EX-99.1 3 dex991.htm PRESS RELEASE DATED 04/23/2003 PRESS RELEASE DATED 04/23/2003

Exhibit 99.1

[Logo of Terra Industries]

Terra Industries Inc.

600 Fourth Street

P.O. Box 6000

Sioux City, IA 51102-6000

Telephone: (712) 277-1340

Telefax: (712) 277-7383

www.terraindustries.com

 

NEWS

 

For immediate release

   

Contact: Mark Rosenbury

    

(712) 279-8756

 

Terra Industries reports first quarter results

 

Sioux City, Iowa (April 24, 2003)—Terra Industries Inc. (NYSE symbol: TRA) announced today a loss from operations for the first quarter ended March 31, 2003, of $14.3 million, or $.19 a share, on revenues of $280 million. This compares with the 2002 first quarter loss from operations of $9.1 million, or $.12 per share, on revenues of $214 million. The increased loss was due to higher natural gas costs and the resulting production decline, partially offset by higher selling prices.

 

The 2002 first quarter net loss of $215.1 million, or $2.86 per share, included a $206.0 million, or $2.74 per share, charge for the cumulative effect of accounting principle which resulted in the write-off of assets classified as “Excess of cost over net assets of acquired businesses.”

 

The Nitrogen Products business segment recorded revenues of $229 million and an operating loss of $13.6 million compared with revenues of $185 million and operating income of $0.7 million for the 2002 first quarter. The $14.3 million earnings decline from the 2002 first quarter was mainly due to high North American natural gas costs and lower production volumes, partially offset by higher selling prices. Natural gas unit costs, net of $8.1 million of cost reductions realized from forward purchase contracts, were 79 percent higher than in the 2002 first quarter. Terra’s North American ammonia production was about 10 percent lower than the 2002 first quarter’s because of the approximately two week shutdown of the Blytheville, Ark. and Woodward, Okla. plants and one of the two Verdigris, Okla. plants and reduced rates at the other ammonia plants. These curtailments were in response to a sharp spike in natural gas prices in late February 2003. Ammonia, nitrogen solutions, ammonium nitrate and urea selling prices for the 2003 first quarter were 58, 30, 4 and 45 percent higher, respectively, than 2002 first quarter prices.

 

The Methanol business segment reported revenues of $51 million and operating income of $1.6 million compared with revenues of $28 million and an operating loss of $2.5 million in the 2002 first quarter. The $4.1 million profit improvement was due to higher selling prices, partially offset by higher natural gas costs and lower sales volumes. Average methanol selling prices increased 124 percent while natural gas unit costs, net of $2.6 million of cost reductions realized on forward purchase contracts, increased 119 percent. Sales volumes were lower than in the 2002 first quarter because of a planned maintenance shutdown at the Beaumont, Tex. facility.

 

Terra’s forward purchase contracts at March 31, 2003, fixed prices for 16 percent of its next 12 months’ natural gas needs at about $7.1 million above the published forward market prices at that date.

 

Michael L. Bennett, Terra’s President and CEO, said, “The sharp February increase in North American natural gas prices and the corresponding production curtailments hurt our first quarter results. However, nitrogen products selling prices have improved in response to relatively low industry supplies. We are experiencing good demand for our Terra U.K. production and methanol selling prices continue to be strong. Seasonal demand for nitrogen products in North America thus far is encouraging. Barring another spike in North American natural gas prices or unforeseen production interruptions, we expect a much improved second quarter.”

 

Terra management will conduct a conference call to discuss these first quarter results on April 24, 2003 beginning at 2:00 CDT. 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 through July 31, 2003.

 

Terra Industries Inc., with 2002 revenues of $1 billion, is a leading international producer of nitrogen products and methanol.

 

Information contained in this news 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 selling prices of nitrogen and methanol products 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 Results” section of Terra’s current annual report.

 

# # #

 

Note: Terra Industries’ news announcements are also available on its web site, www.terraindustries.com.

 

2

 

Terra Industries Inc.

Summarized Results of Operations

(unaudited)

 

    

Three Months Ended
March 31,

  

(in thousands, except per share amounts)

   

2003

     

2002

  

Revenues

                  

Nitrogen products

   

$

228,541

 

   

$

184,987

 

Methanol

   

 

51,114

 

   

 

28,303

 

Other, net of intercompany eliminations

   

 

488

 

   

 

270

 

    
  
    

 

$280,143

 

   

$

213,560

 

    
  

Operating income (loss)

                  

Nitrogen products

   

$

(13,558

)

   

$

666

 

Methanol

   

 

1,633

 

   

 

(2,523

)

Other expense – net

   

 

(1,333

)

   

 

489

 

    
  
    

 

(13,258

)

   

 

(1,368

)

Interest income

   

 

189

 

   

 

48

 

Interest expense

   

 

(12,552

)

   

 

(13,296

)

Minority interest

   

 

1,718

 

   

 

(546

)

Income tax provision

   

 

9,561

 

   

 

6,065

 

    
  

Loss from operations

   

 

(14,342

)

   

 

(9,097

)

Cumulative effect of change in accounting principle

   

 

—  

 

   

 

(205,968

)

    
  

Net loss

   

$

(14,342

)

   

$

(215,065

)

    
  

Basic and diluted loss per share:

                  

Loss before cumulative effect of change in accounting principle

   

$

(0.19

)

   

$

(0.12

)

Cumulative effect of change in accounting principle

   

 

—  

 

   

 

(2.74

)

    
  

Loss per share

   

$

(0.19

)

   

$

(2.86

)

    
  

Weighted average shares outstanding

   

 

75,624

 

   

 

75,200

 

    
  

 

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.

 

3

 

Terra Industries Inc.

Summarized Financial Position

(in thousands)

(unaudited)

 

    

March 31,

Assets

   

2003

   

2002

Cash and short-term investments

   

$

14,958

   

$

2,063

Accounts receivable, net

   

 

102,176

   

 

84,044

Inventories

   

 

128,963

   

 

126,597

Other current assets

   

 

40,977

   

 

37,024

    
  

Total current assets

   

 

287,074

   

 

249,728

Property, plant and equipment, net

   

 

778,161

   

 

806,748

Deferred plant turnaround costs

   

 

23,919

   

 

20,063

Other assets

   

 

32,774

   

 

25,301

    
  

Total assets

   

$

1,121,928

   

$

1,101,840

    
  

Liabilities and Stockholders’ Equity

              

Debt due within one year

   

$

147

   

$

81

Other current liabilities

   

 

228,322

   

 

130,932

    
  

Total current liabilities

   

 

228,469

   

 

131,013

Long-term debt

   

 

400,319

   

 

400,291

Deferred income taxes

   

 

54,348

   

 

111,061

Other liabilities

   

 

108,922

   

 

67,993

Minority interest

   

 

95,961

   

 

99,713

    
  

Total liabilities

   

 

888,019

   

 

810,071

Stockholders’ equity

   

 

233,909

   

 

291,769

    
  

Total liabilities and stockholders’ equity

   

$

1,121,928

   

$

1,101,840

    
  

 

4

 

Terra Industries Inc.

Summarized Cash Flows

(in thousands)

(unaudited)

 

    

Three Months Ended
March 31,

  
    

2003

     

2002

  

Loss from operations

   

$

(14,342

)

   

$

(9,097

)

Noncash charges and credits

                  

Depreciation and amortization

   

 

27,617

 

   

 

24,777

 

Deferred income taxes

   

 

(11,843

)

   

 

(9,515

)

Minority interest

   

 

(1,718

)

   

 

546

 

Changes in current assets and liabilities

   

 

(26,115

)

   

 

30,370

 

    
  

Net cash flows from operating activities

   

 

(26,401

)

   

 

37,081

 

Purchase of property, plant and equipment

   

 

(3,578

)

   

 

(6,328

)

Plant turnaround costs

   

 

(12,318

)

   

 

(3,253

)

Debt repayment

   

 

(35

)

   

 

(36,230

)

Distributions to minority interest

   

 

(1,153

)

   

 

—  

 

Other

   

 

(36

)

   

 

3,668

 

    
  

Decrease in cash and short-term investments

   

 

(43,521

)

   

 

(5,062

)

Cash and short-term investments at beginning of period

   

 

58,479

 

   

 

7,125

 

    
  

Cash and short-term investments at end of period

   

$

14,958

 

   

$

2,063

 

    
  

 

5

 

Terra Industries Inc.

Summarized Information

(in thousands)

 

    

Three Months Ended
March 31,

    

2003

   

2002

Other Financial Data

              

(in thousands)

              

Cost of sales

   

$

284,074

   

$

206,140

Selling, general and administrative expense

   

 

9,327

   

 

8,788

 

Volumes, Prices and Costs

                        
    

Three Months Ended December,

    

2003

   

2002

    

Sales Volumes

   

Average Unit Price(1)

   

Sales Volumes

   

Average Unit Price(1)

(quantities in thousands)

                        

Ammonia (tons)

   

277

   

$

210

   

341

   

$

133

Nitrogen solutions (tons)

   

756

   

 

86

   

636

   

 

66

Urea (tons)

   

152

   

 

157

   

178

   

 

108

Ammonium nitrate (tons)

   

248

   

 

126

   

243

   

 

121

Methanol (gallons)

   

67,505

   

 

0.76

   

82,651

   

 

0.34

Natural gas cost(2)

                        

North America

   

$5.37

   

$2.66

United Kingdom

   

$3.47

   

$2.84

Volumes and Prices

                        

 

  (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.

 

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