EXHIBIT 99.1
Northern Border News 13710 FNB Parkway
Partners, L.P. Release Omaha, Nebraska 68154-5200
For Further Information
Contact:
Media Contact:
Beth Jensen
(402) 492-3400
Investor Contact:
Ellen Konsdorf
(402) 492-7500
NORTHERN BORDER PARTNERS, L.P. RECORDS NON-CASH CHARGES
TO REFLECT IMPAIRMENTS AND UPDATES GUIDANCE
FOR IMMEDIATE RELEASE: WEDNESDAY, OCTOBER 1, 2003
OMAHA - Northern Border Partners, L.P. (NYSE - NBP) today announced
that it will record non-cash charges of approximately $219 million or $4.73 per
unit to reflect asset and goodwill impairments for its natural gas gathering and
processing business segment. The Partnership recently concluded impairment
analyses and as a result will record the charges in the third quarter 2003.
"The impairment analyses involve long-term forecasting of our gathering
and processing businesses, particularly the dynamics of the gas gathering
business in the Powder River Basin," said Bill Cordes, chairman and chief
executive officer of Northern Border Partners. "Rates of decline in production
from coal bed methane wells are greater than expected. Also delays in developing
overall production by Powder River area producers have caused us to reduce our
long-term outlook for this segment."
"Although the gas gathering segment has not performed as expected, this
business provides important gathering services to the producers in the Powder
River Basin," Cordes said. "We will be working with those producers to
restructure the commercial
and operational aspects of our gathering business in an effort to improve its
performance."
The impairment charges will not impact the Partnership's earnings
before interest, taxes, depreciation and amortization (EBITDA), which is
projected for the full year 2003 to be in the range of $343 million to $346
million, including $58 million to $60 million for the gathering and processing
segment. Net income for 2003, exclusive of the impairment charges, is expected
to be $131 million ($2.65 per unit) to $134 million ($2.71 per unit), which is
slightly higher than the Partnership's previous guidance. Including the
impairment charges, the Partnership expects to report a net loss for 2003 of $85
million to $88 million, or a loss per unit of $2.02 to $2.08. As previously
reported, 2003 results include an after-tax gain of $4.9 million or $0.10 per
unit, relating to the June sale of the Gladys and Mazeppa processing plants
located in Alberta, Canada.
Distributable cash flow per unit for 2003 is expected to be in the
range of $4.10 to $4.15, compared to the Partnership's indicated annual
distribution rate of $3.20.
The impairment analyses were performed in accordance with Statement of
Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangibles
and SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets. SFAS No. 142 applies to goodwill for consolidated subsidiaries and
became effective January 1, 2002. Under the standard, companies no longer
amortize goodwill but are required to perform annual assessments of whether the
book value of the goodwill is impaired. As indicated in the Partnership's second
quarter 2003 10-Q, the annual SFAS No. 142 impairment test was accelerated from
the fourth quarter to the third quarter due to lower throughput volumes
experienced and anticipated in the Powder River gathering systems. Northern
Border Partners also performed an analysis of the carrying value of all of the
tangible assets in the natural gas gathering and processing business segment
under SFAS No. 144. The impairment charges are comprised of approximately
$76 million related to the tangible assets in the Powder River Basin and
approximately $143 million for the goodwill related to the gas gathering and
processing segment.
Northern Border Partners will host a conference call Thursday, October
2, 2003 at 9:30 a.m. Eastern time to discuss this development and update its
2003 guidance. Interested parties may listen via the Internet live or on a
replay basis through the
Partnership's website at http://www.northernborderpartners.com. The call will
also be archived through October 24, 2003 on Northern Border Partners' website.
A replay of the call will be available through October 9, 2003 by
dialing, toll free in the United States and Canada, 800-405-2236 and entering
passcode number 554792#.
The Partnership has disclosed forecasted EBITDA and distributable cash
flow 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 forecasted EBITDA and distributable
cash flow to forecasted net income is included in the financial information
available on the Partnership's website at www.northernborderpartners.com.
Forecasted EBITDA is reconciled to net income rather than to cash flows from
operating activities, since the Partnership does not forecast cash flows from
operating activities. Because EBITDA, distributable cash flow, and net income
are forecasted, they are subject to numerous uncertainties outside our control
and therefore constitute forward-looking statements.
Northern Border Partners, L.P. is a publicly traded partnership formed
to own, operate and acquire a diversified portfolio of energy assets. The
partnership owns and manages natural gas pipelines and is engaged in the
gathering and processing of natural gas. More information can 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 Western Canadian Sedimentary Basin; the
rate of development of gas fields near the Partnership's natural gas gathering
systems in the Powder River, Wind River, and Williston Basins; regulatory
actions and receipt of expected regulatory clearances; competitive conditions in
the overall natural gas and electricity markets; 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
formation of CrossCountry Energy, of which Northern Plains and Pan Border would
be a part; potential regulation under Public Utilities Holding Company Act;
actions by rating agencies; our ability to renegotiate gathering contracts with
producers; our ability to control operating costs; and conditions in the capital
markets and our ability to access the capital markets.