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Boardwalk Announces Third Quarter 2012 Results

EBITDA and Distributable Cash Flow should not be considered alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with generally accepted accounting principles (GAAP). EBITDA and Distributable Cash Flow are not necessarily comparable to similarly titled measures of another company.

The following table presents a reconciliation of the Partnership's EBITDA and Distributable Cash Flow to its net income, the most directly comparable GAAP financial measure, for each of the periods presented (in millions):

For the Three Months Ended September 30,
 

For the Nine Months Ended September 30,
2012   2011 2012   2011
Net Income $ 59.0 $ 47.2 $ 216.7 $ 145.4
Income taxes 0.1 0.1 0.4 0.3
Depreciation and amortization 60.4 55.8 184.8 168.9
Interest expense 43.5 39.6 128.0 119.5
Interest income (0.2 ) (0.1 ) (0.4 ) (0.3 )
Loss on early retirement of debt   5.8     13.2  
EBITDA 162.8 148.4 529.5 447.0
Less:

Cash paid for interest, net of capitalized interest  (1)
57.1 65.4 142.3 149.6

Maintenance capital expenditures  (2)
14.9 18.9 51.3 60.6

Other  (3)
0.1 0.1 0.3 0.4
Add:

Cash received for settlements  (4)
5.0 10.4
Loss on disposal of assets 1.2
Asset impairment 1.1   0.1   8.2   28.6  
Distributable Cash Flow $ 98.0   $ 64.1   $ 354.2   $ 265.0  

(1)
 

The three and nine months ended September 30, 2012, include payments of $2.4 million and $9.2 million related to the early settlement of an interest rate swap and the settlement of a treasury rate lock and the three and nine months ended September 30, 2011, include payments of $5.8 million and $13.2 million related to the early extinguishment of debt.

(2)

The three and nine months ended September 30, 2011, includes $2.6 million and $15.0 million of maintenance capital expenditures related to the fire at a compressor station near Carthage, Texas.

(3)

Includes non-cash items such as the equity component of allowance for funds used during construction.

(4)

Represents proceeds received related to insurance recoveries associated with the fire at a compressor station near Carthage, Texas, and a legal settlement.

About Boardwalk

Boardwalk Pipeline Partners, LP (NYSE: BWP) is a midstream master limited partnership that provides transportation, storage, gathering and processing of natural gas and liquids for its customers. Boardwalk and its subsidiaries own and operate approximately 14,540 miles of pipelines and underground storage caverns with an aggregate working gas capacity of approximately 197 billion cubic feet and liquids capacity of approximately 20 million barrels. Boardwalk is a subsidiary of Loews Corporation (NYSE: L), which holds 55% of Boardwalk's equity, excluding incentive distribution rights. Additional information about the Partnership can be found on its website at www.bwpmlp.com.

BOARDWALK PIPELINE PARTNERS, LP
 

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Millions, except per unit amounts)

(Unaudited)
 

For the Three Months Ended September 30,
 

For the Nine Months Ended September 30,
 
  2012     2011 2012     2011  
Operating Revenues:
Gas transportation $ 241.2

$
251.8 $ 773.7 $ 786.6
Parking and lending 8.3 2.2 20.1 8.5
Gas storage 18.3 12.0 57.0 37.5
Other   2.8     2.9     8.5     9.3  
Total operating revenues   270.6     268.9     859.3     841.9  
 
Operating Costs and Expenses:
Fuel and gas transportation

18.2
26.7 51.9 78.7
Operation and maintenance 39.4 45.9 119.1 123.1
Administrative and general 24.5 31.1 83.9 101.9
Depreciation and amortization 60.4 55.8 184.8 168.9
Asset impairment 1.1 0.1 8.2 28.6
Net loss (gain) on disposal of operating assets 1.2 (5.3 ) (2.6 ) (3.9 )
Taxes other than income taxes   23.1     22.2     69.2     67.1  
Total operating costs and expenses   167.9     176.5     514.5     564.4  
 
Operating income   102.7     92.4     344.8     277.5  
 
Other Deductions (Income):
Interest expense 41.5 37.6 122.0 113.5
Interest expense - affiliates 2.0 2.0 6.0 6.0
Loss on early retirement of debt 5.8 13.2
Interest income (0.2 ) (0.1 ) (0.4 ) (0.3 )
Miscellaneous other expense (income), net   0.3     (0.2 )   0.1     (0.6 )
Total other deductions   43.6     45.1     127.7     131.8  
 
Income before income taxes 59.1 47.3 217.1 145.7
Income taxes   0.1     0.1     0.4     0.3  
Net Income $ 59.0  

$
47.2   $ 216.7   $ 145.4  
 
Net Income per Unit:
Basic and diluted net income per unit:
Common units $ 0.26  

$
0.23   $ 0.99   $ 0.72  
Class B units $ (0.02 )

$
  $ 0.21   $ 0.04  
Cash distribution declared and paid to common units $ 0.5325  

$
0.525   $ 1.5950   $ 1.5675  
Cash distribution declared and paid to class B units $ 0.30  

$
0.30   $ 0.90   $ 0.90  
Weighted-average number of units outstanding:
Common units 192.6 175.7 186.8 172.5
Class B units 22.9 22.9 22.9 22.9
 

BOARDWALK PIPELINE PARTNERS, LP

NET INCOME PER UNIT RECONCILIATION(Unaudited)

The following table provides a reconciliation of net income and the assumed allocation of net income to the common and class B units for purposes of computing net income per unit for the three months ended September 30, 2012, (in millions, except per unit data):
  Total  

Common Units
 

Class B Units
 

General Partner and IDRs
Net income $ 59.0
Declared distribution $ 128.2   $ 110.6 $ 6.8 $ 10.8
Assumed allocation of undistributed net loss   (69.2 )   (60.6 )   (7.2 )   (1.4 )

Assumed allocation of net income attributable to limited partner unitholders and general partner
$ 59.0   $ 50.0   $ (0.4 ) $ 9.4  
Weighted-average units outstanding 192.6 22.9
Net income per unit $ 0.26 $ (0.02 )

The following table provides a reconciliation of net income and the assumed allocation of net income to the common and class B units for purposes of computing net income per unit for the three months ended September 30, 2011, (in millions, except per unit data):
  Total  

Common Units
 

Class B Units
 

General Partner and IDRs
Net income $ 47.2
Declared distribution   107.8   $ 92.7 $ 6.9 $ 8.2
Assumed allocation of undistributed net loss   (60.6 )   (52.5 )   (6.9 )   (1.2 )
Assumed allocation of net income $ 47.2   $ 40.2   $   $ 7.0  
Weighted average units outstanding 175.7 22.9
Net income per unit $ 0.23 $

The following table provides a reconciliation of net income and the assumed allocation of net income to the common and class B units for purposes of computing net income per unit for the nine months ended September 30, 2012, (in millions, except per unit data):
  Total  

Common Units
 

Class B Units
 

General Partner and IDRs
Net income $ 216.7

Less: Net income attributable to predecessor equity
  (0.2 )

Net income attributable to limited partner unitholders and general partner
216.5

Declared distribution
$ 364.8   $ 313.7 $ 20.6 $ 30.5

Assumed allocation of undistributed net loss
  (148.3 )   (129.5 )   (15.8 )   (3.0 )

Assumed allocation of net income attributable to limited partner unitholders and general partner
$ 216.5   $ 184.2   $ 4.8   $ 27.5  

Weighted-average units outstanding
186.8 22.9

Net income per unit
$ 0.99 $ 0.21

The following table provides a reconciliation of net income and the assumed allocation of net income to the common and class B units for purposes of computing net income per unit for the nine months ended September 30, 2011, (in millions, except per unit data):
  Total  

Common Units
 

Class B Units
 

General Partner and IDRs
Net income $ 145.4
Declared distribution   317.6   $ 273.6 $ 20.6 $ 23.4
Assumed allocation of undistributed net loss   (172.2 )   (149.0 )   (19.7 )   (3.5 )
Assumed allocation of net income $ 145.4   $ 124.6   $ 0.9   $ 19.9  
Weighted average units outstanding 172.5 22.9
Net income per unit $ 0.72 $ 0.04

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