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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark One)  
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from                               to                              
Commission file number 001-32597
CF INDUSTRIES HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware20-2697511
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
4 Parkway North
60015
Deerfield,Illinois (Zip Code)
 (Address of principal executive offices)
(847) 405-2400
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
common stock, par value $0.01 per shareCFNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes   No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes     No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes     No
208,601,720 shares of the registrant’s common stock, par value $0.01 per share, were outstanding at May 2, 2022.


CF INDUSTRIES HOLDINGS, INC.

TABLE OF CONTENTS



CF INDUSTRIES HOLDINGS, INC.

PART I—FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 Three months ended 
 March 31,
 20222021
 (in millions, except per share amounts)
Net sales $2,868 $1,048 
Cost of sales1,170 759 
Gross margin1,698 289 
Selling, general and administrative expenses64 55 
Other operating—net2 (2)
Total other operating costs and expenses66 53 
Equity in earnings of operating affiliate26 11 
Operating earnings1,658 247 
Interest expense241 48 
Interest income(36) 
Loss on debt extinguishment 6 
Other non-operating—net1  
Earnings before income taxes1,452 193 
Income tax provision401 18 
Net earnings1,051 175 
Less: Net earnings attributable to noncontrolling interest168 24 
Net earnings attributable to common stockholders$883 $151 
Net earnings per share attributable to common stockholders:
Basic$4.23 $0.70 
Diluted$4.21 $0.70 
Weighted-average common shares outstanding:  
Basic208.6 214.9 
Diluted209.9 216.0 
Dividends declared per common share$0.30 $0.30 
See accompanying Notes to Unaudited Consolidated Financial Statements.

1

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 Three months ended 
 March 31,
 20222021
 (in millions)
Net earnings$1,051 $175 
Other comprehensive (loss) income:  
Foreign currency translation adjustment—net of taxes(13)14 
Defined benefit plans—net of taxes4 1 
(9)15 
Comprehensive income1,042 190 
Less: Comprehensive income attributable to noncontrolling interest168 24 
Comprehensive income attributable to common stockholders$874 $166 
See accompanying Notes to Unaudited Consolidated Financial Statements.

2

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS
(Unaudited)
 March 31, 
 2022
December 31, 
 2021
 (in millions, except share
and per share amounts)
Assets  
Current assets:  
Cash and cash equivalents$2,617 $1,628 
Accounts receivable—net679 497 
Inventories488 408 
Prepaid income taxes 4 
Other current assets42 56 
Total current assets3,826 2,593 
Property, plant and equipment—net6,906 7,081 
Investment in affiliate84 82 
Goodwill2,091 2,091 
Operating lease right-of-use assets236 243 
Other assets639 285 
Total assets$13,782 $12,375 
Liabilities and Equity  
Current liabilities:  
Accounts payable and accrued expenses$629 $565 
Income taxes payable408 24 
Customer advances598 700 
Current operating lease liabilities88 89 
Current maturities of long-term debt499  
Other current liabilities6 54 
Total current liabilities2,228 1,432 
Long-term debt, net of current maturities2,963 3,465 
Deferred income taxes1,028 1,029 
Operating lease liabilities152 162 
Other liabilities658 251 
Equity:  
Stockholders’ equity:  
Preferred stock—$0.01 par value, 50,000,000 shares authorized
  
Common stock—$0.01 par value, 500,000,000 shares authorized, 2022—210,569,780 shares issued and 2021—207,603,940 shares issued
2 2 
Paid-in capital1,482 1,375 
Retained earnings2,907 2,088 
Treasury stock—at cost, 2022—1,563,679 shares and 2021—27,962 shares
(123)(2)
Accumulated other comprehensive loss(266)(257)
Total stockholders’ equity4,002 3,206 
Noncontrolling interest2,751 2,830 
Total equity6,753 6,036 
Total liabilities and equity$13,782 $12,375 
See accompanying Notes to Unaudited Consolidated Financial Statements.
3

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
 Common Stockholders
 $0.01 Par
Value
Common
Stock
Treasury
Stock
Paid-In
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Loss
Total
Stockholders’ Equity
Noncontrolling
Interest
Total
Equity
 (in millions, except per share amounts)
Balance as of December 31, 2021$2 $(2)$1,375 $2,088 $(257)$3,206 $2,830 $6,036 
Net earnings   883  883 168 1,051 
Other comprehensive loss    (9)(9) (9)
Purchases of treasury stock (100)   (100) (100)
Retirement of treasury stock 2    2  2 
Acquisition of treasury stock under employee stock plans (23)   (23) (23)
Issuance of $0.01 par value common stock under employee stock plans
  97   97  97 
Stock-based compensation expense  10   10  10 
Cash dividends ($0.30 per share)
   (64) (64) (64)
Distribution declared to noncontrolling interest      (247)(247)
Balance as of March 31, 2022$2 $(123)$1,482 $2,907 $(266)$4,002 $2,751 $6,753 
Balance as of December 31, 2020$2 $(4)$1,317 $1,927 $(320)$2,922 $2,681 $5,603 
Net earnings   151  151 24 175 
Other comprehensive income    15 15  15 
Acquisition of treasury stock under employee stock plans (10)   (10) (10)
Issuance of $0.01 par value common stock under employee stock plans
  8   8  8 
Stock-based compensation expense  8   8  8 
Cash dividends ($0.30 per share)
   (65) (65) (65)
Distribution declared to noncontrolling interest      (64)(64)
Balance as of March 31, 2021$2 $(14)$1,333 $2,013 $(305)$3,029 $2,641 $5,670 

See accompanying Notes to Unaudited Consolidated Financial Statements.
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CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three months ended 
 March 31,
 20222021
 (in millions)
Operating Activities:  
Net earnings$1,051 $175 
Adjustments to reconcile net earnings to net cash provided by operating activities:  
Depreciation and amortization208 204 
Deferred income taxes(2)(12)
Stock-based compensation expense10 8 
Loss on debt extinguishment 6 
Unrealized net gain on natural gas derivatives(33)(6)
Loss on disposal of property, plant and equipment  1 
Undistributed earnings of affiliate—net of taxes(2)(12)
Changes in:  
Accounts receivable—net(185)(7)
Inventories(66)(88)
Accrued and prepaid income taxes387 78 
Accounts payable and accrued expenses76 36 
Customer advances(102)211 
Other—net49 (16)
Net cash provided by operating activities1,391 578 
Investing Activities:  
Additions to property, plant and equipment(63)(71)
Proceeds from sale of property, plant and equipment1  
Purchase of U.K. emission credits(9) 
Proceeds from sale of EU emission credits9  
Net cash used in investing activities(62)(71)
Financing Activities:  
Payments of long-term borrowings (255)
Financing fees(4) 
Dividends paid on common stock(64)(65)
Distributions to noncontrolling interest(247)(64)
Purchases of treasury stock(98) 
Proceeds from issuances of common stock under employee stock plans97 7 
Cash paid for shares withheld for taxes(23)(10)
Net cash used in financing activities(339)(387)
Effect of exchange rate changes on cash and cash equivalents(1)1 
Increase in cash and cash equivalents989 121 
Cash and cash equivalents at beginning of period1,628 683 
Cash and cash equivalents at end of period$2,617 $804 
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
Our mission is to provide clean energy to feed and fuel the world sustainably. With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and blue hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities. Our nine nitrogen manufacturing complexes in the United States, Canada and the United Kingdom, an extensive storage, transportation and distribution network in North America, and logistics capabilities enabling a global reach underpin our strategy to leverage our unique capabilities to accelerate the world’s transition to clean energy. Our principal customers are cooperatives, independent fertilizer distributors, traders, wholesalers and industrial users. Our core product is anhydrous ammonia (ammonia), which contains 82% nitrogen and 18% hydrogen. Our nitrogen products that are upgraded from ammonia are granular urea, urea ammonium nitrate solution (UAN) and ammonium nitrate (AN). Our other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to our industrial customers, and compound fertilizer products (NPKs), which are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus and potassium.
All references to “CF Holdings,” “the Company,” “we,” “us” and “our” refer to CF Industries Holdings, Inc. and its subsidiaries, except where the context makes clear that the reference is only to CF Industries Holdings, Inc. itself and not its subsidiaries. All references to “CF Industries” refer to CF Industries, Inc., a 100% owned subsidiary of CF Industries Holdings, Inc.
The accompanying unaudited interim consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements for the year ended December 31, 2021, in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial reporting. In the opinion of management, these statements reflect all adjustments, consisting only of normal and recurring adjustments, that are necessary for the fair representation of the information for the periods presented. The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. Operating results for any period presented apply to that period only and are not necessarily indicative of results for any future period.
The accompanying unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and related disclosures included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 24, 2022. The preparation of the unaudited interim consolidated financial statements requires us to make use of estimates and assumptions that may significantly affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the unaudited consolidated financial statements and the reported revenues and expenses for the periods presented. Such estimates and assumptions are used for, but are not limited to, net realizable value of inventories, environmental remediation liabilities, environmental and litigation contingencies, the cost of carbon credits required to meet environmental regulations, the cost of customer incentives, the cost to fulfill contractual commitments to our customers, useful lives of property and identifiable intangible assets, the assumptions used in the evaluation of potential impairments of property, investments, identifiable intangible assets and goodwill, income tax and valuation reserves, allowances for doubtful accounts receivable, the measurement of the fair values of investments for which markets are not active, assumptions used in the determination of the funded status and annual expense of defined benefit pension and other postretirement benefit plans and the valuation of stock-based compensation awards granted to employees.

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CF INDUSTRIES HOLDINGS, INC.

2.   Revenue Recognition
We track our revenue by product and by geography. See Note 17—Segment Disclosures for our revenue by reportable segment, which are Ammonia, Granular Urea, UAN, AN and Other. The following table summarizes our revenue by product and by geography (based on destination of our shipment) for the three months ended March 31, 2022 and 2021:
AmmoniaGranular UreaUANANOtherTotal
(in millions)
Three months ended March 31, 2022
North America$583 $736 $1,013 $83 $153 $2,568 
Europe and other57 29 2 140 72 300 
Total revenue$640 $765 $1,015 $223 $225 $2,868 
Three months ended March 31, 2021
North America$168 $399 $222 $41 $77 $907 
Europe and other38  10 64 29 141 
Total revenue$206 $399 $232 $105 $106 $1,048 

As of March 31, 2022 and December 31, 2021, we had $598 million and $700 million, respectively, in customer advances on our consolidated balance sheets. The revenue recognized during the three months ended March 31, 2022 and 2021 that was included in our customer advances at the beginning of each respective period amounted to approximately $560 million and $85 million, respectively.

We offer cash incentives to certain customers generally based on the volume of their purchases over the fertilizer year ending June 30. Our cash incentives do not provide an option to the customer for additional product. The balances of customer incentives accrued as of March 31, 2022 and December 31, 2021 were not material.
We have certain customer contracts with performance obligations under which, if the customer does not take the required amount of product specified in the contract, then the customer is required to make a payment to us, the amount of which payment may vary based upon the terms and conditions of the applicable contract. As of March 31, 2022, excluding contracts with original durations of less than one year, and based on the minimum product tonnage to be sold and current market price estimates, our remaining performance obligations under these contracts are approximately $750 million. We expect to recognize approximately 36% of these performance obligations as revenue in the remainder of 2022, approximately 57% as revenue during 2023-2024, approximately 5% as revenue during 2025-2026, and the remainder thereafter. Subject to the terms and conditions of the applicable contracts, if the customers do not satisfy their purchase obligations under such contracts, the minimum amount that they would be required to pay to us under such contracts, in the aggregate, is approximately $140 million as of March 31, 2022. Other than the performance obligations described above, any performance obligations with our customers that were unfulfilled or partially fulfilled at December 31, 2021 will be satisfied in 2022.
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CF INDUSTRIES HOLDINGS, INC.

3.   Net Earnings Per Share
Net earnings per share were computed as follows:
 Three months ended 
 March 31,
 20222021
 (in millions, except per share amounts)
Net earnings attributable to common stockholders$883 $151 
Basic earnings per common share:  
Weighted-average common shares outstanding208.6 214.9 
Net earnings attributable to common stockholders$4.23 $0.70 
Diluted earnings per common share:  
Weighted-average common shares outstanding208.6 214.9 
Dilutive common shares—stock-based awards1.3 1.1 
Diluted weighted-average common shares outstanding209.9 216.0 
Net earnings attributable to common stockholders$4.21 $0.70 
Diluted earnings per common share is calculated using weighted-average common shares outstanding, including the dilutive effect of stock-based awards as determined under the treasury stock method. In the computation of diluted earnings per common share, potentially dilutive stock-based awards are excluded if the effect of their inclusion is anti-dilutive. Shares for anti-dilutive stock-based awards not included in the computation of diluted earnings per common share were 1.2 million in the three months ended March 31, 2021.

4.   Inventories
Inventories consist of the following:
 March 31, 
 2022
December 31, 
 2021
 (in millions)
Finished goods$436 $358 
Raw materials, spare parts and supplies52 50 
Total inventories$488 $408 

5.   United Kingdom Energy Crisis and Impairment Charges
During the third quarter of 2021, the United Kingdom began experiencing an energy crisis that included a substantial increase in the price of natural gas, which impacted our U.K. operations. In the first half of 2021, natural gas prices had increased to levels that were considered high compared to historical prices, and prices then more than doubled within the third quarter of 2021. On September 15, 2021, we announced the halt of operations at both our Ince and Billingham manufacturing facilities in the United Kingdom due to negative profitability driven by the high cost of natural gas. After certain agreements were finalized, our Billingham facility resumed operations. As of the filing of this report, production continues at our Billingham facility and continues to be idled at our Ince facility.
In the second half of 2021, the U.K. energy crisis necessitated evaluations of the goodwill and long-lived assets, including definite-lived intangible assets, of our U.K. operations to determine if their fair value had declined to below their carrying value. Based on these analyses, we concluded that declines in fair value had occurred, and we recognized impairment charges of $521 million in 2021, consisting of long-lived and intangible asset impairment charges of $236 million and goodwill impairment charges of $285 million. As a result, we had no remaining goodwill related to our U.K. operations on our consolidated balance sheet as of December 31, 2021.
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CF INDUSTRIES HOLDINGS, INC.

During the first quarter of 2022, we concluded that the continued impacts of the U.K. energy crisis, including further increases and volatility in natural gas prices due in part to recent geopolitical events as a result of Russia’s invasion of Ukraine in February 2022, triggered an additional long-lived asset impairment test. The results of the interim impairment test indicated that no additional long-lived asset impairment existed as the undiscounted estimated future cash flows were in excess of the carrying values for each of the U.K. asset groups, consisting of U.K. Ammonia, U.K. AN and U.K. Other.

6.   Property, Plant and Equipment—Net
Property, plant and equipment—net consists of the following:
 March 31, 
 2022
December 31, 
 2021
 (in millions)
Land$67 $68 
Machinery and equipment(1)
12,763 12,757 
Buildings and improvements(1)
916 915 
Construction in progress(1)
179 148 
Property, plant and equipment(2)
13,925 13,888 
Less: Accumulated depreciation and amortization7,019 6,807 
Property, plant and equipment—net$6,906 $7,081 
_______________________________________________________________________________
(1)At both March 31, 2022 and December 31, 2021, machinery and equipment, buildings and improvements, and construction in progress include cumulative impairment charges of $169 million, $5 million and $8 million, respectively, which were recorded in 2021.
(2)As of March 31, 2022 and December 31, 2021, we had property, plant and equipment that was accrued but unpaid of approximately $22 million and $35 million, respectively. As of March 31, 2021 and December 31, 2020, we had property, plant and equipment that was accrued but unpaid of approximately $33 million and $43 million, respectively.
Depreciation and amortization related to property, plant and equipment was $205 million and $200 million for the three months ended March 31, 2022 and 2021, respectively.
In the first quarter of 2022, we concluded that the continued impacts of the U.K. energy crisis, including higher natural gas prices due in part to recent geopolitical events, triggered an impairment test of the long-lived assets in our U.K. asset groups. This test indicated that no long-lived asset impairment existed as the undiscounted estimated future cash flows were in excess of the carrying values for each of the U.K. asset groups. Long-lived assets on our consolidated balance sheet as of March 31, 2022 include approximately $400 million, approximately $360 million of which consists of property, plant and equipment, related to the U.K. asset groups. See Note 5—United Kingdom Energy Crisis and Impairment Charges for additional information.
Plant turnarounds—Scheduled inspections, replacements and overhauls of plant machinery and equipment at our continuous process manufacturing facilities during a full plant shutdown are referred to as plant turnarounds. The expenditures related to turnarounds are capitalized in property, plant and equipment when incurred. The following is a summary of capitalized plant turnaround costs:
 Three months ended 
 March 31,
 20222021
 (in millions)
Net capitalized turnaround costs:  
Beginning balance$355 $226 
Additions5 10 
Depreciation(36)(25)
Effect of exchange rate changes(1) 
Ending balance$323 $211 
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CF INDUSTRIES HOLDINGS, INC.

Scheduled replacements and overhauls of plant machinery and equipment during a plant turnaround include the dismantling, repair or replacement and installation of various components including piping, valves, motors, turbines, pumps, compressors and heat exchangers and the replacement of catalysts when a full plant shutdown occurs. Scheduled inspections, including required safety inspections which entail the disassembly of various components such as steam boilers, pressure vessels and other equipment requiring safety certifications, are also conducted during full plant shutdowns. Internal employee costs and overhead amounts are not considered turnaround costs and are not capitalized.

7.   Goodwill and Other Intangible Assets
The following table shows the carrying amount of goodwill by reportable segment as of March 31, 2022 and December 31, 2021:
 
Ammonia(1)
Granular UreaUAN
AN(1)
Other(1)
Total
 (in millions)
Balance as of December 31, 2021$579 $828 $576 $69 $39 $2,091 
Effect of exchange rate changes      
Balance as of March 31, 2022$579 $828 $576 $69 $39 $2,091 
_______________________________________________________________________________
(1)At both March 31, 2022 and December 31, 2021, the carrying amount of goodwill includes accumulated impairment losses in our Ammonia, AN and Other segments of $9 million, $241 million and $35 million, respectively.
All of our identifiable intangible assets have definite lives and are presented in other assets on our consolidated balance sheets at gross carrying amount, net of accumulated amortization, as follows:
 March 31, 2022December 31, 2021
 Gross
Carrying
Amount
Accumulated
Amortization
NetGross
Carrying
Amount
Accumulated
Amortization
Net
 (in millions)
Customer relationships(1)
$83 $(59)$24 $84 $(60)$24 
Trade names(1)
30 (10)20 31 (10)21 
Total intangible assets$113 $(69)$44 $115 $(70)$45 
_______________________________________________________________________________
(1)At both March 31, 2022 and December 31, 2021, the gross carrying amount for customer relationships and trade names includes cumulative impairment charges of $49 million and $1 million, respectively, which were recorded in 2021.
Our customer relationships and trade names are being amortized over a weighted-average life of approximately 20 years. Amortization expense of our identifiable intangible assets was $1 million and $2 million for the three months ended March 31, 2022 and 2021, respectively. The gross carrying amount and accumulated amortization of our intangible assets are also impacted by the effect of exchange rate changes. Total estimated amortization expense for the remainder of 2022 is $3 million and for each of the fiscal years 2023-2027 is $4 million.
In the first quarter of 2022, we concluded that the continued impacts of the U.K. energy crisis, including higher natural gas prices due in part to recent geopolitical events, triggered an impairment test of the long-lived assets in our U.K. asset groups. This test indicated that no long-lived asset impairment existed as the undiscounted estimated future cash flows were in excess of the carrying values for each of the U.K. asset groups. See Note 5—United Kingdom Energy Crisis and Impairment Charges for additional information. Long-lived assets on our consolidated balance sheet as of March 31, 2022 include approximately $400 million, $25 million of which consists of customer relationships and trade names, related to the U.K. asset groups.

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CF INDUSTRIES HOLDINGS, INC.

8.   Equity Method Investment
We have a 50% ownership interest in Point Lisas Nitrogen Limited (PLNL), which operates an ammonia production facility in the Republic of Trinidad and Tobago. We include our share of the net earnings from this equity method investment as an element of earnings from operations because PLNL provides additional production to our operations and is integrated with our other supply chain and sales activities in the Ammonia segment.
As of March 31, 2022, the total carrying value of our equity method investment in PLNL was $84 million, $38 million more than our share of PLNL’s book value. The excess is attributable to the purchase accounting impact of our acquisition of the investment in PLNL and reflects the revaluation of property, plant and equipment. The increased basis for property, plant and equipment is being amortized over a remaining period of approximately 11 years. Our equity in earnings of PLNL is different from our ownership interest in income reported by PLNL due to amortization of this basis difference.
We have transactions in the normal course of business with PLNL reflecting our obligation to purchase 50% of the ammonia produced by PLNL at current market prices. Our ammonia purchases from PLNL totaled $74 million and $26 million for the three months ended March 31, 2022 and 2021, respectively.

9.   Fair Value Measurements
Our cash and cash equivalents and other investments consist of the following:
 March 31, 2022
 Cost BasisUnrealized
Gains
Unrealized
Losses
Fair Value
 (in millions)
Cash$207 $— $— $207 
Cash equivalents:
U.S. and Canadian government obligations2,324   2,324 
Other debt securities86   86 
Total cash and cash equivalents$2,617 $ $ $2,617 
Nonqualified employee benefit trusts17 2  19 
 December 31, 2021
 Cost BasisUnrealized
Gains
Unrealized
Losses
Fair Value
 (in millions)
Cash$121 $— $— $121 
Cash equivalents:
U.S. and Canadian government obligations1,452   1,452 
Other debt securities55   55 
Total cash and cash equivalents$1,628 $ $ $1,628 
Nonqualified employee benefit trusts17 3  20 
Under our short-term investment policy, we may invest our cash balances, either directly or through mutual funds, in several types of investment-grade securities, including notes and bonds issued by governmental entities or corporations. Securities issued by governmental entities include those issued directly by the U.S. and Canadian federal governments; those issued by state, local or other governmental entities; and those guaranteed by entities affiliated with governmental entities.
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CF INDUSTRIES HOLDINGS, INC.

Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present assets and liabilities included in our consolidated balance sheets as of March 31, 2022 and December 31, 2021 that are recognized at fair value on a recurring basis, and indicate the fair value hierarchy utilized to determine such fair value:
 March 31, 2022
 Total Fair
Value
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
 (in millions)
Cash equivalents$2,410 $2,410 $ $ 
Nonqualified employee benefit trusts19 19   
Derivative assets3  3  
Embedded derivative liability(15) (15) 
 December 31, 2021
 Total Fair
Value
Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
 (in millions)
Cash equivalents$1,507 $1,507 $ $ 
Nonqualified employee benefit trusts20 20   
Derivative assets16  16  
Derivative liabilities(47) (47) 
Embedded derivative liability(15) (15) 

Cash Equivalents
As of March 31, 2022 and December 31, 2021, our cash equivalents consisted primarily of U.S. and Canadian government obligations and money market mutual funds that invest in U.S. government obligations and other investment-grade securities.
Nonqualified Employee Benefit Trusts
We maintain trusts associated with certain nonqualified supplemental pension plans. The fair values of the trust assets are based on daily quoted prices in an active market, which represents the net asset values of the shares held in the trusts, and are included on our consolidated balance sheets in other assets. Debt securities are accounted for as available-for-sale securities, and changes in fair value are reported in other comprehensive income. Changes in the fair value of available-for-sale equity securities in the trust assets are recognized through earnings.
Derivative Instruments
The derivative instruments that we use are primarily natural gas fixed price swaps, basis swaps and options traded in the over-the-counter markets with multi-national commercial banks, other major financial institutions or large energy companies. The natural gas derivative contracts represent anticipated natural gas needs for future periods and settlements are scheduled to coincide with anticipated natural gas purchases during those future periods. The natural gas derivative contracts settle using primarily a NYMEX futures price index. To determine the fair value of these instruments, we use quoted market prices from NYMEX and standard pricing models with inputs derived from or corroborated by observable market data such as forward curves supplied by an industry-recognized independent third party. See Note 13—Derivative Financial Instruments for additional information.
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CF INDUSTRIES HOLDINGS, INC.

Embedded Derivative Liability
Under the terms of our strategic venture with CHS Inc. (CHS), if our credit rating as determined by two of three specified credit rating agencies is below certain levels, we are required to make a non-refundable yearly payment of $5 million to CHS. Since 2016, our credit ratings have been below certain levels and, as a result, we made an annual payment of $5 million to CHS in the fourth quarter of each year. These payments will continue on a yearly basis until the earlier of the date that our credit rating is upgraded to or above certain levels by two of the three specified credit rating agencies or February 1, 2026. This obligation is recognized on our consolidated balance sheets as an embedded derivative and is included within other current liabilities and other liabilities. As of both March 31, 2022 and December 31, 2021, the embedded derivative liability was $15 million.
The inputs into the fair value measurement include the probability of future upgrades and downgrades of our credit rating based on historical credit rating movements of other public companies and the discount rates to be applied to potential annual payments based on applicable credit spreads of other public companies at different credit rating levels. Based on these inputs, our fair value measurement is classified as Level 2.
See Note 14—Noncontrolling Interest for additional information regarding our strategic venture with CHS.
Financial Instruments
The carrying amount and estimated fair value of our financial instruments are as follows:
 March 31, 2022