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PotashCorp Reports Third-Quarter Earnings of $0.41 per Share



         PotashCorp Reports Third-Quarter Earnings of $0.41 per Share

PR Newswire

SASKATOON, Oct. 24, 2013

Symbol: POT
Listed:  TSX, NYSE

Key Highlights

  * Third-quarter earnings of $0.41 per share^1; nine-month total reaches
    $1.77 per share
  * Weaker prices for all nutrients; market uncertainty leads to lower potash
    sales volumes
  * Nine-month cash flow from operating activities second-highest in company
    history
  * Full-year estimate revised to $2.00-$2.20 per share

SASKATOON, Oct. 24,  2013 /PRNewswire/  - Potash  Corporation of  Saskatchewan 
Inc. (PotashCorp) today  reported third-quarter  earnings of  $0.41 per  share 
($356 million), down from  $0.74 per share ($645  million) earned in the  same 
period last year  as a result  of weaker  prices for all  three nutrients  and 
lower potash sales volumes.  With the benefit of  stronger performance in  the 
first half of the year, our nine-month earnings reached $1.77 per share  ($1.6 
billion), down  6 percent  from the  $1.89 per  share ($1.7  billion) in  last 
year's comparative period.

Gross margin contributions from all  three nutrients were negatively  affected 
by a challenging fertilizer  market. Our gross margin  totals of $484  million 
during the third quarter  and $2.3 billion for  the first nine months  trailed 
our performance in  the comparative periods  of 2012, when  we generated  $927 
million and $2.8 billion, respectively.

Earnings  before   finance   costs,   income  taxes   and   depreciation   and 
amortization^2 (EBITDA) of $654 million for the third quarter and $2.7 billion
for the  first nine  months were  below the  comparable previous-year  totals. 
While cash flow from operating activities  of $616 million in the period  fell 
short of  the  $759  million  realized  in  last  year's  third  quarter,  the 
nine-month total of $2.6 billion was the second highest in our history.

Our offshore  investments in  Arab Potash  Company (APC)  in Jordan,  Sociedad 
Quimica y Minera de Chile S.A. (SQM)  in Chile and Israel Chemical Ltd.  (ICL) 
in Israel contributed $85 million to earnings for the quarter. The  nine-month 
contribution from our offshore potash  investments, including a dividend  from 
Sinofert Holdings  Limited (Sinofert)  in China,  reached $251  million.  Both 
totals trailed those of the previous year. The market value of our investments
in these publicly traded companies equated to approximately $6 billion, or  $7 
per PotashCorp share, as of market close on October 23, 2013.

"The most recent quarter can best  be characterized as a predictable  response 
to an  unpredicted  event,"  said PotashCorp  President  and  Chief  Executive 
Officer Bill Doyle. "As we have  seen in the past, fertilizer customers  faced 
with uncertainty act with extreme caution. This was the case during the  third 
quarter, particularly in offshore potash markets, where significant  purchases 
were delayed  as  Russian  producer  pronouncements  left  buyers  waiting  in 
anticipation of  weaker prices.  While  this volatility  does not  change  the 
long-term underlying fundamentals of  fertilizer demand, it did  significantly 
slow market activity and our ability to deliver the results we expected."

Market Conditions
The need for proper crop nutrition fueled strong demand for potash through the
first half of 2013, but  an announced change in  strategy by Uralkali in  late 
July created considerable  market uncertainty and  stalled global demand.  Key 
offshore markets -  particularly large contract  buyers in China  and India  - 
delayed purchases or were reluctant  to accept major tonnage against  existing 
contracts. Although Brazil continued to be a region of relative strength, with
buyers procuring tonnes  in preparation  for their  upcoming planting  season, 
offshore shipments from  North American producers  fell to one  of the  lowest 
third-quarter  totals  in  recent  history.  In  North  America,  a  pause  in 
purchasing early in the  quarter and a late  crop resulted in shipments  below 
the record achieved in 2012, a  period when demand was pulled forward  because 
an early harvest enabled  strong fall applications. In  both the offshore  and 
North American markets, pricing weakened as the quarter progressed.

In nitrogen, US demand for ammonia, urea and nitrogen solutions was relatively
flat compared to  last year  and production from  low-cost domestic  producers 
increased, reducing  the need  for higher-cost  offshore imports.  While  this 
situation benefited domestic  producers, the combination  of typical  seasonal 
slowness and  increased availability  of new  supply from  offshore  exporting 
regions softened key global reference prices through the quarter.

Global phosphate  markets were  subdued during  the quarter,  as strong  Latin 
American demand was offset by the continued absence of significant  engagement 
from India  and a  delayed start  to  the US  fall application  season.  Solid 
phosphate fertilizer shipments from US producers were slightly below those  of 
both the third quarter and the first nine months of 2012. This environment put
downward pressure on prices for most phosphate products.

Potash
The slowdown  in global  markets resulted  in our  third-quarter potash  gross 
margin declining to $228  million from the $554  million generated during  the 
comparative period of 2012. This quarter's result brought our nine-month total
to $1.3 billion, compared to $1.7 billion in the same period last year.

With many buyers delaying purchases, our third-quarter sales volumes declined.
In North  America, sales  volumes of  0.7  million tonnes  were in  line  with 
historical levels but trailed  the record 1 million  tonnes sold in the  third 
quarter of 2012. In offshore markets, the 0.8 million tonnes moved during  the 
quarter fell short of the 1.1 million tonnes sold in the same period last year
as a result of reduced sales to  Canpotex^3 and fewer tonnes shipped from  our 
New Brunswick facility. The  majority of Canpotex  shipments were directed  to 
Other Asia  (39 percent)  and Latin  America  (34 percent)  and, to  a  lesser 
extent, India  (9  percent) and  China  (8  percent). Despite  a  weak  demand 
environment during the  quarter, our total  sales volumes for  the first  nine 
months of 2013 reached 6.3 million tonnes, a 7 percent increase over the  same 
period last year.

Buyer caution  and  competitive pressures  in  all key  markets  weakened  the 
pricing environment and our average realized  price of $307 per tonne for  the 
third quarter was down from $429 per tonne during the same period last year.

Our third-quarter production of  1.2 million tonnes was  down 27 percent  from 
the same  quarter of  2012.  While both  periods included  normal  maintenance 
downtime, this year's total was also  affected by additional downtime at  Cory 
(four weeks)  and reduced  operating rates  at Lanigan  and Rocanville.  Lower 
production levels had a  negative impact on our  per-tonne cost of goods  sold 
for the quarter,  but this  impact was offset  by the  absence of  higher-cost 
tonnes from Esterhazy.

Nitrogen
The positive impact  of higher  sales volumes was  more than  offset by  lower 
prices for all major  nitrogen product categories  and brought nitrogen  gross 
margin for the quarter to $178 million, below the $251 million earned in  last 
year's third quarter. For the first nine months, we generated gross margin  of 
$725 million, compared to a  record $772 million in  the same period in  2012. 
With favorable  natural  gas  costs  and  higher  production  levels,  our  US 
operations generated  the  majority of  gross  margin for  the  quarter  ($116 
million), while  our  facility  in Trinidad  contributed  the  remainder  ($62 
million).

Despite maintenance-related  downtime  in Trinidad,  our  third-quarter  sales 
volumes increased to 1.4  million tonnes - well above  the 1.1 million  tonnes 
sold in the same  period last year.  The key driver of  this increase was  the 
restart of ammonia capacity at Geismar, which also helped raise our nine-month
total to a record 4.3 million tonnes.

Our average realized nitrogen  price of $327 per  tonne for the third  quarter 
fell below the $458 per tonne realized in the same period last year, as prices
declined in all major product categories. Ammonia prices pulled back from  the 
historically high  levels  of  third-quarter  2012,  while  urea  moved  lower 
primarily due to increased supply pressures from key exporting countries.  Our 
remaining nitrogen  products  -  focused largely  on  more  stable  industrial 
markets - declined marginally compared to last year.

Including the impact of our hedge position, the total average natural gas cost
included in production for the third quarter was $4.96 per MMBtu - 27  percent 
below the same  period last  year. This, along  with the  favorable impact  of 
lower-cost production from Geismar,  resulted in improved  cost of goods  sold 
for the quarter relative to the same period of 2012.

Phosphate
Phosphate gross margin of $78 million  trailed the $122 million earned in  the 
third quarter last  year, primarily  as a result  of weaker  prices. Feed  and 
industrial products, which  tend to deliver  more stable margins,  contributed 
$47 million for  the quarter  and demonstrated  the value  of our  diversified 
phosphate product offerings, while fertilizer products generated $28  million. 
For the first  nine months of  2013, our phosphate  gross margin totaled  $260 
million, which compared to $370 million earned in the same period last year.

Phosphate sales volumes of  0.9 million tonnes for  the third quarter and  2.7 
million tonnes for the first nine months were comparable to 2012 levels.

Our average realized phosphate price for the quarter was $467 per tonne,  down 
from $537 per tonne  realized in the  same period last  year. This change  was 
largely due to  a 20 percent  decline in prices  for fertilizer products  from 
third-quarter 2012;  the decline  in feed  and industrial  realizations was  4 
percent.

Per-tonne cost of  goods sold for  the quarter trended  lower compared to  the 
same period  last year  as a  result of  reduced input  costs for  sulfur  and 
ammonia.

Financial
Provincial mining and other taxes totaled $10 million, compared to $62 million
in the third  quarter last year,  primarily due to  adjustments in our  annual 
forecast and  the resulting  impact on  potash production  tax accruals.  With 
lower earnings during  the quarter, our  income tax expense  declined to  $116 
million from $249 million in the comparative period of 2012.

Capital-related cash expenditures  totaled $360 million  in the quarter,  down 
significantly from previous period spending  levels, as we near completion  of 
our major potash expansion program.

Through our announced  share repurchase  program (by  way of  a normal  course 
issuers bid),  we  repurchased 6.3  million  common shares  during  the  third 
quarter at an average cost of $30.95 per share.

Market Outlook
Markets for all three nutrients faced  challenges during the third quarter  as 
near-term uncertainty overshadowed the long-term fundamentals that drive  food 
and fertilizer  demand. The  impact was  evident in  equity market  valuations 
across the sector and in the actions of fertilizer buyers around the world.

This was  most  pronounced in  the  potash  market. However,  as  the  quarter 
progressed, growers  and distributors  in Brazil  and North  America began  to 
focus on  the agronomic  needs  of their  soils  and the  supportive  economic 
motivators of high-yield agriculture. In other markets, the procurement of new
supply continues to be limited  or deferred - not  necessarily due to lack  of 
immediate need, but in  anticipation of lower  prices. Although this  evolving 
situation led us to reduce our global potash demand estimates for 2013 and our
pricing expectations,  we  believe the  deferral  will contribute  to  a  more 
positive demand environment in the coming year.

In North America, potash buyers are  beginning to take the necessary steps  to 
place product in advance of the fall application season. In recent weeks, they
have been  moving more  aggressively in  drawing against  summer-fill  tonnage 
commitments and  are purchasing  additional product  requirements. In  regions 
where the harvest is complete,  fertilizer application activity is  reportedly 
strong, although an  especially late crop  across much of  the US will  likely 
shorten the  fall application  window and  could push  demand from  the  final 
quarter of the year into the first half of 2014.

With Latin America well into its key planting season, favorable crop economics
and the agronomic need to replenish nutrients in its soils continue to support
strong demand for all fertilizer products. Most of the immediate  requirements 
are now in place for their planting season and we anticipate buyers will  take 
a more  measured  approach through  the  balance  of the  year.  Despite  this 
potential slowdown, Brazilian demand for  fertilizer, including potash, is  on 
track to reach record levels for the year.

In  China,  potash  inventories  are  expected  to  satisfy  fall  application 
requirements but are likely to  be drawn down through  the second half of  the 
year. We anticipate  Canpotex will  have sales to  this market  in the  fourth 
quarter, which is  reflected in  the upper end  of our  sales volume  guidance 
range. Challenging growing conditions in key agricultural regions are expected
to put pressure  on the supply  of domestic  grain and oilseeds  and create  a 
greater need for crop imports. We  expect China's desire to improve yields  to 
keep pace with food requirements will increase future potash demand.

Challenges remain in India. Although potash contracts with major suppliers run
through to  March 2014,  weak  domestic demand  caused by  reduced  government 
subsidies and currency  volatility - as  well as  the desire to  hold out  for 
lower contract prices - could result in shipments and pricing falling short of
our previous expectations.

Following limited potash  movements during  the third  quarter, we  anticipate 
buyers in Other Asian  countries will engage more  actively through the  final 
quarter of  2013. With  many  customers entering  their major  tender  season, 
supportive grower economics and limited inventories are expected to result  in 
increased fourth-quarter shipments. Competition remains strong in this region.

Financial Outlook
In this environment,  we have revised  our 2013 potash  gross margin  forecast 
range to $1.5-$1.7 billion on expected  shipment levels between 8 million  and 
8.4 million tonnes. We anticipate our operating levels will remain below those
of the  first  half of  the  year as  we  manage our  inventory  and  position 
ourselves for a Canpotex allocation run at Allan early in 2014. We expect  our 
per-tonne operating costs in the fourth  quarter to improve relative to  those 
of third-quarter 2013 as well as the comparable period last year.

In nitrogen, we remain on track to surpass previous-year annual sales volumes.
While prices for most  nitrogen products appear to  have found support  during 
the third quarter, they have weakened  from our previous expectations and  led 
us to reduce our gross margin estimate for the full year.

In phosphate,  weak Indian  demand is  expected to  pressure solid  fertilizer 
realizations through the balance of the year, although a strong North American
fall application season could provide  some near-term support. The decline  of 
costs for  purchased  inputs -  specifically  sulfur  and ammonia  -  and  the 
continued stability  provided by  our feed,  industrial and  specialty  liquid 
fertilizer products  are expected  to  keep our  margins relatively  close  to 
previous expectations.

In this environment, we now forecast full-year 2013 combined gross margin  for 
nitrogen and phosphate of $1.2 -$1.3 billion.

All other previously disclosed annual guidance assumptions for 2013 remain  in 
place, with  the  exception  of  contributions  from  equity  investments  and 
dividend income, which are now anticipated to approximate $300 million.

Based on  these factors  and guidance  items above,  PotashCorp now  forecasts 
full-year 2013 net income at $2.00-$2.20 per share.

Conclusion
"Throughout  our  history,   PotashCorp  has  demonstrated   the  ability   to 
outperform, during good times and in the face of adversity," said Doyle.  "Our 
large, low-cost operations and distribution  systems in each nutrient  provide 
flexibility and competitive advantages during difficult market conditions.  As 
we have in the past, we manage our assets to minimize the impact of short-term
market volatility  and  position ourselves  to  respond as  demand  grows.  By 
focusing on our competitive advantages in  potash and our unique positions  in 
nitrogen and phosphate, we will continue  to maximize long-term value for  our 
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."
 3. Canpotex Limited (Canpotex), the offshore marketing company for
    Saskatchewan potash producers.

------------------------------------------------------------------------------

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. Forward-looking statements are
subject to risks and uncertainties that are difficult to predict. The results
or events set forth in forward-looking statements may differ materially from
actual results or events. Several factors could cause actual results or events
to differ materially from those expressed in the forward-looking statements,
including, but not limited to the following: 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
within major markets; economic and political uncertainty around the world;
timing and impact of capital expenditures; risks associated with natural gas
and other hedging activities; changes in capital markets; 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; rates of return on and
the risks associated with our investments; changes in, and the effects of,
government policies and regulations; security risks related to our information
technology systems; and earnings and the decisions of taxing authorities,
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, 2012
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 24, 2013 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                                                 2013            2012
                                                                              
       Assets                                                                 
         Current assets                                                       
           Cash and cash equivalents            $           555 $          562
           Receivables                                      853          1,089
           Inventories                                      724            762
           Prepaid expenses and other
           current assets                                    85             83
                                                          2,217          2,496
         Non-current assets                                                   
           Property, plant and
           equipment                                     12,043         11,505
           Investments in
           equity-accounted investees                     1,322          1,254
           Available-for-sale
           investments                                    1,744          2,481
           Other assets                                     390            344
           Intangible assets                                137            126
       Total Assets                             $        17,853 $       18,206
                                                                              
                                                                              
       Liabilities                                                            
         Current liabilities                                                  
           Short-term debt and current
           portion of long-term debt
           (Note 2)                             $           609 $          615
           Payables and accrued charges                   1,108          1,188
           Current portion of
           derivative instrument
           liabilities                                       43             51
                                                          1,760          1,854
         Non-current liabilities                                              
           Long-term debt (Note 2)                        2,969          3,466
           Derivative instrument
           liabilities                                      138            167
           Deferred income tax
           liabilities                                    1,915          1,482
           Pension and other
           post-retirement benefit
           liabilities                                      421            569
           Asset retirement obligations
           and accrued environmental
           costs                                            574            645
           Other non-current
           liabilities and deferred
           credits                                          142            111
       Total Liabilities                                  7,919          8,294
                                                                              
       Shareholders' Equity                                                   
         Share capital (Note 3)                           1,600          1,543
           Unlimited authorization of
           common shares without par
           value; issued and
           outstanding 863,210,541 and
           864,900,513 at September 30,
           2013 and
           December 31, 2012,
           respectively                                                       
         Contributed surplus                                221            299
         Accumulated other
         comprehensive income                               688          1,399
         Retained earnings                                7,425          6,671
       Total Shareholders' Equity                         9,934          9,912
       Total Liabilities and
       Shareholders' Equity                     $        17,853 $       18,206
(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
                                                           
                                      2013       2012        2013      2012
                                                                             
Sales (Note 4)                     $  1,520  $    2,143   $   5,764 $   6,285
Freight, transportation and
distribution                          (139)       (154)       (435)     (381)
Cost of goods sold                    (897)     (1,062)     (2,999)   (3,080)
Gross Margin                            484         927       2,330     2,824
Selling and administrative
expenses                               (48)        (53)       (165)     (166)
Provincial mining and other taxes      (10)        (62)       (154)     (162)
Share of earnings of
equity-accounted investees               57          77         174       220
Dividend income                          31          39          85       106
Impairment of available-for-sale
investment                                -           -           -     (341)
Other expenses                          (9)        (10)        (21)      (21)
Operating Income                        505         918       2,249     2,460
Finance costs                          (33)        (24)       (107)      (89)
Income Before Income Taxes              472         894       2,142     2,371
Income taxes (Note 5)                 (116)       (249)       (587)     (713)
Net Income                         $    356  $      645   $   1,555 $   1,658
                                                                             
Net Income per Share (Note 6)                                                
      Basic                        $   0.41  $     0.75   $    1.80 $    1.93
      Diluted                      $   0.41  $     0.74   $    1.77 $    1.89
                                                                             
Dividends Declared per Share       $   0.35  $     0.21   $    0.98 $    0.49
(See Notes to the Condensed
Consolidated Financial Statements)                                           
                                                                             
                                                                             
                                                                             
                                                                             
                   Potash Corporation of Saskatchewan Inc.
          Condensed Consolidated Statements of Comprehensive Income
                         (in millions of US dollars)
                                 (unaudited)
                                                                             
                                     Three Months Ended     Nine Months Ended
                                        September 30          September 30
(Net of related income taxes)         2013       2012        2013      2012
                                                                             
Net Income                         $    356  $      645   $   1,555 $   1,658
Other comprehensive (loss) income                                            
      Items that will not be
      reclassified to net income:                                            
        Net actuarial gain (loss)
        on defined benefit plans
        ^(1)                              -           -         150      (84)
      Items that may be
      reclassified subsequently to
      net income:                                                            
        Available-for-sale
        investments ^(2)                                                     
          Net fair value (loss)
          gain during the period      (267)         303       (737)       169
          Reclassification to
          income of unrealized
          loss on impaired
          investment                      -           -           -       341
        Cash flow hedges                                                     
          Net fair value loss
          during the period ^(3)          -         (1)           -      (16)
          Reclassification to
          income of net loss ^(4)         6          11          25        36
        Other                             3           -           1       (2)
Other Comprehensive (Loss) Income     (258)         313       (561)       444
Comprehensive Income               $     98  $      958   $     994 $   2,102
                                                                             
^(1) Net of income taxes of $(87) (2012 - $48) for the nine months ended
September 30, 2013.
^(2) Available-for-sale investments are comprised of shares in Israel
Chemicals Ltd. and Sinofert Holdings Limited.
^(3) Cash flow hedges are comprised of natural gas derivative instruments and
were net of income taxes of $NIL (2012 - $1)
for the three months ended September 30, 2013 and $NIL (2012 - $11) for the
nine months ended September 30, 2013.
^(4) Net of income taxes of $(4) (2012 - $(8)) for the three months ended
September 30, 2013 and $(14) (2012 - $(24)) for
the nine months ended September 30, 2013.
(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 loss on                                                        
                                                                               Net
                                                                            actuarial               Total
                                              gain on         derivatives     gain               Accumulated                     
                                                              designated       on                   Other
                  Share    Contributed   available-for-sale       as         defined            Comprehensive   Retained   Total
                                                               cash flow     benefit
                 Capital     Surplus        investments         hedges      plans^(1)   Other      Income       Earnings   Equity
                                                                                                                                 
Balance -
December 31,
2012           $   1,543 $         299 $              1,539 $       (138) $         - $   (2) $         1,399 $    6,671 $  9,912
Net income             -             -                    -             -           -       -               -      1,555    1,555
Other
comprehensive
(loss) income          -             -                (737)            25         150       1           (561)          -    (561)
Share
repurchase
(Note 3)            (11)          (79)                    -             -           -       -               -      (105)    (195)
Dividends
declared               -             -                    -             -           -       -               -      (846)    (846)
Effect of
share-based
compensation                                                                                                                     
  including
  issuance of
  common
  shares              42             1                    -             -           -       -               -          -       43
Shares issued
for dividend                                                                                                                     
  reinvestment
  plan                26             -                    -             -           -       -               -          -       26
Transfer of
net actuarial
gain on                                                                                                                          
  defined
  benefit
  plans                -             -                    -             -       (150)       -           (150)        150        -
Balance -
September 30,
2013           $   1,600 $         221 $                802 $       (113) $         - $   (1) $           688 $    7,425 $  9,934
                                                                                                                                 
^(1) Any amounts incurred during a period were closed out to retained earnings at each period-end. Therefore, no balance exists
at the 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
                                       2013        2012       2013      2012
                                                                              
Operating Activities                                                          
Net income                          $     356   $    645   $   1,555 $   1,658
                                                                              
Adjustments to reconcile net income
   to cash provided by operating
            activities                                                        
      Depreciation and amortization       149        149         489       434
      Share-based compensation              4          3          25        21
      Impairment of
      available-for-sale investment         -          -           -       341
      Realized excess tax benefit
      related to share-based
      compensation                          5          4          15         7
      Provision for deferred income
      tax                                  58        162         311       366
      Net undistributed earnings of
      equity-accounted investees         (55)       (74)        (62)      (90)
      Pension and other
      post-retirement benefits             12       (86)        (10)      (71)
      Asset retirement obligations
      and accrued environmental
      costs                              (12)        (6)        (16)         4
      Other long-term liabilities
      and miscellaneous                     1          7          54        33
      Subtotal of adjustments             162        159         806     1,045
                                                                              
      Changes in non-cash operating
      working capital                                                         
      Receivables                          96       (90)         162      (84)
      Inventories                        (12)         19          29        63
      Prepaid expenses and other
      current assets                     (17)        (5)         (4)      (21)
      Payables and accrued charges         31         31           8     (308)
      Subtotal of changes in
      non-cash operating working
      capital                              98       (45)         195     (350)
Cash provided by operating
activities                                616        759       2,556     2,353
                                                                              
Investing Activities                                                          
Additions to property, plant and
equipment                               (360)      (546)     (1,210)   (1,505)
Other assets and intangible assets          2       (23)         (8)      (37)
Cash used in investing activities       (358)      (569)     (1,218)   (1,542)
                                                                              
Financing Activities                                                          
Repayment of and finance costs on
long-term debt obligations                  -          -       (254)       (2)
Proceeds from (repayment of)
short-term debt obligations               113      (117)       (256)     (501)
Dividends                               (290)      (116)       (700)     (293)
Repurchase of common shares             (166)          -       (166)         -
Issuance of common shares                  10         13          31        16
Cash used in financing activities       (333)      (220)     (1,345)     (780)
(Decrease) Increase in Cash and
Cash Equivalents                         (75)       (30)         (7)        31
Cash and Cash Equivalents,
Beginning of Period                       630        491         562       430
Cash and Cash Equivalents, End of
Period                              $     555   $    461   $     555 $     461
                                                                              
Cash and cash equivalents comprised
of:                                                                           
      Cash                          $      59   $     69   $      59 $      69
      Short-term investments              496        392         496       392
                                    $     555   $    461   $     555 $     461
                                                                              
Supplemental cash flow disclosure                                             
      Interest paid                 $      23   $     12   $     123 $     114
      Income taxes paid             $       6   $     91   $     113 $     583
(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, 2013
            (in millions of US dollars except as otherwise noted) 
                                 (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, as issued by  the 
International Accounting  Standards Board  ("IFRS"). The  accounting  policies 
used in  preparing these  unaudited interim  condensed consolidated  financial 
statements are consistent with those used in the preparation of the  company's 
2012 annual consolidated financial statements except as described in Note 1 of
the company's 2013 First Quarter Quarterly Report on Form 10-Q.

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 company's  2012 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 2013.

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. Long-Term Debt

During the  first quarter  of 2013,  the company  fully repaid  $250 of  4.875 
percent 10-year senior notes at maturity.  During the second quarter of  2013, 
the company classified as current the $500 aggregate principal amount of 5.250
percent senior notes due May 15, 2014.

3. Share Capital

On July  24,  2013,  the  company's Board  of  Directors  authorized  a  share 
repurchase program of up to  $2,000 of PotashCorp's outstanding common  shares 
(5 percent of its  outstanding common shares) through  a normal course  issuer 
bid. Shares  could  be  repurchased from  time  to  time on  the  open  market 
commencing August 2, 2013 through August 1, 2014 at prevailing market  prices. 
The timing and amount  of purchases under the  program are dependent upon  the 
availability and alternate uses of  capital, market conditions, applicable  US 
and Canadian regulations and other factors.

At September 30, 2013, the company had repurchased for cancellation  6,300,000 
common shares, at a cost of $195 and an average price per share of $30.95. The
repurchase resulted in a reduction of share capital of $11, and the excess  of 
net cost over the average book value of the shares was recorded as a reduction
of contributed surplus of $79 and a reduction of retained earnings of $105.

4. Segment Information

The company has three reportable operating segments: potash, nitrogen and
phosphate. 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, 2013
                                                          All
                        Potash   Nitrogen   Phosphate   Others    Consolidated
                                                                              
Sales                 $    539 $      493 $       488 $       - $        1,520
Freight,
transportation
and distribution          (57)       (26)        (56)         -          (139)
Net sales - third
party                      482        467         432         -               
Cost of goods
sold                     (254)      (289)       (354)         -          (897)
Gross margin               228        178          78         -            484
Depreciation and
amortization              (36)       (41)        (69)       (3)          (149)
Inter-segment
sales                        -         32           -         -              -
Cash flows for
additions to
property, plant
and equipment              259         40          56         5            360
                                                                              
                               Three Months Ended September 30, 2012
                                                          All
                        Potash   Nitrogen   Phosphate   Others    Consolidated
                                                                              
Sales                 $    963 $      612 $       568 $       - $        2,143
Freight,
transportation
and distribution          (76)       (23)        (55)         -          (154)
Net sales - third
party                      887        589         513         -               
Cost of goods
sold                     (333)      (338)       (391)         -        (1,062)
Gross margin               554        251         122         -            927
Depreciation and
amortization              (49)       (33)        (64)       (3)          (149)
Inter-segment
sales                        -         72           -         -              -
Cash flows for
additions to
property, plant
and equipment              348        106          73        19            546
                                                                              
                                Nine Months Ended September 30, 2013
                                                          All
                        Potash   Nitrogen   Phosphate   Others    Consolidated
                                                               
Sales                 $  2,399 $    1,781 $     1,584 $       - $        5,764
Freight,
transportation
and distribution         (196)       (78)       (161)         -          (435)
Net sales - third
party                    2,203      1,703       1,423         -               
Cost of goods
sold                     (858)      (978)     (1,163)         -        (2,999)
Gross margin             1,345        725         260         -          2,330
Depreciation and
amortization             (144)      (121)       (214)      (10)          (489)
Inter-segment
sales                        -        141           -         -              -
Cash flows for
additions to
property, plant
and equipment              872        112         178        48          1,210
                                                                              
                                Nine Months Ended September 30, 2012
                                                          All
                        Potash   Nitrogen   Phosphate   Others    Consolidated
                                                                              
Sales                 $  2,731 $    1,804 $     1,750 $       - $        6,285
Freight,
transportation
and distribution         (165)       (76)       (140)         -          (381)
Net sales - third
party                    2,566      1,728       1,610         -               
Cost of goods
sold                     (884)      (956)     (1,240)         -        (3,080)
Gross margin             1,682        772         370         -          2,824
Depreciation and
amortization             (135)      (103)       (188)       (8)          (434)
Inter-segment
sales                        -        164           -         -              -
Cash flows for
additions to
property, plant
and equipment            1,029        261         172        43          1,505

 

5. Income Taxes

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

                                                           Three        Nine Months
                                                          Months           Ended
                                                           Ended
                                                         September       September
                                                            30              30
                                                        2013  2012      2013  2012
Income tax                                              $ 116 $ 249     $ 587 $ 713
expense                                                
Actual                                                    25%   26%       26%   26%
effective
tax rate on
ordinary
earnings                                               
Actual                                                    25%   28%       27%   30%
effective
tax rate
including
discrete
items                                                  
Discrete
tax
adjustments
that
impacted
the tax
rate                                                    $   - $  14     $  37 $  17

Significant items to note include the following:

• In the first nine months of 2013, a tax expense of $9 (recovery of $7 in the
third quarter) was recorded to adjust the 2012 income tax provision.

• In second-quarter 2013, a deferred tax expense of $11 was recorded as a
result of a Canadian income tax rate increase.

• In the first nine months of 2012, a tax expense of $17 ($12 in the third
quarter) was recorded to adjust the 2011 income tax provision.

• In second-quarter 2012, a non-tax deductible impairment of the company's
available-for-sale investment in Sinofert Holdings Limited was recorded.

6. 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
                                                                                                                  2013        2012          2013        2012
Basic                                                                                                          866,108,000 859,573,000   865,707,000 859,118,000
Diluted                                                                                                        874,339,000 876,026,000   876,027,000 875,885,000

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
                                    2013        2012         2013       2012
                                                                             
Potash Sales (tonnes -
thousands)                                                                   
      Manufactured Product                                                   
        North America                  721        951         2,349     2,002
        Offshore                       843      1,107         3,986     3,911
      Manufactured Product           1,564      2,058         6,335     5,913
                                                                             
Potash Net Sales                                                             
      (US $ millions)                                                        
        Sales                    $     539   $    963     $   2,399  $  2,731
        Freight, transportation
        and distribution              (57)       (76)         (196)     (165)
        Net Sales                $     482   $    887     $   2,203  $  2,566
                                                                             
      Manufactured Product                                                   
        North America            $     240   $    443     $     923  $    968
        Offshore                       240        441         1,271     1,588
      Other miscellaneous and
      purchased product                  2          3             9        10
      Net Sales                  $     482   $    887     $   2,203  $  2,566
                                                                             
Manufactured Product                                                         
      Average Realized Sales
      Price per MT                                                           
        North America            $     333   $    466     $     393  $    484
        Offshore                 $     285   $    398     $     319  $    406
        Average                  $     307   $    429     $     346  $    432
      Cost of Goods Sold per MT  $   (159)   $  (160)     $   (133)  $  (148)
      Gross Margin per MT        $     148   $    269     $     213  $    284
                                                                        
                                                                        
                                                                        
                   Potash Corporation of Saskatchewan Inc.
                           Selected Financial Data
                                 (unaudited)
                                                                             
                                   Three Months Ended       Nine Months Ended
                                      September 30            September 30
                                    2013        2012         2013       2012
                                                                             
Average Natural Gas Cost in
Production per MMBtu             $    4.96   $   6.76     $    5.58  $   5.58
Nitrogen Sales (tonnes -
thousands)                                                                   
      Manufactured Product                                                   
        Ammonia                        455        466         1,484     1,499
        Urea                           218        241           800       870
        Solutions/Nitric
        acid/Ammonium nitrate          700        438         1,978     1,371
      Manufactured Product           1,373      1,145         4,262     3,740
                                                                             
      Fertilizer sales tonnes          406        301         1,225     1,108
      Industrial/Feed sales
      tonnes                           967        844         3,037     2,632
      Manufactured Product           1,373      1,145         4,262     3,740
                                                                             
Nitrogen Net Sales                                                           
      (US $ millions)                                                        
        Sales                    $     493   $    612     $   1,781  $  1,804
        Freight, transportation
        and distribution              (26)       (23)          (78)      (76)
        Net Sales                $     467   $    589     $   1,703  $  1,728
                                                                             
      Manufactured Product                                                   
        Ammonia                  $     210   $    299     $     820  $    794
        Urea                            82        121           347       456
        Solutions/Nitric
        acid/Ammonium nitrate          158        104           489       338
      Other miscellaneous and
      purchased product                 17         65            47       140
      Net Sales                  $     467   $    589     $   1,703  $  1,728
                                                                             
      Fertilizer net sales       $     126   $    137     $     487  $    525
      Industrial/Feed net sales        324        387         1,169     1,063
      Other miscellaneous and
      purchased product                 17         65            47       140
      Net Sales                  $     467   $    589     $   1,703  $  1,728
                                                                             
Manufactured Product                                                         
      Average Realized Sales
      Price per MT                                                           
        Ammonia                  $     461   $    641     $     553  $    530
        Urea                     $     376   $    504     $     433  $    525
        Solutions/Nitric
        acid/Ammonium nitrate    $     226   $    238     $     247  $    246
        Average                  $     327   $    458     $     388  $    425
        Fertilizer average price
        per MT                   $     309   $    455     $     397  $    474
        Industrial/Feed average
        price per MT             $     335   $    459     $     385  $    404
        Average                  $     327   $    458     $     388  $    425
      Cost of Goods Sold per MT  $   (199)   $  (254)     $   (220)  $  (233)
      Gross Margin per MT        $     128   $    204     $     168  $    192
                                                                        
                                                                        
                                                                        
                   Potash Corporation of Saskatchewan Inc.
                           Selected Financial Data
                                 (unaudited)
                                                                             
                                   Three Months Ended       Nine Months Ended
                                      September 30            September 30
                                    2013        2012         2013       2012
                                                                             
Phosphate Sales (tonnes -
thousands)                                                                   
      Manufactured Product                                                   
        Fertilizer                     634        676         1,859     1,932
        Feed and Industrial            279        263           887       873
      Manufactured Product             913        939         2,746     2,805
                                                                             
Phosphate Net Sales                                                          
      (US $ millions)                                                        
        Sales                    $     488   $    568     $   1,584  $  1,750
        Freight, transportation
        and distribution              (56)       (55)         (161)     (140)
        Net Sales                $     432   $    513     $   1,423  $  1,610
                                                                             
      Manufactured Product                                                   
        Fertilizer               $     250   $    333     $     835  $  1,004
        Feed and Industrial            176        172           568       581
      Other miscellaneous and
      purchased product                  6          8            20        25
      Net Sales                  $     432   $    513     $   1,423  $  1,610
                                                                             
Manufactured Product                                                         
      Average Realized Sales
      Price per MT                                                           
        Fertilizer               $     395   $    493     $     449  $    520
        Feed and Industrial      $     631   $    654     $     640  $    666
        Average                  $     467   $    537     $     511  $    565
      Cost of Goods Sold per MT  $   (384)   $  (413)     $   (420)  $  (438)
      Gross Margin per MT        $      83   $    124     $      91  $    127

 

                                                                              
               Potash Corporation of Saskatchewan Inc.        
                       Selected Additional Data        
                              (unaudited)      
                                                                              
Exchange Rate (Cdn$/US$)                                                      
                                                               2013     2012
                                                                              
December 31                                                             0.9949
September 30                                                   1.0285   0.9837
Third-quarter average conversion rate                          1.0376   1.0114
                                                                              
                                      Three Months Ended     Nine Months Ended
                                         September 30          September 30
                                        2013      2012         2013     2012
                                                                              
Production                                                                    
Potash production (KCl Tonnes -
thousands)                                1,150    1,579        5,852    5,961
Potash shutdown weeks ^(1)                   12       15           32       55
Nitrogen production (N Tonnes -
thousands)                                  705      651        2,155    2,029
Phosphate production (P[2]O[5 ]Tonnes
- thousands)                                533      493        1,553    1,479
Phosphate P[2]O[5] operating rate [ ]       90%      83%          87%      83%
                                                                              
Shareholders                                                                  
PotashCorp's total shareholder return      -17%       0%         -21%       6%
                                                                              
Customers                                                                     
Product tonnes involved in customer           4                    16
complaints (thousands)                                 7                    54
                                                                              
Community                                                                     
Taxes and royalties ($ millions) ^
(2)                                          83      171          484      521
                                                                              
Employees                                                                     
Annualized turnover rate (excluding
retirements)                                 5%       8%           5%       6%
                                                                              
Safety                                                                        
Total site recordable injury rate
(per 200,000 work hours) ^ (3)             1.35     1.58         1.12     1.30
                                                                              
Environment                                                                   
Environmental incidents ^ (4)                 3        6           13       18
                                                                              

                                                                                September   December
                                                                                   30,        31,
As at                                                                             2013        2012
                                                                                                    
Number of
employees                                                                                           
    
Potash                                                                              2,874      2,759
    
Nitrogen                                                                              776        788
    
Phosphate                                                                           1,771      1,792
    
Other                                                                                 449        440
    
Total                                                                               5,870      5,779
                                                                                                    

(1) Represents weeks of full production shutdown; excludes the impact of any
periods of reduced operating rates and planned routine annual
maintenance shutdowns.      
(2) Taxes and royalties = current income tax expense - investment tax credits
- realized excess tax benefit related to share-based
compensation + potash production tax + resource surcharge + royalties +
municipal taxes + other miscellaneous taxes (calculated on an accrual basis).
     
(3) As defined in our 2012 Annual Integrated 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 2012 Annual Integrated Report).    

 

                   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 ADJUSTED 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
                                          2013      2012      2013      2012
Net income                               $   356   $   645   $ 1,555   $ 1,658
Finance costs                                 33        24       107        89
Income taxes                                 116       249       587       713
Depreciation and
amortization                                 149       149       489       434
EBITDA                                   $   654   $ 1,067   $ 2,738   $ 2,894
   Impairment of
 available-for-sale
     investment                                -         -         -       341
Adjusted EBITDA                          $   654   $ 1,067   $ 2,738   $ 3,235

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
                                          2013      2012      2013      2012
Sales                                   $  1,520   $ 2,143   $ 5,764   $ 6,285
Freight,
transportation
and distribution                           (139)     (154)     (435)     (381)
Net sales                               $  1,381   $ 1,989   $ 5,329   $ 5,904
                                                                              
Net income as a                              23%       30%       27%       26%
percentage of
sales                                                                   
Adjusted EBITDA                              47%       54%       51%       55%
margin                                                                  

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
                                      2013      2012       2013        2012
Cash flow prior to working
capital changes                     $    518   $   804   $   2,361   $   2,703
Changes in non-cash
operating working capital                                                     
      Receivables                         96      (90)         162        (84)
      Inventories                       (12)        19          29          63
      Prepaid expenses and
      other current assets              (17)       (5)         (4)        (21)
      Payables and accrued
      charges                             31        31           8       (308)
Changes in non-cash
operating working capital                 98      (45)         195       (350)
Cash provided by operating
activities                          $    616   $   759   $   2,556   $   2,353
Additions to property,
plant and equipment                    (360)     (546)     (1,210)     (1,505)
Other assets and intangible
assets                                     2      (23)         (8)        (37)
Changes in non-cash
operating working capital               (98)        45       (195)         350
Free cash flow                      $    160   $   235   $   1,143   $   1,161
                                                                              

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

Website: www.potashcorp.com
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