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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
FORM10-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 September 30, 2020
For the quarterly period ended September 30, 2017
OR
o
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-32597
CF INDUSTRIES HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware20-2697511
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
Delaware
 (State or other jurisdiction of
incorporation or organization)
20-2697511
 (I.R.S. Employer
Identification No.)
4 Parkway North, Suite 400

60015
Deerfield,Illinois
 (Zip Code)
 (Address of principal executive offices)
60015
 (Zip Code)
(847) 405-2400
 (Registrant's telephone number, including area code)
(847) 405-2400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
common stock, par value $0.01 per shareCFNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company," and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerx
Accelerated filero
Non-accelerated filero
(Do not check if a smaller reporting company)
Smaller reporting companyo
Emerging growth companyo
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o    No x
233,260,048213,916,195 shares of the registrant'sregistrant’s common stock, $0.01 par value $0.01 per share, were outstanding at October 31, 2017.
November 2, 2020.



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CF INDUSTRIES HOLDINGS, INC.


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CF INDUSTRIES HOLDINGS, INC.


PART I—FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended 
 September 30,
 Nine months ended 
 September 30,
Three months ended 
 September 30,
Nine months ended 
 September 30,
2017 2016 2017 2016 2020201920202019
(in millions, except per share amounts) (in millions, except per share amounts)
Net sales$870
 $680
 $3,031
 $2,818
Net sales$847 $1,038 $3,022 $3,541 
Cost of sales861
 678
 2,744
 2,072
Cost of sales764 810 2,401 2,594 
Gross margin9
 2
 287
 746
Gross margin83 228 621 947 
Selling, general and administrative expenses45
 44
 140
 141
Selling, general and administrative expenses49 56 154 176 
Transaction costs
 
 
 179
Other operating—net(2) 57
 14
 181
Other operating—net(4)(30)(63)
Total other operating costs and expenses43
 101
 154
 501
Total other operating costs and expenses45 26 162 113 
Equity in losses of operating affiliates(5) (2) (8) (11)
Operating (loss) earnings(39) (101) 125
 234
Equity in earnings (losses) of operating affiliateEquity in earnings (losses) of operating affiliate(14)(6)
Operating earningsOperating earnings40 188 467 828 
Interest expense81
 31
 241
 130
Interest expense48 63 141 182 
Interest income(5) (2) (8) (4)Interest income(4)(18)(12)
Other non-operating—net
 1
 
 (1)Other non-operating—net(4)(2)(7)
(Loss) earnings before income taxes(115) (131) (108) 109
(Loss) earnings before income taxes(9)133 346 665 
Income tax benefit(47) (131) (55) (21)
Net (loss) earnings(68) 
 (53) 130
Less: Net earnings attributable to noncontrolling interests19
 30
 54
 87
Income tax (benefit) provisionIncome tax (benefit) provision(13)19 33 113 
Net earningsNet earnings114 313 552 
Less: Net earnings attributable to noncontrolling interestLess: Net earnings attributable to noncontrolling interest32 49 83 114 
Net (loss) earnings attributable to common stockholders$(87) $(30) $(107) $43
Net (loss) earnings attributable to common stockholders$(28)$65 $230 $438 
Net (loss) earnings per share attributable to common stockholders: 
  
  
  
Net (loss) earnings per share attributable to common stockholders:
Basic$(0.37) $(0.13) $(0.46) $0.19
Basic$(0.13)$0.29 $1.07 $1.98 
Diluted$(0.37) $(0.13) $(0.46) $0.19
Diluted$(0.13)$0.29 $1.07 $1.97 
Weighted-average common shares outstanding:     
  
Weighted-average common shares outstanding:  
Basic233.2
 233.1
 233.2
 233.2
Basic213.9 219.0 215.0 221.2 
Diluted233.2
 233.1
 233.2
 233.5
Diluted213.9 220.7 215.3 222.5 
Dividends declared per common share$0.30
 $0.30
 $0.90
 $0.90
Dividends declared per common share$0.30 $0.30 $0.90 $0.90 
See accompanying Notes to Unaudited Consolidated Financial Statements.



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CF INDUSTRIES HOLDINGS, INC.


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)

 Three months ended 
 September 30,
 Nine months ended 
 September 30,
 2017 2016 2017 2016
 (in millions)
Net (loss) earnings$(68) $
 $(53) $130
Other comprehensive income (loss): 
  
  
  
Foreign currency translation adjustment—net of taxes52
 (30) 124
 (20)
Defined benefit plans—net of taxes(2) 
 (1) (3)
 50
 (30) 123
 (23)
Comprehensive (loss) income(18) (30) 70
 107
Less: Comprehensive income attributable to noncontrolling interests19
 30
 54
 87
Comprehensive (loss) income attributable to common stockholders$(37) $(60) $16
 $20
 Three months ended 
 September 30,
Nine months ended 
 September 30,
 2020201920202019
 (in millions)
Net earnings$$114 $313 $552 
Other comprehensive income (loss):    
Foreign currency translation adjustment—net of taxes41 (32)(30)(8)
Defined benefit plans—net of taxes(3)
38 (30)(22)(3)
Comprehensive income42 84 291 549 
Less: Comprehensive income attributable to noncontrolling interest32 49 83 114 
Comprehensive income attributable to common stockholders$10 $35 $208 $435 
See accompanying Notes to Unaudited Consolidated Financial Statements.



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CF INDUSTRIES HOLDINGS, INC.


CONSOLIDATED BALANCE SHEETS
(Unaudited)  (Unaudited)
September 30,
2017
 December 31,
2016
September 30, 2020December 31, 2019
(in millions, except share
and per share amounts)
(in millions, except share
and per share amounts)
Assets 
  
Assets  
Current assets: 
  
Current assets:  
Cash and cash equivalents$1,992
 $1,164
Cash and cash equivalents$553 $287 
Restricted cash
 5
Accounts receivable—net279
 236
Accounts receivable—net234 242 
Inventories316
 339
Inventories298 351 
Prepaid income taxes42
 841
Prepaid income taxes53 71 
Other current assets22
 70
Other current assets33 23 
Total current assets2,651
 2,655
Total current assets1,171 974 
Property, plant and equipment—net9,372
 9,652
Property, plant and equipment—net7,724 8,170 
Investments in affiliates109
 139
Investment in affiliateInvestment in affiliate86 88 
Goodwill2,369
 2,345
Goodwill2,357 2,365 
Operating lease right-of-use assetsOperating lease right-of-use assets284 280 
Other assets356
 340
Other assets309 295 
Total assets$14,857
 $15,131
Total assets$11,931 $12,172 
Liabilities and Equity 
  
Liabilities and Equity  
Current liabilities: 
  
Current liabilities:  
Accounts payable and accrued expenses$635
 $638
Accounts payable and accrued expenses$424 $437 
Income taxes payable7
 1
Income taxes payable
Customer advances92
 42
Customer advances143 119 
Current portion of long-term debt798
 
Current operating lease liabilitiesCurrent operating lease liabilities93 90 
Other current liabilities19
 5
Other current liabilities18 18 
Total current liabilities1,551
 686
Total current liabilities681 665 
Long-term debt4,988
 5,778
Long-term debt3,960 3,957 
Deferred income taxes1,592
 1,630
Deferred income taxes1,201 1,246 
Operating lease liabilitiesOperating lease liabilities195 193 
Other liabilities486
 545
Other liabilities419 474 
Equity: 
  
Equity:  
Stockholders' equity: 
  
Stockholders’ equity:Stockholders’ equity:  
Preferred stock—$0.01 par value, 50,000,000 shares authorized
 
Preferred stock—$0.01 par value, 50,000,000 shares authorized
Common stock—$0.01 par value, 500,000,000 shares authorized, 2017—233,257,461 shares issued and 2016—233,141,771 shares issued2
 2
Common stock—$0.01 par value, 500,000,000 shares authorized, 2020—213,937,036 shares issued and 2019—216,023,826 shares issuedCommon stock—$0.01 par value, 500,000,000 shares authorized, 2020—213,937,036 shares issued and 2019—216,023,826 shares issued
Paid-in capital1,392
 1,380
Paid-in capital1,308 1,303 
Retained earnings2,048
 2,365
Retained earnings1,905 1,958 
Treasury stock—at cost, 2017—386 shares and 2016—27,602 shares
 (1)
Treasury stock—at cost, 2020—27,392 shares and 2019—0 sharesTreasury stock—at cost, 2020—27,392 shares and 2019—0 shares(1)
Accumulated other comprehensive loss(275) (398)Accumulated other comprehensive loss(388)(366)
Total stockholders' equity3,167
 3,348
Noncontrolling interests3,073
 3,144
Total stockholders’ equityTotal stockholders’ equity2,826 2,897 
Noncontrolling interestNoncontrolling interest2,649 2,740 
Total equity6,240
 6,492
Total equity5,475 5,637 
Total liabilities and equity$14,857
 $15,131
Total liabilities and equity$11,931 $12,172 
See accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.


CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
 Common Stockholders    
 
$0.01 Par
Value
Common
Stock
 
Treasury
Stock
 
Paid-In
Capital
 
Retained
Earnings
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Total
Stockholders'
Equity
 
Noncontrolling
Interests
 
Total
Equity
 (in millions, except per share amounts)
Balance as of December 31, 2015$2
 $(153) $1,378
 $3,058
 $(250) $4,035
 $352
 $4,387
Net earnings
 
 
 43
 
 43
 87
 130
Other comprehensive income (loss): 
  
  
  
  
  
  
  
Foreign currency translation adjustment—net of taxes
 
 
 
 (20) (20) 
 (20)
Defined benefit plans—net of taxes
 
 
 
 (3) (3) 
 (3)
Comprehensive income 
  
  
  
  
 20
 87
 107
Acquisition of treasury stock under employee stock plans
 (1) 
 
 
 (1) 
 (1)
Issuance of $0.01 par value common stock under employee stock plans
 3
 (3) 
 
 
 
 
Stock-based compensation expense
 
 15
 
 
 15
 
 15
Cash dividends ($0.90 per share)
 
 
 (209) 
 (209) 
 (209)
Issuance of noncontrolling interest in CF Industries Nitrogen, LLC (CFN)
 
 
 
 
 
 2,792
 2,792
Distributions declared to noncontrolling interest
 
 
 
 
 
 (111) (111)
Balance as of September 30, 2016$2
 $(151) $1,390
 $2,892
 $(273) $3,860
 $3,120
 $6,980
Balance as of December 31, 2016$2
 $(1) $1,380
 $2,365
 $(398) $3,348
 $3,144
 $6,492
Net (loss) earnings
 
 
 (107) 
 (107) 54
 (53)
Other comprehensive income (loss): 
  
  
  
  
  
  
  
Foreign currency translation adjustment—net of taxes
 
 
 
 124
 124
 
 124
Defined benefit plans—net of taxes
 
 
 
 (1) (1) 
 (1)
Comprehensive income 
  
  
  
  
 16
 54
 70
Issuance of $0.01 par value common stock under employee stock plans
 1
 (1) 
 
 
 
 
Stock-based compensation expense
 
 13
 
 
 13
 
 13
Cash dividends ($0.90 per share)
 
 
 (210) 
 (210) 
 (210)
Distributions declared to noncontrolling interests
 
 
 
 
 
 (125) (125)
Balance as of September 30, 2017$2
 $
 $1,392
 $2,048
 $(275) $3,167
 $3,073
 $6,240
 Common Stockholders
 $0.01 Par
Value
Common
Stock
Treasury
Stock
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’ Equity
Noncontrolling
Interest
Total
Equity
 (in millions, except per share amounts)
Balance as of June 30, 2020$$$1,300 $1,997 $(426)$2,873 $2,703 $5,576 
Net (loss) earnings(28)(28)32 
Other comprehensive income38 38 38 
Acquisition of treasury stock under employee stock plans(1)(1)(1)
Issuance of $0.01 par value common stock under employee stock plans
Stock-based compensation expense
Cash dividends ($0.30 per share)(64)(64)(64)
Distribution declared to noncontrolling interest(86)(86)
Balance as of September 30, 2020$$(1)$1,308 $1,905 $(388)$2,826 $2,649 $5,475 
Balance as of December 31, 2019$$$1,303 $1,958 $(366)$2,897 $2,740 $5,637 
Net earnings230 230 83 313 
Other comprehensive loss(22)(22)(22)
Purchases of treasury stock(100)(100)(100)
Retirement of treasury stock107 (17)(90)
Acquisition of treasury stock under employee stock plans(10)(10)(10)
Issuance of $0.01 par value common stock under employee stock plans
Stock-based compensation expense20 20 20 
Cash dividends ($0.90 per share)(193)(193)(193)
Distributions declared to noncontrolling interest(174)(174)
Balance as of September 30, 2020$$(1)$1,308 $1,905 $(388)$2,826 $2,649 $5,475 

(Continued)











CONSOLIDATED STATEMENTS OF EQUITY
(Continued) (Unaudited)
 Common Stockholders
 $0.01 Par
Value
Common
Stock
Treasury
Stock
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’ Equity
Noncontrolling
Interest
Total
Equity
 (in millions, except per share amounts)
Balance as of June 30, 2019$$(2)$1,299 $2,111 $(344)$3,066 $2,752 $5,818 
Net earnings65 65 49 114 
Other comprehensive loss(30)(30)(30)
Purchases of treasury stock(72)(72)(72)
Issuance of $0.01 par value common stock under employee stock plans11 11 11 
Stock-based compensation expense
Cash dividends ($0.30 per share)(67)(67)(67)
Distribution declared to noncontrolling interest(100)(100)
Balance as of September 30, 2019$$(74)$1,317 $2,109 $(374)$2,980 $2,701 $5,681 
Balance as of December 31, 2018$$(504)$1,368 $2,463 $(371)$2,958 $2,773 $5,731 
Net earnings438 438 114 552 
Other comprehensive loss(3)(3)(3)
Purchases of treasury stock(250)(250)(250)
Retirement of treasury stock682 (90)(592)
Acquisition of treasury stock under employee stock plans(4)(4)(4)
Issuance of $0.01 par value common stock under employee stock plans15 17 17 
Stock-based compensation expense24 24 24 
Cash dividends ($0.90 per share)(200)(200)(200)
Distributions declared to noncontrolling interest(186)(186)
Balance as of September 30, 2019$$(74)$1,317 $2,109 $(374)$2,980 $2,701 $5,681 
See accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended 
 September 30,
Nine months ended 
 September 30,
2017 2016 20202019
(in millions) (in millions)
Operating Activities: 
  
Operating Activities:  
Net (loss) earnings$(53) $130
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities: 
  
Net earningsNet earnings$313 $552 
Adjustments to reconcile net earnings to net cash provided by operating activities:Adjustments to reconcile net earnings to net cash provided by operating activities:  
Depreciation and amortization648
 475
Depreciation and amortization662 663 
Deferred income taxes(54) 730
Deferred income taxes(74)116 
Stock-based compensation expense13
 15
Stock-based compensation expense20 24 
Unrealized net loss (gain) on natural gas and foreign currency derivatives64
 (169)
Unrealized net (gain) loss on natural gas derivativesUnrealized net (gain) loss on natural gas derivatives(12)
Unrealized loss on embedded derivative4
 22
Unrealized loss on embedded derivative
Loss on disposal of property, plant and equipment3
 8
Undistributed losses of affiliates—net of taxes7
 
Loss (gain) on disposal of property, plant and equipmentLoss (gain) on disposal of property, plant and equipment14 (43)
Undistributed (earnings) losses of affiliate—net of taxesUndistributed (earnings) losses of affiliate—net of taxes(2)
Changes in: 
  
Changes in:  
Accounts receivable—net(29) 55
Accounts receivable—net(79)
Inventories12
 (4)Inventories29 17 
Accrued and prepaid income taxes804
 (665)Accrued and prepaid income taxes50 12 
Accounts payable and accrued expenses5
 (7)Accounts payable and accrued expenses(42)(67)
Customer advances51
 (75)Customer advances25 35 
Other—net(74) 76
Other—net(51)(36)
Net cash provided by operating activities1,401
 591
Net cash provided by operating activities941 1,203 
Investing Activities: 
  
Investing Activities:  
Additions to property, plant and equipment(290) (1,819)Additions to property, plant and equipment(206)(297)
Proceeds from sale of property, plant and equipment13
 8
Proceeds from sale of property, plant and equipment71 
Distributions received from unconsolidated affiliates12
 
Proceeds from sale of auction rate securities9
 
Withdrawals from restricted cash funds5
 16
Other—net
 4
Distribution received from unconsolidated affiliateDistribution received from unconsolidated affiliate
Insurance proceeds for property, plant and equipmentInsurance proceeds for property, plant and equipment15 
Net cash used in investing activities(251) (1,791)Net cash used in investing activities(201)(211)
Financing Activities: 
  
Financing Activities:  
Proceeds from short-term borrowings
 150
Proceeds from short-term borrowings500 
Payments of short-term borrowings
 (150)
Financing fees(1) (11)
Repayments of short-term borrowingsRepayments of short-term borrowings(500)
Dividends paid on common stock(210) (209)Dividends paid on common stock(193)(200)
Issuance of noncontrolling interest in CFN
 2,800
Distributions to noncontrolling interests(125) (111)
Distributions to noncontrolling interestDistributions to noncontrolling interest(174)(186)
Purchases of treasury stockPurchases of treasury stock(100)(280)
Issuances of common stock under employee stock plans1
 
Issuances of common stock under employee stock plans17 
Net cash (used in) provided by financing activities(335) 2,469
Shares withheld for taxesShares withheld for taxes(10)(4)
Net cash used in financing activitiesNet cash used in financing activities(473)(653)
Effect of exchange rate changes on cash and cash equivalents13
 (1)Effect of exchange rate changes on cash and cash equivalents(1)(2)
Increase in cash and cash equivalents828
 1,268
Increase in cash and cash equivalents266 337 
Cash and cash equivalents at beginning of period1,164
 286
Cash and cash equivalents at beginning of period287 682 
Cash and cash equivalents at end of period$1,992
 $1,554
Cash and cash equivalents at end of period$553 $1,019 
See accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.



NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1.   Background and Basis of Presentation
We are onea leading global manufacturer of the largest manufacturershydrogen and distributors of nitrogen products for clean energy, emissions abatement, fertilizer, and other nitrogen productsindustrial applications. We operate manufacturing complexes in the world.United States, Canada and the United Kingdom, which are among the most cost-advantaged, efficient and flexible in the world, and an extensive storage, transportation and distribution network in North America. Our 3,000 employees focus on safe and reliable operations, environmental stewardship and disciplined capital and corporate management, driving our strategy to leverage and sustainably grow our hydrogen and nitrogen platform to serve customers and create long-term shareholder value. Our principal customers are cooperatives, independent fertilizer distributors, farmerstraders, wholesalers and industrial users. Our principal nitrogen fertilizer products are anhydrous ammonia (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. Our manufacturing and distribution facilities are concentrated in the midwestern United States and other major agricultural areas of the United States, Canada and the United Kingdom. We also export nitrogen fertilizer products from our Donaldsonville, Louisiana and Yazoo City, Mississippi manufacturing facilities, and our United Kingdom manufacturing facilities in Billingham and Ince.
All references to "CF“CF Holdings," "the” “the Company," "we," "us"” “we,” “us” and "our"“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"“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, 2016,2019, 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 2016 Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 23, 2017.24, 2020. 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.

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CF INDUSTRIES HOLDINGS, INC.

2.   New Accounting Standards
Recently Adopted Pronouncement
On January 1, 2017,2020, we adopted Accounting Standards Update (ASU) No. 2015-11, Inventory (Topic 330)2018-15—Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): SimplifyingCustomer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This ASU aligns the Measurementrequirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU does not affect the accounting for the service element of Inventory.a hosting arrangement that is a service contract. We adopted this ASU No. 2015-11 changes the inventory measurement principle for entities using the first-in, first out (FIFO) or average cost methods. For entities utilizing one of these methods, the inventory measurement principle changed from lower of cost or market to the lower of cost and net realizable value. We follow the FIFO or average cost methods and theprospectively. The adoption of this ASU did not have a material effectimpact on our consolidated financial statements.

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CF INDUSTRIES HOLDINGS, INC.

Recently Issued Pronouncementsthe implementation costs would be deferred and expensed over the term of the cloud computing arrangement.
In May 2014,December 2019, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-09, Revenue from Contracts with Customers2019-12—Income Taxes (Topic 606), which supersedes740): Simplifying the revenue recognition requirements in Accounting Standards Codification (ASC) Topic 605, Revenue Recognition.for Income Taxes. This ASU is based onadds new guidance to simplify accounting for income taxes, changes the principle that revenue is recognizedaccounting for certain income tax transactions and makes minor improvements 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 exchangecodification. The amendments are effective for fiscal years, and interim periods within 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 FASB issued additional ASUs that enhance 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, clarify that ASU No. 2014-09 should not be applied to immaterial performance obligations, and enhance the guidance around the treatment of shipping costs incurred to fulfill performance obligations. As modified by ASU No. 2015-14, Deferral of the Effective Date, the effective date of ASU No. 2014-09 is for interim and annual periodsfiscal years, beginning after December 15, 2017, with early2020. Early adoption permitted for interim and annual periods beginning after December 15, 2016. We continue to analyze the impact of ASU No. 2014-09 on our revenue contracts by comparing the revenue recognition that would have occurred from applying this ASU to revenue contracts that existed in 2015, 2016 and 2017. Based on analysis to date, we believe the adoption of ASU No. 2014-09 will not have a material impact on the revenue reported in our consolidated financial statements. We are also reviewing our business processes, systems, and controls to determine what changes are needed to support adoption, including the additional disclosures required under ASU No. 2014-09. We intend to adopt ASU No. 2014-09 effective January 1, 2018 using the modified retrospective approach.
In March 2017, the FASB issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which will change the presentation of net benefit cost related to employer sponsored defined benefit plans and other postretirement benefits. Service cost will 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 will be presented separately outside of operating income. Additionally, only service costs may be capitalized on the balance sheet. This ASU is effective for annual and interim periods beginning after December 15, 2017. We plan on adopting this guidance once it becomes effective. The guidance will be applied retrospectively for the income statement classification requirements and prospectively for the capitalization guidance.permitted. We do not expect the adoption of this ASU will have a material effect on our consolidated financial statements.
In August 2017,
3.   Revenue Recognition
We track our revenue by product and by geography. See Note 16—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 FASB issued ASU No. 2017-12, Derivativesthree and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, which improves the financial reportingnine months ended September 30, 2020 and 2019:
AmmoniaGranular UreaUANANOtherTotal
(in millions)
Three months ended September 30, 2020
North America$116 $222 $221 $41 $56 $656 
Europe and other49 27 27 68 20 191 
Total revenue$165 $249 $248 $109 $76 $847 
Three months ended September 30, 2019
North America$152 $289 $278 $41 $63 $823 
Europe and other35 38 31 95 16 215 
Total revenue$187 $327 $309 $136 $79 $1,038 
 AmmoniaGranular UreaUANANOtherTotal
 (in millions)
Nine months ended September 30, 2020     
North America$614 $865 $739 $138 $171 $2,527 
Europe and other108 50 52 205 80 495 
Total revenue$722 $915 $791 $343 $251 $3,022 
Nine months ended September 30, 2019  
North America$755 $1,037 $866 $141 $190 $2,989 
Europe and other92 66 68 248 78 552 
Total revenue$847 $1,103 $934 $389 $268 $3,541 

As of hedging relationshipsSeptember 30, 2020 and December 31, 2019, we had $143 million and $119 million, respectively, 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. We plan on adopting this guidance once it becomes effective. We do not expect the adoption of this ASU will have a material effectcustomer advances on our consolidated financial statements.
In October 2016,balance sheets. During the FASB issued ASU No. 2016-16, Income Taxes (Topic 740): Intra-Entity Transfersnine months ended September 30, 2020 and 2019, substantially all 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. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017, and should be appliedcustomer advances on a modified retrospective basis through a cumulative-effect adjustment directly to retained earnings as ofour consolidated balance sheet at the beginning of theeach respective period of adoption. We plan on adopting this guidance once it becomes effective. We do not expect the adoption of this ASU will have a material effect on our consolidated financial statements.were recognized as revenue.
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 new right-of-use assets and lease liabilities on our balance sheet for operating leases for certain property and equipment, including rail car leases and barge tow charters that are utilized for the distribution of our products.

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We offer cash incentives to certain customers that do not provide an option to the customer for additional product. The balances of customer incentives accrued at September 30, 2020 and December 31, 2019 were not material.
3.We have certain customer contracts with performance obligations where 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 September 30, 2020, excluding contracts with original durations of less than one year, and based on the minimum product tonnage to be sold and current market price estimates, our remaining performance obligations under these contracts are approximately $892 million. We expect to recognize approximately 13% of these performance obligations as revenue in the remainder of 2020, approximately 49% as revenue during 2021 and 2022, and approximately 38% as revenue during 2023 and 2024. Subject to the terms and conditions of the applicable contracts, if these customers do not satisfy their purchase obligations under such contracts, the minimum amount that they would be required to pay to us under these contracts, in the aggregate, is approximately $225 million as of September 30, 2020. We monitor the ability of our customers to meet their purchase obligations, which could be impacted by the ongoing coronavirus disease 2019 (COVID-19) pandemic. Other than the performance obligations described above, any performance obligations with our customers that were unfulfilled or partially filled at December 31, 2019 were satisfied in 2020.

4.   Net (Loss) Earnings Per Share
Net (loss) earnings per share were computed as follows:
Three months ended 
 September 30,
 Nine months ended 
 September 30,
Three months ended 
 September 30,
Nine months ended 
 September 30,
2017 2016 2017 2016 2020201920202019
(in millions, except per share amounts) (in millions, except per share amounts)
Net (loss) earnings attributable to common stockholders$(87) $(30) $(107) $43
Net (loss) earnings attributable to common stockholders$(28)$65 $230 $438 
Basic earnings per common share: 
  
  
  
Basic (loss) earnings per common share:Basic (loss) earnings per common share:    
Weighted-average common shares outstanding233.2
 233.1
 233.2
 233.2
Weighted-average common shares outstanding213.9 219.0 215.0 221.2 
Net (loss) earnings attributable to common stockholders$(0.37) $(0.13) $(0.46) $0.19
Net (loss) earnings attributable to common stockholders$(0.13)$0.29 $1.07 $1.98 
Diluted earnings per common share: 
  
  
  
Diluted (loss) earnings per common share:Diluted (loss) earnings per common share:    
Weighted-average common shares outstanding233.2
 233.1
 233.2
 233.2
Weighted-average common shares outstanding213.9 219.0 215.0 221.2 
Dilutive common shares—stock options
 
 
 0.3
Dilutive common shares—stock-based awardsDilutive common shares—stock-based awards1.7 0.3 1.3 
Diluted weighted-average shares outstanding233.2
 233.1
 233.2
 233.5
Diluted weighted-average shares outstanding213.9 220.7 215.3 222.5 
Net (loss) earnings attributable to common stockholders$(0.37) $(0.13) $(0.46) $0.19
Net (loss) earnings attributable to common stockholders$(0.13)$0.29 $1.07 $1.97 
Diluted earnings per share is calculated using weighted-average common shares outstanding, including the dilutive effect of stock-based awards as determined under the treasury stock method. In the computation of diluted earnings per common share, potentially dilutive stock optionsstock-based awards are excluded if the effect of their inclusion is anti-dilutive. Shares for anti-dilutive stock optionsstock-based awards not included in the computation of diluted earnings per common share were 6.53.1 million and 3.3 million in each of the three and nine months ended September 30, 2017,2020, respectively, and 5.01.4 million and 4.31.5 million forin the three and nine months ended September 30, 2016,2019, respectively.

4.
5.   Inventories
Inventories consist of the following:
 September 30, 2020December 31, 2019
 (in millions)
Finished goods$259 $311 
Raw materials, spare parts and supplies39 40 
Total inventories$298 $351 
 September 30,
2017
 December 31,
2016
 (in millions)
Finished goods$277
 $279
Raw materials, spare parts and supplies39
 60
Total inventories$316
 $339

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5.6.   Property, Plant and Equipment—Net
Property, plant and equipment—net consists of the following:
September 30,
2017
 December 31,
2016
September 30, 2020December 31, 2019
(in millions) (in millions)
Land$70
 $69
Land$67 $71 
Machinery and equipment12,058
 11,664
Machinery and equipment12,389 12,338 
Buildings and improvements882
 878
Buildings and improvements891 890 
Construction in progress248
 280
Construction in progress307 236 
Property, plant and equipment(1)
13,258
 12,891
Property, plant and equipment(1)
13,654 13,535 
Less: Accumulated depreciation and amortization3,886
 3,239
Less: Accumulated depreciation and amortization5,930 5,365 
Property, plant and equipment—net$9,372
 $9,652
Property, plant and equipment—net$7,724 $8,170 


(1)
As of September 30, 2017 and December 31, 2016, we had property, plant and equipment that was accrued but unpaid of approximately$204 million and $225 million, respectively. These amounts included accruals related to our capacity expansion projects of $158 million and $185 million as of September 30, 2017 and December 31, 2016, respectively. As of September 30, 2016 and December 31, 2015, we had property, plant and equipment that was accrued but unpaid of $426 million and $543 million, respectively.

(1)As of September 30, 2020 and December 31, 2019, we had property, plant and equipment that was accrued but unpaid of approximately $73 million and $42 million, respectively. As of September 30, 2019 and December 31, 2018, we had property, plant and equipment that was accrued but unpaid of $61 million and $48 million, respectively.
Depreciation and amortization related to property, plant and equipment was $217$207 million and $622$650 million for the three and nine months ended September 30, 2017,2020, respectively, and $139$218 million and $425$648 million for the three and nine months ended September 30, 2016,2019, respectively.
During the first quarter of 2019, we entered into an agreement to sell our Pine Bend dry bulk storage and logistics facility in Minnesota. In April 2019, we completed the sale, received proceeds of $55 million and recognized a pre-tax gain of $45 million. The gain is reflected in other operating—net in our consolidated statement of operations for the nine months ended September 30, 2019.
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:
Nine months ended 
 September 30,
Nine months ended 
 September 30,
2017 2016 20202019
(in millions) (in millions)
Net capitalized turnaround costs: 
  
Net capitalized turnaround costs:  
Beginning balance$206
 $220
Beginning balance$246 $252 
Additions83
 60
Additions68 94 
Depreciation(75) (66)Depreciation(77)(85)
Effect of exchange rate changes5
 2
Effect of exchange rate changes(2)
Ending balance$219
 $216
Ending balance$235 $261 
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.

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6.7.  Goodwill and Other Intangible Assets
The following table shows the carrying amount of goodwill by reportable segment as of September 30, 20172020 and December 31, 2016:2019:
 AmmoniaGranular UreaUANANOtherTotal
 (in millions)
Balance as of December 31, 2019$587 $828 $576 $302 $72 $2,365 
Effect of exchange rate changes(1)(6)(1)(8)
Balance as of September 30, 2020$586 $828 $576 $296 $71 $2,357 
 Ammonia Granular Urea UAN AN Other Total
 (in millions)
Balance as of December 31, 2016$585
 $828
 $576
 $286
 $70
 $2,345
Effect of exchange rate changes2
 1
 
 18
 3
 24
Balance as of September 30, 2017$587
 $829
 $576
 $304
 $73
 $2,369

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:
 September 30, 2020December 31, 2019
 Gross
Carrying
Amount
Accumulated
Amortization
NetGross
Carrying
Amount
Accumulated
Amortization
Net
 (in millions)
Customer relationships$128 $(49)$79 $131 $(45)$86 
Trade names31 (8)23 31 (7)24 
Total intangible assets$159 $(57)$102 $162 $(52)$110 
 September 30, 2017 December 31, 2016
 
Gross
Carrying
Amount
 
Accumulated
Amortization
 Net 
Gross
Carrying
Amount
 
Accumulated
Amortization
 Net
 (in millions)
Intangible assets: 
  
  
  
  
  
Customer relationships$131
 $(30) $101
 $125
 $(24) $101
TerraCair brand10
 (10) 
 10
 (10) 
Trade names32
 (3) 29
 29
 (2) 27
Total intangible assets$173
 $(43) $130
 $164
 $(36) $128
Our intangible assets are being amortized over a weighted-average life of approximately 20 years. Amortization expense of our identifiable intangible assets was $2 million and $7$6 million for the three and nine months ended September 30, 2017,2020, respectively, and $2 million and $6 million for the three and nine months ended September 30, 2016,2019, respectively.
The gross carrying amount and accumulated amortization of our intangible assets are also impacted by the effect of exchange rate changes. Total estimated amortization expense for the remainder of 20172020 and each of the five succeeding fiscal years is as follows:
 Estimated
Amortization
Expense
 (in millions)
Remainder of 2020$
2021
2022
2023
2024
2025

 
Estimated
Amortization
Expense
 (in millions)
Remainder of 2017$2
20188
20198
20208
20218
20228

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7.8.  Equity Method InvestmentsInvestment
We have a 50% ownership interest in Point Lisas Nitrogen Limited (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 September 30, 2017,2020, the total carrying value of our equity method investment in PLNL of approximately $109was $86 million, was $59$43 million more than our share of PLNL'sPLNL’s book value. The excess is attributable to the purchase accounting impact of our acquisition of the investment in PLNL and primarily reflects the revaluation of property, plant and equipment and the value of an exclusive natural gas contract.equipment. The increased basis for property, plant and equipment and the gas contract areis being amortized over a remaining period of approximately 16 years and 6 months, respectively.13 years. Our equity in earnings of PLNL is different from our ownership interest in income reported by PLNL due to amortization of thesethis basis differences.difference.
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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 $9$14 million and $53$37 million for the three and nine months ended September 30, 2017,2020, respectively, and $13$12 million and $47$46 million for the three and nine months ended September 30, 2016,2019, respectively.
PLNL operates an ammonia plant that relies on natural gas supplied, under a Gas Sales Contract (the NGC Contract), by The National Gas Company of Trinidad and Tobago Limited (NGC). PLNL has experienced curtailments in the supply of natural gas from NGC, which have reduced the ammonia production at PLNL. The NGC Contract had an initial expiration date of September 2018 and has been extended on the same terms until September 2023. Any NGC commitment to supply gas beyond 2023 will need to be based on new agreements regarding volume and price. PLNL and NGC are currently parties to arbitration proceedings where the main issue remaining in dispute is PLNL's claims for damages for past and ongoing curtailments.
Although PLNL believes its claims against NGC to be meritorious, it is not possible to predict the outcome of the arbitration. There are significant assumptions in the future operations of the joint venture that are uncertain at this time, including the quantities of gas that NGC will make available, the cost of such gas, the estimates that are used to determine the useful lives of fixed assets and the assumptions in the discounted cash flow models utilized for recoverability and impairment testing. As part of our impairment assessment of our equity method investment in PLNL during the fourth quarter of 2016, we determined the carrying value exceeded the fair value and recognized a $134 million impairment charge in 2016. The carrying value of our equity method investment in PLNL at September 30, 2017 is approximately $109 million. If NGC does not make sufficient quantities of natural gas available to PLNL at prices that permit profitable operations, PLNL may cease operating its facility and we would write off the remaining investment in PLNL.
The TrinidadTrinidadian tax authority (the Board of Inland Revenue) has issued a proposed tax assessment against PLNL relatedwith respect to tax years 2011 and 2012 in the amount of approximately $12 million. The proposed assessment asserted that PLNL should have withheld tax at a dispute over whetherhigher rate on dividends paid to its Trinidadian owners. The Board of Inland Revenue also would have assessed statutory interest and penalties on the amount of tax depreciation mustowed when a final assessment was issued for the tax years 2011 and 2012. As we own a 50% interest in PLNL, our effective share of any assessment that is determined to be claimed duringa liability of PLNL would be 50%, which would be reflected as a reduction in our equity in earnings of PLNL.
During the third quarter of 2019, the Trinidadian government offered a tax holidayamnesty period that was grantedprovided taxpayers the opportunity to pay any prior year tax obligations and avoid accumulated interest or penalties. During the tax amnesty period, PLNL evaluated the proposed assessment, including considering the outcome of certain recent legal cases involving other taxpayers. As a result of this evaluation, in the third quarter of 2019, PLNL paid withholding tax to the Board of Inland Revenue under the Trinidad Fiscal Incentives Act. Theamnesty program for tax holiday was granted as an incentiveyears back to construct2011, and recognized a charge for $32 million. Our 50% share of PLNL’s ammonia plant. PLNLtax charge is appealing the assessment. Based on the facts and circumstances of this matter, PLNL recorded a tax contingency accrual in the second quarter of 2017,$16 million, which reduced our equity in earnings of PLNLoperating affiliate for the three and nine months ended September 30, 2017 by approximately $7 million reflecting our 50% ownership interest.2019.


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8.9.  Fair Value Measurements
Our cash and cash equivalents and other investments consist of the following:
 September 30, 2020
 Cost BasisUnrealized
Gains
Unrealized
Losses
Fair Value
 (in millions)
Cash$100 $— $— $100 
Cash equivalents:
U.S. and Canadian government obligations439 — — 439 
Other debt securities14 — — 14 
Total cash and cash equivalents$553 $— $— $553 
Nonqualified employee benefit trusts16 19 
 September 30, 2017
 Cost Basis 
Unrealized
Gains
 
Unrealized
Losses
 Fair Value
 (in millions)
Cash$115
 $
 $
 $115
Cash equivalents:       
U.S. and Canadian government obligations1,865
 
 
 1,865
Other debt securities12
 
 
 12
Total cash and cash equivalents$1,992
 $
 $
 $1,992
Nonqualified employee benefit trusts17
 2
 
 19
December 31, 2016 December 31, 2019
Cost Basis 
Unrealized
Gains
 
Unrealized
Losses
 Fair Value Cost BasisUnrealized
Gains
Unrealized
Losses
Fair Value
(in millions) (in millions)
Cash$89
 $
 $
 $89
Cash$59 $— $— $59 
Cash equivalents:       Cash equivalents:
U.S. and Canadian government obligations1,075
 
 
 1,075
U.S. and Canadian government obligations211 — — 211 
Other debt securitiesOther debt securities17 — — 17 
Total cash and cash equivalents$1,164
 $
 $
 $1,164
Total cash and cash equivalents$287 $— $— $287 
Restricted cash5
 
 
 5
Nonqualified employee benefit trusts18
 1
 
 19
Nonqualified employee benefit trusts17 19 
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.
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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 September 30, 20172020 and December 31, 20162019 that are recognized at fair value on a recurring basis, and indicate the fair value hierarchy utilized to determine such fair value:
 September 30, 2020
 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$453 $453 $$
Nonqualified employee benefit trusts19 19 
Embedded derivative liability(22)(22)
 September 30, 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$1,877
 $1,877
 $
 $
Nonqualified employee benefit trusts19
 19
 
 
Derivative assets1
 
 1
 
Derivative liabilities(15) 
 (15) 
Embedded derivative liability(30) 
 (30) 

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December 31, 2016 December 31, 2019
Total Fair
Value
 
Quoted Prices
in Active
Markets
(Level 1)
 
Significant
Other
Observable
Inputs
(Level 2)
 
Significant
Unobservable
Inputs
(Level 3)
Total Fair
Value
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
(in millions) (in millions)
Cash equivalents$1,075
 $1,075
 $
 $
Cash equivalents$228 $228 $$
Restricted cash5
 5
 
 
Nonqualified employee benefit trusts19
 19
 
 
Nonqualified employee benefit trusts19 19 
Derivative assets56
 
 56
 
Derivative liabilities(6) 
 (6) 
Derivative liabilities(12)(12)
Embedded derivative liability(26) 
 (26) 
Embedded derivative liability(20)(20)
Cash Equivalents
As of September 30, 20172020 and December 31, 2016,2019, 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.
Restricted Cash
We maintained a cash account for which the use of the funds was restricted. The restricted cash was put in place to satisfy certain requirements included in our engineering and procurement services contract for our capacity expansion projects. Under the terms of this contract, we were required to grant an affiliate of ThyssenKrupp Industrial Solutions a security interest in a restricted cash account. During the three months ended September 30, 2017, the remaining balance in our restricted cash account was returned to us and the account was closed.
Nonqualified Employee Benefit Trusts
We maintain trusts associated with certain nonqualified supplemental pension plans. The investments are accounted for as available-for-sale securities. The fair values of the trust assets are based on daily quoted prices in an active market, which represents the net asset values of the shares held in the trusts. These trusts, and are included on our consolidated balance sheets in other assets. Debt securities are accounted for as available-for-sale securities. Changes in the fair value of equity securities in the trust assets are recognized through earnings.
Derivative Instruments
The derivative instruments that we may use are primarily natural gas fixed price swaps, basis swaps and natural gas options traded in the over-the-counter (OTC) markets with multinationalmulti-national 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 a NYMEX futures prices.price index. 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 12—Derivative Financial Instruments for additional information.
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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. InSince 2016, our credit ratings have been below certain levels and, as a result, we made an annual payment of $5 million to CHS in the fourth quarter of 2016, as a result of a reduction in our credit rating, we made a $5 million payment to CHS. The paymenteach 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 term of the strategic ventureobligation is recognized on our consolidated balance sheetsheets as an embedded derivative. See Note 13—Noncontrolling InterestsAs of September 30, 2020 and December 31, 2019, the embedded derivative liability of $22 million and $20 million, respectively, is included in other current liabilities and other liabilities on our consolidated balance sheets. Included in other operating—net in our consolidated statements of operations for additional information regarding our strategic venture with CHS.
During the nine months ended September 30, 2017, we recorded adjustments to adjust the value2020 and 2019 is a net loss of the embedded derivative liability by $4$2 million to $30 million. and $3 million, respectively.
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. The charges to reflect

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the changes in fair valueSee Note 13—Noncontrolling Interest for the nine months ended September 30, 2017, of $4 million are included in other operating—net inadditional information regarding our consolidated statement of operations. As of September 30, 2017 and December 31, 2016, the embedded derivative liability of $30 million and $26 million, respectively, is included in other current liabilities and other liabilities on our consolidated balance sheets.strategic venture with CHS.
Financial Instruments
The carrying amount and estimated fair value of our financial instruments are as follows:
 September 30, 2017 December 31, 2016
 
Carrying
Amount
 Fair Value 
Carrying
Amount
 Fair Value
 (in millions)
Long-term debt$5,786
 $5,916
 $5,778
 $5,506
 September 30, 2020December 31, 2019
 Carrying
Amount
Fair ValueCarrying
Amount
Fair Value
 (in millions)
Long-term debt$3,960 $4,582 $3,957 $4,295 
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, when there is 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'sCompany’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.
Our equity method investment in the Republic
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Table of Trinidad and Tobago, PLNL, operates an ammonia plant that relies on natural gas supplied, under the NGC Contract, by NGC. As part of our impairment assessment of our equity method investment in PLNL during the fourth quarter of 2016, we determined the carrying value exceeded the fair value and recognized a $134 million impairment charge in 2016. See Note 7—Equity Method Investments for additional information.Contents
CF INDUSTRIES HOLDINGS, INC.
9.
10.   Income Taxes
For the three months ended September 30, 2017,2020, we recorded an income tax benefit of $47$13 million on a pre-tax loss of $115$9 million, or an effective tax rate of 40.9%155.0%, compared to an income tax benefitprovision of $131$19 million on pre-tax lossincome of $131$133 million, or an effective tax rate of 100.4%14.6%, for the three months ended September 30, 2016.2019.
For the nine months ended September 30, 2020, we recorded an income tax provision of $33 million on pre-tax income of $346 million or an effective tax rate of 9.4%, compared to an income tax provision of $113 million on pre-tax income of $665 million, or an effective tax rate of 17.1%, for the nine months ended September 30, 2019.
For the nine months ended September 30, 2020, our income tax provision includes a $25 million benefit related to the settlement of certain U.S. and foreign income tax audits, which primarily related to the settlement of the audit of the Terra amended tax returns, which is further described below. For the nine months ended September 30, 2019, our income tax provision included an incentive tax credit from the State of Louisiana of $30 million, net of federal income tax, related to certain capital projects at our Donaldsonville, Louisiana complex.
Our effective tax rate in both periods is also impacted by earnings attributable to the noncontrolling interestsinterest in CF Industries Nitrogen, LLC (CFN) and Terra Nitrogen Company L.P. (TNCLP), as our consolidated income tax provision does not include a tax provision on the earnings attributable to the noncontrolling interests. As a result, earnings attributable to the noncontrolling interests of $19 million in the third quarter of 2017 and $30 million in the third quarter of 2016, which are included in pre-tax loss, impact the effective tax rate in both periods. See Note 13—Noncontrolling Interests for additional information.interest. Our effective tax rate excluding the earnings attributable to the noncontrolling interests for the three months ended September 30, 20172020 of 155.0%, which is 35.2% as comparedbased on a pre-tax loss of $9 million, including $32 million of earnings attributable to anthe noncontrolling interest, would be 121.6 percentage points lower if based on pre-tax loss exclusive of the $32 million of earnings attributable to the noncontrolling interest. Our effective tax rate of 81.8% for the three months ended September 30, 2016.
The2019 of 14.6%, which is based on pre-tax income tax benefit of $47$133 million, in the third quarter of 2017 was impacted by a $5including $49 million increase to our deferred tax liability for the State of Illinois enacted tax rate increase.
The income tax benefit of $131 million in the third quarter of 2016 primarily relatedattributable to the fact that we projected duringnoncontrolling interest, would be 8.5 percentage points higher if based on pre-tax income exclusive of the first half of 2016 that full year 2016 pre-tax earnings, excluding$49 million attributable to the noncontrolling interests, would be income. As of September 30, 2016, we were projecting a loss for the full year. The impact of this change in projected profitability was an income tax benefit of $163 million. In addition, other items included in our annualizedinterest.
Our effective tax rate that impactedfor the nine months ended September 30, 2020 of 9.4%, which is based on pre-tax income tax benefit recorded in the third quarter of 2016 were, as follows:

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We recorded income tax expense of $42$346 million, relatedincluding $83 million attributable to the reversalnoncontrolling interest, would be 3.0 percentage points higher if based on pre-tax income exclusive of prior year U.S. manufacturing profits deductions duethe $83 million attributable to the recapturenoncontrolling interest. Our effective tax rate for the nine months ended September 30, 2019 of these benefits in17.1%, which is based on pre-tax income of $665 million, including $114 million attributable to the third quarter of 2016. The recapture resulted from our intention to carry back certain tax losses to prior years that reduced the amountnoncontrolling interest, would be 3.5 percentage points higher if based on pre-tax income exclusive of the prior year U.S. manufacturing profits deductions that can be claimed.
We recorded a valuation allowance of $21$114 million against certain foreign deferred tax assets which increased income tax expense.
We recorded an income tax benefit of $9 million relatedattributable to the impact of certain transaction costs which were treated as not being deductiblenoncontrolling interest. See Note 13—Noncontrolling Interest for tax purposes in the prior year and were deductible in 2016 as a result of the termination of the proposed combination with certain businesses of OCI.additional information.
During the third quarter of 2016, one2020, as a result of an intercompany transaction with a foreign affiliate, we recognized a capital loss, which we will carry forward, and for which we recorded a deferred tax asset of approximately $90 million. However, as the foreign affiliate has operations that do not normally generate capital gains and no practical plans to do so in the future, we established a full valuation allowance of approximately $90 million against the deferred tax asset. As a result, there was no net impact on our Canadian subsidiariesincome tax provision.
In March 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act). The CARES Act includes, among other things (i) a five-year net operating loss (NOL) carryback (including a related technical correction to the 2017 Tax Cuts and Jobs Act) for tax losses incurred in tax years 2018 through 2020; (ii) a change in interest deduction limitations for tax years 2019 and 2020, increasing the annual interest limitation from 30% to 50% of adjusted taxable income; and (iii) increased refundability of corporate alternative minimum tax (AMT) credits. These provisions have limited applicability to the Company as (i) the Company does not expect to have a NOL in tax year 2020 and did not have a tax loss in 2018 or 2019 which would be eligible for carryback; (ii) the Company was not limited by the interest deduction limitations for tax years 2019 and 2020 prior to changes made by the CARES Act; and (iii) the Company utilized all of its AMT credits in 2019. The Company continues to monitor and assess the impact of the CARES Act and other related governmental actions in response to the coronavirus impacts as more information becomes available.
Terra Amended Tax Returns
We completed the acquisition of Terra Industries Inc. (Terra) in April 2010. After the acquisition, we determined that the manner in which Terra reported the repatriation of cash from foreign affiliates to its U.S. parent for U.S. and foreign income tax purposes was not appropriate. As a result, in 2012 we amended certain tax returns, including Terra’s income and withholding tax returns, back to 1999 (the Amended Tax Returns) and paid additional income and withholding taxes, and related interest and penalties. In early 2013, the Internal Revenue Service (IRS) commenced an examination of the U.S. tax aspects of the Amended Tax Returns.
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In early 2019, the IRS completed its examination of the Amended Tax Returns and submitted its audit reports and related refund claims to the Joint Committee on Taxation of the U.S. Congress (the Joint Committee). For purposes of its review, the Joint Committee separated the IRS audit reports into two separate matters: (i) an income tax related matter and (ii) a withholding tax matter.
In late 2019, we received notification that the Joint Committee had approved the IRS audit reports and related income tax refunds relating to the income tax related matter. Therefore, we expected to receive cash refunds in 2020. In addition, as a Noticeresult of this settlement and the finalization of carryover impacts of this audit settlement on other tax periods, we reduced our liability for unrecognized tax benefits by $19 million and recorded a corresponding deferred income tax liability in the first quarter of 2020. In the second quarter of 2020, we received notification that the Joint Committee approved the IRS audit report and related withholding tax refunds relating to the withholding tax matter and we received IRS Notices indicating the amount of tax and interest to be refunded and received with respect to the withholding tax matter and the income tax matter.
As a result of these events, in the second quarter of 2020, we recognized $16 million of interest income and $16 million of income tax benefit, which consisted of the following:
additional interest income of $16 million ($13 million, net of tax) related to both the income tax matter and the withholding tax matter,
a reduction in our liabilities for unrecognized tax benefits of $12 million with a corresponding reduction in income tax expense related to the withholding tax matter, and
an additional income tax benefit of $7 million related to the income tax matter.
We received income tax refunds, including interest, of $108 million relating to these matters in the second quarter of 2020, consisting of $68 million related to the income tax matter and $40 million related to the withholding tax matter. In the third quarter of 2020, we received an additional $2 million related to the withholding tax matter, which finalized these matters with the IRS. As a result of the finalization of the income tax matter and the withholding tax matter, all U.S. federal tax years commencing before January 1, 2012 are now closed.
Canada Revenue Agency Notices of Reassessment from
In 2016, the Canada Revenue Agency (CRA) issued Notices of Reassessment for tax years 2006 through 2009 to one of our Canadian affiliates asserting a disallowance of certain patronage allocations. The tax assessment ofassessments totaled CAD $174 million (or approximately $140$131 million), including provincial taxes but excluding any interest or penalties, ispenalties. We filed a Notice of Objection with respect to the resultNotices of an audit that was initiated byReassessment with the CRA and we have posted a CAD $98 million bond (or approximately $74 million) in January 2010 andlieu of paying the additional tax liability assessed. In 2017, we made a request with United States Competent Authority (USCA) to include the Company’s dispute with CRA for consideration under the bilateral settlement provisions of the US-Canada Tax Treaty (the Treaty). We also filed a companion request with Canadian Competent Authority (CASD) since this matter ultimately involves the sole issueallocation of whether certain patronage allocations meetprofits and deductions between Canada and the requirementsUnited States. In 2018, the matter was accepted for deductibilityconsideration under the Income Tax Actbilateral settlement provisions of Canada. The reassessmentthe Treaty by both countries.
Under the Treaty, USCA and CASD have two years from the commencement of discussions to reach a settlement or the matter can be referred to binding arbitration under the provisions of the Treaty. This period has been appealedextended to expire in December 2020, and it could be further extended if agreed upon by both parties. The Company does not expect that resolution of this matter will result in a letter of credit inmaterial net tax liability, because the amount of CAD $87 million (or approximately $70 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 shouldCompany would be entitled to aan offsetting U.S. foreign tax credit againstfor any incremental Canadian tax paid. The competent authoritiesUpon resolution of Canada and the United States have been notified of the potential need for competent authority assistance.
As of September 30, 2017 and December 31, 2016, we had prepaid income taxes inthis matter, interest would be assessed based upon the amount of $42 million and $841 million, respectively. In June 2017, we received a federal tax refund of approximately $815 million relateddue. Similarly, the Company would be entitled to receive interest on the offsetting reduction in tax due to the carryback of certain U.S.foreign tax losses from 2016credit. Due to prior tax periods.
During the second quarter of 2017, the valuation allowance foruncertainty in how each taxing authority would apply their interest calculation rules, we are not able to predict the net operating lossesamount of a subsidiaryinterest that we would pay to or receive from the taxing authorities.

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Table of the Company that were recorded in prior periods was reduced by $12 million as the result of a statutory income tax rate change.Contents
CF INDUSTRIES HOLDINGS, INC.
10.
11.   Interest Expense
Details of interest expense are as follows:
 Three months ended 
 September 30,
 Nine months ended 
 September 30,
 2017 2016 2017 2016
 (in millions)
Interest on borrowings(1)
$76
 $76
 $228
 $227
Fees on financing agreements(1)(2)(3)
5
 6
 13
 42
Interest on tax liabilities1
 2
 2
 3
Interest capitalized(4)
(1) (53) (2) (142)
Total interest expense$81
 $31
 $241
 $130
 Three months ended 
 September 30,
Nine months ended 
 September 30,
 2020201920202019
 (in millions)
Interest on borrowings(1)
$46 $57 $139 $171 
Fees on financing agreements(1)
10 
Interest on tax liabilities(2)
(4)
Interest capitalized(1)(2)
Total interest expense$48 $63 $141 $182 


(1)
See Note 11—Financing Agreements for additional information.
(2)
Fees on financing agreements for the nine months ended September 30, 2016 includes $28 million of fees related to the termination of the tranche B commitment under the bridge credit agreement as a result of the termination of an agreement to combine between CF Holdings and OCI N.V.
(3)
Fees on financing agreements for both the three and nine months ended September 30, 2016 includes $2 million of accelerated amortization of deferred fees related to a July 2016 amendment to our revolving credit facility, which reduced the facility to $1.5 billion from $2.0 billion.
(4)
For the three and nine months ended September 30, 2016, amounts include interest capitalized for our capacity expansion projects, which were completed as of December 31, 2016.

(1)See Note 12—Financing Agreements for additional information.

(2)Interest on tax liabilities for the nine months ended September 30, 2020 consists of a reduction in interest accrued on the reserve for unrecognized tax benefits.
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11.12.  Financing Agreements
Revolving Credit Agreement
We haveOn December 5, 2019, CF Holdings and CF Industries entered into a senior secured revolving credit agreementFourth Amended and Restated Credit Agreement (the Revolving Credit Agreement) providing, which amended and restated our Third Amended and Restated Revolving Credit Agreement, as previously amended (referred to herein, as in effect from time to time, as the Prior Credit Agreement), that was scheduled to mature September 18, 2020. The Revolving Credit Agreement provides for a revolving credit facility of up to $750 million with a maturity of September 18, 2020.December 5, 2024. 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, capital expenditures, acquisitions, share repurchases and other general corporate purposes. CF Industries may 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 U.S. dollars, Canadian dollars, euroeuros and British pounds, and bear interest at a per annum rate equal to, at our option, an applicable eurocurrency rate or base rate plus, in either case, a specified margin, and the borrowersmargin. We 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), CF USA Holdings, LLC (CF USA) and CF Industries Distribution Facilities, LLC (CFIDF).
As of September 30, 2017,2020, we had excessunused borrowing capacity under the Revolving Credit Agreement of $695$750 million (net ofand 0 outstanding letters of credit of $55 million).credit. There were no0 borrowings outstanding under the Revolving Credit Agreement as of September 30, 2017 or December 31, 2016, or during2019. In March 2020, we borrowed $500 million under the nine months ended September 30, 2017.Revolving Credit Agreement to ensure we maintained ample financial flexibility in light of the uncertainty in the global markets caused by the COVID-19 pandemic, which we repaid in April 2020. Maximum borrowings outstanding under the Revolving Credit Agreement during the nine months ended September 30, 20162020 were $150 million with a$500 million. The weighted-average annual interest rate of 1.85%borrowings under the Revolving Credit Agreement during the nine months ended September 30, 2020 was 2.05%. There were 0 borrowings under the Prior Credit Agreement during the nine months ended September 30, 2019.
The Revolving Credit Agreement contains representations and warranties and affirmative and negative covenants, including financial covenants. As of September 30, 2017,2020, we were in compliance with all covenants under the Revolving Credit Agreement.
Letters of Credit
In addition to the lettersletter of credit outstandingcapacity under the Revolving Credit Agreement, as described above, we have also entered into a bilateral agreement with capacityproviding for up to issue$145 million of letters of credit up to $75 million.credit. As of September 30, 2017,2020, approximately $73$126 million of letters of credit were outstanding under this agreement.

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CF INDUSTRIES HOLDINGS, INC.


Senior Notes
Long-term debt presented on our consolidated balance sheets as of September 30, 20172020 and December 31, 20162019 consisted of the following Public Senior Notes (unsecured)debt securities issued by CF Industries:
 Effective Interest RateSeptember 30, 2020December 31, 2019
 Principal
Carrying Amount(1)
Principal
Carrying Amount(1)
(in millions)
Public Senior Notes:
3.450% due June 20233.562%$750 $748 $750 $747 
5.150% due March 20345.279%750 741 750 740 
4.950% due June 20435.031%750 742 750 742 
5.375% due March 20445.465%750 741 750 741 
Senior Secured Notes:
3.400% due December 20213.782%250 249 250 248 
4.500% due December 20264.759%750 739 750 739 
Total long-term debt$4,000 $3,960 $4,000 $3,957 

(1)Carrying amount is net of unamortized debt discount and Senior Secured Notes:
 Effective Interest Rate September 30,
2017
 December 31,
2016
  Principal 
Carrying Amount (1)
 Principal 
Carrying Amount (1)
   (in millions)
Public Senior Notes:         
6.875% due May 20187.344% $800
 $798
 $800
 $795
7.125% due May 20207.529% 800
 792
 800
 791
3.450% due June 20233.562% 750
 746
 750
 745
5.150% due March 20345.279% 750
 739
 750
 739
4.950% due June 20435.031% 750
 741
 750
 741
5.375% due March 20445.465% 750
 741
 750
 741
Senior Secured Notes:         
3.400% due December 20213.782% 500
 493
 500
 491
4.500% due December 20264.759% 750
 736
 750
 735
Total long-term debt  $5,850
 $5,786
 $5,850
 $5,778
Less: Current portion  800
 798
 
 
Long-term debt  $5,050
 $4,988
 $5,850
 $5,778

(1)
Carrying amount is net of unamortized debt discount and deferred debt issuance costs. Total unamortized debt discount was $12 million as of both September 30, 2017 and December 31, 2016, and total deferred debt issuance costs were $52 million and $60 million as of September 30, 2017 and December 31, 2016, respectively. 
Public Senior Notesdeferred debt issuance costs. Total unamortized debt discount was $9 million and $10 million as of September 30, 2020 and December 31, 2019, respectively, and total deferred debt issuance costs were $31 million and $33 million as of September 30, 2020 and December 31, 2019, respectively. 
Under the indentures (including the applicable supplemental indentures) governing the senior notes due 2018, 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.
Under the terms of the applicable indenture, the 3.400% senior secured notes due December 2021 (the 2021 Notes) and the 4.500% senior secured notes due December 2026 (the 2026 Notes) identified in the table above (together, the Senior Secured Notes) are guaranteed on a senior secured basis, jointly and severally, by CF Holdings and in connection witheach current and future domestic subsidiary of CF Holdings (other than CF Industries) that from time to time is a borrower, or guarantees indebtedness, under the effectiveness of the November 2016 amendment to our Revolving Credit Agreement, CF Holdings' wholly owned subsidiaries CF Industries Enterprises, Inc. (CFE) and CF Industries Sales, LLC (CFS) becameAgreement. The subsidiary guarantors of the Public Senior Secured Notes currently consist of CFE, CFS, CF USA and CFIDF.
On November 13, 2019, we redeemed in full all of the remaining $500 million outstanding principal amount of the 7.125% senior notes due May 2020 (the 2020 Notes), in accordance with the optional redemption provisions in the indenture governing the 2020 Notes.
On December 13, 2019, we redeemed $250 million principal amount, representing 50% of the $500 million principal amount outstanding immediately prior to such redemption, of the 2021 Notes in accordance with the optional redemption provisions in the indenture governing the 2021 Notes.
Interest on the Public Senior Notes and the Senior Secured 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.
See Note 19—Subsequent Event for additional information regarding the senior notes due May 2018.
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 net proceeds, after deducting discounts and offering expenses, from the issuance and sale of the Senior Secured Notes were approximately $1.23 billion. CF Industries used approximately $1.18 billion of the net proceeds for the prepayment (including payment of a make-whole amount of approximately $170 million and accrued interest) in full of the outstanding $1.0 billion aggregate principal amount of the senior notes due 2022, 2025 and 2027 (Private Senior Notes) issued by CF Industries on September 24, 2015.
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.


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CF INDUSTRIES HOLDINGS, INC.


12.   Derivative Financial Instruments
We use derivative financial instruments to reduce our exposure to changes in commodity prices and foreign currency exchange rates.
Commodity Price Risk Management
Natural gas is the largest and most volatile component of the manufacturing cost for nitrogen-based products. We manage the risk of changes in 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 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 September 30, 2017, we have natural gas derivative contracts covering periods through December 2018.
As of September 30, 2017 and December 31, 2016, we had open natural gas derivative contracts for 75.3 million MMBtus (millions of British thermal units) and 183.0 million MMBtus, respectively. For the nine months ended September 30, 2017, we used derivatives to cover approximately 42% of our natural gas consumption.
Foreign Currency Exchange Rates
A portion of the costs for our capacity expansion projects at our Donaldsonville, Louisiana complex and Port Neal, Iowa complex were euro-denominated. In order to manage our exposure to changes in the euro to U.S. dollar currency exchange rates, we hedged our projected euro-denominated payments through the end of 2016 using foreign currency forward contracts.
As of September 30, 2017, accumulated other comprehensive loss (AOCL) includes $7 million of pre-tax gains related to foreign currency derivatives that were originally designated as cash flow hedges. The hedges were de-designated as of December 31, 2013. The remaining balance in AOCL is being reclassified into income over the depreciable lives of the property, plant and equipment associated with the capacity expansion projects.
The effect of derivatives in our consolidated statements of operations is shown in the table below.
 Gain (loss) recognized in income
   Three months ended 
 September 30,
 Nine months ended 
 September 30,
Location 2017 2016 2017 2016
   (in millions)
Natural gas derivativesCost of sales $7
 $(21) $(64) $169
Foreign exchange contractsOther operating—net 
 
 
 (1)
Unrealized net gains (losses) recognized in income  7
 (21) (64) 168
Realized net losses  (11) (10) (13) (125)
Net derivative (losses) gains  $(4) $(31) $(77) $43

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CF INDUSTRIES HOLDINGS, INC.

The fair values of derivatives on our consolidated balance sheets are shown below. As of September 30, 2017 and December 31, 2016, none of our derivative instruments were designated as hedging instruments. See Note 8—Fair Value Measurements for additional information on derivative fair values.
 Asset Derivatives Liability Derivatives
 
Balance Sheet
Location
 September 30,
2017
 December 31,
2016
 
Balance Sheet
Location
 September 30,
2017
 December 31,
2016
   (in millions)   (in millions)
Natural gas derivativesOther current assets $1
 $52
 Other current liabilities $(14) $
Natural gas derivativesOther assets 
 4
 Other liabilities (1) (6)
Total derivatives  $1
 $56
   $(15) $(6)
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 September 30, 2017 and December 31, 2016, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was $15 million and zero, 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. At September 30, 2017, we had $100 thousand of cash collateral on deposit with one of our counterparties for derivative contracts. At December 31, 2016, 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 September 30, 2017 and December 31, 2016:
 
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)
September 30, 2017 
  
  
  
Total derivative assets$1
 $1
 $
 $
Total derivative liabilities(15) (1) 
 (14)
Net derivative liabilities$(14) $
 $
 $(14)
December 31, 2016 
  
  
  
Total derivative assets$56
 $6
 $
 $50
Total derivative liabilities(6) (6) 
 
Net derivative assets$50
 $
 $
 $50


(1)
We report the fair values of our derivative assets and liabilities on a gross basis on our consolidated balance sheets. As a result, the gross amounts recognized and net amounts presented are the same.
We do not believe the contractually allowed netting, close-out netting or setoff of amounts owed to, or due from, the counterparties to our ISDA agreements would have a material effect on our financial position.

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CF INDUSTRIES HOLDINGS, INC.

13.   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.
 Nine months ended 
 September 30,
 2017 2016
 CFN TNCLP Total CFN TNCLP Total
 (in millions)
Noncontrolling interests:   
      
  
Beginning balance$2,806
 $338
 $3,144
 $
 $352
 $352
Issuance of noncontrolling interest in CFN
 
 
 2,792
 
 2,792
Earnings attributable to noncontrolling interests40
 14
 54
 67
 20
 87
Declaration of distributions payable(107) (18) (125) (79) (32) (111)
Ending balance$2,739
 $334
 $3,073
 $2,780
 $340
 $3,120
Distributions payable to noncontrolling interests:   
      
  
Beginning balance$
 $
 $
 $
 $
 $
Declaration of distributions payable107
 18
 125
 79
 32
 111
Distributions to noncontrolling interests(107) (18) (125) (79) (32) (111)
Ending balance$
 $
 $
 $
 $
 $
CF Industries Nitrogen, LLC (CFN)Interest
We commencedhave a strategic venture with CHS on February 1, 2016, atunder which time CHS purchased a minoritythey own an equity interest in CFN, a subsidiary of CF Holdings, for $2.8 billion, which representedrepresents approximately 11% of the membership interestinterests of CFN. We own the remaining membership interest.interests. Under the terms of CFN'sCFN’s limited liability company agreement, each member’s percentage membership interest will reflect, over time, the impact of the profitability of CFN, and any member contributions made to CFN and withdrawals 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'CHS’ interest in the strategic venture is recorded in noncontrolling interestsinterest in our consolidated financial statements. On February 1, 2016,
A reconciliation of the beginning and ending balances of noncontrolling interest and distributions payable to noncontrolling interest in our consolidated balance sheets is provided below.
20202019
 (in millions)
Noncontrolling interest:
Balance as of January 1$2,740 $2,773 
Earnings attributable to noncontrolling interest83 114 
Declaration of distributions payable(174)(186)
Balance as of September 30$2,649 $2,701 
Distributions payable to noncontrolling interest:
Balance as of January 1$$
Declaration of distributions payable174 186 
Distributions to noncontrolling interest(174)(186)
Balance as of September 30$$
CHS also began receivingreceives 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 entitled 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, ifwe recognized an embedded derivative related to our credit rating asrating. See Note 9—Fair Value Measurements for additional information.
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14.   Stockholders’ Equity
Treasury Stock
On August 1, 2018, our Board of Directors (the Board) authorized the repurchase of up to $500 million of CF Holdings common stock through June 30, 2020 (the 2018 Share Repurchase Program). In 2018, we completed the 2018 Share Repurchase Program with the repurchase of 10.9 million shares for $500 million, of which $33 million was accrued and unpaid at December 31, 2018 and was paid in the first quarter of 2019. In February 2019, we retired all 10.9 million shares that were repurchased under the 2018 Share Repurchase Program.
On February 13, 2019, the Board authorized the repurchase of up to $1 billion of CF Holdings common stock through December 31, 2021 (the 2019 Share Repurchase Program). Repurchases under the 2019 Share Repurchase Program may be made from time to time in the open market, through privately negotiated transactions, block transactions or otherwise. The manner, timing and amount of repurchases will be determined by twoour management based on the evaluation 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. In the fourth quarter of 2016, as a result of a reduction in our credit rating, we made a $5 million payment to CHS. The payment 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. We recognized this term of the strategic venture as an embedded derivative. As of September 30, 2017 and December 31, 2016, the embedded derivative liability of $30 million and $26 million, respectively, is included in other current liabilitiesmarket conditions, stock price, and other liabilities on our consolidated balance sheet. The $4 million charge to reflect the change in fair value forfactors. In the nine months ended September 30, 2017 is included2019, we repurchased approximately 5.7 million shares under the 2019 Share Repurchase Program for $250 million, of which $2 million was accrued and unpaid at September 30, 2019. In the first quarter of 2020, we repurchased approximately 2.6 million shares of CF Holdings common stock under the 2019 Share Repurchase Program for $100 million, which we retired in other operating—netthe second quarter of 2020. NaN shares were repurchased under the 2019 Share Repurchase Program in our consolidated statementthe second or third quarter of operations. See Note 8—Fair Value Measurements for additional information.2020. At September 30, 2020, we held 27,392 shares of treasury stock.

The following table summarizes the share repurchases under the 2019 Share Repurchase Program.

SharesAmounts
(in millions)
Shares repurchased in 2019:
First quarter1.5 $60 
Second quarter2.7 118 
Third quarter1.5 72 
Fourth quarter1.9 87 
Total shares repurchased in 20197.6 337 
Shares repurchased in 2020:
First quarter2.6 100 
Shares repurchased as of September 30, 202010.2 $437 
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Terra Nitrogen Company, L.P. (TNCLP)
TNCLP is a master limited partnership (MLP) that owns a nitrogen fertilizer manufacturing facility in Verdigris, Oklahoma. We own approximately 75.3% of TNCLP through general and limited partnership interests. Outside investors own the remaining approximately 24.7% of the limited partnership. For financial reporting purposes, the assets, liabilities and earnings of the partnership are consolidated into our financial statements. The outside investors' limited partnership interests in the partnership are recorded in noncontrolling interests in our consolidated financial statements. The noncontrolling interest represents the noncontrolling unitholders' interest in the earnings and equity of TNCLP. Affiliates of CF Industries are 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.
TNCLP makes cash distributions to the general and limited partners based on formulas defined within its First Amended and Restated Agreement of Limited Partnership (as amended, the TNCLP Agreement of Limited Partnership). Cash available for distribution (Available Cash) is 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 determines in its reasonable discretion to be necessary or appropriate. Changes in working capital affect Available Cash, as increases in the amount of cash invested in working capital items (such as increases in receivables or inventory and decreases in accounts payable) reduce Available Cash, while declines in the amount of cash invested in working capital items increase Available Cash. Cash distributions to the limited partners and general partner vary depending on the extent to which the cumulative distributions exceed certain target threshold levels set forth in the TNCLP Agreement of Limited Partnership.
In each of the first, second and third quarters of 2017 and 2016, the minimum quarterly distributions under the TNCLP Agreement of Limited Partnership were satisfied, which entitled Terra Nitrogen GP Inc. (TNGP), the general partner of TNCLP and an indirect wholly owned subsidiary of CF Holdings, to receive incentive distributions on its general partner interests (in addition to minimum quarterly distributions). TNGP has assigned its right to receive such incentive distributions to an affiliate of TNGP that is 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 nine months ended September 30, 2017 and 2016, were $19 million and $56 million, respectively.
As of September 30, 2017, TNGP and its affiliates owned approximately 75.1% of TNCLP's outstanding common units. When not more than 25% of TNCLP's issued and outstanding common units are held by persons other than TNGP and its affiliates (collectively, non-affiliated persons), as was the case at September 30, 2017, TNCLP, at TNGP's sole discretion, may call or assign to TNGP or its affiliates, TNCLP's right to acquire all, but not less than all, such outstanding common units held by non-affiliated persons. If TNGP elects to acquire all outstanding common units, TNCLP is required to give at least 30 but not more than 60 days' notice of TNCLP's decision to purchase the outstanding common units, and the purchase price per unit would be the greater of (1) the average of the previous 20 trading days' closing prices as of the date five days before the purchase is announced or (2) the highest price paid by TNGP or any of its affiliates for any unit within the 90 days preceding the date the purchase is announced.
Internal Revenue Service Regulation Impacting Master Limited Partnerships
Currently, no federal income taxes are paid by TNCLP due to its MLP status. Partnerships are generally not subject to federal income tax, although publicly traded partnerships (such as TNCLP) are treated as corporations for federal income tax purposes (and therefore are subject to federal income tax), unless at least 90% of the partnership's gross income is "qualifying income" as defined in Section 7704 of the Internal Revenue Code of 1986, as amended, and the partnership is not required to register as an investment company under the Investment Company Act of 1940. Any change in the tax treatment of income from fertilizer-related activities as qualifying income could cause TNCLP to be treated as a corporation for federal income tax purposes. If TNCLP were taxed as a corporation, under current law, due to its current ownership interest, CF Industries would qualify for a partial dividends received deduction on the dividends received from TNCLP. Therefore, we would not expect a change in the tax treatment of TNCLP to have a material impact on the consolidated financial condition or results of operations of CF Holdings.
On January 19, 2017, the Internal Revenue Service (IRS) issued final regulations on the types of income and activities that constitute or generate qualifying income of a MLP. For calendar year MLPs, the effective date of the regulations is January 1, 2018. The regulations have the effect of limiting the types of income and activities that qualify under the MLP rules, subject to certain transition provisions. The regulations define the activities that generate qualifying income from certain processing or refining and transportation activities with respect to any mineral or natural resource (including fertilizer) as activities that generate qualifying income, but the regulations reserve on specifics regarding fertilizer-related activities. We continue to monitor these IRS regulatory activities.

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CF INDUSTRIES HOLDINGS, INC.

14.   Defined Benefit Pension Plans
We contributed $75 million to our pension plans during the nine months ended September 30, 2017, and expect to contribute an additional $6 million, or a total of approximately $81 million for the full year 2017. The contributions include a voluntary contribution of $59 million made to our U.S. pension plan in the second quarter of 2017.

15.   Accumulated Other Comprehensive Income (Loss)
Changes to accumulated other comprehensive income (loss) are as follows:
 
Foreign
Currency
Translation
Adjustment
 
Unrealized
Gain (Loss)
on
Securities
 
Unrealized
Gain (Loss)
on
Derivatives
 
Defined
Benefit
Plans
 
Accumulated
Other
Comprehensive
Income (Loss)
 (in millions)
Balance as of December 31, 2015$(198) $1
 $5
 $(58) $(250)
Loss arising during the period
 
 
 (3) (3)
Effect of exchange rate changes and deferred taxes(20) 
 
 
 (20)
Balance as of September 30, 2016$(218) $1
 $5
 $(61) $(273)
Balance as of December 31, 2016$(272) $1
 $5
 $(132) $(398)
Gain arising during the period
 
 
 7
 7
Reclassification to earnings
 
 
 1
 1
Effect of exchange rate changes and deferred taxes124
 
 
 (9) 115
Balance as of September 30, 2017$(148) $1
 $5
 $(133) $(275)
 Foreign
Currency
Translation
Adjustment
Unrealized
Gain on
Derivatives
Defined
Benefit
Plans
Accumulated
Other
Comprehensive
Income (Loss)
 (in millions)
Balance as of December 31, 2018$(250)$$(126)$(371)
Gain arising during the period
Reclassification to earnings(1)
(1)(1)
Effect of exchange rate changes and deferred taxes(8)(7)
Balance as of September 30, 2019$(258)$$(121)$(374)
Balance as of December 31, 2019$(188)$$(183)$(366)
Gain arising during the period
Reclassification to earnings(1)
Effect of exchange rate changes and deferred taxes(30)(28)
Balance as of September 30, 2020$(218)$$(175)$(388)

(1)Reclassifications out of accumulated other comprehensive income (loss) to earnings during the three and nine months ended September 30, 20172020 and 20162019 were as follows:not material.


 Three months ended 
 September 30,
 Nine months ended 
 September 30,
 2017 2016 2017 2016
 (in millions)
Defined Benefit Plans 
  
  
  
Amortization of prior service (benefit) cost(1)
$(1) $(1) $(1) $(1)
Amortization of net loss(1)
2
 1
 2
 1
Total before tax1
 
 1
 
Tax effect
 
 
 
Net of tax$1
 $
 $1
 $
Total reclassifications for the period$1
 $
 $1
 $

(1)
These components are included in the computation of net periodic benefit cost and were reclassified from accumulated other comprehensive income (loss) into cost of sales and selling, general and administrative expenses.


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CF INDUSTRIES HOLDINGS, INC.

16.15.  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 beenwere 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 beenwere consolidated for discovery and pretrial proceedings in the District Court of McLennan County under the caption "In“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 beenwere 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'Entities’ Motions for Summary Judgment in August 2015. Over one hundred forty300 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 group of cases is expected to be set for trial is scheduled to begin on January 16, 2018.in 2021. 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.
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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
LouisianaFlorida Environmental MattersMatter
Clean Air Act—Section 185 Fee
Our Donaldsonville nitrogen complex isOn March 17, 2014, we completed the sale of our phosphate mining and manufacturing business, which was located in a five-parish region near Baton Rouge, Louisiana that, asFlorida, to The Mosaic Company (Mosaic). Pursuant to the terms of 2005, was designated as beingthe definitive agreement executed in "severe" nonattainmentOctober 2013, Mosaic assumed the following environmental matter and we agreed to indemnify Mosaic with respect to the national ambient air quality standard (NAAQS) for ozone (the 1-hour ozone standard) pursuant to the Federal Clean Air Act (the Act). Section 185losses arising out of the Act requires states, in their state implementation plans,matter below, subject to levy a fee (Section 185 fee) on major stationary sources (such asmaximum indemnification cap and the Donaldsonville complex) located in a severe nonattainment area that did not meet the 1-hour ozone standard by November 30, 2005. The fee was to be assessed for each calendar year (beginning in 2006) until the area achieved compliance with the ozone NAAQS.
Prior to the imposition of Section 185 fees, the Environmental Protection Agency (EPA) adopted a new ozone standard (the 8-hour ozone standard) and rescinded the 1-hour ozone standard. The Baton Rouge area was designated as a "moderate" nonattainment area with respect to the 8-hour ozone standard. However, because Section 185 fees had never been assessed prior to the rescissionother terms of the 1-hour ozone standard (rescinded prior to the November 30, 2005 ozone attainment deadline), the EPA concluded in a 2004 rulemaking implementing the 8-hour ozone standard that the Act did not require states to assess Section 185 fees. As a result, Section 185 fees were not assessed against us and other companies located in the Baton Rouge area.
In 2006, the federal D.C. Circuit Court of Appeals rejected the EPA's position and held that Section 185 fees were controls that must be maintained and fees should have been assessed under the Act. In January 2008, the U.S. Supreme Court declined to accept the case for review, making the appellate court's decision final.

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CF INDUSTRIES HOLDINGS, INC.

In July 2011, the EPA approved a revision to Louisiana's air pollution program that eliminated the requirement for Baton Rouge area companies to pay Section 185 fees, based on Baton Rouge's ultimate attainment of the 1-hour standard through permanent and enforceable emissions reductions. The EPA's approval of the Louisiana air program revision became effective on August 8, 2011. However, a July 2011 decision by the federal D.C. Circuit Court of Appeals struck down a similar, but perhaps distinguishable, EPA guidance document regarding alternatives to Section 185 fees. At this time, the viability of EPA's approval of Louisiana's elimination of Section 185 fees is uncertain. Regardless of the approach ultimately adopted by the EPA, we expect that it is likely to be challenged by the environmental community, the states, and/or affected industries. Therefore, the costs associated with compliance with the Act cannot be determined at this time, and we cannot reasonably estimate the impact on our consolidated financial position, results of operations or cash flows.
Since 2011, the area has seen significant reductions in ozone levels, attributable to federal and state regulations and community involvement. On December 15, 2016, the EPA redesignated the Baton Rouge Nonattainment Area as "attainment" with the 2008 8-hour ozone standard. However, based on 2013-2015 air quality monitoring data, the State of Louisiana has recommended that the EPA designate the Baton Rouge area as "non-attainment" pursuant to the updated 2015 8-hour ozone standard. In June 2017, the EPA announced that it was extending the deadline to establish designations under the 2015 ozone standard by one year, from October 1, 2017 to October 1, 2018. Although the EPA later announced that it would comply with the October 1, 2017 deadline, it has not yet issued final air quality designations under the 2015 ozone standard.definitive agreement.
Clean Air Act Information RequestNotice of Violation
On February 26, 2009, weWe received a letterNotice of Violation (NOV) from the EPA under Section 114by letter dated June 16, 2010, alleging that we violated the Prevention of Significant Deterioration (PSD) Clean Air Act regulations relating to certain projects undertaken at the former Plant City, Florida facility’s sulfuric acid plants. This NOV further alleges that the actions that are the basis for the alleged PSD violations also resulted in violations of Title V air operating permit regulations. Finally, the NOV alleges that we failed to comply with certain compliance dates established by hazardous air pollutant regulations for phosphoric acid manufacturing plants and phosphate fertilizer production plants. We had several meetings with the EPA with respect to this matter prior to our sale of the Act requesting informationphosphate mining and copies of records relating to compliancemanufacturing business in March 2014. We and Mosaic have separately had continued discussions with New Source Review and New Source Performance Standards at our Donaldsonville facility. We have completed the submittal of all requested information. There has been no further contact from the EPA regardingsubsequent to our sale of the phosphate mining and manufacturing business with respect to this matter.
OtherWe reached a settlement with the EPA and the United States Department of Justice to resolve the Plant City Clean Air Act matter, and executed a final stipulation of settlement that was approved by the United States District Court for the Middle District of Florida on August 5, 2020. The settlement required us to pay a civil penalty of $550,000 to the United States, but did not include any required injunctive relief or other corrective actions.
CERCLA/RemediationOther Environmental 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 CERCLAthe Comprehensive Environmental Response, Compensation, and Liability Act 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 a group of17 former phosphate mines in southeast Idaho, includingone of which is the former Georgetown Canyon mine. WeBecause the former mine site is still in the remedial investigation and feasibility study stage, 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,the results of the site investigation conducted to date, 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.

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CF INDUSTRIES HOLDINGS, INC.


17.16.  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 6—7—Goodwill and Other Intangible Assets.
Segment data for sales, cost of sales and gross margin for the three and nine months ended September 30, 20172020 and 20162019 are presented in the tables below.
Ammonia
Granular Urea(1)
UAN(1)
AN(1)
Other(1)
Consolidated
Ammonia 
Granular
Urea
(1)
 
UAN(1)
 
AN(1)
 
Other(1)
 Consolidated(in millions)
(in millions)
Three months ended September 30, 2017 
  
  
    
  
Three months ended September 30, 2020Three months ended September 30, 2020
Net sales$194
 $228
 $243
 $135
 $70
 $870
Net sales$165 $249 $248 $109 $76 $847 
Cost of sales204
 220
 253
 123
 61
 861
Cost of sales174 183 237 96 74 764 
Gross margin$(10) $8
 $(10) $12
 $9
 9
Gross margin$(9)$66 $11 $13 $83 
Total other operating costs and expenses 
  
  
    
 43
Total other operating costs and expenses45 
Equity in losses of operating affiliates 
  
  
    
 (5)
Operating loss 
  
  
    
 $(39)
Three months ended September 30, 2016 
  
  
    
  
Equity in earnings of operating affiliateEquity in earnings of operating affiliate
Operating earningsOperating earnings$40 
Three months ended September 30, 2019Three months ended September 30, 2019
Net sales$145
 $167
 $212
 $103
 $53
 $680
Net sales$187 $327 $309 $136 $79 $1,038 
Cost of sales149
 152
 218
 114
 45
 678
Cost of sales188 207 250 100 65 810 
Gross margin$(4) $15
 $(6) $(11) $8
 2
Gross margin$(1)$120 $59 $36 $14 228 
Total other operating costs and expenses 
  
  
    
 101
Total other operating costs and expenses26 
Equity in losses of operating affiliates 
  
  
    
 (2)
Operating loss 
  
  
    
 $(101)
Equity in losses of operating affiliateEquity in losses of operating affiliate(14)
Operating earningsOperating earnings$188 
Ammonia
Granular Urea(1)
UAN(1)
AN(1)
Other(1)
Consolidated
Ammonia 
Granular
Urea(1)
 
UAN(1)
 
AN(1)
 
Other(1)
 Consolidated (in millions)
(in millions)
Nine months ended September 30, 2017 
  
  
    
  
Nine months ended September 30, 2020Nine months ended September 30, 2020     
Net sales$865
 $725
 $846
 $372
 $223
 $3,031
Net sales$722 $915 $791 $343 $251 $3,022 
Cost of sales771
 668
 783
 331
 191
 2,744
Cost of sales609 612 675 290 215 2,401 
Gross margin$94
 $57
 $63
 $41
 $32
 287
Gross margin$113 $303 $116 $53 $36 621 
Total other operating costs and expenses 
  
  
    
 154
Total other operating costs and expenses    162 
Equity in losses of operating affiliates 
  
  
    
 (8)
Equity in earnings of operating affiliateEquity in earnings of operating affiliate    
Operating earnings 
  
  
    
 $125
Operating earnings    $467 
Nine months ended September 30, 2016 
  
  
    
  
Nine months ended September 30, 2019Nine months ended September 30, 2019     
Net sales$770
 $642
 $891
 $318
 $197
 $2,818
Net sales$847 $1,103 $934 $389 $268 $3,541 
Cost of sales505
 445
 646
 316
 160
 2,072
Cost of sales654 686 722 308 224 2,594 
Gross margin$265
 $197
 $245
 $2
 $37
 746
Gross margin$193 $417 $212 $81 $44 947 
Total other operating costs and expenses 
  
  
    
 501
Total other operating costs and expenses    113 
Equity in losses of operating affiliates 
  
  
    
 (11)
Equity in losses of operating affiliateEquity in losses of operating affiliate    (6)
Operating earnings 
  
  
    
 $234
Operating earnings    $828 


(1)
The cost of the products that are upgraded into other products is transferred at cost into the upgraded product results.

(1)The cost of the products that are upgraded into other products is transferred at cost into the upgraded product results.


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18.   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 2018, 2020, 2023, 2034, 2043 and 2044 (described in Note 11—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 and CFS (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 2018 and 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 2018 and 2020. CFE and CFS became guarantors of the Public Senior Notes as a result of this requirement on November 21, 2016.
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 later to occur of (a) 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 2018, 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 2018, and (b) 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, CFE and CFS 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 and nine months ended September 30, 2017 and 2016, condensed consolidating statements of cash flows for Parent, CF Industries, the Subsidiary Guarantors and the Non-Guarantors for the nine months ended September 30, 2017 and 2016, and condensed consolidating balance sheets for Parent, CF Industries, the Subsidiary Guarantors and the Non-Guarantors as of September 30, 2017 and December 31, 2016. To reflect the additional Subsidiary Guarantors that became effective on November 21, 2016, the condensed consolidating statement of operations for the three and nine months ended September 30, 2016 and statement of cash flows for the nine months ended September 30, 2016 have been restated to reflect the separate Subsidiary Guarantors. The condensed consolidating financial information presented below is not necessarily indicative of the financial position, results of operations, comprehensive income 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. 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.

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CF INDUSTRIES HOLDINGS, INC.

Condensed Consolidating Statement of Operations
 Three months ended September 30, 2017
 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated
 (in millions)
Net sales$
 $105
 $661
 $770
 $(666) $870
Cost of sales
 62
 725
 740
 (666) 861
Gross margin
 43
 (64) 30
 
 9
Selling, general and administrative expenses1
 (2) 28
 18
 
 45
Other operating—net
 (6) 3
 1
 
 (2)
Total other operating costs and expenses1
 (8) 31
 19
 
 43
Equity in losses of operating affiliates
 
 
 (5) 
 (5)
Operating (loss) earnings(1) 51
 (95) 6
 
 (39)
Interest expense
 80
 11
 1
 (11) 81
Interest income
 (8) (5) (3) 11
 (5)
Net loss of wholly owned subsidiaries86
 73
 13
 
 (172) 
(Loss) earnings before income taxes(87) (94) (114) 8
 172
 (115)
Income tax (benefit) provision
 (8) (44) 5
 
 (47)
Net (loss) earnings(87) (86) (70) 3
 172
 (68)
Less: Net earnings attributable to noncontrolling interests
 
 
 19
 
 19
Net loss attributable to common stockholders$(87) $(86) $(70) $(16) $172
 $(87)

Condensed Consolidating Statement of Comprehensive Income
 Three months ended September 30, 2017
 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated
 (in millions)
Net (loss) earnings$(87) $(86) $(70) $3
 $172
 $(68)
Other comprehensive income50
 49
 36
 49
 (134) 50
Comprehensive (loss) income(37) (37) (34) 52
 38
 (18)
Less: Comprehensive income attributable to noncontrolling interests
 
 
 19
 
 19
Comprehensive (loss) income attributable to common stockholders$(37) $(37) $(34) $33
 $38
 $(37)








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CF INDUSTRIES HOLDINGS, INC.

Condensed Consolidating Statement of Operations
 Nine months ended September 30, 2017
 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated
 (in millions)
Net sales$
 $306
 $2,386
 $2,499
 $(2,160) $3,031
Cost of sales
 184
 2,488
 2,232
 (2,160) 2,744
Gross margin
 122
 (102) 267
 
 287
Selling, general and administrative expenses3
 3
 83
 51
 
 140
Other operating—net
 (8) 5
 17
 
 14
Total other operating costs and expenses3
 (5) 88
 68
 
 154
Equity in losses of operating affiliates
 
 
 (8) 
 (8)
Operating (loss) earnings(3) 127
 (190) 191
 
 125
Interest expense
 241
 31
 4
 (35) 241
Interest income
 (27) (7) (9) 35
 (8)
Net loss (earnings) of wholly owned subsidiaries105
 49
 (127) 
 (27) 
(Loss) earnings before income taxes(108) (136) (87) 196
 27
 (108)
Income tax (benefit) provision(1) (31) (34) 11
 
 (55)
Net (loss) earnings(107) (105) (53) 185
 27
 (53)
Less: Net earnings attributable to noncontrolling interests
 
 
 54
 
 54
Net (loss) earnings attributable to common stockholders$(107) $(105) $(53) $131
 $27
 $(107)

Condensed Consolidating Statement of Comprehensive Income
 Nine months ended September 30, 2017
 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated
 (in millions)
Net (loss) earnings$(107) $(105) $(53) $185
 $27
 $(53)
Other comprehensive income123
 122
 85
 117
 (324) 123
Comprehensive income16
 17
 32
 302
 (297) 70
Less: Comprehensive income attributable to noncontrolling interests
 
 
 54
 
 54
Comprehensive income attributable to common stockholders$16
 $17
 $32
 $248
 $(297) $16

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CF INDUSTRIES HOLDINGS, INC.

Condensed Consolidating Statement of Operations
 Three months ended September 30, 2016
 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated
 (in millions)
Net sales$
 $81
 $497
 $643
 $(541) $680
Cost of sales
 35
 598
 586
 (541) 678
Gross margin
 46
 (101) 57
 
 2
Selling, general and administrative expenses1
 4
 26
 13
 
 44
Other operating—net
 5
 22
 30
 
 57
Total other operating costs and expenses1
 9
 48
 43
 
 101
Equity in losses of operating affiliates
 
 
 (2) 
 (2)
Operating (loss) earnings(1) 37
 (149) 12
 
 (101)
Interest expense
 87
 12
 (50) (18) 31
Interest income
 (11) (1) (8) 18
 (2)
Net loss (earnings) of wholly owned subsidiaries39
 
 (113) 
 74
 
Other non-operating—net
 
 1
 
 
 1
(Loss) earnings before income taxes(40) (39) (48) 70
 (74) (131)
Income tax benefit(10) 
 (118) (3) 
 (131)
Net (loss) earnings(30) (39) 70
 73
 (74) 
Less: Net earnings attributable to noncontrolling interest
 
 
 30
 
 30
Net (loss) earnings attributable to common stockholders$(30) $(39) $70
 $43
 $(74) $(30)

Condensed Consolidating Statement of Comprehensive Income (Loss)
 Three months ended September 30, 2016
 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated
 (in millions)
Net (loss) earnings$(30) $(39) $70
 $73
 $(74) $
Other comprehensive loss(30) (30) (3) (20) 53
 (30)
Comprehensive (loss) income(60) (69) 67
 53
 (21) (30)
Less: Comprehensive income attributable to noncontrolling interest
 
 
 30
 
 30
Comprehensive (loss) income attributable to common stockholders$(60) $(69) $67
 $23
 $(21) $(60)


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CF INDUSTRIES HOLDINGS, INC.

Condensed Consolidating Statement of Operations
 Nine months ended September 30, 2016
 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated
 (in millions)
Net sales$
 $283
 $2,240
 $2,152
 $(1,857) $2,818
Cost of sales
 161
 2,079
 1,689
 (1,857) 2,072
Gross margin
 122
 161
 463
 
 746
Selling, general and administrative expenses3
 8
 88
 42
 
 141
Transaction costs(46) 
 224
 1
 
 179
Other operating—net
 5
 30
 146
 
 181
Total other operating costs and expenses(43) 13
 342
 189
 
 501
Equity in losses of operating affiliates
 
 
 (11) 
 (11)
Operating earnings (loss)43
 109
 (181) 263
 
 234
Interest expense
 249
 73
 (126) (66) 130
Interest income
 (43) (7) (20) 66
 (4)
Net earnings of wholly owned subsidiaries(16) (76) (404) 
 496
 
Other non-operating—net
 
 1
 (2) 
 (1)
Earnings (loss) before income taxes59
 (21) 156
 411
 (496) 109
Income tax provision (benefit)16
 (37) (15) 15
 
 (21)
Net earnings43
 16
 171
 396
 (496) 130
Less: Net earnings attributable to noncontrolling interest
 
 
 87
 
 87
Net earnings attributable to common stockholders$43
 $16
 $171
 $309
 $(496) $43

Condensed Consolidating Statement of Comprehensive Income (Loss)
 Nine months ended September 30, 2016
 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated
 (in millions)
Net earnings$43
 $16
 $171
 $396
 $(496) $130
Other comprehensive (loss) income(23) (23) 4
 (20) 39
 (23)
Comprehensive income (loss)20
 (7) 175
 376
 (457) 107
Less: Comprehensive income attributable to noncontrolling interest
 
 
 87
 
 87
Comprehensive income (loss) attributable to common stockholders$20
 $(7) $175
 $289
 $(457) $20


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CF INDUSTRIES HOLDINGS, INC.

Condensed Consolidating Balance Sheet
 September 30, 2017
 Parent CF Industries Subsidiary Guarantors Non- Guarantors 
Eliminations
and
Reclassifications
 Consolidated
 (in millions)
Assets 
  
    
  
  
Current assets: 
  
    
  
  
Cash and cash equivalents$
 $32
 $1,619
 $341
 $
 $1,992
Accounts and notes receivable—net17
 989
 1,733
 320
 (2,780) 279
Inventories
 
 164
 152
 
 316
Deferred income taxes
 15
 
 
 (15) 
Prepaid income taxes
 
 39
 3
 
 42
Other current assets
 
 14
 8
 
 22
Total current assets17
 1,036
 3,569
 824
 (2,795) 2,651
Property, plant and equipment—net
 
 122
 9,250
 
 9,372
Deferred income taxes
 
 
 
 
 
Investments in affiliates3,727
 9,443
 6,436
 109
 (19,606) 109
Due from affiliates571
 
 
 
 (571) 
Goodwill
 
 2,064
 305
 
 2,369
Other assets
 85
 94
 512
 (335) 356
Total assets$4,315
 $10,564
 $12,285
 $11,000
 $(23,307) $14,857
Liabilities and Equity 
  
    
  
  
Current liabilities: 
  
    
  
  
Accounts and notes payable and accrued expenses$1,148
 $465
 $1,296
 $506
 $(2,780) $635
Income taxes payable
 
 
 7
 
 7
Customer advances
 
 92
 
 
 92
Current portion of long-term debt
 798
 
 
 
 798
Other current liabilities
 
 17
 2
 
 19
Total current liabilities1,148
 1,263
 1,405
 515
 (2,780) 1,551
Long-term debt
 4,988
 260
 76
 (336) 4,988
Deferred income taxes
 
 1,437
 170
 (15) 1,592
Due to affiliates
 571
 
 
 (571) 
Other liabilities
 15
 254
 217
 
 486
Equity: 
  
    
  
  
Stockholders' equity: 
  
    
  
  
Preferred stock
 
 
 
 
 
Common stock2
 
 
 4,712
 (4,712) 2
Paid-in capital1,392
 (13) 9,505
 1,783
 (11,275) 1,392
Retained earnings2,048
 4,016
 (382) 680
 (4,314) 2,048
Treasury stock
 
 
 
 
 
Accumulated other comprehensive loss(275) (276) (186) (234) 696
 (275)
Total stockholders' equity3,167
 3,727
 8,937
 6,941
 (19,605) 3,167
Noncontrolling interests
 
 (8) 3,081
 
 3,073
Total equity3,167
 3,727
 8,929
 10,022
 (19,605) 6,240
Total liabilities and equity$4,315
 $10,564
 $12,285
 $11,000
 $(23,307) $14,857

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CF INDUSTRIES HOLDINGS, INC.

Condensed Consolidating Balance Sheet
 December 31, 2016
 Parent CF Industries Subsidiary Guarantors Non- Guarantors 
Eliminations
and
Reclassifications
 Consolidated
 (in millions)
Assets 
  
    
  
  
Current assets: 
  
    
  
  
Cash and cash equivalents$
 $36
 $878
 $250
 $
 $1,164
Restricted cash
 
 
 5
 
 5
Accounts and notes receivable—net20
 1,259
 1,418
 495
 (2,956) 236
Inventories
 
 164
 175
 
 339
Prepaid income taxes
 
 839
 2
 
 841
Other current assets
 
 59
 11
 
 70
Total current assets20
 1,295
 3,358
 938
 (2,956) 2,655
Property, plant and equipment—net
 
 131
 9,521
 
 9,652
Investments in affiliates3,711
 9,370
 6,019
 139
 (19,100) 139
Due from affiliates571
 
 
 
 (571) 
Goodwill
 
 2,064
 281
 
 2,345
Other assets
 85
 101
 385
 (231) 340
Total assets$4,302
 $10,750
 $11,673
 $11,264
 $(22,858) $15,131
Liabilities and Equity 
  
    
  
  
Current liabilities: 
  
    
  
  
Accounts and notes payable and accrued expenses$954
 $418
 $1,505
 $717
 $(2,956) $638
Income taxes payable
 
 
 1
 
 1
Customer advances
 
 42
 
 
 42
Other current liabilities
 
 5
 
 
 5
Total current liabilities954
 418
 1,552
 718
 (2,956) 686
Long-term debt
 5,903
 39
 67
 (231) 5,778
Deferred income taxes
 90
 1,374
 166
 
 1,630
Due to affiliates
 571
 
 
 (571) 
Other liabilities
 59
 270
 216
 
 545
Equity: 
  
    
  
  
Stockholders' equity: 
  
    
  
  
Preferred stock
 
 
 
 
 
Common stock2
 
 
 4,383
 (4,383) 2
Paid-in capital1,380
 (13) 9,045
 2,246
 (11,278) 1,380
Retained earnings2,365
 4,120
 (329) 668
 (4,459) 2,365
Treasury stock(1) 
 
 
 
 (1)
Accumulated other comprehensive loss(398) (398) (271) (351) 1,020
 (398)
Total stockholders' equity3,348
 3,709
 8,445
 6,946
 (19,100) 3,348
Noncontrolling interests
 
 (7) 3,151
 
 3,144
Total equity3,348
 3,709
 8,438
 10,097
 (19,100) 6,492
Total liabilities and equity$4,302
 $10,750
 $11,673
 $11,264
 $(22,858) $15,131


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CF INDUSTRIES HOLDINGS, INC.

Condensed Consolidating Statement of Cash Flows
 Nine months ended September 30, 2017
 Parent CF Industries Subsidiary Guarantors Non- Guarantors Eliminations Consolidated
 (in millions)
Operating Activities: 
  
    
  
  
Net (loss) earnings$(107) $(105) $(53) $185
 $27
 $(53)
Adjustments to reconcile net (loss) earnings to net cash (used in) provided by operating activities: 
  
  
  
  
  
Depreciation and amortization
 10
 16
 622
 
 648
Deferred income taxes
 
 (44) (10) 
 (54)
Stock-based compensation expense13
 
 
 
 
 13
Unrealized net loss on natural gas and foreign currency derivatives
 
 54
 10
 
 64
Unrealized loss on embedded derivative
 
 4
 
 
 4
Loss on disposal of property, plant and equipment
 
 
 3
 
 3
Undistributed loss (earnings) of affiliates—net105
 48
 (126) 7
 (27) 7
Changes in: 
  
    
  
  
Intercompany accounts receivable/accounts payable—net(10) (91) 92
 9
 
 
Accounts receivable—net
 (8) (23) 2
 
 (29)
Inventories
 
 1
 11
 
 12
Accrued and prepaid income taxes(1) (30) 832
 3
 
 804
Accounts and notes payable and accrued expenses
 37
 (4) (28) 
 5
Customer advances
 
 51
 
 
 51
Other—net
 (5) (46) (23) 
 (74)
Net cash (used in) provided by operating activities
 (144) 754
 791
 
 1,401
Investing Activities: 
  
    
  
  
Additions to property, plant and equipment
 
 (7) (283) 
 (290)
Proceeds from sale of property, plant and equipment
 
 
 13
 
 13
Distributions received from unconsolidated affiliates
 
 179
 (167) 
 12
Proceeds from sale of auction rate securities
 9
 
 
 
 9
Withdrawals from restricted cash funds
 
 
 5
 
 5
Net cash provided by (used in) investing activities
 9
 172
 (432) 
 (251)
Financing Activities: 
  
    
  
  
Long-term debt—net
 (126) 215
 (89) 
 
Short-term debt—net209
 258
 (473) 6
 
 
Financing fees
 (1) 
 
 
 (1)
Dividends paid on common stock(210) 
 
 (73) 73
 (210)
Dividends to/from affiliates
 
 73
 
 (73) 
Distributions to noncontrolling interests
 
 
 (125) 
 (125)
Issuances of common stock under employee stock plans1
 
 
 
 
 1
Net cash provided by (used in) financing activities
 131
 (185) (281) 
 (335)
Effect of exchange rate changes on cash and cash equivalents
 
 
 13
 
 13
(Decrease) increase in cash and cash equivalents
 (4) 741
 91
 
 828
Cash and cash equivalents at beginning of period
 36
 878
 250
 
 1,164
Cash and cash equivalents at end of period$
 $32
 $1,619
 $341
 $
 $1,992

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CF INDUSTRIES HOLDINGS, INC.

Condensed Consolidating Statement of Cash Flows
 Nine months ended September 30, 2016
 Parent CF Industries Subsidiary Guarantors Non- Guarantors Eliminations Consolidated
 (in millions)
Operating Activities: 
  
    
  
  
Net earnings$43
 $16
 $171
 $396
 $(496) $130
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: 
  
  
  
  
  
Depreciation and amortization
 4
 50
 421
 
 475
Deferred income taxes
 29
 706
 (5) 
 730
Stock-based compensation expense14
 
 
 1
 
 15
Unrealized net gain on natural gas and foreign currency derivatives
 
 (147) (22) 
 (169)
Unrealized loss on embedded derivative
 
 22
 
 
 22
Loss on disposal of property, plant and equipment
 
 2
 6
 
 8
Undistributed (earnings) losses of affiliates—net(16) (76) (404) 
 496
 
Changes in: 
  
    
  
  
Intercompany accounts receivable/accounts payable—net(31) 133
 192
 (294) 
 
Accounts receivable—net
 45
 5
 5
 
 55
Inventories
 
 (16) 12
 
 (4)
Accrued and prepaid income taxes
 
 (649) (16) 
 (665)
Accounts and notes payable and accrued expenses(9) (23) (46) 71
 
 (7)
Customer advances
 
 (75) 
 
 (75)
Other—net
 (1) (9) 86
 
 76
Net cash provided by (used in) operating activities1
 127
 (198) 661
 
 591
Investing Activities: 
  
    
  
  
Additions to property, plant and equipment
 
 (19) (1,800) 
 (1,819)
Proceeds from sale of property, plant and equipment
 
 4
 4
 
 8
Withdrawals from restricted cash funds
 
 
 16
 
 16
Other—net
 
 (650) 4
 650
 4
Net cash used in investing activities
 
 (665) (1,776) 650
 (1,791)
Financing Activities: 
  
    
  
  
Short-term debt—net68
 (112) (186) 230
 
 
Proceeds from short-term debt
 150
 
 
 
 150
Payments on short-term debt
 (150) 
 
 
 (150)
Financing fees
 (11) 
 
 
 (11)
Dividends paid on common stock(209) (140) (140) (176) 456
 (209)
Dividends to/from affiliates140
 140
 176
 
 (456) 
Issuance of noncontrolling interest in CFN
 
 
 2,800
 
 2,800
Distributions to noncontrolling interest
 
 
 (111) 
 (111)
Distribution received for CHS strategic venture
 
 2,000
 (2,000) 
 
Other—net
 
 
 650
 (650) 
Net cash (used in) provided by financing activities(1) (123) 1,850
 1,393
 (650) 2,469
Effect of exchange rate changes on cash and cash equivalents
 
 
 (1) 
 (1)
Increase in cash and cash equivalents
 4
 987
 277
 
 1,268
Cash and cash equivalents at beginning of period1
 
 121
 164
 
 286
Cash and cash equivalents at end of period$1
 $4
 $1,108
 $441
 $
 $1,554

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19.   Subsequent Event
On October 30, 2017, we announced that our wholly owned subsidiary CF Industries, Inc. elected to redeem in full the entire outstanding $800 million principal amount of the 6.875% senior notes (the Notes) due May 2018, in accordance with the optional redemption provisions provided in the indenture governing the Notes. We estimate, based on market interest rates on October 30, 2017, the total amount for the redemption of the Notes will be approximately $817 million. The Notes will be redeemed on December 1, 2017. See Note 11—Financing Agreements for additional information.

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ITEM 2.    MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
You should read the following discussion and analysis in conjunction with our annual consolidated financial statements and related notes and our discussion and analysis of financial condition and results of operations, which were included in our 2016 Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 23, 2017,24, 2020, as well as Item 1. Financial Statements in this Quarterly Report on Form 10-Q. All references to "CF“CF Holdings," "we," "us," "our"” “we,” “us,” “our” and "the Company"“the Company” 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"“CF Industries” refer to CF Industries, Inc., a 100% owned subsidiary of CF Industries Holdings, Inc. References to tons refer to short-tons.short tons. Notes referenced in this discussion and analysis refer to the notes to our unaudited interim consolidated financial statements that are found in the preceding section: Item 1. Financial Statements.Statements in this Quarterly Report on Form 10-Q. The following is an outline of the discussion and analysis included herein:
Overview of CF Holdings
Our Company
Market Conditions and Current Developments
Financial Executive Summary
Items Affecting Comparability of Results
Financial Executive Summary
Consolidated Results of Consolidated Operations
Third Quarter of 20172020 Compared to Third Quarter of 20162019
Nine Months Ended September 30, 20172020 Compared to Nine Months Ended September 30, 2016
2019
Operating Results by Business Segment
Liquidity and Capital Resources
Off-Balance Sheet Arrangements
Critical Accounting Policies and Estimates
Recent Accounting Pronouncements
Forward-Looking Statements

Overview of CF Holdings
Our Company
We are onea leading global manufacturer of the largest manufacturershydrogen and distributors of nitrogen products for clean energy, emissions abatement, fertilizer, and other nitrogen productsindustrial applications. We operate manufacturing complexes in the world.United States, Canada and the United Kingdom, which are among the most cost-advantaged, efficient and flexible in the world, and an extensive storage, transportation and distribution network in North America. Our 3,000 employees focus on safe and reliable operations, environmental stewardship and disciplined capital and corporate management, driving our strategy to leverage and sustainably grow our hydrogen and nitrogen platform to serve customers and create long-term shareholder value. Our principal customers are cooperatives, independent fertilizer distributors, farmerstraders, wholesalers and industrial users. Our principal nitrogen fertilizer products are anhydrous ammonia (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. Our manufacturing and distribution facilities are concentrated in the midwestern United States and other major agricultural areas of the United States, Canada and the United Kingdom. We also export nitrogen fertilizer products from our Donaldsonville, Louisiana and Yazoo City, Mississippi manufacturing facilities, and our United Kingdom manufacturing facilities in Billingham and Ince.
Our principal assets as of September 30, 2020 include:
fourfive U.S. nitrogen fertilizer manufacturing facilities located in Donaldsonville, Louisiana (the largest nitrogen fertilizer complex in the world); Port Neal, Iowa; Yazoo City, Mississippi; Verdigris, Oklahoma; and Woodward, Oklahoma. These facilities are wholly owned directly or indirectly by CF Industries Nitrogen, LLC (CFN), inof which we own approximately 89% and CHS Inc. (CHS), owns the remainder. See Note 13—Noncontrolling Interests to our unaudited interim consolidated financial statementsInterest for additional information on our strategic venture with CHS.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;
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two United Kingdom nitrogen manufacturing complexesfacilities located in Billingham and Ince;

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an extensive system of terminals and associated transportation equipment located primarily in the midwesternMidwestern 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.
Items Affecting ComparabilityMarket Conditions and Current Developments
COVID-19 Pandemic
In March 2020, the World Health Organization characterized the outbreak of Resultscoronavirus disease 2019 (COVID-19) as a pandemic. Since that time, efforts to slow the spread of COVID-19 have intensified. A number of countries, as well as certain states and cities within the United States, have continued to enact temporary closures of businesses, to issue shelter in place or quarantine orders, and to take other restrictive measures in response to the pandemic.
Nitrogen Fertilizer Selling PricesDue to the use of fertilizer products in crop production, our business operations have been designated as part of the critical infrastructure by the United States and as essential businesses in the United Kingdom and Canada, with corresponding designations for those states and provinces in which we operate that have issued restrictive orders. As a result, our manufacturing complexes continued to operate during the first nine months of 2020 and have continued to operate through the date of this report. Our production of ammonia, the basic building block for our products, was 7.6 million tons in both the first nine months of 2020 and the first nine months of 2019. Through the date of this filing, we have continued to ship products by all modes of transportation to our customers, and we have not experienced any significant delays in marine, rail or truck transportation services due to the pandemic.
OverIn the last decade, strongfirst nine months of 2020, we did not experience a meaningful impact in customer demand high capacity utilization and increasing operating margins as a result of the COVID-19 pandemic. Our total volume of products shipped in the first nine months of 2020 of 14.8 million tons was 2% higher compared to 14.6 million tons in the first nine months of 2019.
In response to the pandemic, we instituted safety precautions early in the year to protect the health and well-being of all of our employees, including the manufacturing workforce who operate our nitrogen complexes and distribution facilities. These safety measures included installing thermal temperature checks at each of our sites for all personnel, including contractors, who arrive at our sites, adjusting schedules to support social distancing, including changes to loading and shipping procedures, maintaining a close contact log for employees, self-quarantine logs, requiring face coverings on site, restricting visitor access, and implementing enhanced cleaning protocols and travel restrictions for employees. We also paid approximately $19 million of bonuses to our operational workforce under a special COVID-19 bonus program, which concluded in June. In addition, since mid-March 2020, the majority of our non-operational personnel at our sites who work in administrative and operational support functions have worked remotely in order to maintain social distancing following governmental guidelines. These administrative and operational support functions have operated effectively during this period, meeting our commitments to our customers and continuing to manage our business without interruption. We have not furloughed any employees or instituted any reductions in pay or benefits or other significant cost containment measures due to the pandemic.
We participate in a global nitrogen fertilizer prices stimulatedmarket, which includes a global investmentsupply chain and customer base. The long-term effects of the COVID-19 pandemic are unclear and could adversely affect our business in nitrogen production facilities,the future. We have operated our business in a remote working environment and could continue to do so for an extended duration, if necessary. However, if the pandemic were to impact a large portion of our workforce in any one location, we might need to idle that facility temporarily, which resulted incould have an increase in global nitrogen fertilizer production capacity.impact on our business operations, profitability and cash flow. The impact of the COVID-19 pandemic is fluid and continues to evolve. As a result, global nitrogen fertilizer supply increased more quickly than global nitrogen fertilizer demand, creatingwe cannot predict the current global oversupplyextent to which our business, results of operations, financial condition or liquidity will be impacted by the pandemic in the market, and leading to lower nitrogen fertilizer selling prices.future.
A significant amount of new nitrogen production capacity came on line in 2016 and 2017, including an increase in production capacity located in North America, which has further increased supply. We expect the lower priced environment to continue until global supply and demand become more balanced through a combination of continued demand growth and supply reductions as producers respond to lower realized margins by taking higher cost production facilities off line.Sales Volume
The U.S. Gulf is a major global fertilizer pricing point due to the volume of nitrogen fertilizer that trades there. Through most of 2016, nitrogen pricing at the U.S. Gulf declined, often trading below parity with other international pricing points due to continued imports from various exporting regions and decreased North American buyer interest as a result of greater global nitrogen supply availability. Seasonal decreases in agricultural demand combined with delayed customer purchasing activity resulted in multi-year lows in nitrogen fertilizer selling prices in the second half of 2016. During the first quarter of 2017, prices began to increase as the supply and demand balance tightened in anticipation of spring fertilizerThere was strong demand for the planting and growing season. However, as the first quarter progressed, increased imports into North America increased fertilizer supply in the region, which pressured selling prices downward as the quarter ended. During the second quarter of 2017, anticipated demand failed to materialize and the increased imports into the United States that occurred in the first quarternine months of 2017 continued2020 as we shipped 14.8 million tons of product compared to 14.6 million tons in the second quarter, negatively impacting selling prices. Duringfirst nine months of 2019. Our shipments can shift between quarters due primarily to shifts in weather patterns that impact fertilizer applications. In the third quarter of 2017, selling prices for2020, our sales volumes were lower across most nitrogenof our major products increased throughoutcompared to the third quarter ending higher than atof 2019. In 2019, weather-related delays in the beginningfertilizer application season resulted in delayed shipments from the second quarter into the third quarter of the quarter. The strengthening price environment was driven by significantly2019. Additionally, we experienced lower Chinese exports; higher energy and production costs in parts of the world, including higher natural gas costs in Europe and higher coal costs in China; a weaker U.S. dollar; and strong global demand.
The greater global nitrogen supply availability of granular urea and resulting low nitrogen fertilizer selling prices significantly impacted our results forAN in the threethird quarter of 2020 due to plant turnaround and nine months ended September 30, 2017. The average selling price for our products formaintenance activity. However, we experienced greater supply availability of ammonia, and, as a result, we shipped higher sales volumes of ammonia in the third quarter of 2020 compared to the third quarter of 2019 despite this seasonally slow time of year.
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In the three months ended September 30, 20172020, sales volume was $178 per ton4.7 million product tons compared to $185 per tonsales volume of 4.8 million product tons for the three months ended September 30, 2016, a2019. This decrease of 4% resultingin sales volume resulted in a decrease in both net sales and gross margin of approximately $62$6 million. Sales volumes in our granular urea, UAN and AN segments decreased in the third quarter of 2020 compared to the third quarter of 2019, partially offset by an increase in sales volumes in our ammonia and Other segments.
In the nine months ended September 30, 2020, sales volume was 14.8 million betweenproduct tons, an increase of 2%, compared to sales volume of 14.6 million product tons for the periods. The average selling prices fornine months ended September 30, 2019. This increase in sales volume resulted in an increase in net sales of approximately $67 million. Sales volumes in our productsammonia, AN, UAN and Other segments increased in the nine months ended September 30, 20172020 compared to the nine months ended September 30, 2019, partially offset by a decrease in sales volume in our granular urea segment.
Selling Prices
The third quarter is typically the slowest quarter for our business due to the seasonal nature of fertilizer applications in the Northern Hemisphere, which can also impact selling prices as seasonality impacts the supply and demand balance for our products. The selling prices for all products were lower in the third quarter of 2020 than the third quarter of 2019 as global energy prices remained low, driving higher global nitrogen operating rates and the resulting additional global supply availability. In the third quarter of 2020, the average selling price for our products was $207$179 per ton, a decrease of 18% compared to $230$218 per ton in the third quarter of 2019. This resulted in a decrease in net sales of approximately $185 million.
In the nine months ended September 30, 2020, the average selling price for our products was $204 per ton, or 16% lower compared to $243 per ton for the nine months ended September 30, 2016, a decrease of 10%, resulting2019. This resulted in a decrease in both net sales of approximately $586 million.
Natural Gas Prices
Natural gas is the principal raw material used to produce nitrogen fertilizers. We use natural gas both as a chemical feedstock and as a fuel to produce nitrogen products. Natural gas is a significant cost component of manufactured nitrogen products, representing approximately one-third of our production costs.
Most of our nitrogen fertilizer manufacturing facilities are located in the United States and Canada. As a result, the price of natural gas in North America directly impacts a substantial portion of our operating expenses. Due to increases in natural gas production resulting from the rise in production from shale gas formations, natural gas prices in North America have declined over the last decade, but are subject to volatility. Natural gas prices during the first nine months of 2020 were lower on average than in the first nine months of 2019, due in part to reduced energy demand as a result of the COVID-19 pandemic, partially offset by reductions in supply. The average daily market price at the Henry Hub, the most heavily-traded natural gas pricing point in North America, for the three months ended September 30, 2020 was $1.95 per MMBtu compared to $2.33 per MMBtu for the three months ended September 30, 2019, a decrease of 16%. The average daily market price at the Henry Hub for the nine months ended September 30, 2020 was $1.82 per MMBtu compared to $2.57 per MMBtu for the nine months ended September 30, 2019, a decrease of 29%.
We also have manufacturing facilities located in the United Kingdom. Production costs for these facilities are subject to fluctuations associated with the price of natural gas in Europe. The major natural gas trading point for the United Kingdom is the National Balancing Point (NBP). The price of natural gas in the United Kingdom declined throughout the first nine months of 2020 as a result of increased availability of liquefied natural gas in the global market as well as the global economic downturn related to the COVID-19 pandemic. The average daily market price of natural gas at NBP for the three months ended September 30, 2020 was $2.69 per MMBtu compared to $3.42 per MMBtu for the three months ended September 30, 2019, a decrease of 21%. The average daily market price at NBP for the nine months ended September 30, 2020 was $2.49 per MMBtu compared to $4.56 per MMBtu for the nine months ended September 30, 2019, a decrease of 45%.
Natural gas costs in cost of sales, including the impact of realized natural gas derivatives, decreased 15% to $1.91 per MMBtu in the three months ended September 30, 2020 from $2.24 per MMBtu in the three months ended September 30, 2019, which resulted in an increase in gross margin of approximately $326$30 million. Natural gas costs in cost of sales, including the impact of realized natural gas derivatives, decreased 26% to $2.11 per MMBtu in the nine months ended September 30, 2020 from $2.86 per MMBtu in the nine months ended September 30, 2019, which resulted in an increase in gross margin of approximately $213 million.
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Financial Executive Summary
We reported a net loss attributable to common stockholders of $28 million betweenfor the periods. In additionthree months ended September 30, 2020 compared to net earnings attributable to common stockholders of $65 million for the direct impactthree months ended September 30, 2019, a decrease in net earnings of $93 million. The decrease in net earnings was due primarily to lower selling prices, during periods of declining prices, customers tend to delay purchasing fertilizer in anticipation of priceswhich reduced gross margin, partially offset by a lower income tax provision.
Gross margin decreased by $145 million in the future beingthird quarter of 2020 to $83 million as compared to $228 million in the third quarter of 2019. The decrease in gross margin was primarily driven by an 18% decrease in average selling prices, which reduced gross margin by $185 million, partially offset by a 15% decrease in natural gas costs, which increased gross margin by $30 million.
Due to lower than current prices.earnings before income taxes, our income tax provision decreased by $32 million to income tax benefit of $13 million in the third quarter of 2020 as compared to income tax provision of $19 million in the third quarter of 2019.
Diluted net (loss) earnings per share attributable to common stockholders decreased $0.42 per share, to $(0.13) per share in the third quarter of 2020 compared to $0.29 per share in the third quarter of 2019. This decrease is due primarily to lower net earnings, partially offset by a 3% reduction in diluted weighted-average common shares outstanding due to repurchases made under our share repurchase program. On February 13, 2019, our Board of Directors (the Board) authorized the repurchase of up to $1 billion of CF Holdings common stock through December 31, 2021 (the 2019 Share Repurchase Program). In 2019, we repurchased approximately 7.6 million shares of CF Holdings common stock for $337 million, of which approximately 5.7 million shares were repurchased in the first nine months of 2019 for $250 million. In the first quarter of 2020, we repurchased approximately 2.6 million shares for $100 million. No shares were repurchased under the 2019 Share Repurchase Program in the second or third quarter of 2020. See discussion under “Liquidity and Capital Resources—Share Repurchase Program,” below.
Items Affecting Comparability of Results
In addition to the impact of market conditions on nitrogen fertilizer selling prices,discussed above, certain significant items impacted the comparability of our financial results during the three and nine months ended September 30, 20172020 and 2016.2019. The following table and related discussion outline these significant items and how they impacted the comparability of our financial results during these periods. During the three months ended September 30, 20172020 and 2016, we reported a net loss attributable to common stockholders of $(87) million and $(30) million, respectively. During the nine months ended September 30, 2017 and 2016,2019, we reported net (loss) earnings attributable to common stockholders of $(107)$(28) million and $43$65 million, respectively. During the nine months ended September 30, 2020 and 2019, we reported net earnings attributable to common stockholders of $230 million and $438 million, respectively.

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 Three Months Ended September 30, Nine Months Ended September 30,
 2017 2016 2017 2016
 Pre-TaxAfter-Tax Pre-TaxAfter-Tax Pre-TaxAfter-Tax Pre-TaxAfter-Tax
 (in millions) (in millions)
Depreciation and amortization(1)
$226
$142
 $148
$93
 $648
$407
 $475
$298
Unrealized net mark-to-market (gain) loss on natural gas derivatives(2)
(7)(4) 21
13
 64
40
 (169)(106)
Capacity expansion project expenses(3)


 24
15
 

 59
37
Start-up costs Donaldsonville ammonia(2)


 18
11
 

 18
11
Transaction costs

 

 

 179
96
Loss on foreign currency transactions including intercompany loans(3)
1
1
 3
4
 2
2
 86
85
Equity method investment tax contingency accrual(4)


 

 7
7
 

Financing costs related to bridge loan commitment fee(5)


 

 

 28
18
Strategic Venture with CHS:           
Noncontrolling interest(6)
17
17
 27
27
 40
40
 67
67
Loss on embedded derivative(3)
1

 22
14
 4
2
 22
14
Total Impact of Significant Items$238
$156
 $263
$177
 $765
$498
 $765
$520
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Pre-TaxAfter-TaxPre-TaxAfter-TaxPre-TaxAfter-TaxPre-TaxAfter-Tax
(in millions)
Unrealized net mark-to-market loss (gain) on natural gas derivatives(1)
$— $— $$$(12)$(9)$$
COVID impacts:
Special COVID-19 bonus for operational workforce(1)
— — 19 15 — — 
Turnaround deferral(1)
— — — — 
(Gain) loss on foreign currency transactions, including intercompany loans(2)
(6)(5)12 
Engineering cost write-off(2)
— — — — 
Loss on sale of surplus land(2)
— — — — 
Insurance proceeds(2)
— — (37)(29)(10)(8)(37)(29)
Gain on sale of Pine Bend facility(2)
— — — — — — (45)(35)
Louisiana incentive tax credit(3)
— — — — — — — (30)
Terra amended tax returns—interest income and income tax benefit(4)
— — — — (16)(32)— — 
PLNL withholding tax charge(5)
— — 16 16 — — 16 16 

(1)Included primarily in cost of sales and selling, general and administrative expenses in our consolidated statements of operations.
(2)    Included in cost of sales in our consolidated statements of operations.
(3)    
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(2)Included in other operating—net in our consolidated statements of operations.
(4)    (3)Included in equity in losses of operating affiliatesincome tax provision in our consolidated statements of operations.
(5)    (4)Included in interest expenseincome and income tax provision in our consolidated statements of operations.
(6)    (5)Included in netequity in earnings attributable to noncontrolling interests(losses) of operating affiliate in our consolidated statements of operations.
The following describes the significant items that impacted the comparability of our financial results for the three and nine months ended September 30, 2017 and 2016. Descriptions of items below that refer to amounts in the table above, refer to the pre-tax amounts.
Depreciation and amortization
Total depreciation and amortization expense recognized in the three and nine months ended September 30, 2017 was $226 million and $648 million, respectively, and for the three and nine months ended September 30, 2016 was $148 million and $475 million, respectively. This increase in depreciation expense reflects the completion of our capacity expansion projects and placing in service all five of the new plants prior to the end of 2016. The capacity expansion projects were originally announced in 2012 and included the construction of new ammonia, urea, and UAN plants at our Donaldsonville, Louisiana complex and new ammonia and urea plants at our Port Neal, Iowa complex. These plants increased our overall production capacity by approximately 25%, improved our product mix flexibility at Donaldsonville, and improved our ability to serve upper-Midwest urea customers from our Port Neal location. The following table indicates the quarter in which each of the five expansion plants were placed in service.
Quarter placed in serviceExpansion plant location
Q4 2015Donaldsonville Urea
Q1 2016Donaldsonville UAN
Q4 2016Donaldsonville Ammonia
Q4 2016Port Neal Ammonia and Urea
Depreciation expense pertaining to each of our capacity expansion plants commenced once the applicable plant was placed in service.

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Unrealized net mark-to-market loss (gain) loss on natural gas derivatives
Natural gas is typically the largest and most volatile single component of the manufacturing cost for nitrogen-based products. We manageAt certain times, we have managed the risk of changes in natural gas prices through the use of derivative financial instruments. The derivatives that we may use for this purpose are primarily natural gas fixed price swaps, basis swaps and natural gas options. We use natural gas derivatives as an economic hedge of natural gas price risk, but without the application of hedge accounting. This can result in volatility in reported earnings due to the unrealized mark-to-market adjustments that occur from changes in the value of the derivatives, which isare reflected in cost of sales in our consolidated statements of operations. In the threenine months ended September 30, 20172020 and 2016,2019, we recognized an unrealized net mark-to-market (gain) loss on natural gas derivatives of $(7)$(12) million and $21$3 million, respectively.
COVID impacts
In March 2020, a short-term bonus program was initiated to compensate operational employees for continuing their critical tasks during the COVID-19 pandemic. The bonus program concluded in June 2020. Approximately $19 million was paid as part of the program and was recognized in cost of sales in our consolidated statements of operations for the nine months ended September 30, 2017 and 2016, we2020, of which approximately $4 million was recognized unrealized net mark-to-market loss (gain)in the third quarter of $64 million and $(169) million, respectively.2020 as the related inventory was sold.
Capacity expansion projects
Our capacity expansion projects were completed as of December 31, 2016. Capacity expansion project expenses inIn the three and nine months ended September 30, 20162020, certain plant turnaround activities were $24deferred because of the COVID-19 pandemic. As a result, we incurred $7 million and $59 million, respectively, generally consisting of administrative costs and other project costs that did not qualify for capitalization. Start-up costs of $18 million,expense, which primarily relate to theis recognized in cost of commencing production at the Donaldsonville ammonia plant, were incurredsales in the three and nine months ended September 30, 2016.our consolidated statements of operations.
Transaction costs
On August 6, 2015, we entered into a definitive agreement (as amended, the Combination Agreement) to combine with the European, North American and global distribution businesses of OCI N.V. (OCI). On May 22, 2016, CF Holdings, OCI and the other parties to the Combination Agreement entered into a termination agreement under which the parties agreed to terminate the Combination Agreement by mutual written consent. In the nine months ended September 30, 2016, we incurred $179 million of transaction costs associated with the proposed combination with certain businesses of OCI and our strategic venture with CHS, including a $150 million termination fee paid to OCI in the second quarter of 2016 and costs for various consulting and legal services.
Loss(Gain) loss on foreign currency transactions, including intercompany loans
In the three and nine months ended September 30, 2016,2020 and 2019, we recognized lossesa loss of $3$7 million and $86$12 million, respectively, fromprimarily consisting of the impact of changes in foreign currency exchange rates on primarily British pound and Canadian dollar denominated intercompany loans that were not permanently invested. Due to
Engineering cost write-off
In June 2020, a restructuringproject at one of certain intercompany loans, we did not incurour nitrogen complexes was cancelled and, as a result, $9 million of previously capitalized engineering costs were expensed in the same levelnine months ended September 30, 2020. The expense is reflected in other operating—net in our consolidated statements of foreign exchange rate impacts inoperations.
Loss on sale of surplus land
In the three and nine months ended September 30, 2017.
Equity method investment tax contingency accrual
The Trinidad tax authority (the Board2020, we recognized a loss of Inland Revenue) has issued a tax assessment against our equity method investment in the Republic of Trinidad and Tobago, PLNL, related to a dispute over whether tax depreciation must be claimed during a tax holiday period that was granted to PLNL under the Trinidad Fiscal Incentives Act. The tax holiday was granted as an incentive to construct PLNL’s ammonia plant. PLNL is appealing the assessment. Based$2 million on the facts and circumstancessale of this matter, PLNL recorded a tax contingency accrualsurplus land, which is reflected in the second quarterother operating—net in our consolidated statements of 2017, which reduced our equity in earnings of PLNL foroperations.
Insurance proceeds
In the nine months ended September 30, 2017 by approximately $72020, we recognized income of $10 million reflectingrelated to insurance claims at one of our 50% ownership interest.
Strategic Venture with CHS
We commenced a strategic venture with CHS on February 1, 2016, at which time CHS purchased a minority equity interest in CFN for $2.8 billion, which represented approximately 11%nitrogen complexes. The $10 million of the membership interestincome consists of CFN. We own the remaining membership interest. Under the terms of CFN's limited liability company agreement, each member’s percentage membership interest will reflect, over time, the impact of the profitability of CFN$8 million related to business interruption insurance proceeds and any member contributions made$2 million related to and distributions received from, CFN. 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 entitled 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. We began recognizing the noncontrolling interest pertaining to CHS’ ownership interest in CFN on February 1, 2016. We recognized earnings attributable to the noncontrolling interest in CFN of $17 million and $40 million forproperty insurance proceeds. In the three and nine months ended September 30, 2017, respectively,2019, we recognized income of $37 million related to insurance claims at one of our nitrogen complexes. The $37 million of income consisted of $22 million related to business interruption proceeds and $27$15 million related to property insurance proceeds. These proceeds are reflected in other operating—net in our consolidated statements of operations.
Gain on sale of Pine Bend facility
During the first quarter of 2019, we entered into an agreement to sell our Pine Bend dry bulk storage and logistics facility in Minnesota. In April 2019, we completed the sale, received proceeds of $55 million and $67 million for the three and nine months ended

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September 30, 2016, respectively. See Note 13—Noncontrolling Interests for additional information on our strategic venture with CHS.
Under the terms of our strategic venture with CHS, if our credit rating as determined by two of three specified credit rating agencies$45 million. The gain is below certain levels, we are required to make a non-refundable yearly payment of $5 million to CHS. The payment would 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 three specified credit rating agencies or February 1, 2026. In the fourth quarter of 2016, as a result of a reduction in our credit rating, we made a $5 million payment to CHS. This term of the strategic venture is recognized on our consolidated balance sheet as an embedded derivative liability. Includedreflected in other operatingoperating—net in our consolidated statement of operations for the nine months ended September 30, 2017 is an unrealized loss2019.
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Louisiana incentive tax credit
For the liability to fair value.
Financial Executive Summary
We reported a net loss attributable to common stockholders of $87 million for the threenine months ended September 30, 2017 compared to a net loss2019, our income tax provision included an incentive tax credit from the State of Louisiana of $30 million, net of federal income tax, related to certain capital projects at our Donaldsonville, Louisiana nitrogen complex.
Terra amended tax returns
We completed the acquisition of Terra Industries Inc. (Terra) in April 2010. After the acquisition, we determined that the manner in which Terra reported the repatriation of cash from foreign affiliates to its U.S. parent for U.S. and foreign income tax purposes was not appropriate. As a result, in 2012 we amended certain tax returns, including Terra’s income and withholding tax returns, back to 1999 (the Amended Tax Returns) and paid additional income and withholding taxes, and related interest and penalties. In early 2013, the three months ended September 30, 2016. DilutedInternal Revenue Service (IRS) commenced an examination of the U.S. tax aspects of the Amended Tax Returns.
In early 2019, the IRS completed its examination of the Amended Tax Returns and submitted its audit reports and related refund claims to the Joint Committee on Taxation of the U.S. Congress (the Joint Committee). For purposes of its review, the Joint Committee separated the IRS audit reports into two separate matters: (i) an income tax related matter and (ii) a withholding tax matter.
In late 2019, we received notification that the Joint Committee had approved the IRS audit reports and related income tax refunds relating to the income tax related matter, and in the second quarter of 2020, we received notification that the Joint Committee approved the IRS audit report and related withholding tax refunds relating to the withholding tax matter. See “Liquidity and Capital Resources—Terra Amended Tax Returns,” below, for additional information.
As a result of these events, in the second quarter of 2020, we recognized $16 million of interest income and $16 million of income tax benefit, which consisted of the following:
additional interest income of $16 million ($13 million, net loss per share attributableof tax) related to common stockholders was $0.37both the income tax matter and the withholding tax matter,
a reduction in our liabilities for unrecognized tax benefits of $12 million with a corresponding reduction in income tax expense related to the withholding tax matter, and
an additional income tax benefit of $7 million related to the income tax matter.
We received income tax refunds, including interest, of $108 million relating to these matters in the second quarter of 2020. In the third quarter of 2017 compared2020, we received an additional $2 million, which finalized these matters with the IRS. As a result of the finalization of these tax matters, all U.S. federal tax years commencing before January 1, 2012 are now closed.
PLNL withholding tax charge
The Trinidadian tax authority (the Board of Inland Revenue) issued a proposed tax assessment against PLNL with respect to $0.13tax years 2011 and 2012 in the third quarteramount of 2016. approximately $12 million. The proposed assessment asserted that PLNL should have withheld tax at a higher rate on dividends paid to its Trinidadian owners. The Board of Inland Revenue also would have assessed statutory interest and penalties on the amount of tax owed when a final assessment was issued for the tax years 2011 and 2012.
During the third quarter of 2017, we experienced higher net losses attributable2019, the Trinidadian government offered a tax amnesty period that provided taxpayers the opportunity to common stockholders compared topay any prior year tax obligations and avoid accumulated interest or penalties. During the third quartertax amnesty period, PLNL evaluated the proposed assessment, including considering the outcome of 2016 due primarily to lower average selling prices resulting from the excess global supply of nitrogen fertilizer, higher realized natural gas costs, and higher depreciation ascertain recent legal cases involving other taxpayers. As a result of the completion of our capacity expansion projects. These items were partially offset by an increase in sales volume as a result of increased production from the completion of our capacity expansion projects and higher gross margin as a result of higher unrealized net mark-to-market gains on natural gas derivatives.
Net interest expense increased to $76 million in the three months ended September 30, 2017 from $29 million in the three months ended September 30, 2016, due primarily to higher amounts of capitalized interest in 2016 related to our capacity expansion projects that reduced interest expense in 2016. The completion of our capacity expansion projects reduced the amount of capitalized interest in 2017. Capitalized interest of $1 million was recorded for the three months ended September 30, 2017 compared to $53 million for the three months ended September 30, 2016.
Our total gross margin increased by $7 million to $9 millionthis evaluation, in the third quarter of 2017 from $22019, PLNL paid withholding tax to the Board of Inland Revenue under the amnesty program for tax years back to 2011, and recognized a charge for $32 million. Our 50% share of PLNL’s tax charge is $16 million, in the third quarter of 2016. The change in gross margin was due primarily to:
an increase in sales volume of 33%, which increased gross margin by $63 million, primarily driven by an increase in sales volume for ammonia and granular urea of 64% and 42%, respectively,
targeted cost reduction initiatives and production efficiencies due to increased volume,
a higher unrealized net mark-to-market gain on natural gas derivatives, which increased gross margin by $28 million as the third quarter of 2017 included a $7 million gain and the third quarter of 2016 included a $21 million loss,
start-up costs of $18 million of the new ammonia plant at our Donaldsonville facility that occurred in the third quarter of 2016,
a decrease in average selling prices of 4%, which reduced gross margin by $62 million. Inour equity in earnings of operating affiliate for the third quarter, the average selling prices for ammonia, UANthree and granular urea declined by 18%, 8%, and 4%, respectively, while the average selling price for AN increased by 17%,nine months ended September 30, 2019.
an increase in depreciation and amortization due primarily to the completion of our capacity expansion projects, and
an increase in physical natural gas costs in the third quarter of 2017, partially offset by the impact of natural gas derivatives that settled in the period, which decreased gross margin by $46 million as compared to the third quarter of 2016.


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Consolidated Results of Consolidated Operations
The following table presents our consolidated results of operations and supplemental data:
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2017 2016 2017 v. 2016 2017 2016 2017 v. 2016202020192020 v. 2019202020192020 v. 2019
(in millions, except as noted) (in millions, except per share and per MMBtu)
Net sales$870
 $680
 $190
 28 % $3,031
 $2,818
 $213
 8 %Net sales$847 $1,038 $(191)(18)%$3,022 $3,541 $(519)(15)%
Cost of sales861
 678
 183
 27 % 2,744
 2,072
 672
 32 %Cost of sales764 810 (46)(6)%2,401 2,594 (193)(7)%
Gross margin9
 2
 7
 N/M
 287
 746
 (459) (62)%Gross margin83 228 (145)(64)%621 947 (326)(34)%
Gross margin percentage1.0% 0.3% 0.7%   9.5% 26.5% (17.0)%  Gross margin percentage9.8 %22.0 %(12.2)%20.5 %26.7 %(6.2)%
Selling, general and administrative expenses45
 44
 1
 2 % 140
 141
 (1) (1)%Selling, general and administrative expenses49 56 (7)(13)%154 176 (22)(13)%
Transaction costs
 
 
  % 
 179
 (179) (100)%
Other operating—net(2) 57
 (59) N/M
 14
 181
 (167) (92)%Other operating—net(4)(30)26 87 %(63)71 N/M
Total other operating costs and expenses43
 101
 (58) (57)% 154
 501
 (347) (69)%Total other operating costs and expenses45 26 19 73 %162 113 49 43 %
Equity in losses of operating affiliates(5) (2) (3) (150)% (8) (11) 3
 27 %
Operating (loss) earnings(39) (101) 62
 (61)% 125
 234
 (109) (47)%
Equity in earnings (losses) of operating affiliateEquity in earnings (losses) of operating affiliate(14)16 N/M(6)14 N/M
Operating earningsOperating earnings40 188 (148)(79)%467 828 (361)(44)%
Interest expense—net76
 29
 47
 162 % 233
 126
 107
 85 %Interest expense—net48 59 (11)(19)%123 170 (47)(28)%
Other non-operating—net
 1
 (1) (100)% 
 (1) 1
 100 %Other non-operating—net(4)N/M(2)(7)71 %
(Loss) earnings before income taxes(115) (131) 16
 12 % (108) 109
 (217) N/M
(Loss) earnings before income taxes(9)133 (142)N/M346 665 (319)(48)%
Income tax benefit(47) (131) 84
 64 % (55) (21) (34) 162 %
Net (loss) earnings(68) 
 (68) N/M
 (53) 130
 (183) N/M
Less: Net earnings attributable to noncontrolling interests19
 30
 (11) (37)% 54
 87
 (33) (38)%
Income tax (benefit) provisionIncome tax (benefit) provision(13)19 (32)N/M33 113 (80)(71)%
Net earningsNet earnings114 (110)(96)%313 552 (239)(43)%
Less: Net earnings attributable to noncontrolling interestLess: Net earnings attributable to noncontrolling interest32 49 (17)(35)%83 114 (31)(27)%
Net (loss) earnings attributable to common stockholders$(87) $(30) $(57) (190)% $(107) $43
 $(150) N/M
Net (loss) earnings attributable to common stockholders$(28)$65 $(93)N/M$230 $438 $(208)(47)%
Diluted net (loss) earnings per share attributable to common stockholders$(0.37) $(0.13) $(0.24) (185)% $(0.46) $0.19
 $(0.65) N/M
Diluted net (loss) earnings per share attributable to common stockholders$(0.13)$0.29 $(0.42)N/M$1.07 $1.97 $(0.90)(46)%
Diluted weighted-average common shares outstanding 233.2
 233.1
 0.1
  % 233.2
 233.5
 (0.3)  %Diluted weighted-average common shares outstanding213.9 220.7 (6.8)(3)%215.3 222.5 (7.2)(3)%
Dividends declared per common share$0.30
 $0.30
 $
  % $0.90
 $0.90
 $
  %Dividends declared per common share$0.30 $0.30 $— — %$0.90 $0.90 $— — %
Natural Gas Supplemental Data (per MMBtu)               
Natural gas supplemental data (per MMBtu)Natural gas supplemental data (per MMBtu)
Natural gas costs in cost of sales(1)
$3.22
 $2.70
 $0.52
 19 % $3.41
 $2.41
 $1.00
 41 %
Natural gas costs in cost of sales(1)
$1.92 $2.24 $(0.32)(14)%$2.05 $2.87 $(0.82)(29)%
Realized derivatives loss in cost of sales(2)
0.13
 0.17
 (0.04) (24)% 0.05
 0.60
 (0.55) (92)%
Realized derivatives (gain) loss in cost of sales(2)
Realized derivatives (gain) loss in cost of sales(2)
(0.01)— (0.01)— %0.06 (0.01)0.07 N/M
Cost of natural gas in cost of sales$3.35
 $2.87
 $0.48
 17 % $3.46
 $3.01
 $0.45
 15 %Cost of natural gas in cost of sales$1.91 $2.24 $(0.33)(15)%$2.11 $2.86 $(0.75)(26)%
Average daily market price of natural gas Henry Hub (Louisiana)$2.93
 $2.84
 $0.09
 3 % $2.99
 $2.31
 $0.68
 29 %Average daily market price of natural gas Henry Hub (Louisiana)$1.95 $2.33 $(0.38)(16)%$1.82 $2.57 $(0.75)(29)%
Average daily market price of natural gas National Balancing Point (UK)$5.46
 $4.08
 $1.38
 34 % $5.43
 $4.31
 $1.12
 26 %Average daily market price of natural gas National Balancing Point (UK)$2.69 $3.42 $(0.73)(21)%$2.49 $4.56 $(2.07)(45)%
Unrealized net mark-to-market (gain) loss on natural gas derivatives$(7) $21
 $(28) N/M
 $64
 $(169) $233
 N/M
Unrealized net mark-to-market loss (gain) on natural gas derivativesUnrealized net mark-to-market loss (gain) on natural gas derivatives$— $$(2)(100)%$(12)$$(15)N/M
Depreciation and amortization$226
 $148
 $78
 53 % $648
 $475
 $173
 36 %Depreciation and amortization$212 $223 $(11)(5)%$662 $663 $(1)— %
Capital expenditures$105
 $440
 $(335) (76)% $290
 $1,819
 $(1,529) (84)%Capital expenditures$87 $143 $(56)(39)%$206 $297 $(91)(31)%
Sales volume by product tons (000s)4,877
 3,666
 1,211
 33 % 14,668
 12,274
 2,394
 20 %Sales volume by product tons (000s)4,743 4,752 (9)— %14,817 14,555 262 %
Production volume by product tons (000s):               Production volume by product tons (000s):
Ammonia(3)
2,489
 1,987
 502
 25 % 7,653
 5,981
 1,672
 28 %
Ammonia(3)
2,468 2,336 132 %7,621 7,564 57 %
Granular urea1,091
 827
 264
 32 % 3,329
 2,454
 875
 36 %Granular urea1,149 1,206 (57)(5)%3,640 3,836 (196)(5)%
UAN (32%)1,483
 1,614
 (131) (8)% 5,022
 4,903
 119
 2 %UAN (32%)1,572 1,584 (12)(1)%4,879 4,810 69 %
AN571
 475
 96
 20 % 1,572
 1,292
 280
 22 %AN471 552 (81)(15)%1,532 1,585 (53)(3)%

N/M—Not Meaningful
(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.

(1)Includes the cost of natural gas and related transportation 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.

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Third Quarter of 20172020 Compared to Third Quarter of 20162019

Net Sales
Our total net sales increased $190decreased $191 million, or 28%18%, to $870$847 million in the third quarter of 20172020 compared to $680 million$1.04 billion in the third quarter of 20162019 due primarily to a 33% increase in sales volume, which increased net sales by $252 million, partially offset by a 4%an 18% decrease in average selling prices, which reduced net sales by $62$185 million.
AverageOur average selling prices were $178price was $179 per ton in the third quarter of 20172020, or 18% lower, compared to $185$218 per ton in the third quarter of 20162019 due primarily to lower ammonia, UAN and granular urea average selling prices in 2017. Selling prices were negatively impactedacross all products, primarily driven by greaterincreased global nitrogen supply availability which continues to pressure selling prices globally. Duringas lower global energy costs drove higher global operating rates.
Our total sales volume of 4.7 million product tons in the third quarter of 2017, selling prices for most nitrogen products increased throughout2020 was essentially flat compared to the quarter. The strengthening price environment was driven by significantlythird quarter of 2019 as lower Chinese exports; higher energy and production costs in parts of the world, including higher natural gas costs in Europe and higher coal costs in China; a weaker U.S. dollar; and strong global demand.
The increase in total sales volume of 33%in our granular urea, UAN and AN segments was due primarily to increased production from the completion ofoffset by higher sales volume in our capacity expansion projects, higher export sales due to the increased imports into the United Statesammonia and a stronger summer UAN fill program.Other segments.
Cost of Sales
Our total cost of sales increased $183decreased $46 million, or 27%6%, fromto $764 million in the third quarter of 2016 to2020 from $810 million in the third quarter of 2017.2019. The increasedecrease in our cost of sales was due primarily to higher sales volume, higher depreciation expense related to the completion of our capacity expansion projects and placing those assets into service and higher realized natural gas costs, including the impact of realized derivatives. These increases to cost of sales were partially offset by targeted cost reduction initiatives, production efficiencies due to increased volume, an unrealized net mark-to-market gain on natural gas derivatives in the third quarter of 2017 compared to a loss in the same quarter of 2016 and start-up costs of the new ammonia plant at our Donaldsonville facility that occurred in the third quarter of 2016. Additionally,lower realized natural gas costs, including the impact of realized derivatives, increased 17% from $2.87 per MMBtu in 2016and lower distribution costs, partially offset by higher costs related to $3.35 in 2017. The costplant turnaround and maintenance activity. Cost of sales averaged $162 per ton averaged $177 in the third quarter of 2017,2020, a 4%5% decrease from the $185$170 per ton in the same quarter of 2016. The third quarter of 2017 included an unrealized net mark-to-market gain of $7 million compared to an unrealized net mark-to-market loss of $21 million in the third quarter of 2016.2019. Natural gas costs, including the impact of realized derivatives, decreased 15% to $1.91 per MMBtu in the third quarter of 2020 from $2.24 per MMBtu in the third quarter of 2019.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were virtually unchanged at $45decreased $7 million to $49 million in the third quarter of 20172020 as compared to $44$56 million in the samethird quarter of 2016.2019. The decrease was due primarily to lower incentive compensation as a result of lower operating results and lower corporate project activity as a result of the COVID-19 pandemic.
Other Operating—Net
Other operating—net was $2$4 million of income in the third quarter of 20172020 compared to $57$30 million of expenseincome in the same quarter of 2016. The third quarter of 2016 includes expansion project expenses2019. The $4 million of $24 million, generally consisting of administrative and other project costs that did not qualify for capitalization. Theincome in the third quarter of 2016 also includes an unrealized loss2020 was due primarily to a gain on foreign currency transactions of $22$6 million, representing a fair value adjustmentreflecting the impact of changes in foreign currency exchange rates on intercompany loans that were not permanently invested. The $30 million of income in the third quarter of 2019 was due primarily to an embedded derivative related to our strategic venture with CHS.insurance proceeds of $37 million. See Note 8—Fair Value Measurements“Items Affecting Comparability of Results—Insurance proceeds,” above, for additional information.
Equity in LossesEarnings (Losses) of Operating AffiliatesAffiliate
Equity in lossesearnings of operating affiliates, consisting of our 50% share of the operating results of PLNL,affiliate was $5 million in the third quarter of 2017 compared to $2 million in the third quarter of 2016. Lower operating results2020 compared to losses of $14 million in the third quarter of 2019. The loss in the third quarter of 2019 included approximately $16 million related to a withholding tax charge recognized by PLNL regarding a multi-year tax dispute. See “Items Affecting Comparability of Results—PLNL withholding tax charge,” above, for PLNL were due primarily to lower ammonia selling prices due to greater nitrogen supply availability.additional information.
Interest Expense—Net
Net interest expense was $76$48 million in the third quarter of 20172020 compared to $29$59 million in the third quarter of 2016, an increase2019. The decrease was due primarily to our redemption of $47 million. The increased interest expense is primarily due to a decrease$750 million aggregate principal amount of long-term debt in the amount of interest capitalized due to the completion of our capacity expansion projects. In the thirdfourth quarter of 2016, capitalized interest was $53 million compared to $1 million in the third quarter of 2017. Net interest expense in the third quarter of 2016 also includes $2 million of accelerated amortization of deferred fees related to a July 2016 amendment to our revolving credit facility2019, which reduced the facility to $1.5 billion from $2.0 billion.

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is more fully described under “Liquidity and Capital Resources—Senior Notes,” below.
Income Taxes
For the three months ended September 30, 2017,2020, we recorded an income tax benefit of $47$13 million on a pre-tax loss of $115$9 million, or an effective tax rate of 40.9%155.0%, compared to an income tax benefitprovision of $131$19 million on pre-tax lossincome of $131$133 million, or an effective tax rate of 100.4%14.6%, for the three months ended September 30, 2016.2019.
Our effective tax rate in both periods is impacted by earnings attributable to the noncontrolling interestsinterest in CFN, and TNCLP, as our consolidated income tax provision does not include a tax provision on the earnings attributable to the noncontrolling interests. As a result, earnings attributable to the noncontrolling interests of $19 million in the third quarter of 2017 and$30 million in the third quarter of 2016, which are included in pre-tax loss, have the effect of increasing the effective tax rate in both periods.interest. Our effective tax rate excluding the earnings attributable to the noncontrolling interests for the three months ended September 30, 20172020 of 155.0%, which is 35.2% as comparedbased on pre-tax loss of $9 million, including $32 million of earnings attributable to anthe noncontrolling interest, would be 121.6 percentage points lower, or 33.4%, if based on pre-tax loss exclusive of the $32 million of earnings attributable to the noncontrolling interest. Our effective tax rate of 81.8% for the three months ended September 30, 2016.2019 of 14.6%, which is based on pre-tax income of $133 million, including $49 million
The income tax benefit
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Table of $47 million in the third quarter of 2017 was impacted by a $5 million increase to our deferred tax liability for the State of Illinois enacted tax rate increase.Contents
The income tax benefit of $131 million in the third quarter of 2016 primarily relatedCF INDUSTRIES HOLDINGS, INC.

attributable to the fact that we projected that full year 2016noncontrolling interest, would be 8.5 percentage points higher, or 23.1%, if based on pre-tax earnings, excludingincome exclusive of the $49 million attributable to the noncontrolling interests, as a loss. As of June 30, 2016, we were projecting profit for the full year. The impact of this change in projected profitability was an income tax benefit of $163 million. In addition, other items included in our annualized effective tax rate that impacted the income tax benefit recorded in the third quarter of 2016 were, as follows:
We recorded income tax expense of $42 million related to the reversal of prior year U.S. manufacturing profits deductions due to the recapture of these benefits in the third quarter of 2016. The recapture resulted from our intention to carry back certain tax losses to prior years that reduced the amount of the prior year U.S. manufacturing profits deductions that can be claimed.
We recorded a valuation allowance of $21 million against certain foreign deferred tax assets which increased income tax expense.
We recorded an income tax benefit of $9 million related to the impact of certain transaction costs which were treated as not being deductible for tax purposes in the prior year and were deductible in 2016 as a result of the termination of the proposed combination with certain businesses of OCI.
interest. See Note 9—10—Income Taxes and Note 13—Noncontrolling InterestsInterest for additional information.
Net Earnings Attributable to Noncontrolling InterestsInterest
Net earnings attributable to noncontrolling interestsinterest decreased $11$17 million to $32 million in the third quarter of 2017 compared to2020 from $49 million in the third quarter of 20162019 due to lower earnings from both CFN and TNCLP as both were impacteddriven by lower average selling prices due primarily to increased global nitrogen oversupply. The earnings of CFN were also impacted by higher natural gas prices and the impact of higher depreciation as a result of the completion of our capacity expansion projects and placing those assets into service.supply availability.
Diluted Net Loss(Loss) Earnings Per Share Attributable to Common Stockholders
Diluted net lossNet (loss) earnings per share attributable to common stockholders was $0.37decreased $0.42 to $(0.13) per diluted share in the third quarter of 2017 compared to $0.132020 from $0.29 per diluted share in the third quarter of 2016.2019. This decrease reflects lower net earnings, partially offset by the impact of a 3% reduction in diluted weighted-average common shares outstanding due to repurchases made under our share repurchase program.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Net Sales
Our total net sales decreased $519 million, or 15%, to $3.02 billion in the first nine months of 2020 as compared to $3.54 billion in the first nine months of 2019 due to a 16% decrease in average selling prices, which reduced net sales by $586 million, partially offset by a 2% increase in sales volume, which increased net sales by $67 million.
Average selling prices were $204 per ton in the first nine months of 2020, or 16% lower, as compared to $243 per ton in the first nine months of 2019 due to lower average selling prices across all products, primarily driven by increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.
Our total sales volume was 14.8 million product tons in the first nine months of 2020, or 2% higher, as compared to 14.6 million product tons in the first nine months of 2019, due to greater supply availability. Higher sales volume in our ammonia, AN, UAN and Other segments was partially offset by lower sales volumes in our granular urea segment.
Cost of Sales
Our total cost of sales decreased $193 million, or 7%, to $2.40 billion in the first nine months of 2020 as compared to $2.59 billion in the first nine months of 2019. The higher loss isdecrease in our cost of sales was due primarily to lower gross margin driven by the impact of lower selling prices due to the global nitrogen oversupply, higher depreciation expense related to the completion of our capacity expansion projects, and higher realized natural gas costs, including the impact of realized derivatives.

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CF INDUSTRIES HOLDINGS, INC.

Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net Sales
Our total net sales increased $213 million, or 8%, to $3,031$12 million in the first nine months of 20172020 compared to $2,818an unrealized net mark-to-market loss of $3 million in the first nine months of 2016 due to a 20% increase in sales volume, which increased net sales by $572 million,2019. These factors were partially offset by a 10% decreasean increase in average selling prices, which reduced netcost of sales by $359 million.
Average selling prices were $207due to higher sales volumes, higher costs related to plant turnaround and maintenance activity, and costs related to the special COVID-19 bonus. The special COVID-19 bonus is more fully described in the section above titled “Items Affecting Comparability of Results—Special COVID-19 bonus for operational workforce.” Cost of sales averaged $162 per ton in the first nine months of 2017 compared to $2302020, a 9% decrease from $178 per ton in the first nine months of 2016 due primarily to lower ammonia, UAN, and granular urea selling prices in 2017. Selling prices were negatively impacted by greater global nitrogen supply availability. During the first quarter of 2017, prices began to increase as the supply and demand balance tightened in anticipation of spring fertilizer demand for the planting and growing season. However, as the first quarter progressed, increased imports into North America increased fertilizer supply, which pressured selling prices downward as the quarter ended. During the second quarter of 2017, anticipated demand failed to materialize and the increased imports that occurred in the first quarter of 2017 continued in the second quarter impacting selling prices. During the third quarter of 2017, selling prices increased throughout the quarter, ending higher than at the beginning of the quarter. The strengthening price environment was driven by significantly lower Chinese exports; higher energy and production costs in parts of the world, including higher natural gas costs in Europe and higher coal costs in China; a weaker U.S. dollar; and strong global demand.
Our total sales volume increased by 20% from the first nine months of 2016 to the first nine months of 2017 due primarily to the increased production from the completion of our capacity expansion projects.
Cost of Sales
Our total cost of sales increased $672 million, or 32%, from the first nine months of 2016 to the first nine months of 2017. The increase in our cost of sales was2019 due primarily to the impact of higher sales volume, higher unrealized net mark-to-market losses onlower realized natural gas derivatives and higher realized naturalcosts. Natural gas costs, including the impact of realized derivatives, in additiondecreased 26% to higher depreciation expense related to the completion of our capacity expansion projects and placing those assets into service. These increases to cost of sales were partially offset by targeted cost reduction initiatives and production efficiencies due to increased volume and start-up costs of the new ammonia plant at our Donaldsonville facility that occurred in the third quarter of 2016. The cost of sales$2.11 per ton averaged $187MMBtu in the first nine months of 2017, an 11% increase2020 from $169$2.86 per ton in the same period of 2016. The first nine months of 2017 included a $64 million unrealized net mark-to-market loss compared to a $169 million unrealized net mark-to-market gainMMBtu in the first nine months of 2016. Additionally, realized natural gas costs, including the impact of realized derivatives, increased 15% from $3.01 per MMBtu in 2016 to $3.46 in 2017.2019.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were virtually unchanged at $140decreased $22 million to $154 million in the first nine months of 20172020 as compared to $141$176 million in the comparable period of 2016.
Transaction Costs
In the first nine months of 2016, we incurred $179 million of transaction costs associated with the agreements pertaining2019. The decrease was due primarily to the proposed combination with certain businesses of OCI and our strategic venture with CHS. Transaction costs include the $150 million termination fee paid to OCI in the second quarter of 2016lower corporate project activity as a result of the terminationCOVID-19 pandemic and lower incentive compensation.
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Other Operating—Net
Other operating—net was $14$8 million of expense in the first nine months of 20172020 compared to $181$63 million of expense in the comparable period of 2016. The decreased expense was due primarily to an $86 million lossincome in the first nine months of 2016 from2019. The expense in the first nine months of 2020 includes $9 million of expense related to the cancellation of a project, which is more fully described in the section above titled “Items Affecting Comparability of Results—Engineering cost write-off,” and foreign currency transaction losses of $7 million, due to the impact of changes in foreign currency exchange rates on primarily British pound and Canadian dollar denominated intercompany loans that were not permanently invested. Due to a restructuringThese factors were partially offset by insurance proceeds of certain intercompany loans, we did not incur the same level$10 million. See “Items Affecting Comparability of foreign exchange rate impactsResults—Insurance proceeds,” above, for additional information. The $63 million of income in the first nine months of 2017. The decreased expense is also2019 was due primarily to expansion project expenses in the first nine monthsgain recognized on the sale of 2016the Pine Bend facility of $59$45 million generally consistingand insurance proceeds of administrative and other project costs that did not qualify for capitalization, and an unrealized loss of $22$37 million, representing a fair value adjustment to an embedded derivative related to our strategic venture with CHS.partially offset by foreign currency transaction losses.
Equity in LossesEarnings (Losses) of Operating AffiliatesAffiliate
Equity in lossesearnings of operating affiliates consists primarily of our 50% share of the operating results of PLNL. Equity in losses of operating affiliatesaffiliate was $8 million in the first nine months of 20172020 compared to $11losses of $6 million in the first nine months of

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2016. During the second quarter of 2017, PLNL recorded a tax contingency accrual2019 included approximately $16 million related to a withholding tax assessment against PLNL, which reduced our equity in earnings of PLNL for the nine months ended September 30, 2017 by approximately $7 million reflecting our 50% ownership interest. The loss in 2016 at PLNL was due primarily to costs of $24 million that were incurredcharge recognized by PLNL during the second quarterregarding a multi-year tax dispute. See “Items Affecting Comparability of 2016 related to a planned maintenance activity at the Results—PLNL ammonia plant that resulted in the shutdown of the plantwithholding tax charge,” above, for approximately 45 days.additional information.
Interest Expense—Net
Net interest expense was $233decreased by $47 million to $123 million in the first nine months of 20172020 compared to $126$170 million in the first nine months of 2016.2019. The $107decrease was due primarily to our redemption of $750 million increase is primarily due to a decreaseaggregate principal amount of long-term debt in the amountfourth quarter of 2019, which is more fully described under “Liquidity and Capital Resources—Senior Notes,” below. In addition, the decrease reflects $16 million of interest capitalized dueincome in 2020 related to the completionfinalization of the capacity expansion projects. In the first nine months of 2016, capitalized interest was $142 million compared to $2 million in the first nine months of 2017. Net interest expense in the first nine months of 2016 also includes the amortization of capitalized bridge credit agreement fees of $28 million pertaining to the bridge loan for our proposed combination with certain businesses of OCI. Upon the termination of the proposed combination with OCI, the unamortized portion of these fees was expensed.Terra amended tax returns, which is more fully described under “Liquidity and Capital Resources—Terra Amended Tax Returns,” below.
Income Taxes
For the nine months ended September 30, 2017,2020, we recorded an income tax benefitprovision of $55$33 million on pre-tax lossincome of $108$346 million, or an effective tax rate of 50.8%9.4%, compared to an income tax benefitprovision of $21$113 million on pre-tax income of $109$665 million, or an effective tax rate of 19.2%17.1%, for the nine months ended September 30, 2016.2019.
For the nine months ended September 30, 2020, our income tax provision includes a $25 million benefit related to the settlement of certain U.S. and foreign income tax audits, which primarily related to the settlement of the audit of the Terra amended tax returns, which is more fully described under “Liquidity and Capital Resources—Terra Amended Tax Returns,” below.
For the nine months ended September 30, 2019, our income tax benefit included an incentive tax credit from the State of Louisiana of $30 million, net of federal income tax, related to certain capital projects at our Donaldsonville, Louisiana nitrogen complex.
Our effective tax rate in both periods is also impacted by earnings attributable to the noncontrolling interestsinterest in CFN, and TNCLP, as our consolidated income tax (benefit) provision does not include a tax provision on the earnings attributable to the noncontrolling interests. As a result, in the first nine months of 2017 and 2016, earnings attributable to the noncontrolling interests of $54 million and $87 million, respectively, which are included in pre-tax income (loss), have the effect of increasing the effective tax rate.interest. Our effective tax rate excluding the earnings attributable to the noncontrolling interests for the nine months ended September 30, 20172020 of 9.4%, which is 34.0% as comparedbased on pre-tax income of $346 million, including $83 million attributable to anthe noncontrolling interest, would be 3.0 percentage points higher, or 12.4%, if based on pre-tax income exclusive of the $83 million attributable to the noncontrolling interest. Our effective tax rate of 93.7% for the nine months ended September 30, 2016.
The2019 of 17.1%, which is based on pre-tax income tax benefit of $55$665 million, for the nine months ended September 30, 2017 was impacted by a $5including $114 million increase to our deferred tax liability for the State of Illinois enacted tax rate increase.
The income tax benefit of $21 million for the nine months ended September 30, 2016 primarily relatedattributable to the fact thatnoncontrolling interest, would be 3.5 percentage points higher, or 20.6%, if based on pre-tax earnings excludingincome exclusive of the $114 million attributable to the noncontrolling interests was projected to be a loss, but was previously expected to be income.
interest. See Note 9—10—Income Taxes and Note 13—Noncontrolling InterestsInterest for additional information.
Net Earnings Attributable to Noncontrolling InterestsInterest
Net earnings attributable to noncontrolling interestsinterest decreased $33$31 million to $83 million in the first nine months of 2017 compared to2020 from $114 million in the first nine months of 20162019 due to lower earnings from bothof CFN and TNCLP as both were impacteddriven by lower average selling prices due primarily to increased global nitrogen oversupply. The earningssupply availability.
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Diluted Net (Loss) Earnings Per Share Attributable to Common Stockholders
Diluted net (loss)Net earnings per share attributable to common stockholders decreased $0.65$0.90 to $(0.46)$1.07 per diluted share in the first nine months of 20172020 from $0.19$1.97 per diluted share in the first nine months of 2016.2019. This decrease is due primarily to lower gross margin primarily drivennet earnings, partially offset by the impact of lower selling pricesa 3% reduction in diluted weighted-average common shares outstanding due to greater global nitrogen supply availability, an increase in unrealized net mark-to-market loss on natural gas derivatives, higher realized natural gas costs, including the impact of realized derivatives,repurchases made under our share repurchase program. See discussion under “Liquidity and higher depreciation expense.Capital Resources—Share Repurchase Program,” below, for further information.


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Operating Results by Business Segment
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. The following table presents summary operating results by business segment:
Ammonia
Granular Urea(1)
UAN(1)
AN(1)
Other(1)
Consolidated
Ammonia 
Granular
Urea(1)
 
UAN(1)
 
AN(1)
 
Other(1)
 Consolidated (dollars in millions)
(in millions, except percentages)
Three months ended September 30, 2017 
  
  
    
  
Three months ended September 30, 2020Three months ended September 30, 2020     
Net sales$194
 $228
 $243
 $135
 $70
 $870
Net sales$165 $249 $248 $109 $76 $847 
Cost of sales204
 220
 253
 123
 61
 861
Cost of sales174 183 237 96 74 764 
Gross margin$(10) $8
 $(10) $12
 $9
 $9
Gross margin$(9)$66 $11 $13 $$83 
Gross margin percentage(5.2)% 3.5% (4.1)% 8.9 % 12.9% 1.0%Gross margin percentage(5.5)%26.5 %4.4 %11.9 %2.6 %9.8 %
Three months ended September 30, 2016 
  
  
    
  
Three months ended September 30, 2019Three months ended September 30, 2019     
Net sales$145
 $167
 $212
 $103
 $53
 $680
Net sales$187 $327 $309 $136 $79 $1,038 
Cost of sales149
 152
 218
 114
 45
 678
Cost of sales188 207 250 100 65 810 
Gross margin$(4) $15
 $(6) $(11) $8
 $2
Gross margin$(1)$120 $59 $36 $14 $228 
Gross margin percentage(2.8)% 9.0% (2.8)% (10.7)% 15.1% 0.3%Gross margin percentage(0.5)%36.7 %19.1 %26.5 %17.7 %22.0 %
Nine months ended September 30, 2017 
  
  
    
  
Nine months ended September 30, 2020Nine months ended September 30, 2020     
Net sales$865
 $725
 $846
 $372
 $223
 $3,031
Net sales$722 $915 $791 $343 $251 $3,022 
Cost of sales771
 668
 783
 331
 191
 2,744
Cost of sales609 612 675 290 215 2,401 
Gross margin$94
 $57
 $63
 $41
 $32
 $287
Gross margin$113 $303 $116 $53 $36 $621 
Gross margin percentage10.9 % 7.9% 7.4 % 11.0 % 14.3% 9.5%Gross margin percentage15.7 %33.1 %14.7 %15.5 %14.3 %20.5 %
Nine months ended September 30, 2016 
  
  
    
  
Nine months ended September 30, 2019Nine months ended September 30, 2019     
Net sales$770
 $642
 $891
 $318
 $197
 $2,818
Net sales$847 $1,103 $934 $389 $268 $3,541 
Cost of sales505
 445
 646
 316
 160
 2,072
Cost of sales654 686 722 308 224 2,594 
Gross margin$265
 $197
 $245
 $2
 $37
 $746
Gross margin$193 $417 $212 $81 $44 $947 
Gross margin percentage34.4 % 30.7% 27.5 % 0.6 % 18.8% 26.5%Gross margin percentage22.8 %37.8 %22.7 %20.8 %16.4 %26.7 %

(1)
The cost of products that are upgraded into other products is transferred at cost into the upgraded product results.

(1)The cost of products that are upgraded into other products is transferred at cost into the upgraded product results.

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Ammonia Segment
Our ammonia segment produces anhydrous ammonia (ammonia), which is our most concentrated nitrogen fertilizer as it contains 82% nitrogen. The results of our ammonia segment consist of sales of ammonia to external customers. In addition, ammonia is the "basic"“basic” nitrogen product that we upgrade into other nitrogen products such as granular urea, UAN and AN. We produce ammonia at all of our nitrogen manufacturing complexes.
The following table presents summary operating data for our ammonia segment:
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2017 2016 2017 v. 2016 2017 2016 2017 v. 2016 202020192020 v. 2019202020192020 v. 2019
(in millions, except as noted) (in millions, except as noted) (dollars in millions, except per ton amounts)
Net sales$194
 $145
 $49
 34 % $865
 $770
 $95
 12 %Net sales$165 $187 $(22)(12)%$722 $847 $(125)(15)%
Cost of sales204
 149
 55
 37 % 771
 505
 266
 53 %Cost of sales174 188 (14)(7)%609 654 (45)(7)%
Gross margin$(10) $(4) $(6) (150)% $94
 $265
 $(171) (65)%Gross margin$(9)$(1)$(8)N/M$113 $193 $(80)(41)%
Gross margin percentage(5.2)% (2.8)% (2.4)%   10.9% 34.4% (23.5)%  Gross margin percentage(5.5)%(0.5)%(5.0)%15.7 %22.8 %(7.1)%
Sales volume by product tons (000s)826
 505
 321
 64 % 2,898
 2,112
 786
 37 %Sales volume by product tons (000s)795 720 75 10 %2,675 2,548 127 %
Sales volume by nutrient tons (000s)(1)
677
 414
 263
 64 % 2,376
 1,732
 644
 37 %
Sales volume by nutrient tons (000s)(1)
651 590 61 10 %2,193 2,089 104 %
Average selling price per product ton$235
 $287
 $(52) (18)% $298
 $365
 $(67) (18)%Average selling price per product ton$208 $260 $(52)(20)%$270 $332 $(62)(19)%
Average selling price per nutrient ton(1)
$287
 $350
 $(63) (18)% $364
 $445
 $(81) (18)%
Average selling price per nutrient ton(1)
$253 $317 $(64)(20)%$329 $405 $(76)(19)%
Gross margin per product ton$(12) $(8) $(4) (50)% $32
 $125
 $(93) (74)%Gross margin per product ton$(11)$(1)$(10)N/M$42 $76 $(34)(45)%
Gross margin per nutrient ton(1)
$(15) $(10) $(5) (50)% $40
 $153
 $(113) (74)%
Gross margin per nutrient ton(1)
$(14)$(2)$(12)N/M$52 $92 $(40)(43)%
Depreciation and amortization$37
 $19
 $18
 95 % $130
 $59
 $71
 120 %Depreciation and amortization$34 $41 $(7)(17)%$133 $123 $10 %
Unrealized net mark-to-market (gain) loss on natural gas derivatives$(3) $7
 $(10) N/M
 $20
 $(55) $75
 N/M
Unrealized net mark-to-market loss (gain) on natural gas derivativesUnrealized net mark-to-market loss (gain) on natural gas derivatives$— $$(1)(100)%$(4)$$(5)N/M

N/M—Not Meaningful
(1)Ammonia represents 82% nitrogen content. Nutrient tons represent the tons of nitrogen within the product tons.
(1)
Ammonia represents 82% nitrogen content. Nutrient tons represent the equivalent tons of nitrogen within the product tons.
Third Quarter of 20172020 Compared to Third Quarter of 20162019
Net Sales.    Total net    Net sales in theour ammonia segment increaseddecreased by $49$22 million, or 34%12%, to $165 million in the third quarter of 20172020 from $187 million in the third quarter of 20162019 due primarily to a 64% increase in sales volume partially offset by an 18%20% decrease in average selling prices. Theprices, partially offset by a 10% increase in sales volume. Average selling prices decreased to $208 per ton in the third quarter of 2020 compared to $260 per ton in the third quarter of 2019 due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates. Higher sales volume was due to higher production from the completiongreater supply availability as a result of our capacity expansion projects and an increase in exports. Selling prices declined due to greater global nitrogen supply availability.increased production.
Cost of Sales.    Cost of sales in our ammonia segment averaged $247$219 per ton in the third quarter of 2017,2020, a 16% decrease from $295$261 per ton in the same quarter of 2016. The decrease was due primarily to start-up costs of the new ammonia plant at our Donaldsonville facility that occurred in the third quarter of 2016,2019. The decrease is due primarily to the impact of lower realized natural gas costs, lower distribution costs and lower costs related to plant turnaround and maintenance activity.
Gross Margin.    Gross margin in our ammonia segment decreased by $8 million to $(9) million in the third quarter of 2020 from $(1) million in the third quarter of 2019, and our gross margin percentage was (5.5)% in the third quarter of 2020 compared to (0.5)% in the third quarter of 2019. The decrease in gross margin was due to a 20% decrease in average selling prices, which reduced gross margin by $40 million. Lower average selling prices were partially offset by a $16 million net decrease in other manufacturing and distribution costs, a decrease in realized natural gas costs, which increased gross margin by $11 million, a 10% increase in sales volume, which increased gross margin by $4 million, and the impact of a $1 million unrealized net mark-to-market loss on natural gas derivatives in the third quarter of 2019.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Net Sales.    Net sales in our ammonia segment decreased by $125 million, or 15%, to $722 million in the nine months ended September 30, 2020 from $847 million in the nine months ended September 30, 2019 due primarily to a 19% decrease in average selling prices, partially offset by a 5% increase in sales volume. The decrease in average selling prices was due to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates. Sales volume was higher due to greater supply availability.
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Cost of Sales.    Cost of sales in our ammonia segment averaged $228 per ton in the nine months ended September 30, 2020, an 11% decrease from $256 per ton in the nine months ended September 30, 2019 due primarily to the impact of lower realized natural gas costs.
Gross Margin.    Gross margin in our ammonia segment decreased by $80 million to $113 million in the nine months ended September 30, 2020 from $193 million in the nine months ended September 30, 2019, and our gross margin percentage was 15.7% in the nine months ended September 30, 2020 compared to 22.8% in the nine months ended September 30, 2019. The decrease in gross margin was due to a 19% decrease in average selling prices, which reduced gross margin by $165 million. Lower average selling prices were partially offset by a decrease in realized natural gas costs, which increased gross margin by $62 million, a 5% increase in sales volume, which increased gross margin by $11 million, a $7 million net decrease in other manufacturing and distribution costs, and the impact of a $4 million unrealized net mark-to-market gain on natural gas derivatives in the third quarter of 2017 compared to a loss in the same quarter of 2016 and production efficiencies due to increased volume, partially offset by higher realized natural gas costs and higher depreciation as a result of the new ammonia plants at our Donaldsonville and Port Neal facilities and placing those assets into service in the fourth quarter of 2016. Depreciation and amortization in our ammonia segment in the third quarter of 2017 was $45 per ton compared to $38 per ton in the third quarter of 2016.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net Sales.    Total net sales in the ammonia segment increased by $95 million, or 12%, in the nine months ended September 30, 2017 from the nine months ended September 30, 2016 due primarily2020 compared to a 37% increase in sales volume partially offset by an 18% decrease in average selling prices. The increase in sales volume was due to higher production from the completion of our capacity expansion projects and an increase in exports. Selling prices declined due to greater global nitrogen supply availability.
Cost of Sales.    Cost of sales in our ammonia segment averaged $266 per ton in the nine months ended September 30, 2017, a 11% increase from $240 per ton in the nine months ended September 30, 2016. The increase was due primarily to an$1 million unrealized net mark-to-market loss on natural gas derivatives in the nine months ended September 30, 2017 compared to a gain in the comparable period of 2016, higher depreciation as a result of the new ammonia plants at our Donaldsonville and Port Neal facilities and higher realized natural gas costs, including the impact of realized derivatives, partially offset by production2019.

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efficiencies due to increased volume and start-up costs of the new ammonia plant at our Donaldsonville facility that occurred in the third quarter of 2016. Depreciation and amortization in our ammonia segment in the nine months ended September 30, 2017 was $45 per ton compared to $28 per ton in the nine months ended September 30, 2016.
Granular Urea Segment
Our granular urea segment produces granular urea, which contains 46% nitrogen. Produced from ammonia and carbon dioxide, it has the highest nitrogen content of any of our solid nitrogen fertilizers. Granular urea is produced at our Courtright, Ontario; Donaldsonville, Louisiana; Medicine Hat, Alberta; and Port Neal, Iowa, nitrogen complexes.
The following table presents summary operating data for our granular urea segment:
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2017 2016 2017 v. 2016 2017 2016 2017 v. 2016 202020192020 v. 2019202020192020 v. 2019
(in millions, except as noted) (in millions, except as noted) (dollars in millions, except per ton amounts)
Net sales$228
 $167
 $61
 37 % $725
 $642
 $83
 13 %Net sales$249 $327 $(78)(24)%$915 $1,103 $(188)(17)%
Cost of sales220
 152
 68
 45 % 668
 445
 223
 50 %Cost of sales183 207 (24)(12)%612 686 (74)(11)%
Gross margin$8
 $15
 $(7) (47)% $57
 $197
 $(140) (71)%Gross margin$66 $120 $(54)(45)%$303 $417 $(114)(27)%
Gross margin percentage3.5% 9.0% (5.5)%   7.9% 30.7% (22.8)%  Gross margin percentage26.5 %36.7 %(10.2)%33.1 %37.8 %(4.7)%
Sales volume by product tons (000s)1,170
 823
 347
 42 % 3,349
 2,714
 635
 23 %Sales volume by product tons (000s)1,107 1,200 (93)(8)%3,802 3,880 (78)(2)%
Sales volume by nutrient tons (000s)(1)
539
 378
 161
 43 % 1,541
 1,248
 293
 23 %
Sales volume by nutrient tons (000s)(1)
510 552 (42)(8)%1,749 1,785 (36)(2)%
Average selling price per product ton$195
 $203
 $(8) (4)% $216
 $237
 $(21) (9)%Average selling price per product ton$225 $273 $(48)(18)%$241 $284 $(43)(15)%
Average selling price per nutrient ton(1)
$423
 $442
 $(19) (4)% $470
 $514
 $(44) (9)%
Average selling price per nutrient ton(1)
$488 $592 $(104)(18)%$523 $618 $(95)(15)%
Gross margin per product ton$7
 $18
 $(11) (61)% $17
 $73
 $(56) (77)%Gross margin per product ton$60 $100 $(40)(40)%$80 $107 $(27)(25)%
Gross margin per nutrient ton(1)
$15
 $40
 $(25) (63)% $37
 $158
 $(121) (77)%
Gross margin per nutrient ton(1)
$129 $217 $(88)(41)%$173 $234 $(61)(26)%
Depreciation and amortization$67
 $25
 $42
 168 % $187
 $75
 $112
 149 %Depreciation and amortization$60 $66 $(6)(9)%$198 $211 $(13)(6)%
Unrealized net mark-to-market (gain) loss on natural gas derivatives$(2) $5
 $(7) N/M
 $17
 $(44) $61
 N/M
Unrealized net mark-to-market (gain) loss on natural gas derivatives$— $— $— — %$(4)$$(5)N/M

N/M—Not Meaningful
(1)Granular urea represents 46% nitrogen content. Nutrient tons represent the tons of nitrogen within the product tons.


Third Quarter of 20172020 Compared to Third Quarter of 20162019
Net Sales.    Net sales in theour granular urea segment increased $61decreased $78 million, or 37%24%, to $249 million in the third quarter of 20172020 from $327 million in the third quarter of 20162019 due primarily to a 42% increase in sales volume partially offset by a 4%an 18% decrease in average selling prices. Sales volume was higher due primarily to increased production as a result of our expanded urea capacity at our Port Neal facility that came on lineprices and an 8% decrease in the fourth quarter of 2016.sales volume. Average selling prices decreased to $195$225 per ton in the third quarter of 20172020 compared to $203$273 per ton in the third quarter of 20162019 due primarily to greaterincreased global nitrogen supply availability.availability as lower global energy costs drove higher global operating rates. Sales volume was lower due primarily to lower supply availability due to plant turnaround and maintenance activity and lower inventory levels entering the third quarter of 2020 due to robust product shipments earlier in the year.
Cost of Sales.    Cost of sales in our granular urea segment averaged $188$165 per ton in the third quarter of 2017,2020, a 2% increase5% decrease from $185$173 per ton in the samethird quarter of 2016.2019, primarily driven by lower production costs, including lower realized natural gas costs, and lower distribution costs.
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Gross Margin.    Gross margin in our granular urea segment decreased by $54 million to $66 million in the third quarter of 2020 from $120 million in the third quarter of 2019, and our gross margin percentage was 26.5% in the third quarter of 2020 compared to 36.7% in the third quarter of 2019. The increasedecrease in gross margin was due to an 18% decrease in average selling prices, which decreased gross margin by $52 million, and an 8% decrease in sales volume, which decreased gross margin by $12 million. These factors were partially offset by a $7 million net decrease in other manufacturing and distribution costs and lower realized natural gas costs, which increased gross margin by $3 million.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Net Sales.    Net sales in our granular urea segment decreased $188 million, or 17%, to $915 million in the nine months ended September 30, 2020 from $1.10 billion in the nine months ended September 30, 2019 due primarily to a 15% decrease in average selling prices and a 2% decrease in sales volume. Average selling prices decreased to $241 per ton in the nine months ended September 30, 2020 compared to $284 per ton in the nine months ended September 30, 2019. The decrease was due primarily to increased global nitrogen supply availability as lower global energy costs drove higher depreciationglobal operating rates. Sales volume was lower due primarily to lower supply availability as a result of the newplant turnaround and maintenance activity.
Cost of Sales.    Cost of sales in our granular urea plant atsegment averaged $161 per ton in the nine months ended September 30, 2020, a 9% decrease from $177 per ton in the nine months ended September 30, 2019. The decrease was due primarily to lower realized natural gas costs.
Gross Margin.    Gross margin in our Port Neal facility,granular urea segment decreased by $114 million to $303 million in the nine months ended September 30, 2020 from $417 million in the nine months ended September 30, 2019, and our gross margin percentage was 33.1% in the nine months ended September 30, 2020 compared to 37.8% in the nine months ended September 30, 2019. The decrease in gross margin was due to a 15% decrease in average selling prices, which decreased gross margin by $166 million, and a 2% decrease in sales volume, which decreased gross margin by $15 million. These factors were partially offset by lower realized natural gas costs, which increased gross margin by $44 million, an $18 million net decrease in other manufacturing and distribution costs, and the impact of production efficiencies due to increased volume and ana $4 million unrealized net mark-to-market gain on natural gas derivatives in the third quarter of 2017nine months ended September 30, 2020 compared to a loss in the same quarter of 2016. Depreciation and amortization in our granular urea segment in the third quarter of 2017 was $57 per ton compared to $30 per ton in the third quarter of 2016.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net Sales.    Net sales in the granular urea segment increased $83$1 million or 13%,loss in the nine months ended September 30, 2017 from the nine months ended September 30, 2016 due primarily to a 23% increase in sales volume partially offset by a 9% decrease in average selling prices. Sales volume was higher due to increased production as a result of our expanded urea capacity at our Port Neal facility that came on line in the fourth quarter of 2016. Average selling prices decreased to $216 per ton in the first nine months of 2017 compared to $237 per ton in the comparable period of 2016 due primarily to greater global nitrogen supply availability.
Cost of Sales.    Cost of sales in our granular urea segment averaged $199 per ton in the first nine months of 2017, a 21% increase from $164 per ton in the comparable period of 2016. The increase was due primarily to higher depreciation as a result of the new granular urea plant at our Port Neal facility, an unrealized net mark-to-market loss on natural gas derivatives in the

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nine months ended September 30, 2017 compared to a gain in the comparable period of 2016 and higher realized natural gas costs, including the impact of realized derivatives. These increases in cost of sales were partially offset by the impact of production efficiencies due to increased volume. Depreciation and amortization in our granular urea segment in the nine months ended September 30, 2017 was $56 per ton compared to $28 per ton in the nine months ended September 30, 2016.2019.
UAN Segment
Our UAN segment produces urea ammonium nitrate solution (UAN). UAN, a liquid fertilizer product with a nitrogen content that typically ranges from 28% to 32%, is produced by combining urea and ammonium nitrate. UAN is produced at our nitrogen complexes in Courtright, Ontario; Donaldsonville, Louisiana; Port Neal, Iowa; Verdigris, Oklahoma; Woodward, Oklahoma; and Yazoo City, Mississippi.
The following table presents summary operating data for our UAN segment:
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2017 2016 2017 v. 2016 2017 2016 2017 v. 2016 202020192020 v. 2019202020192020 v. 2019
(in millions, except as noted) (in millions, except as noted) (dollars in millions, except per ton amounts)
Net sales$243
 $212
 $31
 15 % $846
 $891
 $(45) (5)%Net sales$248 $309 $(61)(20)%$791 $934 $(143)(15)%
Cost of sales253
 218
 35
 16 % 783
 646
 137
 21 %Cost of sales237 250 (13)(5)%675 722 (47)(7)%
Gross margin$(10) $(6) $(4) (67)% $63
 $245
 $(182) (74)%Gross margin$11 $59 $(48)(81)%$116 $212 $(96)(45)%
Gross margin percentage(4.1)% (2.8)% (1.3)%   7.4% 27.5% (20.1)%  Gross margin percentage4.4 %19.1 %(14.7)%14.7 %22.7 %(8.0)%
Sales volume by product tons (000s)1,693
 1,350
 343
 25 % 5,173
 4,634
 539
 12 %Sales volume by product tons (000s)1,725 1,741 (16)(1)%4,955 4,880 75 %
Sales volume by nutrient tons (000s)(1)
536
 427
 109
 26 % 1,636
 1,461
 175
 12 %
Sales volume by nutrient tons (000s)(1)
545 550 (5)(1)%1,561 1,537 24 %
Average selling price per product ton$144
 $157
 $(13) (8)% $164
 $192
 $(28) (15)%Average selling price per product ton$144 $177 $(33)(19)%$160 $191 $(31)(16)%
Average selling price per nutrient ton(1)
$453
 $496
 $(43) (9)% $517
 $610
 $(93) (15)%
Average selling price per nutrient ton(1)
$455 $562 $(107)(19)%$507 $608 $(101)(17)%
Gross margin per product ton$(6) $(4) $(2) (50)% $12
 $53
 $(41) (77)%Gross margin per product ton$$34 $(28)(82)%$23 $43 $(20)(47)%
Gross margin per nutrient ton(1)
$(19) $(14) $(5) (36)% $39
 $168
 $(129) (77)%
Gross margin per nutrient ton(1)
$20 $107 $(87)(81)%$74 $138 $(64)(46)%
Depreciation and amortization$71
 $58
 $13
 22 % $192
 $175
 $17
 10 %Depreciation and amortization$69 $66 $%$186 $183 $%
Unrealized net mark-to-market (gain) loss on natural gas derivatives$(2) $7
 $(9) N/M
 $19
 $(52) $71
 N/M
Unrealized net mark-to-market loss (gain) on natural gas derivativesUnrealized net mark-to-market loss (gain) on natural gas derivatives$— $$(1)(100)%$(4)$$(5)N/M

N/M—Not Meaningful
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(1)UAN represents between 28% and 32% of nitrogen content. Nutrient tons represent the tons of nitrogen within the product tons.
(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.
Third Quarter of 20172020 Compared to Third Quarter of 20162019
Net Sales.    Net sales in theour UAN segment increased $31decreased $61 million, or 15%20%, to $248 million in the third quarter of 20172020 from $309 million in the third quarter of 20162019 due primarily to a 25% increase in sales volume partially offset by an 8%19% decrease in average selling prices. Sales volume was higher due primarily to greater customer participationprices and a 1% decrease in our summer fill program and higher export sales.sales volume. Average selling prices decreased to $144 per ton in the third quarter of 20172020 compared to $157$177 per ton in the third quarter of 2016. UAN selling prices were lower2019 due primarily to greater global nitrogen supply availability.increased imports into the United States as trade flows continue to adjust in response to the European Union anti-dumping duties.
Cost of Sales.    Cost of sales in our UAN segment averaged $150$138 per ton in the third quarter of 2017,2020, a 7%3% decrease from $161$143 per ton in the third quarter of 2016.2019, primarily driven by lower realized natural gas costs and the impact of lower distribution costs.
Gross Margin.    Gross margin in our UAN segment decreased by $48 million to $11 million in the third quarter of 2020 from $59 million in the third quarter of 2019, and our gross margin percentage was 4.4% in the third quarter of 2020 compared to 19.1% in the third quarter of 2019. The decrease in gross margin was due to a 19% decrease in average selling prices, which decreased gross margin by $62 million. Lower average selling prices were partially offset by lower realized natural gas costs, which increased gross margin by $8 million, a $5 million net decrease in other manufacturing and distribution costs, and the impact of a $1 million unrealized net mark-to-market loss on natural gas derivatives in the third quarter of 2019.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Net Sales.    Net sales in our UAN segment decreased $143 million, or 15%, to $791 million in the nine months ended September 30, 2020 from $934 million in the nine months ended September 30, 2019 due primarily to a 16% decrease in average selling prices, partially offset by a 2% increase in sales volume. Average selling prices decreased to $160 per ton in the nine months ended September 30, 2020 compared to $191 per ton in the nine months ended September 30, 2019, due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates and increased imports into the United States as trade flows adjust in response to the European Union anti-dumping duties. The increase in sales volume was due to greater supply availability.
Cost of Sales.    Cost of sales in our UAN segment averaged $137 per ton in the nine months ended September 30, 2020, a 7% decrease from $148 per ton in the nine months ended September 30, 2019. The decrease was due primarily to targeted cost reduction initiativeslower realized natural gas costs.
Gross Margin.    Gross margin in our UAN segment decreased by $96 million to $116 million in the nine months ended September 30, 2020 from $212 million in the nine months ended September 30, 2019, and anour gross margin percentage was 14.7% in the nine months ended September 30, 2020 compared to 22.7% in the nine months ended September 30, 2019. The decrease in gross margin was due to a 16% decrease in average selling prices, which decreased gross margin by $162 million, and a $14 million net increase in other manufacturing and distribution costs. These factors were partially offset by lower realized natural gas costs, which increased gross margin by $64 million, a 2% increase in sales volume, which increased gross margin by $11 million, and the impact of a $4 million unrealized net mark-to-market gain on natural gas derivatives in the third quarter of 2017nine months ended September 30, 2020 compared to a loss in the same quarter of 2016, partially offset by higher realized natural gas costs. Depreciation and amortization in our UAN segment in the third quarter of 2017 was $42 per ton compared to $43 per ton in the third quarter of 2016.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net Sales.    Net sales in the UAN segment decreased $45$1 million or 5%,loss in the nine months ended September 30, 2017 from the nine months ended September 30, 2016 due primarily to a 15% decrease in average selling prices, partially offset by a 12% increase in sales volume. Average selling prices decreased to $164 per ton in the first nine months of 2017 compared to $192 per ton in the comparable period of 2016. UAN selling prices were lower due primarily to greater global nitrogen supply availability. Our sales volume was higher due primarily to greater customer participation in our summer fill program and higher export sales.
Cost of Sales.    Cost of sales in our UAN segment averaged $152 per ton in the first nine months of 2017, a 9% increase from $139 per ton in the comparable period of 2016. The increase was due primarily to the impact of an unrealized net mark-to-market loss on natural gas derivatives in the first nine months of 2017 compared to a gain in the comparable period of 2016 and

2019.
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the impact of higher realized natural gas costs in the first nine months of 2017, partially offset by targeted cost reduction initiatives and production efficiencies due to increased volume. Depreciation and amortization in our UAN segment in the nine months ended September 30, 2017 was $37 per ton compared to $38 per ton in the nine months ended September 30, 2016.
AN Segment
Our AN segment produces ammonium nitrate (AN). AN, is a nitrogen-based product withwhich has a nitrogen content between 29% and 35%., is produced by combining anhydrous ammonia and nitric acid. AN is used as nitrogen fertilizer and is also used by industrial customers for commercial explosives and blasting systems. AN is produced at our nitrogen complexes in Yazoo City, Mississippi and Ince and Billingham, United Kingdom.
The following table presents summary operating data for our AN segment:
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2017 2016 2017 v. 2016 2017 2016 2017 v. 2016 202020192020 v. 2019202020192020 v. 2019
(in millions, except as noted) (in millions, except as noted) (dollars in millions, except per ton amounts)
Net sales$135
 $103
 $32
 31 % $372
 $318
 $54
 17 %Net sales$109 $136 $(27)(20)%$343 $389 $(46)(12)%
Cost of sales123
 114
 9
 8 % 331
 316
 15
 5 %Cost of sales96 100 (4)(4)%290 308 (18)(6)%
Gross margin$12
 $(11) $23
 N/M
 $41
 $2
 $39
 N/M
Gross margin$13 $36 $(23)(64)%$53 $81 $(28)(35)%
Gross margin percentage8.9% (10.7)% 19.6%   11.0% 0.6% 10.4%  Gross margin percentage11.9 %26.5 %(14.6)%15.5 %20.8 %(5.3)%
Sales volume by product tons (000s)670
 599
 71
 12 % 1,777
 1,610
 167
 10 %Sales volume by product tons (000s)548 561 (13)(2)%1,671 1,590 81 %
Sales volume by nutrient tons (000s)(1)
225
 203
 22
 11 % 599
 545
 54
 10 %
Sales volume by nutrient tons (000s)(1)
185 188 (3)(2)%564 533 31 %
Average selling price per product ton$201
 $172
 $29
 17 % $209
 $198
 $11
 6 %Average selling price per product ton$199 $242 $(43)(18)%$205 $245 $(40)(16)%
Average selling price per nutrient ton(1)
$600
 $507
 $93
 18 % $621
 $583
 $38
 7 %
Average selling price per nutrient ton(1)
$589 $723 $(134)(19)%$608 $730 $(122)(17)%
Gross margin per product ton$18
 $(18) $36
 N/M
 $23
 $1
 $22
 N/M
Gross margin per product ton$24 $64 $(40)(63)%$32 $51 $(19)(37)%
Gross margin per nutrient ton(1)
$53
 $(54) $107
 N/M
 $68
 $4
 $64
 N/M
Gross margin per nutrient ton(1)
$70 $191 $(121)(63)%$94 $152 $(58)(38)%
Depreciation and amortization$24
 $22
 $2
 9 % $64
 $72
 $(8) (11)%Depreciation and amortization$25 $24 $%$76 $67 $13 %
Unrealized net mark-to-market loss (gain) on natural gas derivatives$
 $1
 $(1) (100)% $3
 $(7) $10
 N/M
Unrealized net mark-to-market loss (gain) on natural gas derivatives$— $— $— — %$— $— $— — %

N/M—Not Meaningful(1)AN represents between 29% and 35% of nitrogen content. Nutrient tons represent the tons of nitrogen within the product tons.
(1)
Nutrient tons represent the tons of nitrogen within the product tons.
Third Quarter of 20172020 Compared to Third Quarter of 20162019
Net Sales.    Total net    Net sales in our AN segment increased $32decreased $27 million, or 31%20%, to $109 million in the third quarter of 20172020 from $136 million in the third quarter of 20162019 due primarily to a 17% increasean 18% decrease in average selling prices and a 2% decrease in sales volume. Average selling prices decreased to $199 per ton in the third quarter of 2020 compared to $242 per ton in the third quarter of 2019 due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates. Sales volume declined due primarily to lower supply availability as a result of plant maintenance activity.
Cost of Sales.    Cost of sales in our AN segment averaged $175 per ton in the third quarter of 2020, a 2% decrease from $178 per ton in the third quarter of 2019. The decrease was due primarily to lower realized natural gas costs.
Gross Margin.    Gross margin in our AN segment decreased $23 million, or 64%, to $13 million in the third quarter of 2020 from $36 million in the third quarter of 2019, and our gross margin percentage was 11.9% in the third quarter of 2020 compared to 26.5% in the third quarter of 2019. The decrease in gross margin was due to an 18% decrease in average selling prices, which decreased gross margin by $24 million, a 2% decrease in sales volume, which decreased gross margin by $3 million, and a net increase of $2 million in other manufacturing and distribution costs. These factors were partially offset by a decrease in realized natural gas costs, which increased gross margin by $6 million.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Net Sales.    Net sales in our AN segment decreased $46 million, or 12%, to $343 million in the nine months ended September 30, 2020 from $389 million in the nine months ended September 30, 2019 due primarily to a 16% decrease in average selling prices, partially offset by a 5% increase in sales volume. Average selling prices and sales volume weredecreased to $205 per ton in the nine months ended September 30, 2020 compared to $245 per ton in the nine months ended September 30, 2019 due primarily to increased global nitrogen supply availability as lower global energy costs drove higher due to the commencement of a new long-term supply agreement in 2017.global operating rates. The increase in sales volume was also driven bydue to greater supply availability as a strong summer sales campaign in the United Kingdom.result of higher inventory levels entering 2020.
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Cost of Sales.    Total cost     Cost of sales in our AN segment averaged $183$173 per ton in the third quarter of 2017, a 4% decrease from $190 per ton in the third quarter of 2016, due primarily to costs in the third quarter of 2016 related to plant outages, partially offset by higher realized natural gas costs, including the impact of realized derivatives.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net Sales.    Total net sales in our AN segment increased $54 million, or 17%, in the nine months ended September 30, 20172020, an 11% decrease from $194 per ton in the nine months ended September 30, 2016 as a 10% increase2019. The decrease was due primarily to lower realized natural gas costs and lower costs related to plant maintenance activity.
Gross Margin.    Gross margin in sales volume,our AN segment decreased by $28 million, or 35%, to $53 million in the nine months ended September 30, 2020 from $81 million in the nine months ended September 30, 2019, and our gross margin percentage was 15.5% in the nine months ended September 30, 2020 compared to 20.8% in the nine months ended September 30, 2019. The decrease in gross margin was due to the commencement of a new long-term supply agreement, and higher16% decrease in average selling prices, which decreased gross margin by $69 million. Lower average selling prices were partially offset by the impact of foreign exchange rate changes between the U.S. dollar and the British pound.
Cost of Sales.     Total cost of salesa decrease in our AN segment averaged $186 per ton in the first nine months of 2017, a 6% decrease from $197 per ton in the comparable period of 2016. The decrease was due primarily to the impact of foreign exchange rate changes between the U.S. dollar and the British pound, costs in the second quarter of 2016 related to the completion of the reconfiguration at our Yazoo City complex, and plant outages in the prior year. These decreases were partially offset by higher realized natural gas costs, which increased gross margin by $29 million, a net decrease of $9 million in other manufacturing and the impact of an unrealized net mark-to-market loss on natural gas derivativesdistribution costs, and a 5% increase in the first nine months of 2017 compared to a gain in the comparable period of 2016.

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sales volume, which increased gross margin by $3 million.
Other Segment
Our Other segment primarily includes the following products:
Diesel exhaust fluid (DEF) is an aqueous urea solution typically made with 32.5% or 50% high-purity urea and 67.5%the remainder 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%.industrial product.
Compound fertilizer products (NPKs) are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus and potassium.
The following table presents summary operating data for our Other segment:
Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
2017 2016 2017 v. 2016 2017 2016 2017 v. 2016 202020192020 v. 2019202020192020 v. 2019
(in millions, except as noted) (in millions, except as noted) (dollars in millions, except per ton amounts)
Net sales$70
 $53
 $17
 32 % $223
 $197
 $26
 13 %Net sales$76 $79 $(3)(4)%$251 $268 $(17)(6)%
Cost of sales61
 45
 16
 36 % 191
 160
 31
 19 %Cost of sales74 65 14 %215 224 (9)(4)%
Gross margin$9
 $8
 $1
 13 % $32
 $37
 $(5) (14)%Gross margin$$14 $(12)(86)%$36 $44 $(8)(18)%
Gross margin percentage12.9% 15.1% (2.2)%   14.3% 18.8% (4.5)%  Gross margin percentage2.6 %17.7 %(15.1)%14.3 %16.4 %(2.1)%
Sales volume by product tons (000s)518
 389
 129
 33 % 1,471
 1,204
 267
 22 %Sales volume by product tons (000s)568 530 38 %1,714 1,657 57 %
Sales volume by nutrient tons (000s)(1)
97
 73
 24
 33 % 285
 230
 55
 24 %
Sales volume by nutrient tons (000s)(1)
111 103 %339 327 12 %
Average selling price per product ton$135
 $136
 $(1) (1)% $152
 $164
 $(12) (7)%Average selling price per product ton$134 $149 $(15)(10)%$146 $162 $(16)(10)%
Average selling price per nutrient ton(1)
$722
 $726
 $(4) (1)% $782
 $857
 $(75) (9)%
Average selling price per nutrient ton(1)
$685 $767 $(82)(11)%$740 $820 $(80)(10)%
Gross margin per product ton$17
 $21
 $(4) (19)% $22
 $31
 $(9) (29)%Gross margin per product ton$$26 $(22)(85)%$21 $27 $(6)(22)%
Gross margin per nutrient ton(1)
$93
 $110
 $(17) (15)% $112
 $161
 $(49) (30)%
Gross margin per nutrient ton(1)
$18 $136 $(118)(87)%$106 $135 $(29)(21)%
Depreciation and amortization$15
 $12
 $3
 25 % $40
 $34
 $6
 18 %Depreciation and amortization$18 $18 $— — %$52 $54 $(2)(4)%
Unrealized net mark-to-market loss (gain) on natural gas derivatives$
 $1
 $(1) (100)% $5
 $(11) $16
 N/M
Unrealized net mark-to-market loss (gain) on natural gas derivatives$— $— $— — %$— $— $— — %

N/M—Not Meaningful(1)Nutrient tons represent the tons of nitrogen within the product tons.
(1)
Nutrient tons represent the tons of nitrogen within the product tons.
Third Quarter of 20172020 Compared to Third Quarter of 20162019
Net Sales.    Total net    Net sales in our Other segment increaseddecreased by $17$3 million, or 32%4%, to $76 million in the third quarter of 20172020 from $79 million in the third quarter of 20162019 due primarily to a 33% increase10% decrease in sales volumeaverage selling prices, partially offset by a 1%7% increase in sales volume. The decrease in average selling prices.prices was due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates. The increase in our Other segment sales volume was due primarily to an increase in DEF, NPK and nitric acid sales volume as demand in North America continued to grow. The decline in average selling prices is due primarily to greater global nitrogen supply availability weighing on global nitrogen fertilizer selling prices.volumes.
Cost of Sales.    Cost of sales in our Other segment averaged $118 per ton in the third quarter of 2017, a 3% increase from $115 per ton in the third quarter of 2016 due primarily to higher realized natural gas costs.
Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016
Net Sales.    Total net sales in our Other segment increased by $26 million, or 13%, in the nine months ended September 30, 2017 from the nine months ended September 30, 2016 due to a 22% increase in sales volume partially offset by a 7% decrease in average selling prices. The increase in our Other segment sales volume was due to an increase in DEF sales volume as demand in North America continued to grow. The decline in average selling prices is due to greater global nitrogen supply availability weighing on global nitrogen fertilizer selling prices and the impact of foreign exchange rate changes between the U.S. dollar and the British pound.
Cost of Sales.    Cost of sales in our Other segment averaged $130 per ton in the third quarter of 2020, a 6% increase from $123 per ton in the third quarter of 2019, due primarily to higher costs related to plant maintenance activity and higher distribution costs.
Gross Margin.    Gross margin in our Other segment decreased by $12 million, or 86%, to $2 million in the third quarter of 2020 from $14 million in the third quarter of 2019, and our gross margin percentage was 2.6% in the third quarter of 2020 compared to 17.7% in the third quarter of 2019. The decrease in gross margin was due to an $8 million net increase in other
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manufacturing and distribution costs and a 10% decrease in average selling prices, which reduced gross margin by $7 million. These factors were partially offset by a decrease in realized natural gas costs, which increased gross margin by $2 million, and a 7% increase in sales volume, which increased gross margin by $1 million.
Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019
Net Sales.    Net sales in our Other segment decreased by $17 million, or 6%, to $251 million in the nine months ended September 30, 2017,2020 from $268 million in the nine months ended September 30, 2019 due primarily to a 2%10% decrease from $133in average selling prices, partially offset by a 3% increase in sales volume. The decrease in average selling prices was due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates. The increase in sales volume was due primarily to higher NPK and DEF sales volumes, partially offset by lower nitric acid sales volume.
Cost of Sales.    Cost of sales in our Other segment averaged $125 per ton in the nine months ended September 30, 20162020, a 7% decrease from $135 per ton in the nine months ended September 30, 2019 due primarily to lower realized natural gas costs.
Gross Margin.    Gross margin in our Other segment decreased by $8 million, or 18%, to $36 million in the impact of foreign exchange rate changes betweennine months ended September 30, 2020 from $44 million in the U.S. dollarnine months ended September 30, 2019, and our gross margin percentage was 14.3% in the British pound, andnine months ended September 30, 2020 compared to 16.4% in the impact of production efficiencies,nine months ended September 30, 2019. The decrease in gross margin was due to a 10% decrease in average selling prices, which reduced gross margin by $24 million. Lower average selling prices were partially offset by the impact of an unrealized net mark-to-market loss on natural gas derivativesa decrease in the first nine months of 2017 compared to a gain in the comparable period of 2016 and higher realized natural gas costs, which increased gross margin by $14 million, a 3% increase in sales volume, which increased gross margin by $1 million, and a $1 million net decrease in other manufacturing and distribution costs.


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Liquidity and Capital Resources
Our primary uses of cash are generally for operating costs, working capital, capital expenditures, debt service, investments, taxes, share repurchases and dividends. Our working capital requirements are affected by several factors, including demand for our products, selling prices, raw material costs, freight costs and seasonal factors inherent in the business. In addition, we may from time to time seek to retire or purchase our outstanding debt through cash purchases, in open market or privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Generally, our primary source of cash is cash from operations, which includes cash generated by customer advances. We may also from time to time access the capital markets or engage in borrowings under our credit agreements.agreement. Our cash from operations could be affected by various risks and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic.
In 2016,March 2020, as the impact of the COVID-19 pandemic unfolded in many locations around the world, credit markets began to function less efficiently, causing concern about liquidity in credit markets generally. In response to this and out of an abundance of caution, we completedborrowed $500 million under our capacity expansion projects at Donaldsonville, Louisiana$750 million revolving credit agreement to ensure we maintained ample financial flexibility in light of the uncertainty in the global markets, including the financial credit markets. In April 2020, due to confidence in the functioning of the credit markets and Port Neal, Iowastrong nitrogen fertilizer business conditions, we repaid the $500 million of borrowings that were originally announced in 2012. These projects provided us with an increaseoutstanding under our revolving credit agreement as of approximately 25% in production capacity and had a total capital costMarch 31, 2020.
As of $5.2 billion. The completion of our capacity expansion projects will reduce what had been a substantial use of liquidity in recent years. See discussion under "Overview of CF Holdings—Items Affecting Comparability of Results—Depreciation and Amortization," above, and "—Capital Spending," below, for further information on these projects.
A significant portion of the capital assets that were constructed as part of the capacity expansion projects qualifies for bonus depreciation under the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). Under the provisions of the PATH Act, eligible capital additions are subject to 50% bonus depreciation in the year the asset is placed in service. We generated a substantial federal tax loss in 2016, primarily as a result of the bonus depreciation deductions. In the second quarter of 2017, we received a federal tax refund of approximately $815 million as a result of the claim to carry back the 2016 federal tax loss to prior income tax years.
At September 30, 2017,2020, our balance of cash and cash equivalents balance was $1.99 billion and$553 million, an increase of $266 million from $287 million at December 31, 2019. At September 30, 2020, we were in compliance with all applicable covenant requirements under our Revolving Credit Agreement, Public Senior Notesrevolving credit agreement, senior notes and Senior Secured Notes.senior secured notes, and unused borrowing capacity under our revolving credit agreement was $750 million.
Cash and Cash Equivalents
We had cash and cash equivalents of $1.99 billion and $1.16 billion as of September 30, 2017 and December 31, 2016, respectively. Cash equivalents include highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less. 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.
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Share Repurchase Program
On February 13, 2019, the Board authorized the repurchase of up to $1 billion of CF Holdings common stock through December 31, 2021 (the 2019 Share Repurchase Program). Repurchases under the 2019 Share Repurchase Program may be made from time to time in the open market, through privately negotiated transactions, block transactions or otherwise. The manner, timing and amount of repurchases will be determined by our management based on the evaluation of market conditions, stock price, and other factors. During the first quarter of 2020, we repurchased approximately 2.6 million shares of CF Holdings common stock under the the 2019 Share Repurchase Program for $100 million. In the second quarter of 2020, we retired the approximately 2.6 million shares that were repurchased during the first quarter of 2020 under the 2019 Share Repurchase Program. No shares were repurchased in the second or third quarter of 2020 under the 2019 Share Repurchase Program. At September 30, 2020, we held 27,392 shares of treasury stock.
The following table summarizes the share repurchases under the 2019 Share Repurchase Program.
SharesAmounts
(in millions)
Shares repurchased in 2019:
First quarter1.5 $60 
Second quarter2.7 118 
Third quarter1.5 72 
Fourth quarter1.9 87 
Shares repurchased in 20197.6 337 
Shares repurchased in 2020:
First quarter2.6 100 
Shares repurchased as of September 30, 202010.2 $437 
Capital Spending
We make capital expenditures to sustain our asset base, increase our capacity, improve plant efficiency and comply with various environmental, health and safety requirements. Capital expenditures totaled $290$206 million in the first nine months of 20172020 compared to $1,819$297 million in the first nine months of 2016, with the decrease primarily due to the completion in 2016 of our capacity expansion projects at Donaldsonville, Louisiana and Port Neal, Iowa.2019.
The total cost of the capacity expansion projects includes approximately $158 million of costs for work performed in 2016, which were accrued but unpaid as of September 30, 2017. See discussion under "—Projected Capital Spending," below, for further information.
Projected Capital Spending
NewWe currently anticipate that capital expenditures for 2017 are estimated tothe full year of 2020 will be approximately $375 million. Additionally,$350 million, after taking into account actions we have taken to defer certain non-essential capital activity as a result of September 30, 2017uncertainty caused by the COVID-19 pandemic, including uncertainty regarding the duration of government actions implemented to slow the spread of the virus and December 31, 2016,the safety precautions we had approximately $158 millionhave implemented to protect the health and $185 million, respectively,well-being of costs accrued for work completed in 2016 related to the capacity expansion projects. Most of these unpaid amounts are the subject of disputes with certain contractors and vendors. Actual cash expenditures in 2017 will also reflect any payments for these capacity expansion project amounts when they occur.all our employees.
Planned capital expenditures are generally subject to change due to delays in regulatory approvals or permitting, unanticipated increases in cost, changes in scope and completion time, performance of third parties, delays in the receipt of equipment, adverse weather, defects in materials and workmanship, labor or material shortages, transportation constraints, acceleration or delays in the timing of the work and other unforeseen difficulties. All of these factors may also be influenced or exacerbated by the direct or indirect impacts of the COVID-19 pandemic.

Terra Amended Tax Returns
The Company completed the acquisition of Terra Industries Inc. (Terra) in April 2010. After the acquisition, the Company determined that the manner in which Terra reported the repatriation of cash from foreign affiliates to its U.S. parent for U.S. and foreign income tax purposes was not appropriate. As a result, in 2012 the Company amended certain tax returns, including Terra’s income and withholding tax returns, back to 1999 (the Amended Tax Returns) and paid additional income and withholding taxes, and related interest and penalties. In early 2013, the Internal Revenue Service (IRS) commenced an examination of the U.S. tax aspects of the Amended Tax Returns.
In early 2019, the IRS completed its examination of the Amended Tax Returns and submitted its audit reports and related refund claims to the Joint Committee on Taxation of the U.S. Congress (the Joint Committee). For purposes of its review, the Joint Committee separated the IRS audit reports into two separate matters: (i) an income tax related matter and (ii) a withholding tax matter.
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In late 2019, we received notification that the Joint Committee had approved the IRS audit reports and related income tax refunds relating to the income tax related matter. Therefore, we expected to receive cash refunds in 2020. In the second quarter of 2020, we received notification that the Joint Committee approved the IRS audit report and related withholding tax refunds relating to the withholding tax matter and we received IRS Notices indicating the amount of tax and interest to be refunded and received with respect to the withholding tax matter and the income tax matter.
As a result of these events, in the second quarter of 2020, we recognized $16 million of interest income and $16 million of income tax benefit, which consisted of the following:
additional interest income of $16 million ($13 million, net of tax) related to both the income tax matter and the withholding tax matter,
a reduction in our liabilities for unrecognized tax benefits of $12 million with a corresponding reduction in income tax expense related to the withholding tax matter, and
an additional income tax benefit of $7 million related to the income tax matter.
We received income tax refunds, including interest, of $108 million relating to these matters in the second quarter of 2020, consisting of $68 million related to the income tax matter and $40 million related to the withholding tax matter. In the third quarter of 2020, we received an additional $2 million related to the withholding tax matter, which finalized these matters with the IRS. As a result of the finalization of the income tax matter and the withholding tax matter, all U.S. federal tax years commencing before January 1, 2012 are now closed.
Debt
Revolving Credit Agreement
We haveOn December 5, 2019, CF Holdings and CF Industries entered into a senior secured revolving credit agreementFourth Amended and Restated Credit Agreement (the Revolving Credit Agreement) providing, which amended and restated our Third Amended and Restated Revolving Credit Agreement, as previously amended (referred to herein, as in effect from time to time, as the Prior Credit Agreement), that was scheduled to mature September 18, 2020. The Revolving Credit Agreement provides for a revolving credit facility of up to $750 million with a maturity of September 18, 2020.December 5, 2024. 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, capital expenditures, acquisitions, share repurchases and other general corporate purposes. CF Industries may 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 U.S. dollars, Canadian dollars, euroeuros 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 borrowersmargin. We 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.
CF Industries is the lead borrower under the Revolving Credit Agreement. 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), CF USA Holdings, LLC (CF USA) and CF Industries Distribution Facilities, LLC (CFIDF).
In March 2020, we borrowed $500 million under the Revolving Credit Agreement to ensure we maintained ample financial flexibility in light of the uncertainty in the global markets, including the financial credit markets, caused by the COVID-19 pandemic. In April 2020, due to confidence in the functioning of the credit markets and strong nitrogen fertilizer business conditions, we repaid the $500 million of borrowings that were outstanding under the Revolving Credit Agreement as of March 31, 2020, which returned our unused borrowing capacity under the Revolving Credit Agreement to $750 million.
As of September 30, 2017,2020, we had excessunused borrowing capacity under the Revolving Credit Agreement of $695$750 million (net ofand no outstanding letters of credit of $55 million).credit. There were no borrowings outstanding under the Revolving Credit Agreement as of September 30, 20172020 or December 31, 2016, or during the nine months ended September 30, 2017.2019. Maximum borrowings outstanding under the Revolving Credit Agreement during the nine months ended September 30, 20162020 were $150 million, with a$500 million. The weighted-average annual interest rate of 1.85%borrowings under the Revolving Credit Agreement during the nine months ended September 30, 2020 was 2.05%. There were no borrowings under the Prior Credit Agreement during the nine months ended September 30, 2019.
The Revolving Credit Agreement contains representations and warranties and affirmative and negative covenants, including financial covenants. As of September 30, 2017,2020, we were in compliance with all covenants under the Revolving Credit Agreement.
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Letters of Credit
In addition to the lettersletter of credit outstandingcapacity under the Revolving Credit Agreement, as described above, we have also entered into a bilateral agreement with capacityproviding for up to issue$145 million of letters of credit up to $75 million.credit. As of September 30, 2017,2020, approximately $73$126 million of letters of credit were outstanding under this agreement.
Senior Notes
Long-term debt presented on our consolidated balance sheets as of September 30, 20172020 and December 31, 20162019 consisted of the following Public Senior Notes (unsecured)debt securities issued by CF Industries:
 Effective Interest RateSeptember 30, 2020December 31, 2019
 Principal
Carrying Amount(1)
Principal
Carrying Amount(1)
(in millions)
Public Senior Notes:
3.450% due June 20233.562%$750 $748 $750 $747 
5.150% due March 20345.279%750 741 750 740 
4.950% due June 20435.031%750 742 750 742 
5.375% due March 20445.465%750 741 750 741 
Senior Secured Notes:
3.400% due December 20213.782%250 249 250 248 
4.500% due December 20264.759%750 739 750 739 
Total long-term debt$4,000 $3,960 $4,000 $3,957 

(1)Carrying amount is net of unamortized debt discount and Senior Secured Notes:
 Effective Interest Rate September 30,
2017
 December 31,
2016
  Principal 
Carrying Amount (1)
 Principal 
Carrying Amount (1)
   (in millions)
Public Senior Notes:         
6.875% due May 20187.344% $800
 $798
 $800
 $795
7.125% due May 20207.529% 800
 792
 800
 791
3.450% due June 20233.562% 750
 746
 750
 745
5.150% due March 20345.279% 750
 739
 750
 739
4.950% due June 20435.031% 750
 741
 750
 741
5.375% due March 20445.465% 750
 741
 750
 741
Senior Secured Notes:         
3.400% due December 20213.782% 500
 493
 500
 491
4.500% due December 20264.759% 750
 736
 750
 735
Total long-term debt  $5,850
 $5,786
 $5,850
 $5,778
Less: Current portion  800
 798
 
 
Long-term debt  $5,050
 $4,988
 $5,850
 $5,778

(1)
Carrying amount is net of unamortized debt discount and deferred debt issuance costs. Total unamortized debt discount was $12deferred debt issuance costs. Total unamortized debt discount was $9 million and $10 million as of both September 30, 2017 and December 31, 2016, and total deferred debt issuance costs were $52 million and $60 million as of September 30, 2017 and December 31, 2016, respectively. 

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September 30, 2020 and December 31, 2019, respectively, and total deferred debt issuance costs were $31 million and $33 million as of September 30, 2020 and December 31, 2019, respectively. 
Public Senior Notes
On November 13, 2019, we redeemed in full all of the remaining $500 million outstanding principal amount of the 7.125% senior notes due May 2020 (the 2020 Notes), in accordance with the optional redemption provisions in the indenture governing the 2020 Notes. The total aggregate redemption price, excluding accrued interest paid on the 2020 Notes in connection with the redemption, was approximately $512 million. As a result, we recognized a loss on debt extinguishment of $12 million, primarily consisting of premiums paid for the early retirement of debt for the 2020 Notes.
Under the indentures (including the applicable supplemental indentures) governing our senior notes due 2018, 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, in connection with the effectiveness of the November 2016 amendment to our Revolving Credit Agreement, CF Holdings' wholly owned subsidiaries CF Industries Enterprises, Inc. (CFE) and CF Industries Sales, LLC (CFS) became subsidiary guarantors of the Public Senior Notes.Holdings.
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 October 30, 2017,December 13, 2019, we announced that our wholly owned subsidiary CF Industries, Inc. elected to redeem in full the entire outstanding $800redeemed $250 million principal amount, representing 50% of the 6.875%$500 million principal amount outstanding immediately prior to such redemption, of the 3.400% senior secured notes due December 2021 (the 2021 Notes) due May 2018, in accordance with the optional redemption provisions provided in the indenture governing the 2021 Notes. We estimate, basedThe total aggregate redemption price, excluding accrued interest paid on market interest ratesthe 2021 Notes redeemed in connection with the redemption, was approximately $257 million. As a result, we recognized a loss on October 30, 2017, the total amountdebt extinguishment of $9 million, primarily consisting of premiums paid for the redemptionearly retirement of debt for the 2021 Notes.
Under the terms of the applicable indenture, the 2021 Notes will be approximately $817 million. The Notes will be redeemed on December 1, 2017. See Note 11—Financing Agreements for additional information.
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 ofthe 4.500% senior secured notes due 2026 (the 2026 Notes, and together with the 2021 Notes, the Senior Secured Notes). are guaranteed on a senior secured basis, jointly and severally, by CF Holdings and each current and future domestic subsidiary of CF Holdings (other than CF Industries) that from time to time is a borrower, or guarantees indebtedness, under the Revolving Credit Agreement. The net proceeds, after deducting discounts and offering expenses, from the issuance and salesubsidiary guarantors of the Senior Secured Notes were approximately $1.23 billion.currently consist of CFE, CFS, CF USA and CFIDF.
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Subject to certain exceptions, the obligations under the Senior Secured Notes and each guarantor’s related guarantee are secured by a first priority security interest in substantially all of the assets of CF Industries, used approximately $1.18 billionCF Holdings and the subsidiary guarantors, including a pledge by CF USA of its equity interests in CFN and mortgages over certain material fee-owned domestic real properties (the Collateral). The obligations under the net proceeds forRevolving Credit Agreement, together with certain letter of credit, cash management, hedging and similar obligations and future pari passu secured indebtedness, are secured by the prepayment (including paymentCollateral on a pari passu basis with the Senior Secured Notes. The liens on the Collateral securing the obligations under the Senior Secured Notes of a make-whole amountseries and the related guarantees will be automatically released and the covenant under the applicable indenture limiting dispositions of approximately $170 millionCollateral will no longer apply if CF Holdings has an investment grade corporate rating, with a stable or better outlook, from two of three selected ratings agencies and accrued interest) in fullthere is no default or event of default under the outstanding $1.0 billion aggregate principal amount of the senior notes 2022, 2025 and 2027 (Private Senior Notes) issued by CF Industries on September 24, 2015.applicable indenture.
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.
Forward Sales and Customer Advances
We offer our customers the opportunity to purchase products from us on a forward basis at prices and on delivery dates we propose. Therefore, our reported fertilizer selling prices and margins may differ from market spot prices and margins available at the time of shipment.
Customer advances, which typically represent a portion of the contract's salescontract’s value, are received shortly after the contract is executed, with any remaining unpaid amount generally being collected by the time control transfers to the product is shipped,customer, thereby reducing or eliminating the accounts receivable related to such sales. Any cash payments received in advance from customers in connection with forward sales contracts are reflected on our consolidated balance sheets as a current liability until related orders are shippedcontrol transfers and revenue is recognized. As of September 30, 20172020 and December 31, 2016,2019, we had $92$143 million and $42$119 million, respectively, in customer advances on our consolidated balance sheets.
While customer advances are generally a significant source of liquidity, the level of forward sales contracts is affected by many factors including current market conditions and our customers'customers’ outlook of future market fundamentals. During periods of declining prices, such as the current environment, customers tend to delay purchasing fertilizer in anticipation that prices in the future will be lower than the current prices. If the level of sales under our forward sales programs were to decrease in the future, our cash received from customer advances would likely decrease and our accounts receivable balances would likely increase. Additionally, further borrowing under the Revolving Credit Agreement could become necessary. Due to the volatility inherent in our business and changing customer expectations, we cannot estimate the amount of future forward sales activity.
Under our forward sales programs, a customer may delay delivery of an order due to weather conditions or other factors. These delays generally subject the customer to potential charges for storage or may be grounds for termination of the contract by us. Such a delay in scheduled shipment or termination of a forward sales contract due to a customer'scustomer’s inability or unwillingness to perform may negatively impact our reported sales.

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Derivative Financial Instruments
We may use derivative financial instruments to reduce our exposure to changes in prices for natural gas that will be purchased in the future. Natural gas is the largest and most volatile component of our manufacturing cost for nitrogen-based fertilizers. From time to time, we may also use derivative financial instruments to reduce our exposure to changes in foreign currency exchange rates. Because we use derivative instruments, volatilityVolatility in reported quarterly earnings can result from the unrealized mark-to-market adjustments in the value of the derivatives. In the three and nine months ended September 30, 2017, we recognized unrealized net mark-to-market (gain) loss on natural gas derivatives of $(7) million and $64 million, respectively. In the three and nine months ended September 30, 2016, we recognized unrealized net mark-to-market loss (gain) on natural gas derivatives of $21 million and $(169) million, respectively. These amounts are reflected in cost of sales in our consolidated statements of operations.
Derivatives expose us to counterparties and the risks associated with their ability to meet the terms of the contracts. For derivatives that are in net asset positions, we are exposed to credit loss from nonperformance by the counterparties. We control our credit risk through the use of multiple counterparties that are multinational commercial banks, other major financial institutions or large energy companies, and, in most cases, the use of International Swaps Derivative Association (ISDA) agreements. The ISDA agreements are master netting arrangements commonly used for over-the-counter derivatives that mitigate exposure to counterparty credit risk, in part, by creating contractual rights of netting and setoff, the specifics of which vary from agreement to agreement.
The ISDA agreements to most of our derivative instruments 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 September 30, 2017 and December 31, 2016, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was $15 million and zero, 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 September 30, 2017 and December 31, 2016, we had2020, our open natural gas derivative contracts consisted of natural gas fixed price swaps and basis swaps for 75.320.5 million MMBtus and 183.0 million MMBtus, respectively. At September 30, 2017, we had $100 thousand cash collateral on deposit with counterparties for derivative contracts. AtMMBtus. As of December 31, 2016, we had no cash collateral on deposit with counterparties2019, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options 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.
Embedded Derivative Liability
Under the terms of our strategic venture with 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 $541.1 million to CHS. The payment would 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 three specified credit rating agencies or February 1, 2026. In the fourth quarter of 2016, as a result of a reduction in our credit rating, we made a $5 million payment to CHS.
This term of the strategic venture is recognized on our consolidated balance sheet as an embedded derivative and its value is included in other liabilities. See Note 13—Noncontrolling Interests for additional information.
The fair value of the embedded derivative liability as of September 30, 2017, is $30 million, which is included in other liabilities and other current liabilities on our consolidated balance sheet. Included in other operating—net in our consolidated statement of operations for the nine months ended September 30, 2017 is a loss of $4 million to adjust the liability to fair value.MMBtus.
Defined Benefit Pension Plans
We contributed $75$38 million to our pension plans during the nine months ended September 30, 2017.2020. Over the remainder of 2017,2020, we expect to contribute an additional $6$7 million to our pension plans, or a total of approximately $81$45 million for the full year 2017. The contributions in 2017 include a voluntary contribution of $59 million made in the second quarter of 2017.

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2020.
Distribution onto Noncontrolling Interest in CFN
In the third quarter of 2017,On July 31, 2020, the CFN Board of Managers approved semi-annual distribution payments for the distribution period ended June 30, 20172020 in accordance with the CFNCFN’s limited liability company agreement. On July 31, 2017,2020, CFN distributed $59$86 million to CHS for the distribution period ended June 30, 2017.2020. The estimate of the partnership distribution earned by CHS, but not yet declared, for the third quarter of 20172020 is approximately $17$32 million.
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Cash Flows
Operating Activities
Net cash provided by operating activities during the first nine months of 20172020 was $1,401$941 million, asa decrease of $262 million compared to $591$1.20 billion in the first nine months of 2019. The decrease in cash flow from operations was impacted by lower net earnings, partially offset by favorable changes in net working capital. During the first nine months of 2020, net changes in working capital contributed $69 million to cash flow from operations, while in the first nine months of 2019 net changes in working capital reduced cash flow from operations by $81 million. As further described under Terra Amended Tax Returns above, we received income tax refunds, including interest, of $108 million in the first nine months of 2016. The $810 million increase was primarily due to working capital changes including the receipt of our $815 million income tax refund2020 related to the claimfinalization of the amended U.S. tax returns related to carry backTerra. These refunds offset cash tax payments and contributed to the 2016 federal tax loss to prior income tax years. Thenet increase in net cash provided by operating activities was also a result of entering 2017 with a lower level of customer advances than 2016 due to customer reluctance to enter into prepaid contracts in a declining fertilizer price environment. These increases were partially offset by higher contributions to our pension plans. In the first nine months of 2017, we contributed $75 million to our pension plans compared to $17 millionworking capital in the first nine months of 2016.2020. We expect to be a domestic net cash tax payer going forward.
Investing Activities
Net cash used in investing activities was $251$201 million in the first nine months of 20172020 as compared to $1,791$211 million in the first nine months of 2016. The $1,5402019. Net cash used in investing activities in the first nine months of 2019 included proceeds of $55 million decrease is due primarilyrelated to lower capital expenditures as a result of the completionsale of our capacity expansion projects in Donaldsonville, Louisiana and Port Neal, Iowa at the end of 2016.Pine Bend facility. During the first nine months of 2017,2020, capital expenditures totaled $290$206 million compared to $1,819$297 million in the first nine months of 2016.2019. The decrease in capital expenditures in 2020 was due primarily to actions taken to defer certain non-essential capital project activity as a result of the COVID-19 pandemic and an increase in maintenance activity.
Financing Activities
Net cash used in financing activities was $335$473 million in the first nine months of 20172020 compared to net cash provided by financing activities of $2,469$653 million in the same periodfirst nine months of 2016.2019. The decrease was due primarily to lower share repurchases. In the first nine months of 2016, CHS purchased a minority equity interest2020, we spent $100 million to repurchase shares of common stock compared to $280 million in CFNthe first nine months of 2019, which included approximately $33 million related to shares repurchased in late 2018 that were paid for $2.8 billion.in 2019. Dividends paid on common stock were $210 million and $209 million induring the nine months ended September 30, 20172020 and 2016,2019 were $193 million and $200 million, respectively. Distributions to noncontrolling interest totaled $174 million in the first nine months of 2020 as compared to $186 million in the first nine months of 2019.
Contractual Obligations
ExceptDuring the nine months ended September 30, 2020, except for our October 30, 2017 announcement to redeem in full the entire outstanding $800borrowing and repayment of $500 million principal amount ofunder the Notes due May 2018 on December 1, 2017,Revolving Credit Agreement, there have beenwere no material changes outside the ordinary course of business to our contractual obligations as described under the heading “Contractual Obligations” in Item 7 of our 2016 Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 23, 2017.24, 2020.

Off-Balance Sheet Arrangements
We have operating leases for certain property and equipment under various noncancelable agreements, including rail car leases and barge tow charters that are utilized for the distribution of our products. The rail car leases currently have minimum terms ranging from one to eleven years and the barge charter commitments currently have terms ranging from one to seven years. We also have terminal and warehouse storage agreements for our distribution system, some of which contain minimum throughput requirements. The storage agreements contain minimum terms ranging from one to five years and commonly contain automatic annual renewal provisions thereafter unless canceled by either party. See Note 24—Leases in the notes to our consolidated financial statements included in our 2016 Annual Report on Form 10-K filed with the SEC on February 23, 2017 for additional information concerning leases.
We do not have any other off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Critical Accounting Policies and Estimates
There were no changes to our significant accounting policies or estimates during the first nine months of 2017.2020.

Recent Accounting Pronouncements
See Note 2—New Accounting Standards for a discussion of recent accounting pronouncements.

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CF INDUSTRIES HOLDINGS, INC.


FORWARD-LOOKING STATEMENTS
From time to time, in this Quarterly Report on Form 10-Q as well as in other written reports and oral statements, we make forward-looking statements that are not statements of historical fact and may involve a number of risks and uncertainties. These statements relate to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. These statements may also relate to our prospects, future developments and business strategies. We have used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "will,"“anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will,” or "would"“would” and similar terms and phrases, including references to assumptions, to identify forward-looking statements in this document. These forward-looking statements are made based on currently available competitive, financial and economic data, our current expectations, estimates, forecasts and projections about the industries and markets in which we operate and management'smanagement’s beliefs and assumptions concerning future events affecting us. These statements are not guarantees of future performance and are subject to risks, uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Therefore, our actual results may differ materially from what is expressed in or implied by any forward-looking statements. We want to caution you not to place undue reliance on any forward-looking statements. We do not undertake any responsibility to release publicly any revisions to these forward-looking statements to take into account events or circumstances that occur after the date of this document. Additionally, we do not undertake any responsibility to provide updates regarding the occurrence of any unanticipated events which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this document.
Important factors that could cause actual results to differ materially from our expectations are disclosed under "Risk Factors"“Risk Factors” in Item 1A in our 2016 Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 23, 2017.24, 2020, and Part II, Item 1A of this Quarterly Report on Form 10-Q. Such factors include, among others:
the impact of the novel coronavirus disease 2019 (COVID-19) pandemic, including measures taken by governmental authorities to slow the spread of the virus, on our business and operations;
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,prices;
the global commodity nature of our fertilizer products, the conditions in the international market for nitrogen products, and the intense global competition from other fertilizer producers;
conditions in the U.S.United States, Europe and Europeanother agricultural industry;areas;
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;indebtedness and any additional indebtedness that may be incurred;
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 our revolving credit agreement and the agreements governing our indebtedness;
downgrades of our credit ratings;
risks associated with cyber security;
weather conditions;
risks associated with our ability to utilize our tax net operating losses and other tax assets, including the risk that the use of such tax benefits is limited by an "ownership change;"
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;
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;
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;
our reliance on a limited number of key facilities;
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.

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
We are exposed to the impact of changes in commodity prices, interest rates and foreign currency exchange rates.
Commodity Prices
Our net sales, cash flows and estimates of future cash flows related to nitrogen-based fertilizers are sensitive to changes in fertilizer prices as well as changes in the prices of natural gas and other raw materials unless these costs have been fixed or hedged. A $1.00 per MMBtu change in the price of natural gas would change the cost to produce a ton of ammonia, granular urea, UAN (32%), and AN by approximately $32, $22, $14$33, $21, $15 and $15, respectively.
Natural gas is the largest and most volatile component of the manufacturing cost for nitrogen-based fertilizers. We manageproducts. At certain times, we have managed the risk of changes in natural gas prices primarily withthrough the use of derivative financial instruments covering periods through December 2018.instruments. The derivative instruments that we may use for this purpose are primarily natural gas fixed price swaps, basis swaps and natural gas options. These derivatives settle using primarily a NYMEX futures price indexes,index, which represent the basis for fair value at any given time. The contracts represent anticipated natural gas needs for future periods and settlements are scheduled to coincide with anticipated natural gas purchases during those future periods. As of September 30, 2020, we had natural gas fixed price swaps and basis swaps covering certain periods through March 2021.
As of September 30, 20172020 and December 31, 2016,2019, we had open natural gas derivative contracts for 75.320.5 million MMBtus and 183.041.1 million MMBtus, respectively. A $1.00 per MMBtu increase in the forward curve prices of natural gas at September 30, 20172020 would result in a favorable change in the fair value of these derivative positions of $62$16 million, and a $1.00 per MMBtu decrease in the forward curve prices of natural gas would change their fair value unfavorably by $62$16 million.
From time to time we may purchase nitrogen products on the open market to augment or replace production at our facilities.
Interest Rate FluctuationsRates
As of September 30, 2017,2020, we had eightsix series of senior notes totaling $5.85$4.00 billion of principal outstanding with maturity dates of May 1, 2018, May 1, 2020, December 1, 2021, June 1, 2023, December 1, 2026, March 15, 2034, June 1, 2043 and March 15, 2044. The senior notes have fixed interest rates. As of September 30, 2017,2020, the carrying value and fair value of our senior notes was approximately $5.79$3.96 billion and $5.92$4.58 billion, respectively.
Borrowings under the Revolving Credit Agreement bear current market rates of interest and we are subject to interest rate risk on such borrowings. There were no borrowings outstanding under the Revolving Credit Agreement as of September 30, 20172020, or December 31, 2016, or during the nine months ended September 30, 2017.2019. Maximum borrowings outstanding under the Revolving Credit Agreement during the nine months ended September 30, 20162020 were $150 million with a$500 million. The weighted-average annual interest rate of 1.85%borrowings under the Revolving Credit Agreement during the nine months ended September 30, 2020 was 2.05%. There were no borrowings under the Prior Credit Agreement during the nine months ended September 30, 2019.
Foreign Currency Exchange Rates
From the fourth quarter of 2012 through 2016, we had entered into euro/U.S. dollar derivative hedging transactions related to the euro-denominated construction costs associated with our capacity expansion projects at our Donaldsonville, Louisiana and Port Neal, Iowa facilities. All of these foreign currency derivatives settled prior to December 31, 2016.
We are directly exposed to changes in the value of the Canadian dollar, the British pound and the euro. Outside of the transactions described above, weWe generally do not maintain any exchange rate derivatives or hedges related to these currencies.

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ITEM 4.    CONTROLS AND PROCEDURES.
(a)    Disclosure Controls and Procedures.  The Company'sCompany’s management, with the participation of the Company'sCompany’s principal executive officer and principal financial officer, has evaluated the effectiveness of the Company'sCompany’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, the Company'sCompany’s principal executive officer and principal financial officer have concluded that, as of the end of such period, the Company'sCompany’s disclosure controls and procedures are effective in (i) ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC'sSEC’s rules and forms and (ii) ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company'sCompany’s management, including the Company'sCompany’s principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
(b)    Changes in Internal Control Over Financial Reporting. There have not been any changes in the Company'sCompany’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 20172020 that have materially affected, or are reasonably likely to materially affect, the Company'sCompany’s internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1.    LEGAL PROCEEDINGS.
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 beenwere 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 beenwere consolidated for discovery and pretrial proceedings in the District Court of McLennan County under the caption "In“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 beenwere 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'Entities’ Motions for Summary Judgment in August 2015. Over onethree hundred forty 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 group of cases is expected to be set for trial is scheduled to begin on January 16, 2018.in 2021. 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.
Environmental
Florida Environmental Matter
On March 17, 2014, we completed the sale of our phosphate mining and manufacturing business, which was located in Florida, to The Mosaic Company (Mosaic). Pursuant to the terms of the definitive agreement executed in October 2013, Mosaic assumed the following environmental matter and we agreed to indemnify Mosaic with respect to losses arising out of the matter below, subject to a maximum indemnification cap and the other terms of the definitive agreement.
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Clean Air Act Notice of Violation
We received a Notice of Violation (NOV) from the EPA by letter dated June 16, 2010, alleging that we violated the Prevention of Significant Deterioration (PSD) Clean Air Act regulations relating to certain projects undertaken at the former Plant City, Florida facility’s sulfuric acid plants. This NOV further alleges that the actions that are the basis for the alleged PSD violations also resulted in violations of Title V air operating permit regulations. Finally, the NOV alleges that we failed to comply with certain compliance dates established by hazardous air pollutant regulations for phosphoric acid manufacturing plants and phosphate fertilizer production plants. We had several meetings with the EPA with respect to this matter prior to our sale of the phosphate mining and manufacturing business in March 2014. We and Mosaic have separately had continued discussions with the EPA subsequent to our sale of the phosphate mining and manufacturing business with respect to this matter.
We reached a settlement with the EPA and the United States Department of Justice to resolve the Plant City Clean Air Act matter, and executed a final stipulation of settlement that was approved by the United States District Court for the Middle District of Florida on August 5, 2020. The settlement required us to pay a civil penalty of $550,000 to the United States, but did not include any required injunctive relief or other corrective actions.
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ITEM 1A.    RISK FACTORS.
The disclosure below modifies the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 24, 2020. These risks, along with those previously disclosed, could materially adversely affect our business, financial condition, results of operations or cash flows.

Our business and operations may be adversely affected by the COVID-19 pandemic.
The outbreak and pandemic of the coronavirus disease 2019 (COVID-19) could have a material and adverse effect on our business, financial condition, results of operations or cash flows. The rapid spread of COVID-19 has resulted in governmental authorities implementing numerous measures to try to contain the virus, such as travel bans and restrictions, quarantines, shelter in place orders and shutdowns. Even though our business operations are designated as part of the critical infrastructure by the United States, United Kingdom and Canadian governments and the specific state and provincial governments in which we operate, these measures have impacted and may further impact all or portions of our workforce and operations. If significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, facility closures or other restrictions, we may be unable to meet customer demand or perform fully under our contracts.
In addition, our customers, suppliers and third party service providers, including transportation providers, have been, or may be in the future, affected by COVID-19, including the impact of measures taken by federal and local governments to slow the spread of the virus. Any negative impacts on our customers, suppliers and third party service providers could negatively impact our business, financial condition, results of operations or cash flows. For example, global demand for nitrogen for industrial use has been negatively affected by the pandemic, and we expect this to continue as long as economic activity remains low due to the impacts of the pandemic. Restrictions on or disruptions of transportation, port closures or increased border controls or closures, or other impacts on domestic and global supply chains or distribution channels, could increase our costs, limit our ability to meet customer demand or otherwise have a material adverse effect on our business, financial condition, results of operations or cash flows.
The COVID-19 pandemic has reduced and may further reduce the demand for energy, including crude oil, as well as natural gas and coal, which are nitrogen feedstocks. Reduced demand for nitrogen feedstocks has reduced and could further reduce the cost of nitrogen production outside of North America, increasing global nitrogen supply and reducing the market prices of our products. Lower demand for crude oil could also reduce the supply and therefore increase the cost of natural gas, which is the principal raw material used in our production of nitrogen fertilizers. In addition, lower crude oil prices, and a reduced demand for gasoline resulting from actions to slow the spread of COVID-19, have reduced ethanol production and therefore negatively impacted the demand for corn, which is a significant factor driving customer demand for our nitrogen fertilizers. The pandemic has also disrupted traditional food supply chains, which may have a material impact on livestock and food demand, including the demand for corn. Each of these consequences could have a material adverse effect on our business, financial condition, results of operations or cash flows.
While the COVID-19 pandemic did not have a material adverse effect on our reported results for the three and nine months ended September 30, 2020, we are unable to predict the ultimate impact it may have on our business, financial condition, results of operations or cash flows. The extent to which our operations may be impacted by COVID-19 will depend on future developments, which are highly uncertain and cannot be accurately predicted, including the further spread of the virus, the duration of the COVID-19 outbreak and the type and duration of actions that may be taken by various governmental authorities in response to the outbreak. The pandemic significantly increased global market uncertainty and caused an economic slowdown, which resulted in a global recession. Persistent weakness in economic activity caused by a deterioration of global market and economic conditions could materially adversely affect our business, financial condition, results of operations or cash flows.
The impact of COVID-19 may also exacerbate other risks discussed in Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 24, 2020, any of which could have a material adverse effect on us. This situation continues to change and additional impacts may arise that we are not aware of currently.

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ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
There were no stockThe following table sets forth share repurchases, duringon a trade date basis, for each of the three months of the quarter ended September 30, 2017.2020.
 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(2)
Maximum number (or
approximate dollar
value) of shares (or
units) that may yet be
purchased under the
plans or programs
(in thousands)(2)
July 1, 2020 - July 31, 202092 $31.33 — $563,407 
August 1, 2020 - August 31, 202027,300 33.13 — 563,407 
September 1, 2020 - September 30, 2020— — — 563,407 
Total27,392 

$33.12 —  

(1)Represents shares withheld to pay employee tax obligations upon the lapse of restrictions on restricted stock units and the exercise of nonqualified stock options.
(2)On February 13, 2019, our Board of Directors authorized management to repurchase CF Holdings common stock for a total expenditure of up to $1 billion through December 31, 2021 (the 2019 Share Repurchase Program). This program is discussed in Note 14—Stockholders’ Equity, in the notes to the unaudited consolidated financial statements included in Part I.





ITEM 6.    EXHIBITS.
ITEM 6.    EXHIBITS.
A list of exhibits filed with this Quarterly Report on Form 10-Q (or incorporated by reference to exhibits previously filed or furnished) is provided in the Exhibit Index on page 6053 of this report.

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EXHIBIT INDEX
Exhibit No.Description





101
The following financial information from CF Industries Holdings, Inc.'s’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017,2020, formatted in Inline 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
104 Cover Page Interactive Data File (included in Exhibit 101)



    

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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
CF INDUSTRIES HOLDINGS, INC.
Date: November 2, 20175, 2020By:/s/ W. ANTHONY WILL
W. Anthony Will
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 2, 20175, 2020By:/s/ DENNIS P. KELLEHERCHRISTOPHER D. BOHN
Dennis P. KelleherChristopher D. Bohn
Senior Vice President and Chief Financial Officer (Principal Financial Officer)

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