What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-02 compared with 2022-11-03 · 128 added, 456 removed, 442 unchanged (57% of the section changed)

2 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

(in millions, except per share amounts)

3 unchanged sentences

Selling, general and administrative expenses 74 64

goodwill impairment — 259 — 259

long-lived and intangible asset impairment 87 236 239 236

operations restructuring 2 —

Transaction costs 13 —

Other operating—net ( 35 ) 2

1 unchanged sentence

Equity in earnings of operating affiliate 17 26

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

Operating earnings 826 1,658

Interest expense 40 241

Interest income ( 30 ) ( 36 )

Loss on debt extinguishment — 13 8 19

Other non-operating—net ( 3 ) 1

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

Earnings before income taxes 819 1,452

Income tax provision 169 401

Net earnings 650 1,051

Net earnings attributable to noncontrolling interest 90 168

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

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

Net earnings attributable to common stockholders $ 560 $ 883

Net earnings per share attributable to common stockholders:

Basic $ 2.86 $ 4.23

6 unchanged sentences

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

(in millions)

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

Other comprehensive (loss) income:

Net earnings $ 650 $ 1,051

Other comprehensive income (loss):

Foreign currency translation adjustment—net of taxes 7 ( 13 )

Defined benefit plans—net of taxes ( 1 ) 4

15 ( 20 ) ( 13 ) 4

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

Comprehensive income 656 1,042

Comprehensive income attributable to noncontrolling interest 90 168

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

Comprehensive income attributable to common stockholders $ 566 $ 874

See accompanying Notes to Unaudited Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED BALANCE SHEETS

September 30,

2023 December 31,

32 unchanged sentences

Treasury stock—at cost, 2023— 1,319,380 shares and 2022— 0 shares

( 863 ) ( 2 )

Accumulated other comprehensive loss ( 224 ) ( 230 )

15 unchanged sentences

(in millions, except per share amounts)

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

Balance as of December 31, 2022 $ 2 $ — $ 1,412 $ 3,867 $ ( 230 ) $ 5,051 $ 2,802 $ 7,853

Net earnings — — — 560 — 560 90 650

1 unchanged sentence

Purchases of treasury stock — ( 75 ) — — — ( 75 ) — ( 75 )

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

— — 4 — — 4 — 4

Acquisition of treasury stock under employee stock plans — ( 22 ) — — — ( 22 ) — ( 22 )

Stock-based compensation expense — — 12 — — 12 — 12

Cash dividends ($ 0.40 per share)

Dividends and dividend equivalents ($ 0.40 per share)

— — — ( 79 ) — ( 79 ) — ( 79 )

Distribution declared to noncontrolling interest — — — — — — ( 255 ) ( 255 )

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

Balance as of March 31, 2023 $ 2 $ ( 97 ) $ 1,424 $ 4,348 $ ( 224 ) $ 5,453 $ 2,637 $ 8,090

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

7 unchanged sentences

Stock-based compensation expense — — 10 — — 10 — 10

Cash dividends ($ 1.10 per share)

— — — ( 227 ) — ( 227 ) — ( 227 )

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

(Continued) (Unaudited)

Common Stockholders

Stock Treasury

Stock Paid-In

Capital Retained

Earnings Accumulated

Comprehensive

Stockholders’ Equity Noncontrolling

Interest Total

(in millions, except per share amounts)

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

— — 6 — — 6 — 6

Stock-based compensation expense — — 7 — — 7 — 7

Cash dividends ($ 0.30 per share)

Dividends and dividend equivalents ($ 0.30 per share)

— — — ( 64 ) — ( 64 ) — ( 64 )

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

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

Net earnings — — — 212 — 212 189 401

Other comprehensive income — — — — 4 4 — 4

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

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

Acquisition of treasury stock under employee stock plans — ( 11 ) — — — ( 11 ) — ( 11 )

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

— 1 32 — — 33 — 33

Stock-based compensation expense — — 23 — — 23 — 23

Cash dividends ($ 0.90 per share)

— — — ( 195 ) — ( 195 ) — ( 195 )

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

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

See accompanying Notes to Unaudited Consolidated Financial Statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended

September 30,

Three months ended

(in millions)

5 unchanged sentences

Stock-based compensation expense 12 10

Loss on debt extinguishment 8 19

Unrealized net gain on natural gas derivatives ( 72 ) ( 33 )

Unrealized loss on embedded derivative — 2

goodwill impairment — 259

long-lived and intangible asset impairment 239 236

Pension settlement loss 24 —

Gain on sale of emission credits ( 35 ) —

Loss on disposal of property, plant and equipment 1 3

Undistributed earnings of affiliate—net of taxes ( 7 ) ( 2 )

9 unchanged sentences

Proceeds from sale of property, plant and equipment — 1

Distributions received from unconsolidated affiliate 4 —

Purchase of investments held in nonqualified employee benefit trust ( 1 ) ( 13 )

Proceeds from sale of investments held in nonqualified employee benefit trust 1 13

Purchase of emission credits — ( 9 )

Proceeds from sale of emission credits 35 9

Other—net — ( 1 )

Net cash used in investing activities ( 34 ) ( 62 )

Financing Activities:

Payments of long-term borrowings ( 507 ) ( 518 )

Financing fees — ( 4 )

Dividends paid on common stock ( 227 ) ( 195 )

Dividends paid ( 79 ) ( 64 )

Distributions to noncontrolling interest ( 255 ) ( 247 )

31 unchanged sentences

The preparation of the unaudited interim consolidated financial statements requires us to make use of estimates and assumptions that may significantly affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the unaudited consolidated financial statements and the reported revenues and expenses for the periods presented.

Such estimates and assumptions are used for, but are not limited to, net realizable value of inventories, environmental remediation liabilities, environmental and litigation contingencies, plant closure and asset retirement obligations, the cost of carbon credits required to meet environmental regulations, the cost of customer incentives, the cost to fulfill contractual commitments to our customers, useful lives of property and identifiable intangible assets, the assumptions used in the evaluation of potential impairments of property, investments, identifiable intangible assets and goodwill, income tax reserves and the assessment of the realizability of deferred tax assets, assumptions used in the determination of the funded status and annual expense of defined benefit pension and other postretirement benefit plans and the valuation of stock-based compensation awards granted to employees.

Such estimates and assumptions are used for, but are not limited to, net realizable value of inventories, environmental remediation liabilities, environmental and litigation contingencies, plant closure and asset retirement obligations, the cost of emission credits required to meet environmental regulations, the cost of customer incentives, useful lives of property and identifiable intangible assets, the evaluation of potential impairments of property, investments, identifiable intangible assets and goodwill, income tax reserves and the assessment of the realizability of deferred tax assets, the determination of the funded status and annual expense of defined benefit pension and other postretirement plans and the valuation of stock-based compensation awards granted to employees.

CF INDUSTRIES HOLDINGS, INC.

1 unchanged sentence

We track our revenue by product and by geography.

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 nine months ended September 30, 2022 and 2021:

See Note 14—Segment Disclosures for the revenue of each of our reportable segments, 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 months ended March 31, 2023 and 2022:

Ammonia Granular Urea UAN AN Other Total

(in millions)

Three months ended September 30, 2022

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

Europe and other 164 118 205 110 53 650

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

Three months ended September 30, 2021

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

Europe and other 65 — 66 70 30 231

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

Nine months ended September 30, 2022

Three months ended March 31, 2023

North America $ 330 $ 575 $ 519 $ 74 $ 126 $ 1,624

1 unchanged sentence

Total revenue $ 424 $ 611 $ 667 $ 159 $ 151 $ 2,012

Nine months ended September 30, 2021

Three months ended March 31, 2022

North America $ 583 $ 736 $ 1,013 $ 83 $ 153 $ 2,568

1 unchanged sentence

Total revenue $ 640 $ 765 $ 1,015 $ 223 $ 225 $ 2,868

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.

As of March 31, 2023 and December 31, 2022, we had $ 284 million and $ 229 million, respectively, in customer advances on our consolidated balance sheets.

The revenue recognized during the three months ended March 31, 2023 and 2022 that was included in our customer advances at the beginning of each respective period amounted to approximately $ 160 million and $ 560 million, respectively.

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 September 30, 2022 and December 31, 2021 were not material.

The balances of customer incentives accrued as of March 31, 2023 and December 31, 2022 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 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.

As of March 31, 2023, 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 $ 1.0 billion.

We expect to recognize approximately 34 % of these performance obligations as revenue in the remainder of 2023, approximately 33 % as revenue during 2024-2026, approximately 15 % as revenue during 2027-2029, 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 $ 355 million as of September 30, 2022.

Other than the performance obligations described above, any performance obligations with our customers that were unfulfilled or partially fulfilled at December 31, 2022 will be satisfied in 2023.

CF INDUSTRIES HOLDINGS, INC.

Net Earnings (Loss) Per Share

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

Net Earnings Per Share

Net earnings per share were computed as follows:

Three months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

(in millions, except per share amounts)

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

Basic earnings (loss) per common share:

Net earnings attributable to common stockholders $ 560 $ 883

Basic earnings per common share:

Weighted-average common shares outstanding 196.2 208.6

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

Diluted earnings (loss) per common share:

Net earnings attributable to common stockholders $ 2.86 $ 4.23

Diluted earnings per common share:

Weighted-average common shares outstanding 196.2 208.6

1 unchanged sentence

Diluted weighted-average common shares outstanding 196.9 209.9

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.

Net earnings attributable to common stockholders $ 2.85 $ 4.21

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 in both the three months ended March 31, 2023 and 2022.

Inventories consist of the following:

September 30,

2023 December 31,

3 unchanged sentences

Total inventories $ 430 $ 474

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.

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.

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.

The results of this test indicated that no additional long-lived asset impairment existed as the undiscounted estimated future cash flows were in excess of the carrying values for each of the U.K.

asset groups.

asset groups consist of U.K.

Ammonia, U.K.

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;

◦ an intangible asset impairment charge of $ 8 million related to trade names;

◦ 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, 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 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 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,

2023 December 31,

2 unchanged sentences

Machinery and equipment 12,672 12,633

12,523 12,757

Buildings and improvements 920 914

5 unchanged sentences

_______________________________________________________________________________

(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.

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.

(1) As of March 31, 2023 and December 31, 2022, we had property, plant and equipment that was accrued but unpaid of approximately $ 45 million and $ 53 million, respectively.

As of March 31, 2022 and December 31, 2021, we had property, plant and equipment that was accrued but unpaid of approximately $ 22 million and $ 35 million, respectively.

CF INDUSTRIES HOLDINGS, INC.

Depreciation and amortization related to property, plant and equipment was $ 204 million and $ 205 million for the three months ended March 31, 2023 and 2022, respectively.

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.

3 unchanged sentences

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:

Nine months ended

September 30,

Three months ended

(in millions)

Net capitalized turnaround costs:

Balance as of January 1 $ 355 $ 226

Net capitalized turnaround costs as of January 1 $ 312 $ 355

Additions 7 5

Depreciation ( 31 ) ( 36 )

Impairment ( 21 ) —

Effect of exchange rate changes — ( 1 )

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 September 30, 2022 and December 31, 2021:

Granular Urea UAN AN (1)

(in millions)

Balance as of December 31, 2021 $ 579 $ 828 $ 576 $ 69 $ 39 $ 2,091

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

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

_______________________________________________________________________________

(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:

September 30, 2022 December 31, 2021

Amount Accumulated

Amortization Net Gross

Amount Accumulated

Amortization Net

(in millions)

Customer relationships (1)

$ 50 $ ( 35 ) $ 15 $ 84 $ ( 60 ) $ 24

Trade names (2)

— — — 31 ( 10 ) 21

Total intangible assets $ 50 $ ( 35 ) $ 15 $ 115 $ ( 70 ) $ 45

_______________________________________________________________________________

(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 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.

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.

Net capitalized turnaround costs as of March 31

Equity Method Investment

1 unchanged sentence

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 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.

As of March 31, 2023, the total carrying value of our equity method investment in PLNL was $ 81 million, $ 34 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.

2 unchanged sentences

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 $ 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.

Our ammonia purchases from PLNL totaled $ 59 million and $ 74 million for the three months ended March 31, 2023 and 2022, respectively.

CF INDUSTRIES HOLDINGS, INC.

Fair Value Measurements

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

September 30, 2022

March 31, 2023

Cost Basis Unrealized

19 unchanged sentences

Nonqualified employee benefit trusts 16 — — 16

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.

4 unchanged sentences

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 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

The following tables present assets and liabilities included in our consolidated balance sheets as of March 31, 2023 and December 31, 2022 that are recognized at fair value on a recurring basis, and indicate the fair value hierarchy utilized to determine such fair value:

March 31, 2023

Value Quoted Prices

6 unchanged sentences

Derivative liabilities ( 5 ) — ( 5 ) —

Embedded derivative liability ( 15 ) — ( 15 ) —

CF INDUSTRIES HOLDINGS, INC.

December 31, 2022

7 unchanged sentences

Derivative liabilities ( 85 ) — ( 85 ) —

Embedded derivative liability ( 15 ) — ( 15 ) —

Cash Equivalents

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

Cash equivalents include highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less.

As of March 31, 2023 and December 31, 2022, our cash equivalents consisted primarily of U.S.

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

2 unchanged sentences

We maintain trusts associated with certain nonqualified supplemental pension plans.

The fair values of the trust assets are based on daily quoted prices in an active market, which represents the net asset values of the shares held in the trusts, and are included on our consolidated balance sheets in other assets.

The fair values of the trust assets are based on daily quoted prices in an active market, which represent the net asset values of the shares held in the trusts, and are included on our consolidated balance sheets in other assets.

Debt securities are accounted for as available-for-sale securities, and changes in fair value are reported in other comprehensive income.

4 unchanged sentences

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

CF INDUSTRIES HOLDINGS, INC.

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 curves supplied by an industry-recognized independent third party.

See Note 11—Derivative Financial Instruments for additional information.

Embedded Derivative Liability

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 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.

Financial Instruments

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Amount Fair Value Carrying

7 unchanged sentences

that is, the assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment, when there is allocation of purchase price in an acquisition or when a new liability is being established that requires fair value measurement.

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 Restructuring and Impairment Charges, fair value was measured as the estimated salvage value of such assets, which was immaterial.

These include long-lived assets, goodwill and other

CF INDUSTRIES HOLDINGS, INC.

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.

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.

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 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.

For the three months ended March 31, 2023, we recorded an income tax provision of $ 169 million on pre-tax income of $ 819 million, or an effective tax rate of 20.6 %, compared to an income tax provision of $ 401 million on pre-tax income of $ 1.45 billion, or an effective tax rate of 27.6 %, for the three months ended March 31, 2022.

Our effective tax rate is 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 March 31, 2023 of 20.6 %, which is based on pre-tax income of $ 819 million, including $ 90 million of earnings attributable to the noncontrolling interest, would be 2.6 percentage points higher if based on pre-tax income exclusive of the $ 90 million of earnings attributable to the noncontrolling interest.

Our effective tax rate for the three months ended March 31, 2022 of 27.6 %, which is based on pre-tax income of $ 1.45 billion, including $ 168 million of earnings attributable to the noncontrolling interest, would be 3.7 percentage points higher if based on pre-tax income exclusive of the $ 168 million of earnings attributable to the noncontrolling interest.

In addition, for the three months ended March 31, 2022, our income tax provision includes $ 20 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 and certain transfer pricing reserves recorded in the period, as discussed below.

Canada Revenue Agency Competent Authority Matter

1 unchanged sentence

We filed Notices of Objection with respect to the Notices of Reassessment with the CRA and Alberta TRA and posted letters of credit in lieu of paying the additional tax liability assessed.

The letters of credit serve as security until the matter is resolved.

The letters of credit served as security until the matter was resolved, as discussed below.

In 2018, the matter, including the related transfer pricing topic regarding the allocation of profits between Canada and the United States, was accepted for consideration under the bilateral settlement provisions of the U.S.-Canada tax treaty (the Treaty) by the United States and Canadian competent authorities, and included tax years 2006 through 2011.

2 unchanged sentences

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 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.

Under the terms of the arbitration decision, additional income for tax years 2006 through 2011 was subject to tax in Canada, resulting in our having additional Canadian tax liability for those tax years.

In the three months ended March 31, 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 $ 76 million, reflecting the net impact of $ 127 million of accrued income taxes payable to Canada for tax years 2006 through 2011, partially offset by net income tax receivables of approximately $ 51 million in the United States, and we accrued net interest of $ 99 million, primarily reflecting the impact of estimated interest payable to Canada.

In the second half of 2022, this tax liability and the related interest were assessed and paid, resulting in total payments of $ 224 million, which also reflect the impact of changes in foreign currency exchange rates.

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 $ 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.

Due primarily to the availability of additional foreign tax credits to offset in part the increased Canadian tax referenced above, the Company has filed amended tax returns in the United States to request a refund of taxes paid.

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, we recorded the following in the nine months ended September 30, 2022:

In the first quarter of 2022, 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 for the three months ended March 31, 2022, we recorded the following:

CF INDUSTRIES HOLDINGS, INC.

• liabilities for unrecognized tax benefits of approximately $ 319 million, with a corresponding income tax provision, and accrued interest of approximately $ 91 million related to the liabilities for unrecognized tax benefits, and

• noncurrent income tax receivables of approximately $ 329 million, with a corresponding income tax benefit, and accrued interest income of approximately $ 28 million related to the noncurrent income tax receivables.

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 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 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.

In the three months ended March 31, 2022, the impact on our consolidated statement of operations of the amounts recorded as a result of this evaluation of transfer pricing positions, including a $ 12 million deferred income tax provision for other transfer pricing tax effects, was a $ 2 million income tax provision and $ 63 million of net interest expense before tax ($ 69 million after tax).

Financing Agreements

7 unchanged sentences

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

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.

As of March 31, 2023, 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 March 31, 2023 or December 31, 2022, or during the three months ended March 31, 2023.

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

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

As of March 31, 2023, 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 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

As of March 31, 2023, approximately $ 201 million of letters of credit were outstanding under this agreement.

Long-term debt presented on our consolidated balance sheets as of March 31, 2023 and December 31, 2022 consisted of the following debt securities issued by CF Industries:

Effective Interest Rate March 31, 2023 December 31, 2022

Principal Carrying Amount (1)

2 unchanged sentences

Public Senior Notes:

3.450 % due June 2023

3.665 % $ — $ — $ 500 $ 499

5.150 % due March 2034

10 unchanged sentences

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

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 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.

Total unamortized debt discount was $ 7 million as of both March 31, 2023 and December 31, 2022, and total deferred debt issuance costs were $ 27 million and $ 28 million as of March 31, 2023 and December 31, 2022, respectively.

CF INDUSTRIES HOLDINGS, INC.

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 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, 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.

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, 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.

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

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 is guaranteed by CF Holdings.

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 are guaranteed by CF Holdings.

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.

2 unchanged sentences

Three months ended

September 30, Nine months ended

September 30,

2022 2021 2022 2021

(in millions)

Interest on borrowings (1)

$ 38 $ 43 $ 118 $ 133

Fees on financing agreements (1)

5 unchanged sentences

(2) See Note 8—Income Taxes for additional information.

CF INDUSTRIES HOLDINGS, INC.

Derivative Financial Instruments

7 unchanged sentences

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

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 March 31, 2023, we had natural gas derivative contracts covering certain periods through March 2024.

As of March 31, 2023, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options for 18.9 million MMBtus of natural gas.

As of December 31, 2022, we had open natural gas derivative contracts consisting of natural gas fixed price swaps, basis swaps and options for 66.3 million MMBtus of natural gas.

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

For the three months ended March 31, 2023, we used derivatives to cover approximately 69 % of our natural gas consumption.

CF INDUSTRIES HOLDINGS, INC.

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

1 unchanged sentence

Three months ended

September 30, Nine months ended

September 30,

Location 2023 2022

(in millions)

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

Net derivative gains $ 1 $ 12 $ 59 $ 127

Gain on net settlement of natural gas derivatives due to Winter Storm Uri

We also enter into supply agreements to facilitate the availability of natural gas to operate our plants.

When we purchase natural gas under these agreements, we intend to take physical delivery for use in our plants.

Certain of these supply agreements allow us to fix the price of the deliveries for the following month using an agreed upon first of month price.

We utilize the Normal Purchase Normal Sales (NPNS) derivative scope exception for these fixed price contracts and therefore, we do not account for them as derivatives.

In the first quarter of 2021, the central portion of the United States experienced extreme and unprecedented cold weather due to the impact of Winter Storm Uri.

Certain natural gas suppliers and natural gas pipelines declared force majeure events due to frozen equipment.

This occurred at the same time as large increases in natural gas demand were occurring due to the extreme cold temperatures.

Due to these unprecedented factors, several states declared a state of emergency and natural gas was redirected for residential usage.

We net settled certain natural gas contracts with our suppliers and received prevailing market prices, which were in excess of our cost.

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 nine months ended September 30, 2021.

CF INDUSTRIES HOLDINGS, INC.

Unrealized net gains on natural gas derivatives Cost of sales $ 72 $ 33

Realized net (losses) gains on natural gas derivatives Cost of sales ( 118 ) 17

Net derivative (losses) gains $ ( 46 ) $ 50

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

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

As of March 31, 2023 and December 31, 2022, none of our derivative instruments were designated as hedging instruments.

See Note 7—Fair Value Measurements for additional information on derivative fair values.

Asset Derivatives Liability Derivatives

Balance Sheet Location September 30,

Balance Sheet Location March 31,

2023 December 31, 2022 Balance Sheet

Location September 30,

Location March 31,

2023 December 31, 2022

3 unchanged sentences

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 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.

As of March 31, 2023 and December 31, 2022, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was $ 1 million and $ 73 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 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:

As of March 31, 2023 and December 31, 2022, 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 March 31, 2023 and December 31, 2022:

Amounts presented in consolidated

3 unchanged sentences

(in millions)

September 30, 2022

March 31, 2023

Total derivative assets $ 4 $ — $ — $ 4

Total derivative liabilities ( 5 ) — — ( 5 )

Net derivative assets $ 6 $ — $ — $ 6

Net derivative liabilities $ ( 1 ) $ — $ — $ ( 1 )

December 31, 2022

8 unchanged sentences

Noncontrolling Interest

We have a strategic venture with CHS under which CHS owns an equity interest in CFN, a subsidiary of CF Holdings, which represents approximately 11 % of the membership interests of CFN.

We have a strategic venture with CHS Inc.

(CHS) under which CHS owns an equity interest in CFN, a subsidiary of CF Holdings, which represents approximately 11 % of the membership interests of CFN.

We own the remaining membership interests.

8 unchanged sentences

Declaration of distributions payable ( 255 ) ( 247 )

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

Balance as of March 31 $ 2,637 $ 2,751

Distributions payable to noncontrolling interest:

2 unchanged sentences

Distributions to noncontrolling interest ( 255 ) ( 247 )

Balance as of September 30 $ — $ —

Balance as of March 31 $ — $ —

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.

2 unchanged sentences

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

See Note 9—Fair Value Measurements for additional information.

Stockholders’ Equity

2022 Equity and Incentive Plan

In May 2022, our shareholders approved the CF Industries Holdings, Inc.

2022 Equity and Incentive Plan (the Plan), including 2.5 million new shares of the Company’s common stock available for grant thereunder as part of our pay-for-performance compensation program, which we use to provide incentives that are aligned with the interests of our shareholders.

The Plan replaced the CF Industries Holdings, Inc.

2014 Equity and Incentive Plan and permits grants of stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards, which in each case may be conditioned on performance criteria, to employees and certain consultants of the Company and its subsidiaries and non-employee directors of the Company.

Treasury Stock

On November 3, 2021, our Board of Directors (the Board) authorized the repurchase of up to $ 1.5 billion of CF Holdings common stock through December 31, 2024 (the 2021 Share Repurchase Program).

Repurchases under the 2021 Share Repurchase Program may be made from time to time in the open market, through privately negotiated transactions, through block transactions or otherwise.

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 these programs may be made from time to time in the open market, through privately negotiated transactions, through 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 19—Subsequent Event for additional information.

In the three months ended March 31, 2023, we repurchased approximately 1.1 million shares under the 2021 Share Repurchase Program for $ 75 million, of which $21 million was accrued and unpaid as of March 31, 2023.

As of March 31, 2023, there was approximately $ 80 million of authorization remaining under the 2021 Share Repurchase Program.

In the three months ended March 31, 2022, we repurchased approximately 1.3 million shares under the 2021 Share Repurchase Program for $ 100 million and we retired 27,962 shares of repurchased stock, including shares repurchased under the share repurchase program that expired on December 31, 2021.

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

7 unchanged sentences

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

Loss arising during the period — — ( 4 ) ( 4 )

Reclassification to earnings — — 1 1

Effect of exchange rate changes and deferred taxes ( 13 ) — 3 ( 10 )

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

Balance as of March 31, 2022 $ ( 154 ) $ 4 $ ( 116 ) $ ( 266 )

Balance as of December 31, 2022 $ ( 179 ) $ 3 $ ( 54 ) $ ( 230 )

Gain arising during the period — — 3 3

Reclassification to earnings (2)

Effect of exchange rate changes and deferred taxes 7 — ( 1 ) 6

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 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

West Fertilizer Co.

On April 17, 2013, there was a fire and explosion at the West Fertilizer Co.

fertilizer storage and distribution facility in West, Texas.

According to published reports, 15 people were killed and approximately 200 people were injured in the incident, and the fire and explosion damaged or destroyed a number of homes and buildings around the facility.

Various subsidiaries of CF Industries Holdings, Inc.

(the CF Entities) were named as defendants along with other companies in lawsuits filed in 2013, 2014 and 2015 in the District Court of McLennan County, Texas by the City of West, individual residents of the County and other parties seeking recovery for damages allegedly sustained as a result of the explosion.

The cases were consolidated for discovery and pretrial proceedings in the District Court of McLennan County under the caption “In re:

West Explosion Cases.” The two-year statute of limitations expired on April 17, 2015.

As of that date, over 400 plaintiffs had filed claims, including at least 9 entities, 325 individuals, and 80 insurance companies.

Plaintiffs allege various theories of negligence, strict liability, and breach of warranty under Texas law.

Although we did not own or operate the facility or directly sell our products to West Fertilizer Co., products that the CF Entities manufactured and sold to others were delivered to the facility and may have been stored at the West facility at the time of the incident.

All but two of the claims, including all wrongful death and personal injury claims, have been resolved pursuant to confidential settlements that have been or we expect will be fully funded by insurance.

The two remaining subrogation and statutory indemnification claims have not yet been set for trial.

We believe we have strong legal and factual defenses and intend to continue defending the CF Entities vigorously in the remaining lawsuits.

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

CF INDUSTRIES HOLDINGS, INC.

Other Litigation

From time to time, we are subject to ordinary, routine legal proceedings related to the usual conduct of our business, including proceedings regarding public utility and transportation rates, environmental matters, taxes and permits relating to the operations of our various plants and facilities.

Based on the information available as of the date of this filing, we believe that the ultimate outcome of these routine matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Environmental

From time to time, we receive notices from governmental agencies or third parties alleging that we are a potentially responsible party at certain cleanup sites under the Comprehensive Environmental Response, Compensation, and Liability Act or other environmental cleanup laws.

In 2011, we received a notice from the Idaho Department of Environmental Quality (IDEQ) that alleged that we were a potentially responsible party for the cleanup of a former phosphate mine site we owned in the late 1950s and early 1960s located in Georgetown Canyon, Idaho.

The current owner of the property and a former mining contractor received similar notices for the site.

In 2014, we and the current property owner entered into a Consent Order with IDEQ and the U.S.

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

The remedial investigation was submitted to the agencies in 2021.

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

In 2015, we and several other parties received a notice that the U.S.

Department of the Interior and other trustees intended to undertake a natural resource damage assessment for 18 former phosphate mines and three former processing facilities in southeast Idaho.

The Georgetown Canyon former mine and processing facility was included in the group of former mines and processing facilities identified by the trustees.

In June 2021, we received another notice from the U.S.

Department of the Interior that the natural resource damage trustees were commencing a ‘subsequent’ phase of the natural resource damage assessment, but no further details were provided with respect to said assessment.

Because the former Georgetown Canyon mine site is still in the risk assessment and feasibility study stage, we are not able to estimate at this time our potential liability, if any, with respect to the cleanup of the site or a possible claim for natural resource damages.

However, based on the results of the site investigation conducted to date, we do not expect the remedial or financial obligations to which we may be subject involving this or other cleanup sites will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

CF INDUSTRIES HOLDINGS, INC.

Balance as of March 31, 2023 $ ( 172 ) $ 3 $ ( 55 ) $ ( 224 )

Segment Disclosures

3 unchanged sentences

Total other operating costs and expenses (consisting primarily of selling, general and administrative expenses and other operating—net) and non-operating expenses (consisting primarily of interest and income taxes) are centrally managed and are not included in the measurement of segment profitability reviewed by management.

Our assets, with the exception of goodwill, are not monitored by or reported to our chief operating decision maker by segment;

therefore, we do not present total assets by segment.

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 nine months ended September 30, 2022 and 2021 are presented in the table below.

Granular Urea (2)

Segment data for sales, cost of sales and gross margin for the three months ended March 31, 2023 and 2022 are presented in the table below.

Ammonia Granular Urea (1)

(in millions)

Three months ended September 30, 2022

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

Cost of sales 353 394 414 136 108 1,405

Gross margin $ 178 $ 295 $ 322 $ 44 $ 77 916

Total other operating costs and expenses (3)

Equity in earnings of operating affiliate 20

Operating earnings $ 750

Three months ended September 30, 2021

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

Cost of sales 262 200 233 122 105 922

Gross margin $ 82 $ 186 $ 157 $ ( 4 ) $ 19 440

Total other operating costs and expenses (3)

Equity in earnings of operating affiliate 15

Operating loss $ ( 97 )

Nine months ended September 30, 2022

Three months ended March 31, 2023

Net sales $ 424 $ 611 $ 667 $ 159 $ 151 $ 2,012

4 unchanged sentences

Operating earnings $ 826

Nine months ended September 30, 2021

Three months ended March 31, 2022

Net sales $ 640 $ 765 $ 1,015 $ 223 $ 225 $ 2,868

5 unchanged sentences

_______________________________________________________________________________

(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.

(1) 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 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

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.

Agreement To Purchase Ammonia Production Facility

On March 20, 2023, we entered into an asset purchase agreement with Dyno Nobel Louisiana Ammonia, LLC (DNLA), a U.S.

subsidiary of Australian-based Incitec Pivot Limited (IPL), and IPL.

Under the terms of the agreement, we will purchase DNLA’s ammonia production complex located in Waggaman, Louisiana for a purchase price of $ 1.675 billion, subject to adjustment.

The facility has a nameplate capacity of 880,000 tons of ammonia annually.

The parties will allocate $ 425 million of the purchase price to a long-term ammonia offtake agreement providing for us to supply up to 200,000 tons of ammonia per year to IPL’s Dyno Nobel, Inc.

We expect to fund the balance of the purchase price, representing the $ 1.675 billion purchase price, as adjusted, less $ 425 million, with cash on hand.

The consummation of the transaction is subject to the satisfaction or waiver of customary conditions, including, among others, the expiration or early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

The agreement includes certain customary termination rights, including the right of either party to terminate the agreement if the closing has not occurred by March 20, 2025.

We have agreed to pay a termination fee of $ 75 million if the agreement is terminated in certain circumstances and certain regulatory approvals are not obtained.

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