UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
Commission File Number 333-88577
NORTHERN BORDER PIPELINE COMPANY
(Exact name of registrant as specified in its charter)
Texas 74-2684967
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
1111 South 103rd Street
Omaha, Nebraska 68124-1000
(Address of principal executive (Zip code)
offices)
(402) 398-7700
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
1 of 17
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NORTHERN BORDER PIPELINE COMPANY
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Statement of Income -
Three Months Ended September 30, 2000 and 1999
and Nine Months Ended September 30, 2000 and 1999 3
Balance Sheet - September 30, 2000
and December 31, 1999 4
Statement of Cash Flows -
Nine Months Ended September 30, 2000 and 1999 5
Statement of Changes in Partners' Capital -
Nine Months Ended September 30, 2000 6
Notes to Financial Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
ITEM 3. Quantitative and Qualitative Disclosures About
Market Risk 15
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 16
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF INCOME
(In Thousands)
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
OPERATING REVENUES
Operating revenues $81,446 $73,925 $248,543 $220,582
Provision for rate refunds (3,205) -- (16,715) --
Operating revenues, net 78,241 73,925 231,828 220,582
OPERATING EXPENSES
Operations and maintenance 10,039 9,754 29,948 27,806
Depreciation and amortization 14,248 13,126 43,623 38,806
Taxes other than income 6,370 7,028 21,740 21,894
Operating expenses 30,657 29,908 95,311 88,506
OPERATING INCOME 47,584 44,017 136,517 132,076
INTEREST EXPENSE 16,394 15,398 49,052 44,347
OTHER INCOME 3,103 508 4,985 646
NET INCOME TO PARTNERS $34,293 $29,127 $ 92,450 $ 88,375
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION (Continued)
ITEM 1. FINANCIAL STATEMENTS (Continued)
NORTHERN BORDER PIPELINE COMPANY
BALANCE SHEET
(In Thousands)
(Unaudited)
<CAPTION>
September 30, December 31,
ASSETS 2000 1999
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 35,897 $ 17,310
Accounts receivable 31,292 27,049
Materials and supplies, at cost 5,619 3,645
Under recovered cost of service -- 3,068
Total current assets 72,808 51,072
NATURAL GAS TRANSMISSION PLANT
Property, plant and equipment 2,370,979 2,368,021
Less: Accumulated provision for
depreciation and amortization 678,906 636,627
Property, plant and equipment, net 1,692,073 1,731,394
OTHER ASSETS 14,642 14,225
Total assets $1,779,523 $1,796,691
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Current maturities of long-term debt $ 41,000 $ 66,000
Accounts payable 3,608 5,588
Accrued taxes other than income 28,704 26,290
Accrued interest 6,757 16,504
Over recovered cost of service 5,342 --
Accumulated provision for rate refunds 19,660 2,317
Total current liabilities 105,071 116,699
LONG-TERM DEBT, NET OF CURRENT MATURITIES 837,565 834,459
RESERVES AND DEFERRED CREDITS 7,768 10,698
PARTNERS' CAPITAL 829,119 834,835
Total liabilities and partners' capital $1,779,523 $1,796,691
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION (Continued)
ITEM 1. FINANCIAL STATEMENTS (Continued)
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
<CAPTION>
Nine Months Ended
September 30,
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income to partners $ 92,450 $ 88,375
Adjustments to reconcile net income to partners
to net cash provided by operating activities:
Depreciation and amortization 43,827 38,841
Provision for rate refunds, including interest 17,343 --
Changes in components of working capital (3,597) 5,351
Other (4,873) 717
Total adjustments 52,700 44,909
Net cash provided by operating activities 145,150 133,284
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property, plant
and equipment (7,156) (89,562)
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to Partners (98,166) (97,914)
Issuance of long-term debt, net 75,000 281,026
Retirement of long-term debt (96,000) (255,000)
Proceeds received upon termination of
interest rate forward agreements -- 12,896
Long-term debt financing costs (241) (1,561)
Net cash used in financing activities (119,407) (60,553)
NET CHANGE IN CASH AND CASH EQUIVALENTS 18,587 (16,831)
Cash and cash equivalents-beginning of period 17,310 37,389
Cash and cash equivalents-end of period $ 35,897 $ 20,558
Supplemental Disclosures of Cash Flow Information:
Cash paid for:
Interest (net of amount capitalized) $ 59,358 $ 47,811
Changes in components of working capital:
Accounts receivable $ (4,243) $ (8,461)
Materials and supplies (1,974) (300)
Over/under recovered cost of service 8,410 9,905
Accounts payable 1,543 3,003
Accrued taxes other than income 2,414 4,796
Accrued interest (9,747) (3,592)
Total $ (3,597) $ 5,351
<FN>
The accompanying notes are an integral part of these financial
statements.
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION (Continued)
ITEM 1. FINANCIAL STATEMENTS (Continued)
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(In Thousands)
(Unaudited)
<CAPTION>
TC Northern
PipeLines Border
Intermediate Intermediate Total
Limited Limited Partners'
Partnership Partnership Capital
<S> <C> <C> <C>
Partners' Capital at December 31, 1999 $250,450 $584,385 $834,835
Net income to partners 27,735 64,715 92,450
Distributions to partners (29,450) (68,716) (98,166)
Partners' Capital at September 30, 2000 $248,735 $580,384 $829,119
<FN>
The accompanying notes are an integral part of this financial
statement.
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
NORTHERN BORDER PIPELINE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. The financial statements included herein have been prepared by
Northern Border Pipeline Company ("Northern Border Pipeline")
without audit pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, they reflect
all adjustments which are, in the opinion of management,
necessary for a fair presentation of the financial results for
the interim periods. Certain information and notes normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. However,
Northern Border Pipeline believes that the disclosures are
adequate to make the information presented not misleading. These
financial statements should be read in conjunction with the
financial statements and the notes thereto included in Northern
Border Pipeline's Annual Report on Form 10-K for the year ended
December 31, 1999.
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
2. In October 1998, Northern Border Pipeline filed a certificate
application with the Federal Energy Regulatory Commission
("FERC") to seek approval to expand and extend its pipeline
system into Indiana ("Project 2000"). When completed, Project
2000 would afford shippers on the expanded and extended pipeline
system access to industrial gas consumers in northern Indiana.
The certificate application was subsequently amended by Northern
Border Pipeline in March and December 1999. On March 16, 2000,
the FERC issued an order granting Northern Border Pipeline's
application for a certificate to construct and operate the
proposed facilities. The FERC approved Northern Border
Pipeline's request for rolled-in rate treatment based upon the
proposed project costs. The project has a targeted in-service
date of November 2001. The capital expenditures for the project
are estimated to be approximately $94 million.
3. Northern Border Pipeline filed a rate proceeding with the FERC
in May 1999 for, among other things, a redetermination of its
allowed equity rate of return. The total annual cost of service
increase due to Northern Border Pipeline's proposed changes was
approximately $30 million. A number of Northern Border
Pipeline's shippers and competing pipelines filed
interventions and protests. In June 1999, the FERC issued an
order in which the proposed changes were suspended until December
1, 1999, after which the proposed changes were implemented with
subsequent billings subject to refund. The June order and a
subsequent clarification issued by the FERC in August 1999 set
for hearing not only Northern Border Pipeline's proposed changes
but also several issues raised by intervenors including the
appropriateness of Northern Border Pipeline's cost of service
tariff; rolled-in rate treatment of The Chicago Project, which
was Northern Border Pipeline's expansion and extension project
placed in service in December 1998; capital project cost
containment mechanism ("PCCM") amount recorded for The Chicago
Project; depreciation schedule; and creditworthiness standards.
As agreed to in a prior rate case settlement, the PCCM was
implemented to limit Northern Border Pipeline's ability to
include cost overruns on The Chicago Project in rate base and to
provide incentives for cost underruns. The PCCM amount is
computed by comparing the final cost of The Chicago Project to
the budgeted cost, adjusted for the effects of inflation and
project scope changes as defined in the prior rate case
settlement. Testimony filed by the FERC staff and intervenors in
the current rate case proceeding had proposed changes to the PCCM
computation, which would have resulted in rate base reductions
ranging from $32 million to $43 million.
On September 26, 2000, Northern Border Pipeline filed a
stipulation and agreement that documents the proposed settlement
of its pending rate case. The settlement was reached between
Northern Border Pipeline, the majority of its shippers and the
FERC staff and will become effective if and when approved by the
FERC. Northern Border Pipeline anticipates the FERC will act on
the settlement in the first quarter of 2001. If the settlement
is approved, shippers will pay stated transportation rates based
on a straight fixed variable rate design. Under the straight
fixed variable rate design, approximately 98% of the shipper
payments are attributed to demand charges, based upon contracted
firm capacity, and 2% to commodity charges based on the volumes
of gas actually transported on the system. On a per unit of
transportation basis, the rates under the settlement are
approximately equal to the previous rates under the cost of
service tariff. The settlement further provides for the
incorporation into Northern Border Pipeline's rate base all
of the construction costs of The Chicago Project and specifies
an annual depreciation rate on transmission plant of 2.25%.
Northern Border Pipeline has netted a provision for rate refunds
against operating revenues to reflect the significant terms of
the settlement in its Statement of Income. While the proposed
settlement agreement has not been opposed by any of its shippers,
Northern Border Pipeline can give no assurance whether it will
be approved by the FERC.
4. Income taxes are the responsibility of the partners and are
not reflected in these financial statements. However, the
Northern Border Pipeline FERC tariff establishes the method of
accounting for and calculating income taxes and requires Northern
Border Pipeline to reflect in its accounting records the income
taxes that would have been paid or accrued if Northern Border
Pipeline were organized during the period as a corporation. As a
result, for purposes of calculating the return allowed by the
FERC, partners' capital and rate base are reduced by the amount
equivalent to the net accumulated deferred income taxes. Such
amounts were approximately $324 million and $316 million at
September 30, 2000 and December 31, 1999, respectively, and are
primarily related to accelerated depreciation and other plant-
related differences.
5. Northern Border Pipeline makes distributions to its general
partners approximately one month following the end of the
quarter. The distribution for the third quarter of 2000 of
approximately $36.7 million was paid November 2, 2000.
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NORTHERN BORDER PIPELINE COMPANY
Results of Operations
Northern Border Pipeline Company's ("Northern Border
Pipeline") revenue is derived from agreements with various
shippers for the transportation of natural gas. It transports
gas under a Federal Energy Regulatory Commission ("FERC")
regulated tariff. Northern Border Pipeline has used a cost of
service form of tariff since its inception but has agreed to
convert to stated rates as part of a settlement of its current
rate case discussed below.
The cost of service tariff provides Northern Border Pipeline
an opportunity to recover all of the operations and maintenance
costs of the pipeline, taxes other than income taxes, interest,
depreciation and amortization, an allowance for income taxes and
a regulated return on equity. Northern Border Pipeline is
generally allowed to collect from its shippers a return on
regulated rate base as well as recover that rate base through
depreciation and amortization. The return amount Northern Border
Pipeline may collect from its shippers declines as the rate base
is recovered. Billings for the firm transportation agreements
are based on contracted volumes to determine the allocable share
of the cost of service and are not dependent upon the percentage
of available capacity actually used.
Northern Border Pipeline filed a rate proceeding with the FERC
in May 1999 for, among other things, a redetermination of its
allowed equity rate of return. The total annual cost of service
increase due to Northern Border Pipeline's proposed changes was
approximately $30 million. In June 1999, the FERC issued an
order in which the proposed changes were suspended until December
1, 1999, after which the proposed changes were implemented with
subsequent billings subject to refund.
On September 26, 2000, Northern Border Pipeline filed a
stipulation and agreement that documents the proposed settlement
of its pending rate case. The settlement was reached between
Northern Border Pipeline, the majority of its shippers and the
FERC staff and will become effective if and when approved by the
FERC. Northern Border Pipeline anticipates the FERC will act on
the settlement in the first quarter of 2001. If the settlement
is approved, shippers will pay stated transportation rates based
on a straight fixed variable rate design. Under the straight
fixed variable rate design, approximately 98% of the shipper
payments are attributed to demand charges, based upon contracted
firm capacity, and 2% to commodity charges based on the volumes
of gas actually transported on the system. On a per unit of
transportation basis, the rates under the settlement are
approximately equal to the previous rates under the cost of
service tariff. The settlement further provides for the
incorporation into Northern Border Pipeline's rate base all
of the construction costs of The Chicago Project, which was
Northern Border Pipeline's expansion and extension project
placed in service in December 1998, and specifies an annual
depreciation rate on transmission plant of 2.25%. Under the
settlement, both Northern Border Pipeline and its existing
shippers will not be able to seek rate changes until November 1,
2005. Northern Border Pipeline's earnings and cash flow will
depend on its future costs, contracted capacity, the volumes
of gas transported and its ability to recontract capacity at
acceptable rates. Northern Border Pipeline has netted a
provision for rate refunds against operating revenues to
reflect the significant terms of the settlement in its
Statement of Income. While the proposed settlement agreement
has not been opposed by any of its shippers, Northern Border
Pipeline can give no assurance whether it will be approved
by the FERC.
Third Quarter 2000 Compared With Third Quarter 1999
Operating revenues, net increased $4.3 million (6%) for the
third quarter of 2000, as compared to the same period in 1999.
Northern Border Pipeline's net operating revenues for 2000
reflect the significant terms of the settlement discussed
previously. Operating revenues for 1999 were determined under
Northern Border Pipeline's cost of service tariff.
Depreciation and amortization expense increased $1.1 million
(9%) for the third quarter of 2000, as compared to the same
period in 1999, due primarily to an increase in the depreciation
rate applied to transmission plant. As required by its cost of
service tariff, Northern Border Pipeline used a depreciation rate
of 2.0% for all of 1999, which was increased to 2.3% beginning
January 1, 2000.
Interest expense increased $1.0 million (6%) for the third
quarter of 2000, as compared to the same period in 1999, due
primarily to an increase in interest rates between 1999 and 2000.
Other income increased $2.6 million for the third quarter of
2000, as compared to the same period in 1999, due primarily to a
reduction in reserves previously established for regulatory
issues.
Nine Months September 30, 2000 Compared With Nine Months Ended
September 30, 1999
Operating revenues, net increased $11.2 million (5%) for the
first nine months of 2000, as compared to the same period in
1999. Northern Border Pipeline's net operating revenues for 2000
reflect the significant terms of the settlement discussed
previously. Operating revenues for 1999 were determined under
Northern Border Pipeline's cost of service tariff.
Operations and maintenance expense increased $2.1 million (8%)
for the first nine months of 2000, as compared to the same period
in 1999, due primarily to increased administrative expenses for
the pipeline.
Depreciation and amortization expense increased $4.8 million
(12%) for the first nine months of 2000, as compared to the same
period in 1999, due primarily to an increase in the depreciation
rate applied to transmission plant. As required by its cost of
service tariff, Northern Border Pipeline used a depreciation rate
of 2.0% for all of 1999, which was increased to 2.3% beginning
January 1, 2000.
Interest expense increased $4.7 million (11%) for the first
nine months of 2000, as compared to the same period in 1999, due
primarily to an increase in interest rates between 1999 and 2000.
Other income increased $4.3 million for the first nine months
of 2000, as compared to the same period in 1999, due primarily to
a reduction in reserves previously established for regulatory
issues. Additionally, the 2000 results reflect income earned
from third-party usage of capacity on Northern Border Pipeline's
microwave system.
Liquidity and Capital Resources
General
In August 1999, Northern Border Pipeline completed a private
offering of $200 million of 7.75% Senior Notes due 2009, which
notes were subsequently exchanged in a registered offering for
notes with substantially identical terms ("Senior Notes"). The
proceeds from the Senior Notes were used to reduce indebtedness
under a June 1997 credit agreement.
Northern Border Pipeline entered into a credit agreement
("Pipeline Credit Agreement") with certain financial institutions
in June 1997. The Pipeline Credit Agreement is comprised of a
term loan and a $200 million five-year revolving credit facility,
both maturing in June 2002. At September 30, 2000, $424.0
million was outstanding under the term loan and $60.0 million was
outstanding under the revolving credit facility.
At September 30, 2000, Northern Border Pipeline also had
outstanding $184 million of senior notes issued in a private
placement under a July 1992 note purchase agreement. The note
purchase agreement provides for four series of notes, Series A
through D, maturing between August 2000 and August 2003. The
Series A Notes with a principal amount of $66 million were repaid
in August 2000 primarily by borrowing under the Pipeline Credit
Agreement. The Series B Notes with a principal amount of $41
million mature in August 2001.
Short-term liquidity needs will be met by internal sources and
through the revolving credit facility discussed above. Long-term
capital needs may be met through the ability to issue long-term
indebtedness.
Cash Flows From Operating Activities
Cash flows provided by operating activities increased $11.9
million to $145.2 million for the first nine months of 2000, as
compared to the same period in 1999, primarily due to the
billings collected subject to refund related to Northern Border
Pipeline's current rate proceeding (see Note 3 - Notes to
Financial Statements).
Cash Flows From Investing Activities
Capital expenditures of $7.2 million for the first nine months
of 2000 included $3.3 million for Project 2000 (see Note 2 -
Notes to Financial Statements). For the comparable period in
1999, capital expenditures were $89.6 million and included $78.3
million for The Chicago Project. The remaining capital
expenditures for 2000 and 1999 were primarily related to renewals
and replacements of existing facilities.
Total capital expenditures for 2000 are estimated to be $18
million, including $8 million for Project 2000. The remaining
capital expenditures planned for 2000 are primarily for renewals
and replacements of existing facilities. Northern Border
Pipeline currently anticipates funding its 2000 capital
expenditures primarily by using internal sources and borrowing on
the revolving credit facility.
Cash Flows From Financing Activities
Cash flows used in financing activities was $119.4 million for
the first nine months of 2000, as compared to $60.6 million for
the same period in 1999. Distributions paid to the general
partners remained relatively constant between years with
distributions of $98.2 million in 2000 compared to $97.9 million
in 1999. In August 2000, Northern Border Pipeline repaid its
Series A Notes of $66 million primarily by borrowing under the
Pipeline Credit Agreement. Under the Pipeline Credit Agreement,
borrowings totaled $75 million and repayments totaled $30 million
during the nine months ended September 30, 2000. Financing
activities for the nine months ended September 30, 1999, included
$197.5 million from the issuance of the Senior Notes, net of
associated debt discounts and issuance costs, and $12.9 million
from the termination of the interest rate forward agreements.
Advances under the Pipeline Credit Agreement, which were
primarily used to finance a portion of the capital expenditures
for The Chicago Project, were $82.0 million for the nine months
ended September 30, 1999. During the nine months ended September
30, 1999, $255.0 million was repaid on the Pipeline Credit
Agreement.
New Accounting Pronouncement
In 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities." SFAS No. 133 establishes accounting and reporting
standards requiring that every derivative instrument (including
certain derivative instruments embedded in other contracts) be
recorded on the balance sheet as either an asset or liability
measured at its fair value. The statement requires that changes
in the derivative's fair value be recognized currently in
earnings unless specific hedge accounting criteria are met.
Special accounting for qualifying hedges allows a derivative's
gains and losses to offset related results on the hedged item in
the income statement, and requires that a company must formally
document, designate and assess the effectiveness of transactions
that receive hedge accounting.
In June 1999, the FASB issued SFAS No. 137, which deferred the
effective date of SFAS No. 133 to fiscal years beginning after
June 15, 2000. In June 2000, the FASB issued SFAS No. 138, which
amended certain guidance within SFAS No. 133. Northern Border
Pipeline plans to adopt SFAS No. 133 beginning January 1, 2001.
Northern Border Pipeline believes that SFAS No. 133 (as amended)
will not have a material impact on its financial position or
results of operations.
Information Regarding Forward Looking Statements
The statements in this Quarterly Report that are not
historical information are 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. Such forward looking
statements include the discussions in "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
and in "Notes to Financial Statements" regarding Northern Border
Pipeline's efforts to pursue opportunities to further increase
its capacity and Northern Border Pipeline's efforts to finalize
settlement of its rate case. Although Northern Border Pipeline
believes that its expectations regarding future events are based
on reasonable assumptions within the bounds of its knowledge of
its business, it can give no assurance that its goals will be
achieved or that its expectations regarding future developments
will be realized. Important factors that could cause actual
results to differ materially from those in the forward looking
statements herein include industry results, future demand for
natural gas, availability of supplies of Canadian natural gas,
political and regulatory developments that impact FERC
proceedings involving Northern Border Pipeline, Northern Border
Pipeline's success in sustaining its positions in such proceedings
or the success of intervenors in opposing Northern Border Pipeline's
positions, Northern Border Pipeline's ability to replace its rate
base as it is depreciated and amortized, competitive developments
by Canadian and U.S. natural gas transmission peers, political
and regulatory developments in Canada, and conditions of the
capital markets and equity markets.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
Northern Border Pipeline's interest rate exposure results from
the portion of its debt portfolio subject to variable rates. To
mitigate potential fluctuations in interest rates, Northern
Border Pipeline maintains a significant portion of its debt
portfolio in fixed rate debt. Northern Border Pipeline also uses
interest rate swap agreements to manage its level of exposure to
interest rate changes. Northern Border Pipeline's annual
interest rate exposure from a hypothetical 1% increase in
interest rates is approximately $4.4 million at September 30,
2000. In its Annual Report on Form 10-K for the year ended
December 31, 1999, Northern Border Pipeline reported that, under
its cost of service tariff, it would be able to recover an
increase in interest expense, if an increase were to occur. If
the rate case settlement is approved (see Note 3 - Notes to
Financial Statements), Northern Border Pipeline would bear the
risk for an increase in interest rates.
<PAGE>
PART II. OTHER INFORMATION
NORTHERN BORDER PIPELINE COMPANY
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K.
The company filed a Current Report on Form 8-K, dated
September 26, 2000, reporting the filing of a stipulation and
agreement with the FERC to document the proposed settlement of
Northern Border Pipeline Company's pending rate case.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned thereunto duly
authorized.
NORTHERN BORDER PIPELINE COMPANY
(A Texas General Partnership)
Date: November 13, 2000 By: JERRY L. PETERS
Jerry L. Peters
Vice President, Finance and
Treasurer
