Cornerstone Propane Partners, L.P. Announces Results for FY 2000 and 4th Quarter 2000.

Business Editors

WATSONVILLE, Calif.--(BUSINESS WIRE)--Aug. 2, 2000

Cornerstone Propane Partners, L.P. (NYSE:CNO) today reported results for its fiscal year ended June 30, 2000. For the year, the reported earnings before interest, taxes, depreciation and amortization ("EBITDA") increased 11.6 percent to $64.2 million compared with $57.5 million for fiscal 1999. Average EBITDA per equivalent common unit increased $.10 per unit to $2.74 compared with $2.64 for last year. The fourth quarter EBITDA for fiscal 2000 was below fiscal 1999 by approximately $9.5 million, reflecting continued effects of warm weather and certain discontinued operations at Coast Energy Group.

Keith G. Baxter, president and chief executive officer of Cornerstone, said, "This past quarter and year have been challenging for the Partnership due to the combination of record warm winter conditions and elevated product costs. Many of Cornerstone's residential customers are located in areas that experienced more extreme departures from normal winter weather patterns than the national averages. Nationally this past winter was about 9% warmer than normal. In the markets served by Cornerstone the average winter temperatures were over 15% warmer than normal. Given the Partnership's high retail sales concentration on the residential customer, these mild weather conditions significantly affected earnings due to reduced sales volumes to our higher margin residential retail customers. Additionally, while our CEG division exceeded last years EBITDA, its results were reduced due to a discontinued component of its gas business. In light of the unprecedented adverse weather conditions facing the propane industry, I am extremely proud of our year over year improvement in EBITDA."

Revenue for the year and quarter increased by $2.5 billion and $.7 billion respectively, to $3.7 billion for the year and $1.1 billion for the fourth quarter, respectively. These increases were due primarily to incremental Coast Energy Group ("CEG") energy product and service sales volume increases. Retail propane revenues increased by 28% and 13% for the year and quarter, related to both higher energy prices this past year and acquisitions completed late last year and early this year.

Operating expenses for the year and quarter totaled $142.0 million and $32.7 million, respectively. This represents an increase of $18.3 million over fiscal 1999, and a decrease of $.6 million over the same quarter last year. Depreciation and amortization expense increased $10.3 million for the year to $37.6 million compared with $27.3 million for fiscal 1999. For the quarter, depreciation and amortization expense increased by $1.9 million to $10.5 million compared to $8.6 million for the fourth quarter of last year. Interest expense was up $11.7 million for the year and $2.0 million for the fourth quarter in comparison to the same periods for last year. These increases reflect higher expenses associated with acquisitions completed over the last twelve months, recent increases in both depreciation and amortization, as well as in interest rates on floating rate working capital lines over the last twelve months, combined with higher inventory product costs.

Net income for the year and quarter decreased by $10.9 million and $8.8 million respectively (before non-recurring charges). Several factors, according to Baxter, contributed to the decline: "The Partnership's retail operations have experienced three warmer-than-normal winters in a row, the last of which was the warmest on record, followed by the warmest spring on record. In addition, commodity prices were unusually high during the season, interest costs increased as a result of higher product costs as well as a rise in interest rates themselves, and a non-recurring loss was sustained in connection with a discontinued gas operation at CEG."

During fiscal 2000 Cornerstone added over 15,000 net new customers from internal growth, representing an annual internal growth rate of just over 4.0%. It has added over 45,000 customers through internal growth initiatives since the Partnership was created three and one-half years ago.

Baxter also stated: "The Partnership, together with our General Partner, a subsidiary of Northwestern Corporation, has established a financing program with our banking syndicate. These arrangements, together with existing equity and debt funding capabilities, are expected to provide the Partnership adequate sources of capital to meet its operating needs through FY2001."

Cornerstone Propane Partners, L.P. and consolidated subsidiaries condensed consolidated statements of operations for the quarters and years ended June 30, 2000 and 1999, are presented below. Figures are in thousands of dollars, except per unit figures.

                  Cornerstone Propane Partners, L.P.
   Financial Results of Operations for the Quarters and Years ended
                        June 30, 2000 and 1999
                              (Unaudited)

                     Quarter Ended June 30,     Year Ended June 30,
                     ----------------------     -------------------
                      2000         1999         2000         1999
                     -----         -----        -----        -----
Revenues           $ 1,131,669  $   422,029  $ 3,727,090  $ 1,154,608
Cost and
 expenses:
  Cost of sales      1,099,248      384,094    3,516,292      973,367
  Operating, SG&A
   expenses             32,716       33,363      141,996      123,735
  Depreciation
   and
   amortization         10,499        8,596       37,624       27,253

Income (loss) from
 operations            (10,794)      (4,024)      31,178       30,253
Nonrecurring charge
 to earnings            (4,600)           0       (4,600)           0
Interest expense         9,245        7,245       36,749       25,033

Pre-tax income
 (loss)                (24,639)     (11,269)     (10,171)       5,220
Income tax
 provision                  48          (20)         192           47
Net income (loss)      (24,687)     (11,249)     (10,363)       5,173
General Partner's
 interest in net
 Income (loss)            (494)        (225)        (207)         103
Limited Partner's
 interest in net
 Income (loss)     $   (24,193) $   (11,024) $   (10,156) $     5,070

Supplemental
 Information

Weighted Average
 Units Outstanding      23,419       23,386       23,402       21,805
Limited Partners'
 Net Income
 (Loss) per Unit   $     (1.03) $      (.47) $      (.43) $       .23
EBITDA (a)         $    (4,895) $     4,572  $    64,202  $    57,506
EBITDA per Unit    $      (.21) $       .20  $      2.74  $      2.64
Retail Gallons
 Sold                   39,400       40,778      276,409      261,624

(a) EBITDA is defined as earnings before interest, income taxes, depreciation and amortization. EBITDA should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations). EBITDA is not in accordance with, nor superior to, generally accepted accounting principles, but provides additional information for evaluating the Partnership's ability to pay its Minimum Quarterly Distributions ("MQD").

Cornerstone Propane Partners, L.P. is a master limited partnership. The Partnership is the nation's fifth largest retail propane marketer serving over 460,000 customers with annual sales of nearly 300 million retail gallons, doing business in 34 states through approximately 300 customer service centers. Its North American energy solutions service division, Coast Energy Group, supplies, purchases, processes and markets over 48,000 barrels per day of natural gas liquids to resellers and major end users. Coast also sells approximately 1.0 Bcf per day of natural gas and 100,000 barrels per day of crude oil in the United States and Canada. For more information, please visit our websites at www.cornerstonepropane.com and www.coastenergy.com.

The information presented herein may contain certain "forward-looking statements" within the meaning of the federal securities laws. The Partnership's actual future performance will be affected by a number of factors, risks and uncertainties, including without limitation, weather conditions, regulatory changes, competitive factors, and availability of financing, many of which are beyond the Partnership's control. Future events and results may vary substantially from what the Partnership currently foresees, and there can be no assurance that the Partnership's actual results will not differ materially from its expectations. The Partnership undertakes no obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date of such statements or reflect the occurrence of anticipated or unanticipated events.