What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-02 · 268 added, 198 removed, 630 unchanged (43% of the section changed)

2 unchanged sentences

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

4 unchanged sentences

Selling, general and administrative expenses 66 52 203 167

goodwill impairment — 259 — 259

long-lived and intangible asset impairment 87 236 239 236

operations restructuring 8 — 18 —

2 unchanged sentences

Equity in earnings of operating affiliate 20 15 74 37

Operating earnings 1,778 450 3,436 697

Operating earnings (loss) 750 ( 97 ) 4,186 600

Interest expense 46 46 369 140

2 unchanged sentences

Other non-operating—net 23 ( 19 ) 24 ( 17 )

Earnings before income taxes 1,696 402 3,148 595

Income tax provision 357 85 758 103

Net earnings 1,339 317 2,390 492

Earnings (loss) before income taxes 693 ( 137 ) 3,841 458

Income tax provision (benefit) 155 ( 46 ) 913 57

Net earnings (loss) 538 ( 91 ) 2,928 401

Net earnings attributable to noncontrolling interest 100 94 442 189

Net earnings attributable to common stockholders $ 1,165 $ 246 $ 2,048 $ 397

Net earnings per share attributable to common stockholders:

Net earnings (loss) attributable to common stockholders $ 438 $ ( 185 ) $ 2,486 $ 212

Net earnings (loss) per share attributable to common stockholders:

Basic $ 2.19 $ ( 0.86 ) $ 12.09 $ 0.99

6 unchanged sentences

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

(in millions)

Net earnings $ 1,339 $ 317 $ 2,390 $ 492

Net earnings (loss) $ 538 $ ( 91 ) $ 2,928 $ 401

Other comprehensive (loss) income:

2 unchanged sentences

15 ( 20 ) ( 13 ) 4

Comprehensive income 1,320 326 2,362 516

Comprehensive income (loss) 553 ( 111 ) 2,915 405

Comprehensive income attributable to noncontrolling interest 100 94 442 189

Comprehensive income attributable to common stockholders $ 1,146 $ 255 $ 2,020 $ 421

Comprehensive income (loss) attributable to common stockholders $ 453 $ ( 205 ) $ 2,473 $ 216

See accompanying Notes to Unaudited Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

September 30,

2022 December 31,

50 unchanged sentences

(in millions, except per share amounts)

Balance as of March 31, 2022 $ 2 $ ( 123 ) $ 1,482 $ 2,907 $ ( 266 ) $ 4,002 $ 2,751 $ 6,753

Balance as of June 30, 2022 $ 2 $ ( 331 ) $ 1,474 $ 3,729 $ ( 285 ) $ 4,589 $ 2,925 $ 7,514

Net earnings — — — 438 — 438 100 538

Other comprehensive loss — — — — ( 19 ) ( 19 ) — ( 19 )

Other comprehensive income — — — — 15 15 — 15

Purchases of treasury stock — ( 532 ) — — — ( 532 ) — ( 532 )

Retirement of treasury stock — 281 ( 23 ) ( 260 ) — ( 2 ) — ( 2 )

Issuance of $ 0.01 par value common stock under employee stock plans

3 unchanged sentences

— — — ( 80 ) — ( 80 ) — ( 80 )

Balance as of June 30, 2022 $ 2 $ ( 331 ) $ 1,474 $ 3,729 $ ( 285 ) $ 4,589 $ 2,925 $ 7,514

Distribution declared to noncontrolling interest — — — — — — ( 372 ) ( 372 )

Balance as of September 30, 2022 $ 2 $ ( 863 ) $ 1,488 $ 4,087 $ ( 270 ) $ 4,444 $ 2,653 $ 7,097

Balance as of December 31, 2021 $ 2 $ ( 2 ) $ 1,375 $ 2,088 $ ( 257 ) $ 3,206 $ 2,830 $ 6,036

9 unchanged sentences

— — — ( 227 ) — ( 227 ) — ( 227 )

Distribution declared to noncontrolling interest — — — — — — ( 247 ) ( 247 )

Balance as of June 30, 2022 $ 2 $ ( 331 ) $ 1,474 $ 3,729 $ ( 285 ) $ 4,589 $ 2,925 $ 7,514

Distributions declared to noncontrolling interest — — — — — — ( 619 ) ( 619 )

Balance as of September 30, 2022 $ 2 $ ( 863 ) $ 1,488 $ 4,087 $ ( 270 ) $ 4,444 $ 2,653 $ 7,097

CONSOLIDATED STATEMENTS OF EQUITY

9 unchanged sentences

(in millions, except per share amounts)

Balance as of March 31, 2021 $ 2 $ ( 14 ) $ 1,333 $ 2,013 $ ( 305 ) $ 3,029 $ 2,641 $ 5,670

Net earnings — — — 246 — 246 71 317

Other comprehensive income — — — — 9 9 — 9

Retirement of treasury stock — 13 ( 2 ) ( 11 ) — — — —

Balance as of June 30, 2021 $ 2 $ — $ 1,357 $ 2,183 $ ( 296 ) $ 3,246 $ 2,712 $ 5,958

Net (loss) earnings — — — ( 185 ) — ( 185 ) 94 ( 91 )

Other comprehensive loss — — — — ( 20 ) ( 20 ) — ( 20 )

Purchases of treasury stock — ( 50 ) — — — ( 50 ) — ( 50 )

Acquisition of treasury stock under employee stock plans — ( 1 ) — — — ( 1 ) — ( 1 )

Issuance of $ 0.01 par value common stock under employee stock plans

3 unchanged sentences

— — — ( 65 ) — ( 65 ) — ( 65 )

Balance as of June 30, 2021 $ 2 $ — $ 1,357 $ 2,183 $ ( 296 ) $ 3,246 $ 2,712 $ 5,958

Distribution declared to noncontrolling interest — — — — — — ( 130 ) ( 130 )

Balance as of September 30, 2021 $ 2 $ ( 51 ) $ 1,370 $ 1,933 $ ( 316 ) $ 2,938 $ 2,676 $ 5,614

Balance as of December 31, 2020 $ 2 $ ( 4 ) $ 1,317 $ 1,927 $ ( 320 ) $ 2,922 $ 2,681 $ 5,603

1 unchanged sentence

Other comprehensive income — — — — 4 4 — 4

Purchases of treasury stock — ( 50 ) — — — ( 50 ) — ( 50 )

Retirement of treasury stock — 13 ( 2 ) ( 11 ) — — — —

5 unchanged sentences

— — — ( 195 ) — ( 195 ) — ( 195 )

Distribution declared to noncontrolling interest — — — — — — ( 64 ) ( 64 )

Balance as of June 30, 2021 $ 2 $ — $ 1,357 $ 2,183 $ ( 296 ) $ 3,246 $ 2,712 $ 5,958

Distributions declared to noncontrolling interest — — — — — — ( 194 ) ( 194 )

Balance as of September 30, 2021 $ 2 $ ( 51 ) $ 1,370 $ 1,933 $ ( 316 ) $ 2,938 $ 2,676 $ 5,614

See accompanying Notes to Unaudited Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Six months ended

Nine months ended

September 30,

(in millions)

8 unchanged sentences

Unrealized loss on embedded derivative — 2

operations restructuring asset impairment 152 —

goodwill impairment — 259

long-lived and intangible asset impairment 239 236

Pension settlement loss 24 —

Gain on sale of emission credits ( 6 ) ( 20 )

37 unchanged sentences

With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and blue hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities.

Our nine nitrogen manufacturing complexes in the United States, Canada and the United Kingdom, an extensive storage, transportation and distribution network in North America, and logistics capabilities enabling a global reach underpin our strategy to leverage our unique capabilities to accelerate the world’s transition to clean energy.

Our nitrogen manufacturing complexes in the United States, Canada and the United Kingdom, an extensive storage, transportation and distribution network in North America, and logistics capabilities enabling a global reach underpin our strategy to leverage our unique capabilities to accelerate the world’s transition to clean energy.

Our principal customers are cooperatives, independent fertilizer distributors, traders, wholesalers and industrial users.

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Our nitrogen products that are upgraded from ammonia are granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN).

Our other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to our industrial customers, and compound fertilizer products (NPKs), which are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus and potassium.

Our other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to our industrial customers.

All references to “CF Holdings,” “the Company,” “we,” “us” and “our” refer to CF Industries Holdings, Inc.

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See Note 18—Segment Disclosures for our revenue by reportable segment, which are Ammonia, Granular Urea, UAN, AN and Other.

The following table summarizes our revenue by product and by geography (based on destination of our shipment) for the three and six months ended June 30, 2022 and 2021:

The following table summarizes our revenue by product and by geography (based on destination of our shipment) for the three and nine months ended September 30, 2022 and 2021:

Ammonia Granular Urea UAN AN Other Total

(in millions)

Three months ended June 30, 2022

Three months ended September 30, 2022

North America $ 367 $ 571 $ 531 $ 70 $ 132 $ 1,671

1 unchanged sentence

Total revenue $ 531 $ 689 $ 736 $ 180 $ 185 $ 2,321

Three months ended June 30, 2021

Three months ended September 30, 2021

North America $ 279 $ 386 $ 324 $ 48 $ 94 $ 1,131

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Total revenue $ 344 $ 386 $ 390 $ 118 $ 124 $ 1,362

Six months ended June 30, 2022

Nine months ended September 30, 2022

North America $ 1,937 $ 2,123 $ 2,421 $ 229 $ 465 $ 7,175

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Total revenue $ 2,286 $ 2,287 $ 2,727 $ 656 $ 622 $ 8,578

Six months ended June 30, 2021

Nine months ended September 30, 2021

North America $ 878 $ 1,218 $ 949 $ 144 $ 263 $ 3,452

1 unchanged sentence

Total revenue $ 1,009 $ 1,218 $ 1,056 $ 359 $ 356 $ 3,998

As of June 30, 2022 and December 31, 2021, we had $ 72 million and $ 700 million, respectively, in customer advances on our consolidated balance sheets.

During the six months ended June 30, 2022 and 2021, substantially all of the customer advances at the beginning of each respective period were recognized as revenue.

As of September 30, 2022 and December 31, 2021, we had $ 511 million and $ 700 million, respectively, in customer advances on our consolidated balance sheets.

During the nine months ended September 30, 2022 and 2021, substantially all of the customer advances at the beginning of each respective period were recognized as revenue.

We offer cash incentives to certain customers generally based on the volume of their purchases over the fertilizer year ending June 30.

Our cash incentives do not provide an option to the customer for additional product.

The balances of customer incentives accrued as of June 30, 2022 and December 31, 2021 were not material.

The balances of customer incentives accrued as of September 30, 2022 and December 31, 2021 were not material.

We have certain customer contracts with performance obligations under which, if the customer does not take the required amount of product specified in the contract, then the customer is required to make a payment to us, the amount of which payment may vary based upon the terms and conditions of the applicable contract.

As of June 30, 2022, excluding contracts with original durations of less than one year, and based on the minimum product tonnage to be sold and current market price estimates, our remaining performance obligations under these contracts were approximately $ 790 million.

As of September 30, 2022, excluding contracts with original durations of less than one year, and based on the minimum product tonnage to be sold and current market price estimates, our remaining performance obligations under these contracts were approximately $ 1.3 billion.

We expect to recognize approximately 10 % of these performance obligations as revenue in the remainder of 2022, approximately 63 % as revenue during 2023-2025, approximately 11 % as revenue during 2026-2028, and the remainder thereafter.

Subject to the terms and conditions of the applicable contracts, if the customers do not satisfy their purchase obligations under such contracts, the minimum amount that they would be required to pay to us under such contracts, in the aggregate, was approximately $ 120 million as of June 30, 2022.

Other than the performance obligations described above, any performance obligations with our customers that were unfulfilled or partially fulfilled at December 31, 2021 will be satisfied in 2022.

CF INDUSTRIES HOLDINGS, INC.

Net Earnings Per Share

Net earnings per share were computed as follows:

Net Earnings (Loss) Per Share

Net earnings (loss) per share were computed as follows:

Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

(in millions, except per share amounts)

Net earnings attributable to common stockholders $ 1,165 $ 246 $ 2,048 $ 397

Basic earnings per common share:

Net earnings (loss) attributable to common stockholders $ 438 $ ( 185 ) $ 2,486 $ 212

Basic earnings (loss) per common share:

Weighted-average common shares outstanding 200.2 214.9 205.6 215.3

Net earnings attributable to common stockholders $ 5.59 $ 1.14 $ 9.83 $ 1.84

Diluted earnings per common share:

Net earnings (loss) attributable to common stockholders $ 2.19 $ ( 0.86 ) $ 12.09 $ 0.99

Diluted earnings (loss) per common share:

Weighted-average common shares outstanding 200.2 214.9 205.6 215.3

1 unchanged sentence

Diluted weighted-average common shares outstanding 200.9 214.9 206.5 216.4

Net earnings attributable to common stockholders $ 5.58 $ 1.14 $ 9.78 $ 1.83

Diluted earnings per common share is calculated using weighted-average common shares outstanding, including the dilutive effect of stock-based awards as determined under the treasury stock method.

In the computation of diluted earnings per common share, potentially dilutive stock-based awards are excluded if the effect of their inclusion is anti-dilutive.

Shares for anti-dilutive stock-based awards not included in the computation of diluted earnings per common share were zero for the three and six months ended June 30, 2022, and 1.2 million in both the three and six months ended June 30, 2021.

Net earnings (loss) attributable to common stockholders $ 2.18 $ ( 0.86 ) $ 12.04 $ 0.98

Diluted earnings (loss) per common share is calculated using weighted-average common shares outstanding, including the dilutive effect of stock-based awards as determined under the treasury stock method.

In the computation of diluted earnings (loss) per common share, potentially dilutive stock-based awards are excluded if the effect of their inclusion is anti-dilutive.

Shares for anti-dilutive stock-based awards not included in the computation of diluted earnings (loss) per common share were zero in both the three and nine months ended September 30, 2022, and 3.5 million and 1.2 million in the three and nine months ended September 30, 2021, respectively.

Inventories consist of the following:

September 30,

2022 December 31,

3 unchanged sentences

Total inventories $ 500 $ 408

United Kingdom Operations, Proposed Restructuring and Impairment Charges

During the third quarter of 2021, the United Kingdom began experiencing an energy crisis that included a substantial increase in the price of natural gas.

United Kingdom Operations Restructuring and Impairment Charges

Starting in the third quarter of 2021 the United Kingdom began experiencing an energy crisis that included a substantial increase in the price of natural gas.

The following summarizes the impairment and restructuring charges that have been recognized as a result of the U.K.

energy crisis.

2021 Impairment

energy crisis necessitated evaluations in the third and fourth quarters of 2021 of the long-lived assets, including definite-lived intangible assets, and goodwill of our U.K.

operations to determine if their fair value had declined to below their carrying value.

The evaluations resulted in total goodwill impairment charges of $ 285 million, and total long-lived and intangible asset impairment charges of $ 236 million, in 2021.

These evaluations in 2021 resulted in total goodwill impairment charges of $ 285 million, of which $259 million was recorded in the third quarter of 2021, and total long-lived and intangible asset impairment charges of $ 236 million, which were recorded in the third quarter of 2021.

As of December 31, 2021, after the recognition of the goodwill impairment charges, no goodwill related to our U.K.

operations remained.

During the first quarter of 2022, we concluded that the continued impacts of the U.K.

reporting units remained.

CF INDUSTRIES HOLDINGS, INC.

2022 Impairment and Restructuring

First quarter 2022 — During the first quarter of 2022, we concluded that the continued impacts of the U.K.

energy crisis, including further increases and volatility in natural gas prices due in part to geopolitical events as a result of Russia’s invasion of Ukraine in February 2022, triggered an additional long-lived asset impairment test.

3 unchanged sentences

Ammonia, U.K.

In June 2022, we approved and announced our proposed plan to restructure our U.K.

operations, which includes our manufacturing complexes in Ince and Billingham.

This plan includes permanently closing the Ince facility and optimizing the remaining manufacturing operations at the Billingham facility.

The Ince facility has been idled since September 15, 2021.

As a result, in the three months ended June 30, 2022, we recorded total charges of $ 162 million, as follows:

CF INDUSTRIES HOLDINGS, INC.

• asset impairment charges totaling $ 152 million consisting of the following:

Second quarter 2022 — In the second quarter of 2022, we approved and announced our proposed plan to restructure our U.K.

operations, including the permanent closure of the Ince facility and optimization of the remaining manufacturing operations at the Billingham facility.

The Ince facility had been idled since September 15, 2021.

As a result, in the second quarter of 2022, we recorded total charges of $ 162 million as follows:

• asset impairment charges totaling $ 152 million, which are included in the U.K.

long-lived and intangible asset impairment line item in our consolidated statement of operations, consisting of the following:

◦ an impairment charge of $ 135 million related to property, plant and equipment that has been classified as held for abandonment at the Ince facility, including a liability of approximately $ 9 million for the costs of certain asset retirement activities related to the Ince site;

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◦ an impairment charge of $ 9 million related to the write-down of spare parts and certain raw materials at the Ince facility;

• a charge for post-employment benefits totaling $ 10 million related to contractual and statutory obligations due to employees whose employment would be terminated in the proposed plan.

These amounts are included in the U.K.

operations restructuring line item in our consolidated statements of operations for the three and six months ended June 30, 2022.

We are working with customers, vendors, regulators and others to finalize closure plans, and we expect substantially all of the restructuring activities will be completed within the next twelve months.

• a charge for post-employment benefits totaling $ 10 million, which is included in the U.K.

operations restructuring line item in our consolidated statements of operations, related to contractual and statutory obligations due to employees whose employment would be terminated in the proposed plan.

As a result of the proposed restructuring of our U.K.

operations, we concluded that an additional impairment test was triggered for the asset groups that comprise the continuing U.K.

operations, we concluded that an additional impairment test was triggered in the second quarter of 2022 for the asset groups that comprise the continuing U.K.

operations, consisting of U.K.

Ammonia, U.K.

The results of this long-lived asset impairment test indicated that no additional asset impairment should be recorded as the undiscounted estimated future cash flows for the continuing U.K.

The results of this long-lived asset impairment test indicated that no additional asset impairment existed as the undiscounted estimated future cash flows for the continuing U.K.

operations were in excess of the carrying values for each of the U.K.

asset groups.

Third quarter 2022 — In the third quarter of 2022, the United Kingdom continued to experience extremely high and volatile natural gas prices.

Russian natural gas pipeline flows to Europe via the Nord Stream 1 pipeline ceased, causing the United Kingdom to experience unprecedented natural gas prices.

In addition, the European Union announced a desire to cap the price that Europe would pay Russia for natural gas deliveries, further contributing to the uncertainty in European energy markets.

Given these factors and the lack of a corresponding increase in global nitrogen product market prices, in September 2022, we temporarily idled ammonia production at our Billingham complex.

As a result, we concluded that an additional impairment test was triggered for the asset groups that comprise the continuing U.K.

The results of our impairment test indicated that the carrying values for our U.K.

Ammonia and U.K.

AN asset groups exceeded the undiscounted estimated future cash flows.

As a result, we recognized asset impairment charges of $ 87 million, primarily related to property, plant and equipment and definite-lived intangible assets, which are included in the U.K.

long-lived and intangible asset impairment line item in our consolidated statement of operations.

The expected cash flows used in the long-lived asset impairment analysis reflected assumptions about product selling prices and natural gas costs, as well as estimates of future production and sales volumes, operating rates, operating expenses, inflation, tax rates and capital spending.

The fair value of our property, plant and equipment utilized in the long-lived asset impairment analysis was estimated using the indirect method of the cost approach by determining the reproduction cost new of the assets and applying appropriate adjustments for depreciation including an inutility adjustment based on the cash flows expected to be generated by those asset groups.

In August 2022, the final restructuring plan for our U.K.

operations was approved, and decommissioning activities were initiated.

As a result, in the third quarter of 2022, we incurred additional charges related to our U.K.

restructuring of $ 8 million, primarily related to one-time termination benefits, which is included in the U.K.

operations restructuring line item in our consolidated statement of operations.

We are working with customers, vendors, regulators and others to finalize closure plans of our Ince facility, and we expect substantially all of these restructuring activities will be completed within the next twelve months.

CF INDUSTRIES HOLDINGS, INC.

Property, Plant and Equipment—Net

Property, plant and equipment—net consists of the following:

September 30,

2022 December 31,

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_______________________________________________________________________________

(1) As of June 30, 2022, machinery and equipment, buildings and improvements, and construction in progress include cumulative impairment charges of $ 297 million, $ 7 million and $ 13 million, respectively, which include impairment charges related to our U.K.

operations of $ 135 million recorded in the second quarter of 2022 and $ 182 million recorded in 2021.

As of December 31, 2021, machinery and equipment, buildings and improvements, and construction in progress include cumulative impairment charges of $ 169 million, $ 5 million and $ 8 million, respectively, which were recorded in 2021.

(2) As of June 30, 2022 and December 31, 2021, we had property, plant and equipment that was accrued but unpaid of approximately $ 51 million and $ 35 million, respectively.

As of June 30, 2021 and December 31, 2020, we had property, plant and equipment that was accrued but unpaid of approximately $ 76 million and $ 43 million, respectively.

Depreciation and amortization related to property, plant and equipment was $ 219 million and $ 424 million for the three and six months ended June 30, 2022, respectively, and $ 239 million and $ 439 million for the three and six months ended June 30, 2021, respectively.

(1) As of September 30, 2022, machinery and equipment, buildings and improvements, and construction in progress include cumulative impairment charges of $ 354 million, $ 7 million and $ 25 million, respectively, which include impairment charges related to our U.K.

operations of $ 135 million and $ 69 million recorded in the second quarter and third quarter of 2022, respectively, and $ 182 million recorded in 2021.

As of December 31, 2021, machinery and equipment, buildings and improvements, and construction in progress include cumulative impairment charges related to our U.K.

operations of $ 169 million, $ 5 million and $ 8 million, respectively, which were recorded in the third quarter of 2021.

(2) As of September 30, 2022 and December 31, 2021, we had property, plant and equipment that was accrued but unpaid of approximately $ 60 million and $ 35 million, respectively.

As of September 30, 2021 and December 31, 2020, we had property, plant and equipment that was accrued but unpaid of approximately $ 78 million and $ 43 million, respectively.

Depreciation and amortization related to property, plant and equipment was $ 219 million and $ 643 million for the three and nine months ended September 30, 2022, respectively, and $ 198 million and $ 637 million for the three and nine months ended September 30, 2021, respectively.

In June 2022, we approved and announced our proposed plan to restructure our U.K.

This plan includes permanently closing the Ince facility and optimizing the remaining manufacturing operations at the Billingham facility.

As a result, we recorded total charges of $ 162 million, including an asset impairment charge of $ 135 million to write down the property, plant and equipment at the Ince facility to its estimated salvage value, which are reflected in the line “U.K.

operations restructuring” in our consolidated statements of operations for the three and six months ended June 30, 2022.

The asset impairment consisted of $ 128 million related to machinery and equipment, $ 2 million relating to buildings and improvements,

CF INDUSTRIES HOLDINGS, INC.

and $ 5 million related to construction in progress.

See Note 5—United Kingdom Operations, Proposed Restructuring and Impairment Charges for additional information.

operations, including the permanent closure of our Ince facility and optimization of the remaining manufacturing operations at the Billingham facility.

As a result, in the second quarter of 2022, we recorded an asset impairment charge of $ 135 million to write down the property, plant and equipment at the Ince facility to its estimated salvage value.

The asset impairment consisted of $ 128 million related to machinery and equipment, $ 2 million relating to buildings and improvements, and $ 5 million related to construction in progress.

In the third quarter of 2022, the United Kingdom continued to experience extremely high and volatile natural gas prices.

Given the increase in the price of natural gas in the United Kingdom and the lack of a corresponding increase in global nitrogen product market prices, in September 2022, we temporarily idled ammonia production at our Billingham complex.

As a result, we concluded that an additional impairment test was triggered for the asset groups that comprise the continuing U.K.

The results of our impairment test indicated that the carrying values for our U.K.

Ammonia and U.K.

AN asset groups exceeded the undiscounted estimated future cash flows.

As a result, we recognized asset impairment charges of $ 87 million, of which $ 69 million related to property, plant and equipment, consisting of $ 57 million related to machinery and equipment and $ 12 million related to construction in progress.

See Note 5—United Kingdom Operations Restructuring and Impairment Charges for additional information.

Plant turnarounds —Scheduled inspections, replacements and overhauls of plant machinery and equipment at our continuous process manufacturing facilities during a full plant shutdown are referred to as plant turnarounds.

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Internal employee costs and overhead amounts are not considered turnaround costs and are not capitalized.

CF INDUSTRIES HOLDINGS, INC.

The following is a summary of capitalized plant turnaround costs:

Six months ended

Nine months ended

September 30,

(in millions)

Net capitalized turnaround costs:

Beginning balance $ 355 $ 226

Balance as of January 1 $ 355 $ 226

Additions 84 215

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Effect of exchange rate changes ( 7 ) —

Ending balance $ 300 $ 265

Balance as of September 30 $ 310 $ 357

Goodwill and Other Intangible Assets

The following table shows the carrying amount of goodwill by reportable segment as of June 30, 2022 and December 31, 2021:

The following table shows the carrying amount of goodwill by reportable segment as of September 30, 2022 and December 31, 2021:

Granular Urea UAN AN (1)

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Effect of exchange rate changes ( 3 ) — — — — ( 3 )

Balance as of June 30, 2022 $ 578 $ 828 $ 576 $ 69 $ 39 $ 2,090

Balance as of September 30, 2022 $ 576 $ 828 $ 576 $ 69 $ 39 $ 2,088

_______________________________________________________________________________

(1) At both June 30, 2022 and December 31, 2021, the carrying amount of goodwill includes accumulated impairment losses in our Ammonia, AN and Other segments of $ 9 million, $ 241 million and $ 35 million, respectively.

(1) At both September 30, 2022 and December 31, 2021, the carrying amount of goodwill includes accumulated impairment losses in our Ammonia, AN and Other segments of $ 9 million, $ 241 million and $ 35 million, respectively, which consist of impairment charges related to our U.K.

All of our identifiable intangible assets have definite lives and are presented in other assets on our consolidated balance sheets at gross carrying amount, net of accumulated amortization, as follows:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Amount Accumulated

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_______________________________________________________________________________

(1) At both June 30, 2022 and December 31, 2021, the gross carrying amount for customer relationships includes cumulative impairment charges of $ 49 million, which were recorded in 2021.

CF INDUSTRIES HOLDINGS, INC.

(2) At June 30, 2022, the gross carrying amount for trade names includes cumulative impairment charges of $ 9 million, including $ 8 million recorded in the second quarter of 2022, and $ 1 million recorded in 2021.

(1) As of September 30, 2022, the gross carrying amount for customer relationships includes cumulative impairment charges related to our U.K.

operations of $ 55 million, of which $ 6 million was recorded in the third quarter of 2022 and $ 49 million was recorded in 2021.

As of December 31, 2021, the gross carrying amount for customer relationships includes cumulative impairment charges of $ 49 million, which were recorded in 2021.

(2) As of September 30, 2022, trade names, which are related to our U.K.

operations, had been written down to zero as a result of cumulative impairment charges of $ 18 million, including $ 9 million recorded in the third quarter of 2022, $ 8 million recorded in the second quarter of 2022, and $ 1 million recorded in 2021.

At December 31, 2021, the gross carrying amount for trade names includes cumulative impairment charges of $ 1 million, which were recorded in 2021.

Our customer relationships and trade names are being amortized over a weighted-average life of approximately 20 years.

Amortization expense of our identifiable intangible assets was $ 1 million and $ 2 million for the three and six months ended June 30, 2022, respectively, and $ 2 million and $ 4 million for the three and six months ended June 30, 2021, respectively.

The gross carrying amount and accumulated amortization of our intangible assets are also impacted by the effect of exchange rate changes.

Total estimated amortization expense for the remainder of 2022 is $ 2 million and for each of the fiscal years 2023-2027 is $ 4 million.

Our customer relationships are being amortized over a weighted-average life of approximately 18 years.

Amortization expense of our identifiable intangible assets was $ 1 million and $ 3 million for the three and nine months ended September 30, 2022, respectively, and $ 2 million and $ 6 million for the three and nine months ended September 30, 2021, respectively.

Total estimated amortization expense for the remainder of 2022 is less than $ 1 million and for each of the fiscal years 2023-2027 is approximately $ 3 million.

CF INDUSTRIES HOLDINGS, INC.

In June 2022, we approved and announced our proposed plan to restructure our U.K.

This plan includes permanently closing the Ince facility and optimizing the remaining manufacturing operations at the Billingham facility.

As a result, in the three months ended June 30, 2022, we recorded an intangible asset impairment charge of $ 8 million related to trade names.

See Note 5—United Kingdom Operations, Proposed Restructuring and Impairment Charges for additional information.

operations, including the permanent closure of our Ince facility and optimization of the remaining manufacturing operations at the Billingham facility.

As a result, in the second quarter of 2022, we recorded an intangible asset impairment charge of $ 8 million related to trade names.

In the third quarter of 2022, the United Kingdom continued to experience extremely high and volatile natural gas prices.

As a result, we concluded that an additional impairment test was triggered for the asset groups that comprise the continuing U.K.

operations, which resulted in asset impairment charges of $ 87 million in our U.K.

Ammonia and U.K.

AN asset groups, of which $ 15 million related to intangible assets, consisting of $ 6 million related to customer relationships and $ 9 million related to trade names.

After the impairment charge, intangible assets related to our U.K.

operations were fully written off.

See Note 5—United Kingdom Operations Restructuring and Impairment Charges for additional information.

Equity Method Investment

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We include our share of the net earnings from this equity method investment as an element of earnings from operations because PLNL provides additional production to our operations and is integrated with our other supply chain and sales activities in the Ammonia segment.

As of June 30, 2022, the total carrying value of our equity method investment in PLNL was $ 79 million, $ 37 million more than our share of PLNL’s book value.

As of September 30, 2022, the total carrying value of our equity method investment in PLNL was $ 86 million, $ 36 million more than our share of PLNL’s book value.

The excess is attributable to the purchase accounting impact of our acquisition of the investment in PLNL and reflects the revaluation of property, plant and equipment.

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We have transactions in the normal course of business with PLNL reflecting our obligation to purchase 50 % of the ammonia produced by PLNL at current market prices.

Our ammonia purchases from PLNL totaled $ 77 million and $ 151 million for the three and six months ended June 30, 2022, respectively, and $ 37 million and $ 63 million for the three and six months ended June 30, 2021, respectively.

Our ammonia purchases from PLNL totaled $ 61 million and $ 212 million for the three and nine months ended September 30, 2022, respectively, and $ 30 million and $ 93 million for the three and nine months ended September 30, 2021, respectively.

Fair Value Measurements

Our cash and cash equivalents and other investments consist of the following:

June 30, 2022

September 30, 2022

Cost Basis Unrealized

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Nonqualified employee benefit trusts 16 — — 16

CF INDUSTRIES HOLDINGS, INC.

December 31, 2021

9 unchanged sentences

Nonqualified employee benefit trusts 17 3 — 20

CF INDUSTRIES HOLDINGS, INC.

Under our short-term investment policy, we may invest our cash balances, either directly or through mutual funds, in several types of investment-grade securities, including notes and bonds issued by governmental entities or corporations.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present assets and liabilities included in our consolidated balance sheets as of June 30, 2022 and December 31, 2021 that are recognized at fair value on a recurring basis, and indicate the fair value hierarchy utilized to determine such fair value:

June 30, 2022

The following tables present assets and liabilities included in our consolidated balance sheets as of September 30, 2022 and December 31, 2021 that are recognized at fair value on a recurring basis, and indicate the fair value hierarchy utilized to determine such fair value:

September 30, 2022

Value Quoted Prices

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Cash Equivalents

As of June 30, 2022 and December 31, 2021, our cash equivalents consisted primarily of U.S.

As of September 30, 2022 and December 31, 2021, our cash equivalents consisted primarily of U.S.

and Canadian government obligations and money market mutual funds that invest in U.S.

government obligations and other investment-grade securities.

CF INDUSTRIES HOLDINGS, INC.

Nonqualified Employee Benefit Trusts

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The natural gas derivative contracts settle using primarily a NYMEX futures price index.

To determine the fair value of these instruments, we use quoted market prices from NYMEX and standard pricing models with inputs derived from or corroborated by observable market data such as forward curves supplied by an industry-recognized independent third party.

To determine the fair value of these instruments, we use quoted market prices from NYMEX and standard pricing models with inputs derived from or corroborated by observable market data such as forward

CF INDUSTRIES HOLDINGS, INC.

curves supplied by an industry-recognized independent third party.

See Note 14—Derivative Financial Instruments for additional information.

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Under the terms of our strategic venture with CHS Inc.

(CHS), if our credit rating as determined by two of three specified credit rating agencies is below certain levels, we are required to make a non-refundable yearly payment of $ 5 million to CHS.

Since 2016, our credit ratings have been below certain levels and, as a result, we made an annual payment of $ 5 million to CHS in the fourth quarter of each year.

These payments will continue on a yearly basis until the earlier of the date that our credit rating is upgraded to or above certain levels by two of the three specified credit rating agencies or February 1, 2026.

This obligation is recognized on our consolidated balance sheets as an embedded derivative and is included within other current liabilities and other liabilities.

As of both June 30, 2022 and December 31, 2021, the embedded derivative liability was $ 15 million.

The inputs into the fair value measurement include the probability of future upgrades and downgrades of our credit rating based on historical credit rating movements of other public companies and the discount rates to be applied to potential annual payments based on applicable credit spreads of other public companies at different credit rating levels.

(CHS), if our credit rating as determined by two of three specified credit rating agencies is below certain levels, we are required to make a non-refundable yearly payment of $ 5 million to CHS until the earlier of the date that our credit rating is upgraded to or above such levels by two of the three specified credit rating agencies or February 1, 2026.

Beginning in 2016, our credit ratings were below such levels and, as a result, we made an annual payment of $ 5 million to CHS in the fourth quarter of each year from 2016 through 2021.

This obligation has been recognized on our consolidated balance sheets as an embedded derivative and has been included within other current liabilities and other liabilities.

As of both September 30, 2022 and December 31, 2021, the embedded derivative liability was $ 15 million.

The inputs into the fair value measurement with respect to the embedded derivative liability include the probability of future upgrades and downgrades of our credit rating based on historical credit rating movements of other public companies and the discount rates to be applied to potential annual payments based on applicable credit spreads of other public companies at different credit rating levels.

Based on these inputs, our fair value measurement is classified as Level 2.

Our credit rating was upgraded above certain levels in July 2022 by one of the specified credit rating agencies and subsequent to the end of the third quarter, in October 2022, by a second specified rating agency.

As a result of these upgrades, we are not required to make a $ 5 million annual payment to CHS in the fourth quarter of 2022.

See Note 15—Noncontrolling Interest for additional information regarding our strategic venture with CHS.

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The carrying amount and estimated fair value of our financial instruments are as follows:

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

Amount Fair Value Carrying

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The carrying amounts of cash and cash equivalents, as well as instruments included in other current assets and other current liabilities that meet the definition of financial instruments, approximate fair values because of their short-term maturities.

CF INDUSTRIES HOLDINGS, INC.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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These include long-lived assets, goodwill and other intangible assets and investments in unconsolidated subsidiaries, such as equity method investments, which may be written down to fair value as a result of impairment.

In the case of property, plant and equipment held for abandonment, as described in Note 5—United Kingdom Operations, Proposed Restructuring and Impairment Charges, fair value was measured as the estimated salvage value of such assets, which was immaterial.

In the case of property, plant and equipment held for abandonment, as described in Note 5—United Kingdom Operations Restructuring and Impairment Charges, fair value was measured as the estimated salvage value of such assets, which was immaterial.

The fair value measurements related to each of these rely primarily on Company-specific inputs and the Company’s assumptions about the use of the assets.

Since certain of the Company’s assumptions would involve inputs that are not observable, these fair values would reside within Level 3 of the fair value hierarchy.

For the three months ended June 30, 2022, we recorded an income tax provision of $ 357 million on pre-tax income of $ 1.70 billion, or an effective tax rate of 21.1 %, compared to an income tax provision of $ 85 million on pre-tax income of $ 402 million, or an effective tax rate of 21.2 %, for the three months ended June 30, 2021.

For the six months ended June 30, 2022, we recorded an income tax provision of $ 758 million on pre-tax income of $ 3.15 billion, or an effective tax rate of 24.1 %, compared to an income tax provision of $ 103 million on pre-tax income of $ 595 million, or an effective tax rate of 17.4 %, for the six months ended June 30, 2021.

For the six months ended June 30, 2022, our income tax provision includes $ 22 million of income tax benefit due to share-based compensation activity and $ 78 million of income tax provision related to the Canada Revenue Agency Competent Authority Matter, as discussed below.

For the six months ended June 30, 2021, our income tax provision includes a $ 22 million benefit reflecting the impact of agreement on certain issues related to U.S.

federal income tax audits.

CF INDUSTRIES HOLDINGS, INC.

For the three months ended September 30, 2022, we recorded an income tax provision of $ 155 million on pre-tax income of $ 693 million, or an effective tax rate of 22.3 %, compared to an income tax benefit of $ 46 million on pre-tax loss of $ 137 million, or an effective tax rate of 34.3 %, for the three months ended September 30, 2021.

For the three months ended September 30, 2022, our income tax provision includes $18 million of income tax expense to record a valuation allowance in the United Kingdom due to the uncertainty surrounding the realization of the deferred tax assets as a result of the impairment described in Note 5—United Kingdom Operations Restructuring and Impairment Charges.

For the nine months ended September 30, 2022, we recorded an income tax provision of $ 913 million on pre-tax income of $ 3.84 billion, or an effective tax rate of 23.8 %, compared to an income tax provision of $ 57 million on pre-tax income of $ 458 million, or an effective tax rate of 12.3 %, for the nine months ended September 30, 2021.

For the nine months ended September 30, 2022, our income tax provision includes $18 million of income tax expense to record a valuation allowance in the United Kingdom, $ 22 million of income tax benefit due to share-based compensation activity and $ 78 million of income tax provision related to the Canada Revenue Agency Competent Authority Matter, as discussed below.

For the nine months ended September 30, 2021, we did not record an income tax benefit related to the goodwill impairment described in Note 5—United Kingdom Operations Restructuring and Impairment Charges, above, as the impairment is non-deductible for income tax purposes.

For the nine months ended September 30, 2021, our income tax provision includes a $ 36 million benefit reflecting the impact of agreement on certain issues related to U.S.

federal income tax audits, including the reversal of an accrual for unrecognized tax benefits.

Our effective tax rate is also impacted by earnings attributable to the noncontrolling interest in CF Industries Nitrogen, LLC (CFN), as our consolidated income tax provision does not include a tax provision on the earnings attributable to the noncontrolling interest.

Our effective tax rate for the three months ended June 30, 2022 of 21.1 %, which is based on pre-tax income of $ 1.70 billion, including $ 174 million of earnings attributable to the noncontrolling interest, would be 2.4 percentage points higher if based on pre-tax income exclusive of the $ 174 million of earnings attributable to the noncontrolling interest.

Our effective tax rate for the three months ended June 30, 2021 of 21.2 %, which is based on pre-tax income of $ 402 million, including $ 71 million of earnings attributable to the noncontrolling interest, would be 4.6 percentage points higher if based on pre-tax income exclusive of the $ 71 million of earnings attributable to the noncontrolling interest.

Our effective tax rate for the six months ended June 30, 2022 of 24.1 %, which is based on pre-tax income of $ 3.15 billion, including $ 342 million of earnings attributable to the noncontrolling interest, would be 2.9 percentage points higher if based on pre-tax income exclusive of the $ 342 million of earnings attributable to the noncontrolling interest.

Our effective tax rate for the six months ended June 30, 2021 of 17.4 %, which is based on pre-tax income of $ 595 million, including $ 95 million of earnings attributable to the noncontrolling interest, would be 3.3 percentage points higher if based on pre-tax income exclusive of the $ 95 million of earnings attributable to the noncontrolling interest.

Our effective tax rate for the three months ended September 30, 2022 of 22.3 %, which is based on pre-tax income of $ 693 million, including $ 100 million of earnings attributable to the noncontrolling interest, would be 3.7 percentage points higher if based on pre-tax income exclusive of the $ 100 million of earnings attributable to the noncontrolling interest.

Our effective tax rate for the three months ended September 30, 2021 of 34.3 %, which is based on pre-tax loss of $ 137 million, including $ 94 million of earnings attributable to the noncontrolling interest, would be 14.0 percentage points lower if based on pre-tax loss exclusive of the $ 94 million of earnings attributable to the noncontrolling interest.

Our effective tax rate for the nine months ended September 30, 2022 of 23.8 %, which is based on pre-tax income of $ 3.84 billion, including $ 442 million of earnings attributable to the noncontrolling interest, would be 3.1 percentage points higher if based on pre-tax income exclusive of the $ 442 million of earnings attributable to the noncontrolling interest.

Our effective tax rate for the nine months ended September 30, 2021 of 12.3 %, which is based on pre-tax income of $ 458 million, including $ 189 million of earnings attributable to the noncontrolling interest, would be 8.7 percentage points higher if based on pre-tax income exclusive of the $ 189 million of earnings attributable to the noncontrolling interest.

Canada Revenue Agency Competent Authority Matter

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In the second quarter of 2021, the Company submitted the transfer pricing aspect of the matter into the arbitration process under the terms of the Treaty.

CF INDUSTRIES HOLDINGS, INC.

In February 2022, we were informed that a decision was reached by the arbitration panel for tax years 2006 through 2011.

In March 2022, we received further details of the results of the arbitration proceedings and the settlement provisions between the United States and Canadian competent authorities, and we accepted the decision of the arbitration panel.

Under the terms of the arbitration decision, additional income for tax years 2006 through 2011 will be subject to tax in Canada, resulting in our having additional Canadian tax liability for those tax years of approximately $ 129 million, based on current estimates.

We expect this resulting Canadian tax liability, plus interest of approximately $ 103 million, will be assessed in the second half of 2022 and that payment of those amounts, aggregating to approximately $ 232 million, based on current estimates, will be due in the second half of 2022.

The letters of credit we had posted in lieu of paying the additional tax liability assessed by the Notices of Reassessment will be cancelled upon payment of the additional tax and interest to Canada.

Due primarily to the availability of additional foreign tax credits to offset in part the increased Canadian tax referenced above, the Company will file amended tax returns in the United States to request a refund of tax overpaid.

In the six months ended June 30, 2022, as a result of the impact of these events on our Canadian and U.S.

Under the terms of the arbitration decision, additional income for tax years 2006 through 2011 is subject to tax in Canada, resulting in our having additional Canadian tax liability for those tax years of approximately $ 129 million, based on current estimates.

In the third quarter of 2022, $ 81 million of this tax liability and $ 66 million of related interest was assessed and paid.

As a result, the letters of credit we had posted in lieu of paying the additional tax liability assessed by the Notices of Reassessment were cancelled.

We expect the remaining tax liability and related interest will be assessed and paid in the fourth quarter of 2022.

Due primarily

CF INDUSTRIES HOLDINGS, INC.

to the availability of additional foreign tax credits to offset in part the increased Canadian tax referenced above, the Company will then file amended tax returns in the United States to request a refund of tax overpaid.

In the nine months ended September 30, 2022, as a result of the impact of these events on our Canadian and U.S.

federal and state income taxes, we recognized an income tax provision of $ 78 million, reflecting the net impact of $ 129 million of accrued income taxes payable to Canada for tax years 2006 to 2011, partially offset by net income tax receivables of approximately $ 51 million in the United States, and we accrued net interest of $ 103 million, primarily reflecting the impact of estimated interest payable to Canada.

Of the $ 78 million of income tax provision and $ 104 million of net interest expense recognized in the six months ended June 30, 2022, $ 2 million of income tax provision and $ 5 million of net interest expense was recognized in the three months ended June 30, 2022.

Transfer pricing reserves

Of the $ 78 million of income tax provision and $ 103 million of net interest expense recognized in the nine months ended September 30, 2022, a reduction of $ 1 million of net interest expense was recognized in the three months ended September 30, 2022.

Transfer pricing positions

As a result of the outcome of the arbitration decision discussed above, we also evaluated our transfer pricing positions between Canada and the United States for open years 2012 and after.

Based on this evaluation and our evaluation during the three months ended June 30, 2022, we recorded the following in the six months ended June 30, 2022:

Based on this evaluation, we recorded the following in the nine months ended September 30, 2022:

• liabilities for unrecognized tax benefits of approximately $ 314 million with a corresponding income tax provision, and accrued interest of approximately $ 123 million related to the liabilities for unrecognized tax benefits, and

• noncurrent income tax receivables of approximately $ 359 million with a corresponding income tax benefit, and accrued interest income of approximately $ 33 million related to the noncurrent income tax receivables.

In the six months ended June 30, 2022, the impact of these evaluations of transfer pricing positions on our consolidated statement of operations, including $ 26 million of net deferred income tax provision for other transfer pricing tax effects, was $ 19 million of income tax benefit and $ 86 million of net interest expense before tax ($ 93 million after tax).

Of the $ 19 million of income tax benefit and $ 86 million of net interest expense recognized in the six months ended June 30, 2022, $ 21 million of income tax benefit and $ 23 million of net interest expense ($ 24 million after tax) was recognized in the three months ended June 30, 2022.

In the nine months ended September 30, 2022, the impact of these evaluations of transfer pricing positions on our consolidated statement of operations, including $ 29 million of net deferred income tax provision for other transfer pricing tax effects, was $ 16 million of income tax benefit and $ 90 million of net interest expense before tax ($ 98 million after tax).

Of the $ 16 million of income tax benefit and $ 90 million of net interest expense recognized in the nine months ended September 30, 2022, $ 3 million of income tax provision and $ 4 million of net interest expense ($ 5 million after tax) was recognized in the three months ended September 30, 2022.

Unrecognized tax benefits

As of June 30, 2022, the total amount of our unrecognized tax benefits was $ 351 million, and the total amounts accrued for interest and penalties related to income taxes included in other liabilities was $ 125 million, which primarily reflects the impacts of the evaluation of our transfer pricing positions.

As of September 30, 2022, the total amount of our unrecognized tax benefits was $ 329 million, and the total amounts accrued for interest and penalties related to income taxes included in other liabilities was $ 123 million, which primarily reflects the impacts of the evaluation of our transfer pricing positions.

As of December 31, 2021, the total amount of our unrecognized tax benefits was $ 27 million and the total amounts accrued for interest and penalties related to income taxes was $ 4 million.

We expect that the ultimate outcome of these transfer pricing reserves will not have a material net impact on our results of operations, financial condition or cash flows.

We expect that the ultimate outcome of these unrecognized tax benefits related to transfer pricing will not have a material net impact on our results of operations, financial condition or cash flows.

However, we can provide no assurance as to the ultimate outcome.

Based on the information currently available, we believe we have adequately reserved for the open tax years.

Pension Retiree Annuity Purchase

On July 15, 2022, we entered into an agreement with an insurance company to purchase a non-participating group annuity contract and transfer approximately $ 375 million of our primary U.S.

defined benefit pension plan’s projected benefit obligation, subject to customary closing conditions.

The transaction closed on July 22, 2022 and was funded with plan assets.

Under the transaction, the insurance company assumed responsibility for pension benefits and annuity administration for approximately 4,000 retirees or their beneficiaries.

As a result of this transaction, in the third quarter of 2022, we remeasured the plan's projected benefit obligation and plan assets, and we recognized a non-cash pre-tax pension settlement loss of $ 24 million, reflecting the unamortized net unrecognized postretirement benefit costs related to the settled obligations, with a corresponding offset to accumulated other comprehensive loss.

CF INDUSTRIES HOLDINGS, INC.

8 unchanged sentences

The specified margin and the amount of the commitment fee depend on CF Holdings’ credit rating at the time.

As of June 30, 2022, we had unused borrowing capacity under the Revolving Credit Agreement of $ 750 million and no outstanding letters of credit.

There were no borrowings outstanding under the Revolving Credit Agreement as of June 30, 2022 or December 31, 2021, or during the six months ended June 30, 2022.

As of September 30, 2022, we had unused borrowing capacity under the Revolving Credit Agreement of $ 750 million and no outstanding letters of credit.

There were no borrowings outstanding under the Revolving Credit Agreement as of September 30, 2022 or December 31, 2021, or during the nine months ended September 30, 2022.

The Revolving Credit Agreement contains representations and warranties and affirmative and negative covenants, including financial covenants.

As of June 30, 2022, we were in compliance with all covenants under the Revolving Credit Agreement.

As of September 30, 2022, we were in compliance with all covenants under the Revolving Credit Agreement.

Letters of Credit

In addition to the letters of credit that may be issued under the Revolving Credit Agreement, as described above, we have also entered into a bilateral agreement with capacity to issue up to $ 350 million of letters of credit, reflecting an increase of $ 100 million in May 2022.

As of June 30, 2022, approximately $ 275 million of letters of credit were outstanding under this agreement.

Long-term debt presented on our consolidated balance sheets as of June 30, 2022 and December 31, 2021 consisted of the following debt securities issued by CF Industries:

Effective Interest Rate June 30, 2022 December 31, 2021

As of September 30, 2022, approximately $ 197 million of letters of credit were outstanding under this agreement.

Long-term debt presented on our consolidated balance sheets as of September 30, 2022 and December 31, 2021 consisted of the following debt securities issued by CF Industries:

Effective Interest Rate September 30, 2022 December 31, 2021

Principal Carrying Amount (1)

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(1) Carrying amount is net of unamortized debt discount and deferred debt issuance costs.

Total unamortized debt discount was $ 8 million as of both June 30, 2022 and December 31, 2021, and total deferred debt issuance costs were $ 28 million and $ 27 million as of June 30, 2022 and December 31, 2021, respectively.

Total unamortized debt discount was $ 7 million and $ 8 million as of September 30, 2022 and December 31, 2021, respectively, and total deferred debt issuance costs were $ 28 million and $ 27 million as of September 30, 2022 and December 31, 2021, respectively.

(2) Effective August 23, 2021, these notes are no longer secured, in accordance with the terms of the applicable indenture.

As of June 30, 2022, under the indentures (including the applicable supplemental indentures) governing the senior notes due 2034, 2043 and 2044 identified in the table above (the Public Senior Notes), each series of Public Senior Notes was guaranteed by CF Holdings.

As of September 30, 2022, under the indentures (including the applicable supplemental indentures) governing the senior notes due 2034, 2043 and 2044 identified in the table above (the Public Senior Notes), each series of Public Senior Notes was guaranteed by CF Holdings.

CF INDUSTRIES HOLDINGS, INC.

As of June 30, 2022, under the terms of the indenture governing the 4.500 % senior secured notes due December 2026 (the 2026 Notes) identified in the table above, the 2026 Notes were guaranteed by CF Holdings.

As of September 30, 2022, under the terms of the indenture governing the 4.500 % senior secured notes due December 2026 (the 2026 Notes) identified in the table above, the 2026 Notes were guaranteed by CF Holdings.

Until August 23, 2021, the 2026 Notes were guaranteed by certain subsidiaries of CF Industries.

The requirement for subsidiary guarantees of the 2026 Notes was eliminated, and all subsidiary guarantees were automatically released, as a result of an investment grade rating event under the terms of the indenture governing the 2026 Notes on August 23, 2021.

On March 20, 2021, we redeemed in full all of the $ 250 million outstanding principal amount of the 3.400 % senior secured notes due December 2021 (the 2021 Notes) in accordance with the optional redemption provisions in the indenture governing the 2021 Notes.

The total aggregate redemption price paid in connection with the redemption of the 2021 Notes was $ 258 million, including accrued interest.

As a result, we recognized a loss on debt extinguishment of $ 6 million, consisting primarily of the premium paid on the redemption of the 2021 Notes prior to their scheduled maturity.

On April 21, 2022, we redeemed in full all of the $ 500 million outstanding principal amount of the 3.450 % senior notes due June 2023 (the 2023 Notes) in accordance with the optional redemption provisions in the indenture governing the 2023 Notes.

The total aggregate redemption price paid in connection with the redemption of the 2023 Notes was $ 513 million, including accrued interest.

As a result, we recognized a loss on debt extinguishment of $ 8 million, consisting primarily of the premium paid on the redemption of the 2023 Notes prior to their scheduled maturity.

The total aggregate redemption price paid in connection with the redemption of the 2023 Notes, which was funded with cash on hand, was $ 513 million, including accrued interest.

As a result, we recognized a loss on debt extinguishment of $ 8 million, consisting primarily of the premium paid on the redemption of the $ 500 million principal amount of the 2023 Notes prior to their scheduled maturity.

On September 10, 2021, we redeemed $ 250 million principal amount, representing one-third of the $ 750 million principal amount outstanding immediately prior to such redemption, of the 2023 Notes, in accordance with the optional redemption provisions in the indenture governing the 2023 Notes.

The total aggregate redemption price paid in connection with the redemption of the 2023 Notes, which was funded with cash on hand, was approximately $ 265 million, including accrued interest.

As a result, we recognized a loss on debt extinguishment of $ 13 million in the third quarter of 2021, consisting primarily of a premium paid on the redemption of the $ 250 million principal amount of the 2023 Notes prior to their scheduled maturity.

The total aggregate redemption price paid in connection with the redemption of the 2021 Notes, which was funded with cash on hand, was $ 258 million, including accrued interest.

As a result, we recognized a loss on debt extinguishment of $ 6 million, consisting primarily of the premium paid on the redemption of the $ 250 million principal amount of the 2021 Notes prior to their scheduled maturity.

Interest on the Public Senior Notes and the 2026 Notes is payable semiannually, and the Public Senior Notes and the 2026 Notes are redeemable at our option, in whole at any time or in part from time to time, at specified make-whole redemption prices.

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

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(2) See Note 10—Income Taxes for additional information.

CF INDUSTRIES HOLDINGS, INC.

Derivative Financial Instruments

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As a result, changes in fair value of these contracts are recognized in earnings.

As of June 30, 2022, we had natural gas derivative contracts covering certain periods through March 2023.

As of June 30, 2022, our open natural gas derivative contracts consisted of natural gas fixed price swaps and basis swaps for 11.2 million MMBtus.

As of September 30, 2022, we had natural gas derivative contracts covering certain periods through March 2023.

As of September 30, 2022, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options for 48.2 million MMBtus of natural gas.

As of December 31, 2021, we had open natural gas derivative contracts consisting of natural gas fixed price swaps, basis swaps and options for 60.0 million MMBtus of natural gas.

For the six months ended June 30, 2022, we used derivatives to cover approximately 24 % of our natural gas consumption.

CF INDUSTRIES HOLDINGS, INC.

For the nine months ended September 30, 2022, we used derivatives to cover approximately 16 % of our natural gas consumption.

The effect of derivatives in our consolidated statements of operations is shown in the table below.

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Three months ended

June 30, Six months ended

September 30, Nine months ended

September 30,

Location 2022 2021 2022 2021

(in millions)

Unrealized net gains on natural gas derivatives Cost of sales $ 17 $ — $ 50 $ 6

Realized net (losses) gains on natural gas derivatives Cost of sales ( 9 ) — 8 ( 3 )

Unrealized net (losses) gains on natural gas derivatives Cost of sales $ ( 11 ) $ 12 $ 39 $ 18

Realized net gains (losses) on natural gas derivatives Cost of sales 12 — 20 ( 3 )

Gain on net settlement of natural gas derivatives due to Winter Storm Uri Cost of sales — — — 112

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We no longer qualified for the NPNS derivative scope exception for the natural gas that was net settled with our suppliers due to the impact of Winter Storm Uri.

As a result, we recognized a gain of $ 112 million from the net settlement of these natural gas contracts, which is reflected in cost of sales in our consolidated statement of operations for the six months ended June 30, 2021.

CF INDUSTRIES HOLDINGS, INC.

The fair values of derivatives on our consolidated balance sheets are shown below.

As of June 30, 2022 and December 31, 2021, none of our derivative instruments were designated as hedging instruments.

As of September 30, 2022 and December 31, 2021, none of our derivative instruments were designated as hedging instruments.

See Note 9—Fair Value Measurements for additional information on derivative fair values.

Asset Derivatives Liability Derivatives

Balance Sheet Location June 30,

Balance Sheet Location September 30,

2022 December 31, 2021 Balance Sheet

Location June 30,

Location September 30,

2022 December 31, 2021

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In the event of certain defaults or termination events, our counterparties may request early termination and net settlement of certain derivative trades, or under certain ISDA agreements, may require us to collateralize derivatives in a net liability position.

As of June 30, 2022 and December 31, 2021, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was zero and $ 31 million, respectively, which also approximates the fair value of the assets that may be needed to settle the obligations if the credit-risk-related contingent features were triggered at the reporting dates.

As of September 30, 2022 and December 31, 2021, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was zero and $ 31 million, respectively, which also approximates the fair value of the assets that may be needed to settle the obligations if the credit-risk-related contingent features were triggered at the reporting dates.

The credit support documents executed in connection with certain of our ISDA agreements generally provide us and our counterparties the right to set off collateral against amounts owing under the ISDA agreements upon the occurrence of a default or a specified termination event.

As of June 30, 2022 and December 31, 2021, we had no cash collateral on deposit with counterparties for derivative contracts.

The following table presents amounts relevant to offsetting of our derivative assets and liabilities as of June 30, 2022 and December 31, 2021:

CF INDUSTRIES HOLDINGS, INC.

As of September 30, 2022 and December 31, 2021, we had no cash collateral on deposit with counterparties for derivative contracts.

The following table presents amounts relevant to offsetting of our derivative assets and liabilities as of September 30, 2022 and December 31, 2021:

Amounts presented in consolidated

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(in millions)

June 30, 2022

September 30, 2022

Total derivative assets $ 26 $ — $ — $ 26

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We do not believe the contractually allowed netting, close-out netting or setoff of amounts owed to, or due from, the counterparties to our ISDA agreements would have a material effect on our financial position.

CF INDUSTRIES HOLDINGS, INC.

Noncontrolling Interest

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Declaration of distributions payable ( 619 ) ( 194 )

Balance as of June 30 $ 2,925 $ 2,712

Balance as of September 30 $ 2,653 $ 2,676

Distributions payable to noncontrolling interest:

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Distributions to noncontrolling interest ( 619 ) ( 194 )

Balance as of June 30 $ — $ —

Balance as of September 30 $ — $ —

CHS also receives deliveries pursuant to a supply agreement under which CHS has the right to purchase annually from CFN up to approximately 1.1 million tons of granular urea and 580,000 tons of UAN at market prices.

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The amounts of distributions from CFN to us and CHS are based generally on the profitability of CFN and determined based on the volume of granular urea and UAN sold by CFN to us and CHS pursuant to supply agreements, less a formula driven amount based primarily on the cost of natural gas used to produce the granular urea and UAN, and adjusted for the allocation of items such as operational efficiencies and overhead amounts.

Additionally, under the terms of the strategic

CF INDUSTRIES HOLDINGS, INC.

venture, we recognized an embedded derivative related to our credit rating.

Additionally, under the terms of the strategic venture, we recognized an embedded derivative related to our credit rating.

See Note 9—Fair Value Measurements for additional information.

On July 31, 2022, the CFN Board of Managers approved semi-annual distribution payments for the distribution period ended June 30, 2022 in accordance with CFN’s limited liability company agreement.

On August 1, 2022, CFN distributed $ 371 million to CHS for the distribution period ended June 30, 2022.

Stockholders’ Equity

8 unchanged sentences

The manner, timing and amount of repurchases will be determined by our management based on the evaluation of market conditions, stock price, and other factors.

In the six months ended June 30, 2022, we repurchased approximately 6.6 million shares under the 2021 Share Repurchase Program for $ 590 million, of which $ 14 million was accrued and unpaid as of June 30, 2022.

In the six months ended June 30, 2022, we retired approximately 3.2 million shares of repurchased stock, and we held approximately 3.8 million shares of treasury stock as of June 30, 2022.

See Note 19—Subsequent Event for additional information.

CF INDUSTRIES HOLDINGS, INC.

In the nine months ended September 30, 2022, we repurchased approximately 12.7 million shares under the 2021 Share Repurchase Program for $ 1.12 billion, of which $ 27 million was accrued and unpaid as of September 30, 2022.

In the nine months ended September 30, 2022, we retired approximately 3.2 million shares of repurchased stock, and we held approximately 9.9 million shares of treasury stock as of September 30, 2022.

Accumulated Other Comprehensive Loss

10 unchanged sentences

Effect of exchange rate changes and deferred taxes ( 2 ) — 1 ( 1 )

Balance as of June 30, 2021 $ ( 120 ) $ 4 $ ( 180 ) $ ( 296 )

Balance as of September 30, 2021 $ ( 146 ) $ 4 $ ( 174 ) $ ( 316 )

Balance as of December 31, 2021 $ ( 141 ) $ 4 $ ( 120 ) $ ( 257 )

2 unchanged sentences

Effect of exchange rate changes and deferred taxes ( 49 ) — 7 ( 42 )

Balance as of June 30, 2022 $ ( 181 ) $ 4 $ ( 108 ) $ ( 285 )

Balance as of September 30, 2022 $ ( 190 ) $ 4 $ ( 84 ) $ ( 270 )

____________________________________________________________________________

(1) Reclassifications out of accumulated other comprehensive loss to the consolidated statements of operations during the three and six months ended June 30, 2022 and 2021 were not material.

CF INDUSTRIES HOLDINGS, INC.

(1) Reclassifications out of accumulated other comprehensive loss to the consolidated statements of operations during the three and nine months ended September 30, 2021 were not material.

(2) Reclassifications out of accumulated other comprehensive loss to the consolidated statements of operations during the three and nine months ended September 30, 2022 include a non-cash pre-tax pension settlement loss of $ 24 million.

See Note 11—Pension Retiree Annuity Purchase for additional information.

Contingencies

14 unchanged sentences

Based upon currently available information, we expect any potential loss to be immaterial and fully indemnified by insurance.

CF INDUSTRIES HOLDINGS, INC.

Other Litigation

7 unchanged sentences

Forest Service to conduct a remedial investigation and feasibility study of the site.

A remedial investigation was submitted to the agencies in 2021.

The remedial investigation was submitted to the agencies in 2021.

The next step will be a risk assessment, followed by a feasibility study.

15 unchanged sentences

Goodwill by segment is presented in Note 7—Goodwill and Other Intangible Assets.

Segment data for sales, cost of sales and gross margin for the three and six months ended June 30, 2022 and 2021 are presented in the table below.

Segment data for sales, cost of sales and gross margin for the three and nine months ended September 30, 2022 and 2021 are presented in the table below.

Granular Urea (2)

(in millions)

Three months ended June 30, 2022

Three months ended September 30, 2022

Net sales $ 531 $ 689 $ 736 $ 180 $ 185 $ 2,321

4 unchanged sentences

Operating earnings $ 750

Three months ended June 30, 2021

Three months ended September 30, 2021

Net sales $ 344 $ 386 $ 390 $ 118 $ 124 $ 1,362

3 unchanged sentences

Equity in earnings of operating affiliate 15

Operating earnings $ 450

Six months ended June 30, 2022

Operating loss $ ( 97 )

Nine months ended September 30, 2022

Net sales $ 2,286 $ 2,287 $ 2,727 $ 656 $ 622 $ 8,578

4 unchanged sentences

Operating earnings $ 4,186

Six months ended June 30, 2021

Nine months ended September 30, 2021

Net sales $ 1,009 $ 1,218 $ 1,056 $ 359 $ 356 $ 3,998

1 unchanged sentence

Gross margin $ 334 $ 513 $ 297 $ 22 $ 66 1,232

Total other operating costs and expenses 117

Total other operating costs and expense (3)

Equity in earnings of operating affiliate 37

1 unchanged sentence

_______________________________________________________________________________

(1) Cost of sales and gross margin for the Ammonia segment for the six months ended June 30, 2021 include a $ 112 million gain on the net settlement of certain natural gas contracts with our suppliers.

(1) Cost of sales and gross margin for the Ammonia segment for the nine months ended September 30, 2021 include a $ 112 million gain on the net settlement of certain natural gas contracts with our suppliers.

See Note 14—Derivative Financial Instruments for additional information.

(2) The cost of the products that are upgraded into other products is transferred at cost into the upgraded product results.

(3) Total other operating costs and expenses for the three and six months ended June 30, 2022 include $ 162 million of restructuring charges related to our U.K.

See Note 5—United Kingdom Operations, Proposed Restructuring and Impairment Charges for additional information.

(3) Total other operating costs and expenses for the three and nine months ended September 30, 2022 include $95 million and $257 million, respectively, of asset impairment and restructuring charges related to our U.K.

Total other operating costs and expenses for the three and nine months ended September 30, 2021 include $495 million of asset impairment charges related to our U.K.

See Note 5—United Kingdom Operations Restructuring and Impairment Charges for additional information.

CF INDUSTRIES HOLDINGS, INC.

Subsequent Event

On July 15, 2022, we entered into an agreement with an insurance company to purchase a non-participating group annuity contract and transfer approximately $ 375 million of our primary U.S.

defined benefit pension plan’s projected benefit obligation, subject to customary closing conditions.

The transaction closed on July 22, 2022 and was funded with plan assets.

Under the transaction, the insurance company will assume responsibility for pension benefits and annuity administration for approximately 4,000 retirees or their beneficiaries.

As a result of this transaction, in the third quarter of 2022, we will remeasure the plan's projected benefit obligation and plan assets and we expect to recognize a non-cash pre-tax pension settlement loss of approximately $ 25 million, based on current interest rates, reflecting the unamortized net unrecognized postretirement benefit costs related to the settled obligations, with a corresponding offset to accumulated other comprehensive loss.

On November 2, 2022, the Board authorized the repurchase of up to $ 3 billion of CF Holdings common stock commencing upon completion of the 2021 Share Repurchase Program and effective through December 31, 2025 (the 2022 Share Repurchase Program).

Repurchases under the 2022 Share Repurchase Program may be made from time to time in the open market, through privately negotiated transactions, block transactions or otherwise.

The manner, timing and amount of repurchases will be determined by our management based on the evaluation of market conditions, stock price, and other factors.

See Note 16—Stockholders’ Equity for information related to the 2021 Share Repurchase Program, which expires on December 31, 2024.

CF INDUSTRIES HOLDINGS, INC.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements