  $   276.8  $   385.4  $   276.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash and cash equivalents
     comprised of:
      Cash                        $   121.6  $    29.9  $   121.6  $    29.9
      Short-term investments          263.8      246.9      263.8      246.9
    -------------------------------------------------------------------------
                                  $   385.4  $   276.8  $   385.4  $   276.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplemental cash flow
     disclosure
      Interest paid               $    59.3  $    31.4  $   115.4  $    82.8
      Income taxes (received)
       paid                       $   (98.9) $    74.2  $   640.3  $   669.9
    -------------------------------------------------------------------------
    (See Notes to the Condensed Consolidated Financial Statements)



                   Potash Corporation of Saskatchewan Inc.
       Condensed Consolidated Statement of Comprehensive Income (Loss)
                         (in millions of US dollars)
                                 (unaudited)

                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
    (Net of related income taxes)    2009       2008       2009       2008
    -------------------------------------------------------------------------

    Net income                    $   243.6  $   788.0  $   987.8  $ 3,495.2
    -------------------------------------------------------------------------
    Other comprehensive
     income (loss)
      Net increase (decrease)
       in unrealized gains on
       available-for-sale
       securities(1)                  435.2     (934.7)     988.6   (1,336.9)
      Net losses on derivatives
       designated as cash flow
       hedges(2)                      (24.0)    (105.8)     (63.9)    (166.0)
      Reclassification to income
       of net losses (gains) on
       cash flow hedges(3)             13.2        6.3       53.1       (8.1)
      Unrealized foreign
       exchange gains (losses)
       on translation of
       self-sustaining foreign
       operations                       1.1       (7.7)      13.1      (10.0)
    -------------------------------------------------------------------------
    Other comprehensive income
     (loss)                           425.5   (1,041.9)     990.9   (1,521.0)
    -------------------------------------------------------------------------
    Comprehensive income (loss)   $   669.1  $  (253.9) $ 1,978.7  $ 1,974.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) 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
        (2008 - $(118.5)) for the three months ended December 31, 2009 and
        $26.5 (2008 - $(61.5)) for the twelve months ended December 31, 2009.
    (2) Cash flow hedges are comprised of natural gas derivative instruments,
        and are net of income taxes of $(14.4) (2008 - $(76.2)) for the three
        months ended December 31, 2009 and $(38.7) (2008 - $(100.8)) for the
        twelve months ended December 31, 2009.
    (3) Net of income taxes of $7.9 (2008 - $1.1) for the three months ended
        December 31, 2009 and $32.2 (2008 - $(4.8)) for the twelve months
        ended December 31, 2009.



                   Potash Corporation of Saskatchewan Inc.
               Condensed Consolidated Statement of Accumulated
                         Other Comprehensive Income
                         (in millions of US dollars)
                                 (unaudited)

                                                   December 31,  December 31,
    (Net of related income taxes)                     2009          2008
    -------------------------------------------------------------------------

    Net unrealized gains on available-for-sale
     securities(1)                                 $   1,750.4   $     761.8
    Net unrealized losses on derivatives
     designated as cash flow hedges(2)                  (111.4)       (100.6)
    Unrealized foreign exchange gains (losses)
     on translation of self-sustaining foreign
     operations                                            9.8          (3.3)
    -------------------------------------------------------------------------
    Accumulated other comprehensive income         $   1,648.8   $     657.9
    Retained earnings                                  3,272.1       2,402.3
    -------------------------------------------------------------------------
    Accumulated Other Comprehensive Income
     and Retained Earnings                         $   4,920.9   $   3,060.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) $1,900.8 before income taxes (2008 - $885.7).
    (2) $(177.6) before income taxes (2008 - $(160.2)).
    (See Notes to the Condensed Consolidated Financial Statements)



                   Potash Corporation of Saskatchewan Inc.
            Notes to the Condensed Consolidated Financial Statements
            For the Three and Twelve Months Ended December 31, 2009
        (in millions of US dollars except share and per-share amounts)
                                 (unaudited)

    1.  Significant Accounting Policies

    With its subsidiaries, Potash Corporation of Saskatchewan Inc. ("PCS") -
    together known as "PotashCorp" or "the company" except to the extent the
    context otherwise requires - forms an integrated fertilizer and related
    industrial and feed products company. The company's accounting policies
    are in accordance with accounting principles generally accepted in Canada
    ("Canadian GAAP"). The accounting policies used in preparing these
    unaudited condensed consolidated financial statements are consistent with
    those used in the preparation of the 2008 annual consolidated financial
    statements, except as described below.

    These unaudited condensed consolidated financial statements include the
    accounts of PCS and its subsidiaries; however, they do not include all
    disclosures normally provided in annual consolidated financial statements
    and should be read in conjunction with the 2008 annual consolidated
    financial statements. In management's opinion, the unaudited condensed
    consolidated financial statements include all adjustments (consisting
    solely of normal recurring adjustments) necessary to present fairly such
    information.

    Change in Accounting Policy

    Effective January 1, 2009, the company adopted amended accounting
    standards on goodwill and intangible assets as well as amendments to
    standards which previously permitted the deferral of costs that did not
    meet the definition of an asset. The implementation of these standards
    did not have a material impact on the company's consolidated financial
    statements.

    2.  Accounts Receivable

                                                  December 31,  December 31,
                                                     2009          2008
    -------------------------------------------------------------------------
    Trade accounts - Canpotex                      $     164.3   $     691.2
                   - Other                               264.4         342.7
    Less allowance for doubtful accounts                  (8.4)         (7.7)
    -------------------------------------------------------------------------
                                                         420.3       1,026.2
    Income taxes receivable                              287.4             -
    Provincial mining and other taxes receivable         234.6             -
    Margin deposits on derivative instruments            108.9          91.1
    Other non-trade accounts                              86.7          72.6
    -------------------------------------------------------------------------
                                                   $   1,137.9   $   1,189.9
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    3.  Long-Term Debt

    On May 1, 2009, the company closed the issuance of $500.0 of 5.250
    percent senior notes due May 15, 2014 and $500.0 of 6.500 percent senior
    notes due May 15, 2019. In addition, on September 28, 2009, the company
    closed the issuance of $500.0 of 3.750 percent senior notes due
    September 30, 2015 and $500.0 of 4.875 percent senior notes due March 30,
    2020. The debt securities were issued under the company's US shelf
    registration statement filed on December 12, 2007.

    In December 2009, the company replaced its $1,850.0 and $180.0 credit
    facilities with a $2,500.0 credit facility that matures December 11,
    2012. During the three months ended December 31, 2009, the company
    received proceeds from its long-term credit facilities of $75.0, and made
    repayments of $255.0 under these facilities. During the twelve months
    ended December 31, 2009, the company received proceeds of $2,130.0 and
    made repayments of $3,530.0 under these facilities. At December 31, 2009,
    no amounts were outstanding under the credit facilities.

    4.  Segment Information

    The company has three reportable business segments: potash, phosphate and
    nitrogen. These business segments are differentiated by the chemical
    nutrient contained in the product that each produces. Inter-segment sales
    are made under terms that approximate market value. The accounting
    policies of the segments are the same as those described in Note 1.

                               Three Months Ended December 31, 2009
    -------------------------------------------------------------------------
                       Potash   Phosphate  Nitrogen  All Others  Consolidated
    -------------------------------------------------------------------------

    Sales            $   412.5  $   362.4  $   324.2  $       -    $ 1,099.1
    Freight               24.4       25.1       11.3          -         60.8
    Transportation
     and distribution     10.9        3.1       13.1          -         27.1
    Net sales - third
     party               377.2      334.2      299.8          -
    Cost of goods
     sold                171.0      303.9      256.7          -        731.6
    Gross margin         206.2       30.3       43.1          -        279.6
    Depreciation and
     amortization         13.5       43.9       24.9        2.3         84.6
    Inter-segment
     sales                   -          -       21.9          -            -


                               Three Months Ended December 31, 2008
    -------------------------------------------------------------------------
                       Potash   Phosphate  Nitrogen  All Others  Consolidated
    -------------------------------------------------------------------------

    Sales            $   932.2  $   505.3  $   433.1  $       -    $ 1,870.6
    Freight               15.7       11.9       10.1          -         37.7
    Transportation
     and distribution      6.9       14.2       14.1          -         35.2
    Net sales - third
     party               909.6      479.2      408.9          -
    Cost of goods
     sold                164.8      368.8      391.0          -        924.6
    Gross margin         744.8      110.4       17.9          -        873.1
    Depreciation and
     amortization         16.3       36.1       26.0        2.0         80.4
    Inter-segment
     sales                   -        0.7       28.2          -            -


                               Twelve Months Ended December 31, 2009
    -------------------------------------------------------------------------
                       Potash   Phosphate  Nitrogen  All Others  Consolidated
    -------------------------------------------------------------------------

    Sales            $ 1,315.8  $ 1,374.4  $ 1,286.5  $       -    $ 3,976.7
    Freight               58.5       83.4       49.1          -        191.0
    Transportation
     and distribution     35.3       37.9       54.9          -        128.1
    Net sales - third
     party             1,222.0    1,253.1    1,182.5          -
    Cost of goods
     sold                491.6    1,149.3      990.7          -      2,631.6
    Gross margin         730.4      103.8      191.8          -      1,026.0
    Depreciation and
     amortization         40.1      163.9       99.2        8.9        312.1
    Inter-segment
     sales                   -          -       66.0          -            -


                               Twelve Months Ended December 31, 2008
    -------------------------------------------------------------------------
                       Potash   Phosphate  Nitrogen  All Others  Consolidated
    -------------------------------------------------------------------------

    Sales            $ 4,068.1  $ 2,880.7  $ 2,497.7  $       -    $ 9,446.5
    Freight              167.3      101.1       56.5          -        324.9
    Transportation
     and distribution     42.1       39.4       50.9          -        132.4
    Net sales - third
     party             3,858.7    2,740.2    2,390.3          -
    Cost of goods
     sold                803.2    1,625.7    1,652.9          -      4,081.8
    Gross margin       3,055.5    1,114.5      737.4          -      4,907.4
    Depreciation and
     amortization         82.0      140.5       97.1        7.9        327.5
    Inter-segment
     sales                   -       23.1      173.6          -            -


    5.  Other Income
                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
                                     2009       2008       2009       2008
    -------------------------------------------------------------------------

    Share of earnings of equity
     investees                    $    33.5  $    62.8  $   133.7  $   255.8
    Dividend income                    19.9       43.0       71.7      107.0
    (Provision for) gain on
     disposal of auction rate
     securities                           -      (17.5)     115.3      (88.8)
    Other                              25.4      (10.0)      22.7       34.2
    Gain on forward purchase
     contract for shares in
     Sinofert                             -          -          -       25.3
    -------------------------------------------------------------------------
                                  $    78.8  $    78.3  $   343.4  $   333.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    In April 2009, the company recognized a gain on the disposal of auction
    rate securities of $115.3 due to the settlement of a claim the company
    filed in an arbitration proceeding against an investment firm that
    purchased auction rate securities with a par value of $132.5 for the
    company's account without the company's authorization. The investment
    firm paid the company the full par value of $132.5 in exchange for the
    transfer of the auction rate securities to the investment firm. The
    company retained all interest paid and accrued on these securities
    through the date of the transfer of the securities to the investment
    firm. The company was also reimbursed by the investment firm for $3.0 of
    the company's legal costs. Prior to the settlement, the company had
    recognized in net income a loss of $115.3 related to these unauthorized
    securities placed in its account.

    6.  Interest Expense
                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
                                     2009       2008       2009       2008
    -------------------------------------------------------------------------
    Interest expense on
      Short-term debt             $     9.2  $    11.5  $    26.5  $    28.5
      Long-term debt                   53.3       23.6      173.1       94.9
    Interest capitalized to
     property, plant and equipment    (21.4)     (10.8)     (68.2)     (42.9)
    Interest income                    (1.0)      (3.7)     (10.5)     (17.7)
    -------------------------------------------------------------------------
                                  $    40.1  $    20.6  $   120.9  $    62.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    7.  Income Taxes

    The company's income tax provision was $45.9 for the three months ended
    December 31, 2009 as compared to $66.8 for the same period last year. For
    the twelve months ended December 31, 2009, the company's income tax
    provision was $83.5 (2008 - $1,077.1). The effective tax rate for the
    three and twelve months ended December 31, 2009 was 16 percent and
    8 percent, respectively, compared to 8 percent and 24 percent,
    respectively, for the three and twelve months ended December 31, 2008.

    The provision for the twelve months ended December 31, 2009 included:

        -  A future income tax recovery of $119.2 for a tax rate reduction
           resulting from an internal restructuring during the first quarter.

        -  A current income tax recovery of $47.6 recorded in the first
           quarter that related to an increase in permanent deductions in the
           US from prior years. The recovery had a positive impact on cash.

        -  A future income tax expense of $24.4 related to a second-quarter
           functional currency election by the parent company for Canadian
           income tax purposes.

        -  In the fourth quarter, a current income tax expense of $8.6
           related to currency fluctuations on the repayment of intercompany
           debt.

        -  The benefit of a lower percentage of consolidated income earned in
           higher-tax jurisdictions.

    The provision for the twelve months ended December 31, 2008 included:

        -  The benefit of a scheduled one and a half percentage point
           reduction in the Canadian federal income tax rate applicable to
           resource companies along with the elimination of the one percent
           surtax that became effective at the beginning of the year.

        -  In the third quarter of 2008, a current income tax recovery of
           $29.1 was recorded that related to an increase in permanent
           deductions in the US from prior years. This was in addition to the
           future income tax recovery of $42.0 recorded during the first
           quarter of 2008 that related to an increase in permanent
           deductions in the US from prior years.

        -  No tax expense on the $25.3 gain recognized in the first quarter
           that resulted from the change in fair value of the forward
           purchase contract for shares in Sinofert Holdings Limited
           ("Sinofert") as the gain was not taxable.

    8.  Net Income Per Share

    Basic net income per share for the quarter is calculated on the weighted
    average shares issued and outstanding for the three months ended
    December 31, 2009 of 295,915,000 (2008 - 299,819,000). Basic net income
    per share for the twelve months ended December 31, 2009 is calculated on
    the weighted average shares issued and outstanding for the period of
    295,580,000 (2008 - 307,480,000).

    Diluted net income per share is calculated based on the weighted average
    number of shares issued and outstanding during the period. The
    denominator is: (1) increased by the total of the additional common
    shares that would have been issued assuming exercise of all stock options
    with exercise prices at or below the average market price for the period;
    and (2) decreased by the number of shares that the company could have
    repurchased if it had used the assumed proceeds from the exercise of
    stock options to repurchase them on the open market at the average share
    price for the period. The weighted average number of shares outstanding
    for the diluted net income per share calculation for the three months
    ended December 31, 2009 was 304,350,000 (2008 - 307,511,000) and for the
    twelve months ended December 31, 2009 was 303,943,000 (2008 -
    317,438,000).

    9.  Comparative Figures

    Certain of the prior periods' figures have been reclassified to conform
    with the current period's presentation.

                   Potash Corporation of Saskatchewan Inc.
                     Selected Operating and Revenue Data
                                 (unaudited)

                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
                                     2009       2008       2009       2008
    -------------------------------------------------------------------------

    Potash Operating Data
    Production (KCl Tonnes -
     thousands)                       1,113      2,079      3,405      8,697
    Shutdown weeks                     36.1       23.6      152.8       49.9
    Sales (tonnes - thousands)
      Manufactured Product
        North America                   494        379      1,093      2,962
        Offshore                        612      1,058      1,895      5,585
    -------------------------------------------------------------------------
      Manufactured Product            1,106      1,437      2,988      8,547
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Potash Net Sales
     (US $ millions)
      Sales                          $412.5     $932.2   $1,315.8   $4,068.1
      Less: Freight                    24.4       15.7       58.5      167.3
            Transportation and
             distribution              10.9        6.9       35.3       42.1
    -------------------------------------------------------------------------
      Net Sales                      $377.2     $909.6   $1,222.0   $3,858.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Manufactured Product
        North America                $195.3     $280.4     $506.8   $1,307.5
        Offshore                      176.0      617.3      698.9    2,526.8
      Other miscellaneous and
       purchased product                5.9       11.9       16.3       24.4
    -------------------------------------------------------------------------
      Net Sales                      $377.2     $909.6   $1,222.0   $3,858.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Potash Average Price per MT
        North America               $395.54    $740.48    $463.74    $441.38
        Offshore                    $287.63    $583.27    $368.84    $452.43
    -------------------------------------------------------------------------
      Manufactured Product          $335.83    $624.70    $403.56    $448.60
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                   Potash Corporation of Saskatchewan Inc.
                     Selected Operating and Revenue Data
                                 (unaudited)

                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
                                     2009       2008       2009       2008
    -------------------------------------------------------------------------

    Phosphate Operating Data
    Production (P2O5 Tonnes -
     thousands)                         413        338      1,505      1,873
    P2O5 Operating Rate                 77%        59%        70%        82%
    Sales (tonnes - thousands)
      Manufactured Product
        Fertilizer - Liquid
         phosphates                     263        173        791        893
        Fertilizer - Solid
         phosphates                     305         80      1,182      1,069
        Feed                            135        102        531        654
        Industrial                      151        157        551        706
    -------------------------------------------------------------------------
      Manufactured Product              854        512      3,055      3,322
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Phosphate Net Sales
     (US $ millions)
      Sales                          $362.4     $505.3   $1,374.4   $2,880.7
      Less: Freight                    25.1       11.9       83.4      101.1
            Transportation and
             distribution               3.1       14.2       37.9       39.4
    -------------------------------------------------------------------------
      Net Sales                      $334.2     $479.2   $1,253.1   $2,740.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Manufactured Product
        Fertilizer - Liquid
         phosphates                   $79.4     $175.7     $235.2     $734.6
        Fertilizer - Solid
         phosphates                    91.7       83.1      354.2      996.8
        Feed                           58.8       96.8      260.0      492.9
        Industrial                    100.1      116.9      386.6      471.0
      Other miscellaneous and
       purchased product                4.2        6.7       17.1       44.9
    -------------------------------------------------------------------------
      Net Sales                      $334.2     $479.2   $1,253.1   $2,740.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Phosphate Average Price per MT
        Fertilizer - Liquid
         phosphates                 $302.22  $1,016.58    $297.53    $823.17
        Fertilizer - Solid
         phosphates                 $300.95  $1,041.79    $299.51    $932.44
        Feed                        $434.50    $948.20    $489.78    $753.90
        Industrial                  $659.90    $744.85    $701.62    $666.97
    -------------------------------------------------------------------------
      Manufactured Product          $386.23    $923.51    $404.60    $811.50
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------



                   Potash Corporation of Saskatchewan Inc.
                     Selected Operating and Revenue Data
                                 (unaudited)

                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
                                     2009       2008       2009       2008
    -------------------------------------------------------------------------

    Nitrogen Operating Data
    Production (N Tonnes -
     thousands)                         613        617      2,551      2,780
    Average Natural Gas Production
     Cost per MMBtu                   $4.55      $6.16      $3.86      $7.54
    Sales (tonnes - thousands)
      Manufactured Product
        Ammonia                         354        395      1,740      1,794
        Urea                            341        279      1,433      1,186
        Nitrogen solutions/Nitric
         acid/Ammonium nitrate          437        381      1,794      2,062
    -------------------------------------------------------------------------
      Manufactured Product            1,132      1,055      4,967      5,042
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Fertilizer sales tonnes           446        353      2,084      1,794
      Industrial/Feed sales tonnes      686        702      2,883      3,248
    -------------------------------------------------------------------------
      Manufactured Product            1,132      1,055      4,967      5,042
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Nitrogen Net Sales
     (US $ millions)
      Sales                          $324.2     $433.1   $1,286.5   $2,497.7
      Less: Freight                    11.3       10.1       49.1       56.5
            Transportation and
             distribution              13.1       14.1       54.9       50.9
    -------------------------------------------------------------------------
      Net Sales                      $299.8     $408.9   $1,182.5   $2,390.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Manufactured Product
        Ammonia                      $106.3     $176.4     $425.3     $999.5
        Urea                          101.4      104.6      416.6      633.1
        Nitrogen solutions/Nitric
         acid/Ammonium nitrate         66.4      108.3      284.3      577.9
      Other miscellaneous and
       purchased product               25.7       19.6       56.3      179.8
    -------------------------------------------------------------------------
      Net Sales                      $299.8     $408.9   $1,182.5   $2,390.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Fertilizer net sales           $104.4     $119.9     $492.3     $809.6
      Industrial/Feed net sales       169.7      269.4      633.9    1,400.9
      Other miscellaneous and
       purchased product               25.7       19.6       56.3      179.8
    -------------------------------------------------------------------------
      Net Sales                      $299.8     $408.9   $1,182.5   $2,390.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Nitrogen Average Price per MT
        Ammonia                     $300.27    $447.13    $244.43    $557.05
        Urea                        $297.25    $374.54    $290.64    $533.77
        Nitrogen solutions/Nitric
         acid/Ammonium nitrate      $152.00    $283.95    $158.50    $280.34
    -------------------------------------------------------------------------
      Manufactured Product          $242.14    $368.95    $226.73    $438.43
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

      Fertilizer average price
       per MT                       $234.18    $339.39    $236.25    $451.19
      Industrial/Feed average
       price per MT                 $247.31    $383.83    $219.85    $431.37
    -------------------------------------------------------------------------
      Manufactured Product          $242.14    $368.95    $226.73    $438.43
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Exchange Rate (Cdn$/US$)
                                                            2009       2008
    -------------------------------------------------------------------------

    December 31                                            1.0466     1.2246
    Fourth-quarter average conversion rate                 1.0654     1.1538



                   Potash Corporation of Saskatchewan Inc.
          Selected Non-GAAP Financial Measures and Reconciliations
                         (in millions of US dollars)
                                 (unaudited)

    The following information is included for convenience only. Generally, a
    non-GAAP financial measure is a numerical measure of a company's
    performance, financial position or cash flows that either excludes or
    includes amounts that are not normally excluded or included in the most
    directly comparable measure calculated and presented in accordance with
    generally accepted accounting principles ("GAAP"). EBITDA, adjusted
    EBITDA, EBITDA margin, cash flow prior to working capital changes and
    free cash flow are not measures of financial performance (nor do they
    have standardized meanings) under either Canadian GAAP or US GAAP. In
    evaluating these measures, investors should consider that the methodology
    applied in calculating such measures may differ among companies and
    analysts.

    The company uses both GAAP and certain non-GAAP measures to assess
    performance. The company's management believes these non-GAAP measures
    provide useful supplemental information to investors in order that they
    may evaluate PotashCorp's financial performance using the same measures
    as management. PotashCorp's management believes that, as a result, the
    investor is afforded greater transparency in assessing the financial
    performance of the company. These non-GAAP financial measures should not
    be considered as a substitute for, nor superior to, measures of financial
    performance prepared in accordance with GAAP.

    A.  EBITDA, ADJUSTED EBITDA AND EBITDA MARGIN
        -----------------------------------------

    Set forth below are reconciliations of "EBITDA" and "adjusted EBITDA" to
    net income, and "EBITDA margin" to net income as a percentage of sales,
    the most directly comparable financial measures calculated and presented
    in accordance with Canadian GAAP.

                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
                                     2009       2008       2009       2008
    -------------------------------------------------------------------------
    Net income                    $   243.6  $   788.0  $   987.8  $ 3,495.2
    Income taxes                       45.9       66.8       83.5    1,077.1
    Interest expense                   40.1       20.6      120.9       62.8
    Depreciation and amortization      84.6       80.4      312.1      327.5
    -------------------------------------------------------------------------
    EBITDA                            414.2      955.8    1,504.3    4,962.6
    Provision for (gain on
     disposal of) auction rate
     securities                           -       17.5     (115.3)      88.8
    -------------------------------------------------------------------------
    Adjusted EBITDA               $   414.2  $   973.3  $ 1,389.0  $ 5,051.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EBITDA is calculated as earnings before interest, income taxes,
    depreciation and amortization. Adjusted EBITDA is calculated as earnings
    before interest, income taxes, depreciation and amortization, certain
    gains and losses on disposal of assets, and certain impairment charges.
    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 according to GAAP, these measures
    are limited in that they do not reflect the periodic costs of certain
    capitalized tangible and intangible assets used in generating revenues in
    the company's business, or the non-cash charges associated with
    impairments and 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.

                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
                                     2009       2008       2009       2008
    -------------------------------------------------------------------------
    Sales                         $ 1,099.1  $ 1,870.6  $ 3,976.7  $ 9,446.5
    Freight                           (60.8)     (37.7)    (191.0)    (324.9)
    Transportation and
     distribution                     (27.1)     (35.2)    (128.1)    (132.4)
    -------------------------------------------------------------------------
    Net sales                       1,011.2    1,797.7    3,657.6    8,989.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Net income as a percentage
     of sales                         22.2%      42.1%      24.8%      37.0%
    EBITDA margin                     41.0%      53.2%      41.1%      55.2%

    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.



                   Potash Corporation of Saskatchewan Inc.
          Selected Non-GAAP Financial Measures and Reconciliations
                         (in millions of US dollars)
                                 (unaudited)

    B.  CASH FLOW
        ---------

    Set forth below is a reconciliation of "cash flow prior to working
    capital changes" and "free cash flow" to cash provided by operating
    activities, the most directly comparable financial measure calculated and
    presented in accordance with Canadian GAAP.

                                    Three Months Ended   Twelve Months Ended
                                       December 31           December 31
                                     2009       2008       2009       2008
    -------------------------------------------------------------------------
    Cash flow prior to working
     capital changes(1)           $   503.5  $   849.1  $ 1,350.9  $ 3,780.7
    -------------------------------------------------------------------------
    Changes in non-cash
     operating working capital
      Accounts receivable               0.2      183.1       53.1     (593.7)
      Inventories                      17.7       36.1       88.2     (324.4)
      Prepaid expenses and
       other current assets            30.4       10.4       21.2      (23.7)
      Accounts payable and
       accrued charges                 16.3     (315.4)    (589.5)     174.3
    -------------------------------------------------------------------------
    Changes in non-cash
     operating working capital         64.6      (85.8)    (427.0)    (767.5)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                   $   568.1  $   763.3  $   923.9  $ 3,013.2
    Additions to property,
     plant and equipment             (573.6)    (427.7)  (1,763.8)  (1,198.3)
    Other assets and intangible
     assets                           (18.0)     (13.5)     (54.1)     (46.6)
    Changes in non-cash
     operating working capital        (64.6)      85.8      427.0      767.5
    -------------------------------------------------------------------------
    Free cash flow(2)             $   (88.1) $   407.9  $  (467.0) $ 2,535.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) The company 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 or other timing
        issues 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.
    (2) The company uses free cash flow as a supplemental financial measure
        in its evaluation of liquidity and financial strength. Management
        believes that adjusting principally for the swings in non-cash
        operating working capital items due to seasonality or other timing
        issues, additions to property, plant and equipment, and changes to
        other assets assists management in the long-term assessment of
        liquidity and financial strength. The company also believes that this
        measurement is useful as an indicator of the company's ability to
        service its debt, meet other payment obligations and make strategic
        investments. Readers should be aware that free cash flow does not
        represent residual cash flow available for discretionary
        expenditures.
    

%SEDAR: 00001608E

SOURCE Potash Corporation of Saskatchewan Inc.

For further information: For further information: Investors: Denita Stann, Senior Director, Investor Relations, Phone: (847) 849-4277, Email: ir@potashcorp.com; Media: Bill Johnson, Director, Public Affairs, Phone: (306) 933-8849, Email: pr@potashcorp.com; Web Site: www.potashcorp.com


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890