CF » Topics » Overview

This excerpt taken from the CF 10-Q filed Nov 5, 2007.

Overview

        We are one of the largest manufacturers and distributors of nitrogen and phosphate fertilizer products in North America. Our operations are organized into two business segments: the nitrogen fertilizer business and the phosphate fertilizer business. Our principal products in the nitrogen fertilizer business are ammonia, urea and urea ammonium nitrate solution, or UAN. Our principal products in the phosphate fertilizer business are diammonium phosphate, or DAP, and monoammonium phosphate, or MAP. Our core market and distribution facilities are concentrated in the midwestern U.S. grain-producing states. Our principal customers are cooperatives and independent fertilizer distributors.

        Our principal assets include:

    the largest nitrogen fertilizer complex in North America (Donaldsonville, Louisiana);

    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);

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

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

    an extensive system of terminals, warehouses and associated transportation equipment located primarily in the midwestern United States.
This excerpt taken from the CF 10-Q filed Aug 6, 2007.

Overview

We are one of the largest manufacturers and distributors of nitrogen and phosphate fertilizer products in North America. Our operations are organized into two business segments: the nitrogen fertilizer business and the phosphate fertilizer business. Our principal products in the nitrogen fertilizer business are ammonia, urea and urea ammonium nitrate solution, or UAN. Our principal products in the phosphate fertilizer business are diammonium phosphate, or DAP, and monoammonium phosphate, or MAP. Our core market and distribution facilities are concentrated in the midwestern U.S. grain-producing states. Our principal customers are cooperatives and independent fertilizer distributors.

Our principal assets include:

·       the largest nitrogen fertilizer complex in North America (Donaldsonville, Louisiana);

·       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);

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

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

·       an extensive system of terminals, warehouses and associated transportation equipment located primarily in the midwestern United States.

This excerpt taken from the CF 10-Q filed May 4, 2007.

Overview

We are one of the largest manufacturers and distributors of nitrogen and phosphate fertilizer products in North America. Our operations are organized into two business segments: the nitrogen fertilizer business and the phosphate fertilizer business. Our principal products in the nitrogen fertilizer business are ammonia, urea and urea ammonium nitrate solution, or UAN. Our principal products in the phosphate fertilizer business are diammonium phosphate, or DAP, and monoammonium phosphate, or MAP. Our core market and distribution facilities are concentrated in the midwestern U.S. grain-producing states. Our principal customers are cooperatives and independent fertilizer distributors.

Our principal assets include:

·       the largest nitrogen fertilizer complex in North America (Donaldsonville, Louisiana);

·       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);

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

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

·       an extensive system of terminals, warehouses and associated transportation equipment located primarily in the midwestern United States.

This excerpt taken from the CF 10-Q filed Nov 7, 2006.

Overview

We are one of the largest manufacturers and distributors of nitrogen and phosphate fertilizer products in North America. Our operations are organized into two business segments: the nitrogen fertilizer business and the phosphate fertilizer business. Our principal products in the nitrogen fertilizer business are ammonia, urea and urea ammonium nitrate solution, or UAN. Our principal products in the phosphate fertilizer business are diammonium phosphate, or DAP, and monoammonium phosphate, or MAP. Our core market and distribution facilities are concentrated in the midwestern U.S. grain-producing states. Our principal customers are cooperatives and independent fertilizer distributors.

Our principal assets include:

·       the largest nitrogen fertilizer complex in North America (Donaldsonville, Louisiana);

·       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);

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

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

·       an extensive system of terminals, warehouses and associated transportation equipment located primarily in the midwestern United States.

CF Holdings was formed in 2005 to hold the existing business of CF Industries, Inc. Prior to the consummation of our initial public offering (IPO) in August 2005, CF Industries, Inc. operated as a cooperative and was owned by eight regional agricultural cooperatives (our pre-IPO owners).

This excerpt taken from the CF 10-Q filed Aug 14, 2006.

Overview

We are one of the largest manufacturers and distributors of nitrogen and phosphate fertilizer products in North America. Our operations are organized into two business segments: the nitrogen fertilizer business and the phosphate fertilizer business. Our principal products in the nitrogen fertilizer business are ammonia, urea and urea ammonium nitrate solution, or UAN. Our principal products in the phosphate fertilizer business are diammonium phosphate, or DAP, and monoammonium phosphate, or MAP. Our core market and distribution facilities are concentrated in the midwestern U.S. grain-producing states. Our principal customers are cooperatives and independent fertilizer distributors.

Our principal assets include:

·       the largest nitrogen fertilizer complex in North America (Donaldsonville, Louisiana);

·       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);

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

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

·       an extensive system of terminals, warehouses and associated transportation equipment located primarily in the midwestern United States.

CF Holdings was formed in 2005 to hold the existing business of CF Industries, Inc. Prior to the consummation of our initial public offering in August 2005, CF Industries, Inc. operated as a cooperative and was owned by eight regional agricultural cooperatives.

This excerpt taken from the CF 10-Q filed May 3, 2006.

Overview

We are one of the largest manufacturers and distributors of nitrogen and phosphate fertilizer products in North America. Our operations are organized into two business segments: the nitrogen fertilizer business and the phosphate fertilizer business. Our principal products in the nitrogen fertilizer business are ammonia, urea and urea ammonium nitrate solution, or UAN. Our principal products in the phosphate fertilizer business are diammonium phosphate, or DAP, and monoammonium phosphate, or MAP. Our core market and distribution facilities are concentrated in the midwestern U.S. grain-producing states. Our principal customers are cooperatives and independent fertilizer distributors.

Our principal assets include:

·       the largest nitrogen fertilizer complex in North America (Donaldsonville, Louisiana);

·       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);

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

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

·       an extensive system of terminals, warehouses and associated transportation equipment located primarily in the midwestern United States.

CF Holdings was formed in 2005 to hold the existing business of CF Industries, Inc. Prior to the consummation of our initial public offering in August 2005, CF Industries, Inc. operated as a cooperative and was owned by eight regional agricultural cooperatives.

This excerpt taken from the CF 10-Q filed Nov 9, 2005.

Overview

 

We are one of the largest manufacturers and distributors of nitrogen and phosphate fertilizer products in North America. Our operations are organized into two business segments: the nitrogen fertilizer business and the phosphate fertilizer business. Our principal products in the nitrogen fertilizer business are ammonia, urea and urea ammonium nitrate solution, or UAN. Our principal products in the phosphate fertilizer business are diammonium phosphate, or DAP,  and monoammonium phosphate, or MAP. Our core market and distribution facilities are concentrated in the midwestern U.S. grain-producing states.

 

Our principal assets include:

 

•      the largest nitrogen fertilizer complex in North America (Donaldsonville, Louisiana);

 

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

 

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

 

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

 

•      an extensive system of terminals, warehouses and associated transportation equipment located primarily in the midwestern United States.

 

CF Holdings was formed in 2005 to hold the existing business of CF Industries, Inc. Prior to the consummation of our initial public offering in August 2005, CF Industries, Inc. operated as a cooperative and was owned by eight regional agricultural cooperatives.

 

A number of unique items affected our reported earnings for the quarter ended September 30, 2005 and our financial position as of the end of the period:

 

On August 16, 2005, we completed our initial public offering of common stock. We sold 47,437,500 shares of our common stock in the offering and received net proceeds, after deducting underwriting discounts and commissions, of approximately $715.4 million. In connection with our initial public offering, we consummated a reorganization transaction in which CF Industries, Inc. ceased to be a cooperative and became our wholly-owned subsidiary. In the reorganization transaction, all of the equity interests in CF Industries, Inc. were cancelled in exchange for all of the proceeds of the IPO and 7,562,499 shares of our common stock. We did not

 

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retain any of the proceeds from the IPO.

 

On August 16, 2005, we replaced our $140 million senior secured revolving credit facility with a new $250 million senior secured revolving credit facility.

 

On August 17, 2005, we repaid in full $235.6 million of our term notes, plus associated prepayment penalties and accrued interest in the amount of $29.3 million, with cash on hand and by liquidating short-term investments. Prior thereto, we made principal payments of $0.7 million and $10 million on their scheduled maturity dates, July 20, 2005 and August 1, 2005, respectively.

 

In connection with these transactions, we incurred an estimated net $17.1 million charge (after taxes) related to the prepayment penalties associated with the repayment of our long term debt ($16.0 million) and termination of our long-term incentive plan ($1.1 million) upon completion of our initial public offering. We also incurred a non-cash charge of $1.1 million (after taxes) related to the write-off of unamortized financing fees related to our previous senior secured revolving credit facility and long term debt.

 

On August 28, 2005 we implemented an orderly shutdown of our Donaldsonville, Louisiana nitrogen complex in anticipation of Hurricane Katrina, which struck the region on August 29, 2005. The complex suffered only minor superficial damage. We began restarting the complex on August 30, 2005 and reached full planned production on September 8, 2005. The lost production resulting from Hurricane Katrina consisted of approximately 10,000 tons of shippable ammonia, 25,000 tons of urea and 25,000 tons of UAN solution. Approximately two weeks later, Hurricane Rita came onshore.  Curtailments of natural gas supplies to our Donaldsonville complex began around September 22, 2005, and by September 25, 2005 the complex was shut down.  Although the Donaldsonville complex suffered only minor superficial damage, this hurricane caused substantial damage to the oil and gas production and distribution facilities in the region. As a result, production was not restored to planned levels until after month-end. Total lost production as a result of Hurricane Rita consisted of about 1,000 shippable tons of ammonia, 41,000 tons of urea and 27,000 tons of UAN solution.  We expect to compensate for lost production from both hurricanes through increased future production, usage of existing inventory and/or increased purchases of product from third parties. As a result of these hurricanes, the supply of natural gas, the primary raw material used to produce nitrogen fertilizers, has been substantially affected and the market price of natural gas has increased considerably. We are unable to predict whether or when natural gas prices will return to pre-hurricane levels. Hurricane Katrina also impacted the availability of barges that we use to transport urea and DAP/MAP on the Mississippi River. There can be no assurance as to when normal barge service will be restored or whether this disruption will have an impact on our ability to serve our customers. Operating levels at our Plant City phosphate complex were also adversely impacted by reduced sulfur supplies due to refinery closures following Hurricane Rita.  In light of this, we accelerated the timing of planned turnarounds to coincide with this period of reduced sulfur availability. Production was restored to planned levels by early November of 2005. The Plant City complex suffered no weather-related damage.

 

In connection with our initial public offering, we also recorded a non-cash charge to the caption “Income tax provision” of $99.9 million to reduce to zero what remained of the gross deferred tax asset related to CF Industries, Inc.’s net operating loss carryforwards as of August 16, 2005 (CF Industries, Inc.’s last day as a cooperative).  Those net operating loss carryforwards were generated from business conducted with CF Industries, Inc.’s pre-IPO owners while CF Industries, Inc. was a cooperative. We also entered into a net operating loss agreement, or NOL Agreement, on August 16, 2005 with CF Industries, Inc.’s pre-IPO owners relating to the future treatment of the net operating loss carryforwards. Under the NOL Agreement, if it is finally determined that CF Industries, Inc.’s net operating loss carryforwards can be used after CF Industries, Inc. is no longer a cooperative, we will pay CF Industries, Inc.'s pre-IPO owners an amount equal to the resulting federal and state income taxes actually saved. See our discussion and analysis of financial condition and results of

 

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operations and ‘‘Certain relationships and related party transactions—Initial public offering—Net operating loss carryforwards’’ in our registration statement on Form S-1 as filed August 8, 2005 for additional discussion of our NOL Agreement.

 

We use our Forward Pricing Program (FPP) to reduce margin risk created by the volatility of fertilizer prices and natural gas costs.  As customers place forward nitrogen fertilizer orders, we use derivative instruments, primarily futures and swaps, to fix the natural gas prices for product. These instruments are classified as cash flow hedges as defined in Statement of Financial Accounting Standards (SFAS) No. 133—Accounting for Derivatives and Hedging Activities, and are accounted for accordingly. The gains or losses on these hedges are deferred in other comprehensive income and are recognized in operations when the hedged item affects earnings. If any such hedges become ineffective, the gains or losses are recognized immediately in operations.  As a result of our decision to reduce operating rates at our Donaldsonville complex in favor of increased outside purchases of fertilizers, due to the recent run up in natural gas prices, we now expect to have correspondingly reduced requirements for natural gas in order to meet our FPP obligations to our customers. Consequently, during the third quarter of 2005, we terminated a portion of our original hedge positions prior to maturity, rendering them ineffective as defined in SFAS No. 133—Accounting for Derivatives and Hedging Activities.  A $14.1 million gain, the majority of which arose from the early termination of FPP-related natural gas positions, was recognized as a reduction of cost of sales in the third quarter of 2005.  See Note 10 to our unaudited consolidated financial statements included in this Form 10-Q.

 

In connection with our initial public offering, we granted nonqualified options to purchase 2,720,100 shares of our common stock to our officers and certain key employees, and we issued 27,724 shares of restricted common stock to certain non-management members of our Board of Directors. In the third quarter of 2005, we adopted SFAS No. 123R - Share-Based Payment, (SFAS 123R) which requires us to recognize in our statement of operations the grant date fair value of all share-based awards. As a result, total share-based compensation cost recognized for the quarter and the nine months ended September 30, 2005 was $1.9 million, of which $1.6 million was recorded as selling, general and administrative expenses and $.3 million was recorded as cost of sales. We expect the annual total compensation cost for share-based awards existing as of September 30, 2005 to approximate $4 million and $7 million in 2005 and 2006, respectively. We did not have share-based awards prior to our initial public offering. See the “Critical Accounting Policies and Estimates” section later in this discussion and analysis for additional information on share-based awards.

 

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