QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
−Removed: We are exposed to the impact of changes in commodity prices, interest rates and foreign currency exchange rates.
+Added: Our business operations give rise to market risk exposure due to changes in commodity prices, interest rates and foreign currency exchange rates.
+Added: To manage such risks, we may, from time to time, utilize derivatives that enable us to mitigate the adverse effects of financial market risk.
+Added: Our use of derivatives can result in volatility in reported earnings due to the unrealized mark-to-market adjustments that occur from changes in the value of the derivatives to which we do not apply hedge accounting.
+Added: To the extent that our derivative positions lose value, 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, adversely affecting our liquidity.
Commodity Prices
−Removed: Our gross margin, cash flows and estimates of future cash flows related to nitrogen-based products are sensitive not only to selling prices of our products, but also to changes in market prices of natural gas and other raw materials except to the extent the prices we pay for those inputs have been fixed or hedged.
−Removed: A $1.00 per MMBtu change in the price of natural gas would change the cost to produce a ton of ammonia, granular urea, UAN (32%) and AN by approximately $32, $22, $14 and $15, respectively.
+Added: Our gross margin, cash flows and estimates of future cash flows related to nitrogen-based products are sensitive not only to selling prices of our products, but also to changes in market prices of natural gas and other raw materials.
+Added: A $1.00 per MMBtu change in the price of natural gas would change the cost to produce a ton of ammonia, granular urea, UAN (assuming a 32% nitrogen content) and AN by approximately $33, $22, $14 and $16, respectively.
Natural gas is the largest and most volatile component of the manufacturing cost for nitrogen-based products.
−Removed: At certain times, we have managed the risk of changes in natural gas prices through the use of derivative financial instruments.
−Removed: The derivative instruments that we may use for this purpose are primarily natural gas fixed price swaps, basis swaps and options.
+Added: From time to time, we utilize natural gas derivatives to hedge our financial exposure to the price volatility of natural gas, the principal raw material we use in the production of nitrogen-based products.
+Added: We may use natural gas futures, swaps and option contracts traded in over-the-counter markets or on exchanges.
These derivatives settle using primarily a NYMEX futures price index, which represents the basis for fair value at any given time.
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A $1.00 per MMBtu increase in the forward curve prices of natural gas at December 31, 2024 would result in a favorable change in the fair value of these derivative positions of approximately $14 million, and a $1.00 per MMBtu decrease in the forward curve prices of natural gas would change their fair value unfavorably by approximately $14 million.
−Removed: From time to time, we may purchase nitrogen products on the open market to augment or replace production at our facilities.
+Added: In addition, from time to time, we may purchase nitrogen products on the open market to augment or replace production at our facilities.
Interest Rates
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As of December 31, 2024, the carrying value and fair value of our senior notes was approximately $2.97 billion and $2.83 billion, respectively.
−Removed: Borrowings under the Prior Revolving Credit Agreement bore current market rates of interest, and we were subject to interest rate risk on such borrowings.
−Removed: Borrowings under the New Revolving Credit Agreement bear current market rates of interest, and we are subject to interest rate risk on such borrowings.
−Removed: As of and during the years ended December 31, 2023 and 2022, there were no borrowings outstanding under either the Prior Revolving Credit Agreement or the New Revolving Credit Agreement.
+Added: Our primary exposure to interest rate risk results from borrowings under the Revolving Credit Agreement, if any, which bear current market rates of interest plus a specified margin.
+Added: As of and during the years ended December 31, 2024 and 2023, there were no borrowings outstanding under the Revolving Credit Agreement.
Foreign Currency Exchange Rates
We are directly exposed to changes in the value of the Canadian dollar, the British pound and the euro.
−Removed: We generally do not maintain any exchange rate derivatives or hedges related to these currencies.
+Added: We generally do not maintain any exchange rate derivatives or hedges related to these currencies, but we may from time to time use foreign currency derivatives (primarily forward exchange contracts) to mitigate foreign currency exchange rate risk.
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.