TRANSCANADA CORPORATION
|
||
By:
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/s/ Gregory A. Lohnes
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Gregory A. Lohnes
|
||
Executive Vice-President and
|
||
Chief Financial Officer
|
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By:
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/s/ G. Glenn Menuz
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G. Glenn Menuz
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||
Vice-President and Controller
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EXHIBIT INDEX
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13.1
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations of the registrant as at and for the period ended March 31, 2010.
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13.2
|
Consolidated comparative interim unaudited financial statements of the registrant for the period ended March 31, 2010 (included in the registrant's First Quarter 2010 Quarterly Report to Shareholders).
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13.3
|
U.S. GAAP reconciliation of the consolidated comparative interim unaudited financial statements of the registrant contained in the registrant's First Quarter 2010 Quarterly Report to Shareholders.
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31.1
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Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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31.2
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Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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32.1
|
Certification of Chief Executive Officer regarding Periodic Report containing Financial Statements.
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32.2
|
Certification of Chief Financial Officer regarding Periodic Report containing Financial Statements.
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99.1
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A copy of the registrant’s news release of April 30, 2010.
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For the three months ended March 31
|
||||||||||||||||||||||||||||||||
(unaudited)
(millions of dollars
|
Pipelines
|
Energy
|
Corporate
|
Total
|
||||||||||||||||||||||||||||
except per share amounts)
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
||||||||||||||||||||||||
Comparable EBITDA(1)
|
768 | 871 | 259 | 290 | (26 | ) | (30 | ) | 1,001 | 1,131 | ||||||||||||||||||||||
Depreciation and amortization
|
(253 | ) | (260 | ) | (90 | ) | (86 | ) | - | - | (343 | ) | (346 | ) | ||||||||||||||||||
Comparable EBIT(1)
|
515 | 611 | 169 | 204 | (26 | ) | (30 | ) | 658 | 785 | ||||||||||||||||||||||
Specific items:
|
||||||||||||||||||||||||||||||||
Fair value adjustments of U.S. Power derivative contracts
|
- | - | (28 | ) | - | - | - | (28 | ) | - | ||||||||||||||||||||||
Fair value adjustments of natural gas inventory in storage and forward contracts
|
- | - | (21 | ) | (13 | ) | - | - | (21 | ) | (13 | ) | ||||||||||||||||||||
EBIT(1)
|
515 | 611 | 120 | 191 | (26 | ) | (30 | ) | 609 | 772 | ||||||||||||||||||||||
Interest expense
|
(182 | ) | (295 | ) | ||||||||||||||||||||||||||||
Interest expense of joint ventures
|
(16 | ) | (14 | ) | ||||||||||||||||||||||||||||
Interest income and other
|
24 | 22 | ||||||||||||||||||||||||||||||
Income taxes
|
(101 | ) | (116 | ) | ||||||||||||||||||||||||||||
Non-controlling interests
|
(31 | ) | (35 | ) | ||||||||||||||||||||||||||||
Net Income
|
303 | 334 | ||||||||||||||||||||||||||||||
Preferred share dividends
|
(7 | ) | - | |||||||||||||||||||||||||||||
Net Income Applicable to Common Shares
|
296 | 334 | ||||||||||||||||||||||||||||||
Specific items (net of tax):
|
||||||||||||||||||||||||||||||||
Fair value adjustments of U.S. Power derivative contracts
|
17 | - | ||||||||||||||||||||||||||||||
Fair value adjustments of natural gas inventory in storage and forward contracts
|
15 | 9 | ||||||||||||||||||||||||||||||
Comparable Earnings(1)
|
328 | 343 | ||||||||||||||||||||||||||||||
Net Income Per Share – Basic and Diluted (2)
|
$ | 0.43 | $ | 0.54 | ||||||||||||||||||||||||||||
(1)
|
Refer to the Non-GAAP Measures section in this MD&A for further discussion of Comparable EBITDA, Comparable EBIT, EBIT, Comparable Earnings and Comparable Earnings Per Share.
|
(2) |
For the three months ended March 31
|
||||||||
(unaudited)
|
2010 | 2009 | |||||||
Net Income Per Share
|
$ | 0.43 | $ | 0.54 | |||||
Specific items (net of tax):
|
|||||||||
Fair value adjustments of U.S. Power derivative contracts
|
0.03 | - | |||||||
Fair value adjustments of natural gas inventory in storage and forward contracts
|
0.02 | 0.01 | |||||||
Comparable Earnings Per Share(1)
|
$ | 0.48 | $ | 0.55 |
·
|
decreased EBIT from Pipelines primarily due to the negative impact of a weaker U.S. dollar, lower revenues from certain Other U.S. Pipelines, and higher business development costs relating to the Alaska pipeline project;
|
·
|
decreased EBIT from Energy primarily due to reduced realized power prices in Western Power, lower volumes and higher operating costs at Bruce A, and lower contracted earnings at Bécancour, partially offset by increased capacity payments at Ravenswood, higher third-party storage revenues for Natural Gas Storage and incremental earnings from Portlands Energy which went into service in April 2009; and
|
·
|
decreased Interest Expense primarily due to increased capitalized interest and the positive effect of a weaker U.S. dollar on U.S. dollar-denominated interest.
|
(unaudited)
|
Three months ended March 31
|
|||||
(millions of dollars)
|
2010
|
2009
|
||||
Canadian Pipelines
|
||||||
Canadian Mainline
|
265
|
284
|
||||
Alberta System
|
175
|
168
|
||||
Foothills
|
33
|
34
|
||||
Other (TQM, Ventures LP)
|
13
|
19
|
||||
Canadian Pipelines Comparable EBITDA(1)
|
486
|
505
|
||||
U.S. Pipelines
|
||||||
ANR
|
120
|
133
|
||||
GTN(2)
|
45
|
61
|
||||
Great Lakes
|
33
|
44
|
||||
PipeLines LP(2)(3)
|
26
|
29
|
||||
Iroquois
|
19
|
23
|
||||
Portland(4)
|
10
|
14
|
||||
International (Tamazunchale, TransGas, Gas Pacifico/INNERGY)
|
10
|
13
|
||||
General, administrative and support costs(5)
|
(6
|
)
|
(3
|
)
|
||
Non-controlling interests(6)
|
48
|
60
|
||||
U.S. Pipelines Comparable EBITDA(1)
|
305
|
374
|
||||
Business Development Comparable EBITDA(1)
|
(23
|
)
|
(8
|
)
|
||
Pipelines Comparable EBITDA(1)
|
768
|
871
|
||||
Depreciation and amortization
|
(253
|
)
|
(260
|
)
|
||
Pipelines Comparable EBIT and EBIT(1)
|
515
|
611
|
(1)
|
Refer to the Non-GAAP Measures section in this MD&A for further discussion of Comparable EBITDA, Comparable EBIT and EBIT.
|
(2)
|
GTN’s results include North Baja until July 1, 2009 when it was sold to PipeLines LP.
|
(3)
|
PipeLines LP’s results reflect TransCanada’s ownership interest in PipeLines LP of 38.2 per cent in first quarter 2010 (first quarter 2009 – 32.1 per cent).
|
(4)
|
Portland’s results reflect TransCanada’s 61.7 per cent ownership interest.
|
(5)
|
Represents certain costs associated with supporting the Company’s Canadian and U.S. Pipelines.
|
(6)
|
Non-controlling interests reflects Comparable EBITDA for the portions of PipeLines LP and Portland not owned by TransCanada.
|
(unaudited)
|
Three months ended March 31
|
||||
(millions of dollars)
|
2010
|
2009
|
|||
Canadian Mainline
|
66
|
66
|
|||
Alberta System
|
38
|
39
|
|||
Foothills
|
6
|
6
|
Three months
ended March 31
|
Canadian
Mainline(1)
|
Alberta
System(2)
|
Foothills
|
ANR(3)
|
GTN(3)
|
|||||||||||||||||||||||||||||||||||
(unaudited)
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
||||||||||||||||||||||||||||||
Average investment base
($millions)
|
6,629 | 6,590 | 4,956 | 4,586 | 677 | 725 | n/a | n/a | n/a | n/a | ||||||||||||||||||||||||||||||
Delivery volumes (Bcf)
|
||||||||||||||||||||||||||||||||||||||||
Total
|
560 | 646 | 938 | 1,027 | 328 | 323 | 447 | 491 | 207 | 195 | ||||||||||||||||||||||||||||||
Average per day
|
6.2 | 7.2 | 10.4 | 11.4 | 3.6 | 3.6 | 5.0 | 5.5 | 2.3 | 2.2 |
(1)
|
Canadian Mainline’s throughput volumes in the above table reflect physical deliveries to domestic and export markets. Throughput volumes reported in previous years reflected contract deliveries, however, customer contracting patterns have changed in recent years making physical deliveries a better measure of system utilization. Canadian Mainline’s physical receipts originating at the Alberta border and in Saskatchewan for the three months ended March 31, 2010 were 385 billion cubic feet (Bcf) (2009 – 472 Bcf); average per day was 4.3 Bcf (2009 – 5.3 Bcf).
|
(2)
|
Field receipt volumes for the Alberta System for the three months ended March 31, 2010 were 855 Bcf (2009 – 909 Bcf); average per day was 9.5 Bcf (2009 – 10.1 Bcf).
|
(3)
|
ANR’s and GTN’s results are not impacted by average investment base as these systems operate under fixed rate models approved by the U.S. Federal Energy Regulatory Commission.
|
(unaudited)
|
Three months ended March 31
|
|||||||
(millions of dollars)
|
2010
|
2009
|
||||||
Canadian Power
|
||||||||
Western Power
|
42 | 93 | ||||||
Eastern Power(1)
|
52 | 52 | ||||||
Bruce Power
|
63 | 99 | ||||||
General, administrative and support costs
|
(10 | ) | (8 | ) | ||||
Canadian Power Comparable EBITDA(2)
|
147 | 236 | ||||||
U.S. Power
|
||||||||
Northeast Power(3)
|
75 | 42 | ||||||
General, administrative and support costs
|
(9 | ) | (12 | ) | ||||
U.S. Power Comparable EBITDA(2)
|
66 | 30 | ||||||
Natural Gas Storage
|
||||||||
Alberta Storage
|
53 | 39 | ||||||
General, administrative and support costs
|
(2 | ) | (3 | ) | ||||
Natural Gas Storage Comparable EBITDA(2)
|
51 | 36 | ||||||
Business Development Comparable EBITDA(2)
|
(5 | ) | (12 | ) | ||||
Energy Comparable EBITDA(2)
|
259 | 290 | ||||||
Depreciation and amortization
|
(90 | ) | (86 | ) | ||||
Energy Comparable EBIT(2)
|
169 | 204 | ||||||
Specific items:
|
||||||||
Fair value adjustments of U.S. Power derivative contracts
|
(28 | ) | - | |||||
Fair value adjustments of natural gas inventory in storage and forward contracts
|
(21 | ) | (13 | ) | ||||
Energy EBIT(2)
|
120 | 191 |
(1)
|
Includes Portlands Energy effective April 2009.
|
(2)
|
Refer to the Non-GAAP Measures section in this MD&A for further discussion of Comparable EBITDA, Comparable EBIT and EBIT.
|
(3)
|
Includes phase one of Kibby Wind effective October 2009.
|
(unaudited)
|
Three months ended March 31
|
|||||||
(millions of dollars)
|
2010
|
2009
|
||||||
Revenues
|
||||||||
Western power
|
164 | 215 | ||||||
Eastern power
|
67 | 69 | ||||||
Other(3)
|
22 | 12 | ||||||
253 | 296 | |||||||
Commodity Purchases Resold
|
||||||||
Western power
|
(106 | ) | (98 | ) | ||||
Other(3)(4)
|
(5 | ) | (9 | ) | ||||
(111 | ) | (107 | ) | |||||
Plant operating costs and other
|
(48 | ) | (44 | ) | ||||
General, administrative and support costs
|
(10 | ) | (8 | ) | ||||
Comparable EBITDA(1)
|
84 | 137 |
(1)
|
Refer to the Non-GAAP Measures section in this MD&A for further discussion of Comparable EBITDA.
|
(2)
|
Includes Portlands Energy effective April 2009.
|
(3)
|
Includes sales of excess natural gas purchased for generation and thermal carbon black. Effective January 1, 2010, the net impact of derivatives used to purchase and sell natural gas to manage Western and Eastern Power’s assets is presented on a net basis in Other Revenues. Comparative results for 2009 reflect amounts reclassified from Other Commodity Purchases Resold to Other Revenues.
|
(4)
|
Includes the cost of excess natural gas not used in operations.
|
Three months ended March 31
|
|||||
(unaudited)
|
2010
|
2009
|
|||
Sales Volumes (GWh)
|
|||||
Supply
|
|||||
Generation
|
|||||
Western Power
|
585
|
605
|
|||
Eastern Power
|
429
|
355
|
|||
Purchased
|
|||||
Sundance A & B and Sheerness PPAs
|
2,655
|
2,440
|
|||
Other purchases
|
149
|
185
|
|||
3,818
|
3,585
|
||||
Sales
|
|||||
Contracted
|
|||||
Western Power
|
2,269
|
2,053
|
|||
Eastern Power
|
445
|
391
|
|||
Spot
|
|||||
Western Power
|
1,104
|
1,141
|
|||
3,818
|
3,585
|
||||
Plant Availability
|
|||||
Western Power(2)
|
95%
|
91%
|
|||
Eastern Power
|
96%
|
97%
|
(1)
|
Includes Portlands Energy effective April 2009.
|
(2)
|
Excludes facilities that provide power to TransCanada under PPAs.
|
(TransCanada’s proportionate share)
(unaudited)
|
Three months ended March 31
|
|||||
(millions of dollars unless otherwise indicated)
|
2010
|
2009
|
||||
Revenues(1)
|
225
|
221
|
||||
Operating Expenses
|
(162
|
)
|
(122
|
)
|
||
Comparable EBITDA(2)
|
63
|
99
|
||||
Bruce A Comparable EBITDA(2)
|
13
|
41
|
||||
Bruce B Comparable EBITDA(2)
|
50
|
58
|
||||
Comparable EBITDA(2)
|
63
|
99
|
||||
Bruce Power – Other Information
|
||||||
Plant availability
|
||||||
Bruce A
|
65%
|
97%
|
||||
Bruce B
|
98%
|
96%
|
||||
Combined Bruce Power
|
87%
|
96%
|
||||
Planned outage days
|
||||||
Bruce A
|
35
|
-
|
||||
Bruce B
|
-
|
-
|
||||
Unplanned outage days
|
||||||
Bruce A
|
26
|
5
|
||||
Bruce B
|
6
|
8
|
||||
Sales volumes (GWh)
|
||||||
Bruce A
|
989
|
1,495
|
||||
Bruce B
|
2,155
|
2,139
|
||||
3,144
|
3,634
|
|||||
Results per MWh
|
||||||
Bruce A power revenues
|
$64
|
$63
|
||||
Bruce B power revenues(3)
|
$58
|
$52
|
||||
Combined Bruce Power revenues
|
$60
|
$57
|
||||
Percentage of Bruce B output sold to spot market(4)
|
78%
|
36%
|
(1)
|
Revenues include Bruce A’s fuel cost recoveries of $5 million for the three months ended March 31, 2010 (2009 - $10 million). Revenues also include Bruce B unrealized losses of $1 million as a result of changes in the fair value of power derivatives for the three months ended March 31, 2010 (2009 – $2 million gain).
|
(2)
|
Refer to the Non-GAAP Measures section in this MD&A for further discussion of Comparable EBITDA.
|
(3)
|
Includes revenues received under the floor price mechanism and contract settlements.
|
(4)
|
All of Bruce B’s output is covered by the floor price mechanism, including volumes sold to the spot market.
|
(unaudited)
|
Three months ended March 31
|
|||||||
(millions of dollars)
|
2010
|
2009
|
||||||
Revenues
|
||||||||
Power(3)
|
241 | 272 | ||||||
Capacity
|
42 | 30 | ||||||
Other(3)(4)
|
26 | 46 | ||||||
309 | 348 | |||||||
Commodity purchases resold(3)
|
(142 | ) | (122 | ) | ||||
Plant operating costs and other(4)
|
(92 | ) | (184 | ) | ||||
General, administrative and support costs
|
(9 | ) | (12 | ) | ||||
Comparable EBITDA(1)
|
66 | 30 |
(1)
|
Refer to the Non-GAAP Measures section of this MD&A for further discussion of Comparable EBITDA.
|
(2)
|
Includes phase one of Kibby Wind effective October 2009.
|
(3)
|
Effective January 1, 2010, the net impact of derivatives used to purchase and sell power, natural gas and fuel oil to manage U.S. Power’s assets is presented on a net basis in Power Revenues. Comparative results for 2009 reflect amounts reclassified from Commodity Purchases Resold and Other Revenues to Power Revenues.
|
(4)
|
Includes revenues and costs related to a third-party service agreement at Ravenswood.
|
Three months ended March 31
|
|||||
(unaudited)
|
2010
|
2009
|
|||
Sales Volumes (GWh)
|
|||||
Supply
|
|||||
Generation
|
891
|
1,168
|
|||
Purchased
|
2,486
|
1,259
|
|||
3,377
|
2,427
|
||||
Sales
|
|||||
Contracted
|
3,215
|
2,140
|
|||
Spot
|
162
|
287
|
|||
3,377
|
2,427
|
||||
Plant Availability
|
86%
|
58%
|
(1)
|
Includes phase one of Kibby Wind effective October 2009.
|
(unaudited)
|
Three months ended March 31
|
|||||||
(millions of dollars)
|
2010
|
2009
|
||||||
Interest on long-term debt(1)
|
296 | 335 | ||||||
Other interest and amortization
|
20 | 14 | ||||||
Capitalized interest
|
(134 | ) | (54 | ) | ||||
182 | 295 |
(1)
|
Includes interest for Junior Subordinated Notes.
|
(unaudited)
|
Three months ended March 31
|
||||
(millions of dollars)
|
2010
|
2009
|
|||
Cash Flows
|
|||||
Funds generated from operations(1)
|
723
|
766
|
|||
Decrease in operating working capital
|
109
|
82
|
|||
Net cash provided by operations
|
832
|
848
|
(1)
|
Refer to the Non-GAAP Measures section in this MD&A for further discussion of Funds Generated from Operations.
|
March 31, 2010
|
December 31, 2009
|
||||||||||||
Asset/(Liability)
(unaudited)
(millions of dollars)
|
Fair
Value(1)
|
Notional or Principal Amount
|
Fair
Value(1)
|
Notional or Principal Amount
|
|||||||||
U.S. dollar cross-currency swaps
|
|||||||||||||
(maturing 2010 to 2014)
|
140 |
U.S. 2,000
|
86 |
U.S. 1,850
|
|||||||||
U.S. dollar forward foreign exchange contracts
|
|||||||||||||
(maturing 2010)
|
18 |
U.S. 1,030
|
9 |
U.S. 765
|
|||||||||
U.S. dollar options
|
|||||||||||||
(matured 2010)
|
- | - | 1 |
U.S. 100
|
|||||||||
158 |
U.S. 3,030
|
96 |
U.S. 2,715
|
(1)
|
Fair values equal carrying values.
|
March 31, 2010
|
December 31, 2009
|
||||||||||||
(unaudited)
(millions of dollars)
|
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||
Financial Assets(1)
|
|||||||||||||
Cash and cash equivalents
|
736
|
736
|
997
|
997
|
|||||||||
Accounts receivable and other(2)(3)
|
1,363
|
1,402
|
1,432
|
1,483
|
|||||||||
Available-for-sale assets(2)
|
22
|
22
|
23
|
23
|
|||||||||
2,121
|
2,160
|
2,452
|
2,503
|
||||||||||
Financial Liabilities(1)(3)
|
|||||||||||||
Notes payable
|
2,087
|
2,087
|
1,687
|
1,687
|
|||||||||
Accounts payable and deferred amounts(4)
|
1,638
|
1,638
|
1,538
|
1,538
|
|||||||||
Accrued interest
|
319
|
319
|
377
|
377
|
|||||||||
Long-term debt
|
16,213
|
19,208
|
16,664
|
19,377
|
|||||||||
Junior subordinated notes
|
1,005
|
987
|
1,036
|
976
|
|||||||||
Long-term debt of joint ventures
|
931
|
1,000
|
965
|
1,025
|
|||||||||
22,193
|
25,239
|
22,267
|
24,980
|
(1)
|
Consolidated Net Income in first quarter 2010 included losses of $7 million (2009 – losses of $14 million) for fair value adjustments related to interest rate swap agreements on US$250 million (2009 – US$200 million) of long-term debt. There were no other unrealized gains or losses from fair value adjustments to the financial instruments.
|
(2)
|
At March 31, 2010, the Consolidated Balance Sheet included financial assets of $912 million (December 31, 2009 – $966 million) in Accounts Receivable, $40 million in Other Current Assets (December 31, 2009 – nil) and $433 million (December 31, 2009 - $489 million) in Intangibles and Other Assets.
|
(3)
|
Recorded at amortized cost, except for certain long-term debt which is adjusted to fair value.
|
(4)
|
At March 31, 2010, the Consolidated Balance Sheet included financial liabilities of $1,612 million (December 31, 2009 – $1,513 million) in Accounts Payable and $26 million (December 31, 2009 - $25 million) in Deferred Amounts.
|
March 31, 2010
|
|||||||||||||||
(unaudited)
(all amounts in millions unless otherwise indicated)
|
Power
|
Natural
Gas
|
Oil
Products
|
Foreign
Exchange
|
Interest
|
||||||||||
Derivative Financial Instruments
Held for Trading(1)
|
|||||||||||||||
Fair Values(2)
|
|||||||||||||||
Assets
|
$319
|
$178
|
-
|
$1
|
$26
|
||||||||||
Liabilities
|
$(251
|
)
|
$(182
|
)
|
-
|
$(12
|
)
|
$(73
|
)
|
||||||
Notional Values
|
|||||||||||||||
Volumes(3)
|
|||||||||||||||
Purchases
|
16,661
|
112
|
-
|
-
|
-
|
||||||||||
Sales
|
17,657
|
99
|
-
|
-
|
-
|
||||||||||
Canadian dollars
|
-
|
-
|
-
|
-
|
838
|
||||||||||
U.S. dollars
|
-
|
-
|
-
|
U.S. 612
|
U.S. 1,500
|
||||||||||
Cross-currency
|
-
|
-
|
-
|
47/U.S. 37
|
-
|
||||||||||
Net unrealized (losses)/gains in the three months ended March 31, 2010(4)
|
$(16
|
)
|
$2
|
-
|
-
|
$(4
|
)
|
||||||||
Net realized gains/(losses) in the three months ended March 31, 2010(4)
|
$22
|
$(12
|
)
|
-
|
$8
|
$(4
|
)
|
||||||||
Maturity dates
|
2010-2015
|
2010-2014
|
2010
|
2010-2012
|
2010-2018
|
||||||||||
Derivative Financial Instruments
in Hedging Relationships(5)(6)
|
|||||||||||||||
Fair Values(2)
|
|||||||||||||||
Assets
|
$191
|
-
|
-
|
-
|
$10
|
||||||||||
Liabilities
|
$(313
|
)
|
$(53
|
)
|
-
|
$(48
|
)
|
$(44
|
)
|
||||||
Notional Values
|
|||||||||||||||
Volumes(3)
|
|||||||||||||||
Purchases
|
15,819
|
31
|
-
|
-
|
-
|
||||||||||
Sales
|
12,385
|
-
|
-
|
-
|
-
|
||||||||||
U.S. dollars
|
-
|
-
|
-
|
U.S. 120
|
U.S. 2,075
|
||||||||||
Cross-currency
|
-
|
-
|
-
|
136/U.S. 100
|
-
|
||||||||||
Net realized losses in the three months ended March 31, 2010(4)
|
$(7
|
)
|
$(3
|
)
|
-
|
-
|
$(10
|
)
|
|||||||
Maturity dates | 2010-2015 |
2010-2012
|
n/a | 2010- 2014 | 2010-2020 |
(1)
|
All derivative financial instruments in the held-for-trading classification have been entered into for risk management purposes and are subject to the Company’s risk management strategies, policies and limits. These include derivatives that have not been designated as hedges or do not qualify for hedge accounting treatment but have been entered into as economic hedges to manage the Company’s exposures to market risk.
|
(2)
|
Fair values equal carrying values.
|
(3)
|
Volumes for power, natural gas and oil products derivatives are in GWh, billion cubic feet (Bcf) and thousands of barrels, respectively.
|
(4)
|
Realized and unrealized gains and losses on power, natural gas and oil products derivative financial instruments held for trading are included in Revenues. Realized and unrealized gains and losses on interest rate and foreign exchange derivative financial instruments held for trading are included in Interest Expense and Interest Income and Other, respectively. The effective portion of unrealized gains and losses on derivative financial instruments in hedging relationships are initially recognized in Other Comprehensive Income, and are reclassified to Revenues, Interest Expense and Interest Income and Other, as appropriate, as the original hedged item settles.
|
(5)
|
All hedging relationships are designated as cash flow hedges except for interest rate derivative financial instruments designated as fair value hedges with a fair value of $7 million and a notional amount of US$150 million. Net realized gains on fair value hedges for the three months ended March 31, 2010 were $1 million and were included in Interest Expense. In first quarter 2010, the Company did not record any amounts in Net Income related to ineffectiveness for fair value hedges.
|
(6)
|
Net Income for the three months ended March 31, 2010 included losses of $8 million for changes in the fair value of power and natural gas cash flow hedges that were ineffective in offsetting the change in fair value of their related underlying positions. There were no gains or losses included in Net Income for the three months ended March 31, 2010 for discontinued cash flow hedges. No amounts have been excluded from the assessment of hedge effectiveness.
|
2009
|
||||||||||||||||||
(unaudited)
(all amounts in millions unless otherwise indicated)
|
Power
|
Natural
Gas
|
Oil
Products
|
Foreign
Exchange
|
Interest
|
|||||||||||||
Derivative Financial Instruments Held for Trading
|
||||||||||||||||||
Fair Values(1)(2)
|
||||||||||||||||||
Assets
|
$150
|
$107
|
$5
|
-
|
$25
|
|||||||||||||
Liabilities
|
$(98
|
)
|
$(112
|
)
|
$(5
|
)
|
$(66
|
)
|
$(68
|
)
|
||||||||
Notional Values(2)
|
||||||||||||||||||
Volumes(3)
|
||||||||||||||||||
Purchases
|
15,275
|
238
|
180
|
-
|
-
|
|||||||||||||
Sales
|
13,185
|
194
|
180
|
-
|
-
|
|||||||||||||
Canadian dollars
|
-
|
-
|
-
|
-
|
574
|
|||||||||||||
U.S. dollars
|
-
|
-
|
-
|
U.S. 444
|
U.S. 1,325
|
|||||||||||||
Cross-currency
|
-
|
-
|
-
|
227/ U.S. 157
|
-
|
|||||||||||||
Net unrealized gains/(losses) in the three months ended March 31, 2009(4)
|
$21
|
$(35
|
)
|
$7
|
$1
|
-
|
||||||||||||
Net realized gains/(losses) in the three months ended March 31, 2009(4)
|
$10
|
$26
|
$(3
|
)
|
$6
|
$(4
|
)
|
|||||||||||
Maturity dates(2)
|
2010-2015
|
2010-2014
|
2010
|
2010-2012
|
2010-2018
|
|||||||||||||
Derivative Financial Instruments
in Hedging Relationships(5)(6)
|
||||||||||||||||||
Fair Values(1)(2)
|
||||||||||||||||||
Assets
|
$175
|
$2
|
-
|
-
|
$15
|
|||||||||||||
Liabilities
|
$(148
|
)
|
$(22
|
)
|
-
|
$(43
|
)
|
$(50
|
)
|
|||||||||
Notional Values(2)
|
||||||||||||||||||
Volumes(3)
|
||||||||||||||||||
Purchases
|
13,641
|
33
|
-
|
-
|
-
|
|||||||||||||
Sales
|
14,311
|
-
|
-
|
-
|
-
|
|||||||||||||
U.S. dollars
|
-
|
-
|
-
|
U.S. 120
|
U.S. 1,825
|
|||||||||||||
Cross-currency
|
-
|
-
|
-
|
136/ U.S. 100
|
-
|
|||||||||||||
Net realized gains/(losses) in the three months ended March 31, 2009(4)
|
$26
|
$(10
|
)
|
-
|
-
|
$(7
|
)
|
|||||||||||
Maturity dates(2) | 2010-2015 | 2010-2014 | n/a | 2010-2014 | 2010-2020 |
(1)
|
Fair values equal carrying values.
|
(2)
|
As at December 31, 2009.
|
(3)
|
Volumes for power, natural gas and oil products derivatives are in GWh, Bcf and thousands of barrels, respectively.
|
(4)
|
Realized and unrealized gains and losses on power, natural gas and oil products derivative financial instruments held for trading are included in Revenues. Realized and unrealized gains and losses on interest rate and foreign exchange derivative financial instruments held for trading are included in Interest Expense and Interest Income and Other, respectively. The effective portion of unrealized gains and losses on derivative financial instruments in hedging relationships are initially recognized in Other Comprehensive Income, and are reclassified to Revenues, Interest Expense and Interest Income and Other, as appropriate, as the original hedged item settles.
|
(5)
|
All hedging relationships are designated as cash flow hedges except for interest rate derivative financial instruments designated as fair value hedges with a fair value of $4 million and a notional amount of US$150 million at December 31, 2009. Net realized gains on fair value hedges for the three months ended March 31, 2009 were $1 million and were included in Interest Expense. In first quarter 2009, the Company did not record any amounts in Net Income related to ineffectiveness for fair value hedges.
|
(6)
|
Net Income for the three months ended March 31, 2009 included gains of $5 million for changes in the fair value of power and natural gas cash flow hedges that were ineffective in offsetting the change in fair value of their related underlying positions. There were no gains or losses included in Net Income for the three months ended March 31, 2009 for discontinued cash flow hedges. No amounts have been excluded from the assessment of hedge effectiveness.
|
(unaudited)
|
||||||||
(millions of dollars)
|
March 31, 2010
|
December 31, 2009
|
||||||
Current
|
||||||||
Other current assets
|
460 | 315 | ||||||
Accounts payable
|
(538 | ) | (340 | ) | ||||
Long-term
|
||||||||
Intangibles and other assets
|
423 | 260 | ||||||
Deferred amounts
|
(438 | ) | (272 | ) |
(unaudited)
|
2010
|
2009
|
2008
|
|||||||||||||||||||||||||||||
(millions of dollars except per share amounts)
|
First
|
Fourth
|
Third
|
Second
|
First
|
Fourth
|
Third
|
Second
|
||||||||||||||||||||||||
Revenues
|
1,955 | 2,010 | 2,087 | 2,010 | 2,179 | 2,234 | 2,145 | 2,079 | ||||||||||||||||||||||||
Net Income
|
303 | 387 | 345 | 314 | 334 | 277 | 390 | 324 | ||||||||||||||||||||||||
Share Statistics
|
||||||||||||||||||||||||||||||||
Net income per share – Basic
|
$ | 0.43 | $ | 0.56 | $ | 0.50 | $ | 0.50 | $ | 0.54 | $ | 0.47 | $ | 0.67 | $ | 0.58 | ||||||||||||||||
Net income per share – Diluted
|
$ | 0.43 | $ | 0.56 | $ | 0.50 | $ | 0.50 | $ | 0.54 | $ | 0.46 | $ | 0.67 | $ | 0.58 | ||||||||||||||||
Dividend declared per common share
|
$ | 0.40 | $ | 0.38 | $ | 0.38 | $ | 0.38 | $ | 0.38 | $ | 0.36 | $ | 0.36 | $ | 0.36 |
(1)
|
The selected quarterly consolidated financial data has been prepared in accordance with GAAP. Certain comparative figures have been restated to conform with the current year’s presentation.
|
·
|
First quarter 2010, Energy’s EBIT included net unrealized losses of $28 million pre-tax ($17 million after tax) resulting from changes in the fair value of certain U.S. Power derivative contracts. Energy’s EBIT also included net unrealized losses of $21 million pre-tax ($15 million after tax) due to changes in the fair value of proprietary natural gas inventory in storage and natural gas forward purchase and sale contracts.
|
·
|
Fourth quarter 2009, Pipelines’ EBIT included a dilution gain of $29 million pre-tax ($18 million after tax) resulting from TransCanada’s reduced ownership interest in PipeLines LP after PipeLines LP issued common units to the public. Energy’s EBIT included net unrealized gains of $7 million pre-tax ($5 million after tax) due to changes in the fair value of proprietary natural gas inventory in storage and natural gas forward purchase and sale contracts. Net Income included $30 million of favourable income tax adjustments resulting from reductions in the Province of Ontario’s corporate income tax rates.
|
·
|
Third quarter 2009, Energy’s EBIT included net unrealized gains of $14 million pre-tax ($10 million after tax) due to changes in the fair value of proprietary natural gas inventory in storage and natural gas forward purchase and sale contracts.
|
·
|
Second quarter 2009, Energy’s EBIT included net unrealized losses of $7 million pre-tax ($5 million after tax) due to changes in the fair value of proprietary natural gas inventory in storage and natural gas forward purchase and sale contracts. Energy’s EBIT also included contributions from Portlands Energy, which was placed in service in April 2009, and the negative impact of Western Power’s lower overall realized power prices.
|
·
|
First quarter 2009, Energy’s EBIT included net unrealized losses of $13 million pre-tax ($9 million after tax) due to changes in the fair value of proprietary natural gas inventory in storage and natural gas forward purchase and sale contracts.
|
·
|
Fourth quarter 2008, Energy’s EBIT included net unrealized gains of $7 million pre-tax ($6 million after tax) due to changes in the fair value of proprietary natural gas inventory in storage and natural gas forward purchase and sale contracts. Net Income included net unrealized losses of $57 million pre-tax ($39 million after tax) due to changes in the fair value of derivatives used to manage the Company’s exposure to rising interest rates but which did not qualify as hedges for accounting purposes.
|
·
|
Third quarter 2008, Energy’s EBIT included contributions from the August 2008 acquisition of Ravenswood. Net Income included favourable income tax adjustments of $26 million from an internal restructuring and realization of losses.
|
·
|
Second quarter 2008, Energy’s EBIT included net unrealized gains of $12 million pre-tax ($8 million after tax) due to changes in the fair value of proprietary natural gas inventory in storage and natural gas forward purchase and sale contracts. In addition, Western Power’s EBIT increased due to higher overall realized prices and market heat rates in Alberta.
|
(unaudited)
|
Three months ended March 31
|
||||||||
(millions of dollars except number of shares and per share amounts)
|
2010
|
2009
|
|||||||
Revenues
|
1,955 | 2,179 | |||||||
Operating and Other Expenses
|
|||||||||
Plant operating costs and other
|
747 | 832 | |||||||
Commodity purchases resold
|
256 | 229 | |||||||
Depreciation and amortization
|
343 | 346 | |||||||
1,346 | 1,407 | ||||||||
Financial Charges/(Income)
|
|||||||||
Interest expense
|
182 | 295 | |||||||
Interest expense of joint ventures
|
16 | 14 | |||||||
Interest income and other
|
(24 | ) | (22 | ) | |||||
174 | 287 | ||||||||
Income before Income Taxes and Non-Controlling Interests
|
435 | 485 | |||||||
Income Taxes
|
|||||||||
Current
|
81 | 54 | |||||||
Future
|
20 | 62 | |||||||
101 | 116 | ||||||||
Non-Controlling Interests
|
|||||||||
Non-controlling interest in PipeLines LP
|
22 | 24 | |||||||
Preferred share dividends of subsidiary
|
6 | 6 | |||||||
Non-controlling interest in Portland
|
3 | 5 | |||||||
31 | 35 | ||||||||
Net Income
|
303 | 334 | |||||||
Preferred Share Dividends
|
7 | - | |||||||
Net Income Applicable to Common Shares
|
296 | 334 | |||||||
Net Income Per Share
|
|||||||||
Basic and Diluted
|
$ | 0.43 | $ | 0.54 | |||||
Average Common Shares Outstanding (millions)
|
|||||||||
Basic
|
686 | 618 | |||||||
Diluted
|
687 | 619 |
(unaudited)
|
Three months ended March 31
|
|||||
(millions of dollars)
|
2010
|
2009
|
||||
Cash Generated From Operations
|
||||||
Net income
|
303
|
334
|
||||
Depreciation and amortization
|
343
|
346
|
||||
Future income taxes
|
20
|
62
|
||||
Non-controlling interests
|
31
|
35
|
||||
Employee future benefits funding in excess of expense
|
(32
|
)
|
(34
|
)
|
||
Other
|
58
|
23
|
||||
723
|
766
|
|||||
Decrease in operating working capital
|
109
|
82
|
||||
Net cash provided by operations
|
832
|
848
|
||||
Investing Activities
|
||||||
Capital expenditures
|
(1,276
|
)
|
(1,123
|
)
|
||
Acquisitions, net of cash acquired
|
-
|
(134
|
)
|
|||
Deferred amounts and other
|
(216
|
)
|
(175
|
)
|
||
Net cash used in investing activities
|
(1,492
|
)
|
(1,432
|
)
|
||
Financing Activities
|
||||||
Dividends on common and preferred shares
|
(188
|
)
|
(156
|
)
|
||
Distributions paid to non-controlling interests
|
(27
|
)
|
(27
|
)
|
||
Notes payable issued/(repaid), net
|
432
|
(917
|
)
|
|||
Long-term debt issued, net of issue costs
|
10
|
3,060
|
||||
Reduction of long-term debt
|
(141
|
)
|
(482
|
)
|
||
Long-term debt of joint ventures issued
|
8
|
16
|
||||
Reduction of long-term debt of joint ventures
|
(26
|
)
|
(23
|
)
|
||
Common shares issued
|
9
|
11
|
||||
Preferred shares issued, net of issue costs
|
339
|
-
|
||||
Net cash provided by financing activities
|
416
|
1,482
|
||||
Effect of Foreign Exchange Rate Changes on Cash and Cash Equivalents
|
(17
|
)
|
26
|
|||
(Decrease)/Increase in Cash and Cash Equivalents
|
(261
|
)
|
924
|
|||
Cash and Cash Equivalents
|
||||||
Beginning of period
|
997
|
1,308
|
||||
Cash and Cash Equivalents
|
||||||
End of period
|
736
|
2,232
|
||||
Supplementary Cash Flow Information
|
||||||
Income taxes paid, net of refunds
|
4
|
57
|
||||
Interest paid
|
239
|
263
|
(unaudited)
|
March 31,
|
December 31,
|
||||||
(millions of dollars)
|
2010
|
2009
|
||||||
ASSETS
|
||||||||
Current Assets
|
||||||||
Cash and cash equivalents
|
736 | 997 | ||||||
Accounts receivable
|
912 | 966 | ||||||
Inventories
|
463 | 511 | ||||||
Other
|
799 | 701 | ||||||
2,910 | 3,175 | |||||||
Plant, Property and Equipment
|
34,111 | 32,879 | ||||||
Goodwill
|
3,645 | 3,763 | ||||||
Regulatory Assets
|
1,459 | 1,524 | ||||||
Intangibles and Other Assets
|
2,296 | 2,500 | ||||||
44,421 | 43,841 | |||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current Liabilities
|
||||||||
Notes payable
|
2,087 | 1,687 | ||||||
Accounts payable
|
2,605 | 2,195 | ||||||
Accrued interest
|
319 | 377 | ||||||
Current portion of long-term debt
|
636 | 478 | ||||||
Current portion of long-term debt of joint ventures
|
206 | 212 | ||||||
5,853 | 4,949 | |||||||
Regulatory Liabilities
|
347 | 385 | ||||||
Deferred Amounts
|
912 | 743 | ||||||
Future Income Taxes
|
2,800 | 2,856 | ||||||
Long-Term Debt
|
15,577 | 16,186 | ||||||
Long-Term Debt of Joint Ventures
|
725 | 753 | ||||||
Junior Subordinated Notes
|
1,005 | 1,036 | ||||||
27,219 | 26,908 | |||||||
Non-Controlling Interests
|
||||||||
Non-controlling interest in PipeLines LP
|
686 | 705 | ||||||
Preferred shares of subsidiary
|
389 | 389 | ||||||
Non-controlling interest in Portland
|
81 | 80 | ||||||
1,156 | 1,174 | |||||||
Shareholders’ Equity
|
16,046 | 15,759 | ||||||
44,421 | 43,841 |
(unaudited)
|
Three months ended March 31
|
||||||
(millions of dollars)
|
2010
|
2009
|
|||||
Net Income Applicable to Common Shares
|
296
|
334
|
|||||
Other Comprehensive (Loss)/Income, Net of Income Taxes
|
|||||||
Change in foreign currency translation gains and losses on investments in foreign
operations(1)
|
(147
|
)
|
(38
|
)
|
|||
Change in gains and losses on hedges of investments in foreign operations(2)
|
59
|
-
|
|||||
Change in gains and losses on derivative instruments designated as cash flow hedges(3)
|
(77
|
)
|
27
|
||||
Reclassification to net income of gains and losses on derivative instruments designated
as cash flow hedges pertaining to prior periods(4)
|
1
|
4
|
|||||
Other Comprehensive (Loss)/Income
|
(164
|
)
|
(7
|
)
|
|||
Comprehensive Income
|
132
|
327
|
(1)
|
Net of income tax expense of $30 million for the three months ended March 31, 2010 (2009 - $6 million recovery).
|
(2)
|
Net of income tax expense of $26 million for the three months ended March 31, 2010 (2009 - $4 million expense).
|
(3)
|
Net of income tax recovery of $57 million for the three months ended March 31, 2010 (2009 - $3 million recovery).
|
(4)
|
Net of income tax expense of $1 million for the three months ended March 31, 2010 (2009 - $1 million expense).
|
Currency
|
||||||||||||
(unaudited)
|
Translation
|
Cash Flow
|
||||||||||
(millions of dollars)
|
Adjustments
|
Hedges
|
Total
|
|||||||||
Balance at December 31, 2009
|
(592 | ) | (40 | ) | (632 | ) | ||||||
Change in foreign currency translation gains and losses on investments in foreign operations(1)
|
(147 | ) | - | (147 | ) | |||||||
Change in gains and losses on hedges of investments in foreign operations(2)
|
59 | - | 59 | |||||||||
Change in gains and losses on derivative instruments designated as cash flow hedges(3)
|
- | (77 | ) | (77 | ) | |||||||
Reclassification to net income of gains and losses on derivative instruments designated as cash flow hedges pertaining to prior periods(4)(5)
|
- | 1 | 1 | |||||||||
Balance at March 31, 2010
|
(680 | ) | (116 | ) | (796 | ) | ||||||
Balance at December 31, 2008
|
(379 | ) | (93 | ) | (472 | ) | ||||||
Change in foreign currency translation gains and losses on investments in foreign operations(1)
|
(38 | ) | - | (38 | ) | |||||||
Change in gains and losses on hedges of investments in foreign operations(2)
|
- | - | - | |||||||||
Changes in gains and losses on derivative instruments designated as cash flow hedges(3)
|
- | 27 | 27 | |||||||||
Reclassification to net income of gains and losses on derivative instruments designated as cash flow hedges pertaining to prior periods(4)
|
- | 4 | 4 | |||||||||
Balance at March 31, 2009
|
(417 | ) | (62 | ) | (479 | ) |
(1)
|
Net of income tax expense of $30 million for the three months ended March 31, 2010 (2009 - $6 million recovery).
|
(2)
|
Net of income tax expense of $26 million for the three months ended March 31, 2010 (2009 - $4 million expense).
|
(3)
|
Net of income tax recovery of $57 million for the three months ended March 31, 2010 (2009 - $3 million recovery).
|
(4)
|
Net of income tax expense of $1 million for the three months ended March 31, 2010 (2009 - $1 million expense).
|
(5)
|
Losses related to cash flow hedges reported in Accumulated Other Comprehensive (Loss)/Income and expected to be reclassified to Net Income in the next 12 months are estimated to be $68 million ($35 million, net of tax). These estimates assume constant commodity prices, interest rates and foreign exchange rates over time, however, the amounts reclassified will vary based on the actual value of these factors at the date of settlement.
|
(unaudited)
|
Three months ended March 31
|
||||||
(millions of dollars)
|
2010
|
2009
|
|||||
Common Shares
|
|||||||
Balance at beginning of period
|
11,338
|
9,264
|
|||||
Shares issued under dividend reinvestment plan
|
78
|
67
|
|||||
Proceeds from shares issued on exercise of stock options
|
9
|
11
|
|||||
Balance at end of period
|
11,425
|
9,342
|
|||||
Preferred Shares
|
|||||||
Balance at beginning of period
|
539
|
-
|
|||||
Proceeds from shares issued under public offering, net of issue costs
|
342
|
-
|
|||||
Balance at end of period
|
881
|
-
|
|||||
Contributed Surplus
|
|||||||
Balance at beginning of period
|
328
|
279
|
|||||
Issuance of stock options
|
1
|
-
|
|||||
Balance at end of period
|
329
|
279
|
|||||
Retained Earnings
|
|||||||
Balance at beginning of period
|
4,186
|
3,827
|
|||||
Net income
|
303
|
334
|
|||||
Common share dividends
|
(275
|
)
|
(236
|
)
|
|||
Preferred share dividends
|
(7
|
)
|
-
|
||||
Balance at end of period
|
4,207
|
3,925
|
|||||
Accumulated Other Comprehensive (Loss)/Income
|
|||||||
Balance at beginning of period
|
(632
|
)
|
(472
|
)
|
|||
Other comprehensive (loss)/income
|
(164
|
)
|
(7
|
)
|
|||
Balance at end of period
|
(796
|
)
|
(479
|
)
|
|||
3,411
|
3,446
|
||||||
Total Shareholders’ Equity
|
16,046
|
13,067
|
1.
|
Significant Accounting Policies
|
2.
|
Changes in Accounting Policies
|
3.
|
Segmented Information
|
Three months ended March 31
|
Pipelines
|
Energy(1)
|
Corporate
|
Total
|
||||||||||||||||
(unaudited)(millions of dollars)
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Revenues
|
1,129
|
1,264
|
826
|
915
|
-
|
-
|
1,955
|
2,179
|
||||||||||||
Plant operating costs and other
|
(361
|
)
|
(393
|
)
|
(360
|
)
|
(409
|
)
|
(26
|
)
|
(30
|
)
|
(747
|
)
|
(832
|
)
|
||||
Commodity purchases resold
|
-
|
-
|
(256
|
)
|
(229
|
)
|
-
|
-
|
(256
|
)
|
(229
|
)
|
||||||||
Depreciation and amortization
|
(253
|
)
|
(260
|
)
|
(90
|
)
|
(86
|
)
|
-
|
-
|
(343
|
)
|
(346
|
)
|
||||||
515
|
611
|
120
|
191
|
(26
|
)
|
(30
|
)
|
609
|
772
|
|||||||||||
Interest expense
|
(182
|
)
|
(295
|
)
|
||||||||||||||||
Interest expense of joint ventures
|
(16
|
)
|
(14
|
)
|
||||||||||||||||
Interest income and other
|
24
|
22
|
||||||||||||||||||
Income taxes
|
(101
|
)
|
(116
|
)
|
||||||||||||||||
Non-controlling interests
|
(31
|
)
|
(35
|
)
|
||||||||||||||||
Net Income
|
303
|
334
|
||||||||||||||||||
Preferred share dividends
|
(7
|
)
|
-
|
|||||||||||||||||
Net Income Applicable to Common Shares
|
296
|
334
|
(1)
|
Effective January 1, 2010, the Company records net realized and unrealized gains and losses on derivatives used to purchase and sell power, natural gas and fuel oil in order to manage Energy’s assets on a net basis in Revenues. Comparative results for 2009 reflect amounts reclassified from Commodity Purchases Resold to Revenues.
|
(unaudited)
(millions of dollars)
|
March 31, 2010
|
December 31, 2009
|
|||||
Pipelines
|
29,917
|
29,508
|
|||||
Energy
|
12,862
|
12,477
|
|||||
Corporate
|
1,642
|
1,856
|
|||||
44,421
|
43,841
|
4.
|
Long-Term Debt
|
5.
|
Share Capital
|
6.
|
Financial Instruments and Risk Management
|
March 31, 2010
|
December 31, 2009
|
||||||||||||
Asset/(Liability)
(unaudited)
(millions of dollars)
|
Fair
Value(1)
|
Notional or Principal Amount
|
Fair
Value(1)
|
Notional or Principal Amount
|
|||||||||
U.S. dollar cross-currency swaps
|
|||||||||||||
(maturing 2010 to 2014)
|
140
|
U.S. 2,000
|
86
|
U.S. 1,850
|
|||||||||
U.S. dollar forward foreign exchange contracts
|
|||||||||||||
(maturing 2010)
|
18
|
U.S. 1,030
|
9
|
U.S. 765
|
|||||||||
U.S. dollar options
|
|||||||||||||
(matured 2010)
|
-
|
-
|
1
|
U.S. 100
|
|||||||||
158
|
U.S. 3,030
|
96
|
U.S. 2,715
|
(1)
|
Fair values equal carrying values.
|
March 31, 2010
|
December 31, 2009
|
||||||||||||
(unaudited)
(millions of dollars)
|
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||
Financial Assets(1)
|
|||||||||||||
Cash and cash equivalents
|
736
|
736
|
997
|
997
|
|||||||||
Accounts receivable and other(2)(3)
|
1,363
|
1,402
|
1,432
|
1,483
|
|||||||||
Available-for-sale assets(2)
|
22
|
22
|
23
|
23
|
|||||||||
2,121
|
2,160
|
2,452
|
2,503
|
||||||||||
Financial Liabilities(1)(3)
|
|||||||||||||
Notes payable
|
2,087
|
2,087
|
1,687
|
1,687
|
|||||||||
Accounts payable and deferred amounts(4)
|
1,638
|
1,638
|
1,538
|
1,538
|
|||||||||
Accrued interest
|
319
|
319
|
377
|
377
|
|||||||||
Long-term debt
|
16,213
|
19,208
|
16,664
|
19,377
|
|||||||||
Junior subordinated notes
|
1,005
|
987
|
1,036
|
976
|
|||||||||
Long-term debt of joint ventures
|
931
|
1,000
|
965
|
1,025
|
|||||||||
22,193
|
25,239
|
22,267
|
24,980
|
(1)
|
Consolidated Net Income in first quarter 2010 included losses of $7 million (2009 – losses of $14 million) for fair value adjustments related to interest rate swap agreements on US$250 million (2009 – US$200 million) of long-term debt. There were no other unrealized gains or losses from fair value adjustments to the financial instruments.
|
(2)
|
At March 31, 2010, the Consolidated Balance Sheet included financial assets of $912 million (December 31, 2009 – $966 million) in Accounts Receivable, $40 million in Other Current Assets (December 31, 2009 – nil) and $433 million (December 31, 2009 - $489 million) in Intangibles and Other Assets.
|
(3)
|
Recorded at amortized cost, except for certain long-term debt which is adjusted to fair value.
|
(4)
|
At March 31, 2010, the Consolidated Balance Sheet included financial liabilities of $1,612 million (December 31, 2009 – $1,513 million) in Accounts Payable and $26 million (December 31, 2009 - $25 million) in Deferred Amounts.
|
March 31, 2010
|
|||||||||||||||
(unaudited)
(all amounts in millions unless otherwise indicated)
|
Power
|
Natural
Gas
|
Oil
Products
|
Foreign
Exchange
|
Interest
|
||||||||||
Derivative Financial Instruments
Held for Trading(1)
|
|||||||||||||||
Fair Values(2)
|
|||||||||||||||
Assets
|
$319
|
$178
|
-
|
$1
|
$26
|
||||||||||
Liabilities
|
$(251
|
)
|
$(182
|
)
|
-
|
$(12
|
)
|
$(73
|
)
|
||||||
Notional Values
|
|||||||||||||||
Volumes(3)
|
|||||||||||||||
Purchases
|
16,661
|
112
|
-
|
-
|
-
|
||||||||||
Sales
|
17,657
|
99
|
-
|
-
|
-
|
||||||||||
Canadian dollars
|
-
|
-
|
-
|
-
|
838
|
||||||||||
U.S. dollars
|
-
|
-
|
-
|
U.S. 612
|
U.S. 1,500
|
||||||||||
Cross-currency
|
-
|
-
|
-
|
47/U.S. 37
|
-
|
||||||||||
Net unrealized (losses)/gains in the three months ended March 31, 2010(4)
|
$(16
|
)
|
$2
|
-
|
-
|
$(4
|
)
|
||||||||
Net realized gains/(losses) in the three months ended March 31, 2010(4)
|
$22
|
$(12
|
)
|
-
|
$8
|
$(4
|
)
|
||||||||
Maturity dates
|
2010-2015
|
2010-2014
|
2010
|
2010-2012
|
2010-2018
|
||||||||||
Derivative Financial Instruments
in Hedging Relationships(5)(6)
|
|||||||||||||||
Fair Values(2)
|
|||||||||||||||
Assets
|
$191
|
-
|
-
|
-
|
$10
|
||||||||||
Liabilities
|
$(313
|
)
|
$(53
|
)
|
-
|
$(48
|
)
|
$(44
|
)
|
||||||
Notional Values
|
|||||||||||||||
Volumes(3)
|
|||||||||||||||
Purchases
|
15,819
|
31
|
-
|
-
|
-
|
||||||||||
Sales
|
12,385
|
-
|
-
|
-
|
-
|
||||||||||
U.S. dollars
|
-
|
-
|
-
|
U.S. 120
|
U.S. 2,075
|
||||||||||
Cross-currency
|
-
|
-
|
-
|
136/U.S. 100
|
-
|
||||||||||
Net realized losses in the three months ended March 31, 2010(4)
|
$(7
|
)
|
$(3
|
)
|
-
|
-
|
$(10
|
)
|
|||||||
Maturity dates | 2010-2015 | 2010-2012 | n/a | 2010- 2014 | 2010-2020 |
(1)
|
All derivative financial instruments in the held-for-trading classification have been entered into for risk management purposes and are subject to the Company’s risk management strategies, policies and limits. These include derivatives that have not been designated as hedges or do not qualify for hedge accounting treatment but have been entered into as economic hedges to manage the Company’s exposures to market risk.
|
(2)
|
Fair values equal carrying values.
|
(3)
|
Volumes for power, natural gas and oil products derivatives are in GWh, billion cubic feet (Bcf) and thousands of barrels, respectively.
|
(4)
|
Realized and unrealized gains and losses on power, natural gas and oil products derivative financial instruments held for trading are included in Revenues. Realized and unrealized gains and losses on interest rate and foreign exchange derivative financial instruments held for trading are included in Interest Expense and Interest Income and Other, respectively. The effective portion of unrealized gains and losses on derivative financial instruments in hedging relationships are initially recognized in Other Comprehensive Income, and are reclassified to Revenues, Interest Expense and Interest Income and Other, as appropriate, as the original hedged item settles.
|
(5)
|
All hedging relationships are designated as cash flow hedges except for interest rate derivative financial instruments designated as fair value hedges with a fair value of $7 million and a notional amount of US$150 million. Net realized gains on fair value hedges for the three months ended March 31, 2010 were $1 million and were included in Interest Expense. In first quarter 2010, the Company did not record any amounts in Net Income related to ineffectiveness for fair value hedges.
|
(6)
|
Net Income for the three months ended March 31, 2010 included losses of $8 million for changes in the fair value of power and natural gas cash flow hedges that were ineffective in offsetting the change in fair value of their related underlying positions. There were no gains or losses included in Net Income for the three months ended March 31, 2010 for discontinued cash flow hedges. No amounts have been excluded from the assessment of hedge effectiveness.
|
2009
|
||||||||||||||||||
(unaudited)
(all amounts in millions unless otherwise indicated)
|
Power
|
Natural
Gas
|
Oil
Products
|
Foreign
Exchange
|
Interest
|
|||||||||||||
Derivative Financial Instruments Held for Trading
|
||||||||||||||||||
Fair Values(1)(2)
|
||||||||||||||||||
Assets
|
$150
|
$107
|
$5
|
-
|
$25
|
|||||||||||||
Liabilities
|
$(98
|
)
|
$(112
|
)
|
$(5
|
)
|
$(66
|
)
|
$(68
|
)
|
||||||||
Notional Values(2)
|
||||||||||||||||||
Volumes(3)
|
||||||||||||||||||
Purchases
|
15,275
|
238
|
180
|
-
|
-
|
|||||||||||||
Sales
|
13,185
|
194
|
180
|
-
|
-
|
|||||||||||||
Canadian dollars
|
-
|
-
|
-
|
-
|
574
|
|||||||||||||
U.S. dollars
|
-
|
-
|
-
|
U.S. 444
|
U.S. 1,325
|
|||||||||||||
Cross-currency
|
-
|
-
|
-
|
227/ U.S. 157
|
-
|
|||||||||||||
Net unrealized gains/(losses) in the three months ended March 31, 2009(4)
|
$21
|
$(35
|
)
|
$7
|
$1
|
-
|
||||||||||||
Net realized gains/(losses) in the three months ended March 31, 2009(4)
|
$10
|
$26
|
$(3
|
)
|
$6
|
$(4
|
)
|
|||||||||||
Maturity dates(2)
|
2010-2015
|
2010-2014
|
2010
|
2010-2012
|
2010-2018
|
|||||||||||||
Derivative Financial Instruments
in Hedging Relationships(5)(6)
|
||||||||||||||||||
Fair Values(1)(2)
|
||||||||||||||||||
Assets
|
$175
|
$2
|
-
|
-
|
$15
|
|||||||||||||
Liabilities
|
$(148
|
)
|
$(22
|
)
|
-
|
$(43
|
)
|
$(50
|
)
|
|||||||||
Notional Values(2)
|
||||||||||||||||||
Volumes(3)
|
||||||||||||||||||
Purchases
|
13,641
|
33
|
-
|
-
|
-
|
|||||||||||||
Sales
|
14,311
|
-
|
-
|
-
|
-
|
|||||||||||||
U.S. dollars
|
-
|
-
|
-
|
U.S. 120
|
U.S. 1,825
|
|||||||||||||
Cross-currency
|
-
|
-
|
-
|
136/ U.S. 100
|
-
|
|||||||||||||
Net realized gains/(losses) in the three months ended March 31, 2009(4)
|
$26
|
$(10
|
)
|
-
|
-
|
$(7
|
)
|
|||||||||||
Maturity dates(2) | 2010-2015 | 2010-2014 | n/a | 2010-2014 | 2010-2020 |
(1)
|
Fair values equal carrying values.
|
(2)
|
As at December 31, 2009.
|
(3)
|
Volumes for power, natural gas and oil products derivatives are in GWh, Bcf and thousands of barrels, respectively.
|
(4)
|
Realized and unrealized gains and losses on power, natural gas and oil products derivative financial instruments held for trading are included in Revenues. Realized and unrealized gains and losses on interest rate and foreign exchange derivative financial instruments held for trading are included in Interest Expense and Interest Income and Other, respectively. The effective portion of unrealized gains and losses on derivative financial instruments in hedging relationships are initially recognized in Other Comprehensive Income, and are reclassified to Revenues, Interest Expense and Interest Income and Other, as appropriate, as the original hedged item settles.
|
(5)
|
All hedging relationships are designated as cash flow hedges except for interest rate derivative financial instruments designated as fair value hedges with a fair value of $4 million and a notional amount of US$150 million at December 31, 2009. Net realized gains on fair value hedges for the three months ended March 31, 2009 were $1 million and were included in Interest Expense. In first quarter 2009, the Company did not record any amounts in Net Income related to ineffectiveness for fair value hedges.
|
(6)
|
Net Income for the three months ended March 31, 2009 included gains of $5 million for changes in the fair value of power and natural gas cash flow hedges that were ineffective in offsetting the change in fair value of their related underlying positions. There were no gains or losses included in Net Income for the three months ended March 31, 2009 for discontinued cash flow hedges. No amounts have been excluded from the assessment of hedge effectiveness.
|
(unaudited)
|
||||||||
(millions of dollars)
|
March 31, 2010
|
December 31, 2009
|
||||||
Current
|
||||||||
Other current assets
|
460 | 315 | ||||||
Accounts payable
|
(538 | ) | (340 | ) | ||||
Long-term
|
||||||||
Intangibles and other assets
|
423 | 260 | ||||||
Deferred amounts
|
(438 | ) | (272 | ) |
(unaudited)
(millions of dollars, pre-tax)
|
Quoted Prices in Active Markets (Level I)
|
Significant Other Observable Inputs
(Level II)
|
Significant Unobservable Inputs
(Level III)
|
Total
|
||||||||
Natural Gas Inventory
|
-
|
54
|
-
|
54
|
||||||||
Derivative Financial Instruments:
|
||||||||||||
Assets
|
137
|
742
|
19
|
898
|
||||||||
Liabilities
|
(205
|
)
|
(762
|
)
|
(24
|
)
|
(991
|
)
|
||||
Available-for-sale assets
|
22
|
-
|
-
|
22
|
||||||||
Guarantee Liabilities(1)
|
-
|
-
|
(9
|
)
|
(9
|
)
|
||||||
(46
|
)
|
34
|
(14
|
)
|
(26
|
)
|
(1)
|
The fair value of guarantees is included in Deferred Amounts.
|
(unaudited)
|
|||||||||
(millions of dollars, pre-tax)
|
Derivatives(1)
|
Guarantees(2)
|
Total
|
||||||
Balance at December 31, 2009
|
(2
|
)
|
(9
|
)
|
(11
|
)
|
|||
New contracts(3)
|
(10
|
)
|
-
|
(10
|
)
|
||||
Settlements
|
(1
|
)
|
-
|
(1
|
)
|
||||
Transfers out of Level III
|
(5
|
)
|
-
|
(5
|
)
|
||||
Change in unrealized gains recorded in Net Income
|
5
|
-
|
5
|
||||||
Change in unrealized gains recorded in Other Comprehensive Income
|
8
|
-
|
8
|
||||||
Balance at March 31, 2010
|
(5
|
)
|
(9
|
)
|
(14
|
)
|
(1)
|
The fair value of derivative assets and liabilities is presented on a net basis.
|
(2)
|
The fair value of guarantees is included in Deferred Amounts. No amounts were recognized in Net Income for the periods presented.
|
(3)
|
The total amount of net losses included in Net Income attributable to derivatives that were entered into during the period and still held at the reporting date is $1 million for the three months ended March 31, 2010.
|
7.
|
Employee Future Benefits
|
Three months ended March 31
|
Pension Benefit Plans
|
Other Benefit Plans
|
|||||||||||
(unaudited)(millions of dollars)
|
2010
|
2009
|
2010
|
2009
|
|||||||||
Current service cost
|
12
|
11
|
-
|
-
|
|||||||||
Interest cost
|
23
|
23
|
2
|
2
|
|||||||||
Expected return on plan assets
|
(27
|
)
|
(25
|
)
|
-
|
-
|
|||||||
Amortization of net actuarial loss
|
2
|
1
|
-
|
-
|
|||||||||
Amortization of past service costs
|
1
|
1
|
-
|
-
|
|||||||||
Net benefit cost recognized
|
11
|
11
|
2
|
2
|
8.
|
Contingencies
|
9.
|
Subsequent Events
|
TransCanada welcomes questions from shareholders and potential investors. Please telephone:
|
Investor Relations, at (800) 361-6522 (Canada and U.S. Mainland) or direct dial David Moneta/Myles Dougan/Terry Hook at (403) 920-7911. The investor fax line is (403) 920-2457. Media Relations: Terry Cunha/Cecily Dobson
(403) 920-7859 or (800) 608-7859.
|
Visit the TransCanada website at: http://www.transcanada.com.
|
(unaudited)
|
Three months ended March 31
|
|||||||
(millions of dollars, except per share amounts)
|
2010
|
2009
|
||||||
Net Income in Accordance with Canadian GAAP
|
303 | 334 | ||||||
U.S. GAAP adjustments:
|
||||||||
Net income attributable to non-controlling interests(1)
|
31 | 35 | ||||||
Unrealized loss on natural gas inventory held in storage(2)
|
24 | 23 | ||||||
Tax impact of unrealized loss on natural gas inventory held in storage
|
(7 | ) | (7 | ) | ||||
Tax expense due to a change in tax legislation substantively enacted in Canada(3)
|
(2 | ) | (1 | ) | ||||
Net Income in Accordance with U.S. GAAP
|
349 | 384 | ||||||
Less: net income attributable to non-controlling interests(1)
|
(31 | ) | (35 | ) | ||||
Less: preferred share dividends
|
(7 | ) | - | |||||
Net Income Attributable to Common Shareholders in Accordance with U.S. GAAP
|
311 | 349 | ||||||
Other Comprehensive (Loss)/Income in Accordance with Canadian GAAP
|
(164 | ) | (7 | ) | ||||
U.S. GAAP adjustments:
|
||||||||
Change in funded status of postretirement plan liability(4)
|
1 | 1 | ||||||
Change in equity investment funded status of postretirement plan liability(4)
|
2 | 1 | ||||||
Tax impact of change in equity investment funded status of postretirement plan liability
|
(1 | ) | - | |||||
Comprehensive Income in Accordance with U.S. GAAP
|
149 | 344 | ||||||
Net Income Per Share in Accordance with U.S. GAAP, Basic and Diluted
|
$ | 0.45 | $ | 0.56 | ||||
(unaudited)
(millions of dollars)
|
March 31, 2010
|
December 31, 2009
|
||||||
Current assets(2)
|
2,496 | 2,634 | ||||||
Long-term investments(4)(5)
|
4,929 | 4,873 | ||||||
Plant, property and equipment
|
28,852 | 27,695 | ||||||
Goodwill
|
3,530 | 3,644 | ||||||
Regulatory assets(4)
|
1,468 | 1,675 | ||||||
Intangibles and other assets (4)(6)
|
1,964 | 2,041 | ||||||
43,239 | 42,562 | |||||||
Current liabilities(3)
|
5,377 | 4,471 | ||||||
Deferred amounts(4)(5)
|
1,157 | 899 | ||||||
Regulatory liabilities
|
299 | 381 | ||||||
Deferred income taxes(2)(4)
|
2,754 | 2,802 | ||||||
Long-term debt and junior subordinated notes(6)
|
16,692 | 17,335 | ||||||
26,279 | 25,888 | |||||||
Shareholders’ equity:
|
||||||||
Common shares
|
11,425 | 11,338 | ||||||
Preferred shares
|
881 | 539 | ||||||
Non-controlling interests(1)
|
1,156 | 1,174 | ||||||
Contributed surplus(7)
|
347 | 346 | ||||||
Retained earnings(2)(3)(7)
|
4,185 | 4,149 | ||||||
Accumulated other comprehensive (loss)/income(4)(8)
|
(1,034 | ) | (872 | ) | ||||
16,960 | 16,674 | |||||||
43,239 | 42,562 |
(1)
|
As required by U.S. GAAP, Non-Controlling Interests is presented in the Equity section on the Balance Sheet and on the Income Statement, Consolidated Net Income includes both the Company’s and the Non-Controlling Interests’ share of Net Income.
|
(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)
|
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.
|
(4)
|
Represents the amortization of net loss and prior service cost amounts recorded in Accumulated Other Comprehensive (Loss)/Income (AOCI) for the Company’s defined benefit pension and other postretirement plans that have been previously recorded under U.S. GAAP.
|
(5)
|
Under Canadian GAAP, the Company accounts for certain investments using the proportionate consolidation basis whereby the Company’s proportionate share of 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 Canadian GAAP audited consolidated financial statements for the year ended December 31, 2009. As a consequence of using equity accounting for U.S. GAAP, the Company is required to reflect an additional liability of $318 million at March 31, 2010 (December 31, 2009 - $261 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.
|
(6)
|
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.
|
(7)
|
TC Pipelines, LP issued equity in 2009, resulting in an $18 million dilution gain after tax to the Company. Under U.S. GAAP, the dilution gain is accounted for as an equity transaction although under Canadian GAAP, it is included in Net Income.
|
(8)
|
At March 31, 2010, AOCI in accordance with U.S. GAAP is $238 million higher than under Canadian GAAP. The difference relates to the accounting treatment for defined benefit pension and other postretirement plans.
|
Three months ended March 31, 2010
|
Cash Flow Hedges
|
Net Investment Hedges
|
||||||||||||||||||
(unaudited)
(millions of dollars, pre-tax)
|
Power
|
Natural Gas
|
Foreign Exchange
|
Interest
|
Foreign Exchange
|
|||||||||||||||
Amount of (losses)/gains recognized in OCI on derivative (effective portion)
|
(98 | ) | (36 | ) | 13 | (13 | ) | 85 | ||||||||||||
Amount of (losses)/gains reclassified from AOCI into income (effective portion)
|
(12 | ) | 1 | - | 13 | - | (1) | |||||||||||||
Amount of (losses)/gains recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)
|
(8 | ) | - | - | - | - | (2) |
Three months ended March 31, 2009
|
Cash Flow Hedges
|
Net Investment Hedges
|
||||||||||||||||||
(unaudited)
(millions of dollars, pre-tax)
|
Power
|
Natural Gas
|
Foreign Exchange
|
Interest
|
Foreign Exchange
|
|||||||||||||||
Amount of (losses)/gains recognized in OCI on derivative (effective portion)
|
(39 | ) | (13 | ) | 4 | (5 | ) | 4 | ||||||||||||
Amount of gains/(losses) reclassified from AOCI into income (effective portion)
|
2 | (7 | ) | - | 9 | - | (1) | |||||||||||||
Amount of gains/(losses) recognized in income on derivative (ineffective portion and amount excluded from effectiveness testing)
|
4 | 1 | - | - | - | (2) |
(1)
|
Location of gains/(losses) is Gains/(Losses) on Sale of Subsidiary
|
(2)
|
Location of gains/(losses) is Other Income/(Expense)
|
Three Months Ended
March 31, 2010
|
||||||||
(unaudited)
(millions of dollars, pre-tax)
|
Asset Retirement Obligations(1)
|
Guarantees(2)
|
||||||
Balance, opening
|
(111 | ) | (270 | ) | ||||
Accretion
|
(2 | ) | - | |||||
Total realized and unrealized losses included in Balance Sheet
|
- | (64 | ) | |||||
New contracts entered into during the period
|
- | (9 | ) | |||||
Contracts settled during the period
|
- | 16 | ||||||
Balance, closing
|
(113 | ) | (327 | ) |
(1)
|
The fair value of asset retirement obligations is recognized in Plant, Property and Equipment with offsetting amounts in Accounts Payable and Deferred Amounts. The fair value is calculated by discounting the estimated cash flows required to settle the asset retirement obligations.
|
(2)
|
The fair value of guarantees is recognized in Long-Term Investments and Deferred Amounts. No amounts were recognized in earnings for the period.
|
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 issuer as of, and for, the periods presented in this report;
|
4.
|
The issuer’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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer 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 issuer, 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)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the issuer’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
|
(d)
|
Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
|
5.
|
The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’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 issuer’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 issuer’s internal control over financial reporting.
|
Dated:
|
April 30, 2010
|
/s/ Harold N. Kvisle
|
Harold N. Kvisle
|
||
President and Chief Executive Officer
|
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 issuer as of, and for, the periods presented in this report;
|
|
4.
|
The issuer’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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer 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 issuer, 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) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
(c) |
Evaluated the effectiveness of the issuer’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
|
|
(d) |
Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the issuer’s most recent fiscal quarter (the issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
|
|
5.
|
The issuer’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’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 issuer’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 issuer’s internal control over financial reporting.
|
|
Dated:
|
April 30, 2010
|
/s/ Gregory A. Lohnes
|
Gregory A. Lohnes
|
||
Executive Vice-President
and Chief Financial Officer
|
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 30, 2010
|
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/ Gregory A. Lohnes
|
|
Gregory A. Lohnes
|
|
Chief Financial Officer
|
|
April 30, 2010
|
§
|
Comparable earnings of $328 million or $0.48 per share
|
§
|
Net income applicable to common shares of $296 million or $0.43 per share
|
§
|
Common share dividend of $0.40 per share for the quarter ending June 30, 2010
|
§
|
Comparable earnings before interest, taxes, depreciation and amortization (EBITDA) of $1,001 million
|
§
|
Funds generated from operations of $723 million
|
§
|
Invested $1.3 billion to advance unprecedented $22 billion capital program
|
§
|
In March 2010, the National Energy Board of Canada (NEB) approved the Company’s application to construct and operate the Canadian portion of the Keystone Gulf Coast Expansion. It was a significant milestone in advancing the project. The Keystone expansion will be the first pipeline to directly connect a growing and reliable supply of Canadian crude oil to the largest refining market in North America. Shippers have committed crude oil that amounts to 75 per cent of the expansion capacity for an average term of 17 years. This long term commitment illustrates the value the project has to TransCanada and the overall market. Facility permits for the U.S. portion of the Keystone expansion are expected by late 2010.
|
§
|
Commissioning of the first phase of Keystone, extending from Hardisty, Alberta to Wood River and Patoka, Illinois with an initial capacity of 435,000 barrels per day (Bbl/d) continued in the first quarter of 2010 and it is expected to be placed in service in second quarter 2010.Contracted volumes of 217,500 Bbl/d will increase to 910,000 Bbl/d from 2010 through to 2013 as the Cushing and Gulf Coast phases become operational. Based on these current long-term commitments, TransCanada expects Keystone to generate EBITDA of approximately US$1.2 billion in 2013 - its first full year of commercial operation. If volumes were to increase to 1.1 million Bbl/d, the full commercial design of the system, Keystone would generate annual EBITDA of approximately US$1.5 billion. In the future, Keystone could be economically expanded from 1.1 million Bbl/d to 1.5 milli
on Bbl/d to meet market demand.
|
§
|
The open season for the Alaska Pipeline Project was launched April 30, 2010. Potential shippers have 90 days to assess the merits of the open season - from May through July 2010. The Alaska Pipeline Project will provide information to potential shippers in Alaska and Canada about the project’s anticipated engineering design, commercial terms, estimated project costs and timelines. It is typical on a project of this size for bids from shippers to be conditional. The Alaska Pipeline Project will work with shippers over the summer and fall to resolve any issues
within the project’s control. Other key issues such as Alaska fiscal terms and natural gas resource access at Point Thomson will need to be resolved between shippers and the State of Alaska. The results of the open season are expected to be available near the end of 2010.
|
§
|
TransCanada and the other partners involved in the Mackenzie Gas Pipeline Project continue to pursue approval of the proposed project. The focus is on obtaining regulatory approval and the Canadian government’s support of an acceptable fiscal framework. The NEB recently concluded the final argument hearings for the project and is expected to release its conclusions on the project’s application in September 2010.
|
§
|
In March 2010, TransCanada received approval from the NEB to construct and operate the Groundbirch pipeline. It will be a 77 kilometre (km) (48-mile) natural gas pipeline that will extend the Alberta System, connecting to natural gas supplies in the Montney shale gas formation in northeast B.C. Construction of the Groundbirch pipeline is expected to begin in July 2010 and should be complete by November 2010. The approximate $200 million project has firm transportation contracts that will reach 1.1 billion cubic feet per day (Bcf/d) by 2014.
|
§
|
TransCanada’s Horn River project which includes 72 km (45-mile) of new pipe and the 83 km (52-mile) Ekwan pipeline to be acquired from Encana Corporation will bring B.C. shale gas to market through the Alberta System. The Ekwan pipeline acquisition is expected to close in September 2011. In April 2010, the NEB announced that it will hold a public hearing process on an application TransCanada filed in February 2010 for approval to construct and operate the Horn River project. The public hearing process is scheduled to begin in October 2010. Subject to regulatory approvals, the approximate $310 million Horn River project with commitments for contracted gas of 503 mmcf/d is expected to be operational in s
econd quarter 2012.
|
§
|
TransCanada’s 160 km (99-mile) Red Earth section of the North Central Corridor (NCC) pipeline is now operating. The 140 km (87-mile) North Star section was completed in 2009, along with two compressor stations. The NCC is a 300 km (186-mile) expansion of the Alberta System that provides needed capacity to accommodate increasing natural gas supply in northwest Alberta and northeast B.C. and growing markets in Alberta. The pipeline will initially move about 800 mmcf/d of gas, with total capability of about 1.6 Bcf/d. The project was completed ahead of schedule and under budget of approximately $800 million.
|
§
|
Bison received its Federal Energy Regulatory Commission certificate of public convenience and necessity on April 9, 2010. Construction is expected to begin in second quarter 2010 on the 487 km (303-mile) natural gas pipeline that has shipping commitments for approximately 407 mmcf/d of gas. The approximate US$600 million project is expected to be in service in fourth quarter 2010.
|
§
|
Construction of the 683 megawatt (MW) Halton Hills Generating Station in Ontario is substantially complete. Commissioning activities have begun and the facility is on schedule to begin operating in third quarter 2010. The commissioning team has safely used compressed air and nitrogen to blow clean the high pressure pipeline that supplies natural gas to the plant.
|
§
|
Construction continues on the 575 MW Coolidge Generating Station. The generating station is anticipated to be in service by the summer of 2011.
|
§
|
TransCanada continues to review the results of the open seasons on the proposed Zephyr and Chinook power transmission line projects and expects to finalize those results in second quarter 2010. Each project would be capable of delivering primarily renewable wind-generated power originating in Wyoming (Zephyr) and Montana (Chinook) to Nevada to access California and other desert southwest U.S. markets.
|
§
|
On April 15, 2010, Hal Kvisle announced his retirement as president and chief executive officer effective June 30, 2010. Russ Girling, currently chief operating officer, will succeed Mr. Kvisle as president and chief executive officer on July 1, 2010.
|
§
|
The Board of Directors of TransCanada declared a quarterly dividend of $0.40 per share for the quarter ending June 30, 2010, on TransCanada’s outstanding common shares.
|
§
|
In March 2010, TransCanada completed a public offering of 14 million Series 3 cumulative redeemable first preferred shares, including the full exercise of an underwriters’ over-allotment option of two million shares. The preferred shares were issued at $25 per share, resulting in gross proceeds of $350 million. The initial dividend rate is fixed for five years at four per cent per annum payable quarterly. The net proceeds of this offering were used to partially fund capital projects, for general corporate purposes and to repay short-term debt.
|
§
|
TransCanada is well positioned to fund its existing capital program through its growing internally-generated cash flow, its dividend reinvestment and share purchase plan, and its continued access to capital markets. TransCanada will also continue to examine opportunities for portfolio management, including a greater role for TC PipeLines, LP in financing its capital program.
|
Media Inquiries: | Cecily Dobson/Terry Cunha |
403.920.7859
1.800.608.7859
|
Analyst Inquiries: |
David Moneta/Myler Dougan/Terry Hook
|
403.920.7911
1.800.361.6522
|
(unaudited)
|
Three months ended March 31
|
||||
(millions of dollars)
|
2010
|
2009
|
|||
Revenues
|
1,955
|
2,179
|
|||
Comparable EBITDA(1)
|
1,001
|
|
1,131
|
||
Comparable EBIT(1)
|
658
|
785
|
|||
EBIT(1)
|
609
|
772
|
|||
Net Income
|
303
|
334
|
|||
Net Income Applicable to Common Shares
|
296
|
334
|
|||
Comparable Earnings(1)
|
328
|
343
|
|||
Cash Flows
|
|||||
Funds generated from operations(1)
|
723
|
766
|
|||
Decrease in operating working capital
|
109
|
82
|
|||
Net cash provided by operations
|
832
|
848
|
|||
Capital Expenditures
|
1,276
|
1,123
|
|||
Acquisitions, Net of Cash Acquired
|
-
|
134
|
Three months ended March 31
|
|||||
(unaudited)
|
2010
|
2009
|
|||
Net Income Per Share - Basic
|
$0.43
|
$0.54
|
|||
Comparable Earnings Per Share(1)
|
$0.48
|
$0.55
|
|||
Dividends Declared Per Share
|
$0.40
|
$0.38
|
|||
Basic Common Shares Outstanding (millions)
|
|||||
Average for the period
|
686
|
618
|
|||
End of period
|
687
|
619
|
(1)
|
Refer to the Non-GAAP Measures section in this news release for further discussion of comparable EBITDA, comparable EBIT, EBIT, comparable earnings, funds generated from operations and comparable earnings per share.
|