<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (NO FEE REQUIRED)
For the Year Ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)
For the Transition Period From to
Commission File Number 1-8520
A. Full title of the Plan and the address of the Plan, if different from that
of the issuer named below:
TERRA INDUSTRIES INC. EMPLOYEES' SAVINGS AND INVESTMENT PLAN
B. Name of issuer of the securities held pursuant to the Plan and the address
of its principal executive office:
TERRA INDUSTRIES INC.
TERRA CENTRE
600 FOURTH STREET
P.O. BOX 6000
SIOUX CITY, IOWA 51102-6000
<PAGE>
REQUIRED INFORMATION
Plan financial statements and schedules are prepared in accordance with the
financial reporting requirements of ERISA and are included therein as listed in
the table of contents below.
<TABLE>
<CAPTION>
Table of Contents
- -----------------
(a) Financial Statements Pages
------------------------ -----
<S> <C>
Independent Auditors' Report 3
Statements of Net Assets Available for Benefits at
December 31, 1996 and 1995 4-5
Statements of Changes in Net Assets Available for
Benefits for the Years Ended December 31, 1996 and 1995 6-7
Notes to Financial Statements 8-12
(b) Supplemental Schedules
--------------------------
Schedule of Assets Held for Investment Purposes 13
Schedule of Reportable Transactions 14-16
(c) Exhibits
------------
Exhibit E - Independent Auditors' Consent 17
</TABLE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Participants and
Administrator of the
Terra Industries Inc.
Employees' Savings and Investment Plan
We have audited the accompanying statements of net assets available for benefits
of the Terra Industries Inc. Employees' Savings and Investment Plan as of
December 31, 1996 and 1995, and the related statements of changes in net assets
available for benefits for the years then ended. These financial statements are
the responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Terra Industries Inc.
Employees' Savings and Investment Plan as of December 31, 1996 and 1995, and the
changes in net assets available for benefits for the years then ended in
conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1) assets
held for investment purposes as of December 31, 1996, and (2) reportable
transactions for the year ended December 31, 1996, are presented for purposes of
additional analysis and are not a required part of the basic financial
statements, but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental information by fund in
the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for the purpose of
additional analysis rather than to present the net assets available for benefits
and changes in net assets available for benefits of the individual funds. The
supplemental schedules and supplemental information by fund is the
responsibility of the Plan's management. Such supplemental schedules and
supplemental information by fund have been subjected to the auditing procedures
applied in our audits of the basic financial statements and, in our opinion, are
fairly stated in all material respects when considered in relation to the basic
financial statements taken as a whole.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
May 30, 1997
<PAGE>
<TABLE>
<CAPTION>
TERRA INDUSTRIES INC.
EMPLOYEES' SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1996
-------------------------------------------------------------------
Supplemental Information by Fund
-------------------------------------------------------------------
Employer
Directed Participant Directed
------------- ----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Terra
Terra Industries
Industries Inc.
Inc. Voluntary Putnam Putnam
Common Common Growth & Putnam New
Stock Stock Income Income Opportunities
ASSETS: Fund Fund Fund Fund Fund
Investments, at fair value:
Terra Industries Inc. Common Stock $27,175,208 $5,182,742 $ - $ - $ -
Putnam Fund for Growth and Income - - 11,200,356 - -
Putnam Income Fund - - - 3,852,029 -
Putnam New Opportunities Fund - - - - 7,149,056
Putnam Money Market Fund - - - - -
Putnam International Growth Fund - - - - -
Putnam Asset Allocation - Growth
Portfolio - - - - -
Putnam Asset Allocation -
Balanced Portfolio - - - - -
Putnam Asset Allocation -
Conservative Portfolio - - - - -
Putnam Voyager Fund - - - - -
----------- ---------- ----------- ---------- ----------
Total investments at fair value 27,175,208 5,182,742 11,200,356 3,852,029 7,149,056
Loans to participants - - - - -
----------- ---------- ----------- ---------- ----------
Total investments 27,175,208 5,182,742 11,200,356 3,852,029 7,149,056
Employer contributions receivable 108,026 - - - -
Participant contributions receivable - 24,148 17,562 15,367 61,468
Receivable - securities sold - 726,795 - - -
Total assets ----------- ---------- ----------- ---------- ----------
27,283,234 5,933,685 11,217,918 3,867,396 7,210,524
LIABILITIES:
Accrued administrative expenses - 651 1,234 420 786
Payable - securities purchased 181,766 - - - -
----------- ---------- ----------- ---------- ----------
Total liabilities 181,766 651 1,234 420 786
----------- ---------- ----------- ---------- ----------
Net assets available for benefits $27,101,468 $5,933,034 $11,216,684 $3,866,976 $7,209,738
=========== ========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
Supplemental Information by Fund
------------------------------------------------------------------------------------
Participant Directed
------------------------------------------------------------------------------------
Putnam Putnam Putnam Putnam Putnam
Money International AA AA AA Putnam
Market Growth Growth Balanced Conservative Voyager Participant
ASSETS: Fund Fund Fund Fund Fund Fund Loans
<S> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair value:
Terra Industries Inc. Common Stock $ - $ - $ - $ - $ - $ - $ -
Putnam Fund for Growth and Income - - - - - - -
Putnam Income Fund - - - - - - -
Putnam New Opportunities Fund - - - - - - -
Putnam Money Market Fund 5,177,084 - - - - - -
Putnam International Growth Fund - 1,545,185 - - - - -
Putnam Asset Allocation - Growth
Portfolio - - 1,325,313 - - - -
Putnam Asset Allocation -
Balanced Portfolio - - - 659,142 - - -
Putnam Asset Allocation -
Conservative Portfolio - - - - 281,753 -
Putnam Voyager Fund - - - - - 24,544,054 -
---------- ---------- ---------- -------- -------- ----------- ----------
Total investments at fair value 5,177,084 1,545,185 1,325,313 659,142 281,753 24,544,054 -
Loans to participants - - - - - - 3,282,504
---------- ---------- ---------- -------- -------- ----------- ----------
Total investments 5,177,084 1,545,185 1,325,313 659,142 281,753 24,544,054 3,282,504
Employer contributions receivable - - - - - - -
Participant contributions receivable 13,172 50,492 - - - 37,320 -
Receivable - securities sold - - - - - - -
Total assets ---------- ---------- ---------- -------- -------- ----------- ----------
5,190,256 1,595,677 1,325,313 659,142 281,753 24,581,374 3,282,504
LIABILITIES:
Accrued administrative expenses 570 170 149 75 27 2,698 -
Payable - securities purchased - - - - - - -
Total liabilities ---------- ---------- ---------- -------- -------- ----------- ----------
570 170 149 75 27 2,698 -
Net assets available for benefits ---------- ---------- ---------- -------- -------- ----------- ----------
$5,189,686 $1,595,507 $1,325,164 $659,067 $281,726 $24,578,676 $3,282,504
========== ========== ========== ======== ======== =========== ==========
See notes to financial statements.
</TABLE>
- --------
<TABLE>
<CAPTION>
ASSETS: Total
<S> <C>
Investments, at fair value:
Terra Industries Inc. Common Stock $32,357,950
Putnam Fund for Growth and Income 11,200,356
Putnam Income Fund 3,852,029
Putnam New Opportunities Fund 7,149,056
Putnam Money Market Fund 5,177,084
Putnam International Growth Fund 1,545,185
Putnam Asset Allocation - Growth
Portfolio 1,325,313
Putnam Asset Allocation -
Balanced Portfolio 659,142
Putnam Asset Allocation -
Conservative Portfolio 281,753
Putnam Voyager Fund 24,544,054
-----------
Total investments at fair value 88,091,922
Loans to participants 3,282,504
Total investments 91,374,426
Employer contributions receivable 108,026
Participant contributions receivable 219,529
Receivable - securities sold 726,795
-----------
Total assets 92,428,776
LIABILITIES:
Accrued administrative expenses 6,780
Payable - securities purchased 181,766
-----------
Total liabilities 188,546
-----------
Net assets available for benefits $92,240,230
===========
</TABLE>
-4-
<PAGE>
TERRA INDUSTRIES INC.
EMPLOYEES' SAVINGS AND INVESTMENT PLAN
<TABLE>
<CAPTION>
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
31-December 1995
- ------------------------------------------------------------------------------------------------------------------------------------
Supplemental Information by Fund
-----------------------------------------------------------------------------------------------------
Employer
Directed Participant Directed
---------- -----------------------------------------------------------------------------------------
Terra
Terra Industries
Industries Inc.
Inc. Voluntary
Common Common Equity Money
Stock Stock Income Intermediate Stock Market GIC Windsor Participant
ASSETS: Fund Fund Fund Fund Fund Fund Fund Fund Loans Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Investments, at fair
value:
Terra Industries
Inc. Common
Stock $22,849,038 $6,166,806 $ - $ - $ - $ - $ - $ - $ - $29,015,844
Fidelity Magellan
Fund - - - - 16,680,769 - - - - 16,680,769
Vista Growth and
Income Fund - - 8,963,731 - - - - - - 8,963,731
Vanguard Windsor
Fund - - - - - - - 8,882,165 - 8,882,165
Vista U.S.
Government
Income Fund - - - 4,415,907 - - - - - 4,415,907
Vista U.S.
Government
Money Market
Fund - - - - - 3,621,921 - - - 3,621,921
American
Performance
Cash Management
Fund - - - - - - 159,390 - - 159,390
BancOklahoma
GIC Fund - - - - - - 3,055,795 - - 3,055,795
Chase Bank
Domestic
Liquidity Fund 184,067 3,321 46 24 - - 63,503 - - 250,961
----------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- -----------
Total
investments
at fair value 23,033,105 6,170,127 8,963,777 4,415,931 16,680,769 3,621,921 3,278,688 8,882,165 - 75,046,483
Loans to
participants - - - - - - - - 3,136,466 3,136,466
----------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- -----------
Total
investments 23,033,105 6,170,127 8,963,777 4,415,931 16,680,769 3,621,921 3,278,688 8,882,165 3,136,466 78,102,949
Accrued investment
income - - - 21,281 - - 584 - - 21,865
Employer
contributions
receivable 192,627 - - - - - - - - 192,627
Participant
contributions
receivable - 30,521 43,237 22,890 76,301 20,347 17,804 43,238 - 254,338
Receivable -
securities sold - 79,793 - - - - - - - 79,793
Cash 82 1 - - 203 77 1 - - 364
----------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- -----------
Total assets 23,225,814 6,280,442 9,007,014 4,460,102 16,757,273 3,642,245 3,297,077 8,295,403 3,136,466 78,731,936
LIABILITIES:
Accrued
administrative
expenses - 2,988 4,593 2,424 8,485 2,042 21,000 4,288 - 45,820
Payable -
securities
purchased 133,053 - - - - - - - - 133,053
----------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- -----------
Total
liabilities 133,053 2,988 4,593 2,424 8,485 2,042 21,000 4,288 - 178,873
----------- ---------- ---------- ---------- ----------- ---------- ---------- ---------- ---------- -----------
Net assets available
for benefits $23,092,761 $6,277,454 $9,002,421 $4,457,678 $16,748,788 $3,640,303 $3,276,077 $8,921,115 $3,136,466 $78,553,063
=========== ========== ========== ========== =========== ========== ========== ========== ========== ===========
</TABLE>
See notes to financial statements.
-5-
<PAGE>
TERRA INDUSTRIES INC.
EMPLOYEES' SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Employer
Directed
- ----------------------------------------------------------------------------------------------------
Terra
Terra Industries
Industries Inc.
Inc. Voluntary
Common Common Equity
Stock Stock Income Intermediate Stock
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Investment income:
Dividend, interest, and other
income $ 261,179 $ 66,762 $ 105,612 $ 196,025 $ 649,272
Net appreciation (depreciation)
in fair value of investments 1,402,944 184,017 1,063,070 (257,318) 109,022
----------- ---------- ----------- ----------- ------------
Total investment income 1,664,123 250,779 1,168,682 (61,293) 758,294
Employer contributions 3,665,799 - - - -
Participant contributions - 919,711 1,071,165 606,048 2,091,030
----------- ---------- ----------- ----------- ------------
Total additions 5,329,922 1,170,490 2,239,847 544,755 2,849,324
Deductions:
Benefit payments 1,277,288 179,962 688,776 199,045 1,178,565
Administrative expenses - 13,447 21,599 11,824 38,674
Interfund transfers/net loans 43,927 1,321,501 10,531,893 4,791,564 18,380,873
----------- ---------- ----------- ----------- ------------
Total deductions 1,321,215 1,514,910 11,242,268 5,002,433 19,598,112
----------- ---------- ----------- ----------- ------------
Net increase (decrease) 4,008,707 (344,420) (9,002,421) (4,457,678) (16,748,788)
Assets available for benefits:
Beginning of year 23,092,761 6,277,454 9,002,421 4,457,678 16,748,788
----------- ---------- ----------- ----------- ------------
End of year $27,101,468 $5,933,034 $ - $ - $ -
=========== ========== =========== =========== ============
</TABLE>
<TABLE>
<CAPTION>
Supplemental Information by Fund
- -----------------------------------------------------------------------------------------------------------------------------
Participant Directed
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Gov't Putnam Putnam Putnam
Money Growth & Putnam New Money
Market GIC Windsor Income Income Opportunities Market
Fund Fund Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend, interest, and other
income $ 132,592 $ 9,212 $ 143,972 $ 767,642 $ 83,663 $ 53,560 $ 71,773
Net appreciation (depreciation)
in fair value of investments - 124,366 1,215,899 165,318 70,991 (266,459) -
----------- ----------- ----------- ------------ ---------- ----------- -----------
Total investment income 132,592 133,578 1,359,871 927,960 154,654 (212,899) 71,773
Employer contributions - - - - - - -
Participant contributions 437,905 367,375 1,328,392 374,195 162,295 301,688 168,697
----------- ----------- ----------- ------------ ---------- ----------- -----------
Total additions 570,497 500,953 2,688,263 1,302,155 316,949 88,789 240,470
Deductions:
Benefit payments 239,520 179,656 354,222 130,517 85,153 20,934 30,504
Administrative expenses 7,988 5,705 24,173 1,302 482 842 636
Interfund transfers/net loans 3,963,292 3,591,669 11,230,983 (10,046,348) (3,635,662) (7,142,725) (4,980,356)
----------- ----------- ----------- ------------ ---------- ----------- -----------
Total deductions 4,210,800 3,777,030 11,609,378 (9,914,529) (3,550,027) (7,120,949) (4,949,216)
----------- ----------- ----------- ------------ ---------- ----------- -----------
Net increase (decrease) (3,640,303) (3,276,077) (8,921,115) 11,216,684 3,866,976 7,209,738 5,189,686
Assets available for benefits:
Beginning of year 3,640,303 3,276,077 8,921,115 - - - -
----------- ----------- ----------- ------------ ---------- ----------- -----------
End of year $ - $ - $ - $ 11,216,684 $ 3,866,976 $ 7,209,738 $ 5,189,686
=========== =========== =========== ============ =========== =========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Putnam Putnam Putnam Putnam
International AA AA AA Putnam
Growth Growth Balanced Conservative Voyager Participant
Fund Fund Fund Fund Fund Loans Total
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Dividend, interest, and other
income $ 20,292 $ 64,617 $ 35,771 $ 12,670 $1,542,405 $ 297,869 $ 4,509,888
Net appreciation (depreciation)
in fair value of investments (10,177) (66,880) (35,769) (12,375) (1,887,852) - 1,798,797
----------- ----------- ----------- ------------ ---------- ----------- -----------
Total investment income 10,115 (2,263) 2 295 (345,447) 297,869 6,308,685
Employer contributions - - - - - - 3,665,799
Participant contributions 86,136 32,455 11,469 2,846 800,518 - 8,761,925
----------- ----------- ----------- ------------ ---------- ----------- -----------
Total additions 96,251 30,192 11,471 3,141 455,071 297,869 18,736,409
Deductions:
Benefit payments 105 5 3,932 397 227,975 122,598 4,919,154
Administrative expenses 170 171 75 27 2,968 5 130,088
Interfund transfers/net loans (1,499,531) (1,295,148) (651,603) (279,009) (24,354,548) 29,228 -
----------- ----------- ----------- ------------ ---------- ----------- -----------
Total deductions (1,499,256) (1,294,972) (647,596) (278,585) (24,123,605) 151,831 5,049,242
----------- ----------- ----------- ------------ ---------- ----------- -----------
Net increase (decrease) 1,595,507 1,325,164 659,067 281,726 24,578,676 146,038 13,687,167
Assets available for benefits:
Beginning of year - - - - - 3,136,466 78,553,063
----------- ----------- ----------- ------------ ---------- ----------- -----------
End of year $ 1,595,507 $ 1,325,164 $ 659,067 $ 281,726 $24,578,676 $ 3,282,504 $92,240,230
=========== =========== =========== ============ =========== =========== ===========
</TABLE>
See notes to financial statements.
-6-
<PAGE>
<TABLE>
<CAPTION>
TERRA INDUSTRIES INC.
EMPLOYEES' SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1995
- ---------------------------------------------------------------------------------------------------------------------------------
Supplemental Information by Fund
-------------------------------------------------------------------------
Employer
Directed Participant Directed
----------- ---------------------------------------------------------
Terra
Terra Industries
Industries Inc.
Inc. Voluntary Equity
Common Stock Common Stock Income Intermediate Stock
Fund Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Investment income:
Dividend, interest, and other income $ 155,555 $ 44,373 $ 172,768 $ 270,215 $ 568,706
Net appreciation in fair value
of investments 5,504,919 1,604,341 1,743,823 444,492 3,439,276
----------- ------------ ---------- ---------- -----------
Total investment income 5,660,474 1,648,714 1,916,591 714,707 4,007,982
Employer contributions 3,887,731 - - - -
Participant contributions - 879,661 1,269,662 641,543 1,868,448
----------- ------------ ---------- ---------- -----------
Total additions 9,548,205 2,528,375 3,186,253 1,356,250 5,876,430
Deductions:
Benefit payments 957,499 202,646 493,375 231,945 755,384
Administrative expenses - 13,694 22,158 12,378 37,586
Interfund transfers/net loans (52,652) (621,070) 467,723 873,926 (2,096,625)
----------- ------------ ---------- ---------- -----------
Total deductions 904,847 (404,730) 983,256 1,118,249 (1,303,655)
----------- ------------ ---------- ---------- -----------
Net increase (decrease) 8,643,358 2,933,105 2,202,997 238,001 7,180,085
Assets available for benefits:
Beginning of year 14,449,403 3,344,349 6,799,424 4,219,677 9,568,703
----------- ------------ ---------- ---------- -----------
End of year $23,092,761 $ 6,277,454 $9,002,421 $4,457,678 $16,748,788
=========== ============ ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Money Merged
Market GIC Windsor Participant Plan
Fund Fund Fund Loans (Note F)
<S> <C> <C> <C> <C> <C>
Investment income:
Dividend, interest, and other income $ 214,533 $ 16,082 $ 324,710 $ 215,874 $ -
Net appreciation in fair value
of investments - 196,221 1,332,075 - -
----------- ------------ ---------- ---------- -----------
Total investment income 214,533 212,303 1,656,785 215,874 -
Employer contributions - - - - -
Participant contributions 623,095 469,400 997,438 - -
----------- ------------ ---------- ---------- -----------
Total additions 837,628 681,703 2,654,223 215,874 -
Deductions:
Benefit payments 488,454 154,499 217,460 83,859 -
Administrative expenses 11,195 37,045 18,405 - -
Interfund transfers/net loans 247,427 (2,785,918) (6,502,757) (1,502,881) 11,972,827
----------- ------------ ---------- ---------- -----------
Total deductions 747,076 (2,594,374) (6,266,892) (1,419,022) 11,972,827
----------- ------------ ---------- ---------- -----------
Net increase (decrease) 90,552 3,276,077 8,921,115 1,634,896 (11,972,827)
Assets available for benefits:
Beginning of year 3,549,751 - - 1,501,570 11,972,827
----------- ------------ ---------- ---------- -----------
End of year $ 3,640,303 $ 3,276,077 $8,921,115 $3,136,466 $ -
=========== ============ ========== ========== ===========
</TABLE>
<TABLE>
<CAPTION>
Total
<S> <C>
Investment income:
Dividend, interest, and other income $ 1,982,816
Net appreciation in fair value
of investments 14,265,147
-----------
Total investment income 16,247,963
Employer contributions 3,887,731
Participant contributions 6,749,247
-----------
Total additions 26,884,941
Deductions:
Benefit payments 3,585,121
Administrative expenses 152,461
Interfund transfers/net loans -
-----------
Total deductions 3,737,582
-----------
Net increase (decrease) 23,147,359
Assets available for benefits:
Beginning of year 55,405,704
-----------
End of year $78,553,063
===========
</TABLE>
See notes to financial statements.
-7-
<PAGE>
TERRA INDUSTRIES INC.
EMPLOYEES' SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1996 AND 1995
- -------------------------------------------------------------------------------
A. DESCRIPTION OF PLAN
The following brief description of the Terra Industries Inc. Employees'
Savings and Investment Plan (the Plan) is provided for general information
only. Participants should refer to the Plan Document for more complete
information.
General - The Plan, established as of January 1, 1984, is a defined
contribution plan covering eligible employees of Terra Industries Inc. and
eligible subsidiaries and affiliates (collectively, the Company). The Plan
is subject to the Employee Retirement Income Security Act of 1974 (ERISA)
and is administered by the Employee Benefit Committee (the Committee) of
the Company. The assets of the Plan are held by Putnam Investments (Chase
Manhattan Bank, N.A., through September 30, 1996), the trustee of the Plan.
Certain Plan investments are funds managed by the trustee of the Plan and,
therefore, qualify as party-in-interest.
Participation - All full-time active employees of the Company are eligible
for Plan participation on the first day of the month following the date
their employment commenced. In addition, part time or temporary employees
with at least one year of service and 1,000 hours are eligible for
participation. Participation in the Plan is voluntary.
Participants' Accounts - Each participant's account is credited with the
participant's contributions, the employer's matching contributions and an
allocation of fund earnings. A participant's benefit is limited to the
amount that can be provided from the participant's account, subject to the
applicable vesting requirements.
Contributions - Participants earning $66,000 or less annually in 1996 and
1995, could elect to contribute up to 15% of annual compensation (10% of
their annual compensation through November 1996) on a pretax basis and 10%
on an after-tax basis. The maximum combined deferral on a pretax and after-
tax basis is 20%. Participants earning more than $66,000 in 1996 and 1995,
respectively, could contribute up to 6% of their annual compensation on a
combined pretax and after-tax basis.
The maximum participant pretax contribution was $9,500 and $9,240 in 1996
and 1995, respectively.
Participants may elect to invest their contributions in one or more of the
ten available participant directed investment options.
Employer - The Company contributes an amount determined by its Board of
Directors, equal to 100% of the participants' contributions up to 3% of
their annual compensation, and 50% up to an additional 3% of annual
compensation in 1996 and 1995. The contributions made by the Company must
be invested in the Terra Industries Inc. Common Stock Fund. The Company may
elect to make an additional contribution, subject to certain limitations as
defined in the Plan, in such amount as its Board of Directors shall
determine. No such additional contributions were made in 1996 or 1995.
Employer contributions are reduced by the amount of any participant
forfeitures during the period. Participant forfeitures totaled $127,643 and
$82,977 in 1996 and 1995, respectively.
-8-
<PAGE>
Maximum Contributions Per Participant - The sum of a participant's
contribution and employer matching contribution cannot exceed the lesser of
$30,000 or 25% of net compensation of the participant. Net compensation is
defined as total participant compensation less any pretax contributions
made by the participant. Eligible compensation was limited to $150,000 in
1996 and 1995.
Vesting - Participants are immediately fully vested in their contributions
and earnings on their voluntary contributions. Employer contributions vest
at a rate of 20% per year, until fully vested after five years of service.
Participant Loans - Participants may borrow from their individual
contribution accounts subject to maximum limitations as defined in the
Plan. Loan repayments are reinvested in the funds in accordance with the
participant's investment election at the time of repayment.
Benefits - Participants or their beneficiaries are eligible to receive the
value of their vested account balance upon the occurrence of one of the
following: early or normal retirement; termination of employment; death or
total disability.
B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Valuation of Investments - Investments, except for loans to participants,
are reported at fair value, which is determined, in the case of Terra
Industries Inc.'s Common Stock, from the latest available market quotations
and, in the case of investments in mutual funds, at quoted net asset value.
Money market funds are reported at fair value as determined by the issuer
and common funds are valued at the unit value as reported by the fund. In
accordance with the policy of stating investments at fair value, the net
change in realized and unrealized appreciation or depreciation in fair
value is included in income from investments, which is reflected in the
statement of changes in net assets available for benefits. Dividend income
is recorded on the ex-dividend date. Investment transactions are recognized
on a trade date basis. Participant loans are reported at the outstanding
balance. The outstanding balance of participant loans approximates fair
value.
The Plan has investments in eleven funds. The net assets and net investment
income of the funds are allocated to the participants in the Plan based
upon each participant's participation relative to the total participation
in each of the eleven investment funds. At the close of business on
September 30, 1996, all investment fund options were changed, except for
the Terra Industries Inc. Common Stock Fund and Terra Industries Inc.
Voluntary Common Stock Fund, and assets were transferred to Putnam
Investments. A summary description of each investment fund follows:
Terra Industries Inc. Common Stock Fund (Employer Directed) - A
fund invested primarily in Terra Industries Inc. Common Stock
which is limited to employer contributions only.
Terra Industries Inc. Voluntary Common Stock Fund (Participant
Directed) - A fund invested primarily in Terra Industries Inc. Common
Stock.
Putnam Growth and Income Fund (Participant Directed) - A fund invested
in shares of Putnam Fund for Growth and Income, which is comprised
primarily of common stocks that offer potential for capital growth,
current income, or both.
Putnam Income Fund (Participant Directed) - A fund invested in shares
of Putnam Income Fund, which is comprised primarily of debt
securities, including both government and corporate obligations,
preferred stocks and dividend-paying common stocks.
-9-
<PAGE>
Putnam New Opportunities Fund (Participant Directed) - A fund invested
in shares of Putnam New Opportunities Fund, which is comprised
principally of common stocks of companies in sectors of the economy
which Putnam Management believes possess above-average long-term
growth potential.
Putnam Money Market Fund (Participant Directed) - A fund invested in
shares of Putnam Money Market Fund, which is comprised principally of
high-quality money market instruments and seeks as high a rate of
current income as Putnam Management believes is consistent with
preservation of capital and maintenance of liquidity.
Putnam International Growth Fund (Participant Directed) - A fund
invested in shares of Putnam International Growth Fund, which is
comprised primarily of equity securities of companies located in a
country other than the United States.
Putnam AA Growth Fund (Participant Directed) - A fund invested in
shares of Putnam Asset Allocation: Growth Portfolio, which seeks
capital appreciation and is comprised 65% to 95% of equity securities
and 5% to 35% of fixed income securities.
Putnam AA Balanced Fund (Participant Directed) - A fund invested in
shares of Putnam Asset Allocation: Balanced Portfolio, which is
comprised 50% to 75% of equity securities and 25% to 50% of fixed
income securities.
Putnam AA Conservative Fund (Participant Directed) - A fund invested
in shares of Putnam Asset Allocation: Conservative Portfolio, which is
comprised 25% to 45% of equity securities and 55% to 75% of fixed
income securities.
Putnam Voyager Fund (Participant Directed) - A fund invested in shares
of Putnam Voyager Fund, which is comprised primarily of common stocks
of companies which Putnam Management believes have potential for
capital appreciation which is significantly greater than that of
market averages.
Through September 30, 1996, the Plan had the following investment fund
options in addition to the Terra Industries Inc. Common Stock Fund and
Terra Industries Inc. Voluntary Common Stock Fund:
Equity Income Fund (Participant Directed) - A fund invested primarily
in shares of Vista Growth and Income Fund, which is comprised
primarily of income producing equity securities and securities
convertible into such equity securities.
Intermediate Fund (Participant Directed) - A fund invested primarily
in shares of Vista U.S. Government Income Fund, which is comprised
primarily of debt obligations backed by the full faith and credit of
the U.S. Government.
Stock Fund (Participant Directed) - A fund invested primarily in
shares of Fidelity Magellan Fund, which is comprised primarily of
common stocks and which seeks long-term capital appreciation.
Money Market Fund (Participant Directed) - A fund invested primarily
in shares of Vista U.S. Government Money Market Fund so as to preserve
capital and maintain a high degree of liquidity.
-10-
<PAGE>
GIC Fund (Participant Directed) - A fund invested primarily in shares
of BancOklahoma Guaranteed Investment Contract Fund so as to provide
current income while maintaining a stable market valuation.
Windsor Fund (Participant Directed)- A fund invested primarily in
shares of Vanguard Windsor Fund, a fund invested principally in income
producing equity securities.
Benefits Payable - The Plan's policy is to record benefit payments upon
distribution of balances to participants. Benefits due and unpaid to
retired and terminated participants were $269,751 at December 31, 1995.
There were no benefits payable as of December 31, 1996.
Administrative Expenses - Administrative expenses are comprised of charges
relating to routine services provided by the Plan's trustee and
recordkeeping agent and fees associated with the annual audit of the Plan's
financial statements. Administrative expenses are allocated to the
investment funds, other than the Terra Industries Inc. Employer Directed
Common Stock Fund, based upon the fair value of each fund's investment
relative to the total fair value of all investment funds to which expenses
are allocated.
C. INVESTMENTS
The fair value of the Plan's investments, other than loans to participants,
by basis of valuation, are presented in the following tables.
<TABLE>
<CAPTION>
December 31, 1996
Number of
Shares or
Principal
Amount Fair Value
<S> <C> <C>
Investments, at Fair Value:
Terra Industries Inc. Common Stock 2,230,710 $32,357,950
Putnam Growth and Income Fund 621,551 11,200,356
Putnam Income Fund 549,505 3,852,029
Putnam Voyager Fund 1,522,584 24,544,054
Putnam New Opportunities Fund 175,955 7,149,056
Putnam Asset Allocation - Growth Portfolio 118,015 1,325,313
Putnam Asset Allocation - Balanced Portfolio 62,835 659,142
Putnam Asset Allocation - Conservative Portfolio 29,411 281,753
Putnam International Growth Fund 102,807 1,545,185
Putnam Money Market Fund 5,177,084 5,177,084
-----------
$88,091,922
===========
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
December 31, 1995
Number of
Shares or
Principal
Amount Fair Value
<S> <C> <C>
Investments, at Fair Value:
Terra Industries Inc. Common Stock 2,054,219 $29,015,844
Fidelity Magellan Fund 194,008 16,680,769
Vista Growth and Income Fund 258,470 8,963,731
Vanguard Windsor Fund 611,298 8,882,165
Vista U.S. Government Income Fund 380,026 4,415,907
Vista U.S. Government Money Market Fund 3,621,921 3,621,921
American Performance Cash Management Fund 159,390 159,390
BancOklahoma Guaranteed Investment Contract Fund 177,240 3,055,795
Chase Bank Domestic Liquidity Fund 250,961 250,961
-----------
$75,046,483
===========
</TABLE>
D. PLAN TERMINATION
Although it has expressed no intent to do so, the Company specifically
reserves the right to amend or terminate the Plan or to discontinue
contributions at any time. Upon termination, a participant's entire account
will become fully vested and the assets shall be administered in the manner
provided for in the Plan.
E. FEDERAL INCOME TAX STATUS
The Plan obtained its latest determination letter dated November 21, 1995,
in which the Internal Revenue Service stated that the Plan, as amended
March 9, 1995, was in compliance with the applicable requirements of the
Internal Revenue Code. The Plan administrator believes that the Plan is
currently designed and is being operated in compliance with the applicable
requirements of the Internal Revenue Code. Therefore, they believe that the
Plan was qualified and the related trust was tax exempt as of the financial
statement date. Therefore, no provision for income taxes has been included
in the Plan's financial statements.
Plan income, participant pretax contributions and employer contributions
represent taxable income to the participating employees at the time of
distribution in accordance with IRS regulations currently in effect.
-12-
<PAGE>
<TABLE>
<CAPTION>
TERRA INDUSTRIES INC.
EMPLOYEES' SAVINGS AND INVESTMENT PLAN
PN 333
EIN #52-1145429
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1996
- ----------------------------------------------------------------------------------------------------------------------
Column B Column C Column D Column E
Description of investment
Identity of issue, including collateral, rate
borrower, lessor or of interest, maturity date, Current
similar party par or maturity value Cost Value
<S> <C> <C> <C>
Common Stock:
*Terra Industries Inc. 2,230,710 shares $17,422,575 $32,357,950
Mutual Funds:
*Putnam Growth and Income
Fund 621,551 shares 11,257,250 11,200,356
*Putnam Income Fund 549,505 shares 3,821,995 3,852,029
*Putnam New Opportunities Fund 175,955 shares 7,407,328 7,149,056
*Putnam Money Market Fund 5,177,084 shares 5,177,084 5,177,084
*Putnam International Growth Fund 102,807 shares 1,553,138 1,545,185
*Putnam Asset Allocation - Growth
Portfolio 118,015 shares 1,392,076 1,325,313
*Putnam Asset Allocation -
Balanced Portfolio 62,835 shares 694,576 659,142
*Putnam Asset Allocation -
Conservative Portfolio 29,411 shares 294,102 281,753
*Putnam Voyager Fund 1,522,584 shares 26,522,627 24,544,054
Other Investments:
*Loans to Participants Principal balance of $3,282,504
bearing interest rates ranging
from 5.75% to 14% and maturing
from January 1997 to October
2025 3,282,504
-----------
$91,374,426
===========
</TABLE>
* Party-In-Interest
<TABLE>
<CAPTION>
TERRA INDUSTRIES INC.
EMPLOYEES' SAVINGS AND INVESTMENT PLAN
PN 333
EIN #52-1145429
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
- ---------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Total Dollar
Identity of Number of Number of Value of
Party Involved Description of Asset Purchases Sales Purchases
<S> <C> <C> <C> <C>
Series of Transactions When Aggregated Involving an
Amount in Excess of 5 Percent of the Current Value of Plan Assets
*Terra Industries, Inc. Common Stock 60 78 $5,505,900
Fidelity Institutional Retirement
Services Company Fidelity Magellan Fund 23 36 5,314,580
*Chase Manhattan Bank, N.A. Vista Growth and
Income Fund 25 30 1,819,962
The Vanguard Group Vanguard Windsor
Fund 30 22 3,689,808
*Chase Manhattan Bank, N.A. Vista U.S. Government
Money Market Fund 45 38 690,825
*Chase Manhattan Bank, N.A. Vista U.S. Government
Income Fund 26 36 934,200
*Chase Manhattan Bank, N.A. Chase Bank Domestic
Liquidity Fund 289 254 7,233,394
</TABLE>
<TABLE>
<CAPTION>
Column A Column B Column F Column G
Total Dollar
Identity of Value of Net Gain
Party Involved Description of Asset Sales or (Loss)
<S> <C> <C> <C>
Series of Transactions When Aggregated Involving an
Amount in Excess of 5 Percent of the Current Value of Plan Assets
*Terra Industries, Inc. Common Stock $ 3,750,755 $1,034,021
Fidelity Institutional Retirement
Services Company Fidelity Magellan Fund 22,104,371 3,378,850
*Chase Manhattan Bank, N.A. Vista Growth and
Income Fund 11,846,763 2,341,372
The Vanguard Group Vanguard Windsor
Fund 13,787,872 1,809,352
*Chase Manhattan Bank, N.A. Vista U.S. Government
Money Market Fund 4,312,746 -
*Chase Manhattan Bank, N.A. Vista U.S. Government
Income Fund 5,092,789 (151,170)
*Chase Manhattan Bank, N.A. Chase Bank Domestic
Liquidity Fund 7,484,355 -
</TABLE>
<TABLE>
<CAPTION>
TERRA INDUSTRIES INC.
EMPLOYEES' SAVINGS AND INVESTMENT PLAN
PN 333
EIN #52-1145429
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS, (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column E
Total Dollar
Identity of Number of Number of Value of
Party Involved Description of Asset Purchases Sales Purchases
<S> <C> <C> <C> <C>
Series of Transactions When Aggregated Involving an
Amount in Excess of 5 Percent of the Current Value of Plan Assets
*Putnam Investments Putnam Growth and
Income Fund 30 30 $13,881,826
*Putnam Investments Putnam Income Fund 21 28 5,310,032
*Putnam Investments Putnam New
Opportunities Fund 27 19 7,773,232
*Putnam Investments Putnam Money
Market Fund 44 33 7,689,132
*Putnam Investments Putnam Voyager
Fund 28 36 34,314,279
</TABLE>
<TABLE>
<CAPTION>
Column A Column B Column F Column G
Total Dollar
Identity of Value of Net Gain
Party Involved Description of Asset Sales or (Loss)
<S> <C> <C> <C>
Series of Transactions When Aggregated Involving an
Amount in Excess of 5 Percent of the Current Value of Plan Assets
*Putnam Investments Putnam Growth and
Income Fund $2,846,788 $222,212
*Putnam Investments Putnam Income Fund 1,528,994 40,957
*Putnam Investments Putnam New
Opportunities Fund 357,717 (8,187)
*Putnam Investments Putnam Money
Market Fund 2,512,048 -
*Putnam Investments Putnam Voyager
Fund 7,882,373 90,722
</TABLE>
*Party-In-Interest
<TABLE>
<CAPTION>
TERRA INDUSTRIES INC.
EMPLOYEES' SAVINGS AND INVESTMENT PLAN
PN 333
EIN #52-1145429
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS, (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1996
- ---------------------------------------------------------------------------------------------------------------------------
Column A Column B Column C Column D Column G
Identity of Purchase Selling Cost of
Party Involved Description of Asset Price Price Asset
<S> <C> <C> <C> <C>
Single Transactions:
Fidelity Institutional Retirement Fidelity Magellan
Services Company Fund $ - $17,249,798 $16,141,459
*Chase Manhattan Bank, N.A. Vista U.S. Government
Income Fund - 4,434,069 4,571,808
The Vanguard Group Vanguard Windsor
Fund - 13,150,381 11,411,963
*Chase Manhattan Bank, N.A. Vista Growth and
Income Fund - 10,979,418 8,792,731
*Putnam Investments Putnam Growth
and Income Fund 10,515,135 - 10,515,135
*Putnam Investments Putnam New
Opportunities Fund 6,675,570 - 6,675,570
*Putnam Investments Putnam Voyager
Fund 24,495,072 - 24,495,072
*Putnam Investments Putnam Money
Market Fund 4,973,039 - 4,973,039
</TABLE>
<TABLE>
<CAPTION>
Column A Column B Column H Column I
Current Value
Identity of on Transaction Net Gain
Party Involved Description of Asset Date or (Loss)
<S> <C> <C> <C>
Single Transactions:
Fidelity Institutional Retirement Fidelity Magellan
Services Company Fund $17,249,798 $1,108,339
*Chase Manhattan Bank, N.A. Vista U.S. Government
Income Fund 4,434,069 (137,739)
The Vanguard Group Vanguard Windsor
Fund 13,150,381 1,738,418
*Chase Manhattan Bank, N.A. Vista Growth and
Income Fund 10,979,418 2,186,687
*Putnam Investments Putnam Growth
and Income Fund 10,515,135 -
*Putnam Investments Putnam New
Opportunities Fund 6,675,570 -
*Putnam Investments Putnam Voyager
Fund 24,495,072 -
*Putnam Investments Putnam Money
Market Fund 4,973,039 -
</TABLE>
*Party-In-Interest
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the members
of the Terra Industries Inc. Benefits Committee have duly caused this report to
be signed on its behalf by the undersigned hereunto duly authorized.
TERRA INDUSTRIES INC. EMPLOYEES'
SAVINGS AND INVESTMENT PLAN
June 26, 1997 /s/ George H. Valentine
Date_________________________ By___________________________________
George H. Valentine
Senior Vice President, General Counsel
and Corporate Secretary
<PAGE>
EXHIBIT E
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement 33-46734
on Form S-8 of our report dated May 30, 1997, appearing in this Annual Report on
Form 11-K of the Terra Industries Inc. Employees' Savings and Investment Plan
for the year ended December 31, 1996.
DELOITTE & TOUCHE LLP
Omaha, Nebraska
June 19, 1997
