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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



FORM 10-Q



(Mark One)    

ý

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

OR

o

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from                               to                              

Commission file number 001-32597

CF INDUSTRIES HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  20-2697511
(I.R.S. Employer
Identification No.)

4 Parkway North, Suite 400
Deerfield, Illinois
(Address of principal executive offices)

 

60015
(Zip Code)

(847) 405-2400
(Registrant's telephone number, including area code)

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý    No o

        Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý    No o

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý   Accelerated filer o   Non-accelerated filer o
(Do not check if a smaller reporting company)
  Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No ý

        49,735,222 shares of the registrant's common stock, $0.01 par value per share, were outstanding at October 31, 2014.

   


Table of Contents


TABLE OF CONTENTS

PART I.   Financial Information    

 

 

Item 1.

 

Financial Statements (unaudited)

 

 
        Consolidated Statements of Operations   1
        Consolidated Statements of Comprehensive Income   2
        Consolidated Balance Sheets   3
        Consolidated Statements of Equity   4
        Consolidated Statements of Cash Flows   5
        Notes to Unaudited Consolidated Financial Statements   6

 

 

Item 2.

 

Management's Discussion and Analysis of Financial Condition and Results of Operations

 

40

 

 

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

67

 

 

Item 4.

 

Controls and Procedures

 

68

PART II.

 

Other Information

 

69

 

 

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

69

 

 

Item 6.

 

Exhibits

 

69

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CF INDUSTRIES HOLDINGS, INC.

PART I—FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS.

        


CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
  Three months ended
September 30,
  Nine months ended
September 30,
 
 
  2014   2013   2014   2013  
 
  (in millions, except per share amounts)
 

Net sales

  $ 921.4   $ 1,097.0   $ 3,526.7   $ 4,148.4  

Cost of sales

    620.3     710.9     2,192.5     2,222.0  
                   

Gross margin

    301.1     386.1     1,334.2     1,926.4  
                   

Selling, general and administrative expenses

    38.2     32.2     119.4     121.0  

Other operating—net

    25.7     (20.3 )   41.5     (9.2 )
                   

Total other operating costs and expenses

    63.9     11.9     160.9     111.8  

Gain on sale of phosphate business

            747.1      

Equity in earnings of operating affiliates

    9.4     11.2     27.3     32.3  
                   

Operating earnings

    246.6     385.4     1,947.7     1,846.9  

Interest expense

    46.4     41.0     137.1     112.4  

Interest income

    (0.2 )   (1.0 )   (0.7 )   (4.1 )

Other non-operating—net

    (0.1 )   (0.3 )   0.5     54.1  
                   

Earnings before income taxes and equity in earnings of non-operating affiliates

    200.5     345.7     1,810.8     1,684.5  

Income tax provision

    70.5     109.0     640.9     499.3  

Equity in earnings of non-operating affiliates—net of taxes

    10.6     7.2     15.8     6.2  
                   

Net earnings

    140.6     243.9     1,185.7     1,191.4  

Less: Net earnings attributable to noncontrolling interest

    9.7     9.8     33.7     52.6  
                   

Net earnings attributable to common stockholders

  $ 130.9   $ 234.1   $ 1,152.0   $ 1,138.8  
                   
                   

Net earnings per share attributable to common stockholders:

                         

Basic

  $ 2.63   $ 4.09   $ 22.23   $ 19.12  
                   
                   

Diluted

  $ 2.62   $ 4.07   $ 22.16   $ 19.01  
                   
                   

Weighted average common shares outstanding:

                         

Basic

    49.7     57.3     51.8     59.6  
                   
                   

Diluted

    49.9     57.5     52.0     59.9  
                   
                   

Dividends declared per common share

  $ 1.50   $ 0.40   $ 3.50   $ 1.20  
                   
                   

   

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

 
  Three months ended
September 30,
  Nine months ended
September 30,
 
 
  2014   2013   2014   2013  
 
  (in millions)
 

Net earnings

  $ 140.6   $ 243.9   $ 1,185.7   $ 1,191.4  

Other comprehensive income (loss):

   
 
   
 
   
 
   
 
 

Foreign currency translation adjustment—net of taxes          

    (51.7 )   39.5     (38.3 )   (28.7 )

Unrealized gain (loss) on hedging derivatives—net of taxes

    (1.8 )   3.9     (1.8 )   (0.3 )

Unrealized gain (loss) on securities—net of taxes

    0.4     (0.3 )   0.7     0.3  

Defined benefit plans—net of taxes

    3.1     (0.4 )   9.6     5.0  
                   

    (50.0 )   42.7     (29.8 )   (23.7 )
                   

Comprehensive income

    90.6     286.6     1,155.9     1,167.7  

Less: Comprehensive income attributable to the noncontrolling interest

    9.7     9.8     33.7     51.9  
                   

Comprehensive income attributable to common stockholders

  $ 80.9   $ 276.8   $ 1,122.2   $ 1,115.8  
                   
                   

   

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

 
  (Unaudited)
September 30,
2014
  December 31,
2013
 
 
  (in millions, except share
and per share amounts)

 

Assets

             

Current assets:

             

Cash and cash equivalents

  $ 2,651.2   $ 1,710.8  

Restricted cash

    145.6     154.0  

Accounts receivable—net

    156.9     230.9  

Inventories—net

    254.8     274.3  

Deferred income taxes

    39.8     60.0  

Prepaid income taxes

    43.5     33.4  

Assets held for sale

        74.3  

Other

    46.9     92.4  
           

Total current assets

    3,338.7     2,630.1  

Property, plant and equipment—net

    5,050.2     4,101.7  

Investments in and advances to affiliates

    925.2     926.0  

Goodwill

    2,094.0     2,095.8  

Noncurrent assets held for sale

        679.0  

Other assets

    251.7     245.5  
           

Total assets

  $ 11,659.8   $ 10,678.1  
           
           

Liabilities and Equity

             

Current liabilities:

             

Accounts payable and accrued expenses

  $ 555.7   $ 564.1  

Income taxes payable

    9.0     73.3  

Customer advances

    460.8     120.6  

Liabilities held for sale

        26.8  

Other

    23.3     43.5  
           

Total current liabilities

    1,048.8     828.3  
           

Long-term debt

    4,592.4     3,098.1  

Deferred income taxes

    814.3     833.2  

Noncurrent liabilities held for sale

        154.5  

Other noncurrent liabilities

    349.0     325.6  

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, 2014—52,198,430 shares issued and 2013—56,733,712 shares issued

    0.5     0.6  

Paid-in capital

    1,494.2     1,594.3  

Retained earnings

    3,679.1     3,725.6  

Treasury stock—at cost, 2014—2,469,229 shares and 2013—885,518 shares          

    (604.3 )   (201.8 )

Accumulated other comprehensive loss

    (72.4 )   (42.6 )
           

Total stockholders' equity

    4,497.1     5,076.1  

Noncontrolling interest

    358.2     362.3  
           

Total equity

    4,855.3     5,438.4  
           

Total liabilities and equity

  $ 11,659.8   $ 10,678.1  
           
           

   

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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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
Income (Loss)
  Total
Stockholders'
Equity
  Noncontrolling
Interest
  Total
Equity
 
 
  (in millions)
 

Balance at December 31, 2012

  $ 0.6   $ (2.3 ) $ 2,492.4   $ 3,461.1   $ (49.6 ) $ 5,902.2   $ 380.0   $ 6,282.2  

Net earnings

                1,138.8         1,138.8     52.6     1,191.4  

Other comprehensive income:

                                                 

Foreign currency translation adjustment—net of taxes

                    (28.0 )   (28.0 )   (0.7 )   (28.7 )

Unrealized net loss on hedging derivatives—net of taxes

                    (0.3 )   (0.3 )       (0.3 )

Unrealized net gain on securities—net of taxes

                    0.3     0.3         0.3  

Defined benefit plans—net of taxes

                    5.0     5.0         5.0  
                                             

Comprehensive income

                                  1,115.8     51.9     1,167.7  
                                             

Acquisitions of noncontrolling interests in Canadian Fertilizers Limited (CFL)

            (752.5 )           (752.5 )   (16.8 )   (769.3 )

Acquisition of treasury stock under employee stock plans

        (3.2 )               (3.2 )       (3.2 )

Purchases of treasury stock

        (1,111.5 )               (1,111.5 )       (1,111.5 )

Retirement of treasury stock

        750.1     (106.3 )   (643.8 )                

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

        5.2     4.7     (3.6 )       6.3         6.3  

Stock-based compensation expense

            9.3             9.3         9.3  

Excess tax benefit from stock-based compensation

            11.4             11.4         11.4  

Cash dividends ($1.20 per share)

                (71.9 )       (71.9 )       (71.9 )

Declaration of distribution payable

                            (59.1 )   (59.1 )

Effect of exchange rates changes

                            0.1     0.1  
                                   

Balance at September 30, 2013

  $ 0.6   $ (361.7 ) $ 1,659.0   $ 3,880.6   $ (72.6 ) $ 5,105.9   $ 356.1   $ 5,462.0  
                                   
                                   

Balance at December 31, 2013

  $ 0.6   $ (201.8 ) $ 1,594.3   $ 3,725.6   $ (42.6 ) $ 5,076.1   $ 362.3   $ 5,438.4  

Net earnings

                1,152.0         1,152.0     33.7     1,185.7  

Other comprehensive income:

                                                 

Foreign currency translation adjustment—net of taxes

                    (38.3 )   (38.3 )       (38.3 )

Unrealized net loss on hedging derivatives—net of taxes

                    (1.8 )   (1.8 )       (1.8 )

Unrealized net gain on securities—net of taxes

                    0.7     0.7         0.7  

Defined benefit plans—net of taxes

                    9.6     9.6         9.6  
                                             

Comprehensive income

                                  1,122.2     33.7     1,155.9  
                                             

Acquistion of treasury stock under employee stock plans

        (3.1 )               (3.1 )       (3.1 )

Purchases of treasury stock

        (1,550.8 )               (1,550.8 )       (1,550.8 )

Retirement of treasury stock

    (0.1 )   1,150.6     (133.4 )   (1,017.1 )                

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

        0.8     11.2             12.0         12.0  

Stock-based compensation expense

            13.4             13.4         13.4  

Excess tax benefit from stock-based compensation

            8.7             8.7         8.7  

Cash dividends ($3.50 per share)

                (181.4 )       (181.4 )       (181.4 )

Declaration of distribution payable

                            (37.8 )   (37.8 )
                                   

Balance at September 30, 2014

  $ 0.5   $ (604.3 ) $ 1,494.2   $ 3,679.1   $ (72.4 ) $ 4,497.1   $ 358.2   $ 4,855.3  
                                   
                                   

   

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
  Nine months ended
September 30,
 
 
  2014   2013  
 
  (in millions)
 

Operating Activities:

             

Net earnings

  $ 1,185.7   $ 1,191.4  

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

             

Depreciation, depletion and amortization

    298.5     313.8  

Deferred income taxes

    15.6     35.8  

Stock-based compensation expense

    13.6     9.5  

Excess tax benefit from stock-based compensation

    (8.7 )   (11.4 )

Unrealized loss (gain) on derivatives

    67.6     (4.0 )

Gain on sale of phosphate business

    (747.1 )    

Loss on disposal of property, plant and equipment

    2.5     5.0  

Undistributed earnings of affiliates—net

    (39.2 )   (12.9 )

Changes in:

             

Accounts receivable—net

    97.1     44.6  

Inventories—net

    13.6     (86.3 )

Accrued and prepaid income taxes

    (70.0 )   (232.7 )

Accounts payable and accrued expenses

    (7.2 )   69.4  

Customer advances

    340.2     52.5  

Other—net

    14.7     54.6  
           

Net cash provided by operating activities

    1,176.9     1,429.3  
           

Investing Activities:

             

Additions to property, plant and equipment

    (1,272.7 )   (632.9 )

Proceeds from sale of property, plant and equipment

    10.2     11.1  

Proceeds from sale of phosphate business

    1,353.6      

Sales and maturities of short-term and auction rate securities

    5.0     6.6  

Deposits to restricted cash funds

    (505.0 )   (111.4 )

Withdrawals from restricted cash funds

    513.4      

Other—net

    17.4     (4.3 )
           

Net cash provided by (used in) investing activities

    121.9     (730.9 )
           

Financing Activities:

             

Proceeds from long-term borrowings

    1,494.2     1,498.0  

Financing fees

    (16.0 )   (14.5 )

Dividends paid on common stock

    (181.4 )   (71.9 )

Distributions to noncontrolling interests

    (37.8 )   (64.4 )

Purchases of treasury stock

    (1,591.2 )   (1,111.5 )

Acquisitions of noncontrolling interests in CFL

        (918.7 )

Issuances of common stock under employee stock plans

    12.0     6.3  

Excess tax benefit from stock-based compensation

    8.7     11.4  

Other—net

    (43.0 )    
           

Net cash used in financing activities

    (354.5 )   (665.3 )
           

Effect of exchange rate changes on cash and cash equivalents

    (3.9 )   (21.8 )
           

Increase in cash and cash equivalents

    940.4     11.3  

Cash and cash equivalents at beginning of period

    1,710.8     2,274.9  
           

Cash and cash equivalents at end of period

  $ 2,651.2   $ 2,286.2  
           
           

   

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.


NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.     Background and Basis of Presentation

        We are one of the largest manufacturers and distributors of nitrogen fertilizer and other nitrogen products in the world. Our principal customers are cooperatives, independent fertilizer distributors and industrial users. Our principal nitrogen fertilizer products are ammonia, granular urea and urea ammonium nitrate solution (UAN). Our other nitrogen products include ammonium nitrate (AN), urea liquor, diesel exhaust fluid (DEF), and aqua ammonia, which are sold primarily to our industrial customers. Our core market and distribution facilities are concentrated in the midwestern United States (U.S.) and other major agricultural areas of the U.S. and Canada. We also export nitrogen fertilizer products from our Donaldsonville, Louisiana manufacturing facilities.

        Prior to March 17, 2014, we also manufactured and distributed phosphate fertilizers. Our principal phosphate products were diammonium phosphate (DAP) and monoammonium phosphate (MAP). On March 17, 2014, we completed the sale of our phosphate mining and manufacturing business (the "Transaction"), which was located in Florida, to The Mosaic Company (Mosaic) for approximately $1.4 billion in cash, subject to adjustments as provided in the agreement. The Transaction followed the terms of the definitive agreement executed in October 2013. The accounts receivable and accounts payable pertaining to the phosphate mining and manufacturing business and certain phosphate inventory held in distribution facilities were not sold to Mosaic in the Transaction and are being settled in the ordinary course.

        Upon closing the Transaction, we began to supply Mosaic with ammonia produced by our Point Lisas Nitrogen Limited (PLNL) joint venture. The contract to supply ammonia to Mosaic from our PLNL joint venture represents the continuation of a supply practice that previously existed between our former phosphate mining and manufacturing business and other operations of the Company. Prior to March 17, 2014, PLNL sold ammonia to us for use in the phosphate business and the cost was included in our production costs in the phosphate segment. Subsequent to the sale of the phosphate business, we now sell the PLNL sourced ammonia to Mosaic. The revenue from these sales and costs to purchase the ammonia are included in our ammonia segment. Our 50% share of the operating results of our PLNL joint venture continues to be included in our equity in earnings of operating affiliates in our consolidated statements of operations. Because of the significance of this continuing supply practice, in accordance with U.S. generally accepted accounting principles (GAAP), the phosphate mining and manufacturing business is not reported as discontinued operations in our consolidated statements of operations.

        During the third quarter of 2014, we changed our reporting segments from two segments, nitrogen and phosphate, into five segments: ammonia, granular urea, UAN, other and phosphate. The phosphate segment reflects the reported results of the phosphate business through March 17, 2014, plus the continuing sales of the phosphate inventory in the distribution network after March 17, 2014. The remaining phosphate inventory was sold in the second quarter of 2014; therefore, the phosphate segment does not have operating results subsequent to that quarter. See Note 19—Segment Reporting for additional information.

        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, 2013, in accordance with U.S. 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

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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 2013 Annual Report on Form 10-K filed with the SEC on February 27, 2014.

        The preparation of the unaudited interim consolidated financial statements requires management to make use of estimates and assumptions that affect the reported amount of assets and liabilities, revenue and expenses and certain financial statement disclosures. Actual results could differ from these estimates. Significant estimates and assumptions in the unaudited interim consolidated financial statements include net realizable value of inventories, the timing and ultimate settlement costs of asset retirement obligations, environmental remediation liabilities, environmental and litigation contingencies, the cost of sales incentives, 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 pension and postretirement employee benefit plans, the assumptions used to determine the relative fair values of the Company's new reportable segments and the assumptions used in the valuation of stock-based compensation awards granted to employees.

        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.

2.     Summary of Significant Accounting Policies

        For a complete discussion of the Company's significant accounting policies, refer to our 2013 Annual Report on Form 10-K filed with the SEC on February 27, 2014.

3.     New Accounting Standards

        In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers, which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) 605, Revenue Recognition. This standard is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments. Additionally, information concerning the costs to obtain and fulfill a contract, including assets to be recognized, is to be disclosed. This standard is effective for interim and annual reporting periods beginning after December 15, 2016. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements.

4.     Phosphate Business Disposition

        In March 2014, we completed the sale of our phosphate mining and manufacturing business to Mosaic (the "Transaction") pursuant to the terms of an Asset Purchase Agreement dated as of October 28, 2013 (the "Purchase Agreement"), among CF Industries Holdings, Inc., CF Industries, Inc. and Mosaic for approximately $1.4 billion in cash, subject to adjustments as provided in the Purchase Agreement. We recognized pre-tax and after-tax gains on the Transaction of $747.1 million and

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$461.0 million, respectively. Under the terms of the Purchase Agreement, the accounts receivable and accounts payable pertaining to the phosphate mining and manufacturing business and certain phosphate inventory held in distribution facilities were not sold to Mosaic in the Transaction and are being settled in the ordinary course.

        Upon closing the Transaction, we began to supply Mosaic with ammonia produced by our PLNL joint venture. The contract to supply ammonia to Mosaic from our PLNL joint venture represents the continuation of a supply practice that previously existed between our former phosphate mining and manufacturing business and other operations of the Company. Prior to March 17, 2014, PLNL sold ammonia to us for use in the phosphate business and the cost was included in our production costs in the phosphate segment. Subsequent to the sale of the phosphate business, we now sell the PLNL sourced ammonia to Mosaic. The revenue from these sales and costs to purchase the ammonia are included in our ammonia segment. Our 50% share of the operating results of our PLNL joint venture continues to be included in our equity of operating affiliates in our consolidated statements of operations. Because of the significance of this continuing supply practice, in accordance with U.S. GAAP, the phosphate mining and manufacturing business is not reported as discontinued operations in our consolidated statements of operations.

        The phosphate segment reflects the reported results of the phosphate business through March 17, 2014, plus the continuing sales of the phosphate inventory in the distribution network after March 17, 2014. The remaining phosphate inventory was sold in the second quarter of 2014; therefore, the phosphate segment does not have operating results subsequent to that quarter although the segment will continue to be included until the reporting of comparable period phosphate results cease.

        The phosphate mining and manufacturing business assets we sold in the Transaction include the Hardee County Phosphate Rock Mine; the Plant City Phosphate Complex; an ammonia terminal, phosphate warehouse and dock at the Port of Tampa; and the site of the former Bartow Phosphate Complex. In addition, Mosaic assumed certain liabilities related to the phosphate mining and manufacturing business, including responsibility for closure, water treatment and long-term maintenance and monitoring of the phosphogypsum stacks at the Plant City and Bartow complexes. Mosaic also received the value of the phosphate mining and manufacturing business's asset retirement obligation trust and escrow funds totaling approximately $200 million. See further discussion related to Florida environmental matters in Note 16—Contingencies. The assets and liabilities sold to Mosaic were classified as held for sale as of December 31, 2013; therefore, no depreciation was recorded in 2014 for the related property, plant and equipment.

5.     Derivative Financial Instruments

        We use derivative financial instruments to reduce our exposure to changes in commodity prices and foreign currency exchange rates.

Commodity Price Risk Management

        Natural gas is the largest and most volatile component of the manufacturing cost for nitrogen-based products. We manage the risk of changes in gas prices primarily through the use of derivative financial instruments covering periods of generally less than 18 months. The derivatives that we use are primarily natural gas fixed price swaps and natural gas options traded in the over-the-counter (OTC) markets. These natural gas derivatives settle using primarily a NYMEX futures price index, which represents the basis for fair value at any given time. The contracts are entered into with respect to gas to be consumed in the future and settlements are scheduled to coincide with anticipated purchases of natural gas used to manufacture nitrogen products during those future periods. We use natural gas derivatives as an economic hedge of gas price risk, but without the application of hedge accounting. As a result, changes in fair value of these contracts are recorded in earnings.

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        As of September 30, 2014 and December 31, 2013, we had open natural gas derivative contracts for 117.2 million MMBtus and 76.3 million MMBtus, respectively. For the nine months ended September 30, 2014, we used derivatives to cover approximately 85% of our natural gas consumption.

Foreign Currency Exchange Rates

        In the fourth quarter of 2012, our Board of Directors (BOD) authorized the expenditure of $3.8 billion to construct new ammonia and urea/UAN plants at our Donaldsonville, Louisiana complex and new ammonia and urea plants at our Port Neal, Iowa complex. A portion of the capacity expansion project costs are euro-denominated. In order to manage our exposure to changes in the euro to U.S. dollar currency exchange rates, we have hedged our projected euro-denominated payments through the third quarter of 2015 using currency forward exchange contracts.

        As of September 30, 2014 and December 31, 2013, the notional amount of our open foreign currency derivatives was $328.4 million and $636.3 million, respectively. Of these amounts, none was designated as hedging instruments for accounting purposes.

        As of December 31, 2013, the Company de-designated the remaining cash flow hedging instruments related to our capacity expansion projects. The accumulated other comprehensive income (AOCI) related to these derivatives is expected to be reclassified into income over the depreciable lives of the property, plant and equipment associated with the capacity expansion projects. During the three months ended September 30, 2014, we reclassified $2.8 million from AOCI to income as a result of the discontinuance of certain cash flow hedges. See Note 15—Accumulated Other Comprehensive Income (Loss), for further information. We do not expect additional reclassifications to occur within the next twelve months.

        The effect of derivatives in our consolidated statements of operations for the three and nine months ended September 30, 2014 and 2013 is shown in the table below:

 
  Gain (loss) recognized
in OCI
  Gain (loss) reclassified from AOCI into income  
 
  Three months ended
September 30,
   
  Three months ended
September 30,
 
Derivatives designated
as cash flow hedges
  2014   2013   Location   2014   2013  
 
  (in millions)
   
  (in millions)
 

Foreign exchange contracts

  $   $ 6.1   Other operating—net   $   $  
                       
                       

 

 
   
   
  Gain (loss) recognized in income  
 
   
   
   
  Three months ended
September 30,
 
 
   
   
  Location   2014   2013  
 
   
   
   
  (in millions)
 

Foreign exchange contracts

  Other operating—net(1)   $   $ 1.3  
                           
                           

 

 
   
   
  Gain (loss) recognized in income  
 
   
   
   
  Three months ended
September 30,
 
Derivatives not
   
   
  Location   2014   2013  
designated as hedges
   
   
 
 
   
   
   
  (in millions)
 

Natural gas derivatives

  Cost of sales   $ 12.1   $ (5.6 )

Foreign exchange contracts

  Other operating—net     (27.6 )   19.9  
                           

                  $ (15.5 ) $ 14.3  
                           
                           

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  Gain (loss) in
income
 
 
  Three months ended
September 30,
 
All Derivatives
  2014   2013  
 
  (in millions)
 

Unrealized (losses) gains

             

Derivatives not designated as hedges

  $ (15.5 ) $ 14.3  

Cash flow hedge ineffectiveness

        1.3  
           

Total unrealized (losses) gains

    (15.5 )   15.6  

Realized losses

    (20.1 )   (7.4 )
           

Net derivative (losses) gains

  $ (35.6 ) $ 8.2  
           
           

 

 
  Gain (loss) recognized
in OCI
  Gain (loss) reclassified from AOCI into income  
 
  Nine months ended
September 30,
   
  Nine months ended
September 30,
 
Derivatives designated
as cash flow hedges
  2014   2013   Location   2014   2013  
 
  (in millions)
   
  (in millions)
 

Foreign exchange contracts

  $   $ (0.4 ) Other operating—net   $   $  
                       
                       

 

 
   
   
  Gain (loss) recognized in income  
 
   
   
   
  Nine months ended
September 30,
 
 
   
   
  Location   2014   2013  
 
   
   
   
  (in millions)
 

Foreign exchange contracts

  Other operating—net(1)   $   $ (0.8 )
                           
                           

 

 
   
   
  Gain (loss) recognized in income  
 
   
   
   
  Nine months ended
September 30,
 
Derivatives not
   
   
  Location   2014   2013  
designated as hedges
   
   
 
 
   
   
   
  (in millions)
 

Natural gas derivatives

  Cost of sales   $ (39.1 ) $ (1.2 )

Foreign exchange contracts

  Other operating—net     (40.8 )   12.0  
                           

                  $ (79.9 ) $ 10.8  
                           
                           

 

 
  Gain (loss) in
income
 
 
  Nine months ended
September 30,
 
All Derivatives
  2014   2013  
 
  (in millions)
 

Unrealized (losses) gains

             

Derivatives not designated as hedges

  $ (79.9 ) $ 10.8  

Cash flow hedge ineffectiveness

        (0.8 )
           

Total unrealized (losses) gains

    (79.9 )   10.0  

Realized gains

    77.4     1.9  
           

Net derivative (losses) gains

  $ (2.5 ) $ 11.9  
           
           

(1)
For derivatives designated as cash flow hedges, the amount reported as gain (loss) recognized in income represents the amount excluded from hedge effectiveness.

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        The fair values of derivatives on our consolidated balance sheets are shown below. As of September 30, 2014 and December 31, 2013, none of our derivative instruments were designated as hedging instruments. For additional information on derivative fair values, see Note 18—Fair Value Measurements.

 
  Asset Derivatives   Liability Derivatives  
 
  Balance Sheet
Location
  September 30,
2014
  December 31,
2013
  Balance Sheet
Location
  September 30,
2014
  December 31,
2013
 
 
   
  (in millions)
   
  (in millions)
 

Derivatives not designated as hedging instruments

                                 

Foreign exchange contracts

  Other current assets   $   $ 27.3   Other current liabilities   $ (18.5 ) $  

Foreign exchange contracts

  Other noncurrent assets         1.6   Other noncurrent liabilities          

Natural gas derivatives

  Other current assets     27.0     45.4   Other current liabilities     (4.8 )   (0.2 )

Natural gas derivatives

  Other noncurrent assets           Other noncurrent liabilities          
                           

      $ 27.0   $ 74.3       $ (23.3 ) $ (0.2 )
                           

Total derivatives

      $ 27.0   $ 74.3       $ (23.3 ) $ (0.2 )
                           
                           

Current / Noncurrent totals

                                 

  Other current assets   $ 27.0   $ 72.7   Other current liabilities   $ (23.3 ) $ (0.2 )

  Other noncurrent assets         1.6   Other noncurrent liabilities          
                           

Total derivatives

      $ 27.0   $ 74.3       $ (23.3 ) $ (0.2 )
                           
                           

        The counterparties to our derivative contracts are multinational commercial banks, major financial institutions and large energy companies. Our derivatives are executed with several counterparties, generally under International Swaps and Derivatives Association (ISDA) agreements. The ISDA agreements are master netting arrangements commonly used for OTC derivatives that mitigate exposure to counterparty credit risk, in part, by creating contractual rights of netting and setoff, the specifics of which vary from agreement to agreement. These rights are described further below:

        Most of our ISDA agreements contain credit-risk-related contingent features with sliding-scale credit support thresholds that are dependent upon the Company's credit ratings. Downgrades in our credit ratings would cause the applicable threshold levels to decrease and improvements in those ratings could cause the threshold levels to increase. If our net liability positions with the counterparties exceed the threshold amounts, the counterparties could require cash collateral, some other form of credit support, or daily cash settlement of unrealized losses. As of September 30, 2014 and December 31, 2013, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in a net liability position was $20.4 million and $0.2 million, respectively, which also approximates the fair value of the maximum amount of additional collateral that would need to be

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posted or assets needed to settle the obligations if the credit-risk-related contingent features were triggered at the reporting dates. At both September 30, 2014 and December 31, 2013, we had no cash collateral on deposit with counterparties for derivative contracts. The credit support documents executed in connection with 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.

        The following table presents amounts relevant to offsetting of our derivative assets and liabilities as of September 30, 2014 and December 31, 2013:

 
   
  Gross amounts
not offset in consolidated
balance sheets
   
 
 
  Amounts
presented in
consolidated
balance
sheets(1)
   
 
 
  Financial
instruments
  Cash
collateral
received
(pledged)
  Net
amount
 
 
  (in millions)
 

September 30, 2014

                         

Total derivative assets

  $ 27.0   $ 11.9   $   $ 15.1  

Total derivative liabilities

    23.3     11.9         11.4  
                   

Net assets

  $ 3.7   $   $   $ 3.7  
                   
                   

December 31, 2013

                         

Total derivative assets

  $ 74.3   $ 0.2   $   $ 74.1  

Total derivative liabilities

                 
                   

Net assets

  $ 74.3   $ 0.2   $   $ 74.1  
                   
                   

(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.

        Our exposure to credit loss from nonperformance by counterparties to our derivative contracts was approximately $3.7 million and $74.1 million as of September 30, 2014 and December 31, 2013, respectively. 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.

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6.     Net Earnings Per Share

        Net earnings per share were computed as follows:

 
  Three months ended
September 30,
  Nine months ended
September 30,
 
 
  2014   2013   2014   2013  
 
  (in millions, except per share amounts)
 

Net earnings attributable to common stockholders

  $ 130.9   $ 234.1   $ 1,152.0   $ 1,138.8  
                   
                   

Basic earnings per common share:

                         

Weighted average common shares outstanding

    49.7     57.3     51.8     59.6  
                   
                   

Net earnings attributable to common stockholders

  $ 2.63   $ 4.09   $ 22.23   $ 19.12  
                   
                   

Diluted earnings per common share:

                         

Weighted average common shares outstanding

    49.7     57.3     51.8     59.6  

Dilutive common shares

    0.2     0.2     0.2     0.3  
                   

Diluted weighted average shares outstanding

    49.9     57.5     52.0     59.9  
                   
                   

Net earnings attributable to common stockholders

  $ 2.62   $ 4.07   $ 22.16   $ 19.01  
                   
                   

        In the computation of diluted net earnings per common share, potentially dilutive stock options are excluded if the effect of their inclusion is anti-dilutive. For the three and nine months ended September 30, 2014 and 2013, anti-dilutive stock options were insignificant.

7.     Interest Expense

        Details of interest expense are as follows:

 
  Three months ended
September 30,
  Nine months ended
September 30,
 
 
  2014   2013   2014   2013  
 
  (in millions)
 

Interest on borrowings

  $ 63.5   $ 43.8   $ 174.9   $ 106.8  

Fees on financing agreements

    2.3     3.9     8.2     11.4  

Interest on tax liabilities

    0.6     0.5     2.5     12.2  

Interest capitalized and other

    (20.0 )   (7.2 )   (48.5 )   (18.0 )
                   

  $ 46.4   $ 41.0   $ 137.1   $ 112.4  
                   
                   

        In March 2014, CF Industries issued $750 million aggregate principal amount of 5.150% senior notes due March 15, 2034 and $750 million aggregate principal amount of 5.375% senior notes due March 15, 2044.

8.     Income Taxes

        Our income tax provision for the three months ended September 30, 2014 was $70.5 million on pre-tax income of $200.5 million, or an effective tax rate of 35.2%, compared to an income tax provision of $109.0 million on pre-tax income of $345.7 million, or an effective tax rate of 31.5% for the three months ended September 30, 2013. Our effective tax rate was higher in the three months ended September 30, 2014 due to reduced tax benefits from depletion related to our phosphate mining and manufacturing business that was sold to Mosaic in March 2014.

        Our effective tax rate based on pre-tax earnings differs from our effective tax rate based on pre- tax earnings exclusive of the noncontrolling interest, as our consolidated income tax provision does not

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include a tax provision on the earnings attributable to the noncontrolling interest in Terra Nitrogen Company L.P. (TNCLP), which does not record an income tax provision.

        Unrecognized tax benefits increased by $37.0 million to $140.7 million during the three months ended September 30, 2014 as a result of tax return positions taken for prior years and for tax return positions to be taken for the current tax year. Our effective tax rate would be affected by $114.1 million if these unrecognized tax benefits were to be recognized in the future.

        At the time of our initial public offering (IPO) in 2005, we had accumulated a substantial amount of net operating losses (NOLs). Due to the uncertainty of realizing the tax benefit from the NOLs when we ceased to be a non-exempt cooperative for income tax purposes when we became a public company, a full valuation allowance was recorded against those NOLs. At that time, we entered into an agreement (NOL Agreement) with the pre-IPO owners under which they would benefit should any of the pre-IPO NOLs be realized in future years by our using the NOLs to offset post-IPO taxable income. If this were to occur, we would pay the pre-IPO owners amounts equal to the resulting federal and state income taxes actually saved. At December 31, 2012, the NOLs had a potential tax benefit of $94.3 million, which had been fully reserved by the valuation allowance. In January 2013, we and the pre-IPO owners amended the NOL Agreement to provide, among other things, that we would be entitled to retain 26.9% of any settlement realized.

        In March 2013, we entered into a Closing Agreement with the Internal Revenue Service (IRS) to resolve the tax treatment of the pre-IPO NOLs. Pursuant to the Closing Agreement, we have agreed with the IRS that we will be entitled to a tax deduction equal to a portion of the NOLs over five years commencing with the 2012 tax year. Under the terms of the amended NOL Agreement, 73.1% of the federal and state tax savings will be payable to our pre-IPO owners. As a result of the Closing Agreement, we initially recorded a liability of $55.2 million to recognize the tax savings from the IRS settlement that will be payable to our pre-IPO owners under the terms of the NOL Agreement. The remaining liability in our consolidated balance sheet at September 30, 2014 is $42.9 million, of which $10.2 million is included in accounts payable and accrued expenses for the current portion of the tax savings payable to the pre-IPO owners and $32.7 million is included in other noncurrent liabilities for the portion of the tax savings payable to the pre-IPO owners in future years.

        For additional information concerning income taxes, see Note 11—Income Taxes in our 2013 Annual Report on Form 10-K filed with the SEC on February 27, 2014.

9.     Inventories—Net

        Inventories—net consist of the following:

 
  September 30,
2014
  December 31,
2013
 
 
  (in millions)
 

Finished goods

  $ 233.8   $ 251.0  

Raw materials, spare parts and supplies

    21.0     23.3  
           

  $ 254.8   $ 274.3  
           
           

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10.   Property, Plant and Equipment—Net

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

 
  September 30,
2014
  December 31,
2013
 
 
  (in millions)
 

Land

  $ 48.6   $ 37.9  

Machinery and equipment

    5,154.9     5,046.8  

Buildings and improvements

    161.2     159.4  

Construction in progress(1)

    2,142.7     1,099.1  
           

    7,507.4     6,343.2  

Less: Accumulated depreciation and amortization

    2,457.2     2,241.5  
           

  $ 5,050.2   $ 4,101.7  
           
           

(1)
At September 30, 2014 and December 31, 2013, we had $231.6 million and $228.9 million, respectively, of construction in progress that was accrued but unpaid.

        At September 30, 2014 and December 31, 2013, construction in progress includes expenditures of $1.6 billion and $0.7 billion, respectively, related to our capacity expansion projects in Port Neal, Iowa and Donaldsonville, Louisiana.

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

 
  Nine months ended
September 30,
 
 
  2014   2013  
 
  (in millions)
 

Net capitalized turnaround costs:

             

Beginning balance

  $ 119.8   $ 82.1  

Additions

    53.6     74.8  

Depreciation

    (39.7 )   (30.0 )

Effect of exchange rate changes

    (0.7 )   (0.1 )
           

Ending balance

  $ 133.0   $ 126.8  
           
           

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

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11.   Equity Method Investments

        Equity method investments consist of the following:

 
  September 30,
2014
  December 31,
2013
 
 
  (in millions)
 

Operating equity method investments

  $ 370.4   $ 379.7  

Non-operating equity method investments

    554.8     546.3  
           

Investments in and advances to affiliates

  $ 925.2   $ 926.0  
           
           

Operating Equity Method Investments

        Our equity method investments included in operating earnings consist of: (1) a 50% ownership interest in Point Lisas Nitrogen Limited (PLNL), which operates an ammonia production facility in the Republic of Trinidad and Tobago; and (2) a 50% interest in an ammonia storage joint venture located in Houston, Texas. We include our share of the net earnings from these investments as an element of earnings from operations because these operations provide additional production and storage capacity to our operations and are integrated with our other supply chain and sales activities in the ammonia segment.

        The combined results of operations and financial position for our operating equity method investments are summarized below:

 
  Three months ended
September 30,
  Nine months ended
September 30,
 
 
  2014   2013   2014   2013  
 
  (in millions)
 

Summarized statement of operations information:

                         

Net sales

  $ 67.6   $ 76.1   $ 205.1   $ 247.7  
                   
                   

Net earnings

  $ 19.7   $ 24.4   $ 54.2   $ 80.3  
                   
                   

Equity in earnings of operating affiliates

  $ 9.4   $ 11.2   $ 27.3   $ 32.3  
                   
                   

 

 
  September 30,
2014
  December 31,
2013
 
 
  (in millions)
 

Summarized balance sheet information:

             

Current assets

  $ 99.5   $ 84.3  

Noncurrent assets

    134.9     147.3  
           

Total assets

  $ 234.4   $ 231.6  
           
           

Current liabilities

  $ 49.2   $ 36.5  

Noncurrent liabilities

    22.9     25.0  

Equity

    162.3     170.1  
           

Total liabilities and equity

  $ 234.4   $ 231.6  
           
           

        The total carrying value of these investments at September 30, 2014 was $370.4 million, which was $289.2 million more than our share of the affiliates' book value. The excess is primarily attributable to the purchase accounting impact of our acquisition of the investment in PLNL and reflects primarily the revaluation of property, plant and equipment, the value of an exclusive natural gas contract and goodwill. The increased basis for property, plant and equipment and the gas contract are being depreciated over a remaining period of approximately 19 years and 9 years, respectively. Our equity in

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earnings of operating affiliates is different from our ownership interest in income reported by the unconsolidated affiliates due to amortization of basis differences.

        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 approximately $24.1 million and $90.1 million for the three and nine months ended September 30, 2014, respectively, and $35.3 million and $115.5 million for the three and nine months ended September 30, 2013, respectively.

Non-Operating Equity Method Investments

        Our non-operating equity method investments consist of: (1) a 50% ownership of KEYTRADE AG (Keytrade), a fertilizer trading company headquartered near Zurich, Switzerland; and (2) a 50% ownership in GrowHow UK Limited (GrowHow), which operates nitrogen production facilities in the United Kingdom. We account for these investments as non-operating equity method investments, and exclude the net earnings of these investments from earnings from operations since these operations do not provide additional capacity to us, nor are these operations integrated within our supply chain.

        The combined results of operations and financial position of our non-operating equity method investments are summarized below:

 
  Three months ended
September 30,
  Nine months ended
September 30,
 
 
  2014   2013   2014   2013  
 
  (in millions)
 

Summarized statement of operations information:

                         

Net sales

  $ 559.6   $ 640.9   $ 1,567.2   $ 1,947.5  
                   
                   

Net earnings

  $ 27.6   $ 20.9   $ 60.0   $ 31.2  
                   
                   

Equity in earnings of non-operating affiliates—net of taxes

  $ 10.6   $ 7.2   $ 15.8   $ 6.2  
                   
                   

 

 
  September 30,
2014
  December 31,
2013
 
 
  (in millions)
 

Summarized balance sheet information:

             

Current assets

  $ 584.0   $ 540.3  

Noncurrent assets

    305.4     319.3  
           

Total assets

  $ 889.4   $ 859.6  
           
           

Current liabilities

  $ 305.4   $ 310.6  

Noncurrent liablities

    152.9     168.9  

Equity

    431.1     380.1  
           

Total liabilities and equity

  $ 889.4   $ 859.6  
           
           

        In conjunction with our investment in Keytrade, we provided financing to Keytrade in exchange for subordinated notes that mature on September 30, 2017 and bear interest at LIBOR plus 1.00 percent. At September 30, 2014 and December 31, 2013, the amount of the outstanding advances to Keytrade on our consolidated balance sheets was $12.4 million. For each of the nine-month periods ended September 30, 2014 and 2013, we recognized interest income on advances to Keytrade of approximately $0.1 million. The carrying value of our advances to Keytrade approximates fair value.

        Excluding the advances to Keytrade, the carrying value of our non-operating equity method investments at September 30, 2014 was $542.4 million, which was $326.9 million more than our share of

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the affiliates' book value. The excess is primarily attributable to the purchase accounting impact of our acquisition of GrowHow and reflects primarily the revaluation of property, plant and equipment, identifiable intangibles and goodwill. The increased basis for property, plant and equipment and identifiable intangibles are being depreciated over remaining periods up to 11 years. Our equity in earnings of non-operating affiliates—net of taxes is different than our ownership interest in their net earnings due to the amortization of basis differences.

        At September 30, 2014, the amount of our consolidated retained earnings that represents our undistributed earnings of non-operating equity method investments is $40.4 million.

12.   Goodwill and Other Intangible Assets

        The following table shows the carrying amount of goodwill by business segment at September 30, 2014 and December 31, 2013:

 
  Ammonia   Granular Urea   UAN   Other   Total  
 
  (in millions)
 

Balance at December 31, 2013

  $ 579.5   $ 830.8   $ 577.8   $ 107.7   $ 2,095.8  

Effect of exchange rate changes

    (0.5 )   (0.7 )   (0.5 )   (0.1 )   (1.8 )
                       

Balance at September 30, 2014

  $ 579.0   $ 830.1   $ 577.3   $ 107.6   $ 2,094.0  
                       
                       

        Amounts presented in the above table for December 31, 2013 have been restated to reflect the goodwill allocated to the new reportable segments. See Note 19—Segment Disclosures for further information. As a result of the new reportable segments, we performed an interim goodwill impairment analysis. The fair value of each reporting unit exceeded its carrying value; thus, no impairment was recorded.

        The identifiable intangibles and carrying values are shown below. Our intangible assets are presented in noncurrent other assets on our consolidated balance sheets.

 
  At September 30, 2014   At December 31, 2013  
 
  Gross
Carrying
Amount
  Accumulated
Amortization
  Net   Gross
Carrying
Amount
  Accumulated
Amortization
  Net  
 
   
   
  (in millions)
   
   
 

Intangible assets:

                                     

Customer relationships

  $ 50.0   $ (12.5 ) $ 37.5   $ 50.0   $ (10.4 ) $ 39.6  

TerraCair brand

    10.0     (4.7 )   5.3     10.0     (3.8 )   6.2  
                           

Total intangible assets

  $ 60.0   $ (17.2 ) $ 42.8   $ 60.0   $ (14.2 ) $ 45.8  
                           
                           

        Amortization expense of our identifiable intangibles was $1.0 million and $0.9 million for the three months ended September 30, 2014 and 2013, respectively. Amortization expense for the nine months ended September 30, 2014 and 2013 was $3.0 million and $2.9 million, respectively.

        Total estimated amortization expense for the remainder of 2014 and the five succeeding fiscal years is as follows:

 
  Estimated
Amortization
Expense
 
 
  (in millions)
 

Remainder of 2014

  $ 1.0  

2015

    4.0  

2016

    4.0  

2017

    4.0  

2018

    4.0  

2019

    2.8  
       

  $ 19.8  
       
       

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13.   Financing Agreements

Credit Agreement

        CF Holdings, as a guarantor, and CF Industries, as borrower, entered into a $500 million senior unsecured credit agreement, dated May 1, 2012 (the Credit Agreement), which provided for a revolving credit facility of up to $500 million with a maturity of five years. On April 22, 2013, the Credit Agreement was amended and restated to increase the credit facility from $500 million to $1.0 billion and extend its maturity to May 1, 2018.

        Borrowings under the Credit Agreement bear interest at a variable rate based on an applicable margin over LIBOR or a base rate and may be used for working capital, capital expenditures, acquisitions, share repurchases and other general purposes. The Credit Agreement requires that the Company maintain a minimum interest coverage ratio and not exceed a maximum total leverage ratio, and includes other customary terms and conditions, including customary events of default and covenants.

        All obligations under the Credit Agreement are unsecured. Currently, CF Holdings is the only guarantor of CF Industries' obligations under the Credit Agreement. Certain of CF Industries' domestic subsidiaries would be required to become guarantors under the Credit Agreement if such subsidiary were to guarantee other debt of the Company or CF Industries in excess of $350 million. Currently, no such subsidiary guarantees any debt.

        At September 30, 2014, there was $995.1 million of available credit under the Credit Agreement (net of outstanding letters of credit of $4.9 million), and there were no borrowings outstanding at September 30, 2014 or December 31, 2013.

Senior Notes

        Long-term debt presented on our consolidated balance sheets at September 30, 2014 and December 31, 2013 consisted of the following:

 
  September 30,
2014
  December 31,
2013
 
 
  (in millions)
 

Unsecured senior notes:

             

6.875% due 2018

  $ 800.0   $ 800.0  

7.125% due 2020

    800.0     800.0  

3.450% due 2023

    749.4     749.3  

5.150% due 2034

    746.2      

4.950% due 2043

    748.7     748.8  

5.375% due 2044

    748.1      
           

    4,592.4     3,098.1  

Less: Current portion

         
           

Long-term debt

  $ 4,592.4   $ 3,098.1  
           
           

        On March 11, 2014, CF Industries issued $750 million aggregate principal amount of 5.150% senior notes due March 15, 2034 and $750 million aggregate principal amount of 5.375% senior notes due March 15, 2044. The Company received net proceeds of $1.48 billion from the issuance and sale of the senior notes due in 2034 and 2044, after deducting underwriting discounts and offering expenses. The Company intends to use the net proceeds from the offering to fund capital expenditure programs and stock repurchases and for other general corporate purposes, including working capital.

        Under the indentures (including the applicable supplemental indentures) governing the senior notes identified in the table above, each series of senior notes is guaranteed by CF Holdings. Interest is

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paid semiannually and the senior notes are redeemable at our option, in whole at any time or in part from time to time, at specified make-whole redemption prices. The indentures governing the senior notes contain customary events of default and covenants that limit, among other things, the ability of CF Holdings and its subsidiaries, including CF Industries, to incur liens on certain properties to secure debt. If a Change of Control occurs together with a Ratings Downgrade (as both terms are defined under the indentures governing the senior notes), CF Industries would be required to offer to repurchase each series of senior notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest. In addition, in the event that a subsidiary of ours, other than CF Industries, becomes a borrower or a guarantor under the Credit Agreement (or any renewal, replacement or refinancing thereof), such subsidiary would be required to become a guarantor of the senior notes, provided that such requirement will no longer apply with respect to the senior notes due in 2023, 2034, 2043 and 2044 following the repayment of the senior notes due in 2018 and 2020 or the subsidiaries of ours, other than CF Industries, otherwise becoming no longer subject to such a requirement to guarantee the senior notes due in 2018 and 2020.

14.   Treasury Stock

        In the third quarter of 2012, our BOD authorized the repurchase of up to $3.0 billion of CF Holdings common stock through December 31, 2016 (the 2012 Stock Repurchase Program). Repurchases under this program were made from time to time in the open market, through privately negotiated transactions, block transactions or otherwise. The manner, timing, and amount of repurchases were determined by our management based on the evaluation of market conditions, stock price, and other factors. During 2013, we repurchased 7.3 million shares under the program for approximately $1.4 billion. In the first half of 2014, we repurchased 6.3 million shares for approximately $1.6 billion, which completed the 2012 Stock Repurchase Program. At September 30, 2014, we held in treasury approximately 2.5 million shares of repurchased stock.

        On August 6, 2014, our BOD authorized the repurchase of up to an additional $1.0 billion of CF Holdings common stock through December 31, 2016. Consistent with our previous programs, repurchases under this program may be made from time to time in the open market, through privately negotiated transactions, block transactions or otherwise. The manner, timing and amount of repurchases will be determined by our management based on the evaluation of market conditions, stock price, and other factors. As of September 30, 2014, we had not repurchased any shares of common stock under this program.

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15.   Accumulated Other Comprehensive Income (Loss)

        Changes to AOCI are as follows:

 
  Foreign
Currency
Translation
Adjustment
  Unrealized
Gain (Loss)
on
Securities
  Unrealized
Gain (Loss)
on
Derivatives
  Defined
Benefit
Plans
  Accumulated
Other
Comprehensive
Income (Loss)
 
 
  (in millions)
 

Balance at December 31, 2012

  $ 61.4   $ (0.4 ) $ 4.6   $ (115.2 ) $ (49.6 )

Unrealized gain (loss)

        1.3     (0.4 )       0.9  

Reclassification to net earnings

        (0.4 )       8.6     8.2  

Effect of exchange rate changes, deferred taxes and other

    (28.0 )   (0.6 )   0.1     (3.6 )   (32.1 )
                       

Balance at September 30, 2013

  $ 33.4   $ (0.1 ) $ 4.3   $ (110.2 ) $ (72.6 )
                       
                       

Balance at December 31, 2013

  $ 31.9   $ 0.6   $ 6.5   $ (81.6 ) $ (42.6 )

Unrealized gain

        1.0             1.0  

Gain arising during period

                6.2     6.2  

Reclassification to net earnings

            (2.8 )   1.3     (1.5 )

Effect of exchange rate changes, deferred taxes and other

    (38.3 )   (0.3 )   1.0     2.1     (35.5 )
                       

Balance at September 30, 2014

  $ (6.4 ) $ 1.3   $ 4.7   $ (72.0 ) $ (72.4 )
                       
                       

        Reclassifications out of AOCI during the three and nine months ended September 30, 2014 and 2013 were as follows:

 
  Three months ended
September 30,
  Nine months ended
September 30,
 
 
  2014   2013   2014   2013  

Unrealized Gain (Loss) on Securities

                         

Available-for-sale securities(1)

  $   $ (0.1 ) $   $ (0.4 )
                   

Total before tax

        (0.1 )       (0.4 )

Tax effect

                0.1  
                   

Net of tax

  $   $ (0.1 ) $   $ (0.3 )
                   
                   

Unrealized Gain (Loss) on Derivatives

                         

Reclassification of de-designated hedges(2)

  $ (2.8 ) $   $ (2.8 ) $  
                   

Total before tax

    (2.8 )       (2.8 )    

Tax effect

    1.0         1.0      
                   

Net of tax

  $ (1.8 ) $   $ (1.8 ) $  
                   
                   

Defined Benefit Plans

                         

Amortization of prior service (benefit) cost(3)

  $ (0.2 ) $ 0.1   $ (0.5 ) $ 0.2  

Amortization of net loss(3)

    0.6     2.8     1.8     8.4  
                   

Total before tax

    0.4     2.9     1.3     8.6  

Tax effect

    (0.1 )   (1.0 )   (0.4 )   (3.0 )
                   

Net of tax

  $ 0.3   $ 1.9   $ 0.9   $ 5.6  
                   
                   

Total reclassifications for the period

  $ (1.5 ) $ 1.8   $ (0.9 ) $ 5.3  
                   
                   

(1)
Represents the balance that was reclassified into interest income.

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(2)
Represents the portion of de-designated cash flow hedges that were reclassified into income as a result of the discontinuance of certain cash flow hedges.

(3)
These components are included in the computation of net periodic pension cost and were reclassified from AOCI into cost of sales and selling, general and administrative expenses.

16.   Contingencies

Litigation

West Fertilizer Co.

        In April 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. We have been named as defendants in lawsuits filed in 2013 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. Plaintiffs allege various theories of negligence, strict liability and breach of warranty under Texas law. Although we do not own or operate the facility or directly sell our products to West Fertilizer Co., products we have manufactured and sold to others have been delivered to the facility and may have been stored at the West facility at the time of the incident. Based on our assessment of the pending lawsuits, we believe that we have strong legal and factual defenses to the claims and intend to defend ourselves vigorously in the pending lawsuits and any other claims brought against us in connection with the incident.

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

Louisiana Environmental Matters

Clean Air Act—Section 185 Fee

        Our Donaldsonville nitrogen complex is located in a five-parish region near Baton Rouge, Louisiana that, as of 2005, was designated as being in "severe" nonattainment with respect to the national ambient air quality standard (NAAQS) for ozone (the 1-hour ozone standard) pursuant to the Federal Clean Air Act (the Act). Section 185 of the Act requires states, in their state implementation plans, to levy a fee (Section 185 fee) on major stationary sources (such as the Donaldsonville complex) located in a severe nonattainment area that did not meet the 1-hour ozone standard by November 30, 2005. The fee was to be assessed for each calendar year (beginning in 2006) until the area achieved compliance with the ozone NAAQS.

        Prior to the imposition of Section 185 fees, the Environmental Protection Agency (EPA) adopted a new ozone standard (the 8-hour ozone standard) and rescinded the 1-hour ozone standard. The Baton Rouge area was designated as a "moderate" nonattainment area with respect to the 8-hour ozone standard. However, because Section 185 fees had never been assessed prior to the rescission of the 1-hour ozone standard (rescinded prior to the November 30, 2005 ozone attainment deadline), the EPA

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concluded in a 2004 rulemaking implementing the 8-hour ozone standard that the Act did not require states to assess Section 185 fees. As a result, Section 185 fees were not assessed against CF Industries and other companies located in the Baton Rouge area.

        In 2006, the federal D.C. Circuit Court of Appeals rejected the EPA's position and held that Section 185 fees were controls that must be maintained and fees should have been assessed under the Act. In January 2008, the U.S. Supreme Court declined to accept the case for review, making the appellate court's decision final.

        In July 2011, the EPA approved a revision to Louisiana's air pollution program that eliminated the requirement for Baton Rouge area companies to pay Section 185 fees, based on Baton Rouge's ultimate attainment of the 1-hour standard through permanent and enforceable emissions reductions. EPA's approval of the Louisiana air program revision became effective on August 8, 2011. However, a recent decision by the federal D.C. Circuit Court of Appeals struck down a similar, but perhaps distinguishable, EPA guidance document regarding alternatives to Section 185 fees. At this time, the viability of EPA's approval of Louisiana's elimination of Section 185 fees is uncertain. Regardless of the approach ultimately adopted by the EPA, we expect that it is likely to be challenged by the environmental community, the states, and/or affected industries. Therefore, the costs associated with compliance with the Act cannot be determined at this time, and we cannot reasonably estimate the impact on the Company's financial position, results of operations or cash flows.

        Furthermore, the area has seen significant reductions in ozone levels, attributable to federal and state regulations and community involvement. Preliminary ozone design values computed for the Baton Rouge nonattainment area suggest the area has achieved attainment with the 2008 8-hour ozone standard. A determination from EPA was issued on April 4, 2014 indicating that the Baton Rouge area is currently attaining the 2008 8-hour ozone standard. The determination is based on a recent review of air quality data from 2011-2013. Additional revisions to the ozone NAAQS may affect the longevity and long-term consequences of this determination.

Clean Air Act Information Request

        On February 26, 2009, the Company received a letter from the EPA under Section 114 of the Act requesting information and copies of records relating to compliance with New Source Review and New Source Performance Standards at the Donaldsonville facility. The Company has completed the submittal of all requested information. There has been no further contact from the EPA regarding this matter.

Florida Environmental Matters

        On March 17, 2014, we completed the sale of our phosphate mining and manufacturing business, which was located in Florida, to Mosaic. Pursuant to the terms of the Purchase Agreement, Mosaic has assumed the following environmental matters and the Company has agreed to indemnify Mosaic with respect to losses arising out of the matters below, subject to a maximum indemnification cap and the other terms of the Purchase Agreement.

Clean Air Act Notice of Violation

        The Company received a Notice of Violation (NOV) from the EPA by letter dated June 16, 2010, alleging that the Company violated the Prevention of Significant Deterioration (PSD) Clean Air Act regulations relating to certain projects undertaken at the former Plant City, Florida facility's sulfuric acid plants. This NOV further alleges that the actions that are the basis for the alleged PSD violations also resulted in violations of Title V air operating permit regulations. Finally, the NOV alleges that the Company failed to comply with certain compliance dates established by hazardous air pollutant regulations for phosphoric acid manufacturing plants and phosphate fertilizer production plants. The

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Company had several meetings with the EPA with respect to this matter prior to the sale of the Company's phosphate mining and manufacturing business in March 2014. The Company does not know at this time if this matter will be settled prior to initiation of formal legal action.

        We cannot estimate the potential penalties, fines or other expenditures, if any, that may result from the Clean Air Act NOV and, therefore, we cannot determine if the ultimate outcome of this matter will have a material impact on the Company's financial position, results of operations or cash flows.

EPCRA/CERCLA Notice of Violation

        By letter dated July 6, 2010, the EPA issued a NOV to the Company alleging violations of Section 313 of the Emergency Planning and Community Right-to-Know Act (EPCRA) in connection with the former Plant City facility. EPCRA requires annual reports to be submitted with respect to the use of certain toxic chemicals. The NOV also included an allegation that the Company violated Section 304 of EPCRA and Section 103 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) by failing to file a timely notification relating to the release of hydrogen fluoride above applicable reportable quantities. The Company does not know at this time if this matter will be settled prior to initiation of formal legal action.

        We do not expect that penalties or fines, if any, that may arise out of the EPCRA/CERCLA matter will have a material impact on the Company's financial position, results of operations or cash flows.

Other

CERCLA/Remediation Matters

        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 CERCLA 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. We are not able to estimate at this time our potential liability, if any, with respect to the cleanup of the site. However, based on currently available information, we do not expect that any remedial or financial obligations we may be subject to involving this or other cleanup sites will have a material adverse effect on our business, financial condition, results of operations or cash flows.

17.   Noncontrolling Interests

Terra Nitrogen Company, L.P. (TNCLP)

        TNCLP is a master limited partnership that owns a nitrogen manufacturing facility in Verdigris, Oklahoma. We own an aggregate 75.3% of TNCLP through general and limited partnership interests. Outside investors own the remaining 24.7% of the limited partnership. For financial reporting purposes, the assets, liabilities and earnings of the partnership are consolidated into our financial statements. The outside investors' limited partnership interests in the partnership have been recorded as part of noncontrolling interest in our consolidated financial statements. The noncontrolling interest represents the noncontrolling unitholders' interest in the earnings and equity of TNCLP. An affiliate of CF Industries is required to purchase all of TNCLP's fertilizer products at market prices as defined in the Amendment to the General and Administrative Services and Product Offtake Agreement, dated September 28, 2010.

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        TNCLP makes cash distributions to the general and limited partners based on formulas defined within its Agreement of Limited Partnership. Cash available for distribution is defined in the agreement generally as all cash receipts less all cash disbursements, less certain reserves (including reserves for future operating and capital needs) established as the general partner determines in its reasonable discretion to be necessary or appropriate. Changes in working capital affect available cash, as increases in the amount of cash invested in working capital items (such as increases in inventory and decreases in accounts payable) reduce available cash, while declines in the amount of cash invested in working capital items increase available cash. Cash distributions to the limited partners and general partner vary depending on the extent to which the cumulative distributions exceed certain target threshold levels set forth in the Agreement of Limited Partnership.

        In each of the applicable quarters of 2014 and 2013, the minimum quarterly distributions were satisfied, which entitled us, as the general partner, to receive increased distributions on our general partner interests as provided for in the Agreement of Limited Partnership. The earnings attributed to our general partner interest in excess of the threshold levels for the nine months ended September 30, 2014 and 2013, were $102.7 million and $158.3 million, respectively.

        At September 30, 2014, Terra Nitrogen GP Inc. (TNGP), the general partner of TNCLP (and an indirect wholly-owned subsidiary of CF Industries), and its affiliates owned 75.3% of TNCLP's outstanding units. When not more than 25% of TNCLP's issued and outstanding units are held by non-affiliates of TNGP, TNCLP, at TNGP's sole discretion, may call, or assign to TNGP or its affiliates, TNCLP's right to acquire all such outstanding units held by non-affiliated persons. If TNGP elects to acquire all outstanding units, TNCLP is required to give at least 30 but not more than 60 days' notice of TNCLP's decision to purchase the outstanding units. The purchase price per unit will be the greater of (1) the average of the previous 20 trading days' closing prices as of the date five days before the purchase is announced or (2) the highest price paid by TNGP or any of its affiliates for any unit within the 90 days preceding the date the purchase is announced.

Canadian Fertilizers Limited (CFL)

        CFL owns a nitrogen fertilizer complex in Medicine Hat, Alberta, Canada, which until April 30, 2013, was a variable interest entity that was consolidated in the Company's financial statements. The Medicine Hat complex is the largest nitrogen fertilizer complex in Canada, with two world-scale ammonia plants, a world-scale granular urea plant and on-site storage facilities for both ammonia and urea.

        On April 30, 2013, the Company acquired the noncontrolling interests in CFL for C$0.9 billion, which included 34% of CFL's common and preferred shares owned by Viterra Inc., the product purchase agreement between CFL and Viterra and the CFL common shares held by GROWMARK, Inc. and La Coop fédérée. Since CFL was previously a consolidated variable interest entity, the purchase price was recognized as follows: a $0.8 billion reduction in paid-in capital; a $0.1 billion deferred tax asset; and the removal of the CFL noncontrolling interest. CFL is now a wholly-owned subsidiary.

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

 
  Nine months ended September 30,  
 
  2014   2013  
 
  TNCLP   CFL   TNCLP   Total  
 
  (in millions)
 

Noncontrolling interest:

                         

Beginning balance

  $ 362.3   $ 17.4   $ 362.6   $ 380.0  

Earnings attributable to noncontrolling interest

    33.7     2.3     50.3     52.6  

Declaration of distributions payable

    (37.8 )   (2.3 )   (56.8 )   (59.1 )

Acquistions of noncontrolling interests in CFL

        (16.8 )       (16.8 )

Effect of exchange rate changes

        (0.6 )       (0.6 )