EX-99.1 2 t36797_x99octti.txt OCTOBER 28, 2004 PRESS RELEASE Terra Industries Inc. [logo] 600 Fourth Street P.O. Box 6000 TERRA 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. 28, 2004)--Terra Industries Inc. (NYSE symbol: TRA) announced net income of $6.5 million, or $.08 per share, on revenues of $377 million for the third quarter ended Sept. 30, 2004. This compares to the 2003 third quarter net loss of $4.5 million, or $.06 per share on revenues of $325 million. For the first nine months of 2004 Terra posted net income of $42.5 million, or $.55 per share, on revenues of $1.2 billion, compared to a net loss of $50.0 million, or $.66 per share, on revenues of $1.0 billion in the comparable 2003 period. The 2004 net income included $11.6 million of earnings attributable to recovery of product claim costs (representing $17.9 million of operating income less $6.3 million of related income taxes). The 2003 loss included a $27.0 million charge for "Impairment of long-lived assets" related to the Blytheville production facility (representing a $53.1 million charge to operating income less $9.9 million allocated to minority interest and a $16.2 million tax benefit). Terra permanently closed the Blytheville facility on May 27, 2004. Cash from operations before working capital changes was $40.8 million in the 2004 third quarter, compared to $21.0 million in the 2003 third quarter. Cash flow from operations, which consists of "Net cash flows from operating activities" less "Change in current assets and liabilities", is not a recognized measure under GAAP, but might be considered a useful measure of cash flows generated from operations that are available to repay debt and invest in the business. At Sept. 30, 2004, Terra had cash and short-term investments totaling $144.6 million. The Nitrogen Products business segment recorded revenues of $326.0 million and operating income of $25.2 million for the quarter, compared with revenues of $277.3 million and operating income of $9.4 million for the 2003 third quarter. For the 2004 first nine months, Nitrogen Products posted revenues of $1.0 billion and operating income, excluding the $17.9 million recovery of product claim costs, of $98.7 million, compared with revenues of $0.8 billion and, excluding the $53.1 million impairment charge, operating income of $1.3 million in the 2003 first nine months. The $15.8 million improvement in 2004 third quarter Nitrogen Products results compared to those of the 2003 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 2004 third quarter were 22, 31, 19 and 21 percent higher, respectively, than 2003 third quarter prices. These higher prices reflect improved worldwide nitrogen product supply/demand balances. Nitrogen Products natural gas unit costs for the quarter, including approximately $4.2 million of cost increases due to forward purchase contracts, were 21 percent higher than in the 2003 third quarter. Excluding the 2004 recovery of product claim costs and 2003 impairment charges, the improvement in 2004 year-to-date Nitrogen Products operating income as compared to the same 2003 period was due to higher product selling prices partially offset by higher natural gas costs. Ammonia, nitrogen solutions, ammonium nitrate and urea selling prices were 17, 27, 30 and 12 percent higher, respectively. Natural gas unit costs, net of about $8.4 million of cost reductions realized from forward purchase contracts, increased 12 percent when compared to the 2003 period. The Methanol business segment reported 2004 third quarter revenues of $50 million and operating income of $0.6 million, compared with 2003 third quarter revenues of $47 million and an operating loss of $1.1 million. The profit increase was due to higher selling prices, partially offset by higher natural gas costs. The Methanol segment reported an operating loss for the 2004 first nine months of $2.3 million, on revenues of $147 million. This compares to operating income of $3.7 million on revenues of $161 million for the 2003 first nine months. The decrease was caused by lower selling prices and sales volumes, and higher natural gas costs. Terra's forward purchase contracts at Sept. 30, 2004, fixed prices for approximately 30 percent of its next 12 months' natural gas needs at about $25.6 million below the published forward market prices at the Sept. 30 date. Said Michael L. Bennett, Terra's President and CEO, "Nitrogen markets remained strong in the 2004 third quarter; our sales volumes were essentially limited by our production volumes. The consensus nitrogen industry outlook is for continued firm demand and favorable selling prices through at least the 2005 first half. While these market conditions are encouraging, we continue to be concerned about volatile natural gas markets as we enter the winter heating season. "In August, Terra agreed to purchase Mississippi Chemical Corporation," Bennett continued. "We're excited about the strategic opportunities Mississippi Chemical can provide Terra both in the short- and long-term. We expect the transaction to close as early as December 2004 and no later than the first quarter of 2005. "We were also pleased to have completed this month Terra's private offering of convertible preferred shares," Bennett concluded. "We expect the sale of these shares to reduce our fixed cash requirements by more than $5 million per year." Terra management will conduct a conference call to discuss these third quarter results on Oct. 28, 2004 beginning at 3:00 p.m. (Eastern). 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 2003 revenues of $1.4 billion, is a leading international producer of nitrogen products. 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) 2004 2003 2004 2003 ----------- ----------- ------------ ----------- REVENUES Nitrogen products $ 326,024 $ 277,292 $ 1,006,099 $ 821,577 Methanol 50,123 47,025 146,773 160,992 Other, net of intercompany eliminations 520 525 1,592 1,361 ----------- ----------- ------------ ----------- $ 376,667 $ 324,842 $ 1,154,464 $ 983,930 =========== =========== ============ =========== OPERATING INCOME (LOSS) Nitrogen products $ 25,184 $ 9,355 $ 98,711 $ (51,757) Methanol 638 (1,083) (2,332) 3,659 Recovery of product claim costs -- -- 17,903 -- Other expense--net (534) (2,368) (4,123) (5,166) ----------- ----------- ------------ ----------- 25,288 5,904 110,159 (53,264) Interest income 774 48 1,763 429 Interest expense (13,446) (13,829) (40,387) (41,664) Minority interest (1,651) 234 (8,150) 12,902 Income tax benefit (provision) (4,512) 3,094 (20,837) 31,615 ----------- ----------- ------------ ----------- Net income (loss) $ 6,453 $ (4,549) $ 42,548 $ (49,982) =========== =========== ============ =========== DILUTED INCOME (LOSS) PER SHARE $ 0.08 $ (0.06) $ 0.55 $ (0.66) =========== =========== ============ =========== Basic and diluted weighted average shares outstanding: Basic 76,166 75,726 75,878 75,602 Diluted 78,210 75,726 77,839 75,602 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, ------------------------------------------- 2004 2003 ------------- ------------- ASSETS Cash and short-term investments $ 144,592 $ 21,278 Accounts receivable 127,882 107,450 Inventories 90,823 87,599 Other current assets 54,294 32,835 ------------- ------------- Total current assets 417,591 249,162 Property, plant and equipment, net 665,900 706,610 Deferred plant turnaround costs 25,102 26,029 Other assets 31,585 35,194 ------------- ------------- Total assets $ 1,140,178 $ 1,016,995 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Debt due within one year $ 161 $ 152 Customer prepayments 21,922 25,663 Other current liabilities 160,623 154,622 ------------- ------------- Total current liabilities 182,706 180,437 ------------- ------------- Long-term debt and capital lease obligations 402,081 402,242 Deferred income taxes 40,102 27,942 Other liabilities 107,311 108,403 Minority interest 91,446 84,777 ------------- ------------- Total liabilities and minority interest 823,646 803,801 Stockholders' Equity 316,532 213,194 ------------- ------------- Total liabilities and stockholders' equity $ 1,140,178 $ 1,016,995 ============= =============
TERRA INDUSTRIES INC. SUMMARIZED CASH FLOWS (in thousands) (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, ----------------------------- ----------------------------- 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Income (Loss) from operations $ 6,453 $ (4,549) $ 42,548 $ (49,982) Non-cash charges and credits: Impairment of long-lived assets -- -- -- 53,091 Depreciation and amortization 25,268 26,493 75,752 82,041 Deferred income taxes 7,387 (662) 23,913 (33,806) Minority interest in earnings (loss) 1,651 (234) 8,150 (12,902) Recovery of product claim costs -- -- (12,874) -- Change in current assets and liabilities 13,806 24,608 (51,382) (39,267) ----------- ----------- ----------- ----------- Net cash flows from operating activities 54,565 45,656 86,107 (825) Purchase of property, plant and equipment (4,711) (1,213) (8,136) (7,074) Plant turnaround costs (14,170) (345) (14,989) (20,666) Debt borrowings (repayments) (38) (34,786) (117) 1,893 Deferred financing costs -- (443) -- (8,581) Distributions to minority interests (3,460) -- (5,766) (1,153) Other 1,132 41 (171) (795) ----------- ----------- ----------- ----------- Increase (Decrease) in cash and short-term investments 33,318 8,910 56,928 (37,201) Cash and short-term investments at beginning of period 110,944 12,368 87,334 58,479 ----------- ----------- ----------- ----------- Cash and short-term investments at end of period $ 144,262 $ 21,278 $ 144,262 $ 21,278 =========== =========== =========== ===========
TERRA INDUSTRIES INC. SUMMARIZED INFORMATION (in thousands)
Three Months Ended Nine Months Ended September 30, September 30, ------------- ------------- 2004 2003 2004 2003 ---- ---- ---- ---- OTHER FINANCIAL DATA Cost of sales $ 337,919 $ 308,554 $ 1,032,144 $ 954,659 (includes depreciation and amortization) Selling, general & administrative expense 13,460 10,384 30,064 29,444 (includes depreciation and amortization) Impairment of long-lived assets -- -- -- 53,091 VOLUMES AND PRICES Three Months Ended September 30, -------------------------------- 2004 2003 ---- ---- Sales Average Sales Average Volumes Unit Price(1) Volumes Unit Price(1) ------- ------------- ------- ------------- Ammonia (tons) 324 $ 266 334 $ 219 Nitrogen solutions (tons) 897 128 994 98 Urea (tons) 38 218 73 180 Ammonium nitrate (tons) 342 168 269 141 Methanol (gallons) 68,082 0.72 68,274 0.69 NATURAL GAS COSTS2 North America $5.64 $5.14 United Kingdom $4.41 $2.59 Nine Months Ended September 30, ------------------------------- 2004 2003 ---- ---- Sales Average Sales Average Volumes Unit Price(1) Volumes Unit Price(1) ------- ------------- ------- ------------- Ammonia (tons) 1,077 $ 262 1,012 $ 224 Nitrogen solutions (tons) 2,868 123 2,843 97 Urea (tons) 327 191 397 170 Ammonium nitrate (tons) 766 176 686 135 Methanol (gallons) 206,754 0.69 217,952 0.74 NATURAL GAS COSTS2 North America $5.57 $5.28 United Kingdom $4.33 $2.98 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.