EX-99.1 2 t36797_8kmar28x99.txt PRESS RELEASE [TERRA LOGO] Terra Industries Inc. 600 Fourth Street P.O. Box 6000 Sioux City, IA 51102-6000 Phone: (712) 277-1340 Fax: (712) 277-7383 www.terraindustries.com ================================================================================ NEWS ================================================================================ For immediate release Contact: Joe Ewing (712) 277-7305 TERRA INDUSTRIES REPORTS FIRST QUARTER RESULTS Sioux City, Iowa (April 28, 2005)--Terra Industries Inc. (NYSE symbol: TRA) announced today income available to common shareholders for the first quarter ended March 31, 2005, of $3.2 million, or $.03 a share, on revenues of $450 million, compared to net income of $18.2 million, or $.24 per share, on revenues of $361 million for the 2004 first quarter. The 2005 net income was reduced by a net of $4.9 million for loss on early retirement of debt and gain on revaluation of warrants, while 2004 net income was increased by $10.4 million for recovery of product claim costs. Terra's 2005 income from operations of $30.8 million compared to 2004 income from operations of $45.6 million, which included a $15.5 million gain on recovery of product claim costs. The 2005 operating income included nearly $10 million from Mississippi Chemical operations acquired on December 21, 2004. The 2005 income contribution from Mississippi Chemical operations was offset by the increase in U.K. natural gas costs that was not covered by higher nitrogen products selling prices. Equity earnings of $5.0 million were primarily from Terra's 50 percent interest in Point Lisas Nitrogen Limited (PLNL) Trinidad ammonia plant. Equity earnings were reduced by $1.5 million for market value in excess of cost of acquired PLNL inventory that was sold during the first quarter. Terra's portion of the sales of affiliates accounted for under the equity method was $21.6 million. The nearly $90 million increase in revenues from 2004 to 2005 was due mainly to product sales by acquired Mississippi Chemical U.S. manufacturing facilities and terminals and higher selling prices, offset by lower sales volumes related to Terra's 2004 closing its Blytheville, Ark. ammonia and urea manufacturing facility and mothballing its Beaumont, Texas methanol and ammonia manufacturing facility. Terra realized average selling prices for ammonia, nitrogen solutions, ammonium nitrate and urea that were 1, 20, 1 and 27 percent higher, respectively, in the 2005 first quarter than in the 2004 first quarter. Cost of sales for 2005 was $90 million, or 28 percent, higher than in 2004 because of higher North American and United Kingdom unit natural gas costs and higher overall sales volumes. Terra's forward purchase contracts increased its 2005 first quarter natural gas costs by $11.7 million. Selling, general and administrative expense for the 2005 first quarter was $3.1 million higher than in the 2004 first quarter. Approximately half of the increase was related to transition expenses at Mississippi Chemical's former headquarters. Terra has essentially completed that transition. Interest income and interest expense were $1.4 and $2.4 million higher for the 2005 first quarter than for the 2004 first quarter. The higher interest income was due to Terra's having more cash invested. The higher interest expense was due to the term loan Terra assumed with the Mississippi Chemical acquisition, offset by the 2004 fourth quarter $70.7 million redemption of 11.5 percent notes due 2010. The $10.8 million 2005 loss on early retirement of debt related to the March 21, 2005, $50 million prepayment of the $125 million term loan assumed with the Mississippi Chemical acquisition. The $4.9 million gain revaluation of warrants represents the decline in the estimated fair value of outstanding warrants, which allow the holders to purchase until Dec. 21, 2009, four million Terra common shares at $5.48 per share, from $21.1 million at Dec. 31, 2004 to $16.2 million at March 31, 2005. Terra's forward purchase contracts at March 31, 2005, fixed prices for 24 percent of its North American and United Kingdom next 12 months' natural gas needs at about $23.8 million below the published forward market prices at that date. Michael L. Bennett, Terra's President and CEO, said, "Overall, we're pleased with Terra's first quarter performance. Natural gas costs increased during the quarter despite ample supplies, but demand for our products was strong and the significant January drop in international ammonia prices, which has now reversed, did not affect upgraded nitrogen products prices. "The profit contribution from Terra's newly-acquired Mississippi Chemical operations exceeded our expectations, and Terra's other North American operations also performed well. Our U.K. product selling price increases didn't offset the dramatic natural gas cost increases we incurred there. "Our strong cash flows permitted the first quarter $50 million prepayment of the term loan Terra assumed with the Mississippi Chemical acquisition," Bennett continued. "Our goal is to prepay the loan's balance by the end of 2005. In addition to cash flows from our North American and U.K. operations, Terra received a $22.5 million cash distribution from PLNL on April 15. "Spring planting is now well underway," Bennett concluded. "So far during the second quarter, demand for our products has remained strong and we expect average selling prices for ammonia and UAN to improve over those of the first quarter." Terra management will conduct a conference call to discuss these first quarter results on April 28, 2005, beginning at 3:00 ET. A live webcast of the conference call will be available from Terra's web site at www.terraindustries.com, and will be archived for playback for three months. Terra Industries Inc., with 2004 revenues of $1.9 billion pro forma the Mississippi Chemical acquisition, is a leading international producer of nitrogen 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 Terra's current annual report on Form 10-K . # # # Note: Terra Industries' news announcements are also available on its web site, www.terraindustries.com. TERRA INDUSTRIES INC. SUMMARIZED RESULTS OF OPERATIONS (unaudited)
Three Months Ended March 31, ------------------------------------- (in thousands except per-unit amounts) 2005 2004 ----------- ----------- REVENUES Nitrogen products $ 439,322 $ 317,557 Methanol 10,087 42,904 Other 603 568 ----------- ----------- $ 450,012 $ 361,029 COSTS AND EXPENSES: Cost of sales 413,743 323,718 Equity earnings (5,007) (71) Selling, general and administrative 10,453 7,309 Recovery of product claim costs -- (15,514) ----------- ----------- Other expense--net 419,189 315,442 ----------- ----------- Income from operations 30,823 45,587 Interest income 1,754 377 Interest expense (15,853) (13,501) Loss on early retirement of debt (10,804) -- Gain on revaluation of warrants 4,900 -- ----------- ----------- Income before income taxes and minority interest 10,820 32,463 Income tax provision (2,185) (11,300) Minority interest (4,204) (2,933) ----------- ----------- Net income 4,431 18,230 Preferred stock dividends (1,275) -- ----------- ----------- Income available to common shareholders $ 3,156 $ 18,230 =========== =========== INCOME (LOSS) PER COMMON SHARE ----------- ----------- Basic $ 0.03 $ 0.24 ----------- ----------- Diluted $ 0.03 $ 0.23 =========== =========== Basic and diluted weighted average shares outstanding: Basic 91,357 75,814 Diluted 92,217 77,776 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)
March 31, -------------------------------------------- 2005 2004 -------------- -------------- ASSETS Cash and short-term investments $ 205,001 $ 160,092 Accounts receivable 157,680 106,088 Inventories 138,736 113,986 Other current assets 53,250 36,656 -------------- -------------- Total current assets 554,667 416,822 Property, plant and equipment, net 779,402 697,741 Deferred plant turnaround costs 36,282 22,425 Equity investments 222,453 2,326 Other assets 44,641 30,270 -------------- -------------- Total assets $ 1,637,445 $ 1,169,584 ============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY Debt due within one year $ 151 $ 154 Customer prepayments 113,951 40,252 Other current liabilities 179,613 202,766 -------------- -------------- Total current liabilities 293,715 243,172 -------------- -------------- Long-term debt and capital lease obligations 394,490 402,164 Deferred income taxes 65,903 28,736 Other liabilities 163,606 113,897 Minority interest 93,403 90,842 -------------- -------------- Total liabilities and minority interest 1,011,117 878,811 Series A and B preferred shares 133,069 -- Stockholders' equity 493,259 290,773 -------------- -------------- Total liabilities and stockholders' equity $ 1,637,445 $ 1,169,584 ============== ==============
TERRA INDUSTRIES INC. SUMMARIZED CASH FLOWS (in thousands) (unaudited)
Three Months Ended March 31, --------------------------------- 2005 2004 ----------- ----------- Income from operations $ 4,431 $ 18,230 Non-cash charges and credits: Depreciation and amortization 29,176 25,578 Deferred income taxes 7,077 11,323 Minority interest in earnings 4,204 2,933 Equity in net income of affiliates (5,007) (71) Loss on early retirement of debt 9,418 -- Other 1,548 -- Recovery of product claim costs -- (12,874) Change in current assets and liabilities (13,852) 30,689 ----------- ----------- Net cash flows from operating activities 36,995 75,808 Purchase of property, plant and equipment (6,420) (1,075) Plant turnaround costs (7,032) (150) Debt borrowings (repayments) (50,042) (41) Distributions to minority interests (2,998) (1,153) Stock issuance 102 1,356 Other 598 (1,987) ----------- ----------- Increase (Decrease) in cash and short-term investments (28,797) 72,758 Cash and short-term investments at beginning of period 233,798 87,334 ----------- ----------- Cash and short-term investments at end of period $ 205,001 $ 160,092 =========== ===========
TERRA INDUSTRIES INC. SUMMARIZED INFORMATION (in thousands, except unit prices and costs)
VOLUMES AND PRICES Three months ended March 31, ------------------------------------------------------------ 2005 2004 -------------------------- ------------------------- Sales Average Sales Average Volumes Unit Price(1) Volumes Unit Price(1) ------- ---------- ------- ------------- Ammonia (tons) 491 $ 271 310 $ 270 Nitrogen solutions (tons) 1,088 136 877 113 Urea (tons) 47 239 157 188 Ammonium nitrate (tons) 405 189 247 188 Methanol (gallons) 7,264 0.83 63,906 0.65 NATURAL GAS COSTS2 North America $6.49 $5.37 United Kingdom $6.25 $4.74 (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.