MOSAIC CROP NUTRITION, LLC Securities Registration: Business Combination (S-4/A) MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

The following is an excerpt from a S-4/A SEC Filing, filed by MOSAIC CROP NUTRITION, LLC on 11/15/2004.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS FOR THE CARGILL FERTILIZER BUSINESSES

Cautionary Statement Regarding Forward-Looking Statements

Statements other than historical information contained in this Management's Discussion and Analysis of Financial Condition and Results of Operations of the Cargill Fertilizer Businesses constitute forward-looking statements. Such forward-looking statements may be identified by the use of terminology such as "may," "expect," "anticipate," "predict," "intend," "designed," "estimate," "should" or "continue" or similar expressions. The forward-looking statements involve known or unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Cargill Fertilizer Businesses, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in the section entitled "Risk Factors," and those discussed in the section entitled "Factors Affecting Business Results" below. Readers are cautioned not to place undue reliance on the forward-looking statements, which reflect management's opinion only as of the date hereof. Mosaic undertakes no obligation to revise or publicly release the results of any revisions to these forward-looking statements.

Recent Developments

On October 22, 2004, pursuant to the merger and contribution agreement, GNS Acquisition Corp., a wholly owned subsidiary of Mosaic, merged with and into IMC and Cargill and certain of its affiliates contributed to Mosaic equity interests in certain entities owning all or substantially all of the assets, liabilities and obligations of the Cargill Fertilizer Businesses.

Pursuant to the Cargill merger, each outstanding share of IMC common stock was converted into and became the right to receive one share of Mosaic common stock. In addition, in the Cargill merger each outstanding share of IMC 7.50% mandatory convertible preferred stock was converted into and became the right to receive one share of Mosaic 7.50% mandatory convertible preferred stock. As consideration for the Cargill contribution, Cargill and its affiliates received shares of Mosaic common stock representing approximately 66.5% of the outstanding shares of Mosaic common stock (after giving effect to the Cargill transactions), in addition to 5,458,955 shares of Mosaic Class B common stock. Immediately following the consummation of the Cargill transactions, the former holders of IMC common stock owned approximately 33.5% of the outstanding shares of Mosaic common stock.

In connection with the execution of the merger and contribution agreement, Cargill and Mosaic also entered into the investor rights agreement, which provides for, among other things, Cargill and IMC to designate seven and four director nominees, respectively, with respect to each election of Mosaic's board of directors during the four-year period following completion of the Cargill transactions. The investor rights agreement was amended on October 22, 2004 to add Cargill's subsidiaries, Cargill Fertilizer, Inc. and GNS I (U.S.) Corp., as parties thereto.

For a further discussion of the Cargill merger and the Cargill transactions, please see "Description of the Cargill Transactions."

The Cargill Fertilizer Businesses suffered property damage during Hurricanes Charley, Frances and Jeanne in August and September 2004. In particular, on September 5, 2004, a breach of the active phosphogypsum stack at Mosaic's Riverview facility occurred due to excessive winds from Hurricane Frances, resulting in approximately 65 million gallons of partially-treated fertilizer process water being released into nearby Archie Creek. In addition, the recent hurricanes resulted in lost production at Mosaic and IMC of approximately 182,000 and 140,000 tons, respectively, of granulated

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product (DAP/MAP/TSP/MicroEssentials), as well as expenses relating to the handling and treatment of water resulting from massive rainfall that resulted in raised water levels in certain gypsum stacks and water retention ponds. The release described above could result in potential enforcement actions from governmental authorities, claims from private parties and future regulatory challenges. Within several days following the impact of Hurricane Frances, the phosphogypsum stack was repaired and Mosaic's Riverview facility is expected to be able to operate at full capacity without ongoing effects resulting from this hurricane. Although Mosaic does not expect that this release will be material to the ongoing operations of the Cargill Fertilizer Businesses, it may affect future regulatory and permitting requirements for Mosaic.

These hurricanes are also expected to affect the Cargill Fertilizer Businesses' results of operations for the second quarter of 2004 due in part to an anticipated decrease in revenue as a result of lost production and in part to charges associated with certain water treatment, repair and related cleanup efforts. In particular, the Cargill Fertilizer Businesses' second quarter results will include an estimated loss due to the impact from these hurricanes that resulted in lost production of the approximately 182,000 tons of granulated product (DAP/MAP/MicroEssentials) described above. The second quarter results also include a charge for the handling and treatment of water resulting from excessive rainfall from the hurricanes, as described above. While Mosaic's assessment of the total costs of such water handling is ongoing, the current estimated cost is approximately $7 million.

Business Overview

Currently, the Cargill Fertilizer Businesses consist of a group of crop nutrient business units or segments owned by Mosaic and its subsidiaries which operate certain phosphate, nitrogen and distribution businesses around the world, as well as equity interests in certain fertilizer joint ventures. The Cargill Fertilizer Businesses consist primarily of the assets, liabilities and business of the phosphate and nitrogen production and wholesale fertilizer distribution operations formerly owned by Cargill. Significant operations exist in North America, South America and Asia. Pursuant to the merger and contribution agreement, Cargill restructured its fertilizer businesses so that Cargill and certain of its subsidiaries could contribute to Mosaic equity interests in entities owning all or substantially all of the assets, liabilities and obligations of the Cargill Fertilizer Businesses on the closing date of the Cargill transactions (excluding any tradenames and trademarks that incorporate the word "Cargill"). Cargill's retail fertilizer businesses were not part of the contribution to Mosaic. These retail businesses include fertilizer farm centers and similar retail fertilizer stores and locations owned or operated by Cargill. Cargill reports the financial results of the Cargill Fertilizer Businesses in four segments: (1) Phosphate Production; (2) Crop Nutrition; (3) Brazil Fertilizer; and (4) Saskferco.

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements of the Cargill Fertilizer Businesses included in this prospectus.

Factors Affecting Business Results

Raw Material Prices

The Cargill Fertilizer Businesses purchase three main ingredients in the production of fertilizer products - natural gas, ammonia and sulfur. The prices for these products are volatile and have been unpredictable over the last several years, which has had a major impact on the consistency of net sales and gross margins.

Foreign Currency Transactions

In recent years, both Argentina and Brazil have been negatively affected by volatility of the peso and the real, respectively, which had a corresponding negative effect on the financial results of the

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Cargill Fertilizer Businesses. The recent strengthening of the Canadian dollar has also impacted financial results. Thus, significant currency fluctuations can have a material impact on the financial results of the Cargill Fertilizer Businesses.

Weather Conditions

Weather conditions are unpredictable and can have a significant impact on the operations of the Cargill Fertilizer Businesses. For example, excessive rainfall and widespread flooding along the Mississippi River during the spring of 2001 delayed planting and negatively impacted U.S. fertilizer sales and inventory valuation. The following year monsoons delivered below average rainfall to many of the key growing regions in India resulting in lower phosphate demand and DAP imports in 2002. In addition, excessive winds and rainfall from Hurricane Frances led to a release and property damage at, and a temporary shutdown of, Mosaic's Riverview facility in September 2004, and Hurricanes Charley, Frances and Jeanne affected several Florida businesses, including the Cargill Fertilizer Businesses, in August and September 2004.

Government Policies

Because the Cargill Fertilizer Businesses operate in nearly all of the major crop nutrition markets of the world, government policies can impact financial results. Macroeconomic policies that determine interest and exchange rates have significantly impacted operations in Argentina and Brazil during the past five years. Although China joined the World Trade Organization in 2001, it still vigorously protects its domestic fertilizer sector from foreign competition through policies such as an undervalued currency, price controls and non-tariff trade barriers. India, the second largest phosphate market in the world, heavily subsidizes a growing and inefficient domestic phosphate industry that still must rely on imports of either the raw materials (rock and sulphur) or the intermediate product (phosphoric acid) to produce the final good (DAP). Land reform and other agricultural policies will determine how quickly nutrient demand recovers in Russia and other former Soviet Union countries. In short, a large array of macroeconomic, trade, development and agricultural policies in countries spanning the globe can significantly impact the financial results of the Cargill Fertilizer Businesses.

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Overview of Results

The following table presents the consolidated statements of operations for the Cargill Fertilizer Businesses (in thousands of U.S. dollars):

Three Months Ended August 31, Year Ended May 31,

2004 2003 2004 2003 2002
Net sales 724,775 547,432 $ 2,373,983 $ 1,662,670 $ 1,508,912 Cost of sales 649,329 513,583 2,191,908 1,525,512 1,335,759 Gross profit 75,446 33,849 182,075 137,158 173,153 Expenses:
Selling, general & administrative 30,993 21,867 100,102 87,629 95,836 (Gain)/loss on sale of assets 232 (236 ) 717 (902 ) 3,629 Other operating income (6,000 ) - - - - Operating earnings 50,221 12,218 81,256 50,431 73,688 Interest on external debt 2,608 2,233 8,838 13,210 12,020 Interest on debt with Cargill,
Inc. and affiliates 4,993 6,045 20,326 28,010 30,847 Foreign currency (gains) losses 1,601 86 3,648 (946 ) 4,414 Other expense, (income) net (318 ) (994 ) 3,811 3,118 3,049 Earnings from continuing
operations before tax 41,337 4,848 44,633 7,039 23,358 Income tax expense (benefit) 11,222 860 3,816 (3,863 ) (1,444 ) Earnings from continuing
operations 30,115 3,988 40,817 10,902 24,802 Equity in net earnings of
nonconsolidated companies 14,472 5,079 35,839 25,667 8,225 Minority interests in net
(earnings) losses of consolidated
companies (1,205 ) (839 ) (1,453 ) 2,516 144 Net earnings from continuing
operations 43,382 8,228 75,203 39,085 33,171 Discontinued operations, net of
income taxes - - - 520 2,000 Net earnings 43,382 8,228 $ 75,203 $ 39,605 $ 35,171

The following narrative is based on the consolidated statement of operations of the Cargill Fertilizer Businesses. Following this consolidated discussion is an overview of operations and an analysis of results for each of the four business segments comprising the Cargill Fertilizer Businesses.

Three months ended August 31, 2004 compared to the three months ended August 31, 2003

Net sales of the Cargill Fertilizer Businesses for the three months ended August 31, 2004 increased 32% to $725 million from $547 million for the comparable period of the prior fiscal year, primarily due to volume and price level increases. Gross profit increased to $75 million from $34 million, driven by volume and selling price increases across most business segments.

Selling, general and administrative expenses increased 42%, to $31.0 million for the three months ended August 31, 2004, as compared to $21.9 million in the comparable period of the prior fiscal year. Selling, general and administrative expense for the three months ended August 31, 2004 included approximately $3.1 million in integration expenses related to the pending merger with IMC. In August 2004, the Brazilian government instituted changes in its laws which impacted tax credits related

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to the Social Integration Contribution on Revenue (PIS/COFINS) over raw material and services purchases. The Brazil Fertilizer segment wrote-off approximately $3.3 million in tax credits as management believes their likelihood of realization to be remote. The remaining increase was due to additional commissions and selling expenses attributable to the increased sales.

Interest expense for the three months ended August 31, 2004 on debt owed to Cargill decreased 17% to $5.0 million, as compared to $6.0 million for the comparable period in 2003, primarily due to capital contributions of $62.9 million made by Cargill to the Brazil Fertilizer segment on June 1, 2004. Other income for the three months ended August 31, 2004 primarily reflects a $6.0 million early termination fee received from Lifosa A.B. in Lithuania after the Cargill Fertilizer Businesses and Lifosa mutually agreed to terminate a marketing agreement effective July 2004.

Equity in net earnings of nonconsolidated companies for the three months ended August 31, 2004 increased to $14.5 million for the three months ended August 31, 2004, as compared to $5.1 million for the comparable period in 2003, primarily due to a $4.1 increase for the Saskferco segment and a $1.2 million increase in equity earnings from the Yunnan DAP joint venture. Equity earnings also increased $4.0 in the Brazil Fertilizer segment related to the investment in Fertifos.

Year ended May 31, 2004 compared to the year ended May 31, 2003

Net sales of the Cargill Fertilizer Businesses for fiscal 2004 increased 43% to $2,374 million from $1,663 million for fiscal 2003, primarily due to volume and price level increases. In particular, Cargill's acquisition of a phosphate manufacturing facility in Green Bay, Florida in November 2002 generated an increase of approximately $119 million in sales for the Phosphate Production segment. Gross profit increased 33% to $182 million from $137 million, driven by volume and selling price increases across all business segments.

Selling, general and administrative expenses for fiscal 2004 increased 14% to $100.1 million from $87.6 million for fiscal 2003, primarily due to additional commissions and selling expenses attributable to the increased sales. The selling, general and administrative expense for fiscal 2004 also included approximately $4.7 million in integration expenses related to the pending merger with IMC. Interest expense on external debt decreased 33% for fiscal 2004, primarily due to principal repayments and more favorable interest rates. Interest expense for fiscal 2004 on debt owed to Cargill decreased primarily due to capital contributions made by Cargill to the Brazil Fertilizer segment. The fiscal 2004 foreign currency (gains) losses included $5.0 million in losses for the Brazil Fertilizer segment related to U.S. dollar vs. Brazilian real exchange rate fluctuation impacts on receivable and payable transactions denominated in U.S. dollars. The income tax expense for fiscal 2004 is net of an $8.6 million benefit related to the depletion of the Phosphate Production segment phosphate rock reserves. A net tax benefit of $12.0 million was realized in fiscal 2004, primarily due to utilization of tax loss carryforwards. Equity earnings in nonconsolidated companies for fiscal 2004 increased primarily due to a $4.8 increase for the Saskferco segment and a $3.7 million increase in equity earnings from the Yunnan DAP joint venture, which began marketing products in February 2003. Equity earnings also increased $1.0 million in the Brazil Fertilizer segment related to the investment in Fertifos. The change in the minority interest share for fiscal 2004 is due to operations in Brazil, which improved significantly from fiscal 2003.

Year ended May 31, 2003 compared to the year ended May 31, 2002

Net sales on a consolidated basis increased 10% to $1,663 million in fiscal 2003 from $1,509 million in fiscal 2002. In particular, the November 2002 acquisition of a phosphate manufacturing facility in Green Bay, Florida generated an increase of approximately $95 million in sales for the Phosphate Production segment. Also, net sales for the Crop Nutrition segment increased approximately $70 million due to the resumption of full operations in Lithuania after Lifosa,
A.B.

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emerged from bankruptcy pursuant to a court approved restructuring plan in April, 2002. In connection with Lifosa's restructuring, the Cargill Fertilizer Businesses agreed to continue to market Lifosa's products through a marketing agreement, which the parties mutually agreed to terminate effective July 2004. Gross profit decreased 21% to $137 million in fiscal 2003 from $173 million in fiscal 2002. The primary reason for the decline in gross profit in fiscal 2003 was related to high input prices for ammonia and sulfur, which could not be recovered through selling prices.

Selling, general and administrative expenses decreased 9% to $87.6 million in fiscal 2003 from $95.8 million in fiscal 2002 primarily due to $8.1 million of currency exchange impacts in Brazil, as well as lower bad debt expense in Argentina. Interest expense on external debt in fiscal 2003 increased 10%, primarily due to higher interest rates in Brazil resulting from a higher general market price index in that country. Interest expense on debt owed to Cargill decreased in fiscal 2003 primarily due to lower interest rates. Foreign currency
(gains) losses in fiscal 2003 decreased primarily as a result of a $6.5 million expense in fiscal 2002 related to currency translation losses resulting from exchange rate fluctuations in connection with the de-linking of the Argentine peso from the U.S. dollar, as farmers continued to pay in Argentine pesos that were ultimately converted into U.S. dollars. The functional currency for the operations of the Cargill Fertilizer Businesses in Argentina currently is the U.S. dollar. The income tax benefit for fiscal 2003 included a benefit of $4.5 million related to the sale of the equity investment in Lifosa. Although the investment was written down for book purposes in fiscal 2001, it remained at its initial cost for tax purposes when it was sold in fiscal 2003. Depletion of the Phosphate Production segment phosphate rock reserves is another major contributor to tax benefits in fiscal 2003 and 2002, which provided benefits of $4.1 million and $5.2 million, respectively. Equity earnings increased $17.4 million in fiscal 2003 including $9.8 million for the Brazil Fertilizer segment due to improved results for the Fertifos investment in Brazil, as sales and margins have improved, and Saskferco's operations in Canada, which increased $7.1 million.

Performance by Segments

Historically, the Cargill Fertilizer Businesses have been organized, managed and internally reported in four segments differentiated primarily by their products and services and the markets they serve. The segments, whose results are discussed below, are Phosphate Production, Crop Nutrition, Brazil Fertilizer and Saskferco.

Phosphate Production

The Phosphate Production segment operates phosphate mines and processing plants in Florida which produce phosphate fertilizer and feed phosphate products.

The Cargill Fertilizer Businesses currently operate two phosphate rock mines in central Florida - the Hookers Prairie and South Fort Meade mines. Hookers Prairie is capable of producing 2.1 million tonnes of phosphate rock annually. Capacity of the South Fort Meade mine is 4.6 million tonnes annually and the mine has operated at capacity during the last two years. A third mine, the Fort Meade mine, was idled by Cargill in January 1997 and is expected to operate for eight years when reopened. The current mining plan projects that this mine should be reopened in 2008.

In November 2002, the Cargill Fertilizer Businesses purchased the assets of Farmland Hydro, L.P. The acquired assets included a phosphate processing facility at Green Bay, Florida and approximately 15,000 acres of land in Hardee County, Florida containing an estimated 77 million tonnes of phosphate rock reserves. The Cargill Fertilizer Businesses currently plan to construct a new mine-named the "Pioneer" mine-to develop phosphate rock reserves acquired in the Farmland Hydro transaction. The Pioneer mine is expected to eventually replace the Fort Meade mine.

The Phosphate Production segment's operations process phosphate rock at manufacturing facilities in Bartow, Riverview, and Green Bay, Florida. Current annual capacities of the processing

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facilities are 950,000, 860,000 and 635,000 tonnes of phosphoric acid and approximately 2.4 million, 1.8 million and 1.4 million tonnes of finished phosphate fertilizer products, respectively. Mosaic Phosphates Company, a subsidiary of IMC, currently supplies phosphate rock to the Green Bay facility under a supply agreement that expires in June 2005.

The Phosphate Production segment's ownership of the South Fort Meade mine is through a 35% equity investment in South Ft. Meade Partnership, L.P., which owns the land and mineral rights of the South Fort Meade mine in Central Florida. The Phosphate Production segment also holds a 35% equity stake in a recently constructed DAP granulation plant near Haikou, China in the Yunnan province. The plant began commercial operations in late 2002 and began marketing DAP in February 2003. The Yunnan plant can produce approximately 600,000 tonnes of DAP per year. The Cargill Fertilizer Businesses share of the earnings from these investments is included in "Equity in net earnings of nonconsolidated companies."

The following table presents summary operating data for the Phosphate Production segment (in thousands of U.S. dollars):

Three Months Ended Year Ended May 31,

August 31, August 31, 2004 2003 2004 2003 2002
Net sales (including inter-segment
sales) $ 359,581 $ 281,959 $ 1,139,605 $ 781,005 $ 636,103 Gross profit $ 26,860 $ 4,937 $ 61,346 $ 35,435 $ 63,804 Gross profit percentage 7% 2% 5% 5% 10% Selling, general & administrative
expenses $ 9,307 $ 7,409 $ 34,730 $ 29,904 $ 26,802 Sales volume (in thousand tonnes) 1,504 1,435 5,287 4,222 3,816 Equity in net earnings of
nonconsolidated companies $ 2,460 $ 1,239 $ 5,855 $ 1,069 $ 1,240

Three months ended August 31, 2004 compared to the three months ended August 31, 2003

Net sales increased $77.6 million, or 28%, to $359.6 million for the three months ended August 31, 2004 compared to $282.0 million in the comparable period of the prior fiscal year. This increase was primarily due to a 5% increase in sales volume primarily related to DAP and MAP, as well as a 21% increase in the average sales price of DAP and MAP. Average net sales of DAP increased to $216 per tonne for the three months ended August 31, 2004, as compared to $179 per tonne in the comparable period of the prior fiscal year. Average net sales of MAP increased to $221 per tonne for the three months ended August 31, 2004, as compared to $183 per tonne in the comparable period of the prior fiscal year. These increases in sales price per tonne more than offset the increases in costs of raw material, resulting in a 5% improvement in the gross profit percentage for the current three-month period compared to the three months ended August 31, 2003. Ammonia prices increased to $288 per tonne for the three months ended August 31, 2004, as compared to $216 per tonne for the comparable period of the prior fiscal year. Sulfur and phosphate rock costs remained relatively stable for these periods.

Selling, general and administrative expenses increased by $1.9 million, or 26%, to $9.3 million for the three months ended August 31, 2004 compared to $7.4 million in the comparable period of the prior fiscal year. The increase was primarily due to $1.5 million in integration expenses related to the pending merger with IMC.

Other operating income includes $6.0 million from an early termination fee received from Lifosa A.B. in Lithuania after the Cargill Fertilizer Businesses and Lifosa mutually agreed to terminate a marketing agreement effective July 2004.

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Equity in net earnings of nonconsolidated companies for the three months ended August 31, 2004 increased primarily due to a $1.2 million increase in equity earnings from the Yunnan DAP joint venture.

Year ended May 31, 2004 compared to the year ended May 31, 2003

Net sales increased $358.6 million, or 46%, to $1,139.6 million for the year ended May 31, 2004 compared to $781.0 million in the prior fiscal year. This increase was primarily due to a 25% increase in sales volume, primarily related to DAP and MAP, resulting from the addition of the Green Bay, Florida operations acquired in November 2002. Approximately $118.7 million of the net sales increase in fiscal 2004 over fiscal 2003 is estimated to be related to the Green Bay acquisition. Additionally, DAP average net sales prices increased to $192 per tonne for the year ended May 31, 2004 as compared to $167 per tonne in the prior fiscal year. This increase in sales price per tonne more than offset the increases in raw material costs. Ammonia prices increased to $256 per tonne and sulfur prices increased to $76 per tonne for the year ended May 31, 2004 as compared to $177 per tonne for ammonia and $62 per tonne for sulfur in the prior fiscal year. Phosphate rock costs per tonne remained approximately the same in each fiscal year. The gross profit percentage for each fiscal year remained the same at 5%.

Selling, general and administrative expenses increased $4.8 million, or 16%, to $34.7 million for the year ended May 31, 2004 as compared to $29.9 million in the prior fiscal year. The increase is primarily due to increased compensation and incentives resulting from the improved gross profit as well as the acquisition of the assets of Farmland Hydro, L.P. The expense for fiscal 2004 also included approximately $2.1 million in integration expenses related to the pending Cargill merger.

The results for the year ended May 31, 2003 included a $1.5 million gain on the sale of Cargill's investment in Lifosa, A.B., which previously had been fully impaired by Cargill in fiscal 2001.

Equity earnings in nonconsolidated companies for the year ended May 31, 2004 increased primarily due to a $3.7 million increase in equity earnings from the Yunnan DAP joint venture, which began marketing products in February 2003.

Year ended May 31, 2003 compared to the year ended May 31, 2002

Net sales increased $144.9 million, or 23%, to $781.0 million in fiscal 2003, compared to $636.1 million in fiscal 2002. The increase in part was due to an 11% increase in sales volume, primarily related to sales of MAP, resulting from the addition of the Green Bay, Florida operations acquired in November 2002. Approximately $94.8 million of the net sales increase in fiscal 2003 over fiscal 2002 is estimated to be related to the Green Bay acquisition. DAP average net sales prices increased to $167 per tonne in fiscal 2003 as compared to $153 per tonne in fiscal 2002. This increase in sales price per tonne was more than offset by increases in raw material costs. Ammonia prices increased to $177 per tonne and sulfur prices increased to $62 per tonne in fiscal 2003 as compared to $136 per tonne for ammonia and $35 per tonne for sulfur in fiscal 2002. Phosphate rock costs were slightly higher in fiscal 2003 due to purchases from IMC under a supply agreement for the Green Bay, Florida processing facility.

Selling, general and administrative expenses increased $3.1 million, or 12%, to $29.9 million in fiscal 2003, compared to $26.8 million in fiscal 2002. The increase is primarily due to $1.5 million from the addition of the Green Bay, Florida facility as well as $1.0 million relating to a feasibility study concerning the viability of developing an off shore nitrogen production facility. Cargill elected not to pursue this project.

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Financial results for fiscal 2003 results include $2.1 million in losses on sales of assets, partially offset by the $1.5 million gain related to the sale of the Lifosa investment in August 2002. Financial results for fiscal 2002 included $2.1 million in losses on disposal of excess and obsolete assets.

Crop Nutrition

The Crop Nutrition segment markets fertilizer products and services to wholesalers, cooperatives, independent retailers and agents and other agricultural customers that, in turn, market these products and services to farmers and other end users in North and South America, Europe and Asia. The Crop Nutrition segment operates fertilizer blending and bagging facilities, port terminals and warehouses in nine countries, and presently maintains a sales presence in six additional countries. Past expansions included the acquisition of a joint venture interest in a nitrogen-phosphorous-potassium (NPK) production facility in China, and the construction of port and warehouse facilities in Argentina.

Pursuant to a marketing agreement, the Crop Nutrition segment also markets exported phosphate products produced by WMC Fertilizers, Ltd. in Australia. The marketing agreement with WMC Fertilizers, Ltd. will expire by its terms on December 31, 2004. Mosaic and WMC have not yet determined whether to enter into any new or renewed marketing agreement after the expiration of the current agreement. The Crop Nutrition segment also marketed exported phosphate products produced by Lifosa A.B. in Lithuania. The parties mutually agreed to terminate the marketing agreement with Lifosa effective July 2004. The Lifosa marketing agreement was originally scheduled to expire in August 2008, therefore an early termination fee of $6.0 million was received from Lifosa's majority shareholders in May 2004. Since certain contract termination provisions were not completed at May 31, 2004, the $6.0 million gain ($3.9 million after tax) was not recognized by the Phosphate Production segment until the first quarter of fiscal 2005. Net sales and gross profit under the agreement were $143.4 million and $3.1 million, respectively for the year ended May 31, 2004. Lifosa marketing agreement net sales and gross profit were $121.5 million and $3.9 million, respectively, for the year ended May 31, 2003. The Crop Nutrition segment plans to enter into other supply arrangements to supply certain of these customers in Europe. In North America, the Crop Nutrition segment serves as the exclusive marketing agent for nitrogen products produced by Saskferco Products, Inc. and acts as the exclusive marketing agent for fertilizer products sold in the United States by the Phosphate Production segment of the Cargill Fertilizer Businesses.

The principal Crop Nutrition products include straight fertilizers, such as phosphates, nitrogen and potash, as well as blended and NPK fertilizers. Services include the provision of tailored agronomic services as well as the loading, unloading and storage of fertilizer, grains, meal, salt and coal for both Mosaic affiliates and third parties.

The following table presents summary operating data for the Crop Nutrition segment (in thousands of U.S. dollars):

Three Months Ended Year Ended May 31,

August 31, August 31, 2004 2005 2004 2003 2002
Net sales (including
inter-segment sales) $ 236,805 $ 200,786 $ 923,059 $ 673,881 $ 581,392 Gross profit 19,357 15,297 $ 65,249 $ 57,663 $ 53,212 Gross profit percentage 8% 8% 7% 9% 9% Selling, general & administrative
expenses $ 11,845 $ 8,825 $ 39,863 $ 34,692 $ 37,259 Sales volume (in thousand tonnes) 1,538 1,201 6,458 6,330 5,694 Equity in net earnings (losses)
of nonconsolidated companies $ 5 $ (30 ) $ 198 $ 368 $ (290 )

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Three months ended August 31, 2004 compared to the three months ended August 31, 2003

Net sales increased $36.0 million, or 18%, to $236.8 million for the three months ended August 31, 2004 compared to $200.8 million in the comparable period of the prior fiscal year. Sales volume increased by 28% for the three months ended August 31, 2004 compared to the comparable period of the prior fiscal year. This was partially offset by a decrease in the average sales price by 8% due to changes in the product mix, primarily from sales in the United States. Countries with increased sales included Canada, Thailand, Argentina, France and Mexico. Crop Nutrition's Hong Kong-based sales operations for shipments from Tampa to mainland China experienced declines of $25.4 million in net sales primarily because they were replaced by sales from the DAP granulation plant near Haikoi, China. The Cargill Fertilizer Businesses' 35% share of equity earnings in the China-based DAP joint venture, part of the Phosphate Production segment, increased $1.2 million for the three-month period ended August 31, 2004, as compared to the same period in the prior year. In addition, the Crop Nutrition segment marketed exported phosphate products produced by Lifosa A.B. The parties mutually agreed to terminate the agreement effective July 2004 and a $6.0 million termination fee was received and recognized by the Phosphate Production segment. Net sales under the marketing agreement were $17.8 million and $37.7 million for the three months ended August 31, 2004 and 2003, respectively.

The gross profit percentage remained consistent at 8% for the three months ended August 31, 2004 and 2003. The gross profit percentage in the United States declined by 1%. While sales volume increased in the United States, changes in product mix contributed to their lower margins. This decline was offset by increased margins in India and Mexico. Crop Nutrition began sales in Mexico in early fiscal 2004.

Selling, general and administrative expenses increased by $3.0 million, or 34%, to $11.8 million for the three months ended August 31, 2004 compared to $8.8 million in the comparable period of the prior fiscal year. The increase was primarily due to $1.5 million in integration expenses related to the pending merger with IMC. The remainder related primarily to operations in Argentina and Mexico due to sales increases there.

Year ended May 31, 2004 compared to the year ended May 31, 2003

Net sales increased $249.2 million, or 37%, to $923.1 million for the year ended May 31, 2004, compared to $673.9 million in the prior fiscal year. The increase in net sales was primarily related to price levels as world fertilizer prices rose significantly in fiscal 2004. Sales volumes and average selling prices increased 2% and 34%, respectively for the year ended May 31, 2004 as compared to the prior fiscal year. Countries primarily representing increased sales included the United States, India, Chile and Canada. Crop Nutrition's Hong Kong based sales operations for shipments from Tampa to mainland China experienced declines of $20.4 million and $2.1 million in net sales and gross profit, respectively, primarily due to increased sales from the DAP granulation plant near Haikou, China. The domestic price of DAP was less than the import price as a result of record high ocean freight. The Cargill Fertilizer Businesses' 35% share of equity earning in the China based DAP joint venture operation, part of the Phosphate Production segment, increased $3.7 million for the year ended May 31, 2004 as compared to the prior fiscal year. Early in fiscal 2004, Crop Nutrition began sales in Mexico and this added $13.6 million to net sales and $0.6 million to gross profit for the year ended May 31, 2004.

The $7.6 million increase in gross profit for the year ended May 31, 2004 as compared to the prior fiscal year was primarily related to operations in Chile, India and China due to increased volumes and more favorable sales prices in these geographic areas. The operations in the United States and Argentina were significant contributors to the gross margin in both fiscal years and remained relatively constant.

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Selling, general and administrative expenses increased $5.2 million, or 15%, to $39.9 million for the year ended May 31, 2004, compared to $34.7 million in the prior fiscal year. Of this increase, $2.4 million was related to United States operations due to additional staffing, incentive plans, increased pension funding and a greater percentage of shared services expense allocated from Cargill. The expense for fiscal 2004 also included approximately $2.1 million in integration expenses related to the pending Cargill merger. The remaining increase related primarily to operations in China, Mexico and Chile due to sales increases there. These increases were partially offset by a $1.3 million recovery of receivables in Lithuania that were previously reserved for.

Crop Nutrition recognized $1.1 million in other income for the year ended May 31, 2004 related to cash received for the favorable settlement of a contract dispute. Cargill had filed suit against an industrial customer in August 2001 seeking damages for breach of contract relating to the supply of fertilizer by the Crop Nutrition segment under a requirements contract.

Year ended May 31, 2003 compared to the year ended May 31, 2002

Net sales increased $92.5 million, or 16%, to $673.9 million in fiscal 2003, compared to $581.4 million in fiscal 2002. Of this increase, $69.8 million represented an increase in net sales relating to the Lithuanian operations resulting from the October 2002 resumption of operations of Lifosa upon approval of a restructuring plan with its creditors and shareholders. All other countries showed an increase in net sales with the exception of Argentina, which declined $6.4 million due to changes in pricing terms that shortened the payment terms and reduced bad debt exposure. Also, sales volume in Argentina decreased 24,000 tonnes for fiscal 2003 versus fiscal 2002.

Gross profit remained consistent at 9% in both fiscal 2003 and 2002. The gross profit percentage in the United States improved 4%. While sales volume was relatively unchanged, market prices improved on average by $10 per tonne, which contributed to increased gross margins. This improvement was partially offset by a 3% decline in Argentina due to lower volumes and changes in pricing related to shorter credit terms.

Selling, general and administrative expenses decreased $2.6 million, or 7%, to $34.7 million in fiscal 2003, compared to $37.3 million in fiscal 2002. Of this decrease, $2.1 million related to Crop Nutrition's Argentina operations, primarily due to lower bad debt expenses and commissions expense.

Operating results in fiscal 2002 included $6.5 million in expense related to currency translation losses due to exchange rate fluctuations in the Argentine peso compared to the U.S. dollar. These exchange rate fluctuations were primarily caused by the Argentine government de-linking the peso from the U.S. dollar in December 2001.

Brazil Fertilizer

The Brazil Fertilizer segment began operations in 1993 when Cargill Agricola, S.A. (Cargill Agricola), then the parent company of Mosaic Fertilizantes, S.A. (Mosaic Fertilizantes), constructed a liquid fertilizer blending plant and warehouse located at Monte Alto, which remains in operation today. The Brazil Fertilizer segment primarily includes ownership of Mosaic Fertilizantes, S.A., a wholly owned subsidiary of Mosaic, which is a leading producer and distributor of bulk and bag blended fertilizers in Brazil. There are two primary activities for this segment:

† To serve as a key producer and distributor of blended fertilizers for agricultural use in Brazil that, together with its minority Brazilian fertilizer investments, make Mosaic a significant participant in the important and growing Brazilian fertilizer market. This activity represents an average of 96% of net sales dollars of the Brazil Fertilizer segment.

† To serve as a deep-water fertilizer import and throughput warehouse terminal facility that is both efficient and low cost. Management believes these assets bring a competitive advantage

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to the Cargill Fertilizer Businesses in serving the Brazilian state of Paran and the Cerrado Region. This activity represents an average of 4% of net sales dollars of the Brazil Fertilizer segment.

Mosaic Fertilizantes owns approximately 33% of Fertifos, a Brazilian holding company that controls (i) 55.63% of Fosfertil, a significant Brazilian manufacturer of phosphate-based fertilizer and operator of a phosphate rock mine and a phosphate processing facility, and (ii) Ultrafertil, a significant Brazilian nitrogen company wholly owned by Fosfertil which operates two nitrogen plants and a modern port facility at Santos, as well as a phosphate rock mine and two smaller phosphate processing facilities. The ownership of Fertifos by the Cargill Fertilizer Businesses is recorded under the equity method and its results appear as "Equity in net earnings of nonconsolidated companies" in the consolidated statement of operations for the Cargill Fertilizer Businesses.

In October 2000, the Cargill Fertilizer Businesses expanded their Brazilian fertilizer portfolio by acquiring a controlling interest in Fertiza, a business that distributed approximately 0.7 million tonnes of bagged products per year through an extensive sales network in central and southern Brazil. The Fertiza acquisition also included Fertiza's 62.05% ownership interest in Fospar and 45% ownership interest in IFC. Fospar operates two major assets located in Paranagua, Brazil, including a single superphosphate granulation plant and a deep-water fertilizer import and throughput warehouse terminal facility. IFC's operations include a blending and storage facility in Cubatao that supports the sale of fertilizer products in the Brazilian states of So Paulo, Mato Grosso and Mato Grosso de Sul. Because Fospar is not 100% owned by the Cargill Fertilizer Businesses, the minority interest is shown as "Minority interest in net (earnings) losses of consolidated companies" in the consolidated statement of operations for the Cargill Fertilizer Businesses. IFC is recorded under the equity method and its results appear as "Equity in net earnings of nonconsolidated companies" in the consolidated statement of operations for the Cargill Fertilizer Businesses.

The following table presents summary operating data for the Brazil Fertilizer segment (in thousands of U.S. dollars):

Three Months Ended Year Ended May 31,

August 31, August 31, 2004 2003 2004 2003 2002
Net sales $ 197,000 $ 150,653 $ 525,850 $ 382,905 $ 414,096 Gross profit 29,508 13,621 $ 55,493 $ 45,362 $ 56,794 Gross profit percentage 15% 9% 11% 12% 14% Selling, general & administrative
expenses $ 10,051 $ 5,625 $ 25,475 $ 24,307 $ 32,084 Sales volume (in thousand tonnes)
Fertilizer and feed distribution
(1) 758 757 2,426 2,258 2,439 Terminal facility throughput 722 705 2,487 2,352 2,140 Equity in net earnings of nonconsolidated companies $ 9,207 $ 5,203 $ 17,664 $ 16,897 $ 7,055

(1) tonnage includes feed phosphates

Three months ended August 31, 2004 compared to the three months ended August 31, 2003

Net sales increased $46.3 million, or 31%, to $197.0 million for the three months ended August 31, 2004 compared to $150.7 million in the comparable period of the prior fiscal year. While sales volume was relatively unchanged, this increase was primarily due to a 29% higher average selling price as higher international prices for fertilizer raw materials boosted local selling prices. The 6% improvement

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in gross profit percentage for the three-month period ended August 31, 2004 compared to the comparable prior period was also due to such price changes.

Selling, general and administrative expenses increased by $4.5 million, or 80%, to $10.1 million for the three months ended August 31, 2004 compared to $5.6 million in the comparable period of the prior fiscal year. In August 2004, the Brazilian government instituted changes in its laws which impacted tax credits related to the Social Integration Contribution on Revenue (PIS/COFINS) over raw material and services purchases. The Brazil Fertilizer segment wrote-off approximately $3.3 million in tax credits as management believes their likelihood of realization to be remote. Interest expense for the three months ended August 31, 2004 decreased primarily due to capital contributions of $62.9 million made by Cargill to the Brazil Fertilizer segment on June 1, 2004.

The $4.0 million increase in Fosfertil equity earnings is related to its continued to growth supported by increases in their sales and improved margins.

Year ended May 31, 2004 compared to the year ended May 31, 2003

Net sales increased $143.0 million, or 37%, to $525.9 million for the year ended May 31, 2004 compared to $382.9 million in the prior fiscal year. This increase was primarily due to 33% higher average selling prices as well as 7% increased sales volumes in the distribution business as farmers reacted to higher commodity prices by increasing their planted acreage. Higher international prices for fertilizer raw materials boosted local selling prices. The slight decline in gross profit percentage for the current fiscal year compared to the comparable prior fiscal year was due to changes in product mix and pricing changes.

Selling, general and administrative expenses increased $1.2 million, or 5%, to $25.5 million for the year ended May 31, 2004 compared to $24.3 million in the prior fiscal year. The increase was primarily due to additional commissions linked to higher sales, plus approximately $0.5 million in integration expenses related to the pending Cargill merger.

Interest expense for the year ended May 31, 2004 declined $14.1 million as compared to the prior fiscal year primarily due to lower average interest rates and a capital infusion of $65.8 million from Cargill on June 1, 2003.

The $0.8 million increase in equity earnings is primarily related to Fertifos due to its majority ownership of Fosfertil. Fosfertil's earnings have continued to grow as their sales and margins have improved.

Year ended May 31, 2003 compared to the year ended May 31, 2002

Net sales decreased $31.2 million, or 8%, to $382.9 million in fiscal 2003, compared to $414.1 million in fiscal 2002. Sales volumes in fiscal 2003 were 181,000 tonnes lower than in fiscal 2002 primarily due to a decision not to participate in low margin sales. The 2% decline in gross profit percentage in fiscal 2003 was primarily due to higher costs caused by increasing international prices for fertilizer raw materials.

Selling, general and administrative expenses decreased $7.8 million, or 24%, to $24.3 million in fiscal 2003, compared to $32.1 million in fiscal 2002. The impact of foreign exchange rates reduced selling, general and administrative expenses by $8.1 million, but this was partially offset by costs relating to the merger between Fertiza and Soloricco, S.A., a fertilizer company in which the Cargill Fertilizer Businesses held a controlling interest in fiscal year 2003.

The increase in equity earnings relates to higher sales volumes and selling prices at Fosfertil. Fosfertil's earnings have continued to grow as their sales and margins have improved. The Brazilian

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agricultural sector has benefited from higher oil prices in a depreciated currency that has stimulated planted area, crop production and fertilizer demand.

Saskferco

The Saskferco segment represents Mosaic's 50% ownership interest in Saskferco Products, Inc. (Saskferco), a Saskatchewan-based nitrogen joint venture. The remaining 50% ownership interest in Saskferco is owned by Investment Saskatchewan, Inc. (49%) and Citibank Canada (1%). The ownership stake held by Mosaic is accounted for under the equity method. The functional currency of Saskferco is the U.S. dollar; therefore gains/losses in translating Saskferco's results from the Canadian dollar are included in its net earnings.

Saskferco's world-scale and energy-efficient nitrogen plant, located near Belle Plaine, Saskatchewan, has the capacity to produce approximately 1,860 tonnes of ammonia, 2,850 tonnes of granular urea solution and 650 tonnes of UAN liquid fertilizer solution per day. Saskferco's products are sold to nitrogen fertilizer customers, primarily in western Canada and the northern tier of the United States.

The following table presents summary operating data for the Saskferco segment (in thousands of U.S. dollars):

Three Months Ended Year Ended May 31,

August 31, August 31, 2004 2003 2004 2003 2002
Net sales $ 78,575 $ 16,562 $ 222,284 $ 195,765 $ 173,225 Gross profit 17,843 1,708 61,326 44,597 31,721 Net earnings (loss) 5,444 (2,667 ) 24,339 14,752 210 Equity in net earnings (losses)
of Saskferco 2,800 (1,333 ) 12,122 7,333 220 Sales volume (in thousand tonnes) 343 75 938 1,040 1,130

Three months ended August 31, 2004 compared to the three months ended August 31, 2003

Saskferco reported net earnings of $5.4 million for the three months ended August 31, 2004, compared to a loss of $2.7 million for the three months ended August 31, 2003. Production of ammonia and urea increased by 35,000 tonnes and 60,000 tonnes, respectively, due to a planned four-week maintenance turnaround in June and July 2003. Urea sales increased by 221,000 tonnes, or 318%, and average sales prices increased 10% for the three months ended August 31, 2004 as compared to the same period of the prior fiscal year. These sales increases were offset partially by increases in natural gas prices, but, overall, resulted in stronger margins. In addition, UAN production commenced during the fourth quarter of fiscal 2004, resulting in sales of $7.4 million for the three months ended August 31, 2004.

Unrealized losses on cash flow hedges reported in comprehensive income for Saskferco's natural gas purchases remained relatively unchanged for the three-month period ended August 31, 2004 as compared to the three-month period ended August 31, 2003.

Year ended May 31, 2004 compared to the year ended May 31, 2003

Saskferco reported net earnings of $24.3 million for the year ended May 31, 2004, up from $14.8 million for the prior fiscal year. Urea production was down 21 thousand tonnes, or 2.2%, due to a planned maintenance turnaround for four weeks in June and July 2003. Although urea sales were down 127 thousand tonnes, or 13.4%, this decrease was offset by strong urea fertilizer prices which

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were higher than fiscal 2003 by $51 per tonne. UAN production was started in the fourth quarter of fiscal 2004, which added sales volumes of 32 thousand tonnes to fiscal 2004 results.

Year ended May 31, 2003 compared to the year ended May 31, 2002

Saskferco reported net earnings of $14.8 million for fiscal 2003, up from $0.2 million fiscal 2002. The Canadian dollar strengthened significantly versus the U.S. dollar through May 2003, ending at $0.73 compared to $0.66 in May 2002. This resulted in a $4.0 million currency translation gain. Although urea production and sales in tonnes were down 65,648 tonnes and 81,183 tonnes, respectively, these decreases were offset by strong margins as the increase in nitrogen fertilizer prices outpaced the increase in natural gas prices.

Liquidity and Capital Resources

The primary sources of cash for working capital, capital expenditures and acquisitions are operating cash flow and, historically, borrowings from Cargill. Interest charges on Cargill borrowings are variable based on Cargill's borrowing cost as well as capital market conditions. Borrowings consist of both a short-term component and a long-term component. These borrowings from Cargill have ceased following the closing of the Cargill transactions and there are currently no material Cargill borrowings outstanding. Therefore, Mosaic will be required to seek alternative sources of financing, which may include accessing the public capital markets and/or borrowing funds from commercial banks. The current IMC credit facility has incremental borrowing capacity to meet immediate post-closing needs. IMC and Mosaic are in the process of reviewing credit facility changes with existing lenders with the expectation of modifying the existing facility or replacing it with a new one.

In order to provide an additional source of liquidity for Mosaic and its subsidiaries (excluding IMC and its subsidiaries) following the closing of the Cargill transactions, Mosaic entered into a credit agreement dated as of October 22, 2004 with JPMorgan Chase Bank as Administrative Agent and certain other lenders, referred to as the Mosaic Credit Agreement. The Mosaic Credit Agreement provides for a $160 million revolving loan, to be drawn by Mosaic from time to time in amounts not less than $5 million. The maturity date is the earlier of January 20, 2005 or the date that all loans outstanding under the lenders' existing credit facility with IMC are fully repaid and commitments thereunder terminated. Mosaic may draw down funds as a revolving loan or a swingline loan or obtain letters of credit. Depending on the type of draw by Mosaic, the applicable interest rate is calculated as (a) LIBOR plus 1.25% or (b) the greater of (i) the prime rate, (ii) the base CD rate plus 1% or (iii) the federal funds effective rate plus 0.5%. As of October 22, 2004, there were no revolving loans or swingline loans outstanding under the Mosaic Credit Agreement; however, $25.7 million of letters of credit had been issued resulting in $134.3 million of availability under the Mosaic Credit Agreement at that date.

Mosaic's obligations under the Mosaic Credit Agreement are guaranteed by substantially all of Mosaic's domestic subsidiaries excluding IMC and its subsidiaries and is secured by the pledge of (i) the stock of substantially all of Mosaic's domestic subsidiaries excluding IMC and its subsidiaries, (ii) 65% of the stock of first tier foreign subsidiaries of Mosaic and its subsidiaries excluding IMC and its subsidiaries, and (iii) intercompany promissory notes held by Mosaic and the guarantors.

The Mosaic Credit Agreement contains certain covenants that limit matters, including capital expenditures, joint venture investments, monetary acquisitions and additional indebtedness. In addition, the Mosaic Credit Agreement generally prohibits the payment of dividends on Mosaic's common stock and repurchases or redemptions of Mosaic's capital stock.

Cash flows from operating activities are primarily driven by net earnings, adjusted for the noncash impact of depletion, depreciation and amortization. The other main contributor is volume and price level changes in phosphate product selling prices and raw material input prices, which result in significant changes in accounts receivable, inventories and accounts payable.

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Cash used for investing activities primarily relates to additions to property and acquisitions. The Cargill Fertilizer Businesses spend approximately $60 million annually on regular capital additions to property to maintain fixed assets. The remaining annual capital expenditures primarily relate to expansion of capacity. Of cash used for acquisitions in fiscal 2003, $119.9 million (excluding a $10.0 million deferred payment) related to the purchase of the Florida processing plants and phosphate rock reserves of Farmland Hydro, L.P.

Additions to property for fiscal 2004 were $162.1 million, including approximately $27 million for a new barge, $28 million for conversion projects in Tampa, $11 million for a new clay settling area and $12 million for production expansion in South Fort Meade. In the fourth quarter of fiscal 2004, an additional $16.1 million was spent for a phosphate mine in Florida, excluding $5.4 million in deferred payments. The Cargill Fertilizer Businesses also spent approximately $13.2 million during the year ended May 31, 2004 for the acquisition of the remaining minority interest in Mosaic Fertilizantes, S.A. Additions to property for fiscal 2005 are expected to be approximately $110 to $125 million, of which $39 million was spent during the three months ended August 31, 2004.

Historically, cash flows from financing activities primarily included contributions by Cargill as well as borrowings from Cargill. The Cargill Fertilizer Businesses also had $42.4 million in third party long-term debt at May 31, 2004, a majority of which relates to the Brazil Fertilizer segment, and also includes a 5.5%, $13.8 million Industrial Revenue Bond for the Phosphate Production segment due in 2009. The interest rate on debt relating to the Brazil Fertilizer segment is largely tied to TJLP (a long-term interest rate regulated by the Brazilian Central Bank) and IGPM (a general market price index calculated by the Fundacao Getuilio Vargas). The TJLP has been relatively stable because it is a long-term rate. The IGPM has fluctuated significantly, especially in the fiscal year ended May 31, 2003.

Off-Balance Sheet Arrangements

The Cargill Fertilizer Businesses do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on their financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Contractual Obligations

At May 31, 2004, the Cargill Fertilizer Businesses had certain contractual obligations, which require payments as follows:

Payment Due by Period

Less than 1-3 4-5 More than Contractual Obligations Total 1 year years years 5 years
(dollars in thousands)
Due to Cargill, Inc and affiliates
(a) $ 509,496 $ 202,915 $ - $ - $ 306,581 Long-term debt 42,380 9,756 13,600 2,400 16,624 Estimated interest payments on long-term debt (b) 10,706 3,741 4,249 2,282 434 Deferred acquisition liabilities
(c) 15,400 11,350 2,700 1,350 - Operating leases 20,305 4,100 5,495 2,391 8,319 Purchase obligations (d) 1,483,601 712,570 430,547 152,884 187,600 Total contractual cash obligations $ 2,081,888 $ 944,432 $ 456,591 $ 161,307 $ 519,558

(a) The long-term balance owed by the Cargill Fertilizer Businesses to Cargill does not have a specified due date. For that reason, it is shown as being due in more than five years. The short-term portion primarily relates to funding working capital items. In accordance with the terms of the

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merger and contribution agreement, effective October 22, 2004, the balances owed to Cargill will not be obligations of Mosaic.

(b) Based on interest rates and debt balances as of May 31, 2004.

(c) These liabilities relate to the deferred payments due on acquisitions made in fiscal 2004 and 2003. On the consolidated balance sheets, the current portion is included in accrued expenses and the long-term portion is included in other deferred liabilities.

In addition, the Cargill Fertilizer Businesses are obligated to pay an amount to a former shareholder of the Brazil Fertilizer business if Fosfertil's operating cash flow exceeds certain thresholds through 2019. Such amount, if payable in any given year, is determined on an annual basis. The aggregate amount subject to payment to the former shareholder is capped at $36 million.

(d) The Cargill Fertilizer Businesses purchase raw materials and finished fertilizer products from third parties under contracts that range in term from one to five years. Purchases under these contracts generally are based on prevailing market prices and obligations listed in the above table are valued using prices as of August 1, 2004. Raw materials and finished fertilizer products prices were at the high end of historical ranges on August 1, 2004 and may remain volatile in future years.

The Cargill Fertilizer Businesses currently purchase phosphate rock for the Green Bay phosphate operation under a contract that expires in mid-2005. The Cargill Fertilizer Businesses purchase anhydrous ammonia for Florida-based phosphate operations under a five-year contract based on prevailing market prices. The Cargill Fertilizer Businesses have provided notice of termination under such contract effective June 2005. The Cargill Fertilizer Businesses purchase sulphur for Florida-based phosphate operations under contracts ranging from one to three years based on prevailing market prices.

The Cargill Fertilizer Businesses are obligated to provide the South Fort Meade mine first preference for their phosphate rock requirements and to make royalty payments to the South Fort Meade Partnership L.P. of approximately $3.09 per tonne for the rock mined and beneficiated at this facility. Current capacity of the South Fort Meade mine is 5.9 million tonnes per year.

The Cargill Fertilizer Businesses purchase phosphate products for their Brazilian operations at prevailing market prices under a four-year contract that commenced January 1, 2004. The Cargill Fertilizer Businesses also purchase fertilizer products for worldwide distribution operations under annual contracts and at prevailing market prices.

Critical Accounting Policies and Estimates

The preparation of the financial statements for the Cargill Fertilizer Businesses requires judgments and estimates on the part of management, especially the items presented below. A summary of the significant accounting policies, including the two discussed below, are included in Note 1 of the consolidated financial statements of the Cargill Fertilizer Businesses.

Environmental and reclamation activities

The Cargill Fertilizer Businesses record accrued liabilities for various environmental matters and reclamation activities. As of May 31, 2004 and 2003, the balances of these accrued liabilities were $98.2 million and $67.0 million, respectively. As of August 31, 2004, these balances were $97.6 million. The estimation processes used to determine the amounts of these accrued liabilities are complex and use information obtained from Cargill specific and industry data, as well as general economic information. Changes in major assumptions or estimates could have a significant impact on the results of operations.

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On June 1, 2003, the Cargill Fertilizer Businesses began accounting for its asset retirement obligations under SFAS No. 143, Accounting for Asset Retirement Obligations. Based upon the guidance of SFAS No. 143, the Cargill Fertilizer Businesses estimated the costs of retiring the assets. Actual costs to be incurred at identified sites in future periods may vary from the estimates, given the inherent uncertainties in evaluating retirement costs. The costs are inflated based on an inflation factor and discounted based on a credit-adjusted risk-free rate. Fluctuations in the estimated costs, inflation rates and interest rates can have a significant impact on the amounts recorded.

Recoverability of long-lived assets

The assessment by management of the Cargill Fertilizer Businesses of the recoverability of long-lived assets involves critical accounting estimates. The assessments reflect management's best assumptions and estimates. Factors that management must estimate when performing impairment tests include sales volume, prices, inflation, discount rates, exchange rates, tax rates and capital spending. Significant management judgment is involved in estimating these factors, and they include inherent uncertainties. The recoverability of these assets is dependent upon the accuracy of the assumptions used in making these estimates and how the estimates compare to the eventual future operating performance of the specific businesses to which the assets are attributed. Certain of the operating assumptions are particularly sensitive to the cyclical nature of the Company's phosphate business. All assumptions utilized in the impairment analysis are consistent with management's internal planning. If other assumptions and estimates had been used, the balances for long-lived assets could have been materially impacted.

Recent Accounting Pronouncements

In January 2003, the FASB issued Interpretation (FIN) No. 46 (revised December 2003), Consolidation of Variable Interest Entities, an Interpretation of Accounting Research Bulletin No. 51, which is effective for the Cargill Fertilizer Businesses June 1, 2005. FIN No. 46 defines variable interest entities (VIEs) and provides guidance on when VIEs should be consolidated. The Cargill Fertilizer Businesses do not expect that the adoption of FIN No. 46 will have a material effect on the consolidated financial statements of the Cargill Fertilizer Businesses.

Quantitative and Qualitative Disclosures About Market Risk

The Cargill Fertilizer Businesses are exposed to the impact of changes in interest rates, foreign currency exchange rates and commodity prices.

Interest rates. A one percent change in interest rates would have an annualized pre-tax impact of approximately $5.0 million on the $504 million of borrowings by the Cargill Fertilizer Businesses from Cargill as of August 31, 2004, but this debt will not be transferred to Mosaic. Third party debt totaled $41.1 million at August 31, 2004, nearly half of which was at fixed interest rates. The remainder of third party debt is variable based on Brazilian bank and inflation rates, but any hypothetical changes in these rates is not expected to have a significant impact on the financial results of the Cargill Fertilizer Businesses.

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The table below provides information on the Cargill Fertilizer Businesses' debt obligations that are sensitive to changes in interest rates and currency exchange rates. The obligations are primarily denominated in the U.S. dollar except for a portion of the long-term outside debt that is denominated in the Brazilian real. For these Brazilian debt obligations, the information below is presented in U.S. dollar equivalents, which is the Cargill Fertilizer Businesses' reporting currency.

Expected Maturity Date-Years ended May 31

2005 2006 2007 2008 2009 Thereafter Total
Data as of May 31, 2004 (Dollars in millions) Outside Long-term debt:
Fixed rate ($US) $ 1.0 - 0.1 - - 16.5 17.6 Average interest rate 8.0 % 8.0 % 5.9 % Variable rate ($US) $ 0.7 - - - - - 0.7 Average interest rate (1) 3.1 % Variable Rate tied to BNDES (Brazilian real) $ 0.1 0.1 0.1 - - - 0.3 Average interest rate (2) 10.6 % 10.6 % 10.6 % Variable Rate tied to TJLP (Brazilian real) $ 1.9 2.3 1.9 1.5 0.9 0.2 8.7 Average interest rate (3) 13.5 % 13.5 % 13.5 % 13.7 % 13.9 % 14.0 % Variable Rate tied to IGPM (Brazilian real) $ 6.1 6.0 3.0 - - - 15.1 Average interest rate (4) 13.5 % 13.5 % 13.5 %

Debt with Cargill, Inc. and Affiliates
Short-term borrowings ($US) $ 202.9 - - - - - 202.9 Average interest rate (5) 1.2 % Long-term borrowings ($US) $ - - - - - 306.6 306.6 Average interest rate (6) 6.0 %

(1) This debt is based on LIBOR plus 1.5%. The six-month LIBOR rate at May 31, 2004 was 1.6%.

(2) BNDES reflects the weighted average of the exchange variations amongst the currencies in the BNDES (Brazilian Development Bank) Currency Basket. The rate at May 31, 2004 was 6.6%.

(3) TJLP is a long-term interest rate set by the Brazilian Central Bank. The rate at May 31, 2004 was 3.5%. The May 31, 2003 rate was 5.7%. The interest rate on the various debt of the Cargill Fertilizer Businesses is set at the TJLP rate plus amounts varying from 9.1% to 10.5%.

(4) IGPM is a Brazilian inflation index published by Fundacao Getulio Vargas. The rate was 7.0% at May 31, 2004 and varies much more than the TJLP. The $15.1 million of debt above is indexed to IGPM plus 6.5%. During FY2004 the IGPM ranged from 5.1% to 31.5%.

(5) This rate is set by the Cargill Treasury Department. It ranged from 1.2% to 1.4% during FY2004. This debt is shown as maturing in FY2005 but renews as part of working capital financing.

(6) This rate is set by the Cargill Treasury Department. It ranged from 6.0% to 6.8% during FY2004. This debt does not have a set maturity date but is part of a long-term borrowing pool.

Foreign currency exchange rates. In recent years, the Cargill Fertilizer Businesses have been impacted by various currency fluctuations, most notably changes in the Brazilian real, the Argentine peso and the Canadian dollar. Changes in the Canadian dollar primarily impact the Cargill Fertilizer Businesses' 50% equity interest in Saskferco. The functional currency for Saskferco is the U.S. dollar. Fluctuations in the Brazilian real and the Argentine peso were significant in fiscal 2002, but have had minimal impact on the statement of operations of the Cargill Fertilizer Businesses since that period. The fiscal 2002 fluctuations in the Argentine peso were primarily caused by its de-linking from the U.S dollar in December 2001.

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Index to Financial Statements

The Cargill Fertilizer Businesses do not maintain separate derivatives or hedges related to foreign currency. Cargill, Incorporated, the parent of the Cargill Fertilizer Businesses, monitors foreign currency exposure on a global basis related to its various operations throughout the world. Open exposure in one business segment could be offset by exposures in another business segment, thereby eliminating the need for an external derivative instrument. A separately quantifiable foreign currency hedge portfolio and risk exposure will be available after Mosaic is in operation.

Commodity prices. The Cargill Fertilizer Businesses purchase three primary raw materials-natural gas, ammonia and sulfur. A portion of fluctuations in prices for these raw materials is reflected in the selling prices of finished products, but there can be no guarantee that significant increases in input prices can be recovered. The Cargill Fertilizer Businesses monitor their exposure against a predetermined position limit based on inventory levels, open purchase contracts and open sales orders. The Cargill Fertilizer Businesses enter into raw material purchase contracts to manage market risks but exposure to significant fluctuations still exists. The Cargill Fertilizer Businesses utilize forward pricing for both purchase and sales contracts when appropriate. The geographic diversity of the company serves to reduce commodity market risks, but supply and demand dynamics have a significant impact on the Cargill Fertilizer Businesses. The Cargill Fertilizer Businesses also use product mix to mitigate risks, such as the mix in sales between DAP and MAP, which use different quantities of ammonia.

The table below shows the average prices for the two main purchased raw materials used in the production of DAP and MAP. The table also shows the relative average usage rates for each of these products in the production of one tonne of DAP. There are no well established and fully functional risk management tools such as futures and options markets in the crop nutrition industry. At May 31, 2004, the Cargill Fertilizer Businesses had no derivatives or hedges outstanding for its raw materials or its finished products.

Weighted Cost FY2004 Tonnes Assuming 10% Average cost Needed for one Weighted Raw Material per Tonne Tonne of DAP Cost Cost increase
Ammonia (1) $ 256 0.23 $ 59 $ 65 Sulfur $ 76 0.43 $ 33 $ 36 Primary Purchased Raw
material cost $ 92 $ 101

(1) Ammonia costs have been the most volatile in recent years. Each $10 change per tonne in the cost of ammonia would impact DAP production costs by about $2.30 per tonne.

The following table quantifies the variability of ammonia and sulfur costs since 2001.

Ammonia Sulfur ($ per tonne) ($ per tonne)

Average $ 181 $ 53 Standard Deviation $ 57 $ 15 Coefficient of Variation 32 % 28 % Minimum $ 107 $ 28 Maximum $ 325 $ 70

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