FORM 10-Q |
(Mark One) | ||
x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended March 31, 2018 | ||
OR | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to | ||
Commission file number 001-32597 |
Delaware (State or other jurisdiction of incorporation or organization) | 20-2697511 (I.R.S. Employer Identification No.) | |
4 Parkway North, Suite 400 Deerfield, Illinois (Address of principal executive offices) | 60015 (Zip Code) | |
(847) 405-2400 (Registrant’s telephone number, including area code) |
Large accelerated filer x | Accelerated filer o | Non-accelerated filer o (Do not check if a smaller reporting company) | Smaller reporting company o | Emerging growth company o |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(in millions, except per share amounts) | |||||||
Net sales | $ | 957 | $ | 1,037 | |||
Cost of sales | 767 | 930 | |||||
Gross margin | 190 | 107 | |||||
Selling, general and administrative expenses | 57 | 46 | |||||
Other operating—net | (21 | ) | 6 | ||||
Total other operating costs and expenses | 36 | 52 | |||||
Equity in earnings of operating affiliates | 7 | 3 | |||||
Operating earnings | 161 | 58 | |||||
Interest expense | 60 | 80 | |||||
Interest income | (3 | ) | (1 | ) | |||
Other non-operating—net | (1 | ) | 1 | ||||
Earnings (loss) before income taxes | 105 | (22 | ) | ||||
Income tax provision (benefit) | 17 | (13 | ) | ||||
Net earnings (loss) | 88 | (9 | ) | ||||
Less: Net earnings attributable to noncontrolling interests | 25 | 14 | |||||
Net earnings (loss) attributable to common stockholders | $ | 63 | $ | (23 | ) | ||
Net earnings (loss) per share attributable to common stockholders: | |||||||
Basic | $ | 0.27 | $ | (0.10 | ) | ||
Diluted | $ | 0.27 | $ | (0.10 | ) | ||
Weighted-average common shares outstanding: | |||||||
Basic | 233.9 | 233.1 | |||||
Diluted | 234.8 | 233.1 | |||||
Dividends declared per common share | $ | 0.30 | $ | 0.30 |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Net earnings (loss) | $ | 88 | $ | (9 | ) | ||
Other comprehensive income (loss): | |||||||
Foreign currency translation adjustment—net of taxes | 17 | 20 | |||||
Defined benefit plans—net of taxes | (1 | ) | — | ||||
16 | 20 | ||||||
Comprehensive income | 104 | 11 | |||||
Less: Comprehensive income attributable to noncontrolling interests | 25 | 14 | |||||
Comprehensive income (loss) attributable to common stockholders | $ | 79 | $ | (3 | ) |
(Unaudited) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
(in millions, except share and per share amounts) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 936 | $ | 835 | |||
Accounts receivable—net | 247 | 307 | |||||
Inventories | 401 | 275 | |||||
Prepaid income taxes | 55 | 33 | |||||
Other current assets | 21 | 15 | |||||
Total current assets | 1,660 | 1,465 | |||||
Property, plant and equipment—net | 9,031 | 9,175 | |||||
Investment in affiliate | 100 | 108 | |||||
Goodwill | 2,381 | 2,371 | |||||
Other assets | 350 | 344 | |||||
Total assets | $ | 13,522 | $ | 13,463 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 447 | $ | 472 | |||
Income taxes payable | 10 | 2 | |||||
Customer advances | 154 | 89 | |||||
Other current liabilities | 15 | 17 | |||||
Total current liabilities | 626 | 580 | |||||
Long-term debt | 4,693 | 4,692 | |||||
Deferred income taxes | 1,076 | 1,047 | |||||
Other liabilities | 462 | 460 | |||||
Equity: | |||||||
Stockholders’ equity: | |||||||
Preferred stock—$0.01 par value, 50,000,000 shares authorized | — | — | |||||
Common stock—$0.01 par value, 500,000,000 shares authorized, 2018—233,371,622 shares issued and 2017—233,287,799 shares issued | 2 | 2 | |||||
Paid-in capital | 1,405 | 1,397 | |||||
Retained earnings | 2,436 | 2,443 | |||||
Treasury stock—at cost, 2018—12,704 shares and 2017—710 shares | (1 | ) | — | ||||
Accumulated other comprehensive loss | (248 | ) | (263 | ) | |||
Total stockholders’ equity | 3,594 | 3,579 | |||||
Noncontrolling interests | 3,071 | 3,105 | |||||
Total equity | 6,665 | 6,684 | |||||
Total liabilities and equity | $ | 13,522 | $ | 13,463 |
Common Stockholders | |||||||||||||||||||||||||||||||
$0.01 Par Value Common Stock | Treasury Stock | Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) | Total Stockholders’ Equity | Noncontrolling Interests | Total Equity | ||||||||||||||||||||||||
(in millions, except per share amounts) | |||||||||||||||||||||||||||||||
Balance as of December 31, 2016 | $ | 2 | $ | (1 | ) | $ | 1,380 | $ | 2,365 | $ | (398 | ) | $ | 3,348 | $ | 3,144 | $ | 6,492 | |||||||||||||
Net (loss) earnings | — | — | — | (23 | ) | — | (23 | ) | 14 | (9 | ) | ||||||||||||||||||||
Other comprehensive income | — | — | — | — | 20 | 20 | — | 20 | |||||||||||||||||||||||
Stock-based compensation expense | — | — | 4 | — | — | 4 | — | 4 | |||||||||||||||||||||||
Cash dividends ($0.30 per share) | — | — | — | (70 | ) | — | (70 | ) | — | (70 | ) | ||||||||||||||||||||
Distributions declared to noncontrolling interests | — | — | — | — | — | — | (54 | ) | (54 | ) | |||||||||||||||||||||
Balance as of March 31, 2017 | $ | 2 | $ | (1 | ) | $ | 1,384 | $ | 2,272 | $ | (378 | ) | $ | 3,279 | $ | 3,104 | $ | 6,383 | |||||||||||||
Balance as of December 31, 2017 | $ | 2 | $ | — | $ | 1,397 | $ | 2,443 | $ | (263 | ) | $ | 3,579 | $ | 3,105 | $ | 6,684 | ||||||||||||||
Adoption of ASU 2016-01 | — | — | — | 1 | (1 | ) | — | — | — | ||||||||||||||||||||||
Adoption of ASU 2014-09 | — | — | — | (1 | ) | — | (1 | ) | — | (1 | ) | ||||||||||||||||||||
Net earnings | — | — | — | 63 | — | 63 | 25 | 88 | |||||||||||||||||||||||
Other comprehensive income | — | — | — | — | 16 | 16 | — | 16 | |||||||||||||||||||||||
Acquisition of treasury stock under employee stock plans | — | (1 | ) | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||||||
Issuance of $0.01 par value common stock under employee stock plans | — | — | 2 | — | — | 2 | — | 2 | |||||||||||||||||||||||
Stock-based compensation expense | — | — | 6 | — | — | 6 | — | 6 | |||||||||||||||||||||||
Cash dividends ($0.30 per share) | — | — | — | (70 | ) | — | (70 | ) | — | (70 | ) | ||||||||||||||||||||
Distributions declared to noncontrolling interests | — | — | — | — | — | — | (59 | ) | (59 | ) | |||||||||||||||||||||
Balance as of March 31, 2018 | $ | 2 | $ | (1 | ) | $ | 1,405 | $ | 2,436 | $ | (248 | ) | $ | 3,594 | $ | 3,071 | $ | 6,665 |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Operating Activities: | |||||||
Net earnings (loss) | $ | 88 | $ | (9 | ) | ||
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 193 | 205 | |||||
Deferred income taxes | 29 | (16 | ) | ||||
Stock-based compensation expense | 6 | 4 | |||||
Unrealized net (gain) loss on natural gas derivatives | (3 | ) | 53 | ||||
Unrealized loss on embedded derivative | — | 1 | |||||
Loss on disposal of property, plant and equipment | — | 1 | |||||
Undistributed earnings of affiliates—net of taxes | (3 | ) | (5 | ) | |||
Changes in: | |||||||
Accounts receivable—net | 61 | (9 | ) | ||||
Inventories | (97 | ) | (15 | ) | |||
Accrued and prepaid income taxes | (14 | ) | (5 | ) | |||
Accounts payable and accrued expenses | (24 | ) | 5 | ||||
Customer advances | 65 | 142 | |||||
Other—net | (19 | ) | 4 | ||||
Net cash provided by operating activities | 282 | 356 | |||||
Investing Activities: | |||||||
Additions to property, plant and equipment | (68 | ) | (94 | ) | |||
Proceeds from sale of property, plant and equipment | 8 | 8 | |||||
Distributions received from unconsolidated affiliates | 4 | — | |||||
Other—net | 1 | — | |||||
Net cash used in investing activities | (55 | ) | (86 | ) | |||
Financing Activities: | |||||||
Financing fees | 1 | — | |||||
Dividends paid on common stock | (70 | ) | (70 | ) | |||
Distributions to noncontrolling interests | (59 | ) | (54 | ) | |||
Issuances of common stock under employee stock plans | 2 | — | |||||
Shares withheld for taxes | (1 | ) | — | ||||
Net cash used in financing activities | (127 | ) | (124 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 1 | 1 | |||||
Increase in cash, cash equivalents and restricted cash | 101 | 147 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 835 | 1,169 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 936 | $ | 1,316 |
Ammonia | Granular Urea | UAN | AN | Other | Total | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Three months ended March 31, 2018 | |||||||||||||||||||||||
North America | $ | 168 | $ | 264 | $ | 246 | $ | 45 | $ | 59 | $ | 782 | |||||||||||
Europe and other | 44 | — | 37 | 55 | 39 | 175 | |||||||||||||||||
Total revenue | $ | 212 | $ | 264 | $ | 283 | $ | 100 | $ | 98 | $ | 957 |
Ammonia | Granular Urea | UAN | AN(1) | Other | Total | ||||||||||||
(tons in thousands)(2) | |||||||||||||||||
Remainder of 2018 | 443 | 26 | — | 398 | 52 | 919 | |||||||||||
2019 | 594 | 29 | — | — | 70 | 693 | |||||||||||
2020 | 577 | — | — | — | 70 | 647 | |||||||||||
2021 | 577 | — | — | — | 70 | 647 | |||||||||||
2022 | 577 | — | — | — | 70 | 647 | |||||||||||
2019 - 2021(1) | — | — | — | 1,122 | — | 1,122 | |||||||||||
Total | 2,768 | 55 | — | 1,520 | 332 | 4,675 |
(1) | The AN contracts in the table above have minimum purchase requirements for the current year and over a contractually specified period. As of March 31, 2018, since the annual minimum purchase requirements have not been set past the current year, the table indicates the remaining amount for the current year and a total remaining amount for the contractually specified 2019 - 2021 period. |
(2) | CF has contracts with customers that contain minimum purchase requirements that have original contract durations of one year or less in length that are not included in the above table. |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(in millions, except per share amounts) | |||||||
Net earnings (loss) attributable to common stockholders | $ | 63 | $ | (23 | ) | ||
Basic earnings per common share: | |||||||
Weighted-average common shares outstanding | 233.9 | 233.1 | |||||
Net earnings (loss) attributable to common stockholders | $ | 0.27 | $ | (0.10 | ) | ||
Diluted earnings per common share: | |||||||
Weighted-average common shares outstanding | 233.9 | 233.1 | |||||
Dilutive common shares—stock options | 0.9 | — | |||||
Diluted weighted-average shares outstanding | 234.8 | 233.1 | |||||
Net earnings (loss) attributable to common stockholders | $ | 0.27 | $ | (0.10 | ) |
March 31, 2018 | December 31, 2017 | ||||||
(in millions) | |||||||
Finished goods | $ | 363 | $ | 233 | |||
Raw materials, spare parts and supplies | 38 | 42 | |||||
Total inventories | $ | 401 | $ | 275 |
March 31, 2018 | December 31, 2017 | ||||||
(in millions) | |||||||
Land | $ | 71 | $ | 71 | |||
Machinery and equipment | 12,139 | 12,070 | |||||
Buildings and improvements | 885 | 882 | |||||
Construction in progress | 202 | 223 | |||||
Property, plant and equipment(1) | 13,297 | 13,246 | |||||
Less: Accumulated depreciation and amortization | 4,266 | 4,071 | |||||
Property, plant and equipment—net | $ | 9,031 | $ | 9,175 |
(1) | As of March 31, 2018 and December 31, 2017, we had property, plant and equipment that was accrued but unpaid of approximately $42 million and $46 million, respectively. As of March 31, 2017 and December 31, 2016, we had property, plant and equipment that was accrued but unpaid of $231 million and $225 million, respectively. |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Net capitalized turnaround costs: | |||||||
Beginning balance | $ | 208 | $ | 206 | |||
Additions | 20 | 59 | |||||
Depreciation | (28 | ) | (30 | ) | |||
Effect of exchange rate changes | 1 | 1 | |||||
Ending balance | $ | 201 | $ | 236 |
Ammonia | Granular Urea | UAN | AN | Other | Total | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Balance as of December 31, 2017 | $ | 587 | $ | 829 | $ | 576 | $ | 306 | $ | 73 | $ | 2,371 | |||||||||||
Effect of exchange rate changes | 1 | (1 | ) | — | 9 | 1 | 10 | ||||||||||||||||
Balance as of March 31, 2018 | $ | 588 | $ | 828 | $ | 576 | $ | 315 | $ | 74 | $ | 2,381 |
March 31, 2018 | December 31, 2017 | ||||||||||||||||||||||
Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Intangible assets: | |||||||||||||||||||||||
Customer relationships | $ | 135 | $ | (33 | ) | $ | 102 | $ | 132 | $ | (31 | ) | $ | 101 | |||||||||
TerraCair brand | 10 | (10 | ) | — | 10 | (10 | ) | — | |||||||||||||||
Trade names | 33 | (4 | ) | 29 | 32 | (4 | ) | 28 | |||||||||||||||
Total intangible assets | $ | 178 | $ | (47 | ) | $ | 131 | $ | 174 | $ | (45 | ) | $ | 129 |
Estimated Amortization Expense | |||
(in millions) | |||
Remainder of 2018 | $ | 8 | |
2019 | 9 | ||
2020 | 9 | ||
2021 | 9 | ||
2022 | 9 | ||
2023 | 9 |
March 31, 2018 | |||||||||||||||
Cost Basis | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
(in millions) | |||||||||||||||
Cash | $ | 472 | $ | — | $ | — | $ | 472 | |||||||
Cash equivalents: | |||||||||||||||
U.S. and Canadian government obligations | 462 | — | — | 462 | |||||||||||
Other debt securities | 2 | — | — | 2 | |||||||||||
Total cash and cash equivalents | $ | 936 | $ | — | $ | — | $ | 936 | |||||||
Nonqualified employee benefit trusts | 17 | 2 | — | 19 |
December 31, 2017 | |||||||||||||||
Cost Basis | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
(in millions) | |||||||||||||||
Cash | $ | 120 | $ | — | $ | — | $ | 120 | |||||||
Cash equivalents: | |||||||||||||||
U.S. and Canadian government obligations | 710 | — | — | 710 | |||||||||||
Other debt securities | 5 | — | — | 5 | |||||||||||
Total cash and cash equivalents | $ | 835 | $ | — | $ | — | $ | 835 | |||||||
Nonqualified employee benefit trusts | 17 | 2 | — | 19 |
March 31, 2018 | |||||||||||||||
Total Fair Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
(in millions) | |||||||||||||||
Cash equivalents | $ | 464 | $ | 464 | $ | — | $ | — | |||||||
Nonqualified employee benefit trusts | 19 | 19 | — | — | |||||||||||
Derivative liabilities | (9 | ) | — | (9 | ) | — | |||||||||
Embedded derivative liability | (25 | ) | — | (25 | ) | — |
December 31, 2017 | |||||||||||||||
Total Fair Value | Quoted Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
(in millions) | |||||||||||||||
Cash equivalents | $ | 715 | $ | 715 | $ | — | $ | — | |||||||
Nonqualified employee benefit trusts | 19 | 19 | — | — | |||||||||||
Derivative assets | 1 | — | 1 | — | |||||||||||
Derivative liabilities | (12 | ) | — | (12 | ) | — | |||||||||
Embedded derivative liability | (25 | ) | — | (25 | ) | — |
March 31, 2018 | December 31, 2017 | ||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Fair Value | ||||||||||||
(in millions) | |||||||||||||||
Long-term debt | $ | 4,693 | $ | 4,579 | $ | 4,692 | $ | 4,800 |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Interest on borrowings(1) | $ | 57 | $ | 76 | |||
Fees on financing agreements(1) | 3 | 4 | |||||
Interest on tax liabilities | 1 | 1 | |||||
Interest capitalized | (1 | ) | (1 | ) | |||
Total interest expense | $ | 60 | $ | 80 |
(1) | See Note 12—Financing Agreements for additional information. |
Effective Interest Rate | March 31, 2018 | December 31, 2017 | |||||||||||||||
Principal | Carrying Amount (1) | Principal | Carrying Amount (1) | ||||||||||||||
(in millions) | |||||||||||||||||
Public Senior Notes: | |||||||||||||||||
7.125% due May 2020 | 7.529% | $ | 500 | $ | 496 | $ | 500 | $ | 496 | ||||||||
3.450% due June 2023 | 3.562% | 750 | 746 | 750 | 746 | ||||||||||||
5.150% due March 2034 | 5.279% | 750 | 740 | 750 | 739 | ||||||||||||
4.950% due June 2043 | 5.031% | 750 | 741 | 750 | 741 | ||||||||||||
5.375% due March 2044 | 5.465% | 750 | 741 | 750 | 741 | ||||||||||||
Senior Secured Notes: | |||||||||||||||||
3.400% due December 2021 | 3.782% | 500 | 493 | 500 | 493 | ||||||||||||
4.500% due December 2026 | 4.759% | 750 | 736 | 750 | 736 | ||||||||||||
Total long-term debt | $ | 4,750 | $ | 4,693 | $ | 4,750 | $ | 4,692 |
(1) | Carrying amount is net of unamortized debt discount and deferred debt issuance costs. Total unamortized debt discount was $12 million as of both March 31, 2018 and December 31, 2017, and total deferred debt issuance costs were $45 million and $46 million as of March 31, 2018 and December 31, 2017, respectively. |
Gain (loss) recognized in income | |||||||||
Three months ended March 31, | |||||||||
Location | 2018 | 2017 | |||||||
(in millions) | |||||||||
Natural gas derivatives | |||||||||
Unrealized net gains (losses) recognized in income | Cost of sales | $ | 3 | $ | (53 | ) | |||
Realized net (losses) gains | Cost of sales | (1 | ) | 1 | |||||
Net derivative gains (losses) | $ | 2 | $ | (52 | ) |
Asset Derivatives | Liability Derivatives | ||||||||||||||||||
Balance Sheet Location | March 31, 2018 | December 31, 2017 | Balance Sheet Location | March 31, 2018 | December 31, 2017 | ||||||||||||||
(in millions) | (in millions) | ||||||||||||||||||
Natural gas derivatives | Other current assets | $ | — | $ | 1 | Other current liabilities | $ | (9 | ) | $ | (12 | ) | |||||||
Total derivatives | $ | — | $ | 1 | $ | (9 | ) | $ | (12 | ) |
Amounts presented in consolidated balance sheets(1) | Gross amounts not offset in consolidated balance sheets | ||||||||||||||
Financial instruments | Cash collateral received (pledged) | Net amount | |||||||||||||
(in millions) | |||||||||||||||
March 31, 2018 | |||||||||||||||
Total derivative assets | $ | — | $ | — | $ | — | $ | — | |||||||
Total derivative liabilities | (9 | ) | — | — | (9 | ) | |||||||||
Net derivative liabilities | $ | (9 | ) | $ | — | $ | — | $ | (9 | ) | |||||
December 31, 2017 | |||||||||||||||
Total derivative assets | $ | 1 | $ | 1 | $ | — | $ | — | |||||||
Total derivative liabilities | (12 | ) | (1 | ) | — | (11 | ) | ||||||||
Net derivative liabilities | $ | (11 | ) | $ | — | $ | — | $ | (11 | ) |
(1) | We report the fair values of our derivative assets and liabilities on a gross basis on our consolidated balance sheets. As a result, the gross amounts recognized and net amounts presented in the table above are the same. |
Three months ended March 31, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
CFN | TNCLP | Total | CFN | TNCLP | Total | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Noncontrolling interests: | |||||||||||||||||||||||
Beginning balance | $ | 2,772 | $ | 333 | $ | 3,105 | $ | 2,806 | $ | 338 | $ | 3,144 | |||||||||||
Earnings attributable to noncontrolling interests | 17 | 8 | 25 | 8 | 6 | 14 | |||||||||||||||||
Declaration of distributions payable | (49 | ) | (10 | ) | (59 | ) | (48 | ) | (6 | ) | (54 | ) | |||||||||||
Ending balance | $ | 2,740 | $ | 331 | $ | 3,071 | $ | 2,766 | $ | 338 | $ | 3,104 | |||||||||||
Distributions payable to noncontrolling interests: | |||||||||||||||||||||||
Beginning balance | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||
Declaration of distributions payable | 49 | 10 | 59 | 48 | 6 | 54 | |||||||||||||||||
Distributions to noncontrolling interests | (49 | ) | (10 | ) | (59 | ) | (48 | ) | (6 | ) | (54 | ) | |||||||||||
Ending balance | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — |
Foreign Currency Translation Adjustment | Unrealized Gain (Loss) on Securities | Unrealized Gain (Loss) on Derivatives | Defined Benefit Plans | Accumulated Other Comprehensive Income (Loss) | |||||||||||||||
(in millions) | |||||||||||||||||||
Balance as of December 31, 2016 | $ | (272 | ) | $ | 1 | $ | 5 | $ | (132 | ) | $ | (398 | ) | ||||||
Effect of exchange rate changes and deferred taxes | 20 | — | — | — | 20 | ||||||||||||||
Balance as of March 31, 2017 | $ | (252 | ) | $ | 1 | $ | 5 | $ | (132 | ) | $ | (378 | ) | ||||||
Balance as of December 31, 2017 | $ | (145 | ) | $ | 1 | $ | 4 | $ | (123 | ) | $ | (263 | ) | ||||||
Adoption of ASU 2016-01(1) | — | (1 | ) | — | — | (1 | ) | ||||||||||||
Reclassification to earnings | — | — | — | 1 | 1 | ||||||||||||||
Effect of exchange rate changes and deferred taxes | 17 | — | — | (2 | ) | 15 | |||||||||||||
Balance as of March 31, 2018 | $ | (128 | ) | $ | — | $ | 4 | $ | (124 | ) | $ | (248 | ) |
(1) | See Note 2—New Accounting Standards for additional information. |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Defined Benefit Plans | |||||||
Amortization of net loss(1) | $ | 1 | $ | — | |||
Total before tax | 1 | — | |||||
Tax effect | — | — | |||||
Net of tax | $ | 1 | $ | — | |||
Total reclassifications for the period | $ | 1 | $ | — |
(1) | This component is included in the computation of net periodic benefit cost and was reclassified from accumulated other comprehensive income (loss) into other non-operating costs. |
Ammonia | Granular Urea(1) | UAN(1)(2) | AN(1) | Other(1) | Consolidated | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Three months ended March 31, 2018 | |||||||||||||||||||||||
Net sales | $ | 212 | $ | 264 | $ | 283 | $ | 100 | $ | 98 | $ | 957 | |||||||||||
Cost of sales | 188 | 189 | 230 | 74 | 86 | 767 | |||||||||||||||||
Gross margin | $ | 24 | $ | 75 | $ | 53 | $ | 26 | $ | 12 | 190 | ||||||||||||
Total other operating costs and expenses | 36 | ||||||||||||||||||||||
Equity in earnings of operating affiliates | 7 | ||||||||||||||||||||||
Operating earnings | $ | 161 | |||||||||||||||||||||
Three months ended March 31, 2017 | |||||||||||||||||||||||
Net sales | $ | 282 | $ | 238 | $ | 317 | $ | 125 | $ | 75 | $ | 1,037 | |||||||||||
Cost of sales | 265 | 213 | 281 | 106 | 65 | 930 | |||||||||||||||||
Gross margin | $ | 17 | $ | 25 | $ | 36 | $ | 19 | $ | 10 | 107 | ||||||||||||
Total other operating costs and expenses | 52 | ||||||||||||||||||||||
Equity in earnings of operating affiliates | 3 | ||||||||||||||||||||||
Operating earnings | $ | 58 |
(1) | The cost of the products that are upgraded into other products is transferred at cost into the upgraded product results. |
(2) | As a result of our adoption of ASU No. 2017-07 on January 1, 2018, cost of sales and gross margin were updated for the three months ended March 31, 2017. See Note 2—New Accounting Standards for additional information. |
Three months ended March 31, 2018 | |||||||||||||||||||||||
Parent | CF Industries | Subsidiary Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Net sales | $ | — | $ | 105 | $ | 712 | $ | 885 | $ | (745 | ) | $ | 957 | ||||||||||
Cost of sales | — | 90 | 716 | 700 | (739 | ) | 767 | ||||||||||||||||
Gross margin | — | 15 | (4 | ) | 185 | (6 | ) | 190 | |||||||||||||||
Selling, general and administrative expenses | 1 | 1 | 39 | 22 | (6 | ) | 57 | ||||||||||||||||
Other operating—net | — | (13 | ) | (3 | ) | (5 | ) | — | (21 | ) | |||||||||||||
Total other operating costs and expenses | 1 | (12 | ) | 36 | 17 | (6 | ) | 36 | |||||||||||||||
Equity in earnings of operating affiliates | — | 3 | — | 4 | — | 7 | |||||||||||||||||
Operating (loss) earnings | (1 | ) | 30 | (40 | ) | 172 | — | 161 | |||||||||||||||
Interest expense | — | 62 | 4 | 1 | (7 | ) | 60 | ||||||||||||||||
Interest income | (1 | ) | (2 | ) | (3 | ) | (4 | ) | 7 | (3 | ) | ||||||||||||
Net earnings of wholly owned subsidiaries | (63 | ) | (87 | ) | (135 | ) | — | 285 | — | ||||||||||||||
Other non-operating—net | — | — | — | (1 | ) | — | (1 | ) | |||||||||||||||
Earnings before income taxes | 63 | 57 | 94 | 176 | (285 | ) | 105 | ||||||||||||||||
Income tax (benefit) provision | — | (6 | ) | 17 | 6 | — | 17 | ||||||||||||||||
Net earnings | 63 | 63 | 77 | 170 | (285 | ) | 88 | ||||||||||||||||
Less: Net earnings attributable to noncontrolling interests | — | — | — | 25 | — | 25 | |||||||||||||||||
Net earnings attributable to common stockholders | $ | 63 | $ | 63 | $ | 77 | $ | 145 | $ | (285 | ) | $ | 63 |
Three months ended March 31, 2018 | |||||||||||||||||||||||
Parent | CF Industries | Subsidiary Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Net earnings | $ | 63 | $ | 63 | $ | 77 | $ | 170 | $ | (285 | ) | $ | 88 | ||||||||||
Other comprehensive income | 15 | 15 | 1 | 15 | (30 | ) | 16 | ||||||||||||||||
Comprehensive income | 78 | 78 | 78 | 185 | (315 | ) | 104 | ||||||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | — | — | — | 25 | — | 25 | |||||||||||||||||
Comprehensive income attributable to common stockholders | $ | 78 | $ | 78 | $ | 78 | $ | 160 | $ | (315 | ) | $ | 79 |
Three months ended March 31, 2017 | |||||||||||||||||||||||
Parent | CF Industries | Subsidiary Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Net sales | $ | — | $ | 90 | $ | 822 | $ | 896 | $ | (771 | ) | $ | 1,037 | ||||||||||
Cost of sales | — | 51 | 892 | 758 | (771 | ) | 930 | ||||||||||||||||
Gross margin | — | 39 | (70 | ) | 138 | — | 107 | ||||||||||||||||
Selling, general and administrative expenses | — | 2 | 28 | 16 | — | 46 | |||||||||||||||||
Other operating—net | — | (1 | ) | 1 | 6 | — | 6 | ||||||||||||||||
Total other operating costs and expenses | — | 1 | 29 | 22 | — | 52 | |||||||||||||||||
Equity in earnings of operating affiliates | — | — | — | 3 | — | 3 | |||||||||||||||||
Operating earnings (loss) | — | 38 | (99 | ) | 119 | — | 58 | ||||||||||||||||
Interest expense | — | 81 | 11 | 1 | (13 | ) | 80 | ||||||||||||||||
Interest income | — | (11 | ) | (1 | ) | (2 | ) | 13 | (1 | ) | |||||||||||||
Net loss (earnings) of wholly owned subsidiaries | 23 | 3 | (98 | ) | — | 72 | — | ||||||||||||||||
Other non-operating—net | — | — | 1 | — | — | 1 | |||||||||||||||||
(Loss) earnings before income taxes | (23 | ) | (35 | ) | (12 | ) | 120 | (72 | ) | (22 | ) | ||||||||||||
Income tax (benefit) provision | — | (12 | ) | (5 | ) | 4 | — | (13 | ) | ||||||||||||||
Net (loss) earnings | (23 | ) | (23 | ) | (7 | ) | 116 | (72 | ) | (9 | ) | ||||||||||||
Less: Net earnings attributable to noncontrolling interests | — | — | — | 14 | — | 14 | |||||||||||||||||
Net (loss) earnings attributable to common stockholders | $ | (23 | ) | $ | (23 | ) | $ | (7 | ) | $ | 102 | $ | (72 | ) | $ | (23 | ) |
Three months ended March 31, 2017 | |||||||||||||||||||||||
Parent | CF Industries | Subsidiary Guarantors | Non-Guarantors | Eliminations | Consolidated | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Net (loss) earnings | $ | (23 | ) | $ | (23 | ) | $ | (7 | ) | $ | 116 | $ | (72 | ) | $ | (9 | ) | ||||||
Other comprehensive income | 20 | 20 | 12 | 18 | (50 | ) | 20 | ||||||||||||||||
Comprehensive (loss) income | (3 | ) | (3 | ) | 5 | 134 | (122 | ) | 11 | ||||||||||||||
Less: Comprehensive income attributable to noncontrolling interests | — | — | — | 14 | — | 14 | |||||||||||||||||
Comprehensive (loss) income attributable to common stockholders | $ | (3 | ) | $ | (3 | ) | $ | 5 | $ | 120 | $ | (122 | ) | $ | (3 | ) |
March 31, 2018 | |||||||||||||||||||||||
Parent | CF Industries | Subsidiary Guarantors | Non- Guarantors | Eliminations and Reclassifications | Consolidated | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 15 | $ | 138 | $ | 783 | $ | — | $ | 936 | |||||||||||
Accounts and notes receivable—net | 290 | 483 | 1,560 | 678 | (2,764 | ) | 247 | ||||||||||||||||
Inventories | — | — | 195 | 206 | — | 401 | |||||||||||||||||
Prepaid income taxes | — | — | 53 | 2 | — | 55 | |||||||||||||||||
Other current assets | — | — | 12 | 9 | — | 21 | |||||||||||||||||
Total current assets | 290 | 498 | 1,958 | 1,678 | (2,764 | ) | 1,660 | ||||||||||||||||
Property, plant and equipment—net | — | — | 120 | 8,911 | — | 9,031 | |||||||||||||||||
Deferred income taxes | — | 2 | — | — | (2 | ) | — | ||||||||||||||||
Investments in affiliates | 4,133 | 8,543 | 6,849 | 100 | (19,525 | ) | 100 | ||||||||||||||||
Goodwill | — | — | 2,064 | 317 | — | 2,381 | |||||||||||||||||
Other assets | — | 88 | 60 | 662 | (460 | ) | 350 | ||||||||||||||||
Total assets | $ | 4,423 | $ | 9,131 | $ | 11,051 | $ | 11,668 | $ | (22,751 | ) | $ | 13,522 | ||||||||||
Liabilities and Equity | |||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||
Accounts and notes payable and accrued expenses | $ | 829 | $ | 290 | $ | 1,387 | $ | 705 | $ | (2,764 | ) | $ | 447 | ||||||||||
Income taxes payable | — | — | — | 10 | — | 10 | |||||||||||||||||
Customer advances | — | — | 154 | — | — | 154 | |||||||||||||||||
Other current liabilities | — | — | 15 | — | — | 15 | |||||||||||||||||
Total current liabilities | 829 | 290 | 1,556 | 715 | (2,764 | ) | 626 | ||||||||||||||||
Long-term debt | — | 4,693 | 378 | 82 | (460 | ) | 4,693 | ||||||||||||||||
Deferred income taxes | — | — | 909 | 169 | (2 | ) | 1,076 | ||||||||||||||||
Other liabilities | — | 15 | 245 | 202 | — | 462 | |||||||||||||||||
Equity: | |||||||||||||||||||||||
Stockholders’ equity: | |||||||||||||||||||||||
Preferred stock | — | — | — | — | — | — | |||||||||||||||||
Common stock | 2 | — | — | 4,671 | (4,671 | ) | 2 | ||||||||||||||||
Paid-in capital | 1,405 | 1,854 | 9,505 | 2,229 | (13,588 | ) | 1,405 | ||||||||||||||||
Retained earnings | 2,436 | 2,527 | (1,355 | ) | 727 | (1,899 | ) | 2,436 | |||||||||||||||
Treasury stock | (1 | ) | — | — | — | — | (1 | ) | |||||||||||||||
Accumulated other comprehensive loss | (248 | ) | (248 | ) | (179 | ) | (206 | ) | 633 | (248 | ) | ||||||||||||
Total stockholders’ equity | 3,594 | 4,133 | 7,971 | 7,421 | (19,525 | ) | 3,594 | ||||||||||||||||
Noncontrolling interests | — | — | (8 | ) | 3,079 | — | 3,071 | ||||||||||||||||
Total equity | 3,594 | 4,133 | 7,963 | 10,500 | (19,525 | ) | 6,665 | ||||||||||||||||
Total liabilities and equity | $ | 4,423 | $ | 9,131 | $ | 11,051 | $ | 11,668 | $ | (22,751 | ) | $ | 13,522 |
December 31, 2017 | |||||||||||||||||||||||
Parent | CF Industries | Subsidiary Guarantors | Non- Guarantors | Eliminations and Reclassifications | Consolidated | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Assets | |||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 15 | $ | 388 | $ | 432 | $ | — | $ | 835 | |||||||||||
Accounts and notes receivable—net | 743 | 1,553 | 2,670 | 768 | (5,427 | ) | 307 | ||||||||||||||||
Inventories | — | 4 | 104 | 167 | — | 275 | |||||||||||||||||
Prepaid income taxes | — | — | 33 | — | — | 33 | |||||||||||||||||
Other current assets | — | — | 10 | 5 | — | 15 | |||||||||||||||||
Total current assets | 743 | 1,572 | 3,205 | 1,372 | (5,427 | ) | 1,465 | ||||||||||||||||
Property, plant and equipment—net | — | — | 123 | 9,052 | — | 9,175 | |||||||||||||||||
Deferred income taxes | — | 8 | — | — | (8 | ) | — | ||||||||||||||||
Investments in affiliates | 4,055 | 8,411 | 6,490 | 108 | (18,956 | ) | 108 | ||||||||||||||||
Goodwill | — | — | 2,063 | 308 | — | 2,371 | |||||||||||||||||
Other assets | — | 85 | 82 | 453 | (276 | ) | 344 | ||||||||||||||||
Total assets | $ | 4,798 | $ | 10,076 | $ | 11,963 | $ | 11,293 | $ | (24,667 | ) | $ | 13,463 | ||||||||||
Liabilities and Equity | |||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||
Accounts and notes payable and accrued expenses | $ | 1,219 | $ | 1,314 | $ | 2,658 | $ | 708 | $ | (5,427 | ) | $ | 472 | ||||||||||
Income taxes payable | — | — | — | 2 | — | 2 | |||||||||||||||||
Customer advances | — | — | 89 | — | — | 89 | |||||||||||||||||
Other current liabilities | — | — | 14 | 3 | — | 17 | |||||||||||||||||
Total current liabilities | 1,219 | 1,314 | 2,761 | 713 | (5,427 | ) | 580 | ||||||||||||||||
Long-term debt | — | 4,692 | 198 | 78 | (276 | ) | 4,692 | ||||||||||||||||
Deferred income taxes | — | — | 876 | 179 | (8 | ) | 1,047 | ||||||||||||||||
Other liabilities | — | 16 | 243 | 201 | — | 460 | |||||||||||||||||
Equity: | |||||||||||||||||||||||
Stockholders’ equity: | |||||||||||||||||||||||
Preferred stock | — | — | — | — | — | — | |||||||||||||||||
Common stock | 2 | — | — | 4,738 | (4,738 | ) | 2 | ||||||||||||||||
Paid-in capital | 1,397 | 1,854 | 9,505 | 1,783 | (13,142 | ) | 1,397 | ||||||||||||||||
Retained earnings | 2,443 | 2,463 | (1,432 | ) | 709 | (1,740 | ) | 2,443 | |||||||||||||||
Treasury stock | — | — | — | — | — | — | |||||||||||||||||
Accumulated other comprehensive loss | (263 | ) | (263 | ) | (180 | ) | (221 | ) | 664 | (263 | ) | ||||||||||||
Total stockholders’ equity | 3,579 | 4,054 | 7,893 | 7,009 | (18,956 | ) | 3,579 | ||||||||||||||||
Noncontrolling interests | — | — | (8 | ) | 3,113 | — | 3,105 | ||||||||||||||||
Total equity | 3,579 | 4,054 | 7,885 | 10,122 | (18,956 | ) | 6,684 | ||||||||||||||||
Total liabilities and equity | $ | 4,798 | $ | 10,076 | $ | 11,963 | $ | 11,293 | $ | (24,667 | ) | $ | 13,463 |
Three months ended March 31, 2018 | |||||||||||||||||||||||
Parent | CF Industries | Subsidiary Guarantors | Non- Guarantors | Eliminations | Consolidated | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Operating Activities: | |||||||||||||||||||||||
Net earnings | $ | 63 | $ | 63 | $ | 77 | $ | 170 | $ | (285 | ) | $ | 88 | ||||||||||
Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: | |||||||||||||||||||||||
Depreciation and amortization | — | 2 | 5 | 186 | — | 193 | |||||||||||||||||
Deferred income taxes | — | — | 39 | (10 | ) | — | 29 | ||||||||||||||||
Stock-based compensation expense | 6 | — | — | — | — | 6 | |||||||||||||||||
Unrealized net loss (gain) on natural gas derivatives | — | — | 1 | (4 | ) | — | (3 | ) | |||||||||||||||
Undistributed loss (earnings) of affiliates—net | (63 | ) | (86 | ) | (136 | ) | (3 | ) | 285 | (3 | ) | ||||||||||||
Changes in: | |||||||||||||||||||||||
Intercompany accounts receivable/accounts payable—net | (7 | ) | (50 | ) | 63 | (6 | ) | — | — | ||||||||||||||
Accounts receivable—net | — | — | 64 | (3 | ) | — | 61 | ||||||||||||||||
Inventories | — | 4 | (91 | ) | (10 | ) | — | (97 | ) | ||||||||||||||
Accrued and prepaid income taxes | — | (7 | ) | (13 | ) | 6 | — | (14 | ) | ||||||||||||||
Accounts and notes payable and accrued expenses | — | 7 | (5 | ) | (26 | ) | — | (24 | ) | ||||||||||||||
Customer advances | — | — | 65 | — | — | 65 | |||||||||||||||||
Other—net | — | (1 | ) | 3 | (21 | ) | — | (19 | ) | ||||||||||||||
Net cash (used in) provided by operating activities | (1 | ) | (68 | ) | 72 | 279 | — | 282 | |||||||||||||||
Investing Activities: | |||||||||||||||||||||||
Additions to property, plant and equipment | — | — | (3 | ) | (65 | ) | — | (68 | ) | ||||||||||||||
Proceeds from sale of property, plant and equipment | — | — | — | 8 | — | 8 | |||||||||||||||||
Distributions received from unconsolidated affiliates | — | — | 144 | (140 | ) | — | 4 | ||||||||||||||||
Investments in consolidated subs - capital contributions | — | (31 | ) | (415 | ) | 446 | — | — | |||||||||||||||
Other—net | — | — | — | 1 | — | 1 | |||||||||||||||||
Net cash (used in) provided by investing activities | — | (31 | ) | (274 | ) | 250 | — | (55 | ) | ||||||||||||||
Financing Activities: | |||||||||||||||||||||||
Long-term debt—net | — | — | 178 | (178 | ) | — | — | ||||||||||||||||
Short-term debt—net | 70 | 98 | (275 | ) | 107 | — | — | ||||||||||||||||
Financing fees | — | 1 | — | — | — | 1 | |||||||||||||||||
Dividends paid on common stock | (70 | ) | — | — | (49 | ) | 49 | (70 | ) | ||||||||||||||
Dividends to/from affiliates | — | — | 49 | — | (49 | ) | — | ||||||||||||||||
Distributions to noncontrolling interests | — | — | — | (59 | ) | — | (59 | ) | |||||||||||||||
Issuances of common stock under employee stock plans | 2 | — | — | — | — | 2 | |||||||||||||||||
Shares withheld for taxes | (1 | ) | — | — | — | — | (1 | ) | |||||||||||||||
Net cash provided by (used in) financing activities | 1 | 99 | (48 | ) | (179 | ) | — | (127 | ) | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 1 | — | 1 | |||||||||||||||||
(Decrease) increase in cash and cash equivalents | — | — | (250 | ) | 351 | — | 101 | ||||||||||||||||
Cash and cash equivalents at beginning of period | — | 15 | 388 | 432 | — | 835 | |||||||||||||||||
Cash and cash equivalents at end of period | $ | — | $ | 15 | $ | 138 | $ | 783 | $ | — | $ | 936 |
Three months ended March 31, 2017 | |||||||||||||||||||||||
Parent | CF Industries | Subsidiary Guarantors | Non- Guarantors | Eliminations | Consolidated | ||||||||||||||||||
(in millions) | |||||||||||||||||||||||
Operating Activities: | |||||||||||||||||||||||
Net (loss) earnings | $ | (23 | ) | $ | (23 | ) | $ | (7 | ) | $ | 116 | $ | (72 | ) | $ | (9 | ) | ||||||
Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities: | |||||||||||||||||||||||
Depreciation and amortization | — | 3 | 6 | 196 | — | 205 | |||||||||||||||||
Deferred income taxes | — | (11 | ) | (4 | ) | (1 | ) | — | (16 | ) | |||||||||||||
Stock-based compensation expense | 4 | — | — | — | — | 4 | |||||||||||||||||
Unrealized net loss on natural gas derivatives | — | — | 45 | 8 | — | 53 | |||||||||||||||||
Unrealized loss on embedded derivative | — | — | 1 | — | — | 1 | |||||||||||||||||
Loss on disposal of property, plant and equipment | — | — | — | 1 | — | 1 | |||||||||||||||||
Undistributed losses (earnings) of affiliates—net | 23 | 1 | (97 | ) | (4 | ) | 72 | (5 | ) | ||||||||||||||
Changes in: | |||||||||||||||||||||||
Intercompany accounts receivable/accounts payable—net | (4 | ) | (47 | ) | 138 | (87 | ) | — | — | ||||||||||||||
Accounts receivable—net | — | — | (5 | ) | (4 | ) | — | (9 | ) | ||||||||||||||
Inventories | — | — | (16 | ) | 1 | — | (15 | ) | |||||||||||||||
Accrued and prepaid income taxes | — | — | 2 | (7 | ) | — | (5 | ) | |||||||||||||||
Accounts and notes payable and accrued expenses | — | 37 | 4 | (36 | ) | — | 5 | ||||||||||||||||
Customer advances | — | — | 142 | — | — | 142 | |||||||||||||||||
Other—net | — | — | 6 | (2 | ) | — | 4 | ||||||||||||||||
Net cash (used in) provided by operating activities | — | (40 | ) | 215 | 181 | — | 356 | ||||||||||||||||
Investing Activities: | |||||||||||||||||||||||
Additions to property, plant and equipment | — | — | (3 | ) | (91 | ) | — | (94 | ) | ||||||||||||||
Proceeds from sale of property, plant and equipment | — | — | — | 8 | — | 8 | |||||||||||||||||
Net cash used in investing activities | — | — | (3 | ) | (83 | ) | — | (86 | ) | ||||||||||||||
Financing Activities: | |||||||||||||||||||||||
Long-term debt—net | — | (125 | ) | — | 125 | — | — | ||||||||||||||||
Short-term debt—net | 70 | 145 | (171 | ) | (44 | ) | — | — | |||||||||||||||
Dividends paid on common stock | (70 | ) | — | — | (23 | ) | 23 | (70 | ) | ||||||||||||||
Dividends to/from affiliates | — | — | 23 | — | (23 | ) | — | ||||||||||||||||
Distributions to noncontrolling interest | — | — | — | (54 | ) | — | (54 | ) | |||||||||||||||
Net cash provided by (used in) financing activities | — | 20 | (148 | ) | 4 | — | (124 | ) | |||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | 1 | — | 1 | |||||||||||||||||
(Decrease) increase in cash, cash equivalents and restricted cash | — | (20 | ) | 64 | 103 | — | 147 | ||||||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | — | 36 | 878 | 255 | — | 1,169 | |||||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | — | $ | 16 | $ | 942 | $ | 358 | $ | — | $ | 1,316 |
• | Overview of CF Holdings |
• | Our Company |
• | Items Affecting Comparability of Results |
• | Financial Executive Summary |
• | Results of Consolidated Operations |
• | First Quarter of 2018 Compared to First Quarter of 2017 |
• | Operating Results by Business Segment |
• | Liquidity and Capital Resources |
• | Off-Balance Sheet Arrangements |
• | Critical Accounting Policies and Estimates |
• | Recent Accounting Pronouncements |
• | Forward-Looking Statements |
• | four U.S. nitrogen fertilizer manufacturing facilities located in Donaldsonville, Louisiana (the largest nitrogen fertilizer complex in the world); Port Neal, Iowa; Yazoo City, Mississippi; and Woodward, Oklahoma. These facilities are owned by CF Industries Nitrogen, LLC (CFN), of which we own approximately 89% and CHS Inc. (CHS) owns the remainder. See Note 14—Noncontrolling Interests for additional information on our strategic venture with CHS; |
• | an approximately 75.3% interest in Terra Nitrogen Company, L.P. (TNCLP), a publicly traded limited partnership of which we are the sole general partner and the majority limited partner and which, through its subsidiary Terra Nitrogen, Limited Partnership (TNLP), operates a nitrogen fertilizer manufacturing facility in Verdigris, Oklahoma; |
• | two Canadian nitrogen fertilizer manufacturing facilities located in Medicine Hat, Alberta (the largest nitrogen fertilizer complex in Canada) and Courtright, Ontario; |
• | two United Kingdom nitrogen manufacturing complexes located in Billingham and Ince; |
• | an extensive system of terminals and associated transportation equipment located primarily in the Midwestern United States; and |
• | a 50% interest in Point Lisas Nitrogen Limited (PLNL), an ammonia production joint venture located in the Republic of Trinidad and Tobago that we account for under the equity method. |
Three Months Ended March 31, | |||||||||||||
2018 | 2017 | ||||||||||||
Pre-Tax | After-Tax | Pre-Tax | After-Tax | ||||||||||
(in millions) | |||||||||||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives(1) | $ | (3 | ) | $ | (2 | ) | $ | 53 | $ | 33 | |||
Gain on foreign currency transactions including intercompany loans(2) | (5 | ) | (4 | ) | — | — | |||||||
Costs related to the acquisition of TNCLP public units(3) | 2 | 1 | — | — |
(1) | Included in cost of sales in our consolidated statements of operations. |
(2) | Included in other operating—net in our consolidated statements of operations. |
(3) | Included in selling, general and administrative expenses in our consolidated statements of operations. |
Three Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 v. 2017 | ||||||||||||
(in millions, except as noted) | ||||||||||||||
Net sales | $ | 957 | $ | 1,037 | $ | (80 | ) | (8 | )% | |||||
Cost of sales | 767 | 930 | (163 | ) | (18 | )% | ||||||||
Gross margin | 190 | 107 | 83 | 78 | % | |||||||||
Gross margin percentage | 19.9 | % | 10.3 | % | 9.6 | % | ||||||||
Selling, general and administrative expenses | 57 | 46 | 11 | 24 | % | |||||||||
Other operating—net | (21 | ) | 6 | (27 | ) | N/M | ||||||||
Total other operating costs and expenses | 36 | 52 | (16 | ) | (31 | )% | ||||||||
Equity in earnings of operating affiliates | 7 | 3 | 4 | 133 | % | |||||||||
Operating earnings | 161 | 58 | 103 | 178 | % | |||||||||
Interest expense—net | 57 | 79 | (22 | ) | (28 | )% | ||||||||
Other non-operating—net | (1 | ) | 1 | (2 | ) | N/M | ||||||||
Earnings (loss) before income taxes | 105 | (22 | ) | 127 | N/M | |||||||||
Income tax provision (benefit) | 17 | (13 | ) | 30 | N/M | |||||||||
Net earnings (loss) | 88 | (9 | ) | 97 | N/M | |||||||||
Less: Net earnings attributable to noncontrolling interests | 25 | 14 | 11 | 79 | % | |||||||||
Net earnings (loss) attributable to common stockholders | $ | 63 | $ | (23 | ) | $ | 86 | N/M | ||||||
Diluted net earnings (loss) per share attributable to common stockholders | $ | 0.27 | $ | (0.10 | ) | $ | 0.37 | N/M | ||||||
Diluted weighted-average common shares outstanding | 234.8 | 233.1 | 1.7 | 1 | % | |||||||||
Dividends declared per common share | $ | 0.30 | $ | 0.30 | $ | — | — | % | ||||||
Natural Gas Supplemental Data (per MMBtu) | ||||||||||||||
Natural gas costs in cost of sales(1) | $ | 3.32 | $ | 3.66 | $ | (0.34 | ) | (9 | )% | |||||
Realized derivatives loss (gain) in cost of sales(2) | 0.01 | (0.01 | ) | 0.02 | N/M | |||||||||
Cost of natural gas in cost of sales | $ | 3.33 | $ | 3.65 | $ | (0.32 | ) | (9 | )% | |||||
Average daily market price of natural gas Henry Hub (Louisiana) | $ | 3.02 | $ | 3.00 | $ | 0.02 | 1 | % | ||||||
Average daily market price of natural gas National Balancing Point (UK) | $ | 8.20 | $ | 5.98 | $ | 2.22 | 37 | % | ||||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives | $ | (3 | ) | $ | 53 | $ | (56 | ) | N/M | |||||
Depreciation and amortization | $ | 193 | $ | 205 | $ | (12 | ) | (6 | )% | |||||
Capital expenditures | $ | 68 | $ | 94 | $ | (26 | ) | (28 | )% | |||||
Sales volume by product tons (000s) | 4,303 | 4,745 | (442 | ) | (9 | )% | ||||||||
Production volume by product tons (000s): | ||||||||||||||
Ammonia(3) | 2,508 | 2,508 | — | — | % | |||||||||
Granular urea | 1,151 | 1,002 | 149 | 15 | % | |||||||||
UAN (32%) | 1,805 | 1,817 | (12 | ) | (1 | )% | ||||||||
AN | 458 | 542 | (84 | ) | (15 | )% |
(1) | Includes the cost of natural gas that is included in cost of sales during the period under the first-in, first-out inventory cost method. |
(2) | Includes realized gains and losses on natural gas derivatives settled during the period. Excludes unrealized mark-to-market gains and losses on natural gas derivatives. |
(3) | Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN, or AN. |
Ammonia | Granular Urea(1) | UAN(1)(2) | AN(1) | Other(1) | Consolidated | ||||||||||||||||||
(in millions, except percentages) | |||||||||||||||||||||||
Three months ended March 31, 2018 | |||||||||||||||||||||||
Net sales | $ | 212 | $ | 264 | $ | 283 | $ | 100 | $ | 98 | $ | 957 | |||||||||||
Cost of sales | 188 | 189 | 230 | 74 | 86 | 767 | |||||||||||||||||
Gross margin | $ | 24 | $ | 75 | $ | 53 | $ | 26 | $ | 12 | $ | 190 | |||||||||||
Gross margin percentage | 11.3 | % | 28.4 | % | 18.7 | % | 26.0 | % | 12.2 | % | 19.9 | % | |||||||||||
Three months ended March 31, 2017 | |||||||||||||||||||||||
Net sales | $ | 282 | $ | 238 | $ | 317 | $ | 125 | $ | 75 | $ | 1,037 | |||||||||||
Cost of sales | 265 | 213 | 281 | 106 | 65 | 930 | |||||||||||||||||
Gross margin | $ | 17 | $ | 25 | $ | 36 | $ | 19 | $ | 10 | $ | 107 | |||||||||||
Gross margin percentage | 6.0 | % | 10.5 | % | 11.4 | % | 15.2 | % | 13.3 | % | 10.3 | % |
(1) | The cost of products that are upgraded into other products is transferred at cost into the upgraded product results. |
(2) | Cost of sales for our UAN segment for the three months ended March 31, 2017 was adjusted to reflect the reclassification of $1 million of defined benefit plan costs to other operating-net as a result of our adoption of ASU No. 2017-07 on January 1, 2018. See Note 2—New Accounting Standards for additional information. |
Three Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 v. 2017 | ||||||||||||
(dollars in millions, except per ton amounts) | ||||||||||||||
Net sales | $ | 212 | $ | 282 | $ | (70 | ) | (25 | )% | |||||
Cost of sales | 188 | 265 | (77 | ) | (29 | )% | ||||||||
Gross margin | $ | 24 | $ | 17 | $ | 7 | 41 | % | ||||||
Gross margin percentage | 11.3 | % | 6.0 | % | 5.3 | % | ||||||||
Sales volume by product tons (000s) | 664 | 920 | (256 | ) | (28 | )% | ||||||||
Sales volume by nutrient tons (000s)(1) | 544 | 754 | (210 | ) | (28 | )% | ||||||||
Average selling price per product ton | $ | 319 | $ | 307 | $ | 12 | 4 | % | ||||||
Average selling price per nutrient ton(1) | $ | 390 | $ | 374 | $ | 16 | 4 | % | ||||||
Gross margin per product ton | $ | 36 | $ | 18 | $ | 18 | 100 | % | ||||||
Gross margin per nutrient ton(1) | $ | 44 | $ | 23 | $ | 21 | 91 | % | ||||||
Depreciation and amortization | $ | 25 | $ | 44 | $ | (19 | ) | (43 | )% | |||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives | $ | (1 | ) | $ | 17 | $ | (18 | ) | N/M |
(1) | Ammonia represents 82% nitrogen content. Nutrient tons represent the equivalent tons of nitrogen within the product tons. |
Three Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 v. 2017 | ||||||||||||
(dollars in millions, except per ton amounts) | ||||||||||||||
Net sales | $ | 264 | $ | 238 | $ | 26 | 11 | % | ||||||
Cost of sales | 189 | 213 | (24 | ) | (11 | )% | ||||||||
Gross margin | $ | 75 | $ | 25 | $ | 50 | 200 | % | ||||||
Gross margin percentage | 28.4 | % | 10.5 | % | 17.9 | % | ||||||||
Sales volume by product tons (000s) | 982 | 958 | 24 | 3 | % | |||||||||
Sales volume by nutrient tons (000s)(1) | 452 | 441 | 11 | 2 | % | |||||||||
Average selling price per product ton | $ | 269 | $ | 248 | $ | 21 | 8 | % | ||||||
Average selling price per nutrient ton(1) | $ | 584 | $ | 540 | $ | 44 | 8 | % | ||||||
Gross margin per product ton | $ | 76 | $ | 26 | $ | 50 | 192 | % | ||||||
Gross margin per nutrient ton(1) | $ | 166 | $ | 57 | $ | 109 | 191 | % | ||||||
Depreciation and amortization | $ | 59 | $ | 53 | $ | 6 | 11 | % | ||||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives | $ | (1 | ) | $ | 14 | $ | (15 | ) | N/M |
(1) | Granular urea represents 46% nitrogen content. Nutrient tons represent the tons of nitrogen within the product tons. |
Three Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 v. 2017 | ||||||||||||
(dollars in millions, except per ton amounts) | ||||||||||||||
Net sales | $ | 283 | $ | 317 | $ | (34 | ) | (11 | )% | |||||
Cost of sales | 230 | 281 | (51 | ) | (18 | )% | ||||||||
Gross margin | $ | 53 | $ | 36 | $ | 17 | 47 | % | ||||||
Gross margin percentage | 18.7 | % | 11.4 | % | 7.3 | % | ||||||||
Sales volume by product tons (000s) | 1,669 | 1,849 | (180 | ) | (10 | )% | ||||||||
Sales volume by nutrient tons (000s)(1) | 527 | 584 | (57 | ) | (10 | )% | ||||||||
Average selling price per product ton | $ | 170 | $ | 171 | $ | (1 | ) | (1 | )% | |||||
Average selling price per nutrient ton(1) | $ | 537 | $ | 543 | $ | (6 | ) | (1 | )% | |||||
Gross margin per product ton | $ | 32 | $ | 19 | $ | 13 | 68 | % | ||||||
Gross margin per nutrient ton(1) | $ | 101 | $ | 62 | $ | 39 | 63 | % | ||||||
Depreciation and amortization | $ | 63 | $ | 65 | $ | (2 | ) | (3 | )% | |||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives | $ | (1 | ) | $ | 16 | $ | (17 | ) | N/M |
(1) | UAN represents between 28% and 32% of nitrogen content, depending on the concentration specified by the customer. Nutrient tons represent the tons of nitrogen within the product tons. |
Three Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 v. 2017 | ||||||||||||
(dollars in millions, except per ton amounts) | ||||||||||||||
Net sales | $ | 100 | $ | 125 | $ | (25 | ) | (20 | )% | |||||
Cost of sales | 74 | 106 | (32 | ) | (30 | )% | ||||||||
Gross margin | $ | 26 | $ | 19 | $ | 7 | 37 | % | ||||||
Gross margin percentage | 26.0 | % | 15.2 | % | 10.8 | % | ||||||||
Sales volume by product tons (000s) | 417 | 568 | (151 | ) | (27 | )% | ||||||||
Sales volume by nutrient tons (000s)(1) | 140 | 191 | (51 | ) | (27 | )% | ||||||||
Average selling price per product ton | $ | 240 | $ | 220 | $ | 20 | 9 | % | ||||||
Average selling price per nutrient ton(1) | $ | 714 | $ | 654 | $ | 60 | 9 | % | ||||||
Gross margin per product ton | $ | 62 | $ | 33 | $ | 29 | 88 | % | ||||||
Gross margin per nutrient ton(1) | $ | 186 | $ | 99 | $ | 87 | 88 | % | ||||||
Depreciation and amortization | $ | 18 | $ | 19 | $ | (1 | ) | (5 | )% | |||||
Unrealized net mark-to-market loss on natural gas derivatives | $ | — | $ | 2 | $ | (2 | ) | (100 | )% |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
• | Diesel exhaust fluid (DEF) is an aqueous urea solution typically made with 32.5% high-purity urea and 67.5% deionized water. |
• | Urea liquor is a liquid product that we sell in concentrations of 40%, 50% and 70% urea as a chemical intermediate. |
• | Nitric acid is a nitrogen-based product with a nitrogen content of 22.2%. |
• | Compound fertilizer products (NPKs) are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus, and potassium. |
Three Months Ended March 31, | ||||||||||||||
2018 | 2017 | 2018 v. 2017 | ||||||||||||
(dollars in millions, except per ton amounts) | ||||||||||||||
Net sales | $ | 98 | $ | 75 | $ | 23 | 31 | % | ||||||
Cost of sales | 86 | 65 | 21 | 32 | % | |||||||||
Gross margin | $ | 12 | $ | 10 | $ | 2 | 20 | % | ||||||
Gross margin percentage | 12.2 | % | 13.3 | % | (1.1 | )% | ||||||||
Sales volume by product tons (000s) | 571 | 450 | 121 | 27 | % | |||||||||
Sales volume by nutrient tons (000s)(1) | 111 | 88 | 23 | 26 | % | |||||||||
Average selling price per product ton | $ | 172 | $ | 167 | $ | 5 | 3 | % | ||||||
Average selling price per nutrient ton(1) | $ | 883 | $ | 852 | $ | 31 | 4 | % | ||||||
Gross margin per product ton | $ | 21 | $ | 22 | $ | (1 | ) | (5 | )% | |||||
Gross margin per nutrient ton(1) | $ | 108 | $ | 114 | $ | (6 | ) | (5 | )% | |||||
Depreciation and amortization | $ | 17 | $ | 12 | $ | 5 | 42 | % | ||||||
Unrealized net mark-to-market loss on natural gas derivatives | $ | — | $ | 4 | $ | (4 | ) | (100 | )% |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
Effective Interest Rate | March 31, 2018 | December 31, 2017 | |||||||||||||||
Principal | Carrying Amount (1) | Principal | Carrying Amount (1) | ||||||||||||||
(in millions) | |||||||||||||||||
Public Senior Notes: | |||||||||||||||||
7.125% due May 2020 | 7.529% | $ | 500 | $ | 496 | $ | 500 | $ | 496 | ||||||||
3.450% due June 2023 | 3.562% | 750 | 746 | 750 | 746 | ||||||||||||
5.150% due March 2034 | 5.279% | 750 | 740 | 750 | 739 | ||||||||||||
4.950% due June 2043 | 5.031% | 750 | 741 | 750 | 741 | ||||||||||||
5.375% due March 2044 | 5.465% | 750 | 741 | 750 | 741 | ||||||||||||
Senior Secured Notes: | |||||||||||||||||
3.400% due December 2021 | 3.782% | 500 | 493 | 500 | 493 | ||||||||||||
4.500% due December 2026 | 4.759% | 750 | 736 | 750 | 736 | ||||||||||||
Total long-term debt | $ | 4,750 | $ | 4,693 | $ | 4,750 | $ | 4,692 |
(1) | Carrying amount is net of unamortized debt discount and deferred debt issuance costs. Total unamortized debt discount was $12 million as of both March 31, 2018 and December 31, 2017, and total deferred debt issuance costs were $45 million and $46 million as of March 31, 2018 and December 31, 2017, respectively. |
• | 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 from other fertilizer producers; |
• | conditions in the U.S. and European agricultural industry; |
• | the volatility of natural gas prices in North America and Europe; |
• | difficulties in securing the supply and delivery of raw materials, increases in their costs or delays or interruptions in their delivery; |
• | reliance on third party providers of transportation services and equipment; |
• | the significant risks and hazards involved in producing and handling our products against which we may not be fully insured; |
• | our ability to manage our indebtedness; |
• | operating and financial restrictions imposed on us by the agreements governing our senior secured indebtedness; |
• | risks associated with our incurrence of additional indebtedness; |
• | our ability to maintain compliance with covenants under the agreements governing our indebtedness; |
• | downgrades of our credit ratings; |
• | risks associated with cyber security; |
• | weather conditions; |
• | risks associated with changes in tax laws and disagreements with taxing authorities; |
• | our reliance on a limited number of key facilities; |
• | potential liabilities and expenditures related to environmental, health and safety laws and regulations and permitting requirements; |
• | future regulatory restrictions and requirements related to greenhouse gas emissions; |
• | risks associated with expansions of our business, including unanticipated adverse consequences and the significant resources that could be required; |
• | the seasonality of the fertilizer business; |
• | the impact of changing market conditions on our forward sales programs; |
• | risks involving derivatives and the effectiveness of our risk measurement and hedging activities; |
• | risks associated with the operation or management of the CHS strategic venture, risks and uncertainties relating to the market prices of the fertilizer products that are the subject of our supply agreement with CHS over the life of the supply agreement, and the risk that any challenges related to the CHS strategic venture will harm our other business relationships; |
• | risks associated with our PLNL joint venture; |
• | acts of terrorism and regulations to combat terrorism; |
• | risks associated with international operations; and |
• | deterioration of global market and economic conditions. |
Issuer Purchases of Equity Securities | |||||||||||||
Period | Total Number of Shares (or Units) Purchased(1) | Average Price Paid per Share (or Unit) | Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs (in thousands) | |||||||||
January 1, 2018 - January 31, 2018 | — | $ | — | — | $ | — | |||||||
February 1, 2018 - February 28, 2018 | — | — | — | — | |||||||||
March 1, 2018 - March 31, 2018 | 11,994 | 44.56 | — | — | |||||||||
Total | 11,994 | $ | 44.56 | — |
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 54 of this report. |
Exhibit No. | Description | |
101 | The following financial information from CF Industries Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, formatted in XBRL (eXtensible Business Reporting Language): (1) Consolidated Statements of Operations, (2) Consolidated Statements of Comprehensive Income (Loss), (3) Consolidated Balance Sheets, (4) Consolidated Statements of Equity, (5) Consolidated Statements of Cash Flows, and (6) the Notes to Unaudited Consolidated Financial Statements |
* | Schedules (or similar attachments) have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company hereby undertakes to furnish supplementally copies of any of the omitted schedules (or similar attachments) upon request by the U.S. Securities and Exchange Commission. |
CF INDUSTRIES HOLDINGS, INC. | |||
Date: May 3, 2018 | By: | /s/ W. ANTHONY WILL | |
W. Anthony Will President and Chief Executive Officer (Principal Executive Officer) | |||
Date: May 3, 2018 | By: | /s/ DENNIS P. KELLEHER | |
Dennis P. Kelleher Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
CF INDUSTRIES NITROGEN, LLC | |
By: | /s/ Douglas C. Barnard |
Name: Douglas C. Barnard Title: Senior Vice President, General Counsel, and Secretary |
CF USA HOLDINGS, LLC | |
By: | /s/ Douglas C. Barnard |
Name: Douglas C. Barnard Title: Senior Vice President, General Counsel, and Secretary |
CF INDUSTRIES SALES, LLC | |
By: | /s/ Douglas C. Barnard |
Name: Douglas C. Barnard Title: Senior Vice President, General Counsel, and Secretary |
CHS INC. | |
By: | /s/ Richard A. Dusek |
Name: Richard A. Dusek Title: |
CF USA HOLDINGS, LLC | |
By: | _____________________________________ |
Name: Douglas C. Barnard Title: Senior Vice President, General Counsel, and Secretary |
Section 1. | Registered Office |
Section 2. | Other Offices |
Section 1. | Place of Meetings |
Section 2. | Annual Meetings |
Section 3. | Special Meetings |
Section 4. | Nature of Business at Annual Meetings of Stockholders |
Section 5. | Nomination of Directors |
Section 6. | Notice |
Section 7. | Adjournments |
Section 8. | Quorum |
Section 9. | Voting |
Section 10. | Proxies |
i. | A stockholder may execute a writing authorizing another person or persons to act for such stockholder as proxy. Execution may be accomplished by the stockholder or such stockholder’s authorized officer, director, employee or agent signing such writing or causing such person’s signature to be affixed to such writing by any reasonable means, including, but not limited to, by facsimile signature. |
ii. | A stockholder may authorize another person or persons to act for such stockholder as proxy by transmitting or authorizing the transmission of a telegram or cablegram to the person who will be the holder of the proxy or to a proxy solicitation firm, proxy support service organization or like agent duly authorized by the person who will be the holder of the proxy to receive such telegram or cablegram, provided that any such telegram or cablegram must either set forth or be submitted with information from which it can be determined that the telegram or cablegram was authorized by the stockholder. If it is determined that such telegrams or cablegrams are valid, the inspectors or, if there are no inspectors, such other persons making that determination shall specify the information on which they relied. |
Section 11. | List of Stockholders Entitled to Vote |
Section 12. | Record Date |
Section 13. | Stock Ledger |
Section 14. | Conduct of Meetings |
Section 15. | Inspectors of Election |
Section 16. | Proxy Access |
Section 1. | Number and Election of Directors |
Section 2. | Vacancies |
Section 3. | Duties and Powers |
Section 4. | Meetings |
Section 5. | Organization |
Section 6. | Resignations and Removals of Directors |
Section 7. | Quorum |
Section 8. | Actions of the Board by Written Consent |
Section 9. | Meetings by Means of Conference Telephone |
Section 10. | Committees |
Section 11. | Compensation |
Section 12. | Interested Directors |
Section 13. | Qualifications |
Section 1. | General |
Section 2. | Election |
Section 3. | Voting Securities Owned by the Corporation |
Section 4. | Chairman of the Board of Directors |
Section 5. | President |
Section 6. | Chief Financial Officer |
Section 7. | Vice Presidents |
Section 8. | Secretary |
Section 9. | Treasurer |
Section 10. | Assistant Secretaries |
Section 11. | Assistant Treasurers |
Section 12. | Other Officers |
Section 1. | Form of Certificates |
Section 2. | Signatures |
Section 3. | Lost Certificates |
Section 4. | Transfers |
Section 5. | Dividend Record Date |
Section 6. | Record Owners |
Section 7. | Transfer and Registry Agents |
Section 1. | Notices |
Section 2. | Waivers of Notice |
Section 1. | Dividends |
Section 2. | Disbursements |
Section 3. | Fiscal Year |
Section 4. | Corporate Seal |
Section 5. | Interpretations and Determinations |
Section 1. | Power to Indemnify in Actions, Suits or Proceedings other than those by or in the Right of the Corporation |
Section 2. | Power to Indemnify in Actions, Suits or Proceedings by or in the Right of the Corporation |
Section 3. | Authorization of Indemnification |
Section 4. | Good Faith Defined |
Section 5. | Indemnification by a Court |
Section 6. | Expenses Payable in Advance |
Section 7. | Nonexclusivity of Indemnification and Advancement of Expenses |
Section 8. | Insurance |
Section 9. | Certain Definitions |
Section 10. | Survival of Indemnification and Advancement of Expenses |
Section 11. | Limitation on Indemnification |
Section 12. | Indemnification of Employees and Agents |
Section 13. | Enforceability |
Section 1. | Amendments |
Section 2. | Entire Board of Directors |
By: | /s/ Daniel L. Swenson |
Name: | Daniel L. Swenson |
Title: | Vice President, Treasurer, and Assistant Secretary |
By: | /s/ Daniel L. Swenson |
Name: | Daniel L. Swenson |
Title: | Vice President, Treasurer, and Assistant Secretary |
By: | /s/ Barry D. Somrock |
Name: | Barry D. Somrock |
Title: | Vice President |
By: | /s/ Barry D. Somrock |
Name: | Barry D. Somrock |
Title: | Vice President |
By: | /s/ Daniel L. Swenson |
Name: | Daniel L. Swenson |
Title: | Vice President, Treasurer, and Assistant Secretary |
By: | /s/ Daniel L. Swenson |
Name: | Daniel L. Swenson |
Title: | Vice President, Treasurer, and Assistant Secretary |
By: | /s/ Barry D. Somrock |
Name: | Barry D. Somrock |
Title: | Vice President |
By: | /s/ Barry D. Somrock |
Name: | Barry D. Somrock |
Title: | Vice President |
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: | May 3, 2018 | /s/ W. ANTHONY WILL | |
W. Anthony Will President and Chief Executive Officer (Principal Executive Officer) |
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: | May 3, 2018 | /s/ DENNIS P. KELLEHER | |
Dennis P. Kelleher Senior Vice President and Chief Financial Officer (Principal Financial Officer) |
(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/ W. ANTHONY WILL | ||
W. Anthony Will President and Chief Executive Officer (Principal Executive Officer) | ||
Date: | May 3, 2018 |
(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/ DENNIS P. KELLEHER | ||
Dennis P. Kelleher Senior Vice President and Chief Financial Officer (Principal Financial Officer) | ||
Date: | May 3, 2018 |
Document and Entity Information - shares |
3 Months Ended | |
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Mar. 31, 2018 |
Apr. 30, 2018 |
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Document and Entity Information | ||
Entity Registrant Name | CF Industries Holdings, Inc. | |
Entity Central Index Key | 0001324404 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 233,359,653 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2018 |
Mar. 31, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||
Net earnings (loss) | $ 88 | $ (9) |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment—net of taxes | 17 | 20 |
Defined benefit plans—net of taxes | (1) | 0 |
Total other comprehensive income | 16 | 20 |
Comprehensive income | 104 | 11 |
Less: Comprehensive income attributable to noncontrolling interests | 25 | 14 |
Comprehensive income (loss) attributable to common stockholders | $ 79 | $ (3) |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Mar. 31, 2018 |
Dec. 31, 2017 |
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Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 233,371,622 | 233,287,799 |
Treasury stock, shares | 12,704 | 710 |
CONSOLIDATED STATEMENTS OF EQUITY (Parenthetical) - $ / shares |
3 Months Ended | |
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Mar. 31, 2018 |
Mar. 31, 2017 |
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Statement of Stockholders' Equity [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Cash Dividends (dollars per share) | $ 0.30 | $ 0.30 |
Background and Basis of Presentation |
3 Months Ended |
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Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Background and Basis of Presentation | Background and Basis of Presentation We are a leading global fertilizer and chemical company with outstanding operational capabilities and a highly cost advantaged production and distribution platform. Our 3,000 employees operate world-class manufacturing complexes in Canada, the United Kingdom and the United States. Our principal customers are cooperatives, independent fertilizer distributors, farmers and industrial users. Our principal nitrogen fertilizer products are ammonia, granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN). Our other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to our industrial customers, and compound fertilizer products (NPKs), which are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus, and potassium. We serve our customers in North America through an unparalleled production, storage, transportation and distribution network. We also reach a global customer base with exports from our Donaldsonville, Louisiana, plant, the world’s largest and most flexible nitrogen complex. Additionally, we move product to international destinations from our Yazoo City, Mississippi, facility, and our Billingham and Ince facilities in the United Kingdom, and from a joint venture ammonia facility in the Republic of Trinidad and Tobago in which we own a 50 percent interest. All references to “CF Holdings,” “the Company,” “we,” “us” and “our” refer to CF Industries Holdings, Inc. and its subsidiaries, except where the context makes clear that the reference is only to CF Industries Holdings, Inc. itself and not its subsidiaries. All references to “CF Industries” refer to CF Industries, Inc., a 100% owned subsidiary of CF Industries Holdings, Inc. The accompanying unaudited interim consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the year ended December 31, 2017, in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting. In the opinion of management, these statements reflect all adjustments, consisting only of normal and recurring adjustments, that are necessary for the fair representation of the information for the periods presented. The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Operating results for any period presented apply to that period only and are not necessarily indicative of results for any future period. The accompanying unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related disclosures included in our 2017 Annual Report on Form 10-K filed with the SEC on February 22, 2018. The preparation of the unaudited interim consolidated financial statements requires us to make use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the unaudited consolidated financial statements and the reported revenues and expenses for the periods presented. Significant estimates and assumptions are used for, but are not limited to, net realizable value of inventories, environmental remediation liabilities, environmental and litigation contingencies, the cost of customer incentives, useful lives of property and identifiable intangible assets, the assumptions used in the evaluation of potential impairments of property, investments, identifiable intangible assets and goodwill, income tax and valuation reserves, allowances for doubtful accounts receivable, the measurement of the fair values of investments for which markets are not active, assumptions used in the determination of the funded status and annual expense of defined benefit pension and other postretirement benefit plans and the assumptions used in the valuation of stock-based compensation awards granted to employees. During the first quarter of 2018, we adopted Accounting Standards Update (ASU) No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. As a result, we reclassified certain amounts in our consolidated statements of operations for the three months ended March 31, 2017. See Note 2—New Accounting Standards for additional information. During the first quarter of 2018, we adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. As a result, in our consolidated statements of cash flows for the three months ended March 31, 2017, we have reclassified $1 million of withdrawals from restricted cash funds, previously classified as cash flows provided by investing activities, to be included in the reconciliation of the beginning and ending balances of cash, cash equivalents and restricted cash. See Note 2—New Accounting Standards for additional information. |
New Accounting Standards |
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Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
New Accounting Standards | New Accounting Standards Recently Adopted Pronouncements On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments. Additionally, the costs to obtain and fulfill a contract, including assets to be recognized, are to be capitalized and such capitalized costs should be disclosed. In 2016, the Financial Accounting Standards Board (FASB) issued additional ASUs that enhanced the operability of the principal versus agent guidance in ASU No. 2014-09 by clarifying that an entity should consider the nature of each good or service promised to a customer at the individual good or service level, clarified that ASU No. 2014-09 should not be applied to immaterial performance obligations, and enhanced the guidance around the treatment of shipping costs incurred to fulfill performance obligations. Our adoption of this ASU, utilizing the modified retrospective approach on contracts that were not completed as of January 1, 2018, resulted in a reduction to opening retained earnings of $1 million related to the cumulative difference between ASC 605 and ASC 606. See Note 3—Revenue Recognition for additional information. On January 1, 2018, we adopted ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities, which changes the income statement impact of equity investments held by an entity. The amendments require the unrealized gains or unrealized losses of equity instruments measured at fair value to be recognized in net income. Our adoption of this ASU resulted in an increase to opening retained earnings of $1 million representing the cumulative effect of unrealized gains from equity securities from accumulated other comprehensive income (loss). On January 1, 2018, we adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash - a consensus of the FASB Emerging Issues Task Force, which requires that the statement of cash flows include amounts described as restricted cash and restricted cash equivalents as part of cash and cash equivalents when reconciling the beginning and ending period total amounts. Upon adoption of this ASU, $1 million of withdrawals from restricted cash funds previously reflected as cash provided by investing activities for the three months ended March 31, 2017, and our restricted cash of $5 million and $4 million as of December 31, 2016 and March 31, 2017, respectively, were reclassified to be included within the reconciliation of beginning and ending cash, cash equivalents and restricted cash balances on our consolidated statement of cash flows. On January 1, 2018, we adopted ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changed the presentation of net benefit cost related to employer sponsored defined benefit plans and other postretirement benefits. Only service cost can be included within the same income statement line item as other compensation costs arising from services rendered during the period, while other components of net benefit cost must be presented separately outside of operating income. Additionally, only service costs may be capitalized on the balance sheet. Our adoption of this ASU was applied retrospectively for the income statement classification requirements and prospectively for the capitalization guidance, which resulted in $1 million of net benefit cost previously recognized in cost of sales to be reclassifed to other non-operating on our consolidated statement of operations for the three months ended March 31, 2017. On January 1, 2018, we adopted ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Our adoption of this ASU had no impact on our consolidated financial statements. Recently Issued Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the lease accounting requirements in ASC Topic 840, Leases. This ASU will require lessees to recognize the rights and obligations resulting from virtually all leases (other than leases that meet the definition of a short-term lease) on their balance sheets as right-of-use assets with corresponding lease liabilities. Extensive quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater insight into the extent of income and expense recognized and expected to be recognized from existing contracts. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted, and requires the modified retrospective method of adoption. While we are continuing to evaluate the impact of the adoption of this ASU on our consolidated financial statements, we currently believe the most significant change relates to the recognition of the right-of-use assets and lease liabilities on our balance sheet for operating leases for certain property and equipment, including transportation equipment utilized for the distribution of our products. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which improves the financial reporting of hedging relationships in order to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and should be applied to existing hedging relationships as of the date of adoption. Early adoption of this ASU is permitted. We do not expect the adoption of this ASU will have a material effect on our consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and for interim periods therein. Early adoption of this ASU is permitted. We do not expect the adoption of this ASU will have a material effect on our consolidated financial statements. |
Revenue Recognition |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition The revenue that we recognize arises from contracts we have with our customers. Our performance obligations under a contract correspond to each shipment of product that we make to our customer under the contract; as a result each contract may have more than one performance obligation based on the number of products ordered, the quantity of product to be shipped and the mode of shipment requested by the customer. Control of our products transfers to our customers when the customer is able to direct the use of, and obtain substantially all of the benefits from, our products, which generally occurs at the later of when the customer obtains title to our product or when the customer assumes risk of loss of our product. The transfer of control generally occurs at a point in time upon loading of our product onto transportation equipment or upon delivery to the customer’s intended destination. Once this occurs, we have satisfied our performance obligation and we recognize revenue. When we enter into a contract with a customer, we are obligated to provide the product during a mutually agreed upon time period. Depending on the terms of the contract, either we or the customer arranges delivery of the product to the customer’s intended destination. In situations where we have agreed to arrange delivery of the product to the customer’s intended destination and control of the product transfers upon loading of our product onto transportation equipment, we have elected to account for any freight income associated with the delivery of these products as freight revenue, since this activity fulfills our obligation to transfer the product to the customer. For the three months ended March 31, 2018, the total amount of freight recognized as revenue was not material. Certain of our contracts require us to supply products on a continuous basis to the customer. We recognize revenue on these contracts based on the quantity of products transferred to the customer during the period. For the three months ended March 31, 2018, the amount of revenue for these types of transactions was $25 million. From time to time, we will enter into the marketplace to purchase the needed product in order to meet our customer contracts. When we purchase product to meet customer contracts, we are the principal in the transaction and recognize revenue on a gross basis. As discussed in Note 8—Equity Method Investments, we have transactions in the normal course of business with Point Lisas Nitrogen Limited (PLNL), reflecting our obligation to purchase 50% of the ammonia produced by PLNL at current market prices. For the three months ended March 31, 2018, other than products purchased from PLNL, we did not purchase any products in the marketplace in order to meet our customer contracts. Transaction Price We agree with our customers on the selling price of each transaction. This transaction price is generally based on the product, market conditions, including supply and demand balances, freight arrangements including where control transfers, and customer incentives. In our contracts with customers, we allocate the entire transaction price to the sale of product to the customer, which is the basis for the determination of the relative standalone selling price allocated to each performance obligation. Returns of our product by our customers are permitted only when the product is not to specification, and were not material for the three months ended March 31, 2018. Any sales tax, value added tax, and other tax we collect concurrently with our revenue-producing activities are excluded from revenue. We offer cash incentives to certain customers based on the volume of their purchases over a certain period. These incentives do not provide an option to the customer for additional product. Customer incentives are reported as a reduction in net sales. Accrual of these incentives involves the use of estimates, including how much product the customer will purchase and whether the customer will achieve a certain level of purchases within the incentive period. The balances of customer incentives accrued at March 31, 2018, and December 31, 2017 were not material. If we continued to apply legacy revenue recognition guidance for the first three months of 2018, our revenues, gross margin, and net income attributable to common shareholders would not have been materially different. See Note 2—New Accounting Standards for the impact of our adoption of ASU No. 2014-09. Revenue Disaggregation We track our revenue by product and by geography. See Note 17—Segment Disclosures for our revenue by reportable segment, which are ammonia, granular urea, UAN, AN, and Other. The following table summarizes our revenue by product and by geography (based on destination of our shipment) for the three months ended March 31, 2018:
Accounts Receivable and Customer Advances Our customers purchase our products through sales on credit or forward sales. Products sold to our customers on credit are recorded as accounts receivable when the customer obtains control of the product. Customers that purchase our products on credit are required to pay in accordance with our customary payment terms, which are generally less than 30 days. For the three months ended March 31, 2018, the amount of customer bad debt expense recognized was immaterial. For forward sales, the customer prepays a portion of the value of the sales contract prior to obtaining control of the product. These prepayments, when received, are recorded as customer advances and are recognized as revenue when the customer obtains control of the product. Forward sales are customarily offered for periods of less than one year in advance of when the customer obtains control of the product. As of March 31, 2018 and December 31, 2017, we had $154 million and $89 million, respectively, in customer advances on our consolidated balance sheets. The increase in the balance of customer advances was primarily caused by customers purchasing fertilizer for future delivery in anticipation of the spring application season and improvement in the current conditions of the fertilizer market. During the three months ended March 31, 2018, we recognized approximately $65 million of revenue related to customer advances that were on our consolidated balance sheet as of December 31, 2017. We expect that all of our customer advances that were recorded as of December 31, 2017, will be recognized as revenue during 2018. We have certain customer contracts with performance obligations that extend beyond one year and if the customer does not take the required amount of product specified in the contract, then the customer is required to make a payment to us, which may vary based upon the terms and conditions of the applicable contract. As of March 31, 2018, the minimum product tonnage to be sold under such contracts with original contract durations of more than one year are as follows:
The amount of revenue recognized on these obligations at the time control transfers to our customer will be based on the agreed upon price with our customer that is specified in the customer contract. Other than in the table above, any performance obligations with our customers that were unfulfilled or partially filled at December 31, 2017 will be satisfied in 2018. All of our contracts require that the period between the payment for goods and the transfer of those goods to the customer occur within normal contractual terms that do not exceed one year; therefore, we have not adjusted the transaction price of any of our contracts to recognize a significant financing component. We have also expensed any incremental costs associated with obtaining a contract that has a duration of less than one year, and there were no costs capitalized during the three months ending March 31, 2018. |
Net Earnings Per Share |
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Net Earnings Per Share | Net Earnings (Loss) Per Share Net earnings (loss) per share were computed as follows:
In the computation of diluted earnings per common share, potentially dilutive stock options are excluded if the effect of their inclusion is anti-dilutive. Shares for anti-dilutive stock options not included in the computation of diluted earnings per common share were 2.0 million and 6.6 million for the three months ended March 31, 2018 and 2017, respectively. |
Inventories |
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Inventories | Inventories Inventories consist of the following:
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Property, Plant and Equipment-Net |
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Property, Plant and Equipment-Net | Property, Plant and Equipment—Net Property, plant and equipment—net consists of the following:
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Depreciation and amortization related to property, plant and equipment was $185 million and $197 million for the three months ended March 31, 2018 and 2017, respectively. Plant turnarounds—Scheduled inspections, replacements and overhauls of plant machinery and equipment at our continuous process manufacturing facilities during a full plant shutdown are referred to as plant turnarounds. The expenditures related to turnarounds are capitalized in property, plant and equipment when incurred. The following is a summary of capitalized plant turnaround costs:
Scheduled replacements and overhauls of plant machinery and equipment include the dismantling, repair or replacement and installation of various components including piping, valves, motors, turbines, pumps, compressors, heat exchangers and the replacement of catalysts when a full plant shutdown occurs. Scheduled inspections are also conducted during full plant shutdowns, including required safety inspections which entail the disassembly of various components such as steam boilers, pressure vessels and other equipment requiring safety certifications. Internal employee costs and overhead amounts are not considered turnaround costs and are not capitalized. |
Goodwill and Other Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets The following table shows the carrying amount of goodwill by reportable segment as of March 31, 2018 and December 31, 2017:
All of our identifiable intangible assets have definite lives and are presented in other assets on our consolidated balance sheets at gross carrying amount, net of accumulated amortization, as follows:
Amortization expense of our identifiable intangible assets for each of the three-month periods ended March 31, 2018 and 2017 was $2 million. Our intangible assets are being amortized over a weighted-average life of approximately 20 years. Total estimated amortization expense for the remainder of 2018 and each of the five succeeding fiscal years is as follows:
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Equity Method Investments |
3 Months Ended |
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Mar. 31, 2018 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investments | Equity Method Investments We have a 50% ownership interest in PLNL, which operates an ammonia production facility in the Republic of Trinidad and Tobago. We include our share of the net earnings from this equity method investment as an element of earnings from operations because PLNL provides additional production to our operations and is integrated with our other supply chain and sales activities in the ammonia segment. As of March 31, 2018, the total carrying value of our equity method investment in PLNL of $100 million was $51 million more than our share of PLNL’s book value. The excess is attributable to the purchase accounting impact of our acquisition of the investment in PLNL and reflects the revaluation of property, plant and equipment. The increased basis for property, plant and equipment is being amortized over a remaining period of approximately 15 years. Our equity in earnings of PLNL is different from our ownership interest in income reported by PLNL due to amortization of this basis difference. We have transactions in the normal course of business with PLNL reflecting our obligation to purchase 50% of the ammonia produced by PLNL at current market prices. Our ammonia purchases from PLNL totaled $29 million and $20 million for the three months ended March 31, 2018 and 2017, respectively. |
Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Our cash and cash equivalents and other investments consist of the following:
Under our short-term investment policy, we may invest our cash balances, either directly or through mutual funds, in several types of investment-grade securities, including notes and bonds issued by governmental entities or corporations. Securities issued by governmental entities include those issued directly by the U.S. and Canadian federal governments; those issued by state, local or other governmental entities; and those guaranteed by entities affiliated with governmental entities. Assets and Liabilities Measured at Fair Value on a Recurring Basis The following tables present assets and liabilities included in our consolidated balance sheets as of March 31, 2018 and December 31, 2017 that are recognized at fair value on a recurring basis, and indicate the fair value hierarchy utilized to determine such fair value:
Cash Equivalents As of March 31, 2018 and December 31, 2017, our cash equivalents consisted primarily of U.S. and Canadian government obligations and money market mutual funds that invest in U.S. government obligations and other investment-grade securities. Nonqualified Employee Benefit Trusts We maintain trusts associated with certain nonqualified supplemental pension plans. The fair values of the trust assets are based on daily quoted prices in an active market, which represent the net asset values of the shares held in the trusts, and are included on our consolidated balance sheets in other assets. Debt securities are accounted for as available-for sale securities. In the first quarter of 2018, as a result of our adoption of ASU 2016-01, changes in the fair value of equity securities in the trust assets are recognized through earnings. See Note 2—New Accounting Standards for additional information. Derivative Instruments The derivative instruments that we use are primarily natural gas fixed price swaps, natural gas basis swaps and natural gas options traded in the over-the-counter (OTC) markets with multinational commercial banks, other major financial institutions or large energy companies. The natural gas derivative contracts represent anticipated natural gas needs for future periods and settlements are scheduled to coincide with anticipated natural gas purchases during those future periods. The natural gas derivative contracts settle using primarily NYMEX futures prices. To determine the fair value of these instruments, we use quoted market prices from NYMEX and standard pricing models with inputs derived from or corroborated by observable market data such as forward curves supplied by an industry-recognized independent third party. See Note 13—Derivative Financial Instruments for additional information. Embedded Derivative Liability Under the terms of our strategic venture with CHS Inc. (CHS), if our credit rating as determined by two of three specified credit rating agencies is below certain levels, we are required to make a non-refundable yearly payment of $5 million to CHS. Since our credit ratings were below certain levels in 2016 and 2017, we made a payment of $5 million to CHS in each year. These payments will continue on a yearly basis until the earlier of the date that our credit rating is upgraded to or above certain levels by two of the three specified credit rating agencies or February 1, 2026. This obligation is recognized on our consolidated balance sheets as an embedded derivative. As of March 31, 2018 and December 31, 2017, the embedded derivative liability of $25 million is included in other current liabilities and other liabilities on our consolidated balance sheets. The inputs into the fair value measurement include the probability of future upgrades and downgrades of our credit rating based on historical credit rating movements of other public companies and the discount rates to be applied to potential annual payments based on applicable credit spreads of other public companies at different credit rating levels. Based on these inputs, our fair value measurement is classified as Level 2. For the three months ended March 31, 2017, we recognized a charge of $1 million related to the embedded derivative, which is included in other operating—net in our consolidated statement of operations. See Note 14—Noncontrolling Interests for additional information regarding our strategic venture with CHS. Financial Instruments The carrying amount and estimated fair value of our financial instruments are as follows:
The fair value of our long-term debt was based on quoted prices for identical or similar liabilities in markets that are not active or valuation models in which all significant inputs and value drivers are observable and, as a result, they are classified as Level 2 inputs. The carrying amounts of cash and cash equivalents, as well as instruments included in other current assets and other current liabilities that meet the definition of financial instruments, approximate fair values because of their short-term maturities. Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis We also have assets and liabilities that may be measured at fair value on a nonrecurring basis; that is, the assets and liabilities are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment, allocation of purchase price in an acquisition or when a new liability is being established that requires fair value measurement. These include long-lived assets, goodwill and other intangible assets and investments in unconsolidated subsidiaries, such as equity method investments, which may be written down to fair value as a result of impairment. The fair value measurements related to each of these rely primarily on Company-specific inputs and the Company’s assumptions about the use of the assets. Since certain of the Company’s assumptions would involve inputs that are not observable, these fair values would reside within Level 3 of the fair value hierarchy. |
Income Taxes |
3 Months Ended |
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Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes For the three months ended March 31, 2018, we recorded an income tax provision of $17 million on pre-tax income of $105 million, or an effective tax rate of 15.8%, compared to an income tax benefit of $13 million on a pre-tax loss of $22 million, or an effective tax rate of 59.2%, for the three months ended March 31, 2017. Our effective tax rate in the first quarter of 2018 is based on the U.S. federal tax rate of 21% as a result of the enactment of the Tax Cuts and Jobs Act on December 22, 2017, as compared to the U.S. federal tax rate of 35% that was applicable in the first quarter of 2017. Our effective tax rate in both periods is impacted by earnings attributable to noncontrolling interests in CF Industries Nitrogen, LLC (CFN) and Terra Nitrogen Company, L.P. (TNCLP), as our consolidated income tax provision (benefit) does not include a tax provision on the earnings attributable to the noncontrolling interests. Our effective tax rate for the three months ended March 31, 2018 and 2017, exclusive of the earnings attributable to the noncontrolling interests of $25 million and $14 million, respectively, would be 20.8% and 35.9%, respectively. See Note 14—Noncontrolling Interests for additional information. During the fourth quarter of 2017, we recorded the impact of the Tax Cuts and Jobs Act that was enacted on December 22, 2017, including a provisional amount for the impact of the transition tax liability based on amounts reasonably estimable. We have not recorded measurement period adjustments to this provisional amount in the three months ended March 31, 2018. During the third quarter of 2016, one of our Canadian subsidiaries received a Notice of Reassessment from the Canada Revenue Agency (CRA) for tax years 2006 through 2009 asserting a disallowance of certain patronage allocations. The tax assessment of CAD $174 million (or approximately $135 million), including provincial taxes but excluding any interest or penalties, is the result of an audit that was initiated by the CRA in January 2010 and involves the sole issue of whether certain patronage allocations meet the requirements for deductibility under the Income Tax Act of Canada. The reassessment has been appealed and a letter of credit in the amount of CAD $87 million (or approximately $67 million) has been posted. We believe that it is more likely than not that the patronage allocation deduction will ultimately be sustained. In the event that we do not prevail in the appeal, we should be entitled to a U.S. foreign tax credit against any incremental Canadian tax paid. This issue is currently under review by the competent authorities of Canada and the United States. |
Interest Expense |
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Interest Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Expense | Interest Expense Details of interest expense are as follows:
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Financing Agreements |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Agreements | Financing Agreements Revolving Credit Agreement We have a senior secured revolving credit agreement (the Revolving Credit Agreement) providing for a revolving credit facility of up to $750 million with a maturity of September 18, 2020. The Revolving Credit Agreement includes a letter of credit sub-limit of $125 million. Borrowings under the Revolving Credit Agreement may be used for working capital and general corporate purposes. CF Industries, the borrower under the Revolving Credit Agreement, may also designate as borrowers one or more wholly owned subsidiaries that are organized in the United States or any state thereof or the District of Columbia. Borrowings under the Revolving Credit Agreement may be denominated in dollars, Canadian dollars, euros and British pounds, and bear interest at a per annum rate equal to an applicable eurocurrency rate or base rate plus, in either case, a specified margin, and the borrowers are required to pay an undrawn commitment fee on the undrawn portion of the commitments under the Revolving Credit Agreement and customary letter of credit fees. The specified margin and the amount of the commitment fee depend on CF Holdings’ credit rating at the time. The guarantors under the Revolving Credit Agreement are currently comprised of CF Holdings and CF Holdings’ wholly owned subsidiaries CF Industries Enterprises, LLC (CFE), CF Industries Sales, LLC (CFS) and CF USA Holdings, LLC (CF USA). As of March 31, 2018, we had excess borrowing capacity under the Revolving Credit Agreement of $745 million (net of outstanding letters of credit of $5 million). There were no borrowings outstanding under the Revolving Credit Agreement as of March 31, 2018 or December 31, 2017, or during the three months ended March 31, 2018. The Revolving Credit Agreement contains representations and warranties and affirmative and negative covenants, including financial covenants. As of March 31, 2018, we were in compliance with all covenants under the Revolving Credit Agreement. Letters of Credit In addition to the letters of credit outstanding under the Revolving Credit Agreement, as described above, we have also entered into a bilateral agreement with capacity to issue letters of credit up to $125 million (reflecting an increase of $50 million in March 2018). As of March 31, 2018, approximately $120 million of letters of credit were outstanding under this agreement. Senior Notes Long-term debt presented on our consolidated balance sheets as of March 31, 2018 and December 31, 2017 consisted of the following Public Senior Notes (unsecured) and Senior Secured Notes issued by CF Industries:
Public Senior Notes Under the indentures (including the applicable supplemental indentures) governing the senior notes due 2020, 2023, 2034, 2043 and 2044 identified in the table above (the Public Senior Notes), each series of Public Senior Notes is guaranteed by CF Holdings and CF Holdings’ wholly owned subsidiaries CFE, CFS and CF USA. CFE, CFS and CF USA became subsidiary guarantors of the Public Senior Notes as a result of their becoming guarantors under the Revolving Credit Agreement. Interest on the Public Senior Notes is payable semiannually, and the Public Senior Notes are redeemable at our option, in whole at any time or in part from time to time, at specified make-whole redemption prices. Senior Secured Notes On November 21, 2016, CF Industries issued $500 million aggregate principal amount of 3.400% senior secured notes due 2021 (the 2021 Notes) and $750 million aggregate principal amount of 4.500% senior secured notes due 2026 (the 2026 Notes, and together with the 2021 Notes, the Senior Secured Notes). The subsidiary guarantors of the Public Senior Notes are also guarantors of the Senior Secured Notes. Interest on the Senior Secured Notes is payable semiannually on December 1 and June 1 beginning on June 1, 2017, and the Senior Secured Notes are redeemable at our option, in whole at any time or in part from time to time, at specified make-whole redemption prices. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments We use derivative financial instruments primarily to reduce our exposure to changes in commodity prices. Natural gas is the largest and most volatile component of the manufacturing cost for nitrogen-based products. We manage the risk of changes in natural gas prices primarily through the use of derivative financial instruments. The derivatives that we use for this purpose are primarily natural gas fixed price swaps, natural gas basis swaps and natural gas options traded in the OTC markets. These natural gas derivatives settle using primarily a NYMEX futures price index, which represents the basis for fair value at any given time. We enter into natural gas derivative contracts with respect to natural gas to be consumed by us in the future, and settlements of those derivative contracts are scheduled to coincide with our anticipated purchases of natural gas used to manufacture nitrogen products during those future periods. We use natural gas derivatives as an economic hedge of natural gas price risk, but without the application of hedge accounting. As a result, changes in fair value of these contracts are recognized in earnings. As of March 31, 2018, we had natural gas NYMEX fixed price swaps covering periods through December 2018 and natural gas basis swaps covering certain periods through March 2019. As of March 31, 2018 and December 31, 2017, we had open natural gas derivative contracts, including natural gas fixed price swaps and natural gas basis swaps, for 27.7 million MMBtus (millions of British thermal units) and 35.9 million MMBtus, respectively. For the three months ended March 31, 2018, we used natural gas NYMEX fixed price swaps to cover approximately 9% of our natural gas consumption. The effect of derivatives in our consolidated statements of operations is shown in the table below.
The fair values of derivatives on our consolidated balance sheets are shown below. As of March 31, 2018 and December 31, 2017, none of our derivative instruments were designated as hedging instruments. See Note 9—Fair Value Measurements for additional information on derivative fair values.
Most of our International Swaps and Derivatives Association (ISDA) agreements contain credit-risk-related contingent features such as cross default provisions and credit support thresholds. In the event of certain defaults or a credit ratings downgrade, our counterparty may request early termination and net settlement of certain derivative trades or may require us to collateralize derivatives in a net liability position. The Revolving Credit Agreement, at any time when it is secured, provides a cross collateral feature for those of our derivatives that are with counterparties that are party to, or affiliates of parties to, the Revolving Credit Agreement so that no separate collateral would be required for those counterparties in connection with such derivatives. In the event the Revolving Credit Agreement becomes unsecured, separate collateral could be required in connection with such derivatives. As of March 31, 2018 and December 31, 2017, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was $9 million and $12 million, respectively, which also approximates the fair value of the maximum amount of additional collateral that would need to be posted or assets needed to settle the obligations if the credit-risk-related contingent features were triggered at the reporting dates. As of March 31, 2018 and December 31, 2017, we had no cash collateral on deposit with counterparties for derivative contracts. The credit support documents executed in connection with certain of our ISDA agreements generally provide us and our counterparties the right to set off collateral against amounts owing under the ISDA agreements upon the occurrence of a default or a specified termination event. The following table presents amounts relevant to offsetting of our derivative assets and liabilities as of March 31, 2018 and December 31, 2017:
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We do not believe the contractually allowed netting, close-out netting or setoff of amounts owed to, or due from, the counterparties to our ISDA agreements would have a material effect on our financial position. |
Noncontrolling Interests |
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Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interests | Noncontrolling Interests A reconciliation of the beginning and ending balances of noncontrolling interests and distributions payable to noncontrolling interests in our consolidated balance sheets is provided below.
CF Industries Nitrogen, LLC (CFN) We commenced a strategic venture with CHS on February 1, 2016, at which time CHS purchased a minority equity interest in CFN, a subsidiary of CF Holdings, for $2.8 billion, which represented approximately 11% of the membership interest of CFN. We own the remaining membership interest. Under the terms of CFN’s limited liability company agreement, each member’s interest will reflect, over time, the impact of the profitability of CFN and any member contributions made to, and distributions received from, CFN. For financial reporting purposes, the assets, liabilities and earnings of the strategic venture are consolidated into our financial statements. CHS’ interest in the strategic venture is recorded in noncontrolling interests in our consolidated financial statements. On February 1, 2016, CHS also began receiving deliveries pursuant to a supply agreement under which CHS has the right to purchase annually from CFN up to approximately 1.1 million tons of granular urea and 580,000 tons of UAN at market prices. As a result of its minority equity interest in CFN, CHS is entitled to semi-annual cash distributions from CFN. We are also entitiled to semi-annual cash distributions from CFN. The amounts of distributions from CFN to us and CHS are based generally on the profitability of CFN and determined based on the volume of granular urea and UAN sold by CFN to us and CHS pursuant to supply agreements, less a formula driven amount based primarily on the cost of natural gas used to produce the granular urea and UAN, and adjusted for the allocation of items such as operational efficiencies and overhead amounts. Additionally, under the terms of the strategic venture, we recognized an embedded derivative related to our credit rating. See Note 9—Fair Value Measurements for additional information. Terra Nitrogen Company, L.P. (TNCLP) On February 7, 2018, we announced that, in accordance with the terms of TNCLP’s First Amended and Restated Agreement of Limited Partnership (as amended by Amendment No. 1 to the First Amended and Restated Agreement of Limited Partnership, the TNCLP Agreement of Limited Partnership), Terra Nitrogen GP Inc. (TNGP), the sole general partner of TNCLP and an indirect wholly owned subsidiary of CF Holdings, elected to exercise its right to purchase all of the 4,612,562 publicly traded common units of TNCLP (the Public Units). TNGP completed its purchase of the Public Units on April 2, 2018 (the Purchase) for an aggregate cash purchase price of $388 million. Upon completion of the Purchase, CF Holdings owned, through its subsidiaries, 100 percent of the general and limited partnership interests of TNCLP. See Note 19—Subsequent Event for additional information. As of March 31, 2018, TNCLP was a master limited partnership (MLP) that owned a nitrogen fertilizer manufacturing facility in Verdigris, Oklahoma. As of March 31, 2018, we owned approximately 75.3% of TNCLP through general and limited partnership interests and outside investors owned the remaining approximately 24.7% of the limited partnership. For financial reporting purposes, the assets, liabilities and earnings of the partnership have been consolidated into our financial statements. The outside investors’ limited partnership interests in the partnership have been recorded in noncontrolling interests in our consolidated financial statements. The noncontrolling interest represents the noncontrolling unitholders’ interest (prior to the Purchase) in the earnings and equity of TNCLP. Affiliates of CF Industries were required to purchase all of TNCLP’s fertilizer products at market prices as defined in the Amendment to the General and Administrative Services and Product Offtake Agreement, dated September 28, 2010. Prior to April 2, 2018, TNCLP made cash distributions to the general and limited partners based on formulas defined within the TNCLP Agreement of Limited Partnership. Cash available for distribution (Available Cash) was defined in the TNCLP Agreement of Limited Partnership generally as all cash receipts less all cash disbursements, less certain reserves (including reserves for future operating and capital needs) established as the general partner determined in its reasonable discretion to be necessary or appropriate. Changes in working capital affected Available Cash, as increases in the amount of cash invested in working capital items (such as increases in receivables or inventory and decreases in accounts payable) reduced Available Cash, while declines in the amount of cash invested in working capital items increased Available Cash. Cash distributions to the limited partners and general partner varied depending on the extent to which the cumulative distributions exceeded certain target threshold levels set forth in the TNCLP Agreement of Limited Partnership. In the first quarter of 2017, the minimum quarterly distributions under the TNCLP Agreement of Limited Partnership were satisfied, which entitled TNGP to receive incentive distributions on its general partner interests (in addition to minimum quarterly distributions). TNGP assigned its right to receive such incentive distributions to an affiliate of TNGP that was also an indirect wholly owned subsidiary of CF Holdings. The earnings attributed to our general partner interest in excess of the threshold levels for the three months ended March 31, 2017 was $3 million. |
Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity | Changes to accumulated other comprehensive income (loss) are as follows:
Reclassifications out of accumulated other comprehensive income (loss) to earnings during the three months ended March 31, 2018 and 2017 were as follows:
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Contingencies |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Contingencies Litigation West Fertilizer Co. On April 17, 2013, there was a fire and explosion at the West Fertilizer Co. fertilizer storage and distribution facility in West, Texas. According to published reports, 15 people were killed and approximately 200 people were injured in the incident, and the fire and explosion damaged or destroyed a number of homes and buildings around the facility. Various subsidiaries of CF Industries Holdings, Inc. (the CF Entities) have been named as defendants along with other companies in lawsuits filed in 2013, 2014 and 2015 in the District Court of McLennan County, Texas by the City of West, individual residents of the County and other parties seeking recovery for damages allegedly sustained as a result of the explosion. The cases have been consolidated for discovery and pretrial proceedings in the District Court of McLennan County under the caption “In re: West Explosion Cases.” The two-year statute of limitations expired on April 17, 2015. As of that date, over 400 plaintiffs had filed claims, including at least 9 entities, 325 individuals, and 80 insurance companies. Plaintiffs allege various theories of negligence, strict liability, and breach of warranty under Texas law. Although we do not own or operate the facility or directly sell our products to West Fertilizer Co., products that the CF Entities have manufactured and sold to others have been delivered to the facility and may have been stored at the West facility at the time of the incident. The Court granted in part and denied in part the CF Entities’ Motions for Summary Judgment in August 2015. Over one hundred sixty cases have been resolved pursuant to confidential settlements that have been or we expect will be fully funded by insurance. The remaining cases are in various stages of discovery and pre-trial proceedings. The next trial is scheduled for July 2018. We believe we have strong legal and factual defenses and intend to continue defending the CF Entities vigorously in the pending lawsuits. The Company cannot provide a range of reasonably possible loss due to the lack of damages discovery for many of the remaining claims and the uncertain nature of this litigation, including uncertainties around the potential allocation of responsibility by a jury to other defendants or responsible third parties. The recognition of a potential loss in the future in the West Fertilizer Co. litigation could negatively affect our results in the period of recognition. However, based upon currently available information, including available insurance coverage, we do not believe that this litigation will have a material adverse effect on our consolidated financial position, results of operations or cash flows. Other Litigation From time to time, we are subject to ordinary, routine legal proceedings related to the usual conduct of our business, including proceedings regarding public utility and transportation rates, environmental matters, taxes and permits relating to the operations of our various plants and facilities. Based on the information available as of the date of this filing, we believe that the ultimate outcome of these routine matters will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. Environmental Louisiana Environmental Matters Clean Air Act—Ozone Attainment Designation Our Donaldsonville nitrogen complex is located in a five-parish region near Baton Rouge, Louisiana. On December 15, 2016, the EPA redesignated the Baton Rouge Nonattainment Area as “attainment” with respect to the 2008 8-hour ozone national ambient air quality standard (NAAQS). However, based on 2013-2015 air quality monitoring data, the State of Louisiana recommended that the EPA designate the Baton Rouge area as “non-attainment” pursuant to the updated 2015 8-hour ozone standard. On December 20, 2017, the EPA notified the state of Louisiana that it intends to designate the Baton Rouge area as non-attainment for the 2015 ozone standard. On January 5, 2018, the EPA published notice of a public comment period with respect to the proposed attainment/non-attainment designations of certain air quality regions, including the Baton Rouge area. The EPA subsequently determined, based on certified air emissions data for calendar year 2017, that the air quality monitors for the Baton Rouge area are attaining the 2015 standard. As a result, on April 30, 2018, the EPA Administrator signed a notice designating the Baton Rouge area as “attainment/unclassifiable” with respect to the 2015 ozone standard. Designation of the Baton Rouge area as nonattainment with respect to the 2015 ozone standard could have resulted in more stringent air pollution emissions limits for our existing operation and would have subjected our facilities to more stringent requirements to obtain approvals for plant expansions, or made it more difficult to obtain such approvals. Other CERCLA/Remediation Matters From time to time, we receive notices from governmental agencies or third parties alleging that we are a potentially responsible party at certain cleanup sites under CERCLA or other environmental cleanup laws. In 2011, we received a notice from the Idaho Department of Environmental Quality (IDEQ) that alleged that we were a potentially responsible party for the cleanup of a former phosphate mine site we owned in the late 1950s and early 1960s located in Georgetown Canyon, Idaho. The current owner of the property and a former mining contractor received similar notices for the site. In 2014, we and the current property owner entered into a Consent Order with IDEQ and the U.S. Forest Service to conduct a remedial investigation and feasibility study of the site. In 2015, we and several other parties received a notice that the U.S. Department of the Interior and other trustees intend to undertake a natural resource damage assessment for 17 former phosphate mines in southeast Idaho, one of which is the former Georgetown Canyon mine. We are not able to estimate at this time our potential liability, if any, with respect to the cleanup of the site or a possible claim for natural resource damages. However, based on currently available information, we do not expect the remedial or financial obligations to which we may be subject involving this or other cleanup sites will have a material adverse effect on our consolidated financial position, results of operations or cash flows. |
Segment Disclosures |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Disclosures | Segment Disclosures Our reportable segments consist of ammonia, granular urea, UAN, AN and Other. These segments are differentiated by products. Our management uses gross margin to evaluate segment performance and allocate resources. Total other operating costs and expenses (consisting of selling, general and administrative expenses and other operating—net) and non-operating expenses (interest and income taxes) are centrally managed and are not included in the measurement of segment profitability reviewed by management. Our assets, with the exception of goodwill, are not monitored by or reported to our chief operating decision maker by segment; therefore, we do not present total assets by segment. Goodwill by segment is presented in Note 7—Goodwill and Other Intangible Assets. Segment data for sales, cost of sales and gross margin for the three months ended March 31, 2018 and 2017 are presented in the tables below.
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Condensed Consolidating Financial Statements |
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Condensed Consolidating Financial Statements | Condensed Consolidating Financial Statements The following condensed consolidating financial information is presented in accordance with SEC Regulation S-X Rule 3-10, Financial statements of guarantors and issuers of guaranteed securities registered or being registered, and relates to (i) the senior notes due 2020, 2023, 2034, 2043 and 2044 (described in Note 12—Financing Agreements and referred to in this report as the Public Senior Notes) issued by CF Industries, Inc. (CF Industries), a 100% owned subsidiary of CF Industries Holdings, Inc. (Parent), and guarantees of the Public Senior Notes by Parent and by CFE, CFS and CF USA (the Subsidiary Guarantors), which are 100% owned subsidiaries of Parent, and (ii) debt securities of CF Industries (Other Debt Securities), and guarantees thereof by Parent and the Subsidiary Guarantors, that may be offered and sold from time to time under registration statements that may be filed by Parent, CF Industries and the Subsidiary Guarantors with the SEC. In the event that a subsidiary of Parent, other than CF Industries, becomes a borrower or a guarantor under the Revolving Credit Agreement (or any renewal, replacement or refinancing thereof), such subsidiary would be required to become a guarantor of the Public Senior Notes, provided that such requirement will no longer apply with respect to the Public Senior Notes due 2023, 2034, 2043 and 2044 following the repayment of the Public Senior Notes due 2020 or the subsidiaries of Parent, other than CF Industries, otherwise becoming no longer subject to such a requirement to guarantee the Public Senior Notes due 2020. The Subsidiary Guarantors became guarantors of the Public Senior Notes as a result of this requirement. All of the guarantees of the Public Senior Notes are, and we have assumed for purposes of this presentation of condensed consolidating financial information that the guarantees of any Other Debt Securities would be, full and unconditional (as such term is defined in SEC Regulation S-X Rule 3-10(h)) and joint and several. The guarantee of a Subsidiary Guarantor will be automatically released with respect to a series of the Public Senior Notes (1) upon the release, discharge or termination of such Subsidiary Guarantor’s guarantee of the Revolving Credit Agreement (or any renewal, replacement or refinancing thereof), (2) upon legal defeasance with respect to the Public Senior Notes of such series or satisfaction and discharge of the indenture with respect to such series of Public Senior Notes or (3) in the case of the Public Senior Notes due 2023, 2034, 2043 and 2044, upon the discharge, termination or release of, or the release of such Subsidiary Guarantor from its obligations under, such Subsidiary Guarantor’s guarantee of the Public Senior Notes due 2020, including, without limitation, any such discharge, termination or release as a result of retirement, discharge or legal or covenant defeasance of, or satisfaction and discharge of the supplemental indenture governing, the Public Senior Notes due 2020. For purposes of the presentation of condensed consolidating financial information, the subsidiaries of Parent other than CF Industries and the Subsidiary Guarantors are referred to as the Non-Guarantors. Presented below are condensed consolidating statements of operations for Parent, CF Industries, the Subsidiary Guarantors and the Non-Guarantors for the three months ended March 31, 2018 and 2017, condensed consolidating statements of cash flows for Parent, CF Industries, the Subsidiary Guarantors and the Non-Guarantors for the three months ended March 31, 2018 and 2017, and condensed consolidating balance sheets for Parent, CF Industries, the Subsidiary Guarantors and the Non-Guarantors as of March 31, 2018 and December 31, 2017. The condensed consolidating financial information presented below is not necessarily indicative of the financial position, results of operations, comprehensive income (loss) or cash flows of Parent, CF Industries, the Subsidiary Guarantors or the Non-Guarantors on a stand-alone basis. In these condensed consolidating financial statements, investments in subsidiaries are presented under the equity method, in which our investments are recorded at cost and adjusted for our ownership share of a subsidiary’s cumulative results of operations, distributions and other equity changes, and the eliminating entries reflect primarily intercompany transactions such as sales, accounts receivable and accounts payable and the elimination of equity investments and earnings of subsidiaries. As of March 31, 2018, two of our consolidated entities have made elections to be taxed as partnerships for U.S. federal income tax purposes and are included in the non-guarantor column. Due to the partnership tax treatment, these subsidiaries do not record taxes on their financial statements. The tax provision pertaining to the income of these partnerships, plus applicable deferred tax balances are reflected on the financial statements of the parent company owner that is included in the subsidiary guarantors column in the following financial information. Liabilities related to benefit plan obligations are reflected on the legal entity that funds the obligation, while the benefit plan expense is included on the legal entity to which the employee provides services. Condensed Consolidating Statement of Operations
Condensed Consolidating Statement of Comprehensive Income
Condensed Consolidating Statement of Operations
Condensed Consolidating Statement of Comprehensive Income (Loss)
Condensed Consolidating Balance Sheet
Condensed Consolidating Balance Sheet
Condensed Consolidating Statement of Cash Flows
Condensed Consolidating Statement of Cash Flows
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Subsequent Event (Notes) |
3 Months Ended |
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Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event [Text Block] | 19. Subsequent Event On February 7, 2018, we announced that, in accordance with the terms of the TNCLP Agreement of Limited Partnership, TNGP, the sole general partner of TNCLP and an indirect wholly owned subsidiary of CF Holdings, elected to exercise its right to purchase all of the 4,612,562 publicly traded common units of TNCLP (the Public Units). The purchase price of $84.033 per Public Unit was determined under the terms of TNCLP’s Agreement of Limited Partnership as the average of the daily closing prices per common unit for the 20 consecutive trading days beginning with January 5, 2018 and ending with February 2, 2018. TNGP completed its purchase of the Public Units on April 2, 2018 (the Purchase) for an aggregate cash purchase price of $388 million. We funded the Purchase with cash on hand. As a result of the Purchase, all rights of the holders of the Public Units have ceased, except for the right to receive payment of the purchase price, and the common units representing limited partner interests are no longer publicly traded or listed on the New York Stock Exchange. Upon completion of the Purchase, CF Holdings owned, through its subsidiaries, 100 percent of the general and limited partnership interests of TNCLP. |
New Accounting Standards (Policies) |
3 Months Ended |
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Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Recently Adopted Pronouncements | Recently Adopted Pronouncements On January 1, 2018, we adopted ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), which supersedes the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition. This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments. Additionally, the costs to obtain and fulfill a contract, including assets to be recognized, are to be capitalized and such capitalized costs should be disclosed. In 2016, the Financial Accounting Standards Board (FASB) issued additional ASUs that enhanced the operability of the principal versus agent guidance in ASU No. 2014-09 by clarifying that an entity should consider the nature of each good or service promised to a customer at the individual good or service level, clarified that ASU No. 2014-09 should not be applied to immaterial performance obligations, and enhanced the guidance around the treatment of shipping costs incurred to fulfill performance obligations. Our adoption of this ASU, utilizing the modified retrospective approach on contracts that were not completed as of January 1, 2018, resulted in a reduction to opening retained earnings of $1 million related to the cumulative difference between ASC 605 and ASC 606. See Note 3—Revenue Recognition for additional information. On January 1, 2018, we adopted ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities, which changes the income statement impact of equity investments held by an entity. The amendments require the unrealized gains or unrealized losses of equity instruments measured at fair value to be recognized in net income. Our adoption of this ASU resulted in an increase to opening retained earnings of $1 million representing the cumulative effect of unrealized gains from equity securities from accumulated other comprehensive income (loss). On January 1, 2018, we adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230) Restricted Cash - a consensus of the FASB Emerging Issues Task Force, which requires that the statement of cash flows include amounts described as restricted cash and restricted cash equivalents as part of cash and cash equivalents when reconciling the beginning and ending period total amounts. Upon adoption of this ASU, $1 million of withdrawals from restricted cash funds previously reflected as cash provided by investing activities for the three months ended March 31, 2017, and our restricted cash of $5 million and $4 million as of December 31, 2016 and March 31, 2017, respectively, were reclassified to be included within the reconciliation of beginning and ending cash, cash equivalents and restricted cash balances on our consolidated statement of cash flows. On January 1, 2018, we adopted ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changed the presentation of net benefit cost related to employer sponsored defined benefit plans and other postretirement benefits. Only service cost can be included within the same income statement line item as other compensation costs arising from services rendered during the period, while other components of net benefit cost must be presented separately outside of operating income. Additionally, only service costs may be capitalized on the balance sheet. Our adoption of this ASU was applied retrospectively for the income statement classification requirements and prospectively for the capitalization guidance, which resulted in $1 million of net benefit cost previously recognized in cost of sales to be reclassifed to other non-operating on our consolidated statement of operations for the three months ended March 31, 2017. On January 1, 2018, we adopted ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which requires an entity to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. Our adoption of this ASU had no impact on our consolidated financial statements. Recently Issued Pronouncements In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which supersedes the lease accounting requirements in ASC Topic 840, Leases. This ASU will require lessees to recognize the rights and obligations resulting from virtually all leases (other than leases that meet the definition of a short-term lease) on their balance sheets as right-of-use assets with corresponding lease liabilities. Extensive quantitative and qualitative disclosures, including significant judgments made by management, will be required to provide greater insight into the extent of income and expense recognized and expected to be recognized from existing contracts. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted, and requires the modified retrospective method of adoption. While we are continuing to evaluate the impact of the adoption of this ASU on our consolidated financial statements, we currently believe the most significant change relates to the recognition of the right-of-use assets and lease liabilities on our balance sheet for operating leases for certain property and equipment, including transportation equipment utilized for the distribution of our products. In August 2017, the FASB issued ASU No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which improves the financial reporting of hedging relationships in order to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, and should be applied to existing hedging relationships as of the date of adoption. Early adoption of this ASU is permitted. We do not expect the adoption of this ASU will have a material effect on our consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. This ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018 and for interim periods therein. Early adoption of this ASU is permitted. We do not expect the adoption of this ASU will have a material effect on our consolidated financial statements. |
Revenue Recognition | In situations where we have agreed to arrange delivery of the product to the customer’s intended destination and control of the product transfers upon loading of our product onto transportation equipment, we have elected to account for any freight income associated with the delivery of these products as freight revenue, since this activity fulfills our obligation to transfer the product to the customer. |
Revenue Recognition (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table summarizes our revenue by product and by geography (based on destination of our shipment) for the three months ended March 31, 2018:
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Expected Timing of Remaining Performance Obligations | he minimum product tonnage to be sold under such contracts with original contract durations of more than one year are as follows:
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Net Earnings Per Share (Tables) |
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Summary of net earnings per share | Net earnings (loss) per share were computed as follows:
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Inventories (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of inventories | Inventories consist of the following:
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Property, Plant and Equipment-Net (Tables) |
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Property, Plant and Equipment, Net [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of property, plant and equipment-net | Property, plant and equipment—net consists of the following:
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Depreciation and amortization related to property, plant and equipment was $185 million and $197 million for the three months ended March 31, 2018 and 2017, respectively. |
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Summary of plant turnaround activity | The following is a summary of capitalized plant turnaround costs:
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Goodwill and Other Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of carrying amount of goodwill by business segment | The following table shows the carrying amount of goodwill by reportable segment as of March 31, 2018 and December 31, 2017:
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Schedule of the identifiable intangibles and their carrying values presented in other noncurrent assets on consolidated balance sheet | All of our identifiable intangible assets have definite lives and are presented in other assets on our consolidated balance sheets at gross carrying amount, net of accumulated amortization, as follows:
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Schedule of estimated future amortization expense | Total estimated amortization expense for the remainder of 2018 and each of the five succeeding fiscal years is as follows:
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of cash and cash equivalents and other investments reconciliation from adjusted cost to fair value | Our cash and cash equivalents and other investments consist of the following:
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Schedule of assets and liabilities measured at fair value on a recurring basis | The following tables present assets and liabilities included in our consolidated balance sheets as of March 31, 2018 and December 31, 2017 that are recognized at fair value on a recurring basis, and indicate the fair value hierarchy utilized to determine such fair value:
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Schedule of carrying amounts and estimated fair values of financial instruments | The carrying amount and estimated fair value of our financial instruments are as follows:
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Interest Expense (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Interest Expense [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of interest expense | Details of interest expense are as follows:
_______________________________________________________________________________
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Financing Agreements (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of long-term debt | Long-term debt presented on our consolidated balance sheets as of March 31, 2018 and December 31, 2017 consisted of the following Public Senior Notes (unsecured) and Senior Secured Notes issued by CF Industries:
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Derivative Financial Instruments (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of effect of derivatives in the consolidated statements of operations | The effect of derivatives in our consolidated statements of operations is shown in the table below.
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Schedule of fair values of derivatives in our consolidated balance sheet | The fair values of derivatives on our consolidated balance sheets are shown below. As of March 31, 2018 and December 31, 2017, none of our derivative instruments were designated as hedging instruments. See Note 9—Fair Value Measurements for additional information on derivative fair values.
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Schedule of amounts relevant to offsetting of derivative assets | The following table presents amounts relevant to offsetting of our derivative assets and liabilities as of March 31, 2018 and December 31, 2017:
_______________________________________________________________________________
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Schedule of amounts relevant to offsetting of derivative liabilities | The following table presents amounts relevant to offsetting of our derivative assets and liabilities as of March 31, 2018 and December 31, 2017:
_______________________________________________________________________________
|
Noncontrolling Interests (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interests | A reconciliation of the beginning and ending balances of noncontrolling interests and distributions payable to noncontrolling interests in our consolidated balance sheets is provided below.
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Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes to AOCI | Changes to accumulated other comprehensive income (loss) are as follows:
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Schedule of reclassifications out of AOCI | _______________________________________________________________________________ |
Segment Disclosures (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of segment data for sales, cost of sales and gross margin |
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Condensed Consolidating Financial Statements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 |
Mar. 31, 2017 |
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Condensed Consolidating Financial Statements | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Condensed Consolidating Statements of Operations | Condensed Consolidating Statement of Operations
|
Condensed Consolidating Statement of Operations
|
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Schedule of Condensed Consolidating Statements of Comprehensive Income | Condensed Consolidating Statement of Comprehensive Income
|
Condensed Consolidating Statement of Comprehensive Income (Loss)
|
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Schedule of Condensed Consolidating Balance Sheets | Condensed Consolidating Balance Sheet
Condensed Consolidating Balance Sheet
|
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Schedule of Condensed Consolidating Statements of Cash Flows | Condensed Consolidating Statement of Cash Flows
Condensed Consolidating Statement of Cash Flows
|
Background and Basis of Presentation (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Decrease in Restricted Cash | $ 55 | $ 86 |
Accounting Standards Update 2016-18 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Decrease in Restricted Cash | $ 1 |
Revenue Recognition - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Disaggregation of Revenue [Line Items] | ||
Customary payment terms | 30 days | |
Customer advances | $ 154 | $ 89 |
Customer advanced recognized during period | $ 65 | |
Minimum | ||
Disaggregation of Revenue [Line Items] | ||
Term of supply contract | 1 year | |
Continuous Basis | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from Contract with Customer, Excluding Assessed Tax | $ 25 |
Net Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Net earnings (loss) attributable to common stockholders | $ 63 | $ (23) |
Basic earnings per common share: | ||
Weighted-average common shares outstanding | 233.9 | 233.1 |
Net (loss) earnings attributable to common stockholders (in dollars per share) | $ 0.27 | $ (0.10) |
Diluted earnings per common share: | ||
Weighted-average common shares outstanding | 233.9 | 233.1 |
Dilutive common shares—stock options (in shares) | 0.9 | 0.0 |
Diluted weighted-average shares outstanding | 234.8 | 233.1 |
Net earnings (loss) attributable to common stockholders diluted (in dollars per share) | $ 0.27 | $ (0.10) |
Antidilutive securities excluded from computation of EPS (in shares) | 2.0 | 6.6 |
Inventories (Details) - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished goods | $ 363 | $ 233 |
Raw materials, spare parts and supplies | 38 | 42 |
Total inventories | $ 401 | $ 275 |
Goodwill and Other Intangible Assets (Details) $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
| |
Goodwill and other intangible assets | |
Amortization expense | $ 2 |
Goodwill | |
Goodwill, Beginning Balance | 2,371 |
Effect of exchange rate changes | 10 |
Goodwill, Ending Balance | 2,381 |
Ammonia | |
Goodwill | |
Goodwill, Beginning Balance | 587 |
Effect of exchange rate changes | 1 |
Goodwill, Ending Balance | 588 |
Granular Urea | |
Goodwill | |
Goodwill, Beginning Balance | 829 |
Effect of exchange rate changes | (1) |
Goodwill, Ending Balance | 828 |
UAN | |
Goodwill | |
Goodwill, Beginning Balance | 576 |
Effect of exchange rate changes | 0 |
Goodwill, Ending Balance | 576 |
AN | |
Goodwill | |
Goodwill, Beginning Balance | 306 |
Effect of exchange rate changes | 9 |
Goodwill, Ending Balance | 315 |
Other | |
Goodwill | |
Goodwill, Beginning Balance | 73 |
Effect of exchange rate changes | 1 |
Goodwill, Ending Balance | $ 74 |
Goodwill and Other Intangible Assets (Details 2) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Identifiable intangibles | ||
Gross Carrying Amount | $ 178 | $ 174 |
Accumulated Amortization | (47) | (45) |
Net | 131 | 129 |
Amortization expense | $ 2 | |
Finite-Lived Intangible Asset, Useful Life | 20 years | |
Total estimated amortization expense for the five succeeding fiscal years | ||
Remainder of 2018 | $ 8 | |
2019 | 9 | |
2020 | 9 | |
2021 | 9 | |
2022 | 9 | |
2023 | 9 | |
Customer relationships | ||
Identifiable intangibles | ||
Gross Carrying Amount | 135 | 132 |
Accumulated Amortization | (33) | (31) |
Net | 102 | 101 |
TerraCair brand | ||
Identifiable intangibles | ||
Gross Carrying Amount | 10 | 10 |
Accumulated Amortization | (10) | (10) |
Net | 0 | 0 |
Trade names | ||
Identifiable intangibles | ||
Gross Carrying Amount | 33 | 32 |
Accumulated Amortization | (4) | (4) |
Net | $ 29 | $ 28 |
Equity Method Investments-Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Equity method investments | ||
Equity in earnings of operating affiliates | $ 7 | $ 3 |
Operating equity method investments | Maximum | Property, plant and equipment | ||
Equity method investments | ||
Number of years that the increased basis for property, plant and equipment and identifiable intangibles will be amortized | 15 years | |
Point Lisas Nitrogen Limited [Member] | Operating equity method investments | ||
Equity method investments | ||
Unrecorded Unconditional Purchase Obligation, Percent | 50.00% | |
Ownership interest (as a percent) | 50.00% | |
Equity Method Investments | $ 100 | |
Carrying value of investments in excess of the entity's share of the affiliates' book value | $ 51 | |
Obligation to purchase ammonia (as a percent) | 50% of the ammonia produced by PLNL | |
Purchases of ammonia from PLNL | $ 29 | $ 20 |
Fair Value Measurements (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2017 |
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Investment | |||
Loss on Embedded Derivative Instrument | $ 1 | ||
Cash | $ 472 | $ 120 | |
Cash equivalents: | |||
Cash and cash equivalents, adjusted cost | 936 | 835 | |
Cash and cash equivalents, fair value disclosure | 936 | 835 | |
U.S. and Canadian government obligations | |||
Cash equivalents: | |||
Cash equivalents, adjusted cost | 462 | 710 | |
Cash equivalents, fair value | 462 | 710 | |
Other debt securities | |||
Cash equivalents: | |||
Cash equivalents, adjusted cost | 2 | 5 | |
Cash equivalents, fair value | 2 | 5 | |
Nonqualified employee benefit trusts | |||
Cash equivalents: | |||
Available-for-sale securities, adjusted cost | 17 | 17 | |
Available-for-sale securities, gross unrealized gain | 2 | 2 | |
Available-for-sale securities, fair value | $ 19 | $ 19 |
Interest Expense (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Financing agreements | ||
Interest on borrowings(1) | $ 57 | $ 76 |
Fees on financing agreements(1) | 3 | 4 |
Interest on tax liabilities | 1 | 1 |
Interest capitalized | (1) | (1) |
Interest expense | $ 60 | $ 80 |
Derivative Financial Instruments (Details) MMBTU in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018
USD ($)
MMBTU
|
Mar. 31, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
MMBTU
|
|
Fair values of derivatives on consolidated balance sheets | |||
Open derivative contracts for natural gas (in MMBtus) | MMBTU | 27.7 | 35.9 | |
Percentage of natural gas consumption covered by derivatives | 9.00% | ||
Derivative, net liability position, aggregate fair value | $ 9,000,000 | $ 12,000,000 | |
Cash collateral received pledged, total derivative liabilities | 0 | 0 | |
Gain (loss) on sale of derivatives | (1,000,000) | $ 1,000,000 | |
Net of tax | 2,000,000 | (52,000,000) | |
Derivatives not designated as cash flow hedges | |||
Fair values of derivatives on consolidated balance sheets | |||
Cash collateral received pledged, total derivative liabilities | 0 | $ 0 | |
Derivatives not designated as cash flow hedges | Natural gas derivatives | Cost of Sales | |||
Fair values of derivatives on consolidated balance sheets | |||
Unrealized gain (loss) on derivatives | $ 3,000,000 | $ (53,000,000) |
Derivative Financial Instruments (Details 2) - Derivatives not designated as cash flow hedges - USD ($) $ in Millions |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair values of derivatives on consolidated balance sheets | ||
Derivative assets | $ 0 | $ 1 |
Derivative liability | (9) | (12) |
Natural gas derivatives | ||
Fair values of derivatives on consolidated balance sheets | ||
Other current assets | 0 | 1 |
Other current liabilities | $ (9) | $ (12) |
Contingencies (Details) |
3 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Apr. 17, 2015
Insurance_company
People
Plaintiff
Entity
|
Apr. 17, 2013
People
|
Mar. 31, 2018
Litigation_case
|
Dec. 31, 2015
mine
|
|
Pending Litigation | ||||
Loss Contingencies [Line Items] | ||||
Number of people killed | 15 | |||
Number of people injured | 200 | |||
Number of plaintiffs | Plaintiff | 400 | |||
Number of entities that filed claims | Entity | 9 | |||
Number of people that filed claims | 325 | |||
Number of insurance companies that filed claims | Insurance_company | 80 | |||
Settled Litigation [Member] | ||||
Loss Contingencies [Line Items] | ||||
Loss Contingency, Claims Settled, Number | Litigation_case | 160 | |||
IDAHO | ||||
Loss Contingencies [Line Items] | ||||
Loss contingency, number of mines | mine | 17 |
Segment Disclosures (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Segment data | ||
Net sales | $ 957 | $ 1,037 |
Cost of sales | 767 | 930 |
Gross margin | 190 | 107 |
Total other operating costs and expenses | 36 | 52 |
Equity in earnings of operating affiliates | 7 | 3 |
Operating earnings | 161 | 58 |
Ammonia | ||
Segment data | ||
Net sales | 212 | |
Granular Urea | ||
Segment data | ||
Net sales | 264 | |
UAN | ||
Segment data | ||
Net sales | 283 | |
AN | ||
Segment data | ||
Net sales | 100 | |
Operating Segments | Ammonia | ||
Segment data | ||
Net sales | 212 | 282 |
Cost of sales | 188 | 265 |
Gross margin | 24 | 17 |
Operating Segments | Granular Urea | ||
Segment data | ||
Net sales | 264 | 238 |
Cost of sales | 189 | 213 |
Gross margin | 75 | 25 |
Operating Segments | UAN | ||
Segment data | ||
Net sales | 283 | 317 |
Cost of sales | 230 | 281 |
Gross margin | 53 | 36 |
Operating Segments | AN | ||
Segment data | ||
Net sales | 100 | 125 |
Cost of sales | 74 | 106 |
Gross margin | 26 | 19 |
Operating Segments | Other | ||
Segment data | ||
Net sales | 98 | 75 |
Cost of sales | 86 | 65 |
Gross margin | $ 12 | $ 10 |
Subsequent Event (Details) |
1 Months Ended | ||
---|---|---|---|
Apr. 02, 2018
USD ($)
|
Feb. 02, 2018
trading_day
|
Feb. 07, 2018
$ / shares
shares
|
|
TNCLP | |||
Subsequent Event [Line Items] | |||
Average Trading Days for which Purchase Price is Greater | trading_day | 20 | ||
Terra Nitrogen GP Inc [Member] | Terra Nitrogen Company LP [Member] | |||
Subsequent Event [Line Items] | |||
business acquisition, number of units purchased | shares | 4,612,562 | ||
Business Acquisition, Share Price | $ / shares | $ 84 | ||
Scenario, Forecast [Member] | Terra Nitrogen GP Inc [Member] | Terra Nitrogen Company LP [Member] | |||
Subsequent Event [Line Items] | |||
Payments to Acquire Businesses, Gross | $ | $ 388,000,000 |
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