A keen focus and commitment to implementing operational excellence and innovation throughout our organization is core to Mosaic. That commitment touches every aspect of our business. And when you are preparing for substantial growth, it's absolutely critical.

Unwavering commitment to operational excellence. For great organizations, it's part of the culture. At Mosaic we're making this commitment our mindset, aggressively pursuing excellence throughout the enterprise, rethinking the fundamentals of how we operate and pushing efficiency as far as it can go to maximize returns.

EXCELLENCE

These efforts are underway in our Phosphates business, which is among the lowest-cost operations in the industry. A comprehensive, business-wide operations review and enhancement initiative is underway and promises to establish a new standard for excellence and efficiency.

These efforts touch every aspect of our U.S. phosphate operations. From re-evaluating sourcing contracts to optimizing our inventories of spare parts, every facet of what we do and how we do it is scrutinized.

For instance, improvements in the process for moving draglines and their supporting equipment have trimmed the time from six to nine hours down to only 40 minutes, dramatically boosting productivity. We anticipate work-flow enhancements to generate $11 million in annual cost savings, while our pipe-flange recycling initiative — a simple procedure that re-uses the flanges at the end of steel pipes rather than replacing them when the pipes wear out — is expected to save an additional $600,000 per year. No potential efficiency is either too ambitious or too small to pursue.

In our Potash business, excellence has a slightly different but equally ambitious focus on better enabling our growth.

Our excellence initiatives in Potash are in their early stages and will focus on two primary areas. The first is labor. Our ambitious growth plans for the Potash business will demand a talented new workforce. Mosaic will establish programs for more effectively transferring knowledge and skills from veteran staff to new employees and optimizing our human resources function to help make sure we attract and retain the right people in each area of operations.

Our second focus is cost improvement. Our initiatives in Potash will build off the best practices from our excellence programs in Phosphates and adapt methodologies used by other best-in-class companies to take advantage of the increasing economies of scale as we expand our potash capacity.

As we move forward with our expansion plans in Potash, we have a tremendous opportunity to build excellence and efficiency into our business right from the start, maximizing profitability as we grow.

INNOVATION

Our product-innovation philosophy is simple: if the farmer wins, we win. At Mosaic, any new product must stand on its own agronomic value and deliver more to the farmer than they had before.

That's because today's farmers need to deliver more than ever before. The world's growing food security issues — producing enough food to meet the needs of a growing population — create an added imperative for farm productivity. The world's farmers need to extract higher yields out of each planted area, and more effective use of crop nutrients plays a vital role.

Mosaic's MicroEssentials^® line of premium products is an excellent example of our focus on innovation. MicroEssentials uses a patented process to combine essential crop nutrients in each granule. The result is balanced distribution of each nutrient across each acre and to each plant. MicroEssentials extends our legacy of delivering high-performance fertilizers, a legacy that began with our K-Mag^® product, which delivers vital secondary nutrients of magnesium and sulfur along with the primary nutrient of potash to optimize both crop yields and quality.

Through agricultural industry alliances and research university partnerships, Mosaic is committed to developing MicroEssentials to serve the next generation of field technology. Through replicated field trials and on-farm testing, MicroEssentials has proven itself. Its impact on yields is significant.

University of Illinois crop scientist, Fred Below, agrees. He has his sights set on enabling farmers to consistently achieve corn yields of 300 bushels per acre. Below cites "seven wonders of the corn yield world" that farmers must balance to achieve maximum yields. One of them is proper nutrient use.

"There is yield to be gained with today's advanced seed genetics and modern crop- management practices," says Below. "MicroEssentials, with its unique chemistry, will play an important role in achieving those gains."

But the raw yield-enhancing potential of our products is only one dimension of Mosaic's careful approach to product innovation. We also consider the evolving relationship between farmer and supplier and the fast pace of change in agricultural technology that's driving it. More sophisticated farming techniques, advanced crop genetics and variable-rate application technologies create the need for an increasingly collaborative relationship between farmer and supplier. To effectively serve today's farmers, suppliers need to understand a particular farmer's crop mix, seed packages and methods of nutrient application before recommending the most appropriate nutrient. That's an important lens through which we view innovation, and through it we see tomorrow's breakthroughs.