Condensed Consolidating Financial Statements | Condensed Consolidating Financial Statements The following condensed consolidating financial information is presented in accordance with SEC Regulation S-X Rule 3-10, Financial statements of guarantors and issuers of guaranteed securities registered or being registered , and relates to (i) the senior notes due 2020, 2023, 2034, 2043 and 2044 (described in Note 12—Financing Agreements and referred to in this report as the Public Senior Notes) issued by CF Industries, Inc. (CF Industries), a 100% owned subsidiary of CF Industries Holdings, Inc. (Parent), and guarantees of the Public Senior Notes by Parent and by CFE, CFS, CF USA and CFIDF (the Subsidiary Guarantors), which are 100% owned subsidiaries of Parent, and (ii) debt securities of CF Industries (Other Debt Securities), and guarantees thereof by Parent and the Subsidiary Guarantors, that may be offered and sold from time to time under registration statements that may be filed by Parent, CF Industries and the Subsidiary Guarantors with the SEC. In the event that a subsidiary of Parent, other than CF Industries, becomes a borrower or a guarantor under the Revolving Credit Agreement (or any renewal, replacement or refinancing thereof), such subsidiary would be required to become a guarantor of the Public Senior Notes, provided that such requirement will no longer apply with respect to the Public Senior Notes due 2023, 2034, 2043 and 2044 following the repayment of the Public Senior Notes due 2020 or the subsidiaries of Parent, other than CF Industries, otherwise becoming no longer subject to such a requirement to guarantee the Public Senior Notes due 2020. The Subsidiary Guarantors became guarantors of the Public Senior Notes as a result of this requirement. All of the guarantees of the Public Senior Notes are, and we have assumed for purposes of this presentation of condensed consolidating financial information that the guarantees of any Other Debt Securities would be, full and unconditional (as such term is defined in SEC Regulation S-X Rule 3-10(h)) and joint and several. The guarantee of a Subsidiary Guarantor will be automatically released with respect to a series of the Public Senior Notes (1) upon the release, discharge or termination of such Subsidiary Guarantor’s guarantee of the Revolving Credit Agreement (or any renewal, replacement or refinancing thereof), (2) upon legal defeasance with respect to the Public Senior Notes of such series or satisfaction and discharge of the indenture with respect to such series of Public Senior Notes or (3) in the case of the Public Senior Notes due 2023, 2034, 2043 and 2044, upon the discharge, termination or release of, or the release of such Subsidiary Guarantor from its obligations under, such Subsidiary Guarantor’s guarantee of the Public Senior Notes due 2020, including, without limitation, any such discharge, termination or release as a result of retirement, discharge or legal or covenant defeasance of, or satisfaction and discharge of the supplemental indenture governing, the Public Senior Notes due 2020. For purposes of the presentation of condensed consolidating financial information, the subsidiaries of Parent other than CF Industries and the Subsidiary Guarantors are referred to as the Non-Guarantors. Presented below are condensed consolidating statements of operations and statements of comprehensive income for Parent, CF Industries, the Subsidiary Guarantors and the Non-Guarantors for the three and six months ended June 30, 2019 and 2018 , condensed consolidating statements of cash flows for Parent, CF Industries, the Subsidiary Guarantors and the Non-Guarantors for the six months ended June 30, 2019 and 2018 , and condensed consolidating balance sheets for Parent, CF Industries, the Subsidiary Guarantors and the Non-Guarantors as of June 30, 2019 and December 31, 2018 . 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. As of June 30, 2019 , 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-Guarantors column. Due to the partnership tax treatment, these subsidiaries do not record taxes on their financial statements. The tax provision pertaining to the income of these partnerships, plus applicable deferred tax balances are reflected on the financial statements of the parent company owner that is included in the Subsidiary Guarantors column in the following financial information. Liabilities related to benefit plan obligations are reflected on the legal entity that funds the obligation, while the benefit plan expense is included on the legal entity to which the employee provides services. Condensed Consolidating Statement of Operations Three months ended June 30, 2019 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (in millions) Net sales $ — $ 96 $ 1,262 $ 989 $ (845 ) $ 1,502 Cost of sales — 69 1,052 725 (843 ) 1,003 Gross margin — 27 210 264 (2 ) 499 Selling, general and administrative expenses 1 (2 ) 46 19 (2 ) 62 Other operating—net — 3 (40 ) — — (37 ) Total other operating costs and expenses 1 1 6 19 (2 ) 25 Equity in earnings of operating affiliates — — — 1 — 1 Operating (loss) earnings (1 ) 26 204 246 — 475 Interest expense 1 62 — — (4 ) 59 Interest expense—mandatorily redeemable preferred shares — — — 1 (1 ) — Interest income — — (5 ) (4 ) 5 (4 ) Net earnings of wholly owned subsidiaries (285 ) (314 ) (199 ) — 798 — Other non-operating—net — — (1 ) (1 ) — (2 ) Earnings before income taxes 283 278 409 250 (798 ) 422 Income tax (benefit) provision (1 ) (7 ) 104 6 — 102 Net earnings 284 285 305 244 (798 ) 320 Less: Net earnings attributable to noncontrolling interests — — — 37 — 37 Net earnings attributable to common stockholders $ 284 $ 285 $ 305 $ 207 $ (798 ) $ 283 Condensed Consolidating Statement of Comprehensive Income Three months ended June 30, 2019 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (in millions) Net earnings $ 284 $ 285 $ 305 $ 244 $ (798 ) $ 320 Other comprehensive (loss) income (3 ) (3 ) 2 (7 ) 8 (3 ) Comprehensive income 281 282 307 237 (790 ) 317 Less: Comprehensive income attributable to noncontrolling interests — — — 37 — 37 Comprehensive income attributable to common stockholders $ 281 $ 282 $ 307 $ 200 $ (790 ) $ 280 Condensed Consolidating Statement of Operations Six months ended June 30, 2019 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (in millions) Net sales $ — $ 186 $ 2,001 $ 1,939 $ (1,623 ) $ 2,503 Cost of sales — 157 1,768 1,478 (1,619 ) 1,784 Gross margin — 29 233 461 (4 ) 719 Selling, general and administrative expenses 2 (1 ) 85 38 (4 ) 120 Other operating—net — 4 (39 ) 2 — (33 ) Total other operating costs and expenses 2 3 46 40 (4 ) 87 Equity in earnings of operating affiliates — 1 — 7 — 8 Operating (loss) earnings (2 ) 27 187 428 — 640 Interest expense 1 123 1 1 (7 ) 119 Interest expense—mandatorily redeemable preferred shares — — — 2 (2 ) — Interest income (1 ) — (8 ) (8 ) 9 (8 ) Net earnings of wholly owned subsidiaries (375 ) (451 ) (376 ) — 1,202 — Other non-operating—net — — (1 ) (2 ) — (3 ) Earnings before income taxes 373 355 571 435 (1,202 ) 532 Income tax (benefit) provision (1 ) (20 ) 134 (19 ) — 94 Net earnings 374 375 437 454 (1,202 ) 438 Less: Net earnings attributable to noncontrolling interests — — — 65 — 65 Net earnings attributable to common stockholders $ 374 $ 375 $ 437 $ 389 $ (1,202 ) $ 373 Condensed Consolidating Statement of Comprehensive Income Six months ended June 30, 2019 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (in millions) Net earnings $ 374 $ 375 $ 437 $ 454 $ (1,202 ) $ 438 Other comprehensive income 28 28 22 24 (75 ) 27 Comprehensive income 402 403 459 478 (1,277 ) 465 Less: Comprehensive income attributable to noncontrolling interests — — — 65 — 65 Comprehensive income attributable to common stockholders $ 402 $ 403 $ 459 $ 413 $ (1,277 ) $ 400 Condensed Consolidating Statement of Operations Three months ended June 30, 2018 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (in millions) Net sales $ — $ 85 $ 1,063 $ 918 $ (766 ) $ 1,300 Cost of sales — 69 922 761 (764 ) 988 Gross margin — 16 141 157 (2 ) 312 Selling, general and administrative expenses — 2 33 20 (2 ) 53 Other operating—net — 5 1 (3 ) — 3 Total other operating costs and expenses — 7 34 17 (2 ) 56 Equity in (losses) earnings of operating affiliate — (1 ) — 19 — 18 Operating earnings — 8 107 159 — 274 Interest expense — 61 6 2 (8 ) 61 Interest income — (1 ) (2 ) (7 ) 8 (2 ) Net earnings of wholly owned subsidiaries (148 ) (188 ) (139 ) — 475 — Other non-operating—net — — — (3 ) — (3 ) Earnings before income taxes 148 136 242 167 (475 ) 218 Income tax (benefit) provision — (12 ) 56 — — 44 Net earnings 148 148 186 167 (475 ) 174 Less: Net earnings attributable to noncontrolling interests — — — 26 — 26 Net earnings attributable to common stockholders $ 148 $ 148 $ 186 $ 141 $ (475 ) $ 148 Condensed Consolidating Statement of Comprehensive Income Three months ended June 30, 2018 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (in millions) Net earnings $ 148 $ 148 $ 186 $ 167 $ (475 ) $ 174 Other comprehensive loss (61 ) (61 ) (35 ) (62 ) 158 (61 ) Comprehensive income 87 87 151 105 (317 ) 113 Less: Comprehensive income attributable to noncontrolling interests — — — 26 — 26 Comprehensive income attributable to common stockholders $ 87 $ 87 $ 151 $ 79 $ (317 ) $ 87 Condensed Consolidating Statement of Operations Six months ended June 30, 2018 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (in millions) Net sales $ — $ 190 $ 1,775 $ 1,803 $ (1,511 ) $ 2,257 Cost of sales — 159 1,638 1,461 (1,503 ) 1,755 Gross margin — 31 137 342 (8 ) 502 Selling, general and administrative expenses 1 3 72 42 (8 ) 110 Other operating—net — (8 ) (2 ) (8 ) — (18 ) Total other operating costs and expenses 1 (5 ) 70 34 (8 ) 92 Equity in earnings of operating affiliates — 2 — 23 — 25 Operating (loss) earnings (1 ) 38 67 331 — 435 Interest expense — 123 10 3 (15 ) 121 Interest income (1 ) (3 ) (5 ) (11 ) 15 (5 ) Net earnings of wholly owned subsidiaries (211 ) (275 ) (274 ) — 760 — Other non-operating—net — — — (4 ) — (4 ) Earnings before income taxes 211 193 336 343 (760 ) 323 Income tax (benefit) provision — (18 ) 73 6 — 61 Net earnings 211 211 263 337 (760 ) 262 Less: Net earnings attributable to noncontrolling interests — — — 51 — 51 Net earnings attributable to common stockholders $ 211 $ 211 $ 263 $ 286 $ (760 ) $ 211 Condensed Consolidating Statement of Comprehensive Income Six months ended June 30, 2018 Parent CF Industries Subsidiary Guarantors Non-Guarantors Eliminations Consolidated (in millions) Net earnings $ 211 $ 211 $ 263 $ 337 $ (760 ) $ 262 Other comprehensive loss (46 ) (46 ) (34 ) (47 ) 128 (45 ) Comprehensive income 165 165 229 290 (632 ) 217 Less: Comprehensive income attributable to noncontrolling interests — — — 51 — 51 Comprehensive income attributable to common stockholders $ 165 $ 165 $ 229 $ 239 $ (632 ) $ 166 Condensed Consolidating Balance Sheet June 30, 2019 Parent CF Industries Subsidiary Guarantors Non- Guarantors Eliminations and Reclassifications Consolidated (in millions) Assets Current assets: Cash and cash equivalents $ 68 $ 10 $ 45 $ 735 $ — $ 858 Accounts and notes receivable—net 145 512 1,376 804 (2,524 ) 313 Inventories — — 136 154 — 290 Prepaid income taxes — — — 1 — 1 Other current assets — — 18 8 — 26 Total current assets 213 522 1,575 1,702 (2,524 ) 1,488 Property, plant and equipment—net — — 109 8,227 — 8,336 Investments in affiliates 3,893 8,377 6,719 101 (18,989 ) 101 Goodwill — — 2,064 289 — 2,353 Operating lease right-of-use assets — — 276 5 — 281 Other assets — 3 146 327 (172 ) 304 Total assets $ 4,106 $ 8,902 $ 10,889 $ 10,651 $ (21,685 ) $ 12,863 Liabilities and Equity Current liabilities: Accounts and notes payable and accrued expenses $ 1,040 $ 293 $ 1,309 $ 298 $ (2,524 ) $ 416 Income taxes payable — — 13 — — 13 Customer advances — — 21 — — 21 Current operating lease liabilities — — 87 2 — 89 Current maturities of long-term debt — 498 — — — 498 Other current liabilities — — 5 — — 5 Total current liabilities 1,040 791 1,435 300 (2,524 ) 1,042 Long-term debt, net of current maturities — 4,203 44 126 (170 ) 4,203 Dividends payable—mandatorily redeemable preferred shares — — — 2 (2 ) — Deferred income taxes — — 1,047 160 — 1,207 Operating lease liabilities — — 194 3 — 197 Other liabilities — 15 230 151 — 396 Equity: Stockholders’ equity: Preferred stock — — — — — — Common stock 2 — — 5,147 (5,147 ) 2 Paid-in capital 1,299 1,799 8,760 1,263 (11,822 ) 1,299 Retained earnings 2,111 2,438 (558 ) 1,039 (2,919 ) 2,111 Treasury stock (2 ) — — — — (2 ) Accumulated other comprehensive loss (344 ) (344 ) (255 ) (300 ) 899 (344 ) Total stockholders’ equity 3,066 3,893 7,947 7,149 (18,989 ) 3,066 Noncontrolling interests — — (8 ) 2,760 — 2,752 Total equity 3,066 3,893 7,939 9,909 (18,989 ) 5,818 Total liabilities and equity $ 4,106 $ 8,902 $ 10,889 $ 10,651 $ (21,685 ) $ 12,863 Condensed Consolidating Balance Sheet December 31, 2018 Parent CF Industries Subsidiary Guarantors Non- Guarantors Eliminations and Reclassifications Consolidated (in millions) Assets Current assets: Cash and cash equivalents $ 36 $ 27 $ 65 $ 554 $ — $ 682 Accounts and notes receivable—net 135 500 1,203 911 (2,514 ) 235 Inventories — 4 142 163 — 309 Prepaid income taxes — — 24 4 — 28 Other current assets — — 15 5 — 20 Total current assets 171 531 1,449 1,637 (2,514 ) 1,274 Property, plant and equipment—net — — 118 8,505 — 8,623 Investments in affiliates 3,656 8,208 6,857 94 (18,722 ) 93 Goodwill — — 2,064 289 — 2,353 Other assets — 4 126 320 (132 ) 318 Total assets $ 3,827 $ 8,743 $ 10,614 $ 10,845 $ (21,368 ) $ 12,661 Liabilities and Equity Current liabilities: Accounts and notes payable and accrued expenses $ 870 $ 374 $ 1,429 $ 386 $ (2,514 ) $ 545 Income taxes payable — — 5 — — 5 Customer advances — — 149 — — 149 Other current liabilities — — 6 — — 6 Total current liabilities 870 374 1,589 386 (2,514 ) 705 Long-term debt — 4,698 43 89 (132 ) 4,698 Deferred income taxes — — 960 157 — 1,117 Other liabilities — 15 232 163 — 410 Equity: Stockholders’ equity: Preferred stock — — — — — — Common stock 2 — — 5,363 (5,363 ) 2 Paid-in capital 1,368 1,799 9,070 1,265 (12,134 ) 1,368 Retained earnings 2,463 2,229 (995 ) 965 (2,199 ) 2,463 Treasury stock (504 ) — — — — (504 ) Accumulated other comprehensive loss (372 ) (372 ) (277 ) (324 ) 974 (371 ) Total stockholders’ equity 2,957 3,656 7,798 7,269 (18,722 ) 2,958 Noncontrolling interests — — (8 ) 2,781 — 2,773 Total equity 2,957 3,656 7,790 10,050 (18,722 ) 5,731 Total liabilities and equity $ 3,827 $ 8,743 $ 10,614 $ 10,845 $ (21,368 ) $ 12,661 Condensed Consolidating Statement of Cash Flows Six months ended June 30, 2019 Parent CF Industries Subsidiary Guarantors Non- Guarantors Eliminations Consolidated (in millions) Operating Activities: Net earnings $ 374 $ 375 $ 437 $ 454 $ (1,202 ) $ 438 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: Depreciation and amortization — 4 12 424 — 440 Deferred income taxes — — 86 (1 ) — 85 Stock-based compensation expense 17 — — — — 17 Unrealized net loss on natural gas derivatives — — 1 — — 1 Unrealized loss on embedded derivative — — 2 — — 2 Gain on disposal of property, plant and equipment — — (45 ) — — (45 ) Undistributed earnings of affiliates—net (375 ) (451 ) (376 ) (10 ) 1,202 (10 ) Changes in: Intercompany accounts receivable/accounts payable—net (9 ) (11 ) (22 ) 42 — — Accounts receivable—net — (1 ) (70 ) (7 ) — (78 ) Inventories — 4 5 12 — 21 Accrued and prepaid income taxes (1 ) (20 ) 63 (7 ) — 35 Accounts and notes payable and accrued expenses — (4 ) (21 ) (69 ) — (94 ) Customer advances — — (128 ) — — (128 ) Other—net — — 2 7 — 9 Net cash provided by (used in) operating activities 6 (104 ) (54 ) 845 — 693 Investing Activities: Additions to property, plant and equipment — — (8 ) (146 ) — (154 ) Proceeds from sale of property, plant and equipment — — 55 8 — 63 Distributions received from unconsolidated affiliates — 225 209 (434 ) — — Net cash provided by (used in) investing activities — 225 256 (572 ) — (91 ) Financing Activities: Long-term debt—net — — (39 ) 39 — — Short-term debt—net 199 29 (183 ) (45 ) — — Dividends paid on common stock (133 ) (167 ) — — 167 (133 ) Dividends to/from affiliates 167 — — — (167 ) — Distribution to noncontrolling interest — — — (86 ) — (86 ) Purchases of treasury stock (209 ) — — — — (209 ) Issuances of common stock under employee stock plans 6 — — — — 6 Shares withheld for taxes (4 ) — — — — (4 ) Net cash provided by (used in) financing activities 26 (138 ) (222 ) (92 ) — (426 ) Increase (decrease) in cash and cash equivalents 32 (17 ) (20 ) 181 — 176 Cash and cash equivalents at beginning of period 36 27 65 554 — 682 Cash and cash equivalents at end of period $ 68 $ 10 $ 45 $ 735 $ — $ 858 Condensed Consolidating Statement of Cash Flows Six months ended June 30, 2018 Parent CF Industries Subsidiary Guarantors Non- Guarantors Eliminations Consolidated (in millions) Operating Activities: Net earnings $ 211 $ 211 $ 263 $ 337 $ (760 ) $ 262 Adjustments to reconcile net earnings to net cash (used in) provided by operating activities: Depreciation and amortization — 4 11 419 — 434 Deferred income taxes — — 12 (10 ) — 2 Stock-based compensation expense 11 — — — — 11 Unrealized net loss (gain) on natural gas derivatives — — (5 ) (3 ) — (8 ) Unrealized loss on embedded derivative — — 1 — — 1 Undistributed earnings of affiliates—net (211 ) (275 ) (274 ) (3 ) 760 (3 ) Changes in: Intercompany accounts receivable/accounts payable—net (15 ) (84 ) 124 (25 ) — — Accounts receivable—net — (16 ) (20 ) 2 — (34 ) Inventories — 4 4 13 — 21 Accrued and prepaid income taxes — (18 ) 69 1 — 52 Accounts and notes payable and accrued expenses — (9 ) (1 ) (36 ) — (46 ) Customer advances — — (68 ) — — (68 ) Other—net — (1 ) 4 (29 ) — (26 ) Net cash (used in) provided by operating activities (4 ) (184 ) 120 666 — 598 Investing Activities: Additions to property, plant and equipment — — (4 ) (141 ) — (145 ) Proceeds from sale of property, plant and equipment — — — 16 — 16 Distributions received from unconsolidated affiliates — — 184 (174 ) — 10 Investments in consolidated subs - capital contributions — (31 ) (415 ) 446 — — Other—net — — — 1 — 1 Net cash (used in) provided by investing activities — (31 ) (235 ) 148 — (118 ) Financing Activities: Long-term debt—net — — 178 (178 ) — — Short-term debt—net 141 202 (371 ) 28 — — Financing fees — 1 — — — 1 Dividends paid on common stock (140 ) — — (49 ) 49 (140 ) Dividends to/from affiliates — — 49 — (49 ) — Acquisition of noncontrolling interest in TNCLP — — — (388 ) — (388 ) Distributions to noncontrolling interests — — — (59 ) — (59 ) Issuances of common stock under employee stock plans 4 — — — — 4 Shares withheld for taxes (1 ) — — — — (1 ) Net cash provided by (used in) financing activities 4 203 (144 ) (646 ) — (583 ) Effect of exchange rate changes on cash and cash equivalents — — — (4 ) — (4 ) (Decrease) increase in cash and cash equivalents — (12 ) (259 ) 164 — (107 ) Cash and cash equivalents at beginning of period — 15 388 432 — 835 Cash and cash equivalents at end of period $ — $ 3 $ 129 $ 596 $ — $ 728 |