Good day, ladies and gentlemen, and welcome to the Q1 2010 CF Industries Results Conference Call. [Operator Instructions] I would now like to turn the call over to Terry Huch, Senior Director of Investor Relations and Corporate Communications. Please proceed.

Thank you, Antoine. Good morning, and thanks to everyone for joining us on this conference call for CF Industries holdings, Inc. I'm Terry Huch, Senior Director, Investor Relations and Corporate Communications. And with me are Steve Wilson, our Chairman and Chief Executive Officer; and Tony Nocchiero, our Senior Vice President and Chief Financial Officer. CF Industries Holdings, Inc. reported its first quarter 2010 results this morning. Terra Nitrogen and Terra Industries, which we acquired after the end of the quarter, reported their results yesterday. On this call, we'll review the CF Industries results in detail and provide brief comments on the results of Terra and Terra Nitrogen. We'll also discuss our outlook for industry and company performance in 2010 and field questions about the combined enterprise. If you have detailed modeling questions regarding the future consolidation of financial results, let me suggest that you address those questions to me after the call. As you review the news releases posted on the Investor Relations section of our website at www.cfindustries.com and as you listen to this conference call, please recognize that they contain forward-looking statements as defined by Federal Securities laws. All statements in the release and on this call other than those relating to historical information or current conditions are considered forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties, many which are beyond our control and which could cause actual results to differ materially from such statements. These risks and uncertainties include those spelled out in the Safe Harbor statement included in today's news release. Consider all forward-looking statements in light of those and other risks and uncertainties and do not place undue reliance on any forward-looking statements. Now let me introduce Steve Wilson, our Chairman and CEO.

Thanks, Terry, and thank you, all, for joining us today. For the first quarter of 2010, CF Industries reported a net loss of $4 million or $0.09 per diluted share, down from earnings of $63 million or $1.28 per share in the same period last year. Excluding unusual items, which Tony will discuss later in the call, results were generally in line with our expectations and give us no reason to change our bullish outlook for the spring season. The fact that stocking activity was light in the first quarter, set as up for tighter market conditions in the second quarter, which increases the value of our industry-leading storage and distribution capability. That value became evident in April, as ideal planting conditions for corn emerged throughout most of the Midwest. The investment case for CF Industries starts with a significant advantage for nitrogen production in North America, due to low natural gas costs relative to the world sling producers. That advantage was visible in the quarter and we expect it to continue to be visible in the second quarter, helped by recent weakness in the natural gas prices in North America. The acquisition of Terra Industries, which we completed on April 15, provides us with opportunities to capitalize on the North American natural gas advantage that were not possible previously. Through the acquisition, we have more than doubled our nitrogen capacity; multiplied our logistical options; gain synergy opportunities for costs, capital expenditures and working capital; enhanced our ability to serve our customers; and improved our ability to invest in future growth because of our larger capital base. We remain focused on doing an excellent job of serving our customers through the spring and integrating the operations of the two companies. I'm pleased to report that we're off to a very…

Thanks, Steve, and good morning, everyone. As Steve indicated, CF Industries had a net loss of $4 million or $0.09 per diluted share in the first quarter compared to earnings of $63 million or $1.28 per diluted share in the first quarter of 2009. First quarter results included business combination costs of $136 million before tax, which included the $123 million breakup fee we paid to Yara; Peru project development costs of almost $3 million; a gain of $28 million before tax on the sale of Terra's shares; and unrealized mark-to-market losses on natural gas derivatives of $11 million pretax. Nearly all the costs associated with the business combination and the Peru project are non-deductible for income tax purposes. If these two items had not occurred in 2010, the company's annual effective tax rate for the first quarter would have been approximately 35% rather than the 49.6% income tax rate actually applied in the first quarter. Similar items affecting earnings in the first quarter of 2009 were unrealized mark-to-market gains on natural gas derivatives of $49 million pretax, phosphate inventory write-downs of $24 million, business combination costs of $16 million and Peru project development costs of $4 million. These items had a negative global [ph] impact on the 2009 reported tax rate, which was 39.4%. In the first quarter of 2010, net sales of $502 million included Nitrogen segment sales of $327 million and Phosphate segment sales of $175 million, which were down 28% and 22%, respectively, due to lower prices compared to the first quarter of 2009. Our average price realization for ammonia was $321 per ton, down 39% from the first quarter of 2009 but up 4% sequentially. Excluding sales by Terra, our average selling price for ammonia was $365 per ton. Urea price realizations were 16% lower…

Thanks, Tony. Now I'd like to discuss our outlook for the second quarter and the remainder of 2010. While I'm not going to provide financial guidance, it will be a mistake for you to conclude that we're retracting the guidance provided by the two companies prior the combination, although we are in anyway less confident about our outlook for this year. In fact, there are at least three things that make us more confident than we were at the time of our prior forecast. First, North American natural gas prices have fallen meaningfully over the last two months. Our previous forecast assumed an average cost of $5.05 per MMBtu at Henry Hub over the course of 2010. Right now, December is the only month on the NYMEX Strip for the remainder of the year with a price of $5 or more. Second, our confidence has increased that corn planting will meet or exceed the USDA estimate of 88.8 million acres because of favorable farm level economics, excellent planting conditions across the Midwest and the incentive to plant corn in other major growing regions. And third, we have much more confidence around spring nitrogen application rates because of the blockbuster pre-plant anhydrous ammonia season we have in April. Our production mix among nitrogen fertilizer products is very balanced and good ammonia pre-plant application plays to our competitive advantage in Corn Belt storage and distribution capability. In April, we delivered more ammonia than in any other month since we became a public company, and over 70% more than the average of the previous five Aprils. Ammonia shipments for the legacy Terra operations also were greater than for any month over the same time period. We're working hard to resupply our system for sidedress application and it could be a welcome challenge to…

[Operator Instructions] And your first question comes from the line of Jeff Zekauskas with JPMorgan. Jeffrey Zekauskas - JP Morgan Chase & Co: Can you talk about the pace of your cost reduction program? You're looking for 135 in synergies. Coming into the second quarter, do you think that we'll be able to see some appreciable amount of that or some ratable amount of that?

We have outlined the major components of our synergy targets, and if I may, I'll just briefly summarize those for you. The range that we published going back to early 2009 was $105 million to $135 million in total. The biggest piece of that, SG&A, $55 million to $65 million; logistics and railcar leases, $25 million to $30 million a year; purchases and procurement, $10 million to $15 million a year; other optimization opportunities other than distribution facilities, $10 million to $15 million a year; and distribution facilities optimization, $5 million to $10 million a year. The pace of that realization we've laid out in the presentation and I think is available on our website, but I'll give you a couple of milestones here [ph]. Three months into the process, we hope to be at about a $38 million annualized run rate; six months down the road, about $67 million a year; by a year from the closing, about $100 million a year; and 18 months down the road, the full $135 million run rate. Jeffrey Zekauskas - JP Morgan Chase & Co: And then lastly, you spoke of the weather being very good this season for American farmers. And last year was a very good weather year as well for corn. When you think through what your yield expectations are going to be like for this year, what yield expectations for corn are going to be like? Do you have opinions about that?

Jeff, if I recall, last year, we had a very adverse weather pattern during the planting season. But eventually, the crop got in the ground. A major factor that led to the very high yields in 2009 was the great weather that occurred in the summer. They were ideal growing conditions in the summer. This year, so far, what we have seen is essentially ideal planting conditions certainly in the month of April. We had rain here in Chicago this morning. That's certainly not a bad thing to happen once the crop is in the ground. So what will happen with respect to yields this year will I think largely be, at least the weather impact of that, is yet to be seen. I think expectations are high for again another high-yield season. But until we know what weather patterns are going to develop, it's hard to predict.

Your next question comes from the line of Mark Connelly with CLSA.

Steve, two questions. In past years, it hasn't been unusual to see nitrogen prices moving up when imports are moving up. Obviously, in the Q1, that wasn't going to happen. Where do you think we are in terms of being at a point to re-attract [ph] imports, especially given season sort of coming to an end and nobody really wants to hold inventory? And then my second question is, with respect to that inventory, dealers don't want to hold stuff, you're well positioned to hold inventory close to customers, does that imply an upward shift in your average inventory levels if dealers continue to not want to hold? And does that just push it back to you and raise your working capital?

Well, with respect imports, we all know that imports were slow coming in to this country over the winter and leading right up to spring. And so other than ammonia, nitrogen products were certainly short in terms of inventory levels. And I think there was actually a lot of building stress coming with respect to urea and UAN because of the shortfall in imports. Now that we've had a very strong ammonia run, it's more likely that urea and UAN supply and demand will be in the somewhat better balance. Although we still think it will be tight, we're expecting a strong season in UAN and ammonia. I think that's our perspective on imports. With respect to inventory levels in our own system, we managed our whole system to meet what we believe are our customers' expectations are. With respect to ammonia, there really isn't any choice. If we want to be in the ammonia business, we need to store the ammonia in our system. And our system is a great system. The benefit of that system was definitely on display in the month of April. Other products, we'll manage our inventory levels consistent with a balance between what we see our customer demand to be and our operating desires at the plant level. We look for a balance there.

Your next question comes from the line of David Silver with Bank of America Merrill Lynch.

First thing, I'd like to go back to your first priority when you were articulating your strategy. Your first point was to deliver a great spring season. And my question kind of relates to your comments in the release about your positioning to serve the ammonia market. So if you look at the newsletter prices for Corn Belt ammonia, they've actually spiked up about $50 or even $75 in the last couple of weeks. So in the middle of May, I noted your comment in the release about restocking. Should we assume that you're in position to capture some of that later season premium priced business? Is that part of your comment about delivering great spring season?

David, I guess the short answer is yes, we certainly have on price capacity available. We keep our fingers crossed every year and hope for this kind of ammonia season. We are very well-equipped to do this. So we went into the spring with a fairly light forward book. And this is a time where that becomes advantageous for us.

I also wanted to ask, your comment, on a couple of issues on international nitrogen markets. So recently, the Ukraine nitrogen industry, I guess signed a new or entered a new pricing arrangement with their key gas supplier, Gazprom. And I'm just wondering, if internally your folks have kind of looked at that agreement and have kind of determined what the effect on the competitiveness of the Ukrainian industry might be and their ability to export here? And then also, your comments about what you expect export-wise to come out of China once the higher tariff levels are reduced?

David, it's Tony. Let me talk about Ukraine then Stephen can comment on China. We are generally in agreement with the price for Ukraine that Ferticon had been using of around 6, 7 million BTUs. That price to the fertilizer producers in the Ukraine was subsidized by the Ukrainian natural gas company using inventories that they had built up in previous periods. I would say that, while we think we know where this is going, it's not a completely transparent situation. What we think's going happen as a result of lower delivered prices from the Russians, the Ukrainians will follow through with their pledge to the IMF to start backing off on subsidies to fertilizer producers. And so the net position after the subsidy has taken off, and you substitute the cheaper Russian gas, it's still probably going to be an increase in the average price coming out of Ukraine. Something like $7 or so. So we think on balance, it's about the same situation net, to possibly slightly higher, which of course decreases the competitiveness of Ukrainian production coming into the international markets.

With respect to China, it's always difficult to have visibility on to what goes on there. But we do know that the export tax is coming down. We also know, or we believe, that there been some producers in China who've been building inventory in anticipation of the date when the tax comes down. It's logical to think that, that product, if it's exported, would be directed really in the Asian market, Pakistan and India. India has a substantial amount of demand that needs to be fulfilled. In terms of how much might be exported, we really don't have any insight into the quantities that might be loaded and shipped out of China.

And then one question about logistic. I'm reading in a variety of publications about effects, or potential effects, to shipping in the U.S. Gulf as it relates to the oil spill. So from the perspective of your Donaldsonville facility, or your overall import and distribution network, what could you tell us about on your view on how this oil spill issue might affect the operation?

First of all, there's been no impact to this point, and we don't know whether there will be any impact. So I don't have any ability to predict what might happen with the shipping in the Gulf. But having said that, should there be an impact, that would have, really, no effect on our ability to supply nitrogen to our customers because of our vast network of production points and our distribution and logistic system. And quite frankly, our North American focus. If I look at that possibility, it would have an impact on phosphate because of the normal process of shipping DAP across the Gulf, up the river, and it could impact sulphur deliveries. But we really don't know and we've got lots of -- we do have transportation options. Rail is always an option. The railroads are tough to deal with.

Last question about Peru, I'm reading from your release here, you said any significant future investment regarding Peru depends upon improvements to the capital and operating cost projections and certainty of pipeline delivery of gas to the plant. But improvements to capital and operating cost projections, should I just take that to mean that nothing is imminent unless there are some changes in you overall assumptions about the project as they stand today?

I think that's a very good conclusion, David.

Your next question comes from the line of Don Carson with UBS.

A couple of questions, Steve. Dealers do seem quite reluctant to hang on to material. How do you see the post-season playing out in terms of where prices might trough and how soon dealers will begin restocking through the fall. And just on the upcoming side dress season, I'm seeing that there's some additional cargoes coming in from Houston [ph] on ammonia, what impact, if any, do you think that might have on pricing for the side dress season.

Taking the second question first, I think it's a little late for cargoes coming in to make it into the market for this side dress season. And to the extent ammonia cargoes arrive at the Gulf, they gotta find a way to get into the Midwest and then into the system. We have the largest network of terminals. Others have terminals but there aren't very many of us who have those terminals. With respect to your first question, on the silt season, we expect there to be low inventory levels coming out of this spring. And on a relative basis, to other years, we would expect pretty good ratable demand for restocking coming out of this season because of the low ending stocks that we think are going -- either situation.

So are you saying then, just to clarify, that you think dealers will actually buy early rather than later?

Well we don't know when they're going to buy. We just know that they need the product.

And then follow up question again on side dressing, What do you think the balance will be between ammonia and UAN here? Because I guess it is almost raining, it's still relatively dry, which would play against ammonia. And we haven't seen much of an impact from the new Trinidad ammonia plant, what's your view as to what impact that material may eventually have on the U.S. UAN market?

With respect to the mix on side dress, I think all other things being equal, including field conditions, farmers who use ammonia will ammonia, because they've got a bigger bang for the buck. And UAN would be the second choice. Don, what was your second question?

It was the impact of the new UAN capacity in Trinidad, it frankly hasn't had much of an impact on pricing thus far. How do you see that going forward?

Well I think what's unfolded is pretty much what we expected when we first learned about this. And that is, that the capacity will find its way through its natural market, and will back out whatever supply was being sent to those sources previously. And we all know where the high cost supply is these days, it's in Eastern Europe and in places like that. So I think the market has adjusted to that or certainly well into the process of adjusting to it.

Just one follow up on the phosphate side, you've been able to take advantage of higher prices in the U.S. and higher prices in non-Indian markets. How sustainable do you see some of these higher non-Indian export market opportunities as we go forward? I mean we're seeing lower sales into Brazil and Pakistan now. What's your outlook for the export DAP market?

Well we think there's demand yet to come. We don't have a lot of visibility going out too far but I think certainly into the summer, we see reasonably good opportunities. I like the flexibility that we have in our own business to manage the domestic import/export mix. I think we've been pretty effective at doing that. And we have no particular preference. We're looking for the best business we could find.

Your next question comes from the line of Edlain Rodriguez with Broadpoint Gleacher.

Can you talk about your strategy on natural gas hedging? With prices where they are right now, what's your view going forward? Or is there any benefit in locking in prices or do you still think prices will continue to come down?

Edlain, this is Tony. As we said before, when we buy gas, it's typically related to a forward sale. We've also mentioned in previous calls that because we like the opportunity to potentially capitalize on expanding margins, due to flat to weak gas prices and stronger pricing for our products, we stay sharp into that market. As Steve pointed out on the earnings call, a forward NYMEX curve so far is validating our view for the gas for the rest of the year. And we'll probably continue this current program in this current path because we think it's the optimal one in terms of optimizing margin, which is what we focus on. With respect to locking in, anything separate from an FPP sale, we do have that authority. We typically, in the past, have not used it extensively, locking in extra gas to the extent of seven to 10 days of consumption. If gas popped up on the forward curve at $3.50 or $3, we probably get the committee together and have a serious discussion about it because it's something we want to look at. So we can be pretty flexible about that but basically, we're going to continue the same approach to gas and the pricing and margin management that we've had for the last several quarters.

One quick question on phosphate. Where do you see sulfur prices going after the second quarter? And are you having any trouble in terms of sulfur availability? I mean does that impact your phosphate production at all?

We do not have sulfur availability issue. It hasn't affected our production. The guys involved in procuring our sulfur have had some tense moments when we've worked very closely with our suppliers to make sure that we get the quantities that we have under contract. And this has been the time when relationships built over many years pay off for us. So we haven't had any supply issues. With respect to the sulfur pricing situation going forward, it feels a bit like we're at a point of stability going forward. But this has been a commodity with surprisingly high volatility and pricing for the last few years. And so I hesitate to predict the price.

Your next question comes from the line of Horst Hueniken with Thomas Weisel Partners.

I'm wondering whether you could comment on your capital expenditure levels going forward. I can clearly see what CF has been spending in, also Terra has been spending. I'm wondering whether there are plans to discontinue the combined rate going forward or there's opportunity to lower the total CapEx of the combined companies.

This is Tony. This is a topic that came up obviously quite frequently during the roadshow for the equity and debt offerings. And what we told everybody then is that the target for the next couple of years per CapEx, for the combined companies, is $205 million as we continue to focus on paying down our term debt and moving into the target net debt to EBITDA ratio of 1:1.5. So we're are going to run at that rate. If you look at CapEx for the combined companies in the first quarter, it was about $58 million. We think we're in a zone where we can manage to that number for the year.

Also, can you confirm one housekeeping item, you mentioned that the business combination charge of $136 million was pretax and the project development $2.7 million was also pretax. Are those effectively also after-tax numbers?

Well they're after-tax numbers in the sense that they are not deductible in our income tax calculation. The reason we tried to indicate what the tax rate would have been without those items is to give you some tools to make a decision on how you want to handle them and looking at our adjusted income.

Your next question comes from the line Chris Damas of the BCMI Research.

Are there any assets you obtained from the Terra combination you were thinking of reviewing in the short-term? I'm thinking about the U.K. joint venture, with Yara in particular, given what's going on over there.

Well Chris, we've acquired a significant mix of assets. The main nitrogen plants are critical to our core business. The U.K. business has been a good cash generator. At this point, we've come to no conclusions about anything. Everything is in our portfolio and we're glad to have it.

Your next question comes from the line of Michael Picken with Cleveland Research.

Just a few questions for you regarding kind of movement in the international nitrogen markets. It seems like we've had some issues with everybody sort of -- some of the global producers returning to full capacity, and maybe some weakness in demand in some other markets. I mean, how do you see this sort of playing out? Do you see that urea prices, and maybe even ammonia and UAN, moving down further? Or do you think we've sort of started now to see a little bit of stabilization? And then my second part of the question is, if the dealers are reluctant to take product, is it possible that we don't see maybe as many imports as the amount of global products that's out there imply, and we might end up with maybe a little better than expected pricing because somebody ultimately will have to take the product in order to bring it into the U.S. Any thoughts on either of those would be helpful.

Well trying to predict pretty prices is extremely difficult. We've seen some weakness in urea, in UAN, prices, whether they found a floor and are about to come up again, is not clear at this point. We certainly see opportunity in North America for substantial demand. And that could lead to increasing prices. With respect to the whole global nitrogen situation, I just say from a 50,000 foot level, the nitrogen economics are working as they're supposed to work. Those weakness in European demand, product didn't move there to the extent that it might have otherwise. The natural productions that was headed there was a production that had to ease off in Eastern Europe and so forth. So it's a global industry and world prices are determined globally. However, there can be regional dislocations and we see that, for example, in the ammonia market, Corn Belt ammonia has its own set of economics. One of the reasons we like that business so much.

This concludes the question-and-answer session of today's conference call. I will now turn the presentation back over to Mr. Terry Huch.

I just like to thank everybody for participating today, and invite both members of the investment community and the media, to follow up with me if you have further questions. Thank you.

Thank you for your participation in today's conference call. This concludes the presentation. You may now disconnect. Good day.