Item 1. FINANCIAL STATEMENTS.

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Item 1. FINANCIAL STATEMENTS.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended March 31,
		2022		2021
		(in millions, except per share amounts)
Net sales		$	2,868	$	1,048
Cost of sales		1,170		759
Gross margin		1,698		289
Selling, general and administrative expenses		64		55




Other operating—net		2		(2)
Total other operating costs and expenses		66		53

Equity in earnings of operating affiliate		26		11
Operating earnings		1,658		247
Interest expense		241		48
Interest income		(36)		—
Loss on debt extinguishment		—		6
Other non-operating—net		1		—
Earnings before income taxes		1,452		193
Income tax provision		401		18

Net earnings		1,051		175
Less: Net earnings attributable to noncontrolling interest		168		24
Net earnings attributable to common stockholders		$	883	$	151
Net earnings per share attributable to common stockholders:
Basic		$	4.23	$	0.70
Diluted		$	4.21	$	0.70
Weighted-average common shares outstanding:
Basic		208.6		214.9
Diluted		209.9		216.0
Dividends declared per common share		$	0.30	$	0.30

See accompanying Notes to Unaudited Consolidated Financial Statements.

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three months ended March 31,
		2022		2021
		(in millions)
Net earnings		$	1,051	$	175
Other comprehensive (loss) income:
Foreign currency translation adjustment—net of taxes		(13)		14


Defined benefit plans—net of taxes		4		1
		(9)		15
Comprehensive income		1,042		190
Less: Comprehensive income attributable to noncontrolling interest		168		24
Comprehensive income attributable to common stockholders		$	874	$	166

See accompanying Notes to Unaudited Consolidated Financial Statements.

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS


	(Unaudited)
	March 31, 2022		December 31, 2021
	(in millions, except share and per share amounts)
Assets
Current assets:
Cash and cash equivalents	$	2,617	$	1,628

Accounts receivable—net	679		497
Inventories	488		408

Prepaid income taxes	—		4
Other current assets	42		56
Total current assets	3,826		2,593
Property, plant and equipment—net	6,906		7,081
Investment in affiliate	84		82
Goodwill	2,091		2,091
Operating lease right-of-use assets	236		243
Other assets	639		285
Total assets	$	13,782	$	12,375
Liabilities and Equity
Current liabilities:

Accounts payable and accrued expenses	$	629	$	565
Income taxes payable	408		24
Customer advances	598		700
Current operating lease liabilities	88		89
Current maturities of long-term debt	499		—
Other current liabilities	6		54
Total current liabilities	2,228		1,432
Long-term debt, net of current maturities	2,963		3,465
Deferred income taxes	1,028		1,029
Operating lease liabilities	152		162
Other liabilities	658		251
Equity:
Stockholders’ equity:
Preferred stock—$0.01 par value, 50,000,000 shares authorized	—		—
Common stock—$0.01 par value, 500,000,000 shares authorized, 2022—210,569,780 shares issued and 2021—207,603,940 shares issued	2		2
Paid-in capital	1,482		1,375
Retained earnings	2,907		2,088
Treasury stock—at cost, 2022—1,563,679 shares and 2021—27,962 shares	(123)		(2)
Accumulated other comprehensive loss	(266)		(257)
Total stockholders’ equity	4,002		3,206
Noncontrolling interest	2,751		2,830
Total equity	6,753		6,036
Total liabilities and equity	$	13,782	$	12,375

See accompanying Notes to Unaudited Consolidated Financial Statements.

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Common Stockholders
	$0.01 Par Value Common Stock		Treasury Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity
	(in millions, except per share amounts)


















Balance as of December 31, 2021	$	2	$	(2)	$	1,375	$	2,088	$	(257)	$	3,206	$	2,830	$	6,036
Net earnings	—		—		—		883		—		883		168		1,051
Other comprehensive loss	—		—		—		—		(9)		(9)		—		(9)
Purchases of treasury stock	—		(100)		—		—		—		(100)		—		(100)
Retirement of treasury stock	—		2		—		—		—		2		—		2
Acquisition of treasury stock under employee stock plans	—		(23)		—		—		—		(23)		—		(23)
Issuance of $0.01 par value common stock under employee stock plans	—		—		97		—		—		97		—		97

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

Cash dividends ($0.30 per share)	—		—		—		(64)		—		(64)		—		(64)



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

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

























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


Net earnings	—		—		—		151		—		151		24		175
Other comprehensive income	—		—		—		—		15		15		—		15


Acquisition of treasury stock under employee stock plans	—		(10)		—		—		—		(10)		—		(10)
Issuance of $0.01 par value common stock under employee stock plans	—		—		8		—		—		8		—		8

Stock-based compensation expense	—		—		8		—		—		8		—		8

Cash dividends ($0.30 per share)	—		—		—		(65)		—		(65)		—		(65)



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

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

See accompanying Notes to Unaudited Consolidated Financial Statements.

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Three months ended March 31,
	2022		2021
	(in millions)
Operating Activities:
Net earnings	$	1,051	$	175
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	208		204
Deferred income taxes	(2)		(12)
Stock-based compensation expense	10		8

Loss on debt extinguishment	—		6
Unrealized net gain on natural gas derivatives	(33)		(6)




Loss on disposal of property, plant and equipment	—		1
Undistributed earnings of affiliate—net of taxes	(2)		(12)
Changes in:
Accounts receivable—net	(185)		(7)
Inventories	(66)		(88)
Accrued and prepaid income taxes	387		78
Accounts payable and accrued expenses	76		36
Customer advances	(102)		211
Other—net	49		(16)
Net cash provided by operating activities	1,391		578
Investing Activities:
Additions to property, plant and equipment	(63)		(71)
Proceeds from sale of property, plant and equipment	1		—






Purchase of U.K. emission credits	(9)		—
Proceeds from sale of EU emission credits	9		—

Net cash used in investing activities	(62)		(71)
Financing Activities:



Payments of long-term borrowings	—		(255)
Financing fees	(4)		—
Dividends paid on common stock	(64)		(65)

Distributions to noncontrolling interest	(247)		(64)
Purchases of treasury stock	(98)		—
Proceeds from issuances of common stock under employee stock plans	97		7
Cash paid for shares withheld for taxes	(23)		(10)

Net cash used in financing activities	(339)		(387)
Effect of exchange rate changes on cash and cash equivalents	(1)		1
Increase in cash and cash equivalents	989		121
Cash and cash equivalents at beginning of period	1,628		683
Cash and cash equivalents at end of period	$	2,617	$	804

See accompanying Notes to Unaudited Consolidated Financial Statements.

CF INDUSTRIES HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Background and Basis of Presentation

Our mission is to provide clean energy to feed and fuel the world sustainably. With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and blue hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities. Our nine nitrogen manufacturing complexes in the United States, Canada and the United Kingdom, an extensive storage, transportation and distribution network in North America, and logistics capabilities enabling a global reach underpin our strategy to leverage our unique capabilities to accelerate the world’s transition to clean energy. Our principal customers are cooperatives, independent fertilizer distributors, traders, wholesalers and industrial users. Our core product is anhydrous ammonia (ammonia), which contains 82% nitrogen and 18% hydrogen. Our nitrogen products that are upgraded from ammonia are granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN). Our other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to our industrial customers, and compound fertilizer products (NPKs), which are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus and potassium.

All references to “CF Holdings,” “the Company,” “we,” “us” and “our” refer to CF Industries Holdings, Inc. and its subsidiaries, except where the context makes clear that the reference is only to CF Industries Holdings, Inc. itself and not its subsidiaries. All references to “CF Industries” refer to CF Industries, Inc., a 100% owned subsidiary of CF Industries Holdings, Inc.

The accompanying unaudited interim consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the year ended December 31, 2021, in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting. In the opinion of management, these statements reflect all adjustments, consisting only of normal and recurring adjustments, that are necessary for the fair representation of the information for the periods presented. The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Operating results for any period presented apply to that period only and are not necessarily indicative of results for any future period.

The accompanying unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related disclosures included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 24, 2022. The preparation of the unaudited interim consolidated financial statements requires us to make use of estimates and assumptions that may significantly affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the unaudited consolidated financial statements and the reported revenues and expenses for the periods presented. Such estimates and assumptions are used for, but are not limited to, net realizable value of inventories, environmental remediation liabilities, environmental and litigation contingencies, the cost of carbon credits required to meet environmental regulations, the cost of customer incentives, the cost to fulfill contractual commitments to our customers, useful lives of property and identifiable intangible assets, the assumptions used in the evaluation of potential impairments of property, investments, identifiable intangible assets and goodwill, income tax and valuation reserves, allowances for doubtful accounts receivable, the measurement of the fair values of investments for which markets are not active, assumptions used in the determination of the funded status and annual expense of defined benefit pension and other postretirement benefit plans and the valuation of stock-based compensation awards granted to employees.

CF INDUSTRIES HOLDINGS, INC.

2. Revenue Recognition

We track our revenue by product and by geography. See Note 17—Segment Disclosures for our revenue by reportable segment, which are Ammonia, Granular Urea, UAN, AN and Other. The following table summarizes our revenue by product and by geography (based on destination of our shipment) for the three months ended March 31, 2022 and 2021:


	Ammonia		Granular Urea		UAN		AN		Other		Total
	(in millions)











Three months ended March 31, 2022
North America	$	583	$	736	$	1,013	$	83	$	153	$	2,568
Europe and other	57		29		2		140		72		300

Total revenue	$	640	$	765	$	1,015	$	223	$	225	$	2,868
Three months ended March 31, 2021
North America	$	168	$	399	$	222	$	41	$	77	$	907
Europe and other	38		—		10		64		29		141
Total revenue	$	206	$	399	$	232	$	105	$	106	$	1,048

As of March 31, 2022 and December 31, 2021, we had $598 million and $700 million, respectively, in customer advances on our consolidated balance sheets. The revenue recognized during the three months ended March 31, 2022 and 2021 that was included in our customer advances at the beginning of each respective period amounted to approximately $560 million and $85 million, respectively.

We offer cash incentives to certain customers generally based on the volume of their purchases over the fertilizer year ending June 30. Our cash incentives do not provide an option to the customer for additional product. The balances of customer incentives accrued as of March 31, 2022 and December 31, 2021 were not material.

We have certain customer contracts with performance obligations under which, if the customer does not take the required amount of product specified in the contract, then the customer is required to make a payment to us, the amount of which payment may vary based upon the terms and conditions of the applicable contract. As of March 31, 2022, excluding contracts with original durations of less than one year, and based on the minimum product tonnage to be sold and current market price estimates, our remaining performance obligations under these contracts are approximately $750 million. We expect to recognize approximately 36% of these performance obligations as revenue in the remainder of 2022, approximately 57% as revenue during 2023-2024, approximately 5% as revenue during 2025-2026, and the remainder thereafter. Subject to the terms and conditions of the applicable contracts, if the customers do not satisfy their purchase obligations under such contracts, the minimum amount that they would be required to pay to us under such contracts, in the aggregate, is approximately $140 million as of March 31, 2022. Other than the performance obligations described above, any performance obligations with our customers that were unfulfilled or partially fulfilled at December 31, 2021 will be satisfied in 2022.

CF INDUSTRIES HOLDINGS, INC.

3. Net Earnings Per Share

Net earnings per share were computed as follows:


	Three months ended March 31,
		2022		2021
		(in millions, except per share amounts)
Net earnings attributable to common stockholders		$	883	$	151
Basic earnings per common share:
Weighted-average common shares outstanding		208.6		214.9
Net earnings attributable to common stockholders		$	4.23	$	0.70
Diluted earnings per common share:
Weighted-average common shares outstanding		208.6		214.9
Dilutive common shares—stock-based awards		1.3		1.1
Diluted weighted-average common shares outstanding		209.9		216.0
Net earnings attributable to common stockholders		$	4.21	$	0.70

Diluted earnings per common share is calculated using weighted-average common shares outstanding, including the dilutive effect of stock-based awards as determined under the treasury stock method. In the computation of diluted earnings per common share, potentially dilutive stock-based awards are excluded if the effect of their inclusion is anti-dilutive. Shares for anti-dilutive stock-based awards not included in the computation of diluted earnings per common share were 1.2 million in the three months ended March 31, 2021.

4. Inventories

Inventories consist of the following:


	March 31, 2022		December 31, 2021
	(in millions)
Finished goods	$	436	$	358
Raw materials, spare parts and supplies	52		50
Total inventories	$	488	$	408

5. United Kingdom Energy Crisis and Impairment Charges

During the third quarter of 2021, the United Kingdom began experiencing an energy crisis that included a substantial increase in the price of natural gas, which impacted our U.K. operations. In the first half of 2021, natural gas prices had increased to levels that were considered high compared to historical prices, and prices then more than doubled within the third quarter of 2021. On September 15, 2021, we announced the halt of operations at both our Ince and Billingham manufacturing facilities in the United Kingdom due to negative profitability driven by the high cost of natural gas. After certain agreements were finalized, our Billingham facility resumed operations. As of the filing of this report, production continues at our Billingham facility and continues to be idled at our Ince facility.

In the second half of 2021, the U.K. energy crisis necessitated evaluations of the goodwill and long-lived assets, including definite-lived intangible assets, of our U.K. operations to determine if their fair value had declined to below their carrying value. Based on these analyses, we concluded that declines in fair value had occurred, and we recognized impairment charges of $521 million in 2021, consisting of long-lived and intangible asset impairment charges of $236 million and goodwill impairment charges of $285 million. As a result, we had no remaining goodwill related to our U.K. operations on our consolidated balance sheet as of December 31, 2021.

CF INDUSTRIES HOLDINGS, INC.

During the first quarter of 2022, we concluded that the continued impacts of the U.K. energy crisis, including further increases and volatility in natural gas prices due in part to recent geopolitical events as a result of Russia’s invasion of Ukraine in February 2022, triggered an additional long-lived asset impairment test. The results of the interim impairment test indicated that no additional long-lived asset impairment existed as the undiscounted estimated future cash flows were in excess of the carrying values for each of the U.K. asset groups, consisting of U.K. Ammonia, U.K. AN and U.K. Other.

6. Property, Plant and Equipment—Net

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


	March 31, 2022		December 31, 2021
	(in millions)
Land	$	67	$	68
Machinery and equipment(1)	12,763		12,757
Buildings and improvements(1)	916		915
Construction in progress(1)	179		148
Property, plant and equipment(2)	13,925		13,888
Less: Accumulated depreciation and amortization	7,019		6,807
Property, plant and equipment—net	$	6,906	$	7,081

(1)At both March 31, 2022 and December 31, 2021, machinery and equipment, buildings and improvements, and construction in progress include cumulative impairment charges of $169 million, $5 million and $8 million, respectively, which were recorded in 2021.

(2)As of March 31, 2022 and December 31, 2021, we had property, plant and equipment that was accrued but unpaid of approximately $22 million and $35 million, respectively. As of March 31, 2021 and December 31, 2020, we had property, plant and equipment that was accrued but unpaid of approximately $33 million and $43 million, respectively.

Depreciation and amortization related to property, plant and equipment was $205 million and $200 million for the three months ended March 31, 2022 and 2021, respectively.

In the first quarter of 2022, we concluded that the continued impacts of the U.K. energy crisis, including higher natural gas prices due in part to recent geopolitical events, triggered an impairment test of the long-lived assets in our U.K. asset groups. This test indicated that no long-lived asset impairment existed as the undiscounted estimated future cash flows were in excess of the carrying values for each of the U.K. asset groups. Long-lived assets on our consolidated balance sheet as of March 31, 2022 include approximately $400 million, approximately $360 million of which consists of property, plant and equipment, related to the U.K. asset groups. See Note 5—United Kingdom Energy Crisis and Impairment Charges for additional information.

Plant turnarounds—Scheduled inspections, replacements and overhauls of plant machinery and equipment at our continuous process manufacturing facilities during a full plant shutdown are referred to as plant turnarounds. The expenditures related to turnarounds are capitalized in property, plant and equipment when incurred. The following is a summary of capitalized plant turnaround costs:


	Three months ended March 31,
	2022		2021
	(in millions)
Net capitalized turnaround costs:
Beginning balance	$	355	$	226
Additions	5		10
Depreciation	(36)		(25)
Effect of exchange rate changes	(1)		—
Ending balance	$	323	$	211

CF INDUSTRIES HOLDINGS, INC.

Scheduled replacements and overhauls of plant machinery and equipment during a plant turnaround include the dismantling, repair or replacement and installation of various components including piping, valves, motors, turbines, pumps, compressors and heat exchangers and the replacement of catalysts when a full plant shutdown occurs. Scheduled inspections, including required safety inspections which entail the disassembly of various components such as steam boilers, pressure vessels and other equipment requiring safety certifications, are also conducted during full plant shutdowns. Internal employee costs and overhead amounts are not considered turnaround costs and are not capitalized.

7. Goodwill and Other Intangible Assets

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


	Ammonia(1)		Granular Urea		UAN		AN(1)		Other(1)		Total
	(in millions)
Balance as of December 31, 2021	$	579	$	828	$	576	$	69	$	39	$	2,091

Effect of exchange rate changes	—		—		—		—		—		—
Balance as of March 31, 2022	$	579	$	828	$	576	$	69	$	39	$	2,091

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

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


	March 31, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
	(in millions)

Customer relationships(1)	$	83	$	(59)	$	24	$	84	$	(60)	$	24
Trade names(1)	30		(10)		20		31		(10)		21

Total intangible assets	$	113	$	(69)	$	44	$	115	$	(70)	$	45

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

Our customer relationships and trade names are being amortized over a weighted-average life of approximately 20 years. Amortization expense of our identifiable intangible assets was $1 million and $2 million for the three months ended March 31, 2022 and 2021, respectively. The gross carrying amount and accumulated amortization of our intangible assets are also impacted by the effect of exchange rate changes. Total estimated amortization expense for the remainder of 2022 is $3 million and for each of the fiscal years 2023-2027 is $4 million.

In the first quarter of 2022, we concluded that the continued impacts of the U.K. energy crisis, including higher natural gas prices due in part to recent geopolitical events, triggered an impairment test of the long-lived assets in our U.K. asset groups. This test indicated that no long-lived asset impairment existed as the undiscounted estimated future cash flows were in excess of the carrying values for each of the U.K. asset groups. See Note 5—United Kingdom Energy Crisis and Impairment Charges for additional information. Long-lived assets on our consolidated balance sheet as of March 31, 2022 include approximately $400 million, $25 million of which consists of customer relationships and trade names, related to the U.K. asset groups.

CF INDUSTRIES HOLDINGS, INC.

8. Equity Method Investment

We have a 50% ownership interest in Point Lisas Nitrogen Limited (PLNL), which operates an ammonia production facility in the Republic of Trinidad and Tobago. We include our share of the net earnings from this equity method investment as an element of earnings from operations because PLNL provides additional production to our operations and is integrated with our other supply chain and sales activities in the Ammonia segment.

As of March 31, 2022, the total carrying value of our equity method investment in PLNL was $84 million, $38 million more than our share of PLNL’s book value. The excess is attributable to the purchase accounting impact of our acquisition of the investment in PLNL and reflects the revaluation of property, plant and equipment. The increased basis for property, plant and equipment is being amortized over a remaining period of approximately 11 years. Our equity in earnings of PLNL is different from our ownership interest in income reported by PLNL due to amortization of this basis difference.

We have transactions in the normal course of business with PLNL reflecting our obligation to purchase 50% of the ammonia produced by PLNL at current market prices. Our ammonia purchases from PLNL totaled $74 million and $26 million for the three months ended March 31, 2022 and 2021, respectively.

9. Fair Value Measurements

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


	March 31, 2022
	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
	(in millions)
Cash	$	207	$	—	$	—	$	207
Cash equivalents:
U.S. and Canadian government obligations	2,324		—		—		2,324
Other debt securities	86		—		—		86
Total cash and cash equivalents	$	2,617	$	—	$	—	$	2,617

Nonqualified employee benefit trusts	17		2		—		19


	December 31, 2021
	Cost Basis		Unrealized Gains		Unrealized Losses		Fair Value
	(in millions)
Cash	$	121	$	—	$	—	$	121
Cash equivalents:
U.S. and Canadian government obligations	1,452		—		—		1,452
Other debt securities	55		—		—		55
Total cash and cash equivalents	$	1,628	$	—	$	—	$	1,628

Nonqualified employee benefit trusts	17		3		—		20

Under our short-term investment policy, we may invest our cash balances, either directly or through mutual funds, in several types of investment-grade securities, including notes and bonds issued by governmental entities or corporations. Securities issued by governmental entities include those issued directly by the U.S. and Canadian federal governments; those issued by state, local or other governmental entities; and those guaranteed by entities affiliated with governmental entities.

CF INDUSTRIES HOLDINGS, INC.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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


	March 31, 2022
	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)
Cash equivalents	$	2,410	$	2,410	$	—	$	—

Nonqualified employee benefit trusts	19		19		—		—
Derivative assets	3		—		3		—

Embedded derivative liability	(15)		—		(15)		—


	December 31, 2021
	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(in millions)
Cash equivalents	$	1,507	$	1,507	$	—	$	—

Nonqualified employee benefit trusts	20		20		—		—
Derivative assets	16		—		16		—
Derivative liabilities	(47)		—		(47)		—
Embedded derivative liability	(15)		—		(15)		—

Cash Equivalents

As of March 31, 2022 and December 31, 2021, our cash equivalents consisted primarily of U.S. and Canadian government obligations and money market mutual funds that invest in U.S. government obligations and other investment-grade securities.

Nonqualified Employee Benefit Trusts

We maintain trusts associated with certain nonqualified supplemental pension plans. The fair values of the trust assets are based on daily quoted prices in an active market, which represents the net asset values of the shares held in the trusts, and are included on our consolidated balance sheets in other assets. Debt securities are accounted for as available-for-sale securities, and changes in fair value are reported in other comprehensive income. Changes in the fair value of available-for-sale equity securities in the trust assets are recognized through earnings.

Derivative Instruments

The derivative instruments that we use are primarily natural gas fixed price swaps, basis swaps and options traded in the over-the-counter markets with multi-national commercial banks, other major financial institutions or large energy companies. The natural gas derivative contracts represent anticipated natural gas needs for future periods and settlements are scheduled to coincide with anticipated natural gas purchases during those future periods. The natural gas derivative contracts settle using primarily a NYMEX futures price index. To determine the fair value of these instruments, we use quoted market prices from NYMEX and standard pricing models with inputs derived from or corroborated by observable market data such as forward curves supplied by an industry-recognized independent third party. See Note 13—Derivative Financial Instruments for additional information.

CF INDUSTRIES HOLDINGS, INC.

Embedded Derivative Liability

Under the terms of our strategic venture with CHS Inc. (CHS), if our credit rating as determined by two of three specified credit rating agencies is below certain levels, we are required to make a non-refundable yearly payment of $5 million to CHS. Since 2016, our credit ratings have been below certain levels and, as a result, we made an annual payment of $5 million to CHS in the fourth quarter of each year. These payments will continue on a yearly basis until the earlier of the date that our credit rating is upgraded to or above certain levels by two of the three specified credit rating agencies or February 1, 2026. This obligation is recognized on our consolidated balance sheets as an embedded derivative and is included within other current liabilities and other liabilities. As of both March 31, 2022 and December 31, 2021, the embedded derivative liability was $15 million.

The inputs into the fair value measurement include the probability of future upgrades and downgrades of our credit rating based on historical credit rating movements of other public companies and the discount rates to be applied to potential annual payments based on applicable credit spreads of other public companies at different credit rating levels. Based on these inputs, our fair value measurement is classified as Level 2.

See Note 14—Noncontrolling Interest for additional information regarding our strategic venture with CHS.

Financial Instruments

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


	March 31, 2022				December 31, 2021
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(in millions)
Long-term debt, including current maturities	$	3,462	$	3,781	$	3,465	$	4,113

The fair value of our long-term debt was based on quoted prices for identical or similar liabilities in markets that are not active or valuation models in which all significant inputs and value drivers are observable and, as a result, they are classified as Level 2 inputs.

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

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We also have assets and liabilities that may be measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment, when there is allocation of purchase price in an acquisition or when a new liability is being established that requires fair value measurement. These include long-lived assets, goodwill and other intangible assets and investments in unconsolidated subsidiaries, such as equity method investments, which may be written down to fair value as a result of impairment. The fair value measurements related to each of these rely primarily on Company-specific inputs and the Company’s assumptions about the use of the assets. Since certain of the Company’s assumptions would involve inputs that are not observable, these fair values would reside within Level 3 of the fair value hierarchy.

10. Income Taxes

For the three months ended March 31, 2022, we recorded an income tax provision of $401 million on pre-tax income of $1.45 billion, or an effective tax rate of 27.6%, compared to an income tax provision of $18 million on pre-tax income of $193 million, or an effective tax rate of 9.3%, for the three months ended March 31, 2021.

For the three months ended March 31, 2022, our income tax provision includes $20 million of income tax benefit due to share-based compensation activity and $78 million of income tax provision related to the Canada Revenue Agency Competent Authority Matter and certain transfer pricing reserves recorded in the period, as discussed below. For the three months ended March 31, 2021, our income tax provision includes a $22 million benefit reflecting the impact of agreement on certain issues related to U.S. federal income tax audits.

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

CF INDUSTRIES HOLDINGS, INC.

noncontrolling interest. Our effective tax rate for the three months ended March 31, 2022 of 27.6%, which is based on pre-tax income of $1.45 billion, including $168 million of earnings attributable to the noncontrolling interest, would be 3.7 percentage points higher if based on pre-tax income exclusive of the $168 million of earnings attributable to the noncontrolling interest. Our effective tax rate for the three months ended March 31, 2021 of 9.3%, which is based on pre-tax income of $193 million, including $24 million of earnings attributable to the noncontrolling interest, would be 1.3 percentage points higher if based on pre-tax income exclusive of the $24 million of earnings attributable to the noncontrolling interest.

Canada Revenue Agency Competent Authority Matter

In 2016, the Canada Revenue Agency (CRA) and Alberta Tax and Revenue Administration (Alberta TRA) issued Notices of Reassessment for tax years 2006 through 2009 to one of our Canadian affiliates asserting a disallowance of certain patronage deductions. We filed Notices of Objection with respect to the Notices of Reassessment with the CRA and Alberta TRA and posted letters of credit in lieu of paying the additional tax liability assessed. The letters of credit serve as security until the matter is resolved. In 2018, the matter, including the related transfer pricing topic regarding the allocation of profits between Canada and the United States, was accepted for consideration under the bilateral settlement provisions of the U.S.-Canada tax treaty (the Treaty) by the United States and Canadian competent authorities, and included tax years 2006 through 2011. In the second quarter of 2021, the Company submitted the transfer pricing aspect of the matter into the arbitration process under the terms of the Treaty.

In February 2022, we were informed that a decision was reached by the arbitration panel for tax years 2006 through 2011. In March 2022, we received further details of the results of the arbitration proceedings and the settlement provisions between the United States and Canadian competent authorities, and we accepted the decision of the arbitration panel. Under the terms of the arbitration decision, additional income for tax years 2006 through 2011 will be subject to tax in Canada, resulting in our having additional Canadian tax liability for those tax years of approximately $127 million, based on current estimates. We expect this resulting Canadian tax liability, plus interest of approximately $98 million, will be assessed in the second quarter of 2022 and that payment of those amounts, aggregating to approximately $225 million, based on current estimates, will be due in the third quarter of 2022. The letters of credit we had posted in lieu of paying the additional tax liability assessed by the Notices of Reassessment will be cancelled upon payment of the additional tax and interest to Canada. Due primarily to the availability of additional foreign tax credits to offset in part the increased Canadian tax referenced above, the Company will file amended tax returns in the United States to request a refund of tax overpaid.

In the three months ended March 31, 2022, as a result of the impact of these events on our Canadian and U.S. federal and state income taxes, we recognized an income tax provision of $76 million, reflecting the net impact of $127 million of accrued income taxes payable to Canada for tax years 2006 to 2011, partially offset by net income tax receivables of approximately $51 million in the United States, and we accrued net interest of $99 million, primarily reflecting the impact of estimated interest payable to Canada.

Transfer pricing reserves

As a result of the outcome of the arbitration decision discussed above, we have also evaluated our transfer pricing positions between Canada and the United States for open years 2012 and after. Based on this evaluation, for the three months ended March 31, 2022, we recorded the following:

liabilities for unrecognized tax benefits of $319 million with a corresponding income tax provision, and accrued interest of $91 million related to the liabilities for unrecognized tax benefits, and
noncurrent income tax receivables of $329 million with a corresponding income tax benefit, and accrued interest income of $28 million related to the noncurrent income tax receivables.

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

As of March 31, 2022, as a result of recording these transfer pricing reserves, the total amount of our unrecognized tax benefits was $349 million, and the total amounts accrued for interest and penalties related to income taxes included in other liabilities was $96 million. As of December 31, 2021, the total amount of our unrecognized tax benefits was $27 million and the total amounts accrued for interest and penalties related to income taxes was $4 million. We expect that the ultimate outcome of the transfer pricing reserves will not have a material net impact on our results of operations, financial condition or cash flows. However, we can provide no assurance as to the ultimate outcome. Based on the information currently available, we believe we have adequately reserved for the open tax years.

CF INDUSTRIES HOLDINGS, INC.

11. Financing Agreements

Revolving Credit Agreement

We have a senior unsecured revolving credit agreement (the Revolving Credit Agreement), which provides for a revolving credit facility of up to $750 million with a maturity of December 5, 2024. The Revolving Credit Agreement includes a letter of credit sub-limit of $125 million. Borrowings under the Revolving Credit Agreement may be used for working capital, capital expenditures, acquisitions, share repurchases and other general corporate purposes.

Borrowings under the Revolving Credit Agreement may be denominated in U.S. dollars, Canadian dollars, euros and British pounds, and bear interest at a per annum rate equal to, at our option, an applicable eurocurrency rate or base rate plus, in either case, a specified margin. We are required to pay an undrawn commitment fee on the undrawn portion of the commitments under the Revolving Credit Agreement and customary letter of credit fees. The specified margin and the amount of the commitment fee depend on CF Holdings’ credit rating at the time.

As of March 31, 2022, we had unused borrowing capacity under the Revolving Credit Agreement of $750 million and no outstanding letters of credit. There were no borrowings outstanding under the Revolving Credit Agreement as of March 31, 2022 or December 31, 2021, or during the three months ended March 31, 2022.

The Revolving Credit Agreement contains representations and warranties and affirmative and negative covenants, including financial covenants. As of March 31, 2022, we were in compliance with all covenants under the Revolving Credit Agreement.

Letters of Credit

In addition to the letters of credit that may be issued under the Revolving Credit Agreement, as described above, we have also entered into a bilateral agreement with capacity to issue up to $250 million of letters of credit. As of March 31, 2022, approximately $197 million of letters of credit were outstanding under this agreement.

Senior Notes

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


	Effective Interest Rate		March 31, 2022						December 31, 2021
		Principal			Carrying Amount(1)			Principal			Carrying Amount(1)
			(in millions)
Public Senior Notes:


3.450% due June 2023(2)	3.665%		$	500		$	499		$	500		$	499
5.150% due March 2034	5.293%		750			741			750			741
4.950% due June 2043	5.040%		750			741			750			742
5.375% due March 2044	5.478%		750			740			750			741
Senior Secured Notes:

4.500% due December 2026(3)	4.783%		750			741			750			742
Total long-term debt			$	3,500		$	3,462		$	3,500		$	3,465



Less: Current maturities of long-term debt			500			499			—			—
Long-term debt, net of current maturities			$	3,000		$	2,963		$	3,500		$	3,465

(1)Carrying amount is net of unamortized debt discount and deferred debt issuance costs. Total unamortized debt discount was $8 million as of both March 31, 2022 and December 31, 2021, and total deferred debt issuance costs were $30 million and $27 million as of March 31, 2022 and December 31, 2021, respectively.

(2)These notes were redeemed in full on April 21, 2022.

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

CF INDUSTRIES HOLDINGS, INC.

As of March 31, 2022, under the indentures (including the applicable supplemental indentures) governing the senior notes due 2023, 2034, 2043 and 2044 identified in the table above (the Public Senior Notes), each series of Public Senior Notes was guaranteed by CF Holdings.

As of March 31, 2022, under the terms of the indenture governing the 4.500% senior secured notes due December 2026 (the 2026 Notes) identified in the table above, the 2026 Notes were guaranteed by CF Holdings. Until August 23, 2021, the 2026 Notes were guaranteed by certain subsidiaries of CF Industries. The requirement for subsidiary guarantees of the 2026 Notes was eliminated, and all subsidiary guarantees were automatically released, as a result of an investment grade rating event under the terms of the indenture governing the 2026 Notes on August 23, 2021.

On March 20, 2021, we redeemed in full all of the $250 million outstanding principal amount of the 3.400% senior secured notes due December 2021 (the 2021 Notes) in accordance with the optional redemption provisions in the indenture governing the 2021 Notes. The total aggregate redemption price paid in connection with the redemption of the 2021 Notes was $258 million, including accrued interest. As a result, we recognized a loss on debt extinguishment of $6 million, consisting primarily of the premium paid on the redemption of the 2021 Notes prior to their scheduled maturity.

On March 21, 2022, we announced that CF Industries elected to redeem in full all of the $500 million outstanding principal amount of the 3.450% senior notes due June 2023 (the 2023 Notes) on April 21, 2022, in accordance with the optional redemption provisions in the indenture governing the 2023 Notes. See Note 18—Subsequent Events for additional information.

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

12. Interest Expense

Details of interest expense are as follows:


	Three months ended March 31,
		2022		2021
		(in millions)
Interest on borrowings(1)		$	42	$	46
Fees on financing agreements(1)		2		2
Interest on tax liabilities(2)		198		—
Interest capitalized		(1)		—
Total interest expense		$	241	$	48

(1)See Note 11—Financing Agreements for additional information.

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

13. Derivative Financial Instruments

We use derivative financial instruments to reduce our exposure to changes in prices for natural gas that will be purchased in the future. Natural gas is the largest and most volatile component of our manufacturing cost for nitrogen-based products. From time to time, we may also use derivative financial instruments to reduce our exposure to changes in foreign currency exchange rates. The derivatives that we use to reduce our exposure to changes in prices for natural gas are primarily natural gas fixed price swaps, basis swaps and options traded in the over-the-counter markets. These natural gas derivatives settle using primarily a NYMEX futures price index, which represents the basis for fair value at any given time. We enter into natural gas derivative contracts with respect to natural gas to be consumed by us in the future, and settlements of those derivative contracts are scheduled to coincide with our anticipated purchases of natural gas used to manufacture nitrogen products during those future periods. We use natural gas derivatives as an economic hedge of natural gas price risk, but without the application of hedge accounting. As a result, changes in fair value of these contracts are recognized in earnings. As of March 31, 2022, we had natural gas derivative contracts covering certain periods through March 2023.

As of March 31, 2022, our open natural gas derivative contracts consisted of natural gas fixed price swaps and basis swaps for 2.9 million MMBtus. As of December 31, 2021, we had open natural gas derivative contracts consisting of natural

CF INDUSTRIES HOLDINGS, INC.

gas fixed price swaps, basis swaps and options for 60.0 million MMBtus of natural gas. For the three months ended March 31, 2022, we used derivatives to cover approximately 45% of our natural gas consumption.

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


	Gain (loss) recognized in income
		Three months ended March 31,
	Location			2022		2021
			(in millions)


Unrealized net gains on natural gas derivatives	Cost of sales			$	33	$	6
Realized net gains (losses) on natural gas derivatives	Cost of sales			17		(3)
Gain on net settlement of natural gas derivatives due to Winter Storm Uri	Cost of sales			—		112
Net derivative gains				$	50	$	115

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

We also enter into supply agreements to facilitate the availability of natural gas to operate our plants. When we purchase natural gas under these agreements, we intend to take physical delivery for use in our plants. Certain of these supply agreements allow us to fix the price of the deliveries for the following month using an agreed upon first of month price. We utilize the Normal Purchase Normal Sales (NPNS) derivative scope exception for these fixed price contracts and therefore, we do not account for them as derivatives.

In the first quarter of 2021, the central portion of the United States experienced extreme and unprecedented cold weather due to the impact of Winter Storm Uri. Certain natural gas suppliers and natural gas pipelines declared force majeure events due to frozen equipment. This occurred at the same time as large increases in natural gas demand were occurring due to the extreme cold temperatures. Due to these unprecedented factors, several states declared a state of emergency and natural gas was redirected for residential usage. We net settled certain natural gas contracts with our suppliers and received prevailing market prices, which were in excess of our cost. We no longer qualified for the NPNS derivative scope exception for the natural gas that was net settled with our suppliers due to the impact of Winter Storm Uri. As a result, we recognized a gain of $112 million from the net settlement of these natural gas contracts, which is reflected in cost of sales in our consolidated statement of operations for the three months ended March 31, 2021.

The fair values of derivatives on our consolidated balance sheets are shown below. As of March 31, 2022 and December 31, 2021, none of our derivative instruments were designated as hedging instruments. See Note 9—Fair Value Measurements for additional information on derivative fair values.


	Asset Derivatives					Liability Derivatives
	Balance Sheet Location	March 31, 2022		December 31, 2021		Balance Sheet Location	March 31, 2022		December 31, 2021
		(in millions)					(in millions)


Natural gas derivatives	Other current assets	$	3	$	16	Other current liabilities	$	—	$	(47)

Most of our International Swaps and Derivatives Association (ISDA) agreements contain credit-risk-related contingent features such as cross default provisions. In the event of certain defaults or termination events, our counterparties may request early termination and net settlement of certain derivative trades, or under certain ISDA agreements, may require us to collateralize derivatives in a net liability position. As of March 31, 2022 and December 31, 2021, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was zero and $31 million, respectively, which also approximates the fair value of the assets that may be needed to settle the obligations if the credit-risk-related contingent features were triggered at the reporting dates. The credit support documents executed in connection with certain of our ISDA agreements generally provide us and our counterparties the right to set off collateral against amounts owing under the ISDA agreements upon the occurrence of a default or a specified termination event. As of March 31, 2022 and December 31, 2021, we had no cash collateral on deposit with counterparties for derivative contracts.

CF INDUSTRIES HOLDINGS, INC.

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


	Amounts presented in consolidated balance sheets(1)			Gross amounts not offset in consolidated balance sheets
			Financial instruments			Cash collateral received (pledged)			Net amount
	(in millions)
March 31, 2022
Total derivative assets	$	3		$	—		$	—		$	3
Total derivative liabilities	—			—			—			—
Net derivative assets	$	3		$	—		$	—		$	3
December 31, 2021
Total derivative assets	$	16		$	—		$	—		$	16
Total derivative liabilities	(47)			—			—			(47)
Net derivative liabilities	$	(31)		$	—		$	—		$	(31)

(1)We report the fair values of our derivative assets and liabilities on a gross basis on our consolidated balance sheets. As a result, the gross amounts recognized and net amounts presented are the same.

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

14. Noncontrolling Interest

We have a strategic venture with CHS under which CHS owns an equity interest in CFN, a subsidiary of CF Holdings, which represents approximately 11% of the membership interests of CFN. We own the remaining membership interests. Under the terms of CFN’s limited liability company agreement, each member’s interest will reflect, over time, the impact of the profitability of CFN, any member contributions made to CFN and withdrawals and distributions received from CFN. For financial reporting purposes, the assets, liabilities and earnings of the strategic venture are consolidated into our financial statements. CHS’ interest in the strategic venture is recorded in noncontrolling interest in our consolidated financial statements.

A reconciliation of the beginning and ending balances of noncontrolling interest and distributions payable to noncontrolling interest in our consolidated balance sheets is provided below.



	2022		2021

	(in millions)
Noncontrolling interest:
Balance as of January 1	$	2,830	$	2,681

Earnings attributable to noncontrolling interest	168		24
Declaration of distributions payable	(247)		(64)


Balance as of March 31	$	2,751	$	2,641
Distributions payable to noncontrolling interest:
Balance as of January 1	$	—	$	—
Declaration of distributions payable	247		64
Distributions to noncontrolling interest	(247)		(64)

Balance as of March 31	$	—	$	—

CF INDUSTRIES HOLDINGS, INC.

CHS also receives deliveries pursuant to a supply agreement under which CHS has the right to purchase annually from CFN up to approximately 1.1 million tons of granular urea and 580,000 tons of UAN at market prices. As a result of its equity interest in CFN, CHS is entitled to semi-annual cash distributions from CFN. We are also entitled to semi-annual cash distributions from CFN. The amounts of distributions from CFN to us and CHS are based generally on the profitability of CFN and determined based on the volume of granular urea and UAN sold by CFN to us and CHS pursuant to supply agreements, less a formula driven amount based primarily on the cost of natural gas used to produce the granular urea and UAN, and adjusted for the allocation of items such as operational efficiencies and overhead amounts. Additionally, under the terms of the strategic venture, we recognized an embedded derivative related to our credit rating. See Note 9—Fair Value Measurements for additional information.

15. Stockholders’ Equity

Treasury Stock

On November 3, 2021, our Board of Directors (the Board) authorized the repurchase of up to $1.5 billion of CF Holdings common stock through December 31, 2024 (the 2021 Share Repurchase Program). Repurchases under the 2021 Share Repurchase Program may be made from time to time in the open market, through privately negotiated transactions, through block transactions or otherwise. The manner, timing and amount of repurchases will be determined by our management based on the evaluation of market conditions, stock price, and other factors. In the three months ended March 31, 2022, we repurchased approximately 1.3 million shares under the 2021 Share Repurchase Program for $100 million. In the three months ended March 31, 2022, we retired 27,962 shares of repurchased stock, including shares repurchased under the share repurchase program that expired on December 31, 2021. At March 31, 2022, we held 1,563,679 shares of treasury stock.

Accumulated Other Comprehensive Loss

Changes to accumulated other comprehensive loss and the impact on other comprehensive income (loss) are as follows:


	Foreign Currency Translation Adjustment		Unrealized Gain on Derivatives		Defined Benefit Plans		Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance as of December 31, 2020	$	(144)	$	4	$	(180)	$	(320)



Reclassification to earnings(1)	—		—		2		2

Effect of exchange rate changes and deferred taxes	14		—		(1)		13
Balance as of March 31, 2021	$	(130)	$	4	$	(179)	$	(305)

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




Reclassification to earnings(1)	—		—		1		1

Effect of exchange rate changes and deferred taxes	(13)		—		3		(10)
Balance as of March 31, 2022	$	(154)	$	4	$	(116)	$	(266)

(1)Reclassifications out of accumulated other comprehensive loss to the consolidated statements of operations during the three months ended March 31, 2022 and 2021 were not material.

CF INDUSTRIES HOLDINGS, INC.

16. Contingencies

Litigation

West Fertilizer Co.

On April 17, 2013, there was a fire and explosion at the West Fertilizer Co. fertilizer storage and distribution facility in West, Texas. According to published reports, 15 people were killed and approximately 200 people were injured in the incident, and the fire and explosion damaged or destroyed a number of homes and buildings around the facility. Various subsidiaries of CF Industries Holdings, Inc. (the CF Entities) were named as defendants along with other companies in lawsuits filed in 2013, 2014 and 2015 in the District Court of McLennan County, Texas by the City of West, individual residents of the County and other parties seeking recovery for damages allegedly sustained as a result of the explosion. The cases were consolidated for discovery and pretrial proceedings in the District Court of McLennan County under the caption “In re: West Explosion Cases.” The two-year statute of limitations expired on April 17, 2015. As of that date, over 400 plaintiffs had filed claims, including at least 9 entities, 325 individuals, and 80 insurance companies. Plaintiffs allege various theories of negligence, strict liability, and breach of warranty under Texas law. Although we did not own or operate the facility or directly sell our products to West Fertilizer Co., products that the CF Entities manufactured and sold to others were delivered to the facility and may have been stored at the West facility at the time of the incident.

All but two of the claims, including all wrongful death and personal injury claims, have been resolved pursuant to confidential settlements that have been or we expect will be fully funded by insurance. The two remaining subrogation and statutory indemnification claims have not yet been set for trial. We believe we have strong legal and factual defenses and intend to continue defending the CF Entities vigorously in the remaining lawsuits. Based upon currently available information, we expect any potential loss to be immaterial and fully indemnified by insurance.

Other Litigation

From time to time, we are subject to ordinary, routine legal proceedings related to the usual conduct of our business, including proceedings regarding public utility and transportation rates, environmental matters, taxes and permits relating to the operations of our various plants and facilities. Based on the information available as of the date of this filing, we believe that the ultimate outcome of these routine matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Environmental

From time to time, we receive notices from governmental agencies or third parties alleging that we are a potentially responsible party at certain cleanup sites under the Comprehensive Environmental Response, Compensation, and Liability Act or other environmental cleanup laws. In 2011, we received a notice from the Idaho Department of Environmental Quality (IDEQ) that alleged that we were a potentially responsible party for the cleanup of a former phosphate mine site we owned in the late 1950s and early 1960s located in Georgetown Canyon, Idaho. The current owner of the property and a former mining contractor received similar notices for the site. In 2014, we and the current property owner entered into a Consent Order with IDEQ and the U.S. Forest Service to conduct a remedial investigation and feasibility study of the site. A remedial investigation was submitted to the agencies in 2021. The next step will be a risk assessment, followed by a feasibility study. In 2015, we and several other parties received a notice that the U.S. Department of the Interior and other trustees intended to undertake a natural resource damage assessment for 18 former phosphate mines and three former processing facilities in southeast Idaho. The Georgetown Canyon former mine and processing facility was included in the group of former mines and processing facilities identified by the trustees. In June 2021, we received another notice from the U.S. Department of the Interior that the natural resource damage trustees were commencing a ‘subsequent’ phase of the natural resource damage assessment, but no further details were provided with respect to said assessment. Because the former Georgetown Canyon mine site is still in the risk assessment and feasibility study stage, we are not able to estimate at this time our potential liability, if any, with respect to the cleanup of the site or a possible claim for natural resource damages. However, based on the results of the site investigation conducted to date, we do not expect the remedial or financial obligations to which we may be subject involving this or other cleanup sites will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

CF INDUSTRIES HOLDINGS, INC.

17. Segment Disclosures

Our reportable segments consist of Ammonia, Granular Urea, UAN, AN and Other. These segments are differentiated by products. Our management uses gross margin to evaluate segment performance and allocate resources. Total other operating costs and expenses (consisting primarily of selling, general and administrative expenses and other operating—net) and non-operating expenses (consisting primarily of interest and income taxes) are centrally managed and are not included in the measurement of segment profitability reviewed by management.

Our assets, with the exception of goodwill, are not monitored by or reported to our chief operating decision maker by segment; therefore, we do not present total assets by segment. Goodwill by segment is presented in Note 7—Goodwill and Other Intangible Assets. Segment data for sales, cost of sales and gross margin for the three months ended March 31, 2022 and 2021 are presented in the table below.



	Ammonia(1)		Granular Urea(2)		UAN(2)		AN(2)		Other(2)		Consolidated
	(in millions)
















Three months ended March 31, 2022
Net sales	$	640	$	765	$	1,015	$	223	$	225	$	2,868
Cost of sales	280		270		345		171		104		1,170
Gross margin	$	360	$	495	$	670	$	52	$	121	1,698
Total other operating costs and expenses											66
Equity in earnings of operating affiliate											26
Operating earnings											$	1,658
Three months ended March 31, 2021
Net sales	$	206	$	399	$	232	$	105	$	106	$	1,048
Cost of sales	80		264		230		95		90		759
Gross margin	$	126	$	135	$	2	$	10	$	16	289
Total other operating costs and expenses											53

Equity in earnings of operating affiliate											11
Operating earnings											$	247

(1)Cost of sales and gross margin for the Ammonia segment for the three months ended March 31, 2021 include a $112 million gain on the net settlement of certain natural gas contracts with our suppliers. See Note 13—Derivative Financial Instruments for additional information.

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

18. Subsequent Events

On April 21, 2022, we redeemed in full all of the $500 million outstanding principal amount of the 2023 Notes in accordance with the optional redemption provisions in the indenture governing the 2023 Notes. The total aggregate redemption price paid in connection with the redemption of the 2023 Notes was approximately $513 million, including accrued interest. As a result, we will recognize a loss on debt extinguishment of approximately $8 million in the second quarter of 2022. See Note 11—Financing Agreements for additional information.

On April 27, 2022, the Board declared a quarterly dividend of $0.40 per common share, representing an increase from the quarterly dividend of $0.30 per common share that was declared and paid in the first quarter of 2022. The dividend will be paid on May 31, 2022 to stockholders of record as of May 16, 2022.

CF INDUSTRIES HOLDINGS, INC.

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