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 June 30, 1997
Commission File Number 1-12202
NORTHERN BORDER PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
Delaware 93-1120873
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
Enron Building
1400 Smith Street
Houston, Texas 77002
(Address of principal executive (Zip Code)
Offices)
(713) 853-6161
(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 16
<PAGE>
NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Statement of Income -
Three Months Ended June 30, 1997 and 1996
and Six Months Ended June 30, 1997 and 1996 3
Consolidated Balance Sheet - June 30, 1997
and December 31, 1996 4
Consolidated Statement of Cash Flows -
Six Months Ended June 30, 1997 and 1996 5
Consolidated Statement of Changes in Partners'
Capital - Six Months Ended June 30, 1997 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 15
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In Thousands, Except Per Unit Amounts)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
OPERATING REVENUE $48,069 $52,918 $ 94,715 $105,871
OPERATING EXPENSES
Operations and maintenance 8,516 6,984 15,641 13,773
Depreciation and amortization 9,837 13,799 19,463 27,234
Taxes other than income 5,961 6,192 12,038 12,596
Operating expenses 24,314 26,975 47,142 53,603
OPERATING INCOME 23,755 25,943 47,573 52,268
INTEREST EXPENSE 8,190 8,334 16,051 16,797
OTHER INCOME
Other income, net 2,148 1,174 5,145 1,635
Allowance for equity funds used
during construction 315 74 432 136
Other income 2,463 1,248 5,577 1,771
MINORITY INTERESTS IN NET INCOME 5,275 6,120 10,875 11,658
NET INCOME TO PARTNERS $12,753 $12,737 $ 26,224 $ 25,584
NET INCOME PER UNIT $ .48 $ .48 $ .98 $ .96
NUMBER OF UNITS USED IN COMPUTATION 26,242 26,200 26,221 26,200
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION (Continued)
ITEM 1. FINANCIAL STATEMENTS (Continued)
NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In Thousands)
(Unaudited)
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 69,865 $ 41,390
Accounts receivable 22,739 16,907
Related party receivables 2,512 2,364
Materials and supplies, at cost 4,316 4,128
Total current assets 99,432 64,789
TRANSMISSION PLANT
Property, plant and equipment 1,586,617 1,513,116
Less: Accumulated provision for
depreciation and amortization 614,557 575,257
Net property, plant and equipment 972,060 937,859
OTHER ASSETS 17,571 13,836
Total assets $1,089,063 $1,016,484
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Current maturities of long-term debt $ 2,393 $ 17,500
Note payable -- 10,000
Accounts payable 2,975 3,463
Accrued taxes other than income 17,044 20,968
Accrued interest 9,662 10,353
Over recovered cost of service 3,075 4,236
Accumulated provision for rate refunds 53,339 12,227
Total current liabilities 88,488 78,747
LONG-TERM DEBT, net of current maturities 431,127 360,000
MINORITY INTERESTS IN PARTNERS' CAPITAL 149,410 158,089
RESERVES AND DEFERRED CREDITS 9,077 9,062
COMMITMENTS AND CONTINGENCIES
PARTNERS' CAPITAL
General Partners 8,219 8,212
Common Units 304,915 303,777
Subordinated Units 97,827 98,597
Total partners' capital 410,961 410,586
Total liabilities and partners' capital $1,089,063 $1,016,484
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION (Continued)
ITEM 1. FINANCIAL STATEMENTS (Continued)
NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In Thousands)
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income to partners $ 26,224 $ 25,584
Adjustments to reconcile net income to partners
to net cash provided by operating activities:
Depreciation and amortization 19,495 27,249
Minority interests in net income 10,875 11,658
Provision for rate refunds 41,112 581
Changes in other current assets and liabilities (11,695) (620)
Other (888) (1,855)
Total adjustments 58,899 37,013
Net cash provided by operating activities 85,123 62,597
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment, net (33,039) (3,590)
Acquisition and consolidation of businesses 3,374 --
Other 465 --
Net cash used in investing activities (29,200) (3,590)
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash distributions
Common Units (21,758) (21,758)
Subordinated Units (7,062) (7,062)
General Partners (588) (588)
Minority Interests (19,936) (15,667)
Contributions from General Partners 71 --
Issuance of long-term debt 160,000 --
Retirement of long-term debt (127,500) (10,000)
Repayment of note payable (10,000) --
Long-term debt financing costs (675) --
Net cash used in financing activities (27,448) (55,075)
NET CHANGE IN CASH AND CASH EQUIVALENTS 28,475 3,932
Cash and cash equivalents-beginning of period 41,390 39,418
Cash and cash equivalents-end of period $ 69,865 $ 43,350
Supplemental Disclosures of Cash Flow Information:
Cash paid for:
Interest (net of amount capitalized) $ 15,984 $ 16,257
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION (Continued)
ITEM 1. FINANCIAL STATEMENTS (Continued)
NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN PARTNERS' CAPITAL
(In Thousands)
(Unaudited)
Total
<CAPTION>
General Common Subordinated Partners'
Partners Units Units Capital
<S> <C> <C> <C> <C>
Partners' Capital at December 31, 1996 $8,212 $303,777 $98,597 $410,586
Net income to partners 524 19,408 6,292 26,224
General Partners' contribution and
issuance of Common Units for
acquisition 71 3,488 -- 3,559
Distributions to partners (588) (21,758) (7,062) (29,408)
Partners' Capital at June 30, 1997 $8,219 $304,915 $97,827 $410,961
<FN>
The accompanying notes are an integral part of this consolidated
financial statement.
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 1. FINANCIAL STATEMENTS - (Continued)
NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The consolidated financial statements included herein have
been prepared by Northern Border Partners, L.P. (the
"Partnership") 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, the Partnership believes that the disclosures are
adequate to make the information presented not misleading. These
consolidated financial statements should be read in conjunction
with the consolidated financial statements and the notes thereto
included in the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1996.
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.
The Partnership owns a 70% general partner interest in
Northern Border Pipeline Company ("Northern Border Pipeline").
As discussed in Note 4, the Partnership increased its effective
ownership in Black Mesa Pipeline Holdings, Inc. ("Black Mesa")
from 60.5% to 71.75% through the acquisition of Williams
Technologies, Inc. ("WTI") on May 31, 1997.
2. In August 1997, Northern Border Pipeline received Federal
Energy Regulatory Commission ("FERC") approval of the Stipulation
and Agreement ("Stipulation") filed on October 15, 1996 to settle
its November 1995 rate case. Northern Border Pipeline filed the
rate case, in compliance with its FERC tariff, for the
determination of its allowed equity rate of return and was
permitted, pursuant to a December 1995 FERC order, to begin
collecting the requested increase in the equity rate of return
effective June 1, 1996, subject to refund. In accordance with
the terms of the Stipulation, Northern Border Pipeline's allowed
equity rate of return is reduced from the requested 14.25% to
12.75% for the period June 1, 1996 to October 1, 1996 and to 12%
thereafter. Additionally, the Stipulation reduces the effective
depreciation rate applied to Northern Border Pipeline's gross
transmission plant from 3.6% to 2.7% for the period June 1, 1996
to December 31, 1996, resulting in an average effective
depreciation rate of 3.1% for the year ended December 31, 1996.
Beginning January 1, 1997, the depreciation rate is reduced to
2.5%. To reflect the terms of the Stipulation, Northern Border
Pipeline has recorded a provision for rate refunds which reduced
operating revenue by approximately $40.9 million for the six
months ended June 30, 1997, which includes $36.8 million
attributable to the reduction in depreciation and amortization
expense. While implementation of the Stipulation is subject to
disposition of any rehearing requests filed by other parties,
Northern Border Pipeline anticipates it will make the refunds
to its shippers in the fourth quarter of 1997.
In August 1997, the FERC issued a certificate of public
convenience and necessity authorizing Northern Border Pipeline to
construct and operate facilities, as filed for in a September
1996 application with the FERC, for an expansion of its existing
pipeline and extension from its current terminus near Harper,
Iowa to a point near Manhattan, Illinois ("The Chicago Project").
The Chicago Project pipeline facilities consist of 243 miles of
pipeline and 147 miles of pipeline loop. Compression facilities
for The Chicago Project involve the installation of 228,500
compressor horsepower at eight new compressor stations and
upgrades at five existing compressor stations by the removal from
service of units producing 100,000 compressor horsepower with the
installation of replacement units producing 175,000 compressor
horsepower. Project to date expenditures on The Chicago Project,
which are included on the consolidated balance sheet in property,
plant and equipment at June 30, 1997 and December 31, 1996, are
$48.3 million and $16.8 million, respectively. The project is
expected to cost, using certain construction cost escalation
assumptions, approximately $837 million and be ready for service
in November 1998. Northern Border Pipeline has accepted the
certificate. Requests for rehearing by other parties may be
filed within 30 days of issuance of the certificate.
3. In June 1997, Northern Border Pipeline entered into a credit
agreement ("1997 Credit Agreement") with certain financial
institutions to borrow up to an aggregate principal amount of
$750 million. The 1997 Credit Agreement is comprised of a $200
million five-year revolving credit facility to be used for the
retirement of Northern Border Pipeline's existing bank loan and
credit agreements and for general business purposes, and a $550
million three-year revolving credit facility to be used for the
construction of The Chicago Project. The three-year
revolving credit facility may be converted to a term loan
maturing in June 2002 once The Chicago Project has been placed in
service and certain other conditions are met. The 1997 Credit
Agreement permits Northern Border Pipeline to choose among
various interest rate options, to specify the portion of the
borrowings to be covered by specific interest rate options and to
specify the interest rate period, subject to certain parameters.
Northern Border Pipeline is required to pay a facility fee on the
aggregate principal amount of $750 million. At June 30, 1997,
$160 million had been borrowed on the 1997 Credit Agreement at an
average interest rate of 7.78%, after taking into consideration
Northern Border Pipeline's interest rate swap agreements. The
1997 Credit Agreement restricts the incurrence of senior
indebtedness by Northern Border Pipeline and requires the
maintenance of a ratio of debt to partners capital of no more
than 65 percent. The carrying value of the 1997 Credit Agreement
approximates its fair value since the interest rates are
periodically adjusted to current market conditions.
Northern Border Pipeline has senior notes in the aggregate
principal amount of $250 million at both June 30, 1997 and
December 31, 1996. The senior notes place certain restrictions
on distributions to the partners of Northern Border Pipeline. As
of June 30, 1997, $76 million of partners' capital of Northern
Border Pipeline could be distributed.
4. On May 31, 1997, the Partnership exchanged 125,357 Common
Units valued at approximately $3.5 million for all of the
outstanding common stock of WTI, a leading consultant in slurry
pipeline technology. WTI has an 11.25% ownership position in
Black Mesa and is the operator of Black Mesa Pipeline, a wholly-
owned subsidiary of Black Mesa. Black Mesa Pipeline owns a 273-
mile, 18-inch diameter coal slurry pipeline, which is the sole
source of fuel to the 1,500 megawatt Mohave Power Station located
in Laughlin, Nevada. With the issuance of the additional Common
Units, the General Partners collectively contributed $71 thousand
to the Partnership to maintain a 2% general partner interest in
accordance with the partnership agreements.
Effective with the acquisition of WTI, which was recorded
using the purchase method of accounting, the Partnership has
increased its ownership position in Black Mesa from 60.5% to
71.75% and began to reflect Black Mesa, including Black Mesa's
minority ownership interests, in the Partnership's consolidated
financial statements. Prior to this time, the Partnership's
investment in Black Mesa was accounted for using the equity
method. The following is a summary of the effects of the
acquisition of WTI and consolidation of Black Mesa on the
Partnership's consolidated financial position (amounts in
thousands):
<TABLE>
<S> <C>
Cash $ 3,374
Net property, plant and equipment 18,350
Other current and noncurrent assets 8,756
Long-term debt, including
current maturities (23,520)
Other liabilities (3,090)
Minority interests (382)
Common Units $ 3,488
</TABLE>
5. On July 17, 1997, the Partnership declared a cash distribution
of $0.55 per unit for the second quarter ended June 30, 1997.
The distribution is payable August 14, 1997, to unitholders of
record as of July 31, 1997. This quarterly distribution is
consistent with the previously announced indicated annual rate of
$2.20 per unit.
6. In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128 -
"Earnings per Share" ("SFAS No. 128"), which specifies the
computation, presentation and disclosure requirements for
earnings per share ("EPS"). SFAS No. 128 is effective for
interim and annual periods ending after December 15, 1997 and
requires retroactive restatement of prior periods' EPS. Adoption
of the statement is not expected to have any effect on the
Partnership's reported net income per unit.
<PAGE>
PART I. FINANCIAL INFORMATION - (Continued)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES
Results of Operations
Northern Border Partners, L.P. (the "Partnership") owns a 70%
general partner interest in Northern Border Pipeline Company
("Northern Border Pipeline"). Northern Border Pipeline's 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 that
provides 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. The firm transportation contract shippers are
obligated to pay their allocable share of the cost of service
regardless of the volumes actually transported. Based on
existing contracts and capacity, 100% of the pipeline system's
capacity is contractually committed through October 2001.
On May 31, 1997, the Partnership acquired all of the
outstanding common stock of Williams Technologies, Inc. ("WTI"),
a leading consultant in slurry pipeline technology (See Note 4 -
Notes to Consolidated Financial Statements). WTI has an 11.25%
ownership position in Black Mesa Pipeline Holdings, Inc. ("Black
Mesa") and is the operator of Black Mesa Pipeline, a wholly-owned
subsidiary of Black Mesa. Effective with the acquisition of WTI,
the Partnership increased its ownership position in Black Mesa to
71.75% and began to reflect Black Mesa in the Partnership's
consolidated financial statements. Black Mesa Pipeline
transports coal-water slurry through a 273-mile, 18-inch diameter
pipeline that originates at a coal mine in Kayenta, Arizona and
ends at the 1,500 megawatt Mohave Power Station located in
Laughlin, Nevada. Black Mesa Pipeline is the sole source of fuel
for the Mohave plant. The capacity of Black Mesa Pipeline is
fully contracted to the Mohave Power Station coal supplier
through the year 2005.
Second Quarter 1997 Compared With Second Quarter 1996
Operating revenue decreased $4.8 million for the second
quarter of 1997 as compared to the same period in 1996.
Operating revenue attributable to Northern Border Pipeline
decreased $6.7 million (13%) due primarily to lower depreciation
and amortization expense, lower equity returns on a lower rate
base and lower interest expense. Northern Border Pipeline has
recorded a provision for rate refunds which reduced operating
revenue for the second quarter of 1997 by approximately $20.3
million to reflect the terms of the Stipulation and Agreement
("Stipulation") approved by the FERC to settle its rate case (See
Note 2 - Notes to Consolidated Financial Statements). Operating
revenue included in the consolidated statement of income from the
combined operations of Black Mesa and WTI was $1.8 million for
the second quarter of 1997.
Operations and maintenance expense increased $1.5 million in
the second quarter of 1997, as compared to the same period in
1996, primarily due to $1.1 million of expense from the combined
operations of Black Mesa and WTI.
Depreciation and amortization expense decreased $4.0 million
for the second quarter of 1997, as compared to the same period in
1996. Depreciation and amortization expense attributable to
Northern Border Pipeline decreased $4.2 million (30%). In
accordance with the terms of the Stipulation discussed above, the
depreciation rate applied to Northern Border Pipeline's gross
transmission plant is reduced from the 7.6% effective rate in its
FERC tariff to 2.5% for 1997. The depreciation rate applied to
gross transmission plant for the second quarter of 1996 was 3.6%.
Other income increased $1.2 million for the second quarter of
1997, as compared to the same period in 1996. The increase was
primarily due to $0.8 million of reimbursements received by
Northern Border Pipeline for vacating certain microwave frequency
bands and $0.7 million in additional allowance for funds used
during construction. The increase in the allowance for funds
used during construction primarily relates to Northern Border
Pipeline's expenditures for the expansion and extension of its
existing system (See "Cash Flows From Investing Activities").
Six Months June 30, 1997 Compared With Six Months Ended June 30,
1996
Operating revenue decreased $11.2 million for the six months
ended June 30, 1997, as compared to the same period in 1996.
Operating revenue attributable to Northern Border Pipeline
decreased $13.0 million (12%) due primarily to lower depreciation
and amortization expense, lower equity returns on a lower rate
base and lower interest expense. Northern Border Pipeline has
recorded a provision for rate refunds which reduced operating
revenue for the six months ended June 30, 1997 by approximately
$40.9 million to reflect the terms of the Stipulation (See Note 2
- - Notes to Consolidated Financial Statements). Operating revenue
included in the consolidated statement of income from the
combined operations of Black Mesa and WTI was $1.8 million for
the six months ended June 30, 1997.
Operations and maintenance expense increased $1.9 million for
the six months ended June 30, 1997, as compared to the same
period in 1996, primarily due to $1.1 million of expense from the
combined operations of Black Mesa and WTI.
Depreciation and amortization expense decreased $7.8 million
for the six months ended June 30, 1997, as compared to the same
period in 1996. Depreciation and amortization expense
attributable to Northern Border Pipeline decreased $8.0 million
(29%). In accordance with the terms of the Stipulation discussed
above, the depreciation rate applied to Northern Border
Pipeline's gross transmission plant is reduced from the 7.6%
effective rate in its FERC tariff to 2.5% for 1997. The
depreciation rate applied to gross transmission plant for the six
months ended June 30, 1996 was 3.6%.
Interest expense decreased $0.7 million for the six months
ended June 30, 1997, as compared to the same period in 1996,
primarily due to a decrease in Northern Border Pipeline's average
debt outstanding partially offset by $0.2 million of interest
expense from the combined operations of Black Mesa and WTI.
Other income increased $3.8 million for the six months ended
June 30, 1997, as compared to the same period in 1996. The
increase was primarily due to $2.8 million of reimbursements
received by Northern Border Pipeline for vacating certain
microwave frequency bands, $1.0 million in additional allowance
for funds used during construction and $0.5 million of equity
earnings on the Partnership's 60.5% ownership interest in Black
Mesa prior to June 1997. The increase in the allowance for funds
used during construction primarily relates to Northern Border
Pipeline's expenditures for the expansion and extension of its
existing system (See "Cash Flows From Investing Activities").
Liquidity and Capital Resources
General
Short-term liquidity needs of the Partnership will be met by
internal sources and through its ability to establish lines of
credit with one or more financial institutions. Long-term
capital needs can be met by the Partnership's ability to issue
additional limited partner interests in the Partnership.
In June 1997, Northern Border Pipeline entered into a credit
agreement ("1997 Credit Agreement") with certain financial
institutions to borrow up to an aggregate principal amount of
$750 million. The 1997 Credit Agreement is comprised of a $200
million five-year revolving credit facility to be used for the
retirement of Northern Border Pipeline's bank loan and credit
agreements and for general business purposes, and a $550 million
three-year revolving credit facility to be used for the
construction of Northern Border Pipeline's expansion and
extension of its existing system (See "Cash Flows From Investing
Activities"). The three-year revolving credit facility may, if
certain conditions are met, be converted to a term loan maturing
in June 2002. At June 30, 1997, $160 million had been borrowed
on the 1997 Credit Agreement primarily to retire amounts related
to Northern Border Pipeline's existing bank loan and credit
agreements.
Cash Flows From Operating Activities
Cash flow provided by operating activities increased $22.5
million to $85.1 million for the six month period ended June 30,
1997 as compared to the same period in 1996 primarily related to
amounts which have been collected and will be refunded in
accordance with the Stipulation (See Note 2 - Notes to
Consolidated Financial Statements).
Cash Flows From Investing Activities
In August 1997, the FERC issued a certificate of public
convenience and necessity authorizing Northern Border Pipeline to
construct and operate facilities for an expansion of its existing
pipeline and extension from its current terminus near Harper,
Iowa to a point near Manhattan, Illinois ("The Chicago
Project")(See Note 2 - Notes to Consolidated Financial
Statements). The Chicago Project is expected to cost, using
certain construction cost escalation assumptions, approximately
$837 million and be ready for service in November 1998.
Net plant additions of $33.0 million for the six months ended
June 30, 1997 include $31.1 million for The Chicago Project. The
remaining $1.9 million of net plant additions in 1997 are
primarily related to renewals and replacements of the existing
facilities. For the comparable period in 1996, net plant
additions were $3.6 million which included $1.8 million for The
Chicago Project.
Total capital expenditures for 1997 are estimated to be $202
million for The Chicago Project and $18 million for renewals and
replacements of the existing facilities. Funds required to meet
The Chicago Project and other capital expenditures for 1997 and
1998 are expected to be provided primarily by the $550 million
three-year revolving credit facility, a planned $200 million debt
facility of the Partnership, internal sources and equity
contributions from minority interest holders.
The $3.4 million of cash flows provided by acquisition and
consolidation of businesses is related primarily to the
consolidation of Black Mesa's cash balance (See Note 4 - Notes to
Consolidated Financial Statements).
Cash Flows From Financing Activities
Cash flows used in financing activities decreased $27.6
million to $27.4 million for the six month period ended June 30,
1997, as compared to the same period in 1996, primarily due to
borrowings under Northern Border Pipeline's 1997 Credit Agreement
of $160 million which were used primarily to retire amounts
related to Northern Border Pipeline's existing bank loan and
credit agreements of $137.5 million.
Information Regarding Forward Looking Statements
The statements in this Quarterly Report that are not
historical 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 - Liquidity and
Capital Resources" and in "Notes to Consolidated Financial
Statements" on The Chicago Project. Although the Partnership
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 political and regulatory developments
that impact FERC and state utility commission proceedings,
Northern Border Pipeline's success in sustaining its positions in
such proceedings or the success of intervenors in opposing
Northern Border Pipeline's positions, 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 during the periods covered by the
forward looking statements.
<PAGE>
PART II. OTHER INFORMATION
NORTHERN BORDER PARTNERS, L.P. AND SUBSIDIARIES
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
None.
(b) Reports on Form 8-K.
None.
<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 PARTNERS, L.P.
(A Delaware Limited Partnership)
Date: August 14, 1997 By: JERRY L. PETERS
Jerry L. Peters
Chief Financial and Accounting
Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 25,496
<SECURITIES> 44,369
<RECEIVABLES> 25,251
<ALLOWANCES> 0
<INVENTORY> 4,316
<CURRENT-ASSETS> 99,432
<PP&E> 1,586,617
<DEPRECIATION> 614,557
<TOTAL-ASSETS> 1,089,063
<CURRENT-LIABILITIES> 88,488
<BONDS> 431,127
0
0
<COMMON> 0
<OTHER-SE> 410,961
<TOTAL-LIABILITY-AND-EQUITY> 1,089,063
<SALES> 0
<TOTAL-REVENUES> 94,715
<CGS> 0
<TOTAL-COSTS> 47,142
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,051
<INCOME-PRETAX> 26,224
<INCOME-TAX> 0
<INCOME-CONTINUING> 26,224
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 26,224
<EPS-PRIMARY> 0.98
<EPS-DILUTED> 0.98
</TABLE>
