UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 1-8520
TERRA INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
| Maryland | 52-1145429 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
| Terra Centre P.O. Box 6000 600 Fourth Street Sioux City, Iowa |
51102-6000 | |
| (Address of principal executive offices) | (Zip Code) | |
Registrant’s telephone number, including area code: (712) 277-1340
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
As of September 30, 2004, the following shares of the registrant’s stock were outstanding:
Common Shares, without par value 77,838,685 shares
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TERRA INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(in thousands)
(unaudited)
| September 30, 2004 |
December 31, 2003 |
September 30, 2003 |
||||||||||
| ASSETS |
||||||||||||
| Cash and short-term investments |
$ | 144,592 | $ | 87,334 | $ | 21,278 | ||||||
| Accounts receivable, less allowance for doubtful accounts of $233, $87 and $1,643 |
127,882 | 133,480 | 107,450 | |||||||||
| Inventories |
90,823 | 90,869 | 87,599 | |||||||||
| Other current assets |
54,294 | 43,319 | 32,835 | |||||||||
| Total current assets |
417,591 | 355,002 | 249,162 | |||||||||
| Property, plant and equipment, net |
665,900 | 707,665 | 706,610 | |||||||||
| Deferred plant turnaround costs |
25,102 | 28,103 | 26,029 | |||||||||
| Other assets |
31,585 | 34,292 | 35,194 | |||||||||
| Total assets |
$ | 1,140,178 | $ | 1,125,062 | $ | 1,016,995 | ||||||
| LIABILITIES |
||||||||||||
| Debt due within one year |
$ | 161 | $ | 153 | $ | 152 | ||||||
| Accounts payable |
73,052 | 79,563 | 74,956 | |||||||||
| Accrued and other liabilities |
109,493 | 142,338 | 105,329 | |||||||||
| Total current liabilities |
182,706 | 222,054 | 180,437 | |||||||||
| Long-term debt and capital lease obligations |
402,081 | 402,206 | 402,242 | |||||||||
| Deferred income taxes |
40,102 | 17,831 | 27,942 | |||||||||
| Pension liabilities |
63,453 | 63,453 | 61,248 | |||||||||
| Other liabilities |
43,858 | 65,325 | 47,155 | |||||||||
| Minority interest |
91,446 | 89,062 | 84,777 | |||||||||
| Total liabilities and minority interest |
823,646 | 859,931 | 803,801 | |||||||||
| STOCKHOLDERS’ EQUITY |
||||||||||||
| Capital stock |
||||||||||||
| Common Shares, authorized 133,500 shares; outstanding 77,839, 77,563 and 77,505 shares |
129,473 | 128,968 | 128,920 | |||||||||
| Paid-in capital |
555,616 | 555,529 | 555,509 | |||||||||
| Accumulated other comprehensive loss |
(36,335 | ) | (44,596 | ) | (58,964 | ) | ||||||
| Accumulated deficit |
(332,222 | ) | (374,770 | ) | (412,271 | ) | ||||||
| Total stockholders’ equity |
316,532 | 265,131 | 213,194 | |||||||||
| Total liabilities and stockholders’ equity |
$ | 1,140,178 | $ | 1,125,062 | $ | 1,016,995 | ||||||
| See Accompanying Notes to the Condensed Consolidated Financial Statements. |
2 |
TERRA INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per-share amounts)
(unaudited)
| Three months ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| REVENUES |
||||||||||||||||
| Net sales |
$ | 376,147 | $ | 324,317 | $ | 1,152,872 | $ | 982,569 | ||||||||
| Other income, net |
520 | 525 | 1,592 | 1,361 | ||||||||||||
| Total revenues |
376,667 | 324,842 | 1,154,464 | 983,930 | ||||||||||||
| COSTS AND EXPENSES |
||||||||||||||||
| Cost of sales |
337,919 | 308,554 | 1,032,144 | 954,659 | ||||||||||||
| Selling, general and administrative expense |
13,460 | 10,384 | 30,064 | 29,444 | ||||||||||||
| Recovery of product claim costs |
— | — | (17,903 | ) | — | |||||||||||
| Impairment of long-lived assets |
— | — | — | 53,091 | ||||||||||||
| 351,379 | 318,938 | 1,044,305 | 1,037,194 | |||||||||||||
| Income (loss) from operations |
25,288 | 5,904 | 110,159 | (53,264 | ) | |||||||||||
| Interest income |
774 | 48 | 1,763 | 429 | ||||||||||||
| Interest expense |
(13,446 | ) | (13,829 | ) | (40,387 | ) | (41,664 | ) | ||||||||
| Minority interest |
(1,651 | ) | 234 | (8,150 | ) | 12,902 | ||||||||||
| Income (loss) before income taxes |
10,965 | (7,643 | ) | 63,385 | (81,597 | ) | ||||||||||
| Income tax (provision) benefit |
(4,512 | ) | 3,094 | (20,837 | ) | 31,615 | ||||||||||
| NET INCOME (LOSS) |
$ | 6,453 | (4,549 | ) | $ | 42,548 | $ | (49,982 | ) | |||||||
| Basic and diluted income (loss) per share: |
||||||||||||||||
| Basic |
$ | 0.08 | $ | (0.06 | ) | $ | 0.56 | $ | (0.66 | ) | ||||||
| Diluted |
0.08 | (0.06 | ) | 0.55 | (0.66 | ) | ||||||||||
| Basic and diluted weighted average shares outstanding: |
||||||||||||||||
| Basic |
76,164 | 75,726 | 75,878 | 75,602 | ||||||||||||
| Diluted |
78,210 | 75,726 | 77,839 | 75,602 | ||||||||||||
| See Accompanying Notes to the Condensed Consolidated Financial Statements. |
3 |
TERRA INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| OPERATING ACTIVITIES |
||||||||
| Net income (loss) |
$ | 42,548 | $ | (49,982 | ) | |||
| Adjustments to reconcile net income (loss) |
||||||||
| To net cash flows from operating activities: |
||||||||
| Impairment of long-lived assets |
— | 53,091 | ||||||
| Depreciation and amortization |
75,762 | 82,041 | ||||||
| Deferred income taxes |
23,913 | (33,806 | ) | |||||
| Minority interest in earnings (loss) |
8,150 | (12,902 | ) | |||||
| Recovery of product claim costs |
(12,874 | ) | — | |||||
| Changes in current assets and liabilities: |
||||||||
| Accounts receivable |
6,437 | (3,874 | ) | |||||
| Inventories |
933 | 237 | ||||||
| Other current assets |
(12,795 | ) | (4,660 | ) | ||||
| Accounts payable |
(7,146 | ) | (22,419 | ) | ||||
| Accrued and other liabilities |
(38,691 | ) | (9,120 | ) | ||||
| Other |
(120 | ) | 569 | |||||
| Net cash flows from operating activities |
86,117 | (825 | ) | |||||
| INVESTING ACTIVITIES |
||||||||
| Purchase of property, plant and equipment |
(8,136 | ) | (7,074 | ) | ||||
| Plant turnaround costs |
(14,989 | ) | (20,666 | ) | ||||
| Other |
(418 | ) | (1,100 | ) | ||||
| Net cash flows from investing activities |
(23,543 | ) | (28,840 | ) | ||||
| FINANCING ACTIVITIES |
||||||||
| Issuance of long-term debt |
— | 202,000 | ||||||
| Principal payments on long-term debt and capital lease obligations |
(117 | ) | (200,107 | ) | ||||
| Deferred financing costs |
— | (8,581 | ) | |||||
| Proceeds from exercise of stock options |
320 | — | ||||||
| Distributions to minority interests |
(5,766 | ) | (1,153 | ) | ||||
| Net cash flows from financing activities |
(5,563 | ) | (7,841 | ) | ||||
| Effect of exchange rate changes on cash |
247 | 305 | ||||||
| Increase (decrease) to cash and short-term investments |
57,258 | (37,201 | ) | |||||
| Cash and short-term investments at beginning of period |
87,334 | 58,479 | ||||||
| Cash and short-term investments at end of period |
$ | 144,592 | $ | 21,278 | ||||
| See Accompanying Notes to the Condensed Consolidated Financial Statements. |
4 |
TERRA INDUSTRIES INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2004 AND 2003
(in thousands)
(unaudited)