SIOUX CITY, Iowa, Jan. 29 /PRNewswire-FirstCall/ -- Terra Industries Inc.
(NYSE: TRA) announced today net income of $37.5 million, or $.48 per share, on
revenues of $367 million for the fourth quarter ended Dec. 31, 2003. Net
income for the 2003 fourth quarter, excluding $28.7 million of net income tax
benefits described below, was $8.8 million, or $.11 per share. This compares
to the 2002 fourth quarter loss from continuing operations of $16.7 million,
or $.22 per share, on revenues of $272 million. The profit improvement was due
primarily to higher nitrogen product selling prices, partially offset by
higher natural gas costs.
The 2003 fourth quarter included $36.4 million of income tax benefits for
a reduced assessment by a foreign taxing authority and reversals of tax
reserves that had been provided in prior years. This benefit was offset by a
$7.7 million fourth quarter income tax charge for a change in the effective
tax rate used for the first three quarters of 2003.
For 2003, Terra posted a net loss of $12.5 million, or $.16 per share, on
revenues of $1.35 billion compared to a net loss of $258.3 million, or $3.43
per share, on revenues of $1.04 billion in 2002. The 2003 loss, excluding the
$36.4 million income tax benefit described above and second quarter impairment
charge, was $21.9 million. This compares to the 2002 loss from continuing
operations of $36.2 million. The improvement was due mainly to higher selling
prices, partially offset by higher natural gas costs.
Cash at Dec. 31, 2003 of $87.3 million reflected, among other things,
customer prepayments totaling $71.9 million. These prepayments are for the
selling price and delivery costs of nitrogen products that will be delivered
in the 2004 first half. Terra has fixed or capped the cost of natural gas
required to manufacture these products. Cash balances also reflected
$25 million received for the methanol distribution agreement with Methanex
that was announced on Dec. 15, 2003.
The Nitrogen Products business segment recorded fourth quarter revenues of
$318 million and operating income of $32.4 million, compared with revenues of
$230 million and an operating loss of $16.5 million for the 2002 fourth
quarter. For 2003, Nitrogen Products posted revenues of $1,139 million and,
excluding the $53.1 million impairment charge, operating income of
$33.7 million, compared with revenues of $884 million and an operating loss of
$9.4 million in 2002.
The $48.9 million improvement in 2003 fourth quarter Nitrogen Products
results compared to the 2002 fourth quarter results 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
fourth quarter were 47, 39, 34 and 37 percent higher, respectively, than 2002
fourth quarter prices. These higher prices reflect a better balance in
worldwide nitrogen product supplies. Natural gas unit costs for the quarter,
net of about $8.5 million of cost increases due to forward purchase contracts,
were 32 percent higher than in the 2002 fourth quarter.
Nitrogen Products' full-year $43.1 million operating income improvement,
before impairment of long-lived assets, compared to 2002 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 56,
36, 19 and 43 percent higher, respectively. Natural gas unit costs, net of
about $5.4 million of cost increases due to forward purchase contracts,
increased 57 percent over those of 2002.
The Methanol business segment reported 2003 fourth quarter revenues of
$49 million and an operating loss of $1.8 million, compared with 2002 fourth
quarter revenues of $42 million and operating income of $3.5 million. The
profit decrease was due to higher natural gas costs, partially offset by a
10 percent increase in methanol selling prices. Methanol's fourth quarter
natural gas unit costs, net of about $2.7 million in cost increases due to
forward purchase contracts, increased 33 percent.
Methanol's full-year $5.5 million operating income decline was due to
higher natural gas costs and lower sales volumes, partially offset by higher
selling prices. Natural gas costs, net of about $1.5 million of cost increases
due to forward purchase contracts, increased 68 percent.
Results for 2003 include a $27.0 million loss for "Impairment of long-
lived assets" (representing a $53.1 million charge to operating income less
$9.9 million allocated to minority interest and $16.2 million of income tax
benefit), which 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 had 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.
Terra's forward purchase contracts at Dec. 31, 2003, including those to
make products for which customers have prepaid, fixed or capped prices for
27 percent of its next 12 months' natural gas needs at about $14.7 million
below the published forward market prices at that date.
"We are pleased to end 2003 with our strongest quarter in three years,"
said Michael L. Bennett, Terra's President and CEO. "Strong global grain
demand and prices have created a more favorable near-term outlook for the
nitrogen products industry. Should these market conditions continue, we expect
to operate all of our facilities at levels necessary to meet the customer
demand we anticipate for the balance of the 2003/2004 fertilizer year.
"Natural gas prices continue to be a concern," Bennett continued, "To
mitigate the effects of a possible natural gas price spike, our natural gas
forward pricing positions are concentrated in the first quarter of 2004."
Terra management will conduct a conference call to discuss these fourth
quarter results on Jan. 29, 2004 beginning at 3:00 EST. A live webcast of the
conference call will be available from Terra's web site at
http://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.
Terra Industries Inc.
Summarized Results of Operations
(unaudited)
Three Months Ended Twelve Months Ended
(in thousands except December 31, December 31,
per-unit amounts) 2003 2002 2003 2002
Revenues
Nitrogen products $317,802 $230,218 $1,139,379 $883,971
Methanol 48,878 41,530 209,870 158,458
Other, net of
intercompany
eliminations 445 503 1,806 1,554
$367,125 $272,251 $1,351,055 $1,043,983
Operating income (loss)
Nitrogen products $32,387 $(16,462) $(19,370) $(9,351)
Methanol (1,793) 3,543 1,866 7,325
Other expense-net (890) (1,510) (6,056) (3,381)
29,704 (14,429) (23,560) (5,407)
Interest income 105 266 534 543
Interest expense (13,408) (13,748) (55,072) (53,800)
Minority interest (4,285) 267 8,617 (1,510)
Income tax benefit 25,385 10,988 57,000 24,000
Income (loss) from
continuing
operations 37,501 (16,656) (12,481) (36,174)
Loss from discontinued
operations - (5,183) - (16,183)
Cumulative effect of
change in accounting
principle - - - (205,968)
Net income (loss) $37,501 $(21,839) $(12,481) $(258,325)
Diluted income (loss)
per share:
Income (loss) from
continuing
operations $0.48 $(0.22) $(0.16) $(0.48)
Discontinued operations - (0.07) - (0.22)
Cumulative effect of
change in accounting
principle - - - (2.73)
Income (loss) per share $0.48 $(0.29) $(0.16) $(3.43)
Weighted average shares
outstanding
Basic 75,758 75,176 75,676 75,349
Diluted 77,617 75,176 75,676 75,349
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,
2003 2002
Assets
Cash and short-term investments $87,334 $58,479
Accounts receivable, less allowance for
doubtful accounts of $187 and $135 133,480 101,013
Inventories 90,869 88,598
Other current assets 43,319 31,201
Total current assets 355,002 279,291
Property, plant and equipment, net 707,665 790,475
Deferred plant turnaround costs 28,103 29,177
Other assets 34,292 29,167
Total assets $1,125,062 $1,128,110
Liabilities and Stockholders' Equity
Debt due within one year $153 $143
Customer prepayments 71,852 40,500
Other current liabilities 145,049 152,746
Total current liabilities 217,054 193,389
Long-term debt and capital lease obligations 402,206 400,358
Deferred income taxes 17,831 72,748
Other liabilities 133,779 104,919
Minority interest 89,062 98,832
Total liabilities and minority interest 859,932 870,246
Stockholders' Equity 265,130 257,864
Total liabilities and stockholders'
equity $1,125,062 $1,128,110
Terra Industries Inc.
Summarized Cash Flows
(in thousands)
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Income (loss) from
operations $37,501 $(16,656) $(12,481) $(36,174)
Non-cash charges and
credits:
Impairment of
long-lived assets - - 53,091 -
Depreciation and
amortization 25,329 26,879 107,370 105,856
Deferred income
taxes (26,710) (16,392) (60,516) (29,246)
Minority interest
in earnings (loss) 4,285 (267) (8,617) 1,510
Change in current assets
and liabilities 42,842 54,419 3,575 104,290
Net cash flows from
operating
activities 83,247 47,983 82,422 146,236
Purchase of property,
plant and equipment (1,565) (8,597) (8,639) (25,186)
Plant turnaround costs (7,414) (9,208) (28,080) (24,260)
Debt borrowings
(repayments) - (33) - (36,101)
Deferred financing costs - - (8,581) (1,173)
Distributions to
minority interests - - (1,153) (1,846)
Other (8,212) (13,545) (7,114) (6,316)
Increase in cash and
short-term
investments 66,056 16,600 28,855 51,354
Cash and short-term
investments at beginning
of period 21,278 41,879 58,479 7,125
Cash and short-term
investments at
end of period $87,334 $58,479 $87,334 $58,479
Terra Industries Inc.
Summarized Information
(in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
Other Financial Data
Cost of sales $327,004 $276,070 $1,281,663 $1,009,970
(includes
depreciation and
amortization)
Selling, general &
administrative
expense 10,417 10,610 39,861 39,420
(includes
depreciation
and amortization)
Impairment of
long-lived assets - - 53,091 -
Volumes and prices
Three months Ended December 31,
2003 2002
Sales Average Sales Average
Volumes Unit Price(1) Volumes Unit Price(1)
Ammonia (tons) 388 $242 357 $165
Nitrogen solutions
(tons) 997 104 1,062 75
Urea (tons) 149 181 150 132
Ammonium nitrate (tons) 248 160 222 119
Methanol (gallons) 76,581 0.64 71,374 0.58
Natural gas costs(2)
North America $5.01 $3.74
United Kingdom $4.33 $3.33
Twelve months Ended December 31,
2003 2002
Sales Average Sales Average
Volumes Unit Price(1) Volumes Unit Price(1)
Ammonia (tons) 1,400 $229 1,504 $147
Nitrogen solutions
(tons) 3,840 99 3,966 73
Urea (tons) 545 173 633 121
Ammonium nitrate (tons) 934 142 912 119
Methanol (gallons) 294,533 0.71 326,796 0.48
Natural gas costs(2)
North America $5.21 $3.14
United Kingdom $3.34 $2.52
(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.
SOURCE Terra Industries Inc.
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