HTL Heartland Prtns Lp

Heartland Partners Reports First-Quarter Results CHICAGO, May 14 /PRNewswire-FirstCall/ -- Heartland Partners, L.P. , today reported first-quarter net income of $937,000 compared with $5.6 million a year earlier. Class A units were allocated $880,000 of the net income, or $0.42 per Class A Unit, compared with $5.5 million, or $2.61 per Class A Unit, in the 2003 first quarter. The balance of the net income in both periods was allocated to the Class B and General Partner Interests under the partnership agreement. Net income declined primarily because property sales were lower in 2004. The company closed a $9.8 million sale of Kinzie Station property in the first quarter of 2003. About $3 million in sales have closed to date in 2004. Operating expenses were essentially unchanged in both periods, 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 the remaining three parcels in Kinzie Station scheduled to close this year," said Lawrence Adelson, chief executive officer. "The aggregate amount of the Kinzie Station sales is about $10 million. We are still seeking a buyer for our 19-acre site in Glendale, Wisconsin." Adelson said the company is trying to find a single buyer for the remaining properties, consisting of about 13,000 acres. These are primarily smaller parcels -- former railroad right of way. Portions of the property are also being sold as opportunities arise. 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 14 states, primarily in the upper Midwest and northern 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 March 31, March 31, 2004 2003 Operating income $630 $5,600 Total other income (expense) 307 (48) Net income $937 $5,552 Net income per Class A Unit (a) $0 $3 Consolidated Balance Sheets March 31, Dec. 31, 2004 2003 Properties, net $7,062 $7,730 Cash and other assets 9,501 9,261 Total assets 16,563 16,991 Total liabilities (b) 6,135 7,500 Partners' capital $10,428 $9,491 a) Net income per Class A Unit is computed by dividing the net 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 ended March 31, 2004 and 2003. b) Total liabilities include an allowance for claims totaling $4 million at March 31, 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

Copyright