The following information is included for convenience only. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles ("GAAP"). EBITDA, adjusted EBITDA, cash flow prior to working capital changes and free cash flow are not measures of financial performance (nor do they have standardized meanings) under either Canadian GAAP or US GAAP. In evaluating these measures, investors should consider that the methodology applied in calculating such measures may differ among companies and analysts.

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


A. EBITDA AND ADJUSTED EBITDA

Set forth below is a reconciliation of "EBITDA" and "adjusted EBITDA" to net income, the most directly comparable financial measure calculated and presented in accordance with Canadian GAAP.

	Three Months Ended March 31
	2008		2007
Net income	$	566.0	$	198.0
Income taxes		171.8		84.8
Interest expense		11.2		25.5
Depreciation and amortization		79.9		72.7
EBITDA	$	828.9	$	381.0
Provision for auction rate securities		43.1		-
Adjusted EBITDA	$	872.0	$	381.0

EBITDA is calculated as earnings before interest, income taxes, depreciation and amortization. Adjusted EBITDA is calculated as earnings before interest, income taxes, depreciation and amortization, and impairment charges. PotashCorp uses EBITDA and adjusted EBITDA as supplemental financial measures of its operational performance. Management believes EBITDA and adjusted EBITDA to be important measures as they exclude the effects of items which primarily reflect the impact of long-term investment decisions, rather than the performance of the company's day-to-day operations. As compared to net income according to GAAP, these measures are limited in that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the company's business, or the non-cash charges associated with impairments. Management evaluates such items through other financial measures such as capital expenditures and cash flow provided by operating activities. The company believes that these measurements are useful to measure a company's ability to service debt and to meet other payment obligations or as a valuation measurement.


B. CASH FLOW

Set forth below is a reconciliation of "cash flow prior to working capital changes" and "free cash flow" to cash provided by operating activities, the most directly comparable financial measure calculated and presented in accordance with Canadian GAAP.

		Three Months Ended March 31
		2008		2007
Cash flow prior to working capital changes 1		$	625.5	$	283.0
Changes in non-cash operating working capital
	Accounts receivable		(211.4)		(50.8)
	Inventories		(123.1)		(10.6)
	Prepaid expenses and other current assets		(24.2)		(11.4)
	Accounts payable and accrued charges		175.5		109.4
Changes in non-cash operating working capital			(183.2)		36.6
Cash provided by operating activities		$	442.3	$	319.6
Free cash flow 2		$	250.5	$	162.5
Additions to property, plant and equipment			196.5		109.0
Purchase of long-term investments			174.5		9.7
Other assets and intangible assets			4.0		1.8
Changes in non-cash operating working capital			(183.2)		36.6
Cash provided by operating activities		$	442.3	$	319.6

1	The company uses cash flow prior to working capital changes as a supplemental financial measure in its evaluation of liquidity. Management believes that adjusting principally for the swings in non-cash working capital items due to seasonality assists management in making long-term liquidity assessments. The company also believes that this measurement is useful as a measure of liquidity or as a valuation measurement.
2	The company uses free cash flow as a supplemental financial measure in its evaluation of liquidity and financial strength. Management believes that adjusting principally for the swings in non-cash operating working capital items due to seasonality, additions to property, plant and equipment, purchases of long-term investments, and changes to other assets assists management in the long-term assessment of liquidity and financial strength. The company also believes that this measurement is useful as an indicator of the company's ability to service its debt, meet other payment obligations and make strategic investments. Readers should be aware that free cash flow does not represent residual cash flow available for discretionary expenditures.