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PotashCorp Reports Third-Quarter Earnings of $0.74 per Share



         PotashCorp Reports Third-Quarter Earnings of $0.74 per Share

PR Newswire

SASKATOON, Oct. 25, 2012

Key Performance and Outlook Highlights

  * Third-quarter earnings of $0.74 per share^1; 21 percent lower than
    third-quarter 2011
  * Record third-quarter North American potash sales volumes offset by
    offshore sales decline
  * Nine-month cash flow prior to working capital changes^2 reached $2.7
    billion; close to record levels
  * Full-year 2012 earnings guidance lowered to $2.40-$2.60 per share

Symbol: POT
Listed:  TSX, NYSE

SASKATOON, Oct. 25, 2012 /PRNewswire/ - Potash Corporation of Saskatchewan
Inc. (PotashCorp) today reported third-quarter earnings of $0.74 per share
($645 million), which compared to $0.94 per share ($826 million) in the same
period last year. Earnings for the first nine months reached $1.89 per share
($1.7 billion), a total that trailed the $2.73 per share ($2.4 billion) earned
during the same period in 2011.

Gross margin of $0.9 billion was the third highest third-quarter total in  our 
history, exceeded only by  the $1.1 billion generated  in 2011 and the  record 
performance of 2008. The decline from  2011's third quarter was primarily  the 
result of weaker phosphate  margins and reduced offshore  potash sales due  to 
the delay of new supply contracts with  China and India. Our gross margin  for 
the first three quarters of 2012 reached $2.8 billion, which compared to  $3.4 
billion generated in the same period last year.

Earnings  before   finance   costs,   income  taxes   and   depreciation   and 
amortization^2 (EBITDA) reached $1.1 billion for the quarter - down from  $1.3 
billion earned in third-quarter 2011 - and raised the total for the first nine
months to $2.9 billion. Although cash flow prior to working capital changes of
$0.8 billion trailed the $1.0 billion  generated during the same quarter  last 
year, the nine-month total for 2012 grew to $2.7 billion, 8 percent below last
year's record levels.

Offshore investments in Arab Potash  Company (APC) in Jordan, Israel  Chemical 
Ltd. (ICL) in  Israel and Sociedad  Quimica y  Minera de Chile  S.A. (SQM)  in 
Chile  contributed  $113  million  to  our  earnings  in  the  third  quarter. 
Contributions in the form of share of earnings of equity-accounted investments
and dividends from these investments for the first nine months of 2012 reached
a record $318 million - a total  which also included a dividend from  Sinofert 
Holdings Limited  (Sinofert). The  market value  of our  investments in  these 
publicly traded companies equated  to approximately $9.2  billion, or $10  per 
PotashCorp share, at market close on October 24, 2012.

"Strong demand in North  America and Latin  America demonstrated the  powerful 
motivators in place for farmers today, although not all global potash  markets 
moved as quickly to capitalize on these favorable conditions," said PotashCorp
President and Chief Executive  Officer Bill Doyle.  "While Chinese and  Indian 
customers  have  not  engaged  consistently,  their  need  for  improved  soil 
fertility to  increase  food  production has  not  subsided.  Our  diversified 
fertilizer business and global  footprint helped support  our results for  the 
quarter and we believe  position us well to  drive improved results as  demand 
grows."

Market Conditions

Third-quarter potash demand was marked by varying degrees of engagement in key
markets around the world.  Movement to China and  India was limited  following 
the completion of existing  supply contracts, while  Brazil and North  America 
purchased aggressively  to  meet  robust  farmer  demand.  In  North  America, 
fertilizer dealers  began to  prepare  for their  fall requirements  upon  the 
announcement  of   new  summer-fill   pricing  programs.   This  helped   push 
third-quarter shipments from  domestic potash producers  26 percent above  the 
same period last  year. By the  end of the  quarter, shipments accelerated  as 
fertilizer dealers  responded  to  previously  conservative  fall  application 
estimates, especially in regions less severely impacted by drought. Demand was
further aided by a  rapidly advancing harvest that  was expected to create  an 
extended North  American  fall  fertilizer  application  window.  In  offshore 
markets, delays in closing new contracts  with buyers in China and India  more 
than offset strong demand from Latin America (especially Brazil) and  resulted 
in a decrease in third-quarter shipments from North American producers to  1.9 
million tonnes,  25 percent  below the  same period  last year.  As a  result, 
rising  competitive  pressures   in  certain  offshore   markets  moved   most 
spot-market prices lower during the quarter.

In phosphate, strong demand  and continuing supply challenges  in the US  kept 
domestic markets for solid phosphate fertilizer tight. Weaker offshore  demand 
relative to 2011 levels resulted in  lower prices on a comparative basis,  but 
tightness in North America caused prices to move up in this market by the  end 
of the quarter.

Nitrogen markets remained robust throughout  the third quarter, driven by  the 
expectation of high US  corn acreage for the  upcoming spring planting  season 
and steady industrial demand.  Continued delays in  expected new capacity,  as 
well as ongoing production issues  in key exporting regions, kept  inventories 
relatively low. The combination of strong demand and tight supply resulted  in 
prices for ammonia at historically high  levels, well above those of the  same 
period last year.

Potash

Potash gross margin totaled $554 million for the third quarter, below the $700
million generated in  the same period  last year. This  result brought  potash 
gross margin for  the first  nine months to  $1.7 billion,  trailing the  $2.2 
billion earned in the comparative period last year.

Sales volumes for the quarter totaled  2.1 million tonnes, slightly below  the 
2.2 million tonnes sold in the same period of 2011. While strong demand pushed
North American potash sales volumes to  a third-quarter record of 1.0  million 
tonnes, surpassing the 0.8 million tonnes  sold in the same period last  year, 
offshore sales volumes fell to 1.1  million tonnes from 1.4 million tonnes  in 
2011. Shipments  to Latin  America  outpaced last  year's third  quarter,  but 
strength from this  market was more  than offset  by the decline  in sales  to 
China and India.  Shipments from  Canpotex Limited (Canpotex)  - the  offshore 
marketing company for Saskatchewan potash producers - during the third quarter
were heavily weighted towards Latin America and Other Asia (countries  outside 
of China and India), which accounted for 32 percent and 41 percent of  tonnes, 
respectively, while China represented  12 percent and  India 5 percent.  Total 
sales for the year reached 5.9 million tonnes, trailing the record 7.5 million
tonnes sold through the first nine months of 2011.

Our third-quarter  average  realized  potash  price  of  $429  per  tonne  was 
relatively flat compared to second quarter  2012, but declined 5 percent  from 
the same period last year on softening prices in spot markets.

Third-quarter potash production of 1.6 million tonnes reflected the impact  of 
scheduled maintenance shutdowns,  capital-related work at  our Allan  facility 
and inventory-related downtime  at our  Lanigan facility.  Production for  the 
quarter was 18 percent below last year's third quarter, which did not  include 
any  inventory-related  downtime  and  contained  fewer  weeks  of   scheduled 
maintenance. This lower level of production - along with a greater  percentage 
of production from  higher-cost facilities,  a rise in  costs associated  with 
potash tonnes from Esterhazy and  increased depreciation charges -  negatively 
impacted our cost of goods sold on a per-tonne basis.

Phosphate

Third-quarter phosphate gross  margin of  $122 million  raised our  nine-month 
total to $370 million, with both results lagging the $169 million and the $485
million earned  in  the  comparable periods  last  year.  Fertilizer  products 
delivered $74 million  in gross margin  for the third  quarter of 2012,  while 
feed and industrial contributed $43 million.

The impacts of tropical storm Debby, a turnaround at our Geismar facility  and 
challenging mining conditions  in a  new portion  of our  Aurora mine  limited 
production during the quarter. As a result, third-quarter sales volumes of 0.9
million tonnes were below the 1.1 million tonnes sold in the same quarter last
year, reflecting our decision to allocate  a larger percentage of our  limited 
phosphoric acid production to higher-margin products.

Average realized  phosphate prices  for the  quarter totaled  $537 per  tonne, 
trailing the $602 per tonne achieved in the same quarter of 2011. This  change 
reflected lower prices for solid and liquid fertilizers, although the relative
strength of our diversified  feed and industrial products  - where pricing  is 
typically less  volatile than  products with  agricultural exposure  -  helped 
limit the overall decline.

Phosphate cost of  goods sold  on a  per-tonne basis  was positively  impacted 
during the third quarter by lower  sulfur costs and a favorable adjustment  to 
our phosphate asset retirement obligations (due to an increase in the relative
discount rate) compared to the same period last year.

Nitrogen

Our ammonia-focused nitrogen business continued to benefit from higher prices,
increasing third-quarter gross margin  to $251 million,  and raised our  total 
for the year to a record $772 million. These results compared to $263  million 
in gross margin generated in last year's third quarter and $675 million earned
during the first nine months of  2011. Trinidad generated $144 million of  our 
third-quarter 2012 gross margin, while our operations in the US (including the
impact of our hedge position) contributed $107 million.

Gas interruptions in  Trinidad and expansion-related  downtime at our  Augusta 
facility resulted  in sales  volumes for  the third-quarter  declining to  1.1 
million tonnes from 1.3 million tonnes in the same period last year.

Average realized price for nitrogen reached  $458 per tonne, up from $424  per 
tonne in  the third  quarter of  2011, as  tight ammonia  market  fundamentals 
pushed prices higher relative to the same period last year.

Higher Tampa ammonia prices  - the benchmark to  which our Trinidad gas  costs 
are primarily indexed -  were the primary  driver of the  increase in cost  of 
goods sold on a per-tonne basis in the third quarter.

Financial

In September  2012,  we announced  a  50  percent increase  to  our  quarterly 
dividend that  raised it  to $0.21  per  share. This  was our  third  dividend 
increase since the  beginning of 2011,  with our quarterly  dividend now  more 
than six times its level at the start of that year.

Third-quarter capital-related expenditures,  primarily related  to our  potash 
expansion projects, were $546  million, raising our total  for the first  nine 
months of 2012 to $1.5 billion.

General Outlook

The economic motivators for farmers to increase food production remain  strong 
- a situation that,  combined with the  basic principles of  agronomy and  the 
need to  improve crop  yields around  the world,  typically drives  fertilizer 
demand. Yet, as this  situation unfolds, the speed  and magnitude of  response 
has varied  by market.  In the  US  and Brazil,  farmers are  responding  more 
quickly to the opportunities  and driving strong  demand for all  fertilizers, 
while regions with more government involvement and less-developed agricultural
economies -  and  lagging  yields  - have  moved  more  slowly.  This  current 
dichotomy has disrupted  typical demand  patterns and  caused potash  shipment 
expectations  to  fall  below  previously  forecast  levels,  which  are   now 
anticipated to be in the range of 50-52 million tonnes for the year.

These conditions are not unprecedented, as growth has often occurred in uneven
waves,  with  increases   in  demand  sometimes   punctuated  by  periods   of 
contraction. PotashCorp has successfully navigated through these challenges in
the past, following strategies designed to minimize the impact during  periods 
of slower demand while delivering long-term growth.

Potash Market Update

In North  America, we  have  witnessed improved  sentiment among  farmers  and 
fertilizer dealers  that  is  translating  into rising  demand  to  meet  fall 
application needs. While farmers work to address their soil nutrient needs  as 
they seek to capitalize on supportive  crop economics - driven by strong  crop 
prices  and  the  affordability  of  fertilizer  -  we  believe  dealers  will 
cautiously manage purchases through the remainder of the year in an effort  to 
minimize inventory  positions. We  anticipate  fourth-quarter demand  in  this 
market will be  above that  of the  same period last  year and  still see  the 
potential for second-half shipments to reach record levels.

Latin American distributors are working  to keep pace with significant  grower 
demand. Soybean and corn planting is  well underway in key producing  regions, 
which is drawing  down potash supplies.  We anticipate demand  in this  region 
will remain strong  for the balance  of the year  as distributors prepare  for 
Brazil's Safrina  crop  (February/March corn  planting)  and attempt  to  take 
advantage of  the  typically  slower  import period  to  help  alleviate  port 
congestion. Potash shipments for full-year 2012 are forecast to remain  strong 
and we believe could approach last year's record levels.

Demand in Other Asia (countries outside of China and India) remains relatively
strong, despite volatility in prices for oil palm, a key crop in this part  of 
the world.  We  expect  full-year demand  to  fall  below that  of  2011,  but 
anticipate this market will  end the year with  lower inventories than a  year 
ago.

While demand for  potash in China  is expected to  be equal to  that of  2011, 
delays in new contract commitments  have reduced seaborne supply  expectations 
for 2012.  Demand  in  this  market  is  currently  being  met  from  internal 
production,  inventory  withdrawals  and  tonnage  via  rail,  but  additional 
requirements are anticipated. We  do expect a resolution  prior to the end  of 
2012 and believe reduced  Chinese inventory levels by  year-end could lead  to 
increased requirements in 2013.

In  India,  a  number  of  near-term  challenges  are  continuing  to   create 
uncertainty. High food inflation, crop yields  that are well below many  other 
countries in the  developing world  and the  significant under-application  of 
potash are well documented,  but the path India  will follow to address  these 
critical  issues  remains  unclear.  India  faces  significant  challenges  in 
improving, or even maintaining, current crop production levels given  existing 
fertility practices. The need to address this situation - along with  mounting 
internal pressure on the government from its local fertilizer industry - fuels
our confidence  that policies  will  ultimately be  modified and  demand  will 
improve. We  believe an  increase in  demand  will begin  to unfold  in  2013, 
although the extent to which that happens remains uncertain at this time.

Financial Outlook

In this environment, we now estimate our 2012 potash segment gross margin will
be in  the  range of  $2.1  billion to  $2.3  billion. This  revised  estimate 
primarily reflects a reduction  in our shipments estimate  for 2012, which  is 
now anticipated to be in the range of 7.6-8.3 million tonnes. The wide  ranges 
on these  estimates primarily  reflect our  varied timing  assumptions on  new 
supply contracts.

Inventory-related  downtime   at  our   lower-cost  Lanigan   and   Rocanville 
facilities, in addition to  increased depreciation charges  and the impact  of 
higher costs  associated with  potash tonnes  from Esterhazy,  is expected  to 
result in a per-tonne cost  of goods sold for  the fourth quarter above  those 
compared to the same period last year.

In phosphate, tight  North American  phosphoric acid markets  are expected  to 
contribute to  relatively stable  markets  through the  balance of  the  year, 
although this may be offset by higher per-tonne cost of goods sold - a product
of higher  rock and  ammonia costs  - and  result in  margin contraction  from 
third-quarter 2012 levels.

The expectation of record  or near-record corn plantings  in 2013, along  with 
healthy industrial demand,  is likely to  lead to relatively  tight markets  - 
particularly for  ammonia -  through the  balance of  2012. We  expect  higher 
per-tonne cost of  goods sold for  the fourth quarter,  reflecting the  recent 
rise in North American spot  gas prices and the  lagging impact of sales  from 
inventory produced with higher-cost Trinidad gas during the third quarter.  We 
expect that our expansion project at  Augusta will begin producing during  the 
fourth quarter, and that our ammonia plant restart at Geismar will commence in
January 2013.

We now forecast our combined phosphate and nitrogen gross margin for full-year
2012 to be in the range of $1.3 billion to $1.5 billion.

PotashCorp now forecasts full-year earnings between $2.40 and $2.60 per  share 
which includes the impacts  of the $0.39 per  share adjustment for a  Sinofert 
impairment charge recognized in the second-quarter of 2012.

Conclusion

"The agricultural fundamentals that drive  our business - rising food  demand, 
supportive crop prices and the scientific need to replenish nutrients - remain
strong despite some disruption in deliveries to offshore potash markets." said
Doyle. "We intend to follow a business strategy designed to protect the  value 
of our enterprise while  remaining steadfast in our  commitment to deliver  on 
future growth.  We believe  the nature  of food  production necessitates  that 
fertilizer demand will return in  all major markets. When  it does we will  be 
ready to  meet  the needs  of  our customers  and  deliver the  best  possible 
long-term returns for stakeholders."

Notes

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

PotashCorp is the world's largest crop nutrient company and plays an  integral 
role in  global food  production.  The company  produces the  three  essential 
nutrients required to help farmers  grow healthier, more abundant crops.  With 
global population rising  and diets improving  in developing countries,  these 
nutrients offer a responsible and practical solution to meeting the  long-term 
demand for food. PotashCorp  is the largest producer,  by capacity, of  potash 
and third largest producer of nitrogen and phosphate. While agriculture is its
primary market, the company  also produces products  for animal nutrition  and 
industrial uses. Common shares of Potash Corporation of Saskatchewan Inc.  are 
listed on the Toronto Stock Exchange and the New York Stock Exchange.

This release contains forward-looking statements or forward-looking
information (forward-looking statements). These statements can be identified
by expressions of belief, expectation or intention, as well as those
statements that are not historical fact. These statements are based on certain
factors and assumptions including with respect to: foreign exchange rates,
expected growth, results of operations, performance, business prospects and
opportunities, and effective 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 expressed in the forward-looking
statements, including, but not limited to: variations from our assumptions
with respect to foreign exchange rates, expected growth, results of
operations, performance, business prospects and opportunities, and effective
tax rates; fluctuations in supply and demand in the fertilizer, sulfur,
transportation and petrochemical markets; costs and availability of
transportation and distribution for our raw materials and products, including
railcars and ocean freight; changes in competitive pressures, including
pricing pressures; adverse or uncertain economic conditions and changes in
credit and financial markets; the results of sales contract negotiations with
major markets; economic and political uncertainty around the world, including
the European sovereign debt crisis; timing and impact of capital expenditures;
risks associated with natural gas and other hedging activities; changes in
capital markets and corresponding effects on the company's investments;
unexpected or adverse weather conditions; changes in currency and exchange
rates; unexpected geological or environmental conditions, including water
inflows; imprecision in reserve estimates; adverse developments in new and
pending legal proceedings or government investigations; acquisitions we may
undertake; strikes or other forms of work stoppage or slowdowns; changes in,
and the effects of, government policies and regulations; security risks
related to our information technology systems; 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, 2011 under the captions
"Forward-Looking Statements" and "Item 1A - Risk Factors" and in our other
filings with the US Securities and Exchange Commission and the 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, October 25, 2012 at 1:00
                               pm Eastern Time.

Telephone Conference:     Dial-in numbers:
                          - From Canada and the US: 1-877-881-1303
                          - From Elsewhere: 1-412-902-6510
                           
Live Webcast:             Visit www.potashcorp.com
                          - Webcast participants can submit questions to
                          management online from their audio player pop-up
                          window.

                   Potash Corporation of Saskatchewan Inc.
           Condensed Consolidated Statements of Financial Position
               (in millions of US dollars except share amounts)
                                 (unaudited)
                                                                              
                                              September 30,       December 31,
As at                                             2012                2011
                                                                              
Assets                                                                        
  Current assets                                                              
    Cash and cash equivalents               $           461     $          430
    Receivables                                       1,360              1,195
    Inventories                                         681                731
    Prepaid expenses and other current
    assets                                               69                 52
                                                      2,571              2,408
  Non-current assets                                                          
    Property, plant and equipment                    10,962              9,922
    Investments in equity-accounted
    investees                                         1,279              1,187
    Available-for-sale investments
    (Note 2)                                          2,435              2,265
    Other assets                                        323                360
    Intangible assets                                   121                115
Total Assets                                $        17,691     $       16,257
                                                                              
                                                                              
Liabilities                                                                   
  Current liabilities                                                         
    Short-term debt and current portion
    of long-term debt                       $           573     $          832
    Payables and accrued charges                      1,129              1,295
    Current portion of derivative
    instrument liabilities                               58                 67
                                                      1,760              2,194
  Non-current liabilities                                                     
    Long-term debt                                    3,465              3,705
    Derivative instrument liabilities                   178                204
    Deferred income tax liabilities                   1,392              1,052
    Pension and other post-retirement
    benefit liabilities                                 612                552
    Asset retirement obligations and
    accrued environmental costs                         607                615
    Other non-current liabilities and
    deferred credits                                    101                 88
Total Liabilities                                     8,115              8,410
                                                                              
Shareholders' Equity                                                          
  Share capital                                       1,508              1,483
    Unlimited authorization of common
    shares without par value; issued
    and outstanding 861,506,786
    and 858,702,991 at September 30,
    2012 and December 31, 2011,
    respectively                                                              
  Contributed surplus                                   316                291
  Accumulated other comprehensive
  income                                              1,344                816
  Retained earnings                                   6,408              5,257
Total Shareholders' Equity                            9,576              7,847
Total Liabilities and Shareholders'
Equity                                      $        17,691     $       16,257
(See Notes to the Condensed
Consolidated Financial Statements)                                            
                                                                              
                                                                              

 

                      Potash Corporation of Saskatchewan Inc.
                    Condensed Consolidated Statements of Income
                (in millions of US dollars except per-share amounts)
                                   (unaudited)  
                                                                                    
                              Three Months Ended              Nine Months Ended  
                                 September 30                    September 30
                             2012            2011            2012            2011
                                                                                    
Sales (Note 3)           $     2,143     $     2,321     $     6,285     $     6,850
Freight,
transportation and
distribution                   (154)           (129)           (381)           (410)
Cost of goods sold           (1,062)         (1,060)         (3,080)         (3,044)
Gross Margin                     927           1,132           2,824           3,396
Selling and
administrative
expenses                        (53)            (46)           (166)           (176)
Provincial mining
and other taxes                 (62)            (53)           (162)           (147)
Share of earnings
of
equity-accounted
investees                         77              68             220             185
Dividend income                   39              41             106              94
Impairment of
available-for-sale
investment (Note
2)                                 -               -           (341)               -
Other expenses                  (10)               -            (21)            (10)
Operating Income                 918           1,142           2,460           3,342
Finance costs                   (24)            (37)            (89)           (125)
Income Before
Income Taxes                     894           1,105           2,371           3,217
Income taxes (Note
4)                             (249)           (279)           (713)           (819)
Net Income               $       645     $       826     $     1,658     $     2,398
                                                                                    
Net Income per
Share (Note 5)                                                                      
       Basic             $      0.75     $      0.96     $      1.93     $      2.80
       Diluted           $      0.74     $      0.94     $      1.89     $      2.73
                                                                                    
Dividends Declared
per Share                $      0.21     $      0.07     $      0.49     $      0.21
(See Notes to the Condensed Consolidated Financial Statements)  
                                                                                    
                                                                                    

                      Potash Corporation of Saskatchewan Inc.
          Condensed Consolidated Statements of Comprehensive Income (Loss)
                            (in millions of US dollars)
                                    (unaudited)
                                                                                    
                              Three Months Ended               Nine Months Ended
                                 September 30                    September 30
(Net of related              2012            2011            2012            2011
income taxes)                                                             
                                                                                    
Net Income               $       645     $       826     $     1,658     $     2,398
Other comprehensive                                                         
income (loss)                                                                       
  Net increase
  (decrease) in net
  unrealized gain on                                                        
  available-for-sale
  investments ^(1)               303           (983)             169         (1,351)
  Reclassification
  to income of
  unrealized loss on
  impaired                                                                  
  available-for-sale
  investment (Note
  2)                               -               -             341               -
  Net actuarial loss
  on defined benefit                                                        
  plans ^(2)                       -           (125)            (84)           (125)
  Net loss on
  derivatives                                                               
  designated as cash
  flow hedges ^(3)               (1)            (18)            (16)            (18)
  Reclassification
  to income of net                                                          
  loss on cash flow
  hedges ^(4)                     11              10              36              38
  Other                            -             (5)             (2)             (5)
Other Comprehensive                                                         
Income (Loss)                    313         (1,121)             444         (1,461)
Comprehensive Income
(Loss)                                                                      
                         $       958     $     (295)     $     2,102     $       937

^(1) Available-for-sale investments are comprised of shares in Israel
Chemicals Ltd. and Sinofert Holdings Limited.
^(2) Net of income taxes of $NIL (2011 - $71) for the three months ended
September 30, 2012 and $48 (2011 - $71) for the nine months ended September
30, 2012.
^(3) Cash flow hedges are comprised of natural gas derivative instruments and
are net of income taxes of $1 (2011 - $11) for the three months ended
September 30, 2012 and $11 (2011 - $11) for the nine months ended September
30, 2012.
^(4) Net of income taxes of $(8) (2011 - $(7)) for the three months ended
September 30, 2012 and $(24) (2011 - $(23)) for the nine months ended
September 30, 2012.

(See Notes to the Condensed Consolidated Financial Statements)  

                                                                                                       
                                               Potash Corporation of Saskatchewan Inc.
                                        Condensed Consolidated Statement of Changes in Equity
                                                     (in millions of US dollars)
                                                             (unaudited)
                                                                                                                                             
                                                               Accumulated Other Comprehensive Income                                        
                                                        Net
                                                 unrealized         Net            Net                      Total                            
                                                  gain on         loss on       actuarial                Accumulated                         
                                                available-      derivatives       loss                      Other                            
                                                                designated         on
                     Share      Contributed      for-sale           as           defined                Comprehensive     Retained     Total
                                                                  cash flow       benefit
                    Capital       Surplus       investments          hedges     plans^(1)     Other        Income         Earnings     Equity
                                                                                                                                             
Balance -
December 31,
2011              $   1,483   $         291   $         982   $       (168)   $         -   $     2   $           816   $    5,257   $  7,847
Net income                -               -               -               -             -         -                 -        1,658      1,658
Other
comprehensive
income (loss)             -               -             510              20          (84)       (2)               444            -        444
Effect of
share-based
compensation              -              27               -               -             -         -                 -            -         27
Dividends
declared                  -               -               -               -             -         -                 -        (423)      (423)
Issuance of
common shares            25             (2)               -               -             -         -                 -            -         23
Transfer of
actuarial
losses on
defined
benefit plans             -               -               -               -            84         -                84         (84)          -
Balance -
September 30,
2012              $   1,508   $         316   $       1,492   $       (148)   $         -   $     -   $         1,344   $    6,408   $  9,576
^(1) Any amounts incurred during a period are closed out to retained earnings at each period-end. Therefore, no balance exists in the reserve
at beginning or end of period.
 
(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
                               2012            2011            2012            2011
                                                                                      
Operating Activities                                                                  
Net income                 $       645     $       826     $     1,658     $     2,398
                                                                                      
Adjustments to
reconcile net income
to cash provided by
operating activities                                                                  
  Depreciation and
  amortization                     149             122             434             374
  Share-based
  compensation                       3               3              21              22
  Impairment of
  available-for-sale
  investment (Note
  2)                                 -               -             341               -
  Realized excess
  tax benefit
  related to
  share-based
  compensation                       4               6               7              29
  Provision for
  deferred income
  tax                              162             189             366             342
  Net undistributed
  earnings of
  equity-accounted
  investees                       (74)            (68)            (90)           (118)
  Pension and other
  post-retirement
  benefits                        (86)           (145)            (71)           (131)
  Asset retirement
  obligations and
  accrued
  environmental
  costs                            (6)              22               4              40
  Other long-term
  liabilities and
  miscellaneous                      7               9              33            (23)
  Subtotal of
  adjustments                      159             138           1,045             535
                                                                                      
  Changes in
  non-cash operating
  working capital                                                                     
  Receivables                     (90)            (88)            (84)           (277)
  Inventories                       19               7              63            (14)
  Prepaid expenses
  and other current
  assets                           (5)               -            (21)              12
  Payables and
  accrued charges                   31            (18)           (308)            (35)
  Subtotal of
  changes in
  non-cash operating
  working capital                 (45)            (99)           (350)           (314)
Cash provided by
operating activities               759             865           2,353           2,619
                                                                                      
Investing Activities                                                                  
Additions to
property, plant and
equipment                        (546)           (590)         (1,505)         (1,523)
Other assets and
intangible assets                 (23)             (8)            (37)            (11)
Cash used in
investing activities             (569)           (598)         (1,542)         (1,534)
                                                                                      
Financing Activities                                                                  
Repayment of
long-term debt
obligations                          -               -             (2)           (600)
Repayment of
short-term debt
obligations                      (117)           (236)           (501)           (395)
Dividends                        (116)            (60)           (293)           (148)
Issuance of common
shares                              13              15              16              40
Cash used in
financing activities             (220)           (281)           (780)         (1,103)
(Decrease) Increase
in Cash and Cash
Equivalents                       (30)            (14)              31            (18)
Cash and Cash
Equivalents,
Beginning of Period                491             408             430             412
Cash and Cash
Equivalents, End of
Period                     $       461     $       394     $       461     $       394
                                                                                      
Cash and cash
equivalents
comprised of:                                                                         
  Cash                     $        69     $        78     $        69     $        78
  Short-term
  investments                      392             316             392             316
                           $       461     $       394     $       461     $       394
                                                                                      
Supplemental cash
flow disclosure                                                                       
  Interest paid            $        12     $        35     $       114     $       168
  Income taxes paid        $        91     $        91     $       583     $       415
(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, 2012
              (in millions of US dollars except 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 International Financial Reporting Standards ("IFRS"), as
issued by the International Accounting Standards Board ("IASB"). The
accounting policies used in preparing these unaudited interim condensed
consolidated financial statements are consistent with those used in the
preparation of the 2011 annual consolidated financial statements.
These unaudited 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 2011 annual consolidated financial
statements. Further, while the financial figures included in this preliminary
interim results announcement have been computed in accordance with IFRS
applicable to interim periods, this announcement does not contain sufficient
information to constitute an interim financial report as that term is defined
in International Accounting Standard ("IAS") 34, "Interim Financial
Reporting". The company expects to publish an interim financial report that
complies with IAS 34 in its Quarterly Report on Form 10-Q in October 2012.
 
In management's opinion, the unaudited interim condensed consolidated
financial statements include all adjustments necessary to present fairly such
information. Interim results are not necessarily indicative of the results
expected for the fiscal year.
 
2. Available-for-Sale Investments
 
The company assesses at the end of each reporting period whether there is
objective evidence that a financial asset or group of financial assets is
impaired. In the case of equity instruments classified as available-for-sale,
for which unrealized gains and losses are generally recognized in other
comprehensive income ("OCI"), a significant or prolonged decline in the fair
value of the investment below its cost may be evidence that the asset is
impaired. When objective evidence of impairment exists, the impaired amount
(i.e., the unrealized loss) is recognized in net income; any subsequent
reversals would be recognized in OCI and would not flow back into net income.

Changes in fair value, and related accounting, for the company's investment in
Sinofert Holdings Limited ("Sinofert") since December 31, 2011 were as
follows:

                                                     Impact of Unrealized
                                                     Holding Loss on:
                                                                        Net
                                                                      Income
                                    Unrealized        OCI               and
                         Fair        Holding          and            Retained
                        Value          Loss           AOCI           Earnings
Balance -            $    439     $      (140)     $  (140)        $         -
December 31,
2011                
Decrease in              (61)             (61)         (61)                  -
fair value            
Balance -            $    378     $      (201)     $  (201)        $         -
March 31, 2012      
Decrease in             (140)            (140)        (140)                  -
fair value
prior to
recognition of
impairment            
Recognition of                                          341              (341)
impairment                  -                -
Balance - June       $    238     $      (341)     $      -        $     (341)
30, 2012            
Increase in                66               66           66                  -
fair value
subsequent to
recognition of
impairment            
Balance -            $    304     $      (275)     $     66        $     (341)
September 30,
2012                
                                                                              

3. Segment Information
                                       
The company has three reportable operating segments: potash, phosphate and
nitrogen. 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, 2012
                                                                        All
                       Potash         Phosphate       Nitrogen       Others       Consolidated
                                                                                              
Sales               $       963     $       568     $      612     $      -     $        2,143
Freight,
transportation
and
distribution               (76)            (55)           (23)            -              (154)
Net sales -
third party                 887             513            589            -                   
Cost of goods
sold                      (333)           (391)          (338)            -            (1,062)
Gross margin                554             122            251            -                927
Depreciation
and
amortization               (49)            (64)           (33)          (3)              (149)
Inter-segment
sales                         -               -             72            -                  -
Cash flows for
additions to
property,                                                                                     
   plant and
equipment                   348              73            106           19                546
                                                                                              
                                       Three Months Ended September 30, 2011
                                                                        All
                       Potash         Phosphate       Nitrogen       Others       Consolidated
                                                                                              
Sales               $     1,035     $       690     $      596     $      -     $        2,321
Freight,
transportation
and
distribution               (59)            (46)           (24)            -              (129)
Net sales -
third party                 976             644            572            -                   
Cost of goods
sold                      (276)           (475)          (309)            -            (1,060)
Gross margin                700             169            263            -              1,132
Depreciation
and
amortization               (33)            (55)           (32)          (2)              (122)
Inter-segment
sales                         -               -             56            -                  -
Cash flows for
additions to
property,                                                                                     
   plant and
equipment                   493              41             53            3                590
                                                                                              
                                        Nine Months Ended September 30, 2012
                                                                        All
                       Potash         Phosphate       Nitrogen       Others       Consolidated
                                                                                              
Sales               $     2,731     $     1,750     $    1,804     $      -     $        6,285
Freight,
transportation
and
distribution              (165)           (140)           (76)            -              (381)
Net sales -
third party               2,566           1,610          1,728            -                   
Cost of goods
sold                      (884)         (1,240)          (956)            -            (3,080)
Gross margin              1,682             370            772            -              2,824
Depreciation
and
amortization              (135)           (188)          (103)          (8)              (434)
Inter-segment
sales                         -               -            164            -                  -
Cash flows for
additions to
property,                                                                                     
   plant and
equipment                 1,029             172            261           43              1,505
                                                                                              
                                       Nine Months Ended September 30, 2011
                                                                        All
                       Potash         Phosphate       Nitrogen       Others       Consolidated
                                                                                              
Sales               $     3,265     $     1,872     $    1,713     $      -     $        6,850
Freight,
transportation
and
distribution              (212)           (129)           (69)            -              (410)
Net sales -
third party               3,053           1,743          1,644            -                   
Cost of goods
sold                      (817)         (1,258)          (969)            -            (3,044)
Gross margin              2,236             485            675            -              3,396
Depreciation
and
amortization              (112)           (159)           (97)          (6)              (374)
Inter-segment
sales                         -               -            133            -                  -
Cash flows for
additions to
property,                                                                                     
   plant and
equipment                 1,238             133            117           35              1,523

 

4. Income Taxes

A separate estimated average annual effective tax rate is determined for each
taxing jurisdiction and applied individually to the interim period pre-tax
income of each jurisdiction.

                                    Three Months Ended     Nine Months Ended  
                                       September 30          September 30  
                                       2012       2011       2012       2011  
Income tax expense                   $  249     $  279     $  713     $  819  
Actual effective tax rate on            26%        26%        26%        26%  
ordinary earnings                  
Actual effective tax rate               28%        25%        30%        25%  
including discrete items           
                                                                              

The impairment of the company's available-for-sale investment in Sinofert is
not deductible for tax purposes. Total discrete tax adjustments that impacted
the rate in the three months ended September 30, 2012 resulted in an income
tax expense of $14 compared to an income tax recovery of $5 in the same period
last year. Total discrete tax adjustments that impacted the rate in the nine
months ended September 30, 2012 resulted in an income tax expense of $17
compared to an income tax recovery of $29 in the same period last year.
Significant items recorded included the following:

  * In the first nine months of 2012, a tax expense of $17 (of which $12 was
    recorded in the third quarter) to adjust the 2011 tax provision to the
    income tax returns filed for that year.

  * In first-quarter 2011, a current tax recovery of $21 for previously paid
    withholding taxes.

  * In third-quarter 2011, a current tax recovery of $12 due to income tax
    losses in a foreign jurisdiction.

5. Net Income Per Share

Net income per share was calculated on the following weighted average number
of shares:

                                                                                 
                    Three Months Ended                   Nine Months Ended  
                       September 30                        September 30  
                       2012              2011              2012            2011  
                859,573,000       856,022,000       859,118,000       855,024,000
Basic                                                                            
                876,026,000       876,959,000       875,885,000       876,844,000
Diluted                                                                          
                                                                                 

Diluted net income per share was calculated based on the weighted average
number of shares issued and outstanding during the period, incorporating the
following adjustments.  The denominator was: (1) increased by the total of the
additional common shares that would have been issued assuming the 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. For performance-based stock option plans, the number of
contingently issuable common shares included in the calculation was based on
the number of shares, if any, that would be issuable if the end of the
reporting period were the end of the performance period and the effect were
dilutive.

  

                   Potash Corporation of Saskatchewan Inc.
                           Selected Financial Data
                                 (unaudited)
                                                                              
                                                                              
                                    Three Months Ended     Nine Months Ended  
                                       September 30          September 30
                                       2012        2011       2012       2011
                                                                              
Potash Sales (tonnes - thousands)                                             
     Manufactured Product                                                     
          North America                   951        769       2,002     2,692
          Offshore                      1,107      1,387       3,911     4,773
     Manufactured Product               2,058      2,156       5,913     7,465
                                                                              
Potash Net Sales                                                              
     (US $ millions)                                                          
          Sales                     $     963   $  1,035   $   2,731  $  3,265
          Freight, transportation
          and distribution               (76)       (59)       (165)     (212)
          Net Sales                 $     887   $    976   $   2,566  $  3,053
                                                                              
     Manufactured Product                                                     
          North America             $     443   $    410   $     968  $  1,285
          Offshore                        441        563       1,588     1,758
     Other miscellaneous and
     purchased product                      3          3          10        10
     Net Sales                      $     887   $    976   $   2,566  $  3,053
                                                                              
Manufactured Product                                                          
     Average Realized Sales Price
     per MT                                                                   
          North America             $     466   $    533   $     484  $    477
          Offshore                  $     398   $    406   $     406  $    368
          Average                   $     429   $    451   $     432  $    408
     Cost of Goods Sold per MT      $   (160)   $  (127)   $   (148)  $  (109)
     Gross Margin per MT            $     269   $    324   $     284  $    299

                   Potash Corporation of Saskatchewan Inc.
                           Selected Financial Data
                                 (unaudited)
         
                                                                              
                                    Three Months Ended     Nine Months Ended  
                                       September 30          September 30
                                       2012        2011       2012       2011
                                                                              
Phosphate Sales (tonnes -
thousands)                                                                    
     Manufactured Product                                                     
          Fertilizer                      676        780       1,932     2,080
          Feed and Industrial             263        278         873       884
     Manufactured Product                 939      1,058       2,805     2,964
                                                                              
Phosphate Net Sales                                                           
     (US $ millions)                                                          
          Sales                     $     568   $    690   $   1,750  $  1,872
          Freight, transportation
          and distribution               (55)       (46)       (140)     (129)
          Net Sales                 $     513   $    644   $   1,610  $  1,743
                                                                              
     Manufactured Product                                                     
          Fertilizer                $     333   $    454   $   1,004  $  1,173
          Feed and Industrial             172        182         581       548
     Other miscellaneous and
     purchased product                      8          8          25        22
     Net Sales                      $     513   $    644   $   1,610  $  1,743
                                                                              
Manufactured Product                                                          
     Average Realized Sales Price
     per MT                                                                   
          Fertilizer                $     493   $    582   $     520  $    564
          Feed and Industrial       $     654   $    659   $     666  $    620
          Average                   $     537   $    602   $     565  $    581
     Cost of Goods Sold per MT      $   (413)   $  (445)   $   (438)  $  (421)
     Gross Margin per MT            $     124   $    157   $     127  $    160

                   Potash Corporation of Saskatchewan Inc.
                           Selected Financial Data
                                 (unaudited)
         
                                                                              
                                    Three Months Ended     Nine Months Ended  
                                       September 30          September 30
                                       2012        2011       2012       2011
                                                                              
Average Natural Gas Cost in
Production per MMBtu                $    6.76   $   6.13   $    5.58  $   6.06
Nitrogen Sales (tonnes -
thousands)                                                                    
     Manufactured Product                                                     
          Ammonia                         466        475       1,499     1,503
          Urea                            241        325         870       972
          Nitrogen
          solutions/Nitric
          acid/Ammonium nitrate           438        492       1,371     1,456
     Manufactured Product               1,145      1,292       3,740     3,931
                                                                              
     Fertilizer sales tonnes              301        445       1,108     1,281
     Industrial/Feed sales tonnes         844        847       2,632     2,650
     Manufactured Product               1,145      1,292       3,740     3,931
                                                                              
Nitrogen Net Sales                                                            
     (US $ millions)                                                          
          Sales                     $     612   $    596   $   1,804  $  1,713
          Freight, transportation
          and distribution               (23)       (24)        (76)      (69)
          Net Sales                 $     589   $    572   $   1,728  $  1,644
                                                                              
     Manufactured Product                                                     
          Ammonia                   $     299   $    250   $     794  $    774
          Urea                            121        174         456       442
          Nitrogen
          solutions/Nitric
          acid/Ammonium nitrate           104        124         338       346
     Other miscellaneous and
     purchased product                     65         24         140        82
     Net Sales                      $     589   $    572   $   1,728  $  1,644
                                                                              
     Fertilizer net sales           $     137   $    209   $     525  $    544
     Industrial/Feed net sales            387        339       1,063     1,018
     Other miscellaneous and
     purchased product                     65         24         140        82
     Net Sales                      $     589   $    572   $   1,728  $  1,644
                                                                              
Manufactured Product                                                          
     Average Realized Sales Price
     per MT                                                                   
          Ammonia                   $     641   $    526   $     530  $    515
          Urea                      $     504   $    534   $     525  $    455
          Nitrogen
          solutions/Nitric
          acid/Ammonium nitrate     $     238   $    254   $     246  $    238
          Average                   $     458   $    424   $     425  $    397
          Fertilizer average
          price per MT              $     455   $    469   $     474  $    425
          Industrial/Feed average
          price per MT              $     459   $    401   $     404  $    384
          Average                   $     458   $    424   $     425  $    397
     Cost of Goods Sold per MT      $   (254)   $  (232)   $   (233)  $  (234)
     Gross Margin per MT            $     204   $    192   $     192  $    163

                               Potash Corporation of Saskatchewan Inc.
                                       Selected Additional Data
                                             (unaudited)
                                                                                                      
Exchange Rate (Cdn$/US$)                                                                              
                                                                                      2012      2011
                                                                                                      
December 31                                                                                     1.0170
September 30                                                                           0.9837   1.0389
Third-quarter average conversion rate                                                  1.0114   0.9716
                                                                                                      
                                                                           Three
                                                                          Months    Nine Months Ended
                                                                           Ended
                                                                         September     September 30
                                                                            30
                                                                        2012  2011    2012      2011
                                                                                                      
Production                                                                                            
Potash production (KCl Tonnes - thousands)                              1,579 1,937     5,961    7,099
Potash shutdown weeks ^(1)                                                 15     9        55        9
Phosphate production (P[2]O[5 ]Tonnes - thousands)                        493   565     1,479    1,649
Phosphate P[2]O[5] operating rate [ ]                                     83%   95%       83%      93%
Nitrogen production (N Tonnes - thousands)                                651   724     2,029    2,115
                                                                                                      
Shareholders                                                                                          
PotashCorp's shareholder return                                            0%  -24%        6%     -16%
                                                                                                      
Customers                                                                                             
Product tonnes involved in customer complaints vs three-
year average (for third quarter/first nine months of prior
three years, as applicable)                                              -71%   N/A      -43%      N/A
                                                                                                      
Community                                                                                             
Taxes and royalties ($ millions) ^ (2)                                    171   175       521      706
                                                                                                      
Employees                                                                                             
Annualized turnover rate (excluding retirements)                           8%    4%        6%       4%
                                                                                                      
Safety                                                                                                
Total site severity injury rate (per 200,000 work hours) ^ (3)           0.63  0.49      0.53     0.57
                                                                                                      
Environment                                                                                           
Environmental incidents ^ (4)                                               6     3        18       11
                                                                                                      
                                                                                                      
                                                                                    September December
                                                                                       30,      31,
As at                                                                                 2012      2011
                                                                                                      
Number of employees                                                                                   
  Potash                                                                                2,709    2,520
  Phosphate                                                                             1,802    1,975
  Nitrogen                                                                                770      775
  Other                                                                                   435      433
  Total                                                                                 5,716    5,703

(1) Excludes planned routine annual maintenance shutdowns.      
(2) Includes current income taxes, potash production tax, resource surcharge,
royalties, municipal taxes and other miscellaneous taxes less investment tax
credits calculated on an accrual basis.      
(3) Total of lost-time injuries and modified work injuries (as defined in our
2011 Annual Report). Total site includes PotashCorp employees, contractors
and others on site.        
(4) Total of reportable quantity releases, permit excursions and provincial
reportable spills (as defined in our 2011 Annual Report).      
 
N/A = Not applicable

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

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

A. EBITDA, ADJUSTED EBITDA AND EBITDA MARGIN

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

                                          Three Months Ended Nine Months Ended
                                             September 30      September 30
                                            2012      2011     2012     2011
Net income                                 $    645  $   826  $  1,658 $ 2,398
Finance costs                                    24       37        89     125
Income taxes                                    249      279       713     819
Depreciation and amortization                   149      122       434     374
EBITDA                                     $  1,067  $ 1,264  $  2,894 $ 3,716
Impairment of available-for-sale
investment                                        -        -       341       -
Adjusted EBITDA                            $  1,067  $ 1,264  $  3,235 $ 3,716

EBITDA is calculated as earnings before finance costs, income taxes and
depreciation and amortization. Adjusted EBITDA is calculated as earnings
before finance costs, 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 and financing decisions, rather
than the performance of the company's day-to-day operations. As compared to
net income according to IFRS, these measures are limited in that they do not
reflect the periodic costs of certain capitalized tangible and intangible
assets used in generating revenues. 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 Nine Months Ended
                                            September 30      September 30
                                           2012      2011     2012     2011
Sales                                     $  2,143  $ 2,321  $  6,285 $ 6,850
Freight, transportation and distribution     (154)    (129)     (381)   (410)
Net sales                                 $  1,989  $ 2,192  $  5,904 $ 6,440
                                                                             
Net income as a percentage of sales            30%      36%       26%     35%
Adjusted EBITDA margin                         54%      58%       55%     58%

Adjusted EBITDA margin is calculated as adjusted EBITDA divided by net sales
(sales less freight, 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 adjusted EBITDA as compared to net income, adjusted EBITDA
margin as compared to net income as a percentage of sales is also limited in
that freight, transportation and distribution costs are incurred and valued
independently of sales; adjusted EBITDA also includes earnings from equity
investees whose sales are not included in consolidated sales. Management
evaluates these items individually on the consolidated statements of income.

                   Potash Corporation of Saskatchewan Inc.
           Selected Non-IFRS 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 IFRS.

                                    Three Months Ended     Nine Months Ended  
                                       September 30          September 30
                                     2012        2011       2012       2011
Cash flow prior to working
capital changes ^                   $     804   $    964  $    2,703 $   2,933
Changes in non-cash operating
working capital                                                               
    Receivables                          (90)       (88)        (84)     (277)
    Inventories                            19          7          63      (14)
    Prepaid expenses and other
    current assets                        (5)          -        (21)        12
    Payables and accrued charges           31       (18)       (308)      (35)
Changes in non-cash operating
working capital                          (45)       (99)       (350)     (314)
Cash provided by operating
activities                          $     759   $    865  $    2,353 $   2,619
Additions to property, plant and
equipment                               (546)      (590)     (1,505)   (1,523)
Other assets and intangible
assets                                   (23)        (8)        (37)      (11)
Changes in non-cash operating
working capital                            45         99         350       314
Free cash flow                      $     235   $    366  $    1,161 $   1,399

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.

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 its 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.

 

 

 

SOURCE Potash Corporation of Saskatchewan Inc.

Contact:

Investors
Denita Stann
Vice President, Investor and Public Relations
Phone: (306) 933-8521
Fax: (306) 933-8844
Email: ir@potashcorp.com 

Media 
Bill Johnson
Senior Director, Public Affairs
Phone: (306) 933-8849
Fax: (306) 933-8844
Email: pr@potashcorp.com

Web Site: www.potashcorp.com
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