-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K4XvUKMERlGhyivTHDSWMMBMe8RTa0klrDqufBZSHw/MbSvMgUnL4sO7rCXoAjZE zR3Sf0+g9uolQ3wdeOH0tA== 0000914760-03-000220.txt : 20031030 0000914760-03-000220.hdr.sgml : 20031030 20031030124032 ACCESSION NUMBER: 0000914760-03-000220 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20031030 ITEM INFORMATION: ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031030 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TERRA INDUSTRIES INC CENTRAL INDEX KEY: 0000722079 STANDARD INDUSTRIAL CLASSIFICATION: AGRICULTURE CHEMICALS [2870] IRS NUMBER: 521145429 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-08520 FILM NUMBER: 03965894 BUSINESS ADDRESS: STREET 1: 600 FOURTH ST STREET 2: PO BOX 6000 CITY: SIOUX CITY STATE: IA ZIP: 51102-6000 BUSINESS PHONE: 7122771340 MAIL ADDRESS: STREET 1: 600 FOURTH STREET STREET 2: PO BOX 6000 CITY: SIOUX CITY STATE: IA ZIP: 51102-6000 FORMER COMPANY: FORMER CONFORMED NAME: INSPIRATION RESOURCES CORP DATE OF NAME CHANGE: 19920517 8-K 1 t36797_8k.txt OCTOBER 30, 2003 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): October 30, 2003 TERRA INDUSTRIES INC. (Exact name of registrant as specified in its charter) Maryland 1-8520 52-1145429 (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) Terra Centre 600 Fourth Street, P.O. Box 6000 Sioux City, Iowa 51102-6000 (712) 277-1340 (Address of Principal Executive Offices, including Zip Code) (Registrant's Telephone Number, Including Area Code) ================================================================================ ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits Exhibit Number Description -------------- ----------- 99.1 Press Release dated October 30, 2003 announcing third quarter 2003 earnings by Terra Industries Inc. ITEM 12. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On October 30, 2003, Terra Industries issued a press release setting forth Terra Industries Inc.'s third quarter 2003 earnings. A copy of the press release is filed herewith as Exhibit 99.1 and is hereby incorporated by reference. The information in this Form 8-K is being furnished and shall not be deemed "filed" for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference in any other filing under the Securities Exchange Act or Securities Act of 1933 except as shall be expressly set forth by specific reference to this Form 8-K in such filing. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. TERRA INDUSTRIES INC. /s/ Mark A. Kalafut ----------------------------------------- Mark A. Kalafut Vice President, General Counsel and Corporate Secretary Date: October 30, 2003 EX-99.1 3 t36797_8kx99.txt PRESS RELEASE Terra Industries Inc. ------------ 600 Fourth Street [LOGO] Exhibit 99.1 P.O. Box 6000 ------------ Sioux City, IA 51102-6000 Telephone: (712) 277-1340 Telefax: (712) 277-7383 www.terraindustries.com ================================================================================ NEWS ================================================================================ For immediate release Contact: Mark Rosenbury (712) 279-8756 TERRA INDUSTRIES INC. REPORTS THIRD QUARTER RESULTS Sioux City, Iowa (Oct. 30, 2003)--Terra Industries Inc. (NYSE symbol: TRA) announced today a net loss of $4.5 million, or $.06 per share, on revenues of $325 million for the third quarter ended Sept. 30, 2003. This compares to the 2002 third quarter loss from continuing operations of $1.9 million, or $.03 per share, on revenues of $259 million. The 2002 third quarter also included an $11 million, or $.15 per share, loss from discontinued operations resulting in a net loss of $12.9 million, or $.18 per share. For the 2003 first nine months, Terra posted a net loss of $50.0 million, or $.66 per share, on revenues of $984 million compared to a net loss of $236.5 million, or $3.14 per share, on revenues of $772 million in the comparable 2002 period. The 2003 loss, excluding a second quarter $27.0 million charge for "Impairment of long-lived assets" (representing a $53.1 million impairment charge to operating income less $9.9 million allocated to minority interest and a $16.2 million income tax benefit), was $23.0 million. This compares to a $19.5 million loss from continuing operations for the 2002 first nine months. Results for the 2002 first nine months also included an $11 million, or $.15 per share, loss from discontinued operations and a $206.0 million, or $2.74 per share, charge for the cumulative effect of a change in accounting principle. The $53.1 million charge for the impairment of long-lived assets represents the carrying value of Terra's Blytheville, Ark. facility's long-lived assets that may not be realized from ongoing operations. Terra suspended Blytheville's production at the beginning of the 2003 third quarter because of continuing high natural gas costs and the seasonal decline in nitrogen fertilizer demand and prices. Although Terra has taken an impairment charge for the Blytheville assets, it resumed Blytheville's production on Sept. 29 and expects to operate the facility through at least April 2004. Cash from operations, before working capital changes, was $21.0 million in the 2003 third quarter compared to $13.5 million in the 2002 third quarter. Terra had at Sept. 30, 2003, cash and short-term investments totaling $21.3 million and no borrowings under its revolving credit facility that expires in June 2005. Borrowing availability under Terra's revolving credit facility was $102 million at Sept. 30, 2003. The Nitrogen Products business segment recorded revenues of $277 million and operating income of $9.4 million for the quarter, compared with revenues of $211 million and operating income of $4.2 million for the 2002 third quarter. For the 2003 first nine months, Nitrogen Products posted revenues of $822 million and, excluding the $53.1 million impairment charge, operating income of $1.3 million, compared with revenues of $654 million and operating income of $7.1 million in 2002. The $5.2 million improvement in third quarter Nitrogen Products results compared to the 2002 third quarter was due to higher product selling prices, partially offset by higher natural gas costs. Ammonia, nitrogen solutions, ammonium nitrate and urea selling prices for the 2003 third quarter were 56, 34, 19 and 43 percent higher, respectively than 2002 third quarter prices. These higher prices reflect improved worldwide nitrogen supply/demand balances. Natural gas unit costs for the quarter, net of about $2.6 million of cost increases due to forward purchase contracts, were 60 percent higher than in the 2002 third quarter. Nitrogen Products' operating income for the 2003 first nine months results was less than in the comparable 2002 period as the natural gas cost increase exceeded the selling price increases. Natural gas unit costs, net of about $3.1 million of cost reductions realized from forward purchase contracts, increased 68 percent when compared to the 2002 period. Ammonia, nitrogen solutions, ammonium nitrate and urea selling prices were 59, 35, 13 and 45 percent higher, respectively. The Methanol business segment reported 2003 third quarter revenues of $47 million and an operating loss of $1.1 million, compared with 2002 third quarter revenues of $47 million and operating income of $6.7 million. The profit decrease was due to higher natural gas costs and lower sales volumes, partially offset by a 23 percent increase in methanol selling prices. Methanol's third quarter natural gas unit costs, net of about $1.0 million in cost increases due to forward purchase contracts, increased 65 percent. Methanol's operating income for the 2003 first nine months was about the same as that realized in the comparable 2002 period. A 61 percent increase in methanol selling prices was offset by higher natural gas costs, which, net of about $1.2 million of cost reductions realized from forward purchase contracts, increased 82 percent. Terra's forward purchase contracts at Sept. 30, 2003, fixed prices for 26 percent of its next 12 months' natural gas needs at about $12.8 million above the published forward market prices at that date. "Nitrogen product demand and selling prices have proved to be stronger than we anticipated when we reported our second quarter results, and natural gas prices have moderated," said Michael L. Bennett, Terra's President and CEO. "Our liquidity improved during the quarter because of our cash earnings, cost-saving initiatives and customer prepayments, primarily for nitrogen to be applied in the fourth quarter. "Should these market conditions continue," Bennett said, "we anticipate operating all our facilities, with the possible exception of Blytheville, at levels necessary to meet the customer demand we anticipate for the balance of the 2003/2004 fertilizer year. We also expect to meet the covenants of our bank agreements for that period. Nonetheless, natural gas prices and product demand continue to be concerns, as substantial increases in our feedstock costs or significantly reduced demand could impair our operations and finances. To offset some of these effects, our natural gas forward pricing positions are concentrated on upcoming winter months with forward positions for more than 50 percent of our needs through next January. We expect to increase these winter positions when prices permit." Terra management will conduct a conference call to discuss these third quarter results on Oct. 30, 2003 beginning at 3:00 EST. A live webcast of the conference call will be available from Terra's web site at www.terraindustries.com, and will be archived for playback for three months. Terra Industries Inc., with 2002 revenues of $1 billion, is a leading international producer of nitrogen products and methanol. This news release may contain forward-looking statements, which involve inherent risks and uncertainties. Statements that are not historical facts, including statements about Terra Industries Inc.'s beliefs, plans or expectations, are forward-looking statements. These statements are based on current plans, estimates and expectations. Actual results may differ materially from those projected in such forward-looking statements and therefore you should not place undue reliance on them. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements is set forth in Terra Industries Inc.'s most recent report on Form 10-K and Terra Industries Inc.'s other documents on file with the Securities and Exchange Commission. Terra Industries Inc. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise. # # # Note: Terra Industries' news announcements are also available on its web site, www.terraindustries.com. (Tables follow) TERRA INDUSTRIES INC. SUMMARIZED RESULTS OF OPERATIONS (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------ ------------------------------ (in thousands except per-unit amounts) 2003 2002 2003 2002 ------------ ------------ ------------ ------------ REVENUES Nitrogen products $ 277,292 $ 211,103 $ 821,577 $ 653,753 Methanol 47,025 46,772 160,992 116,928 Other, net of intercompany eliminations 525 799 1,361 1,051 ------------ ------------ ------------ ------------ $ 324,842 $ 258,674 $ 983,930 $ 771,732 ============ ============ ============ ============ OPERATING INCOME (LOSS) Nitrogen products $ 9,355 $ 4,241 $ (51,757) $ 7,111 Methanol (1,083) 6,696 3,659 3,782 Other expense--net (2,368) (1,137) (5,166) (1,871) ------------ ------------ ------------ ------------ 5,904 9,800 (53,264) 9,022 Interest income 48 116 429 277 Interest expense (13,829) (13,408) (41,664) (40,052) Minority interest 234 (492) 12,902 (1,777) Income tax benefit 3,094 2,048 31,615 13,012 ------------ ------------ ------------ ------------ Loss from continuing operations (4,549) (1,936) (49,982) (19,518) Loss from discontinued operations -- (11,000) -- (11,000) Cumulative effect of change in accounting principle -- -- -- (205,968) ------------ ------------ ------------ ------------ Net loss $ (4,549) $ (12,936) $ (49,982) $ (236,486) ============ ============ ============ ============ BASIC AND DILUTED LOSS PER SHARE: Loss from continuing operations $ (0.06) $ (0.03) $ (0.66) $ (0.25) Discontinued operations -- (0.15) -- (0.15) Cumulative effect of change in accounting principle -- -- -- (2.74) ------------ ------------ ------------ ------------ Loss per Share $ (0.06) $ (0.18) $ (0.66) $ (3.14) ============ ============ ============ ============ Weighted average shares outstanding 75,726 75,468 75,602 75,276 ============ ============ ============ ============
Because of the seasonal nature and effects of weather-related conditions in several of Terra's marketing areas, results of operations for any single reporting period should not be considered indicative of results for a full year. TERRA INDUSTRIES INC. SUMMARIZED FINANCIAL POSITION (in thousands) (unaudited)
September 30, ------------------------------------------- 2003 2002 ------------- ------------- ASSETS Cash and short-term investments $ 21,278 $ 41,879 Accounts receivable, less allowance for doubtful accounts of $156 and $436 107,450 97,455 Inventories 87,599 86,838 Other current assets 32,835 30,528 ------------- ------------- Total current assets 249,162 256,700 Property, plant and equipment, net 706,610 792,182 Deferred plant turnaround costs 26,029 23,287 Other assets 35,194 30,147 ------------- ------------- Total assets $ 1,016,995 $ 1,102,316 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Debt due within one year $ 152 $ 140 Customer prepayments 23,704 6,612 Other current liabilities 156,581 114,826 ------------- ------------- Total current liabilities 180,437 121,578 ------------- ------------- Long-term debt and capital lease obligations 402,242 400,394 Deferred income taxes 27,942 99,626 Other liabilities 108,403 80,898 Minority interest 84,777 100,021 ------------- ------------- Total liabilities and minority interest 803,801 802,517 Stockholders' Equity 213,194 299,799 ------------- ------------- Total liabilities and stockholders' equity $ 1,016,995 $ 1,102,316 ============= =============
TERRA INDUSTRIES INC. SUMMARIZED CASH FLOWS (in thousands) (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------ ------------------------------ 2003 2002 2003 2002 ------------ ------------ ------------ ------------ Loss from operations $ (4,549) $ (1,936) $ (49,982) $ (19,518) Non-cash charges and credits: Impairment of long-lived assets -- -- 53,091 -- Depreciation and amortization 26,493 26,804 82,041 78,977 Deferred income taxes (662) (11,903) (33,806) (12,854) Minority interest in earnings (loss) (234) 492 (12,902) 1,777 Change in current assets and liabilities 24,608 28,461 (39,267) 49,871 ------------ ------------ ------------ ------------ Net cash flows from operating activities 45,656 41,918 (825) 98,253 Purchase of property, plant and equipment (1,213) (7,579) (7,074) (16,589) Plant turnaround costs (345) (6,998) (20,666) (15,052) Debt borrowings (repayments) (36,679) (33) -- (36,068) Deferred financing costs (443) -- (8,581) -- Distributions to minority interests -- -- (1,153) -- Other 1,934 1,853 1,098 4,210 ------------ ------------ ------------ ------------ Increase (Decrease) in cash and short-term investments 8,910 29,161 (37,201) 34,754 Cash and short-term investments at beginning of period 12,368 12,718 58,479 7,125 ------------ ------------ ------------ ------------ Cash and short-term investments at end of period $ 21,278 $ 41,879 $ 21,278 $ 41,879 ============ ============ ============ ============
TERRA INDUSTRIES INC. SUMMARIZED INFORMATION (in thousands)
Three Months Ended Nine Months Ended September 30, September 30, ------------------------------ ------------------------------ 2003 2002 2003 2002 ------------ ------------ ------------ ------------ OTHER FINANCIAL DATA Cost of sales $ 308,554 $ 238,546 $ 954,659 $ 733,900 (includes depreciation and amortization) Selling, general & administrative expense 10,384 10,328 29,444 28,810 (includes depreciation and amortization) Impairment of long-lived assets -- -- 53,091 --
VOLUMES AND PRICES
Three months Ended September 30, ----------------------------------------------------------------- 2003 2002 -------------------------------- ---------------------------- Sales Average Sales Average Volumes Unit Price(1) Volumes Unit Price(1) -------------- --------------- ------------- ------------- Ammonia (tons) 334 $ 219 354 $ 140 Nitrogen solutions (tons) 994 98 967 73 Urea (tons) 73 180 138 126 Ammonium nitrate (tons) 269 141 239 118 Methanol (gallons) 68,274 0.69 83,777 0.56 NATURAL GAS COSTS(2) North America $5.14 $3.04 United Kingdom $2.59 $2.12 Nine months Ended September 30, ----------------------------------------------------------------- 2003 2002 -------------------------------- ---------------------------- Sales Average Sales Average Volumes Unit Price(1) Volumes Unit Price(1) -------------- --------------- ------------- ------------- Ammonia (tons) 1,012 $ 224 1,147 $ 141 Nitrogen solutions (tons) 2,843 97 2,904 72 Urea (tons) 397 170 482 117 Ammonium nitrate (tons) 686 135 690 119 Methanol (gallons) 217,952 0.74 255,422 0.46 NATURAL GAS COSTS(2) North America $5.28 $2.93 United Kingdom $2.98 $2.33 (1) After deducting outbound freight costs (2) Per MMBtu. Includes all transportation and other logistical costs and any gains or losses on financial derivatives related to natural gas purchases.
Because of the seasonal nature and effects of weather-related conditions in several of its marketing areas, results of operations for any single reporting period should not be considered indicative of results for a full year. -----END PRIVACY-ENHANCED MESSAGE-----