EX-99.1 2 c80776exv99w1.htm EXHIBIT 99.1 Filed by Bowne Pure Compliance
Exhibit 99.1
     
(TERRA LOGO)   Terra Nitrogen Company, L.P.
600 Fourth Street
P.O. Box 6000
Sioux City, IA 51102-6000
www.terraindustries.com
NEWS
     
For immediate release   Contact: Joe A. Ewing
(712) 277-7305
jewing@terraindustries.com
Terra Nitrogen Company, L.P. reports fourth quarter and full-year results,
declares cash distribution
Sioux City, Iowa (February 10, 2009)—Terra Nitrogen Company, L.P. (TNCLP) (NYSE: TNH) today reported net income of $104.4 million, $65.7 million of which is allocable to Common Units ($3.55 per Common Unit), on revenues of $225.2 million for the fourth quarter ended Dec. 31, 2008. This compares with net income of $67.8 million, $66.4 million of which is allocable to Common Units ($3.59 per Common Unit) on revenues of $197.6 million for the 2007 fourth quarter. For 2008, TNCLP reported net income of $422.4 million, $275.7 million of which is allocable to Common Units ($14.90 per Common Unit), on revenues of $903.0 million, compared to net income of $205.8 million, $201.7 million of which is allocable to Common Units ($10.90 per Common Unit) on revenues of $636.3 million for 2007.
TNCLP also announced a cash distribution for the quarter ended Dec. 31, 2008, of $2.97 per common limited partnership unit payable Feb. 27, 2009, to holders of record as of Feb. 17, 2009. Cash distributions depend on TNCLP’s earnings, which can be affected by nitrogen selling prices, natural gas costs, seasonal demand factors, production levels and weather, cash requirements for working capital needs, and capital expenditures. Cash distributions per limited partnership unit also vary based on increasing amounts allocable to the General Partner when cumulative distributions exceed targeted levels. Those targeted levels were attained in the 2008 first quarter.
Analysis of results
Fourth quarter
TNCLP’s improvement in fourth quarter earnings over those of the 2007 fourth quarter was due to higher nitrogen products selling prices, partially offset by lower sales volumes and higher natural gas costs. Strong third quarter demand resulted in the higher nitrogen selling prices that carried over into some fourth quarter sales. The lower sales volumes were due to depressed nitrogen demand in the fourth quarter caused by the global economic slowdown and unfavorable weather. Natural gas costs were affected by global energy price volatility. From the 2007 to the 2008 fourth quarter, TNCLP’s:
  •   Ammonia and urea ammonium nitrate (UAN) selling prices increased by 78 and 46 percent, respectively.
  •   Ammonia and UAN sales volumes decreased by 37 and 20 percent, respectively.
  •   Natural gas unit costs increased by 46 percent.
The fourth quarter 2008 broad-based economic decline reduced 2008 year-end Cornbelt ammonia and UAN spot prices by approximately 25 percent compared to year-end 2007 spot prices. Due to the late fourth quarter pricing pressures, TNCLP recorded $5.8 million on fourth quarter charges related to derivative and inventory valuation.

 

 

 

Full year
TNCLP’s full-year earnings improvement over last year was due to higher nitrogen products selling prices, partially offset by lower sales volumes and higher natural gas costs. Full-year results were generally affected by the same factors affecting fourth quarter results. From 2007 to 2008, TNCLP’s:
  •   Ammonia and UAN selling prices increased by 62 and 47 percent, respectively.
  •   Ammonia and UAN sales volumes decreased by 13 and 2 percent, respectively.
  •   Natural gas unit costs increased by 26 percent.
Forward natural gas position
TNCLP’s forward purchase contracts at Dec. 31, 2008, fixed prices for about 31 percent of its next 12 months’ natural gas requirements at $31 million above published forward markets at that date. TNCLP has entered into these forward gas positions to secure margins on nitrogen products sold forward at fixed prices.
About TNCLP
Terra Nitrogen Company, L.P. is a leading manufacturer of nitrogen fertilizer products.
TNCLP Distributions
This release serves a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b). Please note that 100 percent of the Partnership’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
Forward-looking statements
Certain statements in this news release may constitute “forward-looking” statements within the meaning of the Private Litigation Reform Act of 1995. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and TNCLP undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Words such as “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” and similar expressions are used to identify these forward-looking statements. These include, among others, statements relating to:
  •   financial markets,
 
  •   general economic conditions within the agricultural industry,
 
  •   competitive factors and price changes (principally, sales prices of nitrogen products and natural gas costs),
 
  •   product mix,
 
  •   the seasonality of demand patterns,
 
  •   weather conditions,
 
  •   environmental and other government regulation, and
 
  •   agricultural regulations.
Additional information as to these factors can be found in TNCLP’s 2007 Annual Report/10-K, in the sections entitled “Business,” “Legal Proceedings,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the Notes to the consolidated financial statements.
# # #
Terra Nitrogen Company, L.P. news announcements are also available on Terra Industries’ Web site, www.terraindustries.com.
(Tables follow)

 

 

 

Terra Nitrogen Company, L.P.
Condensed Consolidated Statements of Income
(in thousands except per-unit amounts)
(unaudited)
                                 
    Three Months Ended     Years Ended  
    December 31,     December 31,  
    2008     2007     2008     2007  
 
                                
Revenues:
                                
Product revenues
   $ 225,083     $ 197,491     $ 902,578     $ 635,510  
Other income
     146       69       439       798  
 
                        
Total revenues
     225,229       197,560       903,017       636,308  
 
                        
Costs and expenses:
                                
Cost of goods sold
     118,687       123,315       470,805       414,686  
 
                        
Gross profit
     106,542       74,245       432,212       221,622  
Operating expenses
     2,917       8,069       15,750       21,169  
 
                        
Income from operations
     103,625       66,176       416,462       200,453  
Interest expense
     (82 )     17       (327 )     (324 )
Interest income
     891       1,591       6,250       5,653  
 
                        
Net income
   $ 104,434     $ 67,784     $ 422,385     $ 205,782  
 
                        
Net income allocable to Common Units
   $ 65,654     $ 66,431     $ 275,712     $ 201,670  
 
                        
Net income per Common Unit
   $ 3.55     $ 3.59     $ 14.90     $ 10.90  
 
                        
Nitrogen Volumes and Prices
Note: All UAN data are expressed on a 32% nitrogen basis.
                                 
    2008     2007  
    Sales     Average     Sales     Average  
    Volumes     Unit Price     Volumes     Unit Price  
    (000 tons)     ($/ton) 1     (000 tons)     ($/ton) 1  
Fourth quarter
                                
Ammonia
     81       707       128       397  
UAN
     420       366       527       250  
 
                                
Full year
                                
Ammonia
     303       616       349       380  
UAN
     1,980       330       2,013       224  
Natural Gas Costs/MMBtu2
                                 
    Three Months Ended     Years Ended  
    December 31,     December 31,  
    2008     2007     2008     2007  
 
   $ 10.54     $ 7.24     $ 8.59     $ 6.84  
     
1.   After deducting outbound freight costs.
 
2.   Including effect of settled hedged natural gas position.

 

 

 

Terra Nitrogen Company, L.P.
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
                 
    December 31,  
    2008     2007  
Assets
                
Cash and cash equivalents
   $ 154,681     $ 246,140  
Accounts receivable
     38,053       49,635  
Inventory
     57,207       19,343  
Prepaid expenses and other current assets
     11,815       4,906  
 
            
Total current assets
     261,756       320,024  
 
            
 
                
Property, plant and equipment, net
     68,208       71,289  
Other long-term assets
     11,442       22,473  
 
            
Total assets
   $ 341,406     $ 413,786  
 
            
 
                
Liabilities and partners’ capital
                
Accounts payable and accrued liabilities
   $ 24,844     $ 41,866  
Customer prepayments
     45,067       154,644  
Derivative hedge liabilities
     43,315       7,959  
 
            
Total current liabilities
     113,226       204,469  
 
            
 
                
Other long-term liabilities
     871       2,218  
 
            
Total liabilities
     114,097       206,687  
 
            
 
                
Partners’ Capital
                
Limited partners’ interests, 18,502 Common Units and 184 Class B Common Units authorized and outstanding
     218,918       221,726  
General partners’ interest
     39,172       (9,928 )
Accumulated other comprehensive income (loss)
     (30,781 )     (4,699 )
 
            
Total partners’ capital
     227,309       207,099  
 
            
Total liabilities and partners’ capital
   $ 341,406     $ 413,786