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FORM 10-Q/A
 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarter ended June 30, 2007
 o
    
    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.
  Delaware
    
    73-1389684(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 Terra CentrePO Box 6000, 600 Fourth StreetSioux City, Iowa
    
    51102-6000(Address of principal executive office)
    
    (Zip Code)
 Registrants telephone number:
(712) 277-1340
 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 o No
 Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large
accelerated filer in Rule 12b-2 of the Exchange Act.
 o Large accelerated filer x Accelerated filer o Non-accelerated filer
 Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). o Yes þ No
 At the close of business on July 27, 2007 there were 18,501,576 Common Units and 184,072 Class B
Common Units outstanding.




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##### 



TABLE OF CONTENTS
 Part I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets
    
    
    3Consolidated Statements of Operations
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Consolidated Statements of Partners Capital
    
    
    6Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Management Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    19Item 4.
    
    Controls and Procedures
    
    
    19Part II  OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    20Item 1A.
    
    Risk Factors
    
    
    20Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    20Item 3.
    
    Defaults upon Senior Securities
    
    
    20Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    20Item 5.
    
    Other Information
    
    
    20Item 6.
    
    Exhibits
    
    
    21Exhibit 31.1Exhibit 31.2Exhibit 32




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 TERRA NITROGEN COMPANY, L.P.
CONSOLIDATED BALANCE SHEETS   unaudited
 June 30,
    
    
    December 31,
    
    
    June 30,2007
    
    
    2006
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    80,732
    
    
    $
    62,287
    
    
    $
    33,110Demand deposits with affiliate
    
    
    5,332
    
    
    
    2,457
    
    
    
    7,469Accounts receivable
    
    
    49,999
    
    
    
    37,676
    
    
    
    31,340Inventory
    
    
    22,542
    
    
    
    22,709
    
    
    
    27,362Prepaid expenses and other current assets
    
    
    2,471
    
    
    
    3,334
    
    
    
    1,350Total current assets
    
    
    161,076
    
    
    
    128,463
    
    
    
    100,631Property, plant and equipment, net
    
    
    72,250
    
    
    
    74,096
    
    
    
    75,125Other assets
    
    
    13,749
    
    
    
    15,655
    
    
    
    7,467Total assets
    
    $
    247,075
    
    
    $
    218,214
    
    
    $
    183,223LIABILITIES AND PARTNERS CAPITALCurrent liabilities:Accounts payable and accrued liabilities
    
    $
    47,481
    
    
    $
    38,342
    
    
    $
    24,456Customer prepayments
    
    
    16,846
    
    
    
    35,326
    
    
    
    7,138Total current liabilities
    
    
    64,327
    
    
    
    73,668
    
    
    
    31,594Other long-term liabilities
    
    
    1,815
    
    
    
    474
    
    
    
    289Total liabilities
    
    
    66,142
    
    
    
    74,142
    
    
    
    31,883Partners capital:Limited partners interests, 18,502 Common Units
and 184 Class B Common Units authorized and
outstanding
    
    
    204,785
    
    
    
    160,795
    
    
    
    165,731General partners interest, 5 Master Limited
Partner Units authorized and outstanding
    
    
    (10,099
    )
    
    
    (10,544
    )
    
    
    (10,495
    )Accumulated other comprehensive loss
    
    
    (13,753
    )
    
    
    (6,179
    )
    
    
    (3,896
    )Total partners capital
    
    
    180,933
    
    
    
    144,072
    
    
    
    151,340Total liabilities and partners capital
    
    $
    247,075
    
    
    $
    218,214
    
    
    $
    183,223
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TERRA NITROGEN COMPANY, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS   (unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Revenues
    
    $
    177,158
    
    
    $
    119,109
    
    
    $
    305,010
    
    
    $
    214,587Other
    
    
    282
    
    
    
    42
    
    
    
    587
    
    
    
    21Total revenues
    
    
    177,440
    
    
    
    119,151
    
    
    
    305,597
    
    
    
    214,608Cost of goods sold
    
    
    114,111
    
    
    
    100,105
    
    
    
    204,881
    
    
    
    196,215Gross profit
    
    
    63,329
    
    
    
    19,046
    
    
    
    100,716
    
    
    
    18,393Operating expenses
    
    
    7,470
    
    
    
    2,027
    
    
    
    10,648
    
    
    
    4,065Operating income
    
    
    55,859
    
    
    
    17,019
    
    
    
    90,068
    
    
    
    14,328Interest expense
    
    
    (114
    )
    
    
    (110
    )
    
    
    (226
    )
    
    
    (219
    )Interest income
    
    
    1,312
    
    
    
    456
    
    
    
    2,545
    
    
    
    819Net income
    
    $
    57,057
    
    
    $
    17,365
    
    
    $
    92,387
    
    
    $
    14,928Net income allocable to
limited partners interest
    
    $
    56,486
    
    
    $
    17,191
    
    
    $
    91,463
    
    
    $
    14,779Net income per limited
partnership unit
    
    $
    3.02
    
    
    $
    0.92
    
    
    $
    4.90
    
    
    $
    0.79
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TERRA NITROGEN COMPANY, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS   (unaudited)
 Six Months EndedJune 30,2007
    
    
    2006Operating activities:Net income
    
    $
    92,387
    
    
    $
    14,928Adjustments to reconcile net income to net cash
flows from operating activities:Depreciation and amortization
    
    
    7,619
    
    
    
    6,668Non-cash (gain) loss on derivative instruments
    
    
    (342
    )
    
    
    333Changes in operating assets and liabilities:Receivables
    
    
    (12,323
    )
    
    
    748Inventories
    
    
    167
    
    
    
    (630
    )Accounts payable, accrued liabilities and
customer prepayments
    
    
    (16,188
    )
    
    
    (18,631
    )Other assets and liabilities
    
    
    1,909
    
    
    
    6,887Net cash flows from operating activities
    
    
    73,229
    
    
    
    10,303Investing activities:Capital expenditures
    
    
    (2,900
    )
    
    
    (3,426
    )Plant turnaround expenditures
    
    
    (1,057
    )
    
    
    (282
    )Change in demand deposits with affiliate
    
    
    (2,875
    )
    
    
    19,036Net cash flows from investing activities
    
    
    (6,832
    )
    
    
    15,328Financing activities:Partnership distributions paid
    
    
    (47,952
    )
    
    
    Repayment of long-term debt
and capital lease obligations
    
    
    
    
    
    
    (12
    )Net cash flows used in financing activities
    
    
    (47,952
    )
    
    
    (12
    )Net increase in cash and cash equivalents
    
    
    18,445
    
    
    
    25,619Cash and cash equivalents at beginning of year
    
    
    62,287
    
    
    
    7,491Cash and cash equivalents at end of period
    
    $
    80,732
    
    
    $
    33,110Supplemental disclosure of cash flow information:Cash paid during the year for interest
    
    $
    64
    
    
    $
    126
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TERRA NITROGEN COMPANY, L.P.
CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL   (unaudited)
 AccumulatedLimited
    
    
    General
    
    
    Other
    
    
    TotalPartners'
    
    
    Partner's
    
    
    Comprehensive
    
    
    Partners'
    
    
    Comprehensive(in thousands, except for Units)
    
    Interests
    
    
    Interests
    
    
    Income (Loss)
    
    
    Capital
    
    
    IncomePartners capital at January 1, 2007
    
    $
    160,795
    
    
    $
    (10,544
    )
    
    $
    (6,179
    )
    
    $
    144,072Net income
    
    
    91,463
    
    
    
    924
    
    
    
    
    
    
    
    92,387
    
    
    $
    92,387Change in fair value of derivatives
    
    
    
    
    
    
    
    
    
    
    (7,574
    )
    
    
    (7,574
    )
    
    
    (7,574
    )Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    84,813Distributions
    
    
    (47,473
    )
    
    
    (479
    )
    
    
    
    
    
    
    (47,952
    )Partners capital at June 30 ,2007
    
    $
    204,785
    
    
    $
    (10,099
    )
    
    $
    (13,753
    )
    
    $
    180,933
 Limited partner units issued and
outstanding at June 30, 2007:Common Units
    
    
    18,501,576Class B Common Units
    
    
    184,072Total units outstanding at June 30, 2007
    
    
    18,685,648
 AccumulatedLimited
    
    
    General
    
    
    Other
    
    
    TotalPartners'
    
    
    Partner's
    
    
    Comprehensive
    
    
    Partners'
    
    
    Comprehensive(in thousands, except for Units)
    
    Interests
    
    
    Interest
    
    
    Income (Loss)
    
    
    Capital
    
    
    IncomePartners capital at January 1, 2006
    
    $
    150,952
    
    
    $
    (10,644
    )
    
    $
    (5,949
    )
    
    $
    134,359Net income
    
    
    14,779
    
    
    
    149
    
    
    
    
    
    
    
    14,928
    
    
    $
    14,928Change in fair value of derivatives
    
    
    
    
    
    
    
    
    
    
    2,053
    
    
    
    2,053
    
    
    
    2,053Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    16,981Partners capital at June 30, 2006
    
    $
    165,731
    
    
    $
    (10,495
    )
    
    $
    (3,896
    )
    
    $
    151,340
 Limited partner units issued and
outstanding June 30, 2006:Common Units
    
    
    18,501,576Class B Common Units
    
    
    184,072Total units outstanding at June 30, 2006
    
    
    18,685,648
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Explanatory Note
    7




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TERRA NITROGEN COMPANY, L.P.
 Notes to Consolidated Financial Statements (Unaudited)
 1.
    
    Financial Statement PresentationBasis of PresentationThe condensed 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, 2006. TNCLP
and its operating partnership subsidiary, Terra Nitrogen, Limited Partnership (the Operating
Partnership), are referred to herein, collectively, as the Partnership.The accompanying unaudited condensed consolidated financial statements reflect all adjustments,
which 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.Derivatives and Financial InstrumentsThe Partnership accounts for derivatives in accordance with Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities,which
requires that derivatives be reported on the balance sheet at fair value and, if the derivative
is not designated as a hedging instrument, changes in fair value must be recognized in earnings
in the period of change. If the derivative is designated as a hedge and to the extent such
hedge is determined effective, changes in fair value are either (a) offset by the change in
fair value of the hedged asset or liability or (b) reported as a component of accumulated other
comprehensive
income (loss) in the period of change, and subsequently recognized in the determination of net
income in the period that the offsetting hedged transaction occurs.Terra Industries Inc. and its subsidiaries (Terra) enter into derivative instruments with
counterparties for the Partnerships operations. When Terra enters into a derivative instrument
for the Partnerships operations, the Partnership simultaneously enters into a derivative
instrument with Terra as the counterparty. The terms of the derivative instruments between the
Partnership and Terra are identical to the terms of the derivative instruments between Terra
and Terras counterparty. The types of derivative instruments entered into include future
contracts, swap agreements, put and call options to cap or fix prices for a portion of the
Partnerships natural gas production requirements. Terra may also enter into similar derivative
instruments to fix or set floor prices for a portion of the Partnerships nitrogen sales
volumes.Revenue RecognitionRevenue is recognized when persuasive evidence of a transaction exists, delivery has occurred,
the price is fixed or determinable, no obligations remain and collectibility is probable. The
Partnership classifies any discounts and trade allowances as a reduction in revenue. Gains or
losses associated with settled nitrogen derivative contracts are classified as revenue. The
Partnership classifies amounts directly or indirectly billed to its customers for shipping and
handling as revenue.Cost of SalesThe cost of manufacturing fertilizer products is recorded when the fertilizer products are sold
and revenue is recognized. The Partnership classifies amounts directly or indirectly billed for
delivery of products to its customers or its terminals as cost of sales. Premiums paid for
option contracts are deferred and recognized in cost of sales in the month to which the related
derivative transactions are settled. Realized gains and losses on derivatives activities are
recognized in cost of sales.
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InventoriesInventories are stated at the lower of average cost or estimated net realizable value. The
Partnership performs a monthly analysis of its inventory balances to determine if the carrying
amount of inventories exceeds its net realizable value. The analysis of estimated realizable
value is based on customer orders, market trends and historical pricing. If the carrying amount
exceeds the estimated net realizable value, the carrying amount is reduced to the estimated net
realizable value.Production costs include the cost of direct labor and materials, depreciation and amortization,
and overhead costs related to manufacturing activities. The cost of inventories is determined
using the first-in, first-out method.The Partnership estimates a reserve for obsolescence and excess of its materials and supplies
inventory. Inventory is stated net of the reserve.Impairment of Long-Lived AssetsThe Partnership reviews its long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be recoverable. If the sum
of the undiscounted future cash flows expected to result from the use of the asset is less than
the carrying amount of the asset, an impairment loss is recognized based on the difference
between the carrying amount and the fair value of the asset.Natural Gas Futures, Swaps, Options and Basis SwapsThe estimated fair value of each class of derivatives is based on published referenced prices
and quoted market prices from brokers.Cash and Cash EquivalentsThe Partnership classifies cash and short-term investments with an original maturity of three
months or less as cash and cash equivalents. Demand deposits with affiliate are not classified
in cash and cash equivalents.Demand Deposits with AffiliatePartnership cash receipts are generally received by Terra Capital, Inc., (Terra Capital) the
indirect parent of the General Partner. Cash receipts, net of cash payments made by Terra
Capital, are transferred to the Partnership from Terra Capital on a weekly basis. As a result
of this cash collection and distribution arrangement, Terra Capital is a creditor to the
Partnership.Use of Estimates in Preparation of the Financial StatementsThe preparation of financial statements in conformity with accounting principles generally
accepted in the United States requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those estimates.2.
    
    Agreement of Limited PartnershipThe Partnership makes quarterly cash distributions to Unitholders and the General Partner in an
amount equal to 100% of its Available Cash as defined in the Agreement of Limited
Partnership. Available Cash is defined generally as all cash receipts less all cash
disbursements, adjusted for changes in certain reserves that the General Partner reasonably
determines necessary.The Limited Partner receives 99% of the Available Cash and 1% is distributed to the General
Partner, except when cumulative distributions of Available Cash exceed specified target levels
above the Minimum Quarterly Distribution (MQD) of $0.605 per unit. Under such circumstances,
the General Partner is entitled, as an incentive, to larger percentage interests. As of June
30, 2007, the cumulative shortfall on quarterly distributions to holders of Common Units that must be paid
before the General Partner receives an incentive payment was $197.7 million, or $10.58 per
unit.
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Incremental Distribution
    
    Percentage of Incremental Distributionper Common Unit
    
    to General PartnerLess than $0.715
    
    
    1
    %$0.715-$0.825
    
    
    15
    %$0.825-$1.045
    
    
    25
    %Greater than $1.045
    
    
    50
    %
     3.
    
    Net Income per Limited Partnership UnitBasic income per unit data is based on the weighted-average number of Partnership Units
outstanding during the period. Diluted income per unit data is based on the weighted-average
number of Partnership Units outstanding and the effect of all dilutive potential common units.The following table provides the components of basic income per unit for the three-month
periods ended June 30, 2007 and 2006:
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The following table provides the components of basic income per unit for the three-month
periods ended June 30, 2007 and 2006:
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(in thousands, except share amounts)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Basic income (loss) per limited Partnership
unit computation:Net income allocable to limited
Partners interest
    
    $
    56,486
    
    
    $
    17,191
    
    
    $
    91,463
    
    
    $
    14,779Weighted average units outstanding
    
    
    18,686
    
    
    
    18,686
    
    
    
    18,686
    
    
    
    18,686Net income per limited Partnership unit
    
    $
    3.02
    
    
    $
    0.92
    
    
    $
    4.90
    
    
    $
    0.79
 There were no dilutive Partnership units outstanding for the three- and six-month periods
ended June 30, 2007 and 2006.4.
    
    InventoriesInventories consisted of the following:
 June 30,
    
    
    December 31,
    
    
    June 30,(in thousands)
    
    2007
    
    
    2006
    
    
    2006Materials and supplies
    
    $
    7,494
    
    
    $
    7,925
    
    
    $
    7,932Finished goods
    
    
    15,048
    
    
    
    14,784
    
    
    
    19,430Total
    
    $
    22,542
    
    
    $
    22,709
    
    
    $
    27,362
 Inventory is valued at actual first in, first out cost. Costs include raw material, labor and
overhead.5.
    
    Derivative Financial InstrumentsThe Partnership manages risk using derivative financial instruments for changes in natural gas
supply prices and changes in nitrogen prices. Derivative financial instruments have credit risk
and market risk.Terra enters into derivative instruments with counterparties for the Partnerships operations.
When Terra enters into a derivative instrument for the Partnerships operations, the
Partnership simultaneously enters into a derivative instrument with Terra as the counterparty.
The terms of the derivative instruments between the Partnership and Terra are identical to the
terms of the derivative instruments between Terra and Terras counterparty. Terra will not
enter into transactions with a counterparty if the additional transaction will result in credit
exposure exceeding $20 million. The credit rating of counterparties may be modified through
guarantees, letters of credit or other credit enhancement vehicles.
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The Partnership classifies a derivative financial instrument as a hedge if all of the following
conditions are met:
 1.
    
    The item to be hedged must expose the Partnership to currency or price risk.2.
    
    It must be probable that the results of the hedge position substantially offset
the effects of currency or price changes on the hedged item (e.g., there is a high
correlation between the hedge position and changes in market value of the hedge item).3.
    
    The derivative financial instrument must be designated as a hedge of the item
at the inception of the hedge.
    Other
    
    
    AccruedCurrent
    
    
    Current
    
    
    Net(in thousands)
    
    Assets
    
    
    Liabilities
    
    
    Asset (Liability)June 30, 2007
    
    $
    1,806
    
    
    $
    (14,898
    )
    
    $
    (13,092
    )December 31, 2006
    
    
    1,529
    
    
    
    (8,052
    )
    
    
    (6,523
    )June 30, 2006
    
    
    707
    
    
    
    (4,935
    )
    
    
    (4,228
    )
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(in thousands)
    
    2007
    
    
    2006Beginning accumulated (loss)
    
    $
    (6,179
    )
    
    $
    (5,949
    )Reclassification into earnings
    
    
    282
    
    
    
    21,538Net change associated with current period hedging transactions
    
    
    (7,856
    )
    
    
    (19,485
    )Ending accumulated loss
    
    $
    (13,753
    )
    
    $
    (3,896
    )
 All of the accumulated loss recorded above will be reclassified into earnings during the next
twelve-month period ending June 30, 2008.At times, the Partnership also uses forward derivative instruments to fix or set floor prices
for a portion of its nitrogen sales volumes. At June 30, 2007, the Partnership had open
contracts covering nitrogen solutions. When outstanding, the nitrogen solution contracts do not
qualify for hedge treatment due to inadequate trading history to demonstrate effectiveness.
Consequently, these contracts are marked-to-market and unrealized gains or losses are reflected
in revenue in the statement of operations. For the three- and six-month periods ending June 30,
2007, the Partnership recognized a loss of $1.0 million and $1.9 million, respectively, on
nitrogen forward derivative instruments. For the three-and six-month periods ending June 30,
2006, there were no gains or losses on nitrogen forward derivative instruments.6.
    
    Revolving Credit FacilityIn the first quarter of 2007, the Partnership amended the $50.0 million revolving credit
facility to extend the expiration date to January 31, 2012. The revolving credit facility bears
interest at a variable rate plus a margin (London Interbank Offer Rate (LIBOR) plus 175 basis
points, or 7.07% at June 30, 2007). Under the credit facility, the Partnership may borrow an
amount generally based on eligible cash balances, 85% of eligible accounts receivable and 60%
of eligible finished goods inventory, less outstanding letters of credit. The Partnerships
borrowings under the credit facility are secured by substantially all of its working capital.
The agreement also requires the Partnership to adhere to certain limitations on additional
debt, capital expenditures, acquisitions, liens, asset sales, investments, prepayments of
subordinated indebtedness, changes in lines of business and transactions with affiliates. At
June 30, 2007, the Partnership had $50.0
million of borrowing availability, and, there were no outstanding borrowings or letters of
credit under the facility.
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7.
    
    New Accounting PronouncementsIn September 2006, the FASB issued SFAS 157, Fair Value Measurements,(SFAS 157). SFAS 157 is
definitional and disclosure oriented and addresses how companies should approach measuring fair
value when required by generally accepted accounting principles (GAAP); it does not create or
modify any current GAAP requirements to apply fair value accounting. SFAS 157 provides a single
definition for fair value that is to be applied consistently for all accounting applications,
and also generally describes and prioritized according to reliability the methods and input
used in valuations. SFAS 157 prescribes various disclosures about financial statement
categories and amounts which are measured at fair value, if such disclosures are not already
specified elsewhere in GAAP. The new measurement and disclosure and requirements of SFAS 157
are effective for the Partnership in 2008 first quarter and the Partnership expects no
significant impact from adopting the Standard.In February 2007 the Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) 159, The Fair Value Option for Financial Assets and Financial
Liabilities(SFAS 159). SFAS 159 permits entities to choose to measure many financial
instruments and certain other items at fair value at specified election dates. SFAS 159 is
effective for the Partnership beginning in the first quarter of 2008. The Partnership is
currently assessing the impact SFAS 159 may have on its financial statements.
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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Introduction
    Dependence on Terra Industries
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Three months ended June 30, 2007 compared with
three months ended June 30, 2006
  2007
    
    
    2006Volumes
    
    
    Unit Price
    
    
    Volumes
    
    
    Unit Price(000 tons)
    
    
    ($/ton)*
    
    
    (000 tons)
    
    
    ($/ton)*Ammonia
    
    
    95
    
    
    $
    382
    
    
    
    68
    
    
    $
    381UAN
    
    
    631
    
    
    $
    201
    
    
    
    571
    
    
    $
    141
    Six months ended June 30, 2007 compared with
six months ended June 30, 2006
  2007
    
    
    2006Volumes
    
    
    Unit Price
    
    
    Volumes
    
    
    Unit Price(000 tons)
    
    
    ($/ton)*
    
    
    (000 tons)
    
    
    ($/ton)*Ammonia
    
    
    164
    
    
    $
    371
    
    
    
    120
    
    
    $
    394UAN
    
    
    1,205
    
    
    $
    181
    
    
    
    998
    
    
    $
    146
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Capital resources and liquidity
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Incremental Distribution
    
    Percentage of Incremental Distributionper Common Unit
    
    to General PartnerLess than $0.715
    
    
    1
    %$0.715-$0.825
    
    
    15
    %$0.825-$1.045
    
    
    25
    %Greater than $1.045
    
    
    50
    %
    
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   
 ITEM 4. CONTROLS AND PROCEDURES
   FORWARD LOOKING PRECAUTIONS
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PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
 (a) Exhibits:
 Exhibits *31.1
    
    Certification of the Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002Exhibits *31.2
    
    Certification of the Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002Exhibit *32
    
    Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002*filed herewith
 SIGNATURE
  TERRA NITROGEN COMPANY, L.P.By:
    
    TERRA NITROGEN GP INC.as General PartnerBy:
    
    /s/ Francis G. MeyerFrancis G. MeyerVice President (Principal Accounting Officer)
   21