-----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, T3blFwxsTjQFUo8WmkTBOiVHBw6Ykm1DlC71lGAmrhv4ex6Xq1/JZJ653I5MNsxH nJ8017u2S1uaxXAx9fXGOQ== 0000950137-07-001759.txt : 20070208 0000950137-07-001759.hdr.sgml : 20070208 20070208164231 ACCESSION NUMBER: 0000950137-07-001759 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070208 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070208 DATE AS OF CHANGE: 20070208 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: 07593102 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 c12163e8vk.htm CURRENT REPORT e8vk
Table of Contents

 
 
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 8, 2007
TERRA INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
         
Maryland   1-8520   52-1145429
(State or other jurisdiction of incorporation)   (Commission File Number)   (IRS Employer 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):
     
o
  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 


TABLE OF CONTENTS

SIGNATURES
Press Release


Table of Contents

ITEM 2.02     RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
     On February 8, 2007, Terra Industries Inc. issued a press release setting forth Terra Industries Inc.’s fourth quarter 2006 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 8, 2007 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/ John W. Huey    
  John W. Huey   
  Vice President, General Counsel and
Corporate Secretary
 
 
 
Date: February 8, 2007

 

EX-99.1 2 c12163exv99w1.htm PRESS RELEASE exv99w1
 

         

(TERRA LOGO)
   
Exhibit 99.1
  Terra Industries Inc.
600 Fourth Street
P.O. Box 6000
Sioux City, IA 51102-6000
Telephone: (712) 277-1340
Fax: (712) 277-7383
www.terraindustries.com
 
NEWS
 
     
For immediate release
  Contact: Joe A. Ewing
 
  (712) 277-7305
 
  jewing@terraindustries.com
Terra Industries Inc. reports improved fourth quarter results
Sioux City, Iowa (Feb. 8, 2007)—Terra Industries Inc. (NYSE: TRA) announced today 2006 fourth quarter net income available to common shareholders of $10.3 million, or $.11 per common share, on revenues of $449.5 million for the quarter ended Dec. 31, 2006. This represents a $26.7 million improvement over the net loss to common shareholders for the 2005 fourth quarter of $16.4 million, or $.17 per share, on revenues of $513.4 million.
For 2006, Terra posted a net loss to common shareholders of $0.9 million, or $.01 per share, on revenues of $1.8 billion. Net income available to common shareholders for 2005 was $17.0 million, or $.18 per share, on revenues of $1.9 billion.
Cash balances totaled $179.0 million at Dec. 31, 2006. During the 2006 fourth quarter, Terra did not repurchase any shares under its authorization to repurchase up to 9.5 million of its outstanding common shares by June 30, 2008. Since announcing this authorization, Terra has repurchased 2.7 million common shares.
Analysis of fourth quarter results
Fourth quarter 2006 revenues of almost $450 million were $64 million lower than those of the 2005 fourth quarter mainly in response to lower product prices. Ammonia, UAN and urea selling prices declined 17%, 15% and 23% respectively from prior year levels, due mostly to increased 2006 North American production rates in response to lower North American natural gas costs.
Nitrogen margins improved over the previous year as cost of sales declined by $136 million, due mainly to lower natural gas costs. North American natural gas costs averaged $6.35 per MMBtu during the 2006 fourth quarter compared to $11.36 per MMBtu in the 2005 fourth quarter.
As compared to the 2005 fourth quarter, 2006 operating income was reduced by a $7.5 million decline to equity earnings, mostly as the result of lower operating rates at the Point Lisas Trinidad facility, and a $6.9 million increase to selling, general and administrative expenses, which included professional fees associated with Terra’s proposed U.K. joint venture with Kemira GrowHow and higher expenses for share-based compensation. Terra expects the conditions causing lower operating rates at the Point Lisas Trinidad facility to continue until repairs are completed during the 2007 first quarter.
SUMMARY
Fourth quarter performance:
  Income from operations up $57.7 million.
 
  Gross profits per ton improved for all major products—ammonia, UAN and ammonium nitrate.
 
  Company-owned facilities averaged 97% operating rates.
Outlook:
  Low projected grain inventories are expected to increase nitrogen demand through increased 2007 planted acres of corn and wheat.
 
  Nitrogen prices firmed during the fourth quarter and are expected to exhibit seasonal increases through the 2007 planting season.

 


 

Analysis of full-year results
Terra’s 2006 revenues of $1.8 billion were $102 million lower than 2005 revenues, mainly due to lower UAN and ammonium nitrate sales volumes, which were affected by lower overall fertilizer consumption during the 2006 planting season.
2006 operating income was $66 million, or $47 million lower than 2005 operating income, due mostly to curtailed production rates during the first half of 2006. Operating rates averaged only 74% of plant capacity during the 2006 first half, which resulted in higher costs for purchased product and reduced plant efficiencies. Those effects were mitigated during the 2006 second half as operating results normalized in response to higher grain prices and stable natural gas costs.
Forward natural gas position
Terra’s forward purchase contracts at Dec. 31, 2006, fixed prices for about 17 percent of its next 12 months’ natural gas needs at about $19.1 million above the published forward market prices at that date. The majority of these forward purchase contracts support nitrogen sales commitments.
CEO’s remarks
“As expected, better global demand for nitrogen driven by strong grain markets and more favorable energy markets contributed to improved financial and operating performance for Terra in the fourth quarter,” said Terra President and CEO Michael Bennett. “As we move into the spring application season, product movement is brisk to meet strong nitrogen demand, and nitrogen selling prices have continued to firm. Nitrogen market indications continue to support our positive view of Terra’s prospects through the 2007 first half.”
Conference call details
Terra management will conduct a conference call to discuss these fourth quarter and full-year results this afternoon at 3:00 ET. A live webcast of the conference call will be available from Terra’s website at www.terraindustries.com, and will be archived for playback for three months.
About Terra
Terra Industries Inc., with 2006 revenues of $1.8 billion, is a leading international producer of nitrogen products.
Forward-looking statements
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 website, 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)   2006     2005     2006     2005  
Revenues
                               
Nitrogen products
  $ 438,185     $ 505,733     $ 1,793,759     $ 1,899,236  
Methanol
    9,445       5,430       34,955       31,347  
Other
    1,873       2,203       8,008       8,482  
 
                       
 
  $ 449,503     $ 513,366     $ 1,836,722     $ 1,939,065  
 
                       
 
                               
Costs and expenses
                               
Cost of sales
    395,012       530,998       1,732,222       1,800,236  
Equity earnings
    (1,183 )     (8,678 )     (17,013 )     (21,415 )
Selling, general and administrative
    16,838       9,910       55,233       46,548  
 
                       
Total costs and expenses
    410,667       532,230       1,770,442       1,825,369  
 
                               
Operating income (loss)
    38,836       (18,864 )     66,280       113,696  
 
                               
Interest income
    958       1,695       6,457       8,086  
Interest expense
    (12,651 )     (11,666 )     (47,991 )     (53,478 )
Loss on early retirement of debt
                      (27,193 )
Gain on revaluation of warrants
                      8,860  
 
                       
Income (loss) before income taxes and minority interest
    27,143       (28,835 )     24,746       49,971  
 
                               
Income tax benefit (provision)
    (11,249 )     11,647       (9,247 )     (14,217 )
Minority interest
    (4,286 )     2,056       (11,286 )     (13,667 )
 
                       
Net income (loss)
    11,608       (15,132 )     4,213       22,087  
Preferred stock dividends
    (1,275 )     (1,275 )     (5,100 )     (5,133 )
 
                       
Income (loss) available to common shareholders
  $ 10,333     $ (16,407 )   $ (887 )   $ 16,954  
 
                       
 
                               
Income (loss) per common share
                               
Basic
  $ .11     $ (0.17 )   $ (.01 )   $ .18  
 
                       
Diluted
  $ .11     $ (0.17 )   $ (.01 )   $ .18  
 
                       
 
                               
Basic and diluted weighted average shares outstanding:
                               
Basic
    91,735       93,870       92,676       92,537  
Diluted
    106,317       93,870       92,676       94,935  
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,  
    2006     2005  
Assets
               
Cash and short-term investments
  $ 179,017     $ 86,366  
Restricted cash
          8,595  
Accounts receivable
    198,791       206,407  
Inventories
    211,017       190,314  
Other current assets
    27,563       54,578  
 
           
Total current assets
    616,388       546,260  
Property, plant and equipment, net
    729,102       733,536  
Equity investments
    164,099       183,884  
Deferred plant turnaround costs
    36,353       27,447  
Other assets
    22,654       32,498  
 
           
Total assets
  $ 1,568,596     $ 1,523,625  
 
           
Liabilities and Stockholders’ Equity
               
Debt due within one year
  $ 1     $ 38  
Customer prepayments
    77,091       52,913  
Other current liabilities
    232,355       210,859  
 
           
Total current liabilities
    309,447       263,810  
 
           
 
               
Long-term debt and capital lease obligations
    331,300       331,300  
Deferred income taxes
    59,734       65,998  
Other liabilities
    174,630       161,556  
Minority interest
    94,687       92,258  
 
           
Total liabilities and minority interest
    969,798       914,922  
 
               
Series A preferred shares
    115,800       115,800  
 
               
Stockholders’ equity
    482,998       492,903  
 
           
Total liabilities and stockholders’ equity
  $ 1,568,596     $ 1,523,625  
 
           

 


 

Terra Industries Inc.
Summarized Cash Flows
(in thousands) (unaudited)
                                 
    Three Months Ended     Twelve Months Ended  
    December 31,     December 31,  
    2006     2005     2006     2005  
Net income (loss)
  $ 11,608     $ (15,132 )   $ 4,213     $ 22,087  
Non-cash charges and credits:
                               
Depreciation and amortization
    29,210       26,773       108,069       110,342  
Deferred income taxes
    5,779       (16,015 )     3,777       13,538  
Equity in distributed earnings
    67       5,796       9,202       (6,941 )
Loss on early retirement of debt
                      22,543  
Minority interest in earnings
    4,286       (2,056 )     11,286       13,667  
Non-cash loss on derivatives
    (1,842 )     (3,966 )     933       4,091  
Other
    3,274       (7,114 )     14,454       (5,090 )
Change in assets and liabilities:
                               
Accounts receivable
    (9,650 )     (30,690 )     16,135       (59,591 )
Inventories
    (50,595 )     (44,099 )     (14,003 )     (45,579 )
Accounts payable and customer prepayments
    88,262       32,601       49,403       (60,136 )
Other assets and liabilities, net
    (3,526 )     (9,749 )     (23,322 )     1,944  
 
                       
Net cash flows from operating activities
    76,873       (63,651 )     180,147       10,875  
Purchase of property, plant and equipment
    (10,071 )     (13,414 )     (50,856 )     (30,820 )
Plant turnaround costs
    (3,294 )     (12,654 )     (35,281 )     (22,331 )
Return of investment in unconsolidated affiliates
          (1,224 )     9,660       31,901  
Debt repayments
    (3 )     (43 )     (37 )     (125,167 )
Distributions to minority interests
    (4,617 )     (1,384 )     (8,861 )     (13,607 )
Stock issuance
          (18 )     363       142  
Payments under share repurchase program
                (18,796 )      
Other
    (2,041 )     12,050       16,312       1,575  
 
                       
Increase (Decrease) in cash and short-term investments
    56,847       (80,338 )     92,651       (147,432 )
Cash and short-term investments at beginning of period
    122,170       166,704       86,366       233,798  
 
                       
Cash and short-term investments at end of period
  $ 179,017     $ 86,366     $ 179,017     $ 86,366  
 
                       

 


 

Terra Industries Inc.
Summarized Information
(volumes in thousands)
Volumes and Prices
                                 
    Three Months Ended December 31,  
    2006     2005  
    Sales     Average     Sales     Average  
    Volumes     Unit Price1     Volumes     Unit Price1  
Ammonia (tons)
    479     $ 298       452     $ 357  
Nitrogen solutions (tons)
    1,095       131       1,063       154  
Urea (tons)
    31       241       27       313  
Ammonium nitrate (tons)
    237       218       382       216  
Methanol (gallons)
    7,004       1.10       4,739       0.85  
Natural gas costs2
                               
North America
    $6.35       $11.36  
United Kingdom
    $6.96       $7.66  
                                 
    Twelve Months Ended December 31,  
    2006     2005  
    Sales     Average     Sales     Average  
    Volumes     Unit Price1     Volumes     Unit Price1  
Ammonia (tons)
    1,897     $ 315       1,898     $ 303  
Nitrogen solutions (tons)
    3,894       140       4,368       151  
Urea (tons)
    147       262       151       262  
Ammonium nitrate (tons)
    1,116       224       1,581       202  
Methanol (gallons)
    18,565       0.97       31,556       0.84  
Natural gas costs2
                               
North America
    $7.03       $7.87  
United Kingdom
    $7.33       $6.28  
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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