SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
/x/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934. For the fiscal year ended December 31, 2002.
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
Commission file number 001-10351
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
PCS U.S. Employees' Savings Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Potash Corporation of Saskatchewan Inc.
122 - 1st Avenue South
Saskatoon, Saskatchewan, Canada S7K 7G3
PCS U.S.
Employees' Savings Plan
Financial Statements as of
December 31, 2002 and 2001 and for the
Year Ended December 31, 2002,
Supplemental Schedule as of December 31, 2002 and
Independent Auditors' Report
PCS U.S. EMPLOYEES' SAVINGS PLAN
TABLE OF CONTENTS
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Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 2002 and 2001 2
Statement of Changes in Net Assets Available for Benefits for the
Year Ended December 31, 2002 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULE:
Form 5500, Schedule H, Part IV, Line 4i--
Schedule of Assets (Held at End of Year) as of December 31, 2002 8
(All other supplemental schedules are omitted because of the absence of
conditions under which they are required.)
INDEPENDENT AUDITORS' REPORT
To the Plan Administrator and Participants of the
PCS U.S. Employees' Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the PCS U.S. Employees' Savings Plan (the "Plan") as of December 31, 2002 and
2001, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2002. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2002 and 2001, and the changes in net assets available for benefits for the year
ended December 31, 2002 in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of assets (held
at end of year) as of December 31, 2002 is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This schedule is the responsibility of the Plan's
management. Such schedule has been subjected to the auditing procedures applied
in the audit of the basic 2002 financial statements and, in our opinion, is
fairly stated in all material respects when considered in relation to the basic
financial statements taken as a whole.
April 25, 2003
PCS U.S. EMPLOYEES' SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001
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ASSETS 2002 2001
PARTICIPANT-DIRECTED INVESTMENTS --
At fair value (Note 3) $166,284,315 $187,129,860
RECEIVABLES:
Employer contributions 31,247
Participant contributions 49,356
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NET ASSETS AVAILABLE FOR BENEFITS $166,284,315 $187,210,463
============ ============
See notes to financial statements.
PCS U.S. EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2002
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ADDITIONS:
Interest and dividends $ 4,914,667
Employer contributions 4,512,171
Participant contributions 7,904,791
Rollover contributions 496,229
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Total additions 17,827,858
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DEDUCTIONS:
Net depreciation in fair value of investments (Note 3) (22,871,663)
Benefits paid to participants (15,951,590)
Administrative expenses (23,233)
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Total deductions (38,846,486)
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TRANSFERS FROM OTHER PLANS (Note 2):
White Springs Agricultural Chemicals, Inc. Savings and Investment Plan for
Collective Bargaining Employees 63,817
PCS Nitrogen 401(k) Savings Plan 28,663
------------
NET DECREASE (20,926,148)
NET ASSETS AVAILABLE FOR BENEFITS -- Beginning of year 187,210,463
------------
NET ASSETS AVAILABLE FOR BENEFITS --End of year $166,284,315
============
See notes to financial statements.
PCS U.S. EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2002 AND 2001 AND FOR THE
YEAR ENDED DECEMBER 31, 2002
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1. DESCRIPTION OF PLAN
The following brief description of the PCS U.S. Employees' Savings Plan
(the "Plan") provides only general information. Participants should
refer to the Plan agreement for a more complete description of the
Plan's provisions.
General--The Plan is a defined contribution plan sponsored by PCS
Administration (USA), Inc. (the "Company") covering all employees of
the Company, PCS Phosphate Company, Inc., PCS Sales (USA), Inc.,
certain employees of White Springs Agricultural Chemicals, Inc. and
certain employees of PCS Nitrogen. It is subject to the provisions of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA").
Contributions--Participants may contribute up to 20 percent of base
compensation each year, as defined in the Plan. Effective April 1,
2002, the maximum employee contribution level was increased from 20
percent to 50 percent of base compensation. The Company matches 100
percent of the first five percent of base compensation that
participants contribute to the Plan. Contributions are subject to
certain limitations as described in the Plan agreement and the Internal
Revenue Code of 1986, as amended. Participants may also contribute
amounts representing distributions from other qualified defined benefit
or contribution plans (rollover contributions), which are not eligible
for the Company match.
Participant Accounts--Individual accounts are maintained for each Plan
participant. Each participant's account is credited with the
participant's contribution, the Company's contribution, and allocations
of plan earnings, and is charged with an allocation of plan losses and
administrative expenses. Allocations are based on participant earnings
or account balances, as defined in the Plan. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's vested account.
Vesting--Participants are immediately vested in their account balances.
Investments--Participants direct the investment of their account
balances and contributions into various investment options offered by
the Plan. The Plan currently offers Potash Corporation of Saskatchewan
Inc. ("PCS") Common Stock, eleven mutual funds and one pooled
investment stable value fund. The U.S. Government Reserves Fund is used
to maintain dividends distributed with the ESOP option and is not
available as a participant-directed investment option.
Loans to Participants--Participants may borrow from their fund accounts
up to a maximum amount equal to the lesser of $50,000 or 50 percent of
their vested account balance. Loan terms range from one to five years
or up to 20 years for the purchase of a primary residence. The loans
are secured by the balance in the participant's account and bear
interest at two percentage points above the rate for five-year U.S.
Treasury Notes. Loans for the purchase of a primary residence bear
interest at the standard lending rate for 20-year fixed rate home
mortgage loans. Principal and interest are paid ratably through monthly
payroll deductions.
Payments of Benefits--On termination of service, a participant may
elect to receive either a lump-sum amount equal to the value of the
participant's vested interest in his or her account; or monthly,
quarterly or annual installments over the participant's estimated life
span. A participant may elect to receive payment of benefits prior to
termination of service, as defined in the Plan. Participants may elect
to receive their investment in the PCS Stock Fund in cash or in whole
shares of PCS common stock. Effective April 1, 2002, the Plan was
amended to include an ESOP feature with a dividend payout program
whereby participants may elect to receive dividends paid on their
vested shares of Potash Corporation of Saskatchewan common stock in the
PCS Stock Fund.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation--The accompanying financial statements have been
prepared using the accrual basis of accounting.
Use of Estimates--The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires the plan administrator to make estimates and
assumptions that affect the reported amounts of net assets available
for benefits and changes therein. Actual results could differ from
those estimates. The Plan utilizes various investment instruments.
Investment securities, in general, are exposed to various risks, such
as interest rate, credit, and overall market volatility. Due to the
level of risk associated with certain investment securities, it is
reasonably possible that changes in the values of investment securities
will occur in the near term and that such changes could materially
affect the amounts reported in the financial statements.
Investment Valuation and Income Recognition--The Plan's investments are
stated at fair value. The PCS Common Stock is valued at its quoted
market price. Shares of registered investment companies (mutual funds)
are valued at quoted market prices which represent the net asset value
of shares held by the Plan at year-end. The Managed Income Portfolio
II, a commingled pool, is valued at the amount of participant and
Company contributions plus accrued interest thereon (contract value).
Participant loans are valued at the amount disbursed plus earned
interest less payments received from participants.
The Fidelity Managed Income Portfolio II is a stable value fund that is
a commingled pool of the Fidelity Group Trust for Employee Benefit
Plans. The portfolio may invest in fixed interest insurance investment
contracts, money market funds, corporate and government bonds,
mortgage-backed securities, bond funds, and other fixed income
securities. Participants may ordinarily direct the withdrawal or
transfer of all or a portion of their investment at contract value. The
crediting interest rates were 4.64% and 16.24% at December 31, 2002 and
2001, respectively, which were based on the interest rates of the
underlying portfolio of assets. The average yield for the year ended
December 31, 2002 was 5.05%.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date.
Payment of Benefits--Benefit payments to participants are recorded when
paid. There were no amounts allocated to accounts of participants who
have elected to withdraw from the plan but had not yet been paid at
December 31, 2002 and 2001.
Administrative Expenses--Certain of the Plan's administrative expenses
are paid by the Plan and charged to participants' accounts. Other
administrative expenses are paid by the Company and are not recorded in
these financial statements.
Plan Transfers--During 2002, certain participants in the White Springs
Agricultural Chemicals, Inc. Savings and Investment Plan for Collective
Bargaining Employees and PCS Nitrogen 401(k) Savings Plan became
participants in the Plan. Account balances of the affected participants
were transferred from the White Springs Plan and the PCS Nitrogen Plan
to the Plan.
3. INVESTMENTS
The Plan's investments are shown below. Investments that represent five
percent or more of the Plan's net assets available for benefits as of
December 31, 2002 and 2001 are marked with an asterisk:
2002 2001
Fixed Income and Bond Funds:
Fidelity Managed Income Portfolio II $63,989,006 * $66,550,374 *
Fidelity Retirement Money Market Portfolio 6,708,160 5,827,952
Fidelity Institutional Short-Intermediate Government Fund 6,718,784 4,822,891
Fidelity U.S. Government Reserves Fund 7
Equity Funds:
Fidelity Puritan Fund 10,600,623 * 11,747,172 *
Fidelity Magellan Fund 16,448,744 * 21,514,705 *
Fidelity Growth and Income Portfolio 25,102,127 * 31,550,743 *
Fidelity Overseas Fund 2,756,976 3,313,415
Fidelity Aggressive Growth Fund 9,864,562 * 15,889,021 *
Fidelity Mid-Cap Stock Fund 1,048,144 680,391
Fidelity Small Cap Stock Fund 1,831,058 687,694
Fidelity Spartan US Equity Index Fund 9,127,110 * 11,963,358 *
PCS Stock Fund 7,251,291 7,430,527
Participant Loans 4,837,723 5,151,617
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Total $166,284,315 $187,129,860
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During 2002, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the period)
appreciated (depreciated) in value as follows:
Potash Corporation of Saskatchewan Common Stock $ 311,147
Fidelity Puritan Fund (1,255,268)
Fidelity Magellan Fund (5,276,157)
Fidelity Growth and Income Portfolio (6,091,677)
Fidelity Overseas Fund (681,108)
Fidelity Aggressive Growth Fund (6,559,227)
Fidelity Mid-Cap Stock Fund (292,934)
Fidelity Small Cap Stock Fund (410,497)
Fidelity Spartan US Equity Index Fund (2,829,931)
Fidelity Institutional Short-Intermediate Government Fund 213,989
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Net depreciation $(22,871,663)
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4. RELATED-PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by Fidelity
Management Trust Company ("Fidelity"). Fidelity is the trustee as
defined by the Plan and, therefore, these transactions qualify as
party-in-interest transactions. Fees paid by the Plan for the
investment management services were included as a reduction of the
returns of each fund.
At December 31, 2002 and 2001, the Plan held 114,031.932 shares and
121,057.782 shares, respectively, of common stock of Potash Corporation
of Saskatchewan, the parent company of the Plan sponsor, with a cost
basis of $8,303,689 and $8,865,587, respectively. During the year ended
December 31, 2002, the Plan recorded dividend income of $118,609.
5. PLAN TERMINATION
Although it has not expressed any intention to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event that
the Plan is terminated, participants would remain 100 percent vested in
their accounts.
6. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by
a letter, dated November 13, 2001 that the Plan, as then designed, was
in compliance with applicable sections of the Internal Revenue Code
("IRC"). The Plan has been amended since receiving the determination
letter; however, the plan administrator and the Plan's tax counsel
believe that the Plan is currently designed and being operated in
compliance with the applicable requirements of the IRC, and the Plan
and related trust continue to be tax-exempt. Therefore, no provision
for income taxes has been included in the Plan's financial statements.
******
SCHEDULE H - LINE 4i
PCS U.S. EMPLOYEES' SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i -
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2002
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Description of Investment, Including Maturity
Date, Rate of Interest, Collateral, Par, or
Identity of Issue, Borrower, Lessor, or Similar Party Maturity Value Current Value
-------------------------------------------------------- ---------------------------------------------------- ----------------
SHARES OF REGISTERED INVESTMENT COMPANIES:
* Fidelity Management Trust Company Puritan Fund $10,600,623
* Fidelity Management Trust Company Magellan Fund 16,448,744
* Fidelity Management Trust Company Growth and Income Portfolio 25,102,127
* Fidelity Management Trust Company Overseas Fund 2,756,976
* Fidelity Management Trust Company Aggressive Growth Fund 9,864,562
* Fidelity Management Trust Company Retirement Money Market Portfolio 6,708,160
* Fidelity Management Trust Company Mid-Cap Stock Fund 1,048,144
* Fidelity Management Trust Company Small Cap Stock Fund 1,831,058
* Fidelity Management Trust Company Spartan US Equity Index Fund 9,127,110
* Fidelity Management Trust Company Institutional Short-Intermediate Government Fund 6,718,784
* Fidelity Management Trust Company U.S. Government Reserves Fund 7
COMMINGLED POOL:
* Fidelity Management Trust Company Managed Income Portfolio II 63,989,006
* POTASH CORPORATION OF SASKATCHEWAN PCS, Inc. common stock 7,251,291
* PARTICIPANT LOANS Due 2003 through 2022; interest rates ranging from
4.75% to 8.50% 4,837,723
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TOTAL ASSETS HELD FOR INVESTMENT $166,284,315
================
* Permitted party-in-interest.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the trustees (or other persons who administer the employee benefit plan)
have duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
PCS U.S. Employees Savings Plan
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(Name of plan)
Date: June 20, 2003 /s/ Barbara Jane Irwin
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Barbara Jane Irwin
Senior Vice President, Administration
PCS Administration (USA), Inc.
as Plan Administrator
EXHIBIT INDEX
Exhibit Number Description of Exhibit
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23.1 Consent of Deloitte & Touche, L.L.P.
99.1 Form of Certification Required Under Section 906 of
the Sarbanes-Oxley Act of 2002