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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-Q

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Commission file number 001-32597

CF INDUSTRIES HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

(847) 405-2400
(Registrant's telephone number, including area code)

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

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

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

        62,870,583 shares of the registrant's common stock, $0.01 par value per share, were outstanding at October 31, 2012.

   

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PART I—FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS.

CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

   

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

   

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

   

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

   

See Accompanying Notes to Unaudited Consolidated Financial Statements.

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CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

   

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 one of the largest manufacturers and distributors of nitrogen and phosphate fertilizer products in the world. Our operations are organized into two business segments—the nitrogen segment and the phosphate segment. Our principal customers are cooperatives and independent fertilizer distributors. Our principal fertilizer products in the nitrogen segment are ammonia, granular urea, urea ammonium nitrate solution, or UAN, and ammonium nitrate, or AN. Our other nitrogen products include urea liquor, diesel exhaust fluid, or DEF, and aqua ammonia, which are sold primarily to our industrial customers. Our principal fertilizer products in the phosphate segment are diammonium phosphate, or DAP, and monoammonium phosphate, or MAP.

        Our core market and distribution facilities are concentrated in the midwestern United States and other major agricultural areas of the U.S. and Canada. We also export nitrogen fertilizer products from our Donaldsonville, Louisiana manufacturing facilities and phosphate fertilizer products from our Florida phosphate operations.

        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, 2011, in accordance with accounting principles generally accepted in the United States for interim financial reporting. In the opinion of management, these statements reflect all adjustments, consisting only of normal and recurring adjustments that are necessary for the fair representation of the information for the periods presented. The unaudited interim consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles 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.

        These statements should be read in conjunction with our audited consolidated financial statements and related disclosures included in our 2011 Annual Report on Form 10-K filed with the SEC on February 27, 2012.

        The preparation of the unaudited interim financial statements requires management to make use of estimates and assumptions that affect the reported amount of assets and liabilities, revenue and expenses and certain financial statement disclosures. Actual results could differ from these estimates. Significant estimates in these consolidated financial statements include net realizable value of inventories, the timing and ultimate settlement costs of asset retirement obligations, environmental remediation liabilities, environmental and litigation contingencies, the cost of sales incentives, useful lives of property and identifiable intangible assets, the evaluation of 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 pension and postretirement employee benefit plans and the volatility and expected lives for stock compensation instruments granted to employees.

        All references to "CF Holdings," "the Company," "we," "us" and "our" refer to CF Industries Holdings, Inc. and its subsidiaries, including CF Industries, Inc. (CF Industries), except where the context makes clear that the reference is only to CF Industries Holdings, Inc. itself and not its subsidiaries.

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2.     Summary of Significant Accounting Policies

        For a complete discussion of the Company's significant accounting policies, refer to our 2011 Annual Report on Form 10-K filed with the SEC on February 27, 2012.

3.     New Accounting Standards

        Following are summaries of accounting pronouncements that either were adopted recently or may become applicable to our consolidated financial statements. It should be noted that the accounting standards references provided below reflect the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC), and related Accounting Standards Updates (ASU).

Recently Adopted Pronouncements

        In May 2011, the FASB issued a standard that is intended to improve comparability of fair value measurements presented and disclosed in financial statements prepared in accordance with U.S. generally accepted accounting principles and International Financial Reporting Standards (ASU No. 2011-04). This standard clarifies the application of existing fair value measurement requirements including (1) the application of the highest and best use valuation premise, (2) the methodology to measure the fair value of an instrument classified in a reporting entity's stockholders' equity, (3) disclosure requirements for quantitative information on Level 3 fair value measurements and (4) guidance on measuring the fair value of financial instruments managed within a portfolio. In addition, the standard requires additional disclosures of the sensitivity of fair value to changes in unobservable inputs for Level 3 securities. This standard is effective for interim and annual reporting periods beginning after December 15, 2011. We adopted this standard in the first quarter of 2012 and its adoption did not have a material impact on our consolidated financial statements.

        In June 2011, the FASB issued a standard that pertains to the presentation of comprehensive income (ASU No. 2011-05). This standard requires that comprehensive income be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The standard also requires entities to disclose on the face of the financial statements reclassification adjustments for items that are reclassified from other comprehensive income to net earnings. This standard no longer allows companies to present components of other comprehensive income only in the statement of equity. In December 2011, the FASB deferred the new requirement to present the reclassification components of other comprehensive income to the statement of operations by issuing ASU No. 2011-12. A new effective date for this requirement has not been set by the FASB. The remaining components of the original ASU No. 2011-05 are effective for interim and annual reporting periods beginning on or after December 15, 2011. We adopted this standard in the first quarter of 2012 and its adoption did not have a material impact on our consolidated financial statements.

        In September 2011, the FASB issued a standard to simplify the process for determining goodwill impairment (ASU No. 2011-08). This standard gives an entity the option, as a first step, to assess qualitative factors in determining whether a two-step quantitative goodwill impairment test must be performed. If an assessment of qualitative factors leads to a determination that it is not more likely than not that the fair value of the reporting unit is less than its carrying amount, then performing the two-step test is deemed unnecessary. This standard is effective for interim and annual goodwill impairment tests performed for fiscal years beginning after December 15, 2011. We adopted this standard in the first quarter of 2012 and its adoption did not have a material impact on our consolidated financial statements.

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Recently Issued Pronouncements

        In December 2011, the FASB issued a standard pertaining to disclosures about offsetting assets and liabilities (ASU No. 2011-11). This standard requires an entity to disclose information about offsetting and related arrangements, including financial instruments and derivative instruments and the effect these arrangements have on the entity's financial position. This standard is effective for disclosures in interim and annual reporting periods beginning on or after January 1, 2013. We have not determined the impact of this standard on our consolidated financial statement disclosures.

4.     Noncontrolling Interests

Canadian Fertilizers Limited (CFL)

        CFL owns a nitrogen fertilizer complex in Medicine Hat, Alberta, Canada which supplies fertilizer products to CF Industries, Inc. and Viterra Inc. (Viterra). CFL's Medicine Hat complex is the largest nitrogen fertilizer complex in Canada, with two world-scale ammonia plants, a world-scale granular urea plant and on-site storage facilities for both ammonia and urea.

        CF Industries, Inc. owns 49% of CFL's voting common shares and 66% of CFL's nonvoting preferred shares. Viterra owns 34% of the voting common shares and non-voting preferred shares of CFL. The remaining 17% of the voting common shares are owned by GROWMARK, Inc. and La Coop fédérée. CFL is a variable interest entity which we consolidate in our financial statements.

        General creditors of CFL do not have direct recourse to the assets of CF Industries, Inc. However, the product purchase agreement between CF Industries, Inc. and CFL does require CF Industries, Inc. to advance funds to CFL in the event that CFL is unable to meet its obligations as they become due. The amount of each advance would be at least 66% of the deficiency and would be more in any year in which CF Industries, Inc. purchased more than 66% of Medicine Hat's production. A similar purchase agreement and obligation also exists for Viterra. CF Industries, Inc. and Viterra currently manage CFL such that each party is responsible for its share of CFL's fixed costs and that CFL's production volume is managed to meet the parties' combined requirements. Based on the contractual arrangements, CF Industries, Inc. is the primary beneficiary of CFL as CF Industries, Inc. directs the activities that most significantly impact CFL's economic performance and receives at least 66% of the economic risks and rewards of CFL.

        CFL's net sales for the three and nine months ended September 30, 2012 were $172.0 million and $560.1 million, respectively, and net sales for the three and nine months ended September 30, 2011 were $182.5 million and $529.1 million, respectively. CFL's assets and liabilities at September 30, 2012 were $512.7 million and $461.8 million, respectively, and at December 31, 2011 were $528.5 million and $479.5 million, respectively.

        Because CFL's functional currency is the Canadian dollar, consolidation of CFL results in a cumulative foreign currency translation adjustment, which is reported in other comprehensive income (loss). In accordance with CFL's governing agreements, CFL's net earnings are distributed to its members annually based on approval by CFL's shareholders. A portion of the amounts reported as noncontrolling interest in the consolidated statements of operations represent Viterra's 34% interest in the earnings of CFL, while a portion of the amounts reported as noncontrolling interest on our consolidated balance sheets represent the interests of Viterra and the holders of 17% of CFL's common shares.

        CF Industries, Inc. operates the Medicine Hat facility pursuant to a management agreement and purchases approximately 66% of the facility's ammonia and granular urea production pursuant to a product purchase agreement. Viterra has the right, but not the obligation, to purchase the remaining

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34% of the facility's production under a similar product purchase agreement. To the extent that Viterra does not purchase its 34% of the facility's production, CF Industries, Inc. is obligated to purchase any remaining amounts. However, since 1995, Viterra has purchased at least 34% of the facility's production each year. Both the management agreement and the product purchase agreement can be terminated by either CF Industries, Inc. or CFL upon a twelve-month notice.

        Under the product purchase agreements, both CF Industries, Inc. and Viterra pay the greater of production cost or market price for purchases. CF Industries, Inc. and Viterra pay an initial portion of the selling price based upon production cost once title passes as the products are shipped. The remaining portion of the selling price is the difference between the market price and production cost, which is paid by the end of the following year. As a result, CFL accrues this remaining portion of the selling price on an interim basis. The receivable recognized on our consolidated balance sheets represents the amount due solely from Viterra, as the amount due from CF Industries, Inc. is eliminated in consolidation. At September 30, 2012 and December 31, 2011, the net receivable due from Viterra related to the product purchases that was reflected on our consolidated balance sheets was $135.5 million and $141.0 million, respectively.

        The product purchase agreements also provide that CFL will distribute its net earnings to CF Industries, Inc. and Viterra annually based on the respective quantities of product purchased from CFL. The net earnings attributable to Viterra that are reported in noncontrolling interest on the consolidated balance sheets at September 30, 2012 and December 31, 2011 were approximately $141.2 million and $149.7 million, respectively. The annual distribution is paid by the end of the following year. The distributions to Viterra are reported as financing activities in the consolidated statements of cash flows, as we consider these payments to be similar to dividends.

        In August 2012, CF Industries Holdings, Inc. entered into an agreement to acquire the 34% of CFL's common and preferred shares owned by Viterra and the product purchase agreement between Viterra and CFL for a total purchase price of C$915 million, subject to certain adjustments. As a result of this transaction, we will be entitled to purchase 100% of CFL's ammonia and granular urea production. The completion of the transaction is subject to the closing of Glencore International's acquisition of Viterra, receipt of regulatory approvals in Canada and other terms and conditions in the definitive agreements. In October 2012, CF Industries Holdings, Inc. entered into an agreement with each of GROWMARK, Inc. and La Coop federee to acquire the 9% and 8%, respectively, of CFL's common shares owned by those parties.

Terra Nitrogen Company, L.P. (TNCLP)

        TNCLP is a master limited partnership that owns a nitrogen manufacturing facility in Verdigris, Oklahoma. We own an aggregate 75.3% of TNCLP through general and limited partnership interests. Outside investors own the remaining 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 have been recorded as part of noncontrolling interest in our consolidated financial statements. The noncontrolling interest represents the noncontrolling unitholders' interest in the equity of TNCLP. An affiliate of CF Industries is 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 upon formulas defined within its Agreement of Limited Partnership. Cash available for distribution is defined in the agreement 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

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discretion to be necessary or appropriate. Changes in working capital impact available cash, as increases in the amount of cash invested in working capital items (such as accounts receivable or inventory) reduce available cash, while declines in the amount of cash invested in working capital 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 Agreement of Limited Partnership.

        In each of the applicable quarters of 2012 and 2011, the minimum quarterly distributions were satisfied, which entitled us, as the general partner, to receive increased distributions on our general partner interests as provided for in the Agreement of Limited Partnership. The earnings attributed to our general partner interest in excess of the threshold levels for the nine months ended September 30, 2012 and 2011, were $172.3 million and $158.6 million, respectively.

        At September 30, 2012, Terra Nitrogen GP Inc. (TNGP), the general partner of TNCLP (and an indirect wholly-owned subsidiary of CF Industries), and its affiliates owned 75.3% of TNCLP's outstanding units. When not more than 25% of TNCLP's issued and outstanding units are held by non-affiliates of TNGP, TNCLP, at TNGP's sole discretion, may call, or assign to TNGP or its affiliates, TNCLP's right to acquire all such outstanding units held by non-affiliated persons. If TNGP elects to acquire all outstanding units, TNCLP is required to give at least 30 but not more than 60 days notice of TNCLP's decision to purchase the outstanding units. The purchase price per unit will 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.

        A reconciliation of the beginning and ending balances of noncontrolling interest and distributions payable to noncontrolling interests on our consolidated balance sheets is provided below.

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5.     Fair Value Measurements

        Our cash and cash equivalents, short-term investments and other investments consist of the following:

        Under our short-term investment policy, we may invest our cash balances, either directly or through mutual funds, in several types of investment-grade securities, including notes and bonds issued by governmental entities or corporations. Securities issued by governmental entities include those issued directly by the Federal government; those issued by state, local or other governmental entities; and those guaranteed by entities affiliated with governmental entities.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

        The following tables present assets and liabilities included in our consolidated balance sheets at September 30, 2012 and December 31, 2011 that are recognized at fair value on a recurring basis, and indicates the fair value hierarchy utilized to determine such fair value:

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        Following is a summary of the valuation techniques for assets and liabilities recorded on our consolidated balance sheets at fair value on a recurring basis:

Cash and Cash Equivalents

        At September 30, 2012 and December 31, 2011, our cash and 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.

Natural Gas Derivatives

        The derivative instruments that we currently use are natural gas swap contracts. These contracts settle using primarily a NYMEX futures price index, which represents the basis for fair value at any given time. The contracts are traded in months forward and settlements are scheduled to coincide with anticipated gas purchases during those future periods. The observable inputs used to determine the fair value of these instruments are quoted market prices for similar instruments. See Note 17—Derivative Financial Instruments, for additional information.

Asset Retirement Obligation Funds

        In order to meet financial assurance requirements associated with certain asset retirement obligations (AROs) in Florida, we maintain investments in an escrow account established for the benefit of the Florida Department of Environmental Protection (FDEP) and a trust established to comply with a 2010 Consent Decree with the U.S. Environmental Protection Agency (EPA) and the FDEP. The investments in the trust and escrow account are accounted for as available-for-sale securities. The fair values of these investments are based upon daily quoted prices representing the Net Asset Value (NAV) of the investments. See Note 9—Asset Retirement Obligations, for additional information regarding the trust and escrow accounts. The fair values of the ARO funds approximate their cost bases.

Investments in Auction Rate Securities

        Our investments in Auction Rate Securities (ARS) are accounted for as available-for-sale securities and are included on our consolidated balance sheets in other assets. They are classified as noncurrent assets as a result of the continuing market illiquidity and our judgment regarding the period of time

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that may elapse until the traditional auction process resumes or other effective market trading mechanisms develop. These ARS have maturities that range up to 35 years, with 77% of the carrying value maturing in 20 to 30 years.

        We currently intend to hold our ARS until a market recovery occurs and, based on our current liquidity position, we do not believe it is likely that we will need to sell these securities prior to their recovery in value. Therefore, we expect to recover our amortized cost basis in the investments. As a result, our unrealized holding loss on these securities is classified as a temporary impairment and is reported in other comprehensive income (loss). During the third quarter of 2012, $15.0 million of our ARS were redeemed at par.

        We are unable to use significant observable (Level 1 or Level 2) inputs to value these investments and they are therefore classified as Level 3 for purposes of the fair value disclosure requirements. To determine the fair value of our ARS, we use a mark-to-model approach that relies on discounted cash flows, market data and inputs derived from similar instruments to arrive at the fair value of these instruments. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset. It is reasonably possible that a change in the estimated fair value for these instruments measured using Level 3 inputs could occur in the future. The following table provides a reconciliation of changes in these Level 3 assets.

Nonqualified Employee Benefit Trusts

        We maintain trusts associated with certain deferred compensation related to nonqualified employee benefits. The investments are accounted for as available-for-sale securities. The fair values of the trusts are based on daily quoted prices representing the NAV of the investments. These trusts are included on our consolidated balance sheet in other assets.

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6.     Net Earnings Per Share

        Net earnings per share were computed as follows:

        In the computation of diluted net earnings per common share, potentially dilutive stock options are excluded if the effect of their inclusion is anti-dilutive. For the three and nine months ended September 30, 2012 and 2011, anti-dilutive stock options were insignificant.

        In August 2011, our Board of Directors authorized a program to repurchase Company common stock for a total expenditure of up to $1.5 billion plus program expenses (the 2011 Stock Repurchase Program). In the third and fourth quarters of 2011, we repurchased 6.5 million shares for $1.0 billion and during the second quarter of 2012, we repurchased an additional 3.1 million shares under the program for $500.0 million, thereby completing the 2011 Stock Repurchase Program. The impact of the share repurchase program on weighted average shares outstanding is reflected in the table above. Also, see Note 19—Treasury Stock.

7.     Pension and Other Postretirement Benefits

        We maintain four funded defined benefit pension plans: two U.S. plans and two Canadian plans. Three of the four plans are closed to new employees. One of our Canadian plans remains open to new employees. We also provide group medical insurance benefits to certain retirees. The specific medical benefits provided to retirees vary by group and location.

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        Net periodic benefit cost included the following components:

        In the third quarter of 2012, we implemented a reduction in certain retiree medical benefits. This curtailment of benefits was recognized in the third quarter and resulted in a $24.3 million reduction in the retiree medical liability. Of the $24.3 million reduction, $13.4 million was recognized in other comprehensive income and $10.9 million was recognized in net periodic benefit plan cost as shown in the table above. Of the $10.9 million, $9.6 million was reported in cost of sales and $1.3 million was reported in selling, general and administrative expenses.

        Our 2012 consolidated pension funding contributions are estimated to be approximately $20.0 million, of which approximately $9.2 million was funded in the first nine months of 2012.

        We have defined contribution plans covering substantially all employees. Under these plans, we contribute a fixed percentage of base salary to employees' accounts and match employee contributions up to specified limits. We contributed $3.4 million and $9.7 million to the plans for the three and nine months ended September 30, 2012, respectively, and $2.9 million and $8.7 million to the plans for the three and nine months ended September 30, 2011, respectively.

8.     Other Operating—Net

        Details of other operating costs are as follows:

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        In the third quarter of 2011, we recorded a non-cash impairment charge of $35.1 million related to a former methanol plant at our Woodward, Oklahoma nitrogen complex. The Woodward complex was acquired in the Terra acquisition and was able to produce nitrogen fertilizers and methanol. Based on a strategic review that was completed in the third quarter of 2011, management approved the shutdown and removal of the methanol plant, resulting in recognition of an impairment charge, which is included in the first line of the table above.

        In February 2011, we sold four of our owned dry product warehouses to GROWMARK and realized a pre-tax gain of $32.5 million, which is included in the first line in the table above.

        Engineering studies includes detailed design work, feasibility studies and cost estimates for certain proposed capital projects at our manufacturing complexes.

        Bartow costs consist of provisions for AROs and site maintenance costs at our closed phosphate fertilizer facility in Bartow, Florida. The AROs involve costs of closure and post-closure maintenance and monitoring for the phosphogypsum stack systems. For additional information on our AROs, see Note 9—Asset Retirement Obligations.

        Other includes losses on foreign currency transactions, litigation related costs and environmental remediation costs associated with a closed facility.

9.     Asset Retirement Obligations

        AROs are legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development or normal operation of such assets. Our AROs are primarily associated with phosphogypsum stack systems and mine reclamation in Florida.

        The changes in our AROs from December 31, 2011 to September 30, 2012 are summarized below:

        Our phosphate operations in Florida are subject to regulations governing the construction, operation, closure and long-term maintenance of phosphogypsum stack systems and regulations concerning site reclamation for phosphate rock mines. Our liability for phosphogypsum stack costs includes the cost of stack closure at our Plant City, Florida phosphate fertilizer complex and the costs of cooling pond closure, post-closure monitoring, and ongoing water treatment at both Bartow and Plant City. The actual amounts to be spent will depend on factors such as the timing of activities, refinements in scope, technological developments, cost inflation and changes in regulations. It is possible that these factors could change at any time and impact the estimates. In addition to reclamation AROs arising from normal mining activity, AROs may increase in the future upon expansion of the Plant City phosphogypsum stack.

        The $11.2 million change in estimate in 2012 relates primarily to changes in mining and reclamation plans in the third quarter at our Hardee County, Florida phosphate rock mine. Of this amount, $6.2 million was recorded as a decrease in property, plant and equipment and $5.0 million was credited to cost of sales.

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        AROs are reported in accrued expenses and other noncurrent liabilities on our consolidated balance sheets, as follows:

        In addition to various operational and environmental regulations related to our phosphate segment, we are also subject to financial assurance requirements related to the closure and maintenance of our phosphogypsum stack systems at both our Plant City, Florida phosphate fertilizer complex and our closed Bartow, Florida phosphate fertilizer complex. The financial assurance requirements pertaining to our operations are outlined in two separate regulations. First, in 2010, we entered into a consent decree with the EPA and the FDEP with respect to our compliance with the Resource Conservation and Recovery Act (RCRA) at our Plant City complex (the Plant City Consent Decree). Second, the State of Florida financial assurance regulations (Florida Financial Assurance) apply to both our Plant City and Bartow complexes. Both of these regulations allow the use of a funding mechanism as a means of complying with the financial assurance requirements associated with the closure, long-term maintenance, and monitoring costs for the phosphogypsum stacks, as well as costs incurred to manage the water contained in the stack system upon closure. We have established a trust account for the benefit of the EPA and FDEP and an escrow account for the benefit of the FDEP to meet these financial assurance requirements. On our consolidated balance sheet, these are collectively referred to as "Asset retirement obligation funds" (ARO funds). In October 2012, we deposited $53.0 million into the trust for the Plant City Consent Decree, thereby reaching full funding of that obligation, and we expect to fund the remaining approximately $4.0 million in the State of Florida Financial Assurance escrow account near the end of 2015. Both financial assurance funding obligations require estimates of future expenditures that could be impacted by refinements in scope, technological developments, cost inflation, changes in regulations, discount rates and the timing of activities. Additional funding will be required in the future if increases in cost estimates exceed investment earnings in the trust or escrow accounts. At September 30, 2012 and December 31, 2011, the balance in the ARO funds was $147.6 million and $145.4 million, respectively.

10.   Interest Expense

        Interest expense consisted of the following:

        The fees on financing agreements for the nine months ended September 30, 2012 includes $15.2 million of accelerated amortization of deferred fees related to the termination of a credit agreement in May 2012. Refer to Note 16—Financing Agreements, for additional information. The fees

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on financing agreements for the nine months ended September 30, 2011 includes $19.9 million of accelerated amortization of debt issuance costs recognized upon repayment in full of a senior secured term loan.

11.   Income Taxes

        Our income tax provision for the three months ended September 30, 2012 was $206.0 million on pre-tax income of $640.2 million, or an effective tax rate of 32.2%, compared to an income tax provision of $184.9 million on pre-tax income of $550.6 million, or an effective tax rate of 33.6%, for the three months ended September 30, 2011. The effective tax rate for the third quarter of 2012 based on pre-tax income exclusive of earnings attributable to noncontrolling interest was 35.2% compared to 37.1% in the third quarter of 2011. The decline in the effective tax rate exclusive of earnings attributable to noncontrolling interests was driven primarily by higher state taxes in the prior year. The effective tax rate based on pre-tax income differs from our effective tax rate based on pre-tax income exclusive of earnings attributable to noncontrolling interest, as our consolidated income tax provision does not include tax provisions on the earnings attributable to noncontrolling interests in TNCLP and CFL, which record no income tax provisions.

        Our unrecognized tax benefits decreased by $23.5 million during the three months ended September 30, 2012 to $114.4 million as the result of tax return positions taken in the period. Our effective tax rate would be reduced if $48.2 million of these unrecognized tax benefits were to be recognized in the future.

        For additional information concerning the income tax matters noted above, see Note 13—Income Taxes, to our audited consolidated financial statements included in our 2011 Annual Report on Form 10-K filed with the SEC on February 27, 2012.

12.   Inventories—Net

        Inventories—net consist of the following:

13.   Equity Method Investments

        Equity method investments consist of the following:

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Operating Equity Method Investments

        Our equity method investments included in operating earnings consist of: (1) a 50% ownership interest in Point Lisas Nitrogen Limited (PLNL), which operates an ammonia production facility in the Republic of Trinidad and Tobago; and (2) a 50% interest in an ammonia storage joint venture located in Houston, Texas. We include our share of the net earnings from these investments as an element of earnings from operations because these operations provide additional production and storage capacity to our operations and are integrated with our other supply chain and sales activities in the nitrogen segment.

        The combined results of operations and financial position for our operating equity method investments are summarized below:

 

        The carrying value of these investments at September 30, 2012 was $408.1 million, which was $302.6 million more than our share of the affiliates' book value. The excess is primarily attributable to the purchase accounting impact of our acquisition of the investment in PLNL and reflects primarily the revaluation of property, plant and equipment, the value of an exclusive natural gas contract and goodwill. The increased bases for property, plant and equipment and the gas contract are being depreciated over a remaining period of approximately 22 years and 12 years, respectively. Our equity in earnings of operating affiliates is different from our ownership interest in income reported by the unconsolidated subsidiaries due to amortization of basis differences.

        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 $31.4 million and $113.5 million for the three and nine months ended September 30, 2012, respectively, and $51.6 million and $122.2 million for the three and nine months ended September 30, 2011, respectively.

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Non-Operating Equity Method Investments

        Our non-operating equity method investments consist of: (1) a 50% ownership of KEYTRADE AG (Keytrade), a fertilizer trading company headquartered near Zurich, Switzerland; and (2) a 50% ownership in GrowHow UK Limited (GrowHow), which operates nitrogen production facilities in the United Kingdom. We account for these investments as non-operating equity method investments, and do not include the net earnings of these investments in earnings from operations since these operations do not provide additional capacity to us, nor are these operations integrated within our supply chain.

        The combined results of operations and financial position of our non-operating equity method investments are summarized below:

 

        In conjunction with our investment in Keytrade, we provided financing to Keytrade in the form of subordinated notes that mature on September 30, 2017 and bear interest at LIBOR plus 1.00 percent. At September 30, 2012 and December 31, 2011, the amount of the outstanding advances to Keytrade on our consolidated balance sheets was $12.4 million. The carrying value of our advances to Keytrade approximates fair value.

        During the three months ended September 30, 2012, GrowHow provided $40.5 million of advances to us under a short term loan agreement. The advances are due at various dates as specified in the agreement, bear interest at LIBOR plus 0.20 percent, and are included in our consolidated balance sheet in other current liabilities. The carrying value of our advances from GrowHow approximates fair value.

        Excluding the advances to Keytrade and from GrowHow, the carrying value of our non-operating equity method investments at September 30, 2012 was $571.4 million, which was $352.7 million more than our share of the affiliates' book value. The excess is primarily attributable to the purchase accounting impact of our acquisition of the investments in GrowHow and Keytrade and reflects

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primarily the revaluation of property, plant and equipment, identifiable intangibles and goodwill. The increased basis for property, plant and equipment and identifiable intangibles are being depreciated over remaining periods ranging from 2 to 14 years. Our equity in earnings of non-operating affiliates-net of taxes is different than our ownership interest in their net earnings due to the amortization of basis differences.

        At September 30, 2012, the amount of our consolidated retained earnings that represents our undistributed earnings of non-operating equity method investments is $55.3 million.

14.   Plant Turnaround Costs

        Scheduled inspections, replacements and overhauls of plant machinery and equipment at our continuous process manufacturing facilities are referred to as plant turnarounds. The expenditures related to turnarounds are capitalized into property, plant and equipment when incurred. The following is a summary of plant turnaround activity for the nine months ended September 30, 2012 and 2011:

        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 are not considered turnaround costs and are not capitalized.

15.   Goodwill and Other Intangible Assets

        The following table shows the carrying amount of goodwill by business segment at September 30, 2012 and December 31, 2011:

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        The identifiable intangibles and carrying values are shown below. The Company's intangible assets are presented in other assets on our consolidated balance sheets.

        Amortization expense of our identifiable intangibles was $0.9 million for both the three months ended September 30, 2012 and 2011, respectively, and was $2.8 million for both the nine months ended September 30, 2012 and 2011, respectively.

        Total estimated amortization expense for the remainder of 2012 and the five succeeding fiscal years is as follows:

16.   Financing Agreements

        Long-term debt consisted of the following:

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Credit Agreement

        Until May 1, 2012, we maintained a senior secured revolving credit facility under an agreement, dated April 5, 2010 and amended and restated August 3, 2011 (the 2010 Credit Agreement), that provided up to $500 million in borrowings. The obligations of CF Industries under the 2010 Credit Agreement were guaranteed by the Company and certain direct and indirect wholly-owned subsidiaries of the Company (collectively, the Guarantors). The obligations of CF Industries and the Guarantors under the 2010 Credit Agreement were secured by senior liens on substantially all of the assets of CF Industries and the Guarantors, subject to certain exceptions.

        On May 1, 2012, the Company terminated the 2010 Credit Agreement and all of the guarantees and liens on the assets of the Company and its subsidiaries that secured obligations under the 2010 Credit Agreement were released. Immediately after terminating the 2010 Credit Agreement, the Company, as a guarantor, and CF Industries, as borrower, entered into a $500 million senior unsecured credit agreement, dated May 1, 2012 (the 2012 Credit Agreement), which provides for a revolving credit facility of up to $500 million with a maturity of five years.

        Borrowings under the 2012 Credit Agreement bear interest at a variable rate based on an applicable margin over LIBOR or a base rate and may be used for working capital, capital expenditures, acquisitions, share repurchases and other general purposes. The 2012 Credit Agreement requires that the Company maintain a minimum interest coverage ratio and not exceed a maximum total leverage ratio, and includes other customary terms and conditions, including customary events of default and covenants.

        All obligations under the 2012 Credit Agreement are unsecured. Currently the Company is the only guarantor of CF Industries' obligations under the 2012 Credit Agreement. Certain of CF Industries' material domestic subsidiaries will be required to become guarantors under the 2012 Credit Agreement only if such subsidiary were to guarantee other debt for borrowed money (subject to certain exceptions) of the Company or CF Industries in excess of $250 million. Currently, no such subsidiary guarantees debt for borrowed money in excess of $250 million.

        At September 30, 2012, there was $491.0 million of available credit under the 2012 Credit Agreement (net of outstanding letters of credit), and there were no borrowings outstanding.

Senior Notes due 2018 and 2020

        On April 23, 2010, CF Industries issued $800 million aggregate principal amount of 6.875% senior notes due May 1, 2018 (the 2018 Notes) and $800 million aggregate principal amount of 7.125% senior notes due May 1, 2020 (the 2020 Notes and, together with the 2018 Notes, the Notes). The Notes pay interest semiannually on May 1 and November 1 and are redeemable at CF Industries' option, in whole at any time or in part from time to time, at specified make-whole redemption prices.

        The indentures governing the Notes contain customary events of default and covenants that limit, among other things, the ability of the Company and its subsidiaries, including CF Industries, to incur liens on certain properties to secure debt. In the event of specified changes of control involving the Company or CF Industries, they also require CF Industries to offer to repurchase the Notes at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest.

        Under the supplemental indentures governing the Notes, the Notes are to be guaranteed by the Company and each of the Company's current and future subsidiaries (other than CF Industries) that from time to time is a borrower or guarantor under the 2010 Credit Agreement, or any renewal, replacement or refinancing thereof, including the 2012 Credit Agreement. Upon the termination of the 2010 Credit Agreement, the guarantees of the subsidiaries of the Company securing obligations under

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the 2010 Credit Agreement were released. As a result, the subsidiaries were automatically released from their guarantees of the Notes. In the event that a subsidiary of the Company, other than CF Industries, becomes a borrower or a guarantor under the 2012 Credit Agreement, such subsidiary would be required to become a guarantor of the Notes.

        At September 30, 2012, the carrying value of the Notes was $1.6 billion and the fair value was approximately $2.0 billion.

Terra Senior Notes

        At December 31, 2011, $13.0 million of Terra 7% Senior Notes due 2017 (2017 Notes) were outstanding. In the second quarter of 2012, we redeemed the remaining outstanding 2017 Notes for cash. This redemption did not have a material impact on our consolidated financial results.

Notes Payable

        From time to time, CFL receives advances from CF Industries and from CFL's noncontrolling interest holder to finance major capital expenditures. The advances outstanding are evidenced by unsecured promissory notes due December 31, 2013 and bear interest at market rates. The amount shown as notes payable represents the advances payable to CFL's noncontrolling interest holder. The carrying value of notes payable approximates their fair value.

17.   Derivative Financial Instruments

        We use natural gas in the manufacture of nitrogen fertilizer products. We manage the risk of changes in gas prices through the use of physical gas supply contracts and derivative financial instruments covering periods of generally less than 18 months. Our natural gas acquisition policy allows us to establish derivative positions associated with anticipated natural gas requirements, including requirements to fulfill forward nitrogen fertilizer sales. The use of derivative instruments for our forward sales allows us to lock in a substantial portion of our margin on these sales.

        The derivative instruments that we currently use are natural gas swap contracts. These contracts settle using primarily a NYMEX futures price index, which represents fair value at any given time. The contracts are entered into with respect to gas to be consumed in the future and settlements are scheduled to coincide with anticipated gas purchases used to manufacture nitrogen products during those future periods.

        We report derivatives on our consolidated balance sheet at fair value with changes in fair value recognized immediately in earnings, unless the normal purchase and sale exemption applies. We use natural gas derivatives primarily as an economic hedge of gas price risk, but without the application of hedge accounting. Accordingly, changes in the fair value of the derivatives are recorded in cost of sales as the changes occur. Cash flows related to natural gas derivatives are reported as operating activities.

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        The effect of derivatives in our consolidated statements of operations is shown below. All amounts arise from natural gas derivatives that are not designated as hedging instruments, with resulting gains and losses recorded in cost of sales.

        The fair values of derivatives on our consolidated balance sheets are shown below. All amounts arise from natural gas derivatives that are not designated as hedging instruments. For additional information on derivative fair values, see Note 5—Fair Value Measurements.

        As of September 30, 2012 and December 31, 2011, we had open financial derivative contracts for 38.7 million MMBtus and 156.3 million MMBtus, respectively, of natural gas. For the nine months ended September 30, 2012, we used derivatives to cover approximately 67% of our natural gas consumption.

        Natural gas derivatives involve the risk of dealing with counterparties and their ability to meet the terms of the contracts. The counterparties to our natural gas derivatives are either large oil and gas companies or large financial institutions. Cash collateral is deposited with or received from counterparties when predetermined unrealized gain or loss thresholds are exceeded. At both September 30, 2012 and December 31, 2011, we had no cash collateral on deposit with counterparties for derivative contracts.

        As of September 30, 2012 and December 31, 2011, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in a net liability position was $12.7 million and $74.7 million, respectively, for which we had no cash collateral on deposit with these counterparties.

        For derivatives that are in net asset positions, we are exposed to credit loss from nonperformance by the counterparties. At September 30, 2012 and December 31, 2011, our exposure to credit loss from nonperformance by counterparties to derivative instruments was insignificant. We control our credit risk through the use of multiple counterparties, individual credit limits, monitoring procedures, cash collateral requirements and master netting arrangements.

        The master netting arrangements with respect to our derivative instruments also contain credit-risk-related contingent features that require us to maintain a minimum net worth level and certain financial ratios. If we fail to meet these minimum requirements, the counterparties to derivative instruments that are in net liability positions could require daily cash settlement of unrealized losses or some other form of credit support.

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18.   Stock-Based Compensation

        We grant stock-based compensation awards under the CF Industries Holdings, Inc. 2009 Equity and Incentive Plan (the Plan). The awards granted to date are nonqualified stock options and restricted stock. The cost of employee services received in exchange for the awards is measured based on the fair value of the award on the grant date and is recognized as expense on a straight-line basis over the period during which the employee is required to provide the services.

        A summary of stock option activity under the Plan at September 30, 2012 is presented below:

        Cash received from stock option exercises for the nine months ended September 30, 2012 was $12.6 million.

        A summary of restricted stock activity under the Plan at September 30, 2012 is presented below:

        Stock-based compensation cost is recorded primarily in selling, general and administrative expense. The following table summarizes stock-based compensation costs and related income tax benefits:

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        As of September 30, 2012, pre-tax unrecognized compensation cost, net of estimated forfeitures, was $15.6 million for stock options, which will be recognized over a weighted average period of 2.3 years, and $7.3 million for restricted stock, which will be recognized over a weighted average period of 2.1 years.

        Excess tax benefits for the three and nine months ended September 30, 2012 were $14.6 million and $30.0 million, respectively. Excess tax benefits for the three and nine months ended September 30, 2011 were $7.1 million and $25.7 million, respectively.

19.   Treasury Stock

        In the second quarter of 2012, we repurchased 3.1 million shares of CF Holdings common stock for $500.0 million, thereby completing the $1.5 billion repurchase program that was authorized by our Board of Directors in the third quarter of 2011. In June 2012, all 9.6 million shares that were repurchased under this program were retired.

        In the third quarter of 2012, we announced that our Board of Directors authorized the repurchase of up to $3.0 billion of CF Holdings common stock through December 31, 2016. Repurchases under this program may be made from time to time in the open market, in privately negotiated transactions, or otherwise. The manner, timing, and amount of any repurchases will be determined by our management based on evaluation of market conditions, stock price, and other factors. There were no repurchases under this program in the third quarter of 2012.

20.   Accumulated Other Comprehensive Loss

        Changes to accumulated other comprehensive loss and the impact on other comprehensive loss are as follows:

        For the nine months ended September 30, 2012, the defined benefit plan gain arising during the period pertains to the curtailment of retiree medical benefits recognized in the third quarter of 2012. For additional information, refer to Note 7—Pension and Other Postretirement Benefits.

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21.   Contingencies

Litigation

        From time to time, we are subject to ordinary, routine legal proceedings related to the usual conduct of our business, including proceedings regarding public utility and transportation rates, environmental matters, taxes and permits relating to the operations of our various plants and facilities. Based on the information available as of the date of this filing, we believe that the ultimate outcome of these matters will not have a material adverse effect on our consolidated financial position or results of operations.

Environmental

Florida Environmental Matters

Clean Air Act Investigation

        On March 19, 2007, the Company received a letter from the EPA under Section 114 of the Federal Clean Air Act requesting information and copies of records relating to compliance with New Source Review, New Source Performance Standards, and National Emission Standards for Hazardous Air Pollutants at the Plant City facility. The Company provided the requested information to the EPA in late 2007. The EPA initiated this same process in relation to numerous other sulfuric acid plants and phosphoric acid plants throughout the nation, including other facilities in Florida.

        The Company received a Notice of Violation (NOV) from the EPA by letter dated June 16, 2010. The NOV alleges the Company violated the Prevention of Significant Deterioration (PSD) Clean Air Act regulations relating to certain projects undertaken at the Plant City 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 the Company failed to comply with certain compliance dates established by hazardous air pollutant regulations for phosphoric acid manufacturing plants and phosphate fertilizer production plants. The Company had an initial meeting with the EPA to discuss these alleged violations. This matter has been referred to the United States Department of Justice (DOJ). The Company does not know at this time if it will settle this matter prior to initiation of formal legal action.

        We cannot estimate the potential penalties, fines or other expenditures, if any, that may result from the Clean Air Act NOV and, therefore, we cannot determine if the ultimate outcome of this matter will have a material impact on the Company's financial position, results of operations or cash flows.

EPCRA/CERCLA Investigation

        Pursuant to a letter from the DOJ dated July 28, 2008 that was sent to representatives of the major U.S. phosphoric acid manufacturers, including CF Industries, the DOJ stated that it and the EPA believe that apparent violations of Section 313 of the Emergency Planning and Community Right-to-Know Act (EPCRA), which requires annual reports to be submitted with respect to the use of certain toxic chemicals, have occurred at all of the phosphoric acid facilities operated by these manufacturers. The letter also states that the DOJ and the EPA believe that most of these facilities have violated Section 304 of EPCRA and Section 103 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) by failing to provide required notifications relating to the release of hydrogen fluoride from these facilities. The letter did not specifically identify alleged violations at our Plant City, Florida complex or assert a claim for a specific amount of penalties. The EPA submitted an information request to the Company on February 11, 2009, as a follow-up to the

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July 2008 letter. The Company provided information in response to the agency's inquiry on May 14 and May 29, 2009.

        By letter dated July 6, 2010, the EPA issued a NOV to the Company alleging violations of EPCRA and CERCLA. The Company had an initial meeting with the EPA to discuss these alleged violations. The Company does not know at this time if it will settle this matter prior to initiation of formal legal action.

        We do not expect that penalties or fines, if any, that may arise out of the EPCRA/CERCLA matter will have a material impact on the Company's financial position, results of operations or cash flows.

Federal and State Numeric Nutrient Criteria Regulation

        On August 18, 2009, the EPA entered into a consent decree with certain environmental groups with respect to the promulgation of numeric criteria for nitrogen and phosphorous in surface waters in Florida. The consent decree was approved by a Federal district court judge on November 16, 2009. The EPA adopted final numeric nutrient criteria for Florida lakes and inland flowing waters on November 14, 2010. On February 18, 2012, the Court upheld parts of the numeric nutrient criteria regulation, but found that the EPA had not adequately justified the criteria for streams and therefore concluded that the adoption of such criteria was arbitrary and capricious. The Court ordered the EPA to issue proposed or final numeric nutrient criteria for streams by May 21, 2012 (subject to the EPA seeking an extension of such time period pursuant to the terms of the 2009 consent decree). Subsequently, the Court granted the EPA's motion to allow the EPA to propose numeric nutrient criteria for streams by November 30, 2012 and to finalize such criteria by August 30, 2013. Depending on the developments discussed herein, federal or state numeric water quality criteria for lakes and inland flowing waters could result in substantially more stringent nitrogen and phosphorous limits in wastewater discharge permits for our mining, manufacturing and distribution operations in Florida.

        On July 6, 2012, the EPA issued a final rule delaying the effective date of federal criteria for lakes and inland flowing waters (excluding the criteria found arbitrary and capricious by the Court) until January 6, 2013. The purpose of this delay is to allow the EPA time to evaluate numeric nutrient criteria approved by the State of Florida.

        In December 2011, the State of Florida proposed its own numeric nutrient criteria for surface waters. The nitrogen and phosphorous criteria in the proposed rule are substantially identical to the federal rule, but the state proposal includes biological verification as a component of the criteria and adopts existing nutrient Total Maximum Daily Loads (TMDL) as applicable numeric criteria. The impact of these modifications could be to provide more flexibility with respect to nitrogen and phosphorous limits in wastewater discharge permits so long as such discharges do not impair the biological health of receiving water bodies. Environmental groups filed a challenge to the proposed state rule, and a hearing was held with the Florida Division of Administrative Hearings from February 27 through March 5, 2012. On June 8, 2012, the administrative law judge upheld the State's regulation. Florida submitted its rule package to the EPA for review on June 13, 2012. If the state regulation is approved by the EPA, the EPA would then withdraw the federal numeric criteria.

        The 2009 consent decree also requires the EPA to develop numeric nutrient criteria for Florida coastal and estuarine waters. On July 13, 2012, the Court approved a motion by the EPA allowing it to propose numeric nutrient criteria for these waters by November 30, 2012 and to finalize such criteria by September 30, 2013. The extent to which the February 18, 2012 decision will impact this proposed rule is unclear. The numeric criteria promulgated by the State of Florida, discussed above, include criteria

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for coastal and estuarine waters and, if approved by the EPA, would also supplant federal standards for such water bodies.

        The federal/state numeric nutrient criteria rulemaking is not yet complete. Nonetheless, more stringent limits on wastewater discharge permits could increase our costs and limit our operations and, therefore, could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Louisiana Environmental Matters

Clean Air Act—Section 185 Fee

        Our Donaldsonville Nitrogen Complex is located in a five-parish region near Baton Rouge, Louisiana that, as of 2005, was designated as being in "severe" nonattainment 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 185 of the Act requires states, in their state implementation plans, to levy a fee (Section 185 fee) on major stationary sources (such as the Donaldsonville facility) 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 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 rescission 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 CF Industries 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.

        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. EPA's approval of the Louisiana air program revision became effective on August 8, 2011. However, a recent 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 the Company's financial position, results of operations or cash flows.

Clean Air Act Information Request

        On February 26, 2009, the Company received a letter from the EPA under Section 114 of the Act requesting information and copies of records relating to compliance with New Source Review and New Source Performance Standards at the Donaldsonville facility. The Company has completed the

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submittal of all requested information. There has been no further contact from the EPA regarding this matter.

Other

CERCLA/Remediation Matters

        From time to time, we receive notices from governmental agencies or third parties alleging that we are a potentially responsible party at certain cleanup sites under CERCLA or other environmental cleanup laws. In 2002 and in 2009, we were asked by the current owner of a former phosphate mine and processing facility that we are alleged to have operated in the late 1950s and early 1960s located in Georgetown Canyon, Idaho, to contribute to a remediation of this property. We declined to participate in the cleanup. It is our understanding that the current owner conducted a cleanup of the processing portion of the site pursuant to a Consent Judgment with the Idaho Department of Environmental Quality (IDEQ). The current owner could bring a lawsuit against us seeking contribution to the cleanup costs, although we do not have sufficient information to determine whether or when such a lawsuit will be brought. In 2011, the current owner and we received a notice from IDEQ that alleged that these parties were potentially responsible parties for the cleanup of the mine portion of the site. IDEQ requested from each party an indication of its willingness to enter into negotiations for an investigation of the mine portion of the site. The current owner indicated a willingness to negotiate. While reserving all rights and not admitting liability, we also indicated a willingness to negotiate. We are not able to estimate at this time our potential liability, if any, with respect to the remediation of this property. However, based on currently available information, we do not expect that any remedial or financial obligations we may be subject to involving this or other sites will have a material adverse effect on our business, financial condition, results of operations or cash flows.

22.   Segment Disclosures

        We are organized and managed based on two business segments, which are differentiated primarily by their products, the markets they serve and the regulatory environments in which they operate. Our two business segments are the nitrogen segment and the phosphate segment. The Company's management uses gross margin to evaluate segment performance and allocate resources. Total other operating costs and expenses (consisting of selling, general and administrative expenses, restructuring and integration costs 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.

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        Business segment data for sales, cost of sales and gross margin for the three and nine months ended September 30, 2012 and 2011 are presented in the table below.

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        Total assets at September 30, 2012 and December 31, 2011, are presented below.

        The Other category of assets in the table above includes amounts attributable to corporate headquarters and unallocated corporate assets, such as our cash and cash equivalents, short-term investments, equity method investments and other investments.

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23.   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 comprises two separate and distinct presentations.

        The first presentation of condensed consolidating financial information, under the heading "Condensed Consolidating Financial Information Relating to Senior Notes," relates to the Notes issued by CF Industries, Inc. (CFI), a 100% owned subsidiary of CF Industries Holdings, Inc. (Parent), described in Note 17 and the full and unconditional guarantee of such Notes by Parent. Under the supplemental indentures governing the Notes, the Notes are to be guaranteed by Parent and each of its current and future subsidiaries, other than CFI, that from time to time is a borrower or guarantor under the 2012 Credit Agreement, or any renewal, replacement or refinancing thereof. As of September 30, 2012, none of such subsidiaries of Parent was, or was required to be, a guarantor of the Notes. In the event that a subsidiary of Parent, other than CFI, becomes a borrower or a guarantor under the 2012 Credit Agreement, it would be required to become a guarantor of the Notes. For purposes of the presentation of condensed consolidating financial information under the heading "Condensed Consolidating Financial Information Relating to Senior Notes," the subsidiaries of Parent other than CFI are referred to as the Other Subsidiaries.

        The second presentation of condensed consolidating financial information, under the heading "Condensed Consolidating Financial Information Relating to Shelf Registration Statement," relates to the Registration Statement on Form S-3 (File Nos. 333-166079 and 333-166079-01 through -21) (the Registration Statement) registering debt securities of CFI and the full and unconditional, joint and several guarantees of such debt securities by Parent and certain 100% owned domestic subsidiaries of Parent other than CFI (referred to as the Guarantor Subsidiaries). On June 29, 2012, Parent, CFI and the Guarantor Subsidiaries filed a post-effective amendment to the Registration Statement to terminate the effectiveness of the Registration Statement and to deregister all unsold securities thereunder. For purposes of the presentation of condensed consolidating financial information under the heading "Condensed Consolidating Financial Information Relating to Shelf Registration Statement," the subsidiaries of Parent other than CFI and the Guarantor Subsidiaries are referred to as the Non-Guarantor Subsidiaries.

        In the condensed consolidating financial information presented below, 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.

Condensed Consolidating Financial Information Relating to Senior Notes

        Presented below are condensed consolidating statements of operations for Parent, CFI and the Other Subsidiaries for the three and nine months ended September 30, 2012 and 2011, statements of cash flows for Parent, CFI and the Other Subsidiaries for the nine months ended September 30, 2012 and 2011 and condensed consolidating balance sheets for Parent, CFI and the Other Subsidiaries as of September 30, 2012 and December 31, 2011. The condensed consolidating financial information presented below is not necessarily indicative of the financial position, results of operations or cash flows of Parent, CFI or the Other Subsidiaries on a stand-alone basis.

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Condensed, Consolidating Statement of Operations

Condensed, Consolidating Statement of Comprehensive Income

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Condensed, Consolidating Statement of Operations

Condensed, Consolidating Statement of Comprehensive Income

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Condensed, Consolidating Statement of Operations

Condensed, Consolidating Statement of Comprehensive Income

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Condensed, Consolidating Statement of Operations

Condensed, Consolidating Statement of Comprehensive Income

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Condensed, Consolidating Balance Sheet

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Condensed, Consolidating Balance Sheet

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Condensed, Consolidating Statement of Cash Flows

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Condensed, Consolidating Statement of Cash Flows

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Condensed Consolidating Financial Information Relating to Shelf Registration Statement

        Presented below are condensed consolidating statements of operations for Parent, CFI, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries for the three and nine months ended September 30, 2012 and 2011, statements of cash flows for Parent, CFI, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries for the nine months ended September 30, 2012 and 2011 and condensed consolidating balance sheets for the Parent, CFI, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries as of September 30, 2012, and December 31, 2011. The condensed consolidating financial information presented below is not necessarily indicative of the financial position, results of operations or cash flows of Parent, CFI, the Guarantor Subsidiaries or the Non-Guarantor Subsidiaries on a stand-alone basis.

Condensed, Consolidating Statement of Operations

Condensed, Consolidating Statement of Comprehensive Income

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Condensed, Consolidating Statement of Operations

Condensed, Consolidating Statement of Comprehensive Income

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Condensed, Consolidating Statement of Operations

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Condensed, Consolidating Statement of Operations

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Condensed, Consolidating Balance Sheet

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Condensed, Consolidating Balance Sheet

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Condensed, Consolidating Statement of Cash Flows

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Condensed, Consolidating Statement of Cash Flows

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24.   Subsequent Event

        On November 1, 2012, we announced that we will construct new ammonia and urea/UAN production units at our complex in Donaldsonville, Louisiana, and new ammonia and urea units at our complex in Port Neal, Iowa. Our Board of Directors has authorized expenditure of $3.8 billion for the projects. These projects will increase our capacity, increase our product mix flexibility at Donaldsonville, improve our ability to serve upper-Midwest urea customers from our cost-advantaged Port Neal location, and allow us to benefit from the global cost advantage of North American natural gas. All of the new plants are scheduled to be on-stream by 2016.

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ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

        You should read the following discussion and analysis in conjunction with our annual consolidated financial statements and related notes, which were included in our 2011 Annual Report on Form 10-K filed with the SEC on February 27, 2012, as well as Item 1, Financial Statements, in this Form 10-Q. All references to "CF Holdings," "we," "us" and "our" refer to CF Industries Holdings, Inc. and its subsidiaries, including CF Industries, Inc., except where the context makes clear that the reference is only to CF Industries Holdings, Inc. itself and not its subsidiaries. The following is an outline of the discussion and analysis included herein:

•

Overview of CF Holdings



•

Our Company



•

Financial Executive Summary



•

Results of Consolidated Operations



•

Third Quarter of 2012 Compared to the Third Quarter of 2011



•

Nine Months Ended September 30, 2012 Compared to Nine Months Ended September 30, 2011



•

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 one of the largest manufacturers and distributors of nitrogen and phosphate fertilizer products in the world. Our operations are organized into two business segments—the nitrogen segment and the phosphate segment. Our principal customers are cooperatives and independent fertilizer distributors. Our principal fertilizer products in the nitrogen segment are ammonia, granular urea, urea ammonium nitrate solution, or UAN, and ammonium nitrate, or AN. Our other nitrogen products include urea liquor, diesel exhaust fluid, or DEF, and aqua ammonia, which are sold primarily to our industrial customers. Our principal fertilizer products in the phosphate segment are diammonium phosphate, or DAP, and monoammonium phosphate, or MAP.

        Our core market and distribution facilities are concentrated in the midwestern United States and other major agricultural areas of the U.S. and Canada. We also export nitrogen fertilizer products from our Donaldsonville, Louisiana manufacturing facilities and phosphate fertilizer products from our Florida phosphate operations.

        Our principal assets include:

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five nitrogen fertilizer manufacturing facilities in Port Neal, Iowa, Courtright, Ontario, Yazoo City, Mississippi, Woodward, Oklahoma, and the largest nitrogen fertilizer complex in North America, located in Donaldsonville, Louisiana;

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a 75% 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;



•

a 66% economic interest in the largest nitrogen fertilizer complex in Canada (which we operate in Medicine Hat, Alberta through Canadian Fertilizers Limited (CFL), a consolidated variable interest entity);



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one of the largest integrated ammonium phosphate fertilizer complexes in the United States in Plant City, Florida;



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the most-recently constructed phosphate rock mine and associated beneficiation plant in the United States in Hardee County, Florida;



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an extensive system of terminals and associated transportation equipment located primarily in the midwestern United States; and



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joint venture investments that we account for under the equity method, which consist of:



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a 50% interest in GrowHow UK Limited (GrowHow), a nitrogen products production joint venture located in the United Kingdom and serving the British agricultural and industrial markets;



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a 50% interest in Point Lisas Nitrogen Limited (PLNL), an ammonia production joint venture located in the Republic of Trinidad and Tobago; and



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a 50% interest in KEYTRADE AG (Keytrade), a global fertilizer trading company headquartered near Zurich, Switzerland.

Financial Executive Summary

•

We reported net earnings attributable to common stockholders of $403.3 million in the third quarter of 2012 compared to net earnings of $330.9 million in the same quarter of 2011. Our results for the third quarter of 2012 included a net $39.8 million pre-tax unrealized mark-to-market gain ($24.7 million after tax) on natural gas derivatives and a $10.9 million pre-tax curtailment gain ($6.8 million after tax) from a reduction in certain retiree medical benefits.



•

Diluted net earnings per share attributable to common stockholders increased to $6.35 in the third quarter of 2012 from $4.73 in the third quarter of 2011 due to higher earnings and lower average shares outstanding due to our share repurchase program.



•

The net earnings attributable to common stockholders of $330.9 million in the third quarter of 2011 included a $35.1 million pre-tax non-cash impairment charge ($21.8 million after tax) related to the decision to shut down and remove the Woodward, Oklahoma methanol plant and a net $14.1 million pre-tax unrealized mark-to-market loss ($8.7 million after tax) on natural gas derivatives.



•

Our gross margin increased $64.0 million to $702.0 million in the third quarter of 2012 from $638.0 million in the same quarter of 2011 due primarily to higher nitrogen segment results driven by lower realized natural gas costs and unrealized mark-to-market gains on natural gas derivatives compared to unrealized losses in the prior year quarter. These declines in costs were partially offset by lower nitrogen sales volume. The $86.5 million increase in the nitrogen

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segment gross margin was partially offset by a $22.5 million decrease in the phosphate segment gross margin, driven primarily by lower average selling prices.

•

Our net sales decreased $44.4 million, or 3%, to $1.36 billion in the third quarter of 2012 from $1.40 billion in the third quarter of the prior year. The $44.4 million decline in net sales was split approximately equally between the nitrogen segment and the phosphate segment. In the nitrogen segment, the decline was attributable primarily to a decline in volume, while in the phosphate segment, the decline was attributable primarily to a decline in selling prices. Total sales volume (measured in short tons) in the third quarter of 2012 decreased 2% from the prior year period due to a 3% decrease in nitrogen segment sales volume partially offset by a 2% increase in phosphate segment sales volume. Average selling prices in the phosphate segment declined by 10%, which was partially offset by a 1% increase in average selling prices in the nitrogen segment.



•

Cash flow from operations approximated $2.0 billion for the first nine months of both 2012 and 2011. An increase in cash generated by higher net earnings in the 2012 period was offset by an increase in cash invested in working capital due mainly to the timing of income tax payments.



•

We paid cash dividends of $77.4 million and $42.6 million in the first nine months of 2012 and 2011, respectively. The increase is due primarily to an increase in the quarterly dividend to $0.40 per common share from $0.10 per common share, which started in the third quarter of 2011.



•

On August 2, 2012, we entered into a definitive agreement with Glencore International plc (Glencore) to acquire the interests in CFL currently owned by Viterra for total cash consideration of C$915 million subject to certain adjustments. Pursuant to the agreement between CF Industries and Glencore, the interests in CFL being acquired by CF Industries consist of 34% of CFL's outstanding preferred and common stock and a product purchase agreement. As a result of the transaction and subject to the product purchase agreements with CFL, CF Industries will be entitled to purchase 100% of CFL's ammonia and urea production. CFL's results are currently included in our financial statements as a consolidated variable interest entity. The completion of the transaction is subject to the closing of Glencore's acquisition of Viterra, receipt of regulatory approvals in Canada, and other terms and conditions in the definitive purchase agreement.

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Results of Consolidated Operations

        The following tables present our consolidated results of operations:

Third Quarter of 2012 Compared to the Third Quarter of 2011

Consolidated Operating Results

        Our total gross margin increased $64.0 million to $702.0 million in the third quarter of 2012 from $638.0 million in the same quarter of 2011 due primarily to an increase in gross margin in the nitrogen segment, partially offset by a decrease in gross margin in the phosphate segment. In the nitrogen segment, the gross margin increased by $86.5 million, or 16%, to $638.6 million in the third quarter of 2012 compared to $552.1 million in the same quarter of the prior year due primarily to lower average nitrogen fertilizer costs including lower realized natural gas costs and unrealized mark-to-market gains on natural gas derivatives in the current year quarter compared to unrealized losses in the prior year quarter. These declines in costs were partially offset by lower sales volume. In the phosphate segment, gross margin decreased by $22.5 million to $63.4 million in the third quarter of 2012 compared to $85.9 million in the third quarter of 2011 due primarily to lower average phosphate fertilizer selling prices partially offset by lower production costs.

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        We reported net earnings attributable to common stockholders of $403.3 million in the third quarter of 2012 compared to net earnings of $330.9 million in the same quarter of 2011. Our results for the third quarter of 2012 included a net $39.8 million pre-tax unrealized mark-to-market gain ($24.7 million after tax) on natural gas derivatives and a $10.9 million pre-tax curtailment gain ($6.8 million after tax) from a reduction in retiree medical benefits.

        Diluted net earnings per share attributable to common stockholders increased to $6.35 in the third quarter of 2012 from $4.73 in the third quarter of 2011 due to higher earnings and lower average shares outstanding due to our repurchase program.

        The net earnings attributable to common stockholders of $330.9 million in the third quarter of 2011 included a $35.1 million pre-tax non-cash impairment charge ($21.8 million after tax) related to our Woodward, Oklahoma methanol plant and a net $14.1 million pre-tax unrealized mark-to-market loss ($8.7 million after tax) on natural gas derivatives.

Net Sales

        Our net sales decreased $44.4 million, or 3%, to $1.36 billion in the third quarter of 2012 from $1.40 billion in the third quarter of 2011. This decrease was due to declines in both the nitrogen and phosphate segments. In the nitrogen segment, net sales declined by $22.8 million as a 3% decline in volume was partially offset by a 1% increase in average selling prices. Net sales in the phosphate segment declined by $21.6 million in the third quarter of 2012 due to a 10% decline in average selling prices, partially offset by a 2% increase in volume. The decline in phosphate fertilizer average selling prices was due primarily to lower global demand of phosphate products, particularly in India and Central and South America.

Cost of Sales

        Total cost of sales in our nitrogen segment averaged approximately $154 per ton in the third quarter of 2012 compared to $186 per ton in the same quarter of 2011. The 17% period-over-period decrease in cost of sales per ton was due primarily to unrealized mark-to-market gains on natural gas derivatives in the current quarter compared to unrealized losses in the third quarter of 2011 and lower realized natural gas costs. Phosphate segment cost of sales averaged $388 per ton in the third quarter of 2012 compared to $396 per ton in the prior year period. This 2% decrease was due primarily to lower sulfur costs and the impact of the retiree medical plan curtailment gain partially offset by higher ammonia costs.

Selling, General and Administrative Expenses

        Selling, general and administrative expenses increased $6.0 million to $36.5 million in the third quarter of 2012 from $30.5 million in the third quarter of 2011 due primarily to higher corporate office expenses, including higher professional service fees associated with the design and implementation of a new enterprise resource planning (ERP) software system, higher legal costs associated with corporate activities including our planned acquisition of Viterra's interests in CFL, and higher incentive compensation costs. These higher costs were partially offset by a $1.3 million curtailment gain from a reduction in certain retiree medical benefits.

Other Operating—Net

        Net other operating expense decreased $30.8 million to $8.6 million in the third quarter of 2012 as compared to $39.4 million in the third quarter of 2011 due primarily to a third quarter 2011 impairment charge of $35.1 million related to our Woodward, Oklahoma methanol plant.

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Equity in Earnings of Operating Affiliates

        Equity in earnings of operating affiliates consists of our 50% share of the operating results of PLNL and our 50% interest in an ammonia storage joint venture located in Houston, Texas. Equity in earnings of operating affiliates decreased $4.8 million to $10.2 million in the third quarter of 2012 as compared to $15.0 million in the third quarter of 2011 due primarily to reduced earnings at PLNL resulting from a planned plant turnaround and the associated reduction of product available for sale.

Income Taxes

        Our income tax provision for the third quarter of 2012 was $206.0 million on pre-tax income of $640.2 million, or an effective tax rate of 32.2%, compared to an income tax provision of $184.9 million on pre-tax income of $550.6 million, or an effective tax rate of 33.6%, for the same quarter of 2011. The effective tax rate for the third quarter of 2012 based on pre-tax income exclusive of earnings attributable to noncontrolling interest was 35.2% compared to 37.1% in the third quarter of 2011. The decline in the effective tax rate exclusive of earnings attributable to noncontrolling interest was driven primarily by higher state taxes in the prior year. The effective tax rate based on pre-tax income differs from our effective tax rate based on pre-tax income exclusive of earnings attributable to noncontrolling interest, as our consolidated income tax provision does not include tax provisions on the earnings attributable to noncontrolling interests in TNCLP and CFL, which record no income tax provisions. See Note 13—Income Taxes, to our audited consolidated financial statements included in our 2011 Annual Report on Form 10-K filed with the SEC on February 27, 2012 for additional information on income taxes.

Equity in Earnings of Non-Operating Affiliates—Net of Taxes

        Equity in earnings of non-operating affiliates—net of taxes consists of our share of the operating results of unconsolidated joint venture interests in GrowHow and Keytrade. We recorded $23.9 million of earnings in the third quarter of 2012 compared to $16.7 million of earnings in the same quarter of 2011. The increase was due primarily to improved operating results from GrowHow due to a strong UK fertilizer market.

Net Earnings Attributable to Noncontrolling Interest

        Net earnings attributable to noncontrolling interest include the interest of the 34% holder of CFL's common and preferred shares and the net earnings attributable to the 24.7% interest of the publicly held common units of TNCLP. The $3.3 million increase in net earnings attributable to the noncontrolling interest is due primarily to improved operating results for CFL during the quarter ended September 30, 2012 compared to the same period of 2011. During the third quarters of both 2012 and 2011, the TNCLP minimum quarterly distribution was exceeded, which entitled us to receive increased distributions on our general partner interests as provided for in the TNCLP Agreement of Limited Partnership. For additional information, see Note 4 to our unaudited interim consolidated financial statements included in Part 1 of this report.

Diluted Net Earnings Per Share Attributable to Common Stockholders

        Diluted net earnings per share attributable to common stockholders increased to $6.35 in the third quarter of 2012 from $4.73 in the third quarter of 2011 due to an increase in net earnings attributable to common stockholders and a decrease in the weighted average shares outstanding due to the August 2011 share repurchase program under which we repurchased 6.5 million shares of our common stock in the second half of 2011 and an additional 3.1 million shares in the second quarter of 2012.

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Nine Months Ended September 30, 2012 Compared to the Nine Months Ended September 30, 2011

Consolidated Operating Results

        Our total gross margin increased $426.7 million to $2.5 billion for the nine months ended September 30, 2012 from $2.0 billion for the comparable period of 2011 due to an increase in the gross margin in the nitrogen segment partially offset by a decrease in gross margin in the phosphate segment. In the nitrogen segment, the gross margin increased by $516.4 million to $2.3 billion in the first nine months of 2012 compared to $1.8 billion in the same nine months of 2011. The nitrogen segment gross margin increased due to a 9% increase in average nitrogen fertilizer selling prices, a 24% decline in realized natural gas costs and unrealized mark-to-market gains on natural gas derivatives in the current year period compared to unrealized losses in the prior year. In the phosphate segment, gross margin decreased by $89.7 million to $163.5 million in the first nine months of 2012 from $253.2 million in the comparable period of 2011, due primarily to 12% lower average phosphate fertilizer selling prices, partially offset by a 3% increase in volume.

        Net earnings attributable to common stockholders of $1.4 billion for the nine months ended September 30, 2012 included a net $61.5 million pre-tax unrealized mark-to-market gain ($38.2 million after tax) on natural gas derivatives, a $15.2 million charge ($9.4 million after tax) for the accelerated amortization of deferred loan fees on our 2010 Credit Agreement that we replaced in May 2012 and a $10.9 million pre-tax curtailment gain ($6.8 million after tax) from a reduction in certain retiree medical benefits.

        Net earnings attributable to common stockholders of $1.1 billion for the nine months ended September 30, 2011 included a $35.1 million pre-tax ($21.8 million after tax) non-cash impairment charge related to our Woodward, Oklahoma methanol plant, a $32.5 million ($20.0 million after tax) gain on the sale of four dry product warehouses, a net $27.6 million pre-tax unrealized mark-to-market loss ($17.1 million after tax) on natural gas derivatives, $19.9 million ($12.3 million after tax) of accelerated amortization of debt issuance costs recognized upon repayment of the remaining balance of the senior secured term loan in the first quarter of 2011, $4.2 million ($2.6 million after tax) of restructuring and integration costs associated with the acquisition of Terra, and a $2.0 million ($1.3 million after tax) gain on the sale of a non-core transportation business.

Net Sales

        Our net sales increased $243.1 million, or 6%, to $4.6 billion in the nine months ended September 30, 2012 from $4.4 billion in the same period of 2011. This increase was due to an increase in the nitrogen segment, partially offset by a decline in the phosphate segment. In the nitrogen segment, net sales increased by $322.0 million due primarily to higher average ammonia selling prices and sales volume and stronger granular urea selling prices. Market conditions for ammonia were positive in the first nine months of 2012 as favorable weather created a longer application window. Additional supporting factors included a tight domestic ammonia market, lower international ammonia production and lower imports of ammonia into the U.S. market. Granular urea pricing was higher during the first nine months of 2012 as tight supply conditions were prevalent during the first half of the year due to higher application rates and lower U.S. imports. In the phosphate segment, net sales declined $78.9 million due primarily to a 12% decline in average selling prices, partially offset by a 3% increase in volume. Average phosphate fertilizer selling prices in 2012 were lower due to lower global demand, notably in India.

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Cost of Sales

        Total cost of sales in our nitrogen segment averaged approximately $163 per ton in the first nine months of 2012 compared to $183 per ton in the same period of 2011. This 11% decrease was due primarily to lower realized natural gas cost and a net $61.5 million unrealized mark-to-market gain on natural gas derivatives in the current year compared to a net $27.6 million unrealized loss in the prior year. Phosphate segment cost of sales averaged $385 per ton in the first nine months of 2012 compared to $389 per ton in the prior year period.

Selling, General and Administrative Expenses

        Selling, general and administrative expenses increased $18.4 million to $111.6 million in the first nine months of 2012 from $93.2 million in the same period of 2011 due primarily to higher corporate office expenses including higher professional service fees associated with the design and implementation of a new ERP software system, higher legal costs associated with corporate activities including our planned acquisition of Viterra's interest in CFL and higher incentive compensation costs.

Other Operating—Net

        Other operating-net expense was $41.7 million in the first nine months of 2012 compared to $12.3 million in the same period of 2011. The expense recorded in the first nine months of 2012 consists primarily of costs associated with engineering studies for proposed capital projects at certain nitrogen complexes, foreign exchange costs and losses on the disposal of property, plant and equipment. The expense recorded in the first nine months of 2011 included a $35.1 million impairment charge related to our Woodward, Oklahoma methanol plant, offset by a $32.5 million gain that was recognized on the sale of four dry-product warehouses and a $2.0 million gain on the sale of a non-core transportation business.

Interest—Net

        Net interest expense was $102.9 million in the nine months ended September 30, 2012 compared to $113.5 million in the same period of 2011. The decrease in expense was due primarily to a decrease in amortized loan fees, including a $4.7 million decrease in accelerated loan fee amortization. In the first nine months of 2012, we terminated the 2010 Credit Agreement and recognized $15.2 million of accelerated loan fee amortization. In the first nine months of 2011, we repaid the remaining balance of our senior secured term loan and recognized $19.9 million of accelerated loan fee amortization.

Income Taxes

        Our income tax provision for the nine months ended September 30, 2012 was $722.0 million on pre-tax income of $2.2 billion, or an effective tax rate of 32.2%, compared to an income tax provision of $624.7 million on a pre-tax income of $1.8 billion and an effective tax rate of 33.8% in the same period of 2011. The effective tax rate for the nine months ended September 30, 2012 based upon pre-tax income exclusive of earnings attributable to noncontrolling interest was 35.2% compared to 37.0% in the prior year. The decline in the effective tax rate exclusive of earnings attributable to noncontrolling interest was driven primarily by higher state taxes in the prior year. The effective tax rate based on pre-tax income differs from our effective tax rate based on pre-tax income exclusive of earnings attributable to noncontrolling interest, as our consolidated income tax provision does not include tax provisions on the earnings attributable to noncontrolling interests in TNCLP and CFL, which record no income tax provisions. See Note 13 to our audited consolidated financial statements

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included in our 2011 Annual Report on Form 10-K filed with the SEC on February 27, 2012 for additional information on income taxes.

Equity in Earnings of Non-Operating Affiliates—Net of Taxes

        Equity in earnings of non-operating affiliates—net of taxes consists of our share of the operating results of unconsolidated joint venture interests in GrowHow and Keytrade. The $13.8 million increase in the first nine months of 2012 compared to the same period of 2011 was due primarily to higher net earnings at GrowHow due to improved operating results, declines in UK corporate tax rates and an $11.1 million insurance settlement related to a fire that occurred in 2011.

Net Earnings Attributable to Noncontrolling Interest

        Net earnings attributable to noncontrolling interest include the interest of the 34% holder of CFL's common and preferred shares and the net earnings attributable to the 24.7% interest of the publicly held common units of TNCLP. The $31.6 million increase in net earnings attributable to noncontrolling interests was due primarily to an improvement in CFL operating results for the first nine months of 2012. During each of the first three quarters of 2012 and 2011, the TNCLP minimum quarterly distribution was exceeded, which entitled us to receive increased distributions on our general partner interests as provided for in the TNCLP Agreement of Limited Partnership. For additional information, see Note 4 to our unaudited interim consolidated financial statements included in Part 1 of this report.

Diluted Net Earnings Per Share Attributable to Common Stockholders

        Diluted net earnings per share attributable to common stockholders increased to $21.19 in the first nine months of 2012 from $15.41 in the comparable period of 2011 due to an increase in net earnings attributable to common stockholders and a decrease in the weighted average shares outstanding due to the August 2011 share repurchase program under which we repurchased 6.5 million shares of our common stock in the second half of 2011 and an additional 3.1 million shares in the second quarter of 2012.

Operating Results by Business Segment

        Our business is organized and managed internally based on two segments, the nitrogen segment and the phosphate segment, which are differentiated primarily by their products, the markets they serve and the regulatory environments in which they operate.

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Nitrogen Segment

        The following table presents summary operating data for our nitrogen segment:

Third Quarter of 2012 Compared to the Third Quarter of 2011

Net Sales.

        Nitrogen segment net sales of $1.1 billion in the third quarter of 2012 were 2% below net sales in the third quarter of 2011 as lower sales volume was partially offset by higher average selling prices. The decline in sales volumes was primarily attributed to a decline in granular urea and ammonium nitrate sales volumes in the third quarter of 2012. Sales of urea in the third quarter of 2011 were unusually high due to robust domestic demand, strong quarterly production and increased export sales. Sales of ammonium nitrate declined primarily as a result of lower production during the quarter due to a scheduled turnaround. These volume declines were partially offset by volume increases in ammonia and UAN as customers built inventory in anticipation of the fall 2012 and spring 2013 application seasons. Average nitrogen fertilizer selling prices increased slightly to $370 per ton in the third quarter of 2012 from $367 per ton in the same quarter of 2011. Average selling prices for ammonia and granular urea increased due to tight supplies as customers continued to anticipate a strong planting season in spring 2013 and were replenishing inventories.

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Cost of Sales.

        Total cost of sales in the nitrogen segment averaged approximately $154 per ton in the third quarter of 2012 compared to $186 per ton in the third quarter of 2011. The decrease in cost of sales per ton is due primarily to lower realized natural gas costs and $39.8 million of net unrealized mark-to-market gains on natural gas derivatives in the third quarter of 2012 compared to net losses of $14.1 million in the third quarter of 2011.

Nine Months Ended September 30, 2012 Compared to the Nine Months Ended September 30, 2011

Net Sales.

        Nitrogen segment net sales increased $322.0 million or 9% to $3.9 billion in the nine months ended September 30, 2012 compared to $3.5 billion in the same period of last year, due primarily to a 9% increase in average selling prices. Average nitrogen fertilizer selling prices increased to $399 per ton in the first nine months of 2012 from $367 per ton in the first nine months of 2011 with increases in ammonia and urea. Higher ammonia and urea average selling prices resulted from tight industry-wide supply due to increased demand caused by the higher level of planted acres in 2012, lower downstream inventories and lower levels of imports of ammonia into the U.S. market.

Cost of Sales.

        Total cost of sales in the nitrogen segment averaged approximately $163 per ton in the nine months ended September 30, 2012 compared to $183 per ton in the same period of 2011. The 11% decrease is due primarily to lower realized natural gas costs and $61.5 million in net unrealized mark-to-market gains on natural gas derivatives in the first nine months of 2012 compared to net losses of $27.6 million in the 2011 period.

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Phosphate Segment

        The following table presents summary operating data for our phosphate segment:

Third Quarter of 2012 Compared to the Third Quarter of 2011

Net Sales.

        Phosphate segment net sales decreased $21.6 million, or 8%, to $264.2 million in the third quarter of 2012 compared to $285.8 million in the third quarter of 2011 due to lower average selling prices partially offset by higher sales volume. Average selling prices for phosphate products declined by 10% due to lower demand internationally, particularly from India and Central and South America. Our total phosphate sales volume of 517,000 tons in the third quarter of 2012 was 2% higher than the third quarter of 2011 due primarily to increased domestic demand resulting from anticipated high planted acreage in 2013.

Cost of Sales.

        Phosphate segment cost of sales averaged $388 per ton in the third quarter of 2012 compared to $396 per ton in the prior year period. This 2% decrease was due primarily to lower sulfur costs and the impact of the retiree medical plan curtailment gain, partially offset by higher ammonia costs.

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Nine Months Ended September 30, 2012 Compared to the Nine Months Ended September 30, 2011

Net Sales.

        Phosphate segment net sales decreased $78.9 million, or approximately 10%, to $751.6 million in the first nine months of 2012 compared to $830.5 million in the first nine months of 2011 due to lower average selling prices, partially offset by higher sales volume. Average selling prices for the nine months ended September 30, 2012 decreased by 12% compared to the prior year reflecting lower global demand, notably from India. Our total volume of phosphate fertilizer sales of 1.5 million tons in the first nine months of 2012 was 3% higher than in the same period of 2011 due primarily to higher export sales volume.

Cost of Sales.

        Average phosphate segment cost of sales of $385 per ton in the first nine months of 2012 was essentially unchanged from the $389 per ton in the prior year period.

Liquidity and Capital Resources

        Generally, our primary source of cash is cash from operations, which includes cash generated by customer advances. 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.

        Under our short-term investment policy, we may invest our excess cash balances in several types of securities including notes and bonds issued by governmental entities or corporations, and money market funds. Securities issued by governmental agencies 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.

Cash Balances

        We had cash and cash equivalents of $2.2 billion and $1.2 billion as of September 30, 2012, and December 31, 2011, respectively.

Share Repurchase Program

        On August 4, 2011, our Board of Directors authorized a program to repurchase up to $1.5 billion of our common stock. Repurchases under this program were authorized to be made from time to time in the open market, in privately negotiated transactions, or otherwise. During the second half of 2011, we repurchased 6.5 million shares under this program for $1.0 billion. In the second quarter of 2012, we repurchased an additional 3.1 million shares for $500.0 million. The repurchases total 9.6 million shares, completing the $1.5 billion authorization under the program. In June 2012, our Board of Directors approved a resolution to retire all 9.6 million shares of the repurchased stock, and as of June 30, 2012, all repurchased shares had been retired. In the balance sheet, the retirement of these shares eliminated the recorded treasury stock and reduced retained earnings and paid in capital by $1,125.9 million and $374.2 million, respectively, as of June 30, 2012.

        On August 6, 2012, we announced that our Board of Directors authorized the repurchase of up to $3.0 billion of CF Holdings common stock through December 31, 2016. Purchases under this repurchase program may be made from time to time in the open market, in privately negotiated transactions, or otherwise. The manner, timing, and amount of any purchases will be determined by our

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management based on evaluation of market conditions, stock price, and other factors. No purchases have been made under this new program through September 30, 2012.

Debt

        As of September 30, 2012 and December 31, 2011, we had $1.6 billion of outstanding senior notes that were issued in two series of $800 million each. The first series carries an interest rate of 6.875% and is due in the aggregate in 2018. The second series carries an interest rate of 7.125% and is due in the aggregate in 2020. At December 31, 2011 we also had $13.0 million of Terra 7% senior notes due 2017, which were redeemed in the second quarter of 2012.

        As of September 30, 2012, $491.0 million was available for borrowing under our credit agreement, reflecting $9.0 million of outstanding letters of credit and no outstanding borrowings.

        Our 2012 Credit Agreement includes representations, warranties, covenants and events of default, including requirements that we maintain a minimum interest coverage ratio and not exceed a maximum total leverage ratio, as well as other customary covenants and events of default. Our senior notes indentures also include certain covenants and events of default. As of September 30, 2012, we were in compliance with all covenants under the 2012 Credit Agreement and the senior notes indentures.

Capital Spending

        Capital expenditures of $261.4 million were made in the first nine months of 2012 to sustain our asset base, to increase our production capacity, to improve plant efficiency and to comply with various environmental, health and safety requirements. We expect to spend approximately $100-$140 million on capital projects in the fourth quarter of 2012, bringing our total annual capital expenditures for 2012 to approximately $350-$400 million, as compared to $247.2 million for calendar year 2011. The increase is due primarily to an increase in scheduled turnarounds in 2012, higher spending on environmental, health and safety projects and the announced projects to increase production and efficiency at our Donaldsonville nitrogen complex.

        These capital expenditures do not include spending associated with our recently announced capital expansion projects. For additional information regarding this subsequent event, refer to Note 24 to our unaudited consolidated financial statements included in Part I of this report and similar information later in this section.

Forward Sales and Customer Advances

        We offer our customers the opportunity to purchase product on a forward basis, including under our Forward Pricing Program (FPP) at prices and on delivery dates we propose. As our customers enter into forward nitrogen fertilizer purchase contracts with us, we generally will lock in a substantial portion of the margin on these forward sales mainly by using natural gas derivative instruments and fixed price purchases, unless we have already fixed the cost of natural gas. Natural gas is the largest and most volatile component of our manufacturing cost for nitrogen-based fertilizers. As a result of using derivative instruments to hedge against movements of future prices of natural gas, volatility in reported quarterly earnings can result from the unrealized mark-to-market adjustments in the fair value of the derivatives. Our reported selling prices and margins may differ from spot market prices and margins available at the time of shipment. Unlike nitrogen fertilizer products sold under forward sales contracts for which we effectively fix the cost of natural gas, we typically are unable to fix the cost of phosphate fertilizer raw materials, principally sulfur and ammonia, which are among the largest components of our phosphate fertilizer manufacturing costs. As a result, we typically are exposed to margin risk on phosphate fertilizer products sold on a forward basis.

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        Customer advances, which typically represent a portion of the contract's sales value, are received shortly after the contract is executed, with any remaining unpaid amount generally being collected by the time the product is shipped, 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 the related orders are shipped, which may be several months after the order is placed. As is the case for all of our sale transactions, revenue is recognized when title and risk of loss transfers upon shipment or delivery of the product to customers. As of September 30, 2012 and December 31, 2011, we had $617.6 million and $257.2 million, respectively, in customer advances on our consolidated balance sheets.

        While customer advances are a significant source of liquidity, the level of forward sales contracts is affected by many factors including current market conditions and our customers' outlook of future market fundamentals. The level of forward orders at any point in time may reflect our customers' views of the current fertilizer pricing environment and expectations regarding future pricing and availability of supply.

        Under the FPP, 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 an FPP contract due to a customer's inability or unwillingness to perform may negatively impact our reported sales. We also may be subject to certain charges under these arrangements should we be unable to deliver product at the specified time. If the level of forward sales were to decrease in the future, our cash received from customer advances would likely decrease and our accounts receivable balances would likely increase. Also, borrowing under our credit facility 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.

Natural Gas Derivatives

        We use natural gas in the manufacture of nitrogen fertilizer products. We manage the risk of changes in gas prices through the use of physical gas supply contracts and derivative financial instruments covering periods of generally less than 18 months. Our natural gas acquisition policy allows us to establish derivative positions associated with anticipated natural gas requirements, including requirements to fulfill forward nitrogen fertilizer sales. The use of derivative instruments for our forward sales allows us to lock in a substantial portion of our margin on these sales.

        Natural gas derivatives involve the risk of dealing with counterparties and their ability to meet the terms of the contracts. The counterparties to our natural gas derivatives are either large oil and gas companies or large financial institutions. Cash collateral is deposited with or received from counterparties when predetermined unrealized loss or gain thresholds are exceeded. 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, individual credit limits, monitoring procedures, cash collateral requirements and master netting arrangements.

        The master netting arrangements to our derivative instruments also contain credit-risk-related contingent features that require us to maintain minimum net worth levels and certain financial ratios. If we fail to meet these minimum requirements, the counterparties to derivative instruments for which we are in net liability positions could require daily cash settlement of unrealized losses or some other form of credit support.

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        As of September 30, 2012 and December 31, 2011, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in a net liability position was $12.7 million and $74.7 million, respectively, for which we have no cash collateral on deposit with these counterparties.

Financial Assurance Requirements

        In addition to various operational and environmental regulations related to our phosphate segment, we are also subject to financial assurance requirements related to the closure and maintenance of our phosphogypsum stack systems at both our Plant City, Florida phosphate fertilizer complex and our closed Bartow, Florida phosphate fertilizer complex. The financial assurance requirements pertaining to our operations are outlined in two separate regulations. First, in 2010, we entered into a consent decree with the U.S. Environmental Protection Agency (EPA) and the Florida Department of Environmental Protection (FDEP) with respect to our compliance with the Resource Conservation and Recovery Act (RCRA) at our Plant City, Florida complex (the Plant City Consent Decree). Second, the State of Florida financial assurance regulations (Florida Financial Assurance) apply to both our Plant City and Bartow complexes. Both of these regulations allow the use of a funding mechanism as a means of complying with the financial assurance requirements associated with the closure, long-term maintenance, and monitoring costs for the phosphogypsum stacks, as well as costs incurred to manage the water contained in the stack system upon closure. We have established a trust account for the benefit of the EPA and FDEP and an escrow account for the benefit of the FDEP to meet these financial assurance requirements. On our consolidated balance sheet, these are collectively referred to as "Asset retirement obligation funds" (ARO funds). In October 2012, we deposited $53.0 million into the trust for the Plant City Consent Decree, thereby reaching full funding of that obligation, and we expect to fund the remaining approximately $4.0 million of the State of Florida Financial Assurance escrow account near the end of 2015. Both financial assurance funding obligations require estimates of future expenditures that could be impacted by refinements in scope, technological developments, cost inflation, changes in regulations, discount rates and the timing of activities. Additional funding will be required in the future if increases in cost estimates exceed investment earnings in the trust or escrow accounts. At September 30, 2012 and December 31, 2011, the balance in the ARO funds was $147.6 million and $145.4 million, respectively.

        The amounts recognized as expense in operations pertaining to our phosphogypsum stack systems closure and land reclamation are determined and accounted for on an accrual basis as described in Note 9 to our unaudited interim consolidated financial statements included in Part 1 of this report. These expense amounts are expected to differ from the anticipated contributions to the trust and escrow accounts, which are based on the guidelines set forth in the Plant City Consent Decree and Florida Financial Assurance. Ultimately, the funds in these accounts will be used to fund the closure and maintenance of the phosphogypsum stack systems.

        Florida regulations require mining companies to demonstrate financial responsibility for reclamation, wetland and other surface water mitigation measures in advance of any mining activities. We will also be required to demonstrate financial responsibility for reclamation and for wetland and other surface water mitigation measures, if and when we are able to expand our Hardee mining activities to areas not currently permitted. The demonstration of financial responsibility by mining companies in Florida may be provided by passing a financial test or by establishing a trust fund agreement or escrow account. Based on these current regulations, we will have the option to demonstrate financial responsibility in Florida utilizing any of these methods.

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Other Liquidity Requirements

        We are subject to federal, state and local laws and rules concerning surface and underground waters. Such rules evolve through various stages of proposal or development and the ultimate outcome of such rulemaking activities often cannot be predicted prior to enactment. At the present time, rules in the State of Florida are being developed to limit nutrient content in water discharges, including certain specific rules pertaining to water bodies near our Florida operations. We are monitoring the evolution of these rules. Potential costs associated with compliance cannot be determined currently and we cannot reasonably estimate the impact on our financial position, results of operations or cash flows.

        We contributed approximately $9.2 million to our pension plans in the nine months ended September 30, 2012. We expect to contribute approximately $10.8 million to our pension plans over the remaining three months of 2012.

Cash Flows

Operating Activities

        Net cash generated from operating activities approximated $2.0 billion during the first nine months of both 2012 and 2011. Cash from higher net earnings in 2012 was offset by an increase in cash invested in working capital. The increase in the amount of cash invested in working capital in the first nine months of 2012 was due primarily to the timing of income tax payments.

Investing Activities

        Net cash used in investing activities was $221.0 million in the first nine months of 2012 compared to $49.8 million in the nine months ended September 30, 2011. The cash used in investing activities in the first nine months of 2012 consisted mainly of $261.4 million of capital expenditures partially offset by $31.0 million of proceeds from sales and maturities of short-term investments and auction rate securities. Net cash used in investing activities in the first nine months of 2011 included $169.2 million in capital expenditures partially offset by $51.3 million in proceeds from the sale of property, plant and equipment, including the sale of four dry-product warehouses and a non-core transportation business and $36.9 million in proceeds from sales and maturities of short-term and auction rate securities.

Financing Activities

        Net cash used in financing activities was $720.1 million in the first nine months of 2012 compared to $1.3 billion in the same period of 2011. In the first nine months of 2012, we repurchased $500.0 million of our common stock and distributed $212.8 million to the noncontrolling interests. We repurchased $801.9 million of our common stock and distributed $127.4 million to the noncontrolling interests in the same period of 2011. In the first nine months of 2012, $13.0 million was used for the repayment of long term debt compared to $346.0 million in the first nine months of 2011. Dividends paid on common stock increased to $77.4 million in the first nine months of 2012 from $42.6 million in the comparable period of 2011 due primarily to the increase in the common dividend to $0.40 per share from $0.10 per share which started in the third quarter of 2011.

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Obligations

Contractual Obligations

        The following is a summary of our contractual obligations as of September 30, 2012:

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Subsequent Event

        On November 1, 2012, we announced that we will construct new ammonia and urea/UAN production units at our complex in Donaldsonville, Louisiana, and new ammonia and urea units at our complex in Port Neal, Iowa. Our Board of Directors has authorized expenditure of $3.8 billion for the projects. These projects will increase our capacity, increase our product mix flexibility at Donaldsonville, improve our ability to serve upper-Midwest urea customers from our cost-advantaged Port Neal location, and allow us to benefit from the global cost advantage of North American natural gas. All of the new plants are scheduled to be on-stream by 2016. We expect to finance the capital expenditures through the use of cash and short-term investments, cash generated from operations and/or borrowings.

Off-Balance Sheet Arrangements

        We have operating leases for certain property and equipment under various noncancelable agreements, the most significant of which are rail car leases and barge tow charters for the transportation of fertilizer, and terminal leases. The rail car leases currently have minimum terms ranging from one to ten years and the barge charter commitments currently have terms ranging from one to four years. We also have terminal and warehouse storage agreements at several of our distribution locations, some of which contain minimum throughput requirements. The storage agreements contain minimum terms ranging from one to three years and commonly contain automatic annual renewal provisions thereafter unless canceled by either party.

        Our operating lease agreements do not contain significant contingent rents, leasehold incentives, rent holidays, scheduled rent increases, concessions or unusual provisions. See Note 26 to our consolidated financial statements included in our 2011 Annual Report on Form 10-K filed with the SEC on February 27, 2012 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 2012.

Recent Accounting Pronouncements

        See Note 3 to our unaudited interim consolidated financial statements included in Part 1 of this report for a discussion of recent accounting pronouncements.

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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 future prospects, developments and business strategies. We have used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," and similar terms and phrases, including references to assumptions, to identify forward-looking statements in this Form 10-Q. These forward-looking statements are made based on 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'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 report.

        Important factors that could cause actual results to differ materially from our expectations are disclosed under "Risk Factors" in Item 1A in our 2011 Annual Report on Form 10-K, filed with the SEC on February 27, 2012 and Item 1A of Part II of this Quarterly Report on Form 10-Q. Such factors include, among others:

•

the volatility of natural gas prices in North America;



•

the cyclical nature of our business and the agricultural sector;



•

the global commodity nature of our fertilizer products, the impact of global supply and demand on our selling prices, and the intense global competition in the markets in which we operate;



•

conditions in the U.S. agricultural industry;



•

reliance on third party providers of transportation services and equipment;



•

our ability to implement a new enterprise resource planning system and complete other system integration activities;



•

weather conditions;



•

our ability to complete our recently announced production capacity expansion projects on schedule as planned and on budget or at all;



•

risks associated with other expansions of our business, including unanticipated adverse consequences and the significant resources that could be required;



•

potential liabilities and expenditures related to environmental and health and safety laws and regulations;



•

our potential inability to obtain or maintain required permits and governmental approvals or to meet financial assurance requirements;

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•

future regulatory restrictions and requirements related to greenhouse gas emissions and climate change;



•

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;



•

the significant risks and hazards involved in producing and handling our products against which we may not be fully insured;



•

our reliance on a limited number of key facilities;



•

risks associated with joint ventures;



•

acts of terrorism and regulations to combat terrorism;



•

difficulties in securing the supply and delivery of raw materials we use and increases in their costs;



•

risks associated with international operations;



•

losses on our investments in securities;



•

deterioration of global market and economic conditions;



•

our ability to manage our indebtedness; and



•

loss of key members of management and professional staff.

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ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

        We are exposed to the impact of changes in commodity prices, the valuation of our investments, interest rates and foreign currency exchange rates.

Commodity Prices

        Our net sales, cash flows and estimates of future cash flows related to fertilizer sales 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 and UAN (32%) by approximately $33, $22 and $13, respectively.

        We use natural gas in the manufacture of our nitrogen products. Natural gas prices are volatile. We manage the risk of changes in natural gas prices through the use of physical gas supply contracts and derivative financial instruments covering periods not exceeding three years.

        The derivative instruments that we use currently are natural gas swap contracts. These contracts settle using NYMEX futures price indexes, which represent fair value at any given time. The contracts are traded in months forward and settlements are scheduled to coincide with anticipated natural gas purchases during those future periods.

        We account for derivatives under Accounting Standards Codification (ASC) 815—Derivatives and Hedging. Under this section, derivatives are recognized on the consolidated balance sheet at fair value and changes in their fair value are recognized immediately in earnings, unless the normal purchase and sale exemption applies. We use natural gas derivatives primarily as an economic hedge of gas price risk, but without the application of hedge accounting under ASC 815. Accordingly, changes in the fair value of the derivatives are recorded in cost of sales as the changes occur. Cash flows related to natural gas derivatives are reported as operating activities.

        As of September 30, 2012 and December 31, 2011, we had open derivative contracts for 38.7 million MMBtus and 156.3 million MMBtus, respectively, of natural gas. For the nine months ended September 30, 2012, we used derivatives to cover approximately 67% of our natural gas consumption. An overall $1.00 per MMBtu change in the forward curve prices of natural gas would change the pre-tax unrealized mark-to-market gain/loss on these derivative positions by $38.7 million.

        We purchase ammonia and sulfur for use as raw materials in the production of DAP and MAP. There can be no guarantee that significant increases in input prices can always be recovered through increases in selling prices. We enter into raw material purchase contracts to procure ammonia and sulfur at market prices. A $10 per ton change in the related cost of a short ton of ammonia or a long ton of sulfur would change DAP production cost by $2.10 per ton and $3.80 per ton, respectively. We also may, from time to time, purchase ammonia, granular urea, UAN, DAP and MAP to augment or replace production at our facilities.

Interest Rate Fluctuations

        As of September 30, 2012, we had two series of senior notes, each with $800.0 million outstanding and original maturity dates of May 1, 2018 and May 1, 2020. The senior notes have fixed interest rates. The fair value of our senior notes outstanding at September 30, 2012 was approximately $2.0 billion. Borrowings under our 2012 Credit Agreement bear a current market rate of interest and we are subject to interest rate risk on such borrowings. However, in 2012, there were no borrowings under that agreement.

Foreign Currency Exchange Rates

        We are directly exposed to changes in the value of the Canadian dollar, the British pound and the Swiss franc. At the present time, we do not maintain any exchange rate derivatives or hedges related to foreign currencies.

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ITEM 4.    CONTROLS AND PROCEDURES.

        (a)    Disclosure Controls and Procedures.    The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company's disclosure controls and procedures are effective in (i) recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act and (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's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

        (b)    Internal Control Over Financial Reporting.    Except as noted below, there have not been any changes in the Company's internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

        In April 2010, CF completed its acquisition of Terra. We continue to integrate policies, processes, technology and operations for the combined company and will continue to evaluate our internal control over financial reporting as we complete our integration activities. Until the companies are fully integrated, we will maintain the operational integrity of each company's legacy internal controls over financial reporting.

        The Company is in the process of replacing various business information systems with an enterprise resource planning system from SAP. Implementation will occur over several years in phases. This activity involves the migration of multiple legacy systems and users to a common SAP information platform.

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PART II—OTHER INFORMATION

ITEM 1A.    RISK FACTORS

        With the exception of the new risk factor below, there have been no material updates to the Risk Factors disclosure included in our 2011 Annual Report on Form 10-K, filed with the SEC on February 27, 2012.

We may not be able to complete our recently announced capacity expansion projects on schedule as planned and on budget or at all due to a number of factors, many of which our beyond our control.

        On November 1, 2012, we announced that we will construct new ammonia and urea/UAN production units at our complex in Donaldsonville, Louisiana, and new ammonia and urea units at our complex in Port Neal, Iowa. Our Board of Directors has authorized expenditure of $3.8 billion for the projects. The design, development, construction and start-up of the new production units are subject to a number of risks, any of which could prevent us from completing the projects on schedule as planned and on budget or at all, including cost overruns, performance of third parties, permitting matters, adverse weather, defects in materials and workmanship, labor and material shortages, transportation constraints, engineering and construction change orders, and other unforeseen difficulties.

        Our expansion projects are dependent on the availability and performance of the engineering firms, construction firms, equipment suppliers, transportation providers and other vendors necessary to build the new units on a timely basis and on acceptable economic terms. Although we have entered into contracts with an affiliate of ThyssenKrupp Uhde for engineering and procurement services for each of the projects, if it fails to perform under those contracts, our ability to meet our expansion goals would be affected. In addition, although we have procured bids from several construction firms, we have not yet entered into definitive agreements for construction services for either project.

        We must also obtain numerous regulatory approvals and permits in order to construct and operate the additional production units. These requirements may not be satisfied in a timely manner or at all. Our exposure to permitting risks may be exacerbated because we may begin construction on certain of our units and incur substantial costs without first obtaining all permits necessary to operate the unit. In the event that we ultimately fail to obtain all necessary permits, we would be forced to abandon the project and lose the benefit of any construction costs already incurred. In addition, federal and state governmental requirements may substantially increase our costs, which could have a material adverse effect on our business, results of operations and financial condition.

        Our expansion plans may also result in other unanticipated adverse consequences, such as the diversion of management's attention from our existing plants and businesses and other opportunities.

ITEM 4.    MINE SAFETY DISCLOSURES.

        The information concerning mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Form 10-Q.

ITEM 6.    EXHIBITS.

        A list of exhibits filed with this report on Form 10-Q (or incorporated by reference to exhibits previously filed or furnished) is provided in the Exhibit Index on page 77 of this report.

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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.

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EXHIBIT INDEX

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