UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
___________
FORM
8-K
CURRENT
REPORT
Pursuant
To Section 13 or 15(d) of the Securities Exchange Act of 1934
|
Date
of Report (Date of earliest event reported)
|
April
30, 2009
|
|
TC
PipeLines, LP
|
|
(Exact
name of registrant as specified in its
charter)
|
|
Delaware
|
000-26091
|
52-2135448
|
|
(State
or other jurisdiction
of
incorporation)
|
(Commission
File
Number)
|
(IRS
Employer
Identification
No.)
|
|
13710
FNB Parkway
Omaha,
Nebraska
|
68154-5200
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
|
Registrant’s
telephone number, including area code
|
(877)
290-2772
|
|
(Former
name or former address if changed since last
report)
|
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
¨
|
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|
|
¨
|
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
¨
|
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
|
|
¨
|
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
|
Item 2.02 Results
of Operations and Financial Condition.
On April
30, 2009, TC PipeLines, LP ("Partnership") issued a press release announcing
financial results for the Partnership's 2009 first quarter
earnings. A copy of the press release is furnished with this report
as Exhibit 99.1.
In
accordance with General Instruction B.2. of Form 8-K, the information in
this Item 2.02 and Exhibit 99.1 hereto are being furnished and are not
deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, and are not otherwise subject to the liabilities of that
section. Accordingly, the information in this Item 2.02 and Exhibit
99.1 hereto will not be incorporated by reference into any filing made by the
Partnership under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, unless specifically identified therein as
being incorporated therein by reference.
Item
9.01 Financial Statements and
Exhibits.
(d) Exhibits.
|
|
99.1
|
Press
Release dated April 30, 2009.
|
2
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
TC
PipeLines, LP
by: TC
PipeLines GP, Inc.,
its
general partner
By: /s/ Amy W.
Leong
Amy W. Leong
Principal
Financial Officer and Controller
Dated: April
30, 2009
3
Exhibit
99.1
NewsRelease
TC
PipeLines, LP Reports 2009 First Quarter Results
CALGARY,
Alberta – April 30, 2009 – (Nasdaq: TCLP) – TC PipeLines, LP (the Partnership or
PipeLP) today reported first quarter 2009 net income of $31.8 million or $0.82
per common unit (all amounts in U.S. dollars), a decrease of $1.8 million
compared to $33.6 million or $0.87 per common unit for the same period last
year.
Partnership
cash flows (please see the Partnership Cash Flows section for more detail)
increased $3.5 million to $36.5 million for first quarter of 2009 compared
to $33.0 million for the same period last year. This increase was primarily due
to increased cash flows provided by Tuscarora Gas Transmission Company’s
(Tuscarora or TGTC) operating activities and higher cash distributions received
from Northern Border Pipeline Company (Northern Border or NBPC) and Great Lakes
Gas Transmission Limited Partnership (Great Lakes or GLGT).
Cash
distributions paid by the Partnership were $27.7 million or $0.705 per common
unit in first quarter 2009, an increase of $2.1 million compared to $25.6
million or $0.665 per common unit for the same period last year.
“Overall,
the Partnership generated solid earnings and cash flows in the first quarter.
While Northern Border’s results were challenged by additional Rockies gas
delivered into the markets it serves, our gas pipeline investments continued to
perform as expected, with Great Lakes and Tuscarora ahead of last year. In
addition, construction of Northern Border’s new compressor station and
interconnect facilities was completed and placed in-service in March,” said Russ
Girling, chairman and chief executive officer of TC PipeLines GP, Inc. “With a
strong balance sheet, financial liquidity and ongoing solid cash flows from our
quality investments, we continue to pursue additional growth opportunities for
the long-term benefit of our unitholders.”
1
Financial
Highlights
|
(unaudited)
|
Three
months ended March 31,
|
|||||||
|
(millions
of dollars except per common unit amounts)
|
2009
|
2008
|
||||||
|
Net
income
|
31.8 | 33.6 | ||||||
|
Per
common unit (1)
|
$ | 0.82 | $ | 0.87 | ||||
|
Partnership cash
flows (2)
|
36.5 | 33.0 | ||||||
|
Cash
distributions paid
|
27.7 | 25.6 | ||||||
|
Cash distributions declared per
common unit (3)
|
$ | 0.705 | $ | 0.700 | ||||
|
Weighted
average common units outstanding (millions)
|
34.9 | 34.9 | ||||||
|
Common
units outstanding at end of period (millions)
|
34.9 | 34.9 | ||||||
(1) Net income per common unit is computed by dividing net income, after deduction of the general partner’s allocation, by the weighted average number of common units outstanding. The general partner’s allocation is computed based upon the general partner’s two per cent interest plus an amount equal to incentive distributions.
Effective
January 1, 2009, the Partnership adopted the provisions of EITF 07-4
“Application of the Two-Class Method under FASB Statement No. 128, Earnings per
Share, to Master Limited Partnerships”. The retrospective application of
EITF 07-4 has impacted the amount of net income allocated to the Incentive
Distribution Rights (IDRs) held by the general partner. Previously, the net
income allocated to the IDRs was based on the cash distribution paid in the
period, and now it is based on the cash distribution declared for the period.
This resulted in the net income per common unit for first quarter of 2008 being
reduced from $0.89 to $0.87.
(2)
Partnership cash flows is a non-GAAP financial measure. Refer to the section
entitled “Partnership Cash Flows” for further detail.
(3)
The Partnership’s 2009 first quarter cash distribution will be paid on May 15,
2009 to unitholders of record as of April 30, 2009.
Recent
Developments
Northern
Border
Des
Plaines Project – Northern Border’s compressor station and interconnect
facilities went into service in March 2009. The project is fully subscribed
under long-term compression and transportation contracts. The new contracts are
expected to generate approximately $3.0 million in annual revenue.
2
Net
Income
The
following net income information is presented to enhance investors’
understanding of the way that management analyzes the Partnership’s financial
performance:
|
The
shaded areas in the tables below disclose the results from Great Lakes and
Northern Border, representing 100 per cent of each entity's operations for
the given period.
|
||||||||||||||||||||
|
(unaudited)
|
For
the three months ended March 31, 2009
|
|||||||||||||||||||
|
(millions
of dollars)
|
PipeLP
|
TGTC
|
Other
|
GLGT
|
NBPC(1)
|
|||||||||||||||
|
Transmission
revenues
|
8.4 | 8.4 | - | 82.5 | 74.5 | |||||||||||||||
|
Operating
expenses
|
(2.6 | ) | (1.4 | ) | (1.2 | ) | (16.0 | ) | (18.5 | ) | ||||||||||
| 5.8 | 7.0 | (1.2 | ) | 66.5 | 56.0 | |||||||||||||||
|
Depreciation
|
(1.8 | ) | (1.8 | ) | - | (14.6 | ) | (15.3 | ) | |||||||||||
|
Financial
charges, net and other
|
(7.3 | ) | (1.1 | ) | (6.2 | ) | (8.2 | ) | (9.1 | ) | ||||||||||
|
Michigan
business tax
|
- | - | - | (1.8 | ) | - | ||||||||||||||
| 41.9 | 31.6 | |||||||||||||||||||
|
Equity
income
|
35.1 | - | - | 19.5 | 15.6 | |||||||||||||||
|
Net
income
|
31.8 | 4.1 | (7.4 | ) | 19.5 | 15.6 | ||||||||||||||
|
(unaudited)
|
For
the three months ended March 31, 2008
|
|||||||||||||||||||
|
(millions
of dollars)
|
PipeLP
|
TGTC
|
Other
|
GLGT
|
NBPC(1)
|
|||||||||||||||
|
Transmission
revenues
|
6.9 | 6.9 | - | 79.7 | 83.8 | |||||||||||||||
|
Operating
expenses
|
(2.2 | ) | (1.2 | ) | (1.0 | ) | (15.1 | ) | (19.4 | ) | ||||||||||
| 4.7 | 5.7 | (1.0 | ) | 64.6 | 64.4 | |||||||||||||||
|
Depreciation
|
(1.6 | ) | (1.6 | ) | - | (14.6 | ) | (15.2 | ) | |||||||||||
|
Financial
charges, net and other
|
(7.6 | ) | (0.9 | ) | (6.7 | ) | (8.2 | ) | (9.7 | ) | ||||||||||
|
Michigan
business tax
|
- | - | - | (1.7 | ) | - | ||||||||||||||
| 40.1 | 39.5 | |||||||||||||||||||
|
Equity
income
|
38.1 | - | - | 18.6 | 19.5 | |||||||||||||||
|
Net
income
|
33.6 | 3.2 | (7.7 | ) | 18.6 | 19.5 | ||||||||||||||
(1)
The Partnership owns a 50 per cent general partner interest in Northern Border.
Equity income from Northern Border includes amortization of a $10.0 million
transaction fee paid to the operator of Northern Border at the time of the
additional 20 per cent acquisition in April 2006.
The
Partnership’s net income was $31.8 million in first quarter of 2009, a decrease
of $1.8 million compared to $33.6 million in first quarter of 2008. This
decrease was primarily due to lower equity income from Northern Border,
partially offset by increased equity income from Great Lakes and increased
Tuscarora transmission revenues.
Equity
income from Great Lakes was $19.5 million in first quarter of 2009, a $0.9
million increase compared to $18.6 million for the same period last year. This
was primarily due to increased transmission revenues, partially offset by
increased operating expenses. At the Great Lakes level, transmission revenues
increased $2.8 million for the three months ended March 31, 2009 compared to the
same period last year. This increase was primarily due to higher short-term
revenues from increased sales of daily transport capacity, partially offset by
decreased long-term service revenues. Operating expenses increased $0.9 million
for the three months ended March 31, 2009 compared to the same period last year
primarily due to higher pipeline maintenance and overhaul costs.
3
Equity
income from Northern Border was $15.6 million in first quarter of 2009, a
decrease of $3.9 million compared to $19.5 million in the same period last year.
This is primarily due to lower revenues partially offset by decreases in
operating expenses and financial charges, net and other. At the Northern Border
level, transmission revenues decreased $9.3 million for the three months ended
March 31, 2009 compared to the same period last year. This decrease was
primarily due to reduced system utilization, as Northern Border continues to be
negatively impacted by incremental supply from the Rockies’ natural gas basins
transported to the Midwest markets on the western segment of the Rockies Express
Pipeline.
Tuscarora’s
net income was $4.1 million in first quarter of 2009, an increase of $0.9
million compared to $3.2 million in the same period last year. The increase in
net income was primarily due to increased transmission revenues resulting from a
firm transportation service contract which supported the
Likely compressor station expansion that went into service on April 1,
2008.
Costs
at the the Partnership level for first quarter of 2009 were comparable to the
same period last year.
Partnership
Cash Flows
The
Partnership uses non-GAAP financial measures ‘Partnership cash flows’ and
‘Partnership cash flows allocated to common units’ as financial performance
measures. As
the Partnership’s financial performance underpins the availability of cash flows
to fund the cash distributions that the Partnership pays to its unitholders, the
Partnership believes these are key measures of the available cash flows to its
unitholders. The
following Partnership cash flow information is presented to enhance investors’
understanding of the way that management analyzes the Partnership’s financial
performance. Partnership
cash flows and Partnership cash flows allocated to common units are provided as
a supplement to GAAP financial results and are not meant to be considered in
isolation or as substitutes for financial results prepared in accordance with
GAAP.
4
|
(unaudited)
|
Three
months ended March 31,
|
|||||||
|
(millions
of dollars except per common unit amounts)
|
2009
|
2008
|
||||||
|
Net
Income
|
31.8 | 33.6 | ||||||
|
Add:
|
||||||||
|
Cash
flows provided by Tuscarora's operating activities
|
7.2 | 6.0 | ||||||
|
Cash
distributions from Great Lakes (1)
|
12.5 | 11.6 | ||||||
|
Cash
distributions from Northern Border
(1)
|
24.2 | 23.1 | ||||||
| 43.9 | 40.7 | |||||||
|
Less:
|
||||||||
|
Tuscarora's
net income
|
(4.1 | ) | (3.2 | ) | ||||
|
Equity
income from investment in Great Lakes
|
(19.5 | ) | (18.6 | ) | ||||
|
Equity
income from investment in Northern Border
|
(15.6 | ) | (19.5 | ) | ||||
| (39.2 | ) | (41.3 | ) | |||||
|
Partnership
cash flows
|
36.5 | 33.0 | ||||||
|
Partnership
cash flows allocated to general partner (2)
|
(3.2 | ) | (3.0 | ) | ||||
|
Partnership
cash flows allocated to common units
|
33.3 | 30.0 | ||||||
|
Cash
distributions declared
|
(27.7 | ) | (27.4 | ) | ||||
|
Cash
distributions declared per common unit (3)
|
$ | 0.705 | $ | 0.700 | ||||
|
Cash
distributions paid
|
(27.7 | ) | (25.6 | ) | ||||
|
Cash
distributions paid per common unit (3)
|
$ | 0.705 | $ | 0.665 | ||||
|
Weighted
average common units outstanding (millions)
|
34.9 | 34.9 | ||||||
|
(1)
In accordance with the cash distribution policies of the respective
pipeline assets, cash distributions from Great Lakes and Northern Border
are based on their respective prior quarter financial
results.
|
||||
|
(2)
Partnership cash flows allocated to general partner represents the cash
distributions declared to the general partner with respect to its two per
cent interest plus an amount equal to incentive distributions. Previously,
Partnership cash flows allocated to general partner were based on the cash
distributions paid to the general partner; however, this has been changed
to align with the requirements of EITF 07-4. As a result, Partnership cash
flows allocated to general partner in first quarter of 2008 increased from
$2.4 million to $3.0 million.
|
||||
|
(3)
Cash distributions declared per common unit and cash distributions paid
per common unit are computed by dividing cash distributions, after the
deduction of the general partner's allocation, by the number of common
units outstanding. The general partner's allocation is computed based upon
the general partner's two per cent interest plus an amount equal to
incentive distributions.
|
||||
Partnership cash flows increased $3.5 million to $36.5 million for first quarter of 2009 compared to $33.0 million for the same period last year. This increase was primarily due to increased cash flows provided by Tuscarora’s operating activities and higher cash distributions received from Northern Border and Great Lakes. In first quarter of 2009, the Partnership received total cash distributions of $36.7 million, of which $12.5 million was received from Great Lakes and $24.2 million was received from Northern Border. Cash flows provided by Tuscarora’s operating activities increased by $1.2 million to $7.2 million for the quarter ended March 31, 2009 compared with the same period last year primarily due to higher transmission revenues resulting from the Likely compressor station expansion project that went into service on April 1, 2008.
5
The
Partnership paid distributions of $27.7 million in first quarter of 2009, an
increase of $2.1 million compared to $25.6 million for the same period in the
prior year.
Liquidity
and Capital Resources
As
of March 31, 2009, the Partnership had no outstanding borrowings under the
$250.0 million revolving portion of its revolving credit and term loan agreement
and was in compliance with the covenants of the agreement. The interest rate
incurred on the credit facility averaged 5.06 per cent for the three months
ended March 31, 2009 after accounting for hedging activity.
The
Partnership views its core banking group as solid, particularly in light of the
current market environment, and has established a strong relationship with
these institutions.
Conference
Call
Analysts,
members of the public, the media and other interested parties are invited to
participate in a teleconference and audio webcast on Thursday, April 30, 2009 at
1:00 p.m. (Mountain) and 3:00 p.m. (Eastern). Mark Zimmerman, president of the
general partner, will discuss first quarter 2009 financial results and general
developments and issues concerning the Partnership followed by a question and
answer session for the investment community and media. To participate, please
call (866) 225-0198. A replay of the conference call will also be available two
hours after the conclusion of the call and until 10:00p.m.(Mountain) and
midnight (Eastern) on Thursday, May 7, 2009, by dialing (800) 408-3053, then
entering pass code 6378030#.
A
live webcast of the conference call will also be available through the
Partnership’s website at www.tcpipelineslp.com.
An audio replay of the call will be available on the website.
TC
PipeLines, LP is a publicly traded limited partnership. TC PipeLines, LP has
interests in more than 3,600 miles of federally regulated U.S. interstate
natural gas pipelines, including Great Lakes Gas Transmission Limited
Partnership (46.45 per cent ownership), Northern Border Pipeline Company (50 per
cent ownership) and Tuscarora Gas Transmission Company (100 per cent ownership).
Great Lakes is a 2,115-mile pipeline serving markets in Minnesota, Wisconsin,
Michigan and eastern Canada. The 1,249-mile Northern Border Pipeline transports
natural gas from the Montana-Saskatchewan border to markets in the midwestern
United States. Tuscarora owns a 240-mile pipeline system that transports natural
gas from Oregon, where it interconnects TransCanada’s Gas Transmission Northwest
System, to markets in Oregon, Northern California, and Northwestern Nevada. TC
PipeLines, LP is managed by its general partner, TC PipeLines GP, Inc., an
indirect wholly owned subsidiary of TransCanada Corporation. TC PipeLines GP,
Inc. also holds common units of TC PipeLines, LP. Common units of TC PipeLines,
LP are quoted on the NASDAQ Stock Market and trade under the symbol “TCLP.” For
more information about TC PipeLines, LP, visit the Partnership’s website at
www.tcpipelineslp.com.
6
Cautionary
Statement Regarding Forward-Looking Information
This
news release may include forward-looking statements regarding future events and
the future financial performance of TC PipeLines, LP. Words such as “believes,”
“expects,” “intends,” “forecasts,” “projects,” and similar expressions identify
forward-looking statements. All forward-looking statements are based on the
Partnership’s current beliefs as well as assumptions made by and information
currently available to the Partnership. These statements reflect the
Partnership’s current views with respect to future events. The Partnership
assumes no obligation to update any such forward-looking statements to reflect
events or circumstances occurring after the date hereof. Important factors that
could cause actual results to materially differ from the Partnership's current
expectations include the risk of a prolonged slowdown in growth or decline in
the U.S. economy or the risk of delay in growth recovery in the U.S. economy,
regulatory decisions, particularly those of the Federal Energy Regulatory
Commission, the ability of Great Lakes and Northern Border to recontract their
available capacity at maximum rates, our ability to identify accretive growth
opportunities, the ability to access capital and credit markets with competitve
rates and terms, operational decisions of Northern Border’s and Great Lakes’
operator, the failure of a shipper on any one of the Partnership’s pipelines to
perform its contractual obligations, supply of natural gas in the Western Canada
sedimentary basin and in competing basins, such as the Rocky Mountains, future
demand for natural gas, overcapacity in the industry, regulatory, construction
and other risks related to the construction of TransCanada’s Bison Pipeline
Project, success of other pipelines competing with Northern Borderand Great
Lakes by bringing competing U.S. sourced gas to Northern Border’s and Great
Lakes’ markets, and other risks inherent in the transportation of natural gas as
discussed in the Partnership’s filings with the Securities and Exchange
Commission, including the Partnership’s Annual Report on Form 10-K for the year
ended December 31, 2008.
-
30 -
|
Media
Inquiries:
|
Cecily
Dobson
|
(403)
920-7859
(800)
608-7859
|
|
Unitholder
and Analyst Inquiries:
|
Terry
Hook
|
(877)
290-2772
investor_relations@tcpipelineslp.com
|
7
TC
PipeLines, LP
Financial
Summary
Consolidated
Statement of Income
|
(unaudited)
|
Three
months ended March 31,
|
|||||||
|
(millions
of dollars except per common unit amounts)
|
2009
|
2008
|
||||||
|
Equity
income from investment in Great Lakes
|
19.5 | 18.6 | ||||||
|
Equity
income from investment in Northern Border
|
15.6 | 19.5 | ||||||
|
Transmission
revenues
|
8.4 | 6.9 | ||||||
|
Operating
expenses
|
(2.6 | ) | (2.2 | ) | ||||
|
Depreciation
|
(1.8 | ) | (1.6 | ) | ||||
|
Financial
charges, net and other
|
(7.3 | ) | (7.6 | ) | ||||
|
Net
income
|
31.8 | 33.6 | ||||||
|
Net
income allocation
|
||||||||
|
Common
units
|
28.5 | 30.4 | ||||||
|
General
partner
|
3.3 | 3.2 | ||||||
| 31.8 | 33.6 | |||||||
|
Net
income per common unit
|
$ | 0.82 | $ | 0.87 | ||||
|
Weighted average common units
outstanding (millions)
|
34.9 | 34.9 | ||||||
|
Common units outstanding, end
of the period (millions)
|
34.9 | 34.9 | ||||||
|
Operating
Results
|
Three
months ended March 31,
|
|||||||
|
(unaudited)
|
2009
|
2008
|
||||||
|
Great
Lakes
|
||||||||
|
Volumes:
|
||||||||
|
Gas
delivered (million cubic
feet)
|
229,396 | 222,415 | ||||||
|
Average
throughput (million
cubic feet per day)
|
2,549 | 2,444 | ||||||
|
Capital
Expenditures (millions
of dollars):
|
||||||||
|
Maintenance
|
0.7 | 2.5 | ||||||
|
Northern
Border
|
||||||||
|
Volumes:
|
||||||||
|
Gas
delivered (million cubic
feet)
|
175,529 | 217,086 | ||||||
|
Average
throughput (million
cubic feet per day)
|
1,993 | 2,452 | ||||||
|
Capital
Expenditures (millions
of dollars):
|
||||||||
|
Maintenance
|
0.2 | 0.7 | ||||||
|
Growth
|
3.3 | 0.4 | ||||||
|
Tuscarora
|
||||||||
|
Volumes:
|
||||||||
|
Gas
delivered (million cubic
feet)
|
9,289 | 9,724 | ||||||
|
Average
throughput (million
cubic feet per day)
|
102 | 107 | ||||||
|
Capital
Expenditures (millions
of dollars):
|
||||||||
|
Growth
|
0.1 | 4.5 | ||||||
8