FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarter 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 1-10877
TERRA NITROGEN COMPANY, L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 73-1389684 | |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| Terra Centre PO Box 6000, 600 Fourth Street Sioux City, Iowa |
51102-6000 | |
| (Address of principal executive office) | (Zip Code) |
Registrant’s telephone number:
(712) 277-1340
At the close of business on September 30, 2004, there were 18,501,576 Common Units outstanding.
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. x Yes ¨ No
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
TERRA NITROGEN COMPANY, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
| September 30, 2004 |
December 31, 2003 |
September 30, 2003 |
||||||||||
| ASSETS | ||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 42,377 | $ | 39,596 | $ | 2,281 | ||||||
| Accounts receivable |
21,587 | 36,612 | 22,398 | |||||||||
| Inventory – finished products |
8,630 | 12,516 | 15,478 | |||||||||
| Inventory – materials and supplies |
7,150 | 6,848 | 6,541 | |||||||||
| Prepaid insurance and other current assets |
12,112 | 6,344 | 2,271 | |||||||||
| Total current assets |
91,856 | 101,916 | 48,969 | |||||||||
| Property, plant and equipment, net |
80,027 | 84,691 | 86,918 | |||||||||
| Other assets |
7,408 | 9,631 | 10,390 | |||||||||
| Total assets |
$ | 179,291 | $ | 196,238 | $ | 146,277 | ||||||
| LIABILITIES AND PARTNERS’ CAPITAL | ||||||||||||
| Current liabilities: |
||||||||||||
| Accounts payable and accrued liabilities |
$ | 12,685 | $ | 8,661 | $ | 13,847 | ||||||
| Customer prepayments |
11,315 | 41,251 | 14,166 | |||||||||
| Pension liabilities due to affiliate |
2,931 | 4,116 | 4,116 | |||||||||
| Current portion of long-term debt and capital lease obligations |
62 | 58 | 56 | |||||||||
| Total current liabilities |
26,993 | 54,086 | 32,185 | |||||||||
| Long-term debt due to affiliates |
8,200 | 8,200 | 8,200 | |||||||||
| Capital lease obligations |
28 | 75 | 88 | |||||||||
| Other long-term liabilities |
501 | 1,600 | 1,600 | |||||||||
| Total liabilities |
35,722 | 63,961 | 42,073 | |||||||||
| Partners’ capital: |
||||||||||||
| Limited partners’ interests – common unitholders |
147,837 | 138,274 | 121,085 | |||||||||
| General partner’s interest |
(10,852 | ) | (11,047 | ) | (11.398 | ) | ||||||
| Accumulated other comprehensive income (loss) |
6,584 | 5,050 | (5,483 | ) | ||||||||
| Total partners’ capital |
143,569 | 132,277 | 104,204 | |||||||||
| Total liabilities and partners’ capital |
$ | 179,291 | $ | 196,238 | $ | 146,277 | ||||||
See Accompanying Notes to the Condensed Consolidated Financial Statements.
2
TERRA NITROGEN COMPANY, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit amounts)
(unaudited)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| Revenues |
$ | 100,479 | $ | 86,202 | $ | 337,436 | $ | 275,033 | ||||||||
| Other income |
251 | 223 | 620 | 477 | ||||||||||||
| Total revenues |
100,730 | 86,425 | 338,056 | 275,510 | ||||||||||||
| Cost of goods sold |
90,791 | 84,865 | 297,062 | 280,716 | ||||||||||||
| Gross profit (loss) |
9,939 | 1,560 | 40,994 | (5,206 | ) | |||||||||||
| Operating expenses |
3,366 | 2,330 | 8,200 | 6,824 | ||||||||||||
| Impairment of long-lived assets |
— | — | — | 40,655 | ||||||||||||
| Operating income (loss) |
6,573 | (770 | ) | 32,794 | (52,685 | ) | ||||||||||
| Interest expense |
(2 | ) | (198 | ) | (6 | ) | (204 | ) | ||||||||
| Interest income |
185 | 9 | 569 | 81 | ||||||||||||
| Net income (loss) |
$ | 6,756 | $ | (959 | ) | $ | 33,357 | $ | (52,808 | ) | ||||||
| Net income (loss) allocable to limited partners’ interest |
$ | 6,621 | $ | (940 | ) | $ | 32,690 | $ | (51,752 | ) | ||||||
| Net income (loss) per limited partnership unit |
$ | 0.36 | $ | (0.05 | ) | $ | 1.77 | $ | (2.80 | ) | ||||||
See Accompanying Notes to the Condensed Consolidated Financial Statements.
3
TERRA NITROGEN COMPANY, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
| Nine Months Ended September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Operating activities: | ||||||||
| Net income (loss) from operations |
$ | 33,357 | $ | (52,808 | ) | |||
| Adjustments to reconcile net income to net cash flows from operating activities: |
||||||||
| Impairment of long-lived assets |
— | 40,655 | ||||||
| Depreciation |
7,020 | 9,207 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Receivables |
15,025 | 4,362 | ||||||
| Inventories |
3,584 | (6,112 | ) | |||||
| Prepaid insurance and other current assets |
(4,233 | ) | 4,388 | |||||
| Accounts payable, accrued liabilities and customer prepayments |
(25,909 | ) | (22,579 | ) | ||||
| Other |
(935 | ) | (2,846 | ) | ||||
| Net cash flows from operating activities | 27,909 | (25,733 | ) | |||||
| Investing activities: | ||||||||
| Capital expenditures |
(1,482 | ) | (1,763 | ) | ||||
| Financing activities: | ||||||||
| Net changes in short-term borrowings |
— | — | ||||||
| Repayment of long-term debt and capital lease obligations |
(48 | ) | (1,241 | ) | ||||
| Partnership distributions paid |
(23,599 | ) | (4,720 | ) | ||||
| Net cash flows from financing activities |
(25,129 | ) | (7,724 | ) | ||||
| Net decrease in cash and cash equivalents |
2,780 | (33,457 | ) | |||||
| Cash and cash equivalents at beginning of period |
39,596 | 35,738 | ||||||
| Cash and cash equivalents at end of period |
$ | 42,376 | $ | 2,281 | ||||
See Accompanying Notes to the Condensed Consolidated Financial Statements.
4
TERRA NITROGEN COMPANY, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS’ CAPITAL
(in thousands, except for units)
(unaudited)
| (in thousands, except for Units) |
Limited Partners’ Interests |
General Partner’s Interests |
Accumulated Other Comprehensive Income (Loss) |
Total Partners’ Capital |
||||||||||||
| Partners’ capital at January 1, 2004 |
$ | 138,274 | $ | (11,047 | ) | $ | 5,050 | $ | 132,277 | |||||||
| Net income |
32,690 | 667 | — | 33,357 | ||||||||||||
| Change in fair value of derivatives |
— | — | 1,534 | 1,534 | ||||||||||||
| Comprehensive income |
— | — | — | 34,891 | ||||||||||||
| Distributions |
(23,127 | ) | (472 | ) | — | (23,599 | ) | |||||||||
| Partners’ capital at September 30, 2004 |
$ | 147,837 | $ | (10,852 | ) | $ | 6,584 | $ | 143,569 | |||||||
| Limited partner units issued and outstanding at September 30, 2004 |
18,501,576 | |||||||||||||||
| (in thousands, except for Units) |
Limited Partners’ Interest |
General Partner’s Interests |
Accumulated Income (Loss) |
Total Partners’ Capital |
||||||||||||
| Partners’ capital at January 1, 2003 |
$ | 177,463 | $ | (10,248 | ) | $ | 2,273 | $ | 169,488 | |||||||
| Net loss |
(51,752 | ) | (1,056 | ) | — | (52,808 | ) | |||||||||
| Change in fair value of derivatives |
— | — | (7,756 | ) | (7,756 | ) | ||||||||||
| Comprehensive loss |
— | — | — | (60,564 | ) | |||||||||||
| Distributions |
(4,626 | ) | (94 | ) | — | </ | ||||||||||