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, 2003.
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, 2003 and 2002 and for the
Year Ended December 31, 2003,
Supplemental Schedule as of December 31, 2003 and
Independent Auditors' Report
PCS U.S. EMPLOYEES' SAVINGS PLAN
TABLE OF CONTENTS
--------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available for Benefits as of
December 31, 2003 and 2002 2
Statement of Changes in Net Assets Available for Benefits for the
Year Ended December 31, 2003 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, 2003 8
All other schedules required by Section 2520.103-10 of the Department of Labor's
Rules and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974 have been omitted because they are not applicable.
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, 2003 and
2002, and the related statement of changes in net assets available for benefits
for the year ended December 31, 2003. 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,
2003 and 2002, and the changes in net assets available for benefits for the year
ended December 31, 2003 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, 2003 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 2003 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 29, 2004
PCS U.S. EMPLOYEES' SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
--------------------------------------------------------------------------------
2003 2002
ASSETS:
Participant-directed investments (Note 3) $187,949,279 $166,284,315
Unsettled trades 32,123
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $187,981,402 $166,284,315
============ =============
See notes to financial statements.
PCS U.S. EMPLOYEES' SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2003
-------------------------------------------------------------------------------
ADDITIONS:
Contributions:
Employer contributions $ 2,807,636
Participant contributions 7,713,393
Rollover contributions 166,161
-----------
Total contributions 10,687,190
-----------
Investment income:
Net appreciation in fair value of investments (Note 3) 21,162,967
Interest and dividends 4,573,567
-----------
Net investment income 25,736,534
-----------
Net Transfers from Affiliate Plans 104,121
-----------
Total additions 36,527,845
-----------
DEDUCTIONS:
Benefits paid to participants (14,814,323)
Administrative expenses (16,435)
-------------
Total deductions (14,830,758)
-------------
INCREASE IN NET ASSETS 21,697,087
NET ASSETS AVAILABLE FOR BENEFITS:
Beginning of year 166,284,315
------------
End of year $187,981,402
============
See notes to financial statements.
PCS U.S. EMPLOYEES' SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2003 AND 2002 AND FOR THE
YEAR ENDED DECEMBER 31, 2003
--------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following description of the PCS U.S. Employees' Savings Plan (the
"Plan") is provided for general information purposes only. Participants
should refer to the Plan Document for more complete information.
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. The Employee Benefits Committee of the Company
controls and manages the operation and administration of the Plan. The
Plan is subject to the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA").
Contributions--Participants may contribute up to 50 percent of base
compensation each year, as defined in the Plan, subject to certain
Internal Revenue Code limitations. The Company match, which was 100
percent of up to the first five percent of base compensation that
participants contribute to the Plan, was eliminated as of August 1, 2003.
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 matching contribution when applicable, and
allocations of plan earnings, and is charged with withdrawals, 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.
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, twelve 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.
Vesting--Participants are immediately vested in their account balances.
Participant Loans--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 on the
last day of the preceding quarter in which the funds are borrowed. 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. Other
forms of benefits are also provided to participants whose accounts were
transferred from other plans. 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. The Plan includes an ESOP
feature with a dividend payout program whereby participants may elect to
receive dividends paid on their vested shares of PCS Common Stock in the
PCS Stock Fund.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting--The accompanying financial statements have been
prepared in accordance with accounting principles generally accepted in
the United States of America.
Use of Estimates--The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires Plan management 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, including mutual funds,
pooled investment stable value fund, and common stock. 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 mutual funds are valued at quoted market prices, which
represent the net asset value of shares held by the Plan at year-end. The
Fidelity Managed Income Portfolio II is valued at the amount of
participant and Company contributions plus accrued interest thereon
(contract value). Participant loans are valued at the outstanding loan
balances.
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
4.12% and 4.64% at December 31, 2003 and 2002, respectively, which were
based on the interest rates of the underlying portfolio of assets. The
average yield for the year ended December 31, 2003 was 4.31%.
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.
Management fees and operating expenses charged to the Plan for investment
in the mutual funds are deducted from income earned on a daily basis and
are not separately reflected. Consequently, management fees and operating
expenses are reflected as a reduction of net appreciation (depreciation)
in fair market value of investments for such investments.
Administrative Expenses--Administrative expenses of the Plan are paid by
the Plan or the Plan Sponsor, as provided in the Plan Document.
Payment of Benefits--Benefit payments to participants are recorded upon
distribution. 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, 2003 and 2002.
Transfers--Along with the plan, the company also sponsors savings plans
for certain union employees. If employees change their union status during
the year, their account balances are transferred into the corresponding
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, 2003 and 2002 are marked with an asterisk:
2003 2002
Fixed Income and Bond Funds:
Fidelity Managed Income Portfolio II $ 61,748,565 * $ 63,989,006 *
Fidelity Retirement Money Market Portfolio 6,112,264 6,708,160
Fidelity Institutional Short-
Intermediate Government Fund 6,508,618 6,718,784
Fidelity U.S. Government Reserves Fund 1,153 7
Equity Funds:
Clipper Fund 889,115
Fidelity Puritan Fund 12,773,141 * 10,600,623 *
Fidelity Magellan Fund 21,087,002 * 16,448,744 *
Fidelity Growth and Income Portfolio 28,795,862 * 25,102,127 *
Fidelity Overseas Fund 4,412,309 2,756,976
Fidelity Aggressive Growth Fund 14,705,575 * 9,864,562 *
Fidelity Mid-Cap Stock Fund 2,132,716 1,048,144
Fidelity Small Cap Stock Fund 3,587,804 1,831,058
Fidelity Spartan US Equity Index Fund 11,898,309 * 9,127,110 *
PCS Common Stock 8,499,361 7,251,291
Participant Loans 4,797,485 4,837,723
------------ ------------
Total $187,949,279 $166,284,315
============ ============
During 2003, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
(depreciated) in value as follows:
Fixed Income and Bond Funds:
Fidelity Institutional Short-Intermediate Government Fund $ (46,236)
Equity Funds:
Clipper Fund 73,262
Fidelity Puritan Fund 1,804,659
Fidelity Magellan Fund 3,970,288
Fidelity Growth and Income Portfolio 4,345,635
Fidelity Overseas Fund 1,249,436
Fidelity Aggressive Growth Fund 3,477,039
Fidelity Mid-Cap Stock Fund 401,665
Fidelity Small Cap Stock Fund 950,113
Fidelity Spartan US Equity Index Fund 2,478,407
PCS Common Stock 2,458,699
-----------
Net appreciation of investments $21,162,967
===========
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 return earned on
each fund.
At December 31, 2003 and 2002, the Plan held 98,281.235 shares and
114,031.932 shares, respectively, of common stock of Potash Corporation of
Saskatchewan, the parent company of the Plan sponsor, with a cost basis of
$7,172,440 and $8,303,689, respectively. During the year ended December
31, 2003, the Plan recorded dividend income of $110,700.
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 set forth in 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 was designed in accordance
with applicable Internal Revenue Code requirements. The Plan has been
amended since receiving the determination letter. However, the Company and
Plan administrator believe that the Plan is currently designed and being
operated in compliance with the applicable requirements of the Internal
Revenue Code and continues to be tax-exempt. Therefore, no provision for
income taxes has been included in the Plan's financial statements.
******
PCS U.S. EMPLOYEES' SAVINGS PLAN
FORM 5500, SCHEDULE H, PART IV, LINE 4i-
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
DECEMBER 31, 2003
------------------------------------------------------------------------------------------------------------------------------------
Description of Investment,
Including Maturity Date,
Identity of Issue, Borrower, Rate of Interest, Collateral, Current
Lessor, or Similar Party Par, or Maturity Value Cost** Value
SHARES OF REGISTERED INVESTMENT COMPANIES:
Pacific Financial Research Clipper Fund $ 889,115
* Fidelity Management Trust Company Puritan Fund 12,773,141
* Fidelity Management Trust Company Magellan Fund 21,087,002
* Fidelity Management Trust Company Growth and Income Portfolio 28,795,862
* Fidelity Management Trust Company Overseas Fund 4,412,309
* Fidelity Management Trust Company Aggressive Growth Fund 14,705,575
* Fidelity Management Trust Company Retirement Money Market Portfolio 6,112,264
* Fidelity Management Trust Company Mid-Cap Stock Fund 2,132,716
* Fidelity Management Trust Company Small Cap Stock Fund 3,587,804
* Fidelity Management Trust Company Spartan US Equity Index Fund 11,898,309
* Fidelity Management Trust Company Institutional Short-Intermediate Government Fund 6,508,618
* Fidelity Management Trust Company U.S. Governement Reserves Fund 1,153
COMMINGLED POOL:
* Fidelity Management Trust Company Managed Income Portfolio II 61,748,565
* POTASH CORPORATION OF SASKATCHEWAN PCS Common Stock, 98,281.235 shares 8,499,361
* PARTICIPANT LOANS Due 2004 through 2026; interest rates
ranging from 4.75% to 9.250% $ 4,797,485
------------
TOTAL ASSETS HELD FOR INVESTMENT $187,949,279
============
* Party in interest.
** Cost information is not required for participant-directed investments and, therefore, is not included.
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
-------------------------------------
(Name of plan)
Date: June [ ], 2004 /s/ Barbara Jane Irwin
------------------- -------------------------------------
Barbara Jane Irwin
Senior Vice President, Administration
PCS Administration (USA), Inc.
as Plan Administrator
EXHIBIT INDEX
Exhibit Number Description of Exhibit
------------------------ ----------------------------------------------------
23.1 Consent of Deloitte & Touche, L.L.P.