10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended June 30, 2007

OR

oTRANSITION 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	(I.R.S. Employer
incorporation or organization)	Identification No.)
4 Parkway North, Suite 400
Deerfield, Illinois	60015
(Address of principal executive offices)	(Zip Code)

(847) 405-2400

(Registrant’s telephone number, including area code)

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

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

Large accelerated filer x Accelerated filer o Non-accelerated filer o

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

55,674,891 million shares of the registrant’s common stock, $0.01 par value per share, were outstanding at June 30, 2007.

CF INDUSTRIES HOLDINGS, INC.
TABLE OF CONTENTS

PART I.	Financial Information
	Item 1.	Financial Statements
		Consolidated Statements of Operations	1
		Consolidated Statements of Comprehensive Income	2
		Consolidated Balance Sheets	3
		Consolidated Statements of Cash Flows	4
		Notes to Unaudited Consolidated Financial Statements	5
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
	Item 4.	Controls and Procedures	36
PART II.	Other Information
	Item 4.	Submission of Matters to a Vote of Security Holders	37
	Item 6.	Exhibits	37

CF INDUSTRIES HOLDINGS, INC.

PART I—FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	Three months ended				Six months ended
	June 30,				June 30,
	2007		2006		2007		2006
	(in millions, except per share amounts)
Net sales	$ 848.9		$ 688.7		$ 1,321.3		$ 1,107.9
Cost of sales	671.3		587.5		1,038.6		1,029.4
Gross margin	177.6		101.2		282.7		78.5
Selling, general and administrative	17.5		14.3		31.2		27.3
Other operating—net	0.7		1.6		2.0		3.1
Operating earnings	159.4		85.3		249.5		48.1
Interest expense	0.3		1.5		0.8		2.0
Interest income	(5.0	)	(2.8	)	(8.9	)	(5.5	)
Minority interest	19.6		16.4		26.6		22.3
Other non-operating—net	(0.4	)	(0.1	)	(0.9	)	(0.2	)
Earnings before income taxes	144.9		70.3		231.9		29.5
Income tax provision	51.3		27.7		81.1		11.5
Net earnings	$ 93.6		$ 42.6		$  150.8		$    18.0
Net earnings per share
Basic	$ 1.69		$ 0.77		$    2.73		$    0.33
Diluted	$ 1.65		$ 0.77		$    2.67		$    0.33
Weighted average common shares outstanding
Basic	55.4		55.0		55.3		55.0
Diluted	56.6		55.0		56.4		55.0
Dividends declared per common share	$ 0.02		$ 0.02		$    0.04		$    0.04

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three months ended June 30,							Six months ended June 30,
	2007			2006				2007		2006
	(in millions)
Net earnings		$	93.6		$	42.6		$	150.8	$	18.0
Other comprehensive income (loss):
Foreign currency translation adjustment—no tax effect		1.8			1.1			2.0		1.0
Defined benefit plans—net of taxes		0.2			—			0.6		—
Unrealized gain (loss) on securities—net of taxes		0.2			(0.1		)	0.1		0.1
Unrealized loss on derivatives—net of taxes		—			(1.3		)	—		(3.4		)
		2.2			(0.3		)	2.7		(2.3		)
Comprehensive income		$	95.8		$	42.3		$	153.5	$	15.7

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.
CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	June 30,				December 31,
	2007				2006
	(in millions, except share and per share amounts)
Assets
Current assets:
Cash and cash equivalents		$	59.6			$	25.4
Short-term investments		506.0				300.2
Accounts receivable		158.0				113.9
Inventories		180.1				176.1
Assets held for sale		6.0				—
Other		13.6				17.5
Total current assets		923.3				633.1
Property, plant and equipment—net		596.0				597.0
Deferred income taxes		—				1.7
Goodwill		0.9				0.9
Asset retirement obligation escrow account		21.4				11.5
Other assets		46.3				46.2
Total assets		$	1,587.9			$	1,290.4
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses		$	182.0			$	172.3
Income taxes payable		37.6				1.9
Customer advances		167.7				102.7
Deferred income taxes		4.8				9.8
Distributions payable to minority interest		—				27.8
Other		37.3				38.9
Total current liabilities		429.4				353.4
Notes payable		4.6				4.2
Deferred income taxes		17.6				—
Other noncurrent liabilities		159.2				152.2
Contingencies (Note 15)
Minority interest		43.3				13.6
Stockholders’ equity:
Preferred stock—$0.01 par value, 50,000,000 shares authorized		—				—
Common stock—$0.01 par value, 500,000,000 shares authorized, 2007—55,674,891 and 2006—55,172,101 shares issued and outstanding		0.6				0.6
Paid-in capital		766.7				751.2
Retained earnings		197.2				48.6
Accumulated other comprehensive loss		(30.7		)		(33.4		)
Total stockholders’ equity		933.8				767.0
Total liabilities and stockholders’ equity		$	1,587.9			$	1,290.4

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Six months ended
	June 30,
	2007			2006
	(in millions)
Operating Activities:
Net earnings	$	150.8		$	18.0
Adjustments to reconcile net earnings to net cash provided by operating activities:
Minority interest	26.6			22.3
Depreciation, depletion and amortization	40.5			47.4
Deferred income taxes	12.3			4.6
Stock compensation expense	4.1			3.6
Excess tax benefit from stock-based compensation	(3.4		)	—
Unrealized (gain) loss on derivatives	(2.2		)	8.3
Changes in:
Accounts receivable	(36.9		)	(28.9		)
Margin deposits	4.7			9.7
Inventories	(2.9		)	50.7
Accounts payable, accrued expenses, and income taxes	39.9			(22.8		)
Product exchanges—net	0.8			11.7
Customer advances—net	65.0			(61.5		)
Other—net	2.9			(0.2		)
Net cash provided by operating activities	302.2			62.9
Investing Activities:
Additions to property, plant and equipment—net	(39.4		)	(23.2		)
Purchases of short-term investments	(480.6		)	(323.9		)
Sales and maturities of short-term investments	274.7			299.9
Deposit to asset retirement obligation escrow account	(9.4		)	(11.1		)
Other—net	1.2			—
Net cash used in investing activities	(253.5		)	(58.3		)
Financing Activities:
Dividends paid on common stock	(2.2		)	(2.2		)
Distributions to minority interest	(30.0		)	(15.1		)
Issuances of common stock under employee stock plans	8.0			—
Excess tax benefit from stock-based compensation	3.4			—
Net cash used in financing activities	(20.8		)	(17.3		)
Effect of exchange rate changes on cash and cash equivalents	6.3			—
Increase (decrease) in cash and cash equivalents	34.2			(12.7		)
Cash and cash equivalents at beginning of period	25.4			37.4
Cash and cash equivalents at end of period	$	59.6		$	24.7

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.Background and Basis of Presentation

All references to “CF Holdings,” “the Company,” “we,” “us” and “our” refer to CF Industries Holdings, Inc. and its subsidiaries, including CF Industries, Inc. 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 customers are cooperatives and independent fertilizer distributors.

The accompanying unaudited interim consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the year ended December 31, 2006 and in accordance with accounting principles generally accepted in the United States for interim financial reporting. In the opinion of management, these statements reflect all adjustments, consisting only of normal and recurring adjustments that are necessary for the fair representation of the information for the periods presented. These statements should be read in conjunction with our audited consolidated financial statements and related disclosures in our Form 10-K filed with the United States Securities and Exchange Commission (SEC) on February 28, 2007. Operating results for any period presented apply to that period only and are not necessarily indicative of results for any future period.

2.Summary of Significant Accounting Policies

For a complete discussion of the Company’s significant accounting policies, refer to our 2006 Annual Report on Form 10-K as of and for the year-ended December 31, 2006, filed with the SEC on February 28, 2007.

In the first quarter of 2007, we adopted Financial Accounting Standards Board (FASB) Interpretation (FIN) No. 48—Accounting for Uncertainty in Income Taxes. See Note 7—Income Taxes for our accounting policy for interest and penalties related to unrecognized tax benefits.

3.New Accounting Standards

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

·FIN No. 48—Accounting for Uncertainty in Income Taxes.   This Interpretation clarifies the accounting for uncertainty in income taxes recognized in accordance with Statement of Financial Accounting Standards (SFAS or Statement) No. 109—Accounting for Income Taxes. The Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The adoption of FIN No. 48 in the first quarter of 2007 did not have a material impact on our consolidated financial statements.

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CF INDUSTRIES HOLDINGS, INC.

·FASB Staff Position (FSP) No. AUG AIR-1—Accounting for Planned Major Maintenance Activities.   This FSP prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial reporting periods. The adoption of this FSP in the first quarter of 2007 did not have a material impact on our consolidated financial statements.

·SFAS No. 157—Fair Value Measurements.   This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP), and expands disclosures about fair value measurements. It does not require any new fair value measurements; however, for some entities, the application of this Statement may change current practice. This Statement is effective for the Company beginning January 1, 2008. We have not yet determined the impact of this Statement on our consolidated financial statements.

·SFAS No. 159—The Fair Value Option for Financial Assets and Financial Liabilities.   This Statement permits entities to measure eligible financial instruments and certain other items at fair value and record unrealized gains and losses in earnings. It also establishes presentation and disclosure requirements for items reported at fair value in the financial statements. This Statement is effective for the Company beginning January 1, 2008. We have not yet determined the impact of this Statement on our consolidated financial statements.

·Emerging Issues Task Force (EITF) Issue No. 06-11—Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards.   This EITF Issue clarifies how a company should recognize the income tax benefit received on dividends that are paid to employees holding equity-classified nonvested shares, equity-classified nonvested share units, or equity-classified outstanding share options that are charged to retained earnings under SFAS No. 123R—Share-Based Payment. This EITF Issue is effective for income tax benefits that result from dividends on equity-classified share-based payment awards that are declared by the Company after December 31, 2007. We have not yet determined the impact of this EITF Issue on our consolidated financial statements.

·FSP No. FIN 39-1—Amendment of FASB Interpretation No. 39—Offsetting of Amounts Related to Certain Contracts.   This FSP amends FIN No. 39 to replace the terms “conditional contracts” and “exchange contracts” with the term “derivative instruments” as defined in SFAS No. 133—Accounting for Derivative Instruments and Hedging Activities. It also permits the offset of fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral against fair value amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement in accordance with FIN No. 39. If a policy of offsetting is elected, the fair value of the right to reclaim or return cash collateral must be offset against amounts recognized for derivative instruments. This FSP is effective for the Company beginning January 1, 2008. We have not yet determined the impact of this FSP on our consolidated financial statements.

·FSP No. 48-1—Definition of Settlement in FIN No. 48—Accounting for Uncertainty in Income Taxes.   This FSP provides guidance on how to determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. This FSP was effective for the Company upon the initial adoption of FIN No. 48 with retrospective application required to the date of initial adoption. The Company does not currently have any issues for which this FSP would apply. As a result, this FSP did not impact our consolidated financial statements.

6

CF INDUSTRIES HOLDINGS, INC.

4.Change in Estimate of Useful Lives of Depreciable Assets

We periodically review the depreciable lives assigned to our production facilities and related assets, as well as estimated production capacities used to develop our units-of-production (UOP) depreciation expense, and we change our estimates to reflect the results of those reviews. In the fourth quarter of 2006 we completed such a review and, as a result, we increased the depreciable lives of certain assets at our nitrogen production facilities from ten years to fifteen years. Separately, we revised the estimates of production capacities for certain UOP assets at our Donaldsonville, Louisiana nitrogen complex and all UOP assets at our Plant City, Florida phosphate complex. The effect of this change in estimate for the three months ended June 30, 2007 was an increase in earnings before income taxes of $2.9 million, an increase in net earnings of $1.9 million, and an increase in diluted earnings per share of $0.04. The effect of this change in estimate for the six months ended June 30, 2007 was an increase in earnings before income taxes of $4.9 million, an increase in net earnings of $3.2 million, and an increase in diluted earnings per share of $0.06.

5.Net Earnings Per Share

Net earnings per share were computed as follows:

	Three months ended						Six months ended
	June 30,						June 30,
	2007			2006			2007			2006
	(in millions, except per share amounts)
Net earnings available to common shareholders		$	93.6		$	42.6		$	150.8		$	18.0
Basic earnings per common share:
Weighted average common shares outstanding		55.4			55.0			55.3			55.0
Net earnings		$	1.69		$	0.77		$	2.73		$	0.33
Diluted earnings per common share:
Weighted average common shares outstanding		55.4			55.0			55.3			55.0
Dilutive common shares:
Stock options		1.1			—			1.0			—
Restricted stock		0.1			—			0.1			—
Diluted weighted average shares outstanding		56.6			55.0			56.4			55.0
Net earnings		$	1.65		$	0.77		$	2.67		$	0.33

For the three and six months ended June 30, 2006, the computation of diluted earnings per share excludes approximately 2.9 million and 2.8 million potentially dilutive stock options because the effect of their inclusion would be antidilutive.

6.Pension and Other Postretirement Benefits

CF Industries, Inc. and its Canadian subsidiary both maintain noncontributory, defined-benefit pension plans. The U.S. pension plan is a closed plan. We also provide group insurance to our retirees. Until age 65, retirees are eligible to continue to receive the same Company-subsidized medical coverage provided to active employees. When a retiree reaches age 65, medical coverage ceases.

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CF INDUSTRIES HOLDINGS, INC.

Net periodic benefit cost and other amounts recognized in accumulated other comprehensive loss included the following components:

	Pension Plans																Retiree Medical
	Three months ended								Six months ended								Three months ended							Six months ended
	June 30,								June 30,								June 30,							June 30,
	2007				2006				2007				2006				2007				2006			2007				2006
	(in millions)
Service cost for benefits earned during the period		$	1.7			$	1.8			$	3.4			$	3.5			$	0.3			$	0.3		$	0.6			$	0.6
Interest cost on projected benefit obligation		3.4				3.2				6.7				6.3				0.4				0.3			0.9				0.8
Expected return on plan assets		(3.6		)		(3.5		)		(7.1		)		(6.9		)		—				—			—				—
Amortization of transition obligation		—				—				—				—				0.1				0.1			0.2				0.2
Amortization of prior service cost		—				0.1				—				0.1				—				—			—				—
Amortization of actuarial loss		0.6				0.7				1.0				1.3				0.1				0.1			0.1				0.2
Net periodic benefit cost		2.1				$	2.3			4.0				$	4.3			0.9				$	0.8		1.8				$	1.8
Amortization of actuarial loss		(0.6		)						(1.0		)						(0.1		)					(0.1		)
Amortization of transition obligation		—								—								(0.1		)					(0.2		)
Total recognized in accumulated other comprehensive loss		(0.6		)						(1.0		)						(0.2		)					(0.3		)
Total recognized in net periodic benefit cost and accumulated other comprehensive loss		$	1.5							$	3.0							$	0.7						$	1.5

Our pension funding contributions in 2007 are estimated to total $11.7 million.

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 $0.4 million and $0.5 million, respectively, for the three months ended June 30, 2007 and 2006, and $0.7 million and $0.7 million, respectively, for the six months ended June 30, 2007 and 2006. Included in the amounts recognized as expense for the three and six months ended June 30, 2007, was $0.2 million and $0.3 million, respectively, of  amortization for amounts included in our accumulated other comprehensive loss.

7.Income Taxes

The income tax provisions recorded for the three and six months ended June 30, 2007 and 2006 were determined in accordance with the requirements of SFAS No. 109—Accounting for Income Taxes, APB Opinion No. 28—Interim Financial Reporting and FIN No. 18—Accounting for Income Taxes in Interim Periods.

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CF INDUSTRIES HOLDINGS, INC.

The Company has adopted FIN No. 48—Accounting for Uncertainty in Income Taxes as of January 1, 2007. The effect of adoption was not material. The Company files federal, provincial, state and local income tax returns in the United States and Canada. In general, the Company’s filed tax returns remain subject to examination by United States tax jurisdictions for years 2001 and thereafter and by Canadian tax jurisdictions for years 2002 and thereafter.

The Company’s accounting policy is to recognize accrued interest and penalties related to unrecognized tax benefits in interest expense and other non-operating-net, respectively.

8.   Inventories

Inventories consist of the following:

	June 30,			December 31,
	2007			2006
	(in millions)
Fertilizer		$	134.8		$	135.1
Spare parts, raw materials and supplies		45.3			41.0
		$	180.1		$	176.1

9.   Assets Held for Sale

In 2006, we committed to a plan to sell our corporate office facility located in Long Grove, Illinois and entered into a long-term lease for a new corporate office facility in Deerfield, Illinois. During the first quarter of 2007, we relocated our corporate headquarters to the Deerfield facility. As a result, we have classified our Long Grove facility as an asset held for sale based on the guidance of SFAS No. 144—Accounting for the Impairment or Disposal of Long-Lived Assets. The amount presented in our consolidated balance sheet as assets held for sale represents the net book value of the building and the related land. These assets are included within our Other segment in Note 16—Segment Disclosures.

10.   Asset Retirement Obligations

Asset retirement obligations (AROs) are legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development or normal operation of such assets. We account for AROs in accordance with SFAS No. 143—Accounting for Asset Retirement Obligations and FIN No. 47—Accounting for Conditional Asset Retirement Obligations (conditional AROs).

In the first quarters of 2007 and 2006, we made annual contributions of $9.4 million and $11.1 million, respectively, to an escrow account established for the benefit of the Florida Department of Environmental Protection in order to comply with Florida’s regulations governing financial assurance related to the closure of phosphogypsum stacks. Over the next nine years, we expect to contribute between $4 million and $7 million annually based upon the required funding formula as defined in the regulations and an assumed rate of return of 4% on invested funds. The amount of funds that will have accumulated in the account by the year 2016, including interest earned on invested funds, is currently estimated to be approximately $85 million. After 2016, contributions to the fund are estimated to average less than $1 million annually for the following 17 years. The balance in the account is estimated to be approximately $170 million by 2033. The required balance in the account is based on predetermined funding requirements as prescribed by the state of Florida. Therefore, contributions to the account will differ from amounts recognized as expense in our financial statements. Ultimately, the cash in the account will be used to complete settlement of the AROs. The balance in this account is reported as an asset at fair value on our consolidated balance sheet.

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CF INDUSTRIES HOLDINGS, INC.

Additionally, Florida regulations require mining companies to demonstrate financial assurance for wetland and other surface water mitigation measures in advance of any mining activities. We will be required to demonstrate financial assurance for wetland and other surface water mitigation measures in advance of any mining activities if and when we are able to expand our Hardee mining activities into areas not currently permitted.

11.   Credit Agreement

Our senior secured revolving credit facility (the credit facility) with JPMorgan Chase 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 June 30, 2007, there was $190.0 million of available credit, based on the borrowing base, and there were no loans or letters of credit outstanding under the credit facility.

The credit facility is guaranteed by CF Holdings and certain domestic subsidiaries of CF Industries, Inc. (the Loan Parties). The credit facility is secured by substantially all of the personal property and assets, both tangible and intangible, of the Loan Parties, 100% of the equity interests of each Loan Party’s direct and indirect domestic subsidiaries other than immaterial subsidiaries, 65% of the equity interests of each Loan Party’s first-tier foreign subsidiaries and the real property located in Donaldsonville, Louisiana.

12.   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 three years. The derivative instruments that we currently use are swaps. 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 use derivative instruments primarily to lock in a substantial portion of our margin on sales under the forward pricing program. We may also establish natural gas derivative positions that are associated with anticipated natural gas requirements unrelated to our forward pricing program.

We use natural gas derivatives, primarily as an economic hedge of gas price risk, but without the application of hedge accounting for financial reporting purposes. Accordingly, changes in the fair value of the derivatives are recorded in cost of sales as the changes occur. Cash flows related to natural gas derivatives are reported as operating activities.

Derivative gains (losses) recorded directly to cost of sales consist of the following:

	Three months ended								Six months ended
	June 30,								June 30,
	2007				2006				2007			2006
	(in millions)
Realized losses		$	(1.8	)		$	(26.0	)	$	(17.7	)	$	(47.3	)
Unrealized mark-to-market gains (losses)		(36.3		)		11.7			2.2			(8.3		)
Net derivative losses		$	(38.1	)		$	(14.3	)	$	(15.5	)	$	(55.6	)

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CF INDUSTRIES HOLDINGS, INC.

On the consolidated balance sheet at June 30, 2007, we had net unrealized losses of $35.6 million on 34.0 million MMBtus of gas swap contracts. At December 31, 2006, we had net unrealized losses of $37.8 million on 30.6 million MMBtus of gas swap contracts.

13.   Stock-Based Compensation

We account for stock-based compensation in accordance with SFAS No. 123R—Share-Based Payment, which requires the measurement and recognition of compensation expense for all share-based payment awards based on grant date fair values. We estimate the fair value of each stock option award using the Black-Scholes option valuation model. The fair value of the restricted stock is equal to the closing market price of our common stock on the date of grant.

At June 30, 2007, we had 2.7 million stock options outstanding with an aggregate intrinsic value of $120.0 million. At December 31, 2006, we had 3.2 million stock options outstanding with an aggregate intrinsic value of $31.4 million. During the three months ended June 30, 2007, we granted 21,500 stock options and 5,600 shares of restricted stock to employees and 9,690 shares of restricted stock to non-management members of our Board of Directors under the CF Industries Holdings, Inc. 2005 Equity and Incentive Plan. The weighted-average grant-date fair value per share for stock options and restricted stock awards granted during the three months ended June 30, 2007 was $17.21 and $40.75, respectively. There were no stock compensation awards granted in the first quarter of 2007.

Compensation cost is recorded primarily in selling, general, and administrative expense. The following table summaries stock-based compensation costs and related income tax benefits for the three and six months ended June 30, 2007 and 2006.

	Three months ended								Six months ended
	June 30,								June 30,
	2007				2006				2007				2006
	(in millions)
Stock-based compensation expense		$	2.2			$	1.8			$	4.1			$	3.6
Income tax benefit		(0.8		)		(0.7		)		(1.6		)		(1.4		)
Stock-based compensation expense, net of income taxes		$	1.4			$	1.1			$	2.5			$	2.2

Pre-tax unrecognized compensation expense for stock options, net of estimated forfeitures, was $8.0 million as of June 30, 2007, which will be recognized as expense over a weighted-average period of 1.1 years. Pre-tax unrecognized compensation expense for restricted stock awards, net of estimated forfeitures, was $1.4 million as of June 30, 2007, which will be recognized as expense over a weighted-average period of 1.3 years.

During the three and six months ended June 30, 2007, 0.3 million and 0.5 million stock options were exercised with a pre-tax intrinsic value of $7.7 million and $11.6 million, respectively. Cash received from stock option exercises for the three and six months ended June 30, 2007 was $4.7 million and $8.0 million, respectively. At June 30, 2007, 0.6 million stock options were exercisable with an aggregate intrinsic value of $27.4 million. At December 31, 2006, 0.9 million stock options were exercisable with an intrinsic value of $8.7 million.

An excess tax benefit is generated when the realized tax benefit from the vesting of restricted stock, or a stock option exercise, exceeds the previously recognized deferred tax asset. SFAS No. 123R requires excess tax benefits to be reported as a financing cash inflow rather than a reduction of taxes paid. Excess

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tax benefits for the three and six months ended June 30, 2007 was $2.4 million and $3.4 million, respectively.

14.   Other Comprehensive Income (Loss)

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

	Foreign				Unrealized							Accumulated
	Currency				Gain			Defined				Other
	Translation				on			Benefit				Comprehensive
	Adjustment				Securities			Plans				Income (Loss)
	(in millions)
Balance at December 31, 2006		$	(2.9	)		$	0.4		$	(30.9	)		$	(33.4	)
Net change		2.0				0.1			0.6				2.7
Balance at June 30, 2007		$	(0.9	)		$	0.5		$	(30.3	)		$	(30.7	)

The unrealized gain on securities in our nonqualified employee benefit plan trust of $0.1 million is net of deferred taxes of $0.1 million. The $0.6 million adjustment to our defined benefit plans is net of deferred taxes of $0.4 million and consists of amortization of actuarial losses, prior service costs and transition obligations.

15.   Contingencies

Litigation

From time to time, we are subject to ordinary, routine legal proceedings related to the usual conduct of our business, including proceedings regarding public utility and transportation rates, environmental matters, taxes and permits relating to the operations of our various plants and facilities. Based on the information available as of the date of this filing, we believe that the ultimate outcome of these 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 4 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, have resulted in the disposal of hazardous waste into the system without

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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’s 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 the water recirculating system if it is determined that it 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. The EPA has referred this matter to the United States Department of Justice (DOJ) for enforcement. The Company has entered into discussions with the DOJ that have included not only the issues identified in the NOV but other operational practices of the Company and its competitors. The Company does not know if this matter will be resolved prior to the commencement of litigation by the United States.

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. The EPA’s sampling results appear to be consistent with the Company’s results. 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 evaluated and is remediating the impacts resulting from its historic activities, the DOJ and the EPA have indicated that they will be seeking additional environmental investigation at the facilities subject to the enforcement initiative, including Plant City. In addition, we understand that the EPA may decide to inspect our Bartow, Florida property, where we formerly manufactured phosphoric acid. The EPA has requested and the Company has provided copies of existing monitoring data for this facility. Depending on the conclusions that the EPA reaches after reviewing this data, the EPA may require that an investigation of environmental conditions be undertaken at the Bartow facility.

We are subject to a variety of environmental laws and regulations in all jurisdictions in which we operate. When it is probable that environmental liabilities exist and when 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 cleanup 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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16.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 six months ended June 30, 2007 and 2006, and assets at June 30, 2007 and December 31, 2006, are presented below. Other assets include amounts attributable to the corporate headquarters and unallocated corporate assets.

	Nitrogen			Phosphate			Consolidated
	(in millions)
Three months ended June 30, 2007
Net sales
Ammonia		$	264.6		$	—		$	264.6
Urea		237.9			—			237.9
UAN		165.6			—			165.6
DAP		—			141.9			141.9
MAP		—			35.5			35.5
Other		3.4			—			3.4
		671.5			177.4			848.9
Cost of sales		548.7			122.6			671.3
Gross margin		$	122.8		$	54.8		$	177.6
Three months ended June 30, 2006
Net sales
Ammonia		$	217.3		$	—		$	217.3
Urea		202.2			—			202.2
UAN		128.1			—			128.1
DAP		—			111.6			111.6
MAP		—			26.3			26.3
Other		3.2			—			3.2
		550.8			137.9			688.7
Cost of sales		460.8			126.7			587.5
Gross margin		$	90.0		$	11.2		$	101.2

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CF INDUSTRIES HOLDINGS, INC.

	Nitrogen		Phosphate			Consolidated
	(in millions)
Six months ended June 30, 2007
Net sales
Ammonia	$	300.6		$	—		$	300.6
Urea	433.5			—			433.5
UAN	284.6			—			284.6
DAP	—			243.8			243.8
MAP	—			55.1			55.1
Other	3.7			—			3.7
	1,022.4			298.9			1,321.3
Cost of sales	808.9			229.7			1,038.6
Gross margin	$	213.5		$	69.2		$	282.7
Six months ended June 30, 2006
Net sales
Ammonia	$	264.7		$	—		$	264.7
Urea	364.8			—			364.8
UAN	214.2			—			214.2
DAP	—			213.7			213.7
MAP	—			47.0			47.0
Other	3.5			—			3.5
	847.2			260.7			1,107.9
Cost of sales	790.1			239.3			1,029.4
Gross margin	$	57.1		$	21.4		$	78.5

	Nitrogen			Phosphate			Other		Consolidated
	(in millions)
Assets
June 30, 2007		$	504.5		$	475.9	$	607.5		$	1,587.9
December 31, 2006		$	493.9		$	426.9	$	369.6		$	1,290.4

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17.Correction of an Error

In the second quarter of 2007, we identified an error in our previously issued financial statements related to our classification of shipping and handling costs billed to our customers. Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) Issue No. 00-10—Accounting for Shipping and Handling Fees and Costs states that the amount billed to a customer in a sales transaction related to shipping and handling should be classified as revenue in the consolidated statement of operations. Prior to correcting the error we treated the amounts billed to our customers for shipping and handling as a reduction of shipping and handling costs included in cost of sales. Because the correction was between net sales and cost of sales, there was no change to our previously reported gross margin. The correction had no effect on any other financial statement line item or per-share amount. Even though the error is immaterial to the previously presented consolidated financial statements taken as a whole, we corrected our previously presented consolidated financial statements as follows:

	Three months ended
	June 30, 2006
	As previously presented				Correction			As presented herein
	($ in millions)
Nitrogen segment
Net sales		$	536.2			$	14.6		$	550.8
Cost of sales		446.2				14.6			460.8
Gross margin		$	90.0			$	—		$	90.0
Gross margin percentage		16.8		%					16.3		%
Phosphate segment
Net sales		$	128.6			$	9.3		$	137.9
Cost of sales		117.4				9.3			126.7
Gross margin		$	11.2			$	—		$	11.2
Gross margin percentage		8.7		%					8.1		%
Consolidated
Net sales		$	664.8			$	23.9		$	688.7
Cost of sales		563.6				23.9			587.5
Gross margin		$	101.2			$	—		$	101.2
Gross margin percentage		15.2		%					14.7		%

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CF INDUSTRIES HOLDINGS, INC.

	Six months ended
	June 30, 2006
	As previously presented				Correction			As presented herein
	($ in millions)
Nitrogen segment
Net sales		$	822.0			$	25.2		$	847.2
Cost of sales		764.9				25.2			790.1
Gross margin		$	57.1			$	—		$	57.1
Gross margin percentage		6.9		%					6.7		%
Phosphate segment
Net sales		$	243.3			$	17.4		$	260.7
Cost of sales		221.9				17.4			239.3
Gross margin		$	21.4			$	—		$	21.4
Gross margin percentage		8.8		%					8.2		%
Consolidated
Net sales		$	1,065.3			$	42.6		$	1,107.9
Cost of sales		986.8				42.6			1,029.4
Gross margin		$	78.5			$	—		$	78.5
Gross margin percentage		7.4		%					7.1		%

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CF INDUSTRIES HOLDINGS, INC.

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 consolidated financial statements and related notes included in Item 8, Financial Statements and Supplementary Data, of our 2006 Annual Report on Form 10-K as well as Item 1, Financial Statements, in this Form 10-Q. 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 customers are cooperatives and independent fertilizer distributors.

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 (CFL), a consolidated variable interest entity);

·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.

Executive Summary

We reported net earnings of $93.6 million in the second quarter of 2007 compared to net earnings of $42.6 million in the second quarter of 2006. Our results for the second quarter of 2007 included a net $36.3 million pre-tax mark-to-market loss ($23.4 million after tax) on natural gas derivatives. Net earnings of $42.6 million for the second quarter of 2006 included a net $11.7 million pre-tax mark-to-market gain ($7.1 million after tax) on natural gas derivatives.

Our gross margin increased $76.4 million to $177.6 million in the second quarter of 2007 compared to $101.2 million in the second quarter of 2006. The increase in gross margin resulted mainly from higher average nitrogen and phosphate fertilizer selling prices and increased nitrogen fertilizer sales volumes, partially offset by unfavorable variances related to mark-to-market adjustments on natural gas derivatives.

Our net sales increased 23% to $848.9 million in the second quarter of 2007 compared to $688.7 million in the second quarter of 2006. The increase primarily reflected higher average nitrogen and

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phosphate fertilizer selling prices and higher nitrogen fertilizer sales volume. A 165,000 ton increase in fertilizer sold during the second quarter of 2007 resulted in total sales volume of 2.75 million tons in the second quarter of 2007 compared to 2.58 million tons in the second quarter of 2006.

We paid cash dividends of $1.1 million in the second quarter of 2007.

Net earnings of $150.8 million for the six months ended June 30, 2007 were $132.8 million greater than net earnings of the comparable period of 2006. The improvement in net earnings was due primarily to higher average nitrogen and phosphate fertilizer selling prices, decreases in natural gas costs, increased demand for nitrogen fertilizers and favorable variances related to natural gas derivatives.

The following significant item affected the comparability of our reported results for the six months ended June 30, 2007 and 2006:

Hurricane activity in the Gulf of Mexico region during the latter portion of 2005 significantly affected the domestic fertilizer industry. These hurricanes caused substantial damage to the natural gas production and distribution facilities in the region, affecting the supply and price of natural gas, the primary raw material used to produce nitrogen fertilizers. By the end of the first quarter of 2006, natural gas prices had moderated, returning to approximately pre-hurricane levels. These storms also affected the availability of barges used to transport urea and DAP/MAP on the Mississippi River and adversely affected the supply of sulfur, a raw material used in the production of phosphate fertilizers, by causing refinery closures and transportation disruptions.

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Results of Operations

The following table presents our consolidated results of operations:

	Three months ended June 30,										Six months ended June 30,
	2007			2006			2007 v. 2006				2007			2006			2007 v. 2006
	(in millions, except per share amounts)
Net sales	$	848.9		$	688.7			$	160.2		$	1,321.3		$	1,107.9			$	213.4
Cost of sales	671.3			587.5				83.8			1,038.6			1,029.4				9.2
Gross margin	177.6			101.2				76.4			282.7			78.5				204.2
Selling, general and administrative	17.5			14.3				3.2			31.2			27.3				3.9
Other operating—net	0.7			1.6				(0.9		)	2.0			3.1				(1.1		)
Operating earnings	159.4			85.3				74.1			249.5			48.1				201.4
Interest expense	0.3			1.5				(1.2		)	0.8			2.0				(1.2		)
Interest income	(5.0		)	(2.8		)		(2.2		)	(8.9		)	(5.5		)		(3.4		)
Minority interest	19.6			16.4				3.2			26.6			22.3				4.3
Other non-operating—net	(0.4		)	(0.1		)		(0.3		)	(0.9		)	(0.2		)		(0.7		)
Earnings before income taxes	144.9			70.3				74.6			231.9			29.5				202.4
Income tax provision	51.3			27.7				23.6			81.1			11.5				69.6
Net earnings	$	93.6		$	42.6			$	51.0		$	150.8		$	18.0			$	132.8
Net earnings per share
Basic	$	1.69		$	0.77			$	0.92		$	2.73		$	0.33			$	2.40
Diluted	$	1.65		$	0.77			$	0.88		$	2.67		$	0.33			$	2.34
Weighted average common shares outstanding
Basic	55.4			55.0							55.3			55.0
Diluted	56.6			55.0							56.4			55.0

We have corrected an error in our previously presented results of operations to include in net sales amounts billed to our customers for shipping and handling. These amounts were previously included as a reduction in cost of sales. The correction did not impact any other financial statement line item or per-share amount. See “Critical Accounting Policies and Estimates” for additional discussion of this correction.

Second Quarter of 2007 Compared to the Second Quarter of 2006

Consolidated Operating Results

During the second quarter of 2007, the domestic nitrogen fertilizer industry benefited from increased demand resulting from an increase in corn acreage planted and a strong international market. Concurrently, tight worldwide industry supply/demand conditions and increased domestic demand led to improved operating results in our phosphate fertilizer business. Our total gross margin increased by $76.4 million to $177.6 million for the second quarter of 2007 compared to $101.2 million for the same period in 2006, due largely to a strong fertilizer pricing environment, partially offset by unfavorable variances on mark-to-market adjustments on natural gas derivatives. Net earnings of $93.6 million for the second quarter of 2007 included a net pre-tax mark-to-market loss of $36.3 million ($23.4 million after tax) on natural gas derivatives. Net earnings of $42.6 million for the second quarter of 2006 included a net pre-tax mark-to-market gain of $11.7 million ($7.1 million after tax) on natural gas derivatives.

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Net Sales

Our net sales increased 23% to $848.9 million in the second quarter of 2007 compared to $688.7 million in the second quarter of 2006, due primarily to higher average nitrogen and phosphate fertilizer selling prices as well as an increase in nitrogen fertilizer sales volume. Average nitrogen fertilizer prices in the second quarter of 2007 increased by 10% compared to average prices in the same period of 2006. Second quarter 2007 average phosphate fertilizer prices also strengthened, increasing by 40% compared to average prices in the comparable period of the prior year. Our total sales volume increased 6% to 2.75 million tons in the second quarter of 2007 versus 2.58 million tons in the second quarter of the prior year. Nitrogen fertilizer sales volume increased 209,000 tons, or 10%, to 2.24 million tons in the second quarter of 2007 compared to 2.03 million tons in the comparable period of 2006, due primarily to higher ammonia and UAN sales. Our total level of phosphate fertilizer sales of 510,000 tons in the second quarter of 2007 was 44,000 tons, or 8%, lower as compared to the 554,000 tons sold during the same period in 2006 due to lower export sales.

Cost of Sales

Total cost of sales of our nitrogen fertilizers averaged approximately $245 per ton in the second quarter of 2007 compared to $227 per ton in the second quarter of 2006, primarily due to unfavorable variances related to mark-to-market adjustments on natural gas derivatives. Phosphate fertilizer cost of sales averaged $241 per ton in the second quarter of 2007 compared to $229 per ton in the second quarter of the prior year, an increase of 5%, due mainly to higher purchased product costs.

During the second quarter of 2007, we sold approximately 1.8 million tons of fertilizer under our forward pricing program, representing approximately 65% of our total fertilizer sales volume for the quarter. In the comparable period of 2006, we sold approximately 1.0 million tons of fertilizer under this program, representing approximately 41% of our total volume.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 22% to $17.5 million for the second quarter of 2007 compared to $14.3 million in the corresponding quarter of the prior year. The increase in the second quarter of 2007 was largely due to increased expenses related to the relocation of our corporate headquarters to Deerfield, Illinois, expenses related to performance-based management incentive compensation and dues for membership in a fertilizer industry group.

Other Operating—Net

Other operating—net decreased to $0.7 million in the second quarter of 2007 from $1.6 million in the same period of 2006. The decrease was due primarily to a $0.3 million downward adjustment in the second quarter of 2007 to the asset retirement obligations (AROs) at our closed Bartow, Florida, facility as compared to a $0.3 million upward adjustment in the same period of 2006. For a detailed explanation of the accounting for AROs at Bartow, please refer to Note 9 to our audited consolidated financial statements included in our 2006 Annual Report on Form 10-K.

Interest—Net

Net interest income increased $3.4 million to $4.7 million in the second quarter of 2007 from $1.3 million in the second quarter of 2006. Interest expense decreased to $0.3 million for the second quarter of 2007 from $1.5 million in the same quarter of 2006. The $1.2 million decrease in interest

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expense for the second quarter of 2007 was mainly due to the recording of $1.0 million of interest expense in the second quarter of 2006 related to a Canadian tax matter. Interest income increased to $5.0 million in the second quarter of 2007 as compared to $2.8 million in the comparable period of the prior year due to higher average balances of invested cash partially offset by lower average rates of return. The decrease in the average rates of return is due to substantially all of the interest income earned on our short-term investments for the second quarter of 2007 being exempt from federal taxation.

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 second quarter of 2007 was due to improved CFL operating results. The improvement in CFL operating results reflects stronger market conditions for nitrogen fertilizers produced in Canada.

Income Taxes

The income tax provisions recorded for the three months ended June 30, 2007 and 2006 were based upon our estimated annual effective tax rate, which includes applicable federal, foreign and state income taxes.

Our income tax provision for the second quarter of 2007 was $51.3 million, or an effective tax rate of 35.4%. This compared with a tax provision of $27.7 million on pre-tax earnings for the second quarter of 2006, or an effective rate of 39.4%. The 2007 decrease in the effective rate resulted principally from the impact of an increase in the U.S. domestic production activities deduction and non-taxable interest income earned on short-term investments.

Six Months Ended June 30, 2007 Compared to Six Months Ended June 30, 2006

Consolidated Operating Results

Driven by increased demand resulting from anticipated and realized increases in corn acreage planted, as well as higher application rates and a tight international market, the domestic nitrogen industry rebounded from the weaker market conditions of the prior year. Improved operating results in our phosphate fertilizer business resulted from tight domestic supply/demand conditions and strong worldwide demand. Our total gross margin increased by approximately $204.2 million, or 260%, to $282.7 million for the six months ended June 30, 2007 compared to a gross margin of $78.5 million for the same period in 2006 due largely to higher average nitrogen and phosphate fertilizer selling prices, decreases in natural gas costs, favorable variances related to natural gas derivatives and increased demand for nitrogen fertilizers. Net earnings of $150.8 million for the six months ended June 30, 2007 included a net pre-tax mark-to-market gain of $2.2 million ($1.4 million after tax) on natural gas derivatives. Net earnings of $18.0 million for the six months ended June 30, 2006 included a net pre-tax mark-to-market loss of $8.3 million ($5.0 million after tax) on natural gas derivatives.

Net Sales

Our net sales of $1.3 billion for the six months ended June 30, 2007 were 19%, or $213.4 million higher than sales for the same period in 2006, due to greater nitrogen sales volume and higher average nitrogen and phosphate fertilizer selling prices in 2007, partially offset by lower phosphate fertilizer sales volumes. Our total sales volume increased 10% to 4.64 million tons for the six months ended June 30, 2007 versus 4.23 million tons for the six months ended June 30, 2006. Nitrogen fertilizer sales volume increased

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481,000 tons, or 15%, to 3.67 million tons for the six months ended June 30, 2007 compared to 3.19 million tons in the comparable period of 2006. Our total level of phosphate fertilizer sales was 971,000 tons for the six months ended June 30, 2007 versus 1.04 million tons in the same period of 2006. Average nitrogen and phosphate fertilizer prices for the six months ended June 30, 2007 were 5% and 23% higher, respectively, than the average prices for similar products in the comparable period of 2006.

Cost of Sales

Total cost of sales of our nitrogen fertilizers averaged $221 per ton for the six months ended June 30, 2007 compared to $248 per ton in the corresponding period of 2006, a decrease of 11%, largely due to lower natural gas prices, favorable variances related to natural gas derivatives and lower purchased product costs. Phosphate fertilizer cost of sales averaged $237 per ton for the six months ended June 30, 2007 compared to $229 per ton in the same period of the prior year, an increase of 3%, mainly due to higher purchased product costs essentially offset by lower ammonia and sulfur costs.

During the first six months of 2007, we sold approximately 2.7 million tons of fertilizer under our forward pricing program, representing approximately 59% of our total fertilizer sales volume for the period. In the comparable period of 2006, we sold approximately 1.8 million tons of fertilizer under this program, representing approximately 42% of our total fertilizer sales volume for the period.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased 14% to $31.2 million for the six months ended June 30, 2007 compared to $27.3 million in the comparable period of 2006. The year-over-year increase in expense for the six months ended June 30, 2007 resulted largely from the increased expenses related to performance-based management incentive compensation, expenses related to the relocation of our corporate headquarters to Deerfield, Illinois, and dues for membership in a fertilizer industry group.

Other Operating—Net

Other operating—net decreased to $2.0 million for the six months ended June 30, 2007 from $3.1 million in the same period of 2006. The decrease was due primarily to adjustments of $1.0 million to increase the asset retirement obligations (AROs) at our closed Bartow facility recorded in the first six months of 2006. For a detailed explanation of the accounting for AROs at Bartow, please refer to Note 9 to our audited consolidated financial statements included in our 2006 Annual Report on Form 10-K.

Interest—Net

Interest—net increased to $8.1 million of net interest income for the six months ended June 30, 2007 from $3.5 million of net interest income in the same period of 2006. Interest expense decreased 60% to $0.8 million in 2007 from $2.0 million in 2006. This decrease was primarily due to $1.0 million of interest expense recorded in the second quarter of 2006 related to a Canadian tax matter. Interest income increased to $8.9 million in 2007 from $5.5 million in 2006 due to higher average balances of invested cash partially offset by lower average rates of return. The decrease in the average rates of return is due to substantially all of the interest income earned on our short-term investments for 2007 being exempt from federal taxation.

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Minority Interest

Amounts reported as minority interest represent the interest of the 34% minority holder of CFL’s common and preferred shares. The increase for the six months ended June 30, 2007 was due to CFL operating results. The improvement in CFL operating results reflects stronger market conditions for nitrogen fertilizers produced in Canada.

Income Taxes

The income tax provisions recorded for the six month periods ended June 30, 2007 and 2006 were based upon our estimated annual effective tax rate, which includes applicable federal, foreign and state income taxes.

Our income tax provision for the six months ended June 30, 2007 was $81.1 million, or an effective tax rate of 35.0%. This compared with a tax provision of $11.5 million on pre-tax earnings for the same period of 2006, or an effective tax rate of 39.0%. The 2007 decrease in the effective tax rate results principally from the impact of an increase in U.S. domestic production activities deduction and non-taxable interest income earned on short-term investments.

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Segment Review

Our business is organized and managed 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:

	Three months ended June 30,										Six months ended June 30,
	2007			2006			2007 v. 2006				2007			2006			2007 v. 2006
	(in millions, except as noted)
Net sales	$	671.5		$	550.8			$	120.7		$	1,022.4		$	847.2			$	175.2
Cost of sales	548.7			460.8				87.9			808.9			790.1				18.8
Gross margin	$	122.8		$	90.0			$	32.8		$	213.5		$	57.1			$	156.4
Gross margin percentage	18.3		%	16.3		%					20.9		%	6.7		%
Tons of product sold (in thousands)	2,237			2,028				209			3,666			3,185				481
Sales volumes by product (tons in thousands)
Ammonia	679			516				163			800			646				154
Urea	719			780				(61		)	1,385			1,362				23
UAN	805			700				105			1,444			1,142				302
Other nitrogen products	34			32				2			37			35				2
Average selling price per ton by product
Ammonia	$	390		$	421			$	(31	)	$	376		$	410			$	(34	)
Urea	331			259				72			313			268				45
UAN	206			183				23			197			188				9
Cost of natural gas (per MMBtu) (1)
Donaldsonville	$	7.61		$	7.12			$	0.49		$	7.59		$	7.82			$	(0.23	)
Medicine Hat	6.52			6.98				(0.46		)	6.43			7.22				(0.79		)
Average daily market price of natural gas (per MMBtu)
Henry Hub (Louisiana)	$	7.53		$	6.52			$	1.01		$	7.33		$	7.14			$	0.19
AECO (Alberta)	6.46			5.36				1.10			6.37			5.97				0.40
Depreciation and amortization	$	12.1		$	16.0			$	(3.9	)	$	24.5		$	28.9			$	(4.4	)
Capital expenditures	$	10.5		$	4.2			$	6.3		$	16.3		$	8.5			$	7.8
Production volume by product (tons in thousands)
Ammonia (2) (3)	869			852				17			1,742			1,503				239
Granular urea (2)	629			653				(24		)	1,255			1,117				138
UAN (28%)	667			586				81			1,340			993				347

We have corrected an error in our previously presented nitrogen segment data to include in net sales amounts billed to our customers for shipping and handling. These amounts were previously included as a reduction in cost of sales. The correction did not change our previously presented gross margin, but did change our previously presented gross margin percentage and average selling prices. See “Critical Accounting Policies and Estimates” for additional discussion of this correction.

(1)Includes the cost of natural gas purchases and realized gains and losses on natural gas derivatives.

(2)Total production at Donaldsonville and Medicine Hat, including the 34% interest of Westco, our joint venture partner in CFL.

(3)Gross ammonia production, including amounts subsequently upgraded on-site into urea and/or UAN.

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Second Quarter of 2007 Compared to the Second Quarter of 2006

Net Sales.   Nitrogen fertilizer net sales increased $120.7 million to $671.5 million in the second quarter of 2007 compared to $550.8 million in the second quarter of 2006, primarily due to higher ammonia and UAN sales volume, as well as higher urea and UAN average selling prices. The increases in ammonia and UAN sales volume, 32% and 15% respectively, were driven by increases in corn acres planted and higher fertilizer application rates. The increased corn acreage resulted from greater demand for use by ethanol producers, low domestic corn inventories and continued strong demand for feed. Urea sales prices increased by 28% in the second quarter of 2007 compared to prices in the same period of the prior year due to increased demand in domestic and international markets. The 13% increase in average UAN sales prices was primarily due to low industry inventories entering the quarter, decreased imports and strong demand. A 7% decline in average ammonia selling prices for the second quarter of 2007 was due to a relatively high portion of the quarter’s ammonia shipments occurring towards the end of the quarter after the typical price declines following the direct application season. This delay in product movement within the quarter was due to unfavorable early quarter application conditions in some portions of the U.S. Corn Belt.

Cost of Sales.   Total cost of sales of our nitrogen fertilizers averaged approximately $245 per ton in the second quarter of 2007 compared to $227 per ton in the second quarter of 2006, primarily due to unfavorable variances related to mark-to-market adjustments on natural gas derivatives in 2007, somewhat offset by favorable variances on realized losses on natural gas derivatives. The overall weighted average cost of natural gas supplied to our Donaldsonville facility and CFL’s Medicine Hat facility, including realized gains and losses on derivatives, increased by 2% in the second quarter of 2007 versus the cost in the comparable period of 2006. We recognized a net $36.3 million mark-to-market loss in the second quarter of 2007 compared to a net $11.7 million mark-to-market gain in the second quarter of 2006.

During the second quarter of 2007, we sold approximately 1.6 million tons of nitrogen fertilizers under our forward pricing program, representing approximately 70% of our nitrogen fertilizer sales volume for the quarter. In the comparable period of 2006, we sold approximately 1.0 million tons of nitrogen fertilizers under this program, representing approximately 49% of our nitrogen volume.

Six Months Ended June 30, 2007 Compared to the Six Months Ended June 30, 2006

Net Sales.   Nitrogen fertilizer net sales increased $175.2 million to $1.0 billion for the six months ended June 30, 2007 compared to $847.2 million for the six months ended June 30, 2006, due to higher sales volume and higher average urea and UAN selling prices. Nitrogen fertilizer sales volume increased 15% to 3.67 million tons in the first six months of 2007 compared to 3.19 million tons in the same period of 2006, due principally to the impact of an expected increase in corn acres planted and higher fertilizer application rates. The increased corn acreage was driven by greater demand for use by ethanol producers, low domestic corn inventories and continued strong demand for feed. Higher average urea selling prices reflected continued strong domestic and international demand. The 5% increase in average UAN selling prices for the six months ended June 30, 2007 compared to the same period of 2006 reflected strong demand and a tight supply/demand balance.

Cost of Sales.Total cost of sales of our nitrogen fertilizers averaged $221 per ton for the six months ended June 30, 2007, compared to $248 per ton for the same period in 2006, a decrease of 11%, largely due to lower natural gas prices, favorable variances related to natural gas derivatives and lower purchased product costs. The overall weighted average cost of natural gas supplied to our Donaldsonville facility and CFL’s Medicine Hat facility, including realized gains and losses on derivatives, decreased by 6% for the

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six months ended June 30, 2007 versus the cost in the comparable period of 2006. Purchased product costs were approximately $12.3 million lower in 2007 than in the same period of 2006, primarily due to a decrease in the amount of sales volume supported by purchased products. We recognized a net $2.2 million mark-to-market gain for the first six months of 2007 compared to a net $8.3 million mark-to-market loss in the same period of 2006.

During the first six months of 2007, we sold approximately 2.3 million tons of nitrogen fertilizers under our forward pricing program, representing approximately 63% of our nitrogen fertilizer sales volume for the period. In the comparable period of 2006, we sold approximately 1.6 million tons of nitrogen fertilizers under this program, representing approximately 50% of our nitrogen fertilizer sales volume for the period.

During the third quarter of 2007, we expect to take a complex-wide turnaround at our Medicine Hat, Alberta Nitrogen complex. In addition to routine maintenance activities, the electrical system at the complex will be upgraded. We do not expect this outage to impair our ability to meet commitments to our customers.

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Phosphate Fertilizer Business

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

	Three months ended June 30,										Six months ended June 30,
	2007			2006			2007 v. 2006				2007			2006			2007 v. 2006
	(in millions, except as noted)
Net sales	$	177.4		$	137.9			$	39.5		$	298.9		$	260.7			$	38.2
Cost of sales	122.6			126.7				(4.1		)	229.7			239.3				(9.6		)
Gross margin	$	54.8		$	11.2			$	43.6		$	69.2		$	21.4			$	47.8
Gross margin percentage	30.9		%	8.1		%					23.2		%	8.2		%
Tons of product sold (in thousands)	510			554				(44		)	971			1,043				(72		)
Sales volumes by product (tons in thousands)
DAP	406			452				(46		)	794			862				(68		)
MAP	104			102				2			177			181				(4		)
Domestic vs export sales of DAP/MAP (tons in thousands)
Domestic	370			369				1			768			745				23
Export	140			185				(45		)	203			298				(95		)
Average selling price per ton by product
DAP	$	349		$	247			$	102		$	307		$	248			$	59
MAP	341			258				83			312			260				52
Depreciation, depletion and amortization	$	7.6		$	8.4			$	(0.8	)	$	14.8		$	17.4			$	(2.6	)
Capital expenditures	$	6.9		$	7.5			$	(0.6	)	$	19.6		$	14.9			$	4.7
Production volume by product (tons in thousands)
Phosphate rock	722			969				(247		)	1,586			1,867				(281		)
Sulfuric acid	670			652				18			1,259			1,309				(50		)
Phosphoric acid as P2O5 (1)	258			262				(4		)	483			513				(30		)
DAP/MAP	516			527				(11		)	962			1,030				(68		)

We have corrected an error in our previously presented phosphate segment data to include in net sales amounts billed to our customers for shipping and handling. These amounts were previously included as a reduction in cost of sales. The correction did not change our previously presented gross margin, but did change our previously presented gross margin percentage and average selling prices. See “Critical Accounting Policies and Estimates” for additional discussion of this correction.

(1)P2O5 is the basic measure of the nutrient content in phosphate fertilizer products.

Second Quarter of 2007 Compared to the Second Quarter of 2006

Net Sales.   Phosphate fertilizer net sales increased 29% to $177.4 million in the second quarter of 2007 compared to $137.9 million in the second quarter of 2006, primarily due to higher average selling prices. A tight domestic supply/demand balance at the start of the second quarter of 2007, coupled with

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strong international demand during the quarter helped increase average phosphate fertilizer prices by 40% compared to average selling prices in the same quarter of the prior year. Our total level of phosphate fertilizer sales of 510,000 tons in the second quarter of 2007 was 44,000 tons, or 8%, lower than in the comparable period in 2006. Sales of DAP/MAP to export customers were 45,000 tons lower, as supply was made available for domestic sales in anticipation of increased domestic demand which, while strong, fell short of expectations.

Cost of Sales.   Phosphate cost of sales averaged $241 per ton in the second quarter of 2007 compared to $229 per ton in the second quarter of 2006. The 5% increase was mainly due to higher purchased product costs. Purchased product costs were approximately $7.0 million higher in 2007 than in the same period of 2006, mainly due to an increase in the amount of sales volume supported by purchased products.

During the second quarter of 2007, we sold approximately 220,000 tons of phosphate fertilizers under our forward pricing program, representing approximately 43% of our phosphate fertilizer sales volume for the quarter. In the comparable period of 2006, we sold approximately 51,000 tons of phosphate fertilizers under this program, representing approximately 9% of our phosphate volume.

Six Months Ended June 30, 2007 Compared to the Six Months Ended June 30, 2006

Net Sales.Phosphate fertilizer net sales increased 15% to $298.9 million for the six months ended June 30, 2007 compared to $260.7 million in the comparable period of 2006, due primarily to higher average selling prices partially offset by lower phosphate fertilizer sales volume. Average phosphate fertilizer prices during the first six months of 2007 increased by 23% compared to prices in 2006. Our total level of phosphate fertilizer sales of 971,000 tons in the first six months of 2007 decreased 7% compared to 1.04 million tons in the comparable period of 2006. Reduced availability of product due to scheduled first quarter maintenance activity at our Plant City, Florida phosphate complex, along with supply being made available for second quarter domestic sales in anticipation of increased domestic demand which fell short of expectations, led to a 95,000 ton decrease in sales of DAP/MAP to export customers.

Cost of Sales.Phosphate cost of sales averaged $237 per ton for the six months ended June 30, 2007 compared to $229 per ton for the six months ended June 30, 2006. The 3% increase was mainly due to higher purchased product costs partially offset by lower ammonia and sulfur costs. Purchased product costs were approximately $8.0 million higher in 2007 than in the same period of 2006, primarily due to an increase in the amount of sales volume supported by purchased products, mainly occurring during the second quarter of 2007.

During the first six months of 2007, we sold approximately 408,000 tons of phosphate fertilizers under our forward pricing program, representing approximately 42% of our phosphate fertilizer sales volume for the period. In the comparable period of 2006, we sold approximately 177,000 tons of phosphate fertilizers under this program, representing approximately 17% of our phosphate fertilizer sales volume for the period.

Liquidity and Capital Resources

Our primary sources of cash are operating cash flow, which includes customer advances, and our senior secured revolving credit facility. Our primary uses of cash are operating costs, working capital needs, 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.

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Cash Balances

As of June 30, 2007, we had cash and cash equivalents of $59.6 million, short-term investments of $506.0 million and a $167.7 million current liability attributable to customer advances related to cash deposits received under our forward pricing program. As of December 31, 2006, the comparable amounts were $25.4 million, $300.2 million and $102.7 million, respectively. Short-term investments consist primarily of available-for-sale tax exempt 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 June 30, 2007 and December 31, 2006, we had $190.0 million and $176.4 million available, respectively, under our senior secured revolving credit facility.

Debt

Notes payable, representing amounts owed by CFL to its minority interest holder with respect to advances, were $4.6 million as of June 30, 2007 compared to $4.2 million as of December 31, 2006. There were no outstanding borrowings or letters of credit under our $250 million senior secured revolving credit facility as of June 30, 2007 or December 31, 2006.

Forward Pricing Program (FPP)

We offer a FPP to our customers under which product may be ordered for future delivery, with a significant portion of the sales proceeds generally being collected in advance of shipment, thereby reducing or eliminating the accounts receivable related to such sales. As of June 30, 2007 and December 31, 2006, we had approximately $167.7 million and $102.7 million, respectively, in customer advances on our consolidated balance sheet. As of June 30, 2007 and December 31, 2006, we had approximately 2.7 million tons of product and 1.7 million tons of product, respectively, committed to be sold under the FPP. Most of this product was scheduled to ship within 150 days of June 30, 2007 and December 31, 2006, respectively.

While customer advances were a significant source of liquidity in the first six months of both 2007 and 2006, the level of sales under the FPP is affected by many factors, including current market conditions and our customers’ perceptions of future market fundamentals. As of June 30, 2006, we had approximately 814,000 tons of product committed to be sold under this program.

The level of our customers’ participation in our FPP may vary over time. Should the level 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. Due to the volatility inherent in our business and changing customer expectations, we cannot estimate the amount of future FPP sales activity.

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. Pursuant to the Florida regulations governing financial assurance related to the closure of phosphogypsum stacks, we utilize an escrow account to meet such future obligations. We made annual contributions of $9.4 million and $11.1 million in March of 2007 and March of 2006, respectively, to this escrow account, which by rule is earmarked to cover the closure, long-term maintenance, and monitoring costs for our phosphogypsum stacks, as well as any costs incurred to manage the water contained in the stack system upon closure.

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Additionally, Florida regulations require 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 are able to expand our Hardee mining activities to areas not currently permitted. The demonstration of financial responsibility by mining companies in Florida may be provided by passing a financial test or by establishing a cash deposit arrangement. Based on these current regulations, we will have the option to demonstrate financial responsibility in Florida utilizing either of these methods.

See Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity in our 2006 Annual Report on Form 10-K for additional information on financial assurance requirements.

Cash Flows

Operating Activities

Net cash generated from operating activities in the first six months of 2007 was $302.2 million compared to $62.9 million in the same period in 2006. The $239.3 million increase in cash provided by operating activities in 2007 was due primarily to a $132.8 million increase in net earnings and a$111.7 million increase in cash generated by working capital changes. The $111.7 million increase in cash generated by working capital changes is the difference between the $70.6 million generated in the second quarter of 2007 and the $41.1 million used in the same period of 2006. During the first six months of 2007, customer advances increased by $65.0 million and accounts payable, accrued expenses, and income taxes increased by $39.9 million, generating $104.9 million of cash, which was partially offset by a $36.9 million increase in accounts receivable. The increase in customer advances was primarily due to an increase in the level of forward sales on order and higher contracted selling prices. Remaining unpaid amounts of customer advances are generally collected by the time the product is shipped. The increase in accounts payable, accrued expenses, and income taxes was primarily due to an increase in income taxes payable. The increase in accounts receivable was primarily due to higher selling prices.

Investing Activities

Net cash used in investing activities was $253.5 million for the first six months of 2007 as compared to $58.3 million in the comparable period of 2006.The $195.2 million increase in cash used in investing activities was primarily due to net purchases of short-term investments of $205.9 million during the first six months of 2007 as compared to $24.0 million of net purchases during the six months ended June 30, 2006. The level of short-term investments, currently tax exempt auction rate securities that we liquidate over periods ranging from one to twelve months, is dictated by our current cash position and estimated future liquidity requirements. Additions to property, plant and equipment-net were $39.4 million for the first six months of 2007 and $23.2 million for the same period of the prior year. The increase in additions to property, plant and equipment-net in the first six months of 2007 included a $6.2 million increase in plant turnaround-related expenditures as compared to the same period in 2006. As previously discussed, we made annual contributions of $9.4 million in March of 2007 and $11.1 million in March of 2006 to our asset retirement obligation escrow account. The balance in this account is reported at fair value on our consolidated balance sheet.

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Financing Activities

Net cash used in financing activities was $20.8 million in the first six months of 2007 as compared to net cash used in financing activities of $17.3 million for the comparable period of 2006. The $3.5 million increase in cash used in financing activities was due to higher distributions to minority interest, partially offset by the impact of activity related to stock-based compensation. Distributions to minority interest were higher in 2007 as all of CFL’s 2006 net earnings were distributed by June 30, 2007, whereas CFL’s 2005 net earnings were not fully distributed until the end of the third quarter of 2006. We also received $8.0 million of proceeds from stock options exercised under the CF Industries Holdings, Inc. 2005 Equity and Incentive Plan during the first six months of 2007.

Contractual Obligations

As of June 30, 2007, the annual amounts of purchase obligations for 2007, 2008 and 2009 are higher by $161.5 million, $89.8 million and $45.0 million, respectively, as compared to the amounts shown in Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity in our 2006 Annual Report on Form 10-K.Of the $161.5 million increasefor 2007, approximately $102.8 million relates to the first six months of the year and approximately $58.7 million relates to the last six months of the year. These changes primarily reflect higher volume commitments to purchase ammonia and sulfur for use in phosphate production. These commitments are based on spot prices as of June 30, 2007 and actual prices may differ.

As of June 30, 2007, the annual amounts of transportation obligations for 2007, 2008 and 2009 are higher by $16.9 million, $33.9 million and $17.2 million, respectively, as compared to the amounts shown in Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity in our 2006 Annual Report on Form 10-K. The $16.9 million increase for 2007 relates to the last six months of the year. These changes reflect a new requirements-based arrangement to transport finished product that allows for reductions in contract usage should actual transportation needs decrease. These amounts are based on normal transportation needs and contracted prices.

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, 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 2 to our audited consolidated financial statements and related notes included in Item 8, Financial Statements and Supplementary Data, of our 2006 Annual Report on Form 10-K. We discuss our critical accounting estimates in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2006 Annual Report on Form 10-K.

Shipping and Handling Fees and Costs

In the second quarter of 2007, we identified an error in our previously issued financial statements related to our classification of shipping and handling costs billed to our customers. Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) Issue No. 00-10—Accounting for Shipping and Handling Fees and Costs states that the amount billed to a customer in a sales transaction related to

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shipping and handling should be classified as revenue in the consolidated statement of operations. Prior to correcting the error we treated the amounts billed to our customers for shipping and handling as a reduction of shipping and handling costs included in cost of sales. Because the correction was between net sales and cost of sales, there was no change to our previously reported gross margin. The correction had no effect on any other financial statement line item or per-share amount. Even though the error is immaterial to the previously presented consolidated financial statements taken as a whole, we corrected our previously presented consolidated financial statements. See Note 17 to our unaudited consolidated financial statements included in this Form 10-Q for additional information concerning this correction.

Useful Lives of Depreciable Assets

In the fourth quarter of 2006, we completed a comprehensive review of the depreciable lives of our production facilities and related assets, as well as estimated production capacities used to develop our units-of-production (UOP) depreciation expense. As a result of this review, we increased the depreciable lives of certain assets at our nitrogen production facilities from ten years to fifteen years. Separately, we revised the estimates of production capacities for certain UOP assets at our Donaldsonville, Louisiana nitrogen complex and all UOP assets at our Plant City, Florida phosphate complex. As a result of these changes, we expect that depreciation expense will be reduced by approximately $11.7 million during 2007.

Of the $11.7 million anticipated reduction in depreciation expense, approximately $10.4 million relates to our nitrogen production assets and $1.3 million relates to our phosphate production assets. Included in the $10.4 million expected decrease in depreciation for nitrogen assets is approximately $1.5 million relating to CFL, a joint venture of which we own 66%.

The effect of this change in estimate for the quarter ended June 30, 2007 was a reduction of depreciation of $2.8 million, an increase in earnings before income taxes of $2.9 million, an increase in net earnings of $1.9 million, and an increase in diluted earnings per share of $0.04. Of the $2.8 million reduction in depreciation expense, approximately $2.5million related to our nitrogen production assets and $0.3 million related to our phosphate production assets. The effect of this change in estimate for the six months ended June 30, 2007 was a reduction of depreciation of $5.6 million, an increase in earnings before income taxes of $4.9 million, an increase in net earnings of $3.2 million, and an increase in diluted earnings per share of $0.06. Of the $5.6 million reduction in depreciation expense, approximately $4.9 million related to our nitrogen production assets and $0.7 million related to our phosphate production assets.

We review the depreciable lives assigned to our production facilities and related assets on a periodic basis, and change our estimates to reflect the results of those reviews.

Recent Accounting Pronouncements

We adopted Financial Accounting Standards Board (FASB) Interpretation (FIN) No. 48—Accounting for Uncertainty in Income Taxes in the first quarter of 2007.This Interpretation clarifies the accounting for uncertainty in income taxes recognized in accordance with Statement of Financial Accounting Standards (SFAS or Statement) No. 109—Accounting for Income Taxes. The Interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The adoption of FIN No. 48 did not have a material impact on our consolidated financial statements.

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We also adopted FASB Staff Position (FSP) No. AUG AIR-1—Accounting for Planned Major Maintenance Activities in the first quarter of 2007. This FSP prohibits the use of the accrue-in-advance method of accounting for planned major maintenance activities in annual and interim financial reporting periods. The adoption of this FSP did not have a material impact on our consolidated financial statements.

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. 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 2006 Annual Report on Form 10-K. 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;

·our history of losses;

·weather conditions;

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

·the concentration of our sales with certain large customers;

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

·the significant risks and hazards against which we may not be fully insured;

·reliance on third party transportation providers;

·unanticipated consequences related to future expansion of our business;

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

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CF INDUSTRIES HOLDINGS, INC.

·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;

·changes in global fertilizer supply and demand; and

·loss of key members of management and professional staff.

ITEM 3.QUANTITATIVE AND QUALITATIVE 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—Quantitative and Qualitative Disclosures About Market Risk in our 2006 Annual Report on Form 10-K for additional information on market risk.

Interest Rate Fluctuations

As of June 30, 2007, we had notes payable of approximately $5 million that had a floating interest rate. A 100 basis point change in interest rates on our notes payable would result in a $50,000 change in pre-tax income on an annual basis. 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 June 30, 2007, there were no loans outstanding under this credit facility.

As of June 30, 2007, we had short-term investments of $506.0 million consisting primarily of available-for-sale tax exempt auction rate securities that we liquidate over periods ranging from one to twelve months. A 100 basis point change in the average rate of interest earned on these short-term investments would result in a $5.0 million change in pre-tax income on an annual basis.

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. Derivatives are carried at their fair value on the balance sheet and changes in their fair value are recognized in operations as they occur. As of June 30, 2007, 34.0 million MMBtus of natural gas were hedged, most of which related to sales contracted to be sold through our forward pricing program. Most of the 30.6 million MMBtus of natural gas hedged as of December 31, 2006, also related to sales contracted to be sold through our forward pricing program.

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CF INDUSTRIES HOLDINGS, INC.

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.   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 quarter ended June 30, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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CF INDUSTRIES HOLDINGS, INC.

PART II—OTHER INFORMATION

ITEM 4.SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

Our 2007 annual meeting of stockholders was held on May 9, 2007, for the purpose of (1) electing two members of the board of directors to serve until the 2010 annual meeting of stockholders and (2) ratifying the selection of KPMG LLP as our independent registered public accounting firm for 2007.

At the meeting, the following persons were elected to the board of directors, each for a term to expire at the 2010 annual meeting of stockholders:

	Number of Votes
Nominee	For	Withheld
Robert C. Arzbaecher	47,734,266	375,061
Edward A. Schmitt	47,694,416	414,911

The stockholders ratified the appointment of KPMG LLP as our independent registered public accounting firm for the year 2007 with 47,863,142 votes cast for ratification, 240,581 votes cast against ratification and 5,604 abstentions.

ITEM 6.EXHIBITS.

A list of exhibits filed with this report on Form 10-Q (or incorporated by reference to exhibits previously filed or furnished) is provided in the Exhibit Index on page 39 of this report.

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CF INDUSTRIES HOLDINGS, INC.

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: August 6, 2007	By	/s/ STEPHEN R. WILSON
		Stephen R. Wilson
		President and Chief Executive Officer, Chairman of the Board (Principal Executive Officer)
Date: August 6, 2007	By	/s/ ANTHONY J. NOCCHIERO
		Anthony J. Nocchiero
		Senior Vice President and Chief Financial Officer (Principal Financial Officer)

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CF INDUSTRIES HOLDINGS, INC.

EXHIBIT INDEX

Exhibit No.	Description
10.1	Change in Control Severance Agreement, effective as of April 24, 2007, by and between CF Industries Holdings, Inc. and W. Anthony Will.
10.2	Change in Control Severance Agreement, effective as of May 8, 2007, by and between CF Industries Holdings, Inc. and Anthony J. Nocchiero.
10.3	Separation Agreement and Release, effective as of May 24, 2007, by and between CF Industries Holdings, Inc. and Ernest Thomas.
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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EX-10.1

Exhibit 10.1

CHANGE IN CONTROL SEVERANCE AGREEMENT

THIS AGREEMENT, effective as of April 24, 2007, is made by and between CF Industries Holdings, Inc., a Delaware corporation (the “Company”), and W. Anthony Will (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 become effective upon execution, and the Term shall continue in effect through December 31, 2008; provided, however, that commencing on January 1, 2008 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.

5.1           Following 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.

5.2           If 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.

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

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6.             Severance Payments.

6.1           If 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 the twenty-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 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

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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.

(E)           The Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of two

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years 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 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

5

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.

6.3           The 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 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)

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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).

6.4           The 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.

6.5           The 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.

6.6           Notwithstanding 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.

7.1           Notice 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 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

7

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.

7.2           Date 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).

7.3           Dispute 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.

7.4           Compensation 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.

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

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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.

9.1           In 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.

9.2           This 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 Holdings, Inc.

4 Parkway North, Suite 400

Deerfield, Illinois 60015-2590

Attention:  Vice President, Human Resources

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

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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.

14.2         Any 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

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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 have substantially 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

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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/ W. Anthony Will
		W. Anthony Will

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EXHIBIT A

RELEASE

(a)  W. Anthony Will ("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 as of April 24, 2007 (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 ever had 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                  .

W. Anthony Will

Signed as of this      day of                   .

(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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EX-10.2

Exhibit 10.2

CHANGE IN CONTROL SEVERANCE AGREEMENT

THIS AGREEMENT, effective as of May 8, 2007, is made by and between CF Industries Holdings, Inc., a Delaware corporation (the “Company”), and Anthony J. Nocchiero (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 become effective upon execution, and the Term shall continue in effect through December 31, 2008; provided, however, that commencing on January 1, 2008 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.

5.1           Following 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.

5.2           If 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.

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

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6.             Severance Payments.

6.1           If 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 the twenty-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 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

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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.

(E)           The Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of two

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years 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 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

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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.

6.3           The 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 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)

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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).

6.4           The 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.

6.5           The 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.

6.6           Notwithstanding 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.

7.1           Notice 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 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

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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.

7.2           Date 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).

7.3           Dispute 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.

7.4           Compensation 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.

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

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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.

9.1           In 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.

9.2           This 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 Holdings, Inc.

4 Parkway North, Suite 400

Deerfield, Illinois 60015-2590

Attention:  Vice President, Human Resources

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.

14.2         Any 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

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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 have substantially 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/ Anthony J. Nocchiero
		Anthony J. Nocchiero

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EXHIBIT A

RELEASE

(a)  Anthony J. Nocchiero ("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 as of May 8, 2007 (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 ever had 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             .

Anthony J. Nocchiero

Signed as of this    day of            .

(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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EX-10.3

Exhibit 10.3

SEPARATION AGREEMENT AND RELEASE

This Agreement is made and entered into by and between ERNEST THOMAS (“Employee”) and CF INDUSTRIES, INC., including its parents, divisions, subsidiaries, affiliates, employees, directors, officers, trustees, shareholders, successors and assigns (“Company”).

WHEREAS, Employee’s employment with the Company will end at the close of business on Friday, May 25, 2007, which date is the end of the twenty-one (21) calendar day period referred to in Paragraph 13(d) below plus a seven (7) calendar day extension (as so extended, “Consideration Period”), unless Employee executes and returns this Agreement within such Consideration Period, in which case Employee’s employment with the Company will instead end upon the expiration of the seven (7) calendar day revocation period (“Revocation Period”) referred to in Paragraph 13(e) below (in either case the end of Employee’s employment with the Company being referred to herein as the “Termination Date”);

WHEREAS, the parties desire to effect a final settlement and compromise of all claims and issues that have been raised or could have been raised by Employee and Company;

NOW THEREFORE, in consideration of the mutual covenants and promises contained herein, the parties agree as follows:

1.             The Company will pay Employee the lump sum of $500,000, less appropriate withholding, on or before the next regular pay period following the Termination Date, but, as is also true for the consideration set out in Paragraphs 2, 3, 4, and 5 below, in no event before five (5) business days beyond the expiration of the Revocation Period.

2.             For the period commencing immediately after the Termination Date and ending on September 30, 2007 (“Consulting Period”), Employee agrees to make himself available to provide limited consulting services to the Company from time to time.  The consulting services that

Employee will provide shall be as requested by the Chief Executive Officer or the new Chief Financial Officer of the Company, for the purpose of assisting the new Chief Financial Officer with any questions or issues that may arise during the transition, subject to Employee’s availability to provide such services in each instance in light of Employee’s responsibilities in his new position.  Employee shall be paid a fee for such consulting services at the rate of $500 per hour.  In no event shall Employee be expected or required to perform more than one hour of consulting services in any one day or more than twenty hours of consulting services in total during the Consulting Period.

(a)           So long as Employee remains a consultant through August 10, 2007, (i) one-third of his stock option grant made under the CF Industries Holdings, Inc. 2005 Equity and Incentive Plan (the “Plan”) as of August 10, 2005 shall become fully vested and exercisable on August 10, 2007 and (ii) one-third of his stock option grant made under the Plan as of August 10, 2006 shall become fully vested and exercisable on August 10, 2007.

(b)           Employee’s stock options will continue to be subject to the existing terms and conditions, as set forth in the Plan and applicable award agreements, including those provisions with respect to permissible methods of exercise (including those methods previously approved by the Compensation Committee).  In particular, the term of Employee’s stock options will continue through the Consulting Period and for ninety (90) days thereafter, at the end of which period Employee’s stock options will terminate to the extent not theretofore vested and exercised.

(c)           Employee will no longer be subject to the provisions of the Company’s policy on insider trading that, while he was Senior Vice President and Chief Financial Officer of the Company, required him to confine his trading to quarterly trading windows and to obtain pre-clearance before trading.

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3.             At the next regular pay period following the Termination Date, Employee will be paid the equivalent of all unused vacation to which he is entitled, if any.

4.             Employee will receive all retirement and welfare plan benefits for which he is eligible, if any, in accordance with the applicable plan documents.  As further consideration, any unvested Company contributions to qualified and non-qualified savings plans will be paid in cash at the next regular pay period following the Termination Date.

5.             The Company will pay up to twelve (12) months of COBRA premiums for medical insurance coverage should Employee elect to exercise his COBRA rights or until such time as Employee becomes eligible for medical insurance coverage from another employer, whichever occurs first.  If Employee becomes eligible for medical insurance coverage from another employer, the Company’s payments of his COBRA premiums pursuant to this paragraph will cease.

6.             Other than the benefits expressly referred to in Paragraphs 1 through 5 above, all benefits Employee received as an employee of the Company cease and no longer accrue as of the close of business on the Termination Date or, as applicable, in accordance with the provisions of any applicable plan based on the Termination Date.

7.             Employee agrees not to discuss or disclose the terms of this Agreement except insofar as Employee determines that it is necessary to reveal this information to his attorney, accountant or tax preparer, members of his immediate family or as required to do so by law or by the order of any court, government agency or deliberative body with authority to order such disclosure; provided that Employee may disclose the terms of this Agreement in order to enforce any of the provisions of, or Employee’s rights under, this Agreement or to defend Employee against any claim by the Company that Employee has breached any provision of this Agreement.  Should Employee receive any legal request, notice or order to disclose the terms of this Agreement,

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Employee will immediately notify the Company’s General Counsel both in writing (at CF Industries, Inc., 4 Parkway North Suite 400, Deerfield, IL  60015-2590) and telephonically (847-405-2400) that Employee has received such disclosure demand so that the Company may timely take any legal action it considers necessary to stop such disclosure.  Should Employee breach this confidentiality commitment, the Company reserves the right (a) to stop the payment of any benefits pursuant to this Agreement not yet paid; (b) to seek recovery of any payments already made pursuant to this Agreement; and/or (c) to seek legal redress for any damages resulting from such disclosures.

8.             Employee agrees that he will not take any action, or make any statement, whether orally or in writing, which in any manner disparages or impugns the reputation or goodwill of the Company and that to do so will constitute a material breach of this Agreement.  The Company agrees that its current officers will not take any action, or make any statement, whether orally or in writing, which in any manner disparages or impugns the reputation or goodwill of Employee and that to do so will constitute a material breach of this Agreement.

9.             The parties agree that the only public statement to be made by either party regarding Employee’s separation from the Company will be the announcement that Employee has left the Company to accept another position.  Employee is to direct all references to the Company’s General Counsel who will respond only to written reference inquiries with the following information:  dates of employment, position(s) held and confirmation of last salary.  To the extent that Employee directs references to persons at the Company other than the Company’s General Counsel, the Company is not liable for any statements made by such nondesignated individuals regarding Employee.  The parties stipulate and agree that the Company has no liability for any statements

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made regarding Employee by persons not employed by the Company at the time such statements are made.

10.           Employee represents and warrants that he has returned to the Company all Company property.

11.           Employee acknowledges that, as a former executive of the Company, he became aware of Company trade secrets and other confidential, proprietary and legally privileged information including but not limited to financial and legal matters involving the Company.  Employee further acknowledges that he is not to disclose any trade secrets, privileged or confidential information he learned in the course of his employment with the Company and that he is required to return to the Company any such trade secret, privileged or confidential materials currently in his possession, whether in hard copy, disk or on his hard drive.  If Employee has turned over such trade secret, privileged or confidential Company information and/or documents, whether in hard copy or electronic format, to any third party, Employee is required as a condition of this Agreement to take all necessary efforts to retrieve such data and return it to the Company as well as to inform the Company’s General Counsel of the identity of all such third parties so that the Company may take whatever action is necessary to retrieve its data.

12.           In exchange for the foregoing benefits and payments, Employee, for himself, his heirs, and his executors and administrators, will release and forever discharge the Company (as defined above) from any and all legally waivable claims, demands, sums of money, contracts, controversies, agreements, promises, damages, costs, causes of action and liabilities of any kind or character whatsoever, from the beginning of time to the date Employee signs this Agreement, relating to his employment at the Company, including the termination of such employment, except insofar as it may be necessary to take action with respect to the enforcement of this Agreement. 

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This release includes, but is not limited to, all claims which could have been raised under any local, state or federal statute, ordinance, regulation and/or under any express or implied contract and/or under common law.

13.           With respect to the foregoing release and waiver, Employee acknowledges the following:

(a)           That the foregoing release and waiver is entered into knowingly, voluntarily and with the opportunity for advice by Employee’s personal attorney.

(b)           Employee acknowledges that the entitlements set forth in this Agreement exceed in nature and scope that to which he would otherwise be legally eligible to receive.

(c)           Nothing contained in this Agreement purports to release any of Employee’s rights or claims that may arise after the date of execution of this Agreement.

(d)           This Agreement shall not give rise to any legal rights or obligations with respect to any waiver of claims until Employee is afforded a period of at least twenty-one (21) calendar days within which to consider the terms of this Agreement.

(e)           Employee shall be afforded seven (7) calendar days following the execution of this Agreement within which Employee may revoke the Agreement insofar as it relates to the Age Discrimination in Employment Act, and none of the terms and provisions of this Agreement shall become effective or enforceable with respect to any waiver of claims under the Age Discrimination in Employment Act until such revocation period has expired.  Any such revocation must be in writing, including email, and directed to Douglas Barnard, General Counsel, CF Industries, Inc., 4 Parkway North Suite 400, Deerfield, IL  60015-2590.  Mr. Barnard’s email address is:  dbarnard@cfindustries.com and his telephone number is:  847-405-2400.  Although

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such revocation must be in writing, Mr. Barnard must also be informed by telephone of the revocation on or before the last day of the revocation period.

14.           The parties hereby stipulate and agree that nothing contained in this Agreement shall be construed as an admission of liability, culpability or wrongdoing by either party.

15.           This Agreement constitutes the entire understanding between the parties.  No promises or agreements not contained in this Agreement shall be binding unless set forth in writing and signed by all the parties.

16.           The parties agree that this Agreement shall be construed and enforced in accordance with the laws of the State of Illinois, without regard to choice of law or conflict of law principles.  The parties agree that any legal proceedings relating to this Agreement will be instituted in federal or state court in Cook County, Illinois, and the parties consent to the jurisdiction of such courts for such actions.

17.           Should any provision of this Agreement, in whole or in part, be held invalid or unenforceable by operation of law or otherwise, all other provisions shall remain in full force and effect and the parties agree that a court may modify any provision to make it valid or enforceable in whole or in part.

ERNEST THOMAS		CF INDUSTRIES, INC.
/s/ Ernest Thomas		By:	/s/ Douglas C. Barnard
Dated:	May 24, 2007	Its:	Vice President, General Counsel and Secretary
			Dated: May 17, 2007

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EX-31.1

Exhibit 31.1

CF INDUSTRIES HOLDINGS, INC.

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(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    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

(d)   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(s) 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 the 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: August 6, 2007	/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

CF INDUSTRIES HOLDINGS, INC.

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

I, Anthony J. Nocchiero, 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(s) 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    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

(d)   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(s) 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 the 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:  August 6, 2007	/s/ ANTHONY J. NOCCHIERO
	Anthony J. Nocchiero Senior Vice President and Chief Financial Officer (Principal Financial Officer)

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EX-32.1

Exhibit 32.1

CF INDUSTRIES HOLDINGS, INC.

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 June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Stephen R. Wilson, as President and Chief Executive Officer of the Company, hereby 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.

/s/ STEPHEN R. WILSON

Stephen R. Wilson
President and Chief Executive Officer, Chairman of the Board
(Principal Executive Officer)

Date:  August 6, 2007

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EX-32.2

Exhibit 32.2

CF INDUSTRIES HOLDINGS, INC.

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 June 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Anthony J. Nocchiero, as Senior Vice President and Chief Financial Officer of the Company, hereby 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.

/s/ ANTHONY J. NOCCHIERO

Anthony J. Nocchiero
Senior Vice President and Chief Financial Officer
(Principal Financial Officer)

Date:  August 6, 2007

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