SIOUX CITY, Iowa, April 24 /PRNewswire-FirstCall/ -- Terra Industries Inc.
(NYSE: TRA) announced today a loss from operations for the first quarter ended
March 31, 2003, of $14.3 million, or $.19 a share, on revenues of
$280 million. This compares with the 2002 first quarter loss from operations
of $9.1 million, or $.12 per share, on revenues of $214 million. The
increased loss was due to higher natural gas costs and the resulting
production decline, partially offset by higher selling prices.
The 2002 first quarter net loss of $215.1 million, or $2.86 per share,
included a $206.0 million, or $2.74 per share, charge for the cumulative
effect of accounting principle which resulted in the write-off of assets
classified as "Excess of cost over net assets of acquired businesses."
The Nitrogen Products business segment recorded revenues of $229 million
and an operating loss of $13.6 million compared with revenues of $185 million
and operating income of $0.7 million for the 2002 first quarter. The
$14.3 million earnings decline from the 2002 first quarter was mainly due to
high North American natural gas costs and lower production volumes, partially
offset by higher selling prices. Natural gas unit costs, net of $8.1 million
of cost reductions realized from forward purchase contracts, were 79 percent
higher than in the 2002 first quarter. Terra's North American ammonia
production was about 10 percent lower than the 2002 first quarter's because of
the approximately two week shutdown of the Blytheville, Ark. and Woodward,
Okla. plants and one of the two Verdigris, Okla. plants and reduced rates at
the other ammonia plants. These curtailments were in response to a sharp spike
in natural gas prices in late February 2003. Ammonia, nitrogen solutions,
ammonium nitrate and urea selling prices for the 2003 first quarter were 58,
30, 4 and 45 percent higher, respectively, than 2002 first quarter prices.
The Methanol business segment reported revenues of $51 million and
operating income of $1.6 million compared with revenues of $28 million and an
operating loss of $2.5 million in the 2002 first quarter. The $4.1 million
profit improvement was due to higher selling prices, partially offset by
higher natural gas costs and lower sales volumes. Average methanol selling
prices increased 124 percent while natural gas unit costs, net of $2.6 million
of cost reductions realized on forward purchase contracts, increased 119
percent. Sales volumes were lower than in the 2002 first quarter because of a
planned maintenance shutdown at the Beaumont, Tex. facility.
Terra's forward purchase contracts at March 31, 2003, fixed prices for 16
percent of its next 12 months' natural gas needs at about $7.1 million above
the published forward market prices at that date.
Michael L. Bennett, Terra's President and CEO, said, "The sharp February
increase in North American natural gas prices and the corresponding production
curtailments hurt our first quarter results. However, nitrogen products
selling prices have improved in response to relatively low industry supplies.
We are experiencing good demand for our Terra U.K. production and methanol
selling prices continue to be strong. Seasonal demand for nitrogen products
in North America thus far is encouraging. Barring another spike in North
American natural gas prices or unforeseen production interruptions, we expect
a much improved second quarter."
Terra management will conduct a conference call to discuss these first
quarter results on April 24, 2003 beginning at 2:00 CDT. 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 through July 31,
2003.
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
March 31,
(in thousands, except per share amounts) 2003 2002
Revenues
Nitrogen products $228,541 $184,987
Methanol 51,114 28,303
Other, net of intercompany eliminations 488 270
$280,143 $213,560
Operating income (loss)
Nitrogen products $(13,558) $666
Methanol 1,633 (2,523)
Other expense - net (1,333) 489
(13,258) (1,368)
Interest income 189 48
Interest expense (12,552) (13,296)
Minority interest 1,718 (546)
Income tax provision 9,561 6,065
Loss from operations (14,342) (9,097)
Cumulative effect of change in accounting
principle - (205,968)
Net loss $(14,342) $(215,065)
Basic and diluted loss per share:
Loss before cumulative effect of change in
accounting principle $(0.19) $(0.12)
Cumulative effect of change in accounting
principle - (2.74)
Loss per share $(0.19) $(2.86)
Weighted average shares outstanding 75,624 75,200
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)
March 31,
Assets 2003 2002
Cash and short-term investments $14,958 $2,063
Accounts receivable, net 102,176 84,044
Inventories 128,963 126,597
Other current assets 40,977 37,024
Total current assets 287,074 249,728
Property, plant and equipment, net 778,161 806,748
Deferred plant turnaround costs 23,919 20,063
Other assets 32,774 25,301
Total assets $1,121,928 $1,101,840
Liabilities and Stockholders' Equity
Debt due within one year $147 $81
Other current liabilities 228,322 130,932
Total current liabilities 228,469 131,013
Long-term debt 400,319 400,291
Deferred income taxes 54,348 111,061
Other liabilities 108,922 67,993
Minority interest 95,961 99,713
Total liabilities 888,019 810,071
Stockholders' equity 233,909 291,769
Total liabilities and stockholders'
equity $1,121,928 $1,101,840
Terra Industries Inc.
Summarized Cash Flows
(in thousands)
(unaudited)
Three Months Ended
March 31,
2003 2002
Loss from operations $(14,342) $(9,097)
Noncash charges and credits
Depreciation and amortization 27,617 24,777
Deferred income taxes (11,843) (9,515)
Minority interest (1,718) 546
Changes in current assets and liabilities (26,115) 30,370
Net cash flows from operating activities (26,401) 37,081
Purchase of property, plant and equipment (3,578) (6,328)
Plant turnaround costs (12,318) (3,253)
Debt repayment (35) (36,230)
Distributions to minority interest (1,153) -
Other (36) 3,668
Decrease in cash and short-term investments (43,521) (5,062)
Cash and short-term investments
at beginning of period 58,479 7,125
Cash and short-term investments
at end of period $14,958 $2,063
Terra Industries Inc.
Summarized Information
(in thousands)
Three Months Ended
March 31,
2003 2002
Other Financial Data
(in thousands)
Cost of sales $284,074 $206,140
Selling, general and administrative expense 9,327 8,788
Volumes, Prices and Costs
Three Months Ended December,
2003 2002
Sales Average Sales Average
(quantities in thousands) Volumes Unit Price(a) Volumes Unit Price(a)
Ammonia (tons) 277 $210 341 $133
Nitrogen solutions (tons) 756 86 636 66
Urea (tons) 152 157 178 108
Ammonium nitrate (tons) 248 126 243 121
Methanol (gallons) 67,505 0.76 82,651 0.34
Natural gas cost (b)
North America $5.37 $2.66
United Kingdom $3.47 $2.84
Volumes and Prices
(a) After deducting outbound freight costs.
(b) 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.
back to top
