Terra Industries Inc.
[logo] TERRA 600 Fourth Street
P.O. Box 6000
Sioux City, IA 51102-6000
www.terraindustries.com
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NEWS
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For immediate release Contact: Mark Rosenbury
(712) 279-8756
mrosenbury@terraindustries.com
TERRA NITROGEN COMPANY, L.P. REPORTS FOURTH QUARTER RESULTS;
ANNOUNCES CASH DISTRIBUTION
Sioux City, Iowa (Jan. 29, 2004)--Terra Nitrogen Company, L.P. (TNCLP) (NYSE
symbol: TNH) today reported net income of $17.5 million, or $.93 per limited
partnership unit, on revenues of $129.8 million for the fourth quarter ended
Dec. 31, 2003. This compares with a net loss of $1.1 million, or $.06 per unit,
on revenues of $88.5 million for the 2002 fourth quarter. The net loss for the
year ended Dec. 31, 2003, was $35.3 million, or $1.87 per unit, on revenues of
$405.4 million compared to net income of $6.2 million, or $.33 per unit, on
revenues of $326.9 million for 2002.
TNCLP also announced a cash distribution for the quarter ended Dec. 31, 2003, of
$.25 per limited partnership unit payable Feb. 25, 2004, to holders of record as
of Feb. 9, 2004. 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.
Results for the year ended Dec. 31, 2003, include a $40.7 million charge for the
impairment of TNCLP's Blytheville, Ark. long-lived assets. The impairment charge
represents the carrying value of the Blytheville facility's long-lived assets
that may not be realized from ongoing operations. TNCLP suspended production at
the Blytheville facility in the 2003 third quarter; it resumed production on
Sept. 29, 2003, in response to higher urea selling prices and strong seasonal
demand.
TNCLP's 2003 fourth quarter results as compared to those of the 2002 fourth
quarter reflect similar sales volumes and higher selling prices, partially
offset by higher natural gas costs. Unit selling prices for ammonia, nitrogen
solutions and urea increased by 45, 40 and 42 percent, respectively, over fourth
quarter 2002 prices.
TNCLP's natural gas unit costs in the 2003 fourth quarter were 32 percent higher
than in the comparable 2002 period. Forward pricing contracts increased TNCLP's
fourth quarter 2003 natural gas costs by $5.2 million. As of Dec. 31, 2003, 33
percent of TNCLP's expected 2004 natural gas requirements had been priced at
about $5.6 million below published market prices at that date.
TNCLP's 2003 results as compared to those of 2002 reflect significantly higher
selling prices, partially offset by higher natural gas costs and lower sales
volumes. Ammonia, nitrogen solutions and urea selling prices for the year were
58, 39 and 45 percent higher, respectively, than for 2002. The lower sales
volumes reflect a three-month production shutdown during 2003 at TNCLP's
Blytheville facility due to adverse market conditions. TNCLP expects to operate
the Blytheville facility through at least April 2004.
TNCLP's natural gas unit costs in 2003 were 67 percent higher than in 2002.
Natural gas hedging activities increased TNCLP's 2003 natural gas costs by $3.0
million compared to spot prices.
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 Nitrogen Company, L.P. news announcements are also available on
Terra Industries' web site, www.terraindustries.com.
(Tables follow)
TERRA NITROGEN COMPANY, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per-unit amounts)
(unaudited)
Three Months Ended Twelve Months Ended
December 31 December 31
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2003 2002 2003 2002
-------------- ---------- ----------- ------------
Product revenues $ 129,519 $ 88,280 $ 404,552 $ 325,919
Other income 323 185 800 1,003
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Total revenues 129,842 88,465 405,352 326,922
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Cost of goods sold 107,588 83,851 379,096 297,886
Depreciation and amortization 2,358 3,283 11,566 13,107
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Total cost of sales 109,946 87,134 390,662 310,993
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Total gross profit 19,896 1,331 14,690 15,929
Operating expenses 2,263 2,197 9,087 9,439
Impairment of long-lived assets -- -- 40,655 --
Interest expenses--net 93 226 216 311
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Net income (loss) $ 17,540 $ (1,092) $ (35,268) $ 6,179
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Earnings (loss) per limited
partnership unit $ 0.93 $ (0.06) $ (1.87) $ 0.33
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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
2003 2002
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Sales Average Sales Average
QUARTER Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton) (000 tons) ($/ton)
---------- ------- ---------- -------
Ammonia 132 249 107 172
Nitrogen Solutions 633 102 636 73
Urea 121 179 108 126
2003 2002
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Sales Average Sales Average
YEAR Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton) (000 tons) ($/ton)
---------- ------- ---------- -------
Ammonia 336 242 394 153
Nitrogen Solutions 2,280 97 2,475 70
Urea 390 168 450 116
TERRA NITROGEN COMPANY, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
December 31,
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2003 2002
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ASSETS
Cash and short-term investments $ 39,596 $ 35,738
Accounts receivable 36,612 26,760
Inventories 19,364 20,103
Other current assets 6,344 6,659
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Total current assets 101,916 89,260
Property, plant and equipment, net 84,691 126,056
Other assets 9,631 10,708
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Total assets $ 196,238 $ 226,024
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LIABILITIES
Current portion of long-term debt and
capital lease obligations $ 58 $ 53
Accounts payable, accrued liabilities and
pension liabilities 54,028 42,834
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Total current liabilities 54,086 42,887
Long-term debt and capital lease obligations 8,275 8,333
Other liabilities 1,600 5,316
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Total liabilities 63,961 56,536
PARTNERS' EQUITY 132,277 169,488
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Total liabilities and partners' equity $ 196,238 $ 226,024
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