CVR PARTNERS, LP 10-K

Item 8. Financial Statements and Supplementary Data CVR Partners, LP and Subsidiaries INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm (PCAOB ID Number 248 ) 47 Consolidated Balance Sheets as of December 31, 2021 and 2020 49 Consolidated Statements of Operations for the Years Ended December 31, 2021, 2020 and 2019 50 Consolidated Statements of Partners ’ Capital for the Years Ended December 31, 2021, 2020 and 2019 51 Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2020 and 2019 52 Notes to the Consolidated Financial Statements 53 December 31, 2021 | 46 Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors of CVR GP, LLC The Unitholders of CVR Partners, LP The General Partner of CVR Partners, LP: Opinion on the financial statements We have audited the accompanying consolidated balance sheets of CVR Partners, LP (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of December 31, 2021 and 2020, the related consolidated statements of operations, partners’ capital, and cash flows for each of the three years in the period ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Partnership as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Partnership’s internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated February 22, 2022 expressed an unqualified opinion. Basis for opinion These financial statements are the responsibility of the Partnership’s management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. 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 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. We believe that our audits provide a reasonable basis for our opinion. Critical audit matters Critical audit matters are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and ( 2) involved our especially challenging, subjective, or complex judgments. We determined that there are no critical audit matters. /s/ GRANT THORNTON LLP We have served as the Partnership’s auditor since 2013. Dallas, Texas February 22, 2022 December 31, 2021 | 47 Table of Contents Report of Independent Registered Public Accounting Firm The Board of Directors of CVR GP, LLC The Unitholders of CVR Partners, LP The General Partner of CVR Partners, LP: Opinion on internal control over financial reporting We have audited the internal control over financial reporting of CVR Partners, LP (a Delaware limited partnership) and subsidiaries (the “Partnership”) as of December 31, 2021, based on criteria established in the 2013 Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in the 2013 Internal Control-Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Partnership as of and for the year ended December 31, 2021, and our report dated February 22, 2022 expressed an unqualified opinion on those financial statements. Basis for opinion The Partnership’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and limitations of internal control over financial reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ GRANT THORNTON LLP Dallas, Texas February 22, 2022 December 31, 2021 | 48 Table of Contents CVR Partners, LP and Subsidiaries CONSOLIDATED BALANCE SHEETS December 31, (in thousands) 2021 2020 ASSETS Current assets: Cash and cash equivalents $ 112,516 $ 30,559 Accounts receivable 88,351 36,896 Inventories 52,270 42,349 Prepaid expenses and other current assets 9,108 8,410 Total current assets 262,245 118,214 Property, plant, and equipment, net 850,462 897,847 Other long-term assets 14,351 16,819 Total assets $ 1,127,058 $ 1,032,880 LIABILITIES AND PARTNERS’ CAPITAL Current liabilities: Current portion of long-term debt $ — $ 2,240 Accounts payable 41,504 19,544 Accounts payable to affiliates 8,895 5,217 Deferred revenue 87,060 30,631 Other current liabilities 24,401 18,709 Total current liabilities 161,860 76,341 Long-term liabilities: Long-term debt, net of current portion 610,642 633,942 Other long-term liabilities 12,358 8,356 Total long-term liabilities 623,000 642,298 Commitments and contingencies (See Note 8) Partners’ capital: Common unitholders, 10,681,332 and 10,705,710 units issued and outstanding as of December 31, 2021 and 2020, respectively 342,197 314,240 General partner interest 1 1 Total partners’ capital 342,198 314,241 Total liabilities and partners’ capital $ 1,127,058 $ 1,032,880 The accompanying notes are an integral part of these consolidated financial statements. December 31, 2021 | 49 Table of Contents CVR Partners, LP and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS Year Ended December 31, (in thousands, except per unit data) 2021 2020 2019 Net sales $ 532,581 $ 349,953 $ 404,177 Operating costs and expenses: Cost of materials and other 98,345 91,117 94,103 Direct operating expenses (exclusive of depreciation and amortization) 198,714 157,916 173,629 Depreciation and amortization 73,480 76,077 79,839 Cost of sales 370,539 325,110 347,571 Selling, general and administrative expenses 26,615 18,174 25,829 Loss on asset disposals 948 582 3,397 Goodwill impairment — 40,969 — Operating income (loss) 134,479 ( 34,882 ) 27,380 Other (expense) income: Interest expense, net ( 60,978 ) ( 63,428 ) ( 62,636 ) Other income, net 4,711 159 269 Income (loss) before income tax expense 78,212 ( 98,151 ) ( 34,987 ) Income tax expense (benefit) 57 30 ( 18 ) Net income (loss) $ 78,155 $ ( 98,181 ) $ ( 34,969 ) Basic and diluted earnings (loss) per common unit $ 7.31 $ ( 8.77 ) $ ( 3.09 ) Distributions declared per common unit 4.65 — 4.00 Weighted-average common units outstanding: Basic and Diluted 10,685 11,195 11,328 The accompanying notes are an integral part of these consolidated financial statements. December 31, 2021 | 50 Table of Contents CVR Partners, LP and Subsidiaries CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL (in thousands, except unit data) Common Units General Partner Interest Total Partners ’ Capital Issued Amount Balance at December 31, 2018 11,328,297 $ 499,825 $ 1 $ 499,826 Cash distributions to common unitholders – Affiliates — ( 15,568 ) — ( 15,568 ) Cash distributions to common unitholders – Non-affiliates — ( 29,745 ) — ( 29,745 ) Net loss — ( 34,969 ) — ( 34,969 ) Balance at December 31, 2019 11,328,297 419,543 1 419,544 Net loss — ( 98,181 ) — ( 98,181 ) Repurchase of common units ( 623,177 ) ( 7,076 ) — ( 7,076 ) Fractional unit impact of reverse unit split 590 — — — Other — ( 46 ) — ( 46 ) Balance at December 31, 2020 10,705,710 314,240 1 314,241 Cash distributions to common unitholders – Affiliates — ( 18,098 ) — ( 18,098 ) Cash distributions to common unitholders – Non-affiliates — ( 31,571 ) — ( 31,571 ) Net income — 78,155 — 78,155 Repurchase of common units ( 24,378 ) ( 529 ) — ( 529 ) Balance at December 31, 2021 10,681,332 $ 342,197 $ 1 $ 342,198 The accompanying notes are an integral part of these consolidated financial statements. December 31, 2021 | 51 Table of Contents CVR Partners, LP and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS Year Ended December 31, (in thousands) 2021 2020 2019 Cash flows from operating activities: Net income (loss) $ 78,155 $ ( 98,181 ) $ ( 34,969 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 73,480 76,077 79,839 Amortization of deferred financing costs and original issue discount 2,799 4,049 3,666 Goodwill impairment — 40,969 — Loss on asset disposals 948 582 3,397 Loss on debt extinguishment 8,462 — — Share-based compensation 23,069 1,035 3,445 Other adjustments 142 964 ( 5 ) Changes in assets and liabilities: Accounts receivable ( 21,877 ) 2,892 936 Inventories ( 7,508 ) 538 9,914 Prepaid expenses and other current assets ( 785 ) ( 4,514 ) 1,582 Accounts payable 11,367 ( 1,635 ) ( 8,077 ) Deferred revenue 26,658 ( 1,612 ) ( 14,575 ) Accrued expenses and other current liabilities ( 7,182 ) ( 1,726 ) ( 6,542 ) Other long-term assets and liabilities 997 302 546 Net cash provided by operating activities 188,725 19,740 39,157 Cash flows from investing activities: Capital expenditures ( 20,594 ) ( 18,598 ) ( 18,656 ) Proceeds from the sale of assets 252 48 127 Net cash used in investing activities ( 20,342 ) ( 18,550 ) ( 18,529 ) Cash flows from financing activities: Principal payments on senior secured notes ( 582,240 ) — — Proceeds on issuance of senior secured notes 550,000 — — Payment of deferred financing costs ( 3,892 ) ( 448 ) — Repurchase of common units ( 529 ) ( 7,076 ) — Cash distributions to common unitholders – Affiliates ( 18,098 ) — ( 15,568 ) Cash distribution to common unitholders – Non-affiliates ( 31,571 ) — ( 29,745 ) Other financing activities ( 96 ) ( 101 ) ( 97 ) Net cash used in financing activities ( 86,426 ) ( 7,625 ) ( 45,410 ) Net increase (decrease) in cash and cash equivalents and restricted cash 81,957 ( 6,435 ) ( 24,782 ) Cash and cash equivalents, beginning of period 30,559 36,994 61,776 Cash and cash equivalents, end of period $ 112,516 $ 30,559 $ 36,994 The accompanying notes are an integral part of these consolidated financial statements. December 31, 2021 | 52 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) Organization and Nature of Business CVR Partners, LP (“CVR Partners” or the “Partnership”) is a Delaware limited partnership formed by CVR Energy, Inc. (together with its subsidiaries, but excluding the Partnership and its subsidiaries, “CVR Energy”) to own, operate and grow its nitrogen fertilizer business. The Partnership produces nitrogen fertilizer products at two manufacturing facilities, which are located in Coffeyville, Kansas (the “Coffeyville Facility”) and East Dubuque, Illinois (the “East Dubuque Facility”). Both facilities manufacture ammonia and are able to further upgrade to other nitrogen fertilizer products, principally urea ammonium nitrate (“UAN”). Nitrogen fertilizer is used by farmers to improve the yield and quality of their crops, primarily corn and wheat. The Partnership’s products are sold on a wholesale basis in the United States. As used in these financial statements, references to CVR Partners, the Partnership, “we”, “us”, and “our” may refer to consolidated subsidiaries of CVR Partners or one or both of the facilities, as the context may require. Interest Holders As of December 31, 2021, public common unitholders held approximately 64 % of the Partnership’s outstanding limited partner interests; CVR Services, LLC (“CVR Services”), a wholly-owned subsidiary of CVR Energy, held approximately 36 % of the Partnership’s outstanding limited partner interests; and CVR GP, LLC (“CVR GP” or the “general partner”), a wholly owned subsidiary of CVR Energy, held 100 % of the Partnership’s general partner interest. As of December 31, 2021, Icahn Enterprises L.P. (“IEP”) and its affiliates owned approximately 71 % of the common stock of CVR Energy. Unit Repurchase Program On May 6, 2020, the board of directors of the Partnership’s general partner (the “Board”), on behalf of the Partnership, authorized a unit repurchase program (the “Unit Repurchase Program”). The Unit Repurchase Program enables the Partnership to repurchase up to $ 10 million of the Partnership’s common units. On February 22, 2021, the Board authorized an additional $ 10 million for the Unit Repurchase Program. During the year ended December 31, 2021, the Partnership repurchased 24,378 common units on the open market in accordance with a repurchase agreement under Rules 10b5-1 and 10b-18 of the Securities Exchange Act of 1934, as amended, at a cost of $ 0.5 million, inclusive of transaction costs, or an average price of $ 21.70 per common unit. During the year ended December 31, 2020, as adjusted to reflect the impact of the 1-for-10 reverse unit split of the Partnership’s common units that was effective as of November 23, 2020, the Partnership repurchased 623,177 common units, respectively, at a cost of $ 7.1 million, inclusive of transaction costs, or an average price of $ 11.35 per common unit. As of December 31, 2021, the Partnership had $ 12.4 million in authority remaining under the Unit Repurchase Program. This Unit Repurchase Program does not obligate the Partnership to acquire any common units and may be cancelled or terminated by the Board at any time. Management and Operations The Partnership, including CVR GP, is led by the Board and its committees and managed by the general partner’s executive officers, CVR Services (as sole member of the general partner), and certain officers of CVR Energy and its subsidiaries, pursuant to the Partnership Agreement, as well as a number of agreements between the Partnership, CVR GP, CVR Energy, and certain of their respective subsidiaries, including a service agreement. See Note 9 (“Related Party Transactions”) for further discussion. Common unitholders have limited voting rights on matters affecting the Partnership and have no right to elect the general partner’s directors or officers, whether on an annual or continuing basis or otherwise. Subsequent Events The Partnership evaluated subsequent events, if any, that would require an adjustment to the Partnership’s consolidated financial statements or require disclosure in the notes to the consolidated financial statements through the date of issuance of these consolidated financial statements. Where applicable, the notes to these consolidated financial statements have been updated to discuss all significant subsequent events which have occurred. December 31, 2021 | 53 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (2) Summary of Significant Accounting Policies Principles of Consolidation 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 CVR Partners and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. Reclassifications Certain reclassifications have been made within the consolidated financial statements for prior periods to conform with current presentation. Use of Estimates 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. Changes in facts and circumstances may result in revised estimates and actual results could differ from those estimates. Cash and Cash Equivalents 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. Accounts Receivable, net 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 are unbilled fixed price contracts which is discussed further within Note 6 (“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 was approximately 22 % and 20 % of the net accounts receivable balance at December 31, 2021 and 2020, respectively. Bad debt expense was $ 0.2 million, $ 0.1 million and $ 0.1 million for the years ended December 31, 2021, 2020, and 2019, respectively. Inventories Inventories consist of fertilizer products which are valued at the lower of FIFO cost, or net realizable value. Inventories also include raw materials (primarily gauze, natural gas, and pet coke) and parts and supplies that are valued at the lower of moving-average cost, which approximates FIFO, or net realizable value. The cost of inventories includes inbound freight costs. Inventories consisted of the following: December 31, (in thousands) 2021 2020 Finished goods $ 17,141 $ 9,815 Raw materials 833 152 Parts, supplies and other 34,296 32,382 Total inventories $ 52,270 $ 42,349 At December 31, 2021 and 2020, inventories included depreciation of approximately $ 3.1 million and $ 2.0 million, respectively. December 31, 2021 | 54 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) 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. Expenditures for improvements that increase economic benefit or returns and/or extend useful life are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of the various classes of depreciable assets. The lives used in computing depreciation for significant asset classes are as follows: Asset Range of Useful Lives, in Years Land and improvements 10 to 30 Buildings and improvements 3 to 30 Automotive equipment 5 to 30 Machinery and equipment 1 to 30 Other 3 to 10 Property, plant and equipment, net consisted of the following: December 31, (in thousands) 2021 2020 Machinery and equipment $ 1,410,203 $ 1,388,735 Buildings and improvements 17,598 17,598 Automotive equipment 16,433 16,608 Land and improvements 14,199 14,132 Construction in progress 14,167 12,098 Other 2,221 1,721 1,474,821 1,450,892 Less: Accumulated depreciation ( 624,359 ) ( 553,045 ) Total property, plant and equipment, net $ 850,462 $ 897,847 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 costs are expensed when incurred. Such expenses are reported in Direct operating expenses (exclusive of depreciation and amortization) in the Partnership’s Consolidated Statements of Operations. As of December 31, 2021, the Partnership had not identified the existence of an impairment indicator for our long-lived asset groups as outlined under Accounting Standards Codification (“ASC”) Topic 360, Property, Plant, and Equipment . Leases At inception, the Partnership 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, 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. The Partnership recognizes lease expense for these leases on a straight-line basis over the expected lease term. ROU assets represent the Partnership’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. ROU assets and liabilities are recognized at the commencement date based on the present value of minimum lease payments over the lease term using an incremental borrowing rate with a maturity similar to the lease term, as our leases do not generally provide an implicit rate. 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 December 31, 2021 | 55 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) certain of exercise, in which case the depreciation policy in the “Property, Plant and Equipment, net” section above is applicable. The periodic lease payments are treated as payments of the lease obligation and interest is recorded as interest expense. 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. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future net cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future net cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds their fair value. Assets to be disposed of are reported at the lower of their carrying value or fair value less cost to sell. Goodwill represents the excess of the cost of an acquired entity over the fair value of the assets acquired less liabilities assumed. Intangible assets are assets that lack physical substance (excluding financial assets). Goodwill acquired in a business combination and intangible assets with indefinite useful lives are not amortized, while intangible assets with finite useful lives are amortized. Goodwill and intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate the asset might be impaired. The Partnership uses November 1 of each year as its annual valuation date for its goodwill impairment test. One of the Partnership’s reporting units, the Coffeyville Facility, had a goodwill balance of $ 41.0 million at December 31, 2019. During the second quarter of 2020, following completion of the spring planting season, the market pricing for ammonia and UAN, which are the facility’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 impacted 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 the Partnership’s near-term economic recovery assumptions, and market price performance of the Partnership’s common units, the Partnership 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 are goodwill 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 Partnership recorded a full non-cash impairment charge of $ 41.0 million during the year ended December 31, 2020. As there was no goodwill remaining as of December 31, 2021 and 2020, no annual impairment review was performed. The Partnership performed the annual impairment review of goodwill for 2019 associated with the Coffeyville 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 for December 31, 2018, which resulted in the fair value of the Coffeyville Facility reporting unit exceeding its carrying value by approximately 36 %. Loss Contingencies In the ordinary course of business, CVR Partners may become party to lawsuits, administrative proceedings, and governmental investigations, including environmental, regulatory, and other matters. The outcome of these matters cannot always be predicted accurately, but the Partnership accrues liabilities for these matters if the Partnership has determined that it is probable a loss has been incurred and the loss can be reasonably estimated. Accrued amounts are reflected in Other current liabilities or Other long-term liabilities depending on when the Company expects to expend such amounts. As of December 31, 2021 and 2020, there are no matters or contingencies that require recognition or disclosure. December 31, 2021 | 56 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Environmental, Health & Safety (“EHS”) Matters The Partnership is subject to various stringent 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. In reporting environmental liabilities, no offset is made for potential recoveries. 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. 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. Accrued amounts are reflected in Other current liabilities or Other long-term liabilities depending on when the Company expects to expend such amounts. As of December 31, 2021 and 2020, no liabilities have been recognized for environmental remediation matters as no matters have been identified that are considered to be probable or estimable. Revenue Recognition The Partnership recognizes revenue 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 accounting policies relevant to revenue include: • Revenue transactions that pass control at customers’ designated facilities; • Non-monetary product exchanges which are entered into in the normal course of business are included on a net cost basis in operating expenses on the Consolidated Statements of Operations; and • 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. Other considerations - Excise and other taxes collected from customers and remitted to governmental authorities are excluded from reported revenues. Cost Classifications Cost of materials and other consist primarily of freight and distribution expenses, feedstock expenses, purchased ammonia, and purchased hydrogen. Direct operating expenses (exclusive of depreciation and amortization) consist primarily of energy and other utility costs, direct costs of labor, property taxes, plant-related maintenance services, including turnaround, and environmental and safety compliance costs, as well as catalyst and chemical costs. Each of these financial statement line items are also impacted by changes in inventory balances. Direct operating expenses also include allocated share-based compensation from CVR Energy and its subsidiaries, as discussed in Note 7 (“Share-Based Compensation”). Selling, general and administrative expenses consist primarily of legal expenses, treasury, accounting, marketing, human resources, information technology, and maintaining the corporate and administrative offices in Texas and Kansas. Share-Based Compensation The Partnership accounts for share-based compensation in accordance with ASC Topic 718, Compensation — Stock Compensation (“ASC 718”). Currently, all of the Partnership’s share-based compensation awards are liability-classified and are measured at fair value at the end of each reporting period based on the applicable closing unit price. Compensation expense will fluctuate based on changes in the applicable unit price value and expense reversals resulting from employee terminations prior to award vesting. See Note 7 (“Share-Based Compensation”) for further discussion. December 31, 2021 | 57 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Income Taxes CVR Partners accounts for income taxes utilizing the asset and liability approach. Under this method, deferred tax assets and liabilities are recognized for the anticipated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred amounts are measured using enacted tax rates expected to apply to taxable income in the year those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Allocation of Costs CVR Energy and its subsidiaries provide a variety of services to the Partnership, including employee benefits provided through CVR Energy’s benefit plans, administrative services provided by CVR Energy’s employees and management, insurance, and office space leased by CVR Energy. As such, the accompanying consolidated financial statements include costs that have been incurred by CVR Energy on behalf of the Partnership. These amounts incurred by CVR Energy are then billed or allocated to the Partnership and are classified on the Consolidated Statements of Operations as either Direct operating expenses (exclusive of depreciation and amortization) or as Selling, general and administrative expenses. See Note 9 (“Related Party Transactions”) for a detailed discussion of the billing procedures and the basis for calculating the charges for specific products and services. Recent Accounting Pronouncements - Adoption of Income Taxes Standard In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“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 and others on a prospective basis. Effective January 1, 2021, we adopted this ASU with no material impact on the Partnership’s consolidated financial position or results of operations. Recent Accounting Pronouncements - Adoption of Codification Improvements Standard In October 2020, the FASB issued ASU 2020-10, Codification Improvements. The ASU amends various sections of the codification in the FASB’s ongoing efforts to simplify and improve guidance. Effective January 1, 2021, we adopted this ASU with no material impact on the Partnership’s consolidated financial position or results of operations. Recent Accounting Pronouncements - New Accounting Standards Issued But Not Yet Implemented In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). This ASU was issued because, by the end of 2022, 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. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848), which clarifies certain optional expedients and exceptions for contract modifications and hedge accounting. Companies can apply the ASU immediately. However, the guidance will only be available for a limited time (generally through December 31, 2022). The Partnership is currently evaluating the impact of adopting this new accounting standard, but does not expect it to have a material impact on its consolidated financial statements and related disclosures. (3) Leases Lease Overview We lease railcars and certain facilities and equipment to support the Partnership’s operations. Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 20 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase December 31, 2021 | 58 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) option reasonably certain of exercise. Certain of our lease agreements include rental payments which are adjusted periodically for factors such as inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. Additionally, we do not have any material lessor or sub-leasing arrangements. Balance Sheet Summary at December 31, 2021 and 2020 The following tables summarize the ROU asset and lease liability balances for the Partnership’s operating and finance leases at December 31, 2021 and 2020: December 31, 2021 December 31, 2020 (in thousands) Operating Leases Finance Leases Operating Leases Finance Leases ROU asset, net Railcars $ 4,570 $ — $ 7,327 $ — Real estate and other 2,755 34 3,040 101 Lease liability Railcars $ 4,570 $ — $ 7,696 $ — Real estate and other 665 — 867 105 Lease Expense Summary for the Years Ended December 31, 2021, 2020, and 2019 We recognize lease expense on a straight-line basis over the lease term and short-term lease expense within Direct operating expenses (exclusive of depreciation and amortization). For the years ended December 31, 2021, 2020, and 2019, we recognized lease expense comprised of the following components: Year Ended December 31, (in thousands) 2021 2020 2019 Operating lease expense $ 3,827 $ 4,113 $ 3,122 Finance lease expense: Amortization of ROU asset $ 102 $ 101 $ 322 Interest expense on lease liability 2 6 10 Short-term lease expense $ 552 $ 372 $ 417 Lease Terms and Discount Rates The following outlines the remaining lease terms and discount rates used in the measurement of the Partnership’s ROU assets and liabilities: December 31, 2021 December 31, 2020 Operating Leases Finance Leases Operating Leases Finance Leases Weighted-average remaining lease term 2.1 years 0.0 years 2.9 years 1.3 years Weighted-average discount rate 5.1 % — % 5.1 % 4.0 % December 31, 2021 | 59 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Maturities of Lease Liabilities The following summarizes the remaining minimum operating lease payments through maturity of the Partnership’s ROU assets and liabilities at December 31, 2021. There were no finance lease payments remaining at December 31, 2021. (in thousands) Operating Leases Year Ending December 31, 2022 $ 3,220 2023 1,359 2024 676 2025 261 2026 — Thereafter — Total lease payments 5,516 Less: imputed interest ( 281 ) Total lease liability $ 5,235 On July 31, 2020, the Partnership and Messer LLC (“Messer”) entered into an On-Site Product Supply Agreement (the “Messer Agreement”). On February 21, 2022, the Partnership entered into the First Amendment to the On-Site Product Supply Agreement (the “Messer Amendment”, and collectively, the “Amended Messer Agreement”) with Messer. Under the Amended Messer Agreement, among other obligations, Messer is obligated to supply and make certain capital improvements during the term of the Amended Messer Agreement, and the Partnership is obligated to take as available and pay for, oxygen, nitrogen, and compressed dry air from Messer’s facility. This arrangement for the Partnership’s purchase of oxygen, nitrogen, and dry air from Messer does not meet the definition of a lease under FASB Accounting Standards Codification (“ASC”) Topic 842, Leases (“Topic 842”), as the Partnership 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 Amended Messer Agreement. The Amended Messer Agreement also obligates Messer to install a new oxygen storage vessel, related equipment and infrastructure (“Oxygen Storage Vessel” or “Vessel”) to be used solely by the Coffeyville Facility. The arrangement for the use of the Oxygen Storage Vessel meets the definition of a lease under Topic 842, as the Partnership will receive all output associated with the Vessel. Based on terms outlined in the Amended Messer Agreement, the Partnership expects the lease of the Oxygen Storage Vessel to be classified as a financing lease with an amount of approximately $ 25 million being capitalized upon lease commencement when the Vessel is placed in service. (4) Other Current Liabilities Other current liabilities were as follows: December 31, (in thousands) 2021 2020 Personnel accruals $ 7,920 $ 7,475 Share-based compensation 5,888 442 Operating lease liabilities 3,052 3,309 Accrued taxes other than income taxes 1,744 1,769 Accrued interest 1,654 2,506 Sales incentives 1,555 2,215 Prepaid revenue contracts 954 197 Other accrued expenses and liabilities 1,634 796 Total other current liabilities $ 24,401 $ 18,709 December 31, 2021 | 60 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (5) Long-Term Debt Long-term debt consists of the following: December 31, (in thousands) 2021 2020 9.25 % Senior Secured Notes, due June 2023 (1) (2) $ 65,000 $ 645,000 6.125 % Senior Notes, due June 2028 (1) 550,000 $ — Unamortized discount and debt issuance costs (3) ( 4,358 ) ( 11,058 ) Total long-term debt 610,642 633,942 Current portion of long-term debt and finance lease obligations (4) — 2,240 Total long-term debt, including current portion $ 610,642 $ 636,182 (1) The estimated fair value of the 9.25 % Senior Secured Notes due June 2023 (the “2023 Notes”) was approximately $ 65.1 million and $ 645.7 million as of December 31, 2021 and December 31, 2020, respectively. The estimated fair value of the 6.125 % Senior Secured Notes due June 2028 was approximately $ 580.3 million as of December 31, 2021. This estimate of fair value is a Level 2 measurement as it was determined by quotations obtained from a broker-dealer who makes a market in these and similar securities. (2) The call price of the 2023 Notes decreased to par on June 15, 2021. On June 23, 2021, September 23, 2021, and December 22, 2021, the Partnership redeemed $ 550 million, $ 15 million, and $ 15 million, respectively, of the 2023 Notes, at par, plus accrued and unpaid interest on the redeemed portion. The remaining balance of $ 65 million was outstanding as of December 31, 2021. The $ 65 million outstanding balance of the 2023 Notes was paid in full on February 22, 2022 at par, plus accrued and unpaid interest. (3) For the years ended December 31, 2021, 2020, and 2019, amortization of the discount on debt and amortization of deferred financing costs reported as Interest expense, net totaled approximately $ 2.5 million, $ 3.8 million, and $ 3.4 million, respectively. (4) The $ 2.2 million outstanding balance of the 6.5 % Notes, due April 2021, was paid in full on April 15, 2021. Credit Agreements (in thousands) Total Capacity Amount borrowed as of December 31, 2021 Outstanding Letters of Credit Available capacity as of December 31, 2021 Maturity Date ABL Credit Agreement (1) (2) (3) $ 35,000 $ — $ — $ 35,000 September 30, 2024 (1) On September 30, 2021, the Partnership entered into a senior secured asset based credit agreement with an aggregate principal amount of up to $ 35.0 million with a maturity date of September 30, 2024 (the “ABL Credit Facility”) and terminated its $ 35.0 million ABL Credit Agreement , dated as of September 30, 2016, as amended (the “2016 ABL Credit Agreement”). (2) Beginning September 30, 2021, loans under the Partnership’s ABL Credit Facility bear interest at an annual rate equal to, at the option of the borrowers, (i) (a) 1.615 % plus the daily simple Secured Overnight Financing Rate (“SOFR”) or (b) 0.615 % plus a base rate, if our quarterly excess availability is greater than or equal to 75%, (ii) (a) 1.865 % plus SOFR or (b) 0.865 % plus a base rate, if our quarterly excess availability is greater than or equal to 50% but less than 75%, or (iii) (a) 2.115 % plus SOFR or (b) 1.115 % plus a base rate, otherwise. (3) For the years ended December 31, 2021, 2020, and 2019, amortization expense for deferred financing costs were approximately $ 0.3 million, $ 0.2 million, and $ 0.2 million, respectively. 6.125 % Senior Secured Notes due June 2028 On June 23, 2021, CVR Partners and its subsidiary, CVR Nitrogen Finance Corporation (“Finance Co.” and, together with CVR Partners, the “Issuers”), completed a private offering of $ 550 million aggregate principal amount of 6.125 % Senior Secured Notes due June 2028 (the “2028 Notes”). Interest on the 2028 Notes is payable semi-annually in arrears on June 15 and December 15 each year, commencing on December 15, 2021. The 2028 Notes mature on June 15, 2028, unless earlier redeemed or repurchased by the Issuers. The 2028 Notes are jointly and severally guaranteed on a senior secured basis by all the existing domestic subsidiaries of CVR Partners, excluding Finance Co. In relation to the issuance of the 2028 Notes, the Partnership received $ 546.7 million of net cash proceeds, net of underwriting fees and other third-party fees and expenses associated with the offering. The debt issuance costs of the 2028 Notes totaled approximately $ 3.9 million and are being amortized over the term of the 2028 Notes as interest expense using the effective-interest amortization method. December 31, 2021 | 61 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) We may, at our option, at any time and from time to time prior to June 15, 2024, on any one or more occasions, redeem all or part of the 2028 Notes at a price equal to 100 % of the principal amount plus a “make whole” premium, plus accrued and unpaid interest. On or after June 15, 2024, we may, on any one or more occasions, redeem all or part of the 2028 Notes at the redemption prices set forth below, expressed as a percentage of the principal amount of the respective notes, plus accrued and unpaid interest to the applicable redemption date. 12-month period beginning June 15, Percentage 2024 103.063 % 2025 101.531 % 2026 and thereafter 100.000 % The indenture governing the 2028 Notes contains covenants that are substantially the same as the indenture governing the 2023 Notes. However, the 2028 Notes contain a permitted investment activity carveout that allows for the transfer of certain carbon capture assets to a joint venture for the purpose of monetizing potential tax credits. 9.25 % Senior Secured Notes due June 2023 On June 10, 2016, CVR Partners and Finance Co. (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”). The 2023 Notes mature on June 15, 2023, unless earlier redeemed or repurchased by the issuers. Interest on the 2023 Notes is payable semi-annually in arrears on June 15 and December 15 of each year. The 2023 Notes are guaranteed on a senior secured basis by all of the Partnership’s existing subsidiaries. On or after June 15, 2021, the 2023 Notes Issuers may redeem all or part of the 2023 Notes at a price equal to 100 % of the principal amount plus accrued and unpaid interest to the applicable redemption date. The 2023 Notes contain customary covenants for a financing of this type that, among other things, restrict CVR Partners’ ability and the ability of certain of its subsidiaries to: (i) sell assets; (ii) pay distributions on, redeem or repurchase the Partnership’s units or redeem or repurchase its subordinated debt; (iii) make investments; (iv) incur or guarantee additional indebtedness or issue preferred units; (v) create or incur certain liens; (vi) enter into agreements that restrict distributions or other payments from the Partnerships’ restricted subsidiaries to the Partnership; (vii) consolidate, merge or transfer all or substantially all of the Partnerships’ assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries. 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. On June 23, 2021, the Partnership redeemed $ 550 million aggregate principal amount of the outstanding 2023 Notes at par and settled accrued interest of approximately $ 1.1 million through the date of redemption. As a result of this transaction, the Partnership recognized in Interest expense, net a $ 7.8 million loss on extinguishment of debt in the second quarter of 2021, which includes the write-off of unamortized deferred financing costs and original issue discount of $ 2.9 million and $ 4.9 million, respectively. On September 23, 2021 and December 22, 2021, the Partnership redeemed $ 15 million and $ 15 million, respectively, in aggregate principal amount of the outstanding 2023 Notes at par and settled accrued interest of approximately $ 0.4 million and less than $ 0.1 million, respectively, through the date of each redemption. As a result of these redemptions and for the year ended December 31, 2021, the Partnership recognized in Interest expense, net a $ 0.3 million loss on extinguishment of debt, which includes the write-off of unamortized deferred financing costs and discount of $ 0.1 million and $ 0.2 million, respectively. On February 22, 2022, the Partnership redeemed all of the outstanding 2023 Notes at par and settled accrued interest of approximately $ 1.1 million through the date of redemption. As a result of this transaction, the Partnerships will recognize a loss on extinguishment of debt of $ 0.6 million in the first quarter of 2022, which includes the write-off of unamortized deferred financing costs and discount of $ 0.2 million and $ 0.4 million, respectively. December 31, 2021 | 62 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) ABL Credit Agreement On September 30, 2021, CVR Partners, LP and its subsidiaries, CVR Nitrogen, LP, East Dubuque Nitrogen Fertilizers, LLC, Coffeyville Resources Nitrogen Fertilizers, LLC, CVR Nitrogen Holdings, LLC, Finance Co. and CVR Nitrogen GP, LLC, entered into the ABL Credit Facility with Wells Fargo Bank National Association, a national banking association (“Wells Fargo”), as administrative agent, collateral agent, and lender. The ABL Credit Facility has an aggregate principal amount of availability of up to $ 35.0 million with an incremental facility, which permits an increase in borrowings of up to $ 15.0 million in the aggregate subject to additional lender commitments and certain other conditions. The proceeds of the loans may be used for general corporate purposes of the Partnership and its subsidiaries. The ABL Credit Facility provides for loans and letters of credit, subject to meeting certain borrowing base conditions, with sub-limits of $ 3.5 million for swingline loans and $ 10.0 million for letters of credit. The ABL Credit Facility is scheduled to mature on September 30, 2024. Loans under the ABL Credit Facility initially bear interest at an annual rate equal to, at the option of the borrowers, (i) 1.615 % plus SOFR or (ii) 0.615 % plus a base rate. Based on the previous quarter’s excess availability, such annual rate could increase to, at the option of the borrowers, (i) 2.115 % plus SOFR or (ii) 1.115 % plus a base rate. The borrowers must also pay a commitment fee on the unutilized commitments and also pay customary letter of credit fees. The ABL Credit Facility contains customary covenants for a financing of this type and requires the Partnership in certain circumstances to comply with a minimum fixed charge coverage ratio test and contains other restrictive covenants that limit the ability of the Partnership and its subsidiaries ability to, among other things, incur liens, engage in a consolidation, merger, purchase or sale of assets, pay dividends, incur indebtedness, make advances, investments and loans, enter into affiliate transactions, issue certain equity interests, create subsidiaries and unrestricted subsidiaries, and create certain restrictions on the ability to make distributions, loans, and asset transfers among the Partnership or its subsidiaries. In connection with the ABL Credit Facility, the Partnership incurred lender and other third-party costs of $ 0.8 million which have been deferred in Prepaid expenses and other current assets and Other long-term assets and are being amortized as interest expense over the term of the ABL Credit Facility using the straight-line amortization method. Covenant Compliance The Partnership and its subsidiaries were in compliance with all covenants under their respective debt instruments as of December 31, 2021. (6) Revenue The following table presents the Partnership’s revenue, disaggregated by major product: Year Ended December 31, (in thousands) 2021 2020 2019 Ammonia $ 146,140 $ 94,117 $ 94,467 UAN 316,014 198,258 251,199 Urea products 28,746 14,115 17,430 Net sales, exclusive of freight and other 490,900 306,490 363,096 Freight revenue 31,419 33,329 33,436 Other revenue 10,262 10,134 7,645 Net sales $ 532,581 $ 349,953 $ 404,177 The Partnership sells its products on a wholesale basis under a contract or by purchase order. The Partnership’s contracts with customers generally contain fixed pricing and most have terms of less than one year. The Partnership 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 at one of the Partnership’s manufacturing facilities, at one of the Partnership’s off-site loading facilities, or at the customer’s designated facility. Freight revenue recognized by the Partnership represents the pass-through finished goods delivery costs incurred prior to customer acceptance December 31, 2021 | 63 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) and is reimbursed by customers. An offsetting expense for freight is included in Cost of materials and other. Qualifying taxes collected from customers and remitted to governmental authorities are not included in reported revenues. Depending on the product sold and the type of contract, payments from customers are generally either due prior to delivery or within 15 to 30 days of product delivery. The Partnership generally provides no warranty other than the implicit promise that goods delivered are free of liens and encumbrances and meet the agreed upon specifications. Product returns are rare, and as such, the Partnership does not record a specific warranty reserve or consider activities related to such warranty, if any, to be a separate performance obligation. The Partnership has an immaterial amount of variable consideration for contracts with an original duration of less than a year. A small portion of the Partnership’s revenue includes contracts extending beyond one year, some of which contain variable pricing in which the majority of the variability is attributed to the market-based pricing. The Partnership’s contracts do not contain a significant financing component. The Partnership has an immaterial amount of fee-based revenue, included in other revenue in the table above, that is recognized based on the net amount of the proceeds received. Transaction Price - Allocation to Remaining Performance Obligations As of December 31, 2021, the Partnership had approximately $ 10.2 million of remaining performance obligations for contracts with an original expected duration of more than one year. The Partnership expects to recognize approximately $ 6.0 million of these performance obligations as revenue by the end of 2022, an additional $ 4.0 million in 2023, and the remaining balance thereafter. The Partnership has elected to not disclose the amount of transaction price allocated to remaining performance obligations for contracts with an original expected duration of less than one year. The Partnership has elected to not disclose variable consideration allocated to wholly unsatisfied performance obligations that are based on market prices that have not yet been determined. Contract Balances The Partnership’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. 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. A summary of the deferred revenue activity during the year ended December 31, 2021 is presented below: (in thousands) Balance at December 31, 2020 $ 30,631 Add: New prepay contracts entered into during the period (1) 146,598 Less: Revenue recognized that was included in the contract liability balance at the beginning of the period ( 29,724 ) Revenue recognized related to contracts entered into during the period ( 59,914 ) Other changes ( 531 ) Balance at December 31, 2021 $ 87,060 (1) Includes $ 93.7 million where payment associated with prepaid contracts was collected as of December 31, 2021. December 31, 2021 | 64 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Major Customers CVR Partners had one customer who comprised 13 % of net sales for the year ended December 31, 2021 and two customers who comprised 26 % and 28 % of net sales for the years ended December 31, 2020 and 2019, respectively. (7) Share-Based Compensation Overview CVR Partners has a Long-Term Incentive Plan (“CVR Partners LTIP”) which permits 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). Individuals who are eligible to receive awards under or in connection with the CVR Partners LTIP include any director, officer, employee, employee candidate, consultant or advisor of the Partnership, its subsidiaries, or its parent. CVR Partners’ Phantom Unit Awards and Compensation Expense Phantom unit awards have been granted to officers, employees, and directors (the “Share-Based Awards”). As a result, Share-Based Awards that reflect the value and distributions of CVR Partners, as applicable, have been granted and remain outstanding as of December 31, 2021. Each Share-Based Award and the related distribution equivalent right represents the right to receive, upon vesting, a cash payment equal to (i) the average fair market value of one unit, in accordance with the award agreement, plus (ii) the per unit cash value of all distributions declared and paid, as applicable, from the grant date through the vesting date. The Share-Based Awards are generally graded-vesting awards, which vest over three years with one-third of the award vesting each year the grantee remains employed by the Partnership and its subsidiaries. Compensation expense is recognized ratably, based on service provided to the Partnership 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. A summary of phantom unit award activity during the year ended December 31, 2021 is presented below: (in thousands, except per unit data) Units (1) Weighted- Average Grant Date Fair Value Aggregate Intrinsic Value Non-vested at December 31, 2020 518,881 $ 14.70 $ 8,312 Granted 46,581 80.61 Vested ( 189,177 ) 14.21 Forfeited ( 14,445 ) 11.67 Non-vested at December 31, 2021 361,840 $ 18.89 $ 29,921 (1) As of December 31, 2021, there are no outstanding awards under the CVR Partners LTIP, and the only outstanding and unvested phantom awards are issued in connection with, not under, the CVR Partners LTIP. Unrecognized compensation expense associated with the phantom units at December 31, 2021 was approximately $ 19.0 million, which is expected to be recognized over a weighted average period of 2.0 years. Compensation expense recorded for the years ended December 31, 2021, 2020, and 2019 related to these awards was approximately $ 27.0 million, $ 0.6 million, and $ 2.3 million, respectively. As of December 31, 2021 and 2020, the Partnership had a liability of $ 9.1 million and $ 0.6 million, respectively, for cash settled non-vested phantom unit awards and associated distribution equivalent rights and, for the years ended December 31, 2021, 2020, and 2019, paid cash of $ 11.1 million, $ 0.5 million, and $ 0.8 million, respectively, to settle liability-classified awards upon vesting. As of December 31, 2021 and 2020, CVR Energy had a liability associated with the CVR Partners LTIP of $ 3.3 million and $ 0.3 million, respectively, for cash settled non-vested phantom unit awards and associated distribution equivalent rights December 31, 2021 | 65 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) and, for the years ended December 31, 2021, 2020, and 2019, paid cash of $ 4.4 million, $ 0.3 million, and $ 0.9 million, respectively, to settle liability-classified awards upon vesting under the CVR Partners LTIP. Incentive Unit Awards — CVR Energy CVR Energy grants awards of incentive units and dividend equivalent rights to certain of its employees and those of its subsidiaries, including CVR GP, who provide shared services for CVR Energy and its subsidiaries, including the Partnership. Costs related to these incentive unit awards are allocated to the Partnership based on time spent on Partnership business. Total compensation expense allocated to the Partnership for the years ended December 31, 2021, 2020, and 2019 related to the incentive units was $ 2.3 million, $ 0.4 million and $ 1.0 million, respectively. The Partnership had no separate liabilities related to these incentive unit awards as of December 31, 2021 and 2020, as the allocation of compensation expense for incentive unit awards is part of the amount charged to the Partnership under the Corporate MSA. For the years ended December 31, 2021 and 2019, the Partnership had no reimbursements related to its allocated portion of CVR Energy’s incentive unit awards payments, respectively, and for the year ended December 31, 2020, the Partnership made reimbursements to CVR Energy of $ 2.2 million. See Note 9 (“Related Party Transactions”) for further discussion of the Corporate MSA. Performance Unit Awards Pursuant to the employment agreement, as amended, with the Partnership’s Executive Chairman, CVR Energy entered into a performance unit award agreement (the “2017 Performance Unit Award Agreement”) on November 1, 2017 with our Executive Chairman representing the right to receive upon vesting, a cash payment equal to $ 10.0 million if the average closing price of CVR Energy’s common stock over the 30 day trading period from January 4, 2022 to February 15, 2022 is equal to or greater than $ 60 per share. Effective as of December 22, 2021, CVR Energy and our Executive Chairman entered into an amendment to the 2017 Performance Unit Award Agreement, which extended the end of the performance period thereunder to December 31, 2024, and changed the 30 day trading period on which the average closing price of CVR Energy’s common stock is based to January 6, 2025 through February 20, 2025. Under the 2017 Performance Unit Award Agreement, for the year ended December 31, 2021, the Partnership recognized a benefit of $ 0.6 million. No compensation costs were recognized for the years ended December 31, 2020 and 2019. Under the 2017 Performance Unit Award Agreement, as of December 31, 2021 and 2020, the Partnership had no outstanding liability. Once the performance parameters are probable of being met under the 2017 Performance Unit Award Agreement, the Partnership’s allocated portion of unrecognized compensation costs would be approximately $ 2.3 million. Other Benefit Plans CVR Energy sponsors and administers two defined contribution 401(k) plans, the CVR Energy 401(k) Plan and the CVR Energy 401(k) Plan for Represented Employees (the “Plans”), in which employees of the general partner, CVR Partners and its subsidiaries may participate. Participants in the Plans may elect to contribute a designated percentage of their eligible compensation in accordance with the Plans, subject to statutory limits. CVR Partners provides a matching contribution of 100 % of the first 6 % of eligible compensation contributed by participants. Participants in both Plans are immediately vested in their individual contributions. The Plans provide for a three-year vesting schedule for the Partnership’s matching contributions and contain a provision to count service with predecessor organizations. The Partnership did not have contributions under the Plans for the year ended December 31, 2021, as the Partnership’s matching contributions for the Plans were suspended effective January 1, 2021, and had approximately $ 1.9 million, and $ 1.8 million for the years ended December 31, 2020 and 2019, respectively. The Partnership’s matching contributions for the Plans resumed effective January 1, 2022. December 31, 2021 | 66 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) (8) Commitments Supply Commitments The minimum required payments for unconditional purchase obligations, including the natural gas purchases outlined below, are as follows: (in thousands) Unconditional Purchase Obligations Year Ending December 31, 2022 $ 41,351 2023 9,261 2024 8,778 2025 8,779 2026 8,779 Thereafter 37,599 $ 114,547 Supply Commitments - The Partnership is a party to various supply agreements with both related and third parties which commit the Partnership to purchase minimum volumes of hydrogen, oxygen, nitrogen, pet coke, and natural gas to run its plants’ operations. The Partnership is also party to a natural gas supply agreement with various third-parties. Natural gas expense for the years ended December 31, 2021, 2020, and 2019 totaled approximately $ 52.9 million, $ 32.4 million, and $ 33.1 million, respectively, and is included in Cost of materials and other and Direct operating expenses (exclusive of depreciation and amortization). The Partnership entered into the Coffeyville Master Service Agreement (“Coffeyville MSA”) with Coffeyville Resources Refining & Marketing, LLC, an indirect, wholly-owned subsidiary of CVR Energy (“CRRM”), pursuant to which, it agrees to pay a monthly fee for pet coke purchases. The Partnership’s Coffeyville Facility obtains a significant amount ( 48 % on average during last five years , 43 % in 2021) of the pet coke it needs from the Coffeyville MSA. Any remaining pet coke needs are required to be purchased from various third parties. The price paid pursuant to the Coffeyville MSA is based on the lesser of a pet coke price derived from the price received for UAN (the “UAN-based Price”) or a pet coke price index. The UAN-based Price begins with a pet coke price of $ 25 per ton based on a price per ton for UAN that excludes transportation cost (“netback price”) of $ 205 per ton, and adjusts up or down $ 0.50 per ton for every $ 1.00 change in the netback price. The UAN-based price has a ceiling of $ 40 per ton and a floor of $ 5 per ton. See Note 9 (“Related Party Transactions”) for further discussion of the Coffeyville MSA. Pursuant to the Coffeyville MSA, the Partnership agreed, with respect to the Coffeyville Facility, to pay CRRM for hydrogen purchases. The committed hydrogen volume pricing is based on a monthly fixed fee (based on the fixed and capital charges associated with producing the committed volume) and a monthly variable fee (based on the natural gas price associated with hydrogen actually received). In the event the Coffeyville Facility fails to take delivery of the full committed volume in a month, the Partnership remains obligated to pay CRRM for the monthly fixed fee and the monthly variable fee based upon the actual hydrogen volume received, if any. In the event CRRM fails to deliver any portion of the committed volume for the applicable month for any reason other than planned repairs and maintenance, the Partnership will be entitled to a pro-rata reduction of the monthly fixed fee. See Note 9 (“Related Party Transactions”) for further discussion. The Partnership, with respect to the Coffeyville Facility, is also party to the Messer Agreement, pursuant to which, it is required to take as available and pay for the supply of oxygen and nitrogen to the plant. This agreement was renewed and commenced in July 2020 for an initial term of 15 years with annual renewals thereafter. Expenses associated with this agreement are included in Direct operating expenses (exclusive of depreciation and amortization), and, for the years ended December 31, 2021, 2020, and 2019, totaled approximately $ 3.9 million, $ 4.2 million, and $ 4.2 million, respectively. In addition to the related party Coffeyville MSA, the Coffeyville Facility has pet coke supply agreements with multiple third-party refineries to purchase approximately 327,000 tons of pet coke at a fixed price for delivery at different dates through December 31, 2021 | 67 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) December 2022. The Coffeyville Facility has historically purchased third-party pet coke based on spot purchases and supply agreements in place at the time. The delivered cost of third-party pet coke purchases is included in Cost of materials and other and totaled approximately $ 17.4 million, $ 17.9 million, and $ 10.3 million for the years ended December 31, 2021, 2020, and 2019, respectively. During 2019, the Partnership, with respect to the East Dubuque Facility, entered into a utility service agreement with a new third-party energy cooperative. The new utility service agreement does not contain purchase commitments. The cost of utilities, including natural gas purchases, is included in Direct operating expenses (exclusive of depreciation and amortization). Prior to entering into the new utility service agreement, the East Dubuque Facility had a utility service agreement with a third-party energy cooperative which included certain charges on a take-or-pay basis and amounts associated with this agreement totaled approximately $ 3.7 million for the year ended December 31, 2019. (9) Related Party Transactions Limited Partnership Agreement The Partnership’s general partner manages the Partnership’s operations and activities as specified in CVR Partners’ limited partnership agreement. The general partner of the Partnership, CVR GP, is managed by its board of directors. The partnership agreement provides that the Partnership will reimburse CVR GP for all direct and indirect expenses it incurs or payments it makes on behalf of the Partnership, including salary, bonus, incentive compensation, and other amounts paid to any person to perform services for the Partnership or for its general partner in connection with operating the Partnership. Omnibus Agreement We are party to an omnibus agreement with CVR Energy and our general partner, pursuant to which we have agreed that CVR Energy will have a preferential right to acquire any assets or group of assets that do not constitute assets used in a fertilizer restricted business. In determining whether to exercise any preferential right under the omnibus agreement, CVR Energy will be permitted to act in its sole discretion, without any fiduciary obligation to us or the unitholders whatsoever. These obligations will continue so long as CVR Energy owns at least 50% of our general partner. There was no activity reported under this agreement during the years ended 2021, 2020, and 2019. Coffeyville MSA Effective January 1, 2020, the Conflicts Committee of the Board and the audit committee of CVR Energy approved, and CRNF and CRRM entered into, the Coffeyville MSA which is comprised of various supply and service agreements effectively replacing, on substantially equivalent terms, other related party agreements in place during 2019 (the “Replaced Coffeyville Agreements”). In addition to affirming the terms and services described in the Replaced Coffeyville Agreements and resetting the durations thereof, as applicable, commencing January 1, 2020, the Coffeyville MSA provides for monthly payments, subject to netting, for all goods and services supplied under the Coffeyville MSA. The Coffeyville MSA will continue in effect until terminated in writing, in whole or in part, by either party, or until terminated automatically in the event a party falls out of common control with the other party. The Coffeyville MSA provides the following services: • Cross Easements - Both CRNF and CRRM can access and utilize each other’s land in certain circumstances in order to operate their respective businesses. • Hydrogen Purchase and Sale - CRRM agrees to sell and deliver a committed hydrogen volume of 90,000 mscf per month to CRNF and CRNF agrees to purchase and receive the committed volume. CRNF also has the option to purchase excess volume from CRRM, if available. • Raw Water and Facilities Sharing - CRNF and CRRM are each owners of an undivided one-half interest in and to the water rights and agree to (i) allocate raw water resources between CVR Energy’s Coffeyville refinery and our Coffeyville Facility and (ii) provide for the management of the water intake system which draws raw water from the Verdigris River for both our Coffeyville Facility and CVR Energy’s Coffeyville Refinery. • Coke Supply - Our Coffeyville Facility purchases pet coke from CVR Energy’s Coffeyville Refinery which provides that CRRM must deliver, and the Coffeyville Facility must purchase, during each calendar year an annual required December 31, 2021 | 68 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) amount of pet coke equal to the lesser of (i) 100 percent of the pet coke or (ii) 500,000 tons of pet coke. If during a calendar month, more than 41,667 tons of pet coke is produced and available for purchase, then the Coffeyville Facility will have the option to purchase the excess at the purchase price provided for in the agreement. If the option is declined, CRRM may sell the excess to a third-party. • Feedstock and Shared Services - CRNF and CRRM provide feedstock and other services to one another. These feedstocks and services are utilized in the respective production processes of CRRM’s Coffeyville Refinery and our Coffeyville Facility. Feedstocks provided under the agreement include, among others, hydrogen, high-pressure steam, nitrogen, instrument air, oxygen, and natural gas. • Lease - CRNF leases certain office and laboratory space from CRRM. Corporate MSA Also effective January 1, 2020, the Conflicts Committee of the Board and the audit committee of CVR Energy approved, and the parties entered into the Corporate MSA between CVR Services and certain of its affiliates, including CVR Energy, CVR GP and the Partnership and its subsidiaries, which is comprised of various management and service agreements effectively replacing other related party agreements, on substantially equivalent terms, in place for 2019 (the “Replaced Corporate Agreements”). In addition to affirming the terms and services described in the Replaced Corporate Agreements and resetting the durations thereof, as applicable, commencing January 1, 2020, the Corporate MSA provides for payment by each service recipient under the Corporate MSA of a monthly fee for goods and services supplied under the Corporate MSA, subject to netting and an annual true up, as well as pass-through of any direct costs incurred on behalf of a service recipient without markup. Either CVR Services or CVR GP may terminate the Corporate MSA upon at least 90 days notice. Under the Corporate MSA, CVR GP and the Partnership and its subsidiaries obtain certain management and other professional services from CVR Services, including the following, among others: • services from CVR Services’ employees in capacities equivalent to the capacities of corporate executive officers, except that those who serve in such capacities under the agreement will serve the Partnership on a shared, part-time basis only, unless the Partnership and CVR Services agree otherwise; • administrative and professional services, including legal, accounting, SOX compliance, financial reporting, human resources, information technology, communications, insurance, tax, credit, finance, corporate compliance, enterprise risk management, consulting, and government and regulatory affairs; • recommendations on capital raising activities to the board of directors of the general partner, including the issuance of debt or equity interests, the entry into credit facilities, and other capital market transactions; • managing or overseeing litigation and administrative or regulatory proceedings, investigations and other reviews in the ordinary course of business or operations, establishing appropriate insurance policies for the Partnership, and providing safety and environmental advice; • recommending the payment of distributions; • managing or providing advice for other projects, including acquisitions, as may be agreed by the general partner and CVR Services from time to time; and • permitting the use of the CVR Energy and CVR Partners trademarks by CVR GP and the Partnership at no cost. For services performed in connection with the services agreement, the Partnership recognized personnel costs, excluding amounts related to share based compensation (refer to Note 7 (“Share-Based Compensation”)), of $ 8.1 million, $ 6.6 million, and $ 7.3 million, respectively, for the years ended December 31, 2021, 2020, and 2019. December 31, 2021 | 69 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Related Party Activity Activity associated with the Partnership’s related party arrangements for the years ended December 31, 2021, 2020, and 2019 is summarized below: Year Ended December 31, (in thousands) 2021 2020 2019 Sales to related parties (1) $ 308 $ 993 $ 119 Purchases from related parties (2) 41,717 26,276 30,876 December 31, 2021 2020 Due to related parties (3) $ 3,580 $ 694 (1) Sales to related parties, included in Net sales, consist primarily of sales of feedstocks and services to CRRM under the Coffeyville MSA. (2) Purchases from related parties, included in Cost of materials and other, Direct operating expenses (exclusive of depreciation and amortization), and Selling, general and administrative expenses, consist primarily of pet coke and hydrogen purchased from CRRM under the Coffeyville MSA. (3) Due to related parties, included in Accounts payable to affiliates, consist primarily of amounts payable for feedstocks and other supplies and services provided by CRRM and CVR Services under the Coffeyville MSA and Corporate MSA. Environmental Agreement Our Coffeyville Facility is a party to an environmental agreement with CRRM which provides for certain indemnification and access rights in connection with environmental matters affecting CVR Energy’s Coffeyville refinery and our Coffeyville Facility. To the extent that liability arises from environmental contamination that is caused by CRRM but is also commingled with environmental contamination caused by our Coffeyville Facility, CRRM may elect, in its sole discretion and at its own cost and expense, to perform government mandated environmental activities relating to such liability, subject to certain conditions and provided that CRRM will not waive any rights to indemnification or compensation otherwise provided for in the agreement. No liability under this agreement was recorded as of December 31, 2021 and 2020. Terminal and Operating Agreement Our Coffeyville Facility entered into a lease and operating agreement with Coffeyville Resources Terminal, LLC, an indirect wholly owned subsidiary of CVR Energy (“CRT”), under which it leases the premises located at Phillipsburg, Kansas to be utilized as a UAN terminal. The initial term of the agreement will expire in May 2032, provided, however, we may terminate the lease at any time during the initial term by providing 180 days prior written notice. In addition, this agreement will automatically renew for successive five-year terms, provided that we may terminate the agreement during any renewal term with at least 180 days written notice. Under the terms of this agreement, we will pay CRT $ 1.00 per year for rent, $ 4.00 per ton of UAN placed into the terminal, and $ 4.00 per ton of UAN taken out of the terminal. Property Exchange On October 18, 2019, the Conflicts Committee of the Board and on October 22, 2019, the audit committee of CVR Energy 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. 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 Topic 805-50, Business Combinations (“ Topic 805-50”), guidance on transferring assets between entities under common control. This transaction had a net impact to the Partnership’s partners’ capital of less than $ 0.1 million. December 31, 2021 | 70 Table of Contents CVR Partners, LP and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued) Distributions to CVR Partners’ Unitholders The Board has a policy for the Partnership to distribute all available cash generated on a quarterly basis. Cash distributions are made to the common unitholders of record on the applicable record date, generally within 60 days after the end of each quarter. Available cash for each quarter is determined by the Board following the end of such quarter. Distributions, if any, including the payment, amount, and timing thereof, are subject to change at the discretion of the Board. The following table presents distributions paid by the Partnership to CVR Partners’ unitholders, including amounts paid to CVR Energy, as of December 31, 2021. Distributions Paid (in thousands) Related Period Date Paid Distribution Per Common Unit Public Unitholders CVR Energy Total 2021 - 2nd Quarter August 23, 2021 $ 1.72 $ 11,678 $ 6,694 $ 18,372 2021 - 3rd Quarter November 22, 2021 2.93 19,893 11,404 31,297 Total distributions $ 4.65 $ 31,571 $ 18,098 $ 49,669 There were no distributions declared or paid by the Partnership related to the first quarter of 2021 and fourth quarter of 2020, and no distributions were declared or paid during 2020. During the year ended December 31, 2019, the Partnership paid distributions totaling $ 4.00 per common unit on a split-adjusted basis, or $ 45.3 million. Of these distributions, CVR Energy received $ 15.6 million. For the fourth quarter of 2021, the Partnership, upon approval by the Board on February 21, 2022, declared a distribution of $ 5.24 per common unit, or $ 56.0 million, which is payable March 14, 2022 to unitholders of record as of March 7, 2022. Of this amount, CVR Energy will receive approximately $ 20.4 million, with the remaining amount payable to public unitholders. (10) Supplemental Cash Flow Information Cash flows related to income taxes, interest, leases, and capital expenditures and deferred financing costs included in accounts payable are as follows: Year Ended December 31, (in thousands) 2021 2020 2019 Supplemental disclosures: Cash paid for income taxes, net of refunds $ 27 $ 69 $ 40 Cash paid for interest 51,369 59,850 60,057 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 3,652 4,117 4,019 Operating cash flows from finance leases 2 6 20 Financing cash flows from finance leases 96 100 321 Non-cash investing and financing activities: Change in capital expenditures included in accounts payable 5,092 ( 2,167 ) 1,618 Change in deferred financing costs included in accounts payable 675 — — December 31, 2021 | 71 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.