Terra Nitrogen Company, L.P. Reports Fourth Quarter Results

Business Wire, Feb 9, 2005

SIOUX CITY, Iowa -- Terra Nitrogen Company, L.P. (TNCLP) (NYSE:TNH) today reported net income of $12.5 million, or $.66 per limited partnership unit, on revenues of $85.1 million for the fourth quarter ended Dec. 31, 2004. This compares with net income of $17.5 million, or $.93 per limited partnership unit, on revenues of $129.3 million for the 2003 fourth quarter. Net income for the year ended Dec. 31, 2004, was $45.9 million, or $2.43 per limited partnership unit, on revenues of $419.6 million, compared to a net loss of $35.3 million, or $1.87 per unit, on revenues of $404.4 million for 2003.

TNCLP also announced on Feb. 2, 2005, a cash distribution for the quarter ended Dec. 31, 2004, of $.65 per limited partnership unit payable Feb. 28, 2005, to holders of record as of Feb. 14, 2005.

Results for the year ended Dec. 31, 2003, include a $40.7 million charge for the impairment of TNCLP's Blytheville, Ark., long-lived assets. The Blytheville facility permanently ceased production on May 27, 2004; TNCLP continues to operate the Blytheville ammonia storage and distribution assets.

TNCLP's 2004 fourth quarter results as compared to those of the 2003 fourth quarter reflect higher selling prices partially offset by lower sales volumes and higher natural gas costs. Unit selling prices for ammonia and nitrogen solutions increased by 14 and 12 percent, respectively, over fourth quarter 2003 prices. TNCLP sold no urea in the 2004 fourth quarter due to the closure of the Blytheville manufacturing facility.

TNCLP's natural gas unit costs in the 2004 fourth quarter were 8 percent higher than in the comparable 2003 period. Forward pricing contracts decreased TNCLP's fourth quarter 2004 natural gas costs by $3.6 million. As of Dec. 31, 2004, forward positions covered 29 percent of the Verdigris facility's 2004 natural gas consumption.

TNCLP's full-year 2004 results as compared to those of 2003 reflect higher selling prices, partially offset by higher natural gas costs and lower sales volumes. Ammonia, nitrogen solutions and urea selling prices for the year were 11, 19 and 9 percent higher, respectively, than those of 2003. The lower sales volumes reflect the closure of the Blytheville manufacturing plants on May 31, 2004.

TNCLP's natural gas unit costs in 2004 were 3 percent higher than in 2003. Natural gas hedging activities decreased TNCLP's 2004 natural gas costs by $8.8 million compared to spot prices.

Terra Nitrogen Company, L.P. is a leading manufacturer of nitrogen fertilizer products.

Information contained in this release, other than historical information, may be considered forward-looking. Forward-looking information reflects management's current views of future events and financial performance that involve a number of risks and uncertainties. The factors that could cause actual results to differ materially include, but are not limited to, the following: changes in financial markets, general economic conditions within the agricultural industry, competitive factors and price changes (principally nitrogen fertilizer selling prices and natural gas costs), changes in product mix, changes in the seasonality of demand patterns, changes in weather conditions, changes in governmental regulations and other risks described in the "Factors That Affect Operating Performance" section of TNCLP's current annual report.

Note: Terra Nitrogen Company, L.P. news announcements are also available on Terra Industries' web site, www.terraindustries.com.

Terra Nitrogen Company, L.P.
             Condensed Consolidated Statements of Income
                (in thousands except per-unit amounts)
                             (unaudited)


                         Three Months Ended      Twelve Months Ended
                             December 31             December 31
                       ----------------------- -----------------------
                          2004        2003        2004        2003
                       ----------- ----------- ----------- -----------

Product revenues          $85,277    $129,006    $419,198    $403,599
Other income                 (177)        323         443         800
                       ----------- ----------- ----------- -----------

    Total revenues         85,100     129,329     419,641     404,399
                       ----------- ----------- ----------- -----------

Cost of goods sold         68,053     107,075     354,580     378,143
Depreciation and
 amortization               2,358       2,358       9,378      11,566
                       ----------- ----------- ----------- -----------

    Total cost of
     sales                 70,411     109,433     363,958     389,709
                       ----------- ----------- ----------- -----------

    Total gross profit     14,689      19,896      55,683      14,690

Operating expenses          2,517       2,263      10,717       9,087
Impairment of long-
 lived assets                  --          --          --      40,655
Interest expenses--net       (342)         93        (905)        216
                       ----------- ----------- ----------- -----------

    Net income (loss)     $12,514     $17,540     $45,871    $(35,268)
                       =========== =========== =========== ===========

Earnings (loss) per
 limited partnership
 unit                       $0.66       $0.93       $2.43      $(1.87)
                       =========== =========== =========== ===========

The amount of net income allocable to the Limited Partners' interest
is based on the Partnership's net income and the proportionate share
of cash distributed to the Limited Partners and the General Partner.


Nitrogen Volumes and
 Prices
                                2004                    2003
                       ----------------------- -----------------------
                          Sales      Average      Sales      Average
Quarter                  Volumes   Unit Price    Volumes   Unit Price
                       (000 tons)  ($/ton)(1)  (000 tons)  ($/ton)(1)
                       ----------- ----------- ----------- -----------

Ammonia                        64         284         132         249
Nitrogen Solutions            518         114         633         102
Urea                            0           0         121         179

                                2004                    2003
                       ----------------------- -----------------------
                          Sales      Average      Sales      Average
Year                     Volumes   Unit Price     Volumes  Unit Price
                       (000 tons)  ($/ton)(1)  (000 tons)  ($/ton)(1)
                       ----------- ----------- ----------- -----------

Ammonia                       338         269         336         242
Nitrogen Solutions          2,197         115       2,280          97
Urea                          212         181         390         166

(1) After deducting outbound freight costs


                     Terra Nitrogen Company, L.P.
                Condensed Consolidated Balance Sheets
                            (in thousands)
                             (unaudited)


                                                    December 31,
                                               -----------------------
                                                  2004        2003
                                               ----------- -----------
ASSETS
    Cash and short-term investments               $78,192     $39,596
    Accounts receivable                            21,079      36,612
    Inventories                                    15,729      19,364
    Other current assets                            4,244       6,344
                                               ----------- -----------

        Total current assets                      119,244     101,916

    Property, plant and equipment, net             80,425      84,691
    Other assets                                   14,284       9,631
                                               ----------- -----------

        Total assets                             $213,953    $196,238
                                               =========== ===========


LIABILITIES
    Current portion of long-term debt and
     capital lease obligations                        $63         $58
    Accounts payable and accrued liabilities       18,816       8,661
    Customer prepayments                           52,871      41,251
                                               ----------- -----------
        Total current liabilities                  71,750      49,970

    Long-term debt                                  8,219       8,275
    Other liabilities                                  --       5,716
                                               ----------- -----------

        Total liabilities                          79,969      63,961

    PARTNERS' EQUITY                              133,984     132,277
                                               ----------- -----------

        Total liabilities and partners' equity   $213,953    $196,238
                                               =========== ===========