Total Distribution for 1998 Projected to be Between $2.37 and $2.67
SIOUX CITY, Iowa, April 23 /PRNewswire/ -- Terra Nitrogen Company, L.P.
(TNCLP) (NYSE: TNH) today reported net income of $5.8 million on revenues of
$48.9 million for the quarter ended March 31, 1998, compared with net income
of $29.8 million on revenues of $74.2 million for the 1997 quarter. Earnings
per limited partnership unit were $0.31 for the first quarter of 1998 compared
with $1.44 for the comparable 1997 quarter. The amount of net income
allocable to the limited partners' interest is based on the partnership's net
income and the proportionate share of cash distributed to the limited partners
and the general partner.
Earnings for the first quarter of 1998 were down significantly from the
prior year quarter due primarily to lower nitrogen prices for all partnership
products. Surplus worldwide nitrogen production continued to put pressure on
prices during the 1998 quarter. Ammonia, nitrogen solutions and urea prices
were down 31%, 30% and 37%, respectively, from the first quarter of 1997.
Ammonia sales volumes declined 26% compared with the prior year quarter
primarily due to wet weather in part of our marketing area. Urea sales
volumes increased 20% from the 1997 quarter spurred by lower urea prices,
reduced imports in 1998, and lower dealer inventories at the beginning of
1998. Natural gas costs were essentially unchanged from the year-ago level.
TNCLP also announced that there would be no cash distribution for the
quarter ended March 31, 1998 due to the low level of net income combined with
investments in working capital during the quarter. Management projects cash
distributions for the remainder of 1998, payable in August and November, will
total between $1.20 and $1.50 per unit. Cash distributions paid in August and
November 1997 totaled $2.67 per unit. The anticipated decline in cash
distributions is primarily due to expectations of continued lower selling
prices in 1998 than those realized in 1997. Management currently expects only
slight increases in product selling prices and little to no change in natural
gas costs during the next two quarters. Sales volumes are expected to
approximate 1997 levels for ammonia and urea with nitrogen solution sales
volumes projected to increase 16%, or about 180,000 tons. Actual selling
prices, sales volumes and natural gas costs that differ from management's
estimates, as well as unanticipated partnership cash requirements or sources,
will result in cash distributions that are different from projected amounts.
Cash distributions are dependent on TNCLP earnings, which are
traditionally highest in the quarter ending June 30, due to the seasonal
demand for fertilizer. Earnings can also be affected by market prices for
nitrogen products, the cost of natural gas, industry production levels,
business cycles and weather.
TNCLP is one of the largest U.S. manufacturers of nitrogen fertilizer
products.
Note: Terra Nitrogen's news releases are available by fax at no charge by
calling 800-758-5804, code 106067.
This news release contains statements that are forward-looking. Such
statements involve risks and uncertainties and should be considered along with
the factors affecting our business as discussed on pages 5, 6 and 7 in our
1997 annual report to unitholders. Actual results may differ materially from
those in the forward-looking statements.
(Tables follow)
TERRA NITROGEN COMPANY, L.P.
Consolidated Statements of Income
($ in Thousands, except per Unit amounts)
Three Months Ended March 31,
1998 1997
Revenues 48,499 74,045
Other income 417 134
Total net revenues 48,916 74,179
Cost of goods sold 40,595 42,509
Gross profit 8,321 31,670
Operating expenses 2,443 2,970
Operating income 5,878 28,700
Interest expense (491) (434)
Interest income 414 1,526
Net income 5,801 29,792
Net income per Limited Partnership Unit 0.31 1.44
The amount of net income allocable to the Limited Partners' interest is
based on the Partnership's net income and the proportionate share of cash
distributed to the Limited Partners and the General Partner.
Nitrogen Volumes and Prices
1998 1997
Quarter Sales Average Sales Average
Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton) (000 tons) ($/ton)
Ammonia 63 142 85 207
UAN 390 63 407 90
Urea 137 108 114 173
TERRA NITROGEN COMPANY, L.P.
Consolidated Balance Sheets
($ in Thousands)
March 31,
Assets 1998 1997
Cash and cash equivalents 1,535 61,371
Accounts receivable 2,389 581
Inventory 46,873 48,360
Prepaid expenses and other current assets 2,961 2,723
Total current assets 53,758 113,035
Property, plant and equipment, net 169,073 171,378
Other assets 11,925 19,387
Total assets 234,756 303,800
Liabilities and partners' capital
Accounts payable and accrued liabilities 31,349 59,868
Current portion of long-term debt and
capital lease obligations 1,083 1,036
Total current liabilities 32,432 60,904
Long-term debt and capital lease obligations 8,770 2,869
Long-term payable to affiliates 4,996 3,845
Other long-term liabilities 1,060 1,060
Partners' capital 187,498 235,122
Total liabilities and partners' capital 234,756 303,800
SOURCE Terra Nitrogen Company, L.P.
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Related links:
http://www.terraindustries.com
Company News On-Call: http://www.prnewswire.com or
fax, 800-758-5804, ext. 106067
CONTACT:
Paula C. Norton of Terra Industries Inc.,
712-277-5438
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