HTL Heartland Prtns Lp

Heartland Partners Reports Third-Quarter Results CHICAGO, Nov. 15 /PRNewswire-FirstCall/ -- Heartland Partners, L.P. (AMEX:HTL) today reported third-quarter net income of $971,000 compared with a net loss of $4,784,000 a year earlier. Class A Units, the publicly traded portion of the partnership, were allocated $520,000 of the net income, or $0.25 per Class A Unit, compared with an allocated net loss of $4,712,000, or $2.25 Class A Unit, in the 2003 third quarter. For the nine months ended September 30, 2004, net income was $551,000 compared with a net loss of $535,000 for the year-earlier period. The net income allocated to the Class A Limited Partners for nine months was $520,000, or $0.25 per Class A Unit, compared with an allocated net loss of $527,000, or $0.25 per Class A Unit, the prior year. The balance of the net loss or income in all periods was allocated to the Class B and General Partner Interests under the partnership agreement. The improvement in both third-quarter and nine-month results was attributed primarily to a non-cash reduction of more than $2 million in environmental reserve that improved net income in the third quarter of 2004 and a non-cash write down of more than $3.5 million in connection with the eminent domain condemnation of its Menomonee Valley property in Milwaukee that reduced net income in the third quarter of 2003. Total operating expenses for the first nine months of 2004 decreased by $2.3 million over the comparable period in 2003 to $2.2 million from $4.5 million. Selling expenses decreased by about $963,000. The decrease resulted in part from the elimination of sales expenses in connection with the Longleaf project in Southern Pines, North Carolina, which was sold at the end of 2003. Sales expenses were also lower because sales were lower. Environmental expenses decreased by about $1 million primarily as a result of an agreement with a third party to contribute to the clean up of an environmental problem at the Lite Yard in Minneapolis. The company also had lower interest and real estate tax expenses, partially offset by higher costs for partnership insurance. "As we continue to wind down operations, we have reduced our number of employees to four," said Lawrence Adelson, chief executive officer. "In Chicago, we have agreements for the sale of all of our remaining holdings, including our office space at Kinzie Station, for an aggregate gross amount of about $10.5 million. We remain hopeful that we can close the sale of the Kinzie Station Phase II site yet this year for about $4.2 million. The other sales will not have received requisite approvals, primarily from the city of Chicago, in time for them to be closed in 2004." Adelson also noted the company has appealed the award it received from the Redevelopment Authority of the City of Milwaukee, which acquired the Heartland's Menomonee Valley property by eminent domain in 2003. RACM awarded the company $3.5 million based on its appraisal, while the company's appraiser valued the property at $10.7 million. "The balance of our work involves dealing with the company's liabilities," Adelson said. "Currently, these consist primarily of environmental liabilities and the lawsuit by Edwin Jacobson, the company's former CEO. "As far as environmental liabilities, we are looking again at the possibilities of paying a third party to take them over or buying environmental insurance to define the company's exposure," Adelson explained. "There have been a number of developments on the environmental front, including the cost-sharing agreement for the Lite Yard property. The U.S. EPA is cleaning up arsenic-bearing soils from residential yards in the area of the Lite Yard and we anticipate the agency will seek to recover at least part of its costs from us. In another action, a company called Trinity that owns a former Milwaukee Road property in Miles City, Montana, has sued the company and is seeking to have the company pay to clean up the site and to enjoin distributions to unitholders until the company does so. We do not believe that claim has merits and will defend it vigorously." About Heartland Heartland Partners is a Chicago-based real estate partnership with properties in seven states, primarily in the upper Midwest United States. CMC Heartland is a subsidiary of Heartland Partners, L.P. CMC is the successor to the Milwaukee Road Railroad, founded in 1847. This news release may contain certain statements that constitute "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievement of results to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements. These factors include, but are not limited to, real estate market conditions, changing demographic conditions, adverse weather conditions and natural disasters, delays in construction schedules, cost overruns, changes in government regulations or requirements, increases in real estate taxes and other local government fees, access to financing, the unpredictability of the timing of real estate sales and the cost of land, materials and labor. HEARTLAND PARTNERS, L.P. FINANCIAL SUMMARY (amounts in thousands, except per unit data) (unaudited) Consolidated Operations Quarters Ended Nine Months Ended Sept. 30, Sept. 30, 2004 2003 2004 2003 Operating income (loss) $1,096 $(4,850) $430 $(487) Total other (expense) income (125) 66 121 (48) Net income (loss) $971 $(4,784) $551 $(535) Net income (loss) per Class A Unit(a) $0.25 $(2.25) $0.25 $(0.25) Sept. 30, Dec. 31, 2004 2003 Properties, net $6,416 $7,730 Cash and other assets 9,414 9,261 Total assets 15,830 16,991 Total liabilities (b) 5,788 7,500 Partners' capital $10,042 $9,491 a) Net income (loss) per Class A Unit is computed by dividing the net income (loss), after deducting the General Partners' return and the return of the Class B Interest, by 2,092,000 Class A Units outstanding for the quarters and nine months ended b) Total liabilities include an allowance for claims totaling approximately $4 million at September 30, 2004 and December 31, 2003. DATASOURCE: Heartland Partners, L.P. CONTACT: Richard Brandstatter, President, of Heartland Partners, L.P., +1-312-575-0400; or Karl Plath or Brien Gately of Investor Relations Co., +1-847-296-4200

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