TC PipeLines, LP Announces 2013 Third Quarter Cash Distribution and Financial Results

TC PipeLines, LP Announces 2013 Third Quarter Cash Distribution and Financial 
Results 
HOUSTON, TEXAS -- (Marketwired) -- 10/25/13 -- TC PipeLines, LP
(NYSE:TCP) (the Partnership) today announced that the board of
directors of TC PipeLines GP, Inc., its general partner (the General
Partner), declared the Partnership's third quarter 2013 cash
distribution of $0.81 per common unit. The distribution is payable on
November 14, 2013 to unitholders of record as of the close of
business on November 5, 2013. 
The Partnership also reported third quarter 2013 Partnership cash
flows of $58 million and net income attributable to controlling
interests of $37 million or $0.58 per common unit. 
"The Partnership's third quarter results reflect the $1.05 billion
acquisition of additional interests in the GTN and Bison pipelines
including the debt and equity financing for the transaction," said
Steve Becker, president of TC PipeLines, GP, Inc. "TC PipeLines had
another quarter of positive performance from the majority of our
pipeline assets. Going forward, we are confident that our expanded
asset base will allow us to continue to deliver stable cash flows and
long-term value to our investors." 
Third Quarter 2013 Highlights (All financial figures are unaudited) 


 
--  Partnership cash flows of $58 million. 
--  Paid cash distributions of $52 million. 
--  Declared cash distributions of $0.81 per common unit. 
--  Net income attributable to controlling interests of $37 million or $0.58
    per common unit. 
--  Closed acquisition of an additional 45 percent interest in each of Gas
    Transmission Northwest LLC (GTN) and Bison Pipeline LLC (Bison). 
--  Reached rate case settlement with Great Lakes' shippers and filed
    settlement with FERC for approval. 

 
The Partnership's financial highlights for the third quarter of 2013
compared to the third quarter of 2012 were: 


 
                               Three months ended      Nine months ended    
(unaudited)                      September 30,           September 30,      
(millions of dollars except                                                 
 per common unit amounts)          2013      2012(c)     2013(c)     2012(c)
----------------------------------------------------------------------------
Partnership cash flows(a)            58          48         142         150 
Cash distributions paid             (52)        (43)       (137)       (127)
Cash distributions declared                                                 
 per common unit                  $0.81      $ 0.78       $2.40      $ 2.33 
Net income attributable to                                                  
 controlling interests               37          48         114         148 
Net income per common                                                       
 unit(b)                          $0.58      $ 0.88       $1.94      $ 2.71 
Weighted average common                                                     
 units outstanding                                                          
 (millions)                        62.3        53.5        57.8        53.5 
Common units outstanding at                                                 
 end of period (millions)          62.3        53.5        62.3        53.5 

 
(a) Partnership cash flows is a non-GAAP financial measure. Refer to
the description of Partnership Cash Flows in the section of this
release entitled "Partnership Cash Flows" and the Supplemental
Schedule Non-GAAP Measures for further detail. 
(b) Net income per common unit is computed by dividing net income
attributable to controlling interests, 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. On May 22, 2013, the
Partnership issued 8.855 million common units in a public offering. 
(c) Because the additional 45 percent membership interests in each of
GTN and Bison were acquired from subsidiaries of TransCanada, the
acquisition was accounted for as a transaction between entities under
common control, similar to a pooling of interests, whereby the assets
and liabilities of GTN and Bison were recorded at TransCanada's
carrying value and the Partnership's historical financial information
was recast to consolidate GTN and Bison for all periods presented. 
Recent Developments 
Great Lakes Rate Settlement - On September 27, 2013, Great Lakes
filed with the Federal Energy Regulatory Commission (FERC) a
settlement with its customers to modify its transportation rates
beginning on November 1, 2013. The settlement is expected to be
approved by FERC before the end of the year. The settlement
establishes maximum recourse transportation rates on the Great Lakes
system. Commencing November 2013, rates will increase, compared to
current rates, by approximately 21 percent. This will result in a
modest increase in the portion of Great Lakes' revenue derived from
its recourse rate contracts. The settlement includes a moratorium on
filing rate cases or challenging the settlement rates between
November 1, 2013 and March 31, 2015 and requires that Great Lakes
file to have new rates in effect no later than January 1, 2018. 
Cash Distributions - On October 24, 2013, the board of directors of
our General Partner declared the Partnership's third quarter 2013
cash distribution in the amount of $0.81 per common unit payable on
November 14, 2013 to unitholders of record as of November 5, 2013. 
Liquidity and Capital Resources 
Partnership Cash Flows  
Partnership cash flows increased by $10 million to $58 million in the
third quarter of 2013 compared to $48 million in the same period of
2012. This increase was primarily due to the increased cash
distributions of $19 million from GTN and Bison beginning July 1,
2013 as a result of the 2013 Acquisition. It was partially offset by
lower cash distributions from Great Lakes of $8 million, due to lower
revenue, as compared to the same period of 2012.  
The Partnership paid distributions of $52 million in the third
quarter of 2013, an increase of $9 million compared to the same
period in 2012. This increase was due to a $0.03 increase in the
distribution per common unit in the second quarter of 2013, as well
as an increase in the number of common units outstanding resulting
from the May 2013 equity issuance. 
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 management analyzes
the Partnership's financial performance. 
Partnership cash flows include net income attributable to controlling
interests, less net income attributed to 45 percent interests in each
of GTN and Bison not owned prior to July 1, 2013, plus operating cash
flows from North Baja and Tuscarora, and cash distributions received
from Great Lakes, Northern Border, GTN and Bison, less equity
earnings from unconsolidated affiliates and Other Pipes' net income
as previously reported, plus net income attributable to
non-controlling interests from consolidated subsidiaries after the
2013 Acquisition, and net of 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. 
Contractual Obligations 
At September 30, 2013, there was $350 million outstanding on the
Partnership's $500 million senior revolving credit facility. The
Partnership was in compliance with the covenants of the credit
agreement at September 30, 2013. 
Net Income attributable to controlling interests 
For the three months ended September 30, 2013, net income
attributable to controlling interests decreased by $11 million to $37
million compared to $48 million in the third quarter of 2012. This
decrease was primarily due to lower equity earnings from Great Lakes
and increased Partnership expenses.  
Equity losses from Great Lakes were $2 million in the third quarter
of 2013, whereas Great Lakes had equity earnings of $6 million in the
same period in 2012. The decrease of $8 million was due to lower
revenue resulting from capacity contracted at lower rates and volumes
in the third quarter of 2013 compared to the same period in 2012.  
Partnership expenses were $9 million in the third quarter of 2013, an
increase of $3 million compared to the same period in 2012. This
increase was due to higher interest expense as a result of the $500
million term loan obtained to finance a portion of the purchase price
of the 2013 Acquisition. 
Conference Call  
Analysts, members of the media, investors and other interested
parties are invited to participate in a teleconference by calling
866.226.1793 today, Friday, October 25, 2013 at 10 a.m. central time
(CT)/11 a.m. eastern time (ET). Steve Becker, President of the
General Partner, will discuss the Partnership's financial results and
latest developments. Please dial in 10 minutes prior to the start of
the call. No pass code is required. Interested parties can also
listen to a live webcast and replay of the conference call by
accessing the Investor Center portion of the Partnership's website at
www.tcpipelineslp.com. Slides with information that may be discussed
during the webcast will be posted on the Investor Center of the
Partnership's website under "Events and Presentations" prior to the
webcast. 
A replay of the teleconference will also be available two hours after
the conclusion of the call and until 11 p.m. (CT) and midnight (ET)
on November 1, 2013, by calling 800.408.3053, then entering pass code
9135626. 
TC PipeLines, LP is a Delaware master limited partnership with
interests in six federally regulated U.S. interstate natural gas
pipelines which serve markets in western and mid-western United
States and Eastern Canada. The Partnership is managed by its general
partner, TC PipeLines GP, Inc., a subsidiary of TransCanada
Corporation (NYSE: TRP). For more information about TC PipeLines, LP,
visit the Partnership's website at www.tcpipelineslp.com. 
Forward-Looking Statements 
Certain non-historical statements in this release relating to future
plans, projections, events or conditions, including our belief that
the Partnership is well positioned to deliver long-term value and
solid results in the future and our expectation for FERC approval of
the Great Lakes settlement, are intended to be "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 based on current expectations and, therefore, subject
to a variety of risks and uncertainties 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 market demand 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 Item 1A in our Annual Report on
Form 10-K for the year-ended December 31, 2012 filed with the
Securities and Exchange Commission (the "SEC"), as updated and
supplemented by subsequent filings with the SEC. All forward-looking
statements are made only as of the date made and except as required
by applicable law, we undertake no obligation to update any
forward-looking statements to reflect new information, subsequent
events or other changes.  


 
                              TC PipeLines, LP                              
                              Financial Summary                             
                                                                            
Consolidated Statement of Income                                            
                               Three months ended      Nine months ended    
(unaudited)                      September 30,           September 30,      
(millions of dollars except                                                 
 per common unit amounts)          2013      2012(a)     2013(a)     2012(a)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Transmission revenues                85          84         253         256 
Equity earnings from                                                        
 unconsolidated affiliates           15          24          48          77 
Operating expenses                  (19)        (19)        (57)        (58)
General and administrative           (2)         (1)         (8)         (5)
Depreciation                        (21)        (21)        (64)        (64)
Financial charges and other         (12)        (10)        (31)        (30)
                            ------------------------------------------------
Net income                           46          57         141         176 
                            ------------------------------------------------
                                                                            
Net income attributable to                                                  
 non-controlling interests            9           9          27          28 
                            ------------------------------------------------
Net income attributable to                                                  
 controlling interests               37          48         114         148 
                            ------------------------------------------------
                            ------------------------------------------------
                                                                            
Net income attributable to                                                  
 controlling interests                                                      
 allocation                                                                 
Common units                         36          47         112         145 
General Partner                       1           1           2           3 
                            ------------------------------------------------
                                     37          48         114         148 
                            ------------------------------------------------
                            ------------------------------------------------
                                                                            
Net income per common unit-                                                 
 basic and diluted                $0.58       $0.88       $1.94       $2.71 
                            ------------------------------------------------
                            ------------------------------------------------
                                                                            
Weighted average common                                                     
 units outstanding                                                          
 (millions) - basic and                                                     
 diluted                           62.3        53.5        57.8        53.5 
                            ------------------------------------------------
                            ------------------------------------------------
                                                                            
Common units outstanding,                                                   
 end of period (millions)          62.3        53.5        62.3        53.5 
                            ------------------------------------------------
                            ------------------------------------------------
                                                                            
(a) Financial information was recast to consolidate GTN and Bison.          
                                                                            
                              TC PipeLines, LP                              
                              Financial Summary                             
                                                                            
Consolidated Condensed Balance Sheet                                        
                                                                            
(unaudited)                                     September 30,   December 31,
(millions of dollars)                                    2013        2012(a)
----------------------------------------------------------------------------
ASSETS                                                                      
Current assets                                             89             69
Investment in unconsolidated affiliates                 1,161          1,189
Plant, property and equipment                           2,056          2,111
Other assets                                              139            136
                                              ------------------------------
                                                        3,445          3,505
                                              ------------------------------
                                                                            
----------------------------------------------------------------------------
LIABILITIES AND PARTNERS' EQUITY                                            
Current liabilities                                        40             49
Other liabilities                                          25             21
Long-term debt, including current portion               1,551          1,013
Partners' equity                                        1,829          2,422
                                              ------------------------------
                                                        3,445          3,505
                                              ------------------------------
                                                                            
(a) Financial information was recast to consolidate GTN and Bison.          
                                                                            
                               TC PipeLines, LP                             
                            Supplemental Schedule                           
                                                                            
Non-GAAP Measures                                                           
Reconciliation of Net Income attributable to controlling interests to       
Partnership Cash Flows                                                      
                                                                            
                               Three months ended      Nine months ended    
(unaudited)                      September 30,           September 30,      
(millions of dollars except                                                 
 per common unit amounts)          2013        2012        2013        2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income attributable to                                                  
 controlling interests(d)            37          48         114         148 
Less net income attributed                                                  
 to 45 percent interests in                                                 
 GTN and Bison not owned                                                    
 prior to July 1, 2013(d)             -         (13)        (26)        (41)
                            ------------------------------------------------
Net income as previously                                                    
 reported                            37          35          88         107 
                                                                            
Add:                                                                        
Cash distributions from                                                     
 Great Lakes (a)                      3          11          15          34 
Cash distributions from                                                     
 Northern Border (a)                 22          20          66          71 
Cash distributions from GTN                                                 
 (a)                                 19           7          33          21 
Cash distributions from                                                     
 Bison (a)                           11           4          18          12 
Cash flows provided by North                                                
 Baja's and Tuscarora's                                                     
 operating activities                13          13          39          37 
                            ------------------------------------------------
                                     68          55         171         175 
                                                                            
Less:                                                                       
Equity earnings/(losses) as                                                 
 previously reported:                                                       
  Great Lakes                         2          (6)          -         (23)
  Northern Border                   (17)        (18)        (48)        (54)
  GTN                                 -          (5)         (9)        (15)
  Bison                               -          (2)         (6)         (8)
                            ------------------------------------------------
                                    (15)        (31)        (63)       (100)
Other Pipes' net income as                                                  
 previously reported (e)                                                    
  GTN                               (19)          -         (19)          - 
  Bison                             (11)          -         (11)          - 
  North Baja                         (6)         (6)        (18)        (17)
  Tuscarora                          (4)         (4)        (12)        (12)
                            ------------------------------------------------
                                    (40)        (10)        (60)        (29)
Net income attributable to                                                  
 non-controlling interests                                                  
 after the 2013 Acquisition           9           -           9           - 
                            ------------------------------------------------
                                    (46)        (41)       (114)       (129)
                            ------------------------------------------------
                                                                            
Partnership cash flows                                                      
 before General Partner                                                     
 distributions                       59          49         145         153 
General Partner                                                             
 distributions (b)                   (1)         (1)         (3)         (3)
                            ------------------------------------------------
                                                                            
Partnership cash flows               58          48         142         150 
                            ------------------------------------------------
                                                                            
Cash distributions declared         (52)        (43)       (146)       (127)
Cash distributions declared                                                 
 per common unit (c)              $0.81       $0.78       $2.40       $2.33 
Cash distributions paid             (52)        (43)       (137)       (127)
Cash distributions paid per                                                 
 common unit (c)                  $0.81       $0.78       $2.37       $2.32 
                            ------------------------------------------------
                            ------------------------------------------------
                                                                            
(a) In accordance with the cash distribution policies of the respective     
    entities, cash distributions from Great Lakes, Northern Border, GTN and 
    Bison are based on their respective prior quarter financial results.    
    Distributions from GTN and Bison are based on 70 percent ownership      
    starting from July 1, 2013.                                             
                                                                            
(b) General Partner distributions represent the cash distributions paid to  
    the General Partner with respect to its two percent interest plus an    
    amount equal to incentive distributions. Incentive distributions in the 
    first three quarters of 2013 and 2012 were nil.                         
                                                                            
(c) 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. The General Partner's allocation is computed based   
    upon the General Partner's two percent interest plus an amount equal to 
    incentive distributions.                                                
                                                                            
(d) Financial information was recast to consolidate GTN and Bison for all   
    periods presented. Prior to the 2013 Acquisition, our net income was $35
    million and $107 million for the three and nine months ended September  
    30, 2012, respectively, reflecting 25 percent ownership in each of GTN  
    and Bison. As part of the recast, we show net income of $48 million and 
    $148 million for the three and nine months ended September 30, 2012,    
    respectively, as if we owned 70 percent in each of GTN and Bison. Net   
    income attributed to GTN and Bison's former parent of $13 million and   
    $41 million, reflecting the 45 percent interests not then owned by the  
    Partnership, for the three and nine months ended September 30, 2012,    
    respectively, reconciles the net income as previously reported and that 
    after the recast.                                                       
                                                                            
(e) "Other Pipes" includes the results of North Baja and Tuscarora prior to 
    July 1, 2013. Since July 1, 2013, it includes the results of GTN, Bison,
    North Baja and Tuscarora.                                               

Contacts:
TC PipeLines, LP
Media Inquiries:
Grady Semmens/Shawn Howard/Davis Sheremata
403.920.7859 or 800.608.7859 
TC PipeLines, LP
Unitholder and Analyst Inquiries:
Rhonda Amundson
877.290.2772
investor_relations@tcpipelineslp.com
www.tcpipelineslp.com
 
 
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