-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VJBdtl/CUNjq3lItqNwBtFd+EDk9w77/d8Zg66SBYj819h/2YhRu9AbGNIZK/09+ nuvrXBu9MNhki0dD6O3lLA== 0000950131-98-004039.txt : 19980629 0000950131-98-004039.hdr.sgml : 19980629 ACCESSION NUMBER: 0000950131-98-004039 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980626 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TERRA INDUSTRIES INC CENTRAL INDEX KEY: 0000722079 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-MISCELLANEOUS NONDURABLE GOODS [5190] IRS NUMBER: 521145429 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-08520 FILM NUMBER: 98654861 BUSINESS ADDRESS: STREET 1: TERRA CENTRE 600 4TH ST STREET 2: P.O. BOX 6000 CITY: SIOUX CITY STATE: IA ZIP: 51102-6000 BUSINESS PHONE: 7122771340 MAIL ADDRESS: STREET 1: TERRA CENTER STREET 2: 600 4TH ST P O BOX 6000 CITY: SIOUX CITY STATE: IA ZIP: 51102-6000 FORMER COMPANY: FORMER CONFORMED NAME: INSPIRATION RESOURCES CORP DATE OF NAME CHANGE: 19920517 11-K 1 FORM 11-K TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN Form 11-K for the Years Ended December 31, 1997 and 1996 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED) For the Year Ended December 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the Transition Period From to Commission File Number 1-8520 A. Full title of the Plan and the address of the Plan, if different from that of the issuer named below: TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN B. Name of issuer of the securities held pursuant to the Plan and the address of its principal executive office: TERRA INDUSTRIES INC. TERRA CENTRE 600 FOURTH STREET P.O. BOX 6000 SIOUX CITY, IOWA 51102-6000 REQUIRED INFORMATION Plan financial statements and schedules are prepared in accordance with the financial reporting requirements of ERISA and are included therein as listed in the table of contents below.
Table of Contents - ----------------- (a) Financial Statements Pages ------------------------ ----- Independent Auditors' Report 3 Statements of Net Assets Available for Benefits at December 31, 1997 and 1996 4-5 Statements of Changes in Net Assets Available for Benefits for the Years Ended December 31, 1997 and 1996 6-7 Notes to Financial Statements 8-12 (b) Supplemental Schedules -------------------------- Schedule of Assets Held for Investment Purposes 13 Schedule of Reportable Transactions 14 (c) Exhibits ------------ Exhibit E - Independent Auditors' Consent 15
Schedules not filed herewith are omitted because of the absence of the conditions under which they are required. INDEPENDENT AUDITORS' REPORT To the Participants and Administrator of the Terra Industries Inc. Employees' Savings and Investment Plan We have audited the accompanying statements of net assets available for benefits of the Terra Industries Inc. Employees' Savings and Investment Plan as of December 31, 1997 and 1996, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the net assets available for benefits of the Terra Industries Inc. Employees' Savings and Investment Plan as of December 31, 1997 and 1996, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were conducted for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of (1) assets held for investment purposes as of December 31, 1997, and (2) reportable transactions for the year ended December 31, 1997, are presented for purposes of additional analysis and are not a required part of the basic financial statements, but are supplementary information required by the Department of Labor is Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental information by fund in the statements of net assets available for benefits and the statements of changes in net assets available for benefits is presented for the purpose of additional analysis rather than to present the net assets available for benefits and changes in net assets available for benefits of the individual funds. The supplemental schedules and supplemental information by fund is the responsibility of the Plan's management. Such supplemental schedules and supplemental information by fund have been subjected to the auditing procedures applied in our audits of the basic financial statements and, in our opinion, are fairly stated in all material respects when considered in relation to the basic financial statements taken as a whole. DELOITTE & TOUCHE LLP Omaha, Nebraska April 24, 1998 TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1997
Employer Directed Terra Terra Industries Industries Inc. Inc. Voluntary Putnam Putnam Putnam Putnam Common Common Growth & Income New Money Stock Stock Income Fund Opportunities Market Fund Fund Fund Fund Fund ASSETS: Investments, at fair value: Terra Industries Inc. Common Stock $26,931,358 $5,587,962 $ - $ - $ - $ - Putnam Fund for Growth and Income - - 16,143,082 - - Putnam Income Fund - - - 4,163,301 - Putnam New Opportunities Fund - - - - 10,044,027 - Putnam Money Market Fund - - - - - 6,522,779 Putnam International Growth Fund - - - - - - Putnam Asset Allocation - Growth Portfolio - - - - - - Putnam Asset Allocation - Balanced Portfolio - - - - - Putnam Asset Allocation - Conservative Portfolio - - - - - Putnam Voyager Fund - - - - - - Loans to participants - - - - - Total investments 26,931,358 5,587,962 16,143,082 4,163,301 10,044,027 6,522,779 Employer contributions receivable 141,209 - - - - - Participant contributions receivable - 27,721 20,161 17,641 70,563 15,121 Receivable - securities sold - 62,542 - - - - Total assets 27,072,567 5,678,225 16,163,243 4,180,942 10,114,590 6,537,900 LIABILITIES: Payable - securities - 18,956 - - - - purchased Net assets available for benefits $27,072,567 $5,659,269 $16,163,243 $4,180,942 $10,114,590 $6,537,900
See notes to financial statements. - ------------------------------------------------------------------------------- Supplemental Information by Fund - ------------------------------------------------------------------------------- Participant Directed - -------------------------------------------------------------------------------
Putnam Putnam Putnam Putnam AA International AA AA Conserv- Putnam Growth Growth Balanced ative Voyager Participant Fund Fund Fund Fund Fund Loans Total $ - $ - $ - $ - $ - $ - $ 32,519,320 - - - - - - 16,143,082 - - - - - - 4,163,301 - - - - - - 10,044,027 - - - - - - 6,522,779 2,675,251 - - - - - 2,675,251 - - 2,196,170 - - - - 2,196,170 - - - 1,425,041 - - - 1,425,041 - - - 698,683 - - 698,683 - - - - 26,896,589 - 26,896,589 - - - - - 3,863,754 3,863,754 ---------- ---------- ---------- -------- ----------- ---------- ------------ 2,675,251 2,196,170 1,425,041 698,683 26,896,589 3,863,754 107,147,997 - - - - - - 141,209 57,962 - - - 42,842 - 252,011 - - - - - - 62,542 ---------- ---------- ---------- -------- ----------- ---------- ------------ 2,733,213 2,196,170 1,425,041 698,683 26,939,431 3,863,754 107,603,759 ---------- ---------- ---------- -------- ----------- ---------- ------------ - - - - - - 18,956 ---------- ---------- ---------- -------- ----------- ---------- ------------ $2,733,213 $2,196,170 $1,425,041 $698,683 $26,939,431 $3,863,754 $107,584,803 ========== ========== ========== ======== =========== ========== ============
TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1996
Employer Directed Terra Terra Industries Industries Inc. Inc. Voluntary Putnam Putnam Putnam Common Common Growth & Putnam New Money Stock Stock Income Income Opportunities Market Fund Fund Fund Fund Fund Fund ASSETS: Investments, at fair value: Terra Industries Inc. Common Stock $27,175,208 $5,182,742 $ - $ - $ - $ - Putnam Fund for Growth and Income - - 11,200,356 - - - Putnam Income Fund - - - 3,852,029 - - Putnam New Opportunities Fund - - - - 7,149,056 - Putnam Money Market Fund - - - - - 5,177,084 Putnam International Growth Fund - - - - - - Putnam Asset Allocation - Growth Portfolio - - - - - - Putnam Asset Allocation - Balanced Portfolio - - - - - - Putnam Asset Allocation - Conservative Portfolio - - - - - - Putnam Voyager Fund - - - - - - Loans to participants - - - - - - Total investments 27,175,208 5,182,742 11,200,356 3,852,029 7,149,056 5,177,084 Employer contributions receivable 108,026 - - - - - Participant contributions receivable - 24,148 17,562 15,367 61,468 13,172 Receivable - securities sold - 726,795 - - - - Total assets 27,283,234 5,933,685 11,217,918 3,867,396 7,210,524 5,190,256 LIABILITIES: Accrued administrative expenses - 651 1,234 420 786 570 Payable - securities 181,766 - - - - - purchased Total liabilities 181,766 651 1,234 420 786 570 Net assets available for benefits $27,101,468 $5,933,034 $11,216,684 $3,866,976 $7,209,738 $5,189,686
See notes to financial statements.
- ----------------------------------------------------------------------------------------------------- Supplemental Information by Fund - ------------------------------------------------------------------------------------------- Participant Directed - ------------------------------------------------------------------------------------------- Putnam Putnam Putnam Putnam International AA AA AA Putnam Growth Growth Balanced Conservative Voyager Participant Fund Fund Fund Fund Fund Loans Total $ -- $ -- $ -- $ -- $ -- $ -- $32,357,950 -- -- -- -- -- -- 11,200,356 -- -- -- -- -- -- 3,852,029 -- -- -- -- -- -- 7,149,056 -- -- -- -- -- -- 5,177,084 1,545,185 -- -- -- -- -- 1,545,185 -- 1,325,313 -- -- -- -- 1,325,313 -- -- 659,142 -- -- -- 659,142 -- -- -- 281,753 -- -- 281,753 -- -- -- -- 24,544,054 -- 24,544,054 -- -- -- -- -- 3,282,504 3,282,504 ---------- ---------- -------- -------- ----------- ---------- ----------- 1,545,185 1,325,313 659,142 281,753 24,544,054 3,282,504 91,374,426 -- -- -- -- -- -- 108,026 50,492 -- -- -- 37,320 -- 219,529 -- -- -- -- -- -- 726,795 ---------- ---------- -------- -------- ----------- ---------- ----------- 1,595,677 1,325,313 659,142 281,753 24,581,374 3,282,504 92,428,776 ---------- ---------- -------- -------- ----------- ---------- ----------- 170 149 75 27 2,698 -- 6,780 -- -- -- -- -- -- 181,766 ---------- ---------- -------- -------- ----------- ---------- ----------- 170 149 75 27 2,698 -- 188,546 ---------- ---------- -------- -------- ----------- ---------- ----------- $1,595,507 $1,325,164 $659,067 $281,726 $24,578,676 $3,282,504 $92,240,230 ========== ========== ======== ======== =========== ========== ===========
TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1997 - ------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------- Employer Directed -------------------------------------------------------------------------------------- Terra Terra Industries Industries Inc. Inc. Voluntary Putnam Putnam Putnam Common Common Growth & Putnam New Money Stock Stock Income Income Opportunities Market Fund Fund Fund Fund Fund Fund Additions to net assets attributed to: Investment income (loss): Dividend, interest, and other income $ 349,696 $ 74,907 $ 2,114,763 $ 259,416 $ 216,733 $ 321,005 Net appreciation (depreciation) in fair value of investments (3,081,128) (512,418) 979,189 55,447 1,429,352 593 Total investment income (loss) (2,731,432) (437,511) 3,093,952 314,863 1,646,085 321,598 Employer contributions 4,585,387 - - - - - Participant contributions - 703,586 1,780,537 468,906 2,157,095 369,706 Total additions 1,853,955 266,075 4,874,489 783,769 3,803,180 691,304 Deductions from net assets attributed to: Benefit payments 1,687,008 309,158 1,512,050 233,118 387,421 783,109 Administrative expenses 5,709 19,489 14,623 3,187 7,453 7,151 Total deductions 1,692,717 328,647 1,526,673 236,305 394,874 790,260 Net increase (decrease) prior to interfund transfers/net loans 161,238 (62,572) 3,347,816 547,464 3,408,306 (98,956) Interfund transfers/net loans (190,139) (211,193) 1,598,752 (233,498) (503,454) 1,447,170 Net increase (decrease) (28,901) (273,765) 4,946,568 313,966 2,904,852 1,348,214 Assets available for benefits: Beginning of year 27,101,468 5,933,034 11,216,684 3,866,976 7,209,738 5,189,686 End of year $27,072,567 $5,659,269 $16,163,243 $4,180,942 $10,114,590 $6,537,900
See notes to financial statements.
- ------------------------------------------------------------------------------------------------------------------------------- Supplemental Information by Fund - ------------------------------------------------------------------------------------------------------------- Participant Directed - ------------------------------------------------------------------------------------------------------------- Putnam Putnam Putnam Putnam International AA AA AA Putnam Growth Growth Balanced Conservative Voyager Participant Fund Fund Fund Fund Fund Loans Total $ 157,221 $ 157,770 $ 119,964 $ 43,436 $ 1,601,778 $ 359,810 $ 5,776,499 194,314 146,067 54,533 7,562 3,972,341 - 3,245,852 351,535 303,837 174,497 50,998 5,574,119 359,810 9,022,351 - - - - - - 4,585,387 532,854 445,167 191,396 71,150 2,646,975 - 9,367,372 884,389 749,004 365,893 122,148 8,221,094 359,810 22,975,110 139,542 148,764 13,461 1,327 2,020,384 309,740 7,545,082 2,198 1,798 1,056 426 22,356 - 85,455 141,740 150,562 14,517 1,753 2,042,740 309,740 7,630,537 742,649 598,442 351,376 120,395 6,178,354 50,070 15,344,573 395,057 272,564 414,598 296,562 (3,817,599) 531,180 - 1,137,706 871,006 765,974 416,957 2,360,755 581,250 15,344,573 1,595,507 1,325,164 659,067 281,726 24,578,676 3,282,504 92,240,230 $2,733,213 $2,196,170 $1,425,041 $698,683 $26,939,431 $3,863,754 $107,584,803
TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS FOR THE YEAR ENDED DECEMBER 31, 1996
Employer Directed Terra Terra Industries Industries Inc. Inc. Voluntary U.S. Common Common Equity Money Stock Stock Income Intermediate Stock Market Fund Fund Fund Fund Fund Fund Additions to net assets attributed to: Investment income (loss): Dividend, interest, and other income $ 261,179 $ 66,762 $ 105,612 $ 196,025 $ 649,272 $ 132,592 Net appreciation (depreciation) in fair value of investments 1,402,944 184,017 1,063,070 (257,318) 109,022 - Total investment income (loss) 1,664,123 250,779 1,168,682 (61,293) 758,294 132,592 Employer contributions 3,665,799 - - - - - Participant contributions - 919,711 1,071,165 606,048 2,091,030 437,905 Total additions 5,329,922 1,170,490 2,239,847 544,755 2,849,324 570,497 Deductions from net assets attributed to: Benefit payments 1,277,288 179,962 688,776 199,045 1,178,565 239,520 Administrative expenses - 13,447 21,599 11,824 38,674 7,988 Total deductions 1,277,288 193,409 710,375 210,869 1,217,239 247,508 Net increase (decrease) prior to interfund transfers/net loans 4,052,634 977,081 1,529,472 333,886 1,632,085 322,989 Interfund transfers/ net loans (43,927) (1,321,501) (10,531,893) (4,791,564) (18,380,873) (3,963,292) Net increase (decrease) 4,008,707 (344,420) (9,002,421) (4,457,678) (16,748,788) (3,640,303) Assets available for benefits: Beginning of year 23,092,761 6,277,454 9,002,421 4,457,678 16,748,788 3,640,303 End of year $27,101,468 $ 5,933,034 $ - $ - $ - $ -
See notes to financial statements.
Supplemental Information Participant Directed Putnam Putnam Putnam Putnam Growth & Putnam New Money International GIC Windsor Income Income Opportunities Market Growth Fund Fund Fund Fund Fund Fund Fund $ 9,212 $ 143,972 $ 762,642 $ 83,663 $ 53,560 $ 71,773 $ 20,292 124,366 1,215,899 165,318 70,991 (266,459) - (10,177) ----------- ------------ ----------- ---------- ---------- ---------- ---------- 133,578 1,359,871 927,960 154,654 (212,899) 71,773 10,115 - - - - - - - 367,375 1,328,392 374,195 162,295 301,688 168,697 86,136 500,953 2,688,263 1,302,155 316,949 88,789 240,470 96,251 179,656 354,222 130,517 85,153 20,934 30,504 105 5,705 24,173 1,302 482 842 636 170 185,361 378,395 131,819 85,635 21,776 31,140 275 315,592 2,309,868 1,170,336 231,314 67,013 209,330 95,976 (3,591,669) (11,230,983) 10,046,348 3,635,662 7,142,725 4,980,356 1,499,531 (3,276,077) (8,921,115) 11,216,684 3,866,976 7,209,738 5,189,686 1,595,507 3,276,077 8,921,115 - - - - - $ - $ - $11,216,684 $3,866,976 $7,209,738 $5,189,686 $1,595,507
- ------------------------------------------------------------------------------------------------------------------------------ by Fund - -------------------------------------------------------------------------------------------------------------- - -------------------------------------------------------------------------------------------------------------- Putnam Putnam Putnam AA AA AA Putnam Growth Balanced Conservative Voyager Participant Fund Fund Fund Fund Loans Total $ 64,617 $ 35,771 $ 12,670 $ 1,542,405 $ 297,869 $ 4,509,888 (66,880) (35,769) (12,375) (1,887,852) - 1,798,797 ---------- -------- -------- ----------- ---------- ----------- (2,263) 2 295 (345,447) 297,869 6,308,685 - - - - - 3,665,799 32,455 11,469 2,846 800,518 - 8,761,925 ---------- -------- -------- ----------- ---------- ----------- 30,192 11,471 3,141 455,071 297,869 18,736,409 ---------- -------- -------- ----------- ---------- ----------- 5 3,932 397 227,975 122,598 4,919,154 171 75 27 2,968 5 130,088 ---------- -------- -------- ----------- ---------- ----------- 176 4,007 424 230,943 122,603 5,049,242 ---------- -------- -------- ----------- ---------- ----------- 30,016 7,464 2,717 224,128 175,266 13,687,167 1,295,148 651,603 279,009 24,354,548 (29,228) - ---------- -------- -------- ----------- ---------- ----------- 1,325,164 659,067 281,726 24,578,676 146,038 13,687,167 - - - - 3,136,466 78,553,063 ---------- -------- -------- ----------- ---------- ----------- $1,325,164 $659,067 $281,726 $24,578,676 $3,282,504 $92,240,230 ========== ======== ======== =========== ========== ===========
TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996 - -------------------------------------------------------------------------------- A. DESCRIPTION OF PLAN The following brief description of the Terra Industries Inc. Employees' Savings and Investment Plan (the Plan) is provided for general information only. Participants should refer to the Plan Document for more complete information. General - The Plan, established as of January 1, 1984, is a defined contribution plan covering eligible employees of Terra Industries Inc. and eligible subsidiaries and affiliates (collectively, the Company). The Plan is subject to the Employee Retirement Income Security Act of 1974 (ERISA) and is administered by the Employee Benefit Committee (the Committee) of the Company. The assets of the Plan are held by Putnam Investments (Chase Manhattan Bank, N.A., through September 30, 1996), the trustee of the Plan. Certain Plan investments are funds managed by the trustee of the Plan and, therefore, qualify as party-in-interest. Participation - All full-time active employees of the Company are eligible for Plan participation on the first day of the month following the date their employment commenced. In addition, part time or temporary employees with at least one year of service and 1,000 hours are eligible for participation. Participation in the Plan is voluntary. Participants' Accounts - Each participant's account is credited with the participant's contributions, the employer's matching contributions and an allocation of fund earnings. A participant's benefit is limited to the amount that can be provided from the participant's account, subject to the applicable vesting requirements. Contributions - Participants earning $80,000 or less annually in 1997 and $66,000 or less annually in 1996, could elect to contribute up to 15% of annual compensation (10% of their annual compensation through November 1996) on a pretax basis and 10% on an after-tax basis. The maximum combined deferral on a pretax and after-tax basis is 20%. Participants earning more than $80,000 and $66,000 in 1997 and 1996, respectively, could contribute up to 8% and 6%, respectively, of their annual compensation on a combined pretax and after-tax basis. The maximum participant pretax contribution was $10,000 and $9,500 in 1997 and 1996, respectively. Participants may elect to invest their contributions in one or more of the ten available participant directed investment options. Employer - The Company contributes an amount determined by its Board of Directors, equal to 100% of the participant's contributions up to 3% of their annual compensation, and 50% up to an additional 3% of annual compensation in 1997 and 1996. Beginning October 1, 1997, the Company increased its contribution on the second 3% of annual compensation from 50% to 60%. The contributions made by the Company must be invested in the Terra Industries Inc. Common Stock Fund. The Company may elect to make an additional contribution, subject to certain limitations as defined in the Plan, in such amount as its Board of Directors shall determine. No such additional contributions were made in 1997 or 1996. Employer contributions are reduced by the amount of any participant forfeitures during the period. Participant forfeitures totaled $198,930 and $127,643 in 1997 and 1996, respectively. Maximum Contributions Per Participant - The sum of a participant's contribution and employer matching contribution cannot exceed the lesser of $30,000 or 25% of net compensation of the participant. Net compensation is defined as total participant compensation less any pretax contributions made by the participant. Eligible compensation was limited to $160,000 and $150,000 in 1997 and 1996, respectively. Vesting - Participants are immediately fully vested in their contributions and earnings on their voluntary contributions. Employer contributions vest at a rate of 20% per year, until fully vested after five years of service. Participant Loans - Participants may borrow from their individual contribution accounts subject to maximum limitations as defined in the Plan. Loan transactions are treated as a transfer to (from) the investment fund from (to) the Participant Loan fund. Loan terms range from one to five years or up to thirty years for the purchase of a primary residence. The loans are secured by the balance in the participant's account and bear interest at a reasonable rate based on the published prime rate. Interest rates range from 5.5% to 14%. Principal and interest is paid ratably through monthly payroll deductions. Benefits - Participants or their beneficiaries are eligible to receive the value of their vested account balance upon the occurrence of one of the following: early or normal retirement; termination of employment; death or total disability. Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Valuation of Investments - Investments, except for loans to participants, are reported at fair value, which is determined, in the case of Terra Industries Inc.'s Common Stock, from the latest available market quotations and, in the case of investments in mutual funds, at quoted net asset value. Money market funds are reported at fair value as determined by the issuer and common funds are valued at the unit value as reported by the fund. Participant loans are valued at cost which approximates fair value. In accordance with the policy of stating investments at fair value, the net change in realized and unrealized appreciation or depreciation in fair value is included in income from investments, which is reflected in the statement of changes in net assets available for benefits. Dividend income is recorded on the ex-dividend date. Investment transactions are recognized on a trade date basis. The Plan has investments in eleven funds. The net assets and net investment income of the funds are allocated to the participants in the Plan based upon each participant's participation relative to the total participation in each of the eleven investment funds. At the close of business on September 30, 1996, all investment fund options were changed, except for the Terra Industries Inc. Common Stock Fund and Terra Industries Inc. Voluntary Common Stock Fund, and assets were transferred to Putnam Investments. A summary description of each investment fund follows: Terra Industries Inc. Common Stock Fund (Employer Directed) - A fund invested primarily in Terra Industries Inc. Common Stock which is limited to employer contributions only. Terra Industries Inc. Voluntary Common Stock Fund (Participant Directed) - A fund invested primarily in Terra Industries Inc. Common Stock. Putnam Growth and Income Fund (Participant Directed) - A fund invested in shares of Putnam Fund for Growth and Income, which is comprised primarily of common stocks that offer potential for capital growth, current income, or both. Putnam Income Fund (Participant Directed) - A fund invested in shares of Putnam Income Fund, which is comprised primarily of debt securities, including both government and corporate obligations, preferred stocks and dividend-paying common stocks. Putnam New Opportunities Fund (Participant Directed) - A fund invested in shares of Putnam New Opportunities Fund, which is comprised principally of common stocks of companies in sectors of the economy which Putnam Management believes possess above-average long-term growth potential. Putnam Money Market Fund (Participant Directed) - A fund invested in shares of Putnam Money Market Fund, which is comprised principally of high-quality money market instruments and seeks as high a rate of current income as Putnam Management believes is consistent with preservation of capital and maintenance of liquidity. Putnam International Growth Fund (Participant Directed) - A fund invested in shares of Putnam International Growth Fund, which is comprised primarily of equity securities of companies located in a country other than the United States. Putnam AA Growth Fund (Participant Directed) - A fund invested in shares of Putnam Asset Allocation: Growth Portfolio, which seeks capital appreciation and is comprised 65% to 95% of equity securities and 5% to 35% of fixed income securities. Putnam AA Balanced Fund (Participant Directed) - A fund invested in shares of Putnam Asset Allocation: Balanced Portfolio, which is comprised 50% to 75% of equity securities and 25% to 50% of fixed income securities. Putnam AA Conservative Fund (Participant Directed) - A fund invested in shares of Putnam Asset Allocation: Conservative Portfolio, which is comprised 25% to 45% of equity securities and 55% to 75% of fixed income securities. Putnam Voyager Fund (Participant Directed) - A fund invested in shares of Putnam Voyager Fund, which is comprised primarily of common stocks of companies which Putnam Management believes have potential for capital appreciation which is significantly greater than that of market averages. Through September 30, 1996, the Plan had the following investment fund options in addition to the Terra Industries Inc. Common Stock Fund and Terra Industries Inc. Voluntary Common Stock Fund: Equity Income Fund (Participant Directed) - A fund invested primarily in shares of Vista Growth and Income Fund, which is comprised primarily of income producing equity securities and securities convertible into such equity securities. Intermediate Fund (Participant Directed) - A fund invested primarily in shares of Vista U.S. Government Income Fund, which is comprised primarily of debt obligations backed by the full faith and credit of the U.S. Government. Stock Fund (Participant Directed) - A fund invested primarily in shares of Fidelity Magellan Fund, which is comprised primarily of common stocks and which seeks long-term capital appreciation. Money Market Fund (Participant Directed) - A fund invested primarily in shares of Vista U.S. Government Money Market Fund so as to preserve capital and maintain a high degree of liquidity. GIC Fund (Participant Directed) - A fund invested primarily in shares of BancOklahoma Guaranteed Investment Contract Fund so as to provide current income while maintaining a stable market valuation. Windsor Fund (Participant Directed) - A fund invested primarily in shares of Vanguard Windsor Fund, a fund invested principally in income producing equity securities. Benefits Payable - The Plan's policy is to record benefit payments upon distribution of balances to participants. There were no benefits payable as of December 31, 1997 and 1996. Administrative Expenses - Administrative expenses are comprised of charges relating to routine services provided by the Plan's trustee and recordkeeping agent and fees associated with the annual audit of the Plan's financial statements. Administrative expenses are allocated to the investment funds, other than the Terra Industries Inc. Employer Directed Common Stock Fund, based upon the fair value of each fund's investment relative to the total fair value of all investment funds to which expenses are allocated. C. INVESTMENTS The fair value of the Plan's investments, other than loans to participants are presented in the following tables. Investments that represent five percent or more of the Plan's net assets are separately identified. December 31, 1997 ------------------------------------- Number of Shares or Principal Amount Fair Value ----------------- ------------- Investments, at Fair Value as Determined by Quoted Market Price: Terra Industries Inc. Common Stock 2,489,019 $ 32,519,320 Putnam Growth and Income Fund 826,156 16,143,082 Putnam Income Fund 585,556 4,163,301 Putnam New Opportunities Fund 206,455 10,044,027 Putnam Money Market Fund 6,522,779 6,522,779 Putnam International Growth Fund 160,483 2,675,251 Putnam Asset Allocation - Growth Portfolio 178,116 2,196,170 Putnam Asset Allocation - Balanced Portfolio 128,036 1,425,041 Putnam Asset Allocation - Conservative Portfolio 70,079 698,683 Putnam Voyager Fund 1,411,894 26,896,589 ------------ $103,284,243 ============
December 31, 1996 --------------------------- Number of Shares or Principal Amount Fair Value --------- ----------- Investments, at Fair Value as Determined by Quoted Market Price: Terra Industries Inc. Common Stock 2,230,710 $32,357,950 Putnam Growth and Income Fund 621,551 11,200,356 Putnam Income Fund 549,505 3,852,029 Putnam New Opportunities Fund 175,955 7,149,056 Putnam Money Market Fund 5,177,084 5,177,084 Putnam International Growth Fund 102,807 1,545,185 Putnam Asset Allocation - Growth Portfolio 118,015 1,325,313 Putnam Asset Allocation - Balanced Portfolio 62,835 659,142 Putnam Asset Allocation - Conservative Portfolio 29,411 281,753 Putnam Voyager Fund 1,522,584 24,544,054 ----------- $88,091,922 ===========
D. PLAN TERMINATION Although it has expressed no intent to do so, the Company specifically reserves the right to amend or terminate the Plan or to discontinue contributions at any time. Upon termination, a participant's entire account will become fully vested and the assets shall be administered in the manner provided for in the Plan. E. FEDERAL INCOME TAX STATUS The Plan obtained its latest determination letter dated November 21, 1995, in which the Internal Revenue Service stated that the Plan, as amended March 9, 1995, was in compliance with the applicable requirements of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. However, the Plan administrator believes that the Plan is currently designed and is being operated in compliance with the applicable requirements of the Internal Revenue Code. Therefore, they believe that the Plan was qualified and the related trust was tax exempt as of the financial statement date. Therefore, no provision for income taxes has been included in the Plan's financial statements. Plan income, participant pretax contributions and employer contributions represent taxable income to the participating employees at the time of distribution in accordance with IRS regulations currently in effect. F. RELATED PARTY TRANSACTIONS Plan investments include 2,489,019 and 2,230,710 shares of Terra Industries Inc. Common Stock with a fair market value of $32,519,320 and $32,357,950 at December 31, 1997 and 1996, respectively. Terra Industries Inc. is the Plan sponsor and therefore, these transactions qualify as related party transactions. Certain Plan investments are shares of mutual funds managed by Putnam Investments. Putnam Investments is the trustee as designated by the Plan and, therefore, these transactions qualify as related party transactions. TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN
PN 333 EIN #52-1145429 ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES DECEMBER 31, 1997 - -------------------------------------------------------------------------------------------------------------- Column B Column C Column D Column E Description of investment Identity of issue, including collateral, rate borrower, lessor or of interest, maturity date, Current similar party par or maturity value Cost Value Common Stock: *Terra Industries Inc. 2,489,019 shares $21,751,695 $32,519,320 Mutual Funds: *Putnam Growth and Income Fund 826,156 shares 15,489,571 16,143,082 *Putnam Income Fund 585,556 shares 4,079,694 4,163,301 *Putnam New Opportunities Fund 206,455 shares 8,891,107 10,044,027 *Putnam Money Market Fund 6,522,779 shares 6,522,779 6,522,779 *Putnam International Growth Fund 160,483 shares 2,551,061 2,675,251 *Putnam Asset Allocation - Growth Portfolio 178,116 shares 2,138,504 2,196,170 *Putnam Asset Allocation - Balanced Portfolio 128,036 shares 1,415,130 1,425,041 *Putnam Asset Allocation - Conservative Portfolio 70,079 shares 704,598 698,683 *Putnam Voyager Fund 1,411,894 shares 24,785,376 26,896,589 Other Investments: *Loans to Participants Principal balance of $3,863,754 bearing interest rates ranging from 5.5% to 14% and maturing from January 1998 to August 2027 3,863,754 ------------ $107,147,997 ============ * Party-In-Interest
TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN PN 333 EIN #52-1145429 ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1997 Series of Transactions When Aggregated Involving an Amount in Excess of 5 Percent of the Current Value of Plan Assets
Column A Column B Column C Column D Column E Total Dollar Identity of Description Number of Number of Value of Party Involved of Asset Purchases Sales Purchases *Terra Industries Inc. Common Stock 250 451 $7,005,347 *Putnam Investments Putnam Growth and Income Fund 276 395 7,622,156 *Putnam Investments Putnam Voyager Fund 207 514 5,505,373
Column F Column G Total Dollar Value of Net Gain Sales or (Loss) $ 3,751,873 $1,075,646 3,658,620 268,785 7,125,178 (117,446)
*Party-In-Interest
TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1997 - ---------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Employer Directed -------------------------------------------------------------------------------- Terra Terra Industries Industries Inc. Inc. Voluntary Putnam Putnam Putnam Common Common Growth & Putnam New Money Stock Stock Income Income Opportunities Market ASSETS: Fund Fund Fund Fund Fund Fund Investments, at fair value: Terra Industries Inc. Common Stock $26,931,358 $5,587,962 $ - $ - $ - $ - Putnam Fund for Growth and Income - - 16,143,082 - - - Putnam Income Fund - - - 4,163,301 - - Putnam New opportunities Fund - - - - 10,044,027 - Putnam Money Market Fund - - - - - 6,522,779 Putnam International Growth Fund - - - - - - Putnam Asset Allocation - Balanced Portfolio - - - - - - Putnam Asset Allocation - Conservative Portfolio - - - - - - Putnam Voyager Fund - - - - - - Loans to participants - - - - - - Total investments 26,931,358 5,587,962 16,143,082 4,163,301 10,044,027 6,522,779 Employer contributions receivable 141,209 - - - - - Participant contributions receivable - 27,721 20,161 17,641 70,563 15,121 Receivable - securities sold - 62,542 - - - - Total assets 27,072,567 5,678,225 16,163,243 4,180,942 10,114,590 6,537,900 LIABILITIES: Payable - securities purchased - 18,956 - - - - Net assets available for benefits $27,072,567 $5,659,269 $16,163,243 $4,180,942 $10,114,590 $6,537,900
See notes to financial statements.
TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1996 - ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------- Employer Directed ------------------------------------------------------------------------------------------- Terra Terra Industries Industries Inc. Inc. Voluntary Putnam Common Common Growth & Putnam Putnam Stock Stock Income Income Voyager ASSETS: Fund Fund Fund Fund Fund Investments, at fair value: Terra Industries Inc. Common Stock $27,175,208 $5,182,742 $ - $ - $ - Putnam Fund for Growth and Income - - 11,200,356 - - Putnam Income Fund - - - 3,852,029 - Putnam Voyager Fund - - - - 24,544,054 Putnam New Opportunities Fund - - - - - Putnam Asset Allocation - Growth Portfolio - - - - - Putnam Asset Allocation - Balanced Portfolio - - - - - Putnam Asset Allocation - Conservative Portfolio - - - - - Putnam International Growth Fund - - - - - Putnam Money Market Fund - - - - - ----------- ---------- ----------- ---------- ----------- Total investments at fair value 27,175,208 5,182,742 11,200,356 3,852,029 24,544,054 Loans to participants - - - - - ----------- ---------- ----------- ---------- ----------- Total investments 27,175,208 5,182,742 11,200,356 3,852,029 24,544,054 Employer contributions receivable 108,026 - - - - Participant contributions receivable - 24,148 17,562 15,367 37,320 Receivable - securities sold - 726,795 - - - ----------- ---------- ----------- ---------- ---------- Total assets 27,283,234 5,933,685 11,217,919 3,867,396 24,581,374 LIABILITIES: Accrued administrative expenses - 651 1,234 420 2,698 Payable - securities purchased 181,766 - - - - ----------- ---------- ----------- ---------- ----------- Total liabilities 181,766 651 1,234 420 2,698 ----------- ---------- ----------- ---------- ----------- Net assets available for benefits $27,101,468 $5,933,034 $11,216,684 $3,866,976 $24,578,676 =========== ========== =========== ========== ===========
----------------------------------------------------------------------------- Supplemental Information by Fund ----------------------------------------------------------------------------- Participant Directed ----------------------------------------------------------------------------- Putnam Putnam Putnam Putnam Putnam New AA AA AA International Opportunities Growth Balanced Conservative Growth ASSETS: Fund Fund Fund Fund Fund Investments, at fair value: Terra Industries Inc. Common Stock $ - $ - $ - $ - $ - Putnam Fund for Growth and Income - - - - - Putnam Income Fund - - - - - Putnam Voyager Fund - - - - - Putnam New Opportunities Fund 7,149,056 - - - - Putnam Asset Allocation - Growth Portfolio - 1,325,313 - - - Putnam Asset Allocation - Balanced Portfolio - - 659,142 - - Putnam Asset Allocation - Conservative - - - - - Portfolio - - - 281,753 - Putnam International Growth Fund - - - - - Putnam Money Market Fund - - - - - ---------- ---------- -------- -------- ---------- Total investments at fair value 7,149,056 1,325,313 659,142 281,753 1,545,185 Loans to participants - - - - - ---------- ---------- -------- -------- ---------- Total investments 7,149,056 1,325,313 659,142 281,753 1,545,084 Employer contributions receivable - - - - - Participant contributions receivable 61,468 - - - 50,492 Receivable - securities sold - - - - - ---------- ---------- -------- -------- ---------- Total assets 7,210,524 1,325,313 659,142 281,753 1,595,677 LIABILITIES: Accrued administrative expenses 786 149 75 27 170 Payable - securities purchased - - - - - ---------- ---------- -------- -------- ---------- Total liabilities 786 149 75 27 170 ---------- ---------- -------- -------- ---------- Net assets available for benefits $7,209,738 $1,325,164 $659,067 $281,726 $1,595,507 ========== ========== ======== ======== ==========
------------------------------- ------------------------------- Putnam Money Market Participant ASSETS: Fund Loans Investments, at fair value: Terra Industries Inc. Common Stock $ - $ - Putnam Fund for Growth and Income - - Putnam Income Fund - - Putnam Voyager Fund Putnam New Opportunities Fund - - Putnam Asset Allocation - Growth Portfolio - - Putnam Asset Allocation - Balanced Portfolio - - Putnam Asset Allocation - Conservative Portfolio Putnam International Growth Fund - - Putnam Money Market Fund 5,177,084 - ---------- ---------- Total investments at fair value 5,177,084 - Loans to participants - 3,282,504 ---------- ---------- Total investments 5,177,084 3,282,504 Employer contributions receivable - - Participant contributions receivable 13,172 - Receivable - securities sold - - ---------- ---------- Total assets 5,190,256 3,282,504 LIABILITIES: Accrued administrative expenses 570 - Payable - securities purchased - - ---------- ---------- Total liabilities 570 - ---------- ---------- Net assets available for benefits $5,189,686 $3,282,504 ========== ==========
See notes to financial statements. 22 EX-99.E 2 INDEPENDENT AUDITORS REPORT EXHIBIT E INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement 33-46734 on Form S-8 of our report dated April 24, 1998 appearing in this Annual Report on Form 11-K of the Terra Industries Inc. Employees' Savings and Investment Plan for the year ended December 31, 1997. DELOITTE & TOUCHE LLP Omaha, Nebraska June 22, 1998 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the members of the Terra Industries Inc. Employee Benefit Committee have duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN Date: June 24, 1998 By: /s/ George H. Valentine ------------------------------ ------------------------------ George H. Valentine Senior Vice President, General Counsel and Corporate Secretary -----END PRIVACY-ENHANCED MESSAGE-----