The following Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the material under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Annual Report on Form 10-K of The Mosaic Company filed with the Securities and Exchange Commission for the fiscal year ended May 31, 2009 and the material under Item 1 of Part I of this report.

Throughout the discussion below, we measure units of production, sales and raw materials in metric tonnes, which are the equivalent of 2,205 pounds, unless we specifically state we mean long ton(s) which are the equivalent of 2,240 pounds. In the following tables, there are certain percentages that are not considered to be meaningful and are represented by "NM".

Results of Operations

The following table shows the results of operations for the three months ended
August 31, 2009 and 2008:



                                               Three months ended
                                                   August 31,                      2009-2008
(in millions, except per share data)          2009            2008            Change         Percent
Net sales                                   $ 1,457.2       $ 4,322.5       $ (2,865.3 )         (66 %)
Cost of goods sold                            1,235.0         2,673.9         (1,438.9 )         (54 %)

Gross margin                                    222.2         1,648.6         (1,426.4 )         (87 %)
Gross margin percentage                          15.2 %          38.1 %
Selling, general and administrative
expenses                                         81.4            90.0             (8.6 )         (10 %)
Other operating expenses                          6.6             9.7             (3.1 )         (32 %)

Operating earnings                              134.2         1,548.9         (1,414.7 )         (91 %)
Interest expense, net                            14.9            10.6              4.3            41 %
Foreign currency transaction (gain)             (13.1 )         (86.7 )           73.6           (85 %)
Other (income)                                   (0.4 )          (1.5 )            1.1           (73 %)

Earnings from consolidated companies
before income taxes                             132.8         1,626.5         (1,493.7 )         (92 %)
Provision for income taxes                       32.8           497.7           (464.9 )         (93 %)

Earnings from consolidated companies            100.0         1,128.8         (1,028.8 )         (91 %)
Equity in net earnings of
nonconsolidated companies                         2.5            59.8            (57.3 )         (96 %)

Net earnings including non-controlling
interest                                        102.5         1,188.6         (1,086.1 )         (91 %)
Less: Net earnings attributable to
non-controlling interest                         (1.9 )          (3.9 )            2.0           (51 %)

Net earnings attributable to Mosaic         $   100.6       $ 1,184.7       $ (1,084.1 )         (92 %)

Diluted net earnings attributable to
Mosaic per share                            $    0.23       $    2.65       $    (2.42 )         (91 %)
Diluted weighted average number of
shares outstanding                              446.3           446.5

Overview of Consolidated Results for the three months ended August 31, 2009 and August 31, 2008

Net earnings attributable to Mosaic for the fiscal 2010 first quarter ended August 31, 2009 were $100.6 million, or $0.23 per diluted share, compared with net earnings attributable to Mosaic of $1.2 billion, or $2.65 per diluted share, for the same period a year ago. The more significant factors affecting our results of operations and financial condition are listed below. Certain of these factors are discussed in more detail in the following sections of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Mosaic's first quarter results in fiscal 2010 were impacted by significant declines in phosphate selling prices, potash sales volumes, and potash selling prices, following very strong market conditions in the same period in the prior year. In the latter part of the second quarter of fiscal 2009, we began to experience a rapid softening of the strong agricultural fundamentals and industry demand that was due to a change in buyer sentiment resulting from, among other factors, lower grain and oilseed prices, a build-up of inventories in the distribution supply chain, the global economic slowdown and the re-calibration of the phosphate market to reflect lower raw material input costs. These market conditions caused phosphate selling prices and volumes to begin declining toward the end of the second quarter of fiscal 2009. In our most recent quarter, phosphate sales volumes resumed to levels comparable to a year ago. Potash sales volumes and selling prices continue to be affected by cautious customer purchasing behavior due to volatile grain and oilseed prices and the lack of normal contracting activity, including key international customer contracts with Canpotex. Because of continued lower demand for potash, we are operating at reduced production volumes into the second quarter of fiscal 2010. The lower potash demand and production levels had a significant adverse impact on our operating costs and results in the first quarter of fiscal 2010.

During the three months ended August 31, 2009:

• We generated $172.4 million in cash flow from operations in the first quarter of fiscal 2010. The positive cash flow from operations was primarily driven by net earnings.

• We maintained a strong financial position, with cash and cash equivalents of $2.6 billion as of August 31, 2009.

• In addition, on July 29, 2009, we entered into a new unsecured three-year revolving credit facility of up to $500 million (the "Mosaic Credit Facility"). The Mosaic Credit Facility is available for revolving credit loans, swing line loans of up to $20 million and letters of credit of up to $200 million. The Mosaic Credit Facility replaces our prior senior secured credit facility entered into on February 18, 2005 (the "Prior Credit Facility"). Replacement of the Prior Credit Facility with the Mosaic Credit Facility reflects the culmination of our efforts to achieve the goal we established at the time of formation of Mosaic to achieve investment grade credit ratings2 and eliminate a non-investment grade debt covenant structure.

• We continued the expansion of capacity in our Potash segment, in line with our views of the long-term fundamentals of that business. The planned expansions are expected to increase our annual capacity for finished product by more than five million tonnes over the next eleven years. Some of the expansions have been approved and are underway while others are in the planning phases.

2 A security rating is not a recommendation to buy, sell or hold securities. A security rating may be subject to revision or withdrawal at any time by the assigning rating organization. Each rating should be evaluated separately from any other rating.

Phosphates Net Sales and Gross Margin

The following table summarizes Phosphates net sales, gross margin, sales volume,
selling prices and raw material prices:



                                          Three months ended August 31,                    2009-2008
(in millions, except price per
tonne or unit)                            2009                   2008                Change          Percent
Net sales:
North America                         $      294.8          $         910.3        $   (615.5 )          (68 %)
International                                519.6                  1,682.5          (1,162.9 )          (69 %)

Total                                        814.4                  2,592.8          (1,778.4 )          (69 %)
Cost of goods sold                           703.0                  1,587.1            (884.1 )          (56 %)

Gross margin                          $      111.4          $       1,005.7        $   (894.3 )          (89 %)

Gross margin as a percent of net
sales                                           14 %                     39 %
Sales volume (in thousands of
metric tonnes)
Crop Nutrients(a):
North America                                  683                      779               (96 )          (12 %)
International                                1,244                    1,138               106              9 %

Total                                        1,927                    1,917                10              1 %
Feed Phosphates                                135                      174               (39 )          (22 %)

Total                                        2,062                    2,091               (29 )           (1 %)

Average selling price per tonne:
DAP (FOB plant)                       $        276          $         1,013        $     (737 )          (73 %)
Average price per unit:
Ammonia (metric tonne)(Central
Florida)                              $        233          $           572        $     (339 )          (59 %)
Sulfur (long ton)                               43                      573              (530 )          (92 %)

(a) Excludes tonnes sold by PhosChem for its other members

Three months ended August 31, 2009 and 2008

Phosphate's net sales decreased 69% to $814.4 million in the first quarter of fiscal 2010, as a result of the significant decline in average selling prices.

Our average DAP selling price was $276 per tonne in the first quarter of fiscal 2010, a decrease of $737 per tonne or 73% compared with the same period a year ago. The market DAP selling price began to decline sharply toward the end of the second quarter of fiscal 2009 before stabilizing in the first quarter of fiscal 2010. This was due to the combined effects of several factors previously described in the Overview Section.

Sales volumes of concentrated phosphate crop nutrients and animal feed ingredients were flat at 2.1 million tonnes for the first quarter of fiscal 2010 compared to fiscal 2009. A decline in crop nutrient phosphates sales volumes into North America was offset by an increase in shipments to International customers. Feed phosphate sales volumes declined in the first quarter of fiscal 2010 by approximately 22% compared with a year ago primarily due to weak economics in the livestock industry and customers' increasing use of an enzyme that can help optimize usage of phosphates-based animal feed ingredients.

Gross margin decreased to $111.4 million, or 14% of net sales in the first quarter of fiscal 2010 compared with $1.0 billion, or 39% of net sales in the same period of fiscal 2009. The decline in gross margin was primarily due to the effects of significantly lower selling prices, partially offset by lower raw material costs for sulfur and ammonia and net unrealized mark-to-market derivative gains compared with net losses a year ago. Net

unrealized mark-to-market derivative gains, primarily on natural gas derivatives, were $4.6 million in the first quarter of fiscal 2010 compared with net losses, primarily on natural gas derivatives, of $74.6 million for the same period a year ago.

The average price for sulfur declined to $43 per long ton in the first quarter of fiscal 2010 from $573 in the same period a year ago. The average price for ammonia (central Florida) decreased to $233 per tonne in the first quarter of fiscal 2010 from $572 in the same period a year ago. The decline in these raw material costs is due to lower demand for sulfur and lower natural gas input costs for ammonia compared with the first quarter of fiscal 2009. During the current fiscal year, we continue to work through higher cost contracted purchases of sulfur that were committed to when supply was short and prices were substantially higher.

We consolidate the financials of Phosphate Chemicals Export Association, Inc. ("PhosChem"), a U.S. Webb-Pomerene Act export association which markets phosphate crop nutrients outside of the U.S. for us and its other member. Included in our first quarter results in fiscal 2010 is PhosChem revenue and cost of goods sold from sales for its other member of $111.6 million, compared with $288.9 million for the first quarter in fiscal 2009.

Phosphates' production of crop nutrient dry concentrates decreased to 1.8 million tonnes for the first quarter of fiscal 2010 compared with 2.1 million tonnes for the same period a year ago. We had reduced our phosphate production in response to a prior build-up of inventories in crop nutrient distribution channels and a decline in demand. Toward the end of the first quarter of fiscal 2010, we increased production closer to normal levels due to increased sales orders and demand. Our phosphate inventory levels had been drawn down significantly as of August 31, 2009 due to this increased demand.

Potash Net Sales and Gross Margin

The following table summarizes Potash net sales, gross margin, sales volume and
selling price:



                                           Three months ended August 31,                   2009-2008
(in millions, except price per
tonne or unit)                              2009                   2008              Change         Percent
Net sales:
North America                           $       141.5          $       379.7        $ (238.2 )          (63 %)
International                                   191.8                  596.7          (404.9 )          (68 %)

Total                                           333.3                  976.4          (643.1 )          (66 %)
Cost of goods sold                              208.7                  473.2          (264.5 )          (56 %)

Gross margin                            $       124.6          $       503.2        $ (378.6 )          (75 %)

Gross margin as a percent of net
sales                                              37 %                   52 %
Sales volume (in thousands of
metric tonnes)
Crop Nutrients(a):
North America                                     109                    546            (437 )          (80 %)
International                                     508                  1,090            (582 )          (53 %)

Total                                             617                  1,636          (1,019 )          (62 %)
Non-agricultural                                  178                    261             (83 )          (32 %)

Total                                             795                  1,897          (1,102 )          (58 %)

Average selling price per tonne:
MOP (FOB plant)                         $         382          $         488        $   (106 )          (22 %)

(a) Excludes tonnes related to a third-party tolling arrangement

Three months ended August 31, 2009 and 2008

Potash net sales were $333.3 million in the first quarter of fiscal 2010 compared with $976.4 million in the same period of fiscal 2009. The 66% decrease in net sales in the first quarter of fiscal 2010 resulted primarily from a 58% decline in sales volumes as well as a 22% decline in the average selling price for MOP. Sales volumes declined to 0.8 million tonnes in the quarter due to continued slow demand around the world as a result of the factors previously noted in the Overview Section.

Our average MOP selling price was $382 per tonne in the first quarter of fiscal 2010, a decline of $106 per tonne compared with the same period a year ago. The decline in the average MOP selling price was primarily the result of a decline in the average export price for MOP and a shift in sales volume mix. Approximately 22% of total sales volume was to non-agricultural customers compared with 14% a year ago. This shift in mix was primarily driven by lower sales volumes of crop nutrients. The average non-agricultural selling price is at a discount to crop nutrient selling prices but the gap is narrowing on pricing.

Gross margin decreased to $124.6 million, or 37% of net sales in the first quarter of fiscal 2010 compared with $503.2 million, or 52% of net sales in the same period of fiscal 2009. Gross margin decreased primarily as a result of the sharp decline in sales volumes, the effects of significantly lower operating rates on fixed cost absorption and a decrease in the average MOP selling price, along with a shift in sales mix to more North American non-agricultural sales. Fixed cost absorption unfavorably impacted our results by approximately $130 million in the first quarter of fiscal 2010. These factors were partially offset by lower net unrealized mark-to-market derivative losses and lower Canadian resource taxes and royalties. Our fixed cost absorption will continue to be impacted in fiscal 2010 until demand returns and we resume production to more normal levels. Net unrealized mark-to-market derivative losses were $1.6 million in the first quarter of fiscal 2010 compared with losses of $41.7 million for the same period a year ago.

We incurred $17.2 million in Canadian resource taxes and royalties in the first quarter of fiscal 2010 compared with $169.0 million a year ago. The decline in these taxes was the result of our lower profitability due to the significant reduction in sales volumes.

The brine inflows at our Esterhazy mine unfavorably impacted gross margin by $24.6 million during the first quarter of fiscal 2010 compared with $13.7 million a year ago. Approximately 25% of these cash costs for the brine inflows are reimbursed under a tolling agreement. At various times, our Esterhazy mine experiences new or increased brine inflows. The increase in costs in the first quarter of fiscal 2010 is due to slightly higher brine inflow rates compared with a year ago, yet within a manageable level.

Potash production declined to 0.8 million tonnes for the first quarter of fiscal 2010 compared with 2.0 million tonnes for the same period a year ago. Due to slow demand and in order to more effectively manage inventories, we continue to operate at lower production rates and will continue to do so until demand improves.

Offshore Net Sales and Gross Margin

The following table summarizes Offshore net sales, gross margin, and gross
margin as a percentage of net sales:



                                                Three months ended
                                                    August 31,                            2009-2008
(in millions)                                 2009              2008              Change             Percent
Net sales                                  $     468.1        $ 1,048.0        $     (579.9 )              (55 %)
Cost of goods sold                               456.9            867.4              (410.5 )              (47 %)

Gross margin                               $      11.2        $   180.6        $     (169.4 )              (94 %)

Gross margin as a percent of net sales               2 %             17 %

Three months ended August 31, 2009 and 2008

Offshore net sales declined to $468.1 million, or 55%, in the first quarter of fiscal 2010 compared with the same period in fiscal 2009, primarily due to a decline in international selling prices and, to a lesser extent, a decline in sales volumes. Offshore results were impacted by the factors previously noted in the Overview Section. Gross margin decreased to $11.2 million, or 2% of net sales, in the first quarter of fiscal 2010, compared with a gross margin of $180.6 million, or 17% of net sales, for the same period a year ago for the same reasons as the decline in net sales. Our Offshore segment sells products produced by our Phosphates and Potash segments, as well as other suppliers. Strong Offshore results in the first quarter of fiscal 2009 primarily reflected the significant benefit of positioning lower cost inventories in a period of rising selling prices.

Other Income Statement Items



                                         Three months ended                                      Percent of
                                             August 31,                  2009-2008                Net Sales
(in millions)                            2009           2008        Change       Percent       2009       2008
Selling, general and administrative
expenses                               $    81.4       $  90.0      $  (8.6 )        (10 %)       6 %        2 %
Other operating expenses                     6.6           9.7         (3.1 )        (32 %)       0 %        0 %
Interest expense                            18.8          25.1         (6.3 )        (25 %)       1 %        1 %
Interest income                              3.9          14.5        (10.6 )        (73 %)       0 %        0 %

Interest expense, net                       14.9          10.6          4.3           41 %        1 %        0 %
Foreign currency transaction (gain)        (13.1 )       (86.7 )       73.6          (85 %)      (1 %)      (2 %)
Other (income)                              (0.4 )        (1.5 )       (1.1 )         73 %        0 %        0 %
Provision for income taxes                  32.8         497.7        464.9           93 %        2 %       12 %
Equity in net earnings of
nonconsolidated companies                    2.5          59.8        (57.3 )        (96 %)       0 %        1 %

Foreign Currency Transaction (Gain) Loss

For the first quarter of fiscal 2010, we recorded foreign currency transaction gains of $13.1 million, compared with gains of $86.7 million for the same period in the prior year. For the first quarter of fiscal 2009, the gains were mainly the result of the effect of a strengthening of the U.S. dollar relative to the Canadian dollar on significant U.S. dollar denominated intercompany receivables and cash held by our Canadian affiliates.

Provision for Income Taxes



                                            Effective       Provision for
            Three months ended August 31,   Tax Rate        Income Taxes
            2009                                 24.7 %    $          32.8
            2008                                 30.6 %              497.7

Income tax expense was $32.8 million and the effective tax rate was 24.7% for the first quarter of fiscal 2010. For the first quarter of fiscal 2009, we had income tax expense of $497.7 million and an effective tax rate of 30.6%. The effective tax rate is impacted primarily by the benefit associated with depletion along with the amount of income and the jurisdictions in which the income is taxed. These items had a greater impact on the rate for the first quarter of fiscal 2010 relative to the first quarter of fiscal 2009. The tax rate in the first quarter of fiscal 2009 reflected $20.4 million of benefits specific to the period, including approximately $18 million related to our ability to utilize foreign tax credits.

Equity in Net Earnings of Non-Consolidated Companies

Equity in net earnings of non-consolidated companies was $2.5 million for the first quarter of fiscal 2010, compared with $59.8 million for the same period in fiscal 2009. The decrease in equity earnings in fiscal 2010 is

primarily due to the sale of Saskferco Products ULC and lower equity earnings from our investment in Fertifos S.A. and its subsidiary Fosfertil. The three months ended August 31, 2009 did not include equity earnings of Saskferco due to the sale of our investment on October 1, 2008. The decrease in equity earnings from Fertifos S.A. is a result of a decrease in phosphate selling prices, higher costs of raw materials to produce phosphates, and an unfavorable foreign exchange impact.

Critical Accounting Estimates

The Consolidated Financial Statements are prepared in conformity with U.S. GAAP. In preparing the Consolidated Financial Statements, we are required to make various judgments, estimates and assumptions that could have a significant impact on the results reported in the Consolidated Financial Statements. We base these estimates on historical experience and other assumptions believed to be reasonable by management under the circumstances. Changes in these estimates could have a material effect on our Consolidated Financial Statements.

Our significant accounting policies, including our significant accounting estimates, are summarized in Note 2 to the Consolidated Financial Statements. A more detailed description of our significant accounting policies is included in Note 2 of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended May 31, 2009. Further information regarding our critical accounting estimates is included in Management's Discussion and Analysis in our Annual Report on Form 10-K for the fiscal year ended May 31, 2009.

Liquidity and Capital Resources

The following table represents a comparison of the cash provided by operating
activities, cash used in investing activities, and cash used in financing
activities for the three months ended August 31, 2009 and August 31, 2008:



                                                   Three months ended                        2009 - 2008
                                            August 31,            August 31,
(in millions)                                  2009                  2008             $ Change          % Change
Cash Flow
Cash provided by operating activities      $       172.4         $      561.5         $  (389.1 )            (69 %)
Cash used in investing activities                 (236.1 )             (187.8 )           (48.3 )             26 %
Cash used in financing activities                  (27.5 )              (76.5 )            49.0              (64 %)

At August 31, 2009, we had $2.6 billion in cash and cash equivalents. Funds generated by operating activities, available cash and cash equivalents, and our credit facilities continue to be our most significant sources of liquidity. We believe funds generated from the expected results of operations and available cash and cash equivalents will be sufficient to finance expansion plans and strategic initiatives for the remainder of fiscal 2010. In addition, our Mosaic Credit Facility is available for additional working capital needs and investment opportunities. There can be no assurance, however, that we will continue to generate cash flows at or above current levels.

Operating Activities

Cash flow generated from operating activities has provided us with a significant source of liquidity. During the first quarter of fiscal 2010, net cash provided by operating activities was $172.4 million, a decrease of $389.1 million compared to the same period in fiscal 2009. The decrease in operating cash flows was primarily due to a reduction in net earnings and significant changes in working capital levels in the prior year. The changes in working capital in the first quarter of fiscal 2010 included reductions in accounts receivable, inventories, accrued liabilities and accrued income taxes. Accounts receivable decreased as a result of lower sales in the current year. The reduction in . . .