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)
|
November
6, 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
November 6, 2009, TC PipeLines, LP (“Partnership”) issued a press release
announcing financial results for the Partnership's 2009 third 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 November 6, 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: November
6, 2009
3
|
Exhibit
No.
|
Description |
|
99.1
|
Press Release dated November 6, 2009. |
Exhibit
99.1
NewsRelease
TC
PipeLines, LP Reports 2009 Third Quarter Results
OMAHA,
Nebraska – November 6,
2009 – (Nasdaq: TCLP) – TC PipeLines, LP (the Partnership or PipeLP)
today reported third quarter 2009 net income of $27.4 million or $0.65 per
common unit (all amounts in U.S. dollars), a decrease of $0.9 million compared
to $28.3 million or $0.72 per common unit, prior to recast, for the same period
last year.
On July
1, 2009, the Partnership acquired North Baja Pipeline, LLC (North Baja) from a
wholly owned subsidiary of TransCanada Corporation (TransCanada). The
acquisition was accounted for as a transaction between entities under common
control, whereby the Partnership’s historical financial information has been
recast to include North Baja’s results for all periods presented. The $6.2
million contribution to net income, or $0.15 per common unit, from North Baja
since the acquisition partially offset the lower equity income from Northern
Border Pipeline Company (Northern Border or NBPC) in third quarter 2009 compared
to the same period last year. Equity income from Northern Border decreased
primarily as a result of the $16.1 million (Partnership share - $8.1 million)
gain on sale of Bison Pipeline LLC (Bison) in 2008.
“The
Partnership’s earnings and cash flows in the third quarter were solid as each of
our natural gas pipeline systems performed well. While Northern Border remains
challenged by the over supply of gas delivered into its market areas, the
acquisition of North Baja in July enhances and diversifies the cash flows from
our portfolio of pipeline investments,” said Russ Girling, chairman and chief
executive officer of TC PipeLines GP, Inc. “Looking ahead, the Partnership
remains well positioned for growth and is expected to play an ongoing role in
the financing of TransCanada’s Cdn$22 billion capital program.”
Partnership
cash flows decreased $1.2 million to $40.4 million for third quarter 2009
compared to $41.6 million, prior to recast, for the same period last year. North
Baja provided $8.5 million in cash flows from operating activities since the
acquisition, which partially offset the decreased cash distributions from
Northern Border. In third quarter 2008, cash distributions from Northern Border
included a $8.2 million special one-time distribution for the proceeds received
in connection with the sale of Bison. Please see the Partnership Cash Flows
section for more detail.
Cash
distributions paid by the Partnership were $30.7 million or $0.73 per common
unit in third quarter 2009, an increase of $2.9 million compared to $27.8
million or $0.705 per common unit for the same period last year.
1
Financial
Highlights
|
(unaudited)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||||
|
(millions
of dollars except per common unit amounts)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
|
Net income(1)
|
27.4 | 33.0 | 81.2 | 93.9 | ||||||||||||
|
Net
income prior to recast
|
27.4 | 28.3 | 72.9 | 81.1 | ||||||||||||
|
Per
common unit(2)
|
$0.65 | $0.72 | $1.78 | $2.06 | ||||||||||||
|
Partnership cash flows prior to
recast(3)
|
40.4 | 41.6 | 117.2 | 121.5 | ||||||||||||
|
Cash
distributions paid
|
30.7 | 27.8 | 86.3 | 80.8 | ||||||||||||
|
Cash distributions declared per
common unit(4)
|
$0.730 | $0.705 | $2.165 | $2.110 | ||||||||||||
|
Weighted
average common units outstanding (millions)
|
41.2 | 34.9 | 37.0 | 34.9 | ||||||||||||
|
Common
units outstanding at end of period (millions)
|
41.2 | 34.9 | 41.2 | 34.9 | ||||||||||||
(1) Because North Baja was acquired from TransCanada, the acquisition was accounted for as a transaction between entities under common control, similar to a pooling of interests, whereby the assets and liabilities of North Baja were recorded at TransCanada’s carrying value and the Partnership’s historical financial information was recast to include the acquired entity for all periods presented. The effect of recasting the Partnership’s consolidated financial statements to account for the common control transaction increased the Partnership’s net income by $4.7 million and $12.8 million for the three and nine months ended September 30, 2008, respectively, from amounts previously reported. In addition, the Partnership’s net income increased by $8.3 million for the six months ended June 30, 2009 from amounts previously reported.
(2) 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 Accounting
Standards Codification (ASC) 260-10-55 Earnings Per Share – Overall –
Implementation Guidance and Illustrations – Master Limited Partnerships.
The retrospective application of ASC 260-10-55 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 a reduction in the net income per
common unit of nil and $0.02 for the three and nine months ended September 30,
2008, respectively.
(3) The
effect of recasting the Partnership’s consolidated financial statements to
account for the common control transaction increased Partnership cash flows by
$5.2 million and $14.0 million for the three and nine months ended
September 30, 2008, respectively, from amounts previously reported. In
addition, Partnership cash flows increased by $9.7 million for the six months
ended June 30, 2009 from amounts previously reported. Partnership cash flows is
a non-GAAP financial measure. Refer to the section entitled “Partnership Cash
Flows” for further detail.
(4) The
Partnership’s 2009 third quarter cash distribution will be paid on November 13,
2009 to unitholders of record as of October 31, 2009.
Recent
Developments
On July
1, 2009, the Partnership acquired North Baja from TransCanada and amended the
IDRs held by TC PipeLines GP, Inc. by amending and restating the Agreement of
Limited Partnership. The aggregate consideration of approximately $395 million
provided to TransCanada included a combination of cash and the issuance of
approximately 6.4 million common units. On a per unit basis, the transaction has
been accretive to Partnership cash flows.
2
On
October 22, 2009, the Board of Directors of TC PipeLines GP, Inc. declared the
Partnership’s third quarter 2009 cash distribution in the amount of $0.73 per
common unit, payable on November 13, 2009, to unitholders of record on October
31, 2009. This cash distribution is equivalent to the second quarter 2009
distribution and represents a 3.5 per cent increase from the third quarter 2008
distribution of $0.705 per common unit.
Great
Lakes Gas Transmission Limited Partnership (Great Lakes or GLGT) has
approximately 830 thousand dekatherms per day (MDth/d) of longhaul capacity
under contract expiring on October 31, 2010 with its largest shipper,
TransCanada. On November 3, 2009, Great Lakes and TransCanada renewed contracts
for one year for 470 MDth/d of capacity, some at a slightly discounted rate, and
agreed to provide other transportation services. The remaining approximate 360
MDth/d of capacity will expire October 31, 2010. Great Lakes will actively
market and post the expiring capacity for shipper interest in early
2010.
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.
|
||||||||||||||||||||||||||||||||||||||||
|
For
the three months ended September 30, 2009
|
For
the three months ended September 30, 2008
|
|||||||||||||||||||||||||||||||||||||||
|
(unaudited)
(millions
of dollars)
|
PipeLP
|
Other
Pipes
|
Corp
|
GLGT
|
NBPC(1)
|
PipeLP
|
Other
Pipes
|
Corp
|
GLGT
|
NBPC(1) | ||||||||||||||||||||||||||||||
|
Transmission
revenues
|
17.5 | 17.5 | - | 68.9 | 65.2 | 8.2 | 8.2 | - | 66.7 | 67.7 | ||||||||||||||||||||||||||||||
|
Operating
expenses
|
(3.5 | ) | (2.5 | ) | (1.0 | ) | (16.5 | ) | (19.0 | ) | (2.3 | ) | (1.4 | ) | (0.9 | ) | (17.1 | ) | (19.3 | ) | ||||||||||||||||||||
| 14.0 | 15.0 | (1.0 | ) | 52.4 | 46.2 | 5.9 | 6.8 | (0.9 | ) | 49.6 | 48.4 | |||||||||||||||||||||||||||||
|
Depreciation
|
(3.7 | ) | (3.7 | ) | - | (14.7 | ) | (15.6 | ) | (1.8 | ) | (1.8 | ) | - | (14.7 | ) | (15.3 | ) | ||||||||||||||||||||||
|
Financial
charges, net and other
|
(6.6 | ) | (1.0 | ) | (5.6 | ) | (8.1 | ) | (9.1 | ) | (7.7 | ) | (1.1 | ) | (6.6 | ) | (8.0 | ) | 7.1 | |||||||||||||||||||||
|
Michigan
business tax
|
- | - | - | (1.3 | ) | - | - | - | - | (1.2 | ) | - | ||||||||||||||||||||||||||||
| 28.3 | 21.5 | 25.7 | 40.2 | |||||||||||||||||||||||||||||||||||||
|
Equity
income
|
23.7 | - | - | 13.2 | 10.5 | 31.9 | - | - | 12.0 | 19.9 | ||||||||||||||||||||||||||||||
|
Net
income prior to recast
|
27.4 | 10.3 | (6.6 | ) | 13.2 | 10.5 | 28.3 | 3.9 | (7.5 | ) | 12.0 | 19.9 | ||||||||||||||||||||||||||||
|
North
Baja's contribution prior to acquisition(2)
|
- | - | - | - | - | 4.7 | 4.7 | - | - | - | ||||||||||||||||||||||||||||||
|
Net
income(2)
|
27.4 | 10.3 | (6.6 | ) | 13.2 | 10.5 | 33.0 | 8.6 | (7.5 | ) | 12.0 | 19.9 | ||||||||||||||||||||||||||||
3
|
For
the nine months ended September 30, 2009
|
For
the nine months ended September 30, 2008
|
|||||||||||||||||||||||||||||||||||||||
|
(unaudited)
(millions
of dollars)
|
PipeLP
|
Other
Pipes
|
Corp
|
GLGT
|
NBPC(1) |
PipeLP
|
Other
Pipes
|
Corp
|
GLGT
|
NBPC(1) | ||||||||||||||||||||||||||||||
|
Transmission
revenues
|
34.1 | 34.1 | - | 220.4 | 193.9 | 23.3 | 23.3 | - | 213.9 | 212.8 | ||||||||||||||||||||||||||||||
|
Operating
expenses
|
(10.2 | ) | (5.1 | ) | (5.1 | ) | (49.6 | ) | (55.8 | ) | (6.8 | ) | (3.7 | ) | (3.1 | ) | (45.9 | ) | (57.5 | ) | ||||||||||||||||||||
| 23.9 | 29.0 | (5.1 | ) | 170.8 | 138.1 | 16.5 | 19.6 | (3.1 | ) | 168.0 | 155.3 | |||||||||||||||||||||||||||||
|
Depreciation
|
(7.2 | ) | (7.2 | ) | - | (43.9 | ) | (46.4 | ) | (5.1 | ) | (5.1 | ) | - | (43.9 | ) | (45.8 | ) | ||||||||||||||||||||||
|
Financial
charges, net and other
|
(20.9 | ) | (3.3 | ) | (17.6 | ) | (24.4 | ) | (27.4 | ) | (22.8 | ) | (3.1 | ) | (19.7 | ) | (24.4 | ) | (12.1 | ) | ||||||||||||||||||||
|
Michigan
business tax
|
- | - | - | (4.4 | ) | - | - | - | - | (4.2 | ) | - | ||||||||||||||||||||||||||||
| 98.1 | 64.3 | 95.5 | 97.4 | |||||||||||||||||||||||||||||||||||||
|
Equity
income
|
77.1 | - | - | 45.6 | 31.5 | 92.5 | - | - | 44.4 | 48.1 | ||||||||||||||||||||||||||||||
|
Net
income prior to recast
|
72.9 | 18.5 | (22.7 | ) | 45.6 | 31.5 | 81.1 | 11.4 | (22.8 | ) | 44.4 | 48.1 | ||||||||||||||||||||||||||||
| North Baja's contribution prior to acquisition(2) | 8.3 | 8.3 | - | - | - | 12.8 | 12.8 | - | - | - | ||||||||||||||||||||||||||||||
|
Net
income(2)
|
81.2 | 26.8 | (22.7 | ) | 45.6 | 31.5 | 93.9 | 24.2 | (22.8 | ) | 44.4 | 48.1 | ||||||||||||||||||||||||||||
(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.
(2) Because
North Baja was acquired from TransCanada, the acquisition was accounted for as a
transaction between entities under common control, similar to a pooling of
interests, whereby the assets and liabilities of North Baja were recorded at
TransCanada’s carrying value and the Partnership’s historical financial
information was recast to include the acquired entity for all periods
presented.
The
Partnership’s net income was $27.4 million in third quarter 2009, a decrease of
$0.9 million compared to $28.3 million prior to recast in third quarter 2008.
The $6.2 million contribution to net income from North Baja since the
acquisition partially offset the lower
equity income from Northern Border, which decreased primarily as a result of the
$16.1 million (Partnership share - $8.1 million) gain on sale of Bison in
2008.
Equity
income from Great Lakes increased $1.2 million to $13.2 million in third quarter
2009, compared to $12.0 million for the same period last year. The increase in
equity income was primarily due to increased transmission revenues. Utilization
of long-term firm contracts, some of which are priced at lower rates than during
the same period last year, decreased significantly in third quarter 2009
compared to the same period last year; however, this had minimal impact on
revenues. The sale of
short-term services contributed to increased overall transmission revenues of
$2.2 million in third quarter 2009 compared to the same period last
year.
Equity
income from Northern Border was $10.5 million in third quarter 2009, a decrease
of $9.4 million compared to $19.9 million for the same period last year. The
decrease in equity income was primarily due to a $16.1 million (Partnership
share - $8.1 million) gain on sale of Bison in 2008. Excluding this gain,
Northern Border’s net income decreased $2.6 million compared to the same period
last year due to decreased transmission revenues. Northern Border’s transmission
revenues decreased due to reduced system utilization. Northern Border continues
to be negatively impacted by increased supply competition as a result of
increased U.S. natural gas supplies being transported to the Mid-western and
Eastern markets from new U.S. supply sources, including the Rockies Basin and
southern shale gas, which is displacing demand for gas from traditional natural
gas sources including the Western Canada Sedimentary Basin. Additionally,
reduced overall demand for natural gas related to the current economic
environment is affecting demand for Northern Border’s
transportation.
4
Net
income prior to recast from Other Pipes, which includes results from North Baja
and Tuscarora Gas Transmission Company (Tuscarora), increased $6.4 million to
$10.3 million in third quarter 2009 compared to $3.9 million for the same period
last year. This increase is primarily due to the acquisition of North Baja which
contributed $6.2 million to net income in third quarter 2009.
Costs at
the Partnership level decreased by $0.9 million to $6.6 million in third quarter
2009 compared to the same period last year. This decrease is primarily due to
decreased financial charges as a result of lower interest rates, partially
offset by losses on interest rate derivatives.
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.
5
|
(unaudited)
|
Three
months ended
September
30,
|
Nine
months ended
September 30, |
||||||||||||||
|
(millions
of dollars except per common unit amounts)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
|
Net
income(1)
|
27.4 | 33.0 | 81.2 | 93.9 | ||||||||||||
|
North
Baja's contribution prior to acquisition(1)
|
- | (4.7 | ) | (8.3 | ) | (12.8 | ) | |||||||||
|
Net
income prior to recast
|
27.4 | 28.3 | 72.9 | 81.1 | ||||||||||||
|
Add:
|
||||||||||||||||
|
Cash
distributions from Great Lakes(2)
|
19.8 | 19.3 | 54.0 | 55.0 | ||||||||||||
|
Cash
distributions from Northern Border(2)
|
11.8 | 22.6 | 58.5 | 72.0 | ||||||||||||
|
Cash
flows provided by North Baja's operating activities
|
8.5 | - | 8.5 | - | ||||||||||||
|
Cash
flows provided by Tuscarora's operating activities
|
6.9 | 7.2 | 18.9 | 17.3 | ||||||||||||
| 47.0 | 49.1 | 139.9 | 144.3 | |||||||||||||
|
Less:
|
||||||||||||||||
|
Equity
income from investment in Great Lakes
|
(13.2 | ) | (12.0 | ) | (45.6 | ) | (44.4 | ) | ||||||||
|
Equity
income from investment in Northern Border
|
(10.5 | ) | (19.9 | ) | (31.5 | ) | (48.1 | ) | ||||||||
|
North
Baja's net income
|
(6.2 | ) | - | (6.2 | ) | - | ||||||||||
|
Tuscarora's
net income
|
(4.1 | ) | (3.9 | ) | (12.3 | ) | (11.4 | ) | ||||||||
| (34.0 | ) | (35.8 | ) | (95.6 | ) | (103.9 | ) | |||||||||
|
Partnership
cash flows prior to recast
|
40.4 | 41.6 | 117.2 | 121.5 | ||||||||||||
|
Partnership
cash flows prior to recast allocated to general partner(3)
|
(0.7 | ) | (3.2 | ) | (7.1 | ) | (9.4 | ) | ||||||||
|
Partnership
cash flows prior to recast allocated to common units
|
39.7 | 38.4 | 110.1 | 112.1 | ||||||||||||
|
Cash
flows provided by North Baja's pre-acquisition operating activities(1)
|
- | 5.2 | 9.7 | 14.0 | ||||||||||||
|
Cash
distributions declared
|
(30.7 | ) | (27.8 | ) | (89.2 | ) | (83.0 | ) | ||||||||
|
Cash
distributions declared per common unit(4)
|
$ | 0.730 | $ | 0.705 | $ | 2.165 | $ | 2.110 | ||||||||
|
Cash
distributions paid
|
(30.7 | ) | (27.8 | ) | (86.3 | ) | (80.8 | ) | ||||||||
|
Cash
distributions paid per common unit(4)
|
$ | 0.730 | $ | 0.705 | $ | 2.140 | $ | 2.070 | ||||||||
|
Weighted
average common units outstanding (millions)
|
41.2 | 34.9 | 37.0 | 34.9 | ||||||||||||
|
(1)
Because North Baja was acquired from TransCanada, the acquisition was
accounted for as a transaction between entities under common control,
similar to a pooling of interests, whereby the assets and liabilities of
North Baja were recorded at TransCanada’s carrying value and the
Partnership’s historical financial information was recast to include the
acquired entity for all periods presented. To calculate recasted
partnership cash flows, add partnership cash flows prior to recast and
cash flows provided by North Baja's pre-acquisition operating
activities.
|
||||||||||||||||
|
(2)
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, except that
the distribution paid by Northern Border in third quarter 2008 included a
special distribution of $16.4 million (Partnership share - $8.2 million)
related to the sale of Bison.
|
||||||||||||||||
6
|
(3)
Partnership cash flows prior to recast 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. Prior to 2009, Partnership cash flows allocated to general
partner were based on the cash distributions paid during the quarter to
the general partner. As a result of the retrospective application of ASC
260-10-55, Partnership cash flows allocated to general partner in the
third quarter of 2008 remained the same. Partnership cash flows allocated
to the general partner for the nine months ended September 30, 2008
increased from $8.6 million to $9.4 million.
|
||||||||||||||||
|
(4)
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 decreased $1.2 million to $40.4 million for third quarter 2009 compared to $41.6 million, prior to recast, for the same period last year. North Baja provided $8.5 million in cash flows from operating activities since the acquisition, which partially offset the decreased cash distributions from Northern Border. Northern Border’s decreased distribution was primarily due to a special one-time distribution for the proceeds received in connection with the sale of Bison in 2008 and lower net income, partially offset by a reduction in maintenance capital expenditures.
The
Partnership paid distributions of $30.7 million in third quarter 2009, an
increase of $2.9 million compared to the same period in the prior year due to an
increase in the number of common units outstanding, in addition to increases in
quarterly per common unit distribution amounts. In third quarter 2009, proceeds
from equity issuances of $80.0 million, including the general partner’s
contribution to maintain its two per cent interest, were used to partially fund
the acquisition of North Baja. The Partnership funded the balance of the
acquisition cost with a $170.0 million draw on its revolving credit facility and
cash on hand. During third quarter 2009, the Partnership also made an equity
contribution of $38.0 million to Northern Border to partially
fund the repayment of its $200.0 million of debt which matured on September 1,
2009.
Liquidity
and Capital Resources
At
September 30, 2009, the outstanding balance on the Partnership’s revolving
credit facility was $203.0 million, with $47.0 million available for future
borrowings, and the Partnership was in compliance with the covenants of the
agreement. The interest rate incurred on the credit facility averaged 3.39 per
cent for the three months ended September 30, 2009 after accounting for hedging
activity. The Partnership views its core banking group as solid 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 Friday, November 6, 2009 at
11:00 a.m. (Central) and noon (Eastern). Mark Zimmerman, president of the
general partner, will discuss third 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. No pass code is required.
A replay
of the conference call will also be available two hours after the conclusion of
the call and until 11:00 p.m.(Central) and midnight (Eastern) on Friday,
November 13, 2009, by dialing (800) 408-3053, then entering pass code
5265060#.
7
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.
Beginning
in second quarter 2009, the Partnership will no longer be mailing a Quarterly
Report on Form 10-Q to unitholders. The Quarterly Report on Form 10-Q
will be available through the Partnership’s website at www.tcpipelineslp.com.
TC
PipeLines, LP has interests in approximately 3,700 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), North Baja Pipeline, LLC (100 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.
North Baja is an 80-mile natural gas pipeline that extends from southwestern
Arizona to a point on the California/Mexico border and connects with a natural
gas pipeline system in Mexico. 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.
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 on competitive terms, the Partnership’s ability to identify
and/or consummate accretive growth opportunities from TransCanada or others, 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, success of other pipelines competing
with Northern Border and Great Lakes by bringing competing U.S. sourced gas to
Northern Border’s and Great Lakes’ markets, regulatory approvals and other
project-related risks related to the construction of the Princeton lateral
project, 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 and the Partnership’s Quarterly Reports on Form 10-Q for
the quarters ended March 31 and June 30, 2009.
- 30
- -
|
Media
Inquiries:
|
Cecily
Dobson/Terry Cunha
|
(403)
920-7859
(800)
608-7859
|
|
Unitholder
and Analyst Inquiries:
|
Terry
Hook
|
(877)
290-2772
investor_relations@tcpipelineslp.com
|
8
TC
PipeLines, LP
Financial
Summary
Consolidated
Statement of Income
|
(unaudited)
|
Three
months ended
September 30, |
Nine
months ended
September
30,
|
||||||||||||||
|
(millions
of dollars except per common unit amounts)
|
2009
|
2008(1)
|
2009(1)
|
2008(1)
|
||||||||||||
|
Equity
income from investment in Great Lakes
|
13.2 | 12.0 | 45.6 | 44.4 | ||||||||||||
|
Equity
income from investment in Northern Border
|
10.5 | 19.9 | 31.5 | 48.1 | ||||||||||||
|
Transmission
revenues
|
17.5 | 17.4 | 51.1 | 47.6 | ||||||||||||
|
Operating
expenses
|
(3.5 | ) | (3.7 | ) | (13.3 | ) | (10.2 | ) | ||||||||
|
Depreciation
|
(3.7 | ) | (3.6 | ) | (11.0 | ) | (10.2 | ) | ||||||||
|
Financial
charges, net and other
|
(6.6 | ) | (9.0 | ) | (22.7 | ) | (25.8 | ) | ||||||||
|
Net
income
|
27.4 | 33.0 | 81.2 | 93.9 | ||||||||||||
|
Pre-acquisition
net income contribution from North Baja
|
- | (4.7 | ) | (8.3 | ) | (12.8 | ) | |||||||||
|
Net
income prior to recast
|
27.4 | 28.3 | 72.9 | 81.1 | ||||||||||||
|
Net
income allocation
|
||||||||||||||||
|
Common
units
|
26.8 | 25.1 | 66.1 | 71.7 | ||||||||||||
|
General
partner
|
0.6 | 3.2 | 6.8 | 9.4 | ||||||||||||
| 27.4 | 28.3 | 72.9 | 81.1 | |||||||||||||
|
Net
income per common unit
|
$ | 0.65 | $ | 0.72 | $ | 1.78 | $ | 2.06 | ||||||||
|
Weighted average common units
outstanding (millions)
|
41.2 | 34.9 | 37.0 | 34.9 | ||||||||||||
|
Common units outstanding, end
of the period (millions)
|
41.2 | 34.9 | 41.2 | 34.9 | ||||||||||||
Consolidated
Condensed Balance Sheet
|
(unaudited)
|
September 30, | December 31, | ||||||
|
(millions
of dollars)
|
2009
|
2008(1)
|
||||||
|
ASSETS
|
||||||||
|
Current
assets
|
12.0 | 19.8 | ||||||
|
Investment
in Great Lakes
|
696.2 | 704.5 | ||||||
|
Investment
in Northern Border
|
531.2 | 514.8 | ||||||
|
Other
assets
|
452.8 | 462.0 | ||||||
| 1,692.2 | 1,701.1 | |||||||
|
LIABILITIES
AND PARTNERS' EQUITY
|
||||||||
|
Current
liabilities
|
6.7 | 9.0 | ||||||
|
Fair
value of derivative contracts, including current portion and
other
|
26.1 | 32.2 | ||||||
|
Long-term
debt, including current portion
|
737.5 | 536.8 | ||||||
|
Due
to North Baja's former parent
|
- | 247.5 | ||||||
|
Partners'
equity
|
921.9 | 875.6 | ||||||
| 1,692.2 | 1,701.1 | |||||||
|
(1)
Because North Baja was acquired from TransCanada, the acquisition
was accounted for as a transaction between entities under common control,
similar to a pooling of interests, whereby the assets and liabilities of
North Baja were recorded at TransCanada’s carrying value and the
Partnership’s historical financial information was recast to include the
acquired entity for all periods presented. The effect of recasting the
Partnership’s consolidated financial statements to account for the common
control transaction increased the Partnership’s net income by $4.7 million
and $12.8 million
for the three and nine months ended September 30,
2008, respectively, from amounts previously reported. In addition, the
Partnership’s net income increased by $8.3 million for the six months
ended June 30, 2009 from amounts previously
reported.
|
||||||||
9
|
Operating
Results
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||||
|
(unaudited)
|
2009
|
2008
|
2009
|
2008
|
||||||||||||
|
Great Lakes
|
||||||||||||||||
|
Volumes:
|
||||||||||||||||
|
Gas
delivered (million cubic
feet)
|
149,222 | 195,244 | 565,428 | 606,106 | ||||||||||||
|
Average
throughput (million
cubic feet per day)
|
1,622 | 2,122 | 2,071 | 2,212 | ||||||||||||
|
Capital
Expenditures (millions
of dollars):
|
||||||||||||||||
|
Maintenance
|
3.5 | 1.1 | 5.0 | 6.2 | ||||||||||||
|
Northern Border
|
||||||||||||||||
|
Volumes:
|
||||||||||||||||
|
Gas
delivered (million cubic
feet)
|
160,739 | 164,283 | 471,396 | 526,806 | ||||||||||||
|
Average
throughput (million
cubic feet per day)
|
1,774 | 1,813 | 1,754 | 1,961 | ||||||||||||
|
Capital
Expenditures (millions
of dollars):
|
||||||||||||||||
|
Maintenance
|
2.1 | 1.8 | 5.4 | 6.7 | ||||||||||||
|
Growth
|
0.4 | 3.8 | 4.3 | 6.9 | ||||||||||||
|
North Baja
|
||||||||||||||||
|
Volumes:
|
||||||||||||||||
|
Gas delivered (million
cubic feet)
|
32,374 | 32,665 | 72,605 | 78,868 | ||||||||||||
|
Average
throughput (million
cubic feet per day)
|
352 | 355 | 266 | 289 | ||||||||||||
|
Capital
Expenditures (millions
of dollars):
|
||||||||||||||||
|
Maintenance
|
- | 0.3 | - | 0.3 | ||||||||||||
|
Growth
|
0.4 | 4.5 | 1.6 | 26.2 | ||||||||||||
|
Tuscarora
|
||||||||||||||||
|
Volumes:
|
||||||||||||||||
|
Gas delivered (million cubic
feet)
|
8,499 | 6,124 | 24,040 | 21,688 | ||||||||||||
|
Average
throughput (million
cubic feet per day)
|
92 | 67 | 88 | 79 | ||||||||||||
|
Capital
Expenditures (millions
of dollars):
|
||||||||||||||||
|
Maintenance
|
0.1 | - | 0.2 | - | ||||||||||||
|
Growth
|
0.2 | 1.0 | 0.5 | 6.4 | ||||||||||||
10