SIOUX CITY, Iowa, July 29 /PRNewswire-FirstCall/ -- Terra Industries Inc.
(NYSE: TRA) announced today net income of $17.9 million, or $.23 per share, on
revenues of $417 million for the second quarter ended June 30, 2004. Terra
reported a 2003 second quarter net loss of $31.1 million, or $.41 per share on
revenues of $379 million. The 2003 net loss included a $27.0 million loss for
"Impairment of long-lived assets" which represented a $53.1 million impairment
charge to operating income related to Terra's Blytheville, Ark. facility less
$9.9 million allocated to minority interest and $16.2 million of income tax
benefit.
For the 2004 first half, Terra posted net income of $36.1 million, or $.46
per share, on revenues of $778 million. The 2004 first half net income
included $12.2 million ($17.9 million before tax) from the recovery of product
claim costs. The 2003 first half loss, including the $27.0 million impairment
loss, was $45.4 million, or $.60 per share, on revenues of $659 million.
Cash from operations, before working capital changes, was $51.5 million in
the 2004 second quarter, compared to $17.7 million in the 2003 second quarter.
Terra's cash and short-term investments balance was $111 million at June 30,
2004.
The Nitrogen Products business segment recorded revenues of $363 million
and operating income of $39.6 million for the quarter, compared with revenues
of $316 million and an operating loss of $47.6 million for the 2003 second
quarter. For the first half, Nitrogen Products posted revenues of $680 million
and operating income of $73.5 million, compared with revenues of $544 million
and an operating loss of $61.1 million in 2003. The 2003 results include a
$53.1 million impairment charge. The 2004 results include $1.6 million of
costs incurred for the permanent closure of the Blytheville facility.
Excluding the effect of the 2003 impairment charge, the $34.1 million
improvement in 2004 second quarter Nitrogen Products results over those of the
2003 second quarter, was due to higher product selling prices, partially
offset by higher natural gas costs. Ammonia, nitrogen solutions, ammonium
nitrate and urea selling prices for the 2004 second quarter were 4, 21, 26 and
3 percent higher, respectively, than 2003 second quarter prices. These higher
prices reflect lower ammonia and other nitrogen product supplies and strong
demand.
Natural gas unit costs for the quarter, net of about $5.8 million of cost
decreases due to forward purchase contracts, were 9 percent higher than in the
2003 second quarter.
Factors that affected Nitrogen Products' first half results were similar
to those that affected the second quarter. Ammonia, nitrogen solutions,
ammonium nitrate and urea selling prices were 13, 25, 40 and 59 percent
higher, respectively, than in 2003. Natural gas unit costs, net of about
$12.6 million of cost reductions realized from forward purchase contracts,
increased 8 percent.
The Methanol business segment reported 2004 second quarter revenues of
$54 million and an operating loss of $.9 million, compared with revenues of
$63 million and operating income of $3.1 million in the 2003 second quarter.
This decline was due to lower sales volumes and selling prices, and higher
natural gas costs. Methanol's second quarter natural gas unit costs increased
11 percent.
Methanol's 2004 first half operating loss of $3.0 million compared to
operating income of $4.7 million in the 2003 first half was due to lower sales
volumes and selling prices, and higher natural gas costs which increased
4 percent.
Terra's forward purchase contracts at June 30, 2004, fixed prices for 22
percent of its next 12 months' natural gas needs at about $1 million below the
published forward market prices at that date.
"Nitrogen products demand and selling prices in key Terra market areas
were strong this quarter," said Michael L. Bennett, Terra's President and CEO.
"Those same factors continue to look strong as we start the 2004-05 fertilizer
year. We attribute the current environment to very low industry-wide nitrogen
inventories and low global grain inventories; nonetheless, nitrogen markets
and profits have been unpredictable. Nitrogen margins will continue to be
pressured if natural gas costs remain at current high levels."
Terra management will conduct a conference call to discuss these second
quarter results on July 29, 2004 beginning at 3:00 EDT. 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 for three
months.
Terra Industries Inc., with 2003 revenues of $1.4 billion, is a leading
international producer of nitrogen products.
This news release may contain forward-looking statements, which involve
inherent risks and uncertainties. Statements that are not historical facts,
including statements about Terra Industries Inc.'s beliefs, plans or
expectations, are forward-looking statements. These statements are based on
current plans, estimates and expectations. Actual results may differ
materially from those projected in such forward-looking statements and
therefore you should not place undue reliance on them. A non-exclusive list of
the important factors that could cause actual results to differ materially
from those in such forward-looking statements is set forth in Terra Industries
Inc.'s most recent report on Form 10-K and Terra Industries Inc.'s other
documents on file with the Securities and Exchange Commission. Terra
Industries Inc. undertakes no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future
developments or otherwise.
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 Six Months Ended
June 30, June 30,
(in thousands except 2004 2003 2004 2003
per-unit amounts)
Revenues
Nitrogen products $362,518 $315,744 $680,075 $544,285
Methanol 53,746 62,853 96,650 113,967
Other, net of intercompany
eliminations 504 348 1,072 836
$416,768 $378,945 $777,797 $659,088
Operating income (loss)
Nitrogen products $39,623 $(47,554) $73,527 $(61,112)
Methanol (924) 3,109 (2,970) 4,742
Recovery of product claim
costs 2,389 - 17,903 -
Other expense - net (1,804) (1,465) (3,589) (2,798)
39,284 (45,910) 84,871 (59,168)
Interest income 612 192 989 381
Interest expense (13,440) (15,283) (26,941) (27,835)
Minority interest (3,566) 10,950 (6,499) 12,668
Income tax (provision)
benefit (5,025) 18,960 (16,325) 28,521
Net income (loss) $17,865 $(31,091) $36,095 $(45,433)
Diluted Income (Loss) per Share $0.23 $(0.41) $0.46 $(0.60)
Basic and diluted weighted average
shares outstanding
Basic 75,898 75,715 75,769 75,539
Diluted 77,879 75,715 77,663 75,539
Because of the seasonal nature and effects of weather-related conditions
in several of Terra's 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)
June 30,
2004 2003
Assets
Cash and short-term investments $110,944 $12,368
Accounts receivable 129,414 123,852
Inventories 90,015 96,501
Other current assets 36,739 21,463
Total current assets 367,112 254,184
Property, plant and equipment, net 677,268 725,297
Deferred plant turnaround costs 22,313 32,006
Other assets 25,132 36,023
Total assets $1,091,825 $1,047,510
Liabilities and Stockholders' Equity
Debt due within one year $157 $149
Other current liabilities 149,737 160,631
Total current liabilities 149,894 160,780
Long-term debt and capital lease obligations 402,123 437,031
Deferred income taxes 31,436 32,457
Other liabilities 116,235 109,750
Minority interest 93,255 85,011
Total liabilities and minority interest 792,943 825,029
Stockholders' Equity 298,882 222,481
Total liabilities and stockholders'
equity $1,091,825 $1,047,510
Terra Industries Inc.
Summarized Cash Flows
(in thousands)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Income (Loss) from operations $17,865 $(31,091) $36,095 $(45,443)
Non-cash charges and credits:
Impairment of long-lived
assets - 53,091 - 53,091
Depreciation and amortization 24,906 27,931 50,484 55,548
Deferred income taxes 5,203 (21,301) 16,526 (33,144)
Minority interest in
earnings (loss) 3,566 (10,950) 6,499 (12,668)
Recovery of product claim
costs - - (12,874) -
Change in current assets
and liabilities (95,806) (37,760) (65,188) (63,875)
Net cash flows from
operating activities (44,266) (20,080) 31,542 (46,481)
Purchase of property, plant
and equipment (2,350) (2,283) (3,425) (5,861)
Plant turnaround costs (669) (8,003) (819) (20,321)
Debt borrowings (repayments) (38) 36,714 (79) 36,679
Deferred financing costs - (8,138) - (8,138)
Distributions to minority
interests (1,153) (1,153) (2,306) (1,153)
Other (672) 353 (1,303) (836)
Increase (Decrease) in cash and
short-term investments (49,148) (2,590) 23,610 (46,111)
Cash and short-term investments
at beginning of period 160,092 14,958 87,334 58,479
Cash and short-term investments
at end of period $110,944 $12,368 $110,944 $12,368
Terra Industries Inc.
Summarized Information
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2004 2003 2004 2003
Other Financial Data
Cost of sales $370,578 $362,031 $694,225 $646,105
(includes depreciation
and amortization)
Selling, general &
administrative expense 9,255 9,733 16,604 19,060
(includes depreciation
and amortization)
Impairment of long-lived assets - 53,091 - 53,091
Volumes and prices
Three months Ended June 30,
2004 2003
Average Average
Sales Unit Sales Unit
Volumes Price(a) Volumes Price(a)
Ammonia (tons) 452 $248 400 $238
Nitrogen solutions (tons) 1,108 126 1,093 104
Urea (tons) 135 183 172 178
Ammonium nitrate (tons) 176 173 169 137
Methanol (gallons) 74,766 0.70 82,174 0.77
Natural gas costs(b)
North America $5.67 $5.36
United Kingdom $3.81 $2.91
Six months Ended June 30,
2004 2003
Average Average
Sales Unit Sales Unit
Volumes Price(a) Volumes Price(a)
Ammonia (tons) 763 $257 678 $227
Nitrogen solutions (tons) 1,983 120 1,848 96
Urea (tons) 292 186 324 117
Ammonium nitrate (tons) 424 182 417 130
Methanol (gallons) 138,672 0.67 149,679 0.76
Natural gas costs(b)
North America $5.52 $5.35
United Kingdom $4.29 $3.18
(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
