SIOUX CITY, Iowa, Jan. 31 /PRNewswire-FirstCall/ --
Terra Industries Inc. (NYSE: TRA) announced today a net loss of
$28.9 million for the fourth quarter ended December 31, 2001, or $.38 per
share, on revenues of $234 million. This compares to net income of
$4.1 million, or $.05 per share, on revenues of $272 million for the 2000
fourth quarter. The profit deterioration was due mainly to lower selling
prices and higher costs incurred by Terra's United Kingdom operations,
partially offset by lower North American natural gas costs. The 2001 fourth
quarter also included a $2.1 million extraordinary loss on early retirement of
debt. EBITDA (earnings before interest, taxes, depreciation and amortization)
was $12.4 million compared to $41.4 million in the 2000 fourth quarter.
The net loss for the year ended December 31, 2001, was $79.8 million, or
$1.06 per share, on revenues of $1.04 billion compared to a net loss of
$10.2 million, or $.14 per share, on revenues of $1.06 billion in 2000. The
increased loss was due mainly to higher natural gas costs, reduced production
rates and lower sales volumes, partially offset by higher selling prices.
EBITDA was $59.5 million in 2001 and $146.4 million in 2000.
The Nitrogen Products business segment's quarterly results were revenues
of $202 million and an operating loss of $13.3 million compared with revenues
of $229 million and operating income of $9.1 million in the 2000 fourth
quarter. For calendar 2001, Nitrogen Products posted revenues of $864 million
and an operating loss of $34.5 million compared with revenues of $917 million
and operating income of $28.4 million in 2000.
The Nitrogen Products fourth quarter profit deterioration was due
primarily to lower selling prices, partially offset by lower North American
natural gas costs. The selling price decrease was due mainly to excess
industry-wide inventories. Terra's average selling prices for ammonia,
nitrogen solutions, urea and ammonium nitrate were 25, 24, 25 and 9 percent
lower, respectively, than selling prices realized in the 2000 fourth quarter.
Terra's U.K. fourth quarter operating income was $22.2 million less than that
of the 2000 fourth quarter. U.K. margins suffered because of lower fertilizer
and industrial sales and production levels that were about 20 percent less
than those of the 2000 fourth quarter. U.K. results also included a
$6.0 million charge for equipment write-offs and employee termination costs
related to the company's decision to stop sodium nitrite production.
The 2001 fourth quarter also included a $6.5 million credit from settling
the insurance claim on the Courtright facility's extended 2001 second quarter
mechanical outage. Terra's 2001 fourth quarter natural gas costs were
29 percent lower than those of the 2000 fourth quarter. Forward pricing
contracts increased fourth quarter natural gas costs by approximately
$2.8 million.
Nitrogen Products results for the year ended December 31, 2001, as
compared to 2000, were adversely affected by lower sales and production
volumes. Although higher selling prices offset the effects of increased
natural gas costs, the unprecedented volatility of selling prices and natural
gas costs reduced volumes through the need to curtail production at certain
times during 2001, lower nitrogen fertilizer consumption and market share lost
to foreign producers. Natural gas costs for 2001 were 30 percent higher than
for 2000. Terra's forward pricing contracts reduced 2001 natural gas costs by
approximately $5.5 million. Terra's average selling prices for ammonia,
nitrogen solutions, urea and ammonium nitrate were 15, 23, 4 and 8 percent
higher, respectively, than selling prices realized in 2000. The 2001
operating loss also includes a $14 million charge to provide for possible
claim costs related to a product recall made by U.K. carbonated drink
producers and distributors.
The Methanol business reported 2001 fourth quarter revenues of $28 million
and an operating loss of $5.7 million compared with revenues of $40 million
and operating income of $2.8 million in the 2000 fourth quarter. The
$8.5 million decrease in operating profit was due primarily to the 49 percent
decline in Terra's average realized methanol selling price, partially offset
by a 25 percent decrease in natural gas costs. Forward pricing contracts
increased 2001 fourth quarter natural gas costs by approximately $0.9 million.
Methanol's results for calendar 2001 were revenues of $169 million and an
operating loss of $11.7 million compared to revenues of $137 million and
operating income of $12.4 million in 2000. The $24.1 million decrease in
operating income was due mainly to a 32 percent increase in natural gas costs.
Terra's forward pricing contracts increased natural gas costs for 2001 by
approximately $3.6 million.
Michael L. Bennett, Terra's President and CEO, said, "Our fourth quarter
results clearly reflect the difficult global economy in the form of lower
selling prices and reduced industrial demand, especially in our U.K. business.
We were unable to achieve our targeted selling price for nitrogen solutions
due to the continued record levels of imports.
"We are encouraged by the continued decline in North American natural gas
prices as well as the prospects for increased corn acres. Terra is poised to
benefit from lower natural gas prices as the price of only 21 percent of the
next 12 months' expected requirements as of December 31, 2001, was fixed at
amounts approximating the published forward market prices at that date.
"We are committed to making Terra more competitive by focusing on our
strengths and eliminating activities that have limited profit prospects. Our
decision to stop sodium nitrite production at our Billingham facility is an
example of this commitment."
Terra Industries Inc., with 2001 revenues of $1 billion, is a leading
international producer of nitrogen products and methanol.
Information contained in this news release, other than historical
information, may be considered forward looking. Forward-looking information
reflects management's current views of future events and financial performance
that involve a number of risks and uncertainties. The factors that could
cause actual results to differ materially include, but are not limited to, the
following: changes in financial markets, general economic conditions within
the agricultural industry, competitive factors and price changes (principally
selling prices of nitrogen and methanol products and natural gas costs),
changes in product mix, changes in the seasonality of demand patterns, changes
in weather conditions, changes in governmental regulations and other risks
described in the "Factors That Affect Operating Results" section of Terra's
current annual report.
Note: Terra Industries' news announcements are also available on its web
site, http://www.terraindustries.com , and by fax at no charge by calling
800-758-5804, code 437906.
TERRA INDUSTRIES INC.
Summarized Results of Operations
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
(in thousands, except
per share amounts) 2001 2000 2001 2000
Revenues
Nitrogen products $202,447 $228,785 $863,512 $916,959
Methanol 28,087 39,786 169,098 136,781
Other, net of
intercompany
eliminations 3,699 3,310 4,700 9,270
$234,233 $271,881 $1,037,310 $1,063,010
Operating income (loss)
Nitrogen products $(13,300) $9,096 $(34,453) $28,414
Methanol (5,657) 2,834 (11,739) 12,395
Product claim costs -- -- (14,023) --
Other expense -- net (2,597) 1,208 (1,603) 1,998
(21,554) 13,138 (61,818) 42,807
Insurance settlement
costs -- (439) -- (5,968)
Interest Income 512 1,779 3,364 3,869
Interest expense (15,737) (12,827) (53,594) (51,511)
Minority interest (221) (19) 2,247 (5,379)
Income tax provision 10,248 2,437 32,088 6,000
Income (loss) before
extraordinary items (26,752) 4,069 (77,713) (10,182)
Extraordinary loss on
early retirement of
debt (2,130) -- (2,130) --
Net Income (loss) $(28,882) $4,069 $(79,843) $(10,182)
Basic and diluted
earnings (loss) per
share:
Income (loss) from
continuing
operations $(0.35) $0.05 $(1.03) $(0.14)
Extraordinary loss on
early retirement of
debt (0.03) -- (0.03) --
$(0.38) $0.05 $(1.06) $(0.14)
Weighted average
shares outstanding 75,176 74,828 75,118 74,707
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.
TERRA INDUSTRIES INC.
Summarized Financial Position
(in thousands)
(unaudited)
December 31,
Assets 2001 2000
Cash and short-term investments $7,125 $101,425
Accounts receivable, net 101,109 107,299
Inventories 110,281 101,526
Other current assets 35,142 17,448
Total current assets 253,657 327,698
Property, plant and equipment, net 824,982 902,801
Excess of cost over net assets of
acquired businesses 206,209 231,372
Other assets 51,195 50,681
Total assets $1,336,043 $1,512,552
Liabilities and Stockholders' Equity
Debt due within one year $68 $5,546
Other current liabilities 117,211 123,144
Total current liabilities 117,279 128,690
Long-term debt 436,534 467,808
Deferred income taxes 112,645 156,475
Other liabilities 69,639 43,508
Minority interest 99,167 105,274
Total liabilities 835,264 901,755
Stockholders' equity 500,779 610,797
Total liabilities and stockholders' equity $1,336,043 $1,512,552
TERRA INDUSTRIES INC.
Summarized Information
(unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
2001 2000 2001 2000
Other Financial Data
(in thousands)
Cost of sales (includes
depreciation & amortization) $243,608 $248,281 $1,047,219 $975,966
Selling, general and
administrative expense
(includes depreciation &
amortization) 11,633 9,914 37,886 44,237
Depreciation and amortization 36,311 28,754 121,181 114,901
Capital expenditures 4,068 1,200 15,204 12,219
Volumes, Prices and Costs Three Months Ended December 31,
2001 2000
Sales Average Sales Average
(quantities in thousands) Volumes Unit Price Volumes Unit Price
Ammonia (tons) 341 $145 289 $192
Nitrogen solutions (tons) 972 71 924 94
Urea (tons) 157 113 121 151
Ammonium nitrate (tons) 192 120 181 132
Methanol (gallons) 80,618 0.36 56,795 0.70
Natural gas costs: (a)
North America $2.70 $4.10
United Kingdom $2.93 $2.76
Twelve Months Ended December 31,
2001 2000
Sales Average Sales Average
(quantities in thousands) Volumes Unit Price Volumes Unit Price
Ammonia (tons) 1,195 $187 1,418 $162
Nitrogen solutions (tons) 3,296 97 3,990 79
Urea (tons) 451 142 474 136
Ammonium nitrate (tons) 682 127 1,000 118
Methanol (gallons) 310,596 0.56 256,812 0.53
Natural gas costs: (a)
North America $4.28 $3.21
United Kingdom $2.48 $2.17
(a) Per MMBtu. Includes all transportation and other logistical costs
and 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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