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UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2004
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______ to ________.
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)
13710 FNB Parkway
Omaha, Nebraska 68154-5200
--------------- ----------
(Address of principal executive (Zip code)
offices)
(402) 492-7300
------------------------------------------------------------
(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 [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date. Not applicable.
1 OF 23
NORTHERN BORDER PIPELINE COMPANY
TABLE OF CONTENTS
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Statement of Income -
Three Months Ended June 30, 2004 and 2003
and Six Months Ended June 30, 2004 and 2003 3
Statement of Comprehensive Income -
Three Months Ended June 30, 2004 and 2003
and Six Months Ended June 30, 2004 and 2003 3
Balance Sheet - June 30, 2004
and December 31, 2003 4
Statement of Cash Flows -
Six Months Ended June 30, 2004 and 2003 5
Statement of Changes in Partners' Equity -
Six Months Ended June 30, 2004 6
Notes to Financial Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
ITEM 3. Quantitative and Qualitative Disclosures About
Market Risk 18
ITEM 4. Controls and Procedures 19
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 21
ITEM 5. Other Information 21
ITEM 6. Exhibits and Reports on Form 8-K 21
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF INCOME
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
2004 2003 2004 2003
---- ---- ---- ----
OPERATING REVENUES $81,532 $80,659 $164,839 $160,551
------- ------- -------- --------
OPERATING EXPENSES
Operations and maintenance 9,760 10,363 18,825 19,282
Depreciation and amortization 14,546 14,431 29,056 28,920
Taxes other than income 6,390 6,950 14,303 14,795
------- ------- -------- --------
Operating expenses 30,696 31,744 62,184 62,997
------- ------- -------- --------
OPERATING INCOME 50,836 48,915 102,655 97,554
------- ------- -------- --------
INTEREST EXPENSE 9,923 11,612 20,144 23,431
------- ------- -------- --------
OTHER INCOME 384 314 543 228
------- ------- -------- --------
NET INCOME TO PARTNERS $41,297 $37,617 $ 83,054 $ 74,351
======= ======= ======== ========
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF COMPREHENSIVE INCOME
(IN THOUSANDS)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
2004 2003 2004 2003
---- ---- ---- ----
Net income to partners $41,297 $37,617 $83,054 $74,351
Other comprehensive income:
Change associated with current
period hedging transactions (401) (389) (803) (778)
------- ------- ------- -------
Total comprehensive income $40,896 $37,228 $82,251 $73,573
======= ======= ======= =======
The accompanying notes are an integral part of these financial statements.
3
PART I. FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
BALANCE SHEET
(IN THOUSANDS)
(UNAUDITED)
JUNE 30, DECEMBER 31,
2004 2003
---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 25,117 $ 28,732
Accounts receivable 38,412 33,687
Materials and supplies, at cost 3,628 4,818
Prepaid expenses and other 1,211 2,267
---------- ----------
Total current assets 68,368 69,504
---------- ----------
NATURAL GAS TRANSMISSION PLANT
Property, plant and equipment 2,442,825 2,438,816
Less: Accumulated provision for
depreciation and amortization 874,622 847,061
---------- ----------
Property, plant and equipment, net 1,568,203 1,591,755
---------- ----------
OTHER ASSETS
Derivative financial instruments 10,421 16,648
Other 12,456 13,402
---------- ----------
Total other assets 22,877 30,050
---------- ----------
Total assets $1,659,448 $1,691,309
========== ==========
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 25,173 $ 22,637
Accrued taxes other than income 24,533 28,947
Accrued interest 10,507 10,717
---------- ----------
Total current liabilities 60,213 62,301
---------- ----------
LONG-TERM DEBT 684,346 821,498
---------- ----------
RESERVES AND DEFERRED CREDITS 4,596 5,072
---------- ----------
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY
Partners' capital 905,894 797,236
Accumulated other comprehensive income 4,399 5,202
---------- ----------
Total partners' equity 910,293 802,438
---------- ----------
Total liabilities and partners' equity $1,659,448 $1,691,309
========== ==========
The accompanying notes are an integral part of these financial statements.
4
PART I. FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED
JUNE 30,
--------
2004 2003
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income to partners $ 83,054 $ 74,351
--------- ---------
Adjustments to reconcile net income to partners to net cash provided by
operating activities:
Depreciation and amortization 29,239 29,103
Provision for regulatory refunds -- 261
Regulatory refunds paid -- (10,261)
Reserves and deferred credits (475) 604
Changes in components of working capital (5,225) (16,025)
Other (294) (249)
--------- ---------
Total adjustments 23,245 3,433
--------- ---------
Net cash provided by operating activities 106,299 77,784
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property, plant
and equipment (4,518) (2,075)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Contributions from partners 130,000 --
Distributions to partners (104,396) (74,208)
Issuance of long-term debt -- 39,000
Retirement of long-term debt (131,000) (38,000)
--------- ---------
Net cash used in financing activities (105,396) (73,208)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS (3,615) 2,501
Cash and cash equivalents-beginning of period 28,732 25,358
--------- ---------
Cash and cash equivalents-end of period $ 25,117 $ 27,859
========= =========
Supplemental Disclosures of Cash Flow Information:
Cash paid for:
Interest (net of amount capitalized) $ 20,623 $ 23,788
========= =========
Changes in components of working capital:
Accounts receivable $ 1,869 $ (3,885)
Materials and supplies 478 139
Prepaid expenses and other 1,056 684
Accounts payable (4,004) (9,326)
Accrued taxes other than income (4,414) (3,512)
Accrued interest (210) (125)
--------- ---------
Total $ (5,225) $ (16,025)
========= =========
The accompanying notes are an integral part of these financial statements.
5
PART I. FINANCIAL INFORMATION (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
STATEMENT OF CHANGES IN PARTNERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
TC NORTHERN
PIPELINES BORDER ACCUMULATED
INTERMEDIATE INTERMEDIATE OTHER TOTAL
LIMITED LIMITED COMPREHENSIVE PARTNERS'
PARTNERSHIP PARTNERSHIP INCOME EQUITY
----------- ----------- ------ ------
Balance at December 31, 2003 $ 239,171 $ 558,065 $ 5,202 $ 802,438
Net income to partners 24,916 58,138 -- 83,054
Change associated with current
period hedging transactions -- -- (803) (803)
Contributions from partners 39,000 91,000 -- 130,000
Distributions to partners (31,319) (73,077) -- (104,396)
------------ ------------ ------------- -----------
Balance at June 30, 2004 $ 271,768 $ 634,126 $ 4,399 $ 910,293
============ ============ ============= ===========
The accompanying notes are an integral part of these financial statements.
6
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS - (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The financial statements included herein have been prepared by Northern
Border Pipeline Company without audit pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, they reflect all
adjustments that 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 accounting principles generally accepted in the United States of
America ("GAAP") 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, 2003.
The preparation of financial statements in conformity with GAAP 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. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Northern Border Pipeline uses financial instruments in the management of
its interest rate exposure. A control environment has been established which
includes policies and procedures for risk assessment and the approval, reporting
and monitoring of financial instrument activities. As a result, Northern Border
Pipeline has entered into various interest rate swap agreements with major
financial institutions to hedge its interest rate risk.
Northern Border Pipeline records in accumulated other comprehensive income
amounts related to terminated interest rate swap agreements for cash flow hedges
with such amounts amortized to interest expense over the term of the hedged
debt. During the three months and six months ended June 30, 2004, Northern
Border Pipeline amortized $0.4 million and $0.8 million, respectively, related
to the terminated interest rate swap agreements, as a reduction to interest
expense from accumulated other comprehensive income. Northern Border Pipeline
expects to amortize comparable amounts in each of the remaining quarters of
2004.
Northern Border Pipeline has outstanding interest rate swap agreements
with notional amounts totaling $225 million that expire in May 2007. Under the
interest rate swap agreements, Northern Border Pipeline makes payments to
counterparties at variable rates based on the London Interbank Offered Rate and
in return receives payments based on a 6.25% fixed rate. At June 30, 2004, the
average effective interest rate on Northern Border Pipeline's
7
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 1. FINANCIAL STATEMENTS - (CONCLUDED)
NORTHERN BORDER PIPELINE COMPANY
NOTES TO FINANCIAL STATEMENTS
interest rate swap agreements was 2.46%. Northern Border Pipeline's interest
rate swap agreements have been designated as fair value hedges as they were
entered into to hedge the fluctuations in the market value of the fixed rate
debt issued in 2002. The accompanying balance sheet at June 30, 2004, reflects
derivative financial instrument assets of approximately $10.4 million with a
corresponding increase in long-term debt.
3. COMMITMENTS AND CONTINGENCIES
On July 31, 2001, the Assiniboine and Sioux Tribes of the Fort Peck Indian
Reservation ("Tribes") filed a lawsuit in Tribal Court against Northern Border
Pipeline to collect more than $3 million in back taxes, together with interest
and penalties. The lawsuit relates to a utilities tax on certain of Northern
Border Pipeline's properties within the Fort Peck Indian Reservation. Since the
filing of the lawsuit, the Tribes have continued to assess annual utilities
taxes of approximately $1.8 million per year, which remain unpaid. Based upon
federal court decisions and other defenses, Northern Border Pipeline believes
that the Tribes do not have the authority to impose these taxes. The Tribes and
Northern Border Pipeline, through a mediation process, have held settlement
discussions and have reached a settlement in principle on pipeline right-of-way
lease and taxation issues, subject to final documentation and necessary
government approvals. This settlement grants to Northern Border Pipeline, among
other things: (i) an option to renew the pipeline right-of-way lease upon agreed
terms and conditions on or before April 1, 2011 for a term of 25 years with a
renewal right for an additional 25 years; (ii) a right to use additional tribal
lands for expanded facilities; and (iii) release and satisfaction of all tribal
taxes against Northern Border Pipeline. Upon execution by the parties and
approval by the Bureau of Indian Affairs, in consideration of this option and
other benefits, Northern Border Pipeline will pay a lump sum amount of $5.9
million and an annual amount of approximately $1.5 million effective April 2004
until April 2011. Northern Border Pipeline intends to seek regulatory recovery
of the costs resulting from the settlement. Northern Border Pipeline believes
that the settlement should be executed in the very near future and will be
presented to the Bureau of Indian Affairs for approval. Northern Border Pipeline
is unable to predict at this time if or when such approval will be obtained.
Northern Border Pipeline believes that the outcome of this settlement will not
have a material adverse impact on its results of operations for 2004 or
financial position.
Various legal actions that have arisen in the ordinary course of business
are pending. Northern Border Pipeline believes that the resolution of these
issues will not have a material adverse impact on Northern Border Pipeline's
results of operations or financial position.
4. SUBSEQUENT EVENTS
Northern Border Pipeline makes distributions to its general partners
approximately one month following the end of the quarter. The distributions for
the second quarter of 2004 of approximately $51.6 million were paid August 2,
2004.
8
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NORTHERN BORDER PIPELINE COMPANY
Northern Border Pipeline's discussion and analysis of its financial
condition and results of operations is based on its Financial Statements, which
are prepared in accordance with accounting principles generally accepted in the
United States of America. You should read the following discussion and analysis
in conjunction with the Financial Statements included elsewhere in this report.
OVERVIEW
There are several major business drivers that have an impact on Northern
Border Pipeline's business. These factors are discussed in "Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Overview" in Northern Border Pipeline's 2003 Annual Report on Form 10-K for the
year ended December 31, 2003.
Firm transportation contracts representing approximately 30% of Northern
Border Pipeline's contracted capacity, or 778 million cubic feet per day
("MMcf/d"), expire late in 2004. By the end of the second quarter, Northern
Border Pipeline successfully extended contracts for approximately 18% of that
capacity with existing shippers at maximum transportation rates for terms of at
least one year. The remaining 637 MMcf/d of the 2004 expiring capacity is
currently available for recontracting. Also, there will be an additional 126
MMcf/d available for recontracting in April 2005.
Northern Border Pipeline's objective is to recontract the remaining
pipeline capacity at maximum transportation rates. Because the current forward
basis differentials are currently less than Northern Border Pipeline's maximum
transportation rate, it may be selling a significant portion of this capacity on
a short-term basis. Also, Northern Border Pipeline may be awarding contracts to
shippers who bid at maximum rates but for distances less than the full
transportation path.
On July 14, 2004, Northern Border Pipeline announced an open season for a
proposed expansion from various receipts point along the pipeline system for
deliveries into the Chicago area. The project, with an estimated 130 MMcf/d of
capacity, would involve construction of a new compressor station and minor
modifications to other compressor stations, and is estimated to cost
approximately $20 million. The projected in-service date would be April 1, 2006.
Northern Border Pipeline is presently evaluating the bids received.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Certain amounts included in or affecting Northern Border Pipeline's
Financial Statements and related disclosures must be estimated, requiring it to
make certain assumptions with respect to values or conditions that cannot be
known with certainty at the time the financial statements are prepared. The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires
9
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
management to make estimates and 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. Any effects on Northern Border Pipeline's business, financial
position or results of operations resulting from revisions to these estimates
are recorded in the period in which the facts that give rise to the revision
become known.
Northern Border Pipeline's significant accounting policies are summarized
in Note 2 - Notes to Financial Statements included in Northern Border Pipeline's
Annual Report on Form 10-K for the year ended December 31, 2003. Certain of
Northern Border Pipeline's accounting policies are of more significance in its
financial statement preparation process than others.
Northern Border Pipeline's accounting policies conform to Statement of
Financial Accounting Standards ("SFAS") No. 71, "Accounting for the Effects of
Certain Types of Regulation." Accordingly, certain assets that result from the
regulated ratemaking process are recorded that would not be recorded under
accounting principles generally accepted in the United States of America for
nonregulated entities. Northern Border Pipeline continually assesses whether the
future recovery of the regulatory assets is probable by considering such factors
as regulatory changes and the impact of competition. If future recovery ceases
to be probable, Northern Border Pipeline would be required to write-off the
regulatory assets at that time. At June 30, 2004, Northern Border Pipeline has
recorded regulatory assets of $7.7 million, which are being recovered from its
shippers over varying periods of time.
Northern Border Pipeline's long-lived assets are stated at original cost.
Northern Border Pipeline must use estimates in determining the economic useful
lives of those assets. For utility property, no retirement gain or loss is
included in income except in the case of retirements or sales of entire
regulated operating units. The original cost of utility property retired is
charged to accumulated depreciation and amortization, net of salvage and cost of
removal.
Northern Border Pipeline's accounting for financial instruments follows
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which requires that every derivative instrument 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. At June 30, 2004, Northern
Border Pipeline's balance sheet reflects derivative financial instrument assets
of approximately $10.4 million with a corresponding increase in long-term debt.
10
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
RESULTS OF OPERATIONS
SECOND QUARTER 2004 COMPARED WITH SECOND QUARTER 2003
Net income to partners increased $3.7 million for the second quarter of
2004, as compared to the same period in 2003. Higher operating revenues, lower
operating expenses and reductions in interest expense increased Northern Border
Pipeline's net income.
Operating revenues increased $0.9 million for the second quarter of 2004,
as compared to the same period in 2003. Under a condition of Northern Border
Pipeline's previous rate case settlement, it was required to share interruptible
transportation and new services revenues with its shippers. This condition
expired in October 2003 and allowed Northern Border Pipeline to realize an
additional $0.6 million of revenue during the second quarter of 2004. Northern
Border Pipeline was able to generate and retain additional revenue from the sale
of short-term capacity, which represented approximately $0.3 million of the
increase.
Operations and maintenance expenses decreased $0.6 million for the second
quarter of 2004, as compared to the same period in 2003, due primarily to the
settlement of previously accrued charges for administrative services provided by
the operator and its affiliates reducing expense by approximately $1.1 million.
Partially offsetting this reduction was $0.7 million of expense for the option
to renew a pipeline right-of-way lease with the Fort Peck Indian Reservation
(see Note 3 - Notes to Financial Statements).
Taxes other than income decreased $0.6 million for the second quarter of
2004, as compared to the same period in 2003, due primarily to adjustments to ad
valorem taxes. Northern Border Pipeline periodically reviews and adjusts its
estimates of ad valorem taxes. Reductions to previous estimates in 2004 exceeded
reductions to previous estimates in 2003 by approximately $0.6 million.
Interest expense decreased $1.7 million for the second quarter of 2004, as
compared to the same period in 2003, due primarily to a decrease in Northern
Border Pipeline's average debt outstanding.
SIX MONTHS ENDED JUNE 30, 2004 COMPARED WITH SIX MONTHS ENDED JUNE 30, 2003
Net income to partners increased $8.7 million for the six months ended
June 30, 2004, as compared to the same period in 2003. Higher operating
revenues, decreases in operating expenses and reductions in interest expense
increased Northern Border Pipeline's net income.
Operating revenues increased $4.3 million for the six months ended June 30,
2004, as compared to the same period in 2003. Northern Border Pipeline was able
to generate and retain additional revenue from the sale of short-term capacity,
which represented approximately $2.1 million of the
11
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
increase. The leap year added an additional day of transportation, which
approximated $0.9 million of the revenue increase. Under a condition of Northern
Border Pipeline's previous rate case settlement, it was required to share
interruptible transportation and new services revenues with its shippers. This
condition expired in October 2003 and allowed Northern Border Pipeline to
realize an additional $1.3 million of revenue for the six months ended June 30,
2004.
Operations and maintenance expenses decreased $0.5 million for the six
months ended June 30, 2004, as compared to the same period in 2003.
Administrative expenses provided by the operator and its affiliates decreased
$1.5 million primarily related to the settlement of previous accrued charges. In
addition, benefits costs were reduced approximately $0.6 million compared to the
same period in 2003. Partially offsetting these reductions was $0.8 million of
higher electricity costs for Northern Border Pipeline's electric-powered
compressors and $0.7 million of expense for the option to renew a pipeline
right-of-way lease with the Fort Peck Indian Reservation (see Note 3 - Notes to
Financial Statements).
Taxes other than income decreased $0.5 million for the six months ended
June 30, 2004, as compared to the same period in 2003. Both 2004 and 2003
included adjustments to ad valorem taxes. Northern Border Pipeline periodically
reviews and adjusts its estimates of ad valorem taxes. Reductions to previous
estimates in 2004 exceeded reductions to previous estimates in 2003 by
approximately $0.6 million.
Interest expense decreased $3.3 million for the six months ended June 30,
2004, as compared to the same period in 2003, primarily due to a decrease in
Northern Border Pipeline's average debt outstanding as well as a decrease in
average interest rates.
Other income increased $0.3 million for the six months ended June 30,
2004, as compared to the same period in 2003. The 2004 amount includes the
reversal of reserves of $0.4 million.
LIQUIDITY AND CAPITAL RESOURCES
DEBT AND CREDIT FACILITIES
Northern Border Pipeline's debt and credit facilities outstanding at June
30, 2004, are as follows:
Total
Long Term
(In Thousands)
--------------
$175 million Pipeline Credit
Agreement, due 2005 $ --
6.25% Senior Notes due 2007 225,000
7.75% Senior Notes due 2009 200,000
7.50% Senior Notes due 2021 250,000
--------
Total $675,000
========
12
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
Northern Border Pipeline has outstanding interest rate swap agreements
with notional amounts totaling $225 million that expire in May 2007. Under the
interest rate swap agreements, Northern Border Pipeline makes payments to
counterparties at variable rates based on the London Interbank Offered Rate and
in return receives payments based on a 6.25% fixed rate. At June 30, 2004, the
average effective interest rate on Northern Border Pipeline's interest rate swap
agreements was 2.46%.
Short-term liquidity needs will be met by operating cash flows and through
the Pipeline Credit Agreement. 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 were $106.3 million in the six
months ended June 30, 2004 as compared to $77.8 million for the comparable
period in 2003. Increases in operating revenues and lower interest expense for
2004 contributed approximately $7.6 million to the increase between 2004 and
2003. In addition, the six months ended June 30, 2003 reflects lower cash flows
from operating activities of approximately $9.5 million due to the
discontinuance of certain shipper transportation prepayments, and refunds to
shippers for $10.3 million due to the FERC rejecting Northern Border Pipeline's
proposed tariff sheet revision for company use gas.
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures were $4.5 million for the six months ended June 30,
2004 as compared to $2.1 million for the comparable period in 2003. The capital
expenditures for 2004 and 2003 were primarily related to renewals and
replacements of existing facilities.
Total capital expenditures for 2004 are estimated to be $14 million,
primarily related to renewals and replacements of existing facilities. Northern
Border Pipeline currently anticipates funding its 2004 capital expenditures
primarily by borrowing under the Pipeline Credit Agreement and using operating
cash flows.
CASH FLOWS FROM FINANCING ACTIVITIES
Cash flows used in financing activities were $105.4 million for the six
months ended June 30, 2004 as compared to $73.2 million for the comparable
period in 2003. Distributions to partners were $104.4 million and $74.2 million
in the six months ended June 30, 2004 and 2003, respectively. The distributions
for 2003 were reduced in accordance with the then approved distribution formula
to reflect the impact of the refunds ordered by the FERC on March 27, 2003.
13
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
Effective January 1, 2004, each quarterly distribution is equal to 100% of
distributable cash flow as determined by the previous quarter's earnings before
interest expense, depreciation and amortization, less interest expense and less
maintenance capital expenditures.
A distribution of approximately $51.6 million was declared for the second
quarter of 2004 and paid on August 2, 2004.
Contributions from partners were $130.0 million in 2004. For 2003,
borrowings on long-term debt totaled $39.0 million. Total payments on debt were
$131.0 million and $38.0 million in 2004 and 2003, respectively.
UPDATE ON THE IMPACT OF ENRON'S CHAPTER 11 FILING ON NORTHERN BORDER PIPELINE'S
BUSINESS
As discussed in Northern Border Pipeline's Annual Report on Form 10-K for
the year ended December 31, 2003, on December 2, 2001, Enron Corp. and certain
of its wholly owned subsidiaries filed a voluntary petition for bankruptcy
protection under Chapter 11 of the United States Bankruptcy Code. Refer to the
Form 10-K for the year ended December 31, 2003 for the full discussion of
impacts of Enron's Chapter 11 Filing on Northern Border Pipeline's business.
On March 31, 2004, Enron transferred its ownership interests in Northern
Plains Natural Gas Company and Pan Border Gas Company to CrossCountry Energy,
LLC ("CrossCountry"). In addition, CrossCountry and Enron entered into a
transition services agreement pursuant to which Enron will provide to
CrossCountry, on an interim, transitional basis, various services, including but
not limited to (i) information technology services, (ii) accounting system usage
rights and administrative support and (iii) payroll, employee benefits and
administrative services. In turn, these services are provided to Northern Border
Pipeline through Northern Plains. The agreement terminates on the earlier of a
sale of CrossCountry or December 31, 2004. The agreement may be extended by
mutual agreement of the parties and approval of Enron's Official Committee of
Unsecured Creditors.
On June 24, 2004, Enron announced that it had reached an agreement with a
joint venture of Southern Union Company and GE Commercial Finance Energy
Financial Services ("Southern Union/GE Joint Venture") for the sale of
CrossCountry. The bid of Southern Union/GE Joint Venture will be the "stalking
horse" for an auction of CrossCountry. The Bankruptcy Court approved the bidding
procedures. Bids are due August 23, 2004 for the September 1, 2004 auction. The
Bankruptcy Court is scheduled to approve the winning bid on September 9, 2004.
The sale of CrossCountry, which is subject to certain regulatory and
governmental approvals, is expected to close by mid-December 2004. Enron has
agreed to provide certain transition services
14
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
for a period of six months from the closing date, consistent with terms of the
agreement between Enron and Southern Union/GE Joint Venture. Once the buyer has
been approved and the terms of that extended transition services agreement are
known, Northern Plains will advise Northern Border Pipeline on any impacts to
resources, systems and timing of the services provided to Northern Border
Pipeline.
As previously reported in Northern Border Pipeline's Form 10-K for the
year ended December 31, 2003, on December 31, 2003, Enron filed a motion seeking
approval of the Bankruptcy Court to provide additional funding to, and for
authority to terminate, the Enron Corp. Cash Balance Plan ("Cash Balance Plan")
and certain other defined benefit plans of Enron's affiliates (collectively, the
"Plans") in "standard terminations" within the meaning of Section 4041 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Such
standard terminations would satisfy all of the obligations of Enron and its
affiliates with respect to funding liabilities under the Plans. In addition, a
standard termination would eliminate the contingent claims of the Pension
Benefit Guaranty Corporation ("PBGC") against Enron and its affiliates with
respect to funding liabilities under the Plans. On January 30, 2004, the
Bankruptcy Court entered an order authorizing the termination, additional
funding and other actions necessary to effect the relief requested. Pursuant to
the Bankruptcy Court order, any contributions to the Plans are subject to the
prior receipt of a favorable determination by the Internal Revenue Service that
the Plans are tax-qualified as of their respective dates of termination.
On June 2, 2004, the PBGC issued a notice to Enron stating that it had
determined that the Plans will be unable to pay benefits when due and should be
terminated in order to protect the interests of the participants in the Plans,
and/or that the risk of loss to the PBGC would increase unreasonably if the
Plans were not so terminated. On June 3, 2004, the PBGC filed a complaint in the
District Court for the Southern District of Texas against Enron as the sponsor
and/or administrator of the Plans (the "Action") which complaint was served on
Enron on July 19, 2004. By filing the Action, the PBGC is seeking an order (i)
terminating the Plans; (ii) appointing the PBGC the statutory trustee of the
Plans; (iii) requiring transfer to the PBGC of all records, assets or other
property of the Plans required to determine the benefits payable to the Plans'
participants; and (iv) establishing June 2, 2004 as the termination date of the
Plans.
Enron management previously informed Northern Plains that Enron will seek
funding contributions from each member of its ERISA controlled group of
corporations that employs, or employed, individuals who are, or were, covered
under the Cash Balance Plan. Northern Plains is considered a member of Enron's
ERISA controlled group of corporations. As of December 31, 2003, an amount of
approximately $3.1 million, relating to the operations of Northern Border
Pipeline, was
15
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
estimated for Northern Plains' proportionate share of the up to $200 million
estimated termination costs for the Plans authorized by the Bankruptcy Court
order. Under the operating agreement with Northern Plains, these costs may be
Northern Border Pipeline's responsibility. In December of 2003, Northern Border
Pipeline accrued $3.1 million to satisfy claims of reimbursement for these
termination costs. While the claims for reimbursement cannot be
determined at this time, they could be less than the amount accrued.
The Action and the possible consequences of an adverse determination of
the Action have the potential to increase the costs of the termination of the
Plans and potentially the estimated share of Northern Plains' termination costs.
Enron and its affiliates have taken certain steps to protect non-debtor
interests and the acquirers of such interests that should limit the impact of
the Action on Northern Plains. First, pursuant to the modified Fifth Amended
Joint Plan of Reorganization, filed with the Bankruptcy Court on June 1, 2004,
Enron and its affiliated debtors have agreed to escrow $200 million for the
costs associated with the termination of the Plans. Second, pursuant to the
Amended and Restated Contribution and Separation Agreement dated as of March 31,
2004, which provided for the contribution of certain equity interests to
CrossCountry Energy, Enron and its affiliated debtors have agreed to indemnify
Northern Plains against claims of any joint and several liability for the
termination costs of the Cash Balance Plan.
Under the agreement reached with the Southern Union/GE Joint Venture for
the sale of CrossCountry, from June 24, 2004, neither Northern Plains, nor
Northern Border Pipeline will be required to contribute to, or otherwise be
liable for any contributions to Enron in connection with, the Cash Balance Plan.
The purchase price under the agreement shall be deemed to include all
contributions which otherwise would have been allocable to Northern Plains from
Enron.
Northern Border Pipeline does not believe at this time that it will be
subject to any increased liability as a result of the PBGC's filing of the
Action; however, Northern Border Pipeline cannot determine at this time the
effect, if any, on it if the PBGC receives a favorable ruling on its Action.
Furthermore, while the final amounts chargeable to Northern Border Pipeline
under the operating agreement for the termination of the Cash Balance Plan
cannot be determined at this time, Northern Border Pipeline believes the
ultimate settlement of this matter will not have a material adverse effect on
its results of operations.
On July 15, 2004, the Bankruptcy Court approved the amended joint Chapter
11 plan and related disclosure statement ("Chapter 11 Plan"). Under the approved
Chapter 11 Plan, assuming the previously announced sales of Portland General
Electric and CrossCountry are consummated, Enron creditors, which should include
Northern Border Pipeline, will receive a combination of cash and equity of
Prisma Energy International, Enron's international energy asset business.
Northern Border Pipeline
16
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)
NORTHERN BORDER PIPELINE COMPANY
anticipates realizing income in 2004 or 2005 of $1 million to $2 million related
to adjustments to reserves for certain claims filed in the Enron bankruptcy
proceedings. Currently, Northern Border Pipeline has fully reserved these
claims. However, the Chapter 11 Plan has not yet become effective and a number
of parties have filed Notices of Appeal, which could delay the effective date
and/or change the terms of the Plan. There can be no assurances on the amounts
of the claims recovered or timing of distributions under the Chapter 11 Plan.
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. These forward-looking statements are identified as any statement that does
not relate strictly to historical or current facts. Forward-looking statements
are not guarantees of performance. They involve risks, uncertainties and
assumptions. The future results of Northern Border Pipeline's operations may
differ materially from those expressed in these forward-looking statements. Such
forward-looking statements include, among other things, the discussions in
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" regarding Northern Border
Pipeline's estimated capital expenditures for 2004. 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, among other things, 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, including Bankruptcy Court
approval of the sale of CrossCountry, and outcome of Enron's Chapter 11 process
regulation under PUHCA; ability to recontract available capacity at maximum
transportation rates; ability to settle with the Fort Peck Tribes on
rights-of-way and tax issues and to recover the associated costs in pipeline
rates, ability to control operating costs; performance of contractual
obligations by the shippers; 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; timely receipt of FERC approval and other regulatory approvals of the
expansion project; 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.
17
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONCLUDED)
NORTHERN BORDER PIPELINE COMPANY
These and other risks are described in greater detail in the section
entitled "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Risk Factors and Information Regarding Forward-Looking
Statements" included in Northern Border Pipeline's Annual Report on Form 10-K
for the year ended December 31, 2003. All forward-looking statements
attributable to Northern Border Pipeline or persons acting on its behalf are
expressly qualified in their entirety by these factors. Other than as required
under the securities laws, Northern Border Pipeline does not assume a duty to
update these forward-looking statements, whether as a result of new information,
subsequent events or circumstances, changes in expectations or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
NORTHERN BORDER PIPELINE COMPANY
Northern Border Pipeline may be exposed to market risk through changes in
interest rates, as discussed below. A control environment has been established
which includes policies and procedures for risk assessment and the approval,
reporting and monitoring of financial instrument activities. Northern Border
Pipeline has utilized and expects to continue to utilize derivative financial
instruments in the management of interest rate risks to achieve a more
predictable cash flow by reducing its exposure to interest rate fluctuations.
For more information on risk management activities, see Note 2 to Northern
Border Pipeline's financial statements included elsewhere in this report.
Northern Border Pipeline's interest rate exposure results from variable
rate borrowings from commercial banks. To mitigate potential fluctuations in
interest rates, Northern Border Pipeline attempts to maintain a significant
portion of its debt portfolio in fixed rate debt. Northern Border Pipeline also
uses interest rate swaps as a means to manage interest expense by converting a
portion of fixed rate debt into variable rate debt to take advantage of
declining interest rates. At June 30, 2004, Northern Border Pipeline had $225.0
million of variable rate debt outstanding (approximately 33% of its debt
portfolio) that was previously fixed rate debt that had been converted to
variable rate debt through the use of interest rate swaps. For additional
information on Northern Border Pipeline's derivative instruments, see Note 2 to
the Financial Statements, included elsewhere in this report. If average interest
rates change by one percent compared to rates in effect as of June 30, 2004,
annual interest expense would change by approximately $2.3 million. This amount
has been determined by considering the impact of the hypothetical interest rates
on Northern Border Pipeline's variable rate borrowings outstanding as of June
30, 2004.
18
PART I. FINANCIAL INFORMATION - (CONTINUED)
ITEM 4. CONTROLS AND PROCEDURES
NORTHERN BORDER PIPELINE COMPANY
Those officers of Northern Plains that are the equivalent of Northern
Border Pipeline's principal executive officer and principal financial officer
have evaluated the effectiveness of Northern Border Pipeline's "disclosure
controls and procedures," as such term is defined in Rule 13a-15(e) and Rule
15d-15(e) of the Securities Exchange Act of 1934, as amended, as of the date of
the end of the period covered by this Quarterly Report on Form 10-Q. Based upon
their evaluation, they have concluded that Northern Border Pipeline's disclosure
controls and procedures are effective.
There were no changes in Northern Border Pipeline's internal controls over
financial reporting that occurred during its last fiscal quarter that have
materially affected, or are reasonably likely to materially affect, its internal
control over financial reporting.
In conjunction with Northern Border Partners' requirements, Northern
Border Pipeline is currently undergoing a comprehensive effort to ensure
compliance with Section 404 of the Sarbanes Oxley Act of 2002 for the year
ending December 31, 2004. This effort includes internal control documentation
and review under the direction of those officers of Northern Plains that are the
equivalent of Northern Border Pipeline's principal executive officer and
principal financial officer. During the course of these activities, certain
control issues were identified that Northern Border Pipeline believes can be
improved. These control issues in large part are related to documentation of the
operation and execution of internal controls. Northern Border Pipeline has
implemented a number of improvements in its internal controls over financial
reporting as a result of its review efforts.
In addition, certain critical business systems, including information
technology applications, third party software licenses and computer and
communication hardware, supporting Northern Border Pipeline's financial
accounting and reporting systems are owned by Enron and/or CrossCountry.
Northern Border Pipeline's rights to utilize these systems and hardware may be
impacted by the sale of CrossCountry. Northern Border Pipeline's access to these
business systems is currently being provided through services agreements,
including a transition services agreement between Enron and CrossCountry.
Although that agreement terminates upon the sale of CrossCountry, in the
purchase and sale agreement with Southern Union/GE Joint Venture, Enron has
agreed to extend the terms of the transition services agreement for certain
services for a period of six months from the closing date, which is expected to
occur no later than mid-December 2004. Until the Bankruptcy Court has approved
the sale of CrossCountry, Northern Border Pipeline is uncertain which business
systems of Enron, CrossCountry or the buyer will be utilized for Northern Border
Pipeline. Implementation of controls, as well as documentation and testing, of
any new systems that require conversion before year-end may not be possible.
At this time Northern Border Pipeline expects it will complete all
internal controls review, testing and documentation as required under Section
404 of the Sarbanes-Oxley Act. However, Northern Border Pipeline's ability to
realize this expectation is dependent upon the availability of resources
19
PART I. FINANCIAL INFORMATION - (CONCLUDED)
ITEM 4. CONTROLS AND PROCEDURES - (CONCLUDED)
NORTHERN BORDER PIPELINE COMPANY
to execute internal controls, complete all of the testing and documentation
required and on the actions of Enron, CrossCountry and the buyer of
CrossCountry, as the sale process is consummated. See also Item 2. "Management's
Discussion And Analysis Of Financial Condition And Results Of Operations -
Update On The Impact of Enron's Chapter 11 Filing On Northern Border Pipeline's
Business."
20
PART II. OTHER INFORMATION
NORTHERN BORDER PIPELINE COMPANY
ITEM 1. LEGAL PROCEEDINGS
See Note 3 to the Financial Statements for an update on certain legal
proceedings involving Northern Border Pipeline.
ITEM 5. OTHER INFORMATION
In Northern Border Pipeline's pending proceeding before the FERC on
procedures for awarding capacity, an order was issued on April 15, 2004 in which
the FERC requested comments from interested parties on whether the FERC's
current policy on awarding available capacity to a short-haul shipper
appropriately balances the risks to the pipeline, bidding shippers and other
shippers on the pipeline. Comments were filed on June 15, 2004. The timing of
the issuance of the FERC's order in this proceeding is not known.
On July 20, 2004, the D.C. Circuit Court of Appeals issued an opinion in
BP West Coast Products, LLC v. FERC that reversed the FERC decision that
provided for an income tax allowance in the rates for SFPP, LP, a limited
partnership. The D.C. Circuit remanded the case to FERC for the FERC's
determination regarding the proper tax allowance. Northern Border Pipeline has
not fully analyzed the SFPP decision, and Northern Border Pipeline does not know
the scope, timing or outcome of any FERC proceeding(s) related to the remand.
However, Northern Border Pipeline believes that its specific circumstances are
different from those of SFPP and many other pipeline partnerships, given
Northern Border Pipeline's particular circumstances regarding its tariff,
deferred income tax treatment, FERC orders and underlying agreements with its
shippers.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
10.1 First Amendment to the Revolving Credit Agreement dated as of April
9, 2004 between Northern Border Pipeline Company, Bank One, NA and
the lenders named therein (incorporated by reference to Exhibit 10.1
to Northern Border Pipeline Company's quarterly report on Form 10-Q
(File No. 3333-88577) filed with the SEC on May 7, 2004.
31.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
31.2 Certification of Chief Financial and Accounting Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
21
PART II. OTHER INFORMATION (CONCLUDED)
NORTHERN BORDER PIPELINE COMPANY
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial and Accounting Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K.
1) Northern Border Pipeline filed a Current Report on Form 8-K, dated May
21, 2004 including a copy of Northern Border Partners, L.P.'s press release
announcing Enron Corp. reached an agreement to sell CrossCountry Energy, LLC
that included general partner interests in Northern Border Partners, L.P., to Nu
Costal LLC. This information was filed under Items 5 and 7 of the Form.
2) Northern Border Pipeline filed a Current Report on Form 8-K, dated
June 3, 2004 indicating that on June 2, 2004, the Pension Benefit Guaranty
Corporation ("PBGC") issued a notice to Enron stating that it had determined
that the Enron Corp. Cash Balance Plan ("Cash Balance Plan") and certain other
defined benefit plans of Enron's affiliates (collectively the "Plans") will be
unable to pay benefits when due and should be terminated in order to protect the
interests of the participants in the Plans, and/or that the risk of loss to the
PBGC would increase unreasonably if the Plans were not so terminated. On June 3,
2004, the PBGC filed a complaint in the District Court for the Southern District
of Texas against Enron as the sponsor and/or administrator of the Plans (the
"Action"). By filing the Action, the PBGC is seeking an order (i) terminating
the Plans; (ii) appointing the PBGC the statutory trustee of the Plans; (iii)
requiring transfer to the PBGC of all records, assets or other property of the
Plans required to determine the benefits payable to the Plans' participants; and
(iv) establishing June 2, 2004 as the termination date of the Plans. The
information was filed under Item 5 of the Form.
22
SIGNATURES
Pursuant to the requirements of the Securities 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: August 6, 2004 By: /s/ Jerry L. Peters
-----------------------------------
Jerry L. Peters
Vice President, Finance and
Treasurer
23
Index to Exhibits
Exhibit No Description
- ---------- -----------
31.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial and Accounting Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
32.2 Certification of Chief Financial and Accounting Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.