What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-23 compared with 2020-02-20 · 424 added, 446 removed, 856 unchanged (50% of the section changed)

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Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

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Petroleum Segment’s Inventory Finished Goods Valuation

As described in Note 2 to the consolidated financial statements, the Company utilizes the ability-to-bear process to determine the valuation of its Petroleum Segment’s finished goods inventories, which was $160 million at December 31, 2019.

As described in Note 2 to the consolidated financial statements, the Company utilizes the ability-to-bear methodology to determine the valuation of its Petroleum Segment’s finished goods inventories, which was $123 million at December 31, 2020.

Management makes certain estimates based on observable inputs, including monthly sales prices and current market prices to determine how much raw materials and production costs are capitalized into Inventories.

Management then assesses if a lower of cost or net realizable value adjustment is required.

Changes in these estimates could have a significant impact on the Company’s valuation of finished goods inventory.

We identified the Company’s Petroleum Segment’s finished goods inventory valuation process as a critical audit matter.

The principal consideration for our determination that the inventory valuation process is a critical audit matter is the degree of complexity and subjectivity inherent in determining management’s estimates.

December 31, 2020 | 65

Our audit procedures to evaluate the valuation of the Company’s valuation of finished goods inventory, included the following procedures to test management’s process, among others:

We identified the Company’s Petroleum Segment’s finished goods inventory valuation process as a critical audit matter.

Our audit procedures to evaluate the Company’s valuation of finished goods inventory, included the following procedures to test management’s process, among others:

• We tested the design and operating effectiveness of management’s processes and controls for determining the valuation of finished goods inventory.

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• We tested or evaluated the reasonableness of inputs including sales volumes, monthly sales prices and current market prices for each product by obtaining third-party market prices and a sample of sales transactions by product to verify the accuracy of the information used by management.

Change in the Petroleum Segment’s Turnaround Activities Accounting

As described in Note 2 to the consolidated financial statements, effective January 1, 2019, the accounting policy for turnaround activities was changed to the deferral method for the Petroleum Segment due to its preferability as compared to the direct-expense method.

This accounting policy was changed on a retrospective basis.

Management made certain assumptions in determining that the deferral method was preferable;

such assumptions had a significant impact on the Petroleum Segment’s determination of which accounting method was preferable for its turnaround activities.

We identified the change in accounting policy for turnaround activities as a critical audit matter.

The principal consideration for our determination that the change in the Petroleum Segment’s turnaround accounting policy is a critical audit matter is due to the degree of auditor subjectivity given the limited authoritative guidance and the nature of evidence obtained in determining which method is preferable.

Our audit procedures to evaluate the Company’s determination that the deferral method was preferable, included the following procedures, among others:

• We evaluated management’s assumptions in their preferability determination, including analysis of consistency to its peer companies and management’s conclusion that the deferral method better reflects the economic substance of the benefits earned from turnaround activities.

Such evaluation included consultations with our national office resources.

• We analyzed the applicable accounting guidance in assessing whether the deferral method was preferable.

• We tested the design and operating effectiveness of management’s process and controls for evaluating unique accounting conclusions and the impact to the Company’s financial statements.

• We selected a sample of turnaround invoices from current and historical periods that were used in management’s retrospective application of the change in accounting policy and inspected the invoices to determine the amounts were accurately recorded and subsequently amortized in accordance with the change to the deferral method.

• We tested management’s process of calculating the lower of cost or net realizable value including verifying the reasonableness of the methodology used and accuracy of the inputs such as selling prices for refined fuels and market pricing.

Nitrogen Fertilizer Segment’s Goodwill Impairment Assessment

As described in Note 2 to the consolidated financial statements, annually or as facts or circumstances may dictate, management performs a valuation of the Coffeyville reporting unit to determine if a goodwill impairment exists.

During the second quarter of 2020 following the completion of the spring planting season and observation of certain market and other conditions described in Note 2, the Company’s Nitrogen Fertilizer Segment’s Coffeyville Fertilizer Facility reporting unit concluded a triggering event occurred and performed an interim quantitative impairment assessment.

The identification of a triggering event and the determination of the fair value of the reporting unit required management to make significant estimates and develop assumptions related to cash flow forecasts using estimates of future nitrogen fertilizer product pricing, volumes to be sold, costs to be incurred for key process inputs and other operating expenses as well as estimating appropriate discount rates and growth rates for future periods.

Changes in these assumptions could have had a significant impact on the identification of a triggering event as well as the reporting unit’s estimated fair value.

As a result of the quantitative impairment assessment, a full goodwill impairment of $41 million was recorded during the year ended December 31, 2020.

We identified the goodwill impairment assessment of the Nitrogen Fertilizer Segment’s Coffeyville Fertilizer Facility reporting unit as a critical audit matter.

The principal consideration for our determination that the goodwill impairment assessment is a critical audit matter was the degree of complexity and subjectivity inherent in determining management’s estimates.

Our audit procedures related to the Nitrogen Fertilizer Segment’s Coffeyville Fertilizer Facility reporting unit’s goodwill impairment assessment included the following, among others:

• We tested the design and operating effectiveness of management’s processes and controls over the identification of a triggering event and the fair value assessment of the Coffeyville reporting unit.

• We evaluated the reasonableness of a triggering event by considering the current market conditions following the completion of the spring planting season as well as the economic uncertainty surrounding the COVID-19 pandemic.

• We evaluated the reasonableness of future nitrogen fertilizer pricing assumptions by comparing the prices used by management to current industry and economic trends considering the impacts of the COVID-19 pandemic as well as comparing those prices to the historical performance of the Coffeyville reporting unit, performed sensitivity analyses to evaluate the change in the fair value estimates that would result from changes in those price assumptions, and recalculated management’s estimates.

• We compared forecasted sales volumes and expenses to historical operating results.

• We utilized valuation professionals with specialized skills and knowledge to assist in evaluating the Nitrogen Fertilizer Segment’s Coffeyville Fertilizer Facility’s discounted cash flow model and guideline public company methods and certain significant assumptions, including the discount rate, terminal growth rate, and cost of capital.

• We evaluated whether the assumptions used were consistent with evidence obtained in other areas of the audit.

/s/ GRANT THORNTON LLP

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Cost of materials and other 3,373 4,851 5,683

Direct operating expenses (exclusive of depreciation and amortization as reflected below) 533 517 516

Direct operating expenses (exclusive of depreciation and amortization) 478 533 517

Depreciation and amortization 268 278 263

Cost of sales 4,119 5,662 6,463

Selling, general and administrative expenses (exclusive of depreciation and amortization as reflected below) 117 112 113

Selling, general and administrative expenses (exclusive of depreciation and amortization) 86 117 112

Depreciation and amortization 10 9 11

(Gain) loss on asset disposals ( 4 ) 6 3

Operating income 580 532 145

Loss (gain) on asset disposals 7 ( 4 ) 6

Goodwill impairment 41 — —

Operating (loss) income ( 333 ) 580 532

Other (expense) income:

Interest expense, net ( 130 ) ( 102 ) ( 102 )

Investment income from marketable securities 41 — —

Other income, net 7 13 15

Income before income taxes 491 445 38

Income tax expense (benefit) 129 79 ( 220 )

Net income 362 366 258

(Loss) income before income taxes ( 415 ) 491 445

Income tax (benefit) expense ( 95 ) 129 79

Net (loss) income ( 320 ) 362 366

Net (loss) income attributable to non-controlling interest ( 64 ) ( 18 ) 107

Net income attributable to CVR Energy stockholders $ 380 $ 259 $ 263

Basic and diluted earnings per share $ 3.78 $ 2.80 $ 3.03

Net (loss) income attributable to CVR Energy stockholders $ ( 256 ) $ 380 $ 259

Basic and diluted (loss) earnings per share $ ( 2.54 ) $ 3.78 $ 2.80

Dividends declared per share $ 1.20 $ 3.05 $ 2.50

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Balance at December 31, 2017 86,929,660 $ 1 $ 1,197 $ ( 208 ) $ ( 2 ) $ 988 $ 835 $ 1,823

Dividends paid to CVR Energy stockholders — — — ( 174 ) — ( 174 ) — ( 174 )

Distributions from CVR Partners to public unitholders — — — — — — ( 2 ) ( 2 )

Distributions from CVR Refining to public unitholders — — — — — — ( 47 ) ( 47 )

Net income (loss) — — — 263 — 263 ( 5 ) 258

Balance at December 31, 2017 86,929,660 1 1,197 ( 208 ) ( 2 ) 988 835 1,823

Exchange offer impact 13,699,549 — 276 — — 276 ( 192 ) 84

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Balance at December 31, 2019 100,629,209 1 1,507 ( 113 ) ( 2 ) 1,393 275 1,668

Dividends paid to CVR Energy stockholders — — — ( 121 ) — ( 121 ) — ( 121 )

Changes in equity due to CVR Partners’ common unit repurchases — — 3 — — 3 ( 11 ) ( 8 )

Net loss — — — ( 256 ) — ( 256 ) ( 64 ) ( 320 )

Balance at December 31, 2020 100,629,209 $ 1 $ 1,510 $ ( 490 ) $ ( 2 ) $ 1,019 $ 200 $ 1,219

The accompanying notes are an integral part of these consolidated financial statements.

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Cash flows from operating activities:

Net income $ 362 $ 366 $ 258

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income $ ( 320 ) $ 362 $ 366

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization 278 287 274

Loss on lower of cost or net realizable value adjustments 59 — —

Goodwill impairment 41 — —

Deferred income taxes ( 30 ) 24 49

(Gain) loss on asset disposals ( 4 ) 6 3

Unrealized gain on marketable securities ( 34 ) — —

Loss (gain) on asset disposals 7 ( 4 ) 6

Share-based compensation 4 17 16

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Prepaid expenses and other current assets ( 28 ) 16 ( 29 )

Due to (from) parent 4 2 ( 16 )

Due to parent — 4 2

Accounts payable ( 121 ) 94 ( 21 )

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Proceeds from sale of assets 1 37 1

Investment in affiliates, net of return of investment — — ( 76 )

Investment in marketable securities ( 140 ) — —

Other investing activities ( 1 ) 1 1

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Cash flows from financing activities:

Proceeds from issuance of senior secured notes 1,000 — —

Principal payments on senior secured notes ( 500 ) — —

Call premium on extinguishment of debt ( 5 ) — —

Repurchase of CVR Partners common units ( 7 ) — —

Acquisition of CVR Refining common units — ( 301 ) —

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Other financing activities ( 12 ) ( 5 ) ( 3 )

Net cash used in financing activities ( 642 ) ( 334 ) ( 226 )

Net (decrease) increase in cash and cash equivalents ( 16 ) 186 ( 254 )

Cash and cash equivalents, beginning of period 668 482 736

Cash and cash equivalents, end of period $ 652 $ 668 $ 482

Net cash provided by (used in) financing activities 355 ( 642 ) ( 334 )

Net increase (decrease) in cash and cash equivalents and restricted cash 22 ( 16 ) 186

Cash and cash equivalents and restricted cash, beginning of period 652 668 482

Cash and cash equivalents and restricted cash, end of period $ 674 $ 652 $ 668

The accompanying notes are an integral part of these consolidated financial statements.

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and its affiliates (“IEP”) owned approximately 71 % of the Company’s outstanding common shares as of December 31, 2020.

Stock Repurchase Program

On October 23, 2019, the Board of Directors authorized a stock repurchase program (the “Stock Repurchase Program”).

The Stock Repurchase Program enables the Company to repurchase up to $ 300 million of the Company’s common stock.

Repurchases under the Stock Repurchase Program may be made from time-to-time through open market transactions, block trades, privately negotiated transactions or otherwise in accordance with applicable securities laws.

The timing, price and amount of repurchases (if any) will be made at the discretion of management and are subject to market conditions as well as corporate, regulatory and other considerations.

While the Stock Repurchase Program currently has a duration of four years , it does not obligate the Company to acquire any stock and may be terminated by the Board of Directors at any time.

We did no t repurchase any of our common stock during the year ended December 31, 2020.

CVR Refining, LP

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CVR Partners, LP

As of December 31, 2019, public security holders held approximately 66 % of CVR Partners’ outstanding common units, and Coffeyville Resources, LLC (“CRLLC”), a wholly-owned subsidiary of CVR Energy, held approximately 34 % of CVR Partners’ outstanding common units.

In addition, CRLLC owns 100 % of CVR Partners’ general partner, CVR GP, LLC, which holds a non-economic general partner interest in CVR Partners.

Interest Holders - As of December 31, 2020, public common unitholders held approximately 64 % of CVR Partners’ outstanding common units, and CVR Services, LLC (“CVR Services”) (formerly Coffeyville Resources, LLC), a wholly-owned subsidiary of CVR Energy, held approximately 36 % of CVR Partners’ outstanding common units.

In addition, CVR Services held 100 % of CVR Partners’ general partner, CVR GP, LLC (“CVR GP”), which held a non-economic general partner interest in CVR Partners as of December 31, 2020.

Following the acquisition of the non-controlling interest in CVR Refining in January 2019, the non-controlling interest reflected on the consolidated balance sheets of CVR is only impacted by the net income of, and distributions from, CVR Partners.

Stock Repurchase Program

On October 23, 2019, the Board of Directors of the Company authorized a stock repurchase program (the “Stock Repurchase Program”).

The Stock Repurchase Program would enable the Company to repurchase up to $ 300 million of the Company’s common stock.

The timing, price and amount of repurchases (if any) will be made at the discretion of management and are subject to market conditions as well as corporate, regulatory and other considerations.

While the Stock Repurchase Program currently has a duration of four years , it does not obligate the Company to acquire any stock and may be terminated by the Company’s Board of Directors at any time.

We did no t repurchase any of our common stock during the year ended December 31, 2019.

December 31, 2020 | 72

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

NYSE Listing Requirements and Reverse Split - On April 20, 2020, the average closing price of CVR Partners’ common units over a 30 consecutive trading-day period fell below $1.00 per common unit, resulting in noncompliance with the continued listing compliance standards in Section 802.01C of the NYSE Listed Company Manual.

CVR Partners received written notification of this noncompliance from the NYSE on April 22, 2020, and had until January 1, 2021 to regain compliance or be subject to the NYSE’s suspension and delisting procedures.

See the Form 8-K filed by CVR Partners with the SEC on April 24, 2020 for further discussion.

On November 2, 2020, CVR Partners announced that the board of directors of its general partner (the "UAN GP Board") approved a 1-for-10 reverse split of CVR Partners’ common units that was completed on November 23, 2020, pursuant to which each ten common units of CVR Partners would be converted into one common unit of the CVR Partners (the “Reverse Unit Split”).

In accordance with CVR Partners’ Agreement of Limited Partnership, as amended, following the Reverse Unit Split, any fractional units of record holders were rounded up or down, as applicable, to the nearest whole common unit, with any fraction equal to or above 0.5 common units rounding up to the next higher common unit.

Following the Reverse Unit Split, the number of CVR Partners common units outstanding decreased from approximately 111 million common units to approximately 11 million common units, with proportionate adjustments to the common units under CVR Partners’ long-term incentive plan and outstanding awards thereunder.

CVR Partners’ common units began trading on a split-adjusted basis when markets opened on November 24, 2020, under the symbol “UAN” and a new CUSIP number.

The reverse split enabled the Partnership to regain compliance with NYSE listing requirements on November 30, 2020, in advance of the January 1, 2021 deadline.

Unit Repurchase Program - On May 6, 2020, the UAN GP Board, on behalf of CVR Partners, authorized a unit repurchase program (the “Unit Repurchase Program”).

The Unit Repurchase Program enables CVR Partners to repurchase up to $ 10 million of its common units.

During the year ended December 31, 2020, CVR Partners repurchased 623,177 common units, on the open market in accordance with a repurchase agreement under Rules 10b5-1 and 10b-18 of the Exchange Act, which was terminated on August 6, 2020, at a cost of $ 7 million, inclusive of transaction costs, or an average price of $ 11.35 per common unit.

At December 31, 2020, CVR Partners had $ 3 million in authority remaining under the Unit Repurchase Program.

On February 22, 2021, the UAN GP Board authorized an additional $ 10 million for the Unit Repurchase Program.

This Unit Repurchase Program does not obligate CVR Partners to acquire any common units and may be cancelled or terminated by the UAN GP Board at any time.

As a result of these repurchases, and the resulting change in CVR Energy’s ownership of CVR Partners while maintaining control, CVR Energy recognized an increase of $ 3 million to additional paid-in capital from the non-cash reduction of non-controlling interests totaling $ 4 million and the recognition of a deferred tax liability totaling $ 1 million from changes in its book versus tax basis in CVR Partners.

Subsequent Events

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Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its majority-owned direct and indirect subsidiaries.

The accompanying consolidated financial statements, prepared in accordance with U.S.

generally accepted accounting principles (“GAAP”) and in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”), include the accounts of the Company and its majority-owned direct and indirect subsidiaries.

All intercompany accounts and transactions have been eliminated.

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CVR Partners is considered a VIE.

As the 100% owner of the general partner of CVR Partners, the Company has the sole ability to direct the activities that most significantly impact the economic performance of the partnership and is considered to be the primary beneficiary.

December 31, 2020 | 73

CVR Energy, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

the primary beneficiary.

In January 2019, following the CVRR Unit Purchase, CVR Refining was no longer considered a VIE and is accounted for as a wholly-owned subsidiary.

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Certain reclassifications have been made within the consolidated financial statements for the years ended December 31, 2019 and 2018 to conform with current presentation.

Catalyst inventory with a value of $ 17 million as of December 31, 2019 was reclassified in the first quarter of 2020 to Other long-term assets to conform to current presentation.

Use of Estimates

These consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”), which requires management to make estimates and assumptions that affect the reported amounts and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The consolidated financial statements are prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amounts and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Estimates are reviewed on an ongoing basis, based on currently available information.

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Cash and cash equivalents include cash on hand and on deposit, investments in highly liquid money market accounts, and debt instruments with original maturities of three months or less.

Restricted Cash

Restricted cash consists of cash that must be maintained in a commercial escrow account pending resolution of certain litigation matters and is discussed further in Note 11 (“Commitments and Contingencies”).

Accounts Receivable, net

Accounts receivable primarily consist of customer accounts receivable recorded at the invoiced amounts and generally do not bear interest.

Also included within accounts receivable of the Nitrogen Fertilizer Segment are unbilled fixed price contracts which is further discussed within Note 7 (“Revenue”).

Accounts receivable, net primarily consist of customer accounts receivable recorded at the invoiced amounts and generally do not bear interest.

Also included within accounts receivable of the Nitrogen Fertilizer Segment are unbilled fixed price contracts which is discussed further within Note 7 (“Revenue”).

Allowances for doubtful accounts are generally recorded when it becomes probable the receivable will not be collected and is booked to bad debt expense.

The largest concentration of credit for any one customer at December 31, 2019 and 2018 was approximately 11 % and 12 %, respectively, of the net accounts receivable balance.

As of December 31, 2019 and 2018, the allowance for doubtful accounts balances were immaterial.

December 31, 2019 | 73

CVR Energy, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The largest concentration of credit for any one customer was approximately 11 % and 11 % of the net accounts receivable balance at December 31, 2020 and 2019, respectively.

During the years ended December 31, 2020 and 2019, the Company had no minal bad debt expense, and during the year ended December 31, 2018, a recovery was recognized of $ 1 million related to bad debt expense previously written off.

Inventories consist primarily of domestic and foreign crude oil, blending stock and components, work-in-progress, fertilizer products, and refined fuels and by-products.

All inventories are valued at the lower of the first-in, first-out (“FIFO”) cost, or net realizable value.

All inventories are valued at the lower of GAAP First-In, First-Out (“FIFO”) cost, or net realizable value.

The Petroleum Segment’s unfinished and finished products inventory values were determined using the ability-to-bear methodology.

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The cost of inventories includes inbound freight costs.

At December 31, 2019 and 2018, inventories related to the Nitrogen Fertilizer Segment included depreciation of approximately $ 5 million and $ 6 million, respectively.

December 31, 2020 | 74

CVR Energy, Inc.

and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The carrying amounts of the Petroleum Segment’s inventories exceeded their net realizable value (market value) by $ 58 million resulting in the recognition of a lower of cost or net realizable value adjustment as of March 31, 2020.

The $ 58 million loss represents the difference between the carrying value of the Petroleum Segment’s inventories accounted for using the FIFO method and selling prices for refined products subsequent to March 31, 2020.

No adjustment was necessary as of December 31, 2020 or December 31, 2019.

Inventories consisted of the following:

(in millions) 2020 2019

Finished goods $ 133 $ 177

Raw materials 83 112

In-process inventories 16 18

Finished goods 177 186

Parts and supplies 66 66

Total Inventories $ 298 $ 373

Property, Plant and Equipment

At December 31, 2020 and 2019, inventories related to the Nitrogen Fertilizer Segment included depreciation of approximately $ 2 million and $ 5 million, respectively.

Property, Plant and Equipment, net

Additions to property, plant and equipment, including capitalized interest and certain costs allocable to construction and property purchases, are recorded at cost.

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Furniture and fixtures 3 to 10

ROU finance leases 1 to 25

Right-of-use (“ROU”) finance leases 3 to 18

Other 5 to 30

Property, plant and equipment consisted of the following:

Property, plant and equipment, net consisted of the following:

(in millions) 2020 2019

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Buildings and improvements 88 87

ROU finance leases 80 81

Land and improvements 47 46

Furniture and fixtures 38 35

ROU finance leases 27 —

Construction in progress 100 95

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Total Property, plant and equipment, net $ 2,240 $ 2,336

(1) Includes $ 29 million in leases classified as finance leases under ASC Topic 842 (Leases) as of December 31, 2019 and $ 32 million in leases classified as capital leases under the superseded ASC Topic 840 (Leases) as of December 31, 2018.

Leasehold improvements and assets held under finance leases are depreciated or amortized on the straight-line method over the shorter of the contractual lease term or the estimated useful life of the asset.

Expenditures for routine maintenance and repair

December 31, 2020 | 75

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Expenditures for routine maintenance and repair costs are expensed when incurred.

costs are expensed when incurred.

Such expenses are reported in Direct operating expenses (exclusive of depreciation and amortization) in the Company’s Consolidated Statements of Operations.

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The carrying value of the inventory sold as part of this transaction has been presented on a net basis, with the proceeds on sale, within the net cash used in investing section of the Consolidated Statements of Cash Flows.

As of December 31, 2020, the Company had not identified the existence of an impairment indicator for its long-lived asset groups as outlined under Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment .

At inception, the Company determines whether an arrangement is a lease and the appropriate lease classification.

Operating leases are included as operating lease right-of-use (“ROU”) assets within Other long-term assets and lease liabilities within Other current liabilities and Other long-term liabilities on our Consolidated Balance Sheets.

Finance leases are included as ROU finance leases within Property, plant, and equipment, net, and finance lease liabilities within Other current liabilities and Long-term debt and finance lease obligations, net of current portion on our Consolidated Balance Sheets.

Operating leases are included as operating lease ROU assets within Other long-term assets and lease liabilities within Other current liabilities and Other long-term liabilities on our Consolidated Balance Sheets.

Finance leases are included as ROU finance leases within Property, plant, and equipment, net, and finance lease liabilities within Note payable and finance lease obligations and Long-term debt and finance lease obligations, net of current portion on our Consolidated Balance Sheets.

Leases with an initial expected term of 12 months or less are considered short-term and are not recorded on our Consolidated Balance Sheets.

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The lease term is modified to reflect options to extend or terminate the lease when it is reasonably certain we will exercise such option.

The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise, in which case the depreciation policy in the “Property, Plant and Equipment” section above is applicable.

The periodic lease payments are treated as payments of the lease obligation and interest is recorded as interest expense.

See “Recent Accounting Pronouncements - Adoption of Lease Standard” within this Note for a further discussion on the impacts of adopting the lease standard.

Deferred Financing Costs

Lender and other third-party costs associated with debt issuances are deferred and amortized to interest expense and other financing costs using the effective-interest method over the life of the debt.

Deferred financing costs related to line-of-credit arrangements are amortized using the straight-line method through the termination date of the facility.

The deferred financing costs are included net within long-term debt and in other long-term assets for the line-of-credit arrangements where no debt balance exists.

Impairment of Long-Lived Assets

Deferred financing costs related to line-of-credit arrangements are amortized using the straight-line method through the maturity date of the facility.

The deferred financing costs are included net within Long-term debt and finance lease obligations, net of current portion and in Other long-term liabilities for the line-of-credit arrangements where no debt balance exists.

Impairment of Long-Lived Assets and Goodwill

Long-lived assets (excluding goodwill, intangible assets with indefinite lives, and deferred tax assets) are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

One of the reporting units associated with our Nitrogen Fertilizer Segment’s Coffeyville, Kansas facility (the “Coffeyville Facility”) had a goodwill balance of $ 41 million at December 31, 2019.

During the second quarter of 2020, following the completion of the spring planting season, the market pricing for ammonia and UAN, the Nitrogen Fertilizer Segment’s two primary products, experienced significant pricing declines driven by updated market expectations around supply and demand fundamentals which were expected to continue into the second half of 2020.

Additionally, significant uncertainty remained as to the nature and extent of impacts to be seen on the overall demand for corn and soybean given reduced ethanol production and broader economic conditions which may negatively impact demand.

Therefore in connection with the preparation of the financial statements for the three months ended June 30, 2020, given the pricing declines experienced in the second quarter of 2020, further muting of our near-term economic recovery assumptions, and market price performance of CVR Partners’ common units, the Company concluded an impairment indicator was present and a triggering event under ASC Topic 350, Intangibles-Goodwill and Other , had occurred as of June 30, 2020.

Significant assumptions inherent in the valuation methodologies for goodwill are employed and include, but are not limited to, prospective financial information, growth rates, discount rates, inflationary factors, and cost of capital.

Based on the interim quantitative analysis, it was determined that the estimated fair value of the Coffeyville Facility reporting unit did not exceed its carrying value.

As a result, the Company recorded a full, non-cash impairment charge of $ 41 million during the year ended December 31, 2020.

As there is no goodwill balance at December 31, 2020, no annual impairment review was performed.

The Company performed its annual impairment review of goodwill for 2019 and 2018 associated with CVR Partners’ Coffeyville, Kansas Nitrogen Fertilizer (the “Coffeyville Fertilizer Facility”) reporting unit and concluded there were no impairments.

For the period ended December 31, 2019, no events or circumstances were identified which would trigger the performance of a quantitative analysis after reviewing all qualitative factors impacting the reporting unit including improved market conditions, financial results, and financial forecasts from those used in the fair value analysis at December 31, 2018.

For the periods ended December 31, 2018 and 2017, the fair value of the Coffeyville Fertilizer Facility reporting unit exceeded its carrying value by approximately 36 % and 12 %, respectively, based upon the results of the reporting unit’s goodwill impairment test.

For the period ended December 31, 2018, the fair value of the Coffeyville Fertilizer Facility exceeded its carrying value by approximately 36 % based upon the results of the reporting unit’s goodwill impairment test.

Loss Contingencies

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Environmental, Health & Safety (“EHS”) Matters

The Petroleum and Nitrogen Fertilizer Segments are subject to various federal, state, and local EHS rules and regulations.

Liabilities related to EHS matters are recognized when the related costs are probable and can be reasonably estimated.

The Petroleum and Nitrogen Fertilizer Segments are subject to various federal, state, and local environmental, health, and safety rules and regulations.

Liabilities related to future remediation costs of past environmental contamination of properties are recognized when the related costs are considered probable and can be reasonably estimated.

Estimates of these costs are based upon currently available facts, internal and third-party assessments of contamination, available remediation technology, site-specific costs, and currently enacted laws and regulations.

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Loss contingency accruals, including those for environmental remediation, are subject to revision as further information develops or circumstances change and such accruals can take into account the legal liability of other parties.

Environmental expenditures are capitalized at the time of the expenditure when such costs provide future economic benefits.

Management periodically reviews and, as appropriate, revises its environmental accruals.

Environmental expenditures for capital assets are capitalized at the time of the expenditure when such costs provide future economic benefits.

Revenue Recognition

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Any pass-through finished goods delivery costs reimbursed by customers are reported in Net sales, while an offsetting expense is included in Cost of materials and other.

Non-monetary product exchanges and certain buy/sell transactions which are entered into in the normal course of business are included on a net cost basis in Cost of materials and other on the Consolidated Statements of Operations.

• Nitrogen Fertilizer Segment - Revenue is recognized when our customers receive control of the product.

The adoption of ASC 606 resulted in the recognition of deferred revenue and related receivables, on a gross basis, associated with contracts that guarantee a price and supply of nitrogen fertilizer products in quantities expected to be delivered in the normal course of business.

Other considerations - For both segments, excise and other taxes collected from customers and remitted to governmental authorities are excluded from reported revenues.

Non-monetary product

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

exchanges and certain buy/sell transactions which are entered into in the normal course of business are included on a net cost basis in Cost of materials and other on the Consolidated Statements of Operations.

• Nitrogen Fertilizer Segment - Revenue is recognized based on consideration specified in contracts or agreements with customers when performance obligations are satisfied by transferring control over products or services to a customer.

The adoption of ASC Topic 606, Revenue from Contracts with Customers , resulted in the recognition of deferred revenue and related receivables, on a gross basis, associated with contracts that guarantee a price and supply of nitrogen fertilizer products in quantities expected to be delivered in the normal course of business.

Other considerations - For both segments, excise and other taxes collected from customers and remitted to governmental authorities are excluded from reported revenues.

Cost Classifications

Cost of materials and other includes cost of crude oil, other feedstocks, blendstocks, purchased refined products, pet coke expenses, Renewable Identification Number (“RIN”) expenses, derivative gains or losses, and freight and distribution costs.

Direct operating expenses (exclusive of depreciation and amortization) consist primarily of energy and other utility costs, direct costs of labor, including applicable share-based compensation expense, property taxes, plant-related maintenance services, and environmental and safety compliance costs, as well as catalyst and chemical costs.

Cost of materials and other includes cost of crude oil, other feedstocks, blendstocks, purchased refined products, purchased ammonia, purchased hydrogen, pet coke expenses, Renewable Identification Number (“RIN”) expenses, derivative gains or losses, and freight and distribution costs.

Direct operating expenses (exclusive of depreciation and amortization) consist primarily of energy and other utility costs, direct costs of labor, including applicable share-based compensation expense, property taxes, plant-related maintenance services, including turnaround, and environmental and safety compliance costs, as well as catalyst and chemical costs.

Selling, general and administrative expenses (exclusive of depreciation and amortization) consist primarily of labor and other direct expenses associated with the Company’s corporate activities, including accounting, finance, information technology, human resources, legal, and other related administrative functions.

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Accordingly, the fair value of these contracts are not recorded at the end of each reporting period.

Refer to Note 8 (“Derivative Financial Instruments”) for further discussion of the Company’s derivative activity.

Other financial instruments consisting of cash and cash equivalents, accounts receivable, and accounts payable are carried at cost, which approximates fair value, as a result of the short-term nature of the instruments.

Refer to Note 8 (“Derivative Financial Instruments”) for further fair value disclosures.

Refer to Note 8 (“Derivative Financial Instruments, Investments and Fair Value Measurements”) for further discussion of the Company’s derivative activity.

Other financial instruments consisting of cash and cash equivalents, restricted cash, accounts receivable, and accounts payable are carried at cost, which approximates fair value, as a result of the short-term nature of the instruments.

Refer to Note 8 (“Derivative Financial Instruments, Investments and Fair Value Measurements”) for further fair value disclosures.

Turnaround Expenses

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The new method of accounting for turnarounds is considered preferable as it is more consistent with the accounting policy of our peer companies and better reflects the economic substance of the benefits earned from turnaround expenditures.

The Consolidated Balance Sheets for the period ended December 31, 2018, the related Consolidated Statements of Operations, Consolidated Statements of Changes in Equity, and Consolidated Statements of Cash Flows for each of the two years in the period ended December 31, 2018 have been recast to reflect our new accounting policy.

The related Consolidated Statements of Operations, Consolidated Statements of Changes in Equity, and Consolidated Statements of Cash Flows for the year ended December 31, 2018 have been recast to reflect our new accounting policy.

Turnaround costs, and related accumulated amortization, are included in the Consolidated Balance Sheets as Other long-term assets.

The amortization expense related to turnaround costs is included in Depreciation and amortization in the Consolidated Statements of Operations.

During the years ended December 31, 2019, 2018, and 2017, the Petroleum Segment capitalized $ 38 million, $ 8 million, and $ 87 million, respectively.

Nitrogen Fertilizer Segment - The Nitrogen Fertilizer Segment follows the direct-expense method of accounting for turnaround activities.

Costs associated with these turnaround activities were included in Direct operating expenses (exclusive of depreciation and amortization) in the Consolidated Statements of Operations.

During the years ended December 31, 2019, 2018, and 2017, the Nitrogen Fertilizer Segment incurred turnaround expenses of $ 10 million, $ 6 million, and $ 3 million, respectively.

The amortization

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

expense related to turnaround costs is included in Depreciation and amortization in the Consolidated Statements of Operations.

During the years ended December 31, 2020, 2019, and 2018, the Petroleum Segment capitalized $ 155 million, $ 38 million, and $ 8 million, respectively.

Nitrogen Fertilizer Segment - The Nitrogen Fertilizer Segment follows the direct-expense method of accounting for turnaround activities.

Costs associated with these turnaround activities were included in Direct operating expenses (exclusive of depreciation and amortization) in the Consolidated Statements of Operations.

During the years ended December 31, 2020, 2019, and 2018, the Nitrogen Fertilizer Segment incurred turnaround expenses of $ 1 million, $ 10 million, and $ 6 million, respectively.

The following presents the financial statement line items impacted by the Petroleum Segment turnaround accounting change for each of the periods presented within these consolidated financial statements.

Effect of Turnaround Accounting Change on Consolidated Balance Sheet as of December 31, 2018

December 31, 2018

(in millions) As Previously Reported Effect of Turnaround Accounting Change As Stated

Property, plant and equipment, net of accumulated depreciation $ 2,445 $ ( 15 ) $ 2,430

Other long-term assets (1) 169 108 277

Total assets $ 3,907 $ 93 $ 4,000

Long-term liabilities:

Deferred income taxes (2) $ 362 $ 18 $ 380

Total long-term liabilities 1,543 18 1,561

CVR stockholders’ equity:

Additional paid-in-capital $ 1,473 $ 1 $ 1,474

Retained deficit ( 226 ) 39 ( 187 )

Total CVR stockholders’ equity 1,246 40 1,286

Noncontrolling interest 622 35 657

Total equity 1,868 75 1,943

Total liabilities and equity $ 3,907 $ 93 $ 4,000

(1) This represents the capitalized turnaround asset recognized due to the turnaround policy change.

(2) This represents the increase in deferred tax liability due to the recognition of the capitalized turnaround asset.

Effect of Turnaround Accounting on Consolidated Statement of Operations and Consolidated Statement of Cash Flows for the Years Ended December 31, 2018 and 2017

Effect of Turnaround Accounting on Consolidated Statement of Operations and Consolidated Statement of Cash Flows for the Year Ended December 31, 2018

Year Ended December 31,

(in millions) As Previously Reported Effect of Turnaround Accounting Change As Stated As Previously Reported Effect of Turnaround Accounting Change As Stated

(in millions) As Previously Reported Effect of Turnaround Accounting Change As Stated

Consolidated Statement of Operations

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Net income (loss) $ 411 $ ( 45 ) $ 366

Net income attributable to noncontrolling interest 122 ( 15 ) 107 ( 18 ) 13 ( 5 )

Net income attributable to CVR Energy stockholders $ 289 $ ( 30 ) $ 259 $ 235 $ 28 $ 263

Net income (loss) attributable to noncontrolling interest 122 ( 15 ) 107

Net income (loss) attributable to CVR Energy stockholders $ 289 $ ( 30 ) $ 259

Consolidated Statement of Cash Flows

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Net cash used by investing activities $ ( 100 ) $ ( 8 ) $ ( 108 )

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Share-Based Compensation

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See Note 9 (“Share-Based Compensation”) for further discussion.

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Income taxes are accounted for utilizing the asset and liability approach.

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Management considers the scheduled reversal of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment.

Further, the Company recognizes interest expense (income) and penalties on uncertain tax positions and income tax deficiencies (refunds) in Income tax expense (benefit).

Further, the Company recognizes interest expense (income) and penalties on uncertain tax positions and income tax deficiencies (refunds) in Income tax (benefit) expense.

Earnings Per Share

There were no dilutive awards outstanding during the years ended December 31, 2020, 2019, and 2018.

Recent Accounting Pronouncements - Adoption of Lease Standard

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-02, “ Leases ” (“ASU 2016-02”), creating a new topic, FASB ASC Topic 842, “Leases” (“Topic 842”), which supersedes lease requirements in FASB ASC Topic 840, “Leases.” The new standard revises accounting for operating leases by a lessee, among other changes, and requires a lessee to recognize a liability related to future lease payments and a right-of-use (“ROU”) asset representing its right to use of the underlying asset for the lease term on the consolidated balance sheets.

We adopted Topic 842 as of January 1, 2019, electing the option to apply the transition provisions at the adoption date instead of the earliest comparative period presented in the financial statements.

In connection with the adoption of Topic 842, we made the following elections:

• Only ROU assets and related lease liabilities for leases with an initial term greater than one year were and will be recognized;

• The accounting treatment for existing land easements was carried forward;

• Lease and non-lease components were and will not be bifurcated for all of the Company’s asset groups, respectively;

• The portfolio approach was, and will be, used in the selection of the discount rate used to calculate minimum lease payments and the related ROU asset and operating lease liability amounts.

The Company’s adoption of Topic 842 resulted in the recognition of additional ROU assets and lease liabilities of approximately $ 56 million as of January 1, 2019, in addition to the recognition of a finance lease asset of $ 26 million with an

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obligation of $ 23 million.

There were no impacts to our consolidated statements of operations or cash flows.

See Note 4 (“Leases”) for further discussion.

(in millions) December 31, 2018

As Stated (1)

Effect of Adoption of Topic 842 January 1, 2019

Current assets:

Prepaid expenses and other current assets $ 76 $ ( 3 ) (2) $ 73

Total currents assets 1,293 ( 3 ) 1,290

Property, plant and equipment, net 2,430 26 (3) 2,456

Other long-term assets 277 56 (4) 333

Total assets $ 4,000 $ 79 $ 4,079

Current liabilities:

Other current liabilities $ 176 $ 16 (5) $ 192

Total current liabilities 496 16 512

Long-term debt and finance lease obligations 1,167 23 (3) 1,190

Other long-term liabilities 14 40 (5) 54

Total long-term liabilities 1,561 63 1,624

Total liabilities and equity $ 4,000 $ 79 $ 4,079

(1) Represents the retrospectively adjusted balance sheet amounts upon reflection of the turnaround accounting change, for which the Recast Form 8-K for 2018 was filed on June 12, 2019, prior to the adoption of Topic 842.

(2) Represents lease prepayments reclassified to ROU assets.

(3) The additional $ 26 million ROU asset and $ 23 million in lease liability represents a lease with a third-party that met the definition of a finance lease under ASC 842 as compared to an operating lease under ASC 840.

(4) Represents recognition of initial ROU assets for operating leases, including the reclassification of certain lease prepayments as noted above.

(5) Represents the initial recognition of lease liabilities.

Recent Accounting Pronouncements - Adoption of Internal-Use Software Standard

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40).

This ASU better aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is also a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

Effective January 1, 2019, we adopted this ASU and chose to apply the prospective approach for all implementation costs incurred after the date of adoption.

We evaluated the effects of adopting this new accounting guidance and concluded it did not have a material impact on the Company’s consolidated financial position or results of operations.

Recent Accounting Pronouncements - New Accounting Standards Issued But Not Yet Implemented

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326).

Recent Accounting Pronouncements - Adoption of Credit Losses Standard

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326).

The ASU replaces the incurred loss model with a current expected credit loss model for more timely recognition of expected impairment losses for most financial assets and certain other instruments that are not measured at fair value through net income.

Effective January 1, 2020, the Company adopted this ASU and evaluated the effects of adopting this new accounting guidance.

The adoption will not have a material impact on the Company’s consolidated financial position or results of operations.

Effective January 1, 2020, we adopted this ASU with no material impact on the Company’s consolidated financial position or results of operations.

Recent Accounting Pronouncements - Adoption of Fair Value Measurement Standard

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820).

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Certain disclosures are required to be applied on a retrospective basis and others on a prospective basis.

Effective January 1, 2020, we adopted this ASU and evaluated the effects of adopting this new accounting guidance.

The adoption did not have a material impact on the Company’s disclosures.

Effective January 1, 2020, we adopted this ASU with no material impact on the Company’s disclosures.

Recent Accounting Pronouncements - New Accounting Standards Issued But Not Yet Implemented

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740).

The ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and modifies other areas of the topic to clarify the application of GAAP.

Certain amendments within the standard are required to be applied on a retrospective basis

Certain amendments within the standard are required to be applied on a retrospective basis and others on a prospective basis.

This standard is effective for the Company beginning January 1, 2021, with early adoption permitted.

The Company is evaluating the effect of adopting this new accounting guidance on its consolidated financial statements, but does not currently expect adoption will have a material impact on the Company’s consolidated financial position or results of operations.

The Company does not intend to early adopt this ASU.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848).

This ASU was issued because, by the end of 2021, banks will no longer be required to report information that is used to determine London Interbank Offered Rate (“LIBOR”), which is used globally by all types of entities.

As a result, LIBOR could be discontinued, as well as other interest rates used globally.

ASU 2020-04 provides companies with optional expedients for contract modifications under Topics 310, 470, 842, and 815-15, excluded components of certain hedging relationships, fair value hedges, and cash flow hedges, as well as certain exceptions, which are intended to help ease the potential accounting burden associated with transitioning away from these reference rates.

Companies can apply the ASU immediately.

However, the guidance will only be available for a limited time (generally through December 31, 2022).

The Company is currently evaluating the impact that adopting this new accounting standard will have on its consolidated financial statements and related disclosures.

or results of operations.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements.

The ASU amends various sections of the codification in the Boards ongoing efforts to simplify and improve guidance.

This standard is effective for the Company

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

and others on a prospective basis.

This standard is effective for the company beginning January 1, 2021, with early adoption permitted.

beginning January 1, 2021, with early adoption permitted.

The Company does not intend to early adopt this ASU.

(3) Equity Method Investments

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Certain leases also include options to purchase the leased property.

The depreciable life of assets and leasehold improvements is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Certain of our lease agreements include rental payments which are adjusted periodically for factors such as inflation.

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Additionally, we do not have any material lessor or sub-leasing arrangements.

The adoption of Topic 842 impacted our January 1, 2019 consolidated balance sheet, as shown below, only for those line items impacted.

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Effect of Initial Adoption of Topic 842 - January 1, 2019

Upon initial recognition, our ROU assets for operating and finance leases were comprised of the following:

(in millions) January 1, 2019

(initial recognition)

Pipeline and storage agreements (1) $ 29

Railcar leases (2) 15

Real Estate and other leases (3) 35

Total ROU assets $ 79

(1) Includes finance leased assets of $ 1 million as of January 1, 2019.

(2) Includes $ 14 million of railcar leases recognized by CVR Partners.

(3) Includes finance leased assets of $ 25 million recognized upon adoption of Topic 842 as of January 1, 2019.

Lease Liabilities .

Upon initial recognition, our lease liabilities for operating and finance leases were comprised of the following:

(in millions) January 1, 2019

(initial recognition)

Current liabilities:

Operating leases $ 14

Finance leases 2

Long-term liabilities:

Operating leases 40

Finance leases 23

Total lease liabilities $ 79

Balance Sheet Summary as of December 31, 2019

The following tables summarize the right of use asset and lease liability balances for the Company’s operating and finance leases at December 31, 2019:

(in millions) December 31, 2019

Balance Sheet Summary as of December 31, 2020 and 2019

The following tables summarize the right of use asset and lease liability balances for the Company’s operating and finance leases at December 31, 2020 and 2019:

(in millions) 2020 2019

Operating Leases:

ROU assets, net

ROU asset, net

Pipeline and storage $ 15 $ 20

Railcars 8 12

Real estate and other 14 16

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Pipelines and storage $ 16 $ 22

Railcars 8 12

Real estate and other 14 14

(in millions) December 31, 2019

(in millions) 2020 2019

Finance Leases:

ROU assets, net

ROU asset, net

Pipeline and storage $ 26 $ 29

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Real estate and other 22 25

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Lease Expense Summary for the Year Ended December 31, 2019

Lease Expense Summary for the Year Ended December 31, 2020 and 2019

We recognize lease expense on a straight-line basis over the lease term.

For the year ended December 31, 2019, we recognized lease expense comprised of the following components:

(in millions) December 31, 2019

For the year ended December 31, 2020 and 2019, we recognized lease expense comprised of the following components:

Year Ended December 31,

(in millions) 2020 2019

Operating lease expense $ 17 $ 12

Finance lease expense:

Amortization of ROU $ 7

Amortization of ROU asset $ 6 $ 7

Interest expense on lease liability 6 6

Short-term lease expense, recognized within Direct operating expenses (exclusive of depreciation and amortization), was $ 8 million for the year ended December 31, 2019.

Short-term lease expense, recognized within Direct operating expenses (exclusive of depreciation and amortization), was $ 8 million and $ 8 million for the year ended December 31, 2020 and 2019, respectively.

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Lease Terms and Discount Rates

The following outlines the remaining lease terms and discount rates used in the measurement of the Company’s ROU assets and liabilities:

December 31, 2019 January 1, 2019

(initial recognition)

Weighted-average remaining lease term (years)

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Total lease liability $ 38 $ 60

On July 31, 2020, Coffeyville Resources Nitrogen Fertilizers, LLC (“CRNF”), a subsidiary of CVR Partners, and Messer LLC (“Messer”) entered into an On-Site Product Supply Agreement (the “Messer Agreement”).

Under the Messer Agreement, among other obligations, Messer is obligated to supply and make certain capital improvements during the term of the Messer Agreement, and CRNF is obligated to take as available and pay for, oxygen, nitrogen, and compressed dry air from Messer’s facility.

This arrangement for CRNF’s purchase of oxygen, nitrogen, and dry air from Messer does not meet the definition of a lease under FASB ASC Topic 842, Leases, (“Topic 842”), as CRNF does not expect to receive substantially all of the output of Messer’s on-site production from its air separation unit over the life of the Messer Agreement.

The Messer Agreement also obligates Messer to install a new oxygen storage vessel and related equipment to be used solely by the Coffeyville Facility.

This arrangement for the use of the oxygen storage vessel and related equipment meets the definition of a lease under Topic 842, as CRNF will receive all output associated with the vessel.

Based on terms outlined in the Messer Agreement, the Company expects the lease of the oxygen storage vessel to be classified as a financing lease with an amount between $ 20 and $ 25 million being capitalized upon lease commencement when the oxygen storage vessel is placed in service.

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(in millions) 2020 2019

Personnel accruals $ 47 $ 40

Accrued Renewable Fuel Standards (“RFS”) obligation $ 214 $ 7

Accrued taxes other than income taxes 32 28

Deferred revenue 31 28

Accrued income taxes 24 —

Operating lease liabilities (1) 14 —

Personnel accruals 23 47

Accrued interest 25 9

Accrued derivatives 17 7

Accrued Renewable Fuel Standards (“RFS”) obligation 7 4

Operating lease liabilities 14 14

Share-based compensation 4 6

Accrued income taxes — 24

Other accrued expenses and liabilities 9 9

Total other current liabilities $ 369 $ 179

(1) The lease standard was adopted on January 1, 2019 on a prospective basis.

Therefore, only 2019 disclosures are applicable to be included within the table above.

(6) Long-Term Debt and Finance Lease Obligations

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9.25 % Senior Secured Notes, due June 2023

6.50 % Senior Notes due April 2021

6.50 % Senior Notes, due April 2021, net of current portion (1)

Unamortized discount and debt issuance costs ( 11 ) ( 15 )

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Total CVR Refining debt 55 558

5.250 % Senior Notes, due February 2025

5.750 % Senior Notes, due February 2028

Unamortized debt issuance cost ( 6 ) —

Total CVR Energy debt 994 —

Total long-term debt and finance lease obligations $ 1,683 $ 1,190

(1) This debt was issued at a $ 16 million discount which is being amortized, as interest expense, over the remaining term of the debt.

Debt issuance costs associated with this debt totaled $ 9 million.

(2) Debt issuance costs associated with this debt totaled $ 9 million.

On January 29, 2019, the 2022 Notes were amended such that CVR Energy was included as the primary guarantor, on a senior unsecured basis, of the 2022 Notes.

The CVR Energy guarantee is full and unconditional and joint and several.

On January 27, 2020, the Company redeemed all of the 2022 Notes for a redemption price equal to 101.083 %, plus accrued and unpaid interest, on the redeemed notes.

Current portion of long-term debt and finance lease obligations (1)(3) 8 5

Total long-term debt and finance lease obligations, including current portion $ 1,691 $ 1,195

(1) The 6.50 % Senior Notes, due April 2021, mature within 12 months, and, therefore, the outstanding balance of $ 2 million has been classified as short-term as of December 31, 2020.

(2) On January 27, 2020, the Company redeemed all of the 6.50 % Senior Notes, due November 2022 (the “2022 Notes”) for a redemption price equal to 101.083 %, plus accrued and unpaid interest on the redeemed notes.

(3) Current portion of finance lease obligations was approximately $ 6 million and $ 5 million as of December 31, 2020 and 2019, respectively.

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Credit Facilities

Credit Agreements

(in millions) Total Capacity Amount Borrowed as of December 31, 2020 Outstanding Letters of Credit Available Capacity as of December 31, 2020 Maturity Date

CVR Partners:

Asset Based (“AB”) Credit Facility (1)

Asset Based (“Nitrogen Fertilizer ABL”) Credit Agreement (1)(2)

$ 20 $ — $ — $ 20 September 30, 2022

CVR Refining:

Amended and Restated Asset Based (“Amended and Restated ABL”) Credit Facility (2)

Amended and Restated Asset Based (“Petroleum ABL”) Credit Agreement (3)

$ 400 $ — $ 35 $ 365 November 14, 2022

(1) Loans under the AB Credit Facility initially bear interest at an annual rate equal to (i) 2.00 % plus LIBOR or (ii) 1.00 % plus a base rate, subject to a 0.50 % step-down based on the previous quarter’s excess availability.

(2) Loans under the Amended and Restated ABL Credit Facility initially bear interest at an annual rate equal to (i) 1.50 % plus LIBOR or (ii) 0.50 % plus a base rate, subject to quarterly excess availability.

The Company is in compliance with all covenants of the AB credit facilities, Amended and Restated ABL, and the senior notes as of December 31, 2019.

AB Credit Facility - On September 30, 2016, CVR Partners entered into a senior secured asset based revolving credit facility (the “AB Credit Facility”) with a group of lenders and UBS AG (“UBS”), as administrative agent and collateral agent.

The AB Credit Facility has an aggregate principal amount of availability of up to $ 50 million with an incremental facility, which permits an increase in borrowings of up to $ 25 million in the aggregate subject to additional lender commitments and certain other conditions.

The AB Credit Facility is scheduled to mature on September 30, 2021.

(1) Through December 31, 2020, loans under the Nitrogen Fertilizer ABL bear interest at an annual rate equal to (i) 1.00 % plus a base rate.

Thereafter, loans will bear interest (i) at such rates if our quarterly excess availability is greater than 50% and (ii) 1.50 % plus a base rate, otherwise.

(2) The Nitrogen Fertilizer ABL was amended on September 29, 2020, to, among other things, reduce the commitments thereunder to $ 35 million and extended the maturity date to September 30, 2022.

Deferred financing costs of less than $ 1 million were capitalized related to this amendment and will be amortized from Prepaid expenses and other current assets and Other long-term assets over the remaining term of Nitrogen Fertilizer ABL.

(3) Loans under the Petroleum ABL bear interest at an annual rate equal to (i) 0.50 % plus a base rate, if our quarterly excess availability is greater than 50% and (ii) 0.75 % plus a base rate, otherwise.

The Company is in compliance with all covenants of the Nitrogen Fertilizer ABL, Petroleum ABL, and the senior notes as of December 31, 2020.

2023 Notes - On June 10, 2016, CVR Partners and CVR Nitrogen Finance Corporation (“CVR Nitrogen Finance”), an indirect wholly-owned subsidiary of CVR Partners (together the “2023 Notes Issuers”), certain subsidiary guarantors named therein and Wilmington Trust, National Association, as trustee and as collateral trustee, completed a private offering of $ 645 million aggregate principal amount of 9.25 % Senior Secured Notes due 2023 (the “2023 Notes”).

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2020 102.313 %

2021 and thereafter 100.000 %

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In addition, the indenture contains customary events of default, the occurrence of which would result in or permit the trustee or the holders of at least 25 % of the 2023 Notes to cause the acceleration of the 2023 Notes, in addition to the pursuit of other available remedies.

Nitrogen Fertilizer ABL - On September 29, 2020, CVR Partners entered into Amendment No.

1 to the Nitrogen Fertilizer ABL with a group of lenders and UBS AG, Stamford Branch (“UBS”), as administrative agent and collateral agent.

The Nitrogen Fertilizer ABL reduced its aggregate principal amount of availability from $ 50 million to $ 35 million, and extended

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Amended and Restated ABL Credit Facility - On November 14, 2017, CRLLC, CVR Refining, its wholly-owned subsidiary, CVR Refining, LLC (“Refining LLC”) and each of the operating subsidiaries of Refining LLC (collectively, the “Credit Parties”) entered into Amendment No.

1 to the Amended and Restated ABL Credit Agreement (the “Amendment”) with a group of lenders and Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent and collateral agent.

The Amended and Restated ABL is a $ 400 million asset-based revolving credit facility, with sub-limits for letters of credit and swingline loans of $ 60 million and $ 40 million, respectively.

The Amended and Restated ABL also includes a $ 200 million uncommitted incremental facility.

the scheduled maturity to September 30, 2022.

The amendment also removed from the borrowing base calculation the restricted cash and cash equivalent component and increased the advance rate for certain eligible inventory.

2022 Notes - On October 23, 2012, CVR Refining, LLC (“Refining LLC”) and Coffeyville Finance Inc.

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As a result of this transaction, the Company will recognize a $ 8 million loss on extinguishment of debt in the first quarter of 2020, which includes the total premiums paid of $ 5 million and the write-off of previously deferred financing charges of $ 3 million.

Petroleum ABL - On November 14, 2017, CVR Services, CVR Refining, its wholly-owned subsidiary, CVR Refining, LLC (“Refining LLC”) and each of the operating subsidiaries of Refining LLC (collectively, the “Credit Parties”) entered into Amendment No.

The Amended and Restated ABL is a $ 400 million asset-based revolving credit facility, with sub-limits for letters of credit and swingline loans of $ 60 million and $ 40 million, respectively.

The Amended and Restated ABL also includes a $ 200 million uncommitted incremental facility.

2025 Notes and 2028 Notes - On January 27, 2020, CVR Energy completed a private offering of $ 600 million aggregate principal amount of 5.25 % Senior Unsecured Notes due 2025 (the “2025 Notes”) and $ 400 million aggregate principal amount of 5.75 % Senior Unsecured Notes due 2028 (the “2028 Notes” and, collectively with the 2025 Notes, the “Notes”).

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2026 and thereafter 100.000 %

The indenture governing the Notes imposes covenants that will, among other things, limit our ability and the ability of our restricted subsidiaries to:

(i) incur additional indebtedness or issue certain disqualified equity;

(ii) create liens on certain assets

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

to secure debt;

The indenture governing the Notes imposes covenants that will, among other things, limit our ability and the ability of our restricted subsidiaries to:

(i) incur additional indebtedness or issue certain disqualified equity;

(ii) create liens on certain assets to secure debt;

(iii) pay dividends or make other equity distributions;

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As the original maturity was less than three months from the issuance date, the borrowings and repayments under the credit agreement qualified for net reporting on the Consolidated Statements of Cash Flows.

The following tables present the Company’s revenue disaggregated by major product.

The following tables include a reconciliation of the disaggregated revenue by product and other revenue components for the Company’s reportable segments.

The following tables present the Company’s revenue disaggregated by major product, which include a reconciliation of the disaggregated revenue by product and other revenue components for the Company’s reportable segments.

Year Ended December 31, 2020

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Total revenue $ 5,968 $ 404 $ ( 8 ) $ 6,364

Year Ended December 31, 2018

(in millions) Petroleum Nitrogen Fertilizer Other / Eliminations Consolidated

Gasoline $ 3,383 $ — $ — $ 3,383

Distillates (1) 3,083 — — 3,083

Ammonia — 66 — 66

UAN — 222 — 222

Other urea products — 21 — 21

Freight revenue 23 34 — 57

Other (2) 190 8 ( 7 ) 191

Revenue from product sales 6,679 351 ( 7 ) 7,023

Crude oil sales 96 — — 96

Other revenue (2)

Total revenue $ 6,780 $ 351 $ ( 7 ) $ 7,124

(1) Distillates consist primarily of diesel fuel, kerosene, and jet fuel.

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The Petroleum Segment determined that it does not need to estimate the variable consideration because the uncertainty related to the consideration is resolved on the pricing date or the date when the product is delivered.

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The Petroleum Segment may incur broker commissions or transportation costs prior to product transfer on some of its sales.

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The Nitrogen Fertilizer Segment recognizes revenue at the point in time at which the customer obtains control of the product, which is generally upon delivery and acceptance by the customer.

The customer acceptance point is stated in the contract and may be

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at one of the Nitrogen Fertilizer Segment’s manufacturing facilities, at one of the Nitrogen Fertilizer Segment’s off-site loading facilities, or at the customer’s designated facility.

The customer acceptance point is stated in the contract and may be at one of the Nitrogen Fertilizer Segment’s manufacturing facilities, at one of the Nitrogen Fertilizer Segment’s off-site loading facilities, or at the customer’s designated facility.

Freight revenue recognized by the Nitrogen Fertilizer Segment represents the pass-through finished goods delivery costs incurred prior to customer acceptance and is reimbursed by customers.

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Contract Balances

The Nitrogen Fertilizer Segment’s deferred revenue is a contract liability that primarily relates to fertilizer sales contracts requiring customer prepayment prior to product delivery to guarantee a price and supply of nitrogen fertilizer.

The Nitrogen Fertilizer Segment’s deferred revenue is a contract liability that primarily relates to nitrogen fertilizer sales contracts requiring customer prepayment prior to product delivery to guarantee a price and supply of nitrogen fertilizer.

Deferred revenue is recorded at the point in time in which a prepaid contract is legally enforceable and the associated right to consideration is unconditional prior to transferring product to the customer.

An associated receivable is recorded for uncollected prepaid contract amounts.

An associated receivable is recorded for uncollected

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prepaid contract amounts.

Contracts requiring prepayment are generally short-term in nature and, as discussed above, revenue is recognized at the point in time in which the customer obtains control of the product.

At December 31, 2019, $ 19 million of the deferred revenue balance pertained to prepaid contracts where the associated receivable was recognized as it had not yet been collected by the Nitrogen Fertilizer Segment.

A summary of the Nitrogen Fertilizer Segment’s deferred revenue activity during the year ended December 31, 2020 is presented below:

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Revenue recognized related to contracts entered into during the period ( 26 )

Other changes 1

Balance at December 31, 2020 $ 31

(1) Includes $ 33 million where the payment associated with prepaid contracts was collected.

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Major Customers

Petroleum Segment - The Petroleum Segment has two customers who comprise 25 %, 25 %, and 27 % of petroleum net sales for the years ended December 31, 2019, 2018, and 2017, respectively.

Petroleum Segment - The Petroleum Segment has two customers who comprised 26 %, 25 %, and 25 % of petroleum net sales for the years ended December 31, 2020, 2019, and 2018, respectively.

Nitrogen Fertilizer Segment - The Nitrogen Fertilizer Segment has two customers who comprised 26 %, 28 %, and 20 % of nitrogen fertilizer net sales for the years ended December 31, 2020, 2019, and 2018, respectively.

(8) Derivative Financial Instruments, Investments and Fair Value Measurements

Derivative Financial Instruments

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All other derivative instruments are recorded at fair value using mark-to-market accounting on a periodic basis utilizing third-party pricing.

The Petroleum Segment holds derivative instruments, such as exchange-traded crude oil futures and certain over-the-counter forward swap agreements, which it believes provide an economic hedge on future transactions, but such instruments are not designated as hedges under GAAP.

The Petroleum Segment holds derivative instruments, such as exchange-traded crude oil futures and over-the-counter forward swap agreements, which it believes provide an economic hedge on future transactions, but such instruments are not designated as hedges under GAAP.

There are no premiums paid or received at inception of the derivative contracts or upon settlement.

The Petroleum Segment may enter into forward purchase or sale contracts associated with RINs.

As of December 31, 2019, the Petroleum Segment had open fixed-price commitments to purchase 20 million RINs.

As of December 31, 2020, the Petroleum Segment had open fixed-price commitments to purchase a net 13 million RINs.

Commodity derivatives include commodity swaps and forward purchase and sale commitments.

There were no outstanding commodity swap positions as of December 31, 2019 and 2018.

There were 7 million outstanding commodity swap positions as of December 31, 2020 and no open commodity swaps in 2019.

There were approximately 4 million and 3 million in forward purchase commitments as of December 31, 2020 and 2019, respectively, and 2 million and 1 million in forward sale commitments as of December 31, 2020 and 2019, respectively.

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The following outlines the gains (losses) recognized on the Company’s derivative activities, all of which are recorded in Cost of materials and other on the Consolidated Statements of Operations:

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(in millions) 2020 2019 2018

Forward purchases and sales, net $ 20 $ 103 $ ( 26 )

Swaps — 44 ( 43 )

Futures ( 1 ) ( 1 ) ( 1 )

Forward purchases and sales contracts, net $ 53 $ 20 $ 103

Commodity swap instruments ( 8 ) — 44

Futures contracts 10 ( 1 ) ( 1 )

Total gain (loss) on derivatives, net $ 55 $ 19 $ 146

The following outlines our open commodity derivative instruments, which are classified as Prepaid expenses and other current assets and Other current liabilities on the Consolidated Balance Sheets:

Open Commodity Derivative Instruments Year Ended December 31,

(in millions of barrels) 2019 2018

Forward Contracts:

Canadian crude oil 5 2

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Offsetting Assets and Liabilities

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Total net fair value of derivatives $ — $ — $ ( 4 ) $ ( 8 )

In accordance with FASB ASC Topic 820 — Fair Value Measurements and Disclosures (“ASC 820”), the Company utilizes the market approach to measure fair value for its financial assets and liabilities.

Investments consist of equity securities, which are reported at fair value in our Consolidated Balance Sheets.

These investments are considered trading securities.

Investment income from marketable securities consists of the following:

Year Ended December 31,

(in millions) 2020 2019 2018

Dividend income $ 7 $ — $ —

Unrealized gain 34 — —

Investment income from marketable securities $ 41 $ — $ —

Fair Value Measurements

In accordance with FASB ASC Topic 820 — Fair Value Measurements and Disclosures (“Topic 820”), the Company utilizes the market approach to measure fair value for its financial assets and liabilities.

The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets, liabilities, or a group of assets or liabilities, such as a business.

ASC 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.

Topic 820 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.

The following is a brief description of those three levels:

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• Level 3 — Significant unobservable inputs (including the Company’s own assumptions in determining the fair value)

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The following table sets forth the assets and liabilities measured or disclosed at fair value on a recurring basis, by input level, as of December 31, 2020 and 2019:

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Location and Description

Prepaid expenses and other current assets (investments) $ 173 $ — $ — $ 173

Total Assets $ 173 $ — $ — $ 173

Current portion of long-term debt $ — $ ( 2 ) $ — $ ( 2 )

Other current liabilities (commodity derivatives) — ( 17 ) — ( 17 )

Other current liabilities (RFS obligation) — ( 214 ) — ( 214 )

Long-term debt — ( 1,180 ) — ( 1,180 )

Long-term debt and finance lease obligations, net of current portion — ( 1,604 ) — ( 1,604 )

Total Liabilities $ — $ ( 1,837 ) $ — $ ( 1,837 )

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Location and Description

Cash equivalents $ 50 $ — $ — $ 50

Other current assets (derivative agreements) — 7 — 7

Total Assets 50 7 — 57

Other current liabilities (commodity derivatives) $ — $ ( 8 ) $ — $ ( 8 )

Other current liabilities (RFS obligation) — ( 7 ) — ( 7 )

Long-term debt — ( 1,163 ) — ( 1,163 )

Long-term debt and finance lease obligations, net of current portion — ( 1,180 ) — ( 1,180 )

Total Liabilities $ — $ ( 1,195 ) $ — $ ( 1,195 )

As of December 31, 2019 and 2018, the only financial assets and liabilities that are measured at fair value on a recurring basis are the Company’s cash equivalents, derivative instruments, and the RFS obligation.

The Petroleum Segment’s commodity derivative contracts and RFS obligation, which use fair value measurements and are valued using broker quoted

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market prices of similar instruments, are considered Level 2 inputs.

As of December 31, 2020 and 2019, the only financial assets and liabilities that are measured at fair value on a recurring basis are the Company’s investments, derivative instruments, long-term debt, and the RFS obligation.

The estimated fair value of cash equivalents, included amounts invested in short-term money market funds, and restricted cash approximate their carrying amounts.

The Petroleum Segment’s commodity derivative contracts and RFS obligation, which use fair value measurements and are valued using broker quoted market prices of similar instruments, are considered Level 2 inputs.

The Company had no transfers of assets or liabilities between any of the above levels during the year ended December 31, 2020.

(9) Share-Based Compensation

CVR Energy, CVR Refining, and CVR Partners all have a Long-Term Incentive Plans (collectively, the “LTIPs”) which permit the granting of options, stock and unit appreciation rights (“SARs”), restricted shares, restricted stock units, phantom units, unit awards, substitute awards, other unit-based awards, cash awards, dividend and distribution equivalent rights, share awards, and performance awards (including performance share units, performance units, and performance-based restricted stock).

CVR Energy, CVR Refining, and CVR Partners all have Long-Term Incentive Plans (collectively, the “LTIPs”) which permit the granting of options, stock and unit appreciation rights, restricted shares, restricted stock units, phantom units, unit awards, substitute awards, other unit-based awards, cash awards, dividend and distribution equivalent rights, share awards, and performance awards (including performance share units, performance units, and performance-based restricted stock).

Individuals who are eligible to receive awards and grants under the LTIPs include the employees, officers, and directors of the Company, CVR Refining, and CVR Partners.

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Incentive and phantom unit awards have been granted to officers, employees, and directors (collectively, the “Share-Based Awards”) under the LTIPs.

As a result, Share-Based Awards that reflect the value and dividend or distributions of CVR Energy, CVR Refining, or CVR Partners have been granted and remain outstanding as of December 31, 2019.

As a result, Share-Based Awards that reflect the value and dividend or distributions of CVR Energy, CVR Refining, or CVR Partners, as applicable, have been granted and remain outstanding as of December 31, 2020.

Each Share-Based Award and the related dividend or distribution equivalent right represents the right to receive, upon vesting, a cash payment equal to (i) the average fair market value of one share or unit, as applicable, in accordance with the award agreement, plus (ii) the per share or unit cash value of all dividends or distributions declared and paid, as applicable, from the grant date through the vesting date.

The Share-Based Awards are generally graded-vesting awards, which are expected to vest over three years with one-third of the award vesting each year the grantee remains employed by the Company or its subsidiaries.

The Share-Based Awards are generally graded-vesting awards, which vest over three years with one-

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third of the award vesting each year the grantee remains employed by the Company or its subsidiaries.

Compensation expense is recognized ratably, based on service provided to the Company and its subsidiaries, with the amount recognized fluctuating as a result of the Share-Based Awards being re-measured to fair value at the end of each reporting period due to their liability-award classification.

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The CEO Performance Award represents the right to receive upon vesting, a cash payment equal to $ 10 million if the average closing price of the Company’s common stock over the 30 -trading day period from January 4, 2022 to February 15, 2022 is equal to or greater than $ 60 per share.

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Compensation Expense

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For the years ended December 31, 2020, 2019, and 2018, the Company paid cash of $ 8 million, $ 23 million, and $ 17 million, respectively, to settle liability-classified awards upon vesting.

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Other Benefit Plans

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The Company’s contributions under the Plans were approximately $ 10 million, $ 9 million, and $ 9 million for the years ended December 31, 2020, 2019, and 2018, respectively.

Effective January 1, 2021, the matching contributions for the Plans have been suspended.

(10) Income Taxes

Tax Allocation Agreement

In August 2018, CVR Energy completed an exchange offer whereby public unitholders tendered a total of 21,625,106 CVR Refining common units in exchange for a total of 13,699,549 shares of CVR Energy common stock (the “CVRR Unit Exchange”).

Prior to the CVRR Unit Exchange, CVR Energy was a member of the consolidated federal tax group of AEP, an affiliate of IEP, and party to a tax allocation agreement with AEP (the “Tax Allocation Agreement”).

The Tax Allocation Agreement provides that AEP will pay all consolidated federal income taxes on behalf of the consolidated tax group.

The Tax Allocation Agreement provided that AEP would pay all consolidated federal income taxes on behalf of the consolidated tax group.

As a result, CVR Energy was required to make payments to AEP in an amount equal to the tax liability, if any, that it would have had paid if it were to file as a consolidated group separate and apart from AEP.

Following the CVRR Unit Exchange, IEP and affiliates’ ownership of CVR Energy was reduced below 80 % and, since that time, CVR Energy is no longer eligible to file as a member of the AEP consolidated federal income tax group.

Beginning with the tax period after the exchange, CVR Energy became the parent of a new consolidated group for U.S.

federal income tax purposes and will file and pay its federal income tax obligations directly to the IRS.

On August 2, 2018, CVR Energy became the parent of a new consolidated group for U.S.

federal income tax purposes, filing and paying its federal income tax obligations directly to the IRS.

Pursuant to the terms of the Tax Allocation Agreement, however, CVR Energy may be required to make payments in respect of taxes owed by AEP for periods prior to the exchange.

Similar principles may apply for state or local income tax purposes where CVR Energy filed combined, consolidated or unitary tax returns with AEP.

AEP has been notified by the IRS that its income tax return for the period ended December 31, 2017 will be examined.

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As of December 31, 2019 and 2018, the Company recognized a no minal payable and $ 4 million receivable for income taxes due to or from AEP.

The receivable is recognized as Prepaid expenses and other current assets in the Consolidated Balance Sheets.

As of December 31, 2019 and 2018, the Company’s Consolidated Balance Sheets also reflected a payable of $ 20 million to and receivable of $ 12 million from, respectively, the IRS and certain state jurisdictions.

Income Tax Expense (Benefit)

Income tax expense (benefit) is comprised of the following:

AEP’s federal income tax return for the periods ended December 31, 2017 and 2018 are currently under examination by the IRS.

As of December 31, 2020 and 2019, the Company recognized a no minal payable for state income taxes due to AEP.

The payable is recognized in Other current liabilities in the Consolidated Balance Sheets.

As of December 31, 2020 and 2019, the Company’s Consolidated Balance Sheets reflected a receivable of $ 44 million from and a payable of $ 20 million to, respectively, the IRS and certain state jurisdictions.

Income Tax (Benefit) Expense

Income tax (benefit) expense is comprised of the following:

Year Ended December 31,

6 unchanged sentences

Total deferred ( 27 ) 28 55

Total income tax expense (benefit)

Total income tax (benefit) expense

$ ( 95 ) $ 129 $ 79

The following is a reconciliation of total income tax expense (benefit) to income tax expense (benefit) computed by applying the statutory federal income tax rate to pretax income:

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The following is a reconciliation of total income tax (benefit) expense to income tax (benefit) expense computed by applying the statutory federal income tax rate to pretax (loss) income:

Year Ended December 31,

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Noncontrolling interest 13 4 ( 23 )

Goodwill impairment 3 — —

Other, net 1 ( 3 ) —

Adjustment to deferred tax assets and liabilities for enacted change in federal tax rate (1) — — ( 214 )

Total income tax expense (benefit)

Total income tax (benefit) expense

$ ( 95 ) $ 129 $ 79

(1) The income tax benefit for the year ended December 31, 2017 was favorably impacted as a result of the Tax Cuts and Jobs Act legislation that was signed into law in December 2017, reducing the federal income tax rate from 35% to 21% beginning in 2018.

As a result, the Company’s net deferred tax liabilities at December 31, 2017 were remeasured to reflect the lower tax rate in effect for the years in which the deferred tax assets and liabilities will be realized.

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Deferred Tax Assets and Liabilities

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Deferred income tax assets:

Personnel accruals $ 2 $ —

State tax credit carryforward, net 20 7

Net operating loss carryforward 9 —

Total gross deferred income tax assets 31 7

Deferred income tax liabilities:

Unrealized gain ( 9 ) —

Investment in CVR Partners ( 67 ) ( 61 )

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As of December 31, 2020, CVR Energy has state tax credits of approximately $ 30 million, which are available to reduce future state income taxes.

These credits can be carried forward indefinitely.

These credits, if not used, will begin expiring in 2033.

Uncertain Tax Positions

3 unchanged sentences

Balance, beginning of year $ 22 $ 23 $ 29

Increase in current year tax positions (interest expense) 2 — —

Decrease based on prior year tax position ( 2 ) — —

Increase in current year tax positions — 2 —

Reductions related to expirations from statute of limitations ( 3 ) ( 3 ) ( 6 )

Balance, end of year $ 17 $ 22 $ 23

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Included in the balance of unrecognized tax benefits as of December 31, 2020, 2019, and 2018 are $ 13 million, $ 15 million, and $ 18 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate.

Approximately $ 5 million, $ 6 million, and $ 15 million of the unrecognized tax positions relating to state income tax credits were recognized in 2019, 2018, and 2017, respectively, as a result of expirations from statute of limitations.

Additionally, the Company believes that it is reasonably possible that approximately $ 3 million of its unrecognized tax positions related to state income tax credits may be recognized by the end of 2020 as a result of the expiration of statute of limitations.

Additionally, the Company reasonably believes that no unrecognized tax positions related to state income tax credits will be recognized by the end of 2021 as a result of the expiration of statute of limitations.

Approximately $ 8 million and $ 10 million of unrecognized tax benefits were netted with Deferred income tax asset carryforwards as of December 31, 2020 and 2019, respectively.

The remaining unrecognized tax benefits are included in Other long-term liabilities in the Consolidated Balance Sheets.

CVR Energy recognized no minal interest benefit and no minal liability for interest as of December 31, 2019, interest benefit of approximately $ 1 million and a no minal liability for interest as of December 31, 2018, and interest expense of approximately $ 7 million and recognized a liability for interest of approximately $ 1 million as of December 31, 2017.

CVR Energy recognized no minal interest expense and $ 1 million liability for interest as of December 31, 2020, no minal interest benefit and no minal liability for interest as of December 31, 2019, and interest benefit of approximately $ 1 million and no minal liability for interest as of December 31, 2018.

No penalties were recognized during 2020, 2019, or 2018.

At December 31, 2020, the Company’s tax filings are generally open to examination in the United States for the tax years ended December 31, 2017 through December 31, 2019 and in various individual states for the tax years ended December 31, 2016 through December 31, 2019.

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(11) Commitments and Contingencies

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Contingencies

CVRR Unit Purchase - During 2019, the Company, CVR Refining and its general partner, CVR Refining Holdings, IEP, and certain directors and affiliates have been named in at least one of nine lawsuits filed in the Court of Chancery of the State of Delaware by purported former unitholders of CVR Refining, on behalf of themselves and an alleged class of similarly situated unitholders (the “Call Option Lawsuits”).

The Call Option Lawsuits primarily allege breach of contract, tortious interference and breach of the implied covenant of good faith and fair dealing and seek monetary damages and attorneys’ fees, among other remedies, relating to the Company’s exercise of the call option under the CVR Refining Amended and Restated Agreement of Limited Partnership assigned to it by CVR Refining’s general partner.

In January 2020, the court dismissed CVR Holdings and certain former directors of CVR Refining’s general partner from the Call Option Lawsuits, although permitted some or all of the claims to proceed against each remaining defendant.

The Company believes the Call Option Lawsuits are without merit and intends to vigorously defend against them.

The Call Option Lawsuits remain in the early stages of litigation.

Accordingly the Company cannot determine at this time the outcome of the Call Option Lawsuits, including whether the outcome of this matter would have a material impact on the Company’s financial position, results of operations, or cash flows.

Property Tax Matter - In September 2018, the Kansas Court of Appeals upheld property tax determinations by the Kansas Board of Tax Appeals in connection with Coffeyville Resources Nitrogen Fertilizer, LLC’s (“CRNF”) dispute with Montgomery County, Kansas (the “County”) over prior year property tax payments as previously disclosed.

On October 29, 2018, the County petitioned the Kansas Supreme Court to review the Court of Appeals’ determination.

Subsequent briefs were filed by CRNF and the County.

In April 2019, CRNF and the County executed an agreement which the County agrees to withdraw its petition to the Kansas Supreme Court and CRNF is expected to recover approximately $ 8 million through favorable property tax assessments from 2019 through 2028, subject to the terms of the settlement agreement.

Call Option - In 2019, the Company, CVR Refining and its general partner, CVR Refining Holdings, IEP, and certain directors and affiliates were named in at least one of nine lawsuits filed in the Delaware Court of Chancery by purported former unitholders of CVR Refining, on behalf of themselves and an alleged class of similarly situated unitholders relating to the Company’s exercise of the call option (“Call Option”) under the CVR Refining Amended and Restated Agreement of Limited Partnership assigned to it by CVR Refining’s general partner (the “Delaware Lawsuits”).

The Delaware Lawsuits primarily

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Wynnewood Small Refinery Exemption - During 2019, Wynnewood Refining Company, LLC (“WRC”) intervened in a lawsuit filed by four ethanol and biofuels trade associations against the EPA, claiming the EPA exceeded its authority in granting Wynnewood’s 2017 small refinery exemption (“SRE”) under the RFS program under the CAA, as well as the SREs of two other unrelated refineries.

In January 2020, the 10th Circuit Court of Appeals vacated the three SREs and remanded the matter to the EPA for further proceedings, holding, in part, that the “extension” language in the CAA requires a small refinery to have received an SRE continuously in every year since inception of the program to be eligible.

As the EPA has not yet acted following remand by the court, and as Wynnewood intends to appeal this ruling, we cannot currently estimate the outcome, impact, or timing of the resolution of this matter.

allege breach of contract, tortious interference, and breach of the implied covenant of good faith and fair dealing and seek monetary damages and attorneys’ fees, among other remedies.

In January 2020, the court dismissed CVR Holdings and certain former directors of CVR Refining’s general partner from the Delaware Lawsuits, though permitted some or all of the claims to proceed against each remaining defendant.

On April 6, 2020, a lawsuit was filed in the United States District Court for the Southern District of New York against the Company, CVR Refining and its general partner, CVR Refining Holdings, IEP, and the Company’s Chief Executive Officer by purported former unitholders of CVR Refining on behalf of themselves and an alleged class of similarly situated unitholders (the “New York Lawsuit” and together with the Delaware Lawsuits, the “Call Option Lawsuits”) primarily alleging violations of Sections 10(b) and 20(a) of the Exchange Act and Rule 10b-5 thereunder and seeking monetary damages and attorney’s fees, among other remedies.

The Company believes the Call Option Lawsuits are without merit and intends to vigorously defend against them.

Discovery is currently on-going.

Accordingly, the Company cannot determine at this time the outcome of the Call Option Lawsuits, including whether such outcome would have a material impact on the Company’s financial position, results of operations, or cash flows.

On January 27, 2021, a lawsuit was filed against the Company, CVR Refining and its general partner, CVR Refining Holdings, IEP, and certain directors and affiliates in the 434th Judicial District Court of Fort Bend County, Texas by their primary and excess insurers (the “Insurers”) seeking a declaratory judgement determining that they owe no indemnity coverage for the Call Option Lawsuits in relation to insurance policies that have coverage limits of $ 50 million.

The Company believes this lawsuit is without merit and intends to vigorously defend the claims against them.

The lawsuit is in the early stages of litigation.

Accordingly, the Company cannot determine at this time the outcome of the litigation, including whether the outcome of this matter would have a material impact on the Company’s financial position, results of operations, or cash flows.

Wynnewood Small Refinery Exemption - During 2019, WRC intervened in a lawsuit filed by four ethanol and biofuels trade associations against the Environmental Protection Agency (“EPA”), claiming the EPA exceeded its authority in granting WRC’s Wynnewood Refinery’s 2017 small refinery exemption (“SRE”) under the RFS program under the CAA, as well as the SREs of two other unrelated refineries.

In January 2020, the 10th Circuit vacated the three SREs and remanded the matter to the EPA for further proceedings, holding, in part, that the “extension” language in the CAA requires a small refinery to have received an SRE continuously in every year since inception of the program to be eligible.

After the 10th Circuit refused to rehear the case, WRC and others filed a petition for writ of certiorari in the Supreme Court of the United States (the “Supreme Court”) on September 4, 2020, which was granted by the Supreme Court on January 8, 2021.

The case is currently expected to be argued in April 2021.

As it is not yet clear how the Supreme Court will rule, or what steps the EPA will take with respect to SREs, we cannot currently estimate the outcome, impact, or timing of resolution of this matter.

Environmental, Health, and Safety (“EHS”) Matters

Clean Air Act Matter - On August 21, 2018, Coffeyville Resources Refining and Marketing (“CRRM”), a subsidiary of CVR Refining, received a letter from the United States Department of Justice (“DOJ”) on behalf of the EPA and Kansas Department of Health and Environment (“KDHE”) alleging violations of the Clean Air Act (“CAA”) and a 2012 Consent Decree between CRRM, the United States (on behalf of EPA), and KDHE at CRRM’s Coffeyville refinery.

In September 2018, CRRM executed a tolling agreement with the DOJ and KDHE extending time for negotiation regarding the agencies’ allegations through March 2019, and this tolling agreement was extended through April 30, 2020.

At this time the Company cannot reasonably estimate the potential penalties, costs, fines or other expenditures that may result from this matter or any subsequent enforcement or litigation relating thereto and, therefore, the Company cannot determine if the ultimate outcome of this matter will have a material impact on the Company’s financial position, results of operations or cash flows.

Renewable Fuel Standards - The Company’s Petroleum Segment is subject to the RFS of the Environmental Protection Agency (“EPA”) that require refiners to either blend renewable fuels in with their transportation fuels or purchase renewable fuel credits, known as RINs, in lieu of blending.

Clean Air Act Matter - On August 21, 2018, CRRM received a letter from the United States Department of Justice (“DOJ”) on behalf of the EPA and KDHE alleging violations of the CAA and a 2012 Consent Decree (the “CD”) between Coffeyville Resources Refining & Marketing, LLC (“CRRM”), the United States (on behalf of the EPA) and the Kansas Department of Health and Environment (“KDHE”) at CRRM’s Coffeyville refinery.

In June 2020, a tolling agreement between the parties relating to such allegations expired, and the DOJ and KDHE sent demand letters relating to the allegations (the “Stipulated Claims”) and seeking stipulated penalties.

In February 2021, the DOJ and KDHE sent CRRM a statement of position under the CD regarding its demand for Stipulated Claims.

As CRRM disputes most claims asserted by the government, in accordance with the CD, CRRM deposited funds into a commercial escrow account pending resolution of disputed claims.

The escrowed funds are legally restricted for use and are included within Prepaid expenses and other current assets on the consolidated balance sheets.

In December 2020, the DOJ and KDHE filed a supplement complaint in the United States District Court for the District of Kansas (“D.

Kan”) asserting nine counts for alleged violations of the Clean Air Act, the Kansas State Implementation Plan and Kansas law (“the Statutory Claims”) and seeking civil penalties, injunctive and related relief.

Negotiations relating to the Stipulated Claims and the Statutory Claims are ongoing and the Company cannot determine at this time the outcome of these matters, including whether such outcome, or any subsequent enforcement or litigation relating thereto would have a material impact on the Company’s financial position, results of operations, or cash flows.

Renewable Fuel Standards - The Company’s Petroleum Segment is subject to the RFS of the EPA that require refiners to either blend renewable fuels in with their transportation fuels or purchase renewable fuel credits, known as RINs, in lieu of blending.

The Petroleum Segment is not able to blend the substantial majority of its transportation fuels and has to purchase RINs on the open market, and may have to obtain waiver credits for cellulosic biofuels from the EPA, in order to comply with the RFS.

The Company recognized an expense of approximately $ 43 million, $ 60 million, and $ 249 million for the years ended December 31, 2019, 2018, and 2017, respectively, for the Petroleum Segment’s compliance with the RFS.

The recognized amounts are included within Cost of materials and other in the Consolidated Statements of Operations.

The Company’s costs to comply with the RFS include the purchased cost of RINs acquired, the impact of recognizing the Petroleum Segment’s uncommitted biofuel blending obligation at fair value based on market prices at each reporting date, and the valuation change of RINs acquired in excess of its RFS obligation as of the reporting date.

During the year ended December 31, 2019, the Company’s cost to comply with RFS was favorably impacted by a reduction in CVR Refining’s RFS obligation and reduced market pricing.

As of December 31, 2019 and 2018, the Petroleum Segment’s RFS obligation was approximately $ 7 million and $ 4 million, respectively, which is recorded in Other current liabilities in the Consolidated Balance Sheets.

Environmental Remediation - As of December 31, 2019 and 2018, environmental accruals representing estimated costs for future remediation efforts at certain Petroleum Segment sites totaled approximately $ 6 million and $ 8 million, respectively.

These amounts are reflected in Other current liabilities or Other long-term liabilities depending on when the Company expects to expend such amounts.

Wynnewood Refinery Incident - On September 28, 2012, the Petroleum Segment’s Wynnewood refinery, owned and operated by WRC, an indirect wholly-owned subsidiary of CVR Refining, experienced an explosion in a boiler unit during startup after a short outage as part of the turnaround process.

Two employees were fatally injured.

Damage at the refinery was limited to the boiler.

Additionally, there was no environmental impact.

The refinery was in the final stages of shutdown for turnaround maintenance at the time of the incident.

The Company completed an internal investigation of the incident and cooperated with the Occupational Safety and Health Administration (“OSHA”) in its investigation.

OSHA also conducted a general inspection of the facility during the boiler incident investigation.

In March 2013, OSHA completed its investigation, communicated its citations, and placed WRC in its Severe Violators Enforcement Program (“SVEP”).

The Company is vigorously contesting the citations and OSHA’s placement of WRC in the SVEP.

Any penalties associated with OSHA’s citations are not expected to have a material adverse effect on the consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company recognized an expense of approximately $ 190 million, $ 43 million, and $ 60 million for the years ended December 31, 2020, 2019, and 2018, respectively, for the Petroleum Segment’s compliance with the RFS.

The recognized amounts are included within Cost of materials and other in the Consolidated Statements of Operations and represent costs to comply with the RFS obligation through purchasing of RINs not otherwise reduced by blending of ethanol or biodiesel.

At each reporting period, to the extent RINs purchased or generated through blending are less than the RFS obligation, the remaining obligation is marked-to-market using RIN market prices at period end.

As of December 31, 2020 and 2019, the Petroleum Segment’s RFS obligation was approximately $ 214 million and $ 7 million, respectively, which is recorded in Other current liabilities in the Consolidated Balance Sheets.

Environmental Remediation - As of December 31, 2020 and 2019, environmental accruals representing estimated costs for future remediation efforts at certain Petroleum Segment sites totaled approximately $ 11 million and $ 6 million, respectively.

These amounts are reflected in Other current liabilities or Other long-term liabilities depending on when the Company expects to expend such amounts.

Wynnewood Refinery Incident - In October 2020, the 10 th Circuit affirmed a 2019 decision of the Occupational Safety and Health Review Commission which (a) upheld citations issued by the Occupational Safety and Health Administration (“OSHA”) to WRC in 2013 for violations of the OSHA arising from a September 2012 explosion in a boiler unit at the Wynnewood Refinery, but (b) found that such violations were not “repeat violations” under the OSHA.

As a result of the decision, WRC is obligated to pay a penalty by March 2021, the amount of which is not material.

In addition, WRC has been removed from the OSHA Severe Violators Enforcement Program.

(12) Business Segments

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All operations of the segments are located within the United States.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following tables summarize operating results, capital expenditures, and total asset information by segment:

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Total $ 3,930 $ 6,364 $ 7,124

Operating income (loss)

Operating (loss) income

Petroleum $ ( 281 ) $ 574 $ 544

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Interest expense, net ( 130 ) ( 102 ) ( 102 )

Investment income from marketable securities 41 — —

Other income, net 7 13 15

Income before income taxes $ 491 $ 445 $ 38

(Loss) income before income taxes $ ( 415 ) $ 491 $ 445

Depreciation and amortization

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Total assets $ 3,978 $ 3,905

(1) Capital expenditures are shown exclusive of capitalized turnaround and capitalized software costs.

(2) Includes elimination of intercompany assets.

(1) Capital expenditures are shown exclusive of capitalized turnaround expenditures.

(2) Includes elimination of intercompany assets and net cash proceeds from the Notes issued during the year ended December 31, 2020 .

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Supplemental disclosures:

Cash paid for income taxes, net of refunds $ 69 $ 31 $ 15

Cash (received for income taxes, net of payments) paid for income taxes, net of refunds $ ( 2 ) $ 69 $ 31

Cash paid for interest 113 104 103

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(1) The lease standard was adopted on January 1, 2019 on a prospective basis.

Therefore, only 2019 disclosures are applicable to be included within the table above.

See Note 2 (“Summary of Significant Accounting Policies”).

(2) Capital expenditures are shown exclusive of capitalized turnaround expenditures and capitalized software.

Therefore, only 2020 and 2019 disclosures are applicable to be included within the table above.

(2) Capital expenditures are shown exclusive of capitalized turnaround expenditures.

Cash, cash equivalents and restricted cash consisted of the following:

(in millions) 2020 2019

Cash and cash equivalents $ 667 $ 652

Restricted cash (3) 7 —

Cash, cash equivalents and restricted cash $ 674 $ 652

(3) The restricted cash balance is included within Prepaid expenses and other current assets on the consolidated balance sheets.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(14) Related Party Transactions

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Joint Venture Transportation Agreement:

Enable JV $ 12 $ 8 $ 2

Enable $ 11 $ 12 $ 8

Payments (received) made

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Tax Allocation Agreement:

American Entertainment Properties Corporation ( 3 ) 12 15

Amounts due from related parties

(in millions) December 31, 2019 December 31, 2018

Tax Allocation Agreement:

American Entertainment Properties Corporation $ — $ 4

AEP — ( 3 ) 12

(1) See below for a summary of the dividends paid to IEP for the years ended December 31, 2020, 2019, and 2018 .

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Additionally, CVR Refining entered into a terminalling services agreement with Enable JV under which it receives access to Enable JV’s terminal in Lawrence, Oklahoma to unload and pump crude oil into Enable JV’s pipeline for an initial term of 20 years.

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Midway Joint Venture

For the years ended December 31, 2020, 2019, and 2018, CRRM incurred costs of $ 17 million, $ 21 million, and $ 18 million, respectively, from crude oil transportation services incurred on the Midway JV through Vitol as the intermediary purchasing agent.

Agency Arrangement with IEP

On February 4, 2020, CVR Energy and Icahn Enterprises Holdings LP (“IEH”), a subsidiary of IEP, entered into an agency arrangement wherein IEH would act as the agent for CVR Energy.

Under this arrangement, the Company invested approximately $ 140 million in certain marketable securities of Delek US Holdings, Inc.

(“Delek”) (NYSE ticker symbol:

DK) and could make additional investments in Delek or invest in other public companies in the future under this arrangement.

The Company reimbursed IEH for all costs associated with the initial purchase and did not incur any additional fees as part of this transaction.

Property Exchange

On October 18, 2019, the audit committee of CVR Energy and the Conflicts Committee of the board of directors of CVR GP each agreed to authorize the exchange of certain parcels of property owned by subsidiaries of CVR Energy with an equal number of parcels owned by subsidiaries of CVR Partners, all located in Coffeyville, Kansas (the “Property Exchange”).

On February 19, 2020, a subsidiary of CVR Energy and a subsidiary of CVR Partners executed the Property Exchange agreement.

On October 18, 2019, the Conflicts Committee of the UAN GP Board and on October 22, 2019, the audit committee of the Board of Directors, each agreed to authorize the exchange of certain parcels of property owned by CRRM with an equal number of parcels owned by CRNF, all located in Coffeyville, Kansas (the “Property Exchange”).

On February 19, 2020, CRRM and CRNF executed the Property Exchange agreement.

This Property Exchange will enable each such subsidiary to create a more usable, contiguous parcel of land near its own operating footprint.

CVR Energy and the Partnership accounted for this transaction in accordance with the ASC 805-50 guidance on transferring assets between entities under common control.

This transaction had a net impact to the Partnership’s partners’ capital of approximately $ 0.1 million.

This transaction resulted in no net impact on the Company’s condensed consolidated financial statements.

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Dividends to CVR Energy Stockholders

Dividends, if any, including the payment, amount and timing thereof, are subject to change at the discretion of the Board of Directors.

IEP, through its ownership of the Company’s common shares, is entitled to receive dividends that are declared and paid by the Company based on the number of shares held at each record date.

The following presents dividends paid to the Company's stockholders, including IEP, during the years ended December 31, 2019:

The following presents dividends paid to the Company's stockholders, including IEP, during the year ended December 31, 2020 (amounts presented in tables below may not add to totals presented due to rounding).

Dividends Paid (in millions)

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2020 - 1st Quarter May 26, 2020 0.40 12 28 40

2019 - 2nd Quarter August 12, 2019 0.75 21 54 75

2019 - 3rd Quarter November 11, 2019 0.80 24 57 81

Total $ 1.20 $ 35 $ 85 $ 121

On February 19, 2020, the Company’s Board of Directors declared a cash dividend for the fourth quarter of 2019 to the Company’s stockholders of $ 0.80 per share, or $ 80 million in the aggregate.

The dividend will be paid on March 9, 2020 to stockholders of record at the close of business on March 2, 2020.

IEP will receive approximately $ 57 million in respect of its ownership interest in the Company’s shares.

Dividends, if any, including the payment, amount and timing thereof, are subject to change at the discretion of the Company’s Board of Directors.

During the years ended December 31, 2018 and 2017, the Company paid dividends totaling $ 2.50 and $ 2.00 per common unit, or $ 238 million and $ 174 million, respectively.

No dividends were declared for the second, third and fourth quarters of 2020.

During the years ended December 31, 2019 and 2018, the Company paid dividends totaling $ 3.05 and $ 2.50 per common share, or $ 306 million and $ 238 million, respectively.

Of these dividends, IEP received $ 218 million and $ 179 million, respectively, for the same periods.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Distributions to CVR Partners ’ Unitholders

The following table presents distributions paid by CVR Partners to CVR Partners’ unitholders, including amounts received by the Company, as of December 31, 2019.

Distributions Paid (in millions)

Related Period Date Paid Distribution Per

Common Unit Public Unitholders CVR Energy Total

2018 - 4th Quarter March 11, 2019 $ 0.12 $ 9 $ 5 $ 14

2019 - 1st Quarter May 13, 2019 0.07 5 3 8

2019 - 2nd Quarter August 12, 2019 0.14 11 5 16

2019 - 3rd Quarter November 11, 2019 0.07 5 3 8

Total $ 0.40 $ 30 $ 16 $ 46

Distributions, if any, including the payment, amount, and timing thereof, are subject to change at the discretion of the board of directors of CVR Partners’ general partner.

No distributions were declared for the fourth quarter of 2019.

The Partnership did not pay distributions during the year ended December 31, 2018, while during the year ended December 31, 2017, it paid a distribution of $ 0.02 per common unit, or $ 2 million.

Of this distribution, CVR Energy received $ 1 million.

Distributions, if any, including the payment, amount and timing thereof, are subject to change at the discretion of the UAN GP Board.

There were no distributions declared or paid by CVR Partners during the year ended December 31, 2020 related to the fourth quarter of 2019 or the first, second, and third quarters of 2020, and no distributions were declared for the fourth quarter of 2020.

During the year ended December 31, 2019, the Partnership paid distributions totaling $ 4.00 per common unit on a split-adjusted basis, or $ 45 million.

Of these distributions, CVR Energy received $ 16 million for the year ended December 31, 2019.

The Partnership did no t pay distributions during the year ended December 31, 2018.

Affiliate Pension Obligations

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As members of the controlled group, CVR Energy would be liable for any failure of ACF and Federal-Mogul to make ongoing pension contributions or to pay the unfunded liabilities upon a termination of their respective pension plans.

The unfunded plan balances for these sponsors was $ 435 million and $ 424 million as of June 30, 2018 and December 31, 2017, respectively.

The unfunded plan balances for these sponsors was $ 435 million as of June 30, 2018.

These results are based on the information provided by Mr.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(15) Selected Quarterly Financial Information

Summarized quarterly financial data for December 31, 2019 and 2018 is as follows:

Year Ended December 31, 2019

(in millions) First Second Third Fourth

Net sales $ 1,486 $ 1,687 $ 1,622 $ 1,569

Cost of materials and other (1) 1,101 1,267 1,221 1,262

Direct operating expenses (1) 126 132 139 136

Operating income 160 192 159 69

Net income 102 128 104 28

Net income (loss) attributable to noncontrolling interest 1 12 ( 15 ) ( 16 )

Net income attributable to CVR Energy stockholders $ 101 $ 116 $ 119 $ 44

Basic and diluted earnings per share $ 1.00 $ 1.16 $ 1.18 $ 0.44

Dividends declared per share $ 0.75 $ 0.75 $ 0.75 $ 0.80

Weighted-average common shares outstanding - basic and diluted 100.5 100.5 100.5 100.5

Year Ended December 31, 2018

(in millions) First Second Third Fourth

Net sales $ 1,536 $ 1,915 $ 1,935 $ 1,738

Cost of materials and other (1) 1,179 1,560 1,556 1,388

Direct operating expenses (1) 130 140 120 127

Operating income 136 108 164 124

Net income 93 70 108 95

Net income attributable to noncontrolling interest 33 24 28 22

Net income attributable to CVR Energy stockholders $ 60 $ 46 $ 80 $ 73

Basic and diluted earnings per share $ 0.69 $ 0.53 $ 0.85 $ 0.73

Dividends declared per share $ 0.50 $ 0.50 $ 0.75 $ 0.75

Weighted-average common shares outstanding - basic and diluted 86.8 86.8 95.8 100.5

(1) Excludes depreciation and amortization expenses.

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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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-K

Item 8. Financial Statements and Supplementary Data