PotashCorp Reports Record Third-Quarter Earnings



    Listed: TSX, NYSE
    Symbol: POT

    SASKATOON, SK, Oct. 25 /CNW/ - Potash Corporation of Saskatchewan Inc.
(PotashCorp) today announced record third-quarter earnings of $0.75 per
share(1) ($243.1 million), a 63-percent increase over the $0.46 per share
($145.2 million) earned in the same period last year. These earnings were the
second-highest quarterly total in PotashCorp history. They would have exceeded
the record earnings of this year's second quarter if not for the net negative
impacts of a strengthening Canadian dollar ($0.07 per share, primarily
non-cash) and an increase in the company's consolidated income tax rate ($0.10
per share) - which may revert to the previous rate over future quarters.
    Year-to-date earnings reached $726.8 million ($2.25 per share), a
63-percent increase over the first nine months of last year and higher than
the full-year 2006 total of $631.8 million, supporting a fourth consecutive
year of record earnings. This reflects the continuing long-term growth of
global fertilizer markets and our ability to deliver on strategies set years
ago. We are now benefiting from rapidly growing economies in the developing
world which increases the demand for crops used in food, animal feed, fiber
and fuel.
    Gross margin of $475.1 million was also a third-quarter record, up from
$245.8 million in the same period last year. Year-to-date gross margin of
$1.3 billion already exceeds our previous full-year record of $1.1 billion set
in 2005. Earnings before interest, taxes, depreciation and amortization
(EBITDA) of $475.7 million(2) were 67 percent higher than the $285.4 million
of last year's third quarter and raised our year-to-date total to
$1.4 billion, surpassing the previous full-year record of $1.1 billion.
    Offshore investments in Arab Potash Company Ltd. (APC) in Jordan, Israel
Chemicals Ltd. (ICL) in Israel and Sociedad Quimica y Minera de Chile (SQM) in
Chile accounted for $24.2 million in other income during the quarter. The
year-to-date contribution of these investments, and our investment in Sinofert
Holdings Limited (Sinofert) in China, increased from $60.1 million in 2006 to
$105.7 million this year, further demonstrating our favorable global exposure
to potash. The total market value of our investments in these publicly-traded
companies is now $4.9 billion and equates to $15 per PotashCorp share.
    "Many regions of the world are enjoying unprecedented wealth creation and
their people are developing an appetite for more nutritious food," said
PotashCorp President and CEO Bill Doyle. "These fundamental changes are
driving significant growth in demand for the nutrients needed to produce grain
and meat. With tight global supply, especially in potash, we are capturing
greater value for our products and delivering record performance for our
shareholders."

    Market Conditions

    The combination of rising global population, higher incomes and increased
protein consumption in many countries continues to propel strong demand for
agricultural commodities, pushing prices for many key crops to record levels.
Against this backdrop, the world's stocks-to-use ratio for wheat and coarse
grains declined in the quarter to 14.6 percent, the lowest level ever recorded
by the United States Department of Agriculture (USDA). Together, these
conditions provide farmers in all regions with the foundation for vastly
improved profitability. They are therefore motivated to increase plantings and
invest in fertilizer to maximize yields, continuing the strong demand for
nitrogen, phosphate and potash.
    With good growing conditions in the summer and excellent fall weather in
the United States, the USDA predicted that the corn crop currently being
harvested will be a record. That crop removed significant levels of nutrients
from the soil, necessitating increased fertilization for future production. US
dealer inventories for all three nutrients were depleted during the second
quarter and many customers began restocking in the third quarter, if and where
product was available. North American producer inventories remained thin at
the end of the quarter. More acreage has already been dedicated to winter
wheat plantings, strongly kicking off the US fall fertilizer season.
    Offshore demand remained strong for all three nutrients, especially
potash. This has taken reported potash producer inventories to historically
low levels and contributed to further offshore spot-market price increases
during the quarter. Farmers outside of North America are working to correct
decades of under-application of potash, and while this will take many more
years to accomplish, potash is vital to improving crop quality and gives
plants the capability to better utilize nitrogen and phosphate.

    Potash

    Potash gross margin rose to $221.3 million from $153.6 million in the
same period last year and was the second highest quarterly total in our
history. The improvement is largely a reflection of higher prices, although
total volumes increased slightly over third-quarter 2006 levels when China and
India were purchasing heavily to catch up on shortfalls caused by extended
price negotiations. Year-to-date potash gross margin climbed to $655.9
million, up from $377.2 million in the first nine months of last year and
approaching our full-year record potash gross margin of $707.4 million in
2005. North American realized prices contributed to this result, improving by
20 percent ($33 per tonne) quarter over quarter.
    While record ocean freights have been a problem for our business,
offshore realized prices increased 31 percent ($39 per tonne) from last year's
third quarter and 17 percent ($24 per tonne) from the trailing quarter. For
the first time this year, prices in most markets are finally exceeding
increases in ocean freight costs. This can be seen in higher spot-market
prices paid by Brazil and Southeast Asia. However, in India, ocean freight
costs have eaten most of the $50-per-tonne price improvement negotiated there
earlier in the year.
    Year-to-date, higher ocean freight rates had a negative impact of about
$13 per tonne on all delivered (CFR) sales, as Canpotex Limited (Canpotex),
the offshore marketing company for Saskatchewan producers, sells approximately
60 percent of its volumes on a CFR basis. However, Canpotex has locked in
about 40 percent of its CFR shipments under long-term freight agreements,
which, compared to shipping entirely at spot rates, is expected to save it
more than $70 million in ocean freight costs in 2007.
    Exceptionally tight potash market conditions led to products being sold
on an allocation basis to all customers for much of the quarter. Total volumes
of 2.2 million tonnes were up 3 percent from last year's third quarter and
year-to-date volumes were 42 percent ahead of 2006 totals.
    Our offshore sales for the third quarter reached 1.4 million tonnes, a
2-percent increase quarter over quarter. Year-to-date offshore sales totaled
4.5 million tonnes, 45 percent higher than in the same period last year.
Canpotex shipped 2.3 million tonnes in the quarter, including over 600,000
tonnes to China - a 28-percent increase over the same quarter in 2006 - and
almost 530,000 tonnes to other Southeast Asian countries, a 16-percent jump.
Its shipments to Brazil (almost 550,000 tonnes) declined 15 percent, largely
because of delays in moving product through that country's congested port
system and tight supply conditions. Canpotex shipped 7.0 million tonnes by the
end of the third quarter in 2007 - more than was shipped in all of 2006 - as
all major markets have increased consumption. In North America, potash sales
volumes of approximately 710,000 tonnes were up 5 percent from the third
quarter of 2006, while year-to-date volumes of 2.7 million tonnes represented
a 37-percent increase.
    Even with production 27 percent higher than in the third quarter of 2006,
our quarter-end potash inventories were 41 percent below the levels at the
same time last year and 44 percent lower than at the end of the second quarter
of 2007. Our cost of goods sold was negatively affected by the strength of the
Canadian dollar, which added almost $4 per tonne, while continuing higher
brine inflow costs at New Brunswick and Esterhazy had an impact of $11 per
tonne on all tonnes sold.

    Nitrogen

    Third-quarter nitrogen gross margin of $123.9 million was almost double
the $62.4 million in the same period last year and raised our year-to-date
total to $399.4 million, surpassing the record full-year gross margin of
$318.7 million set in 2005. In Trinidad, where we have long-term, lower-cost
gas contracts, we generated $67.7 million in gross margin in the quarter. Our
North American facilities continued to perform well, contributing
$46.2 million, while our natural gas hedging program added $10.0 million.
    Realized prices for ammonia and urea were up 11 percent and 37 percent,
respectively, compared to the third quarter of 2006, while prices for nitrogen
solutions jumped 51 percent quarter over quarter. Although nitrogen prices
have historically decreased after the second quarter because of a seasonal
decline in natural gas costs and sales volumes, strong demand limited the size
and duration of the pricing decline from the second quarter of 2007.
    Total nitrogen volumes rose 18 percent from last year's third quarter to
1.5 million tonnes, with fertilizer shipments increasing by 22 percent and
industrial volumes up 16 percent. Our ammonia sales volumes rose 20 percent
quarter over quarter as we had greater production available this year from our
Lima facility and the 2006 debottlenecking projects in Trinidad. Urea volumes
were up 23 percent from the third quarter of 2006 in large part because Lima
operated for the entire quarter. Nitrogen solutions were up 32 percent due to
opportunistic production of UAN at Geismar.
    Our total average natural gas cost for the quarter, which includes the
benefit of our hedge and our lower-cost Trinidad gas contracts, was $3.94 per
MMBtu, 13 percent higher than the same quarter last year but 11 percent lower
than in the second quarter.

    Phosphate

    Higher prices and continuing strong demand resulted in record phosphate
gross margin of $129.9 million for the quarter, compared to $29.8 million in
the year-earlier period. This raised our year-to-date phosphate gross margin
to $290.9 million, surpassing our full-year phosphate gross margin record of
$228.5 million set in 1998. Solid fertilizers generated $65.1 million in gross
margin during the quarter, while liquid fertilizers added $28.5 million,
industrial products $15.7 million and feed $17.8 million.
    Strong global agricultural demand pushed up realized prices for solid
fertilizers by 70 percent compared to the third quarter last year. Many
producers allocated more of their phosphoric acid to solid fertilizer
production, tightening supply of other phosphate products. Liquid fertilizer
realized prices were up 39 percent from last year's third quarter.
Additionally, netbacks on feed phosphate supplements increased by 18 percent
quarter over quarter as we focused on more profitable North American markets,
with monocal and dical rising by more than $50 per tonne and DFP, a poultry
feed supplement, by $20 per tonne. Industrial product pricing, which is
generally set under longer-term contracts, rose 5 percent.
    Our focus in solid fertilizers also shifted closer to home, where we
realized higher prices during the quarter. As a result, North American solid
fertilizer volumes increased 38 percent from last year's third quarter, while
offshore volumes fell 32 percent. Liquid fertilizer volumes remained strong
and were up 9 percent quarter over quarter. Feed volumes declined 17 percent
from last year's third quarter, as we sold considerably less into lower-margin
offshore markets, while industrial tonnes increased 17 percent quarter over
quarter, due primarily to the availability of more tonnes from our new
purified acid plant at Aurora.
    Rising costs for sulfur negatively impacted phosphate gross margin in the
quarter. Reduced oil refinery production and high demand from the phosphate
industry tightened global sulfur supply and raised these costs by 8 percent
compared to last year's third quarter and 29 percent from the trailing
quarter.

    Financial

    The Canadian dollar strengthened substantially against the US dollar
during the quarter, starting at $1.0634 and closing at $0.9963. This
contributed to a $25.9-million foreign exchange loss, which is mainly the
result of revaluing the Canadian dollar future income tax liability associated
with our Canadian potash assets to the spot rate at each period end. This loss
is primarily non-cash.
    Stronger than anticipated earnings, particularly from our nitrogen and
phosphate operations, resulted in an increase in our consolidated effective
income tax rate. It rose to 33 percent from the previous effective rate of 30
percent, resulting in a $33.3-million increase in income tax expense in the
quarter, of which $20.5 million represented the cumulative effect of the rate
increase applied to the previous two quarters. The strengthening Canadian
dollar also increased our future tax provision related to certain Canadian
liabilities, and was a further factor in this rate adjustment. There is a
possibility that a favorable income tax decision related to prior years'
deductions could occur in the fourth quarter, allowing the consolidated
reported income tax rate to revert back to 30 percent for the 2007 year;
however, there is no certainty to either the amount or timing of such a
determination. On a preliminary basis, subject to further year-end guidance,
we expect our consolidated effective income tax rate for 2008 to approximate
30 percent, based largely on a scheduled 2.5-percent reduction in Canadian
corporate income tax rates.
    Our third-quarter and year-to-date selling and administrative expenses
were substantially higher than in the same periods last year, due primarily to
higher medium-term incentive plan accruals and revaluation of deferred share
units that were directly impacted by the significant upward movement in our
share price. Capital expenditures on property, plant and equipment totaled
$145.1 million in the quarter. Approximately two-thirds of this was spent in
the potash segment, primarily on continuing debottlenecking and expansion
projects at our Lanigan, Allan, Patience Lake, Cory and New Brunswick
facilities.

    Outlook

    Demand-driven growth of the fertilizer industry is expected to continue,
as strong economies in Asia and Latin America are creating a desire for more
and better food. In addition, the biofuel industry requires more grains and
oilseeds as nations explore options for renewable, home-grown energy. As the
supply of many key crops tightens and demand continues to grow, prices are
rising and farmers are working to increase production.
    Even with a pause in the growth of the US ethanol industry to address
logistical and infrastructure issues, biofuel production is expected to
consume about one billion additional bushels of corn in 2008. For this reason,
and because global demand for US corn has boosted exports to an all-time high,
there are concerns about the longer-term supply of grains. It is more than
just a North American issue, as global production of wheat and coarse grains
is expected to fall short of consumption for the eighth time in nine years,
largely due to population growth and the wealth effect on food consumption.
The land per capita available for agriculture is shrinking as a result of
population growth and infrastructure expansion. Over the long term, crop
yields must increase to meet the demand for grains, which creates a favorable
environment for potash, phosphate and nitrogen used to protect soil fertility
and raise productivity.
    Supply of all three nutrients is expected to remain tight and
allocations, particularly in potash, are now the norm. In the United States,
dealers are purchasing nutrients in preparation for an expected strong fall
season. An October 1 potash price increase of $22 per tonne is now in effect
and a further $33 per tonne increase has been announced for December 1, 2007.
    In offshore markets, potash customers are preparing for another strong
fertilizer season. In Brazil, higher soybean acreage is predicted for the
spring season, with strong fertilizer demand through 2008. With extremely
tight global potash markets and record high ocean freight rates, Canpotex
announced in September a new delivered price of $360 per tonne for Southeast
Asia, which took effect immediately and brought year-to-date increases there
to $155 per tonne. Additionally, a $50-per-tonne hike in Brazil was announced
to take effect December 1, 2007, raising the price to $355 per tonne, up $175
per tonne in 2007.
    These price increases will widen the gap between spot-market prices and
the 2007 contract price with China to more than $100 per tonne, a measure of
the substantial change in the potash industry over the past several months.
Although China buys mainly lower-cost standard grade potash and has
historically received a discount for being the largest volume buyer, the
changed fundamentals in the potash industry are expected to close this gap
considerably.
    As global demand for potash grows, the prospect of greenfield projects
continues to be discussed, but no one has committed to undertaking such a
long-term project. The cost to develop a conventional underground
2-million-tonne greenfield mine and related mill - if constructed on a viable
deposit - is estimated at more than $2.2 billion, excluding infrastructure
outside the plant gates, with costs and lead times for construction inputs and
new equipment continuing to rise. Such an investment would not generate
positive cash flow for five to seven years. Given an expected potash
consumption growth rate of 3-4 percent annually, roughly equivalent to one new
greenfield mine per year, we believe long-term potash industry fundamentals
are very positive. Through debottlenecking and expansion projects at existing
facilities, PotashCorp is currently developing approximately 6 million
additional tonnes of production to come on line incrementally over the next
several years, providing additional gross margin leverage based on expected
higher volumes and prices.
    We believe that the significant strengthening of the Canadian dollar
against its US counterpart is now largely behind us, which should reduce its
impact on earnings in future quarters. Similarly, we expect that the massive
ocean freight rate increases seen through 2007 will moderate going forward,
with a large slate of new vessels scheduled to hit the market beginning in
2008 and reduced port congestion due to increased worldwide investment in port
infrastructure and development. Regardless, we expect demand for potash should
be sufficient to allow prices to overcome both rising ocean freight costs and
any further strengthening of the Canadian dollar.
    In nitrogen, strong demand for industrial and agricultural products is
continuing, along with higher global costs for natural gas and transportation.
This is expected to increase the delivered cost of ammonia and support US
prices through 2007 and well into 2008. In urea, increased production in
low-cost gas regions is being offset by higher demand in all key agricultural
regions, particularly in the US and India. Strong agricultural fundamentals
are expected to keep urea markets tight and support current favorable pricing
conditions.
    The strong agricultural market, increasingly valuable phosphate rock
reserves, and higher prices for rock, phosphoric acid and sulfur are expected
to support strong phosphate prices for the foreseeable future.
    Looking ahead through the end of 2007, we now expect our capital
expenditures for the year to be approximately $600 million, including
capitalized interest. Most of the opportunity capital will have been invested
in our continuing potash projects in Saskatchewan and New Brunswick, and on
completing the silicon tetrafluoride plants at our Aurora phosphate facility.
    Our guidance for 2007 remains in the range of $3.00-$3.25 per diluted
share, based on a $1.00 Canadian dollar. In the current trading range of the
Canadian dollar relative to the US dollar, each one-cent change in the
Canadian dollar will typically have an impact of approximately $5.0 million on
the foreign-exchange line, or $0.01 per share on an after-tax basis, although
this is primarily a non-cash item.

    Conclusion

    "While we faced a number of challenges in the third quarter, including
record ocean freights and a stronger Canadian dollar, we see increasing
margins as we go forward," said Doyle. "Our growth in potash this year will be
largely volume related, but 2008 should be a strong margin year. With potash
in tight supply, price increases seem all but certain, and these increases
will now flow through to the bottom line. The execution of our strategy will
be focused on delivering value to our customers who rely on our products and a
proper return to our investors who have loyally supported our company."

    
    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 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 phosphate and fourth largest in
nitrogen; 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 as set forth in this release,
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. A number of 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; 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; government policy changes; 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
2006 financial review annual report and in filings with the U.S. 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. In the case of guidance, should subsequent events show that the
forward-looking statements released herein may be materially off-target, the
company will evaluate whether to issue and, if appropriate following such
review, issue a news release updating guidance or explaining reasons for the
difference.

    
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    PotashCorp will host a conference call on Thursday, October 25, 2007,
                         at 1:00 p.m. Eastern Time.

        To join the call, dial (416) 640-1907 at least 10 minutes prior to
                               the start time.

                       Use reservation ID No. 21213531.

      Alternatively, visit www.potashcorp.com for a live webcast of the
                   conference call in a listen-only mode.

          This news release is also available at this same website.



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

                                                  September 30,  December 31,
                                                      2007           2006
    -------------------------------------------------------------------------
    Assets
     Current assets
      Cash and cash equivalents                     $   442.5      $   325.7
      Other short-term investments (Note 2)             112.5              -
      Accounts receivable                               581.3          442.3
      Inventories                                       433.3          501.3
      Prepaid expenses and other current assets          39.9           40.9
      Current portion of derivative instrument assets    41.4              -
    -------------------------------------------------------------------------
                                                      1,650.9        1,310.2

     Derivative instrument assets                        73.5              -
     Property, plant and equipment                    3,722.9        3,525.8
     Investments (Note 3)                             2,926.1        1,148.9
     Other assets                                       128.1          105.8
     Intangible assets                                   25.8           29.3
     Goodwill                                            97.0           97.0
    -------------------------------------------------------------------------
                                                    $ 8,624.3      $ 6,217.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Liabilities
     Current liabilities
      Short-term debt                               $    92.1      $   157.9
      Accounts payable and accrued charges              681.1          545.2
      Current portion of long-term debt                   0.2          400.4
    -------------------------------------------------------------------------
                                                        773.4        1,103.5

     Long-term debt (Note 4)                          1,337.9        1,357.1
     Future income tax liability                      1,019.4          632.1
     Accrued pension and other post-retirement
      benefits                                          237.4          219.6
     Accrued environmental costs and asset
      retirement obligations                            122.2          110.3
     Other non-current liabilities and deferred
      credits                                             3.5           14.1
    -------------------------------------------------------------------------
                                                      3,493.8        3,436.7
    -------------------------------------------------------------------------

    Shareholders' Equity
     Share capital                                    1,456.2        1,431.6
      Unlimited authorization of common shares
      without par value; issued and outstanding
      316,114,911 and 314,403,147 at September 30,
      2007 and December 31, 2006, respectively
     Contributed surplus                                 95.1           62.3
     Accumulated other comprehensive income (Note 6)  1,644.8              -
     Retained earnings                                1,934.4        1,286.4
    -------------------------------------------------------------------------
                                                      5,130.5        2,780.3
    -------------------------------------------------------------------------
                                                    $ 8,624.3      $ 6,217.0
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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     Nine Months Ended
                                       September 30          September 30
                                     2007       2006       2007       2006
    -------------------------------------------------------------------------
    Sales (Note 9)                $ 1,295.0  $   953.5  $ 3,802.8  $ 2,743.8
    Less: Freight                      80.6       65.6      254.8      182.8
          Transportation and
           distribution                31.0       37.6       94.6      104.6
          Cost of goods sold          708.3      604.5    2,107.2    1,753.7
    -------------------------------------------------------------------------
    Gross Margin                      475.1      245.8    1,346.2      702.7
    -------------------------------------------------------------------------
    Selling and administrative         43.9       35.9      158.0      114.6
    Provincial mining and other
     taxes                             28.2       12.5       95.3       41.2
    Foreign exchange loss (gain)       25.9       (4.7)      67.4        9.2
    Other income (Note 12)            (29.1)     (21.1)    (111.3)     (72.3)
    -------------------------------------------------------------------------
                                       68.9       22.6      209.4       92.7
    -------------------------------------------------------------------------
    Operating Income                  406.2      223.2    1,136.8      610.0
    Interest Expense                   12.7       25.2       59.0       69.1
    -------------------------------------------------------------------------
    Income Before Income Taxes        393.5      198.0    1,077.8      540.9
    Income Taxes (Note 7)             150.4       52.8      351.0       95.1
    -------------------------------------------------------------------------
    Net Income                    $   243.1  $   145.2      726.8      445.8
                                 ----------------------
                                 ----------------------
    Retained Earnings, Beginning
     of Period                                            1,286.4      716.9
    Change in Accounting Policy (Note 1)                      0.2          -
    Dividends                                               (79.0)     (46.5)
    -------------------------------------------------------------------------
    Retained Earnings, End of Period                    $ 1,934.4  $ 1,116.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net Income Per Share (Note 8)
      Basic                       $    0.77  $    0.47  $    2.30  $    1.43
      Diluted                     $    0.75  $    0.46  $    2.25  $    1.40
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Dividends Per Share           $    0.10  $    0.05  $    0.25  $    0.15
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (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     Nine Months Ended
                                       September 30          September 30
                                     2007       2006       2007       2006
    -------------------------------------------------------------------------
    Operating Activities
    Net income                     $  243.1   $  145.2   $  726.8   $  445.8
    -------------------------------------------------------------------------

    Adjustments to reconcile net
     income to cash provided by
     operating activities
      Depreciation and amortization    69.5       62.2      216.3      181.4
      Stock-based compensation          4.2        2.8       34.7       26.8
      Loss (gain) on disposal of
       property, plant and equipment
       and long-term investments        0.2       (4.2)       5.6       (3.9)
      Provision for plant shutdowns
       - phosphate segment                -        6.3          -        6.3
      Foreign exchange on future
       income tax                      21.4          -       47.5       12.1
      Provision for future income
       tax                             52.6       17.8      119.8        3.9
      Undistributed earnings of
       equity investees               (15.7)     (10.6)     (17.6)      (9.1)
      Unrealized gain on derivative
       instruments                    (13.0)         -      (18.4)         -
      Other long-term liabilities     (25.6)       9.3      (21.3)      11.9
    -------------------------------------------------------------------------
      Subtotal of adjustments          93.6       83.6      366.6      229.4
    -------------------------------------------------------------------------

      Changes in non-cash operating
       working capital
      Accounts receivable            (100.2)     (52.6)    (139.9)      (1.1)
      Inventories                      35.5       23.3       51.6       21.8
      Prepaid expenses and other
       current assets                   0.8       10.4        1.3      (23.3)
      Accounts payable and accrued
       charges                         38.8       15.0      150.9     (319.0)
    -------------------------------------------------------------------------
      Subtotal of changes in
       non-cash operating working
       capital                        (25.1)      (3.9)      63.9     (321.6)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                       311.6      224.9    1,157.3      353.6
    -------------------------------------------------------------------------
    Investing Activities
    Additions to property, plant
     and equipment                   (145.1)    (133.8)    (381.6)    (384.9)
    Purchase of long-term
     investments                      (21.0)         -      (30.7)    (130.0)
    Purchase of other short-term
     investments                     (132.5)         -     (132.5)         -
    Proceeds from disposal of
     property, plant and equipment
     and long-term investments          2.9        7.8        4.2       10.0
    Other assets and intangible
     assets                            (0.9)      (0.7)       9.8        2.3
    -------------------------------------------------------------------------
    Cash used in investing
     activities                      (296.6)    (126.7)    (530.8)    (502.6)
    -------------------------------------------------------------------------
    Cash before financing
     activities                        15.0       98.2      626.5     (149.0)
    -------------------------------------------------------------------------

    Financing Activities
    Repayment and issue costs of
     long-term debt obligations           -       (0.3)    (403.6)      (1.0)
    Proceeds from (repayment of)
     short-term debt obligations        5.5      (26.5)     (65.8)     277.8
    Dividends                         (31.3)     (15.2)     (62.6)     (45.7)
    Issuance of common shares           3.6        5.5       22.3       15.4
    -------------------------------------------------------------------------
    Cash (used in) provided by
     financing activities             (22.2)     (36.5)    (509.7)     246.5
    -------------------------------------------------------------------------
    (Decrease) Increase in Cash
     and Cash Equivalents              (7.2)      61.7      116.8       97.5
    Cash and Cash Equivalents,
     Beginning of Period              449.7      129.7      325.7       93.9
    -------------------------------------------------------------------------
    Cash and Cash Equivalents,
     End of Period                 $  442.5   $  191.4   $  442.5   $  191.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Cash and cash equivalents
     comprised of:
      Cash                         $   11.3   $   25.7   $   11.3   $   25.7
      Short-term investments          431.2      165.7      431.2      165.7
    -------------------------------------------------------------------------
                                   $  442.5   $  191.4   $  442.5   $  191.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Supplemental cash flow
     disclosure
      Interest paid                $   15.7   $   24.4   $   71.5   $   74.5
      Income taxes paid            $   59.1   $   18.7   $  128.2   $  243.2
    -------------------------------------------------------------------------
    (See Notes to the Condensed Consolidated Financial Statements)



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

                                      `            Three Months Ended
                                                    September 30, 2007

                                              Before                Net of
                                              Income     Income     Income
                                               Taxes      Taxes      Taxes
    -------------------------------------------------------------------------

    Net income                               $   393.5  $   150.4  $   243.1
    -------------------------------------------------------------------------
    Other comprehensive income
     Net increase in unrealized gains on
      available-for-sale securities(1)           281.5       23.4      258.1
     Net losses on derivatives designated
      as cash flow hedges(2)                     (17.0)      (4.7)     (12.3)
     Reclassification to income of gains
      on cash flow hedges(2)                      (8.5)      (3.7)      (4.8)
     Unrealized foreign exchange gains on
      translation of self-sustaining
      foreign operations                           1.0          -        1.0
    -------------------------------------------------------------------------
    Other comprehensive income                   257.0       15.0      242.0
    -------------------------------------------------------------------------
    Comprehensive income                     $   650.5  $   165.4  $   485.1
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


                                                     Nine Months Ended
                                                    September 30, 2007

                                              Before                Net of
                                              Income     Income     Income
                                               Taxes      Taxes      Taxes
    -------------------------------------------------------------------------

    Net income                               $ 1,077.8  $   351.0  $   726.8
    -------------------------------------------------------------------------
    Other comprehensive income
     Net increase in unrealized gains on
      available-for-sale securities(1)           844.7       57.4      787.3
     Net gains on derivatives designated
      as cash flow hedges(2)                      13.9        4.6        9.3
     Reclassification to income of gains on
      cash flow hedges(2)                        (39.8)     (13.1)     (26.7)
     Unrealized foreign exchange gains on
      translation of self-sustaining foreign
      operations                                   5.9          -        5.9
    -------------------------------------------------------------------------
    Other comprehensive income                   824.7       48.9      775.8
    -------------------------------------------------------------------------
    Comprehensive income                     $ 1,902.5  $   399.9  $ 1,502.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (1) Available-for-sale securities are comprised of shares in Israel
        Chemicals Ltd., Sinofert Holdings Limited and other short-term
        investments
    (2) Natural gas derivative instruments
    -------------------------------------------------------------------------
    (See Notes to the Condensed Consolidated Financial Statements)



                   Potash Corporation of Saskatchewan Inc.
          Notes to the Condensed Consolidated Financial Statements
           For the Three and Nine Months Ended September 30, 2007
       (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
    interim condensed consolidated financial statements are consistent with
    those used in the preparation of the 2006 annual consolidated financial
    statements, except as described below.

    These interim 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 2006 annual consolidated
    financial statements. In management's opinion, the unaudited financial
    statements include all adjustments (consisting solely of normal recurring
    adjustments) necessary to present fairly such information. Interim
    results are not necessarily indicative of the results expected for the
    fiscal year.

    Comprehensive Income, Equity, Financial Instruments and Hedges

    Effective January 1, 2007, the company adopted Canadian Institute of
    Chartered Accountants ("CICA") Section 1530, "Comprehensive Income",
    Section 3251, "Equity", Section 3855, "Financial Instruments -
    Recognition and Measurement" and Section 3865, "Hedges". These
    pronouncements increase harmonization with US GAAP. Under the standards:

    - Financial assets are classified as loans and receivables, held-to-
    maturity, held-for-trading or available-for-sale. Loans and receivables
    include all loans and receivables except debt securities and are
    accounted for at amortized cost. Held-to-maturity classification is
    restricted to fixed maturity instruments that the company intends and is
    able to hold to maturity and are accounted for at amortized cost. Held-
    for-trading instruments include all derivative financial instruments not
    included in a hedging relationship and any designated instruments and are
    recorded at fair value with realized and unrealized gains and losses
    reported in net income. The remaining financial assets are classified as
    available-for-sale. These are recorded at fair value with unrealized
    gains and losses reported in a new category of the Consolidated Statement
    of Financial Position under shareholders' equity called accumulated other
    comprehensive income ("AOCI");

    - Financial liabilities are classified as either held-for-trading or
    other. Held-for-trading instruments are recorded at fair value with
    realized and unrealized gains and losses reported in net income. Other
    instruments are accounted for at amortized cost with gains and losses
    reported in net income in the period that the liability is derecognized;
    and

    - Derivative instruments ("derivatives") are classified as held-for-
    trading unless designated as hedging instruments. All derivatives are
    recorded at fair value on the Consolidated Statement of Financial
    Position. For derivatives that hedge the changes in fair value of an
    asset or liability, changes in the derivatives' fair value are reported
    in net income and are substantially offset by changes in the fair value
    of the hedged asset or liability attributable to the risk being hedged.
    For derivatives that hedge variability in cash flows, the effective
    portion of the changes in the derivatives' fair value are initially
    recognized in other comprehensive income ("OCI") and the ineffective
    portion is recorded in net income. Amounts temporarily recorded in AOCI
    will subsequently be reclassified to net income in the periods when net
    income is affected by the variability in the cash flows of the hedged
    item.

    These standards have been applied prospectively; accordingly comparative
    amounts for prior periods have not been restated. The adoption of these
    standards resulted in the following adjustments as of January 1, 2007 in
    accordance with the transition provisions:

    (1) Available-for-sale securities
    - The company's investments in Israel Chemicals Ltd. ("ICL") and Sinofert
    Holdings Limited ("Sinofert") have been classified as available-for-sale
    and recorded at fair value in the Consolidated Statement of Financial
    Position, resulting in an increase in investments of $887.8, an increase
    to AOCI of $789.6 and an increase in future income tax liability of
    $98.2;

    (2) Deferred debt costs
    - Bond issue costs were reclassified from other assets to long-term debt
    and deferred swap gains were reclassified from other non-current
    liabilities to long-term debt, resulting in a reduction in other assets
    of $23.9, a reduction in other non-current liabilities of $6.6 and a
    reduction in long-term debt of $17.3;

    (3) Natural gas derivatives
    - The company employs futures, swaps and option agreements to establish
    the cost of a portion of its natural gas requirements. These derivative
    instruments generally qualify for hedge accounting. Derivative
    instruments were recorded on the Consolidated Statement of Financial
    Position at fair value resulting in an increase in current portion of
    derivative instrument assets of $50.9, an increase in derivative
    instrument assets (non-current asset) of $69.4, an increase in future
    income tax liability of $45.6 and an increase in AOCI of $74.7;

    - Hedge ineffectiveness on these derivative instruments was recorded as a
    cumulative effect adjustment to opening retained earnings, net of tax,
    resulting in an increase in retained earnings of $0.2 and a decrease in
    AOCI of $0.2; and

    - Deferred realized hedging gains were reclassified from inventory to
    AOCI resulting in an increase in inventory of $8.0, an increase in future
    income tax liability of $3.1 and an increase in AOCI of $4.9.

    Stripping Costs Incurred in the Production Phase of a Mining Operation

    In March 2006, the Emerging Issues Committee issued Abstract No. 160,
    "Stripping Costs Incurred in the Production Phase of a Mining Operation"
    ("EIC-160"). EIC-160 discusses the treatment of costs associated with the
    activity of removing overburden and other mine waste minerals in the
    production phase of a mining operation. It concludes that such stripping
    costs should be accounted for according to the benefit received by the
    entity and recorded as either a component of inventory or a betterment to
    the mineral property, depending on the benefit received. The
    implementation of EIC-160, effective January 1, 2007, resulted in a
    decrease in inventory of $21.1, a decrease in other assets of $7.4 and an
    increase in property, plant and equipment of $28.5.

    2. Other Short-term Investments

    Other short-term investments consist of auction rate securities carried
    at $112.5 (face value $132.5) as of September 30, 2007, that have been
    classified as available-for-sale. In prior periods, auction rate
    securities were included with cash and cash equivalents. The company has
    not reclassified prior periods as the adjustments are not considered
    material.

    3. Investments

    During July 2007, the company's ownership interest in Sinofert was
    diluted from 20 percent to approximately 19 percent due to issuance of
    shares of Sinofert.

    Also during July 2007, the company purchased an additional 1,011,062
    shares of Sociedad Quimica y Minera de Chile S.A. ("SQM") for cash
    consideration of $16.8. The company's ownership interest in SQM
    remains at approximately 32 percent.

    4. Long-term Debt

    In February 2007, the company entered into a back-to-back loan
    arrangement involving certain financial assets and financial liabilities.
    The company has presented $195.0 of financial assets and financial
    liabilities on a net basis because a legal right to set-off exists, and
    it intends to settle with the same party on a net basis. The company
    incurred $3.2 of debt issue costs as a result of this arrangement which
    were included as a reduction to long-term debt and are being amortized
    using the effective interest rate method over the term of the related
    liability.

    In June 2007, the company repaid 10-year notes issued under one of the
    company's shelf registration statements in the principal amount of
    $400.0. The stated interest rate on the notes was 7.125%.

    5. Share Capital

    On May 2, 2007, the Board of Directors of PCS approved a split of the
    company's outstanding common shares on a three-for-one basis. The stock
    split was effected in the form of a stock dividend of two additional
    common shares for each share owned by shareholders of record at the close
    of business on May 22, 2007. All equity-based benefit plans have been
    adjusted to reflect the stock split. All share and per-share data have
    been adjusted to reflect the stock split effective with second-quarter
    2007 reporting. Information on an adjusted basis, showing the impact of
    this split for the first quarter of 2007, and by quarter and total year
    for 2006 and 2005 follows. Comparative results for the second and third
    quarters of 2007 are also included.

    Quarterly Data               First    Second   Third    Fourth      Year
    (Post Split Basis)           Quarter  Quarter  Quarter  Quarter
    -------------------------------------------------------------------------
    Basic net income per share
    2007                         $  0.63  $  0.91  $  0.77
    2006                         $  0.40  $  0.56  $  0.47  $  0.59   $ 2.03
    2005                         $  0.39  $  0.50  $  0.40  $  0.37   $ 1.67
    Diluted net income per share
    2007                         $  0.62  $  0.88  $  0.75
    2006                         $  0.40  $  0.55  $  0.46  $  0.58   $ 1.98
    2005                         $  0.38  $  0.49  $  0.39  $  0.36   $ 1.63

    Net income per share for each quarter has been computed based on the
    weighted average number of shares issued and outstanding during the
    respective quarter; therefore, quarterly amounts may not add to the
    annual total.

    6. Accumulated Other Comprehensive Income

    The balances related to each component of accumulated other comprehensive
    income, net of related income taxes, are as follows:

                                                          September 30, 2007
    -------------------------------------------------------------------------
    Net unrealized holding gains on available-for-sale
     securities                                                   $  1,576.9
    Net unrealized gains on derivatives designated as
     cash flow hedges                                                   62.0
    Unrealized foreign exchange gains on translation of
     self-sustaining foreign operations                                  5.9
    -------------------------------------------------------------------------
    Accumulated other comprehensive income                        $  1,644.8
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    7. Income Taxes

    The company's consolidated reported income tax rate for the three months
    ended September 30, 2007 was approximately 38 percent (2006 - 27 percent)
    and for the nine months ended September 30, 2007 was approximately
    33 percent (2006 - 18 percent). For the three and nine months ended
    September 30, 2007, the consolidated effective income tax rate was
    33 percent (2006 - 30 percent). Items to note include the following:

    - A scheduled 2-percentage point reduction in the Canadian federal income
    tax rate applicable to resource companies, effective at the beginning of
    2007, was more than offset by a higher percentage of consolidated income
    earned in higher-tax jurisdictions during the three and nine months ended
    September 30, 2007, compared to the same periods in 2006. As a result of
    the increasing proportion of consolidated income earned in higher-tax
    jurisdictions, during the third quarter of 2007, it was determined that
    the consolidated effective rate for the year had increased from
    30 percent to 33 percent. The reported income tax rate for the third
    quarter of 2007 is higher than the effective rate as the impact of this
    change on prior periods, as applicable, was reflected during the quarter.

    - During the second quarter of 2007, the Government of Canada enacted a
    reduction of the federal corporate income tax rate to 18.5 percent by
    2011. This reduction was in addition to changes enacted by the Government
    of Canada in the second quarter of 2006 to reduce the federal corporate
    income tax rate from 23 percent in 2006 to 19 percent by 2010 and reduce
    the federal corporate surtax from 1.12 percent to nil in 2008. These
    changes reduced the company's future income tax liability by $4.7 in the
    second quarter of 2007 and $22.9 in the second quarter of 2006.

    - In addition to the federal changes noted above, the Province of
    Saskatchewan enacted changes to the corporate income tax during the
    quarter ended June 30, 2006, reducing the rate from 17 percent to
    12 percent by 2009. These changes resulted in a $21.9 reduction in the
    company's future income tax liability in the second quarter of 2006.

    - Income tax refunds totaling $22.4 for the 1999 and 2001-2004 taxation
    years were recorded during the nine months ended September 30, 2006,
    $6.6 of which was recognized during the third quarter of 2006. The
    refunds related to a Canadian appeal court decision (pertaining to a
    uranium producer) which affirmed the deductibility of the Saskatchewan
    capital tax resource surcharge.

    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
    September 30, 2007 of 315,962,000 (2006 - 311,721,000). Basic net income
    per share for the nine months ended September 30, 2007 is calculated
    based on the weighted average shares issued and outstanding of
    315,444,000 (2006 - 311,344,000).

    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 September 30, 2007 was 324,741,000 (2006 - 318,134,000) and for the
    nine months ended September 30, 2007 was 323,580,000
    (2006 - 317,801,000).

    9. Segment Information

    The company has three reportable business segments: potash, nitrogen and
    phosphate. 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 September 30, 2007
    -------------------------------------------------------------------------
                                                              All    Consoli-
                          Potash   Nitrogen  Phosphate     Others      dated
    -------------------------------------------------------------------------
    Sales              $   427.4  $   436.0  $   431.6  $       -  $ 1,295.0
    Freight                 38.3       15.4       26.9          -       80.6
    Transportation and
     distribution            8.7       12.9        9.4          -       31.0
    Net sales - third
     party                 380.4      407.7      395.3          -
    Cost of goods sold     159.1      283.8      265.4          -      708.3
    Gross margin           221.3      123.9      129.9          -      475.1
    Depreciation and
     amortization           15.5       22.2       29.3        2.5       69.5
    Inter-segment sales        -       25.0          -          -          -

                                   Three Months Ended September 30, 2006
    -------------------------------------------------------------------------
                                                              All    Consoli-
                          Potash   Nitrogen  Phosphate     Others      dated
    -------------------------------------------------------------------------
    Sales              $   334.3  $   292.6  $   326.6  $       -  $   953.5
    Freight                 33.6        9.4       22.6          -       65.6
    Transportation and
     distribution           10.5       13.4       13.7          -       37.6
    Net sales - third
     party                 290.2      269.8      290.3          -
    Cost of goods sold     136.6      207.4      260.5          -      604.5
    Gross margin           153.6       62.4       29.8          -      245.8
    Depreciation and
     amortization           16.4       19.5       23.3        3.0       62.2
    Inter-segment sales      0.2       25.4        0.9          -          -

                                    Nine Months Ended September 30, 2007
    -------------------------------------------------------------------------
                                                              All    Consoli-
                          Potash   Nitrogen  Phosphate     Others      dated
    -------------------------------------------------------------------------
    Sales              $ 1,318.1  $ 1,336.8  $ 1,147.9  $       -  $ 3,802.8
    Freight                135.0       40.0       79.8          -      254.8
    Transportation and
     distribution           30.9       39.1       24.6          -       94.6
    Net sales - third
     party               1,152.2    1,257.7    1,043.5          -
    Cost of goods sold     496.3      858.3      752.6          -    2,107.2
    Gross margin           655.9      399.4      290.9          -    1,346.2
    Depreciation and
     amortization           54.4       65.5       88.6        7.8      216.3
    Inter-segment sales        -       84.1        1.9          -          -

                                    Nine Months Ended September 30, 2006
    -------------------------------------------------------------------------
                                                              All    Consoli-
                          Potash   Nitrogen  Phosphate     Others      dated
    -------------------------------------------------------------------------
    Sales              $   856.5  $   966.9  $   920.4  $       -  $ 2,743.8
    Freight                 91.4       28.1       63.3          -      182.8
    Transportation and
     distribution           28.9       40.3       35.4          -      104.6
    Net sales - third
     party                 736.2      898.5      821.7          -
    Cost of goods sold     359.0      665.0      729.7          -    1,753.7
    Gross margin           377.2      233.5       92.0          -      702.7
    Depreciation and
     amortization           43.2       57.8       70.5        9.9      181.4
    Inter-segment sales      5.0       85.8        5.5          -          -

    10. Stock-Based Compensation

    On May 3, 2007, the company's shareholders approved the 2007 Performance
    Option Plan under which the company may, after February 20, 2007 and
    before January 1, 2008, issue options to acquire up to 3,000,000 common
    shares. Under the plan, the exercise price shall not be less than the
    quoted market closing price of the company's common shares on the last
    trading day immediately preceding the date of grant and an option's
    maximum term is 10 years. In general, options will vest, if at all,
    according to a schedule based on the three-year average excess of the
    company's consolidated cash flow return on investment over weighted
    average cost of capital. As of September 30, 2007, options to purchase a
    total of 1,730,550 common shares have been granted under the plan. The
    weighted average fair value of options granted was $22.68 per share,
    estimated as of the date of grant using the Black-Scholes-Merton option-
    pricing model with the following weighted average assumptions:

    Expected dividend                                                  $0.40
    Expected volatility                                                  29%
    Risk-free interest rate                                            4.48%
    Expected life of options                                       6.4 years

    11. Pension and Other Post-Retirement Expenses

    Defined Benefit Pension Plans   Three Months Ended   Nine Months Ended
                                       September 30         September 30
                                     2007       2006       2007       2006
    -------------------------------------------------------------------------
    Service cost                   $    3.9   $    3.6   $   11.5   $   10.8
    Interest cost                       9.1        8.5       27.3       25.3
    Expected return on plan assets    (10.7)      (9.7)     (32.1)     (28.9)
    Net amortization and change in
     valuation allowance                3.2        3.5        9.6       10.4
    -------------------------------------------------------------------------
    Net expense                    $    5.5   $    5.9   $   16.3   $   17.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Other Post-Retirement Plans     Three Months Ended   Nine Months Ended
                                       September 30         September 30
                                     2007       2006       2007       2006
    -------------------------------------------------------------------------
    Service cost                   $    1.5   $    1.1   $    4.4   $    3.5
    Interest cost                       3.6        3.2       10.6        9.3
    Net amortization                    0.1       (0.1)       0.4       (0.3)
    -------------------------------------------------------------------------
    Net expense                    $    5.2   $    4.2   $   15.4   $   12.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    For the three months ended September 30, 2007, the company contributed
    $39.4 to its defined benefit pension plans, $0.4 to its defined
    contribution pension plans and $2.0 to its other post-retirement plans.
    Contributions for the nine months ended September 30, 2007 were $56.2 to
    its defined benefit pension plans, $13.2 to its defined contribution
    pension plans and $6.2 to its other post-retirement plans. Total
    contributions to these plans are expected to approximate $124.3 for the
    year ended December 31, 2007.

    12. Other Income

                                    Three Months Ended     Nine Months Ended
                                       September 30          September 30
                                     2007       2006       2007       2006
    -------------------------------------------------------------------------
    Share of earnings of equity
     investees                    $    15.4  $    10.6  $    58.2  $    39.0
    Dividend income                     8.8        9.0       47.5       21.1
    Other                               4.9        1.5        5.6       12.2
    -------------------------------------------------------------------------
                                  $    29.1  $    21.1  $   111.3  $    72.3
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    13. Comparative Figures

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

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

                                    Three Months Ended     Nine Months Ended
                                       September 30          September 30
                                     2007       2006       2007       2006
    -------------------------------------------------------------------------

    Potash Operating Data
    Production (KCl Tonnes -
     thousands)                       1,824      1,437      6,618      4,626
    Shutdown weeks                      8.2       12.5       17.6       62.9
    Sales (tonnes - thousands)
     Manufactured Product
       North America                    710        673      2,653      1,939
       Offshore                       1,442      1,410      4,477      3,093
    -------------------------------------------------------------------------
     Manufactured Product             2,152      2,083      7,130      5,032
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Potash Net Sales
     (US $ millions)
      Sales                          $427.4     $334.3   $1,318.1     $856.5
      Less: Freight                    38.3       33.6      135.0       91.4
            Transportation and
             distribution               8.7       10.5       30.9       28.9
    -------------------------------------------------------------------------
      Net Sales                      $380.4     $290.2   $1,152.2     $736.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

     Manufactured Product
       North America                 $138.4     $108.8     $482.0     $329.9
       Offshore                       239.7      179.4      661.8      398.6
     Other miscellaneous and
      purchased product                 2.3        2.0        8.4        7.7
    -------------------------------------------------------------------------
     Net Sales                       $380.4     $290.2   $1,152.2     $736.2
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Potash Average Price per MT
       North America                $194.82    $161.89    $181.63    $170.13
       Offshore                     $166.20    $127.22    $147.82    $128.88
    -------------------------------------------------------------------------
     Manufactured Product           $175.64    $138.42    $160.40    $144.77
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                                    Three Months Ended     Nine Months Ended
                                       September 30          September 30
                                     2007       2006       2007       2006
    -------------------------------------------------------------------------

    Nitrogen Operating Data
    Production (N Tonnes -
     thousands)                         759        689      2,283      1,870
    Average Natural Gas Cost per
     MMBtu                            $3.94      $3.50      $4.26      $3.92
    Sales (tonnes - thousands)
     Manufactured Product
       Ammonia                          526        438      1,622      1,244
       Urea                             356        290      1,008        899
       Nitrogen solutions/Nitric
        acid/Ammonium nitrate           569        503      1,693      1,354
    -------------------------------------------------------------------------
     Manufactured Product             1,451      1,231      4,323      3,497
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

     Fertilizer sales tonnes            482        396      1,533      1,109
     Industrial/Feed sales tonnes       969        835      2,790      2,388
    -------------------------------------------------------------------------
                                      1,451      1,231      4,323      3,497
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Nitrogen Net Sales
     (US $ millions)
      Sales                          $436.0     $292.6   $1,336.8     $966.9
      Less: Freight                    15.4        9.4       40.0       28.1
            Transportation and
             distribution              12.9       13.4       39.1       40.3
    -------------------------------------------------------------------------
      Net Sales                      $407.7     $269.8   $1,257.7     $898.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

     Manufactured Product
       Ammonia                       $148.3     $111.1     $504.4     $369.8
       Urea                           119.1       70.8      344.9      239.7
       Nitrogen solutions/Nitric
        acid/Ammonium nitrate         105.1       75.1      323.9      240.0
     Other miscellaneous and
      purchased product                35.2       12.8       84.5       49.0
    -------------------------------------------------------------------------
     Net Sales                       $407.7     $269.8   $1,257.7     $898.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

     Fertilizer net sales            $151.6      $81.1     $475.6     $275.1
     Industrial/Feed net sales        256.1      188.7      782.1      623.4
    -------------------------------------------------------------------------
                                     $407.7     $269.8   $1,257.7     $898.5
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Nitrogen Average Price per MT
       Ammonia                      $282.14    $253.58    $310.96    $297.26
       Urea                         $334.39    $244.35    $342.36    $266.58
       Nitrogen solutions/Nitric
        acid/Ammonium nitrate       $184.79    $149.41    $191.28    $177.31
    -------------------------------------------------------------------------
     Manufactured Product           $256.82    $208.85    $271.40    $242.94
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

     Fertilizer average price
      per MT                        $314.59    $204.98    $310.29    $248.04
     Industrial/Feed average
      price per MT                  $264.43    $225.90    $280.31    $261.10
    -------------------------------------------------------------------------
                                    $281.10    $219.18    $290.94    $256.96
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


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

                                    Three Months Ended     Nine Months Ended
                                       September 30          September 30
                                     2007       2006       2007       2006
    -------------------------------------------------------------------------

    Phosphate Operating Data
    Production (P2O5 Tonnes -
     thousands)                         540        509      1,548      1,493
    P2O5 Operating Rate                 95%        90%        90%        88%
    Sales (tonnes - thousands)
     Manufactured Product
       Fertilizer - Liquid
        phosphates                      252        232        687        620
       Fertilizer - Solid
        phosphates                      416        428      1,193      1,190
       Feed                             185        222        596        583
       Industrial                       183        156        541        485
    -------------------------------------------------------------------------
     Manufactured Product             1,036      1,038      3,017      2,878
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Phosphate Net Sales
     (US $ millions)
      Sales                          $431.6     $326.6   $1,147.9     $920.4
      Less: Freight                    26.9       22.6       79.8       63.3
            Transportation and
             distribution               9.4       13.7       24.6       35.4
    -------------------------------------------------------------------------
      Net Sales                      $395.3     $290.3   $1,043.5     $821.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

     Manufactured Product
       Fertilizer - Liquid
        phosphates                    $79.2      $52.5     $189.0     $139.0
       Fertilizer - Solid
        phosphates                    167.0      101.2      424.5      288.1
       Feed                            65.1       66.5      191.2      178.4
       Industrial                      71.4       58.2      203.3      180.1
     Other miscellaneous and
      purchased product                12.6       11.9       35.5       36.1
    -------------------------------------------------------------------------
     Net Sales                       $395.3     $290.3   $1,043.5     $821.7
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Phosphate Average Price per MT
       Fertilizer - Liquid
        phosphates                  $315.35    $226.34    $275.28    $224.27
       Fertilizer - Solid
        phosphates                  $400.78    $235.90    $355.80    $242.03
       Feed                         $351.40    $298.99    $320.48    $306.27
       Industrial                   $391.78    $374.46    $375.98    $371.30
    -------------------------------------------------------------------------
     Manufactured Product           $369.63    $268.02    $334.11    $272.99
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Exchange Rate (Cdn$/US$)                               2007       2006
    -------------------------------------------------------------------------
    December 31                                                       1.1653
    September 30                                           0.9963     1.1153
    Third-quarter average conversion rate                  1.0579     1.1204


                   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, 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
        ------

    Set forth below is a reconciliation of "EBITDA" to net income, the most
    directly comparable financial measure calculated and presented in
    accordance with Canadian GAAP.

                                    Three Months Ended     Nine Months Ended
                                       September 30          September 30
                                     2007       2006       2007       2006
    -------------------------------------------------------------------------
    Net income                    $   243.1  $   145.2  $   726.8  $   445.8
    Income taxes                      150.4       52.8      351.0       95.1
    Interest expense                   12.7       25.2       59.0       69.1
    Depreciation and amortization      69.5       62.2      216.3      181.4
    -------------------------------------------------------------------------
    EBITDA                        $   475.7  $   285.4  $ 1,353.1  $   791.4
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    EBITDA is calculated as earnings before interest, income taxes,
    depreciation and amortization. PotashCorp uses EBITDA as a supplemental
    financial measure of its operational performance. Management believes
    EBITDA to be an important measure as it excludes 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, this measure is limited in that
    it does not reflect the periodic costs of certain capitalized tangible
    and intangible assets used in generating revenues in the company's
    business. Management evaluates such items through other financial
    measures such as capital expenditures and cash flow provided by operating
    activities. The company believes that this measurement is useful to
    measure a company's ability to service debt and to meet other payment
    obligations or as a valuation measurement.


                   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     Nine Months Ended
                                       September 30          September 30
                                     2007       2006       2007       2006
    -------------------------------------------------------------------------
    Cash flow prior to working
     capital changes(1)           $   336.7  $   228.8  $ 1,093.4  $   675.2
    -------------------------------------------------------------------------
    Changes in non-cash
     operating working capital
      Accounts receivable            (100.2)     (52.6)    (139.9)      (1.1)
      Inventories                      35.5       23.3       51.6       21.8
      Prepaid expenses and other
       current assets                   0.8       10.4        1.3      (23.3)
      Accounts payable and
       accrued charges                 38.8       15.0      150.9     (319.0)
    -------------------------------------------------------------------------
    Changes in non-cash
     operating working capital        (25.1)      (3.9)      63.9     (321.6)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                   $   311.6  $   224.9  $ 1,157.3  $   353.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Free cash flow(2)             $   169.7  $    94.3  $   690.9  $   162.6
    Additions to property,
     plant and equipment              145.1      133.8      381.6      384.9
    Purchase of long-term
     investments                       21.0          -       30.7      130.0
    Other assets and intangible
     assets                             0.9        0.7       (9.8)      (2.3)
    Changes in non-cash
     operating working capital        (25.1)      (3.9)      63.9     (321.6)
    -------------------------------------------------------------------------
    Cash provided by operating
     activities                   $   311.6  $   224.9  $ 1,157.3  $   353.6
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    (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 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, additions to
        property, plant and equipment, purchases of long-term investments,
        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.

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

    %SEDAR: 00001608EF




For further information:

For further information: Investors: Denita Stann, Director, Investor
Relations, Phone: (847) 849-4277, Fax: (847) 849-4691, Email:
ir@potashcorp.com; Media: Rhonda Speiss, Manager, Public Relations, Phone:
(306) 933-8544, Fax: (306) 933-8844, pr@potashcorp.com; Web Site:
www.potashcorp.com


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