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0001104659-10-042441.txt : 20100805
0001104659-10-042441.hdr.sgml : 20100805
20100805171539
ACCESSION NUMBER: 0001104659-10-042441
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20100805
ITEM INFORMATION: Results of Operations and Financial Condition
ITEM INFORMATION: Financial Statements and Exhibits
FILED AS OF DATE: 20100805
DATE AS OF CHANGE: 20100805
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CF Industries Holdings, Inc.
CENTRAL INDEX KEY: 0001324404
STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870]
IRS NUMBER: 202697511
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-32597
FILM NUMBER: 10995462
BUSINESS ADDRESS:
STREET 1: 4 PARKWAY NORTH
STREET 2: SUITE 400
CITY: DEERFIELD
STATE: IL
ZIP: 60015
BUSINESS PHONE: (847) 405-2400
MAIL ADDRESS:
STREET 1: 4 PARKWAY NORTH
STREET 2: SUITE 400
CITY: DEERFIELD
STATE: IL
ZIP: 60015
8-K
1
a10-15210_18k.htm
8-K
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K
CURRENT
REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 5,
2010
CF
Industries Holdings, Inc.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation)
|
|
001-32597
(Commission File No.)
|
|
20-2697511
(I.R.S. Employer
Identification Number)
|
4 Parkway North, Suite 400
|
|
Deerfield, IL
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60015
|
(Address of principal
|
(Zip Code)
|
executive office)
|
|
Registrants telephone number, including area code (847)
405-2400
(Former name or former address if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
o Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Item 2.02.
|
Results of Operations and Financial Condition.
|
On
August 5, 2010, CF Industries Holdings, Inc. issued a press release
announcing its results for the quarter and six months ended June 30, 2010.
The press release is attached hereto as Exhibit 99.1.
Item 9.01.
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Financial
Statements and Exhibits.
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|
|
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(d) Exhibits.
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Exhibit No.
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|
Description of Exhibit
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|
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99.1
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Press
release dated August 5, 2010
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2
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.
Date:
August 5, 2010
|
CF
INDUSTRIES HOLDINGS, INC.
|
|
|
|
|
By:
|
/s/
Anthony J. Nocchiero
|
|
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Name:
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Anthony
J. Nocchiero
|
|
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Title:
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Senior
Vice President and Chief Financial Officer
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3
EXHIBIT INDEX
Exhibit No.
|
|
Description
|
|
|
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99.1
|
|
Press
release dated August 5, 2010
|
4
EX-99.1
2
a10-15210_1ex99d1.htm
EX-99.1
Exhibit 99.1
NEWS
NEWS
NEWS
![](g152101mn01i001.jpg)
|
4 Parkway North, Suite 400
|
|
Deerfield, IL
60015
|
|
|
Contact:
|
Terry Huch
Senior Director, Investor Relations & Corporate Communications
|
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847-405-2515 thuch@cfindustries.com
|
CF Industries Holdings, Inc.
Reports Second Quarter 2010 Results
Strong Fall Volume and Price
Outlook
Terra Integration on Track and
Delivering Benefits
DEERFIELD, ILAug. 5, 2010CF Industries
Holdings, Inc. (NYSE: CF):
Second
Quarter Highlights
· Net earnings attributable to common stockholders were $105.1 million, or
$1.54 per diluted share, down from earnings of $213.0 million, or $4.33 per
diluted share, in the 2009 second quarter.
· Second quarter results included $113.7 million of business combination and
integration costs, a $15.1 million non-cash mark-to-market gain on natural gas
derivatives and $1.9 million of Perú project development costs.
· Net sales were $1.3 billion, up 32 percent from $991.0 million in the 2009
second quarter.
1
· Nitrogen segment volume was 109 percent higher than year ago reflecting the
Terra acquisition, higher corn plantings and favorable conditions for ammonia
application. DAP/MAP volume fell 19
percent relative to 2009 level that included unusually high exports.
Outlook
and Update
· Outlook is favorable for fall volume in North America due to likely early
harvest and strong projected 2011 plantings.
· Pricing momentum is positive for all products.
· Integration of CF Industries and Terra generating expected cost synergies;
additional opportunities identified to optimize business mix.
· Company using available free cash flow to pay down bank debt.
CF Industries Holdings, Inc. today reported
second quarter 2010 net earnings attributable to common stockholders of $105.1
million, or $1.54 per diluted share, compared to earnings of $213.0 million, or
$4.33 per diluted share, in the second quarter of 2009. Second quarter results included $113.7
million of business combination and integration costs, a $15.1 million non-cash
mark-to-market gain on natural gas derivatives and $1.9 million of Perú project
development costs. These items
reduced/(increased) after-tax earnings per diluted share by $1.08, $(0.14) and
$0.03, respectively.
The carrying value of Terras property, plant and
equipment, as well as other assets, has been increased to market value in
accordance with purchase accounting rules.
The resulting increase in depreciation and amortization is
2
not included in the business combination and
integration costs referenced above.
Net sales were $1.3 billion, up 32 percent from $991.0
million in the same period last year, due to inclusion of Terra net sales of
$526.3 million, higher average phosphate selling prices and nitrogen volumes,
offset partially by lower average nitrogen selling prices and phosphate
volumes. Year-ago sales and all other
2009 volume and financial data in this release are presented on a pre-acquisition
basis, as reported in the prior periods.
Reflecting this basis, total sales volume increased from 2.6 million
tons in the 2009 second quarter to 4.4 million tons in 2010, more than
explained by the inclusion of 2.0 million tons of Terra sales volume. Ammonia and urea ammonium nitrate solution
(UAN) sales volumes increased 147 and 140 percent, respectively, over the
year-earlier period, while sales of urea, which comprised a smaller portion of
Terras sales, increased 19 percent.
Nitrogen volumes in the second quarter benefited from
market conditions and our operating decisions, in addition to the increased
scale of the new CF Industries, said Stephen R. Wilson, chairman and chief
executive officer, CF Holdings, Inc. We are very enthusiastic about the
profile of the combined company and what we can accomplish with our expanded
production and distribution network.
An early thaw in the Corn Belt led to the highest
direct-application ammonia volume of any spring since 1994 and to record low
Midwest inventories of ammonia. While
these conditions were a boon for producers that held high inventories of
ammonia at the start of the quarter, they shifted demand away from urea and
UAN, exacerbating pressure on those products, which had suffered from weak
first quarter demand due to wet weather in the southern plains. Downstream
3
buyers were unwilling to take large urea and UAN
positions, and business was transacted increasingly in smaller lots closer to
the farm.
While these factors were playing out in North America,
international markets were softening due to weather-limited application seasons
in China and Europe, deferred buying in India and high producer operating
rates. Some of these factors reversed
themselves in June and July, leading to price increases for urea and UAN,
but the net effect on the second quarter was to lower prices for these
products.
Sales volume of diammonium phosphate (DAP) and
monoammonium phosphate (MAP) declined 19 percent compared to the second quarter
of 2009 when abnormally high volume resulted from very high carryover
inventory. Phosphate pricing was strong
through the 2010 spring season due to robust demand in the export market and a
rebound in domestic shipments. Long-term
Indian contracts underpinned the world market by removing a substantial portion
of export supply, with spot demand from Asia, Europe and Latin America
absorbing remaining supplies.
First Half Results
In the first six months of 2010, earnings attributable
to common stockholders totaled $100.7 million, or $1.71 per diluted share,
compared to $275.7 million, or $5.61 per diluted share, in the same period of
2009. First half results included
$249.8 million of business combination costs, a $28.3 million gain on the sale
of Terra stock in the first quarter, $3.9 million of non-cash mark-to-market
gains on natural gas derivatives and $4.6 million of Perú project development
costs.
4
Net sales for the first six months of 2010 totaled
$1.8 billion, up 8 percent from $1.7 billion in the same period of 2009. The
increase resulted primarily from the inclusion of Terra net sales of $526.3
million and higher nitrogen volumes, mostly offset by lower nitrogen prices and
lower phosphate volumes.
Nitrogen Segment
Entering the second quarter, CF Industries expected
2.4 million tons of ammonia to be sold for agricultural use in the U.S. Because of ideal conditions for ammonia
application throughout much of the Corn Belt, the company now estimates that
3.0 million tons of agricultural ammonia were applied in the quarter. As a result, nitrogen application for the
fertilizer year ended June 2010 is estimated to have totaled 12.8 million
nutrient tons, compared to an expectation of 12.4 million tons.
CF Industries delivered 1.2 million tons of ammonia in
the quarter at an average price of $380 per ton, compared to 481,000 tons at an
average price of $696 in the second quarter of 2009. Although the very strong ammonia season came
at a time when Midwest storage capacity was full, close coordination among
functional areas was required to deliver such large amounts in a timely
fashion. The companys ammonia terminals
implemented 24-hour/7-day operations for extended periods, while supply and
logistics personnel used all available transportation modes to resupply
them. One terminal set a single-day
delivery record, only to set new records on each of the subsequent three
days. Average realized ammonia prices in
the second quarter of 2010 were lower than spot prices because of sales booked
in the first quarter.
Urea imports, which had been considerably below the
five-year average for the fertilizer year through March, caught up to average
levels by the end of the quarter.
5
However, strong demand late in the quarter,
particularly for rice application, left quarter-end inventories below the
five-year average. CF Industries had
urea sales volume of 851,000 tons at an average price of $292 in the second
quarter, compared to 714,000 tons at an average price of $295 in the 2009
second quarter. In contrast to average
ammonia prices, average realized urea prices in the second quarter of 2010
benefited from sales booked in the first quarter.
Strong ammonia movement diminished urea and UAN demand
early in the quarter at a time when global prices for those products were
falling. Buyers took smaller UAN
positions mostly in local markets rather than large positions in the barge
market, which shifted demand close to the companys inland plant network. The company responded by switching some
orders to Donaldsonville for customers distant from the inland plants, avoiding
local product shortages and garnering transportation savings. UAN sales volume of 1.6 million tons was sold
at an average price of $220 per ton, compared to volume of 651,000 tons at an
average price of $316 a year ago.
In the second quarter, ammonium nitrate (AN) sales
volume of 263,000 tons was sold at an average price of $213. There were no AN sales in prior periods as
all of the companys AN capacity was acquired in the Terra transaction.
Nitrogen net sales totaled $1.1 billion, up 49 percent
from $755.0 million in the 2009 second quarter, due primarily to inclusion of
Terra sales of $526.3 million. Sales
volume for the 2010 second quarter was 3.9 million tons, compared to 1.9
million tons in the year-ago quarter, with the increase largely explained by
the inclusion of 2.0 million tons supplied from former Terra locations.
6
Gross margin for the nitrogen segment was $367.5
million, 9 percent lower than the $403.2 million for the 2009 second quarter.
The decrease was due primarily to lower product prices, largely offset by a
$140.0 million benefit from the Terra acquisition. Gross margin as a percent of sales, including
the effect of the segments mark-to-market adjustments on derivatives, was 33
percent, down from 53 percent in the year-earlier quarter when forward sales
booked during peak commodity conditions in 2008 lifted results.
CF Industries nitrogen facilities operated at 97
percent of capacity in the 2010 second quarter.
UAN operating rates were lower than the other products as the company
shifted production mix toward urea due to market conditions.
Phosphate Segment
The phosphate segment experienced firm pricing and
attractive margins throughout the second quarter. Domestic shipments of DAP and MAP were 4
percent higher in the 2010 second quarter than in the 2009 second quarter.
Exports declined 33 percent year-over-year as the company concentrated on the
recovering domestic market. Export volume in the second quarter of 2009 was
abnormally high, reflecting a large accumulation of inventory in the prior
quarter which the company reduced through aggressive exports.
The phosphate segments second quarter net sales were
$185.1 million, a 22 percent decrease from second quarter 2009 levels on 32
percent lower sales volumes. Revenues from DAP and MAP sales were up 5 percent
year-over-year, despite 19 percent lower total volume. Segment revenues were lower due to the
absence of sales of potash purchased for resale.
7
Average selling prices for phosphate products were
significantly higher than in the 2009 second quarter. For DAP, the average price was $400 per ton,
32 percent higher than the prior-year average price of $304. For MAP, the average selling price was $414
per ton, 20 percent higher than the second quarter 2009 average price of $346.
Gross margin for the segment was $29.3 million, up
from $23.8 million in the 2009 second quarter, which included a $9.2 million
loss on potash purchased for resale.
Gross margin percentage was 15.8 percent of sales, compared to 10.1
percent of sales in the year-earlier period (18.6 percent excluding potash
purchased for resale).
CF Industries Plant City, Florida Phosphate Complex
operated at 87 percent of capacity during the 2010 second quarter.
Safety Performance
The companys Plant City, Florida
Phosphate complex experienced a lost-time accident (LTA) during the 2010 second
quarter.
During the second quarter, the
Medicine Hat, Alberta nitrogen complex achieved five years without an LTA. CF Industries Palmyra, Missouri distribution
terminal recently became the companys sixth location to celebrate 15,000 days
(over 41 years) without incurring an LTA, and its Fremont, Nebraska
distribution terminal celebrated 10,000 days without an LTA.
8
Other Developments
Terra Acquisition and Integration
On April 15, 2010, CF Industries completed the final
steps in its acquisition of Terra Industries Inc. CF Industries is now the worlds
second-largest nitrogen products manufacturer and the third-largest phosphate
producer among publicly traded companies.
The combination creates a larger strategic platform and expands access
to capital markets, which can be utilized to support future growth. The combination benefits customers by
increasing efficiency.
To date, the teams charged with integrating CF
Industries and Terra have succeeded in identifying expected annual synergies in
excess of the targeted range of $105 million to $135 million. As further progress is made in improving and
harmonizing processes, optimization of the combined business is expected to
result in additional profit improvements.
The integration assistance provided by Bain & Company is expected to
conclude shortly.
Said Wilson, We have identified and confirmed all of
the synergy value we targeted in the initial wave of integration. As we implement a new organization structure
that leverages the strengths of the two legacy companies, we expect to achieve
additional business improvements by optimizing a larger network of production,
transportation, distribution and sales activities. Our integration teams have
been very effective in identifying and pursuing opportunities and have done so
with little or no impact on customer service.
The integration already has strengthened the companys
capabilities on many fronts. The sales
and marketing organization now has insight deeper into the value chain through
its regional sales force and better access to all selling channels. These enhancements are expected to result in
improved business mix, greater
9
flexibility in logistics and inventory management and
more data-driven decision making.
Purchase Accounting
CF Industries has completed the preliminary purchase
accounting analysis for the Terra acquisition.
Accordingly, the fixed assets at legacy Terras six plant locations in
North America have been adjusted to their fair market values, the total of
which is estimated to be approximately $2.6 billion greater than the previous
total book value. This and other
adjustments to asset values increased depreciation and amortization by $40.0
million in the quarter.
Perú Nitrogen Complex
Work on CF Industries proposed nitrogen complex in
Perú continues. Any significant future
investment depends upon progress in developing local infrastructure and other
factors.
Expanded Board of Directors
On June 9, the board of directors elected Stephen J.
Hagge a director until the 2013 annual meeting of shareholders and has
appointed him to the audit and compensation committees. His election increases membership of the
board of directors to nine.
Liquidity and Financial Position
At June 30, 2010, CF Industries cash, cash
equivalents and short-term investments totaled $601.4 million. In addition, the company held investments in
illiquid auction rate securities at June 30, 2010 that were valued at $125.3
million.
10
During the quarter, CF Industries financed the Terra
acquisition with cash on hand and $3.75 billion in bridge and term loan
financing, of which approximately $3.6 billion was drawn. Subsequently, the company completed a public
offering of common stock on April 21 and a public offering of senior unsecured
notes on April 23. The net proceeds of
approximately $2.7 billion from these offerings were used to repay the bridge
loan and a portion of the term loans.
Later in the quarter, the company retired approximately $600 million
face amount of notes that had been issued by Terra prior to the acquisition. At the end of the quarter, the company had
outstanding debt of $2.6 billion, comprising primarily $1.6 billion in senior
notes and a $1.0 billion term loan.
CF Industries intends to use free cash flow to pay
down the term loan. The company is
committed to maintaining a strong, flexible balance sheet through deleveraging,
targeting net debt in the range of 1.0 to 1.5 times EBITDA.
Dividend Payment
On July 21, 2010, CF Industries board of directors
declared the regular quarterly dividend of $0.10 per common share. The dividend
will be paid on August 31, 2010 to stockholders of record on August 13, 2010.
Outlook
The outlook for nitrogen and phosphate fertilizers is
favorable. Weather permitting, the fall
fertilizer season is expected to be strong due to an early harvest,
anticipation of another large corn planting in 2011 and increasing application
rates. Producer and customer inventories
are generally low, and near-term demand from Latin America, India and other
markets in Asia should continue to provide support to the market.
11
The very strong spring ammonia application decreased
demand for UAN, pressuring prices during the second quarter. However, due to low levels of imports,
producer inventory of UAN finished the quarter 12 percent below the five-year
average, and downstream inventories also were below normal. CF Industries reduced UAN inventory by
exporting 35,000 tons of product during June. Arrangements have been made for
additional exports to four countries in the third quarter. In July, UAN prices moved up strongly. Summer fill programs, typically introduced in
May, were launched in July in the face of strong, pent-up demand.
We were patient through a challenging UAN market in the
second quarter, and were rewarded for our patience in July, indicated
Wilson. At this point, we expect upward
momentum in nitrogen to be sustained by the combination of low inventories,
seasonal supply outages, solid demand, both domestically and internationally,
and favorable relationships between natural gas prices in North American and
other world markets.
Conditions in the phosphate market also are favorable
for the second half of 2010. CF
Industries continues to maintain very low inventories, matching low levels
observed in markets worldwide. India
continues to require large phosphate volumes, restocking demand is emerging in
South America and demand drivers in Europe and North America are positive.
The company recently concluded negotiations for third
quarter 2010 sulfur purchases at $95 per tonne, down from $145 per ton in the
second quarter.
12
Natural gas prices rose in June as weather forecasts
called for high cooling demand and a potentially active hurricane season. The company purchased call options for August
through October to cap prices of approximately half of its required natural
gas, protecting against hurricane-related spikes without taking away the
opportunity to benefit from lower prices.
Conference Call
CF Industries will hold a conference call to discuss
these second quarter and year-to-date results at 10:00 ET on Friday, August 6,
2010. Investors can access the call and
find dial-in information on the Investor Relations section of the companys Web
site at www.cfindustries.com.
About CF Industries Holdings, Inc.
CF Industries Holdings, Inc., headquartered in
Deerfield, Illinois, is the holding company for the operations of CF
Industries, Inc. CF Industries is a global leader in nitrogen and phosphate
fertilizer manufacturing and distribution, serving both agricultural and
industrial customers. CF Industries operates world-class nitrogen fertilizer
manufacturing complexes in the central United States and Canada; conducts phosphate
mining and manufacturing operations in Central Florida; and distributes
fertilizer products through a system of terminals, warehouses, and associated
transportation equipment located primarily in the Midwestern United States. The
company also owns 50 percent interests in GrowHow UK Limited, a fertilizer
manufacturer in the United Kingdom; an ammonia facility in The Republic of
Trinidad and Tobago; and KEYTRADE AG, a global fertilizer trading organization
headquartered near Zurich, Switzerland. CF Industries routinely posts investor
announcements and additional information on the companys website at
13
www.cfindustries.com and encourages those interested
in the company to check there frequently.
Note Regarding Non-GAAP Financial Measures
The company reports its financial results in
accordance with U.S. generally accepted accounting principles (GAAP).
Management believes that certain non-GAAP financial measures provide additional
meaningful information regarding the companys performance, liquidity,
financial strength, and capital structure. The non-GAAP financial measures
should be viewed in addition to, and not as an alternative for, the companys
reported results prepared in accordance with GAAP. In addition, because not all
companies use identical calculations, the non-GAAP financial measures included
in this financial results release may not be comparable to similarly titled
measures of other companies. Reconciliations of the non-GAAP financial measures
to GAAP are provided in tables accompanying this release.
Safe Harbor Statement
Certain statements contained in this communication may
constitute forward-looking statements. All statements in this communication,
other than those relating to historical information or current condition, are
forward-looking statements. These forward-looking statements are subject to a
number of risks and uncertainties, many of which are beyond our control, which
could cause actual results to differ materially from such statements. Important
factors that could cause actual results to differ materially from our
expectations include, among others: our
ability to integrate the businesses of CF Industries and Terra promptly and effectively
and to achieve the cost savings and synergies we anticipate from the
14
Terra acquisition within the expected time frame or at
all; the potential for disruption from
the Terra acquisition to make it more difficult for us to maintain relationships
with customers, employees or suppliers; the volatile cost of natural gas in the
areas where our production facilities are principally located; the cyclical
nature of our business and the agricultural sector; the global commodity nature
of our fertilizer products, the impact of global supply and demand on our
selling prices, and the intense global competition in the consolidating markets
in which we operate; conditions in the U.S. agricultural industry; weather
conditions; our inability to accurately predict seasonal demand for our
products; the concentration of our sales with certain large customers; the
impact of changing market conditions on our FPP; risks involving derivatives
and the effectiveness of our risk measurement and hedging activities; the
reliance of our operations on a limited number of key facilities and the
significant risks and hazards against which we may not be fully insured;
reliance on third party transportation providers; risks associated with joint
ventures; risks associated with
expansion of our business, including unanticipated adverse consequences and the
significant resources that could be required; potential liabilities and
expenditures related to environmental and health and safety laws and
regulations; our potential inability to obtain or maintain required permits and
governmental approvals or to meet financial assurance requirements; future
regulatory restrictions and requirements related to GHG emissions, climate
change or other environmental requirements; acts of terrorism and regulations
to combat terrorism; difficulties in securing the supply and delivery of raw
materials we use and increases in their costs;
risks associated with international operations; losses on our investments
in securities; deterioration of global market and economic conditions; our
substantial indebtedness and the limitations on our operations imposed by the
terms of our indebtedness; our ability to comply with the covenants under our
indebtedness and to make payments under
15
such indebtedness when due; potential inability to
refinance our indebtedness in connection with any change of control affecting
us; and loss of key members of management and professional staff.
Forward-looking statements are given only as of the date of this release and we
disclaim any obligation to update or revise the forward-looking statements,
whether as a result of new information, future events or otherwise, except as
required by law.
# # #
16
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
RESULTS OF OPERATIONS
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Three months ended
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Six months ended
|
|
|
|
June 30,
|
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June 30,
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|
|
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2010
|
|
2009
|
|
2010
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2009
|
|
|
|
(in millions, except per share amounts)
|
|
Net sales
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|
$
|
1,307.9
|
|
$
|
991.0
|
|
$
|
1,810.3
|
|
$
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1,671.6
|
|
Cost of sales
|
|
911.1
|
|
564.0
|
|
1,284.5
|
|
1,082.3
|
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Gross margin
|
|
396.8
|
|
427.0
|
|
525.8
|
|
589.3
|
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Selling, general and administrative
|
|
28.3
|
|
16.5
|
|
44.5
|
|
31.9
|
|
Restructuring and integration costs
|
|
9.3
|
|
|
|
9.3
|
|
|
|
Equity in earnings of operating affiliates
|
|
(1.5
|
)
|
|
|
(1.5
|
)
|
|
|
Other operating - net
|
|
10.3
|
|
15.3
|
|
149.6
|
|
38.5
|
|
Operating earnings
|
|
350.4
|
|
395.2
|
|
323.9
|
|
518.9
|
|
Interest expense (income) - net
|
|
111.5
|
|
(0.4
|
)
|
111.6
|
|
(1.3
|
)
|
Loss on extinguishment of debt
|
|
17.0
|
|
|
|
17.0
|
|
|
|
Other non-operating - net
|
|
0.2
|
|
(0.1
|
)
|
(28.1
|
)
|
(0.4
|
)
|
Earnings before income taxes and equity in
earnings (loss) of non-operating affiliates
|
|
221.7
|
|
395.7
|
|
223.4
|
|
520.6
|
|
Income tax provision
|
|
89.9
|
|
146.8
|
|
85.5
|
|
188.0
|
|
Equity in earnings (loss) of non-operating affiliates
- net of taxes
|
|
4.8
|
|
(0.7
|
)
|
4.9
|
|
(1.4
|
)
|
Net earnings
|
|
136.6
|
|
248.2
|
|
142.8
|
|
331.2
|
|
Less: Net earnings attributable to noncontrolling
interest
|
|
31.5
|
|
35.2
|
|
42.1
|
|
55.5
|
|
Net earnings attributable to common stockholders
|
|
$
|
105.1
|
|
$
|
213.0
|
|
$
|
100.7
|
|
$
|
275.7
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per share attributable to common
stockholders
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.56
|
|
$
|
4.40
|
|
$
|
1.73
|
|
$
|
5.69
|
|
Diluted
|
|
$
|
1.54
|
|
$
|
4.33
|
|
$
|
1.71
|
|
$
|
5.61
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
67.4
|
|
48.4
|
|
58.1
|
|
48.4
|
|
Diluted
|
|
68.2
|
|
49.2
|
|
58.8
|
|
49.2
|
|
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
SUMMARIZED BALANCE SHEETS
|
|
June 30,
|
|
December 31,
|
|
June 30,
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
|
|
(in millions)
|
|
Assets
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
601.4
|
|
$
|
697.1
|
|
$
|
816.1
|
|
Short-term investments
|
|
|
|
185.0
|
|
105.1
|
|
Accounts receivable
|
|
347.4
|
|
167.4
|
|
137.9
|
|
Inventories - net
|
|
287.3
|
|
207.8
|
|
213.9
|
|
Prepaid income taxes
|
|
7.6
|
|
14.7
|
|
|
|
Other
|
|
23.7
|
|
11.1
|
|
11.4
|
|
Total current assets
|
|
1,267.4
|
|
1,283.1
|
|
1,284.4
|
|
Property, plant and equipment - net
|
|
3,907.6
|
|
793.8
|
|
738.5
|
|
Asset retirement obligation escrow account
|
|
40.2
|
|
36.5
|
|
36.5
|
|
Investments in and advances to unconsolidated
affiliates
|
|
939.4
|
|
45.6
|
|
43.4
|
|
Investments in auction rate securities
|
|
125.3
|
|
133.9
|
|
136.6
|
|
Investment in marketable equity securities
|
|
|
|
160.2
|
|
|
|
Goodwill
|
|
2,096.4
|
|
0.9
|
|
0.9
|
|
Other assets
|
|
219.0
|
|
40.9
|
|
39.1
|
|
Total assets
|
|
$
|
8,595.3
|
|
$
|
2,494.9
|
|
$
|
2,279.4
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$
|
331.6
|
|
$
|
172.5
|
|
$
|
175.6
|
|
Income taxes payable
|
|
29.3
|
|
|
|
23.1
|
|
Customer advances
|
|
10.8
|
|
159.5
|
|
70.9
|
|
Notes payable
|
|
|
|
|
|
4.2
|
|
Deferred income taxes
|
|
88.5
|
|
52.6
|
|
31.4
|
|
Distributions payable to noncontrolling interest
|
|
91.1
|
|
92.1
|
|
|
|
Current portion of long-term debt
|
|
18.6
|
|
|
|
|
|
Other
|
|
10.7
|
|
3.1
|
|
4.3
|
|
Total current liabilities
|
|
580.6
|
|
479.8
|
|
309.5
|
|
Notes payable
|
|
4.6
|
|
4.7
|
|
|
|
Long-term debt
|
|
2,578.0
|
|
|
|
|
|
Deferred income taxes
|
|
935.3
|
|
68.3
|
|
77.7
|
|
Other noncurrent liabilities
|
|
301.7
|
|
197.2
|
|
202.5
|
|
Equity
|
|
|
|
|
|
|
|
Stockholders equity
|
|
3,771.0
|
|
1,728.9
|
|
1,618.3
|
|
Noncontrolling interest
|
|
424.1
|
|
16.0
|
|
71.4
|
|
Total equity
|
|
4,195.1
|
|
1,744.9
|
|
1,689.7
|
|
Total liabilities and equity
|
|
$
|
8,595.3
|
|
$
|
2,494.9
|
|
$
|
2,279.4
|
|
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
STATEMENTS OF CASH FLOWS
|
|
Three months ended
|
|
Six months ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
(in millions)
|
|
Operating Activities:
|
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
|
136.6
|
|
$
|
248.2
|
|
$
|
142.8
|
|
$
|
331.2
|
|
Adjustments to reconcile net earnings to net cash provided
by (used in) operating activities:
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
149.8
|
|
24.4
|
|
178.1
|
|
46.3
|
|
Deferred income (benefit) taxes
|
|
(6.4
|
)
|
40.3
|
|
(6.3
|
)
|
45.6
|
|
Stock compensation expense
|
|
2.0
|
|
1.5
|
|
3.8
|
|
3.0
|
|
Excess tax benefit from stock-based compensation
|
|
(0.2
|
)
|
(0.8
|
)
|
(0.6
|
)
|
(0.9
|
)
|
Unrealized gain on derivatives
|
|
(18.2
|
)
|
(34.3
|
)
|
(7.0
|
)
|
(82.9
|
)
|
Inventory valuation allowance
|
|
|
|
(26.0
|
)
|
|
|
(32.0
|
)
|
Loss on extinguishment of debt
|
|
17.0
|
|
|
|
17.0
|
|
|
|
Gain on sale of marketable equity securities
|
|
|
|
|
|
(28.3
|
)
|
|
|
Loss (gain) on disposal of property, plant and
equipment
|
|
(0.7
|
)
|
(0.9
|
)
|
(0.1
|
)
|
0.8
|
|
Undistributed (earnings) loss of affiliates - net
|
|
(9.4
|
)
|
0.7
|
|
(9.5
|
)
|
1.4
|
|
Changes in (net of effects of acquistion):
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
(18.5
|
)
|
54.2
|
|
(44.9
|
)
|
40.4
|
|
Inventories
|
|
179.5
|
|
273.1
|
|
100.7
|
|
407.1
|
|
Accrued income taxes
|
|
(18.5
|
)
|
7.7
|
|
(26.4
|
)
|
36.5
|
|
Accounts payable and accrued expenses
|
|
(32.7
|
)
|
(17.1
|
)
|
(24.8
|
)
|
(32.3
|
)
|
Customer advances - net
|
|
(378.4
|
)
|
(363.7
|
)
|
(255.4
|
)
|
(276.9
|
)
|
Other - net
|
|
(3.4
|
)
|
(12.4
|
)
|
6.9
|
|
(0.1
|
)
|
Net cash provided by (used in) operating
activities
|
|
(1.5
|
)
|
194.9
|
|
46.0
|
|
487.2
|
|
Investing Activities:
|
|
|
|
|
|
|
|
|
|
Additions to property, plant and equipment
|
|
(75.3
|
)
|
(55.0
|
)
|
(104.3
|
)
|
(126.9
|
)
|
Proceeds from the sale of property, plant and
equipment
|
|
3.6
|
|
2.5
|
|
9.6
|
|
5.3
|
|
Purchases of short-term securities
|
|
(0.1
|
)
|
(69.8
|
)
|
(25.5
|
)
|
(105.0
|
)
|
Sales and maturities of short-term and auction
rate securities
|
|
31.7
|
|
49.2
|
|
218.7
|
|
52.4
|
|
Sale of marketable equity securities
|
|
|
|
|
|
167.1
|
|
|
|
Deposit to asset retirement obligation escrow
account
|
|
|
|
|
|
(3.7
|
)
|
(7.5
|
)
|
Purchase of Terra Industries Inc. - net of cash
acquired
|
|
(3,177.8
|
)
|
|
|
(3,177.8
|
)
|
|
|
Other - net
|
|
30.0
|
|
|
|
30.2
|
|
|
|
Net cash used in investing activities
|
|
(3,187.9
|
)
|
(73.1
|
)
|
(2,885.7
|
)
|
(181.7
|
)
|
Financing Activities:
|
|
|
|
|
|
|
|
|
|
Proceeds from long-term borrowings
|
|
5,197.2
|
|
|
|
5,197.2
|
|
|
|
Payments of long-term debt
|
|
(3,358.7
|
)
|
|
|
(3,358.7
|
)
|
|
|
Financing fees
|
|
(175.7
|
)
|
|
|
(207.8
|
)
|
|
|
Dividends paid on common stock
|
|
(27.2
|
)
|
(4.8
|
)
|
(32.0
|
)
|
(9.6
|
)
|
Distributions to noncontrolling interests
|
|
(5.8
|
)
|
(112.3
|
)
|
(5.8
|
)
|
(112.3
|
)
|
Issuance of common stock
|
|
1,150.0
|
|
|
|
1,150.0
|
|
|
|
Issuances of common stock under employee stock
plans
|
|
0.2
|
|
0.9
|
|
0.5
|
|
1.1
|
|
Excess tax benefit from stock-based compensation
|
|
0.2
|
|
0.8
|
|
0.6
|
|
0.9
|
|
Net cash provided by (used in) financing
activities
|
|
2,780.2
|
|
(115.4
|
)
|
2,744.0
|
|
(119.9
|
)
|
Effect of exchange rate changes on cash and cash
equivalents
|
|
0.1
|
|
5.9
|
|
|
|
5.5
|
|
Increase (decrease) in cash and cash equivalents
|
|
(409.1
|
)
|
12.3
|
|
(95.7
|
)
|
191.1
|
|
Cash and cash equivalents at beginning of period
|
|
1,010.5
|
|
803.8
|
|
697.1
|
|
625.0
|
|
Cash and cash equivalents at end
of period
|
|
$
|
601.4
|
|
$
|
816.1
|
|
$
|
601.4
|
|
$
|
816.1
|
|
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
NITROGEN SEGMENT DATA
|
|
Three months ended
|
|
Six months ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
(in millions, except as noted)
|
|
Net sales
|
|
$
|
1,122.8
|
|
$
|
755.0
|
|
$
|
1,449.8
|
|
$
|
1,211.2
|
|
Cost of sales
|
|
755.3
|
|
351.8
|
|
985.0
|
|
638.6
|
|
Gross margin
|
|
$
|
367.5
|
|
$
|
403.2
|
|
$
|
464.8
|
|
$
|
572.6
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage
|
|
32.7
|
%
|
53.4
|
%
|
32.1
|
%
|
47.3
|
%
|
|
|
|
|
|
|
|
|
|
|
Tons of product sold (in thousands)
|
|
3,932
|
|
1,878
|
|
5,130
|
|
3,143
|
|
|
|
|
|
|
|
|
|
|
|
Sales volumes by product (tons in thousands)
|
|
|
|
|
|
|
|
|
|
Ammonia
|
|
1,190
|
|
481
|
|
1,379
|
|
614
|
|
Urea
|
|
851
|
|
714
|
|
1,449
|
|
1,447
|
|
UAN
|
|
1,562
|
|
651
|
|
1,966
|
|
1,048
|
|
AN
|
|
263
|
|
|
|
263
|
|
|
|
Other nitrogen products
|
|
66
|
|
32
|
|
73
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
Average selling prices (dollars per ton)
|
|
|
|
|
|
|
|
|
|
Ammonia
|
|
$
|
380
|
|
$
|
696
|
|
$
|
372
|
|
$
|
660
|
|
Urea
|
|
292
|
|
295
|
|
298
|
|
331
|
|
UAN
|
|
220
|
|
316
|
|
217
|
|
309
|
|
AN
|
|
213
|
|
|
|
213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of natural gas (dollars per MMBtu) (1)
|
|
$
|
4.42
|
|
$
|
4.75
|
|
$
|
4.66
|
|
$
|
5.94
|
|
|
|
|
|
|
|
|
|
|
|
Average daily market price of natural gas (dollars
per MMBtu)
|
|
|
|
|
|
|
|
|
|
Henry Hub
|
|
$
|
3.99
|
|
$
|
3.69
|
|
$
|
4.86
|
|
$
|
4.14
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
72.6
|
|
$
|
15.3
|
|
$
|
88.2
|
|
$
|
28.3
|
|
Capital expenditures
|
|
$
|
60.5
|
|
$
|
31.5
|
|
$
|
77.0
|
|
$
|
87.2
|
|
|
|
|
|
|
|
|
|
|
|
Production volume by product (tons in thousands)
|
|
|
|
|
|
|
|
|
|
Ammonia (2)
|
|
1,717
|
|
799
|
|
2,588
|
|
1,476
|
|
Granular urea
|
|
639
|
|
609
|
|
1,242
|
|
1,222
|
|
UAN (32%)
|
|
1,320
|
|
520
|
|
1,865
|
|
945
|
|
AN
|
|
274
|
|
|
|
274
|
|
|
|
(1)
|
Includes
gas purchases and realized gains and losses on gas derivatives.
|
(2)
|
Gross
ammonia production including amounts subsequently upgraded on-site into urea
and/or UAN.
|
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
PHOSPHATE SEGMENT DATA
|
|
Three months ended
|
|
Six months ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
(in
millions, except as noted)
|
|
Net sales
|
|
$
|
185.1
|
|
$
|
236.0
|
|
$
|
360.5
|
|
$
|
460.4
|
|
Cost of sales
|
|
155.8
|
|
212.2
|
|
299.5
|
|
443.7
|
|
Gross margin
|
|
$
|
29.3
|
|
$
|
23.8
|
|
$
|
61.0
|
|
$
|
16.7
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage
|
|
15.8
|
%
|
10.1
|
%
|
16.9
|
%
|
3.6
|
%
|
|
|
|
|
|
|
|
|
|
|
Gross margin by product
|
|
|
|
|
|
|
|
|
|
DAP/MAP
|
|
$
|
29.3
|
|
$
|
33.0
|
|
$
|
61.0
|
|
$
|
51.5
|
|
Potash
|
|
|
|
(9.2
|
)
|
|
|
(34.8
|
)
|
|
|
|
|
|
|
|
|
|
|
Gross margin percentage by product
|
|
|
|
|
|
|
|
|
|
DAP/MAP
|
|
15.8
|
%
|
18.6
|
%
|
16.9
|
%
|
12.8
|
%
|
Potash
|
|
|
|
(15.6
|
)%
|
|
|
(58.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
Tons of product sold (in thousands)
|
|
459
|
|
674
|
|
939
|
|
1,201
|
|
|
|
|
|
|
|
|
|
|
|
Sales volumes by product (tons in thousands)
|
|
|
|
|
|
|
|
|
|
DAP
|
|
355
|
|
469
|
|
729
|
|
914
|
|
MAP
|
|
104
|
|
99
|
|
210
|
|
181
|
|
Potash
|
|
|
|
106
|
|
|
|
106
|
|
|
|
|
|
|
|
|
|
|
|
Domestic vs. export sales (tons in thousands)
|
|
|
|
|
|
|
|
|
|
Domestic
|
|
217
|
|
315
|
|
606
|
|
655
|
|
Export
|
|
242
|
|
359
|
|
333
|
|
546
|
|
|
|
|
|
|
|
|
|
|
|
Average selling prices (dollars per ton)
|
|
|
|
|
|
|
|
|
|
DAP
|
|
$
|
400
|
|
$
|
304
|
|
$
|
380
|
|
$
|
359
|
|
MAP
|
|
414
|
|
346
|
|
396
|
|
400
|
|
Potash
|
|
|
|
558
|
|
|
|
560
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion, and amortization
|
|
$
|
12.6
|
|
$
|
8.6
|
|
$
|
24.7
|
|
$
|
16.9
|
|
Capital expenditures
|
|
$
|
14.4
|
|
$
|
23.7
|
|
$
|
26.8
|
|
$
|
39.5
|
|
|
|
|
|
|
|
|
|
|
|
Production volume by product (tons in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hardee Phosphate Rock Mine
|
|
|
|
|
|
|
|
|
|
Phosphate rock
|
|
877
|
|
786
|
|
1,598
|
|
1,354
|
|
|
|
|
|
|
|
|
|
|
|
Plant City Phosphate Fertilizer Complex
|
|
|
|
|
|
|
|
|
|
Sulfuric Acid
|
|
619
|
|
592
|
|
1,196
|
|
1,081
|
|
Phosphoric acid as P2O5 (1)
|
|
230
|
|
251
|
|
451
|
|
448
|
|
DAP/MAP
|
|
454
|
|
503
|
|
892
|
|
893
|
|
(1) P2O5 is the basic
measure of the nutrient content in phosphate fertilizer products.
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
NON-GAAP DISCLOSURE ITEMS
Reconciliation of net earnings to EBITDA:
|
|
Three months ended
|
|
Six months ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2010
|
|
2009
|
|
2010
|
|
2009
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings attributable to common stockholders
|
|
$
|
105.1
|
|
$
|
213.0
|
|
$
|
100.7
|
|
$
|
275.7
|
|
Interest expense (income) - net
|
|
111.5
|
|
(0.4
|
)
|
111.6
|
|
(1.3
|
)
|
Income taxes
|
|
89.9
|
|
146.8
|
|
85.4
|
|
188.0
|
|
Depreciation, depletion and amortization
|
|
149.8
|
|
24.4
|
|
178.1
|
|
46.3
|
|
Less: Loan fee amortization
|
|
(64.2
|
)
|
(0.1
|
)
|
(64.3
|
)
|
(0.2
|
)
|
EBITDA
|
|
$
|
392.1
|
|
$
|
383.7
|
|
$
|
411.5
|
|
$
|
508.5
|
|
EBITDA
is defined as net earnings attributable to common stockholders plus interest
incomenet, income taxes, and depreciation, depletion and amortization. Loan fee amortization is subtracted in the
calculation of EBITDA to adjust for amounts included in both interest and
amortization. We have presented EBITDA because management uses the measure to
track performance and believes that it is frequently used by securities
analysts, investors and other interested parties in the evaluation of companies
in our industry.
Net
earnings and EBITDA for the three and six months ended June 30, 2010
include $9.0 million and $145.1 million, respectively, of business combinations
costs which includes a $123 million merger termination fee paid to Yara
International ASA on behalf of Terra in the first quarter of 2010; $9.3 million
of restructuring and integration costs, a $19.4 million inventory revaluation
adjustment charged to cost of sales upon the sale of Terras product inventory
that was revalued to fair value in purchase accounting; and a $17.0 million
loss on extinguishment of acquired debt.
Net
earnings and EBITDA for the three and six months ended June 30, 2010
include Peru project development costs of $1.9 million and $4.6 million,
respectively, and mark-to-market gains on derivatives of $15.1 million and $3.9
million, respectively.
Net
earnings, interest expense (income) - net, and depreciation, depletion and
amortization for the three and six months ended June 30, 2010 include
$59.0 million of accelerated amortization of deferred loan fees in the second
quarter of 2010 related to repayments of certain Terra acquisition financing.
CF
INDUSTRIES HOLDINGS, INC.
SELECTED
FINANCIAL INFORMATION
NON-GAAP
DISCLOSURE ITEMS
Reconciliation of debt to net debt (net cash):
|
|
June 30,
|
|
December 31,
|
|
June 30,
|
|
|
|
2010
|
|
2009
|
|
2009
|
|
|
|
(in millions)
|
|
Total debt
|
|
$
|
2,601.2
|
|
$
|
4.7
|
|
$
|
4.2
|
|
Less: cash, cash equivalents and short-term
investments
|
|
601.4
|
|
882.1
|
|
921.2
|
|
Plus: customer advances
|
|
10.8
|
|
159.5
|
|
70.9
|
|
Net debt (net cash)
|
|
$
|
2,010.6
|
|
$
|
(717.9
|
)
|
$
|
(846.1
|
)
|
Net
debt (net cash) is defined as total debt minus cash, cash equivalents and
short-term investments, plus customer advances.
We include customer advances in this calculation to reflect the
liability associated with our obligations to supply fertilizer in the future,
which offsets cash received in the form of customer advances. Net debt (net cash) does not include
distributions of earnings payable to noncontrolling interest holders. We use net debt (net cash) in the evaluation
of our capital structure.
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3
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end
-----END PRIVACY-ENHANCED MESSAGE-----