[NORTHERN BORDER PARTNERS, L.P. LOGO] News 13710 FNB Parkway
Release Omaha, NE 68154-5200
For Further Information
Contact:
Media Contact:
Beth Jensen
(402) 492-3400
Investor Contacts:
Ellen Konsdorf
Lisa Couillard
(877) 208-7318
NORTHERN BORDER PARTNERS, L.P. REPORTS INCREASED
FIRST QUARTER RESULTS AND REAFFIRMS GUIDANCE
FOR IMMEDIATE RELEASE: Monday, April 26, 2004
OMAHA - Northern Border Partners, L.P. (NYSE - NBP) today reported
first quarter 2004 net income of $36.6 million or $0.73 per unit compared to net
income of $32.7 million or $0.69 per unit in the first quarter 2003. Cash flows
as measured by earnings before interest, taxes, depreciation and amortization
(EBITDA) increased to $91.3 million in the first quarter 2004 from $86.9 million
in the first quarter of 2003.
Higher first quarter 2004 results are primarily attributable to strong
revenues on Northern Border Pipeline and a full quarter of revenue for Viking
Gas Transmission, which was purchased by the Partnership on January 17, 2003.
Delivered volumes in the Partnership's interstate natural gas pipeline
segment increased during first quarter 2004 to 303 billion cubic feet (Bcf) from
280 Bcf for the first quarter of 2003. Average gathering volumes decreased to
1,088 million cubic feet per day (MMcf/d) during the first quarter 2004 compared
to 1,154 MMcf/d for the first quarter 2003. Volumes on the Partnership's
wholly-owned gathering systems in the Powder River Basin declined to 194 MMcf/d
in the first quarter of 2004 from 225 MMcf/d in first quarter 2003. Gathering
and processing volumes in the Williston Basin remained consistent at 50 MMcf/d
for the first quarter of 2004 and 2003.
"Our first quarter results reflect a strong performance. Our interstate
natural gas pipeline segment results were up for the quarter reflecting
increased revenue from our transportation services during the cold winter
months. The gathering and processing segment EBITDA was
about the same as last year despite the continued volume decline," said Bill
Cordes, chairman and chief executive officer of Northern Border Partners.
The Partnership also reiterated EBITDA and earnings guidance for 2004,
stating that it continues to expect net income for 2004 to be in the range of
$124 million to $130 million or $2.46 to $2.56 per unit. EBITDA in 2004 is
anticipated to be approximately $333 million to $343 million. Distributable cash
flows (DCF) for 2004 are expected to be $176 million to $184 million or $3.56 to
$3.74 per unit.
"We are expecting 2004 financial results to reflect more variability
between the quarters," said Cordes. "We expect our first and fourth quarters to
reflect higher revenues on our interstate pipelines. In addition, our gathering
and processing segment may be impacted by higher income from our equity
investments in those same two quarters. Therefore, balancing these variations,
by the end of second quarter we expect to have realized approximately one-half
of our anticipated year-end financial results."
On April 20, 2004, the Partnership Policy Committee declared the
Partnership's quarterly cash distribution of $0.80 per common unit for the first
quarter of 2004. The indicated annual rate is $3.20. The distribution is payable
May 14, 2004 to unitholders of record April 30, 2004.
Northern Border Partners will host a conference call on Tuesday, April
27, 2004 at 9:00 a.m. Central Time to review first quarter 2004 results and
discuss 2004 guidance. This call is being web cast by CCBN and may be accessed
via the Partnership's website at http://www.northernborderpartners.com.
An audio replay of the call will be available through May 4, 2004 by
dialing, toll free in the United States and Canada, 800-405-2236 and entering
passcode 576294.
The Partnership has disclosed in this press release EBITDA and DCF
amounts that are non-GAAP financial measures. Management believes EBITDA and DCF
provide useful information to investors as a measure of comparability to peer
companies. However, these calculations may vary from company to company, so the
Partnership's computations 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. Reconciliations of first quarter 2004
and 2003 EBITDA to our net income and cash flows from operating activities are
included in the financial information with this release. On a consolidated
basis, EBITDA is reconciled to cash flows from operating activities determined
under GAAP. 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
intercompany cash management activity. A reconciliation of projected EBITDA for
2004 to projected net income and a computation of projected DCF for 2004 are
attached to this release.
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; our
ability to settle with the Fort Peck Tribes on rights-of-way and tax issues and
to recover the associated costs in pipeline rates; the rate of development, gas
quality, and competitive conditions in gas fields near the Partnership's natural
gas gathering systems in the Powder River and Williston Basins and its
investments in the Powder River and Wind River Basins; regulatory actions and
receipt of expected regulatory clearances; renewal of the coal slurry
transportation contract under favorable terms; 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 formation of CrossCountry
Energy, of which Northern Plains Natural Gas Company and Pan Border Gas Company
are a part; regulation under the Public Utility Holding Company Act of 1935;
actions by rating agencies; our ability to renegotiate gathering contracts with
producers; our ability to complete acquisitions or growth projects and their
future performance; our ability to control operating costs; 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)
FIRST QUARTER
----------------------
2004 2003
------- -------
Operating Revenue $ 145.1 $ 138.1
Income From Continuing Operations $ 36.6 $ 33.3
Net Income $ 36.6 $ 32.7
Per Unit Income From Continuing Operations $ 0.73 $ 0.70
Per Unit Net Income $ 0.73 $ 0.69
Cash Flows From Operating Activities $ 73.3 $ 56.8
EBITDA (1) $ 91.3 $ 86.9
CONSOLIDATED STATEMENT OF INCOME
--------------------------------
(Unaudited: In Millions Except Net Income Per Unit)
FIRST QUARTER
----------------------
2004 2003
------- -------
Operating Revenue $ 145.1 $ 138.1
------- -------
Operating Expenses
Product Purchases 21.4 21.1
Operations and Maintenance 29.5 28.5
Depreciation and Amortization 21.6 20.0
Taxes Other Than Income 9.7 9.5
------- -------
Total Operating Expenses 82.2 79.1
------- -------
Operating Income 62.9 59.0
Interest Expense, Net (18.6) (20.5)
Other Income, Net 0.3 0.1
Equity Earnings from Investments 6.4 7.6
Minority Interest (12.5) (11.0)
------- -------
Income From Continuing Operations Before Income Taxes 38.5 35.2
Income Taxes 1.9 1.9
------- -------
Income From Continuing Operations 36.6 33.3
Cumulative Effect of Change in Accounting Principle, net of tax 0.0 (0.6)
------- -------
Net Income $ 36.6 $ 32.7
======= =======
Per Unit Income From Continuing Operations $ 0.73 $ 0.70
======= =======
Per Unit Net Income $ 0.73 $ 0.69
======= =======
Average Units Outstanding 46.4 43.8
======= =======
RECONCILIATION OF EBITDA (1) TO NET INCOME FIRST QUARTER
------------------
2004 2003
----- -----
EBITDA (1) $91.3 $86.9
Minority Interest (12.5) (11.0)
Interest Expense, Net (18.6) (20.5)
Depreciation and Amortization (including amounts in Other
Income, Net) (21.7) (20.3)
Income taxes (1.9) (1.9)
Equity AFUDC (included in Other Income, Net) 0.0 0.1
Cumulative Effect of Change in Accounting Principle, net of tax 0.0 (0.6)
----- -----
Net Income $36.6 $32.7
===== =====
RECONCILIATION OF EBITDA (1) TO CASH FLOWS FROM OPERATING ACTIVITIES
EBITDA (1) $91.3 $86.9
Interest Expense, Net (18.6) (20.5)
Changes in Current Assets and Liabilities 6.4 1.7
Equity Earnings from Investments (6.4) (7.7)
Distributions Received from Equity Investments 5.7 7.2
Changes in Reserves and Deferred Credits (2.4) (8.8)
Other (2.7) (2.0)
----- -----
Cash Flows From Operating Activities $73.3 $56.8
===== =====
NORTHERN BORDER PARTNERS, L.P.
OTHER FINANCIAL INFORMATION
---------------------------
(Unaudited: In Millions)
MARCH 31, DECEMBER 31,
2004 2003
--------- ------------
SUMMARY BALANCE SHEET DATA
Total assets by segment:
Interstate Natural Gas Pipelines $1,977.3 $1,970.8
Natural Gas Gathering and Processing 565.2 565.5
Coal Slurry Pipeline 19.7 21.3
Other (assets not allocated to segments) 26.2 13.0
-------- --------
Total consolidated assets $2,588.4 $2,570.6
======== ========
Consolidated capitalization:
Long-term debt, including current maturities $1,413.8 $1,416.0
Partners' capital 791.8 795.1
Minority interests in partners' equity 258.2 240.7
Accumulated other comprehensive income 5.7 5.5
-------- --------
Total capitalization 2,469.5 2,457.3
Consolidated other current liabilities and reserves and deferred credits 118.9 113.3
-------- --------
Total liabilities and capitalization $2,588.4 $2,570.6
======== ========
FIRST QUARTER
-----------------------
2004 2003
-------- --------
CAPITAL EXPENDITURES AND EQUITY INVESTMENTS (2)
Maintenance -
Interstate Natural Gas Pipelines $ 0.3 $ 2.5
Natural Gas Gathering and Processing 0.3 0.6
Coal Slurry Pipeline 0.1 0.5
-------- --------
0.7 3.6
-------- --------
Growth -
Interstate Natural Gas Pipelines 0.2 120.8
Natural Gas Gathering and Processing 1.2 1.3
Coal Slurry Pipeline 0.0 0.0
-------- --------
1.4 122.1
-------- --------
Total $ 2.1 $ 125.7
======== ========
(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) 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.
(3) Volume information presented in operating results includes 100% of the
volumes for joint ventures and equity investments as well as for
wholly-owned subsidiaries.
SUMMARY SEGMENT INFORMATION
---------------------------
(Unaudited)
FIRST QUARTER
----------------------------
2004 2003
---------- ----------
INTERSTATE NATURAL GAS PIPELINES SEGMENT
Operating Results (3):
Gas Delivered (MMcf) 302,898 280,175
Average Throughput (MMcf/d) 3,409 3,311
Financial Results (In Millions):
Operating Revenue $ 97.6 $ 92.5
---------- ----------
Operating Expenses
Operations and Maintenance 13.5 13.0
Depreciation and Amortization 16.6 16.5
Taxes Other Than Income 8.9 8.7
---------- ----------
Total Operating Expenses 39.0 38.2
---------- ----------
Operating Income 58.6 54.3
Interest Expense, Net (10.9) (12.4)
Other Income, Net 0.1 0.2
Equity Earnings from Investments 0.5 0.4
---------- ----------
Income Before Income Taxes 48.3 42.5
Income Taxes 1.5 1.6
---------- ----------
Net Income 46.8 40.9
Net income to Minority Interest (12.5) (11.0)
---------- ----------
Net Income to Northern Border Partners $ 34.3 $ 29.9
========== ==========
EBITDA (1) $ 75.9 $ 71.4
========== ==========
Distributions from Northern Border Pipeline:
Paid to Northern Border Partners $ 33.7 $ 29.3
Paid to Minority Interest $ 14.5 $ 12.5
---------- ----------
Total Distributions $ 48.2 $ 41.8
========== ==========
RECONCILIATION OF EBITDA (1) TO NET INCOME
EBITDA (1) $ 75.9 $ 71.4
Minority Interest (12.5) (11.0)
Interest Expense, Net (10.9) (12.4)
Depreciation and Amortization (16.7) (16.5)
Income taxes (1.5) (1.6)
---------- ----------
Net Income $ 34.3 $ 29.9
========== ==========
SUMMARY SEGMENT INFORMATION
---------------------------
(Unaudited)
FIRST QUARTER
------------------------
2004 2003
-------- --------
NATURAL GAS GATHERING AND PROCESSING SEGMENT
Operating Results (3):
Volumes (MMcf/d):
Gathering 1,088 1,154
Processing 50 50
Financial Results (In Millions):
Operating Revenue $ 42.1 $ 40.2
-------- --------
Operating Expenses
Product Purchases 21.4 21.1
Operations and Maintenance 10.5 10.1
Depreciation and Amortization 3.7 3.1
Taxes Other Than Income 0.5 0.7
-------- --------
Total Operating Expenses 36.1 35.0
-------- --------
Operating Income 6.0 5.2
Interest Expense, Net (0.1) (0.2)
Equity Earnings from Investments 5.9 7.2
-------- --------
Income Before Income Taxes 11.8 12.2
Income Taxes 0.4 0.0
-------- --------
Net Income 11.4 12.2
======== ========
EBITDA (1) $ 15.6 $ 15.5
======== ========
Distributions Received from Equity Investments $ 5.7 $ 7.2
======== ========
RECONCILIATION OF EBITDA (1) TO NET INCOME
EBITDA (1) $ 15.6 $ 15.5
Interest Expense, Net (0.1) (0.2)
Depreciation and Amortization (3.7) (3.1)
Income taxes (0.4) 0.0
-------- --------
Net Income $ 11.4 $ 12.2
======== ========
SUMMARY SEGMENT INFORMATION
---------------------------
(Unaudited)
FIRST QUARTER
------------------------
2004 2003
-------- --------
COAL SLURRY PIPELINE SEGMENT
Operating Results:
Tons of Coal Shipped (In Thousands) 1,154 1,129
Financial Results (In Millions):
Operating Revenue $ 5.4 $ 5.4
-------- --------
Operating Expenses
Operations and Maintenance 3.2 3.6
Depreciation and Amortization 1.3 0.4
Taxes Other Than Income 0.2 0.2
-------- --------
Total Operating Expenses 4.7 4.2
-------- --------
Operating Income 0.7 1.2
Other Expense 0.0 0.0
-------- --------
Income From Continuing Operations Before Income Taxes 0.7 1.2
Income Taxes 0.0 0.3
-------- --------
Income From Continuing Operations 0.7 0.9
Cumulative Effect of Change in Accounting Principle, net of tax 0.0 (0.4)
-------- --------
Net Income $ 0.7 $ 0.5
======== ========
EBITDA (1) $ 2.0 $ 1.6
======== ========
RECONCILIATION OF EBITDA (1) TO NET INCOME
EBITDA (1) $ 2.0 $ 1.6
Depreciation and Amortization (1.3) (0.4)
Income taxes 0.0 (0.3)
Cumulative Effect of Change in Accounting Principle, net of tax 0.0 (0.4)
-------- --------
Net Income $ 0.7 $ 0.5
======== ========
NORTHERN BORDER PARTNERS, L.P.
(In millions)
RECONCILIATION OF EBITDA TO NET INCOME - PROJECTED 2004
Projected 2004
------------------
Low High
----- -----
EBITDA $ 333 $ 343
Minority Interest ($ 46) ($ 47)
Interest Expense, Net ($ 76) ($ 79)
Depreciation and Amortization Expense ($ 82) ($ 83)
Income Taxes ($ 4) ($ 4)
===== =====
Net Income* $ 124 $ 130
===== =====
* The reconciliation of EBITDA and Net Income does not total due to use of
ranges for the various components of the reconciliation.
RECONCILIATION OF EBITDA TO DISTRIBUTABLE CASH FLOW - PROJECTED 2004
Consolidated
------------------
Low High
----- -----
EBITDA (from above) $ 333 $ 343
Interest Expense, Net ($ 76) ($ 79)
Maintenance Capital ($ 29) ($ 35)
Distributions to Minority Interest ($ 56) ($ 58)
Other $ 2 $ 3
===== =====
Distributable Cash Flow** $ 176 $ 184
===== =====
Distributable Cash Flow (from above) $ 176 $ 184
Distributions to General Partners 11 11
----- -----
Distributable Cash Flow to Limited Partners $ 165 $ 173
===== =====
Distributable Cash to Limited Partners per Unit $3.56 $3.74
===== =====
** The reconciliation of EBITDA and Distributable Cash Flow does not total due
to use of ranges for the various components of the reconciliation.