To assure the best service possible and to accommodate future growth of the company, Terral is creating new divisions in our internal organizational structure. The Service Division—headed by Neil Martin—will manage land assets and associated leases, buildings and equipment. Neil has been with the company for 13 years, working in cottonseed trading, operations management and business development, and serving as a member of our Executive Management Committee. Neil will be promoted to Vice President of Terral. We have also created a Transportation Division, which will manage marine assets and associated operations. Gabe Gattle, who has been working on the marine side and in business development since coming on board four years ago, will head this division as Vice President and continue serving as a member of the Executive Management Committee.

On October 2, Terral held our 10^th Annual Golf Tournament at the Vicksburg Country Club. We hosted 73 customers, vendors and employees. Play began at 12:30pm, under threat of rain, with 16 teams playing in a scramble format, and the winning team of Marvin Collins, Scott Ziller and J. O. Smith posted a score 63. We appreciate the terrific crew at the Vicksburg Country Club for hosting our event. After the tournament, Palmer Tree Catering prepared a delicious dinner.

Thanks to everyone who contributed to another successful tournament. We are already looking forward to next year.

Terral is proud to announce that Larry Stivers is joining our company, working in the procurement and marketing of fertilizer. Larry will be partnering with Don Philley in expanding our fertilizer operations. Larry lives in Owensboro, Kentucky and will be working out of Owensboro. After graduating from Sullivan University in Louisville, Kentucky, Larry worked at Cargill for five years before moving to Miles Enterprises/Miles Farm Supply in Owensboro. He worked at Miles for 18 years as Sales and Marketing Director. In 2010, Miles sold their operation to Agrium and Larry became Agrium’s Regional Sales and Marketing Director. Larry’s wife is Renee; they have two sons, Andrew and Alex.

Terral held our 8th annual golf outing in Vicksburg, Mississippi on October 4, 2012. There were participants from all over the country representing many of our customers and venders. Twenty-four teams participated. Those in attendance who did not play enjoyed the luncheon, banquet and evening meal. We are very pleased with the turnout and appreciate everyone taking time to come. The team of Martin, Spillers, Morgan and Neiderer (not shown) won the scramble.

The river situation has improved at those locations where we either closed the harbor or had restricted access due to low water. The current river gauge at Vicksburg, Mississippi is 3.2, almost four feet above the low river mark. This small rise in river level—coupled with the dredging that took place at the Lake Providence and Madison Ports—is allowing a more normal flow of traffic at theses two locations, though some barge restrictions on the Mississippi River remain. Terral’s newest boat, the Kim King, is pictured above at Lake Providence, Louisiana.

Another difficulty in a season of near-record low river levels

Barge traffic on the Lower Mississippi River (LMR) has been slowed to a crawl. Blockages at mile 525 (LMR) and at mile 545 (LMR) have limited southbound and northbound barge movement. Three Terral fleet boats are caught in the impasse, delaying scheduled rock and coal deliveries.

Terral RiverService recently featured in Los Angeles Times article covering Mississippi River

This problem is one of many our company has faced this season due to low water conditions on the Mississippi. The river is 57 feet lower than this time last year. For three weeks our operations at Lake Providence Port have been completely halted as we await a dredge-dug path to the docks. This location will likely be out of operation another two weeks.

This comes at harvest time for area grain farmers, when grain elevators must be loaded. We typically service four grain elevator companies through the Lake Providence Port, and, with this port closed, we have been forced to make major adjustments. At the Madison Parish Port, near Tallulah, Louisiana, we have access to the river on a limited basis for loading and unloading barges. Three of our grain elevator customers are currently sharing time on this dock to load barges, and we are unloading barges across the riverbank to accommodate inbound product such as fertilizer and rock. Terral personnel are working 24 hours a day to keep our customers served despite these limitations.

In the last two years, the LMR has experienced its highest river in history and now close to its lowest river in history. As a result of the high water, excessive deposits of sand and silt found their way downriver, where they settled in the mouths of our ports and along the main shipping channel of the river. This has resulted in a much more severe low-water condition. The Army Corps of Engineers is working hard to keep access to the river open.

Terral is using all of its resources to cope with the harsh and unusual river conditions. Our towboat, port and management personnel are working hard to provide continual service. We have had barges stuck on sandbars, boats with wheels and rudders and hulls damaged, and many delays. We hope our customers trust our efforts to work through these adversities, and we appreciate their patience in these trying times.

Fertilizer prices presented our company with many difficulties during the spring season. Never have we seen such potential for loss, with prices remaining very high, especially in urea. The urea market is currently inverted, with the nearby price much greater than the deferred pricing. This price structure was driven by a shortage of product, which in turn drove up the nearby prices for urea. Faced with this unpredictable environment, Terral has been committed to keeping product available in our warehouses, even with the threat of loss, in order to provide for our customers. Though we failed to meet inventory demands on a handful of occasions, it was not from a lack of dedication to our customers. It is Terral’s philosophy to stay in the market for our customers at all times, to be a reliable source of products and services even in difficult economic environments.

Terral is deeply saddened by the passing of Tim Duplechain, who was taken by cancer on May 3, 2012. Tim managed our Mermentau, Louisiana operation since its opening in 2004. He was an outstanding employee; we wish we had a hundred more just like him. Tim will be missed by everyone in the Terral family. His wife, Lisa Duplechain, will continue in her position at the Mermentau office.

The newest boat in the Terral fleet is in its final stages of construction. Mid South Marine plans to complete the 1,200 HP vessel by mid-July. The new boat will be named in honor of long-time employee Kim King, who has been with the company since 1980. Kim’s career began in reception. She now works dispatch at the Lake Providence, Louisiana offices, managing Marine Logistics for many of our operations. Kim has done an outstanding job at Terral, and we are pleased to honor her in this way.M/V Kim King will operate out of the Lake Providence Harbor.

A shift in roles within the Management Team

John (Johnny) A. Martin, Jr. has moved from Marine Division Manager to Chief Operating Officer of Terral. In his place, Gabriel (Gabe) Gattle will take over as Marine Division Manager. We are pleased to announce this change and are confident the leadership and experience of both Johnny and Gabe will help facilitate further growth and profitability for the company.

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Terral RiverService has commissioned the building of a new 1,200 HP harbor boat. The boat should be completed by mid-July in time to accommodate Lake Providence’s seasonally busy grain movement. This new harbor boat also will help facilitate additional tonnage from the new succinic acid plant being constructed at the port in Lake Providence by Myriant Technologies.

Terral RiverService has completed a total renovation of its fertilizer warehouse in Lake Providence, Louisiana. We are proud of the fact that we did not disrupt our customer service; the project was accomplished without interrupting the loading or receiving product. Our management team developed the plan, and we achieved it with the help of Bo Lively and Associates—an engineering firm in Monroe, Louisiana—and Timbo’s Construction out of Cleveland, Mississippi. Thanks to all who made this unique construction project successful.