EXHIBIT 99.1
News 13710 FNB Parkway
[NORTHERN BORDER Release Omaha, NE 68154-5200
PARTNERS, L.P.
LOGO] For Further Information
Contact:
Media Contact:
Beth Jensen
(402) 492-3400
NORTHERN BORDER PARTNERS, L.P.
REPORTS HIGHER THIRD QUARTER Investor Contact:
RESULTS, INCREASES 2005 GUIDANCE Ellen Konsdorf
AND PROVIDES INITIAL 2006 GUIDANCE (877) 208-7318
FOR IMMEDIATE RELEASE: Wednesday, November 2, 2005
OMAHA - Northern Border Partners, L.P. (NYSE: NBP) today reported third
quarter 2005 net income of $48.4 million or $0.98 per unit compared with net
income of $34.7 million or $0.69 per unit for third quarter 2004. Year-to-date
2005, Northern Border Partners reported net income of $111.1 million, or $2.22
per unit, compared with $104.6 million, or $2.08 per unit for the same period in
2004. Cash flow as measured by earnings before interest, taxes, depreciation and
amortization (EBITDA) was $106.9 million for third quarter 2005 up from $88.1
million in the third quarter of 2004. Year-to-date 2005 EBITDA was $278.0
million compared with $266.5 million for the same period one year ago.
"All business segments delivered strong third quarter results. This,
coupled with non-recurring items realized in the quarter, resulted in record
quarterly earnings," said Bill Cordes, chief executive officer of Northern
Border Partners. "Therefore, we are increasing our earnings guidance for the
full year 2005. Net income is expected to be in the range of $2.83 per unit to
$2.89 per unit. Distributable cash flow (DCF) is expected to be $3.61 per unit
to $3.67 per unit."
"Our results for 2006 are expected to be fairly consistent with 2005 from
a base business perspective excluding non-recurring items," Cordes continued.
"We anticipate net income to be in the range of $2.50 per unit to $2.60 per unit
and distributable cash flow to be in the range of $3.65 per unit to $3.85 per
unit."
THIRD QUARTER 2005 HIGHLIGHTS
Third quarter results included:
o Higher operating revenue from interstate pipelines of approximately
$8.2 million in third quarter 2005, resulting primarily from the
sale of bankruptcy claims held against Enron and Enron North
America. Northern Border Pipeline realized $9.4 million ($6.6
million net to the Partnership) of non-recurring revenue from the
sale of the bankruptcy claims which was offset by a $2.0 million
($1.4 million net to the Partnership) reduction in revenue as a
result of capacity sold at discounted rates.
o Increased operating income of approximately $5.4 million from the
Partnership's Williston Basin gathering and processing operations.
Gathered and processed volumes increased by 20 percent and the
average price realized for natural gas increased by 39 percent while
the average price realized for natural gas liquids increased by 26
percent.
o Consolidated interest expense of approximately $22.1 million in
third quarter 2005 compared with $19.3 million in the third quarter
2004 due to higher average interest rates, offset by slightly lower
average debt outstanding.
o Equity earnings from our joint venture investments which were $6.5
million greater in third quarter 2005 than third quarter 2004, due
primarily to a settlement of our preferred distributions from
Bighorn Gas Gathering. In the third quarter of 2005, Northern Border
Partners recognized $5.4 million for settlement of Preferred A
distributions related to 2004 and 2005.
o In August, the Partnership completed the purchase of an additional
3.7 percent interest in Fort Union Gas Gathering for approximately
$5.1 million. This brings the Partnership's total ownership position
in this gathering system to 37 percent.
o In September, Northern Border Pipeline accepted the Federal Energy
Regulatory Commission's (FERC) certificate of public convenience and
necessity for the Chicago III Expansion Project. This project will
add 130 mmcfd of transportation capacity from Harper, Iowa to
Chicago, Illinois and is fully subscribed by four shippers under
long-term firm service transportation agreements with terms ranging
from five and one-half to ten years. Construction is estimated to
cost approximately $21 million and the target in-service date is
April 2006.
2
INTERSTATE NATURAL GAS PIPELINE SEGMENT
The interstate natural gas pipeline segment contributed net income of
$36.7 million in third quarter 2005, compared with $30.6 million in third
quarter 2004.
Operating revenue for the segment includes:
o Northern Border Pipeline's $9.4 million of non-recurring
revenue from the sale of its bankruptcy claims;
o a decrease of $2.0 million related to capacity on Northern
Border Pipeline sold at discounted rates;
o higher revenues on Midwestern Gas Transmission of $0.6 million
and Viking Gas Transmission of $0.2 million.
Average daily throughput for the interstate natural gas pipeline segment
increased 8 percent in the quarter totaling 3,264 million cubic feet per day
(mmcfd) compared with 3,029 mmcfd in third quarter 2004.
Northern Border Pipeline had 63 mmcfd of transportation capacity that was
unsold for October. As of October 31, 2005, 88 mmcfd was available for
contracting for November and December 2005 on the Port of Morgan to Ventura
segment.
The following chart provides additional information related to Northern
Border Pipeline's contracting levels and revenue for the three and nine months
ended September 30, 2005. Northern Border Pipeline rates are based on the
distance of the transportation path. As a result, the weighted average system
rate varies due to the changing transportation paths as well as discounting
activity.
NORTHERN BORDER PIPELINE COMPANY
TOTAL SYSTEM REVENUE SUMMARY
=====================================================================================================
THIRD QUARTER YEAR TO DATE
-------------------------------------------------------
2005 2004 2005 2004
- -----------------------------------------------------------------------------------------------------
PERCENT CONTRACTED(1) 101% 100% 97% 101%
WEIGHTED AVERAGE SYSTEM RATE ($/MCF)(2) $0.360(3) $0.374 $0.372(3) $0.376
TOTAL REVENUE (MILLIONS) $79.6(3) $81.6 $232.3(3) $246.4
(1) Compared to a design capacity of 2,374 mmcfd.
(2) Amounts shown in dollars per thousand cubic feet (mcf).
(3) Amounts exclude revenue from sale of Enron bankruptcy claims.
- -----------------------------------------------------------------------------------------------------
3
NATURAL GAS GATHERING AND PROCESSING SEGMENT
Net income from the natural gas gathering and processing segment during
third quarter 2005 was $22.1 million, an increase of 56 percent or $7.9 million
over the third quarter 2004. The primary differences between the periods were:
o Gathering and processing volumes in the Williston Basin of 67
mmcfd compared with 56 mmcfd in third quarter 2004, a 20
percent increase, primarily attributable to increased
production and system expansions in the Grasslands and
Marmarth systems.
o Increased prices realized for natural gas and natural gas
liquids. Average prices realized, net of hedging, during the
third quarter were $0.93 per gallon for natural gas liquids
and $6.83 per million British thermal units (mmBtu) for
natural gas. The combined impact of increased inlet volumes
and prices realized was an increase in gross margins for
Williston Basin of $8.3 million compared with the third
quarter of 2004.
o Volumes on the Partnership's wholly-owned gathering systems in
the Powder River Basin of 177 mmcfd versus 216 mmcfd or a 18
percent decline compared to the third quarter 2004. Since this
decrease is primarily due to the loss of high-pressure
gathered volumes, our revenues from these systems declined by
only 8 percent. Approximately 78 percent of the volumes for
the third quarter 2005 in our wholly-owned Powder River Basin
gathering systems are low pressure volumes and we derive
approximately 88 percent of our revenues from these volumes.
o Higher operations and maintenance expense of approximately
$5.8 million. In third quarter 2004, operations and
maintenance expense included a recovery of $1.8 million of
allowance for doubtful accounts related to bankruptcy claims
and a gain from the sale of gathering assets of $3.1 million.
Third quarter 2005 included higher operating expenses
primarily as a result of system expansions.
o Increased equity earnings of $6.3 million due to of the
Bighorn Gas Gathering Preferred A settlement ($5.4 million)
and better performance for Bighorn Gas Gathering, Fort Union
Gas Gathering, and Lost Creek Gas Gathering.
4
COAL SLURRY PIPELINE SEGMENT
Net income for the coal slurry pipeline segment was $1.7 million for third
quarter 2005, up from $0.9 million for the third quarter 2004 primarily the
result of adjustments to depreciation expense for the assets of Black Mesa.
BUSINESS OUTLOOK
Net income for 2005 is now expected to range from $142 million to $145
million ($2.83 per unit to $2.89 per unit). EBITDA is expected to be in the
range of $363 million to $370 million. Distributable cash flow is expected to be
$178 million to $182 million or $3.61 per unit to $3.67 per unit.
NORTHERN BORDER PARTNERS
RECONCILIATION OF EBITDA TO NET INCOME - PROJECTED 2005
<Table>
<Caption>
======================================================================================================================
INTERSTATE NATURAL GAS GATHERING &
CONSOLIDATED GAS PIPELINES PROCESSING COAL SLURRY
- ----------------------------------------------------------------------------------------------------------------------
LOW HIGH LOW HIGH LOW HIGH LOW HIGH
- ----------------------------------------------------------------------------------------------------------------------
EBITDA $363 $370 $283 $286 $81 $84 $5 $6
MINORITY INTEREST (45) (46) (45) (46) - - - -
INTEREST EXPENSE, NET (86) (88) (44) (45) - - - -
DEPRECIATION & AMORTIZATION
EXPENSE (85) (86) (66) (67) (15) (16) (2) (3)
INCOME TAXES (5) (6) (3) (4) - - (1) (1)
- ----------------------------------------------------------------------------------------------------------------------
NET INCOME $142 $145 $122 $124 $65 $67 $1 $2
======================================================================================================================
Note: The reconciliations of EBITDA and Net Income do not total due to use
of ranges for the various components of the reconciliation and unallocated
Partnership expenses.
Results for 2006 are expected to be in line with 2005 results from a base
business perspective. The base business perspective would exclude 2005
non-recurring items including the Preferred A settlement of $5.4 million from
Bighorn Gas Gathering and the income from the sale of bankruptcy claims totaling
approximately $8.2 million, net to the Partnership. Additionally, the temporary
shut-down of Black Mesa Pipeline is expected to reduce 2006 net income compared
to 2005 by approximately $5.0 million.
Net income for 2006 is now expected to range from $126 million to $131
million ($2.50 per unit to $2.60 per unit). EBITDA is expected to be in the
range of $348 million to $358
5
million. Distributable cash flow is expected to be $181 million to $189 million
or $3.65 per unit to $3.85 per unit.
NORTHERN BORDER PARTNERS
RECONCILIATION OF EBITDA TO NET INCOME - PROJECTED 2006
<Table>
<Caption>
====================================================================================================================
INTERSTATE NATURAL GAS GATHERING &
CONSOLIDATED GAS PIPELINES PROCESSING COAL SLURRY
- --------------------------------------------------------------------------------------------------------------------
LOW HIGH LOW HIGH LOW HIGH LOW HIGH
- --------------------------------------------------------------------------------------------------------------------
EBITDA $348 $358 $272 $277 $86 $91 ($7) ($3)
MINORITY INTEREST (41) (42) (41) (42) - - - -
INTEREST EXPENSE, NET (90) (93) (44) (45) - - - -
DEPRECIATION & AMORTIZATION
EXPENSE (89) (91) (70) (72) (17) (18) - -
INCOME TAXES (2) (3) (4) (5) - - 3 1
- --------------------------------------------------------------------------------------------------------------------
NET INCOME $126 $131 $112 $115 $69 $73 ($4) ($2)
====================================================================================================================
Note: The reconciliations of EBITDA and Net Income do not total due to use
of ranges for the various components of the reconciliation and unallocated
Partnership expenses.
INTERSTATE NATURAL GAS PIPELINE SEGMENT
The Partnership's projections for transportation demand on its interstate
natural gas pipelines assume:
o Midwestern will have strong southbound flows as shippers look
for alternatives to Gulf Coast supply; and Viking will remain
flat to 2005.
o Canadian natural gas supply will remain steady and import
levels will be similar in 2006 as in 2005.
o The anticipated natural gas price differential during the
upcoming April and May shoulder months compared with the
2006-07 winter heating season are expected to impact demand
for Northern Border Pipeline transportation capacity again in
2006.
o Northern Border Pipeline is likely to again experience
seasonal fluctuations in throughput during 2006 and some
discounting may be required to maximize revenue.
o Northern Border Pipeline's Chicago III Expansion Project goes
into service in April 2006.
6
Based on those assumptions, the following table represents a forecast of
Northern Border Pipeline contracting levels and corresponding revenue for the
remainder of the current year, along with 2006. Included for comparison purposes
is actual contracting levels and revenue for 2004.
NORTHERN BORDER PIPELINE COMPANY
TOTAL SYSTEM REVENUE FORECAST
(YEARS ENDED DECEMBER 31)
=================================================================================================================
2004 2005 2006
------------------------------------------------------------
ACTUAL FORECAST FORECAST
- -----------------------------------------------------------------------------------------------------------------
PERCENT CURRENTLY CONTRACTED(1) 101% 97% 71%
PERCENT EXPECTED TO BE CONTRACTED N/A 97% - 98% 97% - 102%
WEIGHTED AVERAGE SYSTEM RATE ($/mcf)(2) $0.375 $0.363 - $0.368(3) $0.345 - $0.362
TOTAL REVENUE (MILLIONS) $329 $310 - $314(3) $305 - $320
(1) Compared to a design capacity of 2,374 mmcfd.
(2) Amounts shown in dollars per thousand cubic feet (mcf).
(3) Amounts exclude revenue from sale of Enron bankruptcy claims.
- -----------------------------------------------------------------------------------------------------------------
As required by the provisions of the settlement of its last rate case, on
November 1, 2005, Northern Border Pipeline filed a rate case with the FERC. The
filing proposes:
o an increase in rates based on an increase in overall revenue
requirement of 7.8 percent;
o a change to the rate design approach with a supply zone and
market area utilizing a fixed rate per dekatherm and a
dekatherm-mile rate, respectively;
o a compressor usage surcharge primarily to recover costs
related to powering electric compressors; and
o the implementation of a short-term, firm-service rate
structure on a prospective basis.
Additionally, the filing incorporates:
o an overall cost of capital of 10.56 percent based on a rate of
return on equity of 14.20 percent;
o an adjustment in the billing determinants primarily to reflect
discounting of capacity;
o an increase in the depreciation rate for transmission plant
from 2.25 percent to 2.84 percent and the institution of a
negative salvage rate of 0.59 percent;
7
o the continuation of the inclusion of income taxes in the
calculation of the rates.
The Partnership cannot predict the outcome or the timing of final
resolution of this proceeding.
NATURAL GAS GATHERING AND PROCESSING SEGMENT
The Partnership's outlook for this segment is based on our expectations
for the performance of the Basins where we have interests including these
assumptions:
o In the Williston Basin, the Partnership expects that
casinghead gas volumes will continue to increase at least
through 2006, but at a slower rate of growth than 2005.
o The Partnership anticipates that favorable natural gas and
natural gas liquids prices will continue in 2006.
o For the remainder of 2005, approximately 77 percent of the
projected natural gas equity volumes are hedged and 65 percent
of the projected equity natural gas liquids volumes are
hedged. For 2006, approximately 47 percent of the equity
natural gas volumes and 24 percent of the equity natural gas
liquids volumes are hedged.
o Overall, drilling in the Powder River Basin is expected to
continue to increase, led by positive developments in drilling
in the Big George Coal in the western portion of the Basin.
COAL SLURRY PIPELINE SEGMENT
We expect Black Mesa Pipeline to be temporarily shut down upon expiration
of our coal slurry transportation contract on December 31, 2005. The Mohave
Generating Station (Mohave) co-owners, the Hopi Tribe, the Navajo Nation,
Peabody Western Coal Company and other interested parties continue to negotiate
water and coal supply issues. Black Mesa is working to resolve coal slurry
transportation issues so that operations may resume in the future. If there are
successful resolutions of all of these issues and the project receives a
favorable Environmental Impact Statement, we believe our coal slurry pipeline
will be modified and reconstructed in late 2008 and 2009. We expect to incur
temporary shut down and standby costs of approximately $2 million in the fourth
quarter of 2005 and approximately $4 to $6 million in 2006. If these issues are
not resolved and Mohave is permanently closed, we expect to incur pipeline
removal and
8
remediation costs of approximately $2 million to $4 million, (pre-tax), net of
salvage, and to take a non-cash impairment charge of approximately $12 million
(pre-tax) related to goodwill and the remaining undepreciated cost of the
assets. Depending on how negotiations progress and in accordance with accounting
rules an impairment charge may be required prior to final resolution of the
issues concerning Mohave even though the project may ultimately proceed.
Our 2005 and 2006 guidance includes the expected costs of a temporary
shut-down of the Black Mesa Pipeline, but does not anticipate any impairment
charges.
DISTRIBUTION DECLARATION
On October 20, 2005, the Partnership Policy Committee declared the
Partnership's quarterly cash distribution of $0.80 per unit for the third
quarter of 2005. The indicated annual rate is $3.20. The distribution is payable
November 14, 2005 to unitholders of record on October 31, 2005.
CONFERENCE CALL
Northern Border Partners will host a conference call on Thursday, November
3, 2005 at 10:00 a.m. Eastern Time to review third quarter 2005 results and
discuss 2005 and 2006 guidance. This call may be accessed via the Partnership's
website at http://www.northernborderpartners.com. An audio replay of the call
will be available through November 30, 2005 by dialing, toll free in the United
States and Canada, 800-405-2236 and entering passcode 11041885.
NON-GAAP FINANCIAL MEASURES
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 those of other companies'.
DCF is not necessarily the same as available cash as defined in the Partnership
Agreements. Management further uses EBITDA to compare the financial performance
of its segments and to internally manage those business segments. The three and
nine months ended 2005 and 2004 reconciliations of EBITDA to net income and
EBITDA to cash flow from operating activities, and computations of DCF are
included in the financial
9
information with this release. On a consolidated basis, EBITDA is reconciled to
cash flow from operating activities determined under GAAP. For segment
information of this press release, EBITDA is reconciled to net income rather
than to cash flow from operating activities, since the Partnership does not
determine segment cash flow from operating activities due to its intercompany
cash management activity. Reconciliations of projected 2005 and projected 2006
EBITDA to projected net income and computations of projected DCF are also
included with 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.
FORWARD-LOOKING STATEMENT
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 believes that its
expectations regarding future events are based on reasonable assumptions, it can
give no assurance that its goals will be achieved. Important factors that could
cause actual results to differ materially from those in the forward-looking
statements herein include:
INTERSTATE NATURAL GAS PIPELINE SEGMENT:
o the impact of unsold capacity on Northern Border Pipeline being greater or
less than expected;
o the ability to market pipeline capacity on favorable terms, which is
affected by:
o future demand for and prices of natural gas;
o competitive conditions in the overall natural gas and electricity
markets;
o availability of supplies of Canadian and United States natural gas;
o availability of additional storage capacity; weather conditions; and
o competitive developments by Canadian and U.S. natural gas
transmission peers;
o orders by the FERC which are significantly different than our assumptions
related to Northern Border Pipeline's November 2005 rate case;
10
o our ability to successfully advocate our position before the FERC or reach
a reasonable settlement with the FERC staff and opposing parties;
o performance of contractual obligations by the shippers;
o political and regulatory developments that impact FERC, proceedings
involving interstate pipelines and the interstate pipelines' success in
sustaining their positions in such proceedings;
o the ability to recover operating costs, costs of property, plant and
equipment and regulatory assets in our rates;
o timely receipt of approval by FERC for construction and operation of the
Midwestern Gas Transmission Eastern Extension Project and required
regulatory clearances; our ability to acquire all necessary rights-of-way
and obtain agreements for interconnects in a timely manner; our ability to
promptly obtain all necessary materials and supplies required for
construction.
NATURAL GAS GATHERING AND PROCESSING SEGMENT:
o the rate of development, well performance, gas quality, and competitive
conditions in gas fields near our natural gas gathering systems in the
Powder River and Williston Basins and our investments in the Powder River
and Wind River Basins;
o prices of natural gas and natural gas liquids;
o the composition and quality of the natural gas we gather and process in
our plants;
o the efficiency of our plants in processing natural gas and extracting
natural gas liquids.
COAL SLURRY PIPELINE SEGMENT:
o renewal of the coal slurry pipeline transportation contract under
reasonable terms;
o the impact of a potential impairment charge.
GENERAL:
o developments in the December 2, 2001, filing by Enron of a voluntary
petition for bankruptcy protection under Chapter 11 of the United States
Bankruptcy Code affecting our settled claims;
o regulatory actions and receipt of expected regulatory clearances;
o actions by rating agencies;
o the ability to control operating costs;
o conditions in the capital markets and the ability to access the capital
markets;
11
o the risk inherent in the use of information systems in our business,
implementation of new software and hardware, and the impact on the
timeliness of information for financial reporting; and
o acts of nature, sabotage, terrorism or other similar acts causing damage
to our facilities or our suppliers' or shippers' facilities.
12
NORTHERN BORDER PARTNERS, L.P.
FINANCIAL HIGHLIGHTS
(Unaudited: In Millions Except Per Unit Amounts)
THIRD QUARTER YEAR TO DATE
2005 2004 2005 2004
-------- -------- -------- --------
Operating Revenue $ 183.0 $ 147.3 $ 492.8 $ 433.6
Income From Continuing Operations $ 48.9 $ 34.4 $ 110.8 $ 103.1
Net Income $ 48.4 $ 34.7 $ 111.1 $ 104.6
Per Unit Income From Continuing Operations $ 0.99 $ 0.68 $ 2.21 $ 2.05
Per Unit Net Income $ 0.98 $ 0.69 $ 2.22 $ 2.08
Cash Flows From Operating Activities $ 91.3 $ 62.2 $ 202.6 $ 192.0
EBITDA (1) $ 106.9 $ 88.1 $ 278.0 $ 266.5
Distributable Cash Flow $ 63.3 $ 48.4 $ 148.4 $ 149.6
Distributable Cash Flow Per Unit $ 1.30 $ 0.98 $ 3.01 $ 3.04
CONSOLIDATED STATEMENT OF INCOME
(Unaudited: In Millions Except Per Unit Amounts)
THIRD QUARTER YEAR TO DATE
2005 2004 2005 2004
-------- -------- -------- --------
Operating Revenue $ 183.0 $ 147.3 $ 492.8 $ 433.6
-------- -------- -------- --------
Operating Expenses
Product Purchases 45.3 26.1 113.3 71.0
Operations and Maintenance 32.2 28.2 95.5 86.6
Depreciation and Amortization 20.4 21.3 63.2 64.2
Taxes Other Than Income 10.2 9.6 29.0 27.4
-------- -------- -------- --------
Total Operating Expenses 108.1 85.2 301.0 249.2
-------- -------- -------- --------
Operating Income 74.9 62.1 191.8 184.4
Interest Expense, Net (22.1) (19.3) (64.6) (56.4)
Other Income (Expense), Net 1.5 0.3 2.8 1.5
Equity Earnings from Investments 10.4 3.9 19.3 13.9
Minority Interest (13.9) (11.3) (34.7) (36.2)
-------- -------- -------- --------
Income From Continuing Operations Before Income Taxes 50.8 35.7 114.6 107.2
Income Taxes 1.9 1.3 3.8 4.1
-------- -------- -------- --------
Income From Continuing Operations 48.9 34.4 110.8 103.1
Discontinued Operations, net of tax (0.5) 0.3 0.3 1.5
-------- -------- -------- --------
Net Income $ 48.4 $ 34.7 $ 111.1 $ 104.6
======== ======== ======== ========
Per Unit Income From Continuing Operations $ 0.99 $ 0.68 $ 2.21 $ 2.05
======== ======== ======== ========
Per Unit Net Income $ 0.98 $ 0.69 $ 2.22 $ 2.08
======== ======== ======== ========
Average Units Outstanding 46.4 46.4 46.4 46.4
======== ======== ======== ========
NORTHERN BORDER PARTNERS, L.P.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited: In Millions Except Per Unit Amounts)
RECONCILIATION OF EBITDA TO NET INCOME THIRD QUARTER YEAR TO DATE
2005 2004 2005 2004
-------- -------- -------- --------
EBITDA (1) $ 106.9 $ 88.1 $ 278.0 $ 266.5
Minority Interest (13.9) (11.3) (34.7) (36.2)
Interest Expense, Net (22.1) (19.3) (64.6) (56.4)
Depreciation and Amortization (including amounts in Other
Income, Net and Discontinued Operations) (20.3) (21.4) (63.3) (64.7)
Income taxes (including amounts in Discontinued Operations) (2.4) (1.4) (4.6) (4.7)
Equity AFUDC (included in Other Income, Net) 0.2 0.0 0.3 0.1
-------- -------- -------- --------
Net Income $ 48.4 $ 34.7 $ 111.1 $ 104.6
======== ======== ======== ========
RECONCILIATION OF EBITDA TO CASH FLOWS FROM OPERATING ACTIVITIES
EBITDA (1) $ 106.9 $ 88.1 $ 278.0 $ 266.5
Interest Expense, Net (22.1) (19.3) (64.6) (56.4)
Changes in Current Assets and Liabilities 11.4 3.1 5.6 2.5
Equity Earnings from Investments (10.4) (3.9) (19.3) (13.9)
Distributions Received from Equity Investments 9.4 1.6 12.1 9.2
Changes in Reserves and Deferred Credits 0.4 (0.1) (0.4) (1.8)
Gain on Sale of Assets 0.0 (3.2) 0.0 (3.4)
Other (4.3) (4.1) (8.8) (10.7)
-------- -------- -------- --------
Cash Flows From Operating Activities $ 91.3 $ 62.2 $ 202.6 $ 192.0
======== ======== ======== ========
RECONCILIATION OF EBITDA TO DISTRIBUTABLE CASH FLOW
EBITDA (1) $ 106.9 $ 88.1 $ 278.0 $ 266.5
Interest Expense, Net (22.1) (19.3) (64.6) (56.4)
Maintenance Capital (7.3) (4.8) (18.9) (12.7)
Distributions to Minority Interest (11.8) (15.5) (43.8) (46.8)
Other (2.4) (0.1) (2.3) (1.0)
-------- -------- -------- --------
Distributable Cash Flow $ 63.3 $ 48.4 $ 148.4 $ 149.6
======== ======== ======== ========
Distributable Cash Flow Per Unit $ 1.30 $ 0.98 $ 3.01 $ 3.04
======== ======== ======== ========
NORTHERN BORDER PARTNERS, L.P.
OTHER FINANCIAL INFORMATION
(Unaudited: In Millions)
SEPTEMBER 30, DECEMBER 31,
2005 2004
-------- --------
SUMMARY BALANCE SHEET DATA
Total assets by segment:
Interstate Natural Gas Pipeline $1,877.6 $1,904.7
Natural Gas Gathering and Processing 590.8 570.1
Coal Slurry Pipeline 16.7 18.3
Other (assets not allocated to segments) 21.2 21.6
-------- --------
Total consolidated assets $2,506.3 $2,514.7
======== ========
Consolidated capitalization:
Long-term debt, including current maturities $1,331.8 $1,330.4
Partners' capital 771.6 780.2
Minority interests in partners' equity 280.7 290.1
Accumulated other comprehensive income (11.9) 9.2
-------- --------
Total capitalization 2,372.2 2,409.9
Consolidated other current liabilities and reserves and deferred credits 134.1 104.8
-------- --------
Total liabilities and capitalization $2,506.3 $2,514.7
======== ========
THIRD QUARTER YEAR TO DATE
2005 2004 2005 2004
------- ------- ------- -------
Capital Expenditures and Equity Investments (2)
Maintenance -
Interstate Natural Gas Pipeline $ 5.6 $ 3.4 $ 14.5 $ 9.0
Natural Gas Gathering and Processing 0.6 1.3 1.5 2.1
Coal Slurry Pipeline 0.0 0.1 0.0 1.5
Other 1.1 0.0 2.9 0.1
------- ------- ------- -------
7.3 4.8 18.9 12.7
------- ------- ------- -------
Growth -
Interstate Natural Gas Pipeline 4.0 0.2 8.2 0.3
Natural Gas Gathering and Processing 10.7 3.3 19.4 4.9
Coal Slurry Pipeline 0.0 0.0 0.0 0.0
------- ------- ------- -------
14.7 3.5 27.6 5.2
------- ------- ------- -------
Total $ 22.0 $ 8.3 $ 46.5 $ 17.9
======= ======= ======= =======
(1) EBITDA is computed from (a) net income plus (b) minority interest; (c)
interest expense, net; (d) income taxes; and (e) depreciation and
amortization less (f) 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.
NORTHERN BORDER PARTNERS, L.P.
SUMMARY SEGMENT INFORMATION
(Unaudited)
THIRD QUARTER YEAR TO DATE
2005 2004 2005 2004
---------- ---------- ---------- ----------
INTERSTATE NATURAL GAS PIPELINE SEGMENT
Operating Results (3):
Gas Delivered (mmcf) 293,079 271,929 856,943 847,505
Average Throughput (mmcfd) 3,264 3,029 3,216 3,167
Financial Results (In Millions):
Operating Revenue $ 103.2 $ 95.0 $ 282.4 $ 287.1
---------- ---------- ---------- ----------
Operating Expenses
Operations and Maintenance 15.7 15.9 45.5 43.5
Depreciation and Amortization 16.9 16.8 49.9 50.0
Taxes Other Than Income 9.4 8.8 26.3 24.9
---------- ---------- ---------- ----------
Total Operating Expenses 42.0 41.5 121.7 118.4
---------- ---------- ---------- ----------
Operating Income 61.2 53.5 160.7 168.7
Interest Expense, Net (11.3) (10.7) (33.7) (32.1)
Other Income, Net 1.2 (0.2) 2.1 0.4
Equity Earnings from Investments 0.6 0.4 1.2 1.0
---------- ---------- ---------- ----------
Income Before Income Taxes 51.7 43.0 130.3 138.0
Income Taxes 1.1 1.1 2.7 3.7
---------- ---------- ---------- ----------
Net Income 50.6 41.9 127.6 134.3
Net income to Minority Interest (13.9) (11.3) (34.7) (36.2)
---------- ---------- ---------- ----------
Net Income to Northern Border Partners $ 36.7 $ 30.6 $ 92.9 $ 98.1
========== ========== ========== ==========
EBITDA (1) $ 79.6 $ 70.5 $ 213.7 $ 220.4
========== ========== ========== ==========
Distributions from Northern Border Pipeline:
Paid to Northern Border Partners $ 27.6 $ 36.1 $ 102.1 $ 109.2
Paid to Minority Interest $ 11.8 $ 15.5 $ 43.8 $ 46.8
---------- ---------- ---------- ----------
Total Distributions $ 39.4 $ 51.6 $ 145.9 $ 156.0
========== ========== ========== ==========
RECONCILIATION OF EBITDA TO NET INCOME
EBITDA (1) $ 79.6 $ 70.5 $ 213.7 $ 220.4
Minority Interest (13.9) (11.3) (34.7) (36.2)
Interest Expense, Net (11.3) (10.7) (33.7) (32.1)
Depreciation and Amortization (16.8) (16.8) (50.0) (50.3)
Income taxes (1.1) (1.1) (2.7) (3.7)
Equity AFUDC (included in Other Income (Expense)) 0.2 0.0 0.3 0.0
---------- ---------- ---------- ----------
Net Income $ 36.7 $ 30.6 $ 92.9 $ 98.1
========== ========== ========== ==========
NORTHERN BORDER PARTNERS, L.P.
SUMMARY SEGMENT INFORMATION
(Unaudited)
THIRD QUARTER YEAR TO DATE
2005 2004 2005 2004
-------- -------- -------- --------
NATURAL GAS GATHERING AND PROCESSING SEGMENT
Operating Results (3):
Volumes (mmcfd):
Gathering 1,037 1,041 1,032 1,013
Processing 67 56 64 54
Financial Results (In Millions):
Operating Revenue $ 73.6 $ 46.8 $ 192.1 $ 130.1
-------- -------- -------- --------
Operating Expenses
Product Purchases 45.3 26.1 113.3 71.0
Operations and Maintenance 11.4 5.6 32.4 26.3
Depreciation and Amortization 3.9 3.7 11.8 11.1
Taxes Other Than Income 0.7 0.6 2.0 1.8
-------- -------- -------- --------
Total Operating Expenses 61.3 36.0 159.5 110.2
-------- -------- -------- --------
Operating Income 12.3 10.8 32.6 19.9
Interest Expense, Net (0.1) (0.1) (0.2) (0.3)
Other Income (Expense) 0.1 0.0 0.5 0.2
Equity Earnings from Investments 9.8 3.5 18.1 12.9
-------- -------- -------- --------
Income Before Income Taxes 22.1 14.2 51.0 32.7
Income Taxes 0.0 0.0 0.0 0.0
-------- -------- -------- --------
Net Income 22.1 14.2 51.0 32.7
======== ======== ======== ========
EBITDA (1) $ 26.1 $ 18.0 $ 63.0 $ 44.1
======== ======== ======== ========
Distributions Received from Equity Investments $ 9.4 $ 1.6 $ 12.1 $ 9.2
======== ======== ======== ========
RECONCILIATION OF EBITDA TO NET INCOME
EBITDA (1) $ 26.1 $ 18.0 $ 63.0 $ 44.1
Interest Expense, Net (0.1) (0.1) (0.2) (0.3)
Depreciation and Amortization (3.9) (3.7) (11.8) (11.1)
Income taxes 0.0 0.0 0.0 0.0
-------- -------- -------- --------
Net Income $ 22.1 $ 14.2 $ 51.0 $ 32.7
======== ======== ======== ========
NORTHERN BORDER PARTNERS, L.P.
SUMMARY SEGMENT INFORMATION
(Unaudited)
THIRD QUARTER YEAR TO DATE
2005 2004 2005 2004
-------- -------- -------- --------
COAL SLURRY PIPELINE SEGMENT
Operating Results:
Tons of Coal Shipped (In Thousands) 1,150 1,217 3,534 3,346
Financial Results (In Millions):
Operating Revenue $ 6.3 $ 5.5 $ 18.3 $ 16.3
-------- -------- -------- --------
Operating Expenses
Operations and Maintenance 4.1 3.4 11.6 9.9
Depreciation and Amortization (0.5) 0.8 1.4 3.0
Taxes Other Than Income 0.2 0.2 0.6 0.6
-------- -------- -------- --------
Total Operating Expenses 3.8 4.4 13.6 13.5
-------- -------- -------- --------
Operating Income 2.5 1.1 4.7 2.8
Other Income 0.0 0.0 0.0 0.0
-------- -------- -------- --------
Income Before Income Taxes 2.5 1.1 4.7 2.8
Income Taxes 0.8 0.2 1.1 0.4
-------- -------- -------- --------
Net Income $ 1.7 $ 0.9 $ 3.6 $ 2.4
======== ======== ======== ========
EBITDA (1) $ 2.0 $ 1.9 $ 6.1 $ 5.8
======== ======== ======== ========
RECONCILIATION OF EBITDA TO NET INCOME
EBITDA (1) $ 2.0 $ 1.9 $ 6.1 $ 5.8
Depreciation and Amortization 0.5 (0.8) (1.4) (3.0)
Income taxes (0.8) (0.2) (1.1) (0.4)
-------- -------- -------- --------
Net Income $ 1.7 $ 0.9 $ 3.6 $ 2.4
======== ======== ======== ========
NORTHERN BORDER PARTNERS, L.P.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(Unaudited: In Millions Except Per Unit Amounts)
RECONCILIATION OF EBITDA TO NET INCOME - PROJECTED 2005 AND 2006
Projected 2005 Projected 2006
-------------- --------------
Low High Low High
--- ---- --- ----
EBITDA $ 363 $ 370 $ 348 $ 358
Minority Interest ($ 45) ($ 46) ($ 41) ($ 42)
Interest Expense, Net ($ 86) ($ 88) ($ 90) ($ 93)
Depreciation and Amortization Expense ($ 85) ($ 86) ($ 89) ($ 91)
Income Taxes ($ 5) ($ 6) ($ 2) ($ 3)
===== ===== ===== =====
Net Income* $ 142 $ 145 $ 126 $ 131
===== ===== ===== =====
Per Unit Net Income $2.83 $2.89 $2.50 $2.60
===== ===== ===== =====
* The reconciliations of EBITDA and Net Income do not total due to use of
ranges for the various components of the reconciliation.
RECONCILIATION OF EBITDA TO DISTRIBUTABLE CASH FLOW - PROJECTED 2005 AND 2006
Projected 2005 Projected 2006
-------------- --------------
Low High Low High
--- ---- --- ----
EBITDA (from above) $ 363 $ 370 $ 348 $ 358
Interest Expense, Net ($ 86) ($ 88) ($ 90) ($ 93)
Maintenance Capital ($ 37) ($ 39) ($ 23) ($ 28)
Distributions to Minority Interest ($ 60) ($ 62) ($ 53) ($ 55)
Other ($ 2) ($ 3) ($ 2) ($ 3)
===== ===== ===== =====
Distributable Cash Flow** $ 178 $ 182 $ 181 $ 189
===== ===== ===== =====
Distributable Cash Flow per Unit $3.61 $3.67 $3.65 $3.85
===== ===== ===== =====
** The reconciliations of EBITDA and Distributable Cash Flow do not total due
to use of ranges for the various components of the reconciliation.