<PAGE>
===============================================================================
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarter ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to _____
Commission file number 1-10877
TERRA NITROGEN COMPANY, L.P.
(Exact name of registrant as specified in its charter)
Delaware 73-1389684
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Terra Centre
PO Box 6000, 600 Fourth Street
Sioux City, Iowa 51102-6000
(Address of principal executive office) (Zip Code)
Registrant's telephone number:
(712) 277-1340
At the close of business on October 30, 1998, there were 18,501,576 Common
Units outstanding.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
X Yes No
- --- ---
===============================================================================
<PAGE>
PART I. FINANCIAL INFORMATION
TERRA NITROGEN COMPANY, L.P.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1998 1997 1997
------------- ------------ -------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16 $ 31,268 $ 8,120
Accounts receivable 1,718 4,007 8,028
Inventory -- finished products 35,389 19,241 26,603
Inventory -- materials and supplies 16,253 11,437 13,294
Prepaid expenses and other current assets 1,597 2,311 2,409
- ------------------------------------------------ -------- -------- --------
Total current assets 54,973 68,264 58,454
Net property, plant and equipment 166,817 169,533 170,986
Other assets 13,136 16,031 18,515
- ------------------------------------------------ -------- -------- --------
Total assets $234,926 $253,828 $247,955
================================================ ======== ======== ========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities:
Short-term note payable $ 18,778 $ --- $ ---
Accounts payable and accrued liabilities $ 21,321 26,524 37,445
Customer prepayments 84 4,746 304
Current portion of long-term debt and
capital lease obligations 1,105 1,070 1,059
- ------------------------------------------------ -------- -------- --------
Total current liabilities 41,288 32,340 38,808
Long-term debt and capital lease obligations 8,439 8,966 9,527
Long-term payable to affiliates 5,521 4,687 ---
Other long-term obligations 1,060 1,060 1,060
Partners' capital 178,618 206,775 198,560
- ------------------------------------------------ -------- -------- --------
Total liabilities and partners' capital $234,926 $253,828 $247,955
================================================ ======== ======== ========
</TABLE>
See accompanying notes.
2
<PAGE>
TERRA NITROGEN COMPANY, L.P.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per unit amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenues $33,306 $76,732 $182,327 $255,952
Other income 303 388 1,029 948
- -------------------------------------------------------------------------------
Total revenues 33,609 77,120 183,356 256,900
Cost of goods sold 26,851 54,993 136,776 157,756
- -------------------------------------------------------------------------------
Gross profit 6,758 22,127 46,580 99,144
Operating expenses 2,124 3,192 7,636 9,394
- -------------------------------------------------------------------------------
Operating income 4,634 18,935 38,944 89,750
Interest expense (422) (553) (1,647) (1,571)
Interest income 460 337 1,342 3,269
- -------------------------------------------------------------------------------
Net income $ 4,672 $18,719 $ 38,639 $ 91,448
===============================================================================
Net income allocable to
limited partners' interest $ 4,581 $14,394 $ 30,491 $ 64,480
===============================================================================
Net income per limited
partnership unit $ 0.25 $ 0.78 $ 1.65 $ 3.46
===============================================================================
</TABLE>
See accompanying notes.
3
<PAGE>
TERRA NITROGEN COMPANY, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1998 1997
-------- ---------
<S> <C> <C>
Operating activities:
Net income $ 38,639 $ 91,448
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 9,217 8,862
Changes in operating assets and liabilities:
Receivables 2,289 3,026
Inventories (20,964) (10,199)
Prepaid expenses 714 (56)
Accounts payable, accrued liabilities and
customer prepayments (9,865) (19,917)
Change in other assets 2,895 ---
Other 837 7,116
- ------------------------------------------------------------------------------------------
Net cash provided by operating activities 23,762 80,280
Net cash used in investing activities:
Capital expenditures (6,503) (7,158)
Financing activities:
Proceeds from elimination of distribution reserve fund --- 18,480
Borrowings under revolving credit agreement or from Affiliates 18,778 7,000
Repayment of long-term debt and capital lease obligations (493) (612)
Redemption of Senior Preference Units --- (6,605)
Partnership distributions (66,796) (130,027)
- ------------------------------------------------------------------------------------------
Net cash used in financing activities (48,511) (111,764)
- ------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents (31,252) (38,642)
Cash and cash equivalents at beginning of period 31,268 46,762
- ------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 16 $ 8,120
==========================================================================================
</TABLE>
See accompanying notes.
4
<PAGE>
TERRA NITROGEN COMPANY, L.P.
Notes to Consolidated Financial Statements (unaudited)
1. Basis of Presentation
The consolidated financial statements contained herein should be read in
conjunction with the consolidated financial statements and notes thereto
contained in the Terra Nitrogen Company, L.P. ("TNCLP") Annual Report on
Form 10-K for the year ended December 31, 1997. TNCLP and its operating
partnership subsidiary, Terra Nitrogen, Limited Partnership (the "Operating
Partnership"), are referred to herein, collectively, as the "Partnership".
The accompanying unaudited consolidated financial statements reflect all
adjustments that are, in the opinion of management, necessary for the fair
statement of the results for the periods presented. All of these
adjustments are of a normal and recurring nature. Results for the quarter
are not necessarily indicative of future financial results of the
Partnership.
Net income per limited partnership unit is computed by dividing net income,
less a 24% and 31% share allocable to the General Partner for the nine
months ended September 30, 1998 and 1997, respectively, by 18,501,576
limited partner units. The net income allocated to the General Partner
decreased to 24% during the nine months ended September 30, 1998 due to the
reduction in Available Cash distributed to the General Partner. According
to the Agreement of Limited Partnership of TNCLP, net income is allocated
to the General Partner and the Limited Partners in each taxable year in the
same proportion as Available Cash for such taxable year was distributed to
the General Partner and the Limited Partners. If there is no cash
distribution, net income or loss is allocated to the Limited Partners and
the General Partner based on their respective ownership percentages.
Distributions of Available Cash are made 98% to the Limited Partners and 2%
to the General Partner, except that the General Partner is entitled, as an
incentive, to larger percentage interests (up to 50%) to the extent that
distributions of Available Cash exceed specified target levels. Available
Cash for the nine months ended September 30, 1998 decreased $8.1 million
from the nine months ended September 30, 1997 due primarily to lower net
income in 1998. In addition, 1997 Available Cash included $18.5 million
from the elimination of the Reserve Amount during 1997 (see Note 2).
2. Distributions to Unitholders
The Partnership makes quarterly cash distributions to Unitholders and the
General Partner in an amount equal to 100% of its Available Cash (as this
and other capitalized terms are defined in the Partnership Agreement).
5
<PAGE>
The quarterly cash distributions paid to the Units and to the General
Partner applicable to 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
Senior Preference Units Common Units General Partner
----------------------------------------------------------------------------------
Total (000s) $ Per Unit Total (000s) $ Per Unit Total (000s) $ Per Unit
------------ ---------- ------------ ---------- ------------ ----------
1998:
<S> <C> <C> <C> <C> <C> <C>
First Quarter $ -- $ -- $21,647 $1.17 $ 3,431 $ --
Second Quarter -- -- -- -- -- --
Third Quarter -- -- 31,822 1.72 9,895 --
1997:
First Quarter 186 .605 27,752 1.50 10,477 --
Second Quarter 186 .605 18,872 1.02 1,835 --
Third Quarter -- -- 44,034 2.38 26,686 --
Fourth Quarter -- -- 5,366 .29 109 --
</TABLE>
The distributions paid in the first and second quarters of 1997 to the
holders of the Senior Preference Units ("SPUs") represented an amount equal
to the minimum quarterly distribution ("MQD") for each quarter. Non-
converting SPU holders were not entitled to participate in cash
distributions in excess of the MQD after December 31, 1996.
The Reserve Amount of $18.5 million (included in cash and cash equivalents
at March 31, 1997) was distributed out of Available Cash on May 27, 1997 to
holders of the Common Units and to the General Partner. Since the non-
converted SPUs were redeemed on May 27, 1997, the Reserve Amount was no
longer required to be maintained.
3. Cash and cash equivalents
The Partnership has demand deposit and demand note with an affiliate to
allow for excess Partnership cash to be deposited with or funds to be
borrowed from Terra Capital, Inc., the parent of the General Partner. The
balance is due on demand and at September 30, 1998 the interest rate was
7.1%. The amount of the demand note was $18.8 million at September 30,
1998.
4. Natural gas costs
The Partnership's natural gas procurement policy is to effectively fix or
cap the price of between 40% and 80% of its natural gas requirements for
one-year period and up to 50% of its natural gas requirements for the
subsequent two-year period through supply contracts, financial derivatives
and other forward pricing techniques. These contracts reference physical
natural gas prices or appropriate NYMEX futures contract prices. Contract
physical prices are frequently based on the Henry Hub Louisiana price, but
natural gas supplies for the Partnership's production facilities are
physically purchased from various suppliers which often creates a location
basis differential between the contract price and the physical price of
natural gas. Accordingly, the use of financial derivatives may not exactly
offset the change in the price of physical gas. The contracts are traded in
months forward and settlement dates are scheduled to coincide with gas
purchases during that future period.
6
<PAGE>
The Partnership has entered into firm contract to minimize the risk of
interruption or curtailment of natural gas supplies. Additionally, the
Partnership has entered into forward pricing positions for a substantial
portion of its natural gas requirements for the remainder of 1998, 1999 and
2000, consistent with its policy. As a result of its policies, the
Partnership has reduced the potential adverse financial impact of natural gas
price increases during the forward pricing period, but conversely, if natural
gas prices were to fall, the Partnership will incur higher costs. Unrealized
gains from forward pricing positions totaled $9.4 million and $29.2 million
as of September 30, 1998 and 1997, respectively. The amount recognized by the
Partnership will be dependent on prices in effect at the time of settlement.
For the first nine months of 1998 and 1997, natural gas hedging activities
produced cost savings of approximately $5.5 million and $15.1 million,
respectively, compared with spot prices.
7
<PAGE>
Management's Discussion and Analysis of Financial Condition and
Results of Operations
RESULTS OF OPERATIONS
Three months ended September 30, 1998, compared with
three months ended September 30, 1997
Volumes and prices for the three-month periods ended September 30, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 1997
---------------------------- -----------------------------------
Sales Average Sales Average
Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton) (000 tons) ($/ton)
------------ ----------- ------------- ---------------
<S> <C> <C> <C> <C>
Ammonia 83 128 122 175
UAN 207 64 562 73
Urea 77 121 116 122
</TABLE>
Revenues for the quarter ended September 30, 1998 declined $43.5 million, or
56%, compared with the same quarter in 1997 due to lower nitrogen prices and
volumes for all Partnership products. Surplus worldwide nitrogen production
continued to put pressure on prices during the 1998 quarter resulting in price
reductions of 27%, 12% and 1% for ammonia, UAN and urea, respectively, compared
with the 1997 quarter. Volumes were less than the comparable quarter a year ago
due to customers' decisions to delay purchases to fill storage and lower demand
for winter wheat acres due to drought conditions and the impact of poor wheat
prices.
Cost of goods sold as a percentage of revenues increased to 80% for the 1998
quarter from 71% in the 1997 period primarily due to the lower nitrogen selling
prices as gas costs increased only slightly during the 1998 quarter compared
with the 1997 quarter. The Partnership's natural gas forward pricing activities
produced $.4 million in cost savings during the 1998 period compared with $4.0
million in the 1997 quarter.
Interest income increased $123,000 compared with the 1997 period due to lower
average levels of cash and short-term investments in 1998.
8
<PAGE>
Nine months ended September 30, 1998, compared with
nine months ended September 30, 1997
Volumes and prices for the nine-month periods ended September 30, 1998 and 1997
were as follows:
<TABLE>
<CAPTION>
1998 1997
----------------------- -----------------------
Sales Average Sales Average
Volumes Unit Price Volumes Unit Price
(000 tons) ($/ton) (000 tons) ($/ton)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Ammonia 301 141 375 189
UAN 1,455 67 1,525 85
Urea 339 124 364 150
</TABLE>
Revenues for the nine months ended September 30, 1998 declined $73.5 million, or
29%, compared with the 1997 period due to lower nitrogen prices and volumes for
all Partnership products. Surplus worldwide nitrogen production caused nitrogen
prices to fall from prior year levels by 25%, 21% and 17% for ammonia, UAN and
urea, respectively. Worldwide urea prices have declined due to a lack of
purchases by China, a major purchaser of urea in the world markets. Increased
urea production in China and the addition of increased nitrogen production in
other parts of the world have led to an oversupply of nitrogen and caused prices
to decline from prior year levels.
Year-to-date sales volume decreases were primarily attributable to the third
quarter customer delays in purchasing to fill storage and lower demand caused by
drought conditions and lower crop prices.
Cost of goods sold as a percentage of revenues increased to 75% for the first
nine months of 1998 compared with 61% for the 1997 period primarily due to the
lower nitrogen selling prices as gas costs decreased only slightly during the
nine months ended June 30, 1998. The Partnership's natural gas forward pricing
activities produced $5.5 million in cost savings during the 1998 period compared
with $15.1 million for the nine months ended September 30, 1997.
Interest income decreased $1.9 million compared with the 1997 period due to
lower levels of cash and short-term investments from lower earnings and due to
the elimination of the Reserve Amount as a result of the redemption of the non-
converted SPUs during the second quarter of 1997.
9
<PAGE>
Capital Resources and Liquidity
Net cash provided by operating activities for the first nine months of 1998 was
$23.8 million, a decrease of $56.5 million compared with the 1997 period. The
reduction in cash provided by operating activities was principally due to lower
net income in 1998.
The Partnership's principal needs for funds are for support of its working
capital, distributions to Partners, and capital expenditures. The Partnership
intends to fund such needs primarily from net cash provided by operating
activities and, to the extent permitted thereunder, from funds available under
the Operating Partnership's revolving credit facility. Under certain
circumstances an affiliate of the Partnership may advance funds to the
Partnership under a demand note. At September 30, 1998, the Operating
Partnership had $18.0 million of unused borrowing capacity under its revolving
credit facility, and had $18.8 million outstanding under a demand note with an
affiliate. The Partnership believes that such sources of funds will be adequate
to meet the Partnership's working capital needs, make quarterly distributions to
Partners and fund the Partnership's capital expenditures for at least the next
twelve months.
Quarterly distributions to the Partners of TNCLP are based on Available Cash for
the quarter as defined in the Agreement of Limited Partnership of TNCLP.
Available Cash is defined generally as all cash receipts less all cash
disbursements, adjusted for changes in certain reserves established as the
General Partner determines in its reasonable discretion to be necessary.
Distributions on the Common Units are cumulative to the extent that, for any
calendar quarter, if a distribution of at least $.605 is not paid to the holders
of the Common Units, the amount of the shortfall (plus any arrearages from prior
quarters) will be paid out of Available Cash in subsequent quarters before any
incentive distributions are paid to the General Partner. During the first nine
months of 1998, the Partnership paid $66.8 million in distributions to its
Partners. As of September 30, 1998, there is no distribution arrearage for the
Common Units.
On October 22, 1998, Terra Nitrogen Company, L.P. announced there would be no
cash distribution for the quarter ended September 30, 1998 since there was no
Available Cash for distribution for the quarter.
Finished products inventory increased $16.1 million and $8.8 million from the
December 31, 1997 and the September 30, 1997 balances, respectively, primarily
due to substantially lower than anticipated UAN sales volumes during the third
quarter of 1998.
Accounts payable and accrued liabilities declined $16.1 million from the
September 30, 1997 balance principally due to the timing of cash transfers
between the Partnership and its affiliates.
Customer prepayments declined $4.7 million from the December 31, 1997 balance.
Certain customers prepay for product during the fall and winter months to take
advantage of generally favorable pricing conditions. The customers then take
delivery of the product as needed during the spring planting season.
Capital Expenditures
Capital expenditures totaled $6.5 million for the first nine months of 1998. For
the remainder of 1998, the Partnership plans to spend approximately $1 million.
Plans for 1998 include urea storage and loading improvements at the Blytheville
plant and environmental control, equipment replacement and efficiency
improvements at both plants.
10
<PAGE>
Year 2000 Issue
The Year 2000 issue concerns computer programs that use only the last two digits
to identify the year in date fields. If not corrected, many of these computer
programs could fail or produce erroneous results on or before January 1, 2000.
This issue affects virtually every company.
The Partnership has assigned dedicated resources to address its Year 2000
issues. Most, but not all, of the Partnership's management information systems
environment have been assessed for Year 2000 issues and some remedial actions
have been identified in these assessed areas. The impact of remedial actions for
areas where an assessment has already been completed is not expected to be
material to the Partnership. Some of these actions have already been completed
at minimal cost.
The Partnership plans to complete in the first quarter of 1999 an organization-
wide review of all possible computing functions, including the process control
systems and instrumentation in the manufacturing facilities. The Partnership is
also assessing Year 2000 issues in relation to its customers, suppliers and
other constituents because the actions or inactions of such third parties may
materially affect the Partnership. General contingency planning efforts have
recently been initiated for precautionary purposes.
The Partnership anticipates that it will complete all assessment, remediation,
testing and contingency planning efforts for Year 2000 issues in the third
quarter of 1999 with no material adverse consequences or material costs to the
Partnership. However, the costs or consequences of incomplete or untimely
resolution of Year 2000 issues by the Partnership or third parties could have a
material adverse affect on the Partnership.
Limited Call Right
If at any time not more than 25% of the Common Units are held by non-affiliates
of the General Partner, either TNCLP, the General Partner or its affiliates may
call all such outstanding units held by non-affiliated persons in accordance
with the terms of the TNCLP partnership agreement. TNCLP is required to give at
least 30 but not more than 60 days notice of its decision to purchase the
outstanding Common Units. The purchase price per unit is required to be the
greater of (1) the average of the previous twenty trading days closing prices as
of the date five days before the purchase is announced or (2) the highest price
paid by the General Partner or any of its affiliates for any unit within 90 days
preceding the date the purchase is announced.
The General Partner and its affiliates own 69% of the Common Units as of October
31, 1998. Under existing authorization of the board of directors of Terra
Industries, Inc., the indirect parent of the General Partner, additional Common
Units may be purchased on the open market and through privately negotiated
transactions by affiliates of the General Partner to bring this ownership level
above 75%. Although TNCLP and its affiliates reserve the right to consider in
the future whether to acquire all of the Common Units, they do not have any
present plan or intention to do so.
11
<PAGE>
FORWARD LOOKING PRECAUTIONS
---------------------------
Information contained in this report, 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: general
economic conditions within the agricultural industry, competitive factors and
price changes (principally, sales prices of nitrogen and methanol products and
natural gas costs), changes in product mix, changes in the seasonality of demand
patterns, changes in weather conditions, changes in agricultural regulations,
and other risks detailed in the Corporation's Securities and Exchange Commission
filings, in particular the "Factors that Affect Operating Results" section of
its most recent Form 10-K.
Part II. Other Information
Item 5. Other Matters
On October 15, 1998 Minorco, the majority shareholder of Terra
Industries, Inc., announced its intention to sell its stake in Terra
Industries by early 1999. Terra Industries is the indirect parent of the
General Partner and the indirect majority owner of approximately 70% of
Terra Nitrogen Company, L.P.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
10.68 Amendment No. 1 dated as of September 30, 1998 to the Amended and
Restated Credit Agreement dated as of March 31, 1998 among Terra
Capital, Inc.; Terra Nitrogen, L.P.; Nations Bank, N.A.; The Chase
Manhattan Bank; and Citibank, N.A., filed as Exhibit 4.5 to Terra
Industries Inc. Form 10-Q for the period ended September 30,1 998 (File
No. 1-8520), is incorporated herein by reference.
10.69 Demand Promissory Note dated August 26, 1998 from Terra Nitrogen,
L.P., as Payor, to Terra Capital Inc.
27 Financial Data Schedule. (EDGAR only)
(b) Reports on Form 8-K:
None.
12
<PAGE>
SIGNATURE
Pursuant to the requirements 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 NITROGEN COMPANY, L.P.
By: TERRA NITROGEN CORPORATION
as General Partner
By: /s/ Francis G. Meyer
------------------------------
Vice President
(Principal Accounting Officer)
Date: November 12, 1998
13
<PAGE>
DEMAND PROMISSORY NOTE
----------------------
August 26,1998
FOR VALUE RECEIVED, the undersigned, Terra Nitrogen, Limited Partnership, a
Delaware limited partnership (the "Payor"), HEREBY PROMISES TO PAY ON DEMAND to
the order of TERRA CAPITAL, INC., a Delaware corporation (the "Company"), the
aggregate principal amount of all advances made hereunder by the Company at its
sole discretion to the Payor outstanding at the time of such demand, together
with interest (computed on the basis of a year of 360 days) on the principal
amount hereof from time to time outstanding from the date hereof until such
principal amount is paid in full, such interest to be payable on demand and on
the final day when such principal amount becomes due, at a rate per annum equal
to the sum of (a) the Applicable Margin (as defined in the Company's Amended and
Restated Credit Agreement with Citibank N.A. as agent dated March 31, 1998 as in
effect from time to time) and (b) the Eurodollar Rate as defined therein in
effect on the date of this Demand Promissory Note for the initial calendar month
and as of the first business day for each other calendar month during which
interest accrues.
The Payor also agrees to pay on demand all costs and expenses, if any,
including reasonable and documented counsel fees and expenses, in connection
with the enforcement (whether through negotiations, legal proceedings or
otherwise) of this Demand Promissory Note.
Both principal and interest hereunder are payable on the day for payment
thereof (whether upon demand or otherwise) in lawful money of the United States
of America to the Company at the Company's executive offices in Sioux City, Iowa
(or at such other location specified by the Company), in same day funds.
Whenever any payment hereunder shall be stated to be due on a day other than a
business day, such payment shall be made on the next succeeding business day,
and such extension of time shall in such case be included in the computation of
payment of interest. All advances made by the Company to the Payor hereunder
and all payments made on account of principal hereof shall be recorded by the
Company and, prior to any transfer hereof, endorsed on the grid attached hereto
which is part of this Demand Promissory Note.
This Demand Promissory Note shall be governed by, and construed in
accordance with, the laws of the State of Iowa.
TERRA NITROGEN, LIMITED PARTNERSHIP
By: Terra Nitrogen Corporation
Its: General Partner
By: /s/ F. G. Meyer
-------------------------------
Name: Francis G. Meyer
Title: Vice President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Terra Nitrogen Company, L.P. 10-Q, and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 16
<SECURITIES> 0
<RECEIVABLES> 1,718
<ALLOWANCES> 0
<INVENTORY> 51,642
<CURRENT-ASSETS> 54,973
<PP&E> 282,403
<DEPRECIATION> 115,586
<TOTAL-ASSETS> 234,926
<CURRENT-LIABILITIES> 41,288
<BONDS> 8,439
0
0
<COMMON> 0
<OTHER-SE> 178,618<F1>
<TOTAL-LIABILITY-AND-EQUITY> 234,926
<SALES> 182,327
<TOTAL-REVENUES> 183,356
<CGS> 136,776
<TOTAL-COSTS> 136,776
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,647
<INCOME-PRETAX> 38,639
<INCOME-TAX> 0
<INCOME-CONTINUING> 38,639
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,639
<EPS-PRIMARY> 1.65
<EPS-DILUTED> 0
<FN>
<F1> Due to the nature of the partnership, this represents partners capital.
</FN>
</TABLE>
