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 June 2009
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 þ
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(1): ¨
Indicate
by check mark if the registrant is submitting the Form 6-K in paper as permitted
by Regulation S-T Rule 101(b)(7): ¨
This
report on Form 6-K is being filed to update the U.S. GAAP reconciliation
included in the Annual Report on Form 40-F for the year ended December 31, 2008
of TransCanada Corporation (the “Company”) to reflect changes due to the
adoption of a new accounting standard that required retrospective adoption as
described below. The Company adopted Statement of Financial
Accounting Standards (SFAS) No. 160 Noncontrolling Interests in
Consolidated Financial Statements – an Amendment of ARB No.
51. As required by SFAS 160, the Company has reclassified its
non-controlling interests on the income statement and balance sheet. On the
balance sheet, non-controlling interests are now presented in the equity
section. On the income statement, consolidated net income includes both
the Company's and the
non-controlling interests’ share of net income. In addition, consolidated
net income attributable to the Company and the non-controlling interests are
separately disclosed. This reclassification has been applied
retrospectively as required.
The
Company is filing this Report on Form 6-K to reflect the impact of the adoption
of this new standard on the previously issued U.S. GAAP
reconciliation. This will permit the Company to incorporate this U.S.
GAAP reconciliation by reference in future SEC filings.
As this
Report on Form 6-K is being filed only for the purpose described above, the
other information in the Company’s Annual Report on Form 40-F remains
unchanged. No other modifications have been made in this Report on
Form 6-K to change or update disclosures in the Company’s 2008 Form 40-F except
as described above. Information in the Company’s 2008 Form 40-F not
affected by this Report on Form 6-K is unchanged and reflects disclosure made at
the time of the filing of the Company’s 2008 Form 40-F with the Securities and
Exchange Commission on February 25, 2009. Accordingly, this Report on
Form 6-K should be read in conjunction with the Company’s 2008 Form 40-F and the
Company’s filings made with the Securities and Exchange Commission subsequent to
the filing of the Company’s 2008 Form 40-F.
Exhibits
13.1 and 23.1 to this report, furnished on Form 6-K, shall be incorporated by
reference into each of the Registration Statements under the Securities Act of
1933, as amended, of the Company: Form S-8 (File Nos. 333-5916, 333-8470,
333-9130 and 333-151736), Form F-3 (File Nos. 33-13564 and 333-6132) and Form
F-10 (File No. 333-151781).
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.
Dated:
June 12, 2009
| TRANSCANADA CORPORATION | ||
|
By:
|
/s/
Gregory A. Lohnes
|
|
|
Gregory
A. Lohnes
|
||
|
Executive
Vice-President and
Chief Financial Officer
|
||
|
By:
|
/s/
Donald J. DeGrandis
|
|
|
Donald
J. DeGrandis
|
||
|
Corporate
Secretary
|
|
|
EXHIBIT
INDEX
|
|
13.1
|
Refiled reconciliation
to U.S. GAAP with respect to the financial statements of TransCanada
Corporation included in its Annual Report of Form 40-F for the year ended
December 31, 2008.
|
|
23.1
|
Consent
of KPMG, LLP, Chartered Accountants.
|
TRANSCANADA
CORPORATION
REFILED RECONCILIATION TO UNITED STATES
GAAP
(This
amended supplemental note reflects the retrospective application of SFAS No. 160
“Noncontrolling Interests in
Consolidated
Financial Statements – an amendment of ARB No. 51” as described in Note 1
herein)
December
31, 2008
AUDITORS’ REPORT ON REFILED RECONCILIATION TO
UNITED STATES GAAP
To
the Board of Directors of TransCanada Corporation
On
February 23, 2009, we reported on the consolidated balance sheets of TransCanada
Corporation as at December 31, 2008 and 2007, and the consolidated statements of
income, comprehensive income, accumulated other comprehensive income,
shareholders’ equity and cash flows for each of the years in the three-year
period ended December 31, 2008, which are included in the Annual Report on Form
40-F.
In
connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related supplemental note entitled
"Refiled Reconciliation to United States GAAP" as included in the Form 40-F.
This supplemental note is the responsibility of the Company's management.
Our responsibility is to express an opinion on this supplemental note based
on our audits.
In our
opinion, such supplemental note, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
/s/ KPMG LLP
Chartered
Accountants
Calgary,
Canada
February
23, 2009 (except as to Note 1 which is as of June 12, 2009)
Page 2
TRANSCANADA
CORPORATION
REFILED
RECONCILIATION TO UNITED STATES GAAP(1)
The 2008
audited consolidated financial statements of TransCanada Corporation
(TransCanada or the Company) have been prepared in accordance with Canadian
generally accepted accounting principles (GAAP), which in some respects, differ
from United States (U.S.) GAAP.
The
effects of significant differences between Canadian and U.S. GAAP on the
Company’s consolidated financial statements for the years ended December 31,
2008, 2007 and 2006 are described below and should be read in conjunction with
TransCanada’s audited consolidated financial statements prepared in accordance
with Canadian GAAP.
Reconciliation
of Net Income and Comprehensive Income
|
Year
Ended December 31 (millions of dollars, except per share
amounts)
|
2008
|
2007
|
2006
|
|||||||||
|
Income
from Continuing Operations in Accordance with Canadian
GAAP
|
1,440 | 1,223 | 1,051 | |||||||||
|
U.S.
GAAP adjustments:
|
||||||||||||
|
Net income attributable to non-controlling interests
(1)
|
130 | 97 | 78 | |||||||||
|
Unrealized loss/(gain) on natural gas inventory held in storage (2)
|
32 | (25 | ) | - | ||||||||
|
Tax impact of unrealized loss/(gain) on natural gas inventory held in
storage
|
(11 | ) | 8 | - | ||||||||
|
Unrealized
gain/(loss) on energy contracts(3)
|
- | 13 | (6 | ) | ||||||||
|
Tax
impact of unrealized gain/(loss) on energy contracts
|
- | (5 | ) | 3 | ||||||||
|
Tax recovery due to
a change in tax legislation substantively enacted in
Canada(4)
|
- | (12 | ) | - | ||||||||
|
Other(5)(6)
|
- | (2 | ) | 2 | ||||||||
|
Income
from Continuing Operations in Accordance with U.S. GAAP
|
1,591 | 1,297 | 1,128 | |||||||||
|
Net
Income from Discontinued Operations – U.S. and Canadian
GAAP
|
- | - | 28 | |||||||||
|
Net
Income in Accordance with U.S. GAAP
|
1,591 | 1,297 | 1,156 | |||||||||
|
Less: net
income attributable to non-controlling
interests (1)
|
(130 | ) | (97 | ) | (78 | ) | ||||||
|
Net
Income Attributable to Common Shareholders in Accordance with U.S.
GAAP
|
1,461 | 1,200 | 1,078 | |||||||||
|
Other
Comprehensive Income (Loss) in Accordance with Canadian
GAAP
|
(99 | ) | (187 | ) | - | |||||||
|
U.S.
GAAP adjustments:
|
||||||||||||
|
Change in funded status of post retirement plan liability
(7)
|
(49 | ) | (48 | ) | - | |||||||
|
Tax impact of change in funded status of post retirement plan
liability
|
10 | 8 | - | |||||||||
|
Change in equity investment funded status of post retirement plan
liability(7)
|
158 | 32 | - | |||||||||
|
Tax impact of change in equity investment funded status of post retirement
plan liability
|
(51 | ) | (11 | ) | - | |||||||
|
Unrealized loss on derivatives(3)(5)
|
- | (22 | ) | (35 | ) | |||||||
|
Tax impact of unrealized loss on derivatives
|
- | 8 | 11 | |||||||||
|
Changes in minimum pension liability(7)
|
- | - | 98 | |||||||||
|
Tax impact of changes in minimum pension liability
|
- | - | (35 | ) | ||||||||
|
Foreign currency translation adjustment
|
- | - | (1 | ) | ||||||||
|
Comprehensive
Income in Accordance with U.S. GAAP
|
1,430 | 980 | 1,116 | |||||||||
|
Net
Earnings Per Share in Accordance with U.S. GAAP:
|
||||||||||||
|
Continuing
Operations
|
$ | 2.57 | $ | 2.26 | $ | 2.15 | ||||||
|
Discontinued
Operations
|
- | - | $ | 0.06 | ||||||||
|
Basic
|
$ | 2.57 | $ | 2.26 | $ | 2.21 | ||||||
|
Diluted
|
$ | 2.56 | $ | 2.25 | $ | 2.20 | ||||||
Page 3
Condensed
Balance Sheet in Accordance with U.S. GAAP
|
(millions
of dollars)
|
December
31, 2008
|
December
31, 2007
|
||||||
|
Current
assets(2)
|
3,399 | 1,766 | ||||||
|
Long-term
investments(3)(6)(7)(8)
|
5,221 | 3,568 | ||||||
|
Plant,
property and equipment
|
22,901 | 19,225 | ||||||
|
Goodwill
|
4,258 | 2,521 | ||||||
|
Other
assets(7)(9)(10)
|
3,418 | 3,448 | ||||||
| 39,197 | 30,528 | |||||||
|
Current
liabilities(4)
|
4,264 | 2,774 | ||||||
|
Deferred
amounts(7)(8)
|
1,789 | 1,158 | ||||||
|
Deferred
income taxes(2)(3)(6)(7)(9)
|
2,602 | 2,693 | ||||||
|
Long-term
debt and junior subordinated notes(10)
|
16,664 | 13,423 | ||||||
| 25,319 | 20,048 | |||||||
|
Shareholders’
equity:
|
||||||||
|
Common
shares
|
9,265 | 6,662 | ||||||
|
Non-controlling
interests
(1)
|
1,194 | 999 | ||||||
|
Contributed
surplus
|
279 | 276 | ||||||
|
Retained
earnings
(2)(3)(4)(5)(6)
|
3,809 | 3,181 | ||||||
|
Accumulated
other comprehensive income(7)(11)
|
(669 | ) | (638 | ) | ||||
| 13,878 | 10,480 | |||||||
| 39,197 | 30,528 | |||||||
Page 4
Statement of Accumulated Other
Comprehensive Income in Accordance with U.S. GAAP(11)
|
(millions
of dollars)
|
Under-funded
Postretirement
Plan
Liability
(SFAS
No. 158)
|
Cumulative
Translation
Account
|
Minimum
Pension
Liability
(SFAS
No. 87)
|
Cash
Flow
Hedges
and Other
(SFAS
No. 133)
|
Total
|
|||||||||||||||
|
Balance
at January 1, 2006
|
- | (89 | ) | (77 | ) | (58 | ) | (224 | ) | |||||||||||
|
Change
in minimum pension liability, net of tax expense of $35(7)
|
- | - | 63 | - | 63 | |||||||||||||||
|
Reversal
of minimum pension liability, due to
adoption of SFAS 158, net of tax recovery of $6(7)
|
(14 | ) | - | 14 | - | - | ||||||||||||||
|
Change
in funding of post retirement plan liability,
net of tax recovery of $35(7)
|
(78 | ) | - | - | - | (78 | ) | |||||||||||||
|
Change
in equity investment post retirement plan liability, net of tax recovery
of $70(7)
|
(154 | ) | - | - | - | (154 | ) | |||||||||||||
|
Unrealized
gain on derivatives, net of tax expense of $11(3)
|
- | - | - | (24 | ) | (24 | ) | |||||||||||||
|
Foreign
currency translation adjustment, net of tax recovery of $1
|
- | (1 | ) | - | - | (1 | ) | |||||||||||||
|
Balance
at December 31, 2006
|
(246 | ) | (90 | ) | - | (82 | ) | (418 | ) | |||||||||||
|
Foreign
currency translation adjustment, net of tax expense of
$101
|
- | (350 | ) | - | - | (350 | ) | |||||||||||||
|
Change
in gains and losses on hedges of instruments in foreign operations, net of
tax expense of $41
|
- | 79 | - | - | 79 | |||||||||||||||
|
Change
in funded status of post retirement plan liability, net of tax recovery of
$8(7)
|
(40 | ) | - | - | - | (40 | ) | |||||||||||||
|
Change
in equity investment funded status of post retirement plan liability, net
of tax expense
of $11(7)
|
21 | - | - | - | 21 | |||||||||||||||
|
Unrealized
loss on derivatives, net of tax expense
of $42(3)(5)
|
- | - | - | 70 | 70 | |||||||||||||||
|
Balance
at December 31, 2007
|
(265 | ) | (361 | ) | - | (12 | ) | (638 | ) | |||||||||||
|
Foreign
currency translation adjustment, net of tax recovery of
$104
|
- | 571 | - | - | 571 | |||||||||||||||
|
Change
in gains and losses on hedges of instruments in foreign operations, net of
tax recovery of $303
|
- | (589 | ) | - | - | (589 | ) | |||||||||||||
|
Change
in funded status of post retirement plan liability, net of tax recovery of
$10(7)
|
(39 | ) | - | - | - | ( 39 | ) | |||||||||||||
|
Change
in equity investment funded status of post retirement plan liability, net
of tax expense of $51
|
107 | - | - | - | 107 | |||||||||||||||
|
Unrealized
gain on derivatives, net of tax recovery of $60
|
- | - | - | (83 | ) | ( 83 | ) | |||||||||||||
|
Change
in gains and losses on available for sale financial instruments, net
of tax of nil
|
- | - | - | 2 | 2 | |||||||||||||||
|
Balance
at December 31, 2008
|
(197 | ) | (379 | ) | - | (93 | ) | (669 | ) | |||||||||||
|
(1)
|
Mandatory refiling to
comply with Statement of Financial Accounting Standards (SFAS) No.160
“Noncontrolling Interests in Consolidated Financial Statements – an
amendment of ARB No. 51”: As required by SFAS 160, the
Company has reclassified its non-controlling interests on the income
statement and balance sheet. On the balance sheet, non-controlling
interests are now presented in the equity section. On the
income statement, consolidated net income includes both the Company’s and
the non-controlling interests’ share of net income. In
addition, consolidated net income attributable to the Company and the
non-controlling interests are separately disclosed. This
reclassification has been applied retrospectively as required and
therefore the Company has refiled its U.S. GAAP reconciliation to comply
with this new U.S. GAAP standard.
|
|
(2)
|
In
accordance with Canadian GAAP, natural gas inventory held in storage is
recorded at its fair value. Under U.S. GAAP, inventory is recorded at
lower of cost or market.
|
|
(3)
|
Relates
to gains and losses realized in 2006 on derivative energy contracts for
periods before they were documented as hedges for purposes of U.S. GAAP
and to differences in accounting for physical energy
contracts.
|
Page 5
|
(4)
|
In
accordance with Canadian GAAP, the Company recorded current income tax
benefits resulting from substantively enacted Canadian federal income tax
legislation. Under U.S. GAAP, the legislation must be fully enacted for
income tax adjustments to be
recorded.
|
|
(5)
|
Represents
the amortization of certain hedges that became ineffective at different
times under Canadian and U.S. GAAP.
|
|
(6)
|
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. (Bruce), an equity
investment, were expensed under U.S.
GAAP.
|
|
(7)
|
SFAS
No. 158 requires an employer to recognize the overfunded or underfunded
status of a defined benefit postretirement plan as an asset or liability
in its statement of financial position and to recognize changes in that
funded status, through other comprehensive income, in the year in which
the changes occur. The amounts recognized in the Company’s
balance sheet as at December 31, 2008 are as
follows:
|
|
December
31 (millions of dollars)
|
2008
|
2007
|
|||||||
|
Non-current
assets
|
- | 20 | |||||||
|
Non-current
liabilities
|
(259 | ) | (251 | ) | |||||
| (259 | ) | (231 | ) | ||||||
| Pre-tax amounts recognized in Accumulated Other Comprehensive Income (AOCI) are as follows: |
|
2008
|
2007
|
2006
|
|||||||||||||||||||||||||||||||||||
|
December
31
(millions
of dollars)
|
Pension
Benefits
|
Other
Benefits
|
Total
|
Pension
Benefitss
|
Other
Benefitss
|
Total
|
Pension
Benefitss
|
Other
Benefitss
|
Total
|
||||||||||||||||||||||||||||
|
Net
loss
|
173 | 22 | 195 | 120 | 15 | 135 | 92 | 14 | 106 | ||||||||||||||||||||||||||||
|
Prior
service cost (credit)
|
11 | 4 | 15 | 12 | 14 | 26 | 11 | (4 | ) | 7 | |||||||||||||||||||||||||||
| 184 | 26 | 210 | 132 | 29 | 161 | 103 | 10 | 113 | |||||||||||||||||||||||||||||
| Pre-tax amounts recorded in Other Comprehensive Income were as follows: |
|
2008
|
2007
|
||||||||||||||||||||||||
|
December
31 (millions of dollars)
|
Pension
Benefits
|
Other
Benefits
|
Total
|
Pension
Benefits
|
Other
Benefits
|
Total
|
|||||||||||||||||||
|
Amortization
of net loss from AOCI to net income
|
(1 | ) | (1 | ) | (2 | ) | (9 | ) | (1 | ) | (10 | ) | |||||||||||||
|
Amortization
of prior service cost (credit) from
AOCI to net income
|
(2 | ) | (1 | ) | (3 | ) | (1 | ) | - | (1 | ) | ||||||||||||||
|
Funded
status adjustment
|
56 | (2 | ) | 54 | 38 | 21 | 59 | ||||||||||||||||||
| 53 | (4 | ) | 49 | 28 | 20 | 48 | |||||||||||||||||||
|
The
funded status based on the accumulated benefit obligation for all defined
benefit pension plans as at December 31, 2008 is as
follows:
|
|
December
31 (millions of dollars)
|
2008
|
2007
|
|||||||
|
Accumulated
benefit obligation
|
1,136 | 1,244 | |||||||
|
Fair
value of plan assets
|
1,164 | 1,358 | |||||||
|
Funded
Status – surplus
|
28 | 114 | |||||||
|
Included
in the above accumulated benefit obligation and fair value of plan assets
as at December 31, 2008 are the following amounts in respect of plans that
are not fully funded.
|
|
December
31 (millions of dollars)
|
2008
|
2007
|
|||||||
|
Accumulated
benefit obligation
|
149 | - | |||||||
|
Fair
value of plan assets
|
133 | - | |||||||
|
Funded
Status – (deficit)
|
(16 | ) | - | ||||||
|
The
estimated net loss and prior service cost for the defined benefit pension
plans that will be amortized from Accumulated Other Comprehensive Income
into net periodic benefit cost over the next fiscal year are $1 million
and $1 million, respectively. The estimated net loss and prior
service cost for the other defined benefit postretirement plans that will
be amortized from Accumulated Other Comprehensive Income into net periodic
benefit cost over the next fiscal year is $2 million and $1 million,
respectively. |
|
|
The
rate used to discount pension and other post-retirement benefit plan
obligations was based on a yield curve from Moody’s corporate AA bond
yields at December 31, 2008 developed by the Company’s third party
actuary. This yield curve is used to develop spot rates that vary based on
the duration of the obligations. The estimated future cash flows for the
pension and other post retirement obligations were matched to the
corresponding rates on the yield curve to derive a weighted average
discount rate.
|
Page 6
|
(8)
|
Under
Canadian GAAP, the Company accounts for certain investments using the
proportionate consolidation basis whereby the Company’s proportionate
share of the assets, liabilities, revenues, expenses and cash flows are
included in the Company’s financial statements. U.S. GAAP does
not allow the use of proportionate consolidation and requires that such
investments be recorded on an equity accounting
basis. Information on the balances that have been
proportionately consolidated is located in Note 8 to the Company’s 2008
audited consolidated annual financial statements. As a consequence of
using equity accounting for U.S. GAAP, the Company is required to reflect
an additional liability of $51 million at December 31, 2008 (December 31,
2007 - $21 million) for the estimated fair value of certain guarantees
related to debt and other performance commitments of the joint venture
operations that were not required to be recorded when the underlying
liability was reflected on the balance sheet under the proportionate
consolidation method of accounting. The distributed earnings from
long-term investments for the year ended December 31, 2008 were $295
million (2007 - $376 million; 2006 - $494 million). The
undistributed earnings from long-term investments for the year ended
December 31, 2008 were $892 million (2007 - $821 million; 2006 - $836
million).
|
|
(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)
|
In
accordance with U.S. GAAP, debt issue costs are recorded as a deferred
asset rather than being included in long-term debt as required by Canadian
GAAP.
|
|
(11)
|
At
December 31, 2008, Accumulated Other Comprehensive Income in accordance
with U.S. GAAP is $197 million higher than under Canadian
GAAP. The difference relates primarily to the accounting
treatment for defined benefit pension and other postretirement
plans.
|
Fair
Value Measurements
The
Company adopted the provisions of SFAS No. 157, “Fair Value Measurements” (SFAS
No. 157) for its financial assets and liabilities measured at fair value on a
recurring basis effective January 1, 2008. The statement defines fair
value, establishes a framework for measuring fair value and expands disclosures
about fair value measurements. In February 2008, the U.S. Financial Accounting
Standards Board (FASB) issued FASB Staff Position No. 157-2, “Effective
Date of FASB Statement No. 157”, which delayed the effective date of SFAS
No. 157 for all non-financial assets and liabilities that are measured at fair
value on a non-recurring basis, until fiscal years beginning after
November 15, 2008. These non-financial items include assets and liabilities
such as non-financial assets and liabilities assumed in a business combination,
reporting units measured at fair value in a goodwill impairment test and asset
retirement obligations initially measured at fair value.
Under
SFAS No. 157, fair value is defined as the price that would be received to sell
an asset or paid to transfer a liability (i.e., the ‘exit price’) in an orderly
transaction between market participants at the measurement
date.
The
Company’s financial assets and liabilities that are recorded at fair value on a
recurring basis have been categorized into one of three categories based upon a
fair value hierarchy in accordance with SFAS No. 157. Fair values of
assets and liabilities included in Level I are determined by reference to quoted
prices in active markets for identical assets and liabilities. Assets and
liabilities in Level II include valuations using inputs other than quoted prices
for which all significant outputs are observable, either directly or
indirectly. This includes comparisons with similar instruments that
have observable market prices, option pricing models and other valuation
techniques commonly used by market participants, which may require the use of
assumptions about the amount and timing of estimated future cash flows and
discount rates. In making these assumptions, the Company looks primarily
to readily observable external market input factors such as interest rate yield
curves, currency rates, and price and rate volatilities as applicable.
Level III valuations are based on inputs that are unobservable and significant
to the overall fair value measurement. TransCanada does not have any
assets or liabilities that are included in Level III.
Page 7
Assets
and liabilities measured at fair value on a recurring basis as of December 31,
2008 are categorized in accordance with SFAS No. 157 as follows:
|
(millions
of dollars)
|
Quoted
prices in
active
markets
(Level
I)
|
Significant
other
observable
inputs
(Level
II)
|
Significant
unobservable
inputs
(Level
III)
|
Total
|
||||
|
Derivative
Financial Instruments Held for Trading:
|
||||||||
|
Assets
|
130
|
254
|
-
|
384
|
||||
|
Liabilities
|
(
127
|
)
|
(
347
|
)
|
-
|
(
474
|
)
|
|
|
Derivative
Financial Instruments in Hedging Relationships:
|
||||||||
|
Assets
|
42
|
150
|
-
|
192
|
||||
|
Liabilities
|
(
100
|
)
|
(
545
|
)
|
-
|
(
645
|
)
|
|
|
Non-Derivative
Financial Instruments Available for Sale:
|
||||||||
|
Assets
|
24
|
-
|
-
|
24
|
||||
|
Liabilities
|
-
|
-
|
-
|
-
|
||||
|
Total
|
(
31
|
)
|
(
488
|
)
|
-
|
(
519
|
)
|
Income
Taxes
The
income tax effects of differences between the accounting value and the tax value
of assets and liabilities are as follows:
|
December
31 (millions of dollars)
|
2008
|
2007
|
||||||
|
Deferred
Tax Liabilities
|
||||||||
|
Difference
in accounting and tax bases of plant, equipment and power purchase
arrangements
|
2,182 | 1,763 | ||||||
|
Taxes
on future revenue requirement
|
387 | 433 | ||||||
|
Investments
in subsidiaries and partnerships
|
313 | 443 | ||||||
|
Unrealized
foreign exchange gains on long-term debt
|
14 | 110 | ||||||
|
Pension
benefit
|
6 | 11 | ||||||
|
Other
comprehensive income
|
- | 8 | ||||||
|
Other
|
81 | 81 | ||||||
| 2,983 | 2,849 | |||||||
|
Deferred
Tax Assets
|
||||||||
|
Deferred
amounts
|
119 | 45 | ||||||
|
Other
post-employment benefits
|
38 | 25 | ||||||
|
Other
comprehensive income
|
62 | 22 | ||||||
|
Non-capital
loss carry-forwards
|
24 | - | ||||||
|
Unrealized
foreign exchange losses on long-term debt
|
77 | - | ||||||
|
Other
|
138 | 77 | ||||||
| 458 | 169 | |||||||
|
Less: Valuation
allowance
|
77 | 13 | ||||||
| 381 | 156 | |||||||
|
Net
deferred tax liabilities
|
2,602 | 2,693 | ||||||
TransCanada
adopted FASB Financial Interpretation 48, Accounting for Uncertainty in Income
Taxes (“FIN 48”), January 1, 2007. The implementation of the
provisions under FIN 48 did not have a material impact on the U.S. GAAP
financial statements of the Company and no adjustment to the beginning balance
of retained earnings was required due to the adoption of FIN 48.
Page 8
Below is
the reconciliation of the annual changes in the total unrecognized tax
benefit.
|
December
31 (millions of dollars)
|
2008
|
2007
|
||||||
|
Unrecognized
tax benefits, beginning of year
|
70
|
80
|
||||||
| Gross increases – tax positions in prior years |
13
|
9 | ||||||
|
Gross
decreases – tax positions in prior years
|
(1 | ) | (11 | ) | ||||
|
Gross
increases – current year positions
|
20 | 9 | ||||||
|
Settlements
|
(19 | ) | (6 | ) | ||||
|
Lapses
of statute of limitations
|
(3 | ) | (11 | ) | ||||
|
Unrecognized
tax benefits, end of year
|
80 | 70 | ||||||
TransCanada
expects the enactment of certain Canadian Federal tax legislation in the next
twelve months which is expected to result in a favourable income tax adjustment
of approximately $12 million. Otherwise, subject to the results of
audit examinations by taxing authorities and other legislative amendments,
TransCanada does not anticipate further adjustments to the unrecognized tax
benefits during the next twelve months that would have a material impact on its
financial statements.
TransCanada
and its subsidiaries are subject to either Canadian federal and provincial
income tax, U.S. federal, state and local income tax or the relevant income tax
in other international jurisdictions. The Company has substantially concluded
all Canadian federal and provincial income tax matters for the years through
2003. Canadian federal income tax returns for years 2004 and 2005 are currently
under examination by the Canada Revenue Agency, which has not proposed any
significant adjustments. Substantially all material U.S. federal
income tax matters have been concluded for years through 2004 and U.S. state and
local income tax matters through 2002.
TransCanada’s
continuing practice is to recognize interest and penalties related to income tax
uncertainties in income tax expense. Included in net tax expense for
the year ended December 31, 2008 is $10 million for interest and nil for
penalties (December 31, 2007- $1 million for interest and nil for penalties). At
December 31, 2008, the Company had $24 million accrued for interest and nil
accrued for penalties (December 31, 2007- $14 million accrued for interest and
nil accrued for penalties).
Other
In
February 2007, FASB issued SFAS No. 159 “The Fair Value Option for Financial
Assets and Financial Liabilities – Including an Amendment of FASB Statement No.
115”, which allows an entity to choose to measure many financial instruments and
certain other items at fair value for fiscal years beginning on or after
November 15, 2007. TransCanada’s U.S. GAAP financial statements were not
materially impacted by SFAS No. 159.
In
December 2007, FASB issued SFAS No. 160 “Noncontrolling Interests in
Consolidated Financial Statements – an amendment of ARB No. 51” and SFAS No.
141(R) “Business Combinations” both of which are effective for annual periods
beginning after December 15, 2008. SFAS No. 160 requires that third party
ownership interests in subsidiaries be presented separately in the equity
section of the balance sheet. In addition, the income attributable to the
non-controlling interest will now be included in consolidated net income and
will be deducted separately at the bottom of the income statement. SFAS
No. 141(R) requires that most identifiable assets, liabilities (including
obligations for contingent consideration), non-controlling interests and
goodwill be recorded at “full fair value”. Also, for step acquisitions,
the acquirer will be required to re-measure its non-controlling equity
investment in the acquiree at fair value as of the date control is obtained and
recognize any gain or loss in income. The Company will adopt these
standards on January 1, 2009. Refer to Note 1 for impact on refiled
December 31, 2008 financial statements.
In March
2008, FASB issued SFAS No. 161 “Disclosures about Derivative Instruments and
Hedging Activities – an amendment of FASB Statement No. 133”, which is effective
for fiscal years beginning after November 15, 2008. SFAS No. 161 expands
the disclosure requirements for derivative instruments and hedging activities
with respect to how and why entities use derivative instruments, how they are
accounted for under SFAS No. 133 and the related impact on financial position,
financial performance and cash flows. TransCanada does not expect a
material affect on its financial disclosures as a result of adopting this
standard on January 1, 2009.
Page 9
In May
2008, FASB issued SFAS No. 162 “The Hierarchy of Generally Accepted Accounting
Principles” which codifies the sources of accounting principles and the related
framework to be utilized in preparing financial statements in conformity with
U.S. GAAP. TransCanada’s U.S. GAAP financial statements are not expected
to be impacted by this standard.
In
October 2008, FASB issued Staff Position No. 157-3, “Determining the Fair Value
of a Financial Asset When the Market for That Asset Is Not Active”, which
clarifies the application of SFAS No. 157 in a market that is not active. This
Staff Position is effective upon issuance and the Company’s U.S. GAAP financial
statements were not impacted by this standard.
In
December 2008, FASB issued Staff Position No. 132(R)-1, “Employers’ Disclosures
about Postretirement Benefit Plan Assets”, which requires more detailed
disclosures regarding the employers’ plan assets, concentrations of risk within
plan assets and valuation techniques used to measure the fair value of plan
assets. This Staff Position will be effective for fiscal years ending after
December 15, 2009. The Company will adopt these standards for its 2009 year-end
reporting.
Page 10
EXHIBIT 23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors of TransCanada Corporation
We
consent to incorporation by reference in the following registration statements
of the Company of our auditors' report dated February 23, 2009 (except
as to Note 1 which is as of June 12, 2009) with respect to the refiled
reconciliation to United States GAAP contained in the Form 6-K dated June
12, 2009 of the Company:
|
•
|
Registration
Statement (No. 333-5916) on Form S-8 dated November 4, 1996
and the Post-Effective Amendment No. 1 to Form S-8 dated
May 15, 2003;
|
|
•
|
Registration
Statement (No. 333-8470) on Form S-8 dated March 18, 1998
and the Post-Effective Amendment No. 1 to Form S-8 dated
May 15, 2003;
|
|
•
|
Registration
Statement (No. 333-9130) on Form S-8 dated July 15, 1998
and the Post-Effective Amendment No. 1 to Form S-8 dated
May 15, 2003;
|
|
•
|
Registration
Statement (No. 33-13564) on Form S-3 dated April 16, 1987
and the Post-Effective Amendment No. 2 on Form F-3 to
Form S-3 dated December 5, 1996, and the Post-Effective
Amendment No. 3 on Form F-3 to Form S-3 dated
June 19, 2003;
|
|
•
|
Registration
Statement (No. 333-6132) on Form F-3 dated December 5,
1996, as amended by Post-Effective Amendment No. 1 to Form F-
3 dated
June 19, 2003;
|
|
•
|
Registration
Statement (No. 333-151781) on Form F-10 dated June 19, 2008
and Amendment No. 1 to Form F-10 dated July 3,
2008; and
|
|
•
|
Registration
Statement (No. 333-151736) on Form S-8 dated June 18, 2008
and the Post-Effective Amendment No. 1. to Form S-8 dated
December 22, 2008.
|
/s/
KPMG LLP
Chartered
Accountants
Calgary,
Canada
June 12,
2009