10-Q

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, 2005
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	20-2697511
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
One Salem Lake Drive Long Grove, Illinois	60047
(Address of principal executive offices)	(Zip Code)

(847) 438-9500

(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 is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes o    No ý

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

As of October 31, 2005, there were 55,027,723 shares of the Company’s common stock outstanding.

CF INDUSTRIES HOLDINGS, INC.

TABLE OF CONTENTS

PART I.	Financial Information
	Item 1.	Financial Statements
		Consolidated Statements of Operations	2
		Consolidated Statements of Comprehensive Income (Loss)	3
		Consolidated Balance Sheets	4
		Consolidated Statement of Stockholders’ Equity	5
		Consolidated Statements of Cash Flows	6
		Notes to Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
	Item 4.	Controls and Procedures	41
PART II.	Other Information
	Item 1.	Legal Proceedings	42
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
	Item 6.	Exhibits	45

1

ITEM 1.  Financial Statements

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2004			2005			2004			2005
Net sales	$	326,694		$	359,430		$	1,172,059		$	1,445,415
Cost of sales	282,781			303,400			1,027,254			1,238,475
Gross margin	43,913			56,030			144,805			206,940
Selling, general and administrative	9,864			17,715			30,166			42,985
Other operating - net	1,721			3,135			6,756			6,026
Operating earnings	32,328			35,180			107,883			157,929
Interest expense	5,411			2,982			17,231			13,513
Interest income	(1,417		)	(3,927		)	(3,407		)	(11,610		)
Loss on extinguishment of debt	—			28,307			—			28,307
Minority interest	5,403			6,313			15,110			18,678
Other non-operating - net	(149		)	(1,798		)	(686		)	(2,134		)
Earnings before income taxes	23,080			3,303			79,635			111,175
Income tax provision	8,764			94,672			30,241			137,429
Equity in earnings (loss) of unconsolidated subsidiaries	(14		)	(19		)	223			16
Net earnings (loss)	$	14,302		$	(91,388	)	$	49,617		$	(26,238	)
Post Initial Public Offering (IPO)* - net loss, weighted average common shares outstanding, and loss per share:
Post-IPO net loss				$	(99,510	)				$	(99,510	)
Basic and diluted weighted average common shares outstanding				55,000						55,000
Basic and diluted loss per common share				$	(1.81	)				$	(1.81	)

*Covers the period from August 17, 2005 through September 30, 2005.

See Accompanying Notes to Unaudited Consolidated Financial Statements.

2

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
(in thousands)	2004		2005			2004			2005
Net earnings (loss)	$	14,302	$	(91,388	)	$	49,617		$	(26,238	)
Other comprehensive income (loss):
Foreign currency translation adjustment - no tax effect	1,531		1,098			598			808
Unrealized gain (loss) on hedging derivatives - net of taxes	2,780		43,837			(1,524		)	44,725
	4,311		44,935			(926		)	45,533
Comprehensive income (loss)	$	18,613	$	(46,453	)	$	48,691		$	19,295

See Accompanying Notes to Unaudited Consolidated Financial Statements.

3

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)	Audited December 31, 2004			Unaudited September 30, 2005
Assets
Current assets:
Cash and cash equivalents	$	50,003		$	40,376
Short-term investments	369,290			277,100
Accounts receivable	41,510			57,160
Income taxes receivable	1,764			3,326
Inventories	233,547			215,816
Deferred income taxes	33,501			—
Other	59,182			93,878
Total current assets	788,797			687,656
Investments in unconsolidated subsidiaries	18,666			—
Property, plant and equipment - net	645,595			627,428
Deferred income taxes	74,909			—
Goodwill	1,327			1,327
Other assets	17,677			21,439
Total assets	$	1,546,971		$	1,337,850
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	169,237		$	170,363
Customer advances	211,501			183,352
Deferred income taxes	—			34,882
Distributions payable to minority interest	5,631			—
Current portion of long-term debt	19,917			—
Other	18,517			1,430
Total current liabilities	424,803			390,027
Notes payable	4,071			4,234
Long-term debt	234,833			—
Deferred income taxes	—			19,321
Other noncurrent liabilities	83,203			82,476
Minority interest	12,772			33,351
Stockholders’ equity:
Patronage preferred stock - $100 par value, 10,000,000 shares authorized and 7,343,018 shares outstanding through August 16, 2005	734,302			—
Common stock - $1,000 par value, 100 shares authorized, 8 shares outstanding through August 16, 2005	8			—
Common stock - $.01 par value, 500,000,000 shares authorized, 55,027,723 shares outstanding	—			550
Paid-in capital	5,555			741,543
Unearned stock-based compensation	—			(371		)
Retained earnings	59,780			33,542
Accumulated other comprehensive income (loss)	(12,356		)	33,177
Total stockholders’ equity	787,289			808,441
Total liabilities and stockholders’ equity	$	1,546,971		$	1,337,850

See Accompanying Notes to Unaudited Consolidated Financial Statements.

4

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Nine Months Ended September 30, 2005
(in thousands)	Patronage Preferred Stock			$1,000 Par Value Common Stock			$0.01 Par Value Common Stock		Paid-In Capital				Unearned Stock-Based Compensation				Retained Earnings				Accumulated Other Comprehensive Income (Loss)				Total
Balance at December 31, 2004	$	734,302		$	8		$	—	$		5,555		$	—			$	59,780			$	(12,356		)	$	787,289
Net loss	—			—			—		—				—				(26,238			)	—				(26,238		)
Other comprehensive income																					45,533				45,533
Issuance of $0.01 par value common stock	—			—			550		739,315				—				—				—				739,865
Issuance of restricted stock awards	—			—			—		451				(451			)	—				—				—
Stock-based compensation expense	—			—			—		1,777				80				—				—				1,857
Exchange of previous owners’ common stock and preferred stock for cash and $0.01 par value common stock	(734,302		)	(8		)	—		(5,555			)	—				—				—				(739,865		)
Balance at September 30, 2005	$	—		$	—		$	550	$	741,543			$		(371	)	$		33,542		$		33,177		$	808,441

See Accompanying Notes to Unaudited Consolidated Financial Statements.

5

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
(in thousands)	2004			2005
Operating Activities:
Net earnings (loss)	$	49,617		$	(26,238	)
Adjustments to reconcile net earnings (loss) to net cash provided by (used in) operating activities
Loss on extinguishment of debt	—			28,307
Minority interest	15,110			18,678
Depreciation, depletion and amortization	81,062			76,431
Deferred income taxes	25,161			133,207
Stock compensation expense	—			1,857
Equity in earnings of unconsolidated subsidiaries	(366		)	(25		)
Changes in:
Accounts receivable	43,188			(14,221		)
Margin deposits	6,168			18,602
Inventories	(32,238		)	18,124
Accounts payable and accrued expenses	(9,118		)	(2,734		)
Customer advances - net	88,586			(28,149		)
Other - net	(6,914		)	(1,442		)
Net cash provided by operating activities	260,256			222,397
Investing Activities:
Additions to property, plant and equipment - net	(26,540		)	(53,773		)
Purchases of short-term investments	(547,272		)	(606,698		)
Sales and maturities of short-term investments	321,503			698,888
Proceeds from sale of unconsolidated subsidiary	—			18,600
Distributions from unconsolidated subsidiary	1,700			—
Net cash provided by (used in) investing activities	(250,609		)	57,017
Financing Activities:
Payments of long-term debt	(19,187		)	(254,750		)
Debt prepayment penalty	—			(26,437		)
Distributions to minority interest	—			(5,721		)
Exchange of stock	—			(715,358		)
Proceeds from issuance of common stock	—			715,358
Other - net	(35		)	(2,638		)
Net cash used in financing activities	(19,222		)	(289,546		)
Effect of exchange rate changes on cash and cash equivalents	1,191			505
Decrease in cash and cash equivalents	(8,384		)	(9,627		)
Cash and cash equivalents at beginning of period	77,146			50,003
Cash and cash equivalents at end of period	$	68,762		$	40,376

See Accompanying Notes to Unaudited Consolidated Financial Statements.

6

CF INDUSTRIES HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts and disclosures applicable to

September 30, 2004 and 2005 are unaudited)

1.   Basis of Presentation

The accompanying unaudited interim financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal and recurring adjustments that are necessary for the fair representation of the information for the periods presented.  These statements should be read in conjunction with the audited consolidated financial statements and related disclosures in the registration statement on Form S-1 as filed with the United States Securities and Exchange Commission (SEC) on August 8, 2005.  Operating results for any period presented apply to that period only and are not necessarily indicative of results for any future period.

All references to “CF Holdings,” “the Company,” “we,” “us” and “our” refer to CF Industries Holdings, Inc. and its subsidiaries, including CF Industries, Inc. after the reorganization transaction described below, except where the context makes clear that the reference is only to CF Holdings itself and not its subsidiaries. All references to “CF Industries” refer to CF Industries, Inc. and its subsidiaries, except where the context makes clear that the reference is only to CF Industries itself and not its subsidiaries.

CF Holdings was formed in April 2005 to hold the existing business of CF Industries. Prior to August 17, 2005, CF Industries operated as a cooperative and was owned by eight regional agricultural cooperatives. On August 16, 2005, we completed our initial public offering of common stock (IPO). We sold 47,437,500 shares of our common stock in the IPO and received net proceeds, after deducting underwriting discounts and commissions, of approximately $715.4 million. In connection with the IPO, we consummated a reorganization transaction in which CF Industries ceased to be a cooperative and became our wholly-owned subsidiary. In the reorganization transaction, all of the equity interests in CF Industries were cancelled in exchange for all of the proceeds of the IPO and 7,562,499 shares of our common stock. We did not retain any of the proceeds from the IPO.  The reorganization transaction did not result in a new basis of accounting for the Company.

Prior to the consummation of the IPO, CF Holdings did not have any activities or operations.  Accordingly, the accompanying unaudited interim financial statements for periods ended prior to August 17, 2005, are the unaudited consolidated interim financial statements of CF Industries, and the unaudited interim financial statements for periods ended after that date, are the unaudited consolidated interim financial statements of CF Holdings, which include the accounts of CF Industries. Weighted average shares outstanding and earnings (loss) per share information is presented on a pro forma basis in Note 4, giving effect to the IPO and related reorganization transaction assuming that they had occurred as of December 31, 2003.

In our December 31, 2004 consolidated balance sheet, certain items were reclassified to conform to the consolidated balance sheet as of September 30, 2005. In particular, we reclassified our investments in auction rate securities from cash and cash equivalents to short-term investments.

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2.    Summary of Significant Accounting Policies

For a complete discussion of the Company’s significant accounting policies, refer to our registration statement on Form S-1 as filed with the SEC on August 8, 2005.

Derivative Financial Instruments

We account for derivatives in accordance with Statement of Financial Accounting Standards (SFAS) No. 133— Accounting for Derivative Instruments and Hedging Activities —as amended by subsequent standards. Under these standards, derivatives are recognized in the consolidated balance sheets at fair value and changes in their fair value are recognized in earnings immediately unless hedge accounting is elected or the normal purchase and sale exemption applies. For a derivative designated and qualified as a cash flow hedge, the effective portion of the change in fair value is recorded in other comprehensive income (OCI) and is recognized in cost of sales with the normal flow of the underlying hedged item through inventory, which takes approximately 2 months.  Any ineffective portion of a change in the fair value of a derivative designated as a cash flow hedge is recognized immediately in cost of sales.  For the three and nine month periods ended September 30, 2005, we recorded ineffective hedge gains of $14.1 million and $14.6 million, respectively, resulting from the early terminations of certain natural gas hedge positions in combination with reductions in fertilizer production.  See Note 10 for more information on derivative financial instruments.

Stock-based compensation

In connection with our IPO, we granted nonqualified options to purchase 2,720,100 shares of our common stock to our officers and certain key employees, and we issued 27,724 shares of restricted common stock to certain non-management members of our Board of Directors.  We did not have any share-based awards prior to our IPO.  We adopted SFAS No. 123R, Share-Based Payment, which requires entities to measure the cost of employee services received in exchange for an award of equity instruments based upon the fair value of the award on the grant date. The cost is recognized over the period during which the employee is required to provide services in exchange for the award, and is accrued based on the straight-line method.  For both the three and nine month periods ended September 30, 2005, we recorded share-based compensation expense of $1.9 million ($1.1 million after taxes). See Note 13 for additional information on stock-based compensation.

3. New Accounting Standards

Following are summaries of recently issued accounting pronouncements that are either currently applicable or may become applicable to the preparation of our consolidated financial statements in the future.

•Financial Accounting Standards Board (FASB) Staff Position (FSP) No. 109-1— Application of FASB Statement 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004. This FSP clarifies that the tax deduction related to the new law should be accounted for as a special deduction under Statement of Financial Accounting Standards (SFAS) No. 109, which would reduce tax expense for the periods in which such deductions are claimed, rather than accounted for as a tax rate reduction.  The disallowed accounting treatment would have also required an adjustment to deferred tax assets and liabilities. Our estimated annual effective income tax rate for 2005 includes the estimated benefit of the special deduction as discussed in the FSP.

•SFAS No. 151— Inventory Costs. This statement amends Accounting Research Bulletin No. 43 to clarify that abnormal amounts of costs, such as idle facility expense, freight, handling and spoilage are to be recognized as current-period charges and that the allocation of fixed production overhead to inventory costs

8

is to be based on normalized production capacity. The statement is effective for fiscal years beginning after June 15, 2005 and may be early adopted for years beginning after November 2004. We do not expect the adoption of SFAS No. 151 to impact our consolidated financial statements.

•FASB Interpretation (FIN) No. 47— Accounting for Conditional Asset Retirement Obligations. This interpretation of SFAS No. 143 addresses asset retirement obligations where the timing and/or method of settlement may be conditional based on a future event. It clarifies that the obligation to perform the asset retirement activity is unconditional even though uncertainty exists about the timing and/or method of settlement, and requires that companies recognize such asset retirement obligations when incurred if the fair value of the liability can be reasonably estimated. FIN No. 47 is effective no later than the end of fiscal years ending after December 15, 2005. We are in the process of evaluating the impact of FIN No. 47 on our consolidated financial statements. It is possible that the results of this evaluation could result in the recognition of additional asset retirement obligations in our consolidated financial statements in the fourth quarter of 2005.

•Emerging Issues Task Force (EITF) Issue No. 04-06— Accounting for Stripping Costs Incurred during Production in the Mining Industry. This EITF Issue addresses the accounting for costs incurred to remove overburden and other materials to allow access to mineral deposits during the production phase of mining operations. The consensus of the EITF affirmed that stripping costs incurred during the production phase of mining operations are a variable cost that should be included in the costs of the mining inventory extracted during the same period that such costs are incurred. The Issue is effective for the first reporting period in fiscal years beginning after December 15, 2005. The Issue will not impact our accounting for mine stripping costs.

•EITF Issue No. 04-13— Accounting for Purchases and Sales of Inventory with the Same Counterparty. This EITF Issue addresses exchanges of inventory with a counterparty in the same line of business and examines the conditions under which such transactions should be viewed as a single nonmonetary transaction and whether such transactions should be recognized at fair value or recorded amounts. The Issue is effective for new arrangements entered into in reporting periods beginning after March 15, 2006, and will apply to our exchanges of product inventory with counterparties.  We have not yet determined the impact of EITF Issue No. 04-13 on our consolidated financial statements.

•SFAS No. 154— Accounting Changes and Error Corrections. This statement amends APB Opinion No. 20 and requires retrospective application of most changes in accounting principle unless it is impracticable to do so. Changes in accounting estimates continue to be applied prospectively, and the correction of an error continues to require restatement of previously issued financial statements. The statement is effective for fiscal years beginning after December 15, 2005. We will be required to adopt the new rules for the year ending December 31, 2006.

•SFAS No. 123R — Share-Based Payment.  This statement requires entities to measure the cost of employee services received in exchange for an award of equity instruments based upon the fair value of the award on the grant date.  The cost will be recognized over the period during which the employee is required to provide services in exchange for the award.  This standard eliminates the use of the intrinsic value method of accounting for share-based payments as previously provided in APB 25, Accounting for Stock Issued to Employees.  We have adopted SFAS 123R, and have applied this standard prospectively to share based payment awards issued in connection with the IPO.  See Note 13 for additional information on stock-based compensation.

9

4. Earnings (Loss) Per Share - Post Initial Public Offering and Pro Forma

Prior to the consummation of the IPO, CF Holdings did not have any activities or operations. Therefore, with the exception of stockholders’ equity and per share amounts, management believes that the current financial statements of CF Holdings are comparable to the historical financial statements of CF Industries.  The weighted average shares outstanding and earnings (loss) per share information is presented on a pro forma basis giving effect to the IPO and related reorganization transaction assuming that they had occurred as of December 31, 2003.

The earnings (loss) per share for the post-IPO period and pro forma earnings (loss) per share were computed as follows:

	Post-IPO			Historical - Pro forma
	Only			Three Months Ended September 30,					Nine Months Ended September 30,
(in thousands, except per share amounts)	2005			2004		2005			2004		2005
Earnings available to common shareholders- Net earnings (loss)	$	(99,510	)	$	14,302	$	(91,388	)	$	49,617	$	(26,238	)
Basic and diluted weighted average common shares outstanding	55,000			55,000		55,000			55,000		55,000
Basic and diluted net earnings (loss) per common share	$	(1.81	)	$	0.26	$	(1.66	)	$	0.90	$	(0.48	)

Restricted stock totaling 1,223 shares were excluded from the computation of diluted earnings (loss) per share because the effect of their inclusion would be antidilutive.

5. Pension and Other Postretirement Benefits

Both CF Industries and its subsidiaries maintain noncontributory, defined-benefit pension plans. For our U.S. pension plan, employees who began employment after December 31, 2003 are not eligible to participate in the plan.

We also provide group medical insurance to our retirees. Until age 65, retirees in the U.S. are eligible to continue to receive the same Company-subsidized medical coverage provided to active employees.  After a retiree becomes eligible for Medicare, generally at age 65, the offered coverage becomes a Medicare supplement and the retiree pays the entire cost of this supplemental coverage.  Similarly, retirees in Canada are eligible to continue the same Company subsidized coverage in both the provincial health care plan and the supplemental medical plan provided to active employees until age 65. When a Canadian retiree reaches age 65, we no longer provide medical coverage.

10

Net pension/retiree medical expense included the following components:

	Pension Plans												Retiree Medical
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2004			2005			2004			2005			2004		2005		2004		2005
Service cost for benefits earned during the period	$	949		$	1,563		$	4,880		$	4,892		$	359	$	313	$	867	$	904
Interest cost on projected benefit obligation	1,823			2,919			9,684			8,941			503		327		1,209		1,231
Expected return on plan assets	(2,177		)	(3,458		)	(11,733		)	(10,365		)	—		—		—		—
Amortization of transition obligation	(16		)	(15		)	(39		)	(45		)	92		82		234		248
Amortization of prior service cost	18			67			89			199			—		—		—		—
Actuarial loss	36			242			106			994			154		84		366		327
Net expense	$	633		$	1,318		$	2,987		$	4,616		$	1,108	$	806	$	2,676	$	2,710

Our key assumptions used in determining pension and retiree medical expense can be found in our registration statement on Form S-1 as filed with the SEC on August 8, 2005.

The estimated funding contribution to our U.S. pension plan in 2005 is $7.0 million which we expect to pay in the fourth quarter of 2005. No funding contributions were made to the U.S. plan during the nine months ended September 30, 2005.

In addition to our qualified defined benefit pension plans, we also maintain nonqualified supplemental pension plans for highly compensated employees as defined under federal law.  We also maintain a closed plan in which no current employees are eligible to participate. We recognized expense for these plans of $45 thousand and $582 thousand, respectively, for the three months ended September 30, 2004 and 2005, and $230 thousand and $748 thousand, respectively, for the nine months ended September 30, 2004 and 2005.

6. Income Taxes

For the three months ended September 30, 2005, the income tax provision of $94.7 million consists of income tax expense of $1.8 million on earnings before income taxes (which includes additional expense of $.5 million related to a year-to-date effective tax rate adjustment primarily resulting from IPO costs that are not deductible for tax purposes), a charge of $99.9 million to establish a valuation allowance, as discussed further below, partially offset by tax benefits of $0.9 million for adjustments to prior years’ tax returns and a Canadian income tax refund of $6.1 million that resulted from the application of an exemption under a tax treaty between Canada and the United States.  For the nine months ended September 30, 2005, the income tax provision of $137.4 million consists of income tax expense of $44.1 million on earnings before income taxes, a charge of $99.9 million for the valuation allowance, discussed further below, partially offset by tax benefits of $.5 million for adjustments to prior years’ tax returns and the Canadian income tax refund of $6.1 million.

On August 16, 2005, we completed our IPO and related reorganization, and CF Industries ceased to be a cooperative for federal income tax purposes.  On that date, CF Industries had a deferred tax asset related to net operating loss carryforwards (NOLs) generated from business conducted with CF Industries’ previous owners when CF Industries was a cooperative for tax purposes.  The income tax provision for the three and nine months ended September 30, 2005 includes a charge of $99.9 million to establish a 100% valuation allowance for the gross deferred tax asset related to the NOLs.  The valuation allowance is required because there is substantial uncertainty under existing tax law whether any tax benefits from this deferred tax asset will be realizable, now that CF Industries is no longer a cooperative for federal income tax purposes.

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In connection with the IPO, we entered into a net operating loss agreement with CF Industries’ previous owners (NOL Agreement) relating to the future treatment of the NOLs. Under the NOL Agreement, if it is finally determined that CF Industries’ net operating loss carryforwards can be used after CF Industries is no longer a cooperative, we will pay to CF Industries’ previous owners an amount equal to the resulting federal and state income taxes actually saved.

We have a 66% economic interest in Canadian Fertilizers Limited (Canadian Fertilizers), which operates as a cooperative for Canadian tax purposes and distributes all of its earnings from the sale of fertilizer as patronage dividends to its customers for fertilizer, including CF Industries.  For Canadian income tax purposes, Canadian Fertilizers is permitted to deduct an amount equal to the patronage dividends it distributes to its customers, provided that certain Canadian income tax requirements are met. Although Canadian Fertilizers is not currently under audit by the Canadian tax authorities, Canadian Fertilizers received a preliminary inquiry from the Canada Revenue Agency during the second quarter of 2005 which questioned whether Canadian Fertilizers’ past patronage distributions had met the requirements for full deductibility under Canadian income tax law. The past years that would be affected by this inquiry are 2002, 2003 and 2004. While Canadian Fertilizers believes its allocation method complied with applicable law, Canadian Fertilizers could be subject to Canadian income tax liabilities (exclusive of interest and penalties) for 2002, 2003 and 2004 of $6.1 million, $8.0 million and $26.0 million, respectively, and additional material Canadian income tax liabilities for future periods if its allocation method were determined to fail to meet the requirements for deductibility under Canadian tax law.

7. Inventories

Inventories consist of the following:

	December 31,		September 30,
(in thousands)	2004		2005
Fertilizer	$	188,291	$	169,691
Spare parts, raw materials and supplies	45,256		46,125
	$	233,547	$	215,816

8. Investments in Unconsolidated Subsidiaries

On July 15, 2005, we sold our interest in CF Martin Sulphur, L.P. to our other joint venture partner, an affiliate of Martin Resource Management, for $18.6 million. The transaction did not have a material impact on our consolidated statement of operations, as the selling price approximated the carrying value of our investment in CF Martin Sulphur, L.P. Concurrent with the sale, we entered into a multi-year sulfur supply contract with CF Martin Sulphur, L.P. with terms commensurate with prevailing market rates.

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9. Long-Term Debt and Credit Agreement

Long-Term Debt

On August 17, 2005, we prepaid our outstanding long – term debt balance of $235.6 million and recorded a loss on extinguishment of debt of $28.3 million, for the three and nine months ended September 30, 2005.  The loss consisted of prepayment penalties of $26.4 million and the write-off of deferred financing fees of $1.9 million.

Credit Agreement

On August 16, 2005, we replaced our previous $140 million, senior secured revolving credit facility with Harris N.A., successor by merger to Harris Trust and Savings Bank, as agent, with a $250 million, senior secured revolving credit facility (the credit facility) with JPMorgan Chase Bank, N.A., acting as administrative agent (JPMorgan Chase), which is scheduled to be available until August 16, 2010.  The credit facility provides up to $250 million, subject to a borrowing base, for working capital and general corporate purposes, including up to $50 million for the issuance of letters of credit.  As of September 30, 2005, there were no loans or letters of credit outstanding under the credit facility.

Availability under the credit facility is limited by a borrowing base equal to the value of a specified percentage of eligible receivables, plus the value of a specified percentage of eligible inventory, plus a property, plant and equipment component (capped at $75 million in the aggregate) to be determined based on specified percentages of eligible fixed assets (including the real property) located at the Donaldsonville, Louisiana facility and other eligible real property, if any (each subject to caps), less the amount of any reserves JPMorgan Chase deems necessary, as determined in good faith and in the exercise of reasonable business judgment.

CF Industries is entitled to make borrowings at interest rates based on (1) the Base Rate (which is the higher of (i) the rate most recently announced by JPMorgan Chase as its “prime” rate and (ii) the federal funds rate plus 1/2 of 1% per annum) plus a margin applied to either rate ranging from 0.00 percent to 0.375 percent, and (2) the applicable Eurodollar Rate (which is the London Interbank Eurodollar Rate adjusted for reserves) plus an applicable margin that ranges from 1.375 percent to 1.625 percent.  Letters of credit issued under the credit facility accrue fees at the applicable Eurodollar Rate borrowing margin.  The applicable margins vary depending on the average daily availability for borrowing under the credit facility for CF Industries' most recent calendar quarter.  CF Industries is also required to pay certain fees, including fees based on the unused portion of the credit facility and fronting fees on undrawn amounts under outstanding letters of credit, and expenses in connection with the credit facility.

The credit facility is guaranteed by CF Holdings and certain of the domestic subsidiaries of CF Industries (collectively, the Guarantors and, together with CF Industries, the Loan Parties) and secured by (i) perfected, first-priority liens (subject to permitted liens) on substantially all of the personal property and assets, both tangible and intangible, of the Loan Parties, (ii) perfected, first-priority liens or pledges (subject to permitted liens) on 100% of the equity interests of each Loan Party’s direct and indirect domestic subsidiaries other than immaterial subsidiaries and on 65% of the equity interests of each Loan Party’s first-tier foreign subsidiaries and (iii) a first-priority lien (subject to permitted liens) on the real property located in Donaldsonville, Louisiana.

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Optional prepayments of borrowings and optional reductions of the unutilized portion of the secured credit facility are permitted at any time, subject to, among other things, reimbursement of the lenders’ redeployment costs in the case of a prepayment of Eurodollar Rate borrowings.  Mandatory prepayments are required, subject to certain exceptions, in certain instances (such as upon certain asset sales, receipt of proceeds of insurance and condemnation events in excess of $5 million and issuances of debt or equity) at any time after our average daily cash availability amount is less than $75 million for any 10 business day period (and until such time as our average daily cash availability amount is equal to or exceeds $75 million for a period of 60 consecutive days).

Under the terms of the credit facility, the Loan Parties agree to covenants that apply to each of them and their respective subsidiaries and which, among other things, limit the incurrence of additional indebtedness, liens, loans and investments; limit the ability to take certain action with respect to payment of dividends, and the making of redemptions and repurchases with respect to capital stock; place limitations on prepayments, redemptions and repurchases of debt; limit entry into mergers, consolidations, acquisitions, asset dispositions and sale/leaseback transactions, transactions with affiliates and certain swap agreements; restrict changes in business and amendment of debt agreements; and place restrictions on distributions from subsidiaries, the issuance and sale of capital stock of subsidiaries, and other matters customarily restricted in secured loan agreements.

Additionally, we are required to meet a financial test on a consolidated basis consisting of a minimum ratio of earnings before interest, taxes, depreciation and amortization (EBITDA), calculated as set forth in the credit facility, minus the unfinanced portion of Capital Expenditures to Fixed Charges (each as defined in the credit facility) if average daily cash availability under the credit facility in any calendar month is less than $50 million.  The Loan Parties are further restricted from making capital expenditures in excess of $100 million during any 12-month period following any month in which average daily cash availability falls below $135 million (until such time as average daily cash availability for three consecutive months thereafter is greater than or equal to $135 million).

The credit facility contains customary representations and warranties and affirmative covenants, as well as customary events of default, including payment defaults, breach of representations and warranties, covenant defaults, cross-defaults and cross-accelerations, certain bankruptcy or insolvency events, judgment defaults, certain ERISA-related events, changes in control, and invalidity of any collateral or guarantee or other document.

10. Derivative Financial Instruments

We use natural gas in the manufacture of nitrogen fertilizer products. Because natural gas prices are volatile, our Natural Gas Acquisition Policy includes the objective of providing protection against significant adverse natural gas price movements. We manage the risk of changes in gas prices through the use of physical gas supply contracts and derivative financial instruments covering periods not exceeding 3 years. The derivative instruments that we currently use are swaps and futures. These contracts reference primarily NYMEX futures contract prices, which represent fair value at any given time. The contracts are traded in months forward and settlements are scheduled to coincide with anticipated gas purchases during those future periods.

We classify a derivative financial instrument as a hedge if all of the following conditions are met: 1) the item to be hedged must expose us to commodity price risk, 2) it must be probable that the results of the hedge position substantially offset the effects of price changes on the hedged item (i.e., there is a high correlation between the hedge position and changes in market value of the hedged item) and 3) the derivative financial instrument must be designated as a hedge of the item at the inception of the hedge. We use derivative instruments primarily to fix the natural gas price for product sold under the forward pricing program.

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We designate, document and assess accounting for hedge relationships, which result primarily in cash flow hedges that require that we record the derivatives as assets and liabilities at their fair value on the balance sheet with an offset in other comprehensive income (OCI). The gain or loss of an effective cash flow hedge is deferred in OCI until the second month after the hedged natural gas is used to manufacture inventoried products, which approximates the period of inventory turns of upgraded products and the release of the cost of the hedged gas to cost of sales. Ineffective hedge gains and losses are recorded immediately in cost of sales.

Compared with spot gas prices, hedging activities increased natural gas costs at the Donaldsonville Nitrogen Complex by approximately $6.0 million for three months ended September 30, 2004, and decreased natural gas costs by approximately $33.1 million for the three months ended September 30, 2005.  For the nine months ended September 30, 2004 and 2005, hedging activities decreased natural gas costs by approximately $17.3 million and $26.4 million, respectively. The ineffective gain for the three and nine months ended September 30, 2005 was approximately $14.1 million and $14.6 million, respectively. These amounts consisted primarily of gains realized during the third quarter on hedge positions terminated prior to maturity as a result of decisions to reduce operating rates below levels associated with originally hedged gas volumes.  The reduced operating rates are a function of recent increases in natural gas prices and an increase in outside purchases of fertilizer to meet future sales commitments.  These decisions rendered a portion of the original hedge positions ineffective, thereby requiring the immediate recognition in cost of sales of gains that otherwise would have been deferred as previously described.  Cash flows related to natural gas hedges are reported as cash flows from operating activities.

Open natural gas derivative contracts at December 31, 2004 and September 30, 2005 are summarized below.

	December 31, 2004				September 30, 2005
	Contract MMBtu (Millions)	Net Unrealized Loss (Thousands)			Contract MMBtu (Millions)	Net Unrealized Gain (Thousands)
Swaps	20.4	$	(14,077	)	8.4	$	33,809
Futures	4.4	(4,172		)	2.0	10,377
	24.8	$	(18,249	)	10.4	$	44,186

Reconciliation of the unrealized gains and losses to amounts reported on the consolidated balance sheet at December 31, 2004 and September 30, 2005 are as follows:

(in thousands)	December 31, 2004			September 30, 2005
Open positions:
Unrealized gains in other current and other noncurrent assets	$	268		$	45,616
Unrealized losses in other current liabilities	(18,517		)	(1,430		)
	(18,249		)	44,186
Plus: Closed positions for forward months settled in cash	(1,681		)	12,938
Plus: Closed positions from prior months in other current assets	16,134			22,767
Less: Ineffective gain (loss) included in earnings	(259		)	9,297
Gross amount in accumulated other comprehensive income (loss)	(3,537		)	70,594
Less: Deferred income tax effect	(1,415		)	27,991
Net amount in accumulated other comprehensive income (loss)	$	(2,122	)	$	42,603

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11. Other Comprehensive Income

Stockholders’ equity includes accumulated other comprehensive income (loss), which consists of the following components:

(in thousands)	Foreign Currency Translation Adjustment			Unrealized Gain (Loss) on Derivatives			Minimum Pension Liability Adjustment			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2004	$	(3,731	)	$	(2,122	)	$	(6,503	)	$	(12,356	)
Net Change	808			44,725			—			45,533
Balance at September 30, 2005	$	(2,923	)	$	42,603		$	(6,503	)	$	33,177

The unrealized gain or loss on derivatives is related to natural gas hedges. As described in Note 10, these amounts are reclassified into earnings as the fertilizer ultimately manufactured with the hedged gas is sold. The amount shown as net change in OCI is the net change resulting from current period hedging transactions.

12. Common Stock

We have 500 million authorized shares of $0.01 par value common stock, of which 55,027,723 shares were outstanding as of September 30, 2005.  Currently, we have 5,502,176 shares of common stock available for future awards under the 2005 Equity and Incentive Plan, of which 2,859,776 are available to be issued for stock awards other than stock options and stock appreciation rights.

Changes in common shares outstanding through September 30, 2005 are as follows:

	2005
Initial public offering	54,999,999
Issuance of restricted stock	27,724
Common stock outstanding	55,027,723

13. Stock Based Compensation Plans

In connection with our IPO, we granted nonqualified options to purchase 2,720,100 shares of our common stock to our officers and certain key employees, and we issued 27,724 shares of restricted common stock to certain non-management members of our Board of Directors.  We did not have any share-based awards prior to our IPO.  We adopted SFAS No. 123R, Share-Based Payment, which requires entities to measure the cost of employee services received in exchange for an award of equity instruments based upon the fair value of the award on the grant date. The cost is recognized over the period during which the employee is required to provide services in exchange for the award, and is accrued based on the straight-line method.

2005 Equity and Incentive Plan

In connection with our IPO, our board of directors adopted the CF Industries Holdings, Inc. 2005 Equity and Incentive Plan (the plan). Under the plan, we may grant incentive stock options, nonqualified incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards (payable in cash or stock), and other stock-based awards to our officers, employees, consultants and independent contractors (including non-employee directors).  The purpose of the plan is to provide an incentive for our employees, officers, consultants and non-employee directors that is aligned with the interests of our shareholders.

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Share Reserve

We have reserved a total 8,250,000 shares of our common stock and we have 5,502,176 shares currently available for future awards under the plan, but no more than 2,859,776 shares of our common stock are available for issuance under the plan for any awards other than stock options and stock appreciation rights. If any outstanding award expires for any reason or is settled in cash, any unissued shares subject to the award will again be available for issuance under the plan. If a participant pays the exercise price of an option by delivering to us previously owned shares, only the number of shares we issue in excess of the surrendered shares will count against the plan’s share limit. Also, if the full number of shares subject to an option is not issued upon exercise for any reason (including to satisfy a tax withholding obligation), only the net number of shares actually issued upon exercise will count against the plan’s share limit.

Individual Award Limits

The plan provides that no more than 1,237,500 underlying shares may be granted to a participant in any one calendar year in the form of stock options and stock appreciation rights.  The plan also provides that no more than 618,750 shares underlying any other type of equity award may be granted to a participant in any one calendar year. The maximum value of the aggregate cash payment that any participant may receive with respect to any cash-based awards under the plan is $3 million with respect to any annual performance period and is $3 million per year for any performance period exceeding one year in length.

Stock Options

On August 10, 2005, we granted to plan participants nonqualified options to purchase 2,720,100 shares of common stock at $16.00 per share.  The exercise price of these options is equal to the price of the shares sold in our IPO. The options will expire in ten years, with one-third vesting on each of the first three anniversaries of the date of grant.  Accelerated vesting provisions exist for participants eligible for retirement at specified ages.

The fair value of each stock option award is estimated using the Black-Scholes option valuation model that uses the assumptions shown in the following table.  Expected volatilities are based on implied volatilities from traded options on the stock of comparable companies and other factors.  The expected term of options granted is estimated based on the contractual term of the instruments and participant’s expected exercise and post-vesting employment termination behavior.  The risk-free rate for the assumed expected life of the options is based on the U.S. Treasury yield curve in effect at the time of grant.

	2004	2005
Expected volatility	N/A	36%-44%
Expected life of stock options	N/A	4-6 Years
Risk-free interest rate	N/A	4.2%
Dividend yield	N/A	0.5%

N/A-not applicable

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A summary of activity under the plan for the nine months ended September 30, 2005 is presented below:

		Weighted -		Weighted - Average	Aggregate
	Shares	Average		Remaining	Intrinsic
	(in thousands)	Exercise Price		Contractual Term	Value
Outstanding at January 1, 2005	—	$	—	—	$	—
Granted	2,720	16.00		9.9	—
Exercised	—	—		—	—
Forfeited or expired	—	—		—	—
Outstanding at September 30, 2005	2,720	$	16.00	9.9	$	—
Exercisable at September 30, 2005	—	$	—	—	$	—

The weighted-average, grant-date fair value of stock options granted during the three and nine months ended September 30, 2005 was $7.12.  No option awards were exercised, forfeited, or expired as of September 30, 2005, and no awards were granted prior to our IPO.

A summary of the status of our nonvested options for the nine months ended September 30, 2005 is presented below:

			Weighted -
			Average
	Shares		Grant-Date
	(in thousands)		Fair Value
Nonvested as of January 1, 2005	—		$	—
Granted	2,720		7.12
Vested	(138	)	5.47
Forfeited or expired	—		—
Nonvested as of September 30, 2005	2,582		7.20

As of September 30, 2005, certain participants met age requirements that allowed their options to qualify for accelerated vesting upon retirement.  The vested options shown above represent the number of options those participants would have been eligible to exercise if they had retired as of September 30, 2005, for a total fair value of approximately $753 thousand.

Restricted Stock

On August 11, 2005 and August 18, 2005, we awarded 16,252 and 11,472 shares of restricted common stock, respectively, to certain non-management members of our  Board of Directors, with corresponding fair values of $16.20 and $16.35 per share. This restricted stock will vest on the earlier of one year from date of grant or the date of the next Annual Shareholder Meeting, which is expected to be in May 2006.

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Compensation Cost

A summary of the total compensation cost related to our equity awards and the portion recognized for the three and nine month periods ended September 30, 2005 is presented below:

	Stock		Restricted
(in thousands)	Options		Stock		Total
Grant-date fair value	$	18,645	$	451	$	19,096
Less: Compensation expense recognized	1,777		80		1,857
Unrecognized compensation cost	$	16,868	$	371	$	17,239
Years over which compensation cost is expected to be recognized	2.9		0.6

The compensation cost shown above was recorded primarily in selling, general and administrative expense.  The income tax benefit related to the compensation cost recognized for the three and nine months ended September 30, 2005 was $736 thousand.

14. Contingencies

Litigation

From time to time we are subject to ordinary, routine legal proceedings related to the usual conduct of our business. We are also involved in 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 matters will not have a material adverse effect on our consolidated financial position or results of operations.

Environmental

In December 2004 and January 2005, the United States Environmental Protection Agency (EPA) inspected our Plant City, Florida phosphate fertilizer complex to evaluate the facility’s compliance with the Resource Conservation and Recovery Act (RCRA), the federal statute that governs the generation, transportation, treatment, storage and disposal of hazardous wastes. This inspection was undertaken as a part of a broad enforcement initiative commenced by the EPA to evaluate whether mineral processing and mining facilities, including, in particular, all wet process phosphoric acid production facilities, are in compliance with RCRA, and the extent to which such facilities’ waste management practices have impacted the environment.

By letter dated September 27, 2005, EPA Region IV issued to the Company a Notice of Violation (NOV) and Compliance Evaluation Inspection Report. The NOV and Compliance Evaluation Inspection Report alleged a number of violations of RCRA, including violations relating to recordkeeping, the failure to properly make hazardous waste determinations as required by RCRA, and alleged treatment of sulfuric acid waste without a permit. The most significant allegation in the NOV is that the Plant City facility’s reuse of phosphoric acid process water (which is otherwise exempt from regulation as a hazardous waste) in the production of ammoniated phosphate fertilizer, and the return of this process water to the facility’s process water recirculating system, has resulted in the disposal of hazardous waste into the system without a permit. The Compliance Evaluation Inspection Report indicates that as a result, the entire process water system, including all pipes, ditches, cooling ponds and gypsum stacks, could be regulated as hazardous waste management units under RCRA.

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Several of our competitors have received NOVs making this same allegation. This particular recycling of process water is common in the industry and, the Company believes, was authorized by the EPA in 1990. The Company also believes that this allegation is inconsistent with recent case law governing the scope of the EPA’s regulatory authority under RCRA. If the EPA does not rescind this allegation and its position is eventually upheld, the Company could incur material expenditures in order to modify its practices, or it may be required to comply with regulations applicable to hazardous waste treatment, storage or disposal facilities. If the Company is required to comply with such obligations, it could incur material capital and operating expenditures or may be required to cease operation of its water recirculating system, which does not meet RCRA standards. This would cause a significant disruption of the operations of the Plant City facility.

The NOV indicated that the Company is liable for penalties up to the statutory maximum (for example, the statutory maximum per day of noncompliance for each violation that occurred after March 15, 2004 is $32,500 per day). Although penalties of this magnitude are rarely, if ever, imposed, the Company is at risk of incurring substantial civil penalties with respect to these allegations. In order to obtain an order or judgment for civil penalties, the EPA will have to bring a civil or administrative enforcement proceeding against the Company. The EPA has not indicated when it intends to initiate an administrative or judicial enforcement proceeding against the Company, although based on conversations with the EPA, we do not believe that such proceedings are imminent.

In connection with the RCRA enforcement initiative, the EPA collected samples of soil, groundwater and various waste streams at the Plant City facility. The analysis of the split samples collected by the Company during the EPA’s inspection did not identify hazardous waste disposal issues impacting the site. It is our understanding that the EPA’s sampling results are consistent with the Company’s results, although we have not been provided with a report by the EPA with respect to its sampling.  Pursuant to a 1992 consent order with the State of Florida, the Company captures and reuses groundwater that has been impacted as a result of the former operation of an unlined gypsum stack at the site. Although the Company believes that it has fully evaluated and is remediating the impacts resulting from its historic activities, we do not know whether the EPA will require us to undertake additional environmental investigations at this facility. In addition, we understand that EPA intends to inspect our Bartow, Florida property, where we formerly manufactured phosphoric acid, and which we are currently closing. We may be required to undertake an investigation of environmental conditions at that facility.

We are subject to a variety of environmental laws and regulations in all jurisdictions in which we operate. Where it is probable that environmental liabilities exist and where reasonable estimates of such liabilities can be made, we have established associated reserves. These estimated liabilities are subject to change as additional information becomes available regarding the magnitude and timing of possible clean-up costs, the relative expense and effectiveness of alternative clean-up methods, and other possible liabilities associated with such situations. However, based on the information available as of the date of this filing, we believe that any additional costs that may be incurred as more information becomes available will not have a material adverse effect on the Company’s financial position, although such costs could have a material effect on the Company’s results of operations or cash flows in a particular period.

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15. Segment Disclosures

We are organized and managed based on two segments, which are differentiated primarily by their products, the markets they serve and the regulatory environments in which they operate. The two segments are the nitrogen and phosphate fertilizer businesses.

Segment data for sales, cost of sales and gross margin for the three and nine months ended September 30, 2004 and 2005, and assets at September 30, 2004, September 30, 2005, and December 31, 2004 are as follows. Other assets include amounts attributable to the corporate headquarters and unallocated corporate assets.

(in thousands)	Nitrogen		Phosphate		Consolidated
Operating Results
Three Months Ended September 30, 2004
Net sales
Anhydrous ammonia	$	45,918	$	—	$	45,918
Granular urea	126,967		—		126,967
UAN solutions	83,687		—		83,687
DAP	—		52,105		52,105
MAP	—		17,262		17,262
Other	754		1		755
	257,326		69,368		326,694
Cost of sales	215,937		66,844		282,781
Gross margin	$	41,389	$	2,524	$	43,913
Three Months Ended September 30, 2005
Net sales
Anhydrous ammonia	$	43,927	$	—	$	43,927
Granular urea	137,508		—		137,508
UAN solutions	76,008		—		76,008
DAP	—		77,231		77,231
MAP	—		23,875		23,875
Other	881		—		881
	258,324		101,106		359,430
Cost of sales	213,319		90,081		303,400
Gross margin	$	45,005	$	11,025	$	56,030

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(in thousands)	Nitrogen		Phosphate		Consolidated
Operating Results
Nine Months Ended September 30, 2004
Net sales
Anhydrous ammonia	$	277,427	$	—	$	277,427
Granular urea	369,773		—		369,773
UAN solutions	262,357		—		262,357
DAP	—		206,313		206,313
MAP	—		52,256		52,256
Other	3,891		42		3,933
	913,448		258,611		1,172,059
Cost of sales	785,272		241,982		1,027,254
Gross margin	$	128,176	$	16,629	$	144,805
Nine Months Ended September 30, 2005
Net sales
Anhydrous ammonia	$	318,644	$	—	$	318,644
Granular urea	482,770		—		482,770
UAN solutions	306,329		—		306,329
DAP	—		263,758		263,758
MAP	—		70,083		70,083
Other	3,831		—		3,831
	1,111,574		333,841		1,445,415
Cost of sales	932,224		306,251		1,238,475
Gross margin	$	179,350	$	27,590	$	206,940

(in thousands)	Nitrogen		Phosphate		Other		Consolidated
Assets
December 31, 2004	$	530,604	$	414,419	$	601,948	$	1,546,971
September 30, 2005	$	552,772	$	372,156	$	412,922	$	1,337,850

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ITEM 2.          MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with the material under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and related notes included in our registration statement on Form S-1 as filed with the United States Securities and Exchange Commission on August 8, 2005.  All references to “CF Holdings,” “we,” “us” and “our” refer to CF Industries Holdings, Inc. and its subsidiaries, including CF Industries, Inc. except where the context makes clear that the reference is only to CF Holdings itself and not its subsidiaries.

Overview

We are one of the largest manufacturers and distributors of nitrogen and phosphate fertilizer products in North America. Our operations are organized into two business segments: the nitrogen fertilizer business and the phosphate fertilizer business. Our principal products in the nitrogen fertilizer business are ammonia, urea and urea ammonium nitrate solution, or UAN. Our principal products in the phosphate fertilizer business are diammonium phosphate, or DAP,  and monoammonium phosphate, or MAP. Our core market and distribution facilities are concentrated in the midwestern U.S. grain-producing states.

Our principal assets include:

•      the largest nitrogen fertilizer complex in North America (Donaldsonville, Louisiana);

•      a 66% economic interest in the largest nitrogen fertilizer complex in Canada (which we operate in Medicine Hat, Alberta through Canadian Fertilizers Limited, or CFL);

•      one of the largest integrated ammonium phosphate fertilizer complexes in the United States (Plant City, Florida);

•      the most-recently constructed phosphate rock mine and associated beneficiation plant in the United States (Hardee County, Florida); and

•      an extensive system of terminals, warehouses and associated transportation equipment located primarily in the midwestern United States.

CF Holdings was formed in 2005 to hold the existing business of CF Industries, Inc. Prior to the consummation of our initial public offering in August 2005, CF Industries, Inc. operated as a cooperative and was owned by eight regional agricultural cooperatives.

A number of unique items affected our reported earnings for the quarter ended September 30, 2005 and our financial position as of the end of the period:

On August 16, 2005, we completed our initial public offering of common stock. We sold 47,437,500 shares of our common stock in the offering and received net proceeds, after deducting underwriting discounts and commissions, of approximately $715.4 million. In connection with our initial public offering, we consummated a reorganization transaction in which CF Industries, Inc. ceased to be a cooperative and became our wholly-owned subsidiary. In the reorganization transaction, all of the equity interests in CF Industries, Inc. were cancelled in exchange for all of the proceeds of the IPO and 7,562,499 shares of our common stock. We did not

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retain any of the proceeds from the IPO.

On August 16, 2005, we replaced our $140 million senior secured revolving credit facility with a new $250 million senior secured revolving credit facility.

On August 17, 2005, we repaid in full $235.6 million of our term notes, plus associated prepayment penalties and accrued interest in the amount of $29.3 million, with cash on hand and by liquidating short-term investments. Prior thereto, we made principal payments of $0.7 million and $10 million on their scheduled maturity dates, July 20, 2005 and August 1, 2005, respectively.

In connection with these transactions, we incurred an estimated net $17.1 million charge (after taxes) related to the prepayment penalties associated with the repayment of our long term debt ($16.0 million) and termination of our long-term incentive plan ($1.1 million) upon completion of our initial public offering. We also incurred a non-cash charge of $1.1 million (after taxes) related to the write-off of unamortized financing fees related to our previous senior secured revolving credit facility and long term debt.

On August 28, 2005 we implemented an orderly shutdown of our Donaldsonville, Louisiana nitrogen complex in anticipation of Hurricane Katrina, which struck the region on August 29, 2005. The complex suffered only minor superficial damage. We began restarting the complex on August 30, 2005 and reached full planned production on September 8, 2005. The lost production resulting from Hurricane Katrina consisted of approximately 10,000 tons of shippable ammonia, 25,000 tons of urea and 25,000 tons of UAN solution. Approximately two weeks later, Hurricane Rita came onshore.  Curtailments of natural gas supplies to our Donaldsonville complex began around September 22, 2005, and by September 25, 2005 the complex was shut down.  Although the Donaldsonville complex suffered only minor superficial damage, this hurricane caused substantial damage to the oil and gas production and distribution facilities in the region. As a result, production was not restored to planned levels until after month-end. Total lost production as a result of Hurricane Rita consisted of about 1,000 shippable tons of ammonia, 41,000 tons of urea and 27,000 tons of UAN solution.  We expect to compensate for lost production from both hurricanes through increased future production, usage of existing inventory and/or increased purchases of product from third parties. As a result of these hurricanes, the supply of natural gas, the primary raw material used to produce nitrogen fertilizers, has been substantially affected and the market price of natural gas has increased considerably. We are unable to predict whether or when natural gas prices will return to pre-hurricane levels. Hurricane Katrina also impacted the availability of barges that we use to transport urea and DAP/MAP on the Mississippi River. There can be no assurance as to when normal barge service will be restored or whether this disruption will have an impact on our ability to serve our customers. Operating levels at our Plant City phosphate complex were also adversely impacted by reduced sulfur supplies due to refinery closures following Hurricane Rita.  In light of this, we accelerated the timing of planned turnarounds to coincide with this period of reduced sulfur availability. Production was restored to planned levels by early November of 2005. The Plant City complex suffered no weather-related damage.

In connection with our initial public offering, we also recorded a non-cash charge to the caption “Income tax provision” of $99.9 million to reduce to zero what remained of the gross deferred tax asset related to CF Industries, Inc.’s net operating loss carryforwards as of August 16, 2005 (CF Industries, Inc.’s last day as a cooperative).  Those net operating loss carryforwards were generated from business conducted with CF Industries, Inc.’s pre-IPO owners while CF Industries, Inc. was a cooperative. We also entered into a net operating loss agreement, or NOL Agreement, on August 16, 2005 with CF Industries, Inc.’s pre-IPO owners relating to the future treatment of the net operating loss carryforwards. Under the NOL Agreement, if it is finally determined that CF Industries, Inc.’s net operating loss carryforwards can be used after CF Industries, Inc. is no longer a cooperative, we will pay CF Industries, Inc.'s pre-IPO owners an amount equal to the resulting federal and state income taxes actually saved. See our discussion and analysis of financial condition and results of

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operations and ‘‘Certain relationships and related party transactions—Initial public offering—Net operating loss carryforwards’’ in our registration statement on Form S-1 as filed August 8, 2005 for additional discussion of our NOL Agreement.

We use our Forward Pricing Program (FPP) to reduce margin risk created by the volatility of fertilizer prices and natural gas costs.  As customers place forward nitrogen fertilizer orders, we use derivative instruments, primarily futures and swaps, to fix the natural gas prices for product. These instruments are classified as cash flow hedges as defined in Statement of Financial Accounting Standards (SFAS) No. 133—Accounting for Derivatives and Hedging Activities, and are accounted for accordingly. The gains or losses on these hedges are deferred in other comprehensive income and are recognized in operations when the hedged item affects earnings. If any such hedges become ineffective, the gains or losses are recognized immediately in operations.  As a result of our decision to reduce operating rates at our Donaldsonville complex in favor of increased outside purchases of fertilizers, due to the recent run up in natural gas prices, we now expect to have correspondingly reduced requirements for natural gas in order to meet our FPP obligations to our customers. Consequently, during the third quarter of 2005, we terminated a portion of our original hedge positions prior to maturity, rendering them ineffective as defined in SFAS No. 133—Accounting for Derivatives and Hedging Activities.  A $14.1 million gain, the majority of which arose from the early termination of FPP-related natural gas positions, was recognized as a reduction of cost of sales in the third quarter of 2005.  See Note 10 to our unaudited consolidated financial statements included in this Form 10-Q.

In connection with our initial public offering, we granted nonqualified options to purchase 2,720,100 shares of our common stock to our officers and certain key employees, and we issued 27,724 shares of restricted common stock to certain non-management members of our Board of Directors. In the third quarter of 2005, we adopted SFAS No. 123R - Share-Based Payment, (SFAS 123R) which requires us to recognize in our statement of operations the grant date fair value of all share-based awards. As a result, total share-based compensation cost recognized for the quarter and the nine months ended September 30, 2005 was $1.9 million, of which $1.6 million was recorded as selling, general and administrative expenses and $.3 million was recorded as cost of sales. We expect the annual total compensation cost for share-based awards existing as of September 30, 2005 to approximate $4 million and $7 million in 2005 and 2006, respectively. We did not have share-based awards prior to our initial public offering. See the “Critical Accounting Policies and Estimates” section later in this discussion and analysis for additional information on share-based awards.

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Results of Operations

The following table presents our consolidated results of operations:

	Quarter ended September 30,						Nine months ended September 30,
	2004			2005			2004			2005
	(in thousands, except per share amounts)
Net sales	$	326,694		$	359,430		$	1,172,059		$	1,445,415
Cost of sales	282,781			303,400			1,027,254			1,238,475
Gross margin	43,913			56,030			144,805			206,940
Selling, general and administrative	9,864			17,715			30,166			42,985
Other operating—net	1,721			3,135			6,756			6,026
Operating earnings	32,328			35,180			107,883			157,929
Interest expense	5,411			2,982			17,231			13,513
Interest income	(1,417		)	(3,927		)	(3,407		)	(11,610		)
Loss on extinguishment of debt	—			28,307			—			28,307
Minority interest	5,403			6,313			15,110			18,678
Other non-operating—net	(149		)	(1,798		)	(686		)	(2,134		)
Earnings before income taxes	23,080			3,303			79,635			111,175
Income tax provision	8,764			94,672			30,241			137,429
Equity in earnings (loss) of unconsolidated subsidiaries	(14		)	(19		)	223			16
Net earnings (loss)	$	14,302		$	(91,388	)	$	49,617		$	(26,238	)
Pro forma Earnings (Loss) Per Share (1)
Basic and diluted net earnings (loss) per share	$	0.26		$	(1.66	)	$	0.90		$	(0.48	)
Basic and diluted weighted average shares outstanding	55,000			55,000			55,000			55,000

(1) Represents the pro forma basic and diluted earnings per share calculations as if the weighted average number of shares issued in the initial public offering were outstanding as of December 31, 2003.  See Note 4 of our unaudited consolidated financial statements in this Form 10-Q for further information regarding pro forma earnings (loss) per share.

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Segment Review

Our business is organized and managed internally based on two segments, the nitrogen fertilizer business and the phosphate fertilizer business, which are differentiated primarily by their products, the markets they serve and the regulatory environments in which they operate.

Nitrogen Fertilizer Business

The following table presents summary operating data for our nitrogen fertilizer business:

	Quarter ended September 30,						Nine months ended September 30,
	2004			2005			2004			2005
	(in thousands, except percentage and price per unit amounts)
Net sales	$	257,326		$	258,324		$	913,448		$	1,111,574
Cost of sales	215,937			213,319			785,272			932,224
Gross margin	$	41,389		$	45,005		$	128,176		$	179,350
Gross margin percentage	16.1		%	17.4		%	14.0		%	16.1		%
Tons of product sold	1,404			1,176			4,871			4,957
Sales volumes by product
Ammonia	177			145			1,018			1,032
Urea	615			549			1,859			1,977
UAN	602			474			1,941			1,905
Other nitrogen fertilizers	10			8			53			43
Average selling price per ton by product
Ammonia	$	259		$	303		$	273		$	309
Urea	206			251			199			244
UAN	139			160			135			161
Cost of natural gas (per mmBTU)
Donaldsonville facility	$	5.77		$	7.17		$	5.43		$	6.97
Medicine Hat facility	4.93			7.25			4.99			6.29
Average daily market price of natural gas (per mmBTU)
Henry Hub (Louisiana)	$	5.45		$	9.72		$	5.72		$	7.69
AECO (Alberta)	4.75			7.73			4.92			6.42

Phosphate Fertilizer Business

The following table presents summary operating data for our phosphate fertilizer business:

	Quarter ended September 30,						Nine months ended September 30,
	2004			2005			2004			2005
	(in thousands, except percentage and price per unit amounts)
Net sales	$	69,368		$	101,106		$	258,611		$	333,841
Cost of sales	66,844			90,081			241,982			306,251
Gross margin	$	2,524		$	11,025		$	16,629		$	27,590
Gross margin percentage	3.6		%	10.9		%	6.4		%	8.3		%
Tons of product sold	354			460			1,338			1,563
Sales volumes by product
DAP	267			353			1,077			1,243
MAP	87			107			261			320
Domestic vs export sales of DAP/MAP
Domestic	187			315			821			1,032
Export	167			145			517			531
Average selling price per ton by product
DAP	$	195		$	219		$	192		$	212
MAP	198			223			200			219

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Third Quarter of 2005 Compared to the Third Quarter of 2004

Consolidated Operating Results

Our operating results for the third quarter of 2005 reflected the completion of our initial public offering of common stock as well as the repayment of our term notes.  During the third quarter of 2005, the nitrogen fertilizer industry benefited from tight global supply conditions, while the phosphate fertilizer industry continued to show improvement due primarily to strong export demand. Our total gross margin increased by approximately $12.1 million, or 28%, from $43.9 million for the third quarter of 2004 to $56.0 million for the same period in 2005 due largely to improved market conditions and increased sales volume for phosphate fertilizers. The net loss of $91.4 million for the third quarter of 2005 included a $99.9 million non-cash charge to “Income tax provision” to record a valuation allowance on the deferred tax asset related to CF Industries, Inc.’s net operating loss carryforwards generated during pre-IPO operations, a $28.3 million loss on the extinguishment of debt, a $14.1 million gain associated with the early termination of certain natural gas hedge positions and a $6.1 million refund of Canadian income taxes.

Net Sales

Our net sales increased 10% to $359.4 million in the third quarter of 2005 compared to $326.7 million in the third quarter of 2004, due to higher average selling prices partially offset by a decrease in sales volume. Nitrogen fertilizer prices for the third quarter of 2005 averaged 20% higher than the prices for similar products in the comparable period of 2004 reflecting strong demand and tight supply. Phosphate fertilizer prices in the third quarter of 2005 were 12% higher than corresponding prices in the third quarter of 2004, resulting primarily from strong international demand. Our total sales volume decreased 7% to 1.6 million tons in the third quarter of 2005 versus 1.8 million tons in the third quarter of 2004 as lower nitrogen fertilizer sales volume was partially offset by increased phosphate fertilizer sales volume. Nitrogen fertilizer sales volume decreased 16% to 1.2 million tons in the third quarter of 2005 compared to 1.4 million tons in the comparable period of 2004 due primarily to lower inventory levels at June 30, 2005, resulting from strong spring sales, scheduled plant turnarounds and the impact of Hurricanes Katrina and Rita. Our total level of phosphate fertilizer sales of 460,000 tons in the third quarter of 2005 increased by 30% compared to the same period of 2004, primarily due to increased sales to domestic customers.

Cost of Sales

Total cost of sales of our nitrogen fertilizers averaged $181 per ton in the third quarter of 2005 compared to $154 per ton in the third quarter of 2004, an increase of 18%, primarily due to higher natural gas prices. The impact of higher natural gas prices in the current period was partially offset by a $14.1 million gain, associated with the early termination of certain natural gas hedge positions coupled with reduced plant operations. Phosphate fertilizer cost of sales averaged $196 per ton in the third quarter of 2005 compared to $189 per ton in the third quarter of the prior year, an increase of 4%, mainly due to higher phosphate rock and ammonia costs.

During the third quarter of 2005, we sold approximately 1 million tons of fertilizer under our forward pricing program, representing approximately 63% of our total fertilizer sales volume for the quarter. In the comparable period of 2004, we sold approximately 700,000 tons of fertilizer under this program, representing approximately 40% of our total fertilizer sales volume for the period.

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Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 80% to $17.7 million in the third quarter of 2005 compared to $9.9 million in the comparable period of 2004. The increase in the third quarter of 2005 was largely due to increased administrative expenses related to the completion of our public offering, performance-based management incentive compensation (including expenses associated with the termination of our long-term incentive plan upon completion of our initial public offering), and compensation expense associated with our share-based awards.

Other Operating—Net

Other operating—net increased from $1.7 million in the third quarter of 2004 to $3.1 million in the same period of 2005. The $1.4 million increase was largely due to a $2.1 million adjustment in the third quarter of 2005 to Bartow phosphogypsum stack asset retirement costs as a result of revised engineering estimates. In the third quarter of 2004, Bartow water treatment costs were expensed as incurred, whereas water treatment costs incurred in the comparable period of 2005 were charged against an asset retirement obligation, which was recorded in the fourth fiscal quarter of 2004. For a detailed explanation of the accounting for water treatment costs at Bartow, please refer to Note 7 to our audited consolidated financial statements included in our registration statement on Form S-1 as filed August 8, 2005.

Interest—Net

Interest-net swung from a net expense of $4.0 million in the third quarter of 2004 to $1.0 million of net interest income in the third quarter of 2005. Interest expense decreased 45% from $5.4 million in the third quarter of 2004 to $3.0 million in the comparable period of 2005, primarily due to lower average debt outstanding in the third quarter of 2005 resulting from scheduled payments as well as the repayment of our term notes. Interest income more than doubled from $1.4 million in the third quarter of 2004 to $3.9 million in the third quarter of 2005 primarily due to higher average rates of return.

Loss on Extinguishment of Debt

The $28.3 million loss on extinguishment of debt incurred in the third quarter of 2005 consists of a $26.4 million penalty associated with the prepayment of our term notes and the write-off of $1.9 million of unamortized financing fees related to our long-term debt and previous senior secured revolving credit facility.

Minority Interest

Amounts reported as minority interest represent the interest of the 34% minority holder of CFL’s common and preferred shares. The increase in the third quarter of 2005 was due to improved CFL operating results. The improvement in CFL operating results reflects stronger market conditions for nitrogen fertilizers.

Other Non-operating—Net

Other non-operating—net increased from $149,000 of income in the third quarter of 2004 to $1.8 million of income in the same period of 2005 primarily due to the gains realized on the sales of a previously idled distribution terminal and excess land at our Bartow complex.

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Income Taxes

Our income tax provision of $94.7 million for the third quarter of 2005 included a non-cash charge of $99.9 million as discussed more fully in the paragraph below, a $6.1 million refund of Canadian income taxes received in the third quarter of 2005, income tax expense of $1.8 million on earnings for the quarter and a tax benefit of $0.9 million for adjustments for prior years’ tax returns.  The income tax provision on earnings for the quarter was recorded based on our estimated annual effective tax rate, which is based on applicable federal, foreign and state statutory rates. Our effective tax rate (excluding the $99.9 million non-cash charge, the $6.1 million Canadian tax refund and the $0.9 million for adjustments for prior years’ tax returns) increased from 38% for the third quarter of 2004 to 54% in the comparable period in 2005. The increase was primarily due to the “catch-up” impact on the third quarter of 2005 of adjusting our estimated annual effective tax rate upward. Excluding the impact of the discrete items, our income tax provision for the third quarter of 2005 was $1.8 million compared to $8.7 million for the comparable period in 2004, primarily due to lower earnings before income taxes.

As of December 31, 2004, CF Industries, Inc. had total net operating loss carryforwards of $311.3 million. A gross deferred tax asset of $124.3 million related to these net operating loss carryforwards is included on our December 31, 2004 balance sheet. Upon the completion of our initial public offering and the related reorganization transaction on August 16, 2005, CF Industries, Inc. ceased to be a cooperative. During the third quarter of 2005, we recorded a non-cash charge of $99.9 million to the caption ‘‘Income tax provision’’ to establish a 100% valuation allowance for the gross deferred tax asset remaining at the date CF Industries, Inc. ceased to be a cooperative. That gross deferred tax asset related to CF Industries, Inc.’s net operating loss carryforwards generated from business conducted with CF Industries, Inc.’s pre-IPO owners when CF Industries, Inc. was a cooperative for tax purposes. The valuation allowance was required because there is substantial uncertainty under existing tax law whether any tax benefits from this deferred tax asset would be realizable after CF Industries, Inc. ceased to be a cooperative for tax purposes. The valuation allowance was 100% of the gross deferred tax asset related to the net operating loss carryforwards remaining as of CF Industries, Inc.’s last day as a cooperative.

Nitrogen Fertilizer Business

Net Sales.    Nitrogen fertilizer net sales of $258.3 million in the third quarter of 2005 approximated the level in the third quarter of 2004, as higher average selling prices were offset by a decrease in sales volume.  Ammonia, urea and UAN sales prices increased by 17%, 22% and 15%, respectively, in the third quarter of 2005 compared to the same period of the prior year. The increase in ammonia prices in the third quarter of 2005 was due to strong U.S. demand and tight supply conditions in midwestern U.S. markets. Urea prices increased in the third quarter of 2005 due to a tight world market caused by plant outages abroad and the impact of increased buying related to demand that had been deferred from previous periods. An improved overall nitrogen market combined with tight supplies supported higher UAN selling prices in the third quarter of 2005. Nitrogen fertilizer sales volume decreased 16% to 1.2 million tons in the third quarter of 2005 compared to 1.4 million tons in the comparable period of 2004 due principally to lower ammonia and urea inventories at June 30, 2005, resulting from very strong spring sales, two scheduled UAN plant turnarounds in the third quarter of 2005, and production and shipping disruptions caused by the two hurricanes. Overall nitrogen fertilizer sales volume to unaffiliated (non pre-IPO owners of CF Industries, Inc.) customers was 38% of total nitrogen fertilizer sales volume for the third quarter of 2005 and 46% for the same quarter in 2004.

Cost of Sales.    Total cost of sales of our nitrogen fertilizers averaged $181 per ton in the third quarter 2005 compared to $154 per ton in the third quarter 2004, an increase of 18%, largely due to higher natural gas prices and higher purchased product costs, partially offset by the favorable impact of the early termination of certain

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natural gas hedge positions associated with our forward pricing program. The overall weighted average cost of natural gas supplied to our Donaldsonville facility and CFL’s Medicine Hat facility increased by 31% in the third quarter of 2005 versus the cost in the comparable period of 2004 due to continued tight market conditions for natural gas and the impact of Hurricanes Katrina and Rita. Purchased product costs were approximately $3.6 million higher in the third quarter of 2005 than in the third quarter of 2004, due to the overall increase in nitrogen fertilizer prices previously discussed as well as additional quantities purchased. As a result of our decision to reduce operating rates at our Donaldsonville complex in favor of increased outside purchases of fertilizers, due to the recent run up in natural gas prices, we now expect to have correspondingly reduced requirements for natural gas in order to meet our FPP obligations to our customers. Consequently, during the third quarter of 2005, we terminated a portion of our original hedge positions prior to maturity, rendering them ineffective as defined in SFAS No. 133—Accounting for Derivatives and Hedging Activities. A $14.1 million gain, the majority of which arose from the early termination of FPP-related natural gas positions, was recognized as a reduction of cost of sales in the third quarter of 2005. See the “Overview” section of this discussion and analysis for additional information about these hedge positions.

During the third quarter of 2005, we sold approximately 797,000 tons of nitrogen fertilizers under our forward pricing program, representing approximately 68% of our nitrogen fertilizer sales volume for the quarter. In the comparable period of 2004, we sold approximately 693,000 tons of nitrogen fertilizers under this program, representing approximately 49% of our nitrogen fertilizer sales volume for the period.

Phosphate Fertilizer Business

Net Sales.    Phosphate fertilizer net sales increased 46% to $101.1 million in the third quarter of 2005 compared to $69.4 million in the third quarter of 2004, due to a combination of increased sales volume and higher average selling prices. Our total level of phosphate fertilizer sales of 460,000 tons in the third quarter of 2005 represented an increase of 30% compared to the same period of 2004. Within our total phosphate fertilizer sales, sales of DAP/MAP to domestic customers increased by 68%, totaling 315,000 tons in the third quarter of 2005 compared to 187,000 tons in the third quarter of 2004. The increase in sales of DAP/MAP to domestic customers is primarily due to an increase in sales to multi-year supply contract customers. Average phosphate fertilizer prices in the third quarter of 2005 increased by 12% compared to prices in the third quarter of 2004, due largely to strong international phosphate fertilizer demand.

Cost of Sales.    Phosphate cost of sales averaged $196 per ton in the third quarter of 2005 compared to $189 per ton in the third quarter of 2004. The 4% increase was mainly due to higher phosphate rock costs and higher ammonia costs, partially offset by the impact of lower fixed costs per ton of production. Phosphate rock costs increased in the third quarter of 2005 compared to the third quarter of 2004 due primarily to increased costs resulting from less favorable mining conditions in the first six months of 2005. Ammonia prices increased by 3% in the third quarter of 2005 compared to the third quarter of 2004, reflecting stronger global market conditions in the third quarter of 2005. Fixed costs per ton of production were higher in the third quarter of 2004 primarily due to lower production levels resulting from scheduled plant turnarounds in 2004.

Nine Months Ended September 30, 2005 Compared to Nine Months Ended September 30, 2004

Consolidated Operating Results

For the nine months ended September 30, 2005, the nitrogen fertilizer industry benefited from tight global supply conditions, while the domestic phosphate fertilizer industry continued to show improvement due primarily to strong export demand earlier in the year and stronger domestic demand in the most recent quarter. Our total gross margin increased by approximately $62.1 million, or 43%, from $144.8 million for the nine

31

months ended September 30, 2004 to $206.9 million for the nine months ended September 30, 2005 due largely to improved market conditions and increased sales volume for phosphate fertilizers. The net loss of $26.2 million for the nine months ended September 30, 2005 included a $99.9 million non-cash charge to record a valuation allowance on the deferred tax asset related to CF Industries, Inc.’s net operating loss carryforwards generated during pre-IPO operations, a $28.3 million loss on the extinguishment of debt, a $14.6 million gain associated with the early termination of certain natural gas hedge positions and a $6.1 million refund of Canadian income taxes.

Net Sales

Our net sales increased 23% to $1.4 billion in the nine months ended September 30, 2005 compared to $1.2 billion in the nine months ended September 30, 2004, due to higher average selling prices and an increase in phosphate sales volumes. Nitrogen fertilizer prices for the nine months ended September 30, 2005 averaged 19% higher than the prices for similar products in the comparable period of 2004 reflecting strong demand and tight supply. Phosphate fertilizer prices in the nine months ended September 30, 2005 were 11% higher than corresponding prices in the nine months ended September 30, 2004, resulting primarily from strong international demand. Our total sales volume increased 5% to 6.5 million tons in the nine months ended September 30, 2005 versus 6.2 million tons in the nine months ended September 30, 2004, primarily due to increased market penetration for phosphate fertilizer products.

Cost of Sales

Total cost of sales of our nitrogen fertilizers averaged $188 per ton in the nine months ended September 30, 2005 compared to $161 per ton in the nine months ended September 30, 2004, an increase of 17%, primarily due to higher natural gas prices. Phosphate fertilizer cost of sales averaged $196 per ton in the nine months ended September 30, 2005 compared to $181 per ton in the comparable period of the prior year, an increase of 8%, mainly due to higher phosphate rock and ammonia costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 43% to $43.0 million in the nine months ended September 30, 2005 compared to $30.2 million in the comparable period of 2004. The increase in the nine months ended September 30, 2005 was largely due to increased administrative expenses related to completion of our public offering, performance-based management incentive compensation (including expenses associated with the termination of our long-term incentive plan upon completion of our initial public offering), compensation expense associated with our stock-based awards and initial expenses associated with our investment opportunity in the Republic of Trinidad and Tobago. See Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity in our registration statement on Form S-1 as filed August 8, 2005 for additional information on our investment opportunity in the Republic of Trinidad and Tobago.

Other Operating—Net

Other operating—net decreased 11% from $6.8 million in the nine months ended September 30, 2004 to $6.0 million in the nine months end September 30, 2005. A decrease in recurring Bartow water treatment expense in the first nine months of 2005 was partially offset by a $2.1 million adjustment to Bartow phosphogypsum stack asset retirement costs as a result of revised engineering estimates. The decrease in recurring Bartow water treatment expense was due to the fact that, in the nine months ended September 30, 2004, Bartow water treatment costs were expensed as incurred, whereas water treatment costs incurred in the comparable period of 2005 were charged against an asset retirement obligation, which was recorded in the fourth fiscal quarter of 2004. For a detailed explanation of the accounting for water treatment costs at Bartow, please refer to Note 7 to our audited consolidated financial statements included in our registration statement on

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Form S-1 as filed on August 8, 2005.

Interest—Net

Net interest expense decreased 86% from $13.8 million in the nine months ended September 30, 2004 to $1.9 million in the nine months ended September 30, 2005. Interest expense decreased 22% from $17.2 million in the nine months ended September 30, 2004 to $13.5 million in the comparable period of 2005 primarily due to lower debt outstanding in the nine months ended September 30, 2005. The decrease in debt outstanding for the nine months ended September 30, 2005 was due to scheduled principal payments as well as the repayment of our term notes. Interest income more than tripled from $3.4 million in the nine months ended September 30, 2004 to $11.6 million in the nine months ended September 30, 2005 as a result of higher average balances of invested cash and, to a lesser extent, higher average rates of return.

Loss on Extinguishment of Debt

The $28.3 million loss on extinguishment of debt for the first nine months of 2005 consists of a $26.4 million penalty associated with the prepayment of our term notes and the write-off of $1.9 million of unamortized financing fees related to our long term debt and previous senior secured revolving credit facility.

Minority Interest

Amounts reported as minority interest represent the interest of the 34% minority holder of CFL’s common and preferred shares. The increase in the first nine months of 2005 was due to improved CFL operating results. The improvement in CFL operating results reflects stronger market conditions for nitrogen fertilizers.

Other Non-operating—Net

Other non-operating—net increased from $686,000 of income in the nine months ended September 30, 2004 to $2.1 million of income in the same period of 2005 primarily due to the gains realized in 2005 on the sales of a previously idled distribution terminal and excess land at our Bartow complex.

Income Taxes

Our income tax provision in the nine months ended September 30, 2005, included a non-cash charge of $99.9 million recorded in the third quarter of 2005, as previously discussed, a $6.1 million refund of Canadian income taxes received in the third quarter of 2005 as well as a provision for income taxes on year-to-date earnings.  The provision on year-to-date earnings was recorded based on our estimated annual effective tax rate, which is based on applicable federal, foreign and state statutory rates. Our effective tax rate (exclusive of the $99.9 million non-cash charge and the $6.1 million refund of Canadian income taxes) increased from 38% in the nine months ended September 30, 2004 to 39% in the nine months ended September 30, 2005 primarily due to the tax effect of expenses associated with our initial public offering that are not deductible for income tax purposes. Excluding the impact of the discrete items, our income tax provision for the nine months ended September 30, 2004 was $30.2 million compared to $43.6 million for the comparable period in 2005, primarily due to improved operating results.

Equity in Earnings (Loss) of Unconsolidated Subsidiaries

Equity in earnings of unconsolidated subsidiaries decreased from $223,000 in the nine months ended September 30, 2004 to $16,000 in the nine months ended September 30, 2005, due to lower operating results of

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our CF Martin Sulphur joint venture through July 15, 2005 (the date we sold our investment in our CF Martin Sulphur joint venture).

Nitrogen Fertilizer Business

Net Sales.    Nitrogen fertilizer net sales increased 22% to $1.1 billion in the nine months ended September 30, 2005 compared to $913.4 million in the nine months ended September 30, 2004, primarily due to higher average selling prices. Ammonia, urea and UAN sales prices increased by 13%, 23% and 19%, respectively, in the nine months ended September 30, 2005 compared to the same period of the prior year. The increase in ammonia prices in the nine months ended September 30, 2005 was due to strong U.S. demand and tight supply conditions in midwestern U.S. markets. Urea prices increased in the nine months ended September 30, 2005 due to a tight world market caused by plant outages abroad and the impact of increased buying related to demand that had been deferred from previous periods. An improved overall nitrogen market combined with tight supplies supported higher UAN selling prices in the nine months ended September 30, 2005. Nitrogen fertilizer sales volume of 5.0 million tons in the nine months ended September 30, 2005 approximated the level sold in the comparable period of 2004. Although ammonia and UAN sales volumes were comparable to the prior period, urea sales volume increased 6% in the nine months ended September 30, 2005 over the prior year’s period.  The increase in urea sales volume was largely due to continued strong industry conditions and increased market penetration. Overall nitrogen fertilizer sales volume to unaffiliated customers was between 38% and 39% of total nitrogen fertilizer sales volume in both of the nine month periods ended September 30, 2004 and September 30, 2005.

Cost of Sales.    Total cost of sales of our nitrogen fertilizers averaged $188 per ton in the nine months ended September 30, 2005 compared to $161 per ton in the nine months ended September 30, 2004, an increase of 17%, largely due to higher natural gas prices and higher purchased product costs, partially offset by the impact of closing out certain natural gas hedge positions associated with our forward pricing program. The overall weighted average cost of natural gas supplied to our Donaldsonville facility and CFL’s Medicine Hat facility increased by 28% in the nine months ended September 30, 2005 versus the cost in the comparable period of 2004, mainly due to continued tight market conditions for natural gas. Purchased product costs were approximately $16.5 million higher in the nine months ended September 30, 2005 than in the nine months ended September 30, 2004, due to the overall increase in nitrogen fertilizer prices previously discussed as well as additional quantities purchased. As a result of our decision to reduce operating rates at our Donaldsonville complex in favor of increased outside purchases of fertilizers, due to the recent run up in natural gas prices, we now expect to have correspondingly reduced requirements for natural gas in order to meet our FPP obligations to our customers. Consequently, during the third quarter of 2005, we terminated a portion of our original hedge positions prior to maturity, rendering them ineffective as defined in SFAS No. 133.  A $14.6 million gain, the majority of which arose from the early termination of FPP-related natural gas positions, was recognized as a reduction of cost of sales in the nine months ended September 30, 2005. See the “Overview” section of this discussion and analysis for additional information about these hedge positions.

During the nine months ended September 30, 2005, we sold approximately 3.4 million tons of nitrogen fertilizers under our forward pricing program, representing approximately 68% of our nitrogen fertilizer sales volume for the nine month period. In the comparable period of 2004, we sold approximately 2.3 million tons of nitrogen fertilizers under this program, representing approximately 48% of our nitrogen fertilizer sales volume for the period.

Phosphate Fertilizer Business

Net Sales.    Phosphate fertilizer net sales increased 29% to $333.8 million in the nine months ended

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September 30, 2005 compared to $258.6 million in the nine months ended September 30, 2004, due to a combination of increased sales volume and higher average selling prices. Our total level of phosphate fertilizer sales of 1.6 million tons in the nine months ended September 30, 2005 represented an increase of 17% compared to the same period of 2004. Within our total phosphate fertilizer sales, sales of DAP/MAP to unaffiliated domestic customers increased by 149%, totaling 281,000 tons in the nine months ended September 30, 2005 compared to 113,000 tons in the nine months ended September 30, 2004. The increase in sales to unaffiliated domestic customers in the nine months ended September 30, 2005 as compared to the nine months ended September 30, 2004 is due to increased market penetration. Our phosphate fertilizer sales volume to unaffiliated customers increased from 47% of total phosphate fertilizer sales volume in the nine months ended September 30, 2004 to 52% of total phosphate fertilizer sales volume in the nine months ended September 30, 2005. Average phosphate fertilizer prices in the nine months ended September 30, 2005 increased by 11% compared to prices in the nine months ended September 30, 2004, due largely to strong international phosphate fertilizer demand.

Cost of Sales.    Phosphate cost of sales averaged $196 per ton in the nine months ended September 30, 2005 compared to $181 per ton in the nine months ended September 30, 2004. The 8% increase was mainly due to higher phosphate rock costs and higher ammonia costs. Phosphate rock costs increased by 18% in the nine months ended September 30, 2005 compared to the nine months ended September 30, 2004 due primarily to increased costs resulting from less favorable mining conditions over the first six months of 2005. Ammonia prices increased by 9% in the nine months ended September 30, 2005 compared to the nine months ended September 30, 2004, reflecting stronger global market conditions mainly in the second and third quarters of 2005.

Liquidity and Capital Resources

The primary sources of cash for working capital, capital expenditures and acquisitions are operating cash flow and our senior secured revolving credit facility. Our primary uses of cash are operating costs, working capital needs, debt service requirements, capital expenditures and dividends. Our working capital requirements are affected by several factors, including demand for our products, selling prices for our products, raw material costs, freight costs and seasonality factors inherent in the business.

Cash Balance and Other Liquidity

As of September 30, 2005, we had cash and cash equivalents of $40.4 million, short-term investments of $277.1 million and a $183.4 million current liability attributable to customer advances related to cash deposits received under our forward pricing program. As of December 31, 2004, the comparable amounts were $50.0 million, $369.3 million and $211.5 million, respectively. Short-term investments consist of available-for-sale auction rate securities that are reported at fair value. We believe that our cash, cash equivalents and short-term investments, our operating cash flows and liquidity under our senior secured revolving credit facility are adequate to fund our cash requirements for the foreseeable future. As of September 30, 2005 and December 31, 2004, we had $186 million and $120 million available, respectively, under our revolving credit facilities.

Debt

As of September 30, 2005, we had no long-term debt, compared to $254.8 million of long-term debt, including current maturities, as of December 31, 2004. Notes payable, representing amounts owed to the CFL minority interest holder with respect to advances, were $4.2 million as of September 30, 2005 compared to $4.1 million as of December 31, 2004. There were no outstanding borrowings under our $140 million senior secured revolving credit facility as of December 31, 2004.

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On August 16, 2005, we replaced our $140 million senior secured revolving credit facility with a new $250 million senior secured revolving credit facility. The senior secured revolving credit facility bears interest at a variable rate and is available through August 16, 2010. This facility is secured by working capital, certain equipment and the Donaldsonville nitrogen fertilizer complex. Borrowing at any time is limited to the lesser of $250 million or the available collateral as defined in our credit facility. As of September 30, 2005, there were no loans or letters of credit outstanding under this credit facility. There was $186 million of available credit under the senior secured revolving credit facility as of September 30, 2005.

On August 17, 2005, we repaid in full $235.6 million of our term notes, plus associated prepayment penalties and accrued interest in the amount of $29.3 million, with cash on hand and by liquidating short-term investments.

Other Liquidity Requirements

We expect to spend approximately $70 million to $80 million on capital expenditures in each of 2005 and 2006. See Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity in our registration statement on Form S-1 as filed August 8, 2005 for additional information on capital spending.

We will pay cash dividends of $1.1 million on outstanding common stock during the fourth quarter of 2005. This amount represents an annual rate equal to approximately 0.5% of $16 per share (the price per share in our initial public offering). We expect to pay quarterly dividends at such a rate going forward. Under certain conditions, our new $250 million senior secured revolving credit facility limits our ability to pay dividends.

We also expect to fund contributions to our U.S. and Canadian pension plans totaling approximately $8 million, primarily in the fourth quarter of 2005.

Forward Pricing Program

We offer a forward pricing program (FPP) to our customers under which product may be ordered for future delivery, with a substantial portion of the sales price being collected before the product is shipped, thereby reducing or eliminating the accounts receivable related to such sales. During the third quarter of 2005, we sold approximately 797,000 tons of nitrogen fertilizer, representing approximately 68% of our nitrogen fertilizer sales volume, and approximately 229,000 tons of phosphate fertilizer, representing approximately 50% of our phosphate fertilizer sales volume, under the FPP.  During the nine months ended September 30, 2005, we sold approximately 3.4 million tons of nitrogen fertilizer, representing approximately 68% of our nitrogen fertilizer sales volume, and approximately 541,000 tons of phosphate fertilizer, representing approximately 35% of our phosphate fertilizer sales volume, under the FPP. As of December 31, 2004 and September 30, 2005, we had approximately 1.9 million tons of product and 1.5 million tons of product, respectively, committed to be sold under this program. The majority of these amounts were scheduled to ship within 150 days of December 31, 2004 and September 30, 2005, respectively.

While customer advances were a significant source of liquidity in 2004 and the first nine months of 2005, the level of sales under the FPP is affected by many factors, including current market conditions and our customers’ perceptions of future market fundamentals. Approximately 220,000 tons of the total volume committed to be sold under the FPP at September 30, 2005 was scheduled to be shipped in 2006. This level is approximately 673,000 tons below the amount committed to be sold as of September 30, 2004 that were scheduled to be shipped in 2005.  The lower level in 2005 reflects the uncertainty that exists in the fertilizer market and the hesitancy of our customers to make commitments in this volatile natural gas pricing environment.

Participation in the FPP is affected by market conditions and our customers’ expectations. There is no guarantee that we will transact the same percentage of our business under the FPP in the future. Should the level

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of participation decrease, there is a risk of increased volatility in the operating earnings of future periods. If the level of sales under the FPP were to decrease in the future, our cash received from customer advances would likely decrease, and our accounts receivable balances would likely increase. Also, borrowing under our senior secured revolving credit facility could become necessary.

Financial Assurance Requirements

In addition to various operational and environmental regulations related to our phosphate fertilizer business, we are also subject to financial assurance requirements. Recently, Florida enacted legislation that requires mining companies to demonstrate financial responsibility for wetland and other surface water mitigation measures in advance of any mining activities. We will be required to demonstrate financial responsibility for wetland and other surface water mitigation measures in advance of any mining activities if and when we expand our Hardee mining activities to areas not currently permitted. The demonstration of financial responsibility may be provided by passage of a financial test. In the event we can not meet the financial test, we have the option to demonstrate financial responsibility with a cash deposit arrangement. See our registration statement on Form S-1 as filed August 8, 2005, for additional information on our financial assurance requirements.

Cash Flows

Operating Activities

Net cash generated from operating activities during the first nine months of 2005 was $222.4 million compared to $260.3 million in the same period in 2004. The $37.9 million decrease in cash provided by operating activities for the nine months ended September 30, 2005, was primarily due to a $105.0 million increase in cash used to fund working capital, partially offset by a $50.0 million increase in operating earnings.  Net changes in working capital consumed $8.4 million of cash in the first nine months of 2005 compared to $96.6 million of cash generated by working capital in the comparable period of 2004. During the first nine months of 2005, accounts receivable increased by $14.2 million and customer advances decreased by $28.2 million, resulting in a net use of cash of $42.4 million, which was partially offset by an $18.6 million decrease in margin deposits and an $18.1 million decrease in inventories. The decrease in customer advances was primarily due to lower levels of forward sales on order as of September 30, 2005 as compared to December 31, 2004. The decrease in margin deposits was primarily due to lower margin requirements. The decreased inventories were due to reduced quantities held at September 30, 2005, somewhat offset by higher per unit costs. The $96.6 million of cash generated by changes in working capital for the nine months ended September 30, 2004 was primarily due to an $88.6 million increase in customer advances and a $43.2 million decrease in accounts receivable partially offset by a $32.2 million increase in inventories. The increase in customer advances during the nine months ended September 30, 2004 was due primarily to higher levels of forward sales on order as of September 30, 2004 as compared to December 31, 2003.

Investing Activities

Net cash used in investing activities was $250.6 million for the first nine months of 2004 compared to $57.0 million of cash provided by investing activities for the first nine months of 2005. The $307.6 million swing in cash provided by investing activities was primarily due to short-term investments activity. Net sales of short-term investments were $92.2 million during the nine months ended September 30, 2005 as compared to $225.8 million of net purchases during the same period of the prior year. The level of short-term investments, generally auction rate securities which we liquidate over periods ranging from three to twelve months, is dictated by our current cash position and estimated future requirements. The increase in additions to property, plant and equipment-net in 2005 was due primarily to a $19.6 million increase in plant turnaround costs

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incurred during the first nine months of 2005 as compared to the first nine months of 2004.  The $18.6 million of proceeds from sale of investment represents the cash realized from the July 15, 2005 sale of our interest in our CF Martin Sulphur joint venture to our joint venture partner, an affiliate of Martin Resource Management.

Financing Activities

The $270.3 million increase in cash used in financing activities in the nine months ended September 30, 2005 over the comparable period of 2004 was primarily due the repayment of $235.6 million of our term debt and the associated prepayment penalty of $26.4 million as previously discussed. We had no outstanding borrowings under our revolving credit facilities at the end of the third quarter of either 2005 or of 2004. The $715.4 million of proceeds from the issuance of common stock and the corresponding exchange of stock represent the proceeds from our initial public offering completed in the third quarter of 2005 and the subsequent payments to CF Industries, Inc.’s pre-IPO owners. See the “Overview” section of this discussion and analysis for additional information about our initial public offering.

Obligations

Contractual Obligations

The following is a summary of our contractual obligations as of September 30, 2005:

	Payments Due by Period
	Last quarter of 2005		2006		2007		2008		2009		After 2009		Total
	(in thousands)
Contractual Obligations
Debt
Long-term debt (1)	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Notes payable (2)	—		—		—		—		4,234		—		4,234
Interest payments on long-term debt and notes payable (1)	50		200		200		200		200		—		850
Other Obligations
Operating leases	3,034		9,032		5,283		2,141		783		305		20,578
Equipment purchases and plant improvements	4,335		2,798		64		—		—		—		7,197
Purchase obligations (3)(4)(5)	150,720		282,879		73,500		35,100		35,100		35,100		612,399
Total	$	158,139	$	294,909	$	79,047	$	37,441	$	40,317	$	35,405	$	645,258

(1)           Based on debt balances and interest rates as of September 30, 2005. All our long-term debt was repaid on August 17, 2005.  See the “Overview” section of this discussion and analysis for further information on the transaction.

(2)           Represents notes payable to the CFL minority interest holder. While the entire principal amount is due December 31, 2009, CFL may prepay all or a portion of the principal at its sole option.

(3)           Includes minimum commitments to purchase ammonia, urea and UAN for resale in our markets and commitments to purchase ammonia and sulfur for use in phosphate fertilizer production. Amounts set forth above are based on spot prices as of September 30, 2005 and actual prices may differ.

(4)           Liquid markets exist for the possible resale of ammonia, urea and UAN purchased for resale in our markets and ammonia and sulfur purchased for use in phosphate fertilizer production under the majority of these commitments, but gains or losses could be incurred on resale.

(5)           Purchase obligations do not include any amounts related to our commitments to purchase natural gas at prevailing spot prices nor our financial hedges associated with natural gas purchases.

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Other Long-Term Obligations

Our other liabilities in our balance sheet included balances related to asset retirement obligations.  As of September 30, 2005 asset retirement obligations totaled $50.4 million as compared to $52.7 million as of December 31, 2004. The asset retirement obligations as of September 30, 2005 included the impact of the $2.1 million adjustment to Bartow phosphogypsum stack asset retirement costs as discussed more fully in other operating-net in “Results of Operations Third Quarter of 2005 Compared to the Third Quarter of 2004” in this discussion and analysis.  As of September 30, 2005, the cash flows required to settle the asset retirement obligations in 2006 are expected to be $7.9 million. See Note 7 to our audited consolidated financial statements in our registration statement on Form S-1 as filed August 8, 2005, for further discussion of asset retirement obligations.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates

We describe our significant accounting policies and estimates in Note 1 to our audited consolidated financial statements included in our registration statement on Form S-1 as filed on August 8, 2005.  We discuss our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our registration statement on Form S-1 as filed on August 8, 2005.

Prior to completion of our initial public offering of common stock, our Board of Directors adopted The CF Industries Holdings, Inc. Equity and Incentive Plan (the plan). In connection with our initial public offering, we granted nonqualified stock options to purchase 2,720,100 shares of our common stock to our officers and certain key employees, and we issued 27,724 shares of restricted common stock to certain non-management members of our Board of Directors. In the third quarter of 2005, we adopted SFAS No. 123R - Share-Based Payment, (SFAS 123R) which requires us to recognize in our statement of operations the grant date fair value of all share-based awards. We did not have share-based awards prior to our initial public offering.

The fair value of options granted is estimated on the date of the grant using the Black-Scholes option valuation model. We accrue cost on the straight line method. As a result, total compensation cost recognized for the quarter and the nine months ended September 30, 2005 was $1.1 million, net of taxes of $736,000; and the net effect on both basic and diluted earnings per share was $0.02.  As of September 30, 2005, there was approximately $16.9 million and $371,000 of total unrecognized compensation cost related to nonqualified options and restricted stock which is expected to be recognized over 2.9 and 0.6 years, respectively.

See Notes 2 and 13 in our unaudited consolidated financial statements for further discussion of share-based payments.

FORWARD LOOKING STATEMENTS

This Form 10-Q contains forward-looking statements that are not statements of historical fact and may involve a number of risks and uncertainties. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our future prospects, developments and business strategies.

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We have used the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” and similar terms and phrases, including references to assumptions, to identify forward-looking statements in this Form 10-Q. These forward-looking statements are made based on our expectations and beliefs concerning future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed in or implied by these forward-looking statements. We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this report. Additionally, we do not undertake any responsibility to provide updates regarding the occurrence of any unanticipated events which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this report.

Important factors that could cause actual results to differ materially from our expectations are disclosed under “Risk Factors” and elsewhere in our registration statement on Form S-1 as filed August 8, 2005. As stated in such filing, such factors include, among others:

•     the relatively expensive and volatile cost of North American natural gas;

•     the cyclical nature of our business;

•     the nature of our products as global commodities;

•     intense global competition in the consolidating markets in which we operate;

•     conditions in the U.S. agricultural industry;

•     weather conditions;

•     our inability to accurately predict seasonal demand for our products;

•     the concentration of our sales to CF Industries, Inc.’s pre-IPO owners and other large customers;

•     the impact of changing market conditions on our forward pricing program;

•     the significant risks and hazards involved in fertilizer manufacturing;

•     unanticipated consequences related to future expansion of our business;

•     our inability to expand our business, including due to the significant resources that could be required;

•     potential liabilities and expenditures related to environmental and health and safety laws and regulations;

•     our inability to obtain or maintain required permits and governmental approvals;

•     acts of terrorism;

•     difficulties in securing the raw materials we use; and

•     changes in global fertilizer supply and demand.

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ITEM 3.    QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to the impact of changes in interest rates, foreign currency exchange rates and commodity prices. See Management’s Discussion and Analysis of Financial Condition and Results of Operations—Qualitative and Quantitative Disclosures About Market Risk in our registration statement on Form S-1 as filed with the SEC on August 8, 2005 for additional information on market risk.

Interest Rate Fluctuations

As of December 31, 2004, we had floating interest rate loans which totaled $25.1 million.  As of September 30, 2005, we had notes payable of approximately $4 million that had a floating interest rate.  A 100 basis point change in interest rates on our notes payable would result in a $40,000 change in pretax income on an annual basis.  On August 16, 2005, we replaced our $140 million senior secured revolving credit facility with a new $250 million senior secured revolving credit facility. The senior secured revolving credit facility bears a current market rate for interest such that we are subject to interest rate risk on borrowings under this facility.  As of September 30, 2005, there were no loans outstanding under this credit facility.

Commodity Prices

We manage the risk of changes in natural gas prices through the use of physical gas supply contracts and derivative financial instruments covering periods not exceeding three years. As of December 31, 2004, we hedged approximately 24.8 million mmBTUs of natural gas, most of which related to sales contracted to be sold through our forward pricing program as of December 31, 2004. As of September 30, 2005, we hedged approximately 10.4 million mmBTUs of natural gas, most of which related to sales contracted to be sold through our forward pricing program as of September 30, 2005.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Disclosure Controls and Procedures.    The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report.  Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Internal Control Over Financial Reporting.     Except as noted below, there have not been any changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. Pursuant to our review of internal controls following an unauthorized trading incident in which we lost approximately $700,000, we implemented additional control procedures in our natural gas purchasing function in order to provide greater assurance that all purchasing activities will be conducted in compliance with Company policies.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

Litigation

From time to time we are subject to ordinary, routine legal proceedings related to the usual conduct of our business. We are also involved in 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 matters will not have a material adverse effect on our consolidated financial position or results of operations.

Environmental

In December 2004 and January 2005, the United States Environmental Protection Agency (EPA) inspected our Plant City, Florida phosphate fertilizer complex to evaluate the facility’s compliance with the Resource Conservation and Recovery Act (RCRA), the federal statute that governs the generation, transportation, treatment, storage and disposal of hazardous wastes. This inspection was undertaken as a part of a broad enforcement initiative commenced by the EPA to evaluate whether mineral processing and mining facilities, including, in particular, all wet process phosphoric acid production facilities, are in compliance with RCRA, and the extent to which such facilities’ waste management practices have impacted the environment.

By letter dated September 27, 2005, EPA Region IV issued to the Company a Notice of Violation (NOV) and Compliance Evaluation Inspection Report. The NOV and Compliance Evaluation Inspection Report alleged a number of violations of RCRA, including violations relating to recordkeeping, the failure to properly make hazardous waste determinations as required by RCRA, and alleged treatment of sulfuric acid waste without a permit. The most significant allegation in the NOV is that the Plant City facility’s reuse of phosphoric acid process water (which is otherwise exempt from regulation as a hazardous waste) in the production of ammoniated phosphate fertilizer, and the return of this process water to the facility’s process water recirculating system, has resulted in the disposal of hazardous waste into the system without a permit. The Compliance Evaluation Inspection Report indicates that as a result, the entire process water system, including all pipes, ditches, cooling ponds and gypsum stacks, could be regulated as hazardous waste management units under RCRA.

Several of our competitors have received NOVs making this same allegation. This particular recycling of process water is common in the industry and, the Company believes, was authorized by the EPA in 1990. The Company also believes that this allegation is inconsistent with recent case law governing the scope of the EPA’s regulatory authority under RCRA. If the EPA does not rescind this allegation and its position is eventually upheld, the Company could incur material expenditures in order to modify its practices, or it may be required to comply with regulations applicable to hazardous waste treatment, storage or disposal facilities. If the Company is required to comply with such obligations, it could incur material capital and operating expenditures or may be required to cease operation of its water recirculating system, which does not meet RCRA standards. This would cause a significant disruption of the operations of the Plant City facility.

The NOV indicated that the Company is liable for penalties up to the statutory maximum (for example, the statutory maximum per day of noncompliance for each violation that occurred after March 15, 2004 is $32,500 per day). Although penalties of this magnitude are rarely, if ever, imposed, the Company is at risk of incurring substantial civil penalties with respect to these allegations. In order to obtain an order or judgment for civil

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penalties, the EPA will have to bring a civil or administrative enforcement proceeding against the Company. The EPA has not indicated when it intends to initiate an administrative or judicial enforcement proceeding against the Company, although based on conversations with the EPA, we do not believe that such proceedings are imminent.

In connection with the RCRA enforcement initiative, the EPA collected samples of soil, groundwater and various waste streams at the Plant City facility. The analysis of the split samples collected by the Company during the EPA’s inspection did not identify hazardous waste disposal issues impacting the site. It is our understanding that the EPA’s sampling results are consistent with the Company’s results, although we have not been provided with a report by the EPA with respect to its sampling.  Pursuant to a 1992 consent order with the State of Florida, the Company captures and reuses groundwater that has been impacted as a result of the former operation of an unlined gypsum stack at the site. Although the Company believes that it has fully evaluated and is remediating the impacts resulting from its historic activities, we do not know whether the EPA will require us to undertake additional environmental investigations at this facility. In addition, we understand that EPA intends to inspect our Bartow, Florida property, where we formerly manufactured phosphoric acid, and which we are currently closing. We may be required to undertake an investigation of environmental conditions at that facility.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a) On August 16, 2005, the Company completed its initial public offering of 47,437,500 shares of its common stock, par value $0.01 per share. In connection with the closing of the initial public offering, the Company consummated a reorganization transaction, in which CF Industries, Inc. became the Company’s wholly-owned subsidiary. Pursuant to the reorganization transaction, CHS Inc. and GROWMARK, Inc. received 2,150,396 and 5,412,103 shares, respectively, of the Company’s common stock in exchange for a portion of their outstanding equity interests in CF Industries, Inc. The issuance of these securities was made in reliance on
Section 4(2) of the Securities Act of 1933, as amended. In connection with the reorganization transaction, CHS Inc. and GROWMARK, Inc. represented to the Company that they are accredited investors and that they acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to their share certificates.  The offer and sale of common stock to CHS, Inc. and GROWMARK, Inc. in connection with the reorganization transaction were made without general solicitation or advertising.

(b) On August 10, 2005, the Company commenced its initial public offering, which was consummated on August 16, 2005 with the sale of 47,437,500 shares of its common stock, par value $0.01 per share, including 6,187,500 shares of common stock sold pursuant to the exercise of the underwriters’ over-allotment option. Morgan Stanley & Co. Incorporated and J.P. Morgan Securities Inc. served as joint bookrunning lead managers in connection with the offering.

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The shares sold in the offering were registered under the Securities Act of 1933, as amended, on a Registration Statement on Form S-1 (File No. 333-124949) filed with the Securities and Exchange Commission on May 16, 2005, as amended (the Registration Statement). The Securities and Exchange Commission declared the Registration Statement effective on August 10, 2005. The Registration Statement registered 47,437,500 shares of common stock at a maximum aggregate offering price of $806,437,500, all of which was sold to the public at a price of $16.00 per share.

The aggregate gross proceeds to the Company from the common shares were approximately $759 million. The net proceeds to the Company from the offering were approximately $715.4 million after deducting the underwriting discount of $43.6 million. The Company incurred approximately $5.2 million in other expenses related to the offering.  None of such payments were to directors, officers, ten percent stockholders or affiliates of the issuer.

On August 16, 2005, the Company used all of the net proceeds from the public offering, or approximately $715.4 million, to make payments to the eight former stockholders of CF Industries, Inc. in connection with the reorganization transaction in which CF Industries, Inc. became a wholly-owned subsidiary of the Company. In the reorganization transaction, these stockholders’ equity interests in CF Industries, Inc. were cancelled in exchange for all of the proceeds of the offering and 7,562,499 shares of the Company’s common stock.

Prior to the completion of the Company’s initial public offering, the stockholders of CF Industries, Inc. each owned more than 5% of CF Industries, Inc.’s common stock and each nominated one person to serve on CF Industries, Inc.’s board of directors.

The following table shows the former stockholders of CF Industries, Inc. and the number of shares of the Company’s common stock issued and the cash payments made to them in the reorganization transaction.

	Shares Issued	Cash Payment
CHS Inc.	2,150,396	$	140,380,590
GROWMARK, Inc.	5,412,103	122,421,792
Intermountain Farmers Association		2,012,445
La Coop fédérée		15,025,736
Land O’Lakes, Inc.		315,448,071
MFA Incorporated		39,508,394
Southern States Cooperative, Incorporated		46,289,510
Tennessee Farmers Cooperative		34,270,977
Total	7,562,499	$	715,357,515

(c) None.

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Item 6.  Exhibits.

EXHIBIT NO.	DESCRIPTION
2.1	Agreement and Plan of Merger dated as of July 21, 2005, by and among CF Industries Holdings, Inc., CF Merger Corp. and CF Industries, Inc. (incorporated by reference to Exhibit 2.1 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 4.1 to CF Industries Holdings, Inc.’s Registration Statement on Form S-8 filed with the SEC on August 11, 2005, File No. 333-127422)
3.2	Amended and Restated By-laws (incorporated by reference to Exhibit 4.2 to CF Industries Holdings, Inc.’s Registration Statement on Form S-8 filed with the SEC on August 11, 2005, File No. 333-127422)
4.1	Rights Agreement, dated as of July 21, 2005, between CF Industries Holdings, Inc. and The Bank of New York, as the Rights Agent (incorporated by reference to Exhibit 4.2 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
4.2	Registration Rights Agreement, dated as of August 10, 2005, by and between CF Industries Holdings, Inc. and GROWMARK, Inc.
10.1	Form of Indemnification Agreement with Officers and Directors (incorporated by reference to Exhibit 10.10 to Amendment No. 2 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 20, 2005, File No. 333-124949)
10.2	CF Industries Holdings, Inc. 2005 Equity and Incentive Plan (incorporated by reference to Exhibit 10.11 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
10.3	Form of Non-Qualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.12 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
10.4	Form of Non-Employee Director Stock Option Award Agreement (incorporated by reference to Exhibit 10.13 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
10.5	Form of Change in Control Severance Agreement with Officers (incorporated by reference to Exhibit 10.14 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
10.6	Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.15 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
10.7	Change in Control Severance Agreement, dated as of August 11, 2005 between CF Industries Holdings, Inc. and David J. Pruett.
10.8	Net Operating Loss Agreement, dated as of August 16, 2005, by and among CF Industries Holdings, Inc., CF Industries, Inc. and Existing Stockholders of CF Industries, Inc.
10.9	Credit Agreement, dated as of August 16, 2005, by and among CF Industries Holdings, Inc., as Loan Guarantor, CF Industries, Inc., as Borrower, the Subsidiary Guarantors party thereto, as Loan Guarantors, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to CF Industries Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on August 19, 2005, File No. 001-32597)
31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CF Industries Holdings, Inc.
Date: November 9, 2005
	by:   /s/  STEPHEN R. WILSON
	Stephen R. Wilson
	President and Chief Executive Officer, Chairman of the Board
	(Principal Executive Officer)
Date: November 9, 2005
	by:   /s/  ERNEST THOMAS
	Ernest Thomas
	Senior Vice President and Chief Financial Officer
	(Principal Financial Officer)

46

EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
2.1	Agreement and Plan of Merger dated as of July 21, 2005, by and among CF Industries Holdings, Inc., CF Merger Corp. and CF Industries, Inc. (incorporated by reference to Exhibit 2.1 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 4.1 to CF Industries Holdings, Inc.’s Registration Statement on Form S-8 filed with the SEC on August 11, 2005, File No. 333-127422)
3.2	Amended and Restated By-laws (incorporated by reference to Exhibit 4.2 to CF Industries Holdings, Inc.’s Registration Statement on Form S-8 filed with the SEC on August 11, 2005, File No. 333-127422)
4.1	Rights Agreement, dated as of July 21, 2005, between CF Industries Holdings, Inc. and The Bank of New York, as the Rights Agent (incorporated by reference to Exhibit 4.2 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
4.2	Registration Rights Agreement, dated as of August 10, 2005, by and between CF Industries Holdings, Inc. and GROWMARK, Inc.
10.1	Form of Indemnification Agreement with Officers and Directors (incorporated by reference to Exhibit 10.10 to Amendment No. 2 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 20, 2005, File No. 333-124949)
10.2	CF Industries Holdings, Inc. 2005 Equity and Incentive Plan (incorporated by reference to Exhibit 10.11 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
10.3	Form of Non-Qualified Stock Option Award Agreement (incorporated by reference to Exhibit 10.12 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
10.4	Form of Non-Employee Director Stock Option Award Agreement (incorporated by reference to Exhibit 10.13 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
10.5	Form of Change in Control Severance Agreement with Officers (incorporated by reference to Exhibit 10.14 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)
10.6	Non-Employee Director Compensation Policy (incorporated by reference to Exhibit 10.15 to Amendment No. 3 to CF Industries Holdings, Inc.’s Registration Statement on Form S-1 filed with the SEC on July 26, 2005, File No. 333-124949)

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10.7	Change in Control Severance Agreement, dated as of August 11, 2005 between CF Industries Holdings, Inc. and David J. Pruett.
10.8	Net Operating Loss Agreement, dated as of August 16, 2005, by and among CF Industries Holdings, Inc., CF Industries, Inc. and Existing Stockholders of CF Industries, Inc.
10.9	Credit Agreement, dated as of August 16, 2005, by and among CF Industries Holdings, Inc., as Loan Guarantor, CF Industries, Inc., as Borrower, the Subsidiary Guarantors party thereto, as Loan Guarantors, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (incorporated by reference to Exhibit 10.1 to CF Industries Holdings, Inc.’s Current Report on Form 8-K filed with the SEC on August 19, 2005, File No. 001-32597)
31.1	Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

48

EX-4.2

Exhibit 4.2

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT (as amended from time to time, this “Agreement”), dated as of August 10, 2005, by and between CF Industries Holdings, Inc., a Delaware corporation (the “Company”) on the one hand, and each of the stockholders listed on the signature pages to this Agreement (each individually a “Stockholder” and, collectively, the “Stockholders”) on the other hand.

W I T N E S S E T H:

WHEREAS, the parties hereto wish to enter into this Registration Rights Agreement to memorialize their agreement regarding registration rights with respect to the Company.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I

DEFINITIONS

1.1Definitions.  The following terms when used in this Agreement shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

“Affiliate” of any Person means any other Person which directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) as used with respect to any Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Agreement” shall have the meaning provided in the Introduction.

“Board” shall mean the Board of Directors of the Company.

“Commission” shall mean the Securities and Exchange Commission.

“Common Stock” shall mean the common stock, par value $.01 per share of the Company.

“Company” shall have the meaning provided in the Introduction.

“Demand Registration” shall have the meaning provided in Section 2.1.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Holder” means any Stockholder that holds Registrable Securities and any transferees of such Registrable Securities provided that such transfer is made in accordance with the terms of this Agreement; provided, however, that such Stockholder or transferee, as the case may be, holds Registrable Securities representing not less than 5% of the then outstanding Common Stock.  For purposes of this Agreement, the Company may deem and treat the registered holder of Registrable Securities as the Holder and absolute owner thereof, and the Company shall not be affected by any notice to the contrary.

“Merger Agreement” shall mean the Agreement and Plan of Merger, dated as of July 21, 2005, by and among the Company, CF Merger Corp., and CF Industries, Inc.

“Person” shall mean any natural person, corporation, firm, limited liability company, partnership, association, government, governmental agency or other entity, whether acting in an individual, fiduciary or other capacity.

“Piggyback Registration” shall have the meaning provided in Section 3.1.

“Prospectus” shall mean the prospectus included in any registration statement, as amended or supplemented by any prospectus supplement with respect of the terms of the offering of any security of the Company covered by such registration statement and all other amendments or supplements to the prospectus, including post effective amendments, and all material incorporated, or deemed to be incorporated, by reference in such prospectus.

“Registrable Securities” shall mean any shares of Common Stock issued to a Stockholder pursuant to the Merger Agreement and any equity securities of the Company issued or issuable with respect to any such Common Stock by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, except, in the case of any such securities issued with respect to Common Stock, for any such securities that are not “restricted securities,” as such term is defined in Rule 144(a) under the Securities Act.  As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when (a) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (b) they shall have been distributed to the public pursuant to Rule 144 (or any successor provision) under the Securities Act, (c) they shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by the Company and subsequent disposition of them shall not require registration or qualification of them under the Securities Act or any similar state law then in force, (d) they become eligible for resale pursuant to Rule 144(k) (or any successor provision) under the Securities Act, or (e) they shall have ceased to be outstanding.

2

“Registration” shall have the meaning provided in Section 2.1.

“Registration Expenses” shall have the meaning provided in Section 6.1.

“Restricted Period” means the one-year “Restricted Period” set forth in those certain Lock-Up Agreements, executed and delivered by the Stockholders in connection with the initial public offering of the Company’s common stock, as such one-year period may be extended in accordance with the terms of such Lock-Up Agreements.

“Rule 144” shall mean Rule 144 promulgated under the Securities Act.

“Securities Act” shall mean the Securities Act of 1933, as amended.

ARTICLE II

DEMAND REGISTRATIONS

2.1Requests for Registration.  Subject to the terms and conditions hereof, at any time after the expiration of the Restricted Period, if any Holder or Holders who hold in the aggregate not less than 25% of the then outstanding Registrable Securities request in writing registration under the Securities Act of any of its or their Registrable Securities (a “Registration”), which request specifies the approximate number of Registrable Securities requested to be registered, then within ten (10) days after receipt of any such request, the Company shall give written notice of such requested Registration to all other Holders and shall include in the Registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the date of mailing of the Company’s notice.  The Registration requested pursuant to this Section 2.1 is referred to herein as a “Demand Registration”.

2.2Registration.  Holders shall be entitled to not more than two (2) Demand Registrations, in the aggregate.  Subject to the limitations set forth in this Section 2.2 and in Section 2.4, no more than one Demand Registration may be requested in any six-month period.  The Company shall pay all Registration Expenses in connection with each Demand Registration.  No request for a Demand Registration shall be permitted unless the Registrable Securities sought to be included in such Demand Registration have an expected market value of at least $25 million.  A Registration shall not count as a Demand Registration until it has become effective, and any Registration shall not count as a Demand Registration unless the initiating Holder or Holders and other Holders are able to register and sell at least 50% of the Registrable Securities requested to be included in such Registration.

2.3Priority on Demand Registrations.  If a Demand Registration is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the number of Registrable Securities and other securities requested to be included in such offering, exceeds the number of Registrable Securities and other securities, if any, which can be sold in an orderly manner in such offering and/or that the number of shares of Registrable Securities proposed to be included in such offering would adversely affect the price per share of the Common Stock, the Company shall

3

include in the Registration, prior to the inclusion of any securities which are not Registrable Securities, the number of Registrable Securities requested to be included which, in the opinion of the underwriters, can be so sold, pro rata (or as may have otherwise been agreed among the Holders of Registrable Securities to be included in such Registration) among the respective Holders thereof on the basis of the amount of Registrable Securities requested to be registered by each such Holder; provided that if the number of Registrable Securities to be included in the Registration is less than 75% of the number requested to be so included, the Holders of Registrable Securities covered by such Demand Registration shall be entitled to withdraw such request, upon the affirmative vote of Holders holding at least 66% of such Registrable Securities, and, if such request is withdrawn, the Demand Registration shall not count as a permitted Demand Registration hereunder, and the Company shall pay all Registration Expenses in connection with the withdrawn Registration.  Any Persons who participate in Demand Registrations not at the Company’s expense must pay their share of the Registration Expenses as provided in Article VI.

2.4Restrictions on Registrations.  The Company shall not be obligated to effect any Demand Registration within six months after the effective date of a Registration demanded by the holders of registration rights under a Registration in which the Holders were given Piggyback Rights pursuant to Article III.  The Company may, not more than twice in any 12-month period, postpone for up to 90 days the filing or the effectiveness of a registration statement for a Demand Registration if the Board determines in good faith that (i) such postponement is necessary in order to avoid premature disclosure of a matter the Board has determined would not be in the best interest of the Company to be disclosed at such time or (ii) the Demand Registration would materially and adversely impact the Company; provided, that in such event, the Holders of Registrable Securities covered by the Demand Registration shall be entitled, upon the affirmative vote of holders holding at least 66% of such Registrable Securities, to withdraw such request and, if such request is withdrawn, the Demand Registration shall not count as a permitted Demand Registration hereunder, and the Company shall pay all Registration Expenses in connection with the withdrawn Registration; provided further, that upon the election of the Company and upon notice to the Holders of Registrable Securities to be included in such Registration, one such postponement may be extended to not more than 120 days at the sole discretion of the Company.

2.5Selection of Underwriters.  In connection with a Demand Registration, the Company shall select the investment banker(s) and manager(s) to administer the offering.

ARTICLE III

PIGGYBACK REGISTRATIONS

3.1Right to Piggyback.  Subject to the terms and conditions hereof, at any time after the Restricted Period whenever the Company proposes to register (including for this purpose a Registration effected by the Company for shareholders other than Holders) any of its securities under the Securities Act (other than (i) a Registration

4

under Article II hereof, (ii) a Registration of securities solely relating to an offering and sale pursuant to any employee stock plan or other employee benefit plan arrangement, including any registration on Form S-8 (or any successor form thereto) or (iii) a Registration of securities issued in an acquisition or business combination including any Registration on Form S-4 (or any successor form thereto)) (a “Piggyback Registration”), the Company shall give at least 20 days’ written notice to all Holders of the Company’s intention to effect such a Registration and shall include in the Registration, subject to any agreement among the Holders to be included in such Registration, all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 10 days after the receipt of the Company’s notice.

3.2Piggyback Expenses.  The Registration Expenses of the Holders shall be paid by the Company in all Piggyback Registrations.

3.3Priority on Primary Registrations.  If a Piggyback Registration is an underwritten primary Registration on behalf of the Company and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such Registration exceeds the number which can be sold in an orderly manner in such offering and/or that the number of securities proposed to be included in such offering would adversely affect the price per share of the Common Stock, the Company shall include in the Registration (i) first, the securities the Company proposes to sell, and (ii) second, the Registrable Securities requested to be included in the Registration pro rata among the Holders on the basis of the number of shares proposed to be registered by each or as such holders may otherwise agree, and (iii) third, other securities requested to be included in the Registration pro rata among the holders of such other securities on the basis of the number of shares requested to be registered by each such holder or as such holders may otherwise agree.

3.4Priority on Secondary Registrations.  If a Piggyback Registration is an underwritten secondary Registration on behalf of holders of the Company’s securities other than Registrable Securities and the managing underwriters advise the Company in writing that, in their opinion, the number of securities requested to be included in the Registration exceeds the number which can be sold in an orderly manner in such offering and/or that the number of securities proposed to be included in such offering would adversely affect the price per share of the Common Stock, the Company shall include in the Registration (i) first, the securities requested to be included therein by the holders requesting such Registration pro rata among the holders of such other securities on the basis of the number of shares requested to be registered by each such holder or as such holders may otherwise agree, (ii) second, the Registrable Securities requested to be included in such Registration pro rata among the Holders on the basis of the number of shares proposed to be registered by each or as such Holders may otherwise agree, and (iii) third, other securities requested to be included in the Registration pro rata among the holders of such other securities on the basis of the number of shares requested to be registered by each such holder or as such holders may otherwise agree.

5

3.5Selection of Underwriters.  If any Piggyback Registration is an underwritten offering, the Company shall select the investment banker(s) and manager(s) to administer the offering.

ARTICLE IV

LOCK UP AGREEMENTS

4.1General.  Each Holder agrees not to effect any sale, distribution or other transfer (including sales pursuant to Rule 144) of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, during a period of up to 180 days (as may be requested by the Company and the managing underwriters) following any underwritten, registered public offering of Common Stock, beginning on the effective date of such underwritten, registered offering (except for sales of such securities as part of such underwritten, registered offering) whether or not the Holder sold shares in such offering, unless the managing underwriters otherwise agree.

ARTICLE V

REGISTRATION PROCEDURES

5.1Registration Procedures.  Whenever the Holders have requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use its best efforts to effect the Registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible:

(a)Prepare and, in the case of a Demand Registration, no later than 60 days after a request for a Demand Registration, file with the Commission a registration statement with respect to such Registrable Securities and use its best efforts to cause the registration statement to become effective and remain effective until the earlier of (i) the date when all Registrable Securities covered by the registration statement have been sold, or (ii) 120 days from the effective date of the registration statement; provided, that before filing a registration statement or Prospectus or any amendments or supplements thereto, furnish to the Holders of Registrable Securities covered by such registration statement and the underwriter or underwriters, if any, copies of all such documents proposed to be filed, including documents incorporated by reference in the Prospectus and, if requested by such Holders, the exhibits incorporated by reference, and such Holders shall have the opportunity to object to any information pertaining to such Holders that is contained therein and the Company will make the corrections reasonably requested by such Holders with respect to such information prior to filing any registration statement or amendment thereto or any Prospectus or any supplement thereto; provided further, that the period for the preparation and filing of a Demand Registration shall be 120 days if a request for a Demand Registration is made in the first 45 days of any year;

6

(b)Prepare and file with the Commission such amendments and supplements to the registration statement and the Prospectus used in connection therewith as may be necessary to keep the registration statement effective for the period referred to in Section 5.1(a) and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the registration statement during such period in accordance with the intended methods of disposition by the sellers thereof as set forth in the registration statement;

(c)Furnish to each seller of Registrable Securities such number of copies of the registration statement, each amendment and supplement thereto, the Prospectus included in the registration statement (including each preliminary prospectus) and such other documents as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder;

(d)Use commercially reasonable efforts to register or qualify such Registrable Securities under such other securities or blue sky laws of such jurisdictions as any Holder thereof reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided, however, provided, that the Company will not be required to (i) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph (d), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction;

(e)Notify each such Holder, at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of any such Holder, the Company shall prepare a supplement or amendment to the Prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such Prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading;

(f)Promptly notify each seller of Registrable Securities and the underwriter or underwriters, if any: (i) when the registration statement, any pre-effective amendment, the Prospectus or any Prospectus supplement or post-effective amendment to the registration statement has been filed and, with respect to the registration statement or any post-effective amendment, when the same has become effective, (ii) of any written request by the Commission for amendments or supplements to the registration statement or Prospectus, (iii) of the notification to the Company by the Commission of its initiation of any proceeding with respect to the issuance by the Commission of any stop order suspending the effectiveness of the registration statement, (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for sale under the applicable securities or blue sky laws of any jurisdiction and (v) of any other material written communication from the Commission relating to the registration statement or the Prospectus.

7

(g)Cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed and, if not so listed, to be listed on the NASD automated quotation system;

(h)Provide a transfer agent and registrar for all such Registrable Securities not later than the effective date of such registration statement;

(i)Make available, for inspection by any seller of Registrable Securities, any underwriter participating in any disposition pursuant to such registration statement, and any attorney, accountant or other agent retained by any such seller or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such registration statement;

(j)Make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months beginning with the first day of the Company’s first full calendar quarter after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 1l(a) of the Securities Act and Rule 158 thereunder; and

(k)If requested, cause to be delivered, immediately prior to the effectiveness of the registration statement (and, in the case of an underwritten offering, at the time of delivery of any Registrable Securities sold pursuant thereto), letters from the Company’s independent certified public accountants addressed to each selling Holder (unless such selling Holder does not provide to such accountants the appropriate representation letter required by rules governing the accounting profession) and each underwriter, if any, stating that such accountants are independent public accountants within the meaning of the Securities Act and the applicable rules and regulations adopted by the Commission thereunder, and otherwise in customary form and covering such financial and accounting matters as are customarily covered by letters of the independent certified public accountants delivered in connection with primary or secondary underwritten public offerings, as the case may be;

(l)In connection with an underwritten offering, (i) make such representations and warranties to such selling Holders and the underwriters with respect to the Registrable Securities and the registration statement as are customarily made by issuers to underwriters in primary or secondary underwritten offerings, (ii) obtain opinions of counsel to the Company and updates thereof addressed to each selling Holder and the underwriters covering the matters customarily covered in opinions requested in primary or secondary underwritten offerings, and (iii) make available, on a reasonable basis, senior management personnel of the Company to participate in, and cause them to cooperate with the selling Holders or the managing underwriter in any underwritten offering in connection with “road show” and other customary marketing activities, including “one on one” meetings with prospective purchasers of the Registrable Securities to be sold in the underwritten offering.

8

ARTICLE VI

REGISTRATION EXPENSES

6.1In General.  All expenses incident to the Company’s performance of or compliance with this Agreement, including without limitation, all Registration and filing fees, fees and expenses of compliance with securities or blue sky laws, printing expenses, messenger and delivery expenses, and fees and disbursements of counsel for the Company and all independent certified public accountants, underwriters (excluding discounts and commissions and transfer taxes, if any, attributable to the sale of Registrable Securities) and other Persons retained by the Company (all such expenses being herein called “Registration Expenses”), shall be borne by the Company, and the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which similar securities issued by the Company are then listed or on the NASD automated quotation system.

6.2Reimbursement by the Company.  In connection with each Registration, the Company shall reimburse the Holders covered by such Registration for the reasonable fees and disbursements of one counsel chosen by the Holders of a majority of the Registrable Securities covered by such Registration.

6.3Obligations of the Holders of Securities.  To the extent registration expenses are not required to be paid by the Company, each Holder of securities included in any Registration hereunder shall pay those registration expenses allocable to the registration of such Holder’s securities so included, and any registration expenses not so allocable shall be borne by all sellers of securities included in the Registration in proportion to the aggregate selling price of the securities to be so registered.

ARTICLE VII

INDEMNIFICATION

7.1In General.  The Company shall indemnify, to the fullest extent permitted by law, each Holder, its officers, directors and Affiliates and each Person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue statement of material fact contained in any registration statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation or alleged violation by the Company of the Securities Act, the Exchange Act or applicable blue sky laws, except insofar as the same are made in reliance and in conformity with information relating to such Holder furnished in writing to the Company by such Holder expressly for use therein or caused by such Holder’s failure to deliver to such Holder’s immediate

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purchaser a copy of the registration statement or Prospectus or any amendments or supplements thereto (if the same was required by applicable law to be so delivered) after the Company has furnished such Holder with a sufficient number of copies of the same.  In connection with an underwritten offering, the Company shall indemnify such underwriters, their officers and directors and each Person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders.

7.2Information from the Holders.  In connection with any registration statement in which a Holder is participating, each such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such registration statement or Prospectus and, shall indemnify, to the fullest extent permitted by law, the Company, its officers, directors Affiliates, and each Person who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue statement of material fact contained in the registration statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that the same are made in reliance and in conformity with information relating to such Holder furnished in writing to the Company by such Holder expressly for use therein or caused by such Holder’s failure to deliver to such Holder’s immediate purchaser a copy of the registration statement or Prospectus or any amendments or supplements thereto (if the same was required by applicable law to be so delivered) after the Company has furnished such Holder with a sufficient number of copies of the same; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders and the liability of each such Holder shall be in proportion to and limited to the net amount received by such Holder from the sale of Registrable Securities pursuant to such registration statement.

7.3Notice of Claim.  Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party.  If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld).  An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party there may be one or more legal or equitable defenses available to such indemnified party which are in addition to or may conflict with those available to another indemnified party with respect to such claim.  Failure to give prompt written notice shall not release the indemnifying party from its obligations hereunder.

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7.4Survival of Indemnification. The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities.

7.5Contribution.  If the indemnification provided for in or pursuant to this Article VII is due in accordance with the terms hereof, but is held by a court to be unavailable or unenforceable in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified Person as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which result in such losses, claims, damages, liabilities or expenses as well as any other relevant equitable considerations.  The relative fault of the indemnifying party on the one hand and of the indemnified Person on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party, and by such party’s relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.  In no event shall the liability of any selling Holder be greater in amount than the amount of net proceeds received by such Holder upon such sale or the amount for which such indemnifying party would have been obligated to pay by way of indemnification if the indemnification provided for under Section 7.1 or 7.2 hereof had been available under the circumstances.

ARTICLE VIII

PARTICIPATION IN UNDERWRITTEN REGISTRATIONS

8.1Participation in Underwritten Registrations.  No Person may participate in any Registration hereunder which is underwritten unless such Person (a) agrees to sell such Person’s securities on the basis provided in any underwriting arrangements approved by the Company and (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements.

ARTICLE IX

REPORTS UNDER THE SECURITIES LAWS

9.1Reports Under the Securities Laws.  With a view to making available to the Holders the benefits of Rule 144 and any other rule or regulation of the Commission that may at any time permit a Holder to sell securities of the Company to the public without Registration, the Company agrees to:

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(a)File with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(b)Furnish to any holder so long as the Holder owns any of the Registrable Securities forthwith upon request a written statement by the Company that it has complied with the reporting requirements of the Securities Act and the Exchange Act.

ARTICLE X

TRANSFER OF REGISTRATION RIGHTS

10.1Transfer of Registration Rights.  Provided that the Company is given prompt written notice by or on behalf a Holder of any transfer of Registrable Securities by such Holder stating the name and address of the transferee of such Registrable Securities and identifying the securities with respect to which the rights under this Agreement are being assigned and such transferee agrees in writing to be bound by the terms and conditions of this Agreement, the rights of the Holder under this Agreement may be transferred in whole or in part at any time to any such transferee, so long as such transfer of securities is in accordance with all applicable state and federal securities laws and regulations.  The Company shall be responsible for the Registration Expenses of any transferee or assignee pursuant to this Section 10.1 to the same extent as the original transferor.

ARTICLE XI

INFORMATION BY HOLDERS OF REGISTRABLE SECURITIES

11.1Reporting of Sales.  Each Holder shall report to the Company sales made pursuant to any Registration of such Registrable Securities.

ARTICLE XII

MISCELLANEOUS

12.1Notices.  Any notice, demand, offer, or other instrument required or permitted to be given pursuant to this Agreement shall be in writing signed by the party giving such notice and shall, to the extent reasonably practicable, be sent by telecopy (with confirmation of receipt), and if not reasonably practicable to send by telecopy, then by hand delivery, overnight courier or certified mail (return receipt requested), to the other parties at the addresses set forth below:

If to the Company:

CF Industries Holdings, Inc.

One Salem Lake Drive

Long Grove, IL 60047
Attention:  General Counsel
Facsimile:  847-438-2005

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If to a Stockholder, to the address(es) set forth on the counterpart signature pages of this Agreement signed by such Stockholder.

If to a transferee Holder, to the address of such Holder set forth in the transfer documentation provided to the Company;

Each party may change the place to which notice shall be sent or delivered or specify one additional address to which copies of notices may be sent, in either case by similar notice sent or delivered in like manner to the other parties.  Without limiting any other means by which a party may be able to prove that a notice has been received by the other party, a notice shall be deemed to be duly received: (a) if sent by hand or overnight courier, the date when duly delivered at the address of the recipient; (b) if sent by certified mail, the date of the return receipt; or (c) if sent by telecopy, upon receipt by the sender of an acknowledgment or transmission report generated by the machine from which the telecopy was sent indicating that the telecopy was sent in its entirety to the recipient’s telecopy number.

12.2Captions.  Titles or captions of Sections or Articles contained in this Agreement are inserted only as a matter of convenience and for reference, and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof.

12.3Amendment.  The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given without the prior written consent of the Holders of a majority of the Registrable Securities; provided, however, that without a Holder’s written consent no such amendment, modification, supplement or waiver shall affect adversely such Holder’s rights hereunder in a discriminatory manner inconsistent with its adverse effects on rights of other Holders hereunder (other than as reflected by the different number of shares held by such Holder); provided, further, that the consent or agreement of the Company shall be required with regard to any termination, amendment, modification or supplement of, or waivers or consents to departures from, the terms hereof, which affect the Company’s obligations hereunder.

12.4Waiver.  Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or as a waiver of any other term or condition, of this Agreement.  The failure of any party to assert any of its rights hereunder shall not constitute a waiver of any of such rights.

12.5Survival.  The several indemnities, agreements, representations, warranties and each other provision set forth in this Agreement and made pursuant hereto

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shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any party, any director or officer of such party, or any controlling person of any of the foregoing, and shall survive the transfer of any Registrable Securities, and the indemnification and contribution provisions set forth in Article VII shall survive termination of this Agreement.

12.6Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument.

12.7Entire Agreement; Assignment.  This Agreement and any agreement, document or schedule attached hereto or thereto or referred to herein or therein, constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, of the parties with respect to the subject matter hereof. Any oral representations or modifications concerning this instrument shall be of no force or effect unless contained in a subsequent written modification signed by the party to be charged.  The registration rights of any Holder under this Agreement with respect to any Registrable Securities may be transferred and assigned in accordance with this Agreement.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, and their respective successors and permitted assigns.

12.8Severability.  If any provision of this Agreement is invalid or unenforceable, the balance of this Agreement shall remain in full force and effect, and this Agreement shall be construed in all respects as if such invalid or unenforceable provision were omitted, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon any such determination that any provision of this Agreement is invalid or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby are consummated as originally contemplated to the greatest extent possible.

12.9Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws thereof.  Each of the parties hereto agrees that process may be served upon them in any manner authorized by the laws of the State of Delaware for such persons and waives and covenants not to assert or plead any objection which they might otherwise have to such jurisdiction and such process.

12.10Consent to Jurisdiction.  Without limiting the provisions of Article VII hereof, the parties agree that any legal proceeding by or against any party or with respect to or arising out of this Agreement may be brought in or removed to the United States District Court for the State of Delaware or in any Delaware state court, as the party or parties instituting such legal action or proceeding may elect.  By execution and delivery of this Agreement, each party irrevocably and unconditionally submits to the exclusive jurisdiction of such courts and to the appellate courts therefrom.  The parties

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irrevocably consent to the service of process out of any of the aforementioned courts in any such action or proceeding by the mailing of copies thereof by registered or certified airmail, postage prepaid, to such parties at the addresses specified in Section 12.1. Any such service of process shall be effective five (5) business days after mailing, or, if hand delivered, upon delivery.  Nothing herein shall affect the right to serve process in any other manner permitted by applicable law.  The parties hereby waive any right to stay or dismiss any action or proceeding under or in connection with this Agreement brought before the foregoing courts on the basis of (a) any claim that it is not personally subject to the jurisdiction of the above-named courts for any reason, or that it or any of its property is immune from the above-described legal process, (b) that such action or proceeding is brought in an inconvenient forum, that venue for the action or proceeding is improper or that this Agreement may not be enforced in or by such courts, or (c) any other defense that would hinder or delay the levy, execution or collection of any amount to which any party is entitled pursuant to any final judgment of any court having jurisdiction.

[Signature Page Follows]

* * * * *

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IN WITNESS WHEREOF, the parties hereto have executed this Registration Rights Agreement as of the date first written above.

CF INDUSTRIES HOLDINGS, INC.
By:	/s/ Stephen R. Wilson
	Name:  Stephen R. Wilson
	Title:    President and Chief Executive Officer
GROWMARK, Inc.
1701 Towanda Avenue
Bloomington, IL 61701-9972
By:	/s/ William Davisson
	Name: William Davisson
	Title: CEO

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EX-10.7

Exhibit 10.7

CHANGE IN CONTROL SEVERANCE AGREEMENT

THIS AGREEMENT, effective as of August 11, 2005, is made by and between CF Industries Holdings, Inc., a Delaware corporation (the “Company”), and David J. Pruett (the “Executive”).

WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and

WHEREAS, the Board recognizes that the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1.Defined Terms.  The definitions of capitalized terms used in this Agreement are provided in the last Section hereof.

2.Term of Agreement.  This Agreement shall not become effective, and the Term of this Agreement shall not commence, unless and until the Company’s initial public offering of its common stock has closed and public trading in its common stock has commenced on the New York Stock Exchange or NASDAQ.  Once in effect, the Term shall continue in effect through December 31, 2007; provided, however, that commencing on January 1, 2007 and each January 1 thereafter, the Term shall automatically be extended for one additional year unless, not later than September 30 of the preceding year, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire no earlier than twenty-four (24) months beyond the month in which such Change in Control occurred.

3.Company’s Covenants Summarized.  In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein.  Except as provided in Section 9.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been

(or, under the terms of the second sentence of Section 6.1 hereof, there shall be deemed to have been) a termination of the Executive’s employment with the Company following a Change in Control and during the Term.  This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

4.The Executive’s Covenants.  The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six (6) months from the date of such Potential Change in Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

5.Compensation Other Than Severance Payments.

5.1Following a Change in Control and during the Term, during any period that the Executive fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to physical or mental illness, the Company shall pay the Executive’s full salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period (other than any disability plan), until the Executive’s employment is terminated by the Company for Disability.

5.2If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay the Executive’s full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

5.3If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due.  Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect

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immediately prior to the occurrence of the first event or circumstance constituting Good Reason.

6.Severance Payments.

6.1If the Executive’s employment is terminated following a Change in Control and during the Term, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”) and Section 6.2, in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof.  For purposes of this Agreement, the Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs).  For purposes of any determination regarding the applicability of the immediately preceding sentence, any position taken by the Executive shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct.

(A)In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to two times the sum of (i) the Executive’s base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (ii) the Executive’s target annual bonus pursuant to any annual bonus or incentive plan maintained by the Company in respect of the fiscal year in which the Date of Termination occurs or, if higher, the fiscal year in which the first event or circumstance constituting Good Reason occurs.

(B)For thetwenty-four (24) month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, disability, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to

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the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, such health insurance benefits shall be provided through a third-party insurer.  Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the twenty-four (24) month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the after tax cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.

(C)In addition to the benefits to which the Executive is entitled under each DC Pension Plan, the Company shall pay the Executive a lump sum amount, in cash, equal to the sum of (1) the amount that would have been contributed or allocated to each DC Pension Plan by the Company on the Executive’s behalf (without regard to whether such amount would be vested) during the two years immediately following the Date of Termination, determined (x) as if the Executive made the maximum permissible contributions thereto during such period, (y) as if the Executive earned compensation during such period at a rate equal to the Executive’s compensation (as defined in the DC Pension Plans) during the twelve (12) months immediately preceding the Date of Termination or, if higher, during the twelve months immediately prior to the first occurrence of an event or circumstance constituting Good Reason, and (z) without regard to any amendment to the DC Pension Plans made subsequent to a Change in Control and on or prior to the Date of Termination, which amendment adversely affects in any manner the computation of benefits thereunder and (2) all other amounts credited to the Executive’s account under each DC Pension Plan to the extent such amounts were unvested on the Date of Termination.

(D)If the Executive would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans, as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, had the Executive’s employment terminated at any time during the period of twenty-four (24) months after the Date of Termination, the Company shall provide such post-retirement health care or life insurance benefits to the Executive and the Executive’s dependents commencing on the later of (i) the date on which such coverage would have first become available and (ii) the date on which benefits described in subsection (B) of this Section 6.1 terminate.

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(E)The Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of twoyears or, if earlier, until the first acceptance by the Executive of an offer of employment.

(F)Notwithstanding any provision of any annual or long-term incentive plan to the contrary, the Company shall pay to the Executive a lump sum amount, in cash, equal to the sum of (i) any unpaid incentive compensation which has been allocated or awarded to the Executive for a completed fiscal year or other measuring period preceding the Date of Termination under any such plan and which, as of the Date of Termination, is contingent only upon the continued employment of the Executive to a subsequent date, and (ii) a pro rata portion to the Date of Termination of the aggregate value of all contingent incentive compensation awards to the Executive for all then uncompleted periods under any such plan, calculated as to each such award by multiplying the award that the Executive would have earned on the last day of the performance award period, assuming the achievement, at the target level (or, if greater, based on actual results to Date of Termination), of the individual and corporate performance goals established with respect to such award, by the fraction obtained by dividing the number of full months and any fractional portion of a month during such performance award period through the Date of Termination by the total number of months contained in such performance award period.

6.2(A)Whether or not the Executive becomes entitled to the Severance Payments, if any of the payments or benefits received or to be received by the Executive (including any payment or benefits received in connection with a Change in Control or the Executive’s termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement) (all such payments and benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) will be subject to the Excise Tax, the Company shall pay to the Executive an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Executive, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, and after taking into account the phase out of itemized deductions and personal exemptions attributable to the Gross-Up Payment, shall be equal to the Total Payments.

(B)For purposes of determining whether any of the Total Payments will be subject to the Excise Tax and the amount of such Excise Tax, (i) all of the Total Payments shall be treated as “parachute payments” (within the meaning of section 280G(b)(2) of the Code) unless, in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to the Executive and selected by the accounting firm which was, immediately prior to the Change in Control, the Company’s independent auditor (the “Auditor”), such payments or benefits (in whole or in part) do not constitute parachute payments, including by reason of section 280G(b)(4)(A) of the Code, (ii) all “excess parachute payments” within the meaning of section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess

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parachute payments (in whole or in part) represent reasonable compensation for services actually rendered (within the meaning of section 280G(b)(4)(B) of the Code) in excess of the Base Amount allocable to such reasonable compensation, or are otherwise not subject to the Excise Tax, and (iii) the value of any noncash benefits or any deferred payment or benefit shall be determined by the Auditor in accordance with the principles of sections 280G(d)(3) and (4) of the Code.  For purposes of determining the amount of the Gross-Up Payment, the Executive shall be deemed to pay federal income tax at the highest marginal rate of federal income taxation in the calendar year in which the Gross-Up Payment is to be made and state and local income taxes at the highest marginal rate of taxation in the state and locality of the Executive’s residence on the Date of Termination (or if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of this Section 6.2), net of the maximum reduction in federal income taxes which could be obtained from deduction of such state and local taxes.

(C)In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Executive shall repay to the Company, within five (5) business days following the time that the amount of such reduction in the Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Executive), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Executive’s taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code.  In the event that the Excise Tax is determined to exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Executive with respect to such excess) within five (5) business days following the time that the amount of such excess is finally determined.  The Executive and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments.

6.3The payments provided in subsections (A),(C) and (F) of Section 6.1 hereof and in Section 6.2 hereof shall be made not later than the fifth day following the Date of Termination (or if there is no Date of Termination, then the date on which the Gross-Up Payment is calculated for purposes of Section 6.2 hereof); provided, however, that if the amounts of such payments cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Executive or, in the case of payments under Section 6.2 hereof, in accordance with Section 6.2 hereof, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with

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interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the thirtieth (30th) day after the Date of Termination.  In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth (5th) business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(B) of the Code).  At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

6.4The Company also shall pay to the Executive all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive’s employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder.  Such payments shall be made within five (5) business days after delivery of the Executive’s written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require.

6.5The Executive agrees that prior to and following the Date of Termination, he shall retain in confidence any confidential information known to him concerning the Company and its Affiliates and their respective businesses for as long as such information is not publicly disclosed.

6.6Notwithstanding anything to the contrary, all compensation and benefits payable to Executive pursuant to this Section 6 (other than Sections 6.2 and 6.4) are conditioned on receipt by the Company of an executed release of claims by Executive in the form attached hereto as Exhibit A and the expiration of any revocation period in such release.

7.Termination Procedures and Compensation During Dispute.

7.1Notice of Termination.  After a Change in Control and during the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof.  For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.  Further, a Notice of Termination for Cause is required to include a copy of a resolution duly adopted by the

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affirmative vote of not less than three-quarters (3/4) of the entire membership of the Board at a meeting of the Board which was called and held for the purpose of considering such termination (after reasonable notice to the Executive and an opportunity for the Executive, together with the Executive’s counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive was guilty of conduct set forth in clause (i) or (ii) of the definition of Cause herein, and specifying the particulars thereof in detail.

7.2Date of Termination.  “Date of Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, shall mean (i) if the Executive’s employment is terminated for Disability, thirty (30) days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such thirty (30) day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than thirty (30) days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given).

7.3Dispute Concerning Termination.  If within fifteen (15) days after any Notice of Termination is given, or, if later, prior to the Date of Termination (as determined without regard to this Section 7.3), the party receiving such Notice of Termination notifies the other party that a dispute exists concerning the termination, the Date of Termination shall be extended until the earlier of (i) the date on which the Term ends or (ii) the date on which the dispute is finally resolved, either by mutual written agreement of the parties or by a final judgment, order or decree of an arbitrator or a court of competent jurisdiction (which is not appealable or with respect to which the time for appeal therefrom has expired and no appeal has been perfected); provided, however, that the Date of Termination shall be extended by a notice of dispute given by the Executive only if such notice is given in good faith and the Executive pursues the resolution of such dispute with reasonable diligence.

7.4Compensation During Dispute.  If a purported termination occurs following a Change in Control and during the Term and the Date of Termination is extended in accordance with Section 7.3 hereof, the Company shall continue to pay the Executive the full compensation in effect when the notice giving rise to the dispute was given (including, but not limited to, salary) and continue the Executive as a participant in all compensation, benefit and insurance plans in which the Executive was participating when the notice giving rise to the dispute was given, until the Date of Termination, as determined in accordance with Section 7.3 hereof.  Amounts paid under this Section 7.4 are in addition to all other amounts due under this Agreement (other than those due under Section 5.2 hereof) and shall not be offset against or reduce any other amounts due under this Agreement.

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8.No Mitigation.  The Company agrees that, if the Executive’s employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof or Section 7.4 hereof.  Further, except as specifically provided in Section 6.1(B) hereof, no payment or benefit provided for in this Agreement shall be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

9.Successors; Binding Agreement.

9.1In addition to any obligations imposed by law upon any successor to the Company, the Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.  Failure of the Company to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Agreement and shall entitle the Executive to compensation from the Company in the same amount and on the same terms as the Executive would be entitled to hereunder if the Executive were to terminate the Executive’s employment for Good Reason after a Change in Control, except that, for purposes of implementing the foregoing, the date on which any such succession becomes effective shall be deemed the Date of Termination.

9.2This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.  If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

10.Notices.  For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address inserted below the Executive’s signature on the final page hereof and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

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To the Company:

CF Industries, Inc.

One Salem Lake Drive

Long Grove, Illinois 60046

Attention:  William G. Eppel

11.Miscellaneous.  No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board.  No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.  This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason.   The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Illinois.  All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections.  Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed.  The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration.

12.Validity.  The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

13.Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

14.Settlement of Disputes; Arbitration.  14.1 All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing.  Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon.  The

10

Board shall afford a reasonable opportunity to the Executive for a review of the decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within sixty (60) days after notification by the Board that the Executive’s claim has been denied.  Notwithstanding the above,  in the event of any dispute, any decision by the Board hereunder shall be subject to a de novo review by the arbitrator.

14.2Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Chicago, Illinois in accordance with the rules of the American Arbitration Association then in effect; provided, however, that the evidentiary standards set forth in this Agreement shall apply.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction.  Notwithstanding any provision of this Agreement to the contrary, the Executive shall be entitled to seek specific performance of the Executive’s right to be paid until the Date of Termination during the pendency of any dispute or controversy arising under or in connection with this Agreement.

15.Definitions.  For purposes of this Agreement, the following terms shall have the meanings indicated below:

(A)“Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

(B)“Auditor” shall have the meaning set forth in Section 6.2 hereof.

(C)“Base Amount” shall have the meaning set forth in section 280G(b)(3) of the Code.

(D)“Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

(E)“Board” shall mean the Board of Directors of the Company.

(F)“Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure by the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from the Executive’s incapacity due to physical or mental illness or any such actual or anticipated failure after the issuance of a Notice of Termination for Good Reason by the Executive pursuant to Section 7.1 hereof) that has not been cured within 30 days after a written demand for substantial performance is delivered to the Executive by the Board, which demand specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties, or (ii) the willful engaging by the Executive in conduct which is demonstrably and materially injurious to the Company or its subsidiaries, monetarily or otherwise.  For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Executive’s part shall be deemed “willful” unless done, or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act, was in

11

or not opposed to the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists.

(G)“Change in Control” shall mean the first to occur of:

(I)any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of CF Industries Holdings, Inc. (not including in the securities beneficially owned by such Person any securities acquired directly from CF Industries Holdings, Inc. or any of its subsidiaries) representing 25% or more of the combined voting power of CF Industries Holdings, Inc.’s then outstanding securities; or

(II)the following individuals cease for any reason to constitute a majority of the number of directors then serving on the Board: individuals who, on the date of the initial public offering, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of CF Industries Holdings, Inc.) whose appointment or election by the Board or nomination for election by CF Industries Holdings, Inc.’s stockholders was approved or recommended by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the date hereof or whose appointment, election or nomination for election was previously so approved or recommended; or

(III)there is consummated a merger or consolidation of CF Industries Holdings, Inc. or any direct or indirect subsidiary of CF Industries Holdings, Inc. with any other corporation, other than a merger or consolidation immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the Board of the entity surviving such merger or consolidation or, if CF Industries Holdings, Inc. or the entity surviving such merger is then a subsidiary, the ultimate parent thereof; or

(IV)the stockholders of CF Industries Holdings, Inc. approve a plan of complete liquidation or dissolution of CF Industries Holdings, Inc. or there is consummated an agreement for the sale or disposition by CF Industries Holdings, Inc. of all or substantially all of CF Industries Holdings, Inc.’s assets, other than (a) a sale or disposition by CF Industries Holdings, Inc. of all or substantially all of CF Industries Holdings, Inc.’s assets to an entity, at least 60% of the combined voting power of the voting securities of which are owned by stockholders of CF Industries Holdings, Inc. following the completion of such transaction in substantially the same proportions as their ownership of CF Industries

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Holdings, Inc. immediately prior to such sale or (b) other than a sale or disposition by CF Industries Holdings, Inc. of all or substantially all of CF Industries Holdings, Inc.’s assets immediately following which the individuals who comprise the Board immediately prior thereto constitute at least a majority of the board of directors of the entity to which such assets are sold or disposed or, if such entity is a subsidiary, the ultimate parent thereof.

Notwithstanding the foregoing, a “Change in Control” shall not be deemed to have occurred (1) by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the common stock of CF Industries Holdings, Inc. immediately prior to such transaction or series of transactions continue to havesubstantially the same proportionate ownership in an entity which owns all or substantially all of the assets of CF Industries Holdings, Inc. immediately following such transaction or series of transactions or (2) as a result of the initial public offering of the Company’s common stock or any transactions or any events contemplated by such offering.

(H)“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(I)“Company” shall mean CF Industries Holdings, Inc., as applicable, and except in determining under Section 15(G) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(J)“DC Pension Plan” shall mean any tax-qualified, supplemental or excess defined contribution plan maintained by the Company and any other defined contribution plan or agreement entered into between the Executive and the Company which is designed to provide the executive with supplemental retirement benefits.

(K)“Date of Termination” shall have the meaning set forth in Section 7.2 hereof.

(L)“Disability”  shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six (6) consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within thirty (30) days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.

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(M)“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(N)“Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.

(O)“Executive” shall mean the individual named in the first paragraph of this Agreement.

(P)“Good Reason” for termination by the Executive of the Executive’s employment shall mean the occurrence (without the Executive’s express written consent which specifically references this Agreement) after any Change in Control, or prior to a Change in Control under the circumstances described in clauses (ii) and (iii) of the second sentence of Section 6.1 hereof (treating all references in paragraphs (I) through (VII) below to a “Change in Control” as references to a “Potential Change in Control”), of any one of the following acts by the Company, or failures by the Company to act, unless, in the case of any act or failure to act described in paragraph (I), (V), (VI) or (VII) below, such act or failure to act is corrected prior to the Date of Termination specified in the Notice of Termination given in respect thereof:

(I)the assignment to the Executive of any duties inconsistent with the Executive’s status as an executive officer of the Company or a substantial adverse alteration in the nature or status of the Executive’s responsibilities from those in effect immediately prior to the Change in Control including, without limitation, if the Executive was, immediately prior to the Change in Control, an executive officer of a public company, the Executive ceasing to be an executive officer of a public company;

(II)a reduction by the Company in the Executive’s annual base salary as in effect on the date hereof or as the same may be increased from time to time except for across-the-board salary reductions similarly affecting all executives of the Company and all executives of any Person in control of the Company;

(III)the relocation of the Executive’s principal place of employment to a location more than 35 miles from the Executive’s principal place of employment immediately prior to the Change in Control or the Company’s requiring the Executive to be based anywhere other than such principal place of employment (or permitted relocation thereof) except for required travel on the Company’s business to an extent substantially consistent with the Executive’s present business travel obligations;

(IV)the failure by the Company to pay to the Executive any portion of the Executive’s current compensation or to pay to the

14

Executive any portion of an installment of deferred compensation under any deferred compensation program of the Company, within seven (7) days after the date demand for payment is made provided such compensation is due;

(V)the failure by the Company to continue in effect any compensation plan in which the Executive participates immediately prior to the Change in Control which is material to the Executive’s total compensation unless an equitable arrangement (embodied in an ongoing substitute or alternative plan) has been made with respect to such plan, or the failure by the Company to continue the Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount or timing of payment of benefits provided and the level of the Executive’s participation relative to other participants, as existed immediately prior to the Change in Control;

(VI)the failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company’s pension, savings, life insurance, medical, health and accident, or disability plans in which the Executive was participating immediately prior to the Change in Control (except for across the board changes similarly affecting all executives of the Company and all executives of any Person in control of the Company), the taking of any other action by the Company which would directly or indirectly materially reduce any of such benefits or deprive the Executive of any material fringe benefit enjoyed by the Executive at the time of the Change in Control, or the failure by the Company to provide the Executive with the number of paid vacation days to which the Executive is entitled with the Company in accordance with the vacation policy applicable to the Executive in effect at the time of the Change in Control; or

(VII)any purported termination of the Executive’s employment which is not effected pursuant to a Notice of Termination satisfying the requirements of Section 7.1 hereof; for purposes of this Agreement, no such purported termination shall be effective.  The Executive’s right to terminate the Executive’s employment for Good Reason shall not be affected by the Executive’s incapacity due to physical or mental illness.

The Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

For purposes of any determination regarding the existence of Good Reason, any claim by the Executive that Good Reason exists shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that Good Reason does not exist.

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(Q)“Gross-Up Payment” shall have the meaning set forth in Section 6.2 hereof.

(R)“Notice of Termination” shall have the meaning set forth in Section 7.1 hereof.

(S)“Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) CF Industries Holdings, Inc. or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of CF Industries, Inc. or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(T)“Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(I)the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

(II)the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(III)any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or

(IV)the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(U)“Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

(V)“Severance Payments” shall have the meaning set forth in Section 6.1 hereof.

(W)“Tax Counsel” shall have the meaning set forth in Section 6.2 hereof.

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(X)“Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

(Y)“Total Payments” shall mean those payments so described in Section 6.2 hereof.

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

CF INDUSTRIES HOLDINGS, INC.
By:	/s/ Stephen R. Wilson
	Stephen R. Wilson
	President & Chief Executive Officer
	/s/ David J. Pruett
	David J. Pruett

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EXHIBIT A

RELEASE

(a)  David J. Pruett (“Executive”) for and in consideration of benefits provided pursuant to the Change in Control Severance Agreement with CF Industries Holdings, Inc. (collectively, referred to herein as the “Company”) entered into August 11, 2005 (the “Severance Agreement”), on behalf of Executive and Executive’s heirs, executors, administrators, successors and assigns, voluntarily, knowingly and willingly releases and discharges the Company and its parents, subsidiaries and affiliates (collectively, the “Company Group”), together with their respective present and former partners, officers, directors, employees and agents, and each of their predecessors, heirs, executors, administrators, successors and assigns, and any and all employee pension or welfare benefit plans of the Company, including current and former trustees and administrators of these plans (collectively, the “Company Releasees”) from any and all charges, complaints, claims, promises, agreements, controversies, causes of action, demands, damages and liabilities (“Claims”) of any nature whatsoever, known or unknown, suspected or unsuspected, which against the Company Releasees, jointly or severally, Executive or Executive’s heirs, executors, administrators, successors or assigns everhad or now have by reason of any matter, cause or thing whatsoever arising from the beginning of time to the time Executive executes this release (the “Release”).  This Release includes, without limitation, any Claims arising out of or relating in any way to Executive’s employment or director relationship with the Company, or the termination thereof, any Claims arising under any statute or regulation, including but not limited to the Age Discrimination in Employment Act of 1967,Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans with Disabilities Act of 1990, the Family and Medical Leave Act of 1993, or the Employee Retirement Income Security Act of 1974, each as amended, or any other federal, state or local law, regulation, ordinance or common law, or under any policy, agreement, understanding or promise, written or oral, formal or informal, between any Company Releasee and Executive.  Executive shall not be entitled to any recovery, in any action or proceeding that may be commenced on Executive’s behalf in any way arising out of or relating to the matters released under this Release.  Notwithstanding the foregoing, nothing herein shall release any Company Releasee from any Claim based on (i) Executive’s rights under the Severance Agreement or any other agreement with the Company (including, but not limited to, any stock option agreements), (ii) any right or claim that arises after the date Executive executes this Release, (iii) Executive’s eligibility for indemnification in accordance with applicable laws or the certificate of incorporation or by-laws of the Company (or any affiliate or subsidiary) or any applicable insurance policy, with respect to any liability Executive incurs or incurred as a director, officer or employee of the Company or any affiliate or subsidiary (including as a trustee, director or officer of any employee benefit plan) or (iv) any rights Executive may have to vested benefits under any employee benefit plan or program.

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(b)  Executive has been advised to consult with an attorney of Executive’s choice prior to signing this Release, has done so and enters into this Release freely and voluntarily.

[(c) Executive acknowledges that the Company has enclosed with this Release information concerning (i) the ages and job titles of all employees who are eligible to receive severance pay and (ii) the ages of all employees in the same job classification or organizational unit who are not eligible to receive severance pay.](1)

(d)  Executive has had at least [twenty-one (21)]  [forty-five (45)](2) calendar days to consider the terms of this Release.  Once Executive has signed this Release, Executive has seven (7) additional days to revoke Executive’s consent and may do so by writing to the Company as provided in Section 10 of the Severance Agreement.  Executive’s Release shall not be effective, and no payments or benefits shall be due under Section 6 of the Severance Agreement, until the eighth day after Executive has executed this Release and returned it to the Company, assuming that Executive has not revoked Executive’s consent to this Release during such time (the “Revocation Date”).

(e)  In the event that any one or more of the provisions of this Release shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder thereof shall not in any way be affected or impaired thereby.

(f)  This Release shall be governed by the law of the State of Illinois without reference to its choice of law rules.

CF INDUSTRIES HOLDINGS, INC.

By:

Name:

Title:

Signed as of this      day of                     .

David J. Pruett

(1)Note:  this paragraph is to be included only for applicable group terminations or exit incentive programs.

(2)Note:  use longer period for applicable group terminations or exit incentive programs.

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Signed as of this      day of                     .

21

EX-10.8

Exhibit 10.8

NET OPERATING LOSS AGREEMENT

dated as of

August 16, 2005

by and among

CF INDUSTRIES HOLDINGS, INC.

CF INDUSTRIES, INC.

and

EXISTING STOCKHOLDERS OF CF INDUSTRIES, INC.

Table of Contents

		Page
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION		1
Section 1.1	Definitions.	1
Section 1.2	Notices	5
Section 1.3	Effect of Headings	6
Section 1.4	Successors and Assigns	6
Section 1.5	Benefits of Agreement	6
Section 1.6	Governing Law	6
Section 1.7	Legal Holidays	6
Section 1.8	Severability Clause	6
Section 1.9	Counterparts	7
Section 1.10	Effectiveness	7
Section 1.11	Entire Agreement	7
ARTICLE II NOL RIGHTS		7
Section 2.1	Payment Procedures.	7
Section 2.2	Payments to Members.	9
Section 2.3	Member-Sourced NOL.	9
Section 2.4	Repayment of Amounts	9
ARTICLE III MEMBERS		10
Section 3.1	Certain Duties and Responsibilities.	10
Section 3.2	Certain Rights of the Responsible Member; Actions of the Responsible Member	12
Section 3.3	Reimbursement and Indemnification of the Responsible Member.	12
Section 3.4	Resignation and Removal; Appointment of Successor.	13
Section 3.5	Acceptance of Appointment by Successor	13
Section 3.6	Final Resolution	14
Section 3.7	Opt Out	14
ARTICLE IV COVENANTS		15
Section 4.1	Prosecution of Litigation by the Company; Settlement; Periodic Reports; Expenses.	15
Section 4.2	Payment of NOL Payment Amount and Operations of the Company	16
Section 4.3	Federal Income Tax Treatment	16
Section 4.4	Transferability	16
ARTICLE V AMENDMENTS		17

Section 5.1	Amendments.	17
Section 5.2	Execution of Amendments	17
Section 5.3	Effect of Amendments	17

ii

NET OPERATING LOSS AGREEMENT

This NET OPERATING LOSS AGREEMENT, dated as of August 16, 2005 (this “Agreement”), is entered into by and among CF Industries Holdings, Inc., a Delaware corporation (the “Parent”), CF Industries, Inc., a Delaware corporation (the “Company”) and the existing stockholders of the Company before the IPO (as defined below) (each a “Member”, collectively “Members”).

RECITALS:

WHEREAS, the Company and the Parent have entered into an agreement and plan of merger dated as of July 21, 2005, pursuant to which a wholly-owned subsidiary of Parent will be merged with and into the Company, with the Company surviving as a wholly-owned subsidiary of Parent (the “Merger”);

WHEREAS, in connection with the Merger, Parent will undertake an initial public offering (the “IPO”) of Parent’s common stock, pursuant to which Parent will become a public company; and

WHEREAS, the parties hereto intend that, following the Merger, the Members may be entitled to receive certain contingent payments from Parent in the amount and manner hereinafter described.

NOW, THEREFORE, for and in consideration of the premises and the consummation of the transactions referred to above, it is mutually covenanted and agreed as follows:

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 1.1Definitions.

(a)For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(i)the terms defined in this Article have the meanings assigned to them in this Article, and include the plural as well as the singular;

(ii)all accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles, and the term “generally accepted accounting principles” means such accounting principles as are generally accepted in the United States at the time of any computation;

(iii)the words “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and

(iv)unless the context otherwise requires, words describing the singular number shall include the plural and vice versa, words denoting any gender shall include all genders and words denoting natural Persons shall include corporations, partnerships and other Persons and vice versa.

(b)Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in the Merger Agreement.  The following additional terms shall have the meanings ascribed to them as follows:

“Affiliate” of a Person means a Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the first mentioned Person.

“Board of Directors” means the board of directors of the Parent or the Company, as applicable.

“Business Day” means any day other than a Saturday, Sunday or a day on which banking institutions in Chicago, Illinois are authorized or obligated by law or executive order to remain closed.

“Code” means the Internal Revenue Code of 1986, as amended.

“Consolidated Group” means any group of corporations that includes the Company (or any successor to the Company) and files any United States federal, state or local income tax return on a combined, consolidated, unitary or affiliated basis.

“Determination” means (i) with respect to the utilization of a Member-Sourced NOL for United States federal income tax purposes, “Determination” shall mean (A) a decision by the tax court or a judgment, decree, or other order by any court of competent jurisdiction, which has become final; (B) a closing agreement made under Section 7121 of the Code; (C) a final disposition by the Secretary of a claim for refund or (D) other decisions as described under Section 1313 of the Code and the regulations thereunder, and (ii) with respect to the utilization of a Member-Sourced NOL for purposes of any state or local income tax, the receipt of an Opinion of Counsel that such Member-Sourced NOL can be utilized to offset taxable income in such state or local jurisdiction.

“Excess Payment” has the meaning specified in Section 2.4

“Expenses” means the sum of all direct expenses incurred after the Merger by any of the Members, the Parent, the Company, the Company Subsidiaries or any of their respective Affiliates in order to carry the Member-Sourced NOLs forward to tax years (or portions thereof) beginning after the Merger, including any fees, expenses or costs incurred after the Merger (including, without limitation, the cost of the time of employees of the Parent, the Company, any Company Subsidiary or any of their Affiliates) in connection with (i) pursuing the Ruling or any

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other Litigation or any Determination, (ii) any tax audit or refund claim to the extent related to the utilization of Member-Sourced NOLs or (iii) defending any audit, litigation or other proceeding with respect to the amount and/or existence of the Member-Sourced NOLs.

“Firm Expenses” has the meaning specified in Section 2.1(d) of this Agreement.

“IPO” has the meaning set forth in the recitals to this Agreement.

“Last NOL Payment Date” shall mean the date determined by the Parent as the date on which the last NOL Payment Amount is to be made under this Agreement (or the date on which it is determined by a Majority that no payment of NOL Payment Amount shall be made pursuant to this Agreement).

“Litigation” means pursuing the Ruling or any litigation that the Parent, the Company or the Company Subsidiaries or any of their Affiliates may file or assert and any similar future lawsuits, claims or appeals brought by the Parent, the Company, the Company Subsidiaries or their Affiliates related to the ability of the Company to utilize Member-Sourced NOL carryforwards to offset any taxable income of the Company or any Consolidated Group in any tax year (or portion thereof) beginning after the Merger.

“Majority” means the Members who held a majority of the shares of preferred stock of the Company outstanding immediately prior to the Merger; provided, however, that in the event that one or more Members has Opted Out of this Agreement in accordance with Section 3.7 as of the time of the determination of a Majority, only the shares of preferred stock owned immediately before the Merger by Members that have not Opted Out of this Agreement shall be considered to have been outstanding at such time.

“Member-Sourced NOLs” means the net operating losses (within the meaning of section 172 of the Code or any similar provision of applicable state or local income tax law) generated by the Company from business with its members prior to the Merger during the taxable years when the Company was taxed as a cooperative under subchapter T of the Code and the regulations thereunder.

“NOL Payment Amount” means, for any NOL Payment Date, the sum of the excess, if any, of (i) the aggregate amount of United States federal, state and local net income tax liability of the Company or any Consolidated Group for any tax year (or portion thereof) beginning after the Merger, calculated without taking into account the utilization of any Member-Sourced NOLs carried forward from tax years ending on or before the date of the Merger (the “Without Calculation”), over (ii) the aggregate amount of United States federal, state and local net income tax liability of the Company or any Consolidated Group for such tax year (or portion thereof) beginning after the Merger, calculated on the basis of utilizing any Member-Sourced NOLs that are available under applicable law (including, without limitation, the limitations imposed by Sections 382 and 384 of the Code) (the “With Calculation”); provided however, that any tax attributes of the Company or any Consolidated Group other than Member-Sourced NOLs (“Other Attributes”) that are treated as utilized to reduce actual current tax liability under the Without Calculation in any tax year shall be deemed to be unavailable to the Company or Consolidated Group in making the Without Calculation in any future year, regardless of whether

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such Other Attributes were actually utilized by the Company or Consolidated Group to reduce tax liability in the prior year.  “NOL Payment Amount” shall also include any interest actually received by the Company or a Consolidated Group with respect to taxes offset by Member-Sourced NOLs.

“NOL Payment Date” means any date that any NOL Payment Amount is paid by the Parent to the Members.

“Officer’s Certificate” means a certificate signed by the President, Chief Financial Officer or General Counsel, in each case of the Parent or the Company, in his or her capacity as such an officer, and delivered to the Members.

“Opinion of Counsel” means a written opinion of nationally recognized counsel, which shall be selected by a Majority, and which opinion and counsel shall be reasonably acceptable to the Company.

“Opt-Out” has the meaning specified in Section 3.7(a).

“Opt-Out Notice” has the meaning specified in Section 3.7(a).

“Person” means any individual, corporation, partnership, joint venture, limited liability company, business trust, association, joint-stock company, trust, estate, unincorporated organization or government or any agency or political subdivision thereof.

“Resolution” has the meaning specified in Section 2.1(d) of this Agreement. 

“Ruling” means a private letter ruling issued by the United States Internal Revenue Service (the “IRS”)  to the effect that the Member-Sourced NOLs of the Company can be used to offset the income of the Company (or any Consolidated Group) for federal income tax purposes after the Merger during tax years when the Company is not taxed as a cooperative under subchapter T of the Code.

“Settlement Decision” means any decision to grant consent to the settlement of any aspect or portion of the Litigation or otherwise to dismiss with prejudice any claim of the Parent, the Company or a Company Subsidiary in a Litigation (and any other determination specified in Section 3.1(d) relating to such a decision).

“Strategic Decision” means, with respect to the Litigation, any decision that involves the appeal of any aspect of the case (whether after a verdict or on a interlocutory basis), the addition of any claim or party, changing legal counsel or the basis for payment of attorney’s fees, any admission of liability with respect to any claim against the Company in the Litigation, or any other proposed decision or determination that in the opinion of outside counsel representing the Parent, the Company and the Company Subsidiaries in the Litigation would represent a material change or development in strategy with respect to the Litigation and result in a substantial likelihood that the recovery or receipt by the Company and Company Subsidiaries of any amount of Litigation Proceeds (whether pursuant to a court order at trial or upon appeal or pursuant to the terms of any settlement agreement) will be delayed; provided, however, a Strategic Decision shall not include any action that constitutes (in whole or in part) a Settlement Decision.

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“Subsidiary” when used with respect to any Person means any corporation or other organization, whether incorporated or unincorporated, of which such Person directly or indirectly owns or controls at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization, or any organization of which such Person is a general partner.

“Transfer” has the meaning specified in Section 4.4.

“Transferee” has the meaning specified in Section 4.4.

“Transferring Member” has the meaning specified in Section 4.4.

Section 1.2Notices.  Any request, demand, authorization, direction, notice, consent, or other document provided or permitted by this Agreement to be made upon, given or furnished to, or filed with:

(a)The Company shall be sufficient for every purpose hereunder if in writing and delivered personally, telecopied or mailed first-class postage prepaid or sent by a nationally recognized overnight courier to the Company addressed to the attention of the General Counsel or Chief Financial Officer at One Salem Lake Drive, Long Grove, IL 60047, fax: (847) 438-0211, phone: (847) 438-9500 or at any other address previously furnished in writing to the other parties hereto, with a copy to Brian Duwe, Esq., Skadden, Arps, Slate, Meagher & Flom LLP, 333 W. Wacker Drive, Suite 2100, Chicago, IL 60606.

(b)CHS Inc. shall be sufficient for every purpose hereunder if in writing and delivered personally, telecopied or mailed first-class postage prepaid or sent by a nationally recognized overnight courier to it addressed to 5500 Cenex Drive, Inver Grove Heights, Minnesota 55077-1733 or any other address previously furnished in writing to the parties hereto.

(c)La Coop fédérée shall be sufficient for every purpose hereunder if in writing and delivered personally, telecopied or mailed first-class postage prepaid or sent by a nationally recognized overnight courier to it addressed to 9001 Boulevard de l’Acadie, Bureau 200, Montreal, Quebec, H4N 3H7 CANADA or any other address previously furnished in writing to the parties hereto.

(d)GROWMARK, Inc. shall be sufficient for every purpose hereunder if in writing and delivered personally, telecopied or mailed first-class postage prepaid or sent by a nationally recognized overnight courier to it addressed to 1701 Towanda Avenue, Bloomington, Illinois 61701-9972 or any other address previously furnished in writing to the parties hereto.

(e)Intermountain Farmers Association shall be sufficient for every purpose hereunder if in writing and delivered personally, telecopied or mailed first-class postage prepaid or sent by a nationally recognized overnight courier to it addressed to 1147 West 2100 South, Salt Lake City, Utah 84119-0168 or any other address previously furnished in writing to the parties hereto.

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(f)Land O’Lakes, Inc. shall be sufficient for every purpose hereunder if in writing and delivered personally, telecopied or mailed first-class postage prepaid or sent by a nationally recognized overnight courier to it addressed to 4001 Lexington Avenue North, Arden Hills, Minnesota 55126-2998 or any other address previously furnished in writing to the parties hereto.

(g)MFA Incorporated shall be sufficient for every purpose hereunder if in writing and delivered personally, telecopied or mailed first-class postage prepaid or sent by a nationally recognized overnight courier to it addressed to 201 Ray Young Drive, Columbia, Missouri 65201-3599 or any other address previously furnished in writing to the parties hereto.

(h)Southern States Cooperative, Incorporated shall be sufficient for every purpose hereunder if in writing and delivered personally, telecopied or mailed first-class postage prepaid or sent by a nationally recognized overnight courier to it addressed to 6606 West Broad Street, Richmond, Virginia 23230-1717 or any other address previously furnished in writing to the parties hereto.

(i)Tennessee Farmers Cooperative shall be sufficient for every purpose hereunder if in writing and delivered personally, telecopied or mailed first-class postage prepaid or sent by a nationally recognized overnight courier to it addressed to 180 Old Nashville Hwy, LaVergne, Tennessee 37086-1983 or any other address previously furnished in writing to the parties hereto.

Section 1.3Effect of Headings.  The Article and Section headings herein are for convenience only and shall not affect the construction hereof.

Section 1.4Successors and Assigns.  All covenants and agreements in this Agreement by the Company shall bind its successors and assigns, whether so expressed or not.

Section 1.5Benefits of Agreement.  Subject to Section 5.6, nothing in this Agreement, express or implied, shall give to any Person (other than the parties hereto) any benefit or any legal or equitable right, remedy or claim under this Agreement or under any covenant or provision herein contained, all such covenants and provisions being for the sole benefit of the parties hereto.

Section 1.6Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the state of Delaware applicable to contracts executed and performed wholly within such state without giving effect to the choice of law principles of such state.

Section 1.7Legal Holidays.  In the event that an NOL Payment Date shall not be a Business Day, then (notwithstanding any provision of this Agreement to the contrary) any payment required to be made in respect of the use of Member-Sourced NOLs pursuant to this Agreement on such date need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if made on the applicable NOL Payment Date.

Section 1.8Severability Clause.  In case any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any

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respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement, but this Agreement shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein.  Upon such determination that any term or other provision is invalid, illegal or unenforceable, the court or other tribunal making such determination is authorized and instructed to modify this Agreement so as to effect the original intent of the parties as closely as possible so that the transactions and agreements contemplated herein are consummated as originally contemplated to the fullest extent possible.

Section 1.9Counterparts.  This Agreement may be signed in any number of counterparts, each of which shall be deemed to constitute but one and the same instrument.

Section 1.10Effectiveness.  This Agreement shall be effective from and after the consummation of the Merger.  This Agreement shall be deemed terminated and of no force or effect, and the parties hereto shall have no liability hereunder, if the IPO is terminated prior to the Effective Time.

Section 1.11Entire Agreement.  This Agreement, the Merger Agreement and the agreements referenced herein and therein represent the entire understanding of the parties hereto with reference to the matters contemplated hereby and such documents supersede any and all prior oral or written agreements regarding such matters.

ARTICLE II

NOL RIGHTS

Section 2.1Payment Procedures.

(a)As promptly as practicable but in no event later than 45 days after the Company or any Consolidated Group or any of their Affiliates realize any actual cash tax saving as a result of the utilization of any Member-Sourced NOL carryforward in any tax year (or portion thereof) beginning after the Merger, the Parent shall deliver to the Members a certificate (the “NOL Certificate”) setting forth, in each case, in reasonable detail (i) the amount of any Member-Sourced NOL carried forward by the Company and used by the Company or any Consolidated Group, if any, (ii) a detailed description of tax savings enjoyed by the Company or a Consolidated Group, if any, as a result of utilization of Member-Sourced NOL, (iii) an itemized list of the Expenses incurred to date, (iv) an itemized list of the Expenses as of the NOL Payment Date (and not previously included in the computation of the NOL Payment Amount) that the Company has incurred (whether directly or reimbursed), (v) the calculation of the NOL Payment Amount, if any, through the date of the NOL Certificate, (vi) any assumptions (as appropriate or requested) underlying the determination of any item used in making the necessary calculations for such calculations, and (vii) any financial or other documentation (if requested) reasonably necessary to sufficiently support such calculations.  For purposes of this Agreement, neither the Company nor any Consolidated Group shall be considered to have realized any actual cash tax savings from the utilization of a Member-Sourced NOL prior to (A) the earlier of (i) the receipt of the Ruling or (ii) a Determination that such Member-Sourced NOLs can be utilized to offset taxable income of the Company or a Consolidated Group in any tax year (or portion thereof) beginning after the Merger, and (B) with respect to any tax year for which a federal or state

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income tax return of the Company or Consolidated Group is due after the receipt of such Ruling or Determination, the earlier of (i) the due date (taking into account applicable extensions) for such return or (ii) the date such return is actually filed.

(b)Within 30 days of delivery of the NOL Certificate, each Member shall give written notice to the Company specifying whether such member agrees or objects (a “Notice of Agreement” and a “Notice of Objection”, respectively) to the NOL Certificate and the computation of the NOL Payment Amount.

(c)If each Member delivers a Notice of Agreement and any NOL Payment Amount is payable, the Company shall pay such amounts to the Members in accordance with Section 2.2(a).

(d)As promptly as practicable following delivery of a Notice of Objection, the applicable Member shall deliver to the Parent and each other Member a certificate (an “Objection Certificate”) setting forth in reasonable detail each of the objections to the calculations, valuations, methodologies, lists, computations, assumptions and other information (collectively, the “Valuations”) that the Member has to the applicable NOL Certificate.  If a Majority does not agree with the Objection Certificate (or any objections within such Objection Certificate), then the NOL Payment Amount shall be as set forth in the NOL Certificate and the Parent shall pay such amounts in accordance with Section 2.2(a).  If within ten days of the delivery of the Objection Certificate, a Majority agrees, in whole or in part, with the Objection Certificate, the Parent and the Members shall attempt in good faith to resolve all disagreements regarding the Valuations.  If, after 20 days, Parent and the Members are unable to resolve any such disagreement, Parent and the Members shall subject the remaining areas of disagreement regarding the NOL Certificate that are in dispute to Ernst & Young or any other mutually agreed upon independent public accounting firm of national standing that shall have expertise in the valuation of assets and properties (the “Firm”).  The Firm shall be instructed to determine whether the Valuations set forth in the NOL Certificate that are in dispute are correct in all material respects.  If the Firm determines that such Valuations are correct, the NOL Payment Amount shall be as set forth in the NOL Certificate, and each Member shall be deemed to have delivered a Notice of Agreement with respect to such NOL Certificate and the Company shall pay such amounts in accordance with Section 2.2(a).  If the Firm determines that any of the Valuations set forth in the NOL Certificate are incorrect in any respect (whether or not material), the Firm’s resulting calculation of the NOL Payment Amount shall be binding on all parties hereto (the “Resolution”) and the Parent, upon notice of such Resolution, shall pay such amounts in accordance with Section 2.2(a).  All costs and expenses billed by the Firm in connection with the performance of its duties described herein (“Firm Expenses”) shall be paid by the Members that agreed with the Objection Certificate giving rise to such costs, in proportion to such Members’ respective ownership of shares of preferred stock of the Company immediately prior to the Merger:

(e)If a Member does not deliver a Notice of Agreement or a Notice of Objection to an NOL Certificate within the 30-day period described above, the Member shall be deemed to have delivered a Notice of Agreement with respect to such NOL Certificate.

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(f)Notwithstanding the foregoing, the provisions of this Section 2.1 (other than Section 2.1(f) and the definition of NOL Certificate) shall not apply to any NOL Certificate received as a result of a Settlement Decision.

Section 2.2Payments to Members.

(a)If any NOL Payment Amount is determined to be payable in accordance with Section 2.1 or Section 3.1(e), the Parent shall pay such amount to the Members in proportion to the number of shares of preferred stock of the Company owned by such Members immediately prior to the Merger (as set forth on Schedule A hereto, as may be amended pursuant to Section 3.7 from time to time) within five (5) Business Days after such determination is final, accompanied by an Officer’s Certificate stating that the amount paid is the NOL Payment Amount as determined in accordance with Section 2.1 or Section 3.1(e), as the case may be.

(b)In the event that the Company or any Consolidated Group has utilized the Member-Sourced NOLs in more than one taxable year, then the NOL Payment Amount with respect to any such resulting tax savings shall be paid with respect to each such actual use and the procedures described in Section 2.1 and Section 3.1(e) shall apply to each such actual use of Member-Sourced NOLs.

(c)The determination by the Company of any NOL Payment Amount pursuant to the procedures set forth in Section 2.1, absent a mathematical error, shall be final and binding on the Company and the Members.

(d)Except in the specific cases specified in this Agreement, no interest shall accrue on any amounts payable to the Members.

Section 2.3Member-Sourced NOL.

Within 45 days after filing the federal and state income tax return of the Company for the tax year ending on the Merger date (and any amended federal income tax return for such year), the Company shall deliver to each Member a notice of the amount of Member-Sourced NOL carryforwards reported on such return.  The Company’s determination of such amount shall be final and binding upon the Parent, the Company and the Members in the absence of manifest error and except to the extent that the amount of Member-Sourced NOL is adjusted through any amended return, tax audit, tax litigation or similar proceeding.

Section 2.4Repayment of Amounts.  Notwithstanding any other provision of this Agreement, in the event that, after any amount is paid to the Members in respect of tax savings as a result of the utilization of Member-Sourced NOL pursuant to this Agreement, the Company reasonably determines that any such payment was erroneous or exceeded the amount of tax savings actually realized from the utilization of Member-Sourced NOL (such as, for example, as a result of an audit or other tax proceeding pursuant to which it is determined that the Member-Sourced NOLs were smaller than believed or were subject to limitations on use that were not taken into account when such payments were made) (“Excess Payments”), each Member that received an Excess Payment shall repay to the Company the amount of such Excess Payment, together with interest on such Excess Payment at the underpayment rate applicable to the Company under Section 6601 of the Code for the period during which the Member held such

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Excess Payment.  Any such repayment shall be made within 30 days after the Company delivers to the affected Members a notice setting forth in reasonable detail the calculation of the amount of the Excess Payment (and interest thereon).  Alternatively, in the Company’s sole and absolute discretion, the Company shall have the right to offset any Excess Payments owed by a Member to the Company against any amounts owed by the Company, the Parent or any of their Subsidiaries to such Member.  The purpose of this Section 2.4 is to ensure that payments to the Members by the Company pursuant to this Agreement shall be made only in respect of tax savings that are actually realized by the Company through utilizing Member-Sourced NOL after the Merger, and this Section 2.4 shall be interpreted consistent with such purpose.

ARTICLE III

MEMBERS

Section 3.1Certain Duties and Responsibilities.

(a)The Members undertake to perform such duties and only such duties as are specifically set forth in this Agreement.

(b)The Members shall bear, in proportion to the number of shares of preferred stock of the Company owned by such Members immediately prior to the Merger as set forth on Schedule A (as may be amended from time to time pursuant to Section 3.7), all of the costs incurred after the Merger in connection with or associated with the Litigation, including, but not limited to, the Expenses. To the extent possible, all Expenses shall be incurred and paid directly by the Members (or the Responsible Member on behalf of the Members). To the extent that Expenses are incurred by the Parent, the Company or any of their respective Subsidiaries, (including, without limitation, Expenses constituting reimbursement for the time of any employee of the Parent, the Company or any of their respective Subsidiaries) the Parent or the Company shall be reimbursed promptly for such Expenses by the Members. The Parent or the Company shall bill each Member for its share of Expenses to be reimbursed by such Member pursuant to the previous sentence whenever the Parent or the Company determines that the aggregate amount of unbilled unreimbursed Expenses due from all Members exceeds $50,000, but in no event less than annually (it being understood that a failure to timely bill a Member for any unreimbursed Expense shall not in any way prejudice the Parent’s or the Company’s right to be reimbursed for such Expense).

(c)The Members shall have the sole power and duty to direct and supervise all matters involving the Litigation (including trial strategy and planning and settlement strategy) on behalf of the Company and any Consolidated Group; provided that all decisions and determinations with respect to the Litigation (including, without limitation, any Settlement Decision or Strategic Decision) shall be made in accordance with this Section 3.1(c).  The Members shall elect by Majority vote a Member (the “Responsible Member”), who shall have primary responsibility for the day-to-day direction and supervision of the Litigation and may, without the approval of any of the Parent, the Company, the Company Subsidiaries, any of their respective Affiliates, or any of the other Members, make decisions and determinations in accordance with Section 3.1(d) hereof with respect to the day-to-day conduct of the Litigation and such decisions shall be deemed to made on behalf of all of the Members.  Notwithstanding

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the foregoing, the approval of a Majority shall be required for any Strategic Decision or any Settlement Decision.

(d)In making any decision or determination with respect to the Litigation (including, without limitation, any Settlement Decision or Strategic Decision) the Responsible Member shall act in good faith with a view to maximizing the present value of the Litigation to the Members.  Without limiting the generality of the foregoing, in connection with any Settlement Decision, the Responsible Member shall consider:

(i)the aggregate amount of Member-Sourced NOLs to be carried forward;

(ii)the benefit to the Company and any Consolidated Group of any actual tax savings as a result of such Member-Sourced NOLs carryforward;

(iii)the discounted present value of any prospective tax-savings.

The discount rate applicable to the value of such prospective tax saving shall be determined by the applicable Majority and shall give due regard to the financial and other costs to the Company and the Company Subsidiaries of other resolution of the Litigation.

(e)In connection with the approval of any Settlement Decision, the Parent and a Majority shall jointly determine the amount, or a methodology for determining the amount, of any Member-Sourced NOLs resulting from the settlement and the resulting tax saving.  As promptly as practicable (but in no event later than 30 days after the settlement), the Parent shall deliver to the Members an NOL Certificate setting forth the matters described in Section 2.1(a) to date.  Upon receipt of any actual tax savings resulting from the Member-Sourced NOL carryover, the Parent shall compute the NOL Payment Amount in a manner consistent with the NOL Certificate and shall pay the NOL Payment Amount to the Members in accordance with Section 2.2(a) (accompanied by the Officer Certificate’s setting forth the NOL Payment Amount). The Parent’s management will make a good faith effort to comply with the Responsible Member’s request to allow employees of the Parent to participate in the Litigation activities.

(f)The Responsible Member shall confer in person or by telephone as frequently as necessary to keep all Members informed about material developments in the Litigation, on at least three days’ prior notice.  Such briefings by the Responsible Member shall include a description of the progress of the Litigation and summarize any material decisions or determinations that were made without seeking the approval of the other Members.

(g)The Responsible Member shall establish procedures for making decisions in an expedited manner in the case of exigent or emergency circumstances arising in connection with the Litigation.

(h)The Responsible Member shall be deemed to be the agent of the Parent and the Company for all purposes relating to evidentiary privileges, including attorney-client privileges.

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Section 3.2Certain Rights of the Responsible Member; Actions of the Responsible Member.  The Responsible Member undertakes to perform such duties and only such duties as are specifically set forth in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Responsible Member.  In addition:

(a)the Responsible Member may rely upon and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;

(b)whenever the Responsible Member shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Responsible Member may, in the absence of bad faith or willful misconduct on its part, rely upon an Officer’s Certificate;

(c)the Responsible Member may engage and consult with counsel of its selection and the written advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by them hereunder in good faith and in reliance thereon;

(d)the Responsible Member may engage and consult with accounting firms, tax experts, valuation firms and other experts and third parties that it, in its sole and absolute discretion, deem appropriate or necessary to enable them to discharge their duties hereunder; and

(e)the Responsible Member may request employees of the Parent, the Company, the Company Subsidiaries, and their Affiliates to respond to discovery requests, attend and prepare for depositions, prepare for and testify at trial, or take any other action that the Responsible Members believes is necessary or prudent in prosecuting the Litigation.

Except as otherwise expressly provided in this Agreement, all decisions of the Members shall be taken by Majority vote of the Members; provided, however, that the right to engage parties (including employees of the Parent, the Company, the Company Subsidiaries, or their Affiliates) to perform services with respect to the day-to-day conduct of the Litigation shall be made by the Responsible Member.

Section 3.3Reimbursement and Indemnification of the Responsible Member.

(a)The Members agree:

(i)except as otherwise expressly provided herein, to pay to or on behalf of the Responsible Member, upon the request of the Responsible Member, all reasonable expenses and disbursements incurred or to be incurred by the Responsible Member in connection with the discharge of their duties under this Agreement (including, without limitation, the reasonable compensation and the expenses and disbursements of their counsel, tax experts, valuation firms and other experts and third parties as contemplated in Section 3.2); and

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(ii)to indemnify the Responsible Member and hold him or her harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, reasonable expenses and reasonable disbursements of any kind or nature whatsoever (including, without limitation, the reasonable compensation and the expenses and disbursements of their counsel, tax experts, valuation firms and other experts and third parties as contemplated in Section 3.2) that may be imposed on, asserted against or incurred by them under this Agreement, and the Responsible Member shall be so indemnified under this Agreement for his own ordinary or gross negligence, but the Responsible Member does not have the right to be indemnified under this Agreement for their own willful misconduct or bad faith.

(b)All reimbursements and indemnification payments made by the Members to the Responsible Member pursuant to this Section 3.3 shall be made by the Members in proportion to the number of shares of preferred stock of the Company owned by such Members immediately prior to the Merger, as set forth on Schedule A (as may be amended from time to time pursuant to Section 3.7).

Section 3.4Resignation and Removal; Appointment of Successor.

(a)The Responsible Member may resign at any time by giving written notice thereof to the Parent and other Members.

(b)A Majority may remove the Responsible Member at any time by giving written notice thereof to the Parent and the Responsible Member.

(c)If the Responsible Member shall resign, be removed or become incapable of acting, his or her successor shall be appointed by a Majority of the remaining Members.

(d)The Parent shall give notice of each resignation and each removal of the Responsible Member and each appointment of a successor Responsible Member to the other Members.  Each notice shall include the name and address of the successor Responsible Member.  If the Parent fails to send such notice within ten days after acceptance of appointment by a successor Responsible Member, the successor Responsible Member shall cause the notice to be mailed at the expense of the Parent.

Section 3.5Acceptance of Appointment by Successor.  Every successor Responsible Member appointed hereunder shall execute, acknowledge and deliver to the Parent and to the retiring Responsible Member an instrument accepting such appointment and a counterpart of this Agreement, and thereupon such successor Responsible Member, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Responsible Member.

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Section 3.6Final Resolution.  On the Last NOL Payment Date, this Agreement shall terminate; provided, however, that the provisions of Section 3.3 shall survive the termination of the Agreement.

Section 3.7Opt Out

(a)A Member may opt out of the provisions of this Agreement (an “Opt Out”) upon written notice to the Company and each of other Members (an “Opt Out Notice”).  A Member’s Opt Out shall be effective on the date specified by the Member in the Opt Out Notice, which shall not be earlier than fifteen days after the delivery of the Opt Out Notice.  Once given, an Opt Out Notice may be revoked only with the consent of the Company and all of the Members that have not Opted Out of this Agreement.

(b)If a Member Opts Out of this Agreement, from and after the effective date of such Member’s Opt Out:  (i) such Member shall not be responsible for any Expenses or Firm Expenses incurred on or after the effective date of the Opt Out (but shall remain liable for its portion of any Expenses or Firm Expenses incurred prior to such effective date); (ii) such Member shall not be entitled to receive any payments pursuant to this Agreement in respect of any tax savings realized by the Company or any Consolidated Group as a result of the utilization of any Member-Sourced NOL in any taxable year that ends on or after the effective date of such Member’s Opt Out Notice (and shall be entitled to receive any payments pursuant to this Agreement in respect of any actual cash tax savings realized by the Company or any Consolidated Group as a result of the utilization of any Member-Sourced NOL in any taxable year that ends prior to the effective date of such Member’s Opt Out Notice);  and (iii) Schedule A shall be amended, as of the effective date of each Opt Out Notice, to remove the Member that has Opted Out, such that (A) any Expenses and Firm Expenses incurred on or after the effective date of such Opt Out Notice shall be borne by the Members that did not Opt Out in proportion to the number of shares of preferred stock of the Company owned by such Members immediately prior to the Merger, treating any shares of preferred stock owned immediately before the Merger by a Member that has Opted Out as not being outstanding immediately prior to the Merger for this purpose and (B) any payments pursuant to this Agreement in respect of any cash tax savings actually realized by the Company or any Consolidated Group as a result of the utilization of any Member-Sourced NOL in any taxable year that ends on or after the effective date of each Opt Out Notice shall be paid to the Members that did not Opt Out in proportion to the number of shares of preferred stock of the Company owned by such Members immediately prior to the Merger.  Nothing in this Section 3.7 shall relieve any Member that Opts Out of this Agreement of any of its obligations under Section 2.4  to repay to the Company any Excess Payments it may have received, without regard to whether the determination that an Excess Payment was made to such Member occurs before or after such Member has Opted Out of this Agreement.

(c)For the avoidance of doubt, in the event that all of the Members Opt Out of this Agreement, from and after the effective date of the Opt Out Notice of the last Member to Opt Out, (i) the Company shall control and make all decisions regarding the prosecution of the Litigation (including, without limitation, whether to abandon the Litigation) in its sole and absolute discretion, (ii) the Company shall bear all Expenses incurred after the effective date of such last Opt Out if the Company chooses to pursue the Litigation, and (iii) the Company shall be entitled to retain any tax savings realized by the Company or any Consolidated Group as a

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result of the utilization of any Member-Sourced NOL in any taxable period ending after the effective date of the Opt Out Notice of the last Member to Opt Out.

ARTICLE IV

COVENANTS

Section 4.1Prosecution of Litigation by the Company; Settlement; Periodic Reports; Expenses.

(a)In each case as directed by the Members pursuant to Section 3.1(c) hereof, the Company shall cause to prosecute in good faith the Litigation and/or seek a settlement of the Litigation.

(b)None of the Parent, the Company, any Company Subsidiary, or their Affiliates shall make any Settlement Decision without obtaining prior approval from the applicable Majority as determined in accordance with the last sentence of Section 3.1(c).

(c)Until the Litigation has been settled or is final and not subject to further judicial review (by appeal or otherwise), each of the Parent, the Company, the Company Subsidiaries, their Affiliates and the Members shall cooperate in order to ensure that (i) all of the Members receive, by the last Business Day of each fiscal quarter of the Company, a report describing the status of the Litigation, which report shall describe, in summary fashion, the total Expenses incurred through the date of such report, the status of all pending IRS or court proceedings related to the Litigation, and the status of any settlement negotiations among the Parent, the Company, the Company Subsidiaries and their Affiliates and the defendants with respect to the Litigation and (ii) except as otherwise required by applicable law or court order, all of the Members are granted access to any and all records, documents, personnel and any other sources of information that are in the possession, custody or control of the Parent, the Company and their Affiliates as the Members shall determine are reasonably necessary or desirable in order to review Settlement Decisions and Strategic Decisions, if any.  The Parent, the Company, the Company Subsidiaries, and their Affiliates shall cooperate with the Members in providing the assistance of any of their officers and employees and, to the extent that the Parent or the Company, as the case may be, believes in its reasonable determination that it is required to have its employees expend efforts in prosecuting the Litigation, the Parent or the Company shall be entitled to be reimbursed for any reasonable amount of hours expended in such effort.

(d)None of the Parent, the Company, or the Company Subsidiaries shall initiate settlement negotiations or expand settlement negotiations with respect to any aspect or portion of the Litigation without the prior permission of a Majority as set forth in the last sentence of Section 3.1(c) and the Parent and the Company agree that such powers shall vest with the Members as provided in Section 3.1(c).  No Member shall initiate settlement negotiations without first informing each other Member of such settlement negotiations and obtaining consent to pursue such negotiations from a Majority of Members as determined in the last sentence of Section 3.1(c).  If one or more Members are allowed to entertain or initiate settlement negotiations, such Members shall keep each other Member reasonably informed

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regarding the status of such negotiations (including any expansion of such negotiations) and any Members shall, if such Members request, be allowed to participate in the settlement negotiations.

Section 4.2Payment of NOL Payment Amount and Operations of the Company.  The Parent or the Company shall duly and promptly pay all amounts due in accordance with the terms of this Agreement; provided, however, that none of the Parent, the Company or any Company Subsidiary shall be obligated to arrange its affairs in such a manner as to increase the likelihood that the Member-Sourced NOLs will be utilized by the Company or any Consolidated Group after the Merger (other than in pursuing the Ruling and any other Litigation in good faith, as contemplated herein).

Section 4.3Federal Income Tax Treatment.  The Parent or the Company shall not (and shall cause each of their Affiliates not to) treat any NOL Payment Amount as payments of interest or compensation (except as required under the Code and regulations promulgated thereunder) and the Parent and the Company shall not (and shall not allow any of their Affiliates to) take any position inconsistent with such treatment (unless required by a determination that is final after the Parent, the Company or their Affiliates have defended such matter in good faith).

Section 4.4Transferability.  No Member shall sell, exchange, transfer or otherwise dispose of any part of its interest in this Agreement (a “Transfer”) to any other person (a “Transferee”) unless: a) such Member (the “Transferring Member”) provides the Company and each other Member with at least 15 days written notice of any proposed Transfer (which notice shall include a description of the material terms of the proposed Transfer and shall identify the proposed Transferee); b) such proposed Transfer and Transferee are approved by a vote of a Majority; c) the proposed Transfer includes a Transfer of the entire interest of the Transferring Member in this Agreement, and d) the Transferee delivers a certificate to the Company and the other Members acknowledging and agreeing to be bound by the terms of this Agreement.  Solely for purposes of this Section 4.4, whether a vote constitutes a Majority shall be determined as if the shares of preferred stock of the Company held by the Transferring Member were not outstanding immediately prior to the Merger.  Any attempted Transfer by a Member of any interest in this Agreement that does not comply with the provisions of this Section 4.4 shall be void and shall be given no effect.  From and after the completion of a Transfer that does comply with the provisions of this Section 4.4, the Transferee shall become a substitute Member and the Transferring Member shall no longer be treated as a Member for purposes of this Agreement; provided, however,  that the Transfer of an interest in this Agreement in accordance with this Section 4.4 shall not relieve the Transferring Member of any of its obligations under this Agreement (including, without limitation, its obligation to pay its share of the Expenses and Firm Expenses) that accrued prior to the effectiveness of such Transfer to the extent that such obligations are not fulfilled by the Transferee.

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ARTICLE V

AMENDMENTS

Section 5.1Amendments.

(a)This Agreement may not be amended except by an instrument in writing signed by the Parent, the Company and the Majority.

Section 5.2Execution of Amendments.  In executing any amendment permitted by this Article, the Members shall be entitled to receive, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such amendment is authorized or permitted by this Agreement.  The Members may, but are not obligated to, enter into any such amendment that affects the Members’ own rights, privileges, covenants or duties under this Agreement or otherwise.

Section 5.3Effect of Amendments.  Upon the execution of any amendment under this Article, this Agreement shall be modified in accordance therewith, such amendment shall form a part of this Agreement for all purposes and every Person hereto shall be bound thereby.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers to be effective as of the day and year first above written.

CF INDUSTRIES HOLDINGS, INC.
By:	/s/ Stephen R. Wilson
Name: Stephen R. Wilson
Title:  President and Chief Executive Officer
CF INDUSTRIES, INC.
By:	/s/ Stephen R. Wilson
Name: Stephen R. Wilson
Title:  President and Chief Executive Officer
MEMBERS
CHS, INC.
By:	/s/ John D. Johnson
Name: John D. Johnson
Title:  President and Chief Executive Officer
LA COOP FÉDÉRÉE
By:	/s/ Ernest Desrosiers
Name: Ernest Desrosiers
Title:
GROWMARK, INC.
By:	/s/ William Davission
Name: William Davisson
Title: CEO

INTERMOUNTAIN FARMERS ASSOCIATION
By:	/s/ Spencer P. Lloyd
Name: Spencer P. Lloyd
Title: Senior VP and CFO
LAND O’LAKES, INC.
By:	/s/ John E. Gherty
Name: John E. Gherty
Title: President and Chief Executive Officer
MFA INCORPORATED
By:	/s/ Don Copenhaver
Name: Don Copenhaver
Title: President and CEO
SOUTHERN STATES COOPERATIVE, INCORPORATED
By:	/s/ Thomas R. Scribner
Name: Thomas R. Scribner
Title: President and Chief Executive Officer
TENNESSEE FARMERS COOPERATIVE
By:	/s/ Vernon L. Glover
Name: Vernon L. Glover
Title: CEO

Schedule A

Ownership of Preferred Stock of CF Industries Prior

to the Merger

	Preferred Shares
Land O’Lakes	2,792,791
Southern States Cooperative	409,820
MFA	349,784
Tennessee Farmers Cooperative	303,415
La Coop fédéree	133,029
Intermountain Farmers Association	17,817
CHS	1,529,945
Growmark	1,806,417
Total	7,343,018

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen R. Wilson, certify that:

1.I have reviewed this quarterly report on Form 10-Q of CF Industries Holdings, Inc;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2005

by:    /s/  STEPHEN R. WILSON

  Stephen R. Wilson

  President and Chief Executive Officer, Chairman of the Board

  (Principal Executive Officer)

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EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302
OF THE SARBANES-OXLEY ACT OF 2002

I, Ernest Thomas, certify that:

1.I have reviewed this quarterly report on Form 10-Q of CF Industries Holdings, Inc;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 9, 2005

by:   /s/  ERNEST THOMAS

 Ernest Thomas

 Senior Vice President and Chief Financial Officer

(Principal Financial Officer)

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EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of CF Industries Holdings, Inc (the Company) for the quarterly period ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Stephen R. Wilson, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

by:   /s/  STEPHEN R. WILSON

 Stephen R. Wilson

 President and Chief Executive Officer, Chairman of
 the Board

 (Principal Executive Officer)

 November 9, 2005

51

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of CF Industries Holdings, Inc (the Company) for the quarterly period ended September 30, 2005 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Ernest Thomas, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)   The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

by:  /s/  ERNEST THOMAS

 Ernest Thomas

 Senior Vice President and Chief
 Financial Officer

 (Principal Financial Officer)

 November 9, 2005

52