Economic Value Distributed
The economic value distributed by PotashCorp (based on the G3 framework) was $4.04 billion in 2007. Cost of goods, materials and services purchased ($2.78 billion), employee wages and benefits ($519.7 million), taxes and royalties to governments ($507.1 million) and costs incurred to providers of capital ($230.9 million) were the most significant components.
ECONOMIC VALUE DISTRIBUTED BY POTASHCORP |
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| ($ million) | 2003 | 2004 | 2005 | 2006 | 2007 |
| Goods, Services and Materials Purchased | 1,710.1 | 1,881.6 | 2,150.6 | 2,273.1 | 2,781.0 |
| Employee Wages and Benefits | 352.1 | 386.7 | 423.8 | 430.0 | 519.7 |
| Costs Incurred to Providers of Capital: Interest Expense and Declared Dividends |
147.6 | 152.3 | 166.1 | 194.4 | 230.9 |
| Taxes and Royalties Paid | 100.5 | 250.6 | 430.1 | 236.2 | 507.1 |
| Community Donations and Investments, Political Contributions | 2.1 | 3.1 | 3.8 | 3.0 | 3.5 |
| Total | 2,312.4 | 2,674.3 | 3,174.4 | 3,136.7 | 4,042.2 |
| Source: PotashCorp, based on G3 framework | |||||
Goods, Materials and Services Purchased
The total value of goods, materials and services purchased was just over $2.78 billion.
GOODS, MATERIALS AND SERVICES PURCHASED |
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| ($ million) | 2003 | 2004 | 2005 | 2006 | 2007 |
| Potash | 307.7 | 357.7 | 394.8 | 573.1 | 717.5 |
| Nitrogen | 763.7 | 821.8 | 930.7 | 825.0 | 910.1 |
| Phosphate | 600.0 | 649.1 | 781.7 | 823.2 | 1,095.1 |
| Corporate | 38.7 | 53.0 | 43.4 | 51.8 | 58.3 |
| Total | 1,710.1 | 1,881.6 | 2,150.6 | 2,273.1 | 2,781.0 |
| Source: PotashCorp | |||||
A major part of PotashCorp's annual procurement represents production feedstocks such as natural gas and sulfur. Other major goods, services and materials purchased include freight, electricity, materials for maintenance and repair and contract services.
Payroll
PotashCorp has employees in the US, Canada, Trinidad, Brazil and Jordan. Many of its facilities are located in small towns where the company is a dominant employer.
In 2007, the total payroll (including benefits) for its worldwide regular workforce was $519.7 million. Payments to the nested contractor workforce totaled an additional $95.0 million.
WAGES AND BENEFITS FOR POTASHCORP'S REGULAR WORKFORCE |
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| ($ million) | 2003 | 2004 | 2005 | 2006 | 2007 |
| Total Wages | 237.4 | 290.6 | 299.0 | 315.0 | 384.1 |
| Benefits | 114.7 | 96.1 | 124.8 | 115.0 | 135.6 |
| Total | 352.1 | 386.7 | 423.8 | 430.0 | 519.7 |
| Source: PotashCorp | |||||
Costs Incurred to Providers of Capital
In 2007, PotashCorp expensed and incurred almost $230.9 million to providers of capital. Of this total, $118.6 million (first two line items in the table below) was incurred to debt holders and $110.6 million was paid to shareholders.
POTASHCORP'S COSTS INCURRED TO PROVIDERS OF CAPITAL |
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| ($ million) | 2003 | 2004 | 2005 | 2006 | 2007 |
| Interest Expense to Short- term Debtholders |
5.1 | 3.4 | 7.0 | 34.5 | 8.7 |
| Interest Expense to Long- term Debtholders (net of interest capitalized to property, plant and equipment) |
90.2 | 89.0 | 94.1 | 97.6 | 111.6 |
| Dividends Paid | 52.3 | 59.9 | 65.0 | 62.3 | 110.6 |
| Total | 147.6 | 152.3 | 166.1 | 194.4 | 229.2 |
| Source: PotashCorp | |||||
Shareholders
In 2007, PotashCorp announced an increase in its dividend rate and paid out a total of $93.6 million in dividends to shareholders (dividends of $110.6 were declared).
Shareholders benefited from a 202 percent total return in 2007. This surpassed the performance of the company's peer group (141 percent) and exceeded the 30 percent return achieved by the DJUSBM over the same period.
TOTAL SHAREHOLDER RETURN |
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| (%) | 2003 | 2004 | 2005 | 2006 | 2007 |
| Total shareholder return | 37.5 | 93.4 | (2.7) | 79.6 | 201.6 |
| Source: PotashCorp | |||||
Book value of shareholders' equity at the end of 2007 was $6.02 billion. This was more than double the $2.78 billion at the end of 2006, mainly reflecting new accounting standards implemented in 2007 that required the company to record the net unrealized gains on available-for-sale securities, including its investments in certain offshore potash companies, and cash flow hedges in a separate component of equity. The increase in value of the company's investments in ICL and Sinofert included in equity in 2007 was $2.13 billion. The remainder of the increase in the book value of shareholders' equity pertained primarily to 2007 net income of $1.10 billion.
BOOK VALUE OF SHAREHOLDERS' EQUITY |
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| ($ million) | 2003 | 2004 | 2005 | 2006 | 2007 |
| Total | 1,973.8 | 2,385.6 | 2,132.5 | 2,780.3 | 6,018.7 |
| Source: PotashCorp | |||||
Taxes and Royalties
In 2007, PotashCorp paid taxes and royalties of $507 million, an all-time record. The majority of these taxes and royalties was paid to governments in Canada ($340 million) and Trinidad ($98 million).
Details regarding taxes in Canada, the US and Trinidad are set out in the following table. Tax expenses incurred and paid in other countries are not significant and have been attributed to the parent and reported as "all other taxes" under Canada.
PotashCorp Taxes and Royalties |
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| ($ million) | 2003 | 2004 | 2005 | 2006 | 2007 |
Canada |
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| Income Taxes | 14.9 | 69.4 | 170.5 | 51.8 | 154.1 |
| All Other Taxes | 21.1 | 27.4 | 36.4 | 34.7 | 45.7 |
| Potash Profits Tax, Surtax and Base Payment Tax |
54.7 | 91.4 | 134.3 | 62.4 | 131.1 |
| Royalties | 3.6 | 4.8 | 8.3 | 5.9 | 8.8 |
| Canada Total | 94.3 | 193.0 | 349.5 | 154.8 | 339.7 |
United States |
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| Income Taxes | (17.0) | 16.9 | 3.0 | 4.9 | 45.2 |
| All Other Taxes | 20.4 | 20.8 | 23.1 | 24.3 | 24.0 |
| US Total | 3.4 | 37.7 | 26.1 | 29.2 | 69.2 |
Trinidad |
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| Income Taxes | 2.1 | 19.1 | 53.8 | 51.4 | 97.3 |
| All Other Taxes | 0.7 | 0.8 | 0.7 | 0.8 | 0.9 |
| Trinidad Total | 2.8 | 19.9 | 54.5 | 52.2 | 98.2 |
Total Taxes and Royalties |
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| Income Taxes | -- | 105.4 | 227.3 | 108.1 | 296.6 |
| All Other Taxes | 42.2 | 49.0 | 60.2 | 59.8 | 70.6 |
| Potash Profits Tax, Surtax and Base Payment Tax |
54.7 | 91.4 | 134.3 | 62.4 | 131.1 |
| Royalties | 3.6 | 4.8 | 8.3 | 5.9 | 8.8 |
| Total | 100.5 | 250.6 | 430.1 | 236.2 | 507.1 |
| Source: PotashCorp | |||||
Community Donations
In 2007, cash and non-cash donations to PotashCorp's host communities and other worthy causes totaled more than $3.5 million. Cash donations, including matching gift contributions, exceeded $3.2 million and non-cash donations were $0.3 million.
Company employees contributed an additional $0.7 million to charitable organizations, the most significant being the United Way.
The company set a target to give more than 1 percent of its after-tax earnings. The after-tax earnings are the average earnings of the five years prior to the year that the money is donated. Even though this is a future target, the company's performance against this target is given in the table below.
More information on the community and charitable contributions by PotashCorp and its employees can be found in the Social and Site Performance sections.
CHARITABLE DONATIONS |
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| ($ million) | 2003 | 2004 | 2005 | 2006 | 2007 |
| Charitable Grants | 1.1 | 1.7 | 2.8 | 2.1 | 2.5 |
| Share of Matching Gifts Program | 0.4 | 0.4 | 0.5 | 0.5 | 0.7 |
| Charitable Non-cash Donations | 0.6 | 1.0 | 0.6 | 0.4 | 0.3 |
| Total | 2.1 | 3.1 | 3.8* | 3.0 | 3.5 |
| % of 5-year after-tax earnings | 1.4 | 2.8 | 2.5 | 1.3 | 1.1 |
| *The line item does not add to the total because of rounding. More detailed numbers are given in the Social section. Source: PotashCorp |
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