-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PIn4mlStWf0xKDGhK2H8Fatkd9Zogzzd/f9rsytMxj3tGi2xOcUIGVcH6sAK/UPR cmwgK0NVj5s7iJSASkLctw== /in/edgar/work/0000950150-00-000885/0000950150-00-000885.txt : 20001110 0000950150-00-000885.hdr.sgml : 20001110 ACCESSION NUMBER: 0000950150-00-000885 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: POTASH CORPORATION OF SASKATCHEWAN INC CENTRAL INDEX KEY: 0000855931 STANDARD INDUSTRIAL CLASSIFICATION: [1400 ] IRS NUMBER: 000000000 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10351 FILM NUMBER: 756926 BUSINESS ADDRESS: STREET 1: 122 1ST AVE S, STE 500 STREET 2: SASKATOON CITY: SASKATCHEWAN CANADA STATE: A9 BUSINESS PHONE: 3069338500 10-Q 1 o05076e10-q.txt FORM 10-Q 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-10351 POTASH CORPORATION OF SASKATCHEWAN INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) SASKATCHEWAN, CANADA N/A (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 122 - 1ST AVENUE SOUTH S7K 7G3 SASKATOON, SASKATCHEWAN, CANADA (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
306-933-8500 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As at October 31, 2000, Potash Corporation of Saskatchewan Inc. (the "Company") had 51,650,160 Common Shares outstanding. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS These interim consolidated financial statements do not include all disclosures normally provided in annual financial statements and should be read in conjunction with the most recent annual financial statements. In management's opinion, the unaudited financial information includes all adjustments (consisting solely of normal recurring adjustments) necessary to present fairly such information. Interim results are not necessarily indicative of the results expected for the fiscal year. POTASH CORPORATION OF SASKATCHEWAN INC. CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS (IN THOUSANDS OF U.S. DOLLARS) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 --------------------- ------------------------ 2000 1999 2000 1999 -------- --------- ---------- ---------- Net sales................................... $542,655 $ 453,578 $1,694,053 $1,567,402 Cost of goods sold.......................... 422,117 387,235 1,317,413 1,238,299 -------- --------- ---------- ---------- GROSS MARGIN................................ 120,538 66,343 376,640 329,103 -------- --------- ---------- ---------- Selling and administrative.................. 30,571 32,034 79,260 89,848 Provincial mining and other taxes........... 18,648 13,194 66,466 60,863 Provision for plant closures................ -- 55,403 -- 55,403 Provision for asset impairment.............. -- 525,118 -- 525,118 Other income................................ (8,789) (7,440) (52,990) (20,479) -------- --------- ---------- ---------- 40,430 618,309 92,736 710,753 -------- --------- ---------- ---------- OPERATING INCOME (LOSS)..................... 80,108 (551,966) 283,904 (381,650) INTEREST EXPENSE............................ 16,606 12,914 45,948 38,506 -------- --------- ---------- ---------- INCOME (LOSS) BEFORE INCOME TAXES........... 63,502 (564,880) 237,956 (420,156) INCOME TAXES (NOTE 5)....................... 17,151 (40,636) 59,859 2,781 -------- --------- ---------- ---------- NET INCOME (LOSS)........................... $ 46,351 $(524,244) 178,097 (422,937) ======== ========= RETAINED EARNINGS, BEGINNING OF PERIOD...... 424,359 889,676 DIVIDENDS................................... (39,200) (39,894) ---------- ---------- RETAINED EARNINGS, END OF PERIOD............ $ 563,256 $ 426,845 ========== ========== NET INCOME (LOSS) PER SHARE (NOTE 6)........ $ 0.89 $ (9.66) $ 3.38 $ (7.79) ======== ========= ========== ========== DIVIDENDS PER SHARE (NOTE 7)................ $ 0.25 $ 0.25 $ 0.74 $ 0.74 ======== ========= ========== ==========
(See Notes to the Consolidated Financial Statements) 2 3 POTASH CORPORATION OF SASKATCHEWAN INC. CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (IN THOUSANDS OF U.S. DOLLARS)
SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ (UNAUDITED) ASSETS Current Assets Cash and cash equivalents................................. $ 95,642 $ 44,037 Accounts receivable....................................... 335,098 269,264 Inventories (Note 4)...................................... 400,983 377,232 Prepaid expenses.......................................... 32,328 35,702 ---------- ---------- 864,051 726,235 Property, plant and equipment............................... 2,895,165 2,877,060 Goodwill.................................................... 107,161 109,378 Other assets................................................ 242,793 204,157 ---------- ---------- $4,109,170 $3,916,830 ========== ========== LIABILITIES Current Liabilities Short-term debt........................................... $ 535,449 $ 474,504 Accounts payable and accrued charges...................... 459,444 349,062 Current portion of long-term debt......................... 7,077 7,437 ---------- ---------- 1,001,970 831,003 Long-term debt.............................................. 413,803 437,020 Deferred income tax liability............................... 425,376 409,371 Accrued post-retirement/post-employment benefits............ 172,405 148,409 Accrued reclamation costs................................... 82,449 112,175 Other non-current liabilities and deferred credits.......... 15,074 16,466 ---------- ---------- 2,111,077 1,954,444 ---------- ---------- SHAREHOLDERS' EQUITY Share Capital............................................... 1,170,587 1,216,533 Unlimited authorization of common shares without par value; issued and outstanding 51,647,660 and 53,694,209 at September 30, 2000 and December 31, 1999, respectively Contributed Surplus......................................... 264,250 321,494 Retained Earnings........................................... 563,256 424,359 ---------- ---------- 1,998,093 1,962,386 ---------- ---------- $4,109,170 $3,916,830 ========== ==========
(See Notes to the Consolidated Financial Statements) 3 4 POTASH CORPORATION OF SASKATCHEWAN INC. CONSOLIDATED STATEMENTS OF CASH FLOW (IN THOUSANDS OF U.S. DOLLARS) (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30 ---------------------- 2000 1999 --------- --------- OPERATING ACTIVITIES Net income (loss)........................................... $ 178,097 $(422,937) Items not affecting cash Depreciation and amortization............................. 143,867 148,205 Gain on disposal of assets................................ (19,089) (84) Provision for deferred income tax......................... 32,922 (12,251) Provision for plant closures.............................. -- 28,953 Provision for asset impairment............................ -- 525,118 Provision for post-retirement/post-employment benefits.... 8,143 8,068 --------- --------- 343,940 275,072 CHANGES IN NON-CASH OPERATING WORKING CAPITAL Accounts receivable....................................... (53,519) 50,123 Inventories............................................... (26,080) 12,702 Prepaid expenses.......................................... 3,385 1,645 Accounts payable and accrued charges...................... 85,633 (1,426) Current income taxes...................................... 11,509 11,839 Accrued reclamation costs................................... (2,534) (20,200) Other non-current liabilities and deferred credits.......... (1,392) (2,592) --------- --------- CASH PROVIDED BY OPERATING ACTIVITIES....................... 360,942 327,163 --------- --------- INVESTING ACTIVITIES Additions to property, plant and equipment.................. (141,297) (65,751) Acquisition of Albright & Wilson Company (Note 3)........... (32,000) -- Acquisition of Minera Yolanda S.C.M......................... -- (36,943) Proceeds from disposal of assets............................ 8,114 1,131 Additions to other assets................................... (38,733) (26,762) --------- --------- CASH USED IN INVESTING ACTIVITIES........................... (203,916) (128,325) --------- --------- CASH BEFORE FINANCING ACTIVITIES............................ 157,026 198,838 --------- --------- FINANCING ACTIVITIES Repayment of long-term debt................................. (23,577) (489,327) Proceeds from short-term debt............................... 60,945 284,134 Dividends................................................... (39,200) (39,894) Repurchase of shares........................................ (104,149) -- Issuance of shares.......................................... 560 1,543 --------- --------- CASH USED IN FINANCING ACTIVITIES........................... (105,421) (243,544) --------- --------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............ 51,605 (44,706) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 44,037 67,971 --------- --------- CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $ 95,642 $ 23,265 ========= ========= Supplemental cash flow disclosure Interest paid............................................. $ 43,087 $ 36,980 Income taxes paid......................................... 11,434 5,361
(See Notes to the Consolidated Financial Statements) 4 5 POTASH CORPORATION OF SASKATCHEWAN INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS OF U.S. DOLLARS) (UNAUDITED) 1. SIGNIFICANT ACCOUNTING POLICIES The Company's accounting policies are in accordance with accounting principles generally accepted in Canada ("Canadian GAAP"). These policies are consistent with accounting principles generally accepted in the United States ("US GAAP") except as outlined in Note 10. The accounting policies used in preparing these interim financial statements are consistent with those used in the preparation of the annual financial statements. BASIS OF PRESENTATION The consolidated financial statements include the accounts of Potash Corporation of Saskatchewan Inc. (PCS) and its principal operating subsidiaries (the "Company" except to the extent the context otherwise requires): -- PCS Sales (Canada) Inc. -- PCS Sales (Iowa), Inc. -- PCS Sales (Indiana), Inc. -- PCS Joint Venture, LP -- Potash Corporation of Saskatchewan Transport Limited -- PCS Sales (USA), Inc. -- PCS Phosphate Company, Inc. -- PCS Purified Phosphates (formerly Albright & Wilson Company) -- White Springs Agricultural Chemicals, Inc. -- PCS Nitrogen, Inc. -- PCS Nitrogen Fertilizer, L.P. -- PCS Nitrogen Ohio, L.P. -- PCS Nitrogen Limited -- PCS Nitrogen Fertilizer Limited -- PCS Nitrogen Trinidad Limited -- PCS Cassidy Lake Company -- PCS Yumbes S.C.M. -- PCS Fosfatos do Brasil Ltda. 2. CHANGE IN ACCOUNTING POLICY The Company has adopted the provisions of section 3461 of the Canadian Institute of Chartered Accountants Handbook "Employee Future Benefits". Under this accounting policy, the cost of post-retirement/post-employment benefits are recognized over the periods in which employees render services to the Company in return for such benefits. The effect of this change on prior period financial statements and current period results is not significant. 3. ACQUISITION OF ALBRIGHT & WILSON COMPANY On March 23, 2000, the Company acquired the remaining 50 percent partnership interest in Albright & Wilson Company ("A&W"). A&W is an industrial phosphoric acid manufacturer with plants in Aurora, NC and Cincinnati, OH. Concurrent with the completion of the acquisition, the name of A&W was changed to PCS Purified Phosphates. 5 6 The acquisition has been accounted for by the purchase method of accounting and, accordingly, the results of operations of PCS Purified Phosphates have been included in the consolidated financial statements from March 24, 2000. Net assets acquired were: Working capital............................................. $12,013 Property, plant and equipment............................... 11,212 Other assets................................................ 8,775 ------- $32,000 =======
The following unaudited pro forma financial information presents the combined results of operations of the Company and PCS Purified Phosphates as if the acquisition had occurred at the beginning of the periods presented. There were no significant pro forma adjustments. The consolidated financial statements and the pro forma amounts are based on a preliminary allocation of the purchase price. However, changes to the unaudited consolidated financial statements and pro forma amounts are expected as evaluations of assets and liabilities are completed and additional information becomes available. Accordingly, the final allocated values may differ from the amounts set forth in the unaudited consolidated financial statements and below. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the future results of operations of the combined company or the results of operations that would have actually occurred had the acquisition been in effect for the periods presented.
NINE MONTHS ENDED SEPTEMBER 30 ------------------------ 2000 1999 ---------- ---------- (UNAUDITED PRO FORMA) Net sales....................................... $1,708,498 $1,606,219 Operating income (loss)......................... $ 287,490 $ (370,655) Net income (loss)............................... $ 180,571 $ (416,470) Net income (loss) per share..................... $ 3.43 $ (7.68)
4. INVENTORIES
SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ (UNAUDITED) Finished product............................... $157,294 $165,301 Materials and supplies......................... 117,688 110,615 Raw materials.................................. 31,760 53,329 Work in process................................ 94,241 47,987 -------- -------- $400,983 $377,232 ======== ========
5. INCOME TAXES The Company's effective consolidated income tax rate approximates 27 percent; however, the gain on the sale of the shares of Moab Salt Inc. in February 2000 (for which there is no tax effect) has resulted in a lower rate on a year-to-date basis. 6. NET INCOME (LOSS) PER SHARE Net income per share for the year to date is calculated on the weighted average shares issued and outstanding during the nine months ended September 30, 2000 of 52,651,000 (1999 -- 54,259,000). 6 7 Third quarter net income per share is calculated on the weighted average shares issued and outstanding for the three months ended September 30, 2000 of 52,031,000 (1999 -- 54,269,000). 7. DIVIDENDS Prior to June 30, 1999 the Company declared its dividends in Canadian dollars. Subsequent to that date, the Company has declared its dividends in US dollars. 8. SEGMENT INFORMATION The Company has three reportable business segments: potash, phosphate and nitrogen. These business segments are differentiated by the chemical nutrient contained in the product that each produces. Inter-segment net sales are made under terms which approximate market prices. For the nine months ended September 30, 2000, the phosphate business segment includes the gain on sale of Moab Salt Inc. of $16,278 as the shares were owned by a subsidiary of the Company in the phosphate business segment.
THREE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED) --------------------------------------------------------------- POTASH PHOSPHATE NITROGEN ALL OTHERS CONSOLIDATED -------- --------- -------- ---------- ------------ Net sales -- third party........... $140,073 $194,566 $208,016 $ -- $542,655 Inter-segment net sales............ 1,106 1,416 16,316 -- -- Gross margin....................... 72,833 15,502 32,203 -- 120,538 Operating income (loss)............ 53,098 9,753 28,323 (11,066) 80,108
THREE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) --------------------------------------------------------------- POTASH PHOSPHATE NITROGEN ALL OTHERS CONSOLIDATED -------- --------- -------- ---------- ------------ Net sales -- third party........... $128,145 $199,206 $126,227 $ -- $453,578 Inter-segment net sales............ 1,005 181 10,255 -- -- Gross margin....................... 64,556 25,094 (23,307) -- 66,343 Provision for plant closures....... -- (5,150) (50,253) -- (55,403) Provision for asset impairment..... -- (7,117) (518,001) -- (525,118) Operating income (loss)............ 50,472 12,228 (598,964) (15,702) (551,966)
NINE MONTHS ENDED SEPTEMBER 30, 2000 (UNAUDITED) --------------------------------------------------------------- POTASH PHOSPHATE NITROGEN ALL OTHERS CONSOLIDATED -------- --------- -------- ---------- ------------ Net sales -- third party........... $487,026 $580,831 $626,196 $ -- $1,694,053 Inter-segment net sales............ 6,819 6,988 45,200 -- -- Gross margin....................... 259,090 59,154 58,396 -- 376,640 Operating income (loss)............ 191,860 66,000 50,434 (24,390) 283,904
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED) --------------------------------------------------------------- POTASH PHOSPHATE NITROGEN ALL OTHERS CONSOLIDATED -------- --------- -------- ---------- ------------ Net sales -- third party........... $448,051 $637,496 $481,855 $ -- $1,567,402 Inter-segment net sales............ 7,284 1,365 35,219 -- -- Gross margin....................... 242,365 114,481 (27,743) -- 329,103 Provision for plant closures....... -- (5,150) (50,253) -- (55,403) Provision for asset impairment..... -- (7,117) (518,001) -- (525,118) Operating income (loss)............ 178,890 101,373 (614,278) (47,635) (381,650)
7 8 9. PLANT CLOSURES AND OFFICE CONSOLIDATION In the third quarter of 1999, the Board of Directors of the Company approved a plan to close nitrogen plants at Clinton, IA and LaPlatte, NE; a phosphate feed plant at Saltville, VA; and a phosphate terminal at Jacksonville, FL. The Company also began the consolidation of its Raleigh, NC and Memphis, TN administrative offices with the Company's office in Northbrook, IL.
ACCRUED BALANCE ACCRUED BALANCE JUNE 30, AMOUNT SEPTEMBER 30, 2000 PAID 2000 --------------- ------ --------------- PLANT CLOSURES Severance............................................ $ 398 $ 198 $ 200 Environmental remediation............................ 797 424 373 Contractual commitments.............................. 6,127 1,687 4,440 Non-cash parts inventory writedown................... 5,646 -- 5,646 Non-cash writedown of property, plant and equipment.......................................... 27,296 -- 27,296 ------- ------ ------- 40,264 2,309 37,955 OFFICE CONSOLIDATION Severance............................................ 3,378 2,300 1,078 Contractual commitments.............................. 1,754 1,754 -- ------- ------ ------- $45,396 $6,363 $39,033 ======= ====== =======
All on-site inventory at Clinton and LaPlatte has been sold and the decommissioning of the ammonia storage tanks at Clinton and LaPlatte has been completed. The Company has contracted out the demolition of the Clinton facility (at a cost of approximately $45) and demolition activity at Clinton is in process. The Company is attempting to sell this property and therefore certain structures which add value to the site will not be demolished at this time. The Company has received an offer for the sale of the LaPlatte plant site. If this sale is completed it is not expected that there will be any significant further environmental or decommissioning activities required relating to this site. If the sale is not completed demolition is expected to start in the second quarter of 2001. There is one employee remaining at each site. The Company is currently in negotiations for the sale of the Saltville site. Dismantling procedures are now complete. The office consolidation is now complete. 10. UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (US GAAP) A description of certain significant differences between Canadian GAAP and US GAAP follows: MARKETABLE SECURITIES: The Company's investment in Israel Chemicals Ltd. ("ICL") is stated at cost. US GAAP would require that this investment be classified as available-for-sale and be stated at market value. PROPERTY, PLANT AND EQUIPMENT AND GOODWILL: The net book value of property, plant and equipment and goodwill under Canadian GAAP is higher than under US GAAP as provisions for asset impairment under Canadian GAAP were measured based on the undiscounted cash flow from use together with the residual value of the assets whereas under US GAAP they were measured based on fair value, which was lower than the undiscounted cash flow from use together with the residual value of the assets. FOREIGN CURRENCY TRANSLATION ADJUSTMENT: The foreign currency translation adjustment results from the restatement of prior periods so that all periods presented are in the same reporting currency. US GAAP requires that the comparative Consolidated Statements of Income and the Consolidated Statements of Cash Flow be translated using weighted average exchange rates for the applicable periods. In contrast, the Consolidated Statements of Financial Position are translated using the exchange rates at the end of the applicable periods in accordance with Canadian GAAP. The difference in these exchange rates gives rise to the foreign currency translation adjustment. 8 9 NET SALES: Sales are recorded net of freight costs (less related revenues) and transportation and distribution expenses. US GAAP would require that net freight costs be included in cost of goods sold and transportation and distribution expenses be included in selling and administrative expenses. COMPREHENSIVE INCOME: Comprehensive income is not recognized under Canadian GAAP. US GAAP would require the recognition of comprehensive income. PRE-OPERATING COSTS: Operating costs incurred during the start-up phase of new projects are deferred until commercial production levels are reached, at which time they are amortized over the estimated life of the project. US GAAP would require that these costs be expensed as incurred. DEPRECIATION AND AMORTIZATION: Depreciation and amortization under Canadian GAAP is higher than under US GAAP as the net book values of property, plant and equipment and goodwill under Canadian GAAP are higher than under US GAAP. STOCK-BASED COMPENSATION: In 1995, the Financial Accounting Standards Board issued Statement No. 123 "Accounting for Stock-Based Compensation". The Company has decided to continue to apply APB Opinion 25 for measurement of compensation of employees. THE APPLICATION OF US GAAP, AS DESCRIBED ABOVE, WOULD HAVE HAD THE FOLLOWING APPROXIMATE EFFECTS ON NET INCOME, NET INCOME PER SHARE, TOTAL ASSETS AND SHAREHOLDERS' EQUITY:
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------ ------------------------ 2000 1999 2000 1999 ---------- ---------- ---------- ---------- (UNAUDITED) (UNAUDITED) Net income (loss) as reported -- Canadian GAAP.................................... $ 46,351 $ (524,244) $ 178,097 $ (422,937) Items increasing (decreasing) reported net income (loss) Pre-operating costs..................... (5,539) -- (9,549) -- Provision for asset impairment.......... -- (217,953) -- (217,953) Depreciation and amortization........... 2,441 -- 7,323 -- Deferred income taxes..................... 927 50,590 645 50,590 ---------- ---------- ---------- ---------- Approximate net income -- US GAAP......... $ 44,180 $ (691,607) $ 176,516 $ (590,300) ========== ========== ========== ========== Weighted average shares outstanding -- US GAAP.................................... 52,031,000 54,269,000 52,651,000 54,259,000 ========== ========== ========== ========== Approximate net income per share -- US GAAP.................................... $ 0.85 $ (12.74) $ 3.35 $ (10.88) ========== ========== ========== ==========
SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ (UNAUDITED) Total assets as reported -- Canadian GAAP................... $4,109,170 $3,916,830 Items increasing (decreasing) reported total assets Available-for-sale security (unrealized holding gain)..... 39,475 26,212 Property, plant and equipment............................. (162,308) (168,632) Pre-operating costs....................................... (14,154) (4,605) Goodwill.................................................. (48,322) (49,321) ---------- ---------- Approximate total assets -- US GAAP......................... $3,923,861 $3,720,484 ========== ==========
9 10
SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ (UNAUDITED) Total shareholders' equity as reported -- Canadian GAAP..... $1,998,093 $1,962,386 Items increasing (decreasing) reported shareholders' equity Other comprehensive income, net of tax.................... 26,540 16,858 Pre-operating costs....................................... (14,154) (4,605) Property, plant and equipment............................. (162,308) (168,632) Goodwill.................................................. (48,322) (49,321) Deferred income taxes..................................... 52,615 51,970 ---------- ---------- Approximate shareholders' equity -- US GAAP................. $1,852,464 $1,808,656 ========== ==========
New Accounting Pronouncements The Company will have to adopt SFAS 133 effective January 1, 2001. It is not expected that SFAS 133 will have a significant impact on the results of operations. The impact of SFAS 133 on the statement of financial position may be significant depending on the volatility of the price of natural gas. Effective January 1, 2001 the Company will be subject to SEC Staff Accounting Bulletin (SAB) No. 101 "Revenue Recognition in Financial Statements". This SAB is not expected to have a significant effect on the Company's results of operations or financial position. 11. COMPARATIVE FIGURES Certain of the prior period's figures have been reclassified to conform with the current period's presentation. 10 11 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The narrative included under this Management's Discussion and Analysis of Financial Condition and Results of Operations has been prepared on a nutrient basis (which is now consistent with the business segment basis) with reference to the consolidated financial statements reported under Canadian GAAP. OVERVIEW Third Quarter
THREE MONTHS ENDED SEPTEMBER 30 ------------------------------------------------------- % OF % OF ($ MILLIONS) 2000 NET SALES 1999 NET SALES % CHANGE - ------------ ------ --------- ------- --------- -------- Net Sales North American......................... $392.3 72 $ 287.8 63 36 Offshore............................... 150.4 28 165.8 37 (9) ------ --- ------- --- --- $542.7 100 $ 453.6 100 20 ====== === ======= === === Gross Margin............................. $120.5 22 $ 66.3 15 82 ====== === ======= === === Provision for plant closures............. -- -- $ 55.4 -- -- ====== === ======= === === Provision for asset impairment........... -- -- $ 525.1 -- -- ====== === ======= === === Operating Income (Loss).................. $ 80.1 15 $(551.9) -- -- ====== === ======= === === Net Income (Loss)........................ $ 46.4 9 $(524.2) -- -- ====== === ======= === === Net Income (Loss) per Share (dollars).... $ 0.89 -- $ (9.66) -- -- ====== === ======= === === Gross Margin by Nutrient(1) Potash................................. $ 72.8 52 $ 64.6 50 13 ====== === ======= === === Phosphate.............................. $ 15.5 8 $ 25.1 13 (38) ====== === ======= === === Nitrogen............................... $ 32.2 15 $ (23.4) (18) -- ====== === ======= === ===
- --------------- (1) Based on net sales by nutrient. Higher nitrogen sales prices combined with record third quarter nitrogen sales volumes resulted in higher nitrogen net sales revenue as compared to the third quarter of 1999. In addition, offshore potash sales volumes were a third quarter record. These factors were the primary reason for the increase in net sales revenue over third quarter 1999. Operating income was favourably impacted by a reduction in selling and administrative expenses due to a reduction in the amortization of goodwill. Results for 1999 were significantly affected by the provisions for plant closures and asset impairment. 11 12 Year to Date
NINE MONTHS ENDED SEPTEMBER 30 -------------------------------------------------------- % OF % OF % ($ MILLIONS) 2000 NET SALES 1999 NET SALES CHANGE - ------------ -------- --------- -------- --------- ------ Net Sales North American......................... $1,206.9 71 $1,099.2 70 10 Offshore............................... 487.2 29 468.2 30 4 -------- --- -------- --- --- $1,694.1 100 $1,567.4 100 8 ======== === ======== === === Gross Margin............................. $ 376.6 22 $ 329.1 21 14 ======== === ======== === === Provision for plant closures............. -- -- $ 55.4 -- -- ======== === ======== === === Provision for asset impairment........... -- -- $ 525.1 -- -- ======== === ======== === === Operating Income (Loss).................. $ 283.9 17 $ (381.7) -- -- ======== === ======== === === Net Income (Loss)........................ $ 178.1 11 $ (422.9) -- -- ======== === ======== === === Net Income (Loss) per Share (dollars).... $ 3.38 -- $ (7.79) -- -- ======== === ======== === === Gross Margin by Nutrient(1) Potash................................. $ 259.1 53 $ 242.4 54 7 ======== === ======== === === Phosphate.............................. $ 59.2 10 $ 114.5 18 (48) ======== === ======== === === Nitrogen............................... $ 58.3 9 $ (27.8) (6) -- ======== === ======== === ===
- --------------- (1) Based on net sales by nutrient. Higher nitrogen sales prices and record total potash sales volumes more than offset lower potash and phosphate sales prices, resulting in an increase in net sales revenues as compared to the first nine months of 1999. Operating income was favourably impacted by a reduction in selling and administrative expenses due to a reduction in the amortization of goodwill. Operating income was also favourably affected by the increase in other income (which was primarily due to the gain on sale of Moab, a dividend from Israel Chemicals Ltd., the gain on sale of an aircraft, recovery of catalyst from Clinton and LaPlatte and foreign exchange gains). Results for 1999 were significantly affected by the provisions for plant closures and asset impairment. POTASH REVENUE Third Quarter
THREE MONTHS ENDED SEPTEMBER 30 ------------------------------------------------------------------- 2000 NET SALES 1999 NET SALES % CHANGE -------------------------------- -------------------------------- -------------------------- AVERAGE AVERAGE AVERAGE REVENUE TONNES PRICE REVENUE TONNES PRICE PRICE ($ MILLIONS) (000'S) PER MT ($ MILLIONS) (000'S) PER MT REVENUE TONNES PER MT ------------ ------- ------- ------------ ------- ------- ------- ------ ------- North American........ $ 60.3 778 $77.55 $ 53.4 669 $79.85 13 16 (3) Offshore.............. 79.8 883 90.34 74.7 780 95.81 7 13 (6) ------ ----- ------ ------ ----- ------ -- -- -- $140.1 1,661 $84.35 $128.1 1,449 $88.45 9 15 (5) ====== ===== ====== ====== ===== ====== == == ==
Record purchases by Brazil were the primary factor which led to record third quarter offshore sales volumes. Offshore sales prices decreased on a quarter-over-quarter basis primarily due to a combination of product mix, earlier competitive pressures and firming freight rates. The increase in North American sales volumes was primarily due to a strong fall fill program in the US. Sales prices were down in North America primarily due to increased competition. 12 13 Year to Date
NINE MONTHS ENDED SEPTEMBER 30 ------------------------------------------------------------------- 2000 NET SALES 1999 NET SALES % CHANGE -------------------------------- -------------------------------- -------------------------- AVERAGE AVERAGE AVERAGE REVENUE TONNES PRICE REVENUE TONNES PRICE PRICE ($ MILLIONS) (000'S) PER MT ($ MILLIONS) (000'S) PER MT REVENUE TONNES PER MT ------------ ------- ------- ------------ ------- ------- ------- ------ ------- North American........ $195.3 2,450 $79.69 $185.5 2,216 $83.68 5 11 (5) Offshore.............. 291.7 3,368 86.63 262.6 2,896 90.69 11 16 (4) ------ ----- ------ ------ ----- ------ -- -- -- $487.0 5,818 $83.71 $448.1 5,112 $87.65 9 14 (4) ====== ===== ====== ====== ===== ====== == == ==
Record offshore sales volumes to China and Brazil and increased sales to Japan, Indonesia and Vietnam contributed to a record for total nine-month sales tonnes. Offshore sales prices were down as compared to the first nine months of 1999 primarily due to competitive pressures and firming freight rates. North American sales volumes increased primarily due to large seeded acreages and favourable planting conditions which extended the fertilizer season and a strong fall fill program. Sales prices in the North American market were down as compared to the same period in 1999 due to competitive pressures. PHOSPHATE REVENUE Third Quarter
THREE MONTHS ENDED SEPTEMBER 30 --------------------------------------------------------------------- 2000 NET SALES 1999 NET SALES % CHANGE --------------------------------- --------------------------------- -------------------------- AVERAGE AVERAGE AVERAGE REVENUE TONNES PRICE REVENUE TONNES PRICE PRICE ($ MILLIONS) (000'S) PER MT ($ MILLIONS) (000'S) PER MT REVENUE TONNES PER MT ------------ ------- -------- ------------ ------- -------- ------- ------ ------- Fertilizer -- liquids............ $ 43.8 236 $185.66 $ 49.0 263 $186.49 (11) (10) -- Fertilizer -- DAP.... 53.4 373 143.22 69.1 414 167.05 (23) (10) (14) Feed................. 55.3 230 240.88 50.3 206 244.15 10 11 (1) Industrial........... 42.1 132 316.71 30.8 104 293.48 37 27 8 ------ --- ------- ------ --- ------- --- --- --- $194.6 971 $200.38 $199.2 987 $201.75 (2) (2) (1) ====== === ======= ====== === ======= === === ===
Higher industrial sales volumes as compared to third quarter 1999 were primarily due to securing new business, reinforcing the Company's objective to grow the industrial phosphate business. Higher industrial sales prices primarily reflect changes in product and customer mix. Offshore liquid fertilizer sales volumes decreased primarily due to reduced sales to India. North American liquid sales volumes were comparable to third quarter 1999. Third quarter North American DAP sales volumes increased from the same quarter in 1999 due to a good fall fill program as customers bought ahead of price increases. However, this was more than offset by a decrease in offshore DAP volumes primarily due to lower PhosChem sales to India and Pakistan. Overall, DAP sales prices were down compared to the third quarter of 1999 but increased as compared to second quarter 2000. Increased feed sales volumes were primarily due to the Company's purchase of a feed plant in Brazil and strong offshore demand. 13 14 Year to Date
NINE MONTHS ENDED SEPTEMBER 30 --------------------------------------------------------------------- 2000 NET SALES 1999 NET SALES % CHANGE --------------------------------- --------------------------------- -------------------------- AVERAGE AVERAGE AVERAGE REVENUE TONNES PRICE REVENUE TONNES PRICE PRICE ($ MILLIONS) (000'S) PER MT ($ MILLIONS) (000'S) PER MT REVENUE TONNES PER MT ------------ ------- -------- ------------ ------- -------- ------- ------ ------- Fertilizer -- liquids............ $139.6 724 $192.74 $165.2 777 $212.50 (15) (7) (9) Fertilizer -- DAP.... 170.6 1,177 144.94 215.4 1,199 179.59 (21) (2) (19) Feed................. 156.4 656 238.39 159.6 656 243.14 (2) -- (2) Industrial........... 114.2 364 314.44 97.3 325 300.16 17 12 5 ------ ----- ------- ------ ----- ------- --- -- --- $580.8 2,921 $198.86 $637.5 2,957 $215.57 (9) (1) (8) ====== ===== ======= ====== ===== ======= === == ===
Higher industrial sales volumes as compared to the first nine months of 1999 were primarily due to securing new business. This reinforced the Company's objective to grow the industrial phosphate business. Higher industrial sales prices primarily reflect changes in product and customer mix. On a year-to-date basis, non-fertilizer products contributed 35 percent of sales volumes (1999 -- 33 percent), 47 percent of net sales revenue (1999 -- 40 percent) and all of the positive gross margin (1999 -- 59 percent of gross margin). Offshore liquid fertilizer sales volumes increased marginally as compared to the first nine months of 1999. This increase was more than offset by a reduction in North American sales volumes due primarily to a carry-over from the previous season. Offshore DAP sales volumes decreased primarily due to reduced purchases by China, India and Pakistan. This more than offset an increase in North American sales volumes. Overall, DAP prices were down 19 percent. Offshore liquid fertilizer prices declined due primarily to lower contract prices in India. North American phosphate fertilizer prices continued to be disappointing. NITROGEN REVENUE Third Quarter
THREE MONTHS ENDED SEPTEMBER 30 --------------------------------------------------------------------- 2000 NET SALES 1999 NET SALES % CHANGE --------------------------------- --------------------------------- -------------------------- AVERAGE AVERAGE AVERAGE REVENUE TONNES PRICE REVENUE TONNES PRICE PRICE ($ MILLIONS) (000'S) PER MT ($ MILLIONS) (000'S) PER MT REVENUE TONNES PER MT ------------ ------- -------- ------------ ------- -------- ------- ------ ------- Ammonia.............. $ 62.3 398 $156.52 $ 41.5 407 $101.95 50 (2) 54 Urea................. 56.2 357 157.61 35.5 325 108.88 59 10 45 Solutions............ 30.9 303 101.92 12.0 187 64.58 156 62 58 Other................ 34.7 641 54.17 25.6 575 44.53 36 12 22 ------ ----- ------- ------ ----- ------- --- -- -- 184.1 1,699 108.34 114.6 1,494 76.67 61 14 41 Purchased............ 23.9 150 159.73 11.7 106 110.61 105 42 44 ------ ----- ------- ------ ----- ------- --- -- -- $208.0 1,849 $112.50 $126.3 1,600 $ 78.91 65 16 43 ====== ===== ======= ====== ===== ======= === == == Fertilizer........... $105.3 765 $137.56 $ 53.4 618 $ 86.41 97 24 59 Non-fertilizer....... 102.7 1,084 94.80 72.9 982 74.19 41 10 28 ------ ----- ------- ------ ----- ------- --- -- -- $208.0 1,849 $112.50 $126.3 1,600 $ 78.91 65 16 43 ====== ===== ======= ====== ===== ======= === == ==
Prices for all nitrogen products were significantly higher than in the third quarter of 1999. These higher prices combined with record third quarter sales volumes resulted in a substantial improvement in nitrogen gross margin on a quarter-over-quarter basis. The increase in prices were primarily the result of healthy demand and tight supply due to temporary and permanent plant shutdowns. The significant increase in US natural gas prices has accelerated industry rationalization in North America. Sales volumes of manufactured products increased as compared to the third quarter of 1999 primarily due to low inventories, good industrial demand and increased market share. As a percentage of total sales volumes, non-fertilizer sales volumes decreased from 61 percent in third quarter 1999 to 59 percent in third quarter 2000 while non-fertilizer sales revenues decreased from 58 percent 14 15 to 49 percent over the same period. This is primarily due to the significant improvement in fertilizer volumes and prices on a quarter-over-quarter basis. Year to Date
NINE MONTHS ENDED SEPTEMBER 30 --------------------------------------------------------------------- 2000 NET SALES 1999 NET SALES % CHANGE --------------------------------- --------------------------------- -------------------------- AVERAGE AVERAGE AVERAGE REVENUE TONNES PRICE REVENUE TONNES PRICE PRICE ($ MILLIONS) (000'S) PER MT ($ MILLIONS) (000'S) PER MT REVENUE TONNES PER MT ------------ ------- -------- ------------ ------- -------- ------- ------ ------- Ammonia.............. $142.8 952 $150.08 $148.0 1,462 $101.22 (3) (35) 48 Urea................. 170.3 1,166 145.99 133.4 1,201 111.12 28 (3) 31 Solutions............ 91.7 1,190 77.07 83.8 1,245 67.32 9 (4) 14 Other................ 103.5 1,665 62.14 87.0 1,722 50.48 19 (3) 23 ------ ----- ------- ------ ----- ------- --- --- -- 508.3 4,973 102.21 452.2 5,630 80.31 12 (12) 27 Purchased............ 118.0 801 147.24 29.6 282 105.39 299 184 40 ------ ----- ------- ------ ----- ------- --- --- -- $626.3 5,774 $108.45 $481.8 5,912 $ 81.51 30 (2) 33 ====== ===== ======= ====== ===== ======= === === == Fertilizer........... $333.5 2,881 $115.76 $257.2 3,051 $ 84.32 30 (6) 37 Non-fertilizer....... 292.8 2,893 101.17 224.6 2,861 78.51 30 1 29 ------ ----- ------- ------ ----- ------- --- --- -- $626.3 5,774 $108.45 $481.8 5,912 $ 81.51 30 (2) 33 ====== ===== ======= ====== ===== ======= === === ==
Prices for all nitrogen products were higher than in the first nine months of 1999. These higher prices were primarily the result of healthy demand and the tight supply due to temporary and permanent plant shutdowns. The significant increase in US natural gas prices has accelerated industry rationalization in North America. Sales volumes of manufactured products decreased as compared to the first nine months of 1999 primarily due to the permanent closure of two of the Company's plants in the third quarter of 1999 and the temporary shutdown of two of the Company's ammonia plants in Trinidad during the first half of 2000. Sales volumes of purchased products increased as purchased products replaced manufactured products in order to satisfy established customer demand. Non-fertilizer sales volumes increased from 48 percent in the first nine months of 1999 to 50 percent in the same period in 2000. Non-fertilizer sales revenues remained at 47 percent of total nitrogen net sales revenues. COST OF GOODS SOLD
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 -------------------------- -------------------------- % % 2000 1999 CHANGE 2000 1999 CHANGE ------- ------- ------ ------- ------- ------ Potash production (KCl) tonnage (000's)... 1,190 1,069 11 5,631 4,700 20 Phosphate production (P(2)0(5)) tonnage (000's)................................. 484 481 1 1,510 1,598 (6) Nitrogen production (N) tonnage (000's)... 759 650 17 1,953 2,372 (18) Potash unit cost of sales ($)............. $ 40.49 $ 43.89 (8) $ 39.18 $ 40.24 (3) Phosphate unit cost of sales ($).......... $184.41 $176.33 5 $178.61 $176.86 1 Manufactured Nitrogen unit cost of sales ($)..................................... $ 89.97 $ 91.25 (1) $ 90.77 $ 85.18 7 Depreciation and amortization ($millions)............................. $ 46.5 $ 47.9 (3) $ 143.9 $ 148.2 (3)
Higher potash production volumes, fewer shutdown weeks, more potash sales sourced from Saskatchewan and a weaker Canadian dollar contributed to a reduction in the potash unit cost of sales as compared to third quarter 1999. On a year-to-date basis record production volumes were primarily responsible for lower per unit cost of sales. 15 16 Phosphate unit cost of sales increased as compared to the third quarter of 1999 primarily due to the increased cost of ammonia which more than offset the lower per unit cost of sulphur. On a year-to-date basis the increased cost of ammonia combined with reduced phosphate production has resulted in higher per unit cost of sales. The per unit cost of manufactured nitrogen products in the third quarter was flat as compared to the third quarter of 1999 due primarily to higher production volumes which offset the effect of higher natural gas costs. The average per unit cost of natural gas increased over third quarter 1999 due to more expensive US based production during the quarter and higher natural gas costs in Trinidad. Natural gas costs at the Company's US plants benefited from the Company's natural gas hedging program which mitigated the effect of the recent increases in US natural gas prices. On a year-to-date basis the per unit cost of manufactured products has increased primarily due to reduced production (due to the temporary closure of two of the Company's plants in Trinidad during the first half of the year) and increased natural gas prices. EXPENSES
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30 SEPTEMBER 30 ------------------------- ------------------------ % % ($ MILLIONS) 2000 1999 CHANGE 2000 1999 CHANGE - ------------ ----- ------ ------ ----- ----- ------ Selling and Administrative.............. $30.6 $ 32.0 (5) $79.3 $89.8 (12) Provincial Mining and Other Taxes....... 18.7 13.2 41 66.5 60.9 9 Interest................................ 16.6 12.9 29 45.9 38.5 19 Income Taxes............................ 17.2 (40.6) 142 59.9 2.8 2,052
Selling and administrative expenses in the third quarter of 2000 and on a year-to-date basis decreased primarily due to a reduction in the amortization of goodwill which was partially offset by relocation costs relating to the Northbrook office. Saskatchewan's Potash Production Tax is comprised of a base tax per tonne of product sold and an additional tax based on mine-by-mine profits. The New Brunswick division and the Saskatchewan divisions pay a provincial Crown royalty, which is accounted for in cost of goods sold. The increase in Provincial Mining and Other Taxes for the quarter and on a year-to-date basis is primarily due to increased Saskatchewan-sourced sales. Interest expense in the third quarter of 2000 and on a year-to-date basis increased due to an increase in interest expense on short-term debt relating to the Company's commercial paper program. The weighted average interest rate on short-term debt outstanding in the third quarter of 2000 was 6.9 percent (1999 - --5.5 percent) and for the nine months ended September 30, 2000 was 6.6 percent (1999 -- 5.3 percent). This increase in short-term interest expense was offset in part by reduced interest expense on long-term debt. Weighted average long-term debt outstanding in the third quarter of 2000 was $436.2 million as compared to $482.6 million in 1999. The weighted average interest rate on the long-term debt outstanding was 6.9 percent in the third quarter of 2000 (1999 -- 6.8 percent). On a year-to-date basis, the weighted average long-term debt outstanding in the first nine months of 2000 was $441.5 million as compared to $702.5 million in the first nine months of 1999. The weighted average interest rate on the long-term debt outstanding was 6.8 percent during the nine months ended September 30, 2000 (1999 -- 6.4 percent). PCS and certain subsidiaries are subject to federal income taxes (which includes the Large Corporations Tax) and provincial income taxes in Canada. The Company's subsidiaries which operate in the United States are subject to US federal and state income taxes; these subsidiaries are currently not subject to federal cash income tax by virtue of net operating losses incurred. The Company's nitrogen subsidiaries which operate in Trinidad are subject to Trinidad taxes. The effective consolidated tax rate for the third quarter of 2000 was 27 percent (1999 -- 27 percent) of income before income taxes. On a year-to-date basis the effective consolidated tax rate was 27 percent (exclusive of the gain on sale of Moab, for which there was no tax effect). The comparable rate in 1999 was 30 percent. The decrease in the effective rate is primarily due to revisions to earnings estimates. As earnings 16 17 estimates within taxing jurisdictions change, the effective rate may also change. On a year-to-date basis the current/deferred tax split approximates 45 percent current and 55 percent deferred. ANALYSIS OF FINANCIAL CONDITION AND CASH FLOW
NINE MONTHS ENDED SEPTEMBER 30 -------------------------- % ($ MILLIONS) 2000 1999 CHANGE - ------------ ------ ------ ------ Cash provided by operating activities....................... $360.9 $327.2 10 Cash used in investing activities........................... $203.9 $128.3 59 Cash used in financing activities........................... $105.4 $243.5 (57)
The increase in cash provided by operating activities in the first nine months of 2000 was primarily due to increases of $30.7 million in net income (exclusive of the gain on sale of Moab) before non-cash provisions for plant closure and asset impairment and $45.2 million of deferred income taxes which were partially offset by a reduction of $35.1 million due to net increases in accounts receivable, inventories and accounts payable. The increase in cash used in investing activities was primarily due to the purchase of Albright & Wilson ($32.0 million), the purchase of rights to certain manufacturing technology ($11.1 million) and the purchase of property, plant and equipment ($75.5 million, which includes the final payment on the sulphur vessel and assets capitalized on the buy out of certain operating leases). Cash used in financing activities was primarily to repurchase shares and to pay dividends. The Company paid dividends of $39.2 million in the first nine months of 2000 (1999 -- $39.9 million) and repurchased shares for $104.1 million (2,070,000 shares at an average price of $50.31). This completed the Company's share repurchase program. On a cumulative basis since inception of the program in November, 1999 the Company repurchased 2,700,000 shares for $133.4 million (an average price of $49.41). The Company has a syndicated credit facility which provides for unsecured advances of up to $500.0 million (less the amount of commercial paper outstanding), none of which was outstanding at September 30, 2000. In addition, the Company has short-term lines of credit for up to $289.8 million in borrowing (less letters of credit of $27.3 million), of which $100.0 million was outstanding at September 30, 2000. The Company is authorized to borrow up to a maximum of $500.0 million under the commercial paper program of which $435.4 was outstanding at September 30, 2000. The Company may also issue up to an additional $600.0 million in unsecured debt securities under its existing shelf registration statement. The Company believes that internally generated cash flow, as supplemented by borrowing from existing financing sources, will be sufficient to meet the Company's anticipated capital expenditures and other cash requirements, exclusive of any possible acquisitions, in 2000. PLANT CLOSURES AND OFFICE CONSOLIDATION In the third quarter of 1999, the Board of Directors of the Company approved a plan to close nitrogen plants at Clinton, IA and LaPlatte, NE; a phosphate feed plant at Saltville, VA; and a phosphate terminal at Jacksonville, FL. The Company also began the consolidation of its Raleigh, NC and Memphis, TN administrative offices with the Company's office in Northbrook, IL. All on-site inventory at Clinton and LaPlatte has been sold and the decommissioning of the ammonia storage tanks at Clinton and LaPlatte has been completed. The Company has contracted out the demolition of the Clinton facility (at a cost of approximately $45) and demolition activity at Clinton is in process. The Company is attempting to sell this property and therefore certain structures which add value to the site will not be demolished at this time. The Company has received an offer for the sale of the LaPlatte plant site. If this sale is completed it is not expected that there will be any significant further environmental or decommissioning activities required relating to this site. If the sale is not completed demolition is expected to start in the second quarter of 2001. There is one employee remaining at each site. 17 18 The Company is currently in negotiations for the sale of the Saltville site. Dismantling procedures are now complete. The office consolidation is now complete. OUTLOOK The rising world population and the demand for more food and better diets, with meat as a protein source, will continue to drive consumption of fertilizers over the long term. Governments around the world are placing priority on fertilizer purchases to increase food production. While the consumption trend line is expected to continue to climb over the long term, there will be, at times, fluctuations in demand. North American fertilizer demand is generally considered mature but is expected to fluctuate from year-to-year, as a function of acres planted and application rates per acre which are influenced by crop prices and weather. In its mid-October Crop Report, the USDA reduced its corn production estimate and increased its demand forecast. The corn stocks-to-use ratio is now expected to be flat year-over-year at 17.9 percent, well below September's estimate of 22.6 percent. This has improved corn prices. Combined with record government payments, this should create a positive mindset for farmers. The Company sells a significant amount of potash and phosphate into countries in the offshore markets. Consumers in these markets purchase fertilizer to grow cash crops for export and to grow food for internal use. Recent estimates by outside consultants suggest that fertilizer consumption in these markets will rise by 2 to 3 percent this year. The Company also sells product in the non-fertilizer markets which are affected by North American economic growth. The outlook for North American economic growth should translate into increased demand for these upgraded products. Domestic fertilizer sales volumes in the fourth quarter of 2000 will be affected primarily by the strength of the fall season. Offshore sales volumes may be affected by the timing of purchases by China, India and Brazil. Sales volumes of manufactured nitrogen products are expected to increase as compared to the first half of 2000 as the Company's two ammonia plants in Trinidad have returned to production in July, 2000. DAP prices have come under pressure with restarts of North American production. DAP prices in the fourth quarter of 2000 may also be affected by imports by China and India and new capacity coming on stream in Australia and India. Nitrogen prices going forward may be affected by the length and number of North American shutdowns, which in turn may be influenced by natural gas prices. In addition, these prices may be affected by how much and how quickly new capacity comes on stream and how efficiently the market restructures to deal with it. PCS continues to operate its potash mines by matching production to anticipated sales demand. The Company is currently planning the same number of shutdown weeks in the fourth quarter of 2000 as in fourth quarter 1999 (18 weeks). Production costs are also affected by the strength of the Canadian dollar, natural gas costs and sourcing of product sales. Phosphate processing costs are primarily affected by the cost of ammonia, sulphur and rock mining conditions. The Company manages its natural gas costs through a combination of fixed price contracts, hedges and the Trinidad gas contracts. A continuation of high spot prices may cause natural gas costs to increase in the fourth quarter relative to 1999 and the third quarter of 2000. However, the Company's natural gas hedging policy in the US and Trinidad gas contracts are expected to significantly mitigate the effect of higher spot prices. For the fourth quarter, PCS expects overall earnings to approximate $0.75 per share. 18 19 FORWARD LOOKING STATEMENTS Certain statements in this quarterly report on Form 10-Q and this Management's Discussion and Analysis of Financial Condition and Results of Operations, including those in the "Outlook" section, relating to the period after September 30, 2000, are forward-looking statements subject to risks and uncertainties. A number of factors could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to: fluctuation in supply and demand in fertilizer, sulphur and petrochemical markets; changes in competitive pressures, including pricing pressures; potential higher costs incurred in connection with restructuring charges as compared to costs estimated for purposes of calculating such charges; uncertainty and variations in future discounted and undiscounted net cash flows from use together with residual values estimated for purposes of calculating asset impairment; changes in capital markets; changes in currency and exchange rates; unexpected geological or environmental conditions; imprecision in reserve estimates; the outcome of legal proceedings; and changes in government policy. The Company sells to a diverse group of customers both by geography and by end product. Market conditions will vary on a year-over-year basis and sales can be expected to shift from one period to another. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company's nitrogen operations are significantly affected by the price of natural gas. The Company employs derivative commodity instruments related to a portion of its natural gas requirements (primarily futures, swaps and options) for the purpose of managing its exposure to commodity price risk in the purchase of natural gas. Changes in the market value of these derivative instruments have a high correlation to changes in the spot price of natural gas. Gains or losses arising from settled hedging transactions are deferred as a component of inventory until the product containing the hedged item is sold. Changes in the market value of open hedging transactions are not recognized as they generally relate to changes in the spot price of anticipated natural gas purchases. A sensitivity analysis has been prepared to estimate the Company's market risk exposure arising from derivative commodity instruments. The fair value of such instruments is calculated by valuing each position using quoted market prices. Market risk is estimated as the potential loss in fair value resulting from a hypothetical 10 percent adverse change in such prices. The results of this analysis indicate that as of September 30, 2000 the Company's estimated derivative commodity instruments market risk exposure was $46.3 million (1999 -- $31.6 million). Actual results may differ from this estimate. Changes in the fair value of such derivative instruments, with maturities in 2000 through 2005, will generally relate to changes in the spot price of anticipated natural gas purchases. The Company also enters into forward exchange contracts for the sole purpose of limiting its exposure to exchange rate fluctuations relating to certain trade accounts. Gains or losses resulting from foreign exchange contracts are recognized at the time that the contracts are entered into and are included in Other Income. 19 20 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS CIVIL ANTITRUST COMPLAINTS In June 1993, PCS and PCS Sales (Canada) Inc. ("PCS Sales (Canada)") were served with a complaint relating to a suit filed in the United States District Court for Minnesota against most North American potash producers, including the Company. The complaint alleged a conspiracy among the defendants to fix the price of potash purchased by the plaintiffs as well as potash purchased by the members of a class of certain purchasers proposed by the plaintiffs. Similar complaints were filed in the United States District Courts for the Northern District of Illinois and the Western District of Virginia. On motion of the defendants, all of the complaints were transferred and consolidated for pre-trial purposes in the United States District Court for Minnesota. The complaint sought treble damages and other relief. PCS and PCS Sales (Canada) filed a motion for summary judgment on December 22, 1995. On January 2, 1997, Judge Richard H. Kyle issued an order granting the defendants' motions for summary judgment and dismissing the lawsuit. The plaintiffs appealed that order to the United States Court of Appeals for the Eighth Circuit. On February 17, 2000, the Eighth Circuit, en banc, affirmed Judge Kyle's summary judgment ruling. On October 2, 2000, the United States Supreme Court denied the plaintiffs' petition for writ of certiori. Accordingly, the claims of federal court plaintiffs have now been fully and finally dismissed. Additional complaints were filed in California state court on behalf of purported class of indirect purchasers of potash. PCS moved to dismiss the California State Court lawsuits for lack of personal jurisdiction and the court ruled that it does not have personal jurisdiction over PCS but that it does have personal jurisdiction over PCS Sales (Canada). Following Judge Kyle's summary judgment decision, the California litigation was stayed, and the plaintiffs agreed to dismiss their lawsuit if Judge Kyle's summary judgment ruling withstood appeal. PCS Sales (Canada) expects the California lawsuit to be dismissed shortly. ITEM 5. OTHER INFORMATION None. 20 21 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 2 Agreement and Plan of Merger dated September 2, 1996, as amended, by and among the registrant, Arcadian Corporation and PCS Nitrogen, Inc., incorporated by reference to Exhibit 2(a) to Amendment Number 2 to the registrant's Form S-4 (File No. 333-17841). 3(a) Restated Articles of Incorporation of the registrant dated October 31, 1989, as amended May 11, 1995, incorporated by reference to Exhibit 3(i) to the registrant's report on Form 10-K for the year ended December 31, 1995 (the "1995 Form 10-K"). 3(b) Bylaws of the registrant dated March 2, 1995, incorporated by reference to Exhibit 3(ii) to the 1995 Form 10-K. 4(a) Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated October 4, 1996, incorporated by reference to Exhibit 4(b) to the registrant's Form S-4 (File No. 333-17841). 4(b) First Amending Agreement to Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated November 6, 1997, incorporated by reference to Exhibit 4(b) to the registrant's report on Form 10-K for the year ended December 31, 1997 (the "1997 Form 10-K"). 4(c) Second Amending Agreement to Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated December 15, 1997, incorporated by reference to Exhibit 4(c) to the 1997 Form 10-K. 4(d) Third Amending Agreement to Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated October 2, 1998, incorporated by reference to Exhibit 4(d) to the registrant's report on Form 10-Q for the quarterly period ended September 30, 1998. 4(e) Fourth Amending Agreement to Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated September 30, 1999, incorporated by reference to exhibit 4(e) to the registrant's report on Form 10-Q for the quarterly period ended September 30, 1999 (the "Third Quarter 1999 Form 10-Q"). 4(f) Fifth Amending Agreement to Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated September 28, 2000. 4(g) Indenture dated as of June 16, 1997, between the registrant and The Bank of Nova Scotia Trust Company of New York, incorporated by reference to Exhibit 4(a) to the registrant's report on Form 8-K dated June 18, 1997.
The registrant hereby undertakes to file with the Securities and Exchange Commission, upon request, copies of any constituent instruments defining the rights of holders of long-term debt of the registrant or its subsidiaries that have not been filed herewith because the amounts represented thereby are less than 10% of the total assets of the registrant and its subsidiaries on a consolidated basis.
10(a) Sixth Voting Agreement dated April 22, 1978, between Central Canada Potash, Division of Noranda, Inc., Cominco Ltd., International Minerals and Chemical Corporation (Canada) Limited, PCS Sales and Texasgulf Inc., incorporated by reference to Exhibit 10(f) to the F-1 Registration Statement.
21 22
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 10(b) Canpotex Limited Shareholders Seventh Memorandum of Agreement effective April 21, 1978, between Central Canada Potash, Division of Noranda Inc., Cominco Ltd., International Minerals and Chemical Corporation (Canada) Limited, PCS Sales, Texasgulf Inc. and Canpotex Limited as amended by Canpotex S & P amending agreement dated November 4, 1987, incorporated by reference to Exhibit 10(g) to the F-1 Registration Statement. 10(c) Producer Agreement dated April 21, 1978, between Canpotex Limited and PCS Sales, incorporated by reference to Exhibit 10(h) to the F-1 Registration Statement. 10(d) Agreement of Limited Partnership of Arcadian Fertilizer, L.P. dated as of March 3, 1992 (form), and the related Certificate of Limited Partnership of Arcadian Fertilizer, L.P., filed with the Secretary of State of the State of Delaware on March 3, 1992 (incorporated by reference to Exhibits 3.1 and 3.2 to Arcadian Partners L.P.'s Registration Statement on Form S-1 (File No. 33-45828)). 10(e) Amendment to Agreement of Limited Partnership of Arcadian Fertilizer, L.P. and related Certificates of Limited Partnership of Arcadian Fertilizer, L.P. filed with the Secretary of State of the State of Delaware on March 6, 1997 and November 26, 1997, incorporated by reference to Exhibit 10(f) to the registrant's report on Form 10-K for the year ended December 31, 1998 (the "1998 Form 10-K"). 10(f) Geismar Complex Services Agreement dated June 4, 1984, between Honeywell International, Inc. and Arcadian Corporation, incorporated by reference to Exhibit 10.4 to Arcadian Corporation's Registration Statement on Form S-1 (File No. 33-34357). 10(g) Canpotex/PCS Amending Agreement, dated with effect October 1, 1992, incorporated by reference to Exhibit 10(f) to the 1995 Form 10-K. 10(h) Canpotex PCA Collateral Withdrawing/PCS Amending Agreement, dated with effect October 7, 1993, incorporated by reference to Exhibit 10(g) to the 1995 Form 10-K. 10(i) Esterhazy Restated Mining and Processing Agreement dated January 31, 1978, between International Minerals and Chemical Corporation (Canada) Limited and the registrant's predecessor, incorporated by reference to Exhibit 10(e) to the F-1 Registration Statement. 10(j) Agreement dated December 21, 1990, between International Minerals & Chemical Corporation (Canada) Limited and the registrant, amending the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978, incorporated by reference to Exhibit 10(p) to the registrant's report on Form 10-K for the year ended December 31, 1990. 10(k) Agreement effective August 27, 1998, between International Minerals & Chemical (Canada) Global Limited and the registrant, amending the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978 (as amended), incorporated by reference to Exhibit 10(l) to the 1998 Form 10-K. 10(l) Agreement effective August 31, 1998, among International Minerals & Chemical (Canada) Global Limited, International Minerals & Chemical (Canada) Limited Partnership and the registrant assigning the interest in the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978 (as amended) held by International Minerals & Chemical (Canada) Global Limited to International Minerals & Chemical (Canada) Limited Partnership, incorporated by reference to Exhibit 10(m) to the 1998 Form 10-K.
22 23
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 10(m) Operating Agreement dated May 11, 1993, between BP Chemicals Inc. and Arcadian Ohio, L.P., as amended by the First Amendment to the Operating Agreement dated as of November 20, 1995, between BP Chemicals Inc. and Arcadian Ohio, L.P. ("First Amendment"), incorporated by reference to Exhibit 10.2 to Arcadian Partners L.P.'s current report on Form 8-K for the report event dated May 11, 1993, except for the First Amendment which is incorporated by reference to Arcadian Corporation's report on Form 10-K for the year ended December 31, 1995. 10(n) Second Amendment to Operating Agreement between BP Chemicals, Inc. and Arcadian Ohio, L.P., dated as of November 25, 1996, incorporated by reference to Exhibit 10(k) to the 1997 Form 10-K. 10(o) Manufacturing Support Agreement dated May 11, 1993, between BP Chemicals Inc. and Arcadian Ohio, L.P., incorporated by reference to Exhibit 10.3 to Arcadian Partners L.P.'s current report on Form 8-K for the report event dated May 11, 1993. 10(p) First Amendment to Manufacturing Support Agreement between BP Chemicals, Inc. and Arcadian Ohio, L.P., dated as of November 25, 1996, incorporated by reference to Exhibit 10(l) to the 1997 Form 10-K. 10(q) Amended and Restated Agreement for Lease dated as of May 16, 1997, between Trinidad Ammonia Company, Limited Partnership, and PCS Nitrogen Fertilizer, L.P., incorporated by reference to Exhibit 10(n) to the registrant's report on Form 10-Q for the quarterly period ended June 30, 1997 (the "Second Quarter 1997 Form 10-Q"). 10(r) Amended and Restated Lease Agreement dated as of May 16, 1997, between Trinidad Ammonia Company, Limited Partnership, and PCS Nitrogen Fertilizer, L.P., incorporated by reference to Exhibit 10(o) to the Second Quarter 1997 Form 10-Q. 10(s) Amended and Restated Agreement for Lease dated as of May 16, 1997, between Nitrogen Leasing Company, Limited Partnership, and PCS Nitrogen Fertilizer, L.P., incorporated by reference to Exhibit 10(p) to the Second Quarter 1997 Form 10-Q. 10(t) Amended and Restated Lease Agreement dated as of May 16, 1997, between Nitrogen Leasing Company, Limited Partnership, and PCS Nitrogen Fertilizer, L.P., incorporated by reference to Exhibit 10(q) to the Second Quarter 1997 Form 10-Q. 10(u) Amended and Restated Purchase Option Agreement dated as of May 16, 1997, between Nitrogen Leasing Company, Limited Partnership, and PCS Nitrogen Fertilizer Operations, Inc., incorporated by reference to Exhibit 10(r) to the Second Quarter 1997 Form 10-Q. 10(v) Amended and Restated Purchase Option Agreement dated as of May 16, 1997, between Trinidad Ammonia Company, Limited Partnership and PCS Nitrogen Fertilizer Operations, Inc., incorporated by reference to Exhibit 10(s) to the Second Quarter 1997 Form 10-Q. 10(w) Agreement dated January 1, 1997 between the registrant and Charles E. Childers, incorporated by reference to Exhibit 10(s) to the 1997 Form 10-K. 10(x) Potash Corporation of Saskatchewan Inc. Stock Option Plan -- Directors, as amended November 3, 1999, incorporated by reference to Exhibit 10(y) to the Third Quarter 1999 Form 10-Q. 10(y) Potash Corporation of Saskatchewan Inc. Stock Option Plan -- Officers and Key Employees, as amended November 3, 1999, incorporated by reference to Exhibit 10(z) to the Third Quarter 1999 Form 10-Q. 10(z) Short-Term Incentive Plan of the registrant effective January 2000, incorporated by reference to Exhibit 10(z) to the First Quarter 2000 Form 10-Q. 10(aa) Long-Term Incentive Plan of the registrant effective January 2000, incorporated by reference to Exhibit 10(aa) to the Second Quarter 2000 Form 10-Q.
23 24
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 10(bb) Resolution and Forms of Agreement for Supplemental Retirement Income Plan, for officers and key employees of the registrant, incorporated by reference to Exhibit 10(o) to the 1995 Form 10-K. 10(cc) Forms of Agreement dated December 30, 1994, between the registrant and certain officers of the registrant, concerning a change in control of the registrant, incorporated by reference to Exhibit 10(p) to the 1995 Form 10-K. 10(dd) Form of Agreement of Indemnification dated August 8, 1995, between the registrant and certain officers and directors of the registrant, incorporated by reference to Exhibit 10(q) to the 1995 Form 10-K. 10(ee) Supplemental Retirement Benefits Plan, for eligible employees of PCS Phosphate Company, Inc., incorporated by reference to Exhibit 10(s) to the 1995 Form 10-K. 10(ff) Second Amended and Restated Membership Agreement dated January 1, 1995, among Phosphate Chemicals Export Association, Inc. and members of such association, including Texasgulf Inc., incorporated by reference to Exhibit 10(t) to the 1995 Form 10-K. 10(gg) International Agency Agreement dated January 1, 1995, between Phosphate Chemicals Export Association, Inc. and Texasgulf Inc. establishing Texasgulf Inc. as exclusive marketing agent for such association's wet phosphatic materials, incorporated by reference to Exhibit 10(u) to the 1995 Form 10-K. 10(hh) General Partnership Agreement forming Albright & Wilson Company, dated July 29, 1988 and amended January 31, 1995, between Texasgulf Inc. and Albright & Wilson Americas Inc., incorporated by reference to Exhibit 10(v) to the 1995 Form 10-K. 10(ii) Amendment to the Albright & Wilson Company General Partnership Agreement dated March 23, 2000, incorporated by reference to Exhibit 10(jj) to the registrant's report on Form 10-K for the year ended December 31, 1999 (the "1999 Form 10-K"). 10(jj) Royalty Agreement dated October 7, 1993, by and between the registrant and Rio Algom Limited, incorporated by reference to Exhibit 10(x) to the 1995 Form 10-K. 10(kk) Amending Resolution and revised forms of agreement regarding Supplemental Retirement Income Plan of the registrant, incorporated by reference to Exhibit 10(x) to the registrant's report on Form 10-Q for the quarterly period ended June 30, 1996. 10(ll) Shareholder Rights Agreement as amended and restated on March 2, 1998, incorporated by reference to Schedule B to the registrant's proxy circular for the annual and special meeting of shareholders held on May 7, 1998. 10(mm) Amended and restated Supplemental Retirement Income Plan of the registrant and text of amendment to existing supplemental income plan agreements. 11 Statement re Computation of Per Share Earnings. 27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K There were no reports on Form 8-K filed by the registrant during the quarterly period covered by this Report. 24 25 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. POTASH CORPORATION OF SASKATCHEWAN INC. November 9, 2000 By: /s/ JOHN L.M. HAMPTON ------------------------------------ John L.M. Hampton Senior Vice President, General Counsel and Secretary November 9, 2000 By: /s/ WAYNE R. BROWNLEE ------------------------------------ Wayne R. Brownlee Senior Vice President, Finance and Treasurer, and Chief Financial Officer (Principal Financial and Accounting Officer) 25 26
EXHIBIT NUMBER EXHIBIT INDEX PAGE - ------- ------------- ---- 2 Agreement and Plan of Merger dated September 2, 1996, as amended, by and among the registrant, Arcadian Corporation and PCS Nitrogen, Inc., incorporated by reference to Exhibit 2(a) to Amendment Number 2 to the registrant's Form S-4 (File No. 333-17841). 3(a) Restated Articles of Incorporation of the registrant dated October 31, 1989, as amended May 11, 1995, incorporated by reference to Exhibit 3(i) to the registrant's report on Form 10-K for the year ended December 31, 1995 (the "1995 Form 10-K"). 3(b) Bylaws of the registrant dated March 2, 1995, incorporated by reference to Exhibit 3(ii) to the 1995 Form 10-K. 4(a) Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated October 4, 1996, incorporated by reference to Exhibit 4(b) to the registrant's Form S-4 (File No. 333-17841). 4(b) First Amending Agreement to Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated November 6, 1997, incorporated by reference to Exhibit 4(b) to the registrant's report on Form 10-K for the year ended December 31, 1997 (the "1997 Form 10-K"). 4(c) Second Amending Agreement to Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated December 15, 1997, incorporated by reference to Exhibit 4(c) to the 1997 Form 10-K. 4(d) Third Amending Agreement to Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated October 2, 1998, incorporated by reference to Exhibit 4(d) to the registrant's report on Form 10-Q for the quarterly period ended September 30, 1998. 4(e) Fourth Amending Agreement to Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated September 30, 1999, incorporated by reference to exhibit 4(e) to the registrant's report on Form 10-Q for the quarterly period ended September 30, 1999 (the "Third Quarter 1999 Form 10-Q"). 4(f) Fifth Amending Agreement to Term Credit Agreement between The Bank of Nova Scotia and other financial institutions and the registrant dated September 28, 2000. 4(g) Indenture dated as of June 16, 1997, between the registrant and The Bank of Nova Scotia Trust Company of New York, incorporated by reference to Exhibit 4(a) to the registrant's report on Form 8-K dated June 18, 1997. 10(a) Sixth Voting Agreement dated April 22, 1978, between Central Canada Potash, Division of Noranda, Inc., Cominco Ltd., International Minerals and Chemical Corporation (Canada) Limited, PCS Sales and Texasgulf Inc., incorporated by reference to Exhibit 10(f) to the F-1 Registration Statement. 10(b) Canpotex Limited Shareholders Seventh Memorandum of Agreement effective April 21, 1978, between Central Canada Potash, Division of Noranda Inc., Cominco Ltd., International Minerals and Chemical Corporation (Canada) Limited, PCS Sales, Texasgulf Inc. and Canpotex Limited as amended by Canpotex S & P amending agreement dated November 4, 1987, incorporated by reference to Exhibit 10(g) to the F-1 Registration Statement. 10(c) Producer Agreement dated April 21, 1978, between Canpotex Limited and PCS Sales, incorporated by reference to Exhibit 10(h) to the F-1 Registration Statement. 10(d) Agreement of Limited Partnership of Arcadian Fertilizer, L.P. dated as of March 3, 1992 (form), and the related Certificate of Limited Partnership of Arcadian Fertilizer, L.P., filed with the Secretary of State of the State of Delaware on March 3, 1992 (incorporated by reference to Exhibits 3.1 and 3.2 to Arcadian Partners L.P.'s Registration Statement on Form S-1 (File No. 33-45828)).
27
EXHIBIT NUMBER EXHIBIT INDEX PAGE - ------- ------------- ---- 10(e) Amendment to Agreement of Limited Partnership of Arcadian Fertilizer, L.P. and related Certificates of Limited Partnership of Arcadian Fertilizer, L.P. filed with the Secretary of State of the State of Delaware on March 6, 1997 and November 26, 1997, incorporated by reference to Exhibit 10(f) to the registrant's report on Form 10-K for the year ended December 31, 1998 (the "1998 Form 10-K"). 10(f) Geismar Complex Services Agreement dated June 4, 1984, between Honeywell International, Inc. and Arcadian Corporation, incorporated by reference to Exhibit 10.4 to Arcadian Corporation's Registration Statement on Form S-1 (File No. 33-34357). 10(g) Canpotex/PCS Amending Agreement, dated with effect October 1, 1992, incorporated by reference to Exhibit 10(f) to the 1995 Form 10-K. 10(h) Canpotex PCA Collateral Withdrawing/PCS Amending Agreement, dated with effect October 7, 1993, incorporated by reference to Exhibit 10(g) to the 1995 Form 10-K. 10(i) Esterhazy Restated Mining and Processing Agreement dated January 31, 1978, between International Minerals and Chemical Corporation (Canada) Limited and the registrant's predecessor, incorporated by reference to Exhibit 10(e) to the F-1 Registration Statement. 10(j) Agreement dated December 21, 1990, between International Minerals & Chemical Corporation (Canada) Limited and the registrant, amending the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978, incorporated by reference to Exhibit 10(p) to the registrant's report on Form 10-K for the year ended December 31, 1990. 10(k) Agreement effective August 27, 1998, between International Minerals & Chemical (Canada) Global Limited and the registrant, amending the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978 (as amended), incorporated by reference to Exhibit 10(l) to the 1998 Form 10-K. 10(l) Agreement effective August 31, 1998, among International Minerals & Chemical (Canada) Global Limited, International Minerals & Chemical (Canada) Limited Partnership and the registrant assigning the interest in the Esterhazy Restated Mining and Processing Agreement dated January 31, 1978 (as amended) held by International Minerals & Chemical (Canada) Global Limited to International Minerals & Chemical (Canada) Limited Partnership, incorporated by reference to Exhibit 10(m) to the 1998 Form 10-K. 10(m) Operating Agreement dated May 11, 1993, between BP Chemicals Inc. and Arcadian Ohio, L.P., as amended by the First Amendment to the Operating Agreement dated as of November 20, 1995, between BP Chemicals Inc. and Arcadian Ohio, L.P. ("First Amendment"), incorporated by reference to Exhibit 10.2 to Arcadian Partners L.P.'s current report on Form 8-K for the report event dated May 11, 1993, except for the First Amendment which is incorporated by reference to Arcadian Corporation's report on Form 10-K for the year ended December 31, 1995. 10(n) Second Amendment to Operating Agreement between BP Chemicals, Inc. and Arcadian Ohio, L.P., dated as of November 25, 1996, incorporated by reference to Exhibit 10(k) to the 1997 Form 10-K. 10(o) Manufacturing Support Agreement dated May 11, 1993, between BP Chemicals Inc. and Arcadian Ohio, L.P., incorporated by reference to Exhibit 10.3 to Arcadian Partners L.P.'s current report on Form 8-K for the report event dated May 11, 1993. 10(p) First Amendment to Manufacturing Support Agreement between BP Chemicals, Inc. and Arcadian Ohio, L.P., dated as of November 25, 1996, incorporated by reference to Exhibit 10(l) to the 1997 Form 10-K.
28
EXHIBIT NUMBER EXHIBIT INDEX PAGE - ------- ------------- ---- 10(q) Amended and Restated Agreement for Lease dated as of May 16, 1997, between Trinidad Ammonia Company, Limited Partnership, and PCS Nitrogen Fertilizer, L.P., incorporated by reference to Exhibit 10(n) to the registrant's report on Form 10-Q for the quarterly period ended June 30, 1997 (the "Second Quarter 1997 Form 10-Q"). 10(r) Amended and Restated Lease Agreement dated as of May 16, 1997, between Trinidad Ammonia Company, Limited Partnership, and PCS Nitrogen Fertilizer, L.P., incorporated by reference to Exhibit 10(o) to the Second Quarter 1997 Form 10-Q. 10(s) Amended and Restated Agreement for Lease dated as of May 16, 1997, between Nitrogen Leasing Company, Limited Partnership, and PCS Nitrogen Fertilizer, L.P., incorporated by reference to Exhibit 10(p) to the Second Quarter 1997 Form 10-Q. 10(t) Amended and Restated Lease Agreement dated as of May 16, 1997, between Nitrogen Leasing Company, Limited Partnership, and PCS Nitrogen Fertilizer, L.P., incorporated by reference to Exhibit 10(q) to the Second Quarter 1997 Form 10-Q. 10(u) Amended and Restated Purchase Option Agreement dated as of May 16, 1997, between Nitrogen Leasing Company, Limited Partnership, and PCS Nitrogen Fertilizer Operations, Inc., incorporated by reference to Exhibit 10(r) to the Second Quarter 1997 Form 10-Q. 10(v) Amended and Restated Purchase Option Agreement dated as of May 16, 1997, between Trinidad Ammonia Company, Limited Partnership and PCS Nitrogen Fertilizer Operations, Inc., incorporated by reference to Exhibit 10(s) to the Second Quarter 1997 Form 10-Q. 10(w) Agreement dated January 1, 1997 between the registrant and Charles E. Childers, incorporated by reference to Exhibit 10(s) to the 1997 Form 10-K. 10(x) Potash Corporation of Saskatchewan Inc. Stock Option Plan -- Directors, as amended November 3, 1999, incorporated by reference to Exhibit 10(y) to the Third Quarter 1999 Form 10-Q. 10(y) Potash Corporation of Saskatchewan Inc. Stock Option Plan -- Officers and Key Employees, as amended November 3, 1999, incorporated by reference to Exhibit 10(z) to the Third Quarter 1999 Form 10-Q. 10(z) Short-Term Incentive Plan of the registrant effective January 2000, incorporated by reference to Exhibit 10(z) to the First Quarter 2000 Form 10-Q. 10(aa) Long-Term Incentive Plan of the registrant effective January 2000, incorporated by reference to Exhibit 10(aa) to the Second Quarter 2000 Form 10-Q. 10(bb) Resolution and Forms of Agreement for Supplemental Retirement Income Plan, for officers and key employees of the registrant, incorporated by reference to Exhibit 10(o) to the 1995 Form 10-K. 10(cc) Forms of Agreement dated December 30, 1994, between the registrant and certain officers of the registrant, concerning a change in control of the registrant, incorporated by reference to Exhibit 10(p) to the 1995 Form 10-K. 10(dd) Form of Agreement of Indemnification dated August 8, 1995, between the registrant and certain officers and directors of the registrant, incorporated by reference to Exhibit 10(q) to the 1995 Form 10-K. 10(ee) Supplemental Retirement Benefits Plan, for eligible employees of PCS Phosphate Company, Inc., incorporated by reference to Exhibit 10(s) to the 1995 Form 10-K. 10(ff) Second Amended and Restated Membership Agreement dated January 1, 1995, among Phosphate Chemicals Export Association, Inc. and members of such association, including Texasgulf Inc., incorporated by reference to Exhibit 10(t) to the 1995 Form 10-K. 10(gg) International Agency Agreement dated January 1, 1995, between Phosphate Chemicals Export Association, Inc. and Texasgulf Inc. establishing Texasgulf Inc. as exclusive marketing agent for such association's wet phosphatic materials, incorporated by reference to Exhibit 10(u) to the 1995 Form 10-K.
29
EXHIBIT NUMBER EXHIBIT INDEX PAGE - ------- ------------- ---- 10(hh) General Partnership Agreement forming Albright & Wilson Company, dated July 29, 1988 and amended January 31, 1995, between Texasgulf Inc. and Albright & Wilson Americas Inc., incorporated by reference to Exhibit 10(v) to the 1995 Form 10-K. 10(ii) Amendment to the Albright & Wilson Company General Partnership Agreement dated March 23, 2000, incorporated by reference to Exhibit 10(jj) to the registrant's report on Form 10-K for the year ended December 31, 1999 (the "1999 Form 10-K"). 10(jj) Royalty Agreement dated October 7, 1993, by and between the registrant and Rio Algom Limited, incorporated by reference to Exhibit 10(x) to the 1995 Form 10-K. 10(kk) Amending Resolution and revised forms of agreement regarding Supplemental Retirement Income Plan of the registrant, incorporated by reference to Exhibit 10(x) to the registrant's report on Form 10-Q for the quarterly period ended June 30, 1996. 10(ll) Shareholder Rights Agreement as amended and restated on March 2, 1998, incorporated by reference to Schedule B to the registrant's proxy circular for the annual and special meeting of shareholders held on May 7, 1998. 10(mm) Amended and restated Supplemental Retirement Income Plan of the registrant and text of amendment to existing supplemental income plan agreements. 11 Statement re Computation of Per Share Earnings. 27 Financial Data Schedule.
EX-4.(F) 2 o05076ex4-f.txt EXHIBIT 4(F) 1 Exhibit 4(f) FIFTH AMENDING AGREEMENT THIS AGREEMENT made as of the 28th day of September, 2000. BETWEEN: THE BANK OF NOVA SCOTIA (herein, in its capacity as agent to the Lenders, called the "Agent") - and - THE BANK OF NOVA SCOTIA, ROYAL BANK OF CANADA, BANK OF MONTREAL, BNP PARIBAS, TORONTO DOMINION (TEXAS), INC., BANK OF AMERICA NA, CANADIAN IMPERIAL BANK OF COMMERCE, CITIBANK N.A., NEW YORK, CREDIT SUISSE FIRST BOSTON, RABOBANK NEDERLAND, NEW YORK BRANCH and COMERICA BANK (herein, in their capacities as lenders to the Borrower under the Credit Facility, collectively called the "Lenders" and individually called a "Lender") - and - POTASH CORPORATION OF SASKATCHEWAN INC., a corporation incorporated under the laws of the Province of Saskatchewan (herein called the "Borrower"). WHEREAS the Borrower, the Lenders and the Agent entered into a credit agreement made as of October 4, 1996, as amended by agreements dated November 6, 1997, December 15, 1997, October 2, 1998 and October 1, 1999 (the "Credit Agreement") and pursuant to which the Lenders established a certain term credit facility in favour of the Borrower; AND WHEREAS the Borrower, the Lenders and the Agent have agreed to effect certain amendments to the Credit Agreement upon the terms set forth herein; 2 -2- NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the mutual covenants and agreements and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto hereby agree as follows: ARTICLE I DEFINED TERMS 1.01 CAPITALIZED TERMS. All capitalized terms which are used herein without being specifically defined herein shall have the meaning ascribed thereto in the Credit Agreement. ARTICLE II AMENDMENTS 2.01 GENERAL RULE. The Credit Agreement is hereby amended to the extent necessary to give full effect to the provisions of this agreement. 2.02 DEFINITIONS. Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of "CONVERSION DATE" and replacing it by the following: "CONVERSION DATE" means September 27, 2001, as extended pursuant to Section 1.13. 2.03 ESTABLISHMENT OF CREDIT FACILITY. Section 2.01 of the Credit Agreement is hereby amended by replacing "U.S. $778,000,000" in the last line thereof with "U.S. $500,000,000". 2.04 DEPARTING LENDERS. The parties hereto confirm that each of Bank of Montreal, Canadian Imperial Bank of Commerce and Credit Suisse First Boston (the "Departing Lenders") hereby ceases to be a Lender under the Credit Agreement and has no further obligations under the Credit Agreement. The parties hereto agree that the Departing Lenders are signatories to this agreement solely for the purpose of giving effect to this Section 2.04. 2.05 INDIVIDUAL COMMITMENTS. Schedule A to the Credit Agreement is hereby amended by restating the Individual Commitment of each of the Lenders with respect to the Credit Facility as follows:
LENDER AMOUNT - ------ ------ The Bank of Nova Scotia $180,000,000 Royal Bank of Canada $ 80,000,000
3 -3-
LENDER AMOUNT - ------ ------ Bank of America NA $ 60,000,000 BNP Paribas $ 50,000,000 Toronto Dominion (Texas), Inc. $ 50,000,000 Citibank N.A., New York $ 30,000,000 Rabobank Nederland, New York Branch $ 25,000,000 Comerica Bank $ 25,000,000 Canadian Imperial Bank of Commerce nil Bank of Montreal nil Credit Suisse First Boston nil
2.06 DELIVERIES PURSUANT TO CREDIT AGREEMENT. For the purposes of the Credit Agreement, this agreement and any document or instrument referred to herein shall be deemed to be delivered pursuant to the Credit Agreement and to be referred to in the Credit Agreement. 2.07 EXTENSION FEE. The Borrower hereby agrees to pay to each Lender (other than the Departing Lenders) on the date hereof an extension fee in an amount equal to 0.025% of the Individual Commitment of such Lender (after giving effect to this agreement). ARTICLE III REPRESENTATIONS AND WARRANTIES 3.01 REPRESENTATIONS AND WARRANTIES. To induce the Lenders and the Agent to enter into this agreement, the Borrower hereby represents and warrants to the Lenders and the Agent that the representations and warranties of the Borrower which are contained in Sections 10.01(e) to (l) of the Credit Agreement, as the same may be amended hereby, are true and correct, and further represents and warrants, as at the date hereof, as follows: (a) STATUS AND POWER. The Borrower is a corporation duly incorporated and organized and validly subsisting in good standing under the laws of the Province of Saskatchewan. The Borrower is duly qualified, registered or licensed in all jurisdictions where such qualification, registration or licensing is required. The Borrower has all requisite corporate capacity, power and authority to own, hold under licence or lease its properties and to carry on its business as now conducted. The 4 -4- Borrower has all requisite corporate capacity, power and authority to enter into and carry out the transactions contemplated by this agreement. (b) AUTHORIZATION AND ENFORCEMENT. All necessary action, corporate or otherwise, has been taken to authorize the execution, delivery and performance by the Borrower of this agreement. The Borrower has duly executed and delivered this agreement. This agreement is a legal, valid and binding obligation of the Borrower enforceable against the Borrower by the Agent and the Lenders in accordance with its terms, subject to the qualifications of the nature contained in the opinion of the Borrower's counsel delivered pursuant to Section 12.02(d)(vii) of the Credit Agreement. (c) COMPLIANCE WITH OTHER INSTRUMENTS. The execution, delivery and performance by the Borrower of this agreement and the consummation of the transactions contemplated herein do not conflict with, result in any breach or violation of, or constitute a default under the terms, conditions or provisions of the charter or constating documents or by-laws of, or any unanimous shareholder agreement relating to, the Borrower or of any law, regulation, judgment, decree or order binding on or applicable to the Borrower or to which its property is subject or of any material agreement, lease, licence, permit or other instrument to which the Borrower is a party or is otherwise bound or by which the Borrower benefits or to which its property is subject and do not require the consent or approval of any Official Body or any other party. ARTICLE IV MISCELLANEOUS 4.01 FUTURE REFERENCES. On and after the effective date of this agreement, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", or words of like import referring to the Credit Agreement, and each reference in any related document to the "Credit Agreement", "thereunder", "thereof", or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended hereby, and each such related document is hereby amended accordingly. The Credit Agreement, as amended hereby, is and shall continue to be in full force and effect and is hereby in all respects ratified and confirmed. 4.02 GOVERNING LAW. This agreement shall be governed by and construed in accordance with the laws of the Province of Ontario. 4.03 ENUREMENT. This agreement shall enure to the benefit of and shall be binding upon the parties hereto and their respective successors and permitted assigns. 4.04 CONFLICT. If any provision of this agreement is inconsistent or conflicts with any provision of the Credit Agreement, the relevant provision of this agreement shall prevail and be paramount. 5 -5- 4.05 FURTHER ASSURANCES. The Borrower shall do, execute and deliver or shall cause to be done, executed and delivered all such further acts, documents and things as the Agent may reasonably request for the purpose of giving effect to this agreement and to each and every provision hereof. 4.06 COUNTERPARTS. This agreement may be executed in one or more counterparts, each of which shall be deemed to be an original and all of which taken together shall be deemed to constitute one and the same instrument. IN WITNESS WHEREOF the parties hereto have executed this agreement. THE BANK OF NOVA SCOTIA, AS AGENT By: /s/ -------------------------- By: /s/ -------------------------- POTASH CORPORATION OF SASKATCHEWAN INC. By: /s/ -------------------------- c.s. By: /s/ -------------------------- THE BANK OF NOVA SCOTIA, AS LENDER By: /s/ -------------------------- By: /s/ -------------------------- 6 -6- BNP PARIBAS By: /s/ -------------------------- By: /s/ -------------------------- ROYAL BANK OF CANADA By: /s/ -------------------------- By: /s/ -------------------------- CANADIAN IMPERIAL BANK OF COMMERCE By: /s/ -------------------------- By: /s/ -------------------------- BANK OF AMERICA NA By: /s/ -------------------------- By: /s/ -------------------------- 7 -7- BANK OF MONTREAL By: /s/ -------------------------- By: /s/ -------------------------- TORONTO DOMINION (TEXAS), INC. By: /s/ -------------------------- By: /s/ -------------------------- CREDIT SUISSE FIRST BOSTON By: /s/ -------------------------- By: /s/ -------------------------- CITIBANK N.A., NEW YORK By: /s/ -------------------------- By: /s/ -------------------------- RABOBANK NEDERLAND, NEW YORK BRANCH By: /s/ -------------------------- By: /s/ -------------------------- 8 -8- COMERICA BANK By: /s/ -------------------------- By: /s/ -------------------------- The undersigned, being a guarantor of the indebtedness, liabilities and obligations of the Borrower to the Lenders, hereby consents to the foregoing amendments to the Credit Agreement. DATED as of the 28th day of September, 2000. PCS NITROGEN, INC. By: /s/ -------------------------- c.s. By: /s/ -------------------------- EX-10.(MM) 3 o05076ex10-mm.txt EXHIBIT 10(MM) 1 Exhibit 10 (mm) POTASH CORPORATION OF SASKATCHEWAN INC. (the "Corporation") Directors' Resolution WHEREAS the Corporation on May 9, 1991 adopted a supplemental executive retirement income plan (the "Supplemental Plan") which plan was amended May 9, 1996; and WHEREAS it is desirable to amend and restate the Supplemental Plan; THEREFORE, BE IT RESOLVED: 1. That the text of the restated and amended plan as set forth in Appendix I attached hereto be approved and adopted. 2. That the actions of the Corporation in adopting the amended and restated plan shall not derogate from the rights of any executive arising from or pursuant to a written supplemental retirement income plan agreement entered into between the executive and the Corporation prior to the passing of this resolution. 2 APPENDIX I SUPPLEMENTAL EXECUTIVE RETIREMENT INCOME PLAN-2000 1. The Corporation shall maintain a supplemental executive retirement income plan (the "Supplemental Plan") for persons employed by the Corporation in certain executive positions to be designated from time to time by the Compensation Committee of the Board of Directors. 2. The Supplemental Plan shall be unfunded. Any benefits which become payable under the Supplemental Plan shall be paid from the general assets of the Corporation. The Corporation may purchase a letter of credit from a bank or trust company to secure the benefit of one or more members. 3. Designated executives shall not be required nor permitted to contribute to the Supplemental Plan. 4. The normal retirement age under the Supplemental Plan shall be age 65. However, members of the Supplemental Plan may begin to receive such benefits as early as age 55. Retirement benefits are reduced by 5% for each year that the benefit commencement date precedes the executive's attainment of age 62. 5. No benefits are payable under this Supplemental Plan for members who leave the Corporation prior to age 55 for any reason. 6. The annual retirement benefit payable under the Supplemental Plan shall be calculated as follows: (a) 2% of the executive's average three highest years' earnings multiplied by the executive's years of service with the Corporation as credited under the Potash Corporation of Saskatchewan Inc. Pension Plan (the "Pension Plan") to a maximum of 35 minus (b) the annual retirement benefit which can be provided under the Pension Plan. 3 - 2 - 7. For purposes of the Supplemental Plan only, an executive's earnings shall be defined as the executive's annual base pay plus: (a) 100% of all bonuses paid or payable in the year to the executive pursuant to the Corporation's annual incentive plan or any similar plan substituted therefor; and (b) any other payment made in a given year to an executive which payment is specifically designated to be included in earnings by the Compensation Committee of the Board of Directors of the Corporation. 8. (a) The normal form of the Supplemental Plan provides a reduced initial pension to the executive with 60% of the reduced amount continuing for the life of the executive's spouse (if any) on the executive's death. Optional forms of benefit, such as, but not limited to, providing 60%, 75% and 100% to the spouse, with a corresponding lower initial pension to the executive will also be available. (b) At the direction of the executive supplemental benefits payable under the Plan to the executive shall be paid in a lump sum provided that such benefits shall be actuarially calculated to reflect a cost neutral position to the Corporation. (c) For the purposes of calculating the lump sum payment payable pursuant to paragraph 8(b) the: i) 1983 GAM Mortality Table based on 50/50 unisex; and ii) annual interest rate on 30 year treasury securities (as published monthly by the United States Federal Reserve and sometimes referred to as the "GATT Rate") for the second month preceding the month of the executive's retirement or such other mortality table, interest rate, lookback period and stability period as may from time to time be prescribed by the Compensation Committee of the Board of Directors of the Corporation shall be utilized. 9. Should the executive die after age 55 but prior to retirement from the Corporation, the executive's spouse (if any) shall receive the annual retirement benefit the spouse would have received had the executive retired immediately prior to his or her death and elected a 60% survivor pension. 4 - 3 - 10. The proper officers of the Corporation be directed to arrange for the appropriate documentation and communication of the Supplemental Plan and that the proper officers of the Corporation are further authorized to do all other acts and things as may be necessary or desirable to implement this resolution. 11. Any two directors or officers of the Corporation be and are hereby authorized to execute on behalf of the Corporation any documentation required to establish the Supplemental Plan on the terms and conditions as aforesaid. 5 May 16, 2000 PERSONAL & CONFIDENTIAL Dear : RE: Long-Term Incentive Plan (LTIP) and approved amendments to Supplemental Retirement Income (SERI) Plan - -------------------------------------------------------------------------------- At its meeting on May 10, 2000, the Board of Directors of PCS approved a new Long-Term Incentive Plan (LTIP) and also approved amendments to the Supplemental Executive Retirement Income (SERI) Plan. The new Long-Term Incentive Plan has changed substantially from the previous plan and you should be receiving from Mr. Doyle information in that regard. Among the changes is a provision that the LTIP award be paid in a lump sum at the end of each three year cycle. Under the previous plan, the award was paid annually on a 1/6, 1/6, 2/3 basis. The SERI Plan was modified to define "earnings" as annual base salary plus the Annual Incentive Plan payment. Prior to the amendments, "earnings" was defined as annual base salary plus all bonus payments made in a year. As a consequence, LTIP payments are not included in "earnings" under the amended SERI Plan. The Compensation Committee of the Board considered the impact of these two changes on existing SERI participants (of whom you are one). The Committee concluded that it would "grandfather" existing SERI participants (so that the amendments regarding the definition of earnings would not affect them) provided that the participant agrees that payments under the new LTIP be deemed to have been paid annually on a 1/3, 1/3, 1/3 basis for the purposes of calculating "earnings" under the SERI Plan. . . . . /2 6 Please signify your agreement with the foregoing by signing the enclosed copy of this letter where indicated and returning it to me. This letter, when signed by you, will constitute an amendment to your existing SERI contract. If you have any questions regarding the foregoing, please call me. Yours truly, POTASH CORPORATION OF SASKATCHEWAN INC. /S/ JOHN L.M. HAMPTON JOHN L. M. HAMPTON Senior Vice President, General Counsel and Secretary JLMH:klc Enclosure EX-11 4 o05076ex11.txt EXHIBIT 11 1 Exhibit 11 POTASH CORPORATION OF SASKATCHEWAN INC. COMPUTATION OF PER SHARE EARNINGS FOR THE THREE MONTHS ENDED SEPTEMBER 30 (Figures and amounts expressed in thousands, except per share and per option amounts)
2000 1999 A Net income as reported, Canadian GAAP $46,351 $(524,244) B Items adjusting net income $(2,171) $(167,363) C Net income, US GAAP (A+B) $44,180 $(691,607) D Weighted average number of shares outstanding 52,031 54,269 E Options outstanding to purchase equivalent shares 3,531 2,939 F Average exercise price per option $ 64.78 $ 70.44 G Average market price per share $ 52.83 $ 54.14 H Period end market price per share $ 52.31 $ 51.63 I Rate of Return available on option proceeds 5.00% 5.00% CANADIAN GAAP Basic earnings per share (A/D) $ 0.89 $ (9.66) Fully diluted earnings per share J Imputed earnings on options proceeds (E*F*I) $ 2,859 $ 2,588 Fully diluted earnings per share ((A+J)/(D+E)) $ 0.89 $ (9.66) UNITED STATES GAAP Basic earnings per share (C/D) $ 0.85 $ (12.74) Fully diluted earnings per share K Net additional shares issuable (E-(E*F/G)) 0 0 Fully diluted earnings per share (C/(D+K)) $ 0.85 $ (12.74)
EX-27 5 o05076ex27.txt FINANCIAL DATA SCHEDULE
5 1,000 U.S. DOLLARS 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 1.00 95,642 0 342,671 (7,573) 400,983 864,051 3,970,080 1,074,915 4,109,170 1,001,970 413,803 0 0 1,170,587 827,506 4,109,170 1,694,053 1,694,053 1,317,413 1,317,413 92,736 0 45,948 237,956 59,859 178,097 0 0 0 178,097 3.38 3.32
-----END PRIVACY-ENHANCED MESSAGE-----