SIOUX CITY, Iowa, Oct. 24 /PRNewswire-FirstCall/ --
Terra Nitrogen Company, L.P. (NYSE: TNH) (TNCLP) today reported net income
of $2.0 million, or $.11 per limited partnership unit, on revenues of
$76.2 million for the third quarter ended September 30, 2002. This compares
with a net loss of $11.4 million, or $.60 per unit, on revenues of
$55.8 million for the 2001 third quarter. Net income for the first nine
months of 2002 was $7.3 million, or $.39 per unit, on revenues of
$238.5 million compared to a net loss of $10.7 million, or $.57 per unit, on
revenues of $223.1 million in the comparable 2001 period. The profitability
increases were due to substantially higher sales volumes and lower natural gas
costs, partially offset by lower selling prices.
TNCLP's third quarter 2002 nitrogen solutions, ammonia and urea sales
volumes as compared to the 2001 third quarter were 16, 131 and 257 percent
higher, respectively. The nitrogen solutions and ammonia sales volumes
increases were mainly due to substantially lower carryover of post-planting
season inventories and earlier fall fill demand by dealers. The urea sales
increase is due to TNCLP operating its Blytheville, Ark., facility at near
full capacity in the 2002 third quarter; production at Blytheville was
suspended during the entire 2001 third quarter because of excessive industry-
wide urea inventories. TNCLP's natural gas unit costs for the 2002 third
quarter, net of about $2.3 million of cost reductions realized from forward
purchase contracts, were 17 percent lower than those incurred in the 2001
third quarter. Nitrogen solutions and ammonia selling prices for the 2002
third quarter were 7 and 21 percent lower, respectively, than 2001 third
quarter selling prices. Urea selling prices for the 2002 third quarter were
11 percent higher than 2001 third quarter selling prices.
TNCLP's forward purchase contracts at September 30, 2002, fixed prices for
about 10 percent of its next 12 months' natural gas requirements at about
$2.6 million below the published forward market prices at that date. In
addition, TNCLP had contracts at September 30, 2002, which would reduce,
assuming no decrease in forward natural gas prices at that date, the cost of
about 4 percent of its next 12 months' natural gas requirements by about
$.5 million.
The reasons for the differences between TNCLP's 2002 and 2001 first nine
months sales volumes are essentially the same as those for the 2002 and 2001
third quarters. TNCLP's 2002 first nine months' nitrogen solutions, ammonia
and urea selling prices were 34, 43 and 26 percent lower, respectively, than
selling prices in the comparable 2001 period. The price declines reflect
higher industry-wide inventories at the start of 2002 as compared to serious
supply concerns in early 2001 created by widespread production curtailments
driven by natural gas prices. Natural gas unit costs for the 2002 first nine
months, net of about $3.7 million of cost reductions realized from forward
purchase contracts, were 44 percent lower than those incurred in the
comparable 2001 period.
TNCLP also announced a cash distribution for the quarter ended
September 30, 2002, of $.20 per limited partnership unit payable November 22,
2002 to holders of record as of November 1, 2002. Cash distributions depend
on TNCLP's earnings, which are driven primarily by product selling prices,
sales volumes, natural gas costs, production levels, 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 Industries' news announcements are also available on its web
site, http://www.terraindustries.com .
Terra Nitrogen Company, L.P.
Consolidated Statements of Income
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands, except
per unit amounts) 2002 2001 2002 2001
Product revenues $76,001 $55,488 $237,639 $222,587
Other income 163 264 818 547
Total revenues $76,164 $55,752 $238,457 $223,134
Cost of goods sold 68,318 61,373 214,035 216,756
Depreciation and
amortization 3,277 3,237 9,824 9,609
Total cost of sales 71,595 64,610 223,859 226,365
Total gross profit 4,569 (8,858) 14,598 (3,231)
Operating expenses 2,598 2,135 7,242 6,876
Interest expense - net (39) 405 84 614
Net income (loss) $2,010 $(11,398) $7,272 $(10,721)
Earnings (loss) per
limited Partnership
unit $0.11 $(0.60) $0.39 $(0.57)
The amount of net income allocable to the Limited Partners' interest is
based on the Partnership's net income and the proportionate share of cash
distributed to the Limited Partners and the General Partner.
Nitrogen Volumes and Prices
2002 2001
Quarter Sales Average Sales Average
Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton) (000 tons) ($/ton)
Ammonia 83 138 36 175
UAN 594 70 510 75
Urea 100 122 28 110
2002 2001
Nine Months Sales Average Sales Average
Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton) (000 tons) ($/ton)
Ammonia 287 147 145 256
UAN 1,839 69 1,323 104
Urea 342 113 171 152
Terra Nitrogen Company, L.P.
Consolidated Balance Sheets
(in thousands)
(unaudited)
September 30,
Assets 2002 2001
Cash and short-term investments $14,462 $10
Accounts receivable, net 27,090 25,170
Inventories 18,516 37,268
Other current assets 9,491 7,902
Total current assets 69,559 70,350
Property, plant and equipment, net 127,800 139,336
Other assets 7,696 6,847
Total assets $205,055 $216,533
Liabilities
Short-term note and current portion of
long-term debt $53 $21,709
Accounts payable and accrued liabilities 16,667 17,906
Total current liabilities 16,720 39,615
Long-term debt 8,347 6,986
Other liabilities 5,316 5,316
Total liabilities 30,383 51,917
Partners' equity 174,672 164,616
Total liabilities and partners' equity $205,055 $216,533
SOURCE Terra Nitrogen Company, L.P.
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Related links:
http://www.terranitrogen.com
Company News On-Call:
http://www.prnewswire.com/gh/cnoc/comp/106067.html
CONTACT:
Mark Rosenbury for Terra Nitrogen Company,
L.P., +1-712-279-8756, or mrosenbury@terraindustries.com
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