SIOUX CITY, Iowa, Jan. 31 /PRNewswire-FirstCall/ -- Terra Industries Inc.
(NYSE: TRA) announced today a net loss from continuing operations of
$16.7 million for the fourth quarter ended December 31, 2002, or $.22 per
share, on revenues of $272 million. This compares to a net loss from
continuing operations of $26.8 million, or $.35 per share, on revenues of
$234 million for the 2001 fourth quarter. EBITDA (earnings from continuing
operations before net interest expense, taxes, depreciation and amortization)
was $10.2 million compared to $14.5 million in the 2001 fourth quarter.
The 2002 fourth quarter net loss of $21.8 million, or $.29 per share,
includes a $5.2 million after-tax charge for discontinued operations. The
charge relates to a January 29, 2003, jury award to an individual whose
distribution and crop consulting business was acquired by Terra in 1997.
Terra, which sold its distribution business in 1999, plans to appeal the
verdict.
Terra's loss from continuing operations for the year ended
December 31, 2002, was $36.2 million, or $.48 per share, on revenues of
$1.04 billion compared to a loss from continuing operations of $77.7 million,
or $1.03 per share, on revenues of $1.04 billion in 2001. The decreased loss
was due mainly to lower natural gas costs and higher sales volumes, partially
offset by lower selling prices. The 2002 results also benefited from
$18.8 million of 2001 goodwill amortization that did not recur in 2002. EBITDA
was $90.5 million in 2002 and $61.6 million in 2001.
Terra's 2002 net loss of $258.3 million, or $3.43 per share, includes a
$206.0 million, or $2.73 per share, charge for the cumulative effect to adopt
Financial Accounting Standards Board Statement of Financial Accounting
Standard No. 142, "Goodwill and Other Intangible Assets." The charge
represents the write-off of assets classified as "Excess of cost over net
assets of acquired businesses" in Terra's December 31, 2001, Statement of
Financial Position. The 2002 net loss also includes a $16.2 million after-tax
charge related to discontinued operations.
The Nitrogen Products business segment's 2002 fourth quarter results were
revenues of $230 million and an operating loss of $16.5 million compared with
revenues of $202 million and an operating loss of $13.3 million in the 2001
fourth quarter. For 2002, Nitrogen Products posted revenues of $884 million
and an operating loss of $9.4 million compared with revenues of $864 million
and an operating loss of $34.5 million in 2001. The Nitrogen Products segment
incurred $4.1 million and $16.6 million, respectively, of goodwill
amortization during the 2001 fourth quarter and full year compared to none in
the comparable 2002 periods.
The Nitrogen Products fourth quarter increased loss was due to a
30 percent increase in natural gas unit costs, partially offset by higher
selling prices and sales volumes. Terra's average 2002 fourth quarter selling
prices for ammonia, nitrogen solutions and urea were 14, 6 and 17 percent
higher, respectively, than selling prices realized in the 2001 fourth quarter.
Forward pricing contracts lowered Nitrogen Products fourth quarter 2002
natural gas costs by $6.3 million.
The Nitrogen Products business segment's results for the year ended
December 31, 2002, were revenues of $884 million and an operating loss of
$9.4 million, as compared to revenues of $864 million and an operating loss of
$34.5 million in 2001. This improvement was due mainly to reductions in
goodwill amortization, higher sales volumes and 23 percent lower natural gas
unit costs, partially offset by lower selling prices. Terra's average selling
prices for ammonia, nitrogen solutions, urea and ammonium nitrate were
21, 25, 15 and 6 percent lower, respectively, than selling prices realized in
2001. Terra's natural gas forward pricing contracts reduced Nitrogen Products'
2002 costs by approximately $13.1 million.
The Methanol business reported 2002 fourth quarter revenues of $42 million
and operating income of $3.5 million compared with revenues of $28 million and
an operating loss of $5.7 million in the 2001 fourth quarter. The $9.2 million
improvement in operating income was due to selling prices that were 61 percent
higher than in the 2001 fourth quarter, partially offset by lower sales
volumes and 34 percent higher natural gas unit costs. Terra's natural gas
forward pricing contracts decreased Methanol's 2002 fourth quarter costs by
approximately $1.8 million.
Methanol's results for calendar 2002 were revenues of $158 million and
operating income of $7.3 million compared to revenues of $169 million and an
operating loss of $11.7 million in 2001. The $19 million improvement in
operating income was due to 5 percent higher sales volumes and 24 percent
lower natural gas unit costs, partially offset by 13 percent lower selling
prices. Terra's natural gas forward pricing contracts reduced Methanol's
natural gas costs for 2002 by approximately $3.6 million.
Terra's forward pricing contracts at December 31, 2002, fixed prices for
13 percent of its next 12 months' natural gas needs at about $4.0 million
below the published forward market prices at that date.
Michael L. Bennett, Terra's President and CEO, said, "We're pleased with
the overall market improvement in 2002 over 2001. We've been able to operate
our nitrogen plants at near full capacity this year, versus about 80 percent
of capacity in 2001. Likewise, our methanol production improved from about
75 percent in 2001 to near full capacity in 2002.
"We're also encouraged by the market outlook," Bennett continued. "By the
end of 2002, Terra had received approximately $40 million in customer
prepayments for spring product needs, as compared to about $4 million at the
end of 2001. This tells us that many of our dealer customers believe that
spring demand will be strong and that nitrogen fertilizer prices are likely to
increase in the 2003 first half. In addition, we're seeing indications that in
2003 growers will plant more acres to corn, which uses more nitrogen
fertilizer than any other crop.
"We continue to be concerned about natural gas prices, which seem higher
than the supply/demand balance should warrant. However, if natural gas prices
remain at these seemingly inflated levels, we believe it's likely that
nitrogen fertilizer prices will continue to follow suit."
Terra Industries Inc., with 2002 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 .
Terra Industries Inc.
Summarized Results of Operations
(unaudited)
Three Months Ended Twelve Months Ended
(in thousands, except December 31, December 31,
per share amounts) 2002 2001 2002 2001
Revenues
Nitrogen products $230,218 $202,447 $883,971 $863,512
Methanol 41,530 28,087 158,458 169,098
Other, net of intercompany
eliminations 503 3,699 1,554 4,700
$272,251 $234,233 $1,043,983 $1,037,310
Operating income (loss)
Nitrogen products $(16,462) $(13,300) $(9,351) $(34,453)
Methanol 3,543 (5,657) 7,325 (11,739)
Product claim costs - - - (14,023)
Other expense - net (1,510) (2,597) (3,381) (1,603)
(14,429) (21,554) (5,407) (61,818)
Interest income 266 512 543 3,364
Interest expense (13,748) (15,737) (53,800) (53,594)
Minority interest 267 (221) (1,510) 2,247
Income tax provision 10,988 10,248 24,000 32,088
Loss from continuing
operations (16,656) (26,752) (36,174) (77,713)
Discontinued operations,
net of taxes (5,183) - (16,183) -
Cumulative effect of change
in accounting principle - - (205,968) -
Extraordinary loss on early
retirement of debt - (2,130) - (2,130)
Net loss $(21,839) $(28,882) $(258,325) $(79,843)
Basic and diluted loss
per share:
Loss before cumulative
effect of change in
accounting principle $(0.22) $(0.35) $(0.48) $(1.03)
Discontinued operations (.07) - (0.22) -
Cumulative effect of change
in accounting principle - (0.03) (2.73) (0.03)
Loss per share $(0.29) $(0.38) $(3.43) $(1.06)
Weighted average shares
outstanding 75,468 75,176 75,349 75,118
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 2002 2001
Cash and short-term investments $58,479 $7,125
Accounts receivable, net 101,013 101,363
Inventories 88,598 110,027
Other current assets 31,201 35,142
Total current assets 279,291 253,657
Property, plant and equipment, net 790,475 824,982
Excess of cost over net assets of
acquired businesses - 206,209
Other assets 58,344 51,195
Total assets $1,128,110 $1,336,043
Liabilities and Stockholders' Equity
Debt due within one year $143 $68
Other current liabilities 190,668 117,211
Total current liabilities 190,811 117,279
Long-term debt 400,358 436,534
Deferred income taxes 72,748 112,645
Other liabilities 107,497 69,639
Minority interest 98,832 99,167
Total liabilities 870,246 835,264
Stockholders' equity 257,864 500,779
Total liabilities and stockholders'
equity $1,128,110 $1,336,043
Terra Industries Inc.
Summarized Information
(in thousands)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2001 2002 2001
Other Financial Data
(in thousands)
Cost of sales $276,070 $244,155 $1,009,970 $1,047,219
(includes depreciation
and amortization)
Selling, general and
administrative expense 10,610 11,632 39,420 37,886
(includes depreciation
and amortization)
Depreciation and
amortization 24,342 36,311 97,451 121,181
Capital expenditures 8,597 3,888 25,186 14,838
Volumes, Prices and Costs
Three Months Ended December,
2002 2001
Sales Average Sales Average
(quantities in thousands) Volumes Unit Price Volumes Unit Price
Ammonia (tons) 357 $165 341 $145
Nitrogen solutions (tons) 1,062 75 972 71
Urea (tons) 150 132 157 113
Ammonium nitrate (tons) 222 119 192 120
Methanol (gallons) 71,374 0.58 80,618 0.36
Natural gas cost(A)
North America $3.74 $2.70
United Kingdom $3.33 $2.93
Volumes and Prices
Twelve Months Ended December,
2002 2001
Sales Average Sales Average
(quantities in thousands) Volumes Unit Price Volumes Unit Price
Ammonia (tons) 1,504 $147 1,195 $187
Nitrogen solutions (tons) 3,966 73 3,296 97
Urea (tons) 633 121 451 142
Ammonium nitrate (tons) 912 119 682 127
Methanol (gallons) 326,796 0.49 310,596 0.56
Natural gas cost(A)
North America $3.14 $4.28
United Kingdom $2.52 $2.48
(A) 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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