TC PipeLines, LP Announces Fourth Quarter 2012 Financial Results

TC PipeLines, LP Announces Fourth Quarter 2012 Financial Results 
HOUSTON, TEXAS -- (Marketwire) -- 02/08/13 -- TC PipeLines, LP
(NYSE:TCP) (the Partnership) today reported fourth quarter 2012
Partnership cash flows of $51 million and net income of $30 million.
For the year ended December 31, 2012, Partnership cash flows were
$202 million and net income was $137 million.  
"The Partnership's 2012 results reflect our solid contract-based
business model where five of our six pipeline assets are largely
insulated from near-term market fluctuations," said Steve Becker,
president of TC PipeLines GP, Inc. "Great Lakes, however, generated
lower results from a combination of expirations of longer-term
contracts and lower demand for transportation services. Measures
including the upcoming Great Lakes' rate case will provide an
opportunity to mitigate the effects of changing market conditions."  
"Over the past two years, we have completed rate cases with our
shippers on Northern Border, GTN and Tuscarora which, although
resulting in a minor revenue reduction, have increased cash flow
stability for our unitholders. Our focus is on maintaining the
long-term value of our portfolio and ensuring a stable asset base as
the North American natural gas transmission industry strengthens,"
adde
d Becker. 
Full Year 2012 Highlights and Fourth Quarter Highlights (All
financial figures are unaudited)  
- Full Year Highlights 


 
--  Partnership cash flows of $202 million 
--  Paid cash distributions of $169 million or $3.10 per common unit 
--  Increased quarterly cash distributions by 1.3 percent to $0.78 per
    common unit 
--  Net income of $137 million or $2.51 per common unit 

 
- Fourth Quarter Highlights 


 
--  Partnership cash flows of $51 million 
--  Paid cash distributions of $43 million 
--  Declared cash distributions of $0.78 per common unit 
--  Net income of $30 million or $0.56 per common unit 
--  Received approval from FERC on Northern Border rate settlement 

 
The Partnership's financial highlights for the fourth quarter of 2012
and year ended December 31, 2012 compared to the same periods in 2011
were: 


 
                                     Three months ended Twelve months ended 
(unaudited)                                December 31,        December 31, 
(millions of dollars except per                                             
 common unit amounts)                    2012      2011      2012      2011 
----------------------------------------------------------------------------
Partnership cash flows(a)(b)(c)            51        82       202       222 
Cash distributions paid                   (43)      (42)     (169)     (155)
Cash distributions paid per common                                          
 unit                                   $0.78    $ 0.77     $3.10    $ 3.04 
Net income(b)                              30        38       137       157 
Net income per common unit(d)           $0.56    $ 0.70     $2.51    $ 3.02 
Weighted average common units                                               
 outstanding (millions)                  53.5      53.5      53.5      51.1 
Common units outstanding at end of                                          
 period (millions)                       53.5      53.5      53.5      53.5 

 
Partnership cash flows in the fourth quarter of 2011 included
one-time $28 million cash distributions from GTN and Bison, including
a $20 million working capital adjustment related to the GTN
acquisition in 2011. Excluding one time items, year over year cash
flows were $51 million in the fourth quarter of 2012 versus $54
million in the fourth quarter of 2011. Similarly, on an annual basis,
cash flows were $202 million in 2012 versus $202 million in 2011. 
(a) Partnership cash flows is a non-GAAP financial measure. Refer to
the section entitled "Partnership Cash Flows" for further detail. 
(b) 25 percent interests in each of GTN and Bison were acquired in
May 2011. 
(c) Partnership cash flows for the three months ended December 31,
2011 included distributions from GTN and Bison related to prior
periods. These distributions included $8 million related to
undistributed second quarter cash flows and $20 million related to a
working capital adjustment from the 2011 GTN acquisition. 
(d) 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 effective two
percent general partner interest plus an amount equal to incentive
distributions. 
Recent Developments 
On January 17, 2013, the board of directors of our General Partner
declared the Partnership's fourth quarter 2012 cash distribution in
the amount of $0.78 per common unit, payable on February 14, 2013 to
unitholders of record as of January 29, 2013.  
Great Lakes' long-haul capacity in the fourth quarter of 2012 was
sold mostly under short-term contracts and at lower rates and volumes
compared to the same period in 2011 resulting in transmis
sion
revenues being $14 million lower than the fourth quarter of 2011.
This resulted in a $7 million reduction to the Partnership's equity
earnings in the fourth quarter of 2012 compared to the fourth quarter
of 2011. Great Lakes has a FERC-approved settlement agreement in
place. It can file for new rates at any time, but must file no later
than November 1, 2013. 
In January 2013, the FERC gave final approval for Northern Border's
settlement with shippers on transportation rates and other terms of
service. The Northern Border settlement establishes maximum long-term
transportation rates and charges on the Northern Border system
effective January 1, 2013. Northern Border's reservation rates will
be reduced by approximately 11 percent. Based on the current
contracted capacity that will be directly impacted by the lower
transportation rates and a lower composite depreciation rate, the
Partnership's share of equity earnings in 2013 is expected to be
reduced by approximately $10 million and the Partnership's cash flows
in 2013 are expected to be reduced by approximately $10 million, as
compared to 2012. Actual results from Northern Border will depend on
a number of other factors. 
Partnership Cash Flows  
The Partnership uses the non-GAAP financial measures "Partnership
cash flows" and "Partnership cash flows before General Partner
distributions" as they provide measures of cash generated during the
period to evaluate our cash distribution capability. Management also
uses these measures as a basis for recommendations to our General
Partner's board of directors regarding the distribution to be
declared each quarter. Partnership cash flow information is presented
to enhance investors' understanding of the way that management
analyzes the Partnership's financial performance. 
Partnership cash flows include cash distributions from the
Partnership's equity investments, Great Lakes, Northern Border, GTN
and Bison, plus operating cash flows from the Partnership's
wholly-owned subsidiaries, North Baja and Tuscarora, net of
Partnership costs and distributions declared to the General Partner.  
Partnership cash flows and Partnership cash flows before General
Partner distributions are provided as a supplement to GAAP financial
results and are not meant to be considered in isolation or as
substitutes for financial results prepared in accordance with GAAP. 
Fourth Quarter 2012  
Partnership cash flows decreased $31 million to $51 million in the
fourth quarter of 2012 compared to $82 million in the same period of
2011. This decrease was primarily due to lower cash distributions
from GTN and Great Lakes.  
In the fourth quarter of 2011, GTN paid a one-time cash distribution
of $20 million and GTN and Bison paid distributions of $5 million and
$3 million, respectively, related to second quarter 2011 earnings.
Great Lakes' fourth quarter 2012 distribution was $7 million lower
than the same period last year due to lower transmission revenues.  
The Partnership paid distributions of $43 million in the fourth
quarter of 2012, an increase of $1 million compared to the same
period in 2011 due to an increase of $0.01 per common unit paid
beginning in the third quarter of 2012. 
Net Income 
Fourth Quarter 2012  
Net income was $30 million in the fourth quarter of 2012 compared to
$38 million in the same period in 2011. This change was primarily due
to lower equity earnings from Great Lakes. Partially offsetting this,
the Partnership's financial charges were lower in the fourth quarter
of 2012 compared to 2011 due to lower levels of debt outstanding and
lower interest rates. 
Liquidity and Capital Resources 
At December 31, 2012, there was $312 million outstanding on the
Partnership's $500 million senior revolving credit facility leaving
$188 million available for future borrowing. The Partnership was in
compliance with the covenants of the credit agreement at December 31,
2012. 
Conference Call  
Analysts, members of the media, investors and other interested
parties are invited to participate in a teleconference by calling
866.226.1792 on Friday, February 8, 2013 at 9 a.m. central standard
time (CST)/10 a.m. eastern standard time (EST). Steve Becker,
President of the General Partner, will discuss the fourth quarter and
full year 2012 financial results and provide an update on the
Partnership's business developments, followed by a question and
answer session for the investment community and media. Please dial in
10 minutes prior to the start of the call. No pass code is required.
A live webcast of the conference call will also be available through
the Partnership's website at www.tcpipelineslp.com. Slides for the
presentation will be posted on the Partnership's website under
"Events and Presentations" prior to the we
bcast. 
A replay of the teleconference will also be available beginning two
hours after the conclusion of the call and until 11 p.m.
(CST)/midnight (EST) on February 15, 2013, by calling 800.408.3053,
then entering pass code 6220304. 
TC PipeLines, LP is a Delaware master limited partnership with
interests in 5,560 miles of federally regulated U.S. interstate
natural gas pipelines which serve markets across the United States
and Eastern Canada. This includes significant interests in Great
Lakes Gas Transmission Limited Partnership and Northern Border
Pipeline Company as well as 25 percent ownership interest in each of
Gas Transmission Northwest LLC, and Bison Pipeline LLC. The
Partnership also wholly owns North Baja Pipeline, LLC and Tuscarora
Gas Transmission Company. The Partnership is managed by its general
partner, TC PipeLines GP, Inc., an indirect wholly-owned subsidiary
of the Partnership's sponsor, TransCanada Corporation (NYSE: TRP). TC
PipeLines GP, Inc. also holds common units of TC PipeLines, LP. For
more information about TC PipeLines, LP, visit the Partnership's
website at www.tcpipelineslp.com. 
Forward-Looking Statements 
Statements in this release relating to future plans, projections,
events or conditions are "forward looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These statements are subject
to a variety of factors that could cause actual results to differ
materially from the projections, anticipated results or other
expectations expressed in this release, including, without
limitation, competitive conditions in the natural gas industry,
increases in operating and compliance costs, the outcome of rate
proceedings, our ability to identify and complete expansion and
growth opportunities, operating hazards beyond our control,
availability of capital and other events or developments that the
Partnership expects or believes will or may occur in the future.
These and other factors that could cause future results to differ
materially from those anticipated are discussed in the Partnership's
Annual Report on Form 10-K filed with the Securities and Exchange
Commission. 


 
                              TC PipeLines, LP                              
                              Financial Summary                             
                                                                            
Consolidated Statement of Income                                            
                                                                            
                                     Three months ended Twelve months ended 
(unaudited)                                December 31,        December 31, 
(millions of dollars except per                                             
 common unit amounts)                    2012      2011      2012      2011 
----------------------------------------------------------------------------
Equity earnings from unconsolidated                                         
 affiliates:                                                                
  Great Lakes                               4        11        27        60 
  Northern Border                          18        19        72        75 
  GTN (a)                                   4         5        19        12 
  Bison (a)                                 3         3        11         7 
Transmission revenues                      16        17        65        70 
Operating expenses                         (5)       (5)      (17)      (15)
General and administrative                 (1)       (1)       (6)       (9)
Depreciation                               (3)       (4)      (11)      (15)
Financial charges and other                (6)       (7)      (23)      (28)
                                    ----------------------------------------
Net income                                 30        38       137       157 
                                    ----------------------------------------
                                                                            
Net income allocation                                                       
Common units                               29        37       134       154 
General partner                             1         1         3         3 
                                    ----------------------------------------
                                           30        38       137       157 
                                    ----------------------------------------
                                                                            
Net income per common unit             $ 0.56    $ 0.70    $ 2.51    $ 3.02 
                                    ----------------------------------------
                                                                            
Weighted average common units                                               
 outstanding (millions)                  53.5      53.5      53.5      51.1 
                                    ----------------------------------------
                                                                            
Common units outstanding, end of the                                        
 period (millions)                       53.5      53.5      53.5      53.5 
                                    ----------------------------------------
                                                                            
(a) 25 percent interests in each of GTN and Bison were acquired in May 2011.
                                                                            
                              TC PipeLines, LP                              
                              Financial Summary                             
                                                                            
Consolidated Condensed Balance Sheet                                        
                                                                            
                               
                                             
(unaudited)                                      December 31,   December 31,
(millions of dollars)                                    2012           2011
----------------------------------------------------------------------------
ASSETS                                                                      
Current assets                                             12             38
Investment in unconsolidated affiliates                 1,563          1,610
Other assets                                              423            434
                                              ------------------------------
                                                        1,998          2,082
                                              ------------------------------
                                                                            
----------------------------------------------------------------------------
LIABILITIES AND PARTNERS' EQUITY                                            
Current liabilities                                         8              6
Other liabilities                                           1              1
Long-term debt, including current portion                 688            742
Partners' equity                                        1,301          1,333
                                              ------------------------------
                                                        1,998          2,082
                                              ------------------------------
                                                                            
                              TC PipeLines, LP                              
                              Financial Summary                             
                                                                            
Non-GAAP Measures                                                           
Reconciliation of Net Income to Partnership Cash Flows                      
                                                                            
(unaudited)                          Three months ended Twelve months ended 
                                           December 31,        December 31, 
(millions of dollars except per                                             
 common unit amounts)                    2012      2011      2012      2011 
----------------------------------------------------------------------------
Net income(a)                              30        38       137       157 
Add:                                                                        
Cash distributions from Great                                               
 Lakes(b)                                  10        17        44        73 
Cash distributions from Northern                                            
 Border(b)                                 25        26        96        99 
Cash distributions from GTN(b)(c)           8        33        28        33 
Cash distributions from Bison(b)(c)         4         6        16         6 
Cash flows provided by Other Pipes'                                         
 operating activities                      12        11        49        52 
                                    ----------------------------------------
                                           59        93       233       263 
Less:                                                                       
Equity earnings from unconsolidated                                         
 affiliates                               (29)      (38)     (129)     (154)
Other Pipes' net income                    (8)      (10)      (36)      (41)
                                    ----------------------------------------
                                          (37)      (48)     (165)     (195)
                                    ----------------------------------------
Partnership cash flows before                                               
 General Partner distributions             52        83       205       225 
General Partner distributions(d)           (1)       (1)       (3)       (3)
                                    ----------------------------------------
Partnership cash flows                     51        82       202       222 
                                    ----------------------------------------
Cash distributions declared               (43)      (42)     (170)     (161)
Cash distributions declared per                                             
 common unit(e)                        $ 0.78    $ 0.77    $ 3.11    $ 3.06 
Cash distributions paid                   (43)      (42)     (169)     (155)
Cash distributions paid per common                                          
 unit(e)                               $ 0.78    $ 0.77    $ 3.10    $ 3.04 
                                    ----------------------------------------
                                                                            
                                                                            
(a) 25 percent interests in each of GTN and Bison were acquired in May 2011.
(b) In accordance with the cash distribution policies of the respective     
pipeline systems, cash distributions from Great Lakes, Northern Border, GTN 
and Bison are based on their respective prior quarter financial results.    
(c) Three months ended December 31, 2011 includes $25 million and $3 million
of distributions from GTN and Bison, respectively, related to prior periods.
(d) General Partner distributions represent the cash distributions declared 
to the General Partner with respect to its effective two percent General    
Partner interest plus an amount equal to incentive distributions.           
(e) Cash distributions declared per common unit and cash distributions paid 
per common unit are computed by dividing cash distributions, after the      
deduction of the General Partner's allocation, by the number of common units
outstanding.                                                                
                                                                            
Growth and Maintenance Capital Expenditures(a)(b)                           
                                                                            
                                    Three months ended   Twelve months ended
(unaudited)                               December 31,          December 31,
(millions of dollars)                  2012       2011       2012       2011
----------------------------------------------------------------------------
Maintenance Capital                       9          8         21         17
Growth Capital                            -         10          3         18
                                                                            
(a) Represents the Partnership's share of capital expenditures.             
(b) 25 percent interests in each of GTN and Bison were acquired in May 2011.

Contacts:
TC PipeLines, LP
Media Inquiries:
Shawn Howard/Grady Semmens
403.920.7859 
TC PipeLines, LP
Unitholder and Analyst Inquiries:
Rhonda Amundson
877.290.2772
investor_relations@tcpipelineslp.com
www.tcpipelineslp.com
 
 
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