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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994 Commission file number: 1-8520
TERRA INDUSTRIES INC.
(Exact name of registrant as specified in its charter)
MARYLAND
(State or other jurisdiction of
incorporation or organization)
52-1145429
(I.R.S. Employer
Identification No.)
TERRA CENTRE
600 FOURTH STREET
P. O. BOX 6000
SIOUX CITY, IOWA
(Address of principal executive offices)
51102-6000
(Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (712) 277-1340
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
------------------- -----------------------
COMMON SHARES, WITHOUT PAR VALUE NEW YORK STOCK EXCHANGE
TORONTO STOCK EXCHANGE
10 3/4% SENIOR NOTES DUE 2003 N/A
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
______________
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 [_]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained to
the best of Registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
The aggregate market value of Registrant's voting stock held by non-
affiliates of Registrant, at January 31, 1995, was approximately $432,220,000.
On January 31, 1995, Registrant's outstanding voting stock consisted of
80,980,502 Common Shares, without par value.
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DOCUMENTS INCORPORATED BY REFERENCE
Annual Report to Stockholders of Registrant for the fiscal year ended December
31, 1994. Certain information therein is incorporated by reference into Part I,
Part II and Part IV hereof.
Proxy Statement for the Annual Meeting of Stockholders of Registrant to be held
on May 2, 1995. Certain information therein is incorporated by reference into
Part III hereof.
TABLE OF CONTENTS
PART I
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ITEMS 1 AND 2. BUSINESS AND PROPERTIES................................... 1
ITEM 3. LEGAL PROCEEDINGS......................................... 10
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....... 10
EXECUTIVE OFFICERS OF THE COMPANY......................... 10
PART II
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ITEM 5. MARKET FOR TERRA INDUSTRIES' COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS....................................... 12
ITEM 6. SELECTED FINANCIAL DATA................................... 12
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS....................... 12
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............... 12
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE....................... 12
PART III
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ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY............ 12
ITEM 11. EXECUTIVE COMPENSATION..................................... 12
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT................................................. 13
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............. 13
PART IV
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K................................................... 13
SIGNATURES................................................................. 19
INDEX TO FINANCIAL STATEMENT SCHEDULES, REPORTS AND CONSENTS............... S-1
PART I
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ITEMS 1 AND 2. BUSINESS AND PROPERTIES.
Terra Industries Inc., a Maryland corporation ("Terra" or the "Company"),
conducts its ongoing operations in North America primarily through its
subsidiaries. The Company's principal operating subsidiaries include Terra
International, Inc., an indirect wholly owned subsidiary ("Terra
International"), Terra International (Canada) Inc., a wholly owned subsidiary of
Terra International ("Terra Canada"), Beaumont Methanol, Limited Partnership, an
indirect wholly owned subsidiary ("BMLP"), Terra Nitrogen Corporation, an
indirect wholly owned subsidiary ("TNC"), and Terra Nitrogen, Limited
Partnership ("TNLP"). TNC is TNLP's sole general partner and owns, directly or
indirectly, approximately 60% of TNLP. Approximately 40% of TNLP is indirectly
owned by other limited partners in the form of publicly traded Senior Preference
Units of Terra Nitrogen Company, L.P. ("TNCLP"). Unless otherwise referred to
herein or the context otherwise requires, references to the "Company" or "Terra"
shall mean Terra Industries Inc., including, where the context so requires, its
direct and indirect subsidiaries. The principal corporate office of the Company
is located at Terra Centre, 600 Fourth Street, Sioux City, Iowa 51102-6000 and
its telephone number is 712-277-1340.
GENERAL
The Company is a leading producer of nitrogen fertilizer and marketer of
fertilizer, crop protection products, seed and services for agricultural, turf,
ornamental and other growers. The Company also produces nitrogen products and
methanol for industrial customers.
The Company owns and operates the largest independent farm service center
network in North America and is the second largest supplier of crop production
inputs in the United States. After giving effect to the acquisition of
Agricultural Minerals and Chemicals Inc., a Delaware corporation ("AMCI"), in
October 1994, the Company became the third largest producer of anhydrous ammonia
and one of the two largest producers of nitrogen solutions in the United States
and Canada. The Company also substantially increased its participation in the
methanol production industry with the acquisition of AMCI.
The Company's distribution network serves the United States and eastern region
of Canada and has grown over the last several years to include approximately:
. 355 farm service centers;
. 100 fertilizer storage facilities, most of which are leased and
approximately half of which are operated by TNLP; and
. 770 affiliated dealer locations.
The Company's production facilities are comprised of:
. three nitrogen fertilizer plants, which are located in Oklahoma (the
"Woodward Facility"), Iowa (the "Port Neal Facility") and Ontario, Canada
(the "Courtright Facility");
. two TNLP nitrogen fertilizer plants, which are located in Oklahoma (the
"Verdigris Facility") and Arkansas (the "Blytheville Facility");
. a methanol production plant, which is located in Texas (the "Beaumont
Facility") (the Woodward Facility also includes some methanol production
capacity);
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. a crop protection chemical formulation plant, which is located in
Arkansas (the "Blytheville Formulation Facility"); and
. seven additional liquid chemical formulation facilities.
The Port Neal Facility suffered a major explosion on December 13, 1994.
The Company has decided to rebuild the facility, but does not expect it to be
fully operational again until 1996.
For certain financial information regarding the Company's industry
segments (Distribution, Nitrogen Products and Methanol), see Note 20 to the
Company's Consolidated Financial Statements incorporated herein.
DISTRIBUTION
The Company's farm service center network is a distribution and marketing
system for a comprehensive line of fertilizers, crop protection products, seeds
and services. The Company's customers are primarily farmers and dealers located
in the midwestern and southern regions of the United States, and the eastern
region of Canada.
Products. The Company markets a comprehensive line of crop protection products
(herbicides, insecticides, fungicides, adjuvants, plant growth regulators,
defoliants, desiccants and other agricultural chemicals), fertilizer (nitrogen,
phosphates, potash and micronutrients) and seed.
Although most crop protection products marketed by the Company are
manufactured by unaffiliated suppliers, the Company also markets its own
Riverside(R) brand products. Riverside products represented approximately 15%
of the Company's total crop protection product sales in 1994. The Riverside line
includes approximately 130 products, of which 23 were added in 1994, and
consists of herbicides, insecticides, fungicides, adjuvants, seed treatments,
plant growth regulators, defoliants and desiccants. The majority of Riverside
products are formulated or packaged in facilities owned by the Company. The
Riverside line includes several formulations produced exclusively by the
Company, but does not include proprietary agricultural chemicals. Riverside
products generally provide higher margins for the Company than products
manufactured by unaffiliated suppliers. The sale of such products, however,
involves additional indirect costs, including the cost of maintaining and
disposing of excess inventory and potentially greater liability for product
defects. The Company possesses and processes the registrations required by the
EPA for Riverside pesticide products.
The Company markets several major seed brands and, in its United States
marketing area, is the largest independent seed distributor. The Company focuses
particular marketing efforts on its proprietary brand of corn hybrids, soybean
and cotton seed varieties, which provide higher margins. These products
represented approximately 15% of total seed sales in 1994. The Company also has
an exclusive retail storefront marketing and distribution agreement for DEKALB
brand seed in the Midwest, which accounted for approximately 10% of total 1994
seed sales.
Services. In addition to selling products required to grow crops, the
Company's farm service centers offer a wide variety of services to grower
customers. These services include soil and plant tissue analysis, crop
production program recommendations, custom blending of fertilizers, field
application services, field inspections for pest control and crop program
performance follow-up. The farm service centers utilize the Company's Ag
Analytical Services laboratory in Elida, Ohio to analyze nutrient levels in soil
and plant tissue samples. The results of these tests are used by the Company's
proprietary CropMaster(R) program to provide specific, localized soil
fertility recommendations for specific crops on a field-by-field basis. Crop
input recommendations are provided through computer terminals at most farm
service center locations, which are linked to a mainframe computer located at
the Company's headquarters in Sioux City, Iowa. Recommendations can be made for
substantially all crops grown in the Company's markets. The program also
provides "least cost" nutrient blending formula recommendations, makes seed
variety recommendations based on hybrid characteristics and other factors
important to the individual grower, and maintains crop input records for grower
customers.
In connection with product sales to dealers, the Company provides warehousing
and delivery services. For selected dealer customers, the Company offers a
service package called MarketMaster/TM/. The package includes environmental and
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safety audits, business management and agronomic training courses, access to the
Company's Ag Analytical Services laboratory, use of the CropMaster program and
other services. There were approximately 510 MarketMaster dealer sites at
December 31, 1994.
Marketing and Distribution. The Company markets its products primarily to
agricultural customers, including both dealers and growers. For 1994,
approximately 65% of the Company's distribution revenues were attributable to
retail sales through farm service center locations and approximately 35% were
attributable to wholesale sales to dealers.
The Company also markets its products through its Professional Products(R)
group to non-farm customers, including turf growers, nurseries, golf courses,
parks, athletic facilities and utility companies. The Company offers these
customers herbicides, insecticides, fungicides, fertilizer, adjuvants, plant
growth regulators, seed and agronomic services. The Professional Products
personnel generally work through the Company's farm service centers, using
established delivery systems and product lines.
The Company's distribution operations are organized into Northern and
Southern Divisions, which include 14 separate regions. Field personnel receive
regular training through Terra University(R), a series of courses designed to
develop skills in agronomy, management, sales, environmental and personal
safety, and field application. The field salespeople are supported by the Ag
Analytical Services laboratory, a staff of Technical Service Representatives and
a research station where the efficacy of various crop protection products and
the performance of numerous seed varieties are tested.
Properties. The Company's farm service centers are located on a combination
of owned and leased properties and a majority of the buildings and other
improvements thereon are owned in fee. The leases have varying expiration dates
through 2007.
Product Formulations. The Company's Blytheville Formulation Facility
formulates dry flowable ("DF") crop protection products and liquid crop
protection chemicals in separate production lines at the same location. DF
formulations are dry, water-dispersible granules that are mixed with water
before application. Because of their dry form, granules have several
benefits compared with liquid formulations including: easier package disposal,
easier cleanup of accidental spills, absence of toxic solvents, no fumes, less
weight, less space required for storage, and no product loss from freezing
temperatures or settling. Because of these benefits, the Company expects more
agricultural chemicals will be offered to growers in DF form in the future. The
Blytheville Formulation Facility is one of 13 known DF plants in the U.S. and
formulates eight DF products and six liquid products. Approximately 50% of the
plant's volume in 1994 was attributable to the Company's own Riverside brand
product line. The Company has developed several DF formulations not available
from any other producer or formulator. The Company has also developed DF
formulations for a number of companies that contract all or portions of their
production at the Blytheville Formulation Facility. The Blytheville Formulation
Facility is owned in fee.
NITROGEN PRODUCTS
Nitrogen is one of three primary nutrients essential for plant growth.
Nitrogen fertilizer products must be reapplied each year in areas of extensive
agricultural usage because of absorption by crops and its tendency to escape
from the soil. There are no substitutes for nitrogen fertilizer in the
cultivation of high-yield crops.
The Company is a major producer and distributor of nitrogen products,
principally fertilizers. The Company's principal nitrogen products are
ammonia, urea and urea ammonium nitrate solution ("UAN"). A significant portion
of the Company's ammonia production is upgraded into other nitrogen fertilizer
products such as urea and UAN.
Products. Although, to some extent, the various nitrogen fertilizer products
are interchangeable, each has its own distinct characteristics which produce
agronomic preferences among end users. Farmers decide which type of nitrogen
fertilizer to apply based on the crop planted, soil and weather conditions,
regional farming practices, relative nitrogen fertilizer prices and the cost
and availability of appropriate storage, handling and application equipment.
Ammonia. Anhydrous ammonia is the simplest form of nitrogen fertilizer and
is the feedstock for the production of most other nitrogen fertilizers,
including urea and UAN. It is produced by reacting natural gas with steam and
air at high temperatures and pressures in the presence of catalysts. It has a
nitrogen content of 82% by weight and is generally the least expensive form of
fertilizer per unit of nitrogen.
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Urea. Solid urea is produced for both the feed and fertilizer market by
converting ammonia into liquid urea, which can then be turned into a solid which
is either prilled or granulated. Urea has a nitrogen content of 46% by weight,
the highest level for any solid nitrogen product. Granular urea is generally
sold as fertilizer and prilled urea is generally sold as a feed supplement. The
Company produces both granular and prilled urea.
UAN Solution. The Company produces UAN at all five of its fertilizer
manufacturing facilities. The Verdigris Facility in Oklahoma is the largest UAN
production facility in the United States. UAN is produced by combining liquid
urea and ammonium nitrate in water. The nitrogen content of UAN is typically 28%
to 32% by weight. UAN is a liquid fertilizer and, unlike ammonia, is generally
odorless and does not need to be refrigerated or pressurized for transportation
or storage.
UAN may be applied separately or may be mixed with various crop protection
products, permitting the application of several materials simultaneously, and
thus reducing energy and labor costs. In addition, UAN may be applied from
ordinary tanks and trucks and can be sprayed or injected into the soil, or
applied through irrigation systems, throughout the growing season. UAN is
relatively expensive to transport and store because of its high water content.
Due to its stable nature, UAN may be used for no-till row crops where fertilizer
is spread upon the surface but may be subject to volatilization losses. The use
of conservation tilling, which reduces erosion, is increasing in the United
States, and the Company believes this trend, if continued, should have a
positive impact on UAN demand.
The Company's sales mix of nitrogen products for the years ended December 31,
1992, 1993 and 1994 (including TNLP on a pro forma basis) were approximately as
follows (based on tons sold):
1992 1993 1994
------------------
Ammonia 21% 23% 25%
Urea 15% 16% 16%
UAN 64% 61% 59%
Plants. The Company's Woodward Facility, Port Neal Facility and Courtright
Facility are integrated facilities for the production of ammonia, liquid urea
and UAN and other nitrogen fertilizer solutions. In addition, the Port Neal
Facility and the Courtright Facility produce solid urea. TNLP's Verdigris
Facility and Blytheville Facility are also integrated facilities. The Verdigris
Facility produces primarily ammonia and UAN and the Blytheville Facility
produces ammonia, urea and UAN.
The Woodward Facility and the Port Neal Facility are owned in fee.
The Courtright Facility is operated under a lease financing agreement. The
agreement expires in April 1997 and requires annual lease payments. The Company
has a purchase option during the term of the lease and at expiration for
approximately $47 million (Cdn). If, at the end of the lease term, the purchase
option is not exercised, the Company must pay to the lessor approximately $40
million (Cdn), subject to reimbursement based on the proceeds realized upon the
sale of the facility by the lessor.
Located at the Verdigris Facility are two ammonia plants, two nitric acid
plants and two UAN solution plants and the Port Terminal. The plants are owned
in fee by TNLP, while the Port Terminal is leased from the Tulsa-Rogers County
Port Authority. The leasehold interest is scheduled to expire in April 1999,
and TNLP has the option to renew the lease for two additional, consecutive
terms of five years each.
The Blytheville Facility consists of an anhydrous ammonia plant, a granular
urea plant and UAN solution plant. The UAN plant began production in late 1994.
The ammonia plant at the Blytheville Facility is leased from the City of
Blytheville at a nominal annual rental. The lease term is scheduled to expire
in November 1999, and TNLP has the option to extend the lease for twelve
successive terms of five years each at the same rental rate. TNLP has the
unconditional right to purchase the plant for a nominal price at the end of the
lease term (including any renewal term). The urea plant is also leased from the
City of Blytheville. The lease is scheduled to expire in November 1999, and TNLP
has the option to renew the lease for four successive periods of five years each
at a nominal annual rental. TNLP also has an option to purchase the property for
a nominal price.
Each of the Company's five fertilizer manufacturing facilities is designed to
operate continuously, except for planned biennial shutdowns for maintenance and
installation of efficiency improvements. Capacity utilization (gross tons
produced divided by capacity tons at expected operating rates and on stream
factors) of Terra International's manufacturing facilities for the years ended
December 31, 1994, 1993 and 1992, in the aggregate, was approximately 93%, 102%,
and 99%, respectively. Capacity utilization of TNLP's manufacturing facilities
for the years ended December 31, 1994, 1993, and 1992, in the aggregate, was
approximately 96%, 101%, and 107%, respectively.
The Courtright Facility's liquid urea and granulation capacities are expected
to increase as a result of a plant upgrade project, announced in February 1994.
The project is expected to be completed in the 1995 fourth quarter and will
enable the replacement of 65,000 tons of annual ammonia sales with urea and UAN
sales. The project cost is estimated to be approximately $20 million and is
expected to be funded through lease financing.
The Port Neal Facility suffered a major explosion on December 13, 1994 and is
not expected to be fully operational again until 1996. At the time of the
explosion, the Port Neal Facility accounted for approximately 15% of the
Company's
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total nitrogen fertilizer production. The Company will recover
insurance proceeds for substantially all its property damage, third-party
liability claims and business interruption. The Company reserved $7 million
during the 1994 fourth quarter to cover insurance deductibles and uninsured
costs related to the explosion.
Marketing and Distribution. The Company's principal customers for its
manufactured nitrogen products are large independent dealers, national retail
chains, cooperatives and industrial customers. Industrial customers accounted
for approximately 26% of the Company's total sales of its manufactured nitrogen
products. Less than 15% of the Company's fertilizer production is sold through
its farm service center locations to retail customers, while the rest is sold to
outside customers. In 1994, no customer accounted for greater than 10% of total
manufactured nitrogen fertilizer sales.
The Company has production facilities and significant storage capacity in
major fertilizer consuming regions which allow it to be a major supplier of
nitrogen fertilizers.
METHANOL
The Company substantially increased its participation in the methanol
production industry in October 1994 with the acquisition of the BMLP Beaumont
Facility. The Company has approximately 320 million gallons of annual methanol
production capacity, representing approximately 20% of the total United States
rated capacity in production at the end of 1994.
Product. Methanol is a liquid petrochemical made primarily from natural gas.
It is used as a feedstock in the production of other chemical products such as
formaldehyde, acetic acid and chemicals used in the building products industry.
Methanol is also used as a feedstock in the production of MTBE, an oxygenate and
octane enhancer used as an additive in reformulated gasoline. Reformulated
gasoline has lower volatility and is less aromatic than gasoline. The methanol
manufacturing process involves heating the natural gas feedstock, mixing it with
steam and passing it over a nickel-based catalyst, which breaks it down into
carbon monoxide, carbon dioxide and hydrogen. This reformed gas is then cooled,
compressed and passed over a copper-zinc based catalyst to produce crude
methanol. Crude methanol consists of approximately 80% methanol and 20% water.
In order to convert it to high-purity chemical grade methanol suitable for sale,
the crude methanol is distilled to remove the water and other impurities.
Plants. During the first half of 1994, the Company completed the capital
improvements necessary to produce methanol instead of ammonia for a portion of
the Woodward Facility's capacity. The project cost approximately $15 million and
gives the Company approximately 40 million gallons of annual methanol capacity
at the Woodward Facility.
The Beaumont Facility is the largest methanol production plant in the United
States, with approximately 280 million gallons of annual methanol capacity. The
plant and processing equipment are owned by BMLP and the land is leased from
E.I. du Pont de Nemours and Company ("DuPont"), from which the methanol business
associated with the Beaumont Facility originated, for a nominal annual rental
under a lease agreement which expires in 2090. Because the Beaumont Facility is
entirely contained in a complex owned and operated by DuPont (the "Beaumont
Complex"), BMLP depends on DuPont for access to the Beaumont Facility. BMLP also
relies on DuPont for access and certain essential services relating to the wharf
located at the Beaumont Complex through which most of the finished methanol
product is shipped to customers and the pipelines used to transport it and to
obtain natural gas, as well as for certain utilities and waste water treatment
facilities and other essential services.
Marketing and Distribution. The marketing of methanol from the Beaumont
Facility had been conducted for over a year on an exclusive basis by
Trammochem, a division of Transammonia, Inc., pursuant to a Marketing Services
Agreement. The services provided by Trammochem included analysis of market
conditions for methanol, marketing and sales on a contract basis and sales on a
spot basis, arrangement of transportation of methanol to customers and customer
relations activities. BMLP retained responsibility for the invoicing and
collection of payments from customers and for loading transportation equipment
in accordance with customer requirements. BMLP paid Trammochem a fee based on
the
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Beaumont Facility's earnings and sales. The Marketing Services Agreement was
terminated by BMLP effective as of February 2, 1995. Company employees have
assumed all functions previously provided by Trammochem.
Methanol customers are primarily large chemical or MTBE producers located in
the United States; however, some sales have been made to customers in Central
and South America.
Methanol Contracts. BMLP has a number of long-term methanol sales contracts,
the most significant of which is with DuPont (the "DuPont Contract"). In 1994,
BMLP sold approximately 60% of its production under such contracts. For 1995,
BMLP has contracted to sell approximately 75% of its production at prices
indexed to published sources. Most of the these sales contracts (other than the
DuPont Contract) cover fixed volumes and have terms of up to three years.
Under the DuPont Contract, DuPont has agreed to purchase 108 million gallons
of methanol each year until 2001 (representing 39% of the Beaumont Facility
capacity). The DuPont Contract will continue in effect after the initial term
unless terminated by either party on two years' notice. Commencing in 1998, BMLP
and DuPont will each have the unilateral right (exercisable one time only for
the remaining term of the contract) to permanently reduce the contract quantity
required to be delivered by BMLP to DuPont in any contract year by up to 54
million gallons. The price for the methanol delivered under the DuPont Contract
is generally indexed to published sources.
BMLP is a party to a methanol hedging agreement pursuant to which it received
a $4 million lump sum payment in exchange for agreeing to make payments based on
the market prices of methanol and natural gas through 1997. BMLP will be
required to make payments under the methanol hedging agreement if methanol
prices remain high relative to natural gas prices as compared with historical
price levels. For the year ended December 31, 1994, BMLP accrued certain amounts
for purposes of potential payments under this agreement. Through the Beaumont
Facility and the Company's other methanol production capabilities, the Company
will benefit from such market price differences at any time at which it is
required to make payments under such agreement. As a result of making such
payments, BMLP will not benefit fully from increases in the price of methanol
during the term of the methanol hedging agreement.
CREDIT
A substantial portion of the Company's sales to its grower and dealer
customers is made on credit terms customary in the industry. During the third
quarter of 1992, the Company established a grower financing program to provide
secured, interest bearing financing to qualified grower customers for their
operating and crop input requirements on extended payment terms. The Company
provided approximately $25 million in 1993 and $65 million in 1994 in credit
lines to grower customers under this program. Although the Company does not
expect, and has not experienced, significant bad debts in its grower finance
program, the Company does not believe it has sufficient experience with the
program to provide a meaningful evaluation of the associated credit risk.
SEASONALITY AND VOLATILITY
The agricultural products business is seasonal, based upon the planting,
growing and harvesting cycles. Inventories must be accumulated to be available
for seasonal sales, requiring significant storage capacity. Inventory
accumulations are financed by suppliers or short-term borrowings, which are
retired with the proceeds of the sales of such inventory. In times of lower
demand, the Company can reduce purchases of crop inputs for the distribution
portion of its business, thereby decreasing inventory carrying costs. In the
past, over half of the Company's sales generally occurred during the second
quarter of each year. This seasonality also generally results in higher
fertilizer prices during peak periods, with prices typically reaching their
highest point in the spring, dropping in the summer, increasing in the fall (as
depleted inventories are restored) through the spring.
The agricultural products business can also be volatile as a result of a
number of other factors, the most important of which, for U.S. markets, are
weather patterns and field conditions (particularly during periods of high
fertilizer consumption), current and projected grain inventories and prices,
and the U.S. government's agricultural policy. Among the
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governmental policies that influence the markets for fertilizer are those
directly or indirectly influencing the number of acres planted, the level of
grain inventories, the mix of crops planted and crop prices.
As with any commodity chemical, the price of methanol is volatile. The
industry has experienced cycles of oversupply resulting in depressed prices and
idled capacity, followed by periods of shortage and rapidly rising prices.
During 1994, increased world demand for methanol combined with a large number of
plant shutdowns and turnarounds in the industry and the phase-in of federally
mandated standards for oxygenated gasoline to create a tight market and
dramatically increased prices over 1993 levels. There can be no assurances that
such conditions will continue. In part, future demand for methanol will depend
on the regulatory environment with respect to oxygenated gasoline. Most methanol
sold in the U.S. is sold pursuant to long-term contracts based on market index
pricing and a fixed volume.
RAW MATERIALS
The principal raw material used to produce nitrogen fertilizer and methanol is
natural gas. The Company estimates that natural gas costs comprised nearly 50%
of the total costs and expenses associated with the Company's manufactured
fertilizer operations in 1994. The Company estimates that natural gas represents
over 50% of the costs and expenses associated with its methanol operations. A
significant increase in the price of natural gas that could not be recovered
through an increase in nitrogen fertilizer or methanol prices could have a
material adverse effect on the Company's profitability and cash flow. The
Company's general policy is to fix or cap the unit cost for 40% to 80% of its
natural gas requirements for the upcoming 12 months using supply contracts and
various forward pricing or hedging techniques. Under certain circumstances, the
Company may fix or cap the unit cost for up to 25% of such requirements beyond
one year. The settlement dates are scheduled to coincide with gas purchases
during such future periods.
Reliable sources for supply of crop inputs at competitive prices are critical
to the distribution portion of the Company's business. The Company's sources for
fertilizer, agricultural chemicals and seed are typically manufacturers of the
products without an internal capability to distribute products to the North
American grower.
TRANSPORTATION
The Company uses several modes of transportation to receive and distribute
products to customers and its own locations, including railroad cars, common
carrier trucks, barges, common carrier pipelines and Company-owned or leased
vehicles. The Company utilizes approximately 100 liquid, dry and anhydrous
ammonia fertilizer terminal storage facilities (some of which are in the same
locations and some of which are operated by TNLP) in over 20 states
and in Ontario, Canada. The Company also has varying amounts of warehouse space
at each of its farm service centers and has one methanol storage facility in
Beaumont, Texas.
Through Terra Express, Inc. and Terra Express of Oklahoma, Inc., wholly-owned
truck transportation subsidiaries of Terra International (together, "Terra
Express"), the Company provides transportation services to its own facilities
and customers as a contract carrier. Terra Express uses approximately 90 owner-
operated trucks and 20 Company-owned trucks to deliver fertilizer, crop
protection products, seed, feed ingredients and other products to its own
facilities and customers. At its manufacturing facilities, Blytheville
Formulation Facility and liquid fertilizer storage locations, the Company
utilizes railcars as the major method of transportation. All of the Company's
approximately 2,000 railcars are leased.
Purchased natural gas is transported to the Port Neal Facility via an
interstate pipeline operating as an open access natural gas transporter. Under a
Federal Energy Regulatory Commission order, the Company maintains facilities for
direct access to its interstate pipeline shipper; however, the Company has
retained its alternative connection to a local utility service to preserve some
flexibility. The Company transports purchased natural gas for the Woodward
Facility and the Verdigris Facility through an intrastate pipeline that is not
an open access carrier; however, the Company is able to transport gas supplies
from any in-state source connected to the widespread pipeline system, and has
limited access to
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supplies outside the state. The Courtright Facility utilizes local gas storage
service provided by a local utility, and purchased gas is transported from
western Canada through the TransCanada Pipeline under various delivery
contracts. The Company transports purchased natural gas for the Blytheville
Facility through a natural gas pipeline company under an agreement that extends
for more than two years.
The Company transports methanol primarily by marine transport via the Neches
River to the Intercoastal Canal and the Gulf of Mexico and via pipeline to
selected customers. Access to the wharf and the pipeline used at the Beaumont
Facility is provided through agreements with DuPont.
RESEARCH AND DEVELOPMENT
The Company operates a 70-acre Agronomy Research Station near its Port Neal
Facility for program development and product testing, and routinely conducts
product evaluation and testing with growers and universities. The Company also
develops DF and other chemical formulations for its Riverside product line and
for basic chemical products at its Blytheville Formulation Facility.
COMPETITION
Nitrogen fertilizer is a global commodity and customers, including end-users,
dealers and other fertilizer producers, base their purchasing decisions
principally on the delivered price of the product. The Company competes with a
number of U.S. producers, and producers in other countries, including state-
owned and government-subsidized entities. Some of the Company's principal
competitors may have greater total resources and may be less dependent on
earnings from nitrogen fertilizer sales than is the Company. Some foreign
competitors may have access to lower cost or government-subsidized natural gas
supplies. The Company believes that it competes with other manufacturers of
nitrogen fertilizer on the basis of delivery terms and availability of products
as well as on price.
The market for the fertilizer, crop protection products and seed distributed
by the Company is highly competitive. In 1994, sales attributable to the
Company's farm service centers accounted for less than 10% of total crop
production products sold in the U.S. Within the specific market areas served by
its farm service centers, however, the Company's share of the market was
substantially higher in most instances. The Company's competitors include
cooperatives, divisions of diversified agribusiness companies, regional
distributors and independent dealers, some of which have substantially greater
financial and other resources than the Company. The Company competes primarily
by providing a comprehensive line of products and by providing what the Company
believes to be superior services to growers and dealers.
The methanol industry, like the fertilizer industry, is highly competitive and
such competition is based largely on price, reliability and deliverability. The
relative cost and availability of natural gas and the efficiency of production
facilities are important competitive factors. Significant determinants of a
plant's competitive position are the natural gas acquisition and transportation
contracts that a plant negotiates with its major suppliers. Domestic competitors
for methanol include a number of large integrated petrochemical producers, many
of which are better capitalized than the Company. In addition, the production
and trade of methanol has become increasingly global, and a number of foreign
competitors produce methanol primarily for the export market.
8
ENVIRONMENTAL AND OTHER REGULATORY MATTERS
The Company's operations are subject to various federal, state and local
environmental, safety and health laws and regulations, including laws relating
to air quality, hazardous and solid wastes and water quality. Terra Canada's
operations are subject to various federal and provincial regulations regarding
such matters, including the Canadian Environmental Protection Act administered
by Environment Canada, and the Ontario Environmental Protection Act administered
by the Ontario Ministry of the Environment. The Company is also involved in the
manufacture, handling, transportation and storage of materials that are or may
be classified as hazardous or toxic by federal, state, provincial or other
regulatory agencies. Precautions are taken to reduce the likelihood of accidents
involving these materials. If such materials have been or are disposed of at
sites that are targeted for cleanup by federal or state regulatory authorities,
the Company may be among those responsible under CERCLA or analogous state laws
for all or part of the costs of such cleanup.
Terra International has been designated as a potentially responsible party
("PRP") under CERCLA or its state analogues with respect to various sites. Under
CERCLA, all PRPs may be held jointly and severally liable for the costs of
investigation and remediation of an environmentally damaged site. After
consideration of such factors as the number and levels of financial
responsibility of other PRPs, the existence of contractual indemnities, the
availability of defenses and the speculative nature of the costs involved, the
Company's management believes that its liability with respect to these matters
will not be material.
Certain state regulatory agencies have enacted requirements to provide
secondary containment for bulk agricultural chemical storage facilities present
at the Company's farm service centers and terminals. It is expected that other
states will adopt similar requirements pursuant to federal mandate. The Company
has commenced construction of these facilities at its farm service centers and
terminals, and estimates that the future cost of complying with these
regulations in 1995 and beyond will be approximately $6.5 million.
With respect to the Verdigris Facility and Blytheville Facility, Freeport-
McMoRan Resource Partners, Limited Partnership ("FMRP") (a former owner and
operator of such facilities) retains liability for certain environmental
matters.
With respect to the Beaumont Facility, DuPont retains responsibility for certain
environmental costs and liabilities stemming from conditions or operations to
the extent such conditions or operations existed or occurred prior to the 1991
acquisition from DuPont. The Company does not believe that any such
environmental matters, whether or not retained by FMRP or DuPont, will have a
material effect on the Company's financial condition or results of operations.
Insulation and other construction or building materials at certain Company
plants contain asbestos. Over 400 suits have been filed by contractors'
employees against DuPont based on exposure to asbestos-containing material at
the complex in which the Beaumont Facility is located. At least nine of these
are directly related to the Beaumont Facility. An estimate of potential
liability associated with these suits is not available. DuPont will retain
responsibility for all claims based on exposure to hazardous materials,
including asbestos, prior to an acquisition in 1991 from DuPont. Although no
suits relating to asbestos exposure have been filed against the Company to date,
the possibility exists that liability could be incurred in the future for claims
based on exposure to asbestos-containing material after such acquisition.
The Company may be required to install additional air and water quality
control equipment, such as low nitrous oxide burners, scrubbers, ammonia sensors
and continuous emission monitors, at certain of its facilities in order to
maintain compliance with Clean Air Act and Clean Water Act requirements. These
equipment requirements are also typically applicable to competitors as well. The
Company estimates that the cost of complying with these requirements will be
approximately $11 million to $13 million through 1997.
The Company endeavors to comply (and has incurred substantial costs in
connection with such compliance) in all material respects with applicable
environmental, safety and health regulations. The Company does not expect its
continued compliance with such regulations to have a material adverse effect on
its earnings or competitive position.
9
EMPLOYEES
The Company had approximately 3,200 full-time employees at December 31, 1994,
none of whom were covered by a collective bargaining agreement. In addition, the
Company, which annually hires temporary employees on a seasonal basis, hired
approximately 1,500 temporary employees during its spring selling season in
1994.
ITEM 3. LEGAL PROCEEDINGS.
Various legal proceedings are pending against the Company and its
subsidiaries. Management of the Company considers that the aggregate liability
resulting from these proceedings will not be material to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No items were submitted to a vote of security holders of the Company during
the fourth quarter of 1994.
EXECUTIVE OFFICERS OF THE COMPANY
The following paragraphs set forth the name, age and offices of each
present executive officer of Terra, the period during which each executive
officer has served as such and each executive officer's business experience
during the past five years:
Present positions and offices with the Company
and principal occupations during the past five
Name and age years
------------ ----------------------------------------------
Michael L. Bennett (41) Senior Vice President, Distribution of Terra since
February 1995; Senior Vice President, Distribution
of Terra International since October 1994; Vice
President, Northern Division thereof from January
1992 to October 1994; Vice President, Wholesale
Fertilizer Division thereof from January 1990 to
January 1992.
John S. Burchfield (54) Vice President, Human Resources of Terra since
March 1992; Vice President, Human Resources of AON
Corporation from January 1989 to November 1991;
Vice President, Human Resources for Denny's
International, National Education Corp. and
American Hospital Supply Corp. prior thereto.
Burton M. Joyce (53) President and Chief Executive Officer of Terra
since May 1991; Executive Vice President and Chief
Operating Officer thereof from February 1988 to
May 1991.
Francis G. Meyer (43) Vice President and Chief Financial Officer of
Terra since November 1993; Controller thereof from
August 1991 to November 1993; Vice President,
Controller of Terra International from June 1986
to August 1991.
Paula C. Norton (49) Vice President, Corporate and Investor Relations
of Terra since February 1995; Director, Corporate
Relations of Terra from January 1993 to February
1995; Director, Corporate Communication of
Universal Foods Corp. prior thereto.
10
Present positions and offices with the Company
and principal occupations during the past five
Name and age years
------------ ----------------------------------------------
Reuben F. Richards (65) Chairman of the Board of Terra since December
1982; Chief Executive Officer thereof from December
1982 to May 1991 and President thereof from July
1983 to May 1991; Director of Engelhard Corporation
since prior to 1990 and Chairman of the Board
thereof from May 1985 to December 1994; Chairman of
the Board of Minorco USA since May 1990 and Chief
Executive Officer and President thereof since
February 1994.
W. Mark Rosenbury (47) President of Terra Nitrogen Corporation since
November 1994; Executive Vice President of Terra
since November 1993; Chief Operating Officer
thereof from November 1993 to November 1994; Vice
President and Chief Financial Officer thereof from
August 1991 to November 1993; Vice President and
Corporate Controller thereof from January 1987 to
August 1991.
Robert E. Thompson (43) Vice President, Controller of Terra since February
1995, after joining Terra in November 1994; Vice
President, Finance and Controller of Ameritech
Custom Business Services from April 1993 to June
1994; Controller of Ameritech Services, Inc. from
October 1990 to April 1993; Controller of
Ameritech Applied Technologies prior thereto.
George H. Valentine (46) Vice President, General Counsel and Corporate
Secretary of Terra since November 1993; Assistant
General Counsel of Household International, Inc.
from February 1986 to November 1993.
There are no family relationships among the executive officers and
directors of Terra or arrangements or understandings between any executive
officer and any other person pursuant to which any executive officer was
selected as such. Officers of Terra are elected annually to serve until their
respective successors are elected and qualified.
11
PART II
-------
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
Information with respect to the market for the Company's common equity
and related stockholder matters contained in Terra's 1994 Annual Report to
Stockholders under the captions "Quarterly Financial and Stock Market Data
(Unaudited)" and "Stockholders and Dividends" is incorporated herein by
reference.
ITEM 6. SELECTED FINANCIAL DATA.
Information with respect to selected financial data contained in Terra's
1994 Annual Report to Stockholders under the caption "Financial Summary" is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Information with respect to management's discussion and analysis of
financial condition and results of operations contained in Terra's 1994 Annual
Report to Stockholders under the caption "Financial Review" is incorporated
herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The consolidated financial statements, together with the notes thereto
and the report of independent auditors thereon, and the information set forth
under the caption "Quarterly Financial and Stock Market Data (Unaudited)"
contained in Terra's 1994 Annual Report to Stockholders are incorporated herein
by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not Applicable.
PART III
--------
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY.
Information with respect to directors of the Company under the caption
"Election of Directors" in the Proxy Statement for the Annual Meeting of
Stockholders of Terra to be held on May 2, 1995, is incorporated herein by
reference. Information with respect to executive officers who are not also
directors of the Company appears under the caption "Executive Officers of the
Company" in Part I hereof and is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION.
Information with respect to executive compensation under the caption
"Executive Compensation and Other Information" in the Proxy Statement for the
Annual Meeting of Stockholders of Terra to be held on May 2, 1995, is
incorporated herein by reference.
12
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Information with respect to security ownership of certain beneficial
owners and management under the caption "Equity Security Ownership" in the Proxy
Statement for the Annual Meeting of Stockholders of Terra to be held on May 2,
1995, is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Information with respect to certain relationships and related
transactions under the caption "Certain Relationships and Related Transactions"
in the Proxy Statement for the Annual Meeting of Stockholders of Terra to be
held on May 2, 1995, is incorporated herein by reference.
PART IV
-------
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(A) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
1. Consolidated Financial Statements of Terra and its subsidiaries
(incorporated herein by reference to Terra's 1994 Annual Report to
Stockholders).
Consolidated Statements of Financial Position at December 31, 1994 and
1993.
Consolidated Statements of Income for the years ended December 31,
1994, 1993 and 1992.
Consolidated Statements of Cash Flows for the years ended December 31,
1994, 1993 and 1992.
Consolidated Statements of Changes in Stockholders' Equity for the
years ended December 31, 1994, 1993 and 1992.
Notes to the Consolidated Financial Statements.
Independent Auditors' Report.
Quarterly Production Data (Unaudited).
Quarterly Financial and Stock Market Data (Unaudited).
Revenues.
Stockholders and Dividends.
Financial Summary.
2. Index to Financial Statement Schedules
See Index to Financial Statement Schedules of Terra and its
subsidiaries at page S-1.
13
3. Other Financial Statements
Individual financial statements of Terra's subsidiaries are omitted
because all such subsidiaries are included in the consolidated financial
statements being filed. Individual financial statements of 50% or less
owned persons accounted for on the equity method have been omitted
because such 50% or less owned persons considered in the aggregate, as a
single subsidiary, would not constitute a significant subsidiary.
(B) EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
1. Amended and Restated Deferred Compensation Agreement made as of May 1,
1991, by and between Terra Industries and R. F. Richards filed as
Exhibit 10 to Terra Industries' Form 8-K dated September 30, 1991.
2. Resolution adopted by the Personnel Committee of the Board of Directors
of Terra Industries with respect to supplemental retirement benefits for
certain senior executive officers of Terra Industries, filed as Exhibit
10.4.2 to Terra Industries' Form 10-Q for the fiscal quarter ended March
31, 1991.
3. 1992 Stock Incentive Plan of Terra Industries filed as Exhibit 10.1.6 to
Terra Industries' Form 10-K for the year ended December 31, 1992.
4. Form of Restricted Stock Agreement of Terra Industries under its 1992
Stock Incentive Plan filed as Exhibit 10.1.7 to Terra Industries' Form
10-K for the year ended December 31, 1992.
5. Form of Incentive Stock Option Agreement of Terra Industries under its
1992 Stock Incentive Plan filed as Exhibit 10.1.8 to Terra Industries'
Form 10-K for the year ended December 31, 1992.
6. Form of Nonqualified Stock Incentive Agreement of Terra Industries under
its 1992 Stock Incentive Plan filed as Exhibit 10.1.9 to Terra
Industries' Form 10-K for the year ended December 31, 1992.
7. 1993 Incentive Award Program for Officers and Key Executives of Terra
Industries filed as Exhibit 10.1.10 to Terra Industries' Form 10-K for
the year ended December 31, 1992.
8. Excess Benefit Plan of Terra Industries as amended effective as of
January 1, 1992, filed as Exhibit 10.1.13 to Terra Industries' Form 10-K
for the year ended December 31, 1992.
9. Restricted Stock Agreement of Burton M. Joyce dated May 1, 1991, filed
as Exhibit 10.1.14 to Terra Industries' Form 10-K for the year ended
December 31, 1992.
10. Terra Industries Inc. Supplemental Deferred Compensation Plan effective
as of December 20, 1993, filed as Exhibit 10.1.9 to Terra Industries'
Form 10-K for the year ended December 31, 1993.
11. Retirement/Consulting Agreement, dated as of May 13, 1993 by and between
Paul D. Foster and Terra International, filed as Exhibit 10.1.2 to Terra
Industries' Form 10-K for the year ended December 31, 1993.
12. Consulting Agreement dated as of December 30, 1993, by and between Paul
D. Foster and Terra International, filed as Exhibit 10.1.13 to Terra
Industries' Form 10-K for the year ended December 31, 1993.
13. 1994 Incentive Award Program for Officers and Key Executives of Terra
Industries filed as Exhibit 10.1.14 to Terra Industries' Form 10-K for
the year ended December 31, 1993.
14
14. 1995 Incentive Award Program for Officers and Key Executives of Terra
Industries filed as Exhibit 10.1.14 to Terra Industries' Formal 10-K for
the year ended December 31, 1994.
(C) REPORTS ON FORM 8-K
The following reports on Form 8-K were filed during the fourth quarter of
1994:
Form 8-K/A dated November 3, 1994, Items 2 and 7 including financial
information incorporated therein.
Form 8-K dated December 19, 1994, Items 2 and 5.
(D) EXHIBITS
3.1.1 Articles of Restatement of Terra Industries filed with the State of
Maryland on September 11, 1990, filed as Exhibit 3.1 to Terra
Industries' Form 10-K for the year ended December 31, 1990, is
incorporated herein by reference.
3.1.2 Articles of Amendment of Terra Industries filed with the State of
Maryland on May 6, 1992, filed as Exhibit 3.1.2 to Terra Industries'
Form 10-K for the year ended December 31, 1992, is incorporated herein
by reference.
3.1.3 Articles Supplementary of Terra Industries filed with the State of
Maryland on October 13, 1994, filed as Exhibit 4.1.3 to Terra
Industries' Form 8-K/A dated November 3, 1994, is incorporated herein
by reference.
3.2 By-Laws of Terra Industries, as amended through August 7, 1991, filed
as Exhibit 3 to Terra Industries' Form 8-K dated September 30, 1991, is
incorporated herein by reference.
4.1 Indenture dated as of May 31, 1987, from Terra Industries to Mellon
Bank, N.A., as Trustee, including form of Debenture, filed as Exhibit 4
to Amendment No. 2 to the Registration Statement on Form S-3
(Registration No. 33-14171) filed by Terra Industries on June 11, 1987,
is incorporated herein by reference.
4.2 Revolving Credit Agreement dated as of November 24, 1992, among Terra
International, Inc., CitiCorp USA, Inc., Mellon Bank, N.A., Continental
Bank N.A., First Bank National Association, NationsBank of Texas, N.A.
and Rabobank Nederland, filed as Exhibit 4.1.2 to Terra Industries'
Form 10-K for the year ended December 31, 1992, is incorporated herein
by reference.
4.3 First Amendment Agreement, dated as of March 26, 1993, by and between
Terra International, Inc., the Lenders listed on the signature page
thereto, and CitiCorp USA, Inc., as agent to Lenders, filed as Exhibit
4.1.3 to Terra Industries' Form 10-K for the year ended December 31,
1993, is incorporated herein by reference.
4.4 Second Amendment Agreement, dated as of December 30, 1993, by and
between Terra International, Inc., the Lenders listed on the signature
page thereto, and CitiCorp USA, Inc., as agent for the Lenders, filed
as Exhibit 4.1.4 to Terra Industries' Form 10-K for the year ended
December 31, 1993, is incorporated herein by reference.
4.5 Indenture dated as of October 15, 1993 among Terra Industries (as
successor by merger to Agricultural Minerals and Chemicals Inc.) and
Society National Bank, including form of Senior Note (the "Senior Notes
Indenture"), filed as Exhibit 99.2 to Terra Industries' Registration
Statement on Form S-3, as amended, (File No. 33-52493), is incorporated
herein by reference.
15
4.6 Credit Agreement among Terra Industries Inc., Terra Capital, Inc.,
Agricultural Minerals, L.P., Certain Guarantors, Certain Lenders,
Certain Issuing Banks and Citibank, N.A. without exhibits or schedules
(the "October 1994 Credit Agreement"), form of which previously filed
as Exhibit 99.5 to Terra Industries' Registration Statement on Form
S-3, as amended (File No. 33-52493).
4.7 Amendment No. 1 to the October 1994 Credit Agreement dated as of
December 28, 1994.
4.8 Amendment No. 2 to the October 1994 Credit Agreement dated as of
December 28, 1994, without exhibits.
4.9 Amendment No. 3 to the October 1994 Credit Agreement dated as of
February 1, 1995.
Other instruments defining the rights of holders of long-term debt of
Terra Industries and its subsidiaries are not being filed because the
total amount of securities authorized under any such instrument does
not exceed 10 percent of the total assets of Terra Industries and its
subsidiaries on a consolidated basis. Terra Industries agrees to
furnish a copy of any instrument to the Securities and Exchange
Commission upon request.
10.1.1 Amended and Restated Deferred Compensation Agreement made as of May 1,
1991, by and between Terra Industries and R. F. Richards filed as
Exhibit 10 to Terra Industries' Form 8-K dated September 30, 1991, is
incorporated herein by reference.
10.1.2 Resolution adopted by the Personnel Committee of the Board of
Directors of Terra Industries with respect to supplemental retirement
benefits for certain senior executive officers of Terra Industries,
filed as Exhibit 10.4.2 to Terra Industries' Form 10-Q for the fiscal
quarter ended March 31, 1991, is incorporated herein by reference.
10.1.3 1992 Stock Incentive Plan of Terra Industries filed as Exhibit 10.1.6
to Terra Industries' Form 10-K for the year ended December 31, 1992, is
incorporated herein by reference.
10.1.4 Form of Restricted Stock Agreement of Terra Industries under its 1992
Stock Incentive Plan filed as Exhibit 10.1.7 to Terra Industries' Form
10-K for the year ended December 31, 1992, is incorporated herein by
reference.
10.1.5 Form of Incentive Stock Option Agreement of Terra Industries under its
1992 Stock Incentive Plan, filed as Exhibit 10.1.8 to Terra Industries'
Form 10-K for the year ended December 31, 1992, is incorporated herein
by reference.
10.1.6 Form of Nonqualified Stock Incentive Agreement of Terra Industries
under its 1992 Stock Incentive Plan, filed as Exhibit 10.1.9 to Terra
Industries' Form 10-K for the year ended December 31, 1992, is
incorporated herein by reference.
10.1.7 1993 Incentive Award Program for Officers and Key Executives of Terra
Industries, filed as Exhibit 10.1.10 to Terra Industries' Form 10-K for
the year ended December 31, 1992, is incorporated herein by reference.
10.1.8 Terra Industries Inc. Supplemental Deferred Compensation Plan effective
as of December 20, 1993 filed as Exhibit 10.1.9 to Terra Industries'
Form 10-K for the year ended December 31, 1993, is incorporated herein
by reference.
16
10.1.9 Excess Benefit Plan of Terra Industries as amended effective as of
January 1, 1992, filed as Exhibit 10.1.13 to Terra Industries' Form
10-K for the year ended December 31, 1992, is incorporated herein by
reference.
10.1.10 Restricted Stock Agreement of Burton M. Joyce dated May 1, 1991, filed
as Exhibit 10.1.14 to Terra Industries' Form 10-K for the year ended
December 31, 1992, is incorporated herein by reference.
10.1.11 Retirement/Consultant Agreement, dated as of May 13, 1993, by and
between Paul D. Foster and Terra International, filed as Exhibit
10.1.12 to Terra Industries' Form 10-K for the year ended December 31,
1993, is incorporated herein by reference.
10.1.12 Consulting Agreement, dated as of December 30, 1993, by and between
Paul D. Foster and Terra International, filed as Exhibit 10.1.13 to
Terra Industries' Form 10-K for the year ended December 31, 1993, is
incorporated herein by reference.
10.1.13 1994 Incentive Award Program for Officers and Key Executives of Terra
Industries filed as Exhibit 10.1.14 to Terra Industries' Form 10-K for
the year ended December 31, 1993, is incorporated herein by reference.
10.1.14 1995 Incentive Award Program for Officers and Key Executives of Terra
Industries.
10.2 Asset Sale and Purchase Agreement among Inspiration Consolidated Copper
Company and Cyprus Miami Mining Corporation and Cyprus Christmas Mine
Corporation dated as of June 30, 1988, filed as Exhibit 10.19 to Terra
Industries' Form 10-K for the year ended December 31, 1988, is
incorporated herein by reference.
10.3.1 Stock Purchase Agreement, dated as of June 14, 1991, among Minorco,
Kirkdale Investments Limited, Terra Industries and Hudson Holdings
Corporation, filed as Exhibit 2 to Terra Industries' Form 8-K dated
June 14, 1991, is incorporated herein by reference.
10.3.2 Amended and Restated Stock Purchase Agreement, dated as of July 31,
1991, among Minorco, Kirkdale Investments Limited, Terra Industries and
Hudson Holdings Corporation, filed as Exhibit 1 to Terra Industries
Form 8-K dated July 31, 1991, is incorporated herein by reference.
10.3.3 Option Agreement, dated as of June 14, 1991, among Kirkdale Investments
Limited and Terra Industries, filed as Exhibit 3 to Terra Industries'
Form 8-K dated June 14, 1991, is incorporated herein by reference.
10.3.4 Amendment to Stock Option Agreement, dated July 31, 1991, among
Minorco, Kirkdale Investments Limited and Terra Industries, filed as
Exhibit 2 to Terra Industries' Form 8-K dated July 31, 1991, is
incorporated herein by reference.
10.4 Asset and Sale Purchase Agreement, dated as of April 8, 1993, by and
between Terra International, Inc., Terra International (Canada) Inc.
and ICI Canada Inc., filed as Exhibit A to Terra Industries' Form 8-K
dated April 8, 1993, is incorporated herein by reference.
10.5 Asset Purchase Agreement, dated as of December 30, 1993, by and between
Terra International, Inc., The Upjohn Company and Asgrow Florida
Company, filed as Exhibit A to Terra Industries' Form 8-K dated
December 31, 1993, is incorporated herein by reference.
10.6 Lease, dated as of April 8, 1993, between W. Patrick Moroney and Terra
International (Canada) Inc., filed as Exhibit 10.6 to Terra Industries'
Form 10-K for the year ended December 31, 1993, is incorporated herein
by reference.
17
10.7 Merger Agreement dated as of August 8, 1994 among Terra Industries Inc.,
AMCI Acquisition Corp. and Agricultural Minerals and Chemicals Inc.
without exhibits or schedules, filed as Exhibit 2 to Terra Industries'
Registration Statement on Form S-3, as amended, (File No. 33-52493), is
incorporated herein by reference.
10.8 Methanol Hedging Agreement among BMLP (as successor by merger to Beaumont
Methanol Corporation) and The Morgan Stanley Leveraged Equity Fund II,
L.P. as Counterparty, form of which filed as Exhibit 99.1 to Terra
Industries' Registration Statement on Form S-3, as amended, (File No. 33-
52493), is incorporated herein by reference.
10.9 Agreement of Limited Partnership of TNCLP (formerly known as Agricultural
Minerals Company, L.P.) dated as of December 4, 1991, filed as Exhibit
99.3 to Terra Industries' Registration Statement on Form S-3, as amended,
(File No. 33-52493), is incorporated herein by reference.
10.10 Agreement of Limited Partnership of TNLP (formerly known as Agricultural
Minerals, Limited Partnership) dated as of December 4, 1991, filed as
Exhibit 99.4 to Terra Industries' Registration Statement on Form S-3, as
amended, (File No. 33-52493), is incorporated herein by reference.
13 Financial Review and Consolidated Financial Statements as contained in the
Annual Report to Stockholders of Terra Industries for the fiscal year
ended December 31, 1994.
18 Deloitte & Touche LLP letter regarding changes in accounting principles
dated February 1, 1995.
21 Subsidiaries of Terra Industries.
24 Powers of Attorney.
27 Financial Data Schedule. [EDGAR filing only]
18
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
TERRA INDUSTRIES INC.
By: /S/George H. Valentine
-------------------------------------
George H. Valentine
Vice President, General Counsel and
Corporate Secretary
Date: March 15, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
- --------- ----- ----
* Chairman of the Board March 15, 1995
- ------------------
Reuben F. Richards
* Chief Executive Officer, President March 15, 1995
- ------------------ and Director
Burton M. Joyce (Principal Executive Officer)
* Vice President and Chief Financial Officer March 15, 1995
- ------------------ (Principal Financial Officer)
Francis G. Meyer
* Vice President, Controller March 15, 1995
- ------------------ (Principal Accounting Officer)
Robert E. Thompson
* Director March 15, 1995
- ------------------
Edward G. Beimfohr
* Director March 15, 1995
- ------------------
Carol L. Brookins
* Director March 15, 1995
- ------------------
Edward M. Carson
* Director March 15, 1995
- ------------------
David E. Fisher
19
* Director March 15, 1995
- ------------------
Basil T.A. Hone
* Director March 15, 1995
- ------------------
Anthony W. Lea
* Director March 15, 1995
- ------------------
John R. Norton III
* Director March 15, 1995
- ------------------
Henry R. Slack
*By: /S/Francis G. Meyer
-------------------------------
Francis G. Meyer
Attorney-in-Fact
20
INDEX TO FINANCIAL STATEMENT SCHEDULES, REPORTS AND CONSENTS
------------------------------------------------------------
PAGE
----
Report of Deloitte & Touche LLP on Financial Statement Schedules.. S-2
Consent of Deloitte & Touche LLP.................................. S-2
Schedule No.
- ------------
I Condensed Financial Information of Registrant........ S-3
II Valuation and Qualifying Accounts:
Years Ended December 31, 1994, 1993 and 1992......... S-8
Financial statement schedules not included in this report have been omitted
because they are not applicable or the required information is shown in the
consolidated financial statements or the notes thereto.
S-1
INDEPENDENT AUDITORS' REPORT ON
-------------------------------
FINANCIAL STATEMENT SCHEDULES
-----------------------------
To the Board of Directors and Stockholders of Terra Industries Inc.:
We have audited the consolidated financial statements of Terra Industries
Inc. as of December 31, 1994 and 1993 and for each of the three years in the
period ended December 31, 1994, and have issued our report thereon dated
February 1, 1995; such financial statements and report are included in the 1994
Annual Report to Stockholders of Terra Industries Inc. and are incorporated
herein by reference. Our audits also included the Financial Statement Schedules
of Terra Industries Inc. listed in Item 14(a) of this Form 10-K. These
Financial Statement Schedules are the responsibility of the management of Terra
Industries Inc. Our responsibility is to express an opinion based on our
audits. In our opinion, such Financial Statement Schedules, when considered in
relation to the basic consolidated financial statements taken as a whole,
present fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
February 1, 1995
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-8 (Registration Nos.
33-46735, 33-46734, 33-30058 and 33-4939) and Registration Statements on Form
S-3 (Registration Nos. 2-90808, 2-84876 and 2-84669) of Terra Industries Inc. of
our report dated February 1, 1995, included in the 1994 Annual Report to
Stockholders of Terra Industries Inc. which is incorporated by reference in this
Form 10-K. We also consent to the incorporation by reference in such
Prospectuses of our report on the Financial Statement Schedules, appearing
above.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
February 1, 1995
S-2
SCHEDULE I
TERRA INDUSTRIES INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
---------------------------------------------
STATEMENTS OF FINANCIAL POSITION
- ----------------------------------------------------------------------------------------
(in thousands) December 31,
- ----------------------------------------------------------------------------------------
1994 1993
- ----------------------------------------------------------------------------------------
ASSETS
Cash and short-term investments $ 10,511 $ 24,249
Accounts receivable, net 3,069 1,016
Deferred tax asset - current 43,992 26,011
Other current assets 4,516 4,337
- ----------------------------------------------------------------------------------------
Total current assets 62,088 55,613
Investment in and advances to Terra Capital, Inc. 530,327 259,961
Deferred tax asset - non-current --- 24,742
Investment in and advances to discontinued subsidiaries --- 3,488
Other assets 13,769 9,226
- ----------------------------------------------------------------------------------------
Total assets $ 606,184 $ 353,030
========================================================================================
LIABILITIES
Income taxes payable $ 1,914 $ 12,912
Accrued and other liabilities 12,901 8,466
- ----------------------------------------------------------------------------------------
Total current liabilities 14,815 21,378
Long-term debt 158,755 72,057
Deferred income taxes 6,235 ---
Other liabilities 6,691 16,127
- ----------------------------------------------------------------------------------------
Total liabilities 186,496 109,562
- ----------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Capital stock 133,770 122,257
Paid-in capital 630,111 516,128
Accumulated deficit (344,193) (394,917)
- ----------------------------------------------------------------------------------------
Total stockholders' equity 419,688 243,468
- ----------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 606,184 $ 353,030
========================================================================================
See accompanying Notes to the Condensed Financial Statements.
S-3
TERRA INDUSTRIES INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
---------------------------------------------
CONDENSED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
- ---------------------------------------------------------------------------------------------------
(in thousands, except per-share amounts) For the Year Ended December 31,
- ---------------------------------------------------------------------------------------------------
1994 1993 1992
- ---------------------------------------------------------------------------------------------------
INCOME
Equity in earnings of Terra Capital, Inc. $ 64,065 $ 26,691 $ 10,029
Interest and other income (49) 140 2,808
- ---------------------------------------------------------------------------------------------------
Total income 64,016 26,831 12,837
- ---------------------------------------------------------------------------------------------------
EXPENSES
Selling, general and administrative expense 3,788 5,929 4,813
Interest expense 6,382 5,853 5,760
Income tax benefit (5,329) (7,796) (2,430)
- ---------------------------------------------------------------------------------------------------
Total expenses 4,841 3,986 8,143
- ---------------------------------------------------------------------------------------------------
Income from continuing operations 59,175 22,845 4,694
Discontinued operations:
Equity in operations of discontinued
subsidiaries, net of taxes --- --- (4,025)
Gain (loss) on disposition, net of taxes --- --- 2,360
- ---------------------------------------------------------------------------------------------------
Income before extraordinary items and
cumulative effect of accounting changes 59,175 22,845 3,029
Extraordinary loss on early retirement of debt (2,614) --- ---
Cumulative effect of accounting changes --- --- 28,000
- ---------------------------------------------------------------------------------------------------
Net income 56,561 22,845 31,029
Cash dividends paid to common stockholders (5,837) (1,386) ---
Accumulated deficit - beginning of year (394,917) (416,376) (447,405)
- ---------------------------------------------------------------------------------------------------
ACCUMULATED DEFICIT - END OF YEAR $(344,193) $(394,917) $(416,376)
===================================================================================================
INCOME (LOSS) PER COMMON SHARE:
Continuing operations $ 0.81 $ 0.33 $ 0.06
Discontinued operations --- --- (0.02)
- ---------------------------------------------------------------------------------------------------
Income before extraordinary items 0.81 0.33 0.04
Extraordinary loss on early retirement of debt (0.03) --- ---
Cumulative effect of accounting changes --- --- 0.41
- ---------------------------------------------------------------------------------------------------
NET INCOME $ 0.78 $ 0.33 $ 0.45
===================================================================================================
See accompanying Notes to the Condensed Financial Statements.
S-4
TERRA INDUSTRIES INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
---------------------------------------------
STATEMENTS OF CASH FLOWS
- -----------------------------------------------------------------------------------------------------
(in thousands) For the Year Ended December 31,
- -----------------------------------------------------------------------------------------------------
1994 1993 1992
- -----------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $ 56,561 $ 22,845 $ 31,029
Adjustments to reconcile net income to
net cash used by operations:
Equity in earnings of subsidiaries (64,065) (26,691) (10,029)
Loss from discontinued operations --- --- 1,665
Gain on early retirement of debentures 2,614 --- ---
Cumulative effect of accounting change --- --- (28,000)
Deferred income taxes 15,291 (4,494) (19,643)
Other non-cash items 48 81 81
Change in working capital components (9,538) (4,062) 7,995
Other 344 (7,256) 1,164
- -----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 1,255 (19,577) (15,738)
- -----------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Proceeds from asset sales and
discontinued operations 541 40,205 30,425
Capital contributions to subsidiaries (113,000) (30,000) ---
Proceeds from investments 500 --- 30
- -----------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY INVESTING ACTIVITIES (111,959) 10,205 30,455
- -----------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net short-term debt decrease (82,395) --- ---
Loss on early retirement of debt (2,533) --- ---
Debt issuance costs (2,873) --- ---
Issuance of common shares 113,000 --- ---
Dividend paid to common stockholders (5,837) (1,386) ---
Stock issuance/repurchase - net 4,666 513 ---
Advances from (to) subsidiaries - net 72,938 (50,001) 4,207
- -----------------------------------------------------------------------------------------------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES 96,966 (50,874) 4,207
- -----------------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN CASH (13,738) (60,246) 18,924
CASH AND INVESTMENTS AT BEGINNING OF YEAR 24,249 84,495 65,571
- -----------------------------------------------------------------------------------------------------
CASH AND INVESTMENTS AT END OF YEAR $ 10,511 $ 24,249 $ 84,495
=====================================================================================================
INTEREST PAID $ 6,285 $ 6,229 $ 6,208
=====================================================================================================
TAXES PAID $ 16,065 $ 3,320 $ 4,208
=====================================================================================================
See accompanying Notes to the Condensed Financial Statements.
S-5
TERRA INDUSTRIES INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
---------------------------------------------
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BASIS OF PRESENTATION
The Condensed Financial Statements include the Registrant only and reflect the
equity method of accounting for its beneficially owned subsidiaries, Terra
Capital, Inc., Terra International, Inc. (TII), Terra Nitrogen Corporation (TNC)
and Beaumont Methanol Limited Partnership (BMLP). Equity in TII's, 1994
earnings includes a net credit of $3.4 million for the cumulative effect of
accounting changes to recognize costs of major maintenance turnarounds on a
deferral rather than accrual method and to recognize a liability for the
estimated cost of benefits provided to TII's disabled employees. Equity in
TII's 1992 earnings includes the deduction of $5.7 million for the cumulative
effect of accounting changes to recognize the prior service cost of providing
post-retirement medical benefits to TII's employees.
Equity in the financial results of the base metals, coal, leasing and other
discontinued businesses have been included in discontinued operations.
2. LONG-TERM DEBT
Long-term debt at December 31, 1994 consists of $158.8 million of unsecured
10.75% Senior Notes due in full September 30, 2003 which were assumed in
conjunction with the October 1994 acquisition of American Minerals and Chemicals
Inc. (AMCI). Following the Registrant's acquisition of AMCI, $16.2 million of
Senior Notes were redeemed. The 10.75% Senior Notes are redeemable at the
option of the Registrant, in whole or part, at any time on or after September
30, 1998, as more fully detailed in Note 10 to the Consolidated Financial
Statements.
Long-term debt at December 31, 1993 consisted of 8.5% Convertible Subordinated
Debentures (Debentures) of $72,057,000 that was due 2012. The Debentures were
convertible into Common Shares any time prior to maturity, unless previously
redeemed, at a conversion price of $8.083 per share. The Debentures were
subject to redemption, upon not less than 20 days notice by mail, at any time,
as a whole or in part, at the election of the Registrant. During March 1994,
the Registrant gave notice to holders of its intent to redeem the Debentures at
the redemption price of 103.4% of par value. During the 20-day notice period,
holders of $5.9 million chose to convert their debentures into Common Stock of
the Registrant. The Registrant issued 730,768 Common Shares and paid cash for
fractional shares.
3. COMMITMENTS AND CONTINGENCIES
The Registrant is committed to a non-cancelable office lease expiring in 1998.
Total minimum rental payments are: 1995, $3.1 million; 1996, $3.2 million;
1997, $3.3 million and 1998, $1.7 million. These amounts are not reduced by
sublease rentals, which in 1994 were $2.0 million.
The Registrant is contingently liable for retiree medical benefits of employees
of coal mining operations sold on January 12, 1993. Under the purchase
agreement, the purchaser agreed to indemnify the Registrant against its
obligations under certain employee benefit plans. Due to the Coal Industry
Retiree Health Benefit Act of 1992, certain retiree medical benefits of union
coal miners have become statutorily mandated, and all companies owning 50
percent or more of any company liable for such benefits as of certain specified
dates becomes liable for such benefits if the company directly liable is unable
to pay them. As a result, if the purchaser becomes unable to pay its retiree
medical obligations assumed pursuant to the sale, the Registrant may have to pay
such amount. The Registrant has estimated that the present value of liabilities
for which it retains contingent responsibility approximates $12 million at
December 31, 1994. In the event the Registrant would be required to assume this
liability, mineral reserves associated with the sold coal subsidiary would
revert to the Registrant.
The Registrant had letters of credit outstanding totaling $9.7 million at
December 31, 1994 and $13.0 million at December 31, 1993, guaranteeing various
insurance and financing activities. Short-term investments of $9.6 million at
December 31, 1994 and $13.0 million at December 31, 1993 are restricted to
collateralize certain of the letters of credit.
S-6
4. INCOME TAXES
The Registrant files a consolidated U.S. federal tax return. Certain operating
subsidiaries provide for federal income taxes according to tax sharing
agreements which allocate the benefits of operating losses and differences
between financial reporting and income tax basis results to the Registrant. The
subsidiaries acquired in connection with the October 1994 acquisition of AMCI
provide for federal taxes according to a separate return basis with any
additional benefits of the Registrant's operating loss utilization allocated to
the Registrant.
S-7
SCHEDULE II
TERRA INDUSTRIES INC.
VALUATION AND QUALIFYING ACCOUNTS
Years Ended December 31, 1994, 1993, and 1992
---------------------------------------------
(in thousands)
Additions
Balance at Charged to Balance
Beginning Costs and at End
Description of Period Expenses Deductions of Period
- ----------------------------------------------------------------------------------------------
Year Ended December 31, 1994:
- -----------------------------
Allowance for Doubtful Accounts $ 5,788 $ 2,231 (a) $ 205 (b) $ 8,224
Year Ended December 31, 1993:
- -----------------------------
Allowance for Doubtful Accounts $ 6,427 $ 1,758 $ (2,397) (b) $ 5,788
Year Ended December 31, 1992:
- -----------------------------
Allowance for Doubtful Accounts $ 6,296 $ 4,026 $ (3,895) (b) $ 6,427
(a) Includes $100 as a result of AMCI acquisition.
(b) Write-offs, net of recoveries.
S-8
EXHIBIT INDEX
4.6 Credit Agreement among Terra Industries Inc., Terra Capital, Inc.,
Agricultural Minerals, L.P., Certain Guarantors, Certain Lenders,
Certain Issuing Banks and Citibank, N.A. without exhibits or schedules
(the "October 1994 Credit Agreement"), form of which previously filed
as Exhibit 99.5 to Terra Industries' Registration Statement on Form
S-3, as amended (File No. 33-52493).
4.7 Amendment No. 1 to the October 1994 Credit Agreement dated as of
December 28, 1994.
4.8 Amendment No. 2 to the October 1994 Credit Agreement dated as of
December 28, 1994, without exhibits.
4.9 Amendment No. 3 to the October 1994 Credit Agreement dated as of
February 1, 1995.
10.1.14 1995 Incentive Award Program for Officers and Key Executives of Terra
Industries.
13 Financial Review and Consolidated Financial Statements as contained in
the Annual Report to Stockholders of Terra Industries for the fiscal
year ended December 31, 1994.
18 Deloitte & Touche LLP letter regarding changes in accounting principles
dated February 1, 1995.
21 Subsidiaries of Terra Industries.
24 Powers of Attorney.
27 Financial Data Schedule. [EDGAR filing only]