HTL Heartland Prtns Lp

Heartland Partners Reports Second-Quarter Results CHICAGO, Aug. 16 /PRNewswire-FirstCall/ -- Heartland Partners, L.P. (AMEX:HTL) today reported a second-quarter net loss of $1.36 million compared with a loss of $1.30 million a year earlier. Class A units, the publicly traded portion of the partnership, were allocated none of the current net loss, equivalent to break-even per Class A Unit, compared with a loss of $1.3 million, or $0.61 per Class A Unit, in the 2003 second quarter. For the first half of 2004 Heartland had a net loss of $564,000 compared with net income of $4.2 million in 2003. None of the net loss for the six months ended June 30, 2004 was allocated to the Class A units compared with $2 per Class A Unit for the same period in 2003. 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. Property sales were lower in the second quarter of 2004, but cost of sales was lower as well. About $3.8 million in sales have closed to date in 2004. In 2003, $12.4 million had closed through June 30, 2003, including a $9.8 million sale of Kinzie Station property in the first quarter of 2003. Operating expenses were essentially unchanged from 2003 to 2004, with a decrease in sales and marketing expense offset by an increase in environmental expenses and other charges. "We are continuing to sell our major properties, with two of the remaining three parcels in Kinzie Station scheduled to close this year," said Lawrence Adelson, chief executive officer. "The aggregate amount of the pending Kinzie Station sales is about $10 million. We are still marketing our 19-acre site in Glendale, Wisconsin." Adelson said the company sold to a single buyer approximately 13,000 acres of its holdings, which consisted primarily of smaller parcels and easements along former railroad right of way, for $300,000. The company said it expects to reduce operating expenses as a result of the sale. Heartland retained about 75 acres of sites formerly leased for uses that can give rise to environmental claims and is seeking to dispose of those separately. Company Sues Milwaukee Authorities Heartland Partners has filed suit against the Redevelopment Authority of the City of Milwaukee seeking additional compensation for the condemnation of its Menomonee Valley property in 2003. The case is likely to go to trial in 2005. The city paid $3.5 million for the property, but the company has had it appraised as high as $10 million. "As we wind down operations, our goals are to control costs and resolve liabilities," Adelson said. "The amount and timing of further cash distributions will depend on progress on each of these fronts." He said possible strategies for reducing operating costs include taking Heartland private through a reverse stock split or using a liquidation trust to dissolve it. "Either option would have implications for unitholders," Adelson said, "primarily the loss of the liquidity provided by public trading of the Class A units, to be weighed against the cost savings." The largest contingent liabilities are the employment contract lawsuit by Edwin Jacobson, former president and chief executive officer, and environmental claims. The Jacobson lawsuit is unlikely to be tried until 2005. The company's environmental liabilities arise primarily out of operations of former tenants or the Milwaukee Road railroad on property Heartland owns. "The cost and timing to resolve them are uncertain and difficult to control," Adelson said. "The company has engaged Marsh to seek a combination of environmental insurance and contractual liability assumption by an outside vendor as a way to bring some finality to the environmental liabilities. It is not yet clear whether this will be the practical solution we hope it will be." 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 Six Months Ended June 30, June 30, 2004 2003 2004 2003 Operating (loss) income $(1,296) $(1,237) $(666) $4,363 Total other (expense) income (61) (66) 246 (114) Net (loss) income $(1,357) $(1,303) $(420) $4,249 Net (loss) income per Class A Unit (a) $(0.42) $(0.61) $- $2.00 June 30, Dec. 31, 2004 2003 Properties, net $6,664 $7,730 Cash and other assets 8,842 9,261 Total assets 15,506 16,991 Total liabilities (b) 6,435 7,500 Partners' capital $9,071 $9,491 a) Net (loss) income per Class A Unit is computed by dividing the net (loss) income, 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 six months ended b) Total liabilities include an allowance for claims totaling approximately $4 million at June 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, both of The Investor Relations Co., +1-847-296-4200

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