Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Potash Corp. fourth quarter and year end earnings conference call. (Operator Instructions) I will now turn the conference over to Denita Stann, Director, Investor Relations. Please go ahead.

Thanks, [Brock]. Good afternoon. Thank you for joining us today and welcome to our fourth quarter and year end earnings call. In the room with us today we have Bill Doyle, our President and CEO, Wayne Brownlee, our Executive Vice President and Chief Financial Officer, Jim Dietz, Executive Vice President and Chief Operating Officer, Joe Podwika, Senior Vice President and General Counsel, Garth Moore, President of PCS Potash, Tom Regan, President of PCS Nitrogen & Phosphate, and David Delaney, President of PSC Sales. I'd like to welcome the media who are listening in and remind people that we are live on our website. I would also like to remind everyone that statements made in this call that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements. Such forward-looking statements are given as of the date of this call and involve risks and uncertainties. A number of factors and assumptions were applied in drawing a conclusion or making a projection as reflected in forward-looking information, and actual results could differ materially from what we think appears the most likely at this time. For additional information with respect to forward-looking statements, factors and assumptions, we direct you to our news release and our most recent Form 10-K. Also, today's news release, which is posted on our website, includes a reconciliation of certain non-GAAP financial measures to their most directly comparable GAAP measures. I will now turn the call over to Bill Doyle for some comments and then we'll go to questions.

Thank you, Denita, and good afternoon, everyone, and thank you for joining Potash Corp.'s fourth quarter and year end conference call. We appreciate this opportunity to discuss another period of record performance and to share our thoughts on current conditions and the strategies we intend to follow to generate continuing long-term growth in our business. Potash is the unquestioned strength of our company in ideal or challenging conditions, and this nutrient was largely responsible for the best fourth quarter in our history. Our earnings of $2.56 per share was the third highest ever and more than double our earnings in the same period last year. Quarterly gross margin of $873.1 million was up 63% quarter-over-quarter, driven primarily by strong potash prices. Our EBITDA of $956 million and cash flow prior to working capital changes of $849 million were both nearly double the same period in 2007. These quarterly results added to the strength of another record year for our company. 2008 earnings of $11.01 per share were more than triple our 2007 performance. All three nutrients generated record full year gross margin, raising the 2008 total to $4.9 billion, $3 billion more than last year. While we're pleased to report a fifth consecutive year of record performance, our real focus is on navigating the road ahead. The severe pressure on the global financial system is now well known and the resulting crisis was a blow to almost every industry, including agriculture. The worldwide push to liquidate assets and secure cash took hold and led investors and consumers to become very protective of their capital. This contributed to a significant decline in prices for commodities, including key crops, with futures prices cut nearly in half from second quarter highs. With farmers taking an extremely cautious approach to deploying working capital, planting…

Thank you. (Operator Instructions) Your first question comes from Vincent Andrews - Morgan Stanley.

Bill, I'm wondering if you could just discuss the retail bottleneck in the U.S. between the farmer and the retailer vis-à-vis the retail price and the wholesale price. When and how do you think that's going to break - presumably over the next four to five weeks - and what do we need to see and how will we know if it's too late?

Vincent, the bottleneck started really last summer. A lot of dealers filled their warehouses with phosphate at $1,000 and urea at fairly high prices; the potash price was up $250. And the credit crisis started, grain prices dropped, so the whole system basically froze. And this has really been going on since probably late October. We have seen some activity in the nitrogen area here in the last few weeks. In terms of fall application, only probably 20% was applied this past fall, mainly due to the late fall and a very short window, so we're hoping here in February and March in the southern half of the U.S., when that season typically starts, for things to start moving, and I would assume no later than March product start moving here in the Midwest.

And Vincent, what I would say is it takes time to get product to a customer's location, and so our customers are very aware of the need to plan. They have become much more so aware of that need over the last few years and when you're looking at the type of [move] where you had virtually no fall. And yes, we're going to have a decline in NP&K over fertilizer year 2008 - 2009, but still you're going to have this big movement in the spring because you had no fall. So you've got to really get going on your infrastructure. The good news for our customers is that we've got I would say the most advanced infrastructure in the business in terms of having the number of warehouses and the systems and the rail cars and the capability to service our customers from really almost any point. But I would say in general we're going to have some customers that depend on other suppliers to be challenged in the spring. So there's just a physical movement that has to take place. We have our domestic winter meeting coming up, The Fertilizer Institute, early February and I think you're going to see a lot of people getting serious about moving material at that time.

Your next question comes from Jacob Bout - CIBC World Markets.

Bill, maybe you can give us your thoughts on potash pricing, i.e., the kind of numbers you're thinking about in 2009 and 2010, and maybe if you can get into what you think the biggest risk is to potash pricing holding. And then maybe you can comment a little bit on the significance of India increasing their base rate of concession for potash for the Indian importers.

In terms of potash pricing, the first and largest question is what's the Chinese price going to be. That negotiation, as you know, hasn't started yet. We're entering Chinese New Year this weekend. According to the Chinese, the last information we had from them, they had hoped to get this done by the end of March. My guess is it'll now spill into the second quarter. BPC will be the main negotiator. We're still confident that there will be an increase. How much that is, we don't know exactly yet. As you know, Korea and Japan both settled up $200, and if you look at the Chinese and the Indian prices, they're considerably below that. You know, the fact that you've had this reduction in production and if you think about the fall of 2008 and then the first quarter of 2009, you look at all that production, it actually matches up very well with the reduction in demand in the short-term financial crisis that we've been through. But about 10 million tons overall and it's almost matched identically by the reduction in production. So if you start thinking about where we are in terms of inventory in potash on a global basis, in very good shape, and we think that, as I said, we're going to have increases in China and India. We think that this year we'll gain momentum. We right now believe 2010 is going to be just a terrific year for the fertilizer business in general. There's going to be a mature need to up the ante in terms of potash application rates. There's been a lot of mining of the soil. So the industry's coming out of this period of time, the potash industry particularly, you know, when you had this incredible down draft in demand caused by the financial paralysis around the world, in really good shape. And we understand where we are; of course, we know the first quarter is going to be very slow, and we're managing our business accordingly. We've always matched supply to demand. We think that's very prudent. I think it's very interesting to see that in the nutrients nitrogen phosphate, where there have been price reductions for various reasons, that has proved to be folly because there hasn't been any increase in orders when the price has gone down. These people, they've just screwed up their businesses. So we look at this thing in the long term. We're really excited about where we're going here, second half of 2009, and 2010 is going to be a bang up year.

Yes, Jacob, India really has been one of the most important global markets for all three nutrients and the subsidy is encouraging for increased potash consumption. If you look at potash imports on a calendar year basis, we're calling potash imports in '08 at 5.9 million tons, which is up 63% over '07. And I was over there in December and on their fertilizer year basis, which goes through March, all indications were they would end their year with fairly low inventories and would likely import a like amount in their next fertilizer year.

Your next question comes from Michael Piken - Cleveland Research.

With respect to a follow up on Vincent's question, in terms of the dealers, how quickly can they refill their inventories once product starts moving and how much do they have in storage, a typical dealer - do they have about one week's worth of supply, one month? And then how quickly can the system sort of reboot, especially in light of all the production cuts that are being taken? And then my second question is: What do you think is going to happen with respect to Brazil, having the situation down there improve, and what gives you confidence that we're going to see an improvement in the second half of the year?

We think the dealer system is full today, but once corn starts to be planted here in the springtime, it doesn't take long to empty that storage. And it varies from dealer to dealer, but with the corn planters that are out there today and what's happening, you know, it could be a matter of one day to three days. So that's why our distribution system, our terminal system is pretty important because we think they'll be coming back to us fairly quickly. In terms of getting products shipped from the mines and from Florida, that typically takes 20 to 25 days, so that's why we think they need to have a little foresight and start ordering fertilizer some time in February or March to arrive in time to be applied.

And Michael, on the Brazil question, what I'd say to you about Brazil is there's no country more impacted by the financial crisis than Brazil. It came at absolutely the worst time for Brazil because what happened, you know, their planting season is during our fall season, it being the Southern Hemisphere, but the financial crisis, what it did is the retail players in the Brazilian market stopped their credit lending policies. They actually had crop terms that were one time and about 25% of all the credit in Brazil came from the local Brazilian industry. They stopped doing that last year once this credit crisis took hold, and I think very smartly. I think that's the bank's job and it's the government's job and the industry shouldn't be doing that, so I take my hat off to them for making that change. But unfortunately, the government wasn't ready and they didn't position themselves to step into the gap and there was definitely credit shortage in Brazil. That impacted planting, it impacted fertilizer applications, and so Brazil, as I said in my formal remarks, Brazil is going to be down 3%, this USDA forecast, for beans and 9% for corn. And, you know, when you see $10 soybeans today and the real of 2.32 now to the dollar the real has weakened the motivation for Brazilian farmers because of profitability has increased dramatically since the fall. They will respond to that and, in addition, Brazil has the poorest soils in the world, very potassium deficient soils, and we're going to see major destocking here during the first few months of the year. We had Brazil actually penciled in not until a second half start, but it looks like now Brazil's going to get going here in the April - May period because they just won't be able to wait. So we see a very strong second half and then a terrific 2010 shaping up for Brazil. So overall about flat, potash in Brazil, 2009 versus 2008.

Your next question comes from Jeff Zekauskas - J.P. Morgan.

Is it correct that you potash shipments in the first quarter of '09 should be below the level of the fourth quarter of '08? And in terms of your forecast of flat potash shipments for 2009, what are the major geographic variances, that is, which geographic areas do you think to be meaningfully up and which ones to be meaningfully down?

All right, Jeff, what I'd tell you is yes, the first quarter of 2009 is going to be a lower potash volume than the fourth quarter of 2008. In terms of geographic areas that will be up versus those that'll be down, we think China will be up. We think that, when I say up, in terms of imports from 5.5 to 7 million is our forecast. Canpotex shipments should move from 1 million to 1.5 million. India will continue to be very strong. You know, there's really no country in the world that is more food challenged than India and more fertilizer challenged than India, because they just don't have any raw materials or capability to [inaudible] and produce their own fertilizer. So India is consistently and constantly challenged, and the demand for food is moving rapidly in India. And the pressure on food production could easily topple a government if they play games with food production. So India we see matching this year. Malaysia-Indonesia, you might have a little bit less, although palm oil prices are now rebounding. They're up to about 1800 ringgit per ton of palm oil, and at that price farmers in Malaysia and Indonesia can make money at palm oil. So that can change rapidly. If you go to other areas, there's a mix and a match, but those main markets, as I said, Brazil, we see flat with last year, China up, India flat, Malaysia-Indonesia maybe a little reduction, and then plusses and minuses along the way, but basically more or less an even situation with 2008.

Your next question comes from Paul D'Amico - TD Newcrest.

Just on the China situation, I wanted to know if you guys wouldn't mind commenting on the estimated China inventory, give us an update on that on a fundamental context, and that versus psychology with respect to timing of the potential conclusion of the Canpotex. I know you said Q2, but given the inventories and the consumption patterns, what sort of month are we talking are we talking early, are we talking late - and following into that the psychology, meaning in terms of pricing that they're looking for and how far they'd be willing to go in your assessment? Somewhat tied to that as well, the net banks in the guidance, are you guys building in current spot rates on shipping costs or are we talking materially higher?

China, our best guess of inventory - this is a big question, of course - but our best guess is 3.5 million tons, 1.6 of that being imports sitting in ports. And as I said, we think they're going to import about 7 million tons this year, up from 5.5 last year. Whether it's early Q2 or late Q2, my guess it'll be earlier in Q2 at this stage just because they need to get going. What else did I miss? Did I miss anything there?

Pricing.

Pricing for China, I said that BPC, you know, is the leader. We expect a price increase since they're doing the negotiating. I don't know what that final number will be, but we expect a price increase in both China and India.

Regarding Canpotex freight, I would say around 40% of their freight is under a freight forward agreement or a contract of affreightment. And with the current spot rates as low as they are, I would say the average Canpotex freight would be around $10 to $15 over the spot freight over the year.

Your next question comes from Robert Koort - Goldman Sachs.

Bill, you talked about South American application rates being down; I was wondering if you could give us a bit more quantification there. And then you expect the U.S. logjam to come unglued here and get some product movement in the spring. What are you thinking in terms of application rates for the '09 crop year there?

In terms of nutrient consumption, Bob, for the year, we're calling nitrogen down around 10% and P&K down 10% to 20% for the year [on a per-year] basis.

And fertilizer application in Brazil during that fourth quarter, which was their spring planting season, we're getting various reports, all of it down - corn, beans, depending on which state. I haven't seen a final number on that out of Brazil, but we know that it's down and we know that our customers have significant inventory that they're working down right now, that they're destocking, and that process is going to continue here through April. And then, as I said earlier, we expect them to get going at that time and then have a strong push during the second half.

Your next question comes from Fai Lee - RBC Capital Markets.

[CPC] was a reportedly approached in December by the Indian Department of Fertilizer to sign a long-term potash plant pricing agreement. If we could envision how signing a pricing agreement for more than a year at a reasonably high price would benefit Potash Corp.'s share prices, it would remove investor concerns around potash price levels going forward. Also, such an agreement could help prevent buyers from holding back purchases in anticipation of lower prices, which could offset some of the potential upsides that may be lost under such an arrangement. Given the potential benefits, would Canpotex or Potash Corp. consider signing such an agreement with India and/or China and has such an option been explored recently?

Okay, Fai, what I'd say about a potential long-term agreement in India, there's a couple of things I see wrong with it. The first thing is that I'm not sure the Indians would keep the agreement. You know, actually for the first time in my career - 35 years - we've seen contract abrogation here at the end of 2008 where the Indians did not honor their phosphoric acid contract. That we've never seen before, and it's a dangerous precedent for our industry and it will be addressed through IFA because no one wants to see that. It's a real bad thing to do. In our business we trade on our word and keeping your word is sacrosanct in the fertilizer business and it has always been that way. And so when you see someone that reneges, it causes you to take note and everyone around the world has taken note of the Indian behavior here. So the first thing is you've got to have someone who's going to keep the contract, so that's the biggest problem there. Secondly what I'd say, from our point of view, I don't like selling forward into a rising market. And we think the market over the next five years is going to be supply challenged and that the value of our potash enterprise is going to go up, and so to lock in a three-year contract and not be reflective of replacement economics for greenfield, which I mentioned in my remarks, we're not close to greenfield replacement economics, just doesn't seen to make much sense to me. We think there's substantial growth ahead in potash pricing, and so I just think it would be dumb to lock in for three years.

Your next question comes from Steve Byrne - Merrill Lynch.

I have a couple of quick ones on OCP and Trinidad. You've been a long time customer of OCP for phosphate rock. Based on your relationship with them, do you see them as having the resolve to hold onto their expectation of selling rock at 250 and above for the first quarter, particularly since it would seem that none of their customers could afford that price? And then one on Trinidad - are your ammonia sales of Trinidad profitable now and why would you not shutter capacity there assuming margins are quite thin there?

First of all, I don't have any idea what OCP's going to do in terms of rock pricing. I have watched the change in the management of OCP, which has been quite remarkable, from politicians running the company to businesspeople running the company. And I think if you look at what they've done, it seems to me that it's based on replacement economics much the way that we look at potash. They've shown a lot of strong marketing approach, I would say, so far. We are customers of OCP and [inaudible] and they have approached us about higher prices for phosphate rock. Of course, we have a contract with them that lasts a little while longer. But I think that they're much more business-oriented people than politically oriented people, and I think that's why. They've probably run the numbers on what it takes to open a new mine and build a new phosphate plant and the same logical conclusions that any businessman would have approaching their business. So I just think that's the difference between former politicians running it and businesspeople running it.

Steve, regarding Trinidad, in the last 60 days we have taken some capacity down. At $125 Tampa ammonia, we're about a breakeven basis. I will tell you, though, that we have made some sells into other parts of the world that net back closer to $150. So the $125, I think, will likely go away here in February and be more reflective of what's happening in the global market due to the amount of nitrogen that's shut down. I also will add that the urea prices have picked up about $100 in the last two weeks, so for the quarter we should be making money at the site.

Steve, you know what? What I'd say, if you look at NP&K, you know, nitrogen has hit the bottom. I don't think there's any question about that. Phosphate we believe is close to the bottom, if not hitting it already. And potash, as you know, has been able to weather the storm. And I think with that and the return of demand coming here, as David said, the February ammonia price will be up over January and as that DAP production returns in Florida, you're going to see a big push on ammonia because, with all that, 50% of the industry, curtailed, you've seen a dramatic decline in ammonia demand and that's what's been behind it. So coming off the bottom here and looking at accelerating Q2 and then second half of the year, I think you're going to see better things out of all three nutrients.

Your next question comes from Terrence Orstlan - TSO Associates.

With respect to USA, I guess the farmers are doing what everybody else is doing, waiting for the last minute, and I think the confidence in the business is in such a way that they see all the commodities coming down that they think they're going to get a break on the fertilizer prices as well. But given the number that you're quoting, Bill, with respect to the world's grain ratios and all, I think [inaudible] numbers are kind of filtrating through the system. Do you think the U.S. new administration is going to have more like a supply policy in influencing the farmer decision as well and try to get this market earlier to start or in fact get more prolific?

I'm not sure what the government is going to do except that we expect them to continue to have a renewable fuel orientation. Barack Obama is from my home state here in Illinois, so we're big supporters of his and we think he's going to do a real good job when it comes to ag. The governor of Iowa is the new Ag secretary. Of course, he understands agriculture as well. We think that renewable fuel is really going to be a strong part of the government program, so we think that's going to have continued benefits for corn markets, again at the incremental level, but still positive. The farmers in North America are like farmers around the world. They have been waiting because they've been scared to death, you know, when you have all these banks that just stop being banks and started to be gamblers and sell things that they have no idea what they were selling and cheating some people along the way, you've got to really wait for the banks to recover and that can't come soon enough. But as I said earlier, our business is a little different than others because you've got to plant the crop. So, you know, we think they've been waiting because they believe that the prices that have gone down at the wholesale level for nitrogen and phosphate will percolate into the retail level. That hasn't really happened so far to any measurable degree because the dealers are holding onto high-priced inventory and, of course, that would be a further disaster for them. And yet even though it's cold and January 22nd, we're not all that far away from spring, and you've got to start planning. The sun's going to come out here one of these days and warm up and all of a sudden you're going to have everybody doing the same thing at the same time, which is getting on with their business. You know, one of the reasons we like the fertilizer business so much is that it's just so fundamental. You just have to plant that crop. If you don't put fertilizer down, you lose 40% of the yield in the world and the farmers know that. You can't blame people for waiting when you think the price is going to go down; I don't care whether it's for a car or a new suit, you wait. And so we understand that and the psychology there, and yet I think that you're going to see these farmers move here in the next few weeks.

Your next question comes from Gary Chapman - Guardian Capital.

I'm wondering if you can just talk about maybe what's going on with the Uralkali ownership and how that might impact their resolve to play hardball during the Chinese negotiations?

That's a great question and of course, without an answer at the moment, we're getting the same reports that all of you are getting, and the last one was that the government was thinking of forming a super resource company to rival, say, a BHP where they put the nickel and fertilizer some of the metals people together. I can't imagine what Uralkali ownership is going through because it seems like every time they've turned around someone's cutting their legs out from underneath them. You've seen what their stock price has done. But from a practical point of view, if the government of Russia were to take Silvinit and Uralkali and put them together, just knowing Putin from an observer's point of view, I mean, if you look at what he's done with gas, when you look at what he's done across the board, he's a little bit tough, I would say, on markets and his use of his position. When he has a strong position, he takes advantage of it. So if they were to do that, I really don't see that hurting our business because he would want to maintain the value of potash because Russia's in a fairly strong position. After Canada, Russia has the second largest capability in the world. So it remains to be seen what will happen, but I don't think it would be a negative for our business if something like that did happen.

Your next question comes from Sam Kanes - Scotia Capital.

I had sort of an extension of that question and part of it, I guess, Bill, with respect to putting together Uralkali and Silvinit, if it went that way - and of course [inaudible], I mean, they're the guys that bought up those five ore bodies back in the spring for $2.5 billion; not too much fun trying to raise money to build those things outright now. I guess the hypothetical would be - and Gary asked me this the other day - is I'd imagine these companies would just sit on those at the moment, whereas under Putin, hypothetically, I guess, looking for employment and development, he may development them long term, but sure as heck short term I'd imagine he'd hold price. Can you see anything different about that, do you?

Sam, I'd tell you that I think with all of this activity in Russia, it hasn't exactly been encouraging for foreign investment. I don't know anybody who thinks that going in and investing in Russia is a good idea these days. I mean, they've really hurt their economy by taking this tact and if you look at the Russian stock market, I think it's down more than any other market in 2008. These new deposit areas that they bid up so high, Silvinit spent $1.5 billion on one before they even put a shove in the ground, and I don't see any of those coming to fruition at any time in the near future. And I think that's the point of our expansions here because you've got all these people for one reason, either political reasons or credit, not being able to finance expansions, delayed CapEx because people are not in that great a shape from a liquidity point of view, you know, the little guys - the gold rush in Saskatchewan is over, all those little guys that were hanging around the edges hoping for a dream, you know, some would come in that make their day - that's not happening. So the real value of expansions like ours which are under way and $0.40 on the dollar, this whole financial crisis, what I tell you, has absolutely helped Potash Corp. valuation over the medium to long term. No question about it, we are in better shape. I mean, it was actually a beneficial thing to our company to have this occur because the value of our assets and the expansions and the bottlenecks that we have under way are going to be worth than they would have been before.

.:

Could you address the short-term debt, your funding plans there and what's the appropriate level of short-term debt going forward?

Mark, we've got a $1 billion credit facility that was going to come due in May of 2009. And we just filed an 8-K, so we're going to extend that facility to May of 2010 and we've increased the size of it to $1.5 billion. And I think one of the lessons of the last six months, where we've because of the strength of the company, all that, the view of the debt markets and the equity markets is that we would never have a problem with access to capital and we don't have, but we want to make sure that we never do have. And so it's purely prudence on our part to extend that duration and increase the size.

And we'll have time, Brock, for one more question.

Your last question comes from Chris Willis - Impala Asset Management.

I just had a quick question about domestic pricing. You posted a pretty fancy potash price in the fourth quarter. Can you put a little color behind that and also talk a little bit about how things are shaping up in the first quarter? I know there hasn't been much activity, but how are you thinking about pricing in the first quarter domestically relative to that fourth quarter number?

We did post a $250 price increase in the fourth quarter that took us back to December. We are adhering to that price increase of 825. There are a few prices below that in the marketplace, but it's really people that have a lower cost basis that are looking for cash that are selling slightly below that. But we have no intention of lowering that price.

In the first quarter.

In the first quarter.

Right.

Great. Thank you very much. We'll be happy to take any questions at the office, so don't hesitate to give us a call. Thank you.

Bye, everybody.

Ladies and gentlemen, this concludes the conference call for today. Thank you for participating. Please disconnect your lines.