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Terra Defines Tax Character of Special Dividend

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February 1, 2010 4:57 PM EST

SIOUX CITY, Iowa--(BUSINESS WIRE)-- Terra Industries Inc. (NYSE: TRA) today announced that approximately $6.87 of the $7.50-per-share special cash dividend paid on Dec. 11, 2009, will, for U.S. federal income tax purposes, be classified as a qualified, ordinary dividend. Approximately $0.63 of the dividend will be classified as a non-dividend distribution. The income tax character of the special cash dividend was based on Terra's accumulated and current earnings and profits for the year ending Dec. 31, 2009.

Shareholders should contact their tax advisors to determine their individual tax treatments.

About Terra

Terra Industries Inc., with 2008 revenues of $2.9 billion, is a leading North American producer and marketer of nitrogen products.

Forward-Looking Statements

Certain statements in this communication may constitute "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. As a result, these statements speak only as of the date they were made and Terra undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as otherwise required by law. Words such as "expects," "intends," "plans," "projects," "believes," "estimates," and similar expressions are used to identify these forward-looking statements. Forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. These risks, uncertainties and assumptions include, among others:

    --  risks related to potential acquisition transactions,
    --  changes in financial and capital markets,
    --  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 environmental and other government regulation,
    --  changes in agricultural regulations and
    --  changes in the securities trading markets.

Additional information as to these factors can be found in Terra's 2008 Annual Report/10-K and in Terra's subsequent Quarterly Reports on Form 10-Q, in each case in the sections entitled "Business," "Risk Factors," "Legal Proceedings," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in the Notes to the consolidated financial statements.

Note: Terra Industries' news announcements are also available on its Web site, www.terraindustries.com.