SIOUX CITY, Iowa, April 25 /PRNewswire-FirstCall/ --
Terra Industries Inc. (NYSE: TRA) reported today a loss before cumulative
effect of change in accounting principle of $9.1 million, or $.12 per share,
on revenues of $214 million. For the 2001 first quarter, Terra incurred a net
loss of $5.2 million, or $.07 per share, on revenues of $245 million. EBITDA
(earnings before net interest expense, taxes, depreciation and amortization)
were $21.5 million and $31.9 million, respectively, in the 2002 and 2001 first
quarters.
The 2002 first quarter net loss of $215.1 million included a
$206.0 million, or $2.74 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 Nitrogen Products business realized operating income of $0.7 million
on revenues of $185 million, compared with operating income of $4.7 million on
revenues of $200 million for the 2001 first quarter. Nitrogen solutions,
ammonia, ammonium nitrate and urea selling prices as compared to the 2001
first quarter were 51, 48, 14 and 45 percent lower, respectively. Lower
prices reflected higher industry-wide inventories, contrasted to the
year-earlier period when serious supply concerns were created by widespread
production curtailments driven by unprecedented natural gas prices. Partially
offsetting the effects of these price decreases was a 52 percent decline in
Terra's natural gas unit costs as compared to the 2001 first quarter. Terra's
natural gas forward pricing contracts increased Nitrogen Products' 2002 first
quarter costs by $2.6 million over spot prices. Total nitrogen products sales
volumes were over 50 percent greater than for the 2001 first quarter, when a
substantial portion of Terra's manufacturing capacity was curtailed.
Terra's Methanol business reported revenues of $28 million and an
operating loss of $2.5 million compared with revenues of $44 million and an
operating loss of $2.0 million in the 2001 first quarter. Methanol selling
prices and natural gas costs as compared to the 2001 first quarter decreased
by 55 and 53 percent, respectively. Terra's natural gas forward pricing
contracts increased Methanol's 2002 first quarter costs by $1.3 million over
spot prices. Methanol's sales volumes increased by over 40 percent as Terra
operated its Beaumont, Texas, plant near capacity; Beaumont was shut down for
nearly 40 days in the 2001 first quarter because of high natural gas prices.
Terra's forward purchase contracts at March 31, 2002, fixed prices for
15 percent of its next 12 months' natural gas needs at $23.4 million below the
published forward market prices at that date. In addition, Terra had
contracts at March 31, 2002, which would reduce, assuming no decrease in the
forward natural gas prices at that date, the purchase price of about 7 percent
of its next 12 months' natural gas requirement by $4.3 million.
Michael L. Bennett, Terra's President and CEO, commented, "We are
disappointed that nitrogen prices remained essentially flat in the first
quarter. Normally, prices improve during that period as the peak application
season approaches. We are also concerned about the recent, unexpected
increase in North American natural gas prices, especially given ample current
gas supplies. On the other hand, we are encouraged by the prospect of strong
demand for nitrogen on corn in North America, along with improving nitrogen
fertilizer and methanol prices."
Information contained in this 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,
sales 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 agricultural regulations, and other risks
detailed in the "Factors That Affect Operating Results" section of Terra's
current annual report.
Terra Industries Inc., with 2001 revenues of $1 billion, is a leading
international producer of nitrogen products and methanol.
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)
(in thousands, except per share amounts) Three Months Ended
March 31,
2002 2001
Revenues
Nitrogen products $184,987 $200,221
Methanol 28,303 43,647
Other, net of intercompany eliminations 270 709
$213,560 $244,577
Operating income (loss)
Nitrogen products $666 $4,672
Methanol (2,523) (2,007)
Other - net 489 685
(1,368) 3,350
Interest income 48 1,700
Interest expense (13,296) (12,582)
Minority interest (546) (528)
Income tax benefit 6,065 2,821
Loss before cumulative effect of change in
accounting principle (9,097) (5,239)
Cumulative effect of change in accounting
principle (205,968) --
Net Loss $(215,065) $(5,239)
Basic and diluted loss per share:
Loss before cumulative effect of change in
accounting principle $(0.12) $ (0.07)
Cumulative effect of change in accounting
principle (2.74) --
Loss Per Share $(2.86) $ (0.07)
Weighted average shares outstanding 75,200 75,094
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 2002 2001
Cash and short-term investments $2,063 $ 63,023
Accounts receivable, net 84,044 99,864
Inventories 126,597 182,833
Other current assets 37,024 30,374
Total current assets 249,728 376,094
Property, plant and equipment, net 806,748 872,946
Excess of cost over net assets of acquired
businesses -- 219,920
Other assets 45,364 44,584
Total assets $1,101,840 $1,513,544
Liabilities and Stockholders' Equity
Debt due within one year $ 81 $13,028
Other current liabilities 130,932 166,977
Total current liabilities 131,013 180,005
Long-term debt 400,291 456,332
Deferred income taxes 111,061 153,850
Other liabilities 67,993 41,072
Minority interest 99,713 102,958
Total liabilities 810,071 934,217
Stockholders' equity 291,769 579,327
Total liabilities and stockholders' equity $1,101,840 $1,513,544
TERRA INDUSTRIES INC.
Summarized Information
(unaudited)
Three Months Ended
March 31,
2002 2001
Other Financial Data
(in thousands)
Cost of sales $206,140 $233,871
(includes depreciation & amortization)
Selling, general and administrative expense 8,788 7,356
(includes depreciation & amortization)
Depreciation and amortization 23,399 29,090
Capital expenditures 6,328 3,730
Volumes and Prices Three Months Ended March 31,
2002 2001
(quantities in Sales Average Sales Average
thousands) Volumes Unit Price Volumes Unit Price
Ammonia (tons) 341 $133 182 $258
Nitrogen solutions (tons) 636 66 534 136
Urea (tons) 178 108 90 195
Ammonium nitrate (tons) 243 121 118 141
Methanol (gallons) 82,651 0.34 58,478 0.75
Natural gas costs: (a)
North America $2.66 $6.40
United Kingdom 2.84 2.88
(a) Per MMBtu purchased. 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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