-----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, LX2yVLYaMQHT3TyCsAPHT7mbNDQHFHvrKyPGnZycQCLsSxOjfpN4/w0j7pLf332x CpHljI/cQrMq5vbd5LOLPA== 0000914760-05-000024.txt : 20050209 0000914760-05-000024.hdr.sgml : 20050209 20050209122426 ACCESSION NUMBER: 0000914760-05-000024 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050209 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050209 DATE AS OF CHANGE: 20050209 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: 05587463 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_8k020905.txt FEBRUARY 9, 2005 ================================================================================ UNITED STATES 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): February 9, 2005 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) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On February 9, 2005, Terra Industries Inc. issued a press release setting forth Terra Industries Inc.'s fourth quarter 2004 earnings. A copy of the press release is furnished herewith as Exhibit 99.1. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits 99.1 Press Release issued February 9, 2005 reporting fourth quarter results. 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: February 9, 2005 EX-99.1 2 t36797_x99020905.txt FEBRUARY 9, 2005 PRESS RELEASE [logo] Terra Industries Inc. TERRA 600 Fourth Street P.O. Box 6000 EXHIBIT 99.1 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 FOURTH QUARTER RESULTS Sioux City, Iowa (Feb. 9, 2005)--Terra Industries Inc. (NYSE symbol: TRA) announced today income available to common shares of $24.0 million, or basic earnings per share of $.31, on revenues of $355 million for the fourth quarter ended Dec. 31, 2004. Net income for the 2003 fourth quarter was $37.5 million, or basic earnings per share of $.50, on revenues of $367 million. Net income for the 2004 and 2003 fourth quarters includes $27.8 million and $28.7 million, respectively, of income tax benefits described below. The 2004 fourth quarter results also includes an $11.1 million charge related to the early repayment of $70.7 million of Terra's 11.5% Senior Notes due 2010. The $27.8 million 2004 fourth quarter income tax benefit relates to final settlement of a plant valuation dispute with Revenue Canada. The 2003 fourth quarter income tax benefit represents $36.4 million on partial settlement of the Revenue Canada valuation dispute less a $7.7 million charge for a change in the effective tax rate used for the first three quarters of 2003. For 2004, Terra reported income available to common shares of $66.6 million, or basic earnings per share of $.87, on revenues of $1.5 billion compared to a net loss of $12.5 million, or $.16 per share, on revenues of $1.4 billion in 2003. The improvement in 2004 income was due mainly to higher selling prices, partially offset by higher natural gas costs. The 2003 results also included a net charge of $27.0 million 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) relating to the Blytheville, Ark. facility, which was closed in May 2004. Cash at Dec. 31, 2004, of $233.8 million reflected, among other items, customer prepayments totaling $115.3 million. These prepayments are for the selling price and delivery costs of nitrogen products that Terra will deliver in the 2005 first half. Terra has fixed or capped the cost of natural gas required to manufacture these products. Terra's debt at Dec. 31, 2004, including $104 million associated with the Dec. 21, 2004 acquisition of Mississippi Chemical Corporation, totaled $435.4 million compared to $402.4 million at Dec. 31, 2003. The Nitrogen Products business segment recorded fourth quarter revenues of $314 million and operating income of $22.1 million, compared with revenues of $318 million and operating income of $32.4 million for the 2003 fourth quarter. For 2004, Nitrogen Products posted revenues of $1,320 million and operating income of $120.8 million, compared with revenues of $1,139 million and an operating loss of $19.4 million in 2003, including the $53.1 million impairment charge. The $10.3 million decrease in 2004 fourth quarter Nitrogen Products operating income compared to that of the 2003 fourth quarter was due to higher natural gas costs, lower sales volumes and higher operating costs, partially offset by higher selling prices. Ammonia, nitrogen solutions, ammonium nitrate and urea selling prices for the 2004 fourth quarter were 17, 17, 15, and 32 percent higher, respectively, than 2003 fourth quarter prices. Natural gas unit costs for the quarter, net of about $10.5 million of cost decreases due to forward purchase contracts, were 20 percent higher than in the 2003 fourth quarter. The lower sales volumes were due to the May 2004 closure of the Blytheville manufacturing plants, which contributed approximately $3 million to 2003 fourth quarter operating income, and unplanned manufacturing disruptions. Operating costs were $11.4 million higher than the 2003 fourth quarter due primarily to plant maintenance costs, professional fees for Sarbanes-Oxley compliance efforts and earnings-based incentive accruals. Nitrogen Products' full-year $87.1 million operating income improvement compared to 2003, before impairment of long-lived assets, was due mainly to higher product selling prices, partially offset by higher natural gas costs. Ammonia, nitrogen solutions, ammonium nitrate and urea selling prices were 16, 21, 25 and 13 percent higher, respectively. Natural gas unit costs, net of about $17.6 million of cost decreases due to forward purchase contracts, increased 13 percent over those of 2003. The Methanol business segment reported 2004 fourth quarter revenues of $40 million and operating income of $3.8 million, compared with 2003 fourth quarter revenues of $49 million and an operating loss of $1.8 million. The profit increase was due mainly to a margin sharing arrangement with Methanex, which purchased production rights to the Beaumont plant through Dec. 31, 2008. Pursuant to the production rights agreement, Methanex instructed Terra to shut down its Beaumont methanol plant on Dec. 1, 2004, and to maintain it for possible restart. Methanol's full-year revenues and operating income were $187 million and $1.5 million, respectively, compared to revenues of $210 million and operating income of $1.9 million for 2003. Terra's North American and U.K. natural gas forward purchase contracts at Dec. 31, 2004, fixed or capped prices for 26 percent of its next 12 months' natural gas needs at about $18.1 million above the published forward market prices at that date. Natural gas for Terra's 50 percent share of a Trinidad manufacturing plant is priced pursuant to a long-term contract. "We capitalized in 2004 on favorable industry conditions by operating our plants safely and efficiently and meeting our customers' needs," said Michael L. Bennett, Terra's President and CEO. "We are pleased to have closed the Mississippi Chemical Corporation acquisition before the end of 2004, and are confident that this acquisition will enhance Terra's earnings power throughout the nitrogen products cycle. Our improved 2004 financial performance enabled us to further strengthen Terra's balance sheet by issuing $120 million of preferred shares in the 2004 fourth quarter. "The nitrogen products industry continues to be volatile," Bennett continued. "Natural gas costs in both North America and the U.K. have experienced significant swings frequently driven by speculation on overall energy prices. We plan to manage gas price volatility through forward pricing and by keeping Terra inventories at a minimum. Although January 2005 prices for ammonia at the Gulf declined significantly because of logistical bottlenecks, we don't perceive any underlying change in the nitrogen supply/demand situation. Demand for our upgraded products has been steady and forecasters continue to predict U.S. planted acres of corn to approximate 80 million acres." Terra management will conduct a conference call to discuss these fourth quarter results on Feb. 9, 2005, 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 2004 revenues of $1.5 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 Twelve Months Ended December 31, December 31, ----------------------------- ------------------------------ (in thousands except per-unit amounts) 2004 2003 2004 2003 ----------- ----------- ------------ ------------ REVENUES Nitrogen products $ 314,043 $ 317,802 $ 1,320,142 $ 1,139,379 Methanol 40,050 48,878 186,823 209,870 Other, net of intercompany eliminations 553 445 2,145 1,806 ----------- ----------- ------------ ------------ $ 354,646 $ 367,125 $ 1,509,110 $ 1,351,055 =========== =========== ============ ============ OPERATING INCOME (LOSS) Nitrogen products $ 22,131 $ 32,387 $ 120,842 $ (19,370) Methanol 3,811 (1,793) 1,479 1,866 Recovery of product claim costs -- -- 17,903 -- Other expense--net (1,355) (890) (5,478) (6,056) ----------- ----------- ------------ ------------ 24,587 29,704 134,746 (23,560) Interest income 1,544 105 3,307 534 Interest expense (12,747) (13,408) (53,134) (55,072) Minority interest (3,057) (4,285) (11,207) 8,617 Loss on early retirement of debt (11,116) -- (11,116) -- Income tax (provision) benefit 25,837 25,385 5,000 57,000 ----------- ----------- ------------ ------------ Net income (loss) 25,048 37,501 67,596 (12,481) Preferred stock dividends (1,029) -- (1,029) -- Income available to common stockholders $ 24,019 $ 37,501 $ 66,567 $ (12,481) =========== =========== ============ =========== INCOME (LOSS) PER COMMON SHARE: Basic $ 0.31 $ 0.50 $ 0.87 $ (0.16) =========== =========== ============ ============ Diluted $ 0.28 $ 0.48 $ 0.85 $ (0.16) =========== =========== ============ ============ Basic and diluted weighted average shares outstanding: Basic 77,940 75,758 76,478 75,676 Diluted 88,471 77,617 79,859 75,676 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)
December 31, ------------------------------------------- 2004 2003 ------------- ------------- ASSETS Cash and short-term investments $ 233,798 $ 87,334 Accounts receivable, less allowance for doubtful accounts of $262 and $87 150,271 133,480 Inventories 148,808 90,869 Other current assets 58,106 43,319 ------------- ------------- Total current assets 590,983 355,002 Property, plant and equipment, net 797,978 707,665 Deferred plant turnaround costs 33,897 28,103 Equity investments 215,939 2,255 Other assets 46,711 32,037 ------------- ------------- Total assets $ 1,685,508 $ 1,125,062 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Debt due within one year $ 167 $ 153 Customer prepayments 115,347 71,852 Other current liabilities 227,566 150,049 ------------- ------------- Total current liabilities 343,080 222,054 ------------- ------------- Long-term debt and capital lease obligations 435,238 402,206 Deferred income taxes 58,223 17,831 Other liabilities 164,296 128,778 Minority interest 92,197 89,062 ------------- ------------- Total liabilities and minority interest 1,093,034 859,931 Preferred Shares 133,069 -- Common Stockholders' Equity 459,405 265,131 ------------- ------------- Total liabilities and stockholders' equity $ 1,685,508 $ 1,125,062 ============= =============
TERRA INDUSTRIES INC. SUMMARIZED CASH FLOWS (in thousands) (unaudited)
Three Months Ended Twelve Months Ended December 31, December 31, ----------------------------- ----------------------------- 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Income (Loss) from operations $ 25,048 $ 37,501 $ 67,596 $ (12,481) Non-cash charges and credits: Impairment of long-lived assets -- -- -- 53,091 Depreciation and amortization 26,478 25,329 102,230 107,370 Deferred income taxes (26,149) (26,710) (2,236) (60,516) Minority interest in earnings (loss) 3,057 4,285 11,207 (8,617) Recovery of product claim costs -- -- (12,874) -- Loss on early retirement of debt 2,985 -- 2,985 -- Change in current assets and liabilities 93,981 42,842 42,599 3,575 ----------- ----------- ----------- ----------- Net cash flows from operating activities 125,400 83,247 211,507 82,422 Purchase of property, plant and equipment (10,474) (1,565) (18,610) (8,639) Plant turnaround costs (13,751) (7,414) (28,740) (28,080) Debt borrowings (repayments) (70,737) -- (70,854) (1,858) Deferred financing costs (2,598) -- (2,598) (8,581) Distributions to minority interests (2,306) -- (8,072) (1,153) Acquisitions, net of cash received (54,168) -- (54,168) -- Stock issuance 116,246 -- 116,246 -- Other 1,594 (8,212) 1,753 (5,256) ----------- ----------- ----------- ----------- Increase in cash and short-term investments 89,206 66,056 146,464 28,855 Cash and short-term investments at beginning of period 144,592 21,278 87,334 58,479 ----------- ----------- ----------- ----------- Cash and short-term investments at end of period $ 233,798 $ 87,334 $ 233,798 $ 87,334 =========== =========== =========== ===========
TERRA INDUSTRIES INC. SUMMARIZED INFORMATION (in thousands)
Three Months Ended Twelve Months Ended ---------------------------------------------------------------- December 31, December 31, 2004 2003 2004 2003 ----------- ----------- ------------ ------------ OTHER FINANCIAL DATA Cost of sales $ 315,933 $ 327,004 $ 1,348,077 $ 1,281,663 (includes depreciation and amortization) Selling, general & administrative expense 14,126 10,417 44,190 39,861 (includes depreciation and amortization) Impairment of long-lived assets -- -- -- 53,091 VOLUMES AND PRICES Three months Ended December 31, ---------------------------------------------------------------- 2004 2003 --------------------------------- -------------------------- Sales Average Sales Average Volumes Unit Price1 Volumes Unit Price1 ------- ----------- ------- ----------- Ammonia (tons) 307 $ 283 388 $ 242 Nitrogen solutions (tons) 938 122 997 104 Urea (tons) 46 239 149 181 Ammonium nitrate (tons) 222 184 248 160 Methanol (gallons) 51,734 0.71 76,581 0.64 NATURAL GAS COSTS2 North America $5.85 $5.01 United Kingdom $5.72 $4.33 Twelve months Ended December 31, ---------------------------------------------------------------- 2004 2003 --------------------------------- -------------------------- Sales Average Sales Average Volumes Unit Price1 Volumes Unit Price1 ------- ----------- ------- ----------- Ammonia (tons) 1,391 $ 266 1,400 $ 229 Nitrogen solutions (tons) 3,869 120 3,840 99 Urea (tons) 376 195 545 173 Ammonium nitrate (tons) 988 178 934 142 Methanol (gallons) 206,754 0.69 294,533 0.71 NATURAL GAS COSTS2 North America $5.62 $5.21 United Kingdom $4.62 $3.34 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.
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