SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report (Date of earliest event reported): APRIL 21, 2003
TC PIPELINES, LP
(Exact name of registrant as specified in its charter)
DELAWARE 000-26091 52-2135448
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
110 TURNPIKE ROAD, SUITE 203 01581
WESTBOROUGH, MASSACHUSETTS (Zip Code)
(Address of principal executive offices)
(508) 871-7046
(Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits. The following materials are filed as exhibits to
this Current Report on Form 8-K:
Exhibit
Number Description of Exhibit
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99.1 Press Release dated April 21, 2003.
ITEM 9. REGULATION FD DISCLOSURE (INCLUDING ITEM 12 INFORMATION)
This information, furnished under this "Item 9. Regulation FD Disclosure," is
intended to be provided under "Item 12. Results of Operations and Financial
Condition," in accordance with U.S. Securities and Exchange Commission
Release No. 33-8216.
On April 21, 2003, TC PipeLines, LP issued a press release announcing first
quarter results for the period ended March 31, 2003. A copy of the press
release is attached as Exhibit 99.1 hereto and is hereby incorporated by
reference.
The information in this report is being furnished, not filed, pursuant to
Item 12 of Form 8-K. Accordingly, the information in Item 12 of this report
will not be incorporated by reference into any registration statement filed
by TC PipeLines, LP under the Securities Act of 1933, as amended, unless
specifically identified therein as being incorporated therein by reference.
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 thereunto duly authorized.
TC PipeLines, LP
By: TC PipeLines GP, Inc.,
its general partner
Dated: April 21, 2003 By: /s/ Theresa Jang
------------------
Theresa Jang
Controller
EXHIBIT INDEX
Exhibit. 99.1 News Release of TC PipeLines, LP entitled "TC PipeLines, LP
Declares Quarterly Cash Distribution; Announces First Quarter Results", issued
April 21, 2003.
Exhibit 99.1
[LOGO]
Media Inquiries: Glenn Herchak/Hejdi Feick (403) 920-7877
Unitholder and Analyst Inquiries: Theresa Jang (403) 920-2050
Toll-free (877) 290-2772
NewsRelease
TC PipeLines, LP Declares Quarterly Cash Distribution;
Announces First Quarter Results
CALGARY, Alberta - April 21, 2003 - (Nasdaq: TCLP) - TC PipeLines, LP (the
Partnership) today announced that the board of directors of its general partner
has declared the Partnership's first quarter 2003 cash distribution in the
amount of US$0.525 per unit. The first quarter distribution will be paid on May
15, 2003 to unitholders of record as of April 30, 2003.
The Partnership also reported first quarter 2003 net income of US$11.9 million
or US$0.66 per unit, equaling net income reported for first quarter 2002.
The Partnership's first quarter 2003 cash generated from operations amounted to
US$13.5 million, a 10% increase compared to first quarter 2002 cash generated
from operations of US$12.3 million. The increase in cash flow reflects higher
cash distributions received from Northern Border Pipeline and Tuscarora.
FINANCIAL HIGHLIGHTS THREE MONTHS ENDED MARCH 31
(unaudited) (millions of U.S. dollars, except per unit amounts)
- --------------------------------------------------------------------------------- -- ----------------------------
2003 2002
------------- --------------
Cash Distributions Declared Per Unit (1) $0.525 $0.50
Net Income 11.9 11.9
Per Unit (2) $0.66 $0.66
Cash Generated from Operations 13.5 12.3
Units Outstanding (millions) 17.5 17.5
(1) The Partnership's 2003 first quarter cash distribution will be paid on May
15, 2003 to unitholders of record as of April 30, 2003.
(2) Net income per unit is computed by dividing net income, after deduction of
the general partner's allocation, by the number of common and subordinated
units outstanding. The general partner's allocation is computed based upon
the general partner's 2% interest plus an amount equal to incentive
distributions.
-4-
NET INCOME
The Partnership reported first quarter 2003 net income of US$11.9 million or
US$0.66 per unit, equaling net income reported for first quarter 2002.
Equity income from Northern Border Pipeline amounted to US$11.0 million in first
quarter 2003 compared to US$11.3 million for first quarter 2002. In first
quarter 2003, Northern Border Pipeline incurred higher expenses related to
electricity costs and taxes other than income compared to first quarter 2002.
These decreases in Northern Border Pipeline's earnings were partially offset by
lower interest expense, resulting from lower average interest rates, and higher
revenues in first quarter 2003. Northern Border Pipeline's first quarter 2002
revenues were lower due to US$1.8 million of uncollected revenues (TC PipeLines'
share is US$0.5 million) associated with the transportation capacity held by
Enron North America (ENA), an Enron Corp. that filed for bankruptcy protection
in December 2001. ENA no longer holds contracts for transportation capacity on
the Northern Border pipeline system.
Equity income from Tuscarora amounted to US$1.3 million in first quarter 2003
compared to US$1.1 million for first quarter 2002. The increase is primarily due
to incremental revenues from Tuscarora's expansion facilities, which were placed
into service on December 1, 2002, partially offset by increased operations and
maintenance expense and depreciation expense related to the new facilities.
The Partnership's first quarter 2003 general and administrative expenses of
US$0.4 million were unchanged from first quarter 2002. Financial charges were
less than US$0.1 million for first quarter 2003 compared to US$0.1 million first
quarter 2002, primarily due to a decrease in the Partnership's average debt
balance outstanding.
CASH FLOW
The Partnership reported first quarter 2003 cash generated from operations of
US$13.5 million compared to US$12.3 million for first quarter 2002, reflecting
higher cash distributions from both Northern Border Pipeline and Tuscarora. In
first quarter 2003, the Partnership received a cash distribution from Northern
Border Pipeline amounting to US$12.5 million compared to US$11.8 million for
first quarter 2002. The increase is primarily due to lower interest expense
incurred by Northern Border Pipeline. The Partnership also received a cash
distribution from Tuscarora in first quarter 2003 amounting to US$1.5 million
compared to US$1.0 million for first quarter 2002. The increase reflects
Tuscarora's incremental cash inflows from new transportation contracts,
including those related to Tuscarora's expansion facilities.
During first quarter 2003, the Partnership used US$4.1 million of its cash from
operations to fund a portion of Tuscarora's expansion, which was partially
offset by a US$0.8 million return of capital from Tuscarora. The Partnership
paid an aggregate US$9.6 million of cash distributions to unitholders and its
general partner, the equivalent of US$0.525 per unit, in first quarter 2003,
compared to US$9.0 million, the equivalent of US$0.50 per unit, in first quarter
2002. Also in first quarter 2003, the Partnership made a US$3.0 million
principal repayment on its revolving credit facility, reducing its debt
outstanding to US$8.5 million at March 31, 2003.
CONFERENCE CALL
The Partnership will hold a conference call Tuesday, April 22, 2003 at 4:00 p.m.
(eastern). During this call, TC PipeLines, LP's senior executives will review
the Partnership's first quarter 2003 results and discuss general developments
and issues concerning the Partnership. Those interested in listening to the
call may dial 1-800-273-9672. A replay of the conference call will also be
available after the call until April 29, 2003 by dialing 1-800-408-3053 then
entering passcode 1386508.
A live web cast 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 held master limited partnership. It owns a 30%
interest in Northern Border Pipeline Company, a Texas general partnership, and a
49% interest in Tuscarora Gas Transmission Company, a Nevada general
partnership. Northern Border Pipeline, which is owned 70% by Northern Border
Partners, L.P., a publicly traded master limited partnership controlled by
affiliates of Enron Corp., owns a 1,249-mile United States interstate pipeline
system that transports natural gas from the Montana-Saskatchewan border to
markets in the midwestern United States. Tuscarora owns a 240-mile United States
interstate pipeline system that transports natural gas from Oregon, where it
interconnects with facilities of PG&E National Energy Group, Gas Transmission
Northwest, to northern Nevada. TC PipeLines, LP is managed by its general
partner, TC PipeLines GP, Inc., a wholly owned
-5-
subsidiary of TransCanada PipeLines Limited. Subsidiaries of TransCanada also
hold common and subordinated units of the Partnership representing an aggregate
31.41% limited partner interest in the Partnership. TransCanada also holds a
minority general partner interest in Northern Border Partners, L.P. 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.
- 30 -
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
This news release includes forward-looking statements regarding future events
and the future financial performance of TC PipeLines, LP. All forward-looking
statements are based on the Partnership's beliefs as well as assumptions made by
and information currently available to the Partnership. Words such as
"believes", "expects", "intends", "forecasts", "projects", and similar
expressions, identify forward-looking statements within the meaning of the
Securities Litigation Reform Act. These statements reflect the Partnership's
current views with respect to future events and are subject to various risks,
uncertainties and assumptions including regulatory decisions, particularly those
of the Federal Energy Regulatory Commission, majority control of the Northern
Border Pipeline management committee by affiliates of Enron Corp., which has
filed for bankruptcy protection, the failure of a shipper on either one of the
Partnership's pipelines to perform its contractual obligations, including Sierra
Pacific Power Company, the shipper of 68% of Tuscarora's capacity, cost of
acquisitions, future demand for natural gas, overcapacity in the industry, and
prevailing economic conditions, particularly conditions of the capital and
equity markets, and other risks 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, 2002. If one or more of these risks or
uncertainties materialize, or if the underlying assumptions prove incorrect,
actual results may vary materially from those described in the forward-looking
statement.
-6-
TC PIPELINES, LP
Financial Highlights
STATEMENT OF INCOME
- -------------------
THREE MONTHS ENDED MARCH 31
(unaudited) (millions of U.S. dollars, except per unit amounts) 2003 2002
- --------------------------------------------------------------------------------------- -------------------
Equity Income from Investment in
Northern Border Pipeline Company (1) 11.0 11.3
Equity Income from Investment in
Tuscarora Gas Transmission Company (2) 1.3 1.1
General and Administrative Expenses (0.4) (0.4)
Financial Charges - (0.1)
--------------------- -------------------
NET INCOME 11.9 11.9
--------------------- -------------------
--------------------- -------------------
NET INCOME PER UNIT (3) $0.66 $0.66
--------------------- -------------------
--------------------- -------------------
UNITS OUTSTANDING (MILLIONS) 17.5 17.5
--------------------- -------------------
--------------------- -------------------
BALANCE SHEET
- -------------
MARCH 31, 2003 December 31, 2002
(millions of U.S. dollars) (unaudited) (audited)
- -------------------------------------------------------------------------------------- --------------------
ASSETS
Cash 4.0 6.4
Investment in Northern Border Pipeline Company (1) 241.3 242.9
Investment in Tuscarora Gas Transmission Company (2) 39.9 36.7
--------------------- --------------------
285.2 286.0
--------------------- --------------------
--------------------- --------------------
LIABILITIES AND PARTNERS' EQUITY
Current Liabilities 0.5 0.6
Long-Term Debt 8.5 11.5
Partners' Equity 276.2 273.9
--------------------- --------------------
285.2 286.0
--------------------- --------------------
--------------------- --------------------
CASH FLOW INFORMATION
- ---------------------
THREE MONTHS ENDED MARCH 31
(unaudited) (millions of U.S. dollars) 2003 2002
- -------------------------------------------------------------------------------------- ------------------
Cash Generated from Operations
Distributions Received from Equity Investments
Northern Border Pipeline Company 12.5 11.8
Tuscarora Gas Transmission Company 1.5 1.0
Changes in Working Capital and Other (0.5) (0.5)
---------------------- ------------------
Cash Generated from Operations 13.5 12.3
Investment in Tuscarora Gas Transmission Company (3.3) -
Distributions Paid (9.6) (9.0)
Repayment of Long-Term Debt (3.0) -
---------------------- ------------------
(Decrease)/Increase In Cash (2.4) 3.3
---------------------- ------------------
---------------------- ------------------
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(1) NORTHERN BORDER PIPELINE COMPANY
TC PipeLines holds a 30% general partner interest in Northern Border
Pipeline Company. Summarized operating and financial information of Northern
Border Pipeline for the three months ended March 31, 2003 and 2002 and as at
March 31, 2003 and December 31, 2002 is as follows:
THREE MONTHS ENDED MARCH 31 (unaudited) 2003 2002
--------------------------------------------------------------------------------- ------------------
OPERATING RESULTS
-----------------
Gas Delivered (million cubic feet) 210,023 201,951
Average Throughput (million cubic feet per day) 2,406 2,307
Financial Results (millions of U.S. dollars)
-----------------
Operating Revenue 79.9 78.2
Operating Expenses
Operations and Maintenance 8.9 7.2
Depreciation and Amortization 14.5 14.5
Taxes other than Income 7.9 6.6
---------------------- ------------------
Total Operating Expenses 31.3 28.3
---------------------- ------------------
Operating Income 48.6 49.9
Interest Expense, Net (11.8) (13.0)
Other Income (0.1) 0.8
---------------------- ------------------
Net Income 36.7 37.7
---------------------- ------------------
---------------------- ------------------
Capital Expenditures (millions of U.S. dollars)
--------------------
Maintenance 1.9 2.1
Growth - -
MARCH 31, 2003 December 31, 2002
SUMMARY BALANCE SHEET DATA (MILLIONS OF U.S. DOLLARS) (unaudited) (audited)
-------------------------- ---------------------- ------------------
Total Assets 1,728.6 1,740.0
---------------------- ------------------
---------------------- ------------------
Other Current Liabilities and
Reserves and Deferred Credits 82.2 81.3
Long-Term Debt (including current maturities) 842.0 848.9
Partners' Capital 798.0 803.0
Accumulated Other Comprehensive Income 6.4 6.8
---------------------- ------------------
Total Liabilities and Partners' Equity 1,728.6 1,740.0
---------------------- ------------------
---------------------- ------------------
-8-
(2) TUSCARORA GAS TRANSMISSION COMPANY
TC PipeLines holds a 49% general partner interest in Tuscarora Gas
Transmission Company. Summarized operating and financial information of
Tuscarora for the three months ended March 31, 2003 and 2002 and as at March
31, 2003 and December 31, 2002 is as follows:
THREE MONTHS ENDED MARCH 31 (unaudited) 2003 2002
--------------------------------------------------------------------------------- ------------------
OPERATING RESULTS
-----------------
Gas Delivered (million cubic feet) 5,753 7,564
Average Throughput (million cubic feet per day) 64 84
Financial Results (millions of U.S. dollars)
-----------------
Operating Revenue 7.4 5.6
Operating Expenses
Operations, Maintenance & Administrative 0.9 0.4
Depreciation and Amortization 1.6 1.2
Taxes other than Income 0.3 0.2
---------------------- ------------------
Total Operating Expenses 2.8 1.8
---------------------- ------------------
Operating Income 4.6 3.8
Interest Expense, Net (1.6) (1.5)
Other Income - 0.1
---------------------- ------------------
Net Income 3.0 2.4
---------------------- ------------------
---------------------- ------------------
Capital Expenditures (millions of U.S. dollars)
--------------------
Maintenance - -
Growth 0.2 1.3
December 31, 2002
March 31, 2003 (audited)
SUMMARY BALANCE SHEET DATA (MILLIONS OF U.S.
DOLLARS) (unaudited)
---------------------- ------------------
Total Assets 155.6 154.5
---------------------- ------------------
---------------------- ------------------
Other Current Liabilities and
Reserves and Deferred Credits 4.3 9.9
Long-Term Debt (including current maturities) 90.0 90.0
Partners' Capital 61.2 54.2
Accumulated Other Comprehensive Income 0.1 0.4
---------------------- ------------------
Total Liabilities and Partners' Equity 155.6 154.5
---------------------- ------------------
---------------------- ------------------
(3) Net income per unit is computed by dividing net income, after deduction of
the general partner's allocation, by the number of common and subordinated
units outstanding. The general partner's allocation is computed based upon
the general partner's 2% interest plus an amount equal to incentive
distributions.
-9-
