SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF
THE SECURITIES EXCHANGE ACT OF 1934
For the month of April 2004
COMMISSION FILE No. 1-31690
TRANSCANADA CORPORATION
(TRANSLATION OF REGISTRANT'S NAME INTO ENGLISH)
450 - 1 STREET S.W., CALGARY, ALBERTA, T2P 5H1, CANADA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F
Form 20-F Form 40-F X
------------- --------------
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
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I
The documents listed below in this Section and filed as Exhibits 1 to 3 to this
Form 6-K are hereby filed with the Securities and Exchange Commission for the
purpose of being and hereby are incorporated by reference into the following
registration statements filed by TransCanada Corporation under the Securities
Act of 1933, as amended.
FORM REGISTRATION NO.
---- ----------------
S-8 33-00958
S-8 333-5916
S-8 333-8470
S-8 333-9130
F-3 33-13564
F-3 333-6132
1 Management's Discussion and Analysis of Financial Condition and Results of
Operations of the registrant as at and for the period ended March 31, 2004.
2 Consolidated comparative interim unaudited financial statements of the
registrant for the three month period ended March 31, 2004 (included in the
registrant's First Quarter 2004 Quarterly Report to Shareholders).
3 U.S. GAAP reconciliation of the consolidated comparative interim unaudited
financial statements of the registrant contained in the registrant's First
Quarter 2004 Quarterly Report to Shareholders.
II
A copy of the Registrant's news release of April 23, 2004 and listed in the
Exhibit Index to this Form 6-K is furnished herewith. This news release is
being furnished, not filed, and will not be incorporated by reference into any
registration statement filed by TransCanada Corporation under the Securities
Act of 1933, as amended.
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.
TRANSCANADA CORPORATION
By: /s/ Russell K. Girling
------------------------------------------
Russell K. Girling
Executive Vice-President, Corporate
Development and Chief Financial Officer
By: /s/ Lee G. Hobbs
------------------------------------------
Lee G. Hobbs
Vice-President and Controller
April 26, 2004
EXHIBIT INDEX
1 Management's Discussion and Analysis of Financial Condition and Results of
Operations of the registrant as at and for the period ended March 31, 2004.
2 Consolidated comparative interim unaudited financial statements of the
registrant for the three month period ended March 31, 2004 (included in the
registrant's First Quarter 2004 Quarterly Report to Shareholders).
3 U.S. GAAP reconciliation of the consolidated comparative interim unaudited
financial statements of the registrant contained in the registrant's First
Quarter 2004 Quarterly Report to Shareholders.
4 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
5 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
6 Certification of Chief Executive Officer regarding Periodic Report
containing Financial Statements.
7 Certification of Chief Financial Officer regarding Periodic Report
containing Financial Statements.
8 A copy of the Registrant's news release of April 23, 2004.
EXHIBIT 1
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion and analysis dated April 23, 2004 should be read in
conjunction with the accompanying unaudited consolidated financial statements of
TransCanada Corporation (TransCanada or the company) for the three months ended
March 31, 2004 and the notes thereto.
CONSOLIDATED RESULTS-AT-A-GLANCE
Three months ended March 31 (unaudited)
(millions of dollars except per share amounts) 2004 2003
- -------------------------------------------------------- ----- -----
NET INCOME 214 208
----- -----
----- -----
NET INCOME PER SHARE - BASIC AND DILUTED $0.44 $0.43
----- -----
----- -----
RESULTS OF OPERATIONS
CONSOLIDATED
TransCanada's net income for first quarter 2004 was $214 million or $0.44 per
share compared to $208 million or $0.43 per share for first quarter 2003. The
increase of $6 million or $0.01 per share was primarily due to lower net
expenses in the Corporate segment, partially offset by lower net earnings from
the Gas Transmission business. The decrease in net expenses of $13 million in
the Corporate segment relates primarily to income tax refunds received in first
quarter 2004. The lower net earnings of $9 million in the Gas Transmission
business for first quarter 2004 compared to the same period in the prior year
were primarily due to lower earnings from the Canadian Mainline and Alberta
System. Net earnings from the Power business for first quarter 2004 were $2
million higher than in the same quarter of 2003.
SEGMENT RESULTS-AT-A-GLANCE
Three months ended March 31 (unaudited)
(millions of dollars) 2004 2003
- -------------------------------------------------------- ----- -----
Gas Transmission 149 158
Power 65 63
Corporate - (13)
----- -----
NET INCOME 214 208
----- -----
----- -----
Funds generated from operations of $423 million for first quarter 2004 decreased
$34 million compared to first quarter 2003.
FIRST QUARTER REPORT 2004
TRANSCANADA [2
GAS TRANSMISSION
The Gas Transmission business generated net earnings of $149 million for the
quarter ended March 31, 2004, compared to $158 million for the same period in
2003.
GAS TRANSMISSION RESULTS-AT-A-GLANCE
Three months ended March 31 (unaudited)
(millions of dollars) 2004 2003
- ------------------------------------------------------ ---- ----
WHOLLY-OWNED PIPELINES
Alberta System 40 42
Canadian Mainline 64 71
Foothills* 6 4
BC System 2 2
---- ----
112 119
---- ----
OTHER GAS TRANSMISSION
Great Lakes 17 17
Iroquois 8 7
TC PipeLines, LP 4 3
Portland** 6 7
Ventures LP 3 2
Trans Quebec & Maritimes 2 2
CrossAlta 1 3
TransGas de Occidente 3 4
Northern Development (1) (1)
General, administrative, support and other (6) (5)
---- ----
37 39
---- ----
Net earnings 149 158
---- ----
---- ----
* The remaining ownership interests in Foothills, previously not held by
TransCanada, were acquired on August 15, 2003.
** TransCanada increased its ownership interest in Portland to 43.4 per cent
from 33.3 per cent on September 29, 2003 and to 61.7 per cent from 43.4 per
cent on December 3, 2003.
WHOLLY-OWNED PIPELINES
Alberta System's net earnings of $40 million in first quarter 2004 decreased $2
million compared to $42 million in the same quarter of 2003, primarily due to a
lower average investment base. Earnings in first quarter 2004 reflect the
implicit return in the 2004 interim tolls approved by the Alberta Energy and
Utilities Board (EUB). The 2004 interim tolls were based on the 2003 negotiated
fixed revenue requirement of $1.277 billion plus certain adjustments. The 2003
negotiated settlement did not include an explicit rate of return on equity or
capital structure; as such, the first quarter 2004 earnings approximate a return
equivalent to a 10.9 per cent rate of return on 32 per cent deemed common equity
or alternatively an 8.7 per cent rate of return on 40 per cent deemed common
equity. The 32 per cent deemed common equity is the last approved by the EUB in
the 1995 General Rate
FIRST QUARTER REPORT 2004
TRANSCANADA [3
Application (GRA) and the 40 per cent deemed common equity is the requested
amount in the current Generic Cost of Capital (GCOC) Proceeding.
Canadian Mainline's first quarter 2004 net earnings of $64 million are $7
million lower than net earnings for the same quarter in 2003. This decrease is
primarily due to a lower rate of return on common equity of 9.56 per cent in
2004 compared to 9.79 per cent in 2003, as well as a lower average investment
base. The common equity return of 9.56 per cent is implicit in the interim tolls
for 2004 which were approved by the National Energy Board (NEB) in December
2003. Also included in first quarter 2004 are negative earnings adjustments of
$2 million after tax related to the estimate of incentive program earnings in
2003.
Foothills' net earnings of $6 million in first quarter 2004 are $2 million
higher than the same quarter in 2003. The remaining ownership interests in
Foothills, previously not held by TransCanada, were acquired in August 2003, and
resulted in higher net earnings in first quarter 2004.
OPERATING STATISTICS
Three months ended March 31 Alberta Canadian
(unaudited) System* Mainline** Foothills*** BC System
- ----------------------------------------- ------------- ------------- ------------- ------------
2004 2003 2004 2003 2004 2003 2004 2003
------- ----- ----- ----- ---- ---- ---- ----
Average investment base ($ millions) 4,762 4,966 8,314 8,692 722 748 231 238
Delivery volumes (Bcf)
Total 1,013 1,062 723 805 281 259 87 61
Average per day 11.1 11.8 7.9 8.9 3.1 2.9 1.0 0.7
- ----------------------------------------------------------------------------------------------------------
* Field receipt volumes for the Alberta System for the three months ended
March 31, 2004 were 950 Bcf (2003 - 956 Bcf); average per day was 10.4 Bcf
(2003 - 10.6 Bcf).
** Canadian Mainline deliveries originating at the Alberta border and in
Saskatchewan for the three months ended March 31, 2004 were 510 Bcf (2003 - 592
Bcf); average per day was 5.6 Bcf (2003 - 6.6 Bcf).
*** The remaining interests in Foothills were acquired in August 2003. The
delivery volumes in the table represent 100 per cent of Foothills.
OTHER GAS TRANSMISSION
TransCanada's proportionate share of net earnings from Other Gas Transmission
was $37 million for the three months ended March 31, 2004 compared to $39
million for the same period in 2003. The $2 million decrease was primarily due
to lower earnings from CrossAlta as a result of lower storage margins from
unfavourable market conditions. Higher U.S. dollar net earnings of U.S.
pipelines in first quarter 2004 compared to first quarter 2003 were offset by
the unfavourable impact of a weaker U.S. dollar.
FIRST QUARTER REPORT 2004
TRANSCANADA [4
POWER
POWER RESULTS-AT-A-GLANCE
Three months ended March 31 (unaudited)
(millions of dollars) 2004 2003
- ------------------------------------------------------ ---- ----
Western operations 35 43
Eastern operations 34 25
Bruce Power investment 48 38
Power LP investment 10 11
General, administrative and support costs (25) (21)
---- ----
Operating and other income 102 96
Financial charges (2) (2)
Income taxes (35) (31)
---- ----
Net earnings 65 63
---- ----
---- ----
Power's net earnings in first quarter 2004 of $65 million increased $2 million
compared to $63 million in first quarter 2003. Higher earnings from Bruce Power
L.P. (Bruce Power) and Eastern Operations were the primary reason for the
increase. Partially offsetting the increase were lower earnings from Western
Operations and higher general, administrative and support costs.
WESTERN OPERATIONS
Operating and other income for first quarter 2004 in Western Operations of $35
million was $8 million lower than first quarter 2003, mainly due to lower prices
achieved on the overall sale of power in first quarter 2004, lower ManChief
income in first quarter 2004 as a result of reduced dispatch levels and higher
depreciation expense and lower electricity transmission tariffs in first quarter
2003.
EASTERN OPERATIONS
Operating and other income for first quarter 2004 in Eastern Operations of $34
million was $9 million higher compared to first quarter 2003. The increase was
mainly due to increased water flows through the Curtis Palmer hydroelectric
facilities, higher net margins on power sales reflecting the growth in the
northeastern U.S. retail business with large commercial and industrial
customers, and fees earned on the demobilization of the Cobourg temporary
generation facility in Ontario. Partially offsetting these increases was the
unfavourable impact of a weaker U.S. dollar in first quarter 2004.
FIRST QUARTER REPORT 2004
TRANSCANADA [5
BRUCE POWER INVESTMENT
BRUCE POWER RESULTS-AT-A-GLANCE
Three months ended March 31 (unaudited)
(millions of dollars) 2004 2003
- ------------------------------------------------------ ---- ----
BRUCE POWER (100 per cent basis)
Revenues 399 398
Operating expenses (250) (194)
---- ----
Operating income 149 204
Financial charges (18) (16)
---- ----
Income before income taxes 131 188
---- ----
---- ----
TransCanada's interest in Bruce Power income
before income taxes* 41 34
Adjustments 7 4
---- ----
TransCanada's income from Bruce Power before
income taxes 48 38
---- ----
---- ----
* TransCanada acquired its interest in Bruce Power on February 14, 2003. Bruce
Power's 100 per cent income before income taxes from February 14, 2003 to March
31, 2003 was $107 million.
Bruce Power contributed $48 million of pre-tax equity income in first quarter
2004 compared to $38 million in first quarter 2003. The increase primarily
reflects TransCanada's ownership for the entire first quarter 2004 compared to
approximately six weeks of ownership in first quarter 2003. In addition, output
was higher in first quarter 2004 as a result of the return to service of Units 3
and 4 which have increased Bruce Power's operating expenses and expanded
capacity by approximately 1,500 megawatts (MW) from first quarter 2003.
TransCanada's share of power output for first quarter 2004 was approximately
2,530 gigawatt hours (GWh) compared to 1,087 GWh in first quarter 2003. Overall
prices achieved during first quarter 2004 were approximately $49 per megawatt
hour (MWh) compared to an average realized price of $57 per MWh in first quarter
2003. Approximately 50 per cent of the output was sold into Ontario's wholesale
spot market in first quarter 2004 with the remainder being sold under longer
term contracts. This represents an increase from 45 per cent sold into the spot
market in first quarter 2003. On a per unit basis, the Bruce operating cost
increased to $31 per MWh in first quarter 2004 from $28 per MWh in first quarter
2003.
FIRST QUARTER REPORT 2004
TRANSCANADA [6
Unit 3 began producing electricity to the Ontario electricity grid on January 8,
2004 and was considered commercially in-service March 1, 2004. The return to
service of Unit 3 brings Bruce Power's capacity to 4,660 MW. The Bruce units ran
at an average availability of 80 per cent in first quarter 2004, whereas average
availability during TransCanada's period of ownership ending March 31, 2003 was
100 per cent. A series of unplanned maintenance outages limited overall output
in first quarter 2004. Unit 3 was offline for more than 50 per cent of the first
two months of 2004 to perform maintenance on its heat transport system and
repair a turbine bearing. While Unit 3 was down, Bruce Power completed
additional work that had been planned for an outage later in the year. As a
result, the planned outage for Unit 3 in second quarter 2004 has been cancelled.
The maintenance outage on Unit 8, which began in third quarter 2003, was
extended until January 28, 2004 to repair support plates in three of the unit's
eight steam generators.
Equity income from Bruce Power is directly impacted by fluctuations in wholesale
spot market prices for electricity as well as overall plant availability, which
in turn, is impacted by scheduled and unscheduled maintenance. To reduce its
exposure to spot market prices, Bruce Power has entered into fixed price sales
contracts for approximately 45 per cent of planned output for the remainder of
2004. There is a planned maintenance outage at one of the Bruce A units for
approximately five weeks of second quarter 2004.
On March 12, 2004, Bruce Power was granted a five year operational license from
the Canadian Nuclear Safety Commission for its Bruce A and B generating
stations.
POWER LP INVESTMENT
Operating and other income of $10 million in first quarter 2004 from Power's
35.6 per cent investment in TransCanada Power, L.P. (Power LP) was consistent
with first quarter 2003.
GENERAL, ADMINISTRATIVE AND SUPPORT COSTS
General, administrative and support costs increased $4 million compared to first
quarter 2003, mainly reflecting higher support costs as part of the company's
increased investment in Power.
FIRST QUARTER REPORT 2004
TRANSCANADA [7
POWER SALES VOLUMES
Three months ended March 31 (unaudited)
(GWh) 2004 2003
- ------------------------------------------------------- ----- -----
Western operations* 2,876 3,091
Eastern operations 1,611 1,685
Bruce Power investment** 2,530 1,087
Power LP investment 572 563
----- -----
Total 7,589 6,426
----- -----
----- -----
* Sales volumes include TransCanada's share of the Sundance B power purchase
arrangement (50 per cent).
** Acquired on February 14, 2003. Sales volumes reflect TransCanada's 31.6
per cent share of Bruce Power output.
WEIGHTED AVERAGE PLANT AVAILABILITY*
Three months ended March 31 (unaudited) 2004 2003
- ------------------------------------------------------- ----- -----
Western operations 99% 98%
Eastern operations 98% 84%
Bruce Power investment** 80% 100%
Power LP investment 99% 98%
All plants 90% 96%
* Plant availability represents the percentage of time in the year that the
plant is available to generate power, whether actually running or not and is
reduced by planned and unplanned outages.
** Acquired February 14, 2003. Bruce A Unit 3 is included effective March 1,
2004.
CORPORATE
Net expenses were nil and $13 million for the three months ended March 31, 2004
and 2003, respectively. The $13 million decrease in net expenses is almost
entirely due to income tax refunds and refund interest received in first quarter
2004 relating to prior years.
LIQUIDITY AND CAPITAL RESOURCES
FUNDS GENERATED FROM OPERATIONS
Funds generated from continuing operations were $423 million for the three
months ended March 31, 2004 compared with $457 million for the same period in
2003.
TransCanada expects that its ability to generate sufficient amounts of cash in
the short term and the long term, when needed, and to maintain financial
capacity and flexibility to provide for planned growth is adequate and remains
substantially unchanged since December 31, 2003.
FIRST QUARTER REPORT 2004
TRANSCANADA [8
INVESTING ACTIVITIES
In the three months ended March 31, 2004, capital expenditures, excluding
acquisitions, totalled $101 million (2003 - $76 million) and related primarily
to construction of new power plants and maintenance and capacity capital in the
Gas Transmission business. Acquisitions for the three months ended March 31,
2004 were nil (2003 - $409 million).
FINANCING ACTIVITIES
TransCanada retired long-term debt of $476 million in the quarter ended March
31, 2004. In February 2004, the company issued $200 million of five year notes
bearing interest at 4.1 per cent. In March 2004, the company issued US$350
million of 30 year senior unsecured notes bearing interest at 5.6 per cent. For
the quarter ended March 31, 2004, outstanding notes payable decreased by $229
million, while cash and short-term investments increased by $57 million.
DIVIDENDS
On April 23, 2004, TransCanada's Board of Directors declared a quarterly
dividend of $0.29 per share for the quarter ending June 30, 2004 on the
outstanding common shares. This is the 162nd consecutive quarterly dividend paid
by TransCanada and its subsidiary on the common shares. It is payable on July
30, 2004 to shareholders of record at the close of business on June 30, 2004.
CONTRACTUAL OBLIGATIONS
There have been no material changes to TransCanada's contractual obligations,
including payments due for each of the next five years and thereafter, since
December 31, 2003. For further information on these contractual obligations,
refer to Management's Discussion and Analysis in TransCanada's 2003 Annual
Report.
FINANCIAL AND OTHER INSTRUMENTS
The following represents the material changes to the company's risk management
and financial instruments since December 31, 2003. The tables reflect the impact
of hedge accounting changes adopted prospectively, effective January 1, 2004, as
further discussed under Accounting Changes - Hedging Relationships.
FIRST QUARTER REPORT 2004
TRANSCANADA [9
FOREIGN EXCHANGE AND INTEREST RATE MANAGEMENT ACTIVITY
The company manages the foreign exchange risk of U.S. dollar debt, U.S. dollar
expenses and the interest rate exposures of the Alberta System, the Canadian
Mainline and the Foothills System through the use of foreign currency and
interest rate derivatives. These derivatives are comprised of contracts for
periods up to eight years. Certain of the realized gains and losses on interest
rate derivatives are shared with shippers on predetermined terms.
Asset/(Liability) March 31, 2004
(millions of dollars) (unaudited) December 31, 2003
- ------------------------------------- ------------------------ ------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -----
FOREIGN EXCHANGE
Cross-currency swaps (21) (21) (26) (26)
INTEREST RATE
Interest rate swaps
Canadian dollars 23 23 2 15
U.S. dollars 9 9 - 8
- ---------------------------------------------------------------------------------------------------
At March 31, 2004, the principal amount of cross-currency swaps was US$282
million (December 31, 2003 - US$282 million). Notional principal amounts for
interest rate swaps were $769 million (December 31, 2003 - $964 million) and
US$100 million (December 31, 2003 - US$100 million).
The company manages the foreign exchange risk and interest rate exposures of its
other U.S. dollar debt through the use of foreign currency and interest rate
derivatives. These derivatives are comprised of contracts for periods up to nine
years. The fair values of the interest rate derivatives are shown in the table
below.
Asset/(Liability) March 31, 2004
(millions of dollars) (unaudited) December 31, 2003
- ------------------------------------- ------------------------ ------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -----
INTEREST RATE
Interest rate swaps
U.S. dollars 44 44 2 37
FORWARD FOREIGN EXCHANGE CONTRACTS
U.S. dollars (4) (4) - -
- ---------------------------------------------------------------------------------------------------
At March 31, 2004, the notional principal amount for interest rate swaps was
US$550 million (December 31, 2003 - US$500 million) and the principal amount of
forward foreign exchange contracts was US$200 million (December 31, 2003 - nil).
FIRST QUARTER REPORT 2004
TRANSCANADA [10
RISK MANAGEMENT
With respect to continuing operations, TransCanada's market, financial and
counterparty risks remain substantially unchanged since December 31, 2003. For
further information on risks, refer to Management's Discussion and Analysis in
TransCanada's 2003 Annual Report.
CONTROLS AND PROCEDURES
As of the end of the period covered by this quarterly report, TransCanada's
management, together with TransCanada's President and Chief Executive Officer
and Chief Financial Officer, evaluated the effectiveness of the design and
operation of the company's disclosure controls and procedures. Based on this
evaluation, the President and Chief Executive Officer and the Chief Financial
Officer of TransCanada have concluded that the disclosure controls and
procedures are effective.
There were no changes in TransCanada's internal control over financial reporting
during the most recent fiscal quarter that have materially affected or are
reasonably likely to materially affect TransCanada's internal control over
financial reporting.
CRITICAL ACCOUNTING POLICY
TransCanada's critical accounting policy, which remains unchanged since December
31, 2003, is the use of regulatory accounting for its regulated operations. For
further information on this critical accounting policy, refer to Management's
Discussion and Analysis in TransCanada's 2003 Annual Report.
CRITICAL ACCOUNTING ESTIMATES
Since a determination of many assets, liabilities, revenues and expenses is
dependent upon future events, the preparation of the company's consolidated
financial statements requires the use of estimates and assumptions which have
been made using careful judgment. TransCanada's critical accounting estimates
from December 31, 2003 continue to be depreciation expense and certain deferred
after-tax gains and remaining obligations related to the Gas Marketing business.
For further information on these critical accounting estimates, refer to
Management's Discussion and Analysis in TransCanada's 2003 Annual Report.
FIRST QUARTER REPORT 2004
TRANSCANADA [11
ACCOUNTING CHANGES
ASSET RETIREMENT OBLIGATIONS
Effective January 1, 2004, the company adopted the new standard of the Canadian
Institute of Chartered Accountants (CICA) Handbook Section "Asset Retirement
Obligations", which addresses financial accounting and reporting for obligations
associated with asset retirement costs. This section requires that the fair
value of a liability for an asset retirement obligation be recognized in the
period in which it is incurred if a reasonable estimate of fair value can be
made. The fair value is added to the carrying amount of the associated asset.
The liability is accreted at the end of each period through charges to operating
expenses. This accounting change was applied retroactively with restatement of
prior periods.
The plant, property and equipment of the regulated natural gas transmission
operations consist primarily of underground pipelines and above ground
compression equipment and other facilities. No amount has been recorded for
asset retirement obligations relating to these assets as it is not possible to
make a reasonable estimate of the fair value of the liability due to the
indeterminate timing and scope of the asset retirements. Management believes
it is reasonable to assume that all retirement costs associated with the
regulated pipelines will be recovered through tolls in future periods.
The plant, property and equipment in the power business consists primarily of
power plants in Canada and the United States. The impact of this accounting
change resulted in an increase of $6 million and $7 million in the estimated
fair value of the liability for the power plants and associated assets as at
January 1, 2003 and December 31, 2003, respectively. The asset retirement cost,
net of accumulated depreciation that would have been recorded if the cost had
been recorded in the period in which it arose, is recorded as an additional cost
of the assets as at January 1, 2003. The estimated fair value of the liability
as at March 31, 2004 was $9 million. The company has no legal liability for
asset retirement obligations with respect to its investment in Bruce Power and
the Sundance A and B power purchase arrangements.
The impact of this accounting change resulted in an increase of $2 million in
the estimated fair value of the liability for TransCanada's Other Gas
Transmission assets as at January 1, 2003 and December 31, 2003. The estimated
fair value of this liability as at March 31, 2004 was $2 million.
The impact of this change on TransCanada's net income in first quarter 2004 and
prior periods was nil.
FIRST QUARTER REPORT 2004
TRANSCANADA [12
HEDGING RELATIONSHIPS
Effective January 1, 2004, the company adopted the provisions of the CICA's new
Accounting Guideline "Hedging Relationships" that specifies the circumstances in
which hedge accounting is appropriate, including the identification,
documentation, designation and effectiveness of hedges, and the discontinuance
of hedge accounting. In accordance with the provisions of this new guideline,
TransCanada has recorded all derivatives on the Consolidated Balance Sheet at
fair value.
This new guideline was applied prospectively and resulted in a decrease to first
quarter 2004 net income of $2 million. The significant impact of the accounting
change on the Consolidated Balance Sheet as at January 1, 2004 is as follows.
(unaudited - millions of dollars) Increase/(Decrease)
- ------------------------------------------------- -------------------
Current Assets
Other 8
Other Assets 123
-------------------
Total Assets 131
-------------------
Current Liabilities
Accounts Payable 8
Deferred Amounts 132
Long-Term Debt (7)
Future Income Taxes (1)
-------------------
Total Liabilities 132
-------------------
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Effective January 1, 2004, the company adopted the new standard of the CICA
Handbook Section "Generally Accepted Accounting Principles" that defines primary
sources of generally accepted accounting principles (GAAP) and the other sources
that need to be considered in the application of GAAP. The new standard
eliminates the ability to rely on industry practice to support a particular
accounting policy.
This accounting change was applied prospectively and there was no impact on net
income in first quarter 2004. In prior periods, in accordance with industry
practice, certain assets and liabilities related to the company's regulated
activities, and offsetting deferral accounts, were not recorded on the balance
sheet. The impact of the change on the consolidated balance sheet as at January
1, 2004 is as follows.
(unaudited - millions of dollars) Increase/(Decrease)
- ------------------------------------------------- -------------------
Other Assets 153
-------------------
Deferred Amounts 80
Long-Term Debt 76
Preferred Securities (3)
-------------------
Total Liabilities 153
-------------------
FIRST QUARTER REPORT 2004
TRANSCANADA [13
OUTLOOK
In 2004, the outcome of the proposed acquisition of Gas Transmission Northwest
Corporation (GTN) could have a positive impact on the expected results of the
Gas Transmission segment. In addition, the sale of the ManChief and Curtis
Palmer power facilities to Power LP could have a significant positive impact on
Power's 2004 expected results. For further information on the acquisition and
sale, please refer to Other Recent Developments. Excluding these impacts and the
receipts of income tax refunds and refund interest in first quarter 2004, the
company's outlook is relatively unchanged since December 31, 2003. For further
information on outlook, refer to Management's Discussion and Analysis in
TransCanada's 2003 Annual Report.
The company's net earnings and cash flow combined with a strong balance sheet
continue to provide the financial flexibility for TransCanada to make
disciplined investments in its core businesses of Gas Transmission and Power.
Credit ratings on TransCanada PipeLines Limited's senior unsecured debt assigned
by Dominion Bond Rating Service Limited (DBRS), Moody's Investors Service
(Moody's) and Standard & Poor's are currently A, A2 and A-, respectively. DBRS
and Moody's both maintain a `stable' outlook on their ratings and Standard &
Poor's maintains a 'negative' outlook on its rating.
OTHER RECENT DEVELOPMENTS
GAS TRANSMISSION
WHOLLY-OWNED PIPELINES
ALBERTA SYSTEM
In July 2003, TransCanada, along with other utilities, filed evidence in the
GCOC Proceeding with the EUB. TransCanada has requested a return on equity of 11
per cent based on a deemed common equity of 40 per cent in its GCOC application.
The EUB expects to adopt a standardized approach to determining the rate of
return and capital structure for all utilities under its jurisdiction at the
conclusion of this proceeding. The oral portion of the hearing was completed on
January 16, 2004 with written argument and reply argument filed on February 23,
2004 and April 5, 2004, respectively. An EUB decision is expected in third
quarter 2004.
In September 2003, TransCanada filed Phase I of the 2004 GRA with the EUB,
consisting of evidence in support of the applied for rate base and revenue
requirement. The company applied for a composite depreciation rate of 4.13 per
cent compared to the current depreciation rate of 4.00 per cent. Phase II of the
application, dealing primarily with rate design and services, was filed in
December 2003. The EUB hearing to consider the GRA Phase I
FIRST QUARTER REPORT 2004
TRANSCANADA [14
application began, in Calgary, on April 5, 2004, with the evidentiary portion
concluding on April 14, 2004. Final argument and reply are due May 5, 2004 and
May 26, 2004 respectively. A decision is expected in third quarter 2004. The
Phase II hearing is scheduled to commence on June 8, 2004.
In December 2003, the EUB approved TransCanada's application to charge interim
tolls for transportation service, effective January 1, 2004. Final tolls for
2004 will be determined based on the EUB decisions in the GCOC proceeding and in
both phases of the proceeding regarding the GRA.
CANADIAN MAINLINE
In April 2004, the Federal Court of Appeal dismissed TransCanada's appeal of the
NEB's decision to deny TransCanada's Fair Return Review and Variance
Application, while endorsing TransCanada's view of the law relating to the
determination of a fair return by the NEB. The judgment has no impact on
reported earnings for 2001, 2002 and 2003.
In December 2003, the NEB approved interim tolls effective January 1, 2004 for
the Canadian Mainline. The 2004 Tolls and Tariff Application for the Canadian
Mainline was filed on January 26, 2004 and includes a request for an 11 per cent
return on a 40 per cent deemed common equity component. Phase I of the hearing
will consider all issues raised by the application, with the exception of cost
of capital, and is expected to commence June 14, 2004 in Ottawa. The procedures
for Phase II of the hearing, which will address cost of capital, have not yet
been announced.
OTHER GAS TRANSMISSION
IROQUOIS
In February 2004, the Iroquois pipeline began commercial operation of its
Eastchester expansion. Iroquois' Eastchester expansion is the first major
natural gas transmission pipeline to be built into New York City in
approximately 40 years.
NORTHERN DEVELOPMENT
TransCanada has been engaged in renewed discussions with the State of Alaska
(the State) relating to the Alaskan portion of the Alaska Highway Pipeline
Project. Further to these discussions, TransCanada is prepared to assume a
leadership position with respect to the development of an independently-owned
pipeline project in Alaska, in addition to the company's long-standing
leadership of the Canadian portion of the project. TransCanada is open to the
potential participation of Alaska Native corporations and other Alaskan
entities.
FIRST QUARTER REPORT 2004
TRANSCANADA [15
In April 2004, TransCanada announced that it had signed a memorandum of
understanding (MOU) with the State. In the MOU, TransCanada has committed to
file an application under the State's Stranded Gas Development Act, and the
State will resume processing of TransCanada's long-pending application for a
right-of-way lease on State lands. TransCanada holds the complementary
rights-of-way on federal lands in the State. In the MOU, the State and
TransCanada recognize the critical importance of upstream fiscal negotiations
between the State and the North Slope producers.
Once a right-of-way lease has been issued by the State and commercial
arrangements adequate to support financing are in place, TransCanada would be
prepared to convey the Alaska right-of-way lease to the corporation or
partnership that would undertake construction of the project within Alaska. Such
corporation or partnership could be owned in part by TransCanada. A conveyance
would be subject to an exclusive interconnection agreement with TransCanada at
the Alaska/Yukon border.
LIQUEFIED NATURAL GAS
In a referendum held on March 9, 2004, the residents of Harpswell, Maine voted
against leasing a town-owned site to build the Fairwinds liquefied natural gas
(LNG) regasification facility. As a result, TransCanada and its partner
ConocoPhillips Company suspended further work on this LNG project.
GAS TRANSMISSION NORTHWEST CORPORATION
As described in Management's Discussion and Analysis in TransCanada's 2003
Annual Report, TransCanada executed a Stock Purchase Agreement with National
Energy & Gas Transmission, Inc., and certain of its subsidiaries (collectively,
NEGT) to acquire GTN for US$1.7 billion, including US$0.5 billion of assumed
debt, subject to closing adjustments. GTN owns and operates two pipeline
systems - the Gas Transmission Northwest Pipeline System and the North Baja
Pipeline System.
On March 25, 2004, the bankruptcy court issued an order approving certain
bidding procedures in connection with this sale. If, after the auction process
contemplated by the Stock Purchase Agreement and the bidding procedures order,
it is determined that TransCanada's bid for GTN is the highest and otherwise
best bid, the bankruptcy court shall hold a hearing, currently scheduled for May
12, 2004, to consider approval of the Stock Purchase Agreement.
FIRST QUARTER REPORT 2004
TRANSCANADA [16
POWER
SALE OF POWER FACILITIES TO TRANSCANADA POWER, L.P.
On March 29, 2004, TransCanada entered into an agreement to sell the ManChief
and Curtis Palmer power facilities for US$402.6 million to Power LP. TransCanada
expects to recognize a gain of approximately $10 million after tax on the sale
of these assets. The sale is subject to certain post closing adjustments,
approval by Power LP's unitholders on April 29, 2004 and applicable regulatory
approvals. TransCanada expects to complete the sale of these assets on or about
May 5, 2004. A wholly owned subsidiary of TransCanada manages Power LP and the
operation of the assets owned by Power LP, and currently owns 35.6 per cent of
Power LP.
Power LP expects to fund the transaction through an offering of 8.11 million
subscription receipts which closed April 15, 2004 and a bridge loan facility
from a Canadian chartered bank. As part of the subscription receipts offering,
TransCanada purchased 540,000 subscription receipts for an aggregate purchase
price of approximately $20 million. Subsequent to the transaction being
completed, TransCanada's ownership interest in Power LP will be reduced to
approximately 30.6 per cent.
Power LP's unitholders will be asked at a special meeting to be held on April
29, 2004 to approve the acquisition and remove Power LP's obligation to redeem
all units not owned by TransCanada in 2017. As a result of the removal of the
redemption obligation and the reduction in ownership interest, upon closing,
TransCanada expects to recognize a gain of approximately $165 million after tax.
This amount primarily reflects the recognition of unamortized gains on previous
Power LP transactions.
MACKAY RIVER
The MacKay River cogeneration plant, situated at Petro-Canada's MacKay River
oilsands development, was declared contractually commercially in-service on
February 1, 2004. However, normal commercial operations have not occurred on a
sustained basis due to unresolved integration issues with the host site. The
issues preventing normal commercial operations are expected to be resolved in
second quarter 2004.
SHARE INFORMATION
As at March 31, 2004, TransCanada had 483,923,583 issued and outstanding common
shares. In addition, there were 10,962,623 outstanding options to purchase
common shares, of which 8,204,452 were exercisable as at March 31, 2004.
- -------------------------------------------------------------------------------
FORWARD-LOOKING INFORMATION
Certain information in this quarterly report is forward-looking and is subject
to important risks and uncertainties. The results or events predicted in this
information may differ from actual results or events. Factors which could cause
actual results or events to differ materially from current expectations include,
among other things, the ability of TransCanada to successfully implement its
strategic initiatives and whether such strategic initiatives will yield the
expected benefits, the availability and price of energy commodities, regulatory
decisions, competitive factors in the pipeline and power industry sectors, and
the prevailing economic conditions in North America. For additional information
on these and other factors, see the reports filed by TransCanada with Canadian
securities regulators and with the United States Securities and Exchange
Commission. TransCanada disclaims any intention or obligation to update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.
EXHIBIT 2
FIRST QUARTER REPORT 2004
TRANSCANADA [17
CONSOLIDATED INCOME
Three months ended March 31 (unaudited)
(millions of dollars except per share amounts) 2004 2003
- ------------------------------------------------------- ----- -----
REVENUES 1,233 1,336
OPERATING EXPENSES
Cost of sales 127 180
Other costs and expenses 374 427
Depreciation 232 215
----- -----
733 822
----- -----
OPERATING INCOME 500 514
OTHER EXPENSES/(INCOME)
Financial charges 195 204
Financial charges of joint ventures 14 22
Equity income (58) (58)
Interest and other income (15) (13)
----- -----
136 155
----- -----
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 364 359
AND NON-CONTROLLING INTERESTS
INCOME TAXES
Current 107 62
Future 23 74
NON-CONTROLLING INTERESTS
Preferred securities charges 8 9
Preferred share dividends 6 6
Other 6 -
----- -----
NET INCOME 214 208
----- -----
----- -----
NET INCOME PER SHARE - BASIC AND DILUTED $0.44 $0.43
----- -----
----- -----
AVERAGE SHARES OUTSTANDING - BASIC (millions) 483.4 480.1
----- -----
----- -----
AVERAGE SHARES OUTSTANDING - DILUTED (millions) 486.1 481.9
----- -----
----- -----
See accompanying Notes to the Consolidated Financial Statements.
FIRST QUARTER REPORT 2004
TRANSCANADA [18
CONSOLIDATED CASH FLOWS
Three months ended March 31 (unaudited)
(millions of dollars) 2004 2003
- ------------------------------------------------------- ----- -----
CASH GENERATED FROM OPERATIONS
Net income 214 208
Depreciation 232 215
Future income taxes 23 74
Equity income in excess of distributions received (51) (51)
Non-controlling interests 20 15
Other (15) (4)
----- -----
Funds generated from operations 423 457
Increase in operating working capital (42) (8)
----- -----
Net cash provided by continuing operations 381 449
Net cash (used in)/provided by discontinued operations (2) 4
----- -----
379 453
----- -----
INVESTING ACTIVITIES
Capital expenditures (101) (76)
Acquisitions, net of cash acquired - (409)
Deferred amounts and other (43) (18)
----- -----
Net cash used in investing activities (144) (503)
----- -----
FINANCING ACTIVITIES
Dividends and preferred securities charges (148) (139)
Notes payable (repaid)/issued, net (229) 209
Long-term debt issued 665 -
Reduction of long-term debt (476) (9)
Non-recourse debt of joint ventures issued 6 17
Reduction of non-recourse debt of joint ventures (9) (16)
Common shares issued 13 16
----- -----
Net cash (used in)/provided by financing activities (178) 78
----- -----
INCREASE IN CASH AND SHORT-TERM INVESTMENTS 57 28
CASH AND SHORT-TERM INVESTMENTS
Beginning of period 338 212
----- -----
CASH AND SHORT-TERM INVESTMENTS
End of period 395 240
----- -----
----- -----
SUPPLEMENTARY CASH FLOW INFORMATION
Income taxes paid 161 55
Interest paid 172 190
----- -----
----- -----
See accompanying Notes to the Consolidated Financial Statements.
FIRST QUARTER REPORT 2004
TRANSCANADA [19
CONSOLIDATED BALANCE SHEET
March 31, 2004 December 31,
(millions of dollars) (unaudited) 2003
- ------------------------------------------------------------ -------------- ------------
ASSETS
CURRENT ASSETS
Cash and short-term investments 395 338
Accounts receivable 555 605
Inventories 161 165
Other 110 88
-------------- ------------
1,221 1,196
LONG-TERM INVESTMENTS 782 733
PLANT, PROPERTY AND EQUIPMENT 17,336 17,460
OTHER ASSETS 1,483 1,164
-------------- ------------
20,822 20,553
-------------- ------------
-------------- ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable 138 367
Accounts payable 911 1,025
Accrued interest 241 208
Current portion of long-term debt 489 550
Current portion of non-recourse debt of joint ventures 25 19
-------------- ------------
1,804 2,169
DEFERRED AMOUNTS 642 475
LONG-TERM DEBT 9,835 9,465
FUTURE INCOME TAXES 434 427
NON-RECOURSE DEBT OF JOINT VENTURES 760 761
PREFERRED SECURITIES 19 22
-------------- ------------
13,494 13,319
-------------- ------------
NON-CONTROLLING INTERESTS
Preferred securities of subsidiary 672 672
Preferred shares of subsidiary 389 389
Other 85 82
-------------- ------------
1,146 1,143
-------------- ------------
SHAREHOLDERS' EQUITY
Common shares 4,692 4,679
Contributed surplus 268 267
Retained earnings 1,259 1,185
Foreign exchange adjustment (37) (40)
-------------- ------------
6,182 6,091
-------------- ------------
20,822 20,553
-------------- ------------
-------------- ------------
See accompanying Notes to the Consolidated Financial Statements.
FIRST QUARTER REPORT 2004
TRANSCANADA [20
CONSOLIDATED RETAINED EARNINGS
Three months ended March 31 (unaudited)
(millions of dollars) 2004 2003
- ------------------------------------------------------------ ----- ----
Balance at beginning of period 1,185 854
Net income 214 208
Common share dividends (140) (129)
----- ----
1,259 933
----- ----
----- ----
See accompanying Notes to the Consolidated Financial Statements.
FIRST QUARTER REPORT 2004
TRANSCANADA [21
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements of TransCanada Corporation (TransCanada or
the company) have been prepared in accordance with Canadian generally accepted
accounting principles (GAAP). The accounting policies applied are consistent
with those outlined in TransCanada's annual financial statements for the year
ended December 31, 2003 except as stated below. These consolidated financial
statements reflect all normal recurring adjustments that are, in the opinion of
management, necessary to present fairly the financial position and results of
operations for the respective periods. These consolidated financial statements
do not include all disclosures required in the annual financial statements and
should be read in conjunction with the annual financial statements included in
TransCanada's 2003 Annual Report. Amounts are stated in Canadian dollars unless
otherwise indicated. Certain comparative figures have been reclassified to
conform with the current period's presentation.
Since a determination of many assets, liabilities, revenues and expenses is
dependent upon future events, the preparation of these consolidated financial
statements requires the use of estimates and assumptions. In the opinion of
Management, these consolidated financial statements have been properly prepared
within reasonable limits of materiality and within the framework of the
company's significant accounting policies.
2. ACCOUNTING CHANGES
ASSET RETIREMENT OBLIGATIONS
Effective January 1, 2004, the company adopted the new standard of the Canadian
Institute of Chartered Accountants (CICA) Handbook Section "Asset Retirement
Obligations", which addresses financial accounting and reporting for obligations
associated with asset retirement costs. This section requires that the fair
value of a liability for an asset retirement obligation be recognized in the
period in which it is incurred if a reasonable estimate of fair value can be
made. The fair value is added to the carrying amount of the associated asset.
The liability is accreted at the end of each period through charges to operating
expenses. This accounting change was applied retroactively with restatement of
prior periods.
FIRST QUARTER REPORT 2004
TRANSCANADA [22
The plant, property and equipment of the regulated natural gas transmission
operations consist primarily of underground pipelines and above ground
compression equipment and other facilities. No amount has been recorded for
asset retirement obligations relating to these assets as it is not possible to
make a reasonable estimate of the fair value of the liability due to the
indeterminate timing and scope of the asset retirements. Management believes
it is reasonable to assume that all retirement costs associated with the
regulated pipelines will be recovered through tolls in future periods.
The plant, property and equipment in the power business consists primarily of
power plants in Canada and the United States. The impact of this accounting
change resulted in an increase of $6 million and $7 million in the estimated
fair value of the liability for the power plants and associated assets as at
January 1, 2003 and December 31, 2003, respectively. The asset retirement cost,
net of accumulated depreciation that would have been recorded if the cost had
been recorded in the period in which it arose, is recorded as an additional cost
of the assets as at January 1, 2003. The estimated fair value of the liability
as at March 31, 2004 was $9 million. The company has no legal liability for
asset retirement obligations with respect to its investment in Bruce Power and
the Sundance A and B power purchase arrangements.
The impact of this accounting change resulted in an increase of $2 million in
the estimated fair value of the liability for TransCanada's Other Gas
Transmission assets as at January 1, 2003 and December 31, 2003. The estimated
fair value of this liability as at March 31, 2004 was $2 million.
The impact of this change on TransCanada's net income in first quarter 2004 and
prior periods was nil.
HEDGING RELATIONSHIPS
Effective January 1, 2004, the company adopted the provisions of the CICA's new
Accounting Guideline "Hedging Relationships" that specifies the circumstances in
which hedge accounting is appropriate, including the identification,
documentation, designation and effectiveness of hedges, and the discontinuance
of hedge accounting. In accordance with the provisions of this new guideline,
TransCanada has recorded all derivatives on the Consolidated Balance Sheet at
fair value.
FIRST QUARTER REPORT 2004
TRANSCANADA [23
This new guideline was applied prospectively and resulted in a decrease to first
quarter 2004 net income of $2 million. The significant impact of the accounting
change on the Consolidated Balance Sheet as at January 1, 2004 is as follows.
(unaudited - millions of dollars) Increase/(Decrease)
- --------------------------------------------------------- -------------------
Current Assets
Other 8
Other Assets 123
-------------------
Total Assets 131
-------------------
Current Liabilities
Accounts Payable 8
Deferred Amounts 132
Long-Term Debt (7)
Future Income Taxes (1)
-------------------
Total Liabilities 132
-------------------
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
Effective January 1, 2004, the company adopted the new standard of the CICA
Handbook Section "Generally Accepted Accounting Principles" that defines primary
sources of generally accepted accounting principles (GAAP) and the other sources
that need to be considered in the application of GAAP. The new standard
eliminates the ability to rely on industry practice to support a particular
accounting policy.
This accounting change was applied prospectively and there was no impact on net
income in first quarter 2004. In prior periods, in accordance with industry
practice, certain assets and liabilities related to the company's regulated
activities, and offsetting deferral accounts, were not recorded on the balance
sheet. The impact of the change on the consolidated balance sheet as at January
1, 2004 is as follows.
(unaudited - millions of dollars) Increase/(Decrease)
- --------------------------------------------------------- -------------------
Other Assets 153
-------------------
Deferred Amounts 80
Long-Term Debt 76
Preferred Securities (3)
-------------------
Total Liabilities 153
-------------------
FIRST QUARTER REPORT 2004
TRANSCANADA [24
3. SEGMENTED INFORMATION
GAS TRANSMISSION POWER CORPORATE TOTAL
Three months ended March 31 ---------------- ------------ ------------ -------------
(unaudited - millions of dollars) 2004 2003 2004 2003 2004 2003 2004 2003
- --------------------------------------- ----- ---- ---- ---- ---- ---- ----- -----
Revenues 949 960 284 376 - - 1,233 1,336
Cost of sales - - (127) (180) - - (127) (180)
Other costs and expenses (285) (304) (87) (121) (2) (2) (374) (427)
Depreciation (212) (194) (20) (21) - - (232) (215)
----- ---- ---- ---- ---- ---- ----- -----
Operating income/(loss) 452 462 50 54 (2) (2) 500 514
Financial charges and non-controlling
interests (192) (196) (2) (2) (21) (21) (215) (219)
Financial charges of joint ventures (14) (22) - - - - (14) (22)
Equity income 10 20 48 38 - - 58 58
Interest and other income 3 5 4 4 8 4 15 13
Income taxes (110) (111) (35) (31) 15 6 (130) (136)
----- ---- ---- ---- ---- ---- ----- -----
NET INCOME 149 158 65 63 - (13) 214 208
----- ---- ---- ---- ---- ---- ----- -----
----- ---- ---- ---- ---- ---- ----- -----
TOTAL ASSETS
March 31, 2004 December 31,
(millions of dollars) (unaudited) 2003
- -------------------------------------------- -------------- ------------
Gas Transmission 16,908 16,974
Power 2,830 2,753
Corporate 1,074 815
-------------- ------------
Continuing Operations 20,812 20,542
Discontinued Operations 10 11
-------------- ------------
20,822 20,553
-------------- ------------
-------------- ------------
4. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
The following represents the material changes to the company's risk management
and financial instruments since December 31, 2003. The tables reflect the impact
of hedge accounting changes adopted prospectively, effective January 1, 2004, as
further discussed under Note 2, Accounting Changes - Hedging Relationships.
FOREIGN EXCHANGE AND INTEREST RATE MANAGEMENT ACTIVITY
The company manages the foreign exchange risk of U.S. dollar debt, U.S. dollar
expenses and the interest rate exposures of the Alberta System, the Canadian
Mainline and the Foothills System through the use of foreign currency and
interest rate derivatives. These derivatives are comprised of contracts for
periods up to eight years. Certain of the realized gains and losses on interest
rate derivatives are shared with shippers on predetermined terms.
FIRST QUARTER REPORT 2004
TRANSCANADA [25
Asset/(Liability) March 31, 2004
(millions of dollars) (unaudited) December 31, 2003
- ------------------------------------ -------------------- --------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -----
FOREIGN EXCHANGE
Cross-currency swaps (21) (21) (26) (26)
INTEREST RATE
Interest rate swaps
Canadian dollars 23 23 2 15
U.S. dollars 9 9 - 8
- ---------------------------------------------------------------------------------------
At March 31, 2004, the principal amounts of cross-currency swaps was US$282
million (December 31, 2003 - US$282 million). Notional principal amounts for
interest rate swaps were $769 million (December 31, 2003 - $964 million) and
US$100 million (December 31, 2003 - US$100 million).
The company manages the foreign exchange risk and interest rate exposures of its
other U.S. dollar debt through the use of foreign currency and interest rate
derivatives. These derivatives are comprised of contracts for periods up to nine
years. The fair values of the interest rate derivatives are shown in the table
below.
Asset/(Liability) March 31, 2004
(millions of dollars) (unaudited) December 31, 2003
- ------------------------------------ -------------------- --------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
-------- ----- -------- -----
INTEREST RATE
Interest rate swaps
U.S. dollars 44 44 2 37
FORWARD FOREIGN EXCHANGE CONTRACTS
U.S. dollars (4) (4) - -
- ---------------------------------------------------------------------------------------
At March 31, 2004, the notional principal amount for interest rate swaps was
US$550 million (December 31, 2003 - US$500 million) and the principal amount of
forward foreign exchange contracts was US$200 million (December 31, 2003 - nil).
5. ACQUISITION
On February 24, 2004, TransCanada announced an agreement to acquire Gas
Transmission Northwest Corporation (GTN) from National Energy & Gas Transmission
Inc. for approximately US$1.7 billion, including US$0.5 billion of assumed debt
and subject to closing adjustments. GTN is a natural gas pipeline company that
owns and operates two pipeline systems. The acquisition is subject to bankruptcy
court approval, including completion of a court-sanctioned auction process,
regulatory approval and an anti-trust review.
FIRST QUARTER REPORT 2004
TRANSCANADA [26
6. SALE OF ASSETS
On March 29, 2004, TransCanada entered into an agreement to sell the ManChief
and Curtis Palmer power facilities for US$402.6 million to Power LP. TransCanada
expects to recognize a gain of approximately $10 million after tax on the sale
of these assets. The sale is subject to certain post closing adjustments,
approval by Power LP's unitholders and applicable regulatory approvals.
TransCanada expects to complete the sale of these assets on or about May 5,
2004. Power LP's unitholders will be asked at a special meeting to be held on
April 29, 2004 to approve the acquisition and to remove Power LP's obligation to
redeem all units not owned by TransCanada in 2017.
Power LP expects to fund the transaction through an offering of 8.11 million
subscription receipts which closed April 15, 2004 and a bridge loan facility
from a Canadian chartered bank. As part of the subscription receipts offering,
TransCanada purchased 540,000 subscription receipts for an aggregate purchase
price of approximately $20 million. Subsequent to the transaction being
completed, TransCanada's ownership interest in Power LP will be reduced from
35.6 per cent to approximately 30.6 per cent. TransCanada expects the removal of
the redemption obligation and the reduction in ownership interest will result in
a gain of approximately $165 million after tax. This amount primarily reflects
the recognition of unamortized gains on previous Power LP transactions.
- -------------------------------------------------------------------------------
TransCanada welcomes questions from shareholders and potential investors. Please
telephone:
Investor Relations, at 1-800-361-6522 (Canada and U.S. Mainland) or direct dial
David Moneta/Debbie Stein at (403) 920-7911. The investor fax line is (403)
920-2457. Media Relations: Hejdi Feick/Kurt Kadatz at (403) 920-7859
Visit TransCanada's Internet site at: http://www.transcanada.com
- -------------------------------------------------------------------------------
EXHIBIT 3
TRANSCANADA CORPORATION
U.S. GAAP CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
CONDENSED STATEMENT OF CONSOLIDATED INCOME AND COMPREHENSIVE INCOME IN
ACCORDANCE WITH U.S. GAAP(1)
Three months ended
March 31
---------------------------
(MILLIONS OF DOLLARS EXCEPT PER SHARE AMOUNTS) 2004 2003
- ------------------------------------------------------------------- --------- -----------
Revenues(2) 1,143 1,177
--------- -----------
Cost of sales(2) 104 151
Other costs and expenses 387 422
Depreciation 212 185
--------- -----------
703 758
--------- -----------
Operating income 440 419
Other (income)/expenses
Equity income(1)(3) (109) (119)
Other expenses(4)(5) 210 220
Income taxes 126 123
--------- -----------
227 224
--------- -----------
Income before cumulative effect of the application of
accounting changes in accordance with U.S. GAAP 213 195
Cumulative effect of the application of accounting changes, net
of tax(2) - (13)
--------- -----------
NET INCOME IN ACCORDANCE WITH U.S. GAAP 213 182
Adjustments affecting comprehensive income under U.S. GAAP
Foreign currency translation adjustment, net of tax(6) 3 (15)
Changes in minimum pension liability, net of tax(7) 25 3
Unrealized (loss)/gain on derivatives, net of tax(4) (13) 8
--------- -----------
COMPREHENSIVE INCOME IN ACCORDANCE WITH U.S. GAAP 228 178
--------- -----------
--------- -----------
NET INCOME PER SHARE IN ACCORDANCE WITH U.S. GAAP -
BASIC AND DILUTED
Income before cumulative effect of the application of
accounting changes in accordance with U.S. GAAP $0.44 $0.41
Cumulative effect of the application of accounting changes,
net of tax(2) - (0.03)
--------- -----------
$0.44 $0.38
--------- -----------
--------- -----------
NET INCOME PER SHARE IN ACCORDANCE WITH CANADIAN GAAP -
BASIC AND DILUTED $0.44 $0.43
--------- -----------
--------- -----------
Dividends per common share $0.29 $0.27
--------- -----------
--------- -----------
COMMON SHARES OUTSTANDING (millions)
Average for the period - Basic 483.4 480.1
--------- -----------
--------- -----------
Average for the period - Diluted 486.1 481.9
--------- -----------
--------- -----------
Page 1 of 6
RECONCILIATION OF INCOME FROM CONTINUING OPERATIONS
Three months ended
March 31
---------------------------
(MILLIONS OF DOLLARS) 2004 2003
- ------------------------------------------------------------------- --------- -----------
Net income from continuing operations in accordance with
Canadian GAAP 214 208
U.S. GAAP adjustments
Unrealized loss on foreign exchange and interest rate
derivatives(4) (4) (6)
Tax impact of loss on foreign exchange and interest rate
derivatives 1 2
Unrealized gain/(loss) on energy trading contracts(2) 4 (11)
Tax impact of unrealized gain/(loss) on energy trading
contracts (1) 4
Equity loss(3) (1) (3)
Tax impact of equity loss - 1
--------- -----------
Income from continuing operations in accordance with U.S. GAAP 213 195
--------- -----------
--------- -----------
CONDENSED BALANCE SHEET IN ACCORDANCE WITH U.S. GAAP(1)
March 31, December 31,
(MILLIONS OF DOLLARS) 2004 2003
- ------------------------------------------------------------------- --------- -----------
Current assets 1,047 1,020
Long-term investments(3)(8) 1,826 1,760
Plant, property and equipment 15,665 15,798
Regulatory asset(9) 2,632 2,721
Other assets(4) 1,379 1,192
--------- -----------
22,549 22,491
--------- -----------
--------- -----------
Current liabilities(10) 1,726 2,073
Deferred amounts(2)(4)(8) 794 741
Long-term debt(4) 9,908 9,494
Deferred income taxes(9) 2,963 3,039
Preferred securities(11) 603 694
Non-controlling interests 474 471
Shareholders' equity 6,081 5,979
--------- -----------
22,549 22,491
--------- -----------
--------- -----------
Page 2 of 6
STATEMENT OF OTHER COMPREHENSIVE INCOME IN ACCORDANCE WITH U.S. GAAP
Cumulative Minimum Cash Flow
Translation Pension Liability Hedges
(MILLIONS OF DOLLARS) Account (SFAS No. 87) (SFAS No. 133) Total
- --------------------------------------------------------- ------------- ------------------ -------------- ---------
Balance at January 1, 2004 (40) (98) (5) (143)
Changes in minimum pension liability, net of tax
of $(13)(7) - 25 - 25
Unrealized loss on derivatives, net of tax of $7(4) - - (13) (13)
Foreign currency translation adjustment, net of tax
of $6(6) 3 - - 3
------------- ------------------ -------------- ---------
BALANCE AT MARCH 31, 2004 (37) (73) (18) (128)
------------- ------------------ -------------- ---------
------------- ------------------ -------------- ---------
Balance at January 1, 2003 14 (96) (13) (95)
Changes in minimum pension liability, net of tax
of $(1)(7) - 3 - 3
Unrealized gain on derivatives, net of tax of nil(4) - - 8 8
Foreign currency translation adjustment, net of tax
of $(21)(6) (15) - - (15)
------------- ------------------ -------------- ---------
Balance at March 31, 2003 (1) (93) (5) (99)
------------- ------------------ -------------- ---------
------------- ------------------ -------------- ---------
(1) In accordance with U.S. GAAP, the Condensed Statement of Consolidated
Income and Balance Sheet are prepared using the equity method of accounting
for joint ventures. Excluding the impact of other U.S. GAAP adjustments,
the use of the proportionate consolidation method of accounting for joint
ventures, as required under Canadian GAAP, results in the same net income
and Shareholders' Equity.
(2) Substantially all of the energy trading contracts are now accounted for as
hedges under U.S. and Canadian GAAP. The energy trading contracts that
qualified as hedges were accounted for as hedges under the provisions of
Statement of Financial Accounting Standards (SFAS) No. 133. All gains or
losses on the contracts that did not qualify as hedges, and the amounts of
any ineffectiveness on the hedging contracts, are included in income each
period. Substantially all of the amounts recorded in 2004 and 2003 as
differences between U.S. and Canadian GAAP relate to gains and losses on
contracts for periods before they were documented as hedges for purposes of
U.S. GAAP.
(3) Under Canadian GAAP, pre-operating costs incurred during the commissioning
phase of a new project are deferred until commercial production levels are
achieved. After such time, those costs are amortized over the estimated
life of the project. Under U.S. GAAP, such costs are expensed as incurred.
Certain start-up costs incurred by Bruce Power L.P. (an equity investment)
are required to be expensed under U.S. GAAP.
Page 3 of 6
(4) Effective January 1, 2004, all foreign exchange and interest rate
derivatives are recorded in the Company's Consolidated Financial Statements
at fair value under Canadian GAAP. Under the provisions of SFAS No. 133
"Accounting for Derivatives and Hedging Activities", all derivatives are
recognized as assets and liabilities on the balance sheet and measured at
fair value. For derivatives designated as fair value hedges, changes in the
fair value are recognized in earnings together with an equal or lesser
amount of changes in the fair value of the hedged item attributable to the
hedged risk. For derivatives designated as cash flow hedges, changes in the
fair value of the derivatives that are effective in offsetting the hedged
risk are recognized in other comprehensive income until the hedged item is
recognized in earnings. Any ineffective portion of the change in fair value
is recognized in earnings each period. Substantially all of the amounts
recorded in 2004 as differences between U.S. and Canadian GAAP, for income
from continuing operations, relate to the differences in accounting
treatment with respect to the hedged items and, for comprehensive income,
relate to cash flow hedges.
(5) Other expenses included an allowance for funds used during construction of
$1 million for the three months ended March 31, 2004 (March 31, 2003 -
$1 million).
(6) Under U.S. GAAP, changes in the foreign currency translation adjustment
account must be recorded as a component of comprehensive income.
(7) Under U.S. GAAP, a net loss recognized pursuant to SFAS No. 87 "Employers'
Accounting for Pensions" as an additional pension liability not yet
recognized as net period pension cost, must be recorded as a component of
comprehensive income. The components of net benefit cost recognized for the
Company's defined benefit pension plans and other post-employment benefit
plans for the three months ended March 31 are as follows.
PENSION BENEFIT OTHER BENEFIT
PLANS PLANS
------------------- -------------------
(MILLIONS OF DOLLARS) 2004 2003 2004 2003
---------------------------------------------------------- ------- -------- -------- --------
Current service cost 7 6 - -
Interest cost 14 13 1 1
Expected return on plan assets (14) (13) - -
Amortization of transitional obligation related to
regulated business - - 1 1
Amortization of net actuarial loss 3 2 1 1
Amortization of past service cost 1 1 - -
------- -------- -------- --------
Net benefit cost recognized 11 9 3 3
------- -------- -------- --------
------- -------- -------- --------
(8) Effective January 1, 2003, the Company adopted the provisions of Financial
Interpretation (FIN) 45 that require the recognition of a liability for the
fair value of certain guarantees that require payments contingent on
specified types of future events. The measurement standards of FIN 45 are
applicable to guarantees entered into after January 1, 2003. For U.S. GAAP
purposes, the fair value of guarantees recorded as a liability at March 31,
2004 was $10 million (December 31, 2003 - $4 million) and relates to the
Company's equity interest in Bruce Power L.P.
(9) Under U.S. GAAP, the Company is required to record a deferred income tax
liability for its cost-of-service regulated businesses. As these deferred
income taxes are recoverable through future revenues, a corresponding
regulatory asset is recorded for U.S. GAAP purposes.
(10) Current liabilities at March 31, 2004 include dividends payable of
$146 million (December 31, 2003 - $136 million) and current taxes payable
of $217 million (December 31, 2003 - $271 million).
Page 4 of 6
(11) The fair value of the preferred securities at March 31, 2004 was $624
million (December 31, 2003 - $612 million). The Company made preferred
securities charges payments of $12 million for the three months ended March
31, 2004 (March 31, 2003 - $14 million).
(12) The Company's Statement of Consolidated Cash Flows under U.S. GAAP would be
identical to that under Canadian GAAP except that the preferred securities
charges would be classified with funds generated from continuing
operations.
(13) Effective December 31, 2003, the Company adopted the provisions of FIN 46
(Revised) "Consolidation of Variable Interest Entities" that requires the
consolidation of certain entities that are controlled through financial
interests that indicate control (referred to as `variable interests').
Adopting these provisions has had no impact on the U.S. GAAP financial
statements of the Company.
Page 5 of 6
SUMMARIZED FINANCIAL INFORMATION OF LONG-TERM INVESTMENTS(14)
Three months ended
March 31
-----------------------------
(MILLIONS OF DOLLARS) 2004 2003
- -------------------------------------------------------------------------------- ------------ -----------
INCOME
Revenues 275 280
Other costs and expenses (119) (105)
Depreciation (33) (38)
Financial charges and other (15) (25)
------------ -----------
Proportionate share of income before income taxes of long-term
investments 108 112
------------ -----------
------------ -----------
March 31, December 31,
(MILLIONS OF DOLLARS) 2004 2003
- ----------------------------------------------------------------- ------------------ -----------------
BALANCE SHEET
Current assets 317 385
Plant, property and equipment 3,048 2,944
Current liabilities (185) (204)
Deferred amounts (net) (291) (286)
Non-recourse debt (1,052) (1,060)
Deferred income taxes (17) (19)
------------------ -----------------
Proportionate share of net assets of long-term investments 1,820 1,760
------------------ -----------------
------------------ -----------------
(14) This includes those investments that are accounted for by the equity method
under U.S. GAAP (including those that are accounted for by the
proportionate consolidation method under Canadian GAAP).
Page 6 of 6
EXHIBIT 4
CERTIFICATIONS
I, Harold N. Kvisle, certify that:
1. I have reviewed this quarterly report on Form 6-K of TransCanada
Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
/s/ Harold N. Kvisle
-------------------------------------
Dated April 26, 2004 Harold N. Kvisle
President and Chief Executive Officer
EXHIBIT 5
CERTIFICATIONS
I, Russell K. Girling, certify that:
1. I have reviewed this quarterly report on Form 6-K of TransCanada
Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of
a material fact or omit to state a material fact necessary to make the
statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being
prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
(c) disclosed in this report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in
the case of an annual report) that has materially affected, or is
reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of the registrant's board
of directors (or persons performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably
likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal control
over financial reporting.
/s/ Russell K. Girling
-----------------------------------------------
Dated April 26, 2004 Russell K. Girling
Executive Vice-President, Corporate Development
and Chief Financial Officer
EXHIBIT 6
TRANSCANADA CORPORATION
450 - 1st Street S.W.
Calgary, Alberta, Canada
T2P 5H1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
REGARDING PERIODIC REPORT CONTAINING
FINANCIAL STATEMENTS
I, Harold N. Kvisle, the Chief Executive Officer of TransCanada Corporation (the
"Company"), in compliance with 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify, in connection
with the Company's Quarterly Report as filed on Form 6-K for the period ended
March 31, 2004 with the Securities and Exchange Commission (the "Report"), that:
1. the Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ Harold N. Kvisle
---------------------------
Harold N. Kvisle
Chief Executive Officer
April 26, 2004
EXHIBIT 7
TRANSCANADA CORPORATION
450 - 1st Street S.W.
Calgary, Alberta, Canada
T2P 5H1
CERTIFICATION OF CHIEF FINANCIAL OFFICER
REGARDING PERIODIC REPORT CONTAINING
FINANCIAL STATEMENTS
I, Russell K. Girling, the Chief Financial Officer of TransCanada Corporation
(the "Company"), in compliance with 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify, in connection
with the Company's Quarterly Report as filed on Form 6-K for the period ended
March 31, 2004 with the Securities and Exchange Commission (the "Report"), that:
1. the Report fully complies with the requirements of Section 13(a) or 15(d)
of the Securities Exchange Act of 1934; and
2. the information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.
/s/ Russell K. Girling
---------------------------
Russell K. Girling
Chief Financial Officer
April 26, 2004
EXHIBIT 8
[TRANSCANADA LOGO]
TRANSCANADA CORPORATION - FIRST QUARTER 2004
QUARTERLY REPORT TO SHAREHOLDERS
Media Inquiries: Hejdi Feick/Kurt Kadatz (403) 920-7859
Analyst Inquiries: David Moneta/Debbie Stein (403) 920-7911
TransCanada delivers steady operating and
financial performance
CALGARY, Alberta - April 23, 2004 - (TSX: TRP) (NYSE: TRP)
FIRST QUARTER 2004 FINANCIAL HIGHLIGHTS
(All financial figures are in Canadian dollars unless noted otherwise)
o Net income $214 million or $0.44 per share
o Funds generated from operations $423 million
o Board declares $0.29 per share dividend on the company's common shares;
the 162nd consecutive quarterly dividend paid by TransCanada and its
subsidiary
o TransCanada Chairman, Dick Haskayne, and Chief Executive Officer, Hal
Kvisle, to address shareholders at Annual and Special Meeting in
Calgary today
TransCanada Corporation today announced net income for the first quarter 2004 of
$214 million or $0.44 per share compared to $208 million or $0.43 per share for
the first quarter 2003. The increase of $6 million or $0.01 per share was
primarily due to lower net expenses in the Corporate segment partially offset by
lower net earnings from the Gas Transmission business. The decrease in net
expenses in the Corporate segment relates primarily to income tax refunds
received in first quarter 2004. Funds generated from operations for the first
quarter 2004 were $423 million compared to $457 million for the same period last
year.
"TransCanada continues to deliver steady operating and financial performance
underpinned by our focus on operational excellence and a strong balance sheet,"
said Hal Kvisle, TransCanada's chief executive officer. "Over the course of the
year, however, TransCanada faces some uncertainty around earnings from our
Alberta System and Canadian Mainline as we await the outcome of regulatory
hearings at the Alberta Energy and Utilities Board and the National Energy Board
respectively.
"Over the longer term, our core businesses of natural gas transmission and power
services remain strong, with increasing North American demand for energy
supporting their growth. We continue to evaluate and act on opportunities to
grow these businesses consistent with our corporate strategy and our commitment
to long-term value creation, balanced against our objective of maintaining our
strong financial position.
"Our announcement in the first quarter of an agreement to acquire Gas
Transmission Northwest (pending bankruptcy court approval), and our
reaffirmation of our intention to play a leadership role in developing the
Alaskan and Canadian portions of an Alaska Highway Pipeline project are evidence
of our ongoing efforts to fulfill that commitment," said Mr. Kvisle.
ANNUAL MEETING OF SHAREHOLDERS AND TELECONFERENCE
TransCanada will hold its Annual and Special Meeting of Shareholders
beginning today at 10:30 a.m. (Mountain) / 12:30 p.m. (Eastern). The meeting
will take place at the Hyatt Regency Hotel (700 Centre St. S.E.) in Calgary,
Alberta. A live audio Web cast of the meeting will be available on
TransCanada's Web site at www.transcanada.com beginning at 10:30 a.m.
(Mountain) / 12:30 p.m. (Eastern). The meeting Web cast will be archived and
available for replay.
TransCanada will hold a teleconference today at 1:00 p.m. (Mountain) / 3:00 p.m.
(Eastern) to discuss the first quarter 2004 financial results and general
developments and issues concerning the company. Analysts, members of the media
and other interested parties wanting to participate in the call should dial
1-800-387-6216 or 416-405-9328 (Toronto area) at least 10 minutes prior to the
start of the call. No pass code is required. A replay of the teleconference will
be available two hours after the conclusion of the call until midnight, April
30, 2004, by dialing 1-800-408-3053 or 416-695-5800 (Toronto area) and entering
pass code 3036277.
The conference will begin with a short address by members of TransCanada's
executive management, followed by a question and answer period for investment
analysts. A question and answer period for members of the media unable to attend
the Annual and Special Meeting of Shareholders will immediately follow. A live
audio Web cast of the teleconference will also be available on TransCanada's Web
site. The teleconference Web cast will be archived and available for replay.
ABOUT TRANSCANADA
TransCanada is a leading North American energy company. We are focused on
natural gas transmission and power services with employees who are expert in
these businesses. Our network of approximately 39,000 kilometres (24,200 miles)
of wholly owned pipeline transports the majority of Western Canada's natural gas
production to the fastest growing markets in Canada and the United States.
TransCanada owns, controls or is constructing nearly 4,700 megawatts of power
generation - an equal amount of power can meet the needs of about 4.7 million
average households. Our common shares trade under the symbol TRP on the Toronto
and New York stock exchanges. Visit us on the Internet at www.transcanada.com
for more information.
FIRST QUARTER 2004 FINANCIAL HIGHLIGHTS
(unaudited)
OPERATING RESULTS Three months ended March 31
(millions of dollars) 2004 2003
- ----------------------------------------------------------------------- ---------- ---------
REVENUES 1,233 1,336
NET INCOME 214 208
CASH FLOWS
Funds generated from operations 423 457
Capital expenditures 101 76
Acquisitions, net of cash acquired - 409
Three months ended March 31
COMMON SHARE STATISTICS 2004 2003
- ----------------------------------------------------------------------- ---------- ---------
NET INCOME PER SHARE - BASIC AND DILUTED $0.44 $0.43
DIVIDENDS DECLARED PER SHARE $0.29 $0.27
COMMON SHARES OUTSTANDING (millions)
Average for the period 483.4 480.1
End of period 483.9 480.5
