OMAHA, NEBRASKA -- (Marketwire) -- 07/30/09 -- TC PipeLines, LP (the Partnership or PipeLP) (NASDAQ: TCLP) today reported second quarter 2009 net income of $13.7 million or $0.31 per common unit (all amounts in U.S. dollars), a decrease of $5.5 million compared to $19.2 million or $0.47 per common unit for the same period last year. The decrease in net income was primarily due to lower Northern Border Pipeline Company (Northern Border or NBPC) revenues and one-time costs associated with the transaction to acquire North Baja Pipeline, LLC (North Baja) and amend the incentive distribution rights (IDRs).
"We are very pleased to provide unitholders an increase in our quarterly cash distribution to $0.73 per common unit, equivalent to a $0.10 increase or $2.92 per common unit on an annualized basis. This followed the July 1st close of the transaction to acquire the North Baja pipeline from TransCanada Corporation and to amend the incentive distribution rights," said Russ Girling, chairman and chief executive officer of TC PipeLines GP, Inc. "Earnings and cash flows generated by our gas pipeline investments in second quarter 2009 were ahead of our expectations although lower than the prior year. Tuscarora and Great Lakes delivered solid results while Northern Border was challenged by the over supply of gas delivered into the Mid-Continent market. Looking forward, the Partnership remains well positioned for growth and is expected to play an ongoing role in the financing of TransCanada's C$21 billion capital program."
Partnership cash flows decreased $6.6 million to $40.3 million for second quarter of 2009 compared to $46.9 million for the same period last year. This decrease was primarily due to decreased cash distributions from Northern Border and Great Lakes Gas Transmission Limited Partnership (Great Lakes or GLGT), in addition to higher costs at the Partnership level, partially offset by increased operating cash flows from Tuscarora Gas Transmission Company (Tuscarora or TGTC). Please see the Partnership Cash Flows section for more detail.
Cash distributions paid by the Partnership were $27.8 million or $0.705 per common unit in second quarter 2009, an increase of $0.4 million compared to $27.4 million or $0.70 per common unit for the same period last year.
Financial Highlights
(unaudited) Three months ended Six months ended
(millions of dollars except per June 30, June 30,
common unit amounts) 2009 2008 2009 2008
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Net income 13.7 19.2 45.5 52.8
Per common unit (1) $ 0.31 $ 0.47 $ 1.13 $ 1.34
Partnership cash flows (2) 40.3 46.9 76.8 79.9
Cash distributions paid 27.8 27.4 55.5 53.0
Cash distributions declared per
common unit (3) $ 0.730 $ 0.705 $ 1.435 $ 1.405
Weighted average common units
outstanding (millions) 34.9 34.9 34.9 34.9
Common units outstanding at end of
period (millions) 34.9 34.9 34.9 34.9
(1) Net income per common unit is computed by dividing net income, after
deduction of the general partner's allocation, by the weighted average
number of common units outstanding. The general partner's allocation is
computed based upon the general partner's two per cent interest plus an
amount equal to incentive distributions.
Effective January 1, 2009, the Partnership adopted the provisions of
EITF 07-4 "Application of the Two-Class Method under FASB Statement No.
128, Earnings per Share, to Master Limited Partnerships". The
retrospective application of EITF 07-4 has impacted the amount of net
income allocated to the IDRs held by the general partner. Previously,
the net income allocated to the IDRs was based on the cash distribution
paid in the period, and now it is based on the cash distribution
declared for the period. This resulted in a reduction in the net income
per common unit of nil and $0.02 for the three and six months ended June
30, 2008, respectively.
(2) Partnership cash flows is a non-GAAP financial measure. Refer to the
section entitled "Partnership Cash Flows" for further detail.
(3) The Partnership's 2009 second quarter cash distribution will be paid on
August 14, 2009 to unitholders of record as of July 31, 2009.
Recent Developments
On July 1, 2009, the Partnership acquired North Baja from TransCanada Corporation and amended the IDRs held by TC PipeLines GP, Inc. by amending and restating the Agreement of Limited Partnership. The aggregate consideration provided to TransCanada included a combination of cash and the issuance of approximately 6.4 million common units totalling approximately $395 million. On a per unit basis, the transaction is expected to be accretive to Partnership cash flows.
On July 21, 2009, the Board of Directors of TC PipeLines GP, Inc. declared the Partnership's second quarter 2009 cash distribution in the amount of $0.73 per common unit, payable on August 14, 2009, to unitholders of record on July 31, 2009. This cash distribution is an increase of $0.025 from the first quarter 2009 distribution and an increase of $0.10 on an annualized basis.
Net Income
The following net income information is presented to enhance investors' understanding of the way that management analyzes the Partnership's financial performance:
The shaded areas in the tables below disclose the results from Great Lakes
and Northern Border, representing 100 per cent of each entity's operations
for the given period.
