SIOUX CITY, Iowa, Oct. 30 /PRNewswire-FirstCall/ -- Terra Industries Inc.
(NYSE: TRA) announced today a net loss of $4.5 million, or $.06 per share, on
revenues of $325 million for the third quarter ended Sept. 30, 2003. This
compares to the 2002 third quarter loss from continuing operations of $1.9
million, or $.03 per share, on revenues of $259 million. The 2002 third
quarter also included an $11 million, or $.15 per share, loss from
discontinued operations resulting in a net loss of $12.9 million, or $.18 per
share.
For the 2003 first nine months, Terra posted a net loss of $50.0 million,
or $.66 per share, on revenues of $984 million compared to a net loss of
$236.5 million, or $3.14 per share, on revenues of $772 million in the
comparable 2002 period. The 2003 loss, excluding a second quarter $27.0
million charge for "Impairment of long-lived assets" (representing a $53.1
million impairment charge to operating income less $9.9 million allocated to
minority interest and a $16.2 million income tax benefit), was $23.0 million.
This compares to a $19.5 million loss from continuing operations for the 2002
first nine months. Results for the 2002 first nine months also included an $11
million, or $.15 per share, loss from discontinued operations and a $206.0
million, or $2.74 per share, charge for the cumulative effect of a change in
accounting principle.
The $53.1 million charge for the impairment of long-lived assets
represents the carrying value of Terra's Blytheville, Ark. facility's long-
lived assets that may not be realized from ongoing operations. Terra suspended
Blytheville's production at the beginning of the 2003 third quarter because of
continuing high natural gas costs and the seasonal decline in nitrogen
fertilizer demand and prices. Although Terra has taken an impairment charge
for the Blytheville assets, it resumed Blytheville's production on Sept. 29
and expects to operate the facility through at least April 2004.
Cash from operations, before working capital changes, was $21.0 million in
the 2003 third quarter compared to $13.5 million in the 2002 third quarter.
Terra had at Sept. 30, 2003, cash and short-term investments totaling $21.3
million and no borrowings under its revolving credit facility that expires in
June 2005. Borrowing availability under Terra's revolving credit facility was
$102 million at Sept. 30, 2003.
The Nitrogen Products business segment recorded revenues of $277 million
and operating income of $9.4 million for the quarter, compared with revenues
of $211 million and operating income of $4.2 million for the 2002 third
quarter. For the 2003 first nine months, Nitrogen Products posted revenues of
$822 million and, excluding the $53.1 million impairment charge, operating
income of $1.3 million, compared with revenues of $654 million and operating
income of $7.1 million in 2002.
The $5.2 million improvement in third quarter Nitrogen Products results
compared to the 2002 third 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 2003 third quarter were 56,
34, 19 and 43 percent higher, respectively than 2002 third quarter prices.
These higher prices reflect improved worldwide nitrogen supply/demand
balances. Natural gas unit costs for the quarter, net of about $2.6 million of
cost increases due to forward purchase contracts, were 60 percent higher than
in the 2002 third quarter.
Nitrogen Products' operating income for the 2003 first nine months results
was less than in the comparable 2002 period as the natural gas cost increase
exceeded the selling price increases. Natural gas unit costs, net of about
$3.1 million of cost reductions realized from forward purchase contracts,
increased 68 percent when compared to the 2002 period. Ammonia, nitrogen
solutions, ammonium nitrate and urea selling prices were 59, 35, 13 and 45
percent higher, respectively.
The Methanol business segment reported 2003 third quarter revenues of $47
million and an operating loss of $1.1 million, compared with 2002 third
quarter revenues of $47 million and operating income of $6.7 million. The
profit decrease was due to higher natural gas costs and lower sales volumes,
partially offset by a 23 percent increase in methanol selling prices.
Methanol's third quarter natural gas unit costs, net of about $1.0 million in
cost increases due to forward purchase contracts, increased 65 percent.
Methanol's operating income for the 2003 first nine months was about the
same as that realized in the comparable 2002 period. A 61 percent increase in
methanol selling prices was offset by higher natural gas costs, which, net of
about $1.2 million of cost reductions realized from forward purchase
contracts, increased 82 percent.
Terra's forward purchase contracts at Sept. 30, 2003, fixed prices for 26
percent of its next 12 months' natural gas needs at about $12.8 million above
the published forward market prices at that date.
"Nitrogen product demand and selling prices have proved to be stronger
than we anticipated when we reported our second quarter results, and natural
gas prices have moderated," said Michael L. Bennett, Terra's President and
CEO. "Our liquidity improved during the quarter because of our cash earnings,
cost-saving initiatives and customer prepayments, primarily for nitrogen to be
applied in the fourth quarter.
"Should these market conditions continue," Bennett said, "we anticipate
operating all our facilities, with the possible exception of Blytheville, at
levels necessary to meet the customer demand we anticipate for the balance of
the 2003/2004 fertilizer year. We also expect to meet the covenants of our
bank agreements for that period. Nonetheless, natural gas prices and product
demand continue to be concerns, as substantial increases in our feedstock
costs or significantly reduced demand could impair our operations and
finances. To offset some of these effects, our natural gas forward pricing
positions are concentrated on upcoming winter months with forward positions
for more than 50 percent of our needs through next January. We expect to
increase these winter positions when prices permit."
Terra management will conduct a conference call to discuss these third
quarter results on Oct. 30, 2003 beginning at 3:00 EST. 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 2002 revenues of $1 billion, is a leading
international producer of nitrogen products and methanol.
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 Nine Months Ended
September 30, September 30,
(in thousands except
per-unit amounts) 2003 2002 2003 2002
Revenues
Nitrogen products $277,292 $211,103 $821,577 $653,753
Methanol 47,025 46,772 160,992 116,928
Other, net of intercompany
eliminations 525 799 1,361 1,051
$324,842 $258,674 $983,930 $771,732
Operating income (loss)
Nitrogen products $9,355 $4,241 $(51,757) $7,111
Methanol (1,083) 6,696 3,659 3,782
Other expense-net (2,368) (1,137) (5,166) (1,871)
5,904 9,800 (53,264) 9,022
Interest income 48 116 429 277
Interest expense (13,829) (13,408) (41,664) (40,052)
Minority interest 234 (492) 12,902 (1,777)
Income tax benefit 3,094 2,048 31,615 13,012
Loss from continuing
operations (4,549) (1,936) (49,982) (19,518)
Loss from discontinued
operations - (11,000) - (11,000)
Cumulative effect of change
in accounting principle - - - (205,968)
Net loss $(4,549) $(12,936) $(49,982) $(236,486)
Basic and Diluted Loss per Share:
Loss from continuing
operations $(0.06) $(0.03) $(0.66) $(0.25)
Discontinued operations - (0.15) - (0.15)
Cumulative effect of change
in accounting principle - - - (2.74)
Loss per Share $(0.06) $(0.18) $(0.66) $(3.14)
Weighted average shares
outstanding 75,726 75,468 75,602 75,276
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)
September 30,
2003 2002
Assets
Cash and short-term investments $21,278 $41,879
Accounts receivable, less allowance
for doubtful accounts of $156 and $436 107,450 97,455
Inventories 87,599 86,838
Other current assets 32,835 30,528
Total current assets 249,162 256,700
Property, plant and equipment, net 706,610 792,182
Deferred plant turnaround costs 26,029 23,287
Other assets 35,194 30,147
Total assets $1,016,995 $1,102,316
Liabilities and Stockholders' Equity
Debt due within one year $152 $140
Customer prepayments 23,704 6,612
Other current liabilities 156,581 114,826
Total current liabilities 180,437 121,578
Long-term debt and capital lease obligations 402,242 400,394
Deferred income taxes 27,942 99,626
Other liabilities 108,403 80,898
Minority interest 84,777 100,021
Total liabilities and minority interest 803,801 802,517
Stockholders' Equity 213,194 299,799
Total liabilities and stockholders' equity $1,016,995 $1,102,316
Terra Industries Inc.
Summarized Cash Flows
(in thousands)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Loss from operations $(4,549) $(1,936) $(49,982) $(19,518)
Non-cash charges and credits:
Impairment of long-lived assets - - 53,091 -
Depreciation and amortization 26,493 26,804 82,041 78,977
Deferred income taxes (662) (11,903) (33,806) (12,854)
Minority interest in
earnings (loss) (234) 492 (12,902) 1,777
Change in current assets
and liabilities 24,608 28,461 (39,267) 49,871
Net cash flows from operating
activities 45,656 41,918 (825) 98,253
Purchase of property, plant
and equipment (1,213) (7,579) (7,074) (16,589)
Plant turnaround costs (345) (6,998) (20,666) (15,052)
Debt borrowings (repayments) (36,679) (33) - (36,068)
Deferred financing costs (443) - (8,581) -
Distributions to minority interests - - (1,153) -
Other 1,934 1,853 1,098 4,210
Increase (Decrease) in cash and
short-term investments 8,910 29,161 (37,201) 34,754
Cash and short-term investments
at beginning of period 12,368 12,718 58,479 7,125
Cash and short-term investments
at end of period $21,278 $41,879 $21,278 $41,879
Terra Industries Inc.
Summarized Information
(in thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
Other Financial Data
Cost of sales $308,554 $238,546 $954,659 $733,900
(includes depreciation
and amortization)
Selling, general &
administrative
expense 10,384 10,328 29,444 28,810
(includes depreciation
and amortization)
Impairment of long-
lived assets - - 53,091 -
Volumes and prices
Three months Ended September 30,
2003 2002
Sales Average Sales Average
Volumes Unit Price(1) Volumes Unit Price(1)
Ammonia (tons) 334 $219 354 $140
Nitrogen solutions (tons) 994 98 967 73
Urea (tons) 73 180 138 126
Ammonium nitrate (tons) 269 141 239 118
Methanol (gallons) 68,274 0.69 83,777 0.56
Natural gas costs(2)
North America $5.14 $3.04
United Kingdom $2.59 $2.12
Nine months Ended September 30,
2003 2002
Sales Average Sales Average
Volumes Unit Price(1) Volumes Unit Price(1)
Ammonia (tons) 1,012 $224 1,147 $141
Nitrogen solutions (tons) 2,843 97 2,904 72
Urea (tons) 397 170 482 117
Ammonium nitrate (tons) 686 135 690 119
Methanol (gallons) 217,952 0.74 255,422 0.46
Natural gas costs(2)
North America $5.28 $2.93
United Kingdom $2.98 $2.33
(1) After deducting outbound freight costs
(2) 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.
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