EXHIBIT 99.1
[NORTHERN BORDER PARTNERS, L.P. LETTERHEAD]
NORTHERN BORDER PARTNERS REPORTS
SECOND QUARTER RESULTS
FOR IMMEDIATE RELEASE: Thursday, July 24, 2003
OMAHA - Northern Border Partners, L.P. (NYSE - NBP) reports second
quarter 2003 net income of $32.1 million or $0.66 per unit compared to $30.1
million or $0.67 per unit in the second quarter 2002. Year-to-date net income
for 2003 was $64.7 million or $1.35 per unit as compared to the first six months
of 2002 net income of $58.1 million or $1.28 per unit. Earnings before interest,
taxes, depreciation and amortization (EBITDA) increased from $83.1 million in
the second quarter of 2002 to $85.3 million in the second quarter 2003.
Year-to-date 2003 EBITDA was $172.1 million compared to $162.1 million for the
same period one year ago.
Year-to-date 2003 net income reflects a charge of approximately
$600,000 or $0.01 per unit for the cumulative effect of the Partnership's
required implementation of Statement of Financial Accounting Standards (SFAS)
No. 143 "Accounting for Asset Retirement Obligations". SFAS No. 143 requires
entities to record on a present value basis a liability for asset retirement
obligations, if the liability can be reasonably estimated.
Results for the quarter include an after-tax gain of $4.9 million, or
$0.10 per unit, reported in Discontinued Operations. The gain relates to the
June sale of the Gladys and Mazeppa processing plants located in Alberta, Canada
for $40.0 million.
The average units outstanding for the quarter increased by 3.3 million
units compared to the same period in 2002. Since the beginning of the year,
Northern Border Partners has issued approximately $102 million of new equity to
fund recent acquisitions and position the company for future growth.
Delivered volumes for the Partnership's interstate natural gas
pipelines segment increased during second quarter 2003 to 276 billion cubic feet
(Bcf) from 231 Bcf for the second quarter of 2002 primarily due to the
acquisition of Viking Gas Transmission early this year. Total gathering volumes
increased to 1,111 million cubic feet per day (MMcf/d) during the second quarter
2003 compared to 1,047 MMcf/d for the second quarter 2002. However, volumes on
the Partnership's wholly-owned gathering systems in the Powder River Basin
decreased from 244 MMcf/d in second quarter 2002 to 212 MMcf/d in the second
quarter 2003. Processing volumes from the Partnership's continuing operations
were 52 MMcf/d for the second quarter of 2003 compared to 56 MMcf/d for the
second quarter 2002.
"Entering 2003, Northern Border Partners focused on two challenges. The
first, the recontracting effort on Northern Border Pipeline, has been
successfully completed. The second is the drilling activity in the Powder River
Basin, which has not escalated as we had anticipated. Though the Environmental
Impact Statement has been issued drilling permits continue to lag," said Bill
Cordes, chairman and chief executive officer of Northern Border Partners. "We
continue to believe that the Powder River Basin is a critical supply source and
that its further development will be necessary to meet the energy needs of the
United States."
The Partnership indicated that for the full year 2003, with the
inclusion of the second quarter gain, it expects earnings per unit toward the
high end of the previously announced range of $2.55 to $2.65 per unit.
On July 21, 2003, the Partnership Policy Committee declared the
Partnership's quarterly cash distribution of $0.80 per unit for the second
quarter of 2003. The indicated annual rate is $3.20. The distribution is payable
August 14, 2003 to unitholders of record July 31, 2003.
Northern Border Partners will host a conference call to review second
quarter 2003 results on Friday, July 25, at 11:00 a.m. Eastern time. Interested
parties may listen via the Internet live or on a replay basis through the
Partnership's website at http://www.northernborderpartners.com.
A replay of the call will be available through August 1, 2003 by
dialing, toll free in the United States and Canada, 800-405-2236 and entering
passcode 544419. The call will also be archived through October 15, 2003 on
Northern Border Partners' website.
The Partnership has disclosed EBITDA amounts in this press release.
These amounts are non-GAAP financial measures. Management believes EBITDA
provides useful information to investors as a measure of comparability to peer
companies. However, EBITDA calculations may vary slightly from company to
company, so the Partnership's computation of EBITDA may not be comparable to
other companies. Management further uses EBITDA to compare the financial
performance of its segments and to internally manage those business segments. A
reconciliation of EBITDA to our net income and cash flows from operating
activities is included in the financial information included in this release.
For segment information of this press release, EBITDA is reconciled to net
income rather than to cash flows
from operating activities, since the Partnership does not determine segment cash
flows from operating activities due to its inter-company cash management
activity.
Northern Border Partners, L.P. owns a 70 percent general partner
interest in Northern Border Pipeline Company. Additionally, the Partnership owns
Midwestern Gas Transmission Company; Viking Gas Transmission Company; a
one-third interest in Guardian Pipeline, L.L.C.; has gathering systems and
processing plants in the Powder River, Wind River and Williston Basins in the
United States; has an interest in a gathering system in central Alberta, Canada;
and transports coal-water slurry via a pipeline in the southwestern U.S.
Northern Border Partners, L.P. information may be found at
http://www.northernborderpartners.com.
This press release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although Northern Border Partners, L.P. believes that its
expectations are based on reasonable assumptions, it can give no assurance that
such expectations will be achieved. Important factors that could cause actual
results to differ materially from those in the forward-looking statements
include natural gas development in the Powder River, Wind River, Williston and
Western Canadian Sedimentary Basins; regulatory actions and receipt of expected
regulatory clearances; competitive conditions in the overall natural gas and
electricity markets; our ability to market pipeline capacity on favorable terms;
performance of contractual obligations by the shippers; prices of natural gas
and natural gas liquids; developments in the voluntary petition for bankruptcy
including Enron's announced intention to form CrossCountry Energy, of which
Northern Plains and Pan Border would be a part; potential regulation under
Public Utilities Holding Company Act; and conditions in the capital markets and
our ability to access the capital markets.
####
NORTHERN BORDER PARTNERS, L.P.
FINANCIAL HIGHLIGHTS
(Unaudited: In Millions Except Net Income Per Unit)
SECOND QUARTER YEAR TO DATE
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
Operating Revenue $ 134.4 $ 121.3 $ 272.5 $ 237.3
Income From Continuing Operations $ 27.7 $ 30.1 $ 60.9 $ 57.6
Net Income $ 32.1 $ 30.1 $ 64.7 $ 58.1
Per Unit Income From Continuing Operations $ 0.56 $ 0.67 $ 1.26 $ 1.27
Per Unit Net Income $ 0.66 $ 0.67 $ 1.35 $ 1.28
Cash Flows From Operating Activities $ 37.6 $ 49.1 $ 94.3 $ 105.7
EBITDA (1) $ 85.3 $ 83.1 $ 172.1 $ 162.1
CONSOLIDATED STATEMENT OF INCOME
(Unaudited: In Millions Except Net Income Per Unit)
SECOND QUARTER YEAR TO DATE
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
Operating Revenue $ 134.4 $ 121.3 $ 272.5 $ 237.3
-------- -------- -------- --------
Operating Expenses
Product Purchases 19.2 12.0 40.3 22.7
Operations and Maintenance 30.1 23.0 58.5 46.8
Depreciation and Amortization 19.5 18.4 39.5 36.6
Taxes Other Than Income 8.7 7.3 18.3 14.7
-------- -------- -------- --------
Total Operating Expenses 77.5 60.7 156.6 120.8
-------- -------- -------- --------
Operating Income 56.9 60.6 115.9 116.5
Interest Expense, Net (20.5) (21.9) (41.0) (42.9)
Other Income (Expense) (1.8) (0.3) (3.7) 0.4
Equity Earnings from Investments 4.4 3.3 12.0 6.5
Minority Interest (11.3) (11.6) (22.3) (22.9)
-------- -------- -------- --------
Income From Continuing Operations 27.7 30.1 60.9 57.6
Discontinued Operations 4.4 0.0 4.4 0.5
Cumulative Effect of Change in Accounting Principle, net of tax 0.0 0.0 (0.6) 0.0
-------- -------- -------- --------
Net Income $ 32.1 $ 30.1 $ 64.7 $ 58.1
======== ======== ======== ========
Per Unit Income From Continuing Operations $ 0.56 $ 0.67 $ 1.26 $ 1.27
======== ======== ======== ========
Per Unit Net Income $ 0.66 $ 0.67 $ 1.35 $ 1.28
======== ======== ======== ========
Average Units Outstanding 44.9 41.6 44.3 41.6
======== ======== ======== ========
RECONCILIATION OF EBITDA (1) TO NET INCOME
EBITDA (1) $ 85.3 $ 83.1 $ 172.1 $ 162.1
Minority Interest (11.3) (11.6) (22.3) (22.9)
Interest Expense, Net (20.5) (21.9) (41.0) (42.9)
Depreciation and Amortization (19.9) (18.7) (40.2) (37.2)
Income taxes (included in Other Income (Expense) and
Discontinued Operations) (1.5) (0.8) (3.4) (1.1)
Equity AFUDC (included in Other Income (Expense)) 0.0 0.0 0.1 0.1
Cumulative Effect of Change in Accounting Principle, net of tax 0.0 0.0 (0.6) 0.0
-------- -------- -------- --------
Net Income $ 32.1 $ 30.1 $ 64.7 $ 58.1
======== ======== ======== ========
RECONCILIATION OF EBITDA (1) TO CASH FLOWS FROM OPERATING ACTIVITIES
EBITDA (1) $ 85.3 $ 83.1 $ 172.1 $ 162.1
Interest Expense, Net (20.5) (21.9) (41.0) (42.9)
Changes in Current Assets and Liabilities (22.6) (9.4) (20.8) (10.4)
Equity Earnings from Investments (4.4) (3.3) (12.0) (6.5)
Distributions Received from Equity Investments 5.1 2.9 12.3 5.8
Changes in Reserves and Deferred Credits 0.8 (0.5) (7.9) 0.6
Gain on Sale of Assets (4.9) 0.0 (4.9) 0.0
Other (1.2) (1.8) (3.5) (3.0)
-------- -------- -------- --------
Cash Flows From Operating Activities $ 37.6 $ 49.1 $ 94.3 $ 105.7
======== ======== ======== ========
NORTHERN BORDER PARTNERS, L.P.
OTHER FINANCIAL INFORMATION
(Unaudited: In Millions)
JUNE 30, DECEMBER 31,
2003 2002
-------- ------------
SUMMARY BALANCE SHEET DATA
Total assets by segment:
Interstate Natural Gas Pipelines $2,002.6 $1,853.8
Natural Gas Gathering and Processing 782.6 823.9
Coal Slurry Pipeline 21.9 20.4
Other (assets not allocated to segments) 21.5 27.4
-------- --------
Total consolidated assets $2,828.6 $2,725.5
======== ========
Consolidated capitalization:
Long-term debt, including current maturities $1,441.4 $1,403.7
Partners' capital 1,028.3 936.5
Minority interests in partners' equity 242.7 243.0
Accumulated other comprehensive income 4.1 7.5
-------- --------
Total capitalization 2,716.5 2,590.7
Consolidated other current liabilities and reserves and deferred credits 112.1 134.8
-------- --------
Total liabilities and capitalization $2,828.6 $2,725.5
======== ========
SECOND QUARTER YEAR TO DATE
2003 2002 2003 2002
-------- -------- -------- --------
CAPITAL EXPENDITURES AND EQUITY INVESTMENTS (2)
Maintenance -
Interstate Natural Gas Pipelines $ 1.9 $ 1.7 $ 3.7 $ 4.0
Natural Gas Gathering and Processing 0.8 0.6 1.4 1.6
Coal Slurry Pipeline 0.9 0.1 1.4 0.4
-------- -------- -------- --------
3.6 2.4 6.5 6.0
-------- -------- -------- --------
Growth -
Interstate Natural Gas Pipelines 1.0 0.4 122.0 1.5
Natural Gas Gathering and Processing 1.6 6.3 2.9 22.7
Coal Slurry Pipeline 0.0 0.0 0.0 0.0
-------- -------- -------- --------
2.6 6.7 124.9 24.2
-------- -------- -------- --------
Total $ 6.2 $ 9.1 $ 131.4 $ 30.2
======== ======== ======== ========
(1) EBITDA is computed from (a) net income plus (b) the cumulative effect of
change in accounting principle; (c) minority interest; (d) interest
expense, net; (e) income taxes; and (f) depreciation and amortization less
(g) equity AFUDC.
(2) Interstate Natural Gas Pipelines' capital expenditures reflect the
Partnership's 70% ownership of Northern Border Pipeline. Management
classifies expenditures that are expected to generate additional revenues
or significant operating efficiency as growth capital expenditures and
equity investments. Any remaining capital expenditures are classified as
maintenance.
SUMMARY SEGMENT INFORMATION
(Unaudited)
SECOND QUARTER YEAR TO DATE
-------------------------- --------------------------
2003 2002 2003 2002
---------- ---------- ---------- ----------
INTERSTATE NATURAL GAS PIPELINES SEGMENT
Operating Results:
Gas Delivered (MMcf) 275,716 231,467 555,889 457,757
Average Throughput (MMcf/d) 3,101 2,614 3,205 2,597
Financial Results (In Millions):
Operating Revenue $ 93.1 $ 84.6 $ 185.6 $ 166.8
---------- ---------- ---------- ----------
Operating Expenses
Operations and Maintenance 14.9 8.8 28.0 17.1
Depreciation and Amortization 16.0 15.0 32.5 30.1
Taxes Other Than Income 7.8 6.6 16.4 13.3
---------- ---------- ---------- ----------
Total Operating Expenses 38.7 30.4 76.9 60.5
---------- ---------- ---------- ----------
Operating Income 54.4 54.2 108.7 106.3
Interest Expense, Net (12.3) (13.8) (24.8) (26.8)
Other Income (Expense) (1.8) 0.1 (3.1) 0.8
Equity Earnings from Investments 0.5 0.0 0.9 0.0
---------- ---------- ---------- ----------
Net Income 40.8 40.5 81.7 80.3
Net income to Minority Interest (11.3) (11.6) (22.3) (22.9)
---------- ---------- ---------- ----------
Net Income to Northern Border Partners $ 29.5 $ 28.9 $ 59.4 $ 57.4
========== ========== ========== ==========
EBITDA (1) $ 71.0 $ 69.5 $ 142.4 $ 137.4
========== ========== ========== ==========
Distributions from Northern Border Pipeline:
Paid to Northern Border Partners $ 22.7 $ 28.6 $ 51.9 $ 56.0
Paid to Minority Interest $ 9.7 $ 12.2 $ 22.3 $ 24.0
---------- ---------- ---------- ----------
Total Distributions $ 32.4 $ 40.8 $ 74.2 $ 80.0
========== ========== ========== ==========
Note: Beginning in January 2003, the Interstate Natural Gas Pipelines segment
information includes the operating results for Viking Gas Transmission
RECONCILIATION OF EBITDA (1) TO NET INCOME
EBITDA (1) $ 71.0 $ 69.5 $ 142.4 $ 137.4
Minority Interest (11.3) (11.6) (22.3) (22.9)
Interest Expense, Net (12.3) (13.8) (24.8) (26.8)
Depreciation and Amortization (16.0) (15.0) (32.5) (30.1)
Income taxes (included in Other Income (Expense)) (1.9) (0.2) (3.5) (0.3)
Equity AFUDC (included in Other Income (Expense)) 0.0 0.0 0.1 0.1
---------- ---------- ---------- ----------
Net Income $ 29.5 $ 28.9 $ 59.4 $ 57.4
========== ========== ========== ==========
SUMMARY SEGMENT INFORMATION
(Unaudited)
SECOND QUARTER YEAR TO DATE
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
NATURAL GAS GATHERING AND PROCESSING SEGMENT
Operating Results:
Volumes (MMcf/d):
Gathering 1,111 1,047 1,132 1,021
Processing 52 56 51 55
Financial Results (In Millions):
Operating Revenue $ 36.2 $ 31.3 $ 76.4 $ 59.8
-------- -------- -------- --------
Operating Expenses
Product Purchases 19.2 12.0 40.3 22.7
Operations and Maintenance 9.9 9.2 20.0 18.9
Depreciation and Amortization 3.1 3.0 6.2 5.7
Taxes Other Than Income 0.7 0.6 1.5 1.1
-------- -------- -------- --------
Total Operating Expenses 32.9 24.8 68.0 48.4
-------- -------- -------- --------
Operating Income 3.3 6.5 8.4 11.4
Interest Expense, Net (0.2) (0.2) (0.3) (0.4)
Other Income (Expense) 0.0 0.0 0.0 0.0
Equity Earnings from Investments 3.9 3.3 11.1 6.5
-------- -------- -------- --------
Income From Continuing Operations 7.0 9.6 19.2 17.5
Discontinued Operations 4.4 0.0 4.4 0.5
Cumulative Effect of Change in Accounting Principle, net of tax 0.0 0.0 (0.2) 0.0
-------- -------- -------- --------
Net Income $ 11.4 $ 9.6 $ 23.4 $ 18.0
======== ======== ======== ========
EBITDA (1) $ 14.4 $ 13.4 $ 30.2 $ 25.1
======== ======== ======== ========
Distributions Received from Equity Investments $ 5.1 $ 2.9 $ 12.3 $ 5.8
======== ======== ======== ========
RECONCILIATION OF EBITDA (1) TO NET INCOME
EBITDA (1) $ 14.4 $ 13.4 $ 30.2 $ 25.1
Interest Expense, Net (0.2) (0.2) (0.3) (0.4)
Depreciation and Amortization (3.5) (3.3) (6.9) (6.3)
Income taxes (included in Other Income (Expense) and
Discontinued Operations) 0.7 (0.3) 0.6 (0.4)
Cumulative Effect of Change in Accounting Principle, net of tax 0.0 0.0 (0.2) 0.0
-------- -------- -------- --------
Net Income $ 11.4 $ 9.6 $ 23.4 $ 18.0
======== ======== ======== ========
SUMMARY SEGMENT INFORMATION
(Unaudited)
SECOND QUARTER YEAR TO DATE
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
COAL SLURRY PIPELINE SEGMENT
Operating Results:
Tons of Coal Shipped (In Thousands) 728 1,089 1,857 2,038
Financial Results (In Millions):
Operating Revenue $ 5.1 $ 5.4 $ 10.5 $ 10.7
-------- -------- -------- --------
Operating Expenses
Operations and Maintenance 3.5 3.3 7.1 7.6
Depreciation and Amortization 0.4 0.4 0.8 0.8
Taxes Other Than Income 0.2 0.1 0.4 0.3
-------- -------- -------- --------
Total Operating Expenses 4.1 3.8 8.3 8.7
-------- -------- -------- --------
Operating Income 1.0 1.6 2.2 2.0
Other Expense (0.3) (0.3) (0.5) (0.4)
-------- -------- -------- --------
Income From Continuing Operations 0.7 1.3 1.7 1.6
Cumulative Effect of Change in Accounting Principle, net of tax 0.0 0.0 (0.4) 0.0
-------- -------- -------- --------
Net Income $ 0.7 $ 1.3 $ 1.3 $ 1.6
======== ======== ======== ========
EBITDA (1) $ 1.4 $ 2.0 $ 3.0 $ 2.8
======== ======== ======== ========
RECONCILIATION OF EBITDA (1) TO NET INCOME
EBITDA (1) $ 1.4 $ 2.0 $ 3.0 $ 2.8
Depreciation and Amortization (0.4) (0.4) (0.8) (0.8)
Income taxes (included in Other Expense) (0.3) (0.3) (0.5) (0.4)
Cumulative Effect of Change in Accounting Principle, net of tax 0.0 0.0 (0.4) 0.0
-------- -------- -------- --------
Net Income $ 0.7 $ 1.3 $ 1.3 $ 1.6
======== ======== ======== ========