SIOUX CITY, Iowa, July 31 /PRNewswire-FirstCall/ -- Terra Nitrogen
Company, L.P. (TNCLP) (NYSE: TNH) today reported a net loss of $44.8 million,
or $2.37 per limited partnership unit, on revenues of $118.1 million for the
second quarter ended June 30, 2003. This compares with net income of
$3.0 million, or $.16 per unit, on revenues of $104.9 million for the 2002
second quarter. For the first six months of 2003 the net loss was
$51.8 million, or $2.75 per unit, on revenues of $189.1 million. This
compares to net income of $5.3 million, or $.28 per unit, on revenues of
$162.3 million in the 2002 first half.
The 2003 second quarter and first half results include a $40.7 million
charge for the impairment of TNCLP's Blytheville, Ark. long-term assets. TNCLP
reported on June 26, 2003, that the Blytheville facility's production would be
suspended because of continuing high natural gas costs and the seasonal
decline in nitrogen fertilizer demand and prices. TNCLP's general partner
subsequently concluded that future market conditions may not justify ongoing
investment in the maintenance and replacement capital required to operate the
Blytheville facility for its estimated useful life. Consequently, the
impairment charge represents the carrying value of the Blytheville facility's
long-term assets that may not be realized from on-going operations. TNCLP's
general partner continues to evaluate how the Blytheville facility can be
operated over the next few years.
TNCLP's natural gas unit costs for the 2003 second quarter, net of about
$.8 million of cost increases due to forward purchasing contracts, were
73 percent higher than those incurred in the 2002 second quarter. This
increase was due to lower industry-wide natural gas inventories. TNCLP's
second quarter 2003 nitrogen solutions and ammonia sales volumes as compared
to the 2002 second quarter were 23 and 36 percent lower, respectively. Urea
sales volumes increased by 11 percent over those of the comparable 2002
period. The lower overall sales volumes were due primarily to the effects
weather had on the 2002-2003 fertilizer year as compared to the prior
fertilizer year. Nitrogen solutions, ammonia and urea selling prices for the
2003 second quarter were 44, 59 and 50 percent higher, respectively, than 2002
second quarter prices. The higher prices reflect lower ammonia and other
nitrogen product supplies in response to higher gas costs.
TNCLP's forward purchase contracts at July 1, 2003, fixed prices for about
19 percent of its next 12 months' natural gas requirements at about
$2.5 million above the published forward market prices at that date.
The reasons for the changes between TNCLP's 2003 and 2002 first half sales
volumes and selling prices are essentially the same as those for the
respective second quarters. Natural gas unit costs for the 2003 first half,
net of about $3.9 million of cost reductions realized from forward purchasing
contracts, were 88 percent higher than those incurred in the 2002 first half.
TNCLP announced that there would be no cash distribution for the quarter
ended June 30, 2003. Cash distributions depend on TNCLP's earnings, which are
driven primarily by product selling prices, sales volumes, natural gas costs
and production levels, as well as working capital requirements and capital
expenditures. TNCLP's quarterly earnings are usually highest in the quarter
ending June 30 due to the seasonal demand for fertilizer.
Terra Nitrogen Company, L.P. is a leading manufacturer of nitrogen
fertilizer products.
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
nitrogen fertilizer selling prices 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 Performance" section of TNCLP's current
annual report.
Note: Terra Nitrogen Company, L.P. news announcements are also available
on Terra Industries' web site, http://www.terraindustries.com .
Terra Nitrogen Company, L.P.
Consolidated Statements of Income
(in thousands except per-unit amounts)
Three Months Ended Six Months Ended
June 30 June 30
2003 2002 2003 2002
Product revenues $117,977 $104,529 $188,832 $161,638
Other income 172 364 254 655
Total revenues 118,149 104,893 189,086 162,293
Cost of goods sold 116,571 95,919 189,231 145,717
Depreciation and
amortization 3,319 3,279 6,620 6,547
Total cost of sales 119,890 99,198 195,851 152,264
Total gross profit (1,741) 5,695 (6,765) 10,029
Operating expenses 2,476 2,649 4,495 4,644
Impairment of long-lived
assets 40,655 - 40,655 -
Interest expenses-net (56) 21 (66) 124
Net income (loss) $(44,816) $3,025 $(51,849) $5,261
Earnings per limited
partnership unit $(2.37) $0.16 $(2.75) $0.28
The amount of net income allocable to the Limited Partners' interest is
based on the Partnership's net income and the proportionate share of cash
distributed to the Limited Partners and the General Partner.
Nitrogen Volumes and Prices
2003 2002
Sales Average Sales Average
Quarter to Date Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton) (000 tons) ($/ton)
Ammonia 82 253 129 159
UAN 638 102 825 71
Urea 135 171 122 114
2003 2002
Sales Average Sales Average
Year to Date Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton) (000 tons) ($/ton)
Ammonia 132 240 204 150
UAN 1,076 95 1,245 68
Urea 237 163 242 109
Terra Nitrogen Company, L.P.
Consolidated Balance Sheets
(in thousands)
June 30
2003 2002
ASSETS
Cash and short-term investments $10 $11,125
Accounts receivable 30,519 28,781
Inventories 24,520 21,891
Other current assets 2,282 2,744
Total current assets 57,331 64,541
Property, plant and equipment, net 95,495 130,850
Other assets 5,144 7,593
Total assets $157,970 $202,983
LIABILITIES
Short-term note and current of portion
long-term debt $7,096 $53
Accounts payable and accrued liabilities 27,594 14,873
Total current liabilities 34,690 14,925
Long-term debt 8,304 8,362
Other liabilities 6,816 5,316
Total liabilities 49,810 28,603
PARTNERS' EQUITY 108,160 174,380
Total liabilities and partners' equity $157,970 $202,983
SOURCE Terra Nitrogen Company, L.P.
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Related links:
http://www.terraindustries.com
http://www.terranitrogen.com
Company News On-Call:
http://www.prnewswire.com/comp/106067.html
CONTACT:
Mark Rosenbury of Terra Nitrogen Company,
L.P., +1-712-279-8756, mrosenbury@terraindustries.com
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