TC PipeLines, LP Announces Fourth Quarter 2013 Financial Results

TC PipeLines, LP Announces Fourth Quarter 2013 Financial Results 
HOUSTON, TEXAS -- (Marketwired) -- 02/07/14 --   TC PipeLines, LP
(NYSE: TCP) (the Partnership) today reported fourth quarter 2013
Partnership cash flows of $53 million and net income attributable to
controlling interests of $41 million. For the year ended December 31,
2013, Partnership cash flows were $195 million and net income
attributable to controlling interests was $155 million.  
"The Partnership's 2013 results reflect the value added from our
approximate one billion dollar acquisition of additional GTN and
Bison interests, as well as very solid overall results from our
portfolio of long-term contracted pipeline assets," said Steve
Becker, President of TC PipeLines, GP, Inc. "Our strong financial
position enhances our ongoing value to TransCanada which we expect
will drop down the remainder of its U.S. natural gas pipeline
portfolio to fund its significant capital program." 
Full Year 2013 Highlights and Fourth Quarter Highlights (All
financial figures are unaudited)  
- Full Year Highlights 


 
 
--  Partnership cash flows of $195 million 
--  Paid cash distributions of $188 million or $3.18 per common unit 
--  Increased quarterly cash distributions by 3.8 percent to $0.81 per
    common unit 
--  Net income attributable to controlling interests of $155 million or
    $2.13 per common unit 
--  Closed acquisition of an additional 45 percent interest in each of Gas
    Transmission Northwest LLC (GTN) and Bison Pipeline LLC (Bison) 
--  Raised $373 million in net equity proceeds in connection with the GTN
    and Bison acquisition 
--  Entered into new $500 million term loan with a syndicate of lenders to
    partially finance the GTN and Bison acquisition

-Fourth Quarter Highlights 


 
 
--  Partnership cash flows of $53 million 
--  Paid cash distributions of $52 million 
--  Declared cash distributions of $0.81 per common unit 
--  Net income attributable to controlling interests of $41 million or $0.63
    per common unit 
--  Received approval from FERC on Great Lakes' rate case settlement 
--  GTN executed Firm Transportation Service Agreement with Portland General
    Electric regarding the Carty Lateral Project expected to be in-service
    in late 2015

The Partnership's financial highlights for the fourth quarter of 2013
and year ended December 31, 2013 compared to the same periods in 2012
were: 


 
 
                                  Three months ended   Twelve months ended  
(unaudited)                          December 31,          December 31,     
(millions of dollars except per                                             
 common unit amounts)                 2013       2012       2013       2012 
----------------------------------------------------------------------------
Partnership cash flows(a)               53         51        195        202 
Cash distributions paid                (52)       (43)      (188)      (169)
Cash distributions paid per                                                 
 common unit                         $0.81     $ 0.78      $3.18     $ 3.10 
Net income attributable to                                                  
 controlling interests(b)               41         44        155        192 
Net income per common unit(c)        $0.63     $ 0.56      $2.13     $ 2.51 
Weighted average common units                                               
 outstanding (millions)               62.3       53.5       58.9       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 "Non-GAAP Measures" and the Supplemental Schedule Non-GAAP     
    Measures for further detail.                                            
(b) The additional 45 percent membership interests in each of GTN and Bison 
    were acquired from subsidiaries of TransCanada. As a result, 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.                 
(c) Net income per common unit for the three and twelve months ended        
    December 31, 2012 is equivalent to that presented prior to the recast.  
    Refer to the description of Net income per common unit in the Financial 
    Summary Schedule for further detail.                                    

Recent Developments  
Cash Distributions - On January 16, 2014, the board of directors of
our General Partner declared the Partnership's fourth quarter 2013
cash distribution in the amount of $0.81 per common unit, payable on
February 14, 2014 to unitholders of record as of January 28, 2014.  
GTN - In the fourth quarter 2013, GTN and Portland General Electric
Company (PGE) executed a Firm Transportation Service Agreement (FTSA)
for the approximately $54 million Carty Lateral Project (Carty
Lateral). The Carty Lateral is expected to be in-service in the
fourth quarter of 2015. In addition to a 30-year contract for 100
percent of the capacity of the Carty Lateral, PGE executed a 20-year
GTN mainline contract for 75,000 Dth/day supplying firm natural gas
service commencing in the second quarter of 2016. The execution of
the FTSA triggers a $25 million payment by the Partnership to
TransCanada in connection with the GTN acquisition in 2013. 
Great Lakes Rate Settlement - On November 14, 2013, FERC approved a
settlement between Great Lakes and Great Lakes' customers to modify
its transportation rates effective November 1, 2013. 
Results of Operations 
For the three months ended December 31, 2013, net income attributable
to controlling interests decreased to $41 million compared to the
fourth quarter of 2012 after the recast. The decrease was primarily
due to higher financial charges as a result of the $500 million term
loan obtained to finance a portion of the 2013 acquisition.   
Partnership cash flows increased to $53 million in the fourth quarter
of 2013 compared to $51 million in the same period of 2012. This
increase was primarily due to the increased cash distributions from
GTN and Bison as a result of the 2013 acquisition. It was partially
offset by lower cash distributions from Northern Border and Great
Lakes.  
Cash distributions from Northern Border decreased in the fourth
quarter of 2013 compared to the same period of 2012 primarily due to
the 11 percent reduction in reservation rates resulting from the
Northern Border settlement which became effective in January 2013.  
Cash distributions from Great Lakes decreased in the fourth quarter
of 2013 compared to the same period of 2012 primarily due to lower
revenue from capacity contracted at lower rates and volumes.  
Distributions paid in the fourth quarter of 2013 increased compared
to the same period in 2012 due to a $0.03 increase in the
distribution per common unit in July 2013, as well as an increase in
the number of common units outstanding resulting from the equity
issuance in May 2013.  
Non-GAAP Measures  
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 GTN's and Bison's former
parent, plus operating cash flows from North Baja and Tuscarora, and
cash distributions received from GTN, Northern Border, Bison and
Great Lakes 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. 
Conference Call 
Analysts, members of the media, investors and other interested
parties are invited to participate in a teleconference by calling
866.226.1793 on Friday, February 7, 2014 at 10 a.m. central time
(CT)/11 a.m. eastern time (ET). Steve Becker, President of the
General Partner, will discuss the fourth quarter and full year 2013
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 webcast. 
A replay of the teleconference will also be available beginning two
hours after the conclusion of the call and until 11 p.m.
(CT)/midnight (ET) on February 14, 2014, 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 the potential for further dropdowns
from TransCanada, 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    Twelve months ended  
(unaudited)                          December 31,          December 31,     
(millions of dollars except per                                             
 common unit amounts)                 2013     2012(a)    2013(a)    2012(a)
----------------------------------------------------------------------------
Transmission revenues                   88         87        341        343 
Equity earnings from                                                        
 unconsolidated affiliates              19         22         67         99 
Operation and maintenance                                                   
 expenses                              (16)       (17)       (55)       (57)
Property taxes                          (5)        (7)       (23)       (25)
General and administrative              (1)        (1)        (9)        (6)
Depreciation                           (22)       (21)       (86)       (85)
Financial charges and other            (13)       (10)       (44)       (40)
                                --------------------------------------------
Net income                              50         53        191        229 
                                --------------------------------------------
 
Net income attributable to non-                                             
 controlling interests                   9          9         36         37 
                                --------------------------------------------
Net income attributable to                                                  
 controlling interests                  41         44        155        192 
                                --------------------------------------------
 
Net income attributable to                                                  
 controlling interests                                                      
 allocation(b)                                                              
Common units                            40         29        126        134 
General partner                          1          1          3          3 
                                --------------------------------------------
                                        41         30        129        137 
                                --------------------------------------------
 
Net income per common unit -                                                
 basic and diluted(c)               $ 0.63     $ 0.56     $ 2.13     $ 2.51 
                                --------------------------------------------
 
Weighted average common units                                               
 outstanding (millions) - basic                                             
 and diluted                          62.3       53.5       58.9       53.5 
                                --------------------------------------------
 
Common units outstanding, end of                                            
 the period (millions)                62.3       53.5       62.3       53.5 
                                --------------------------------------------
 
(a) Financial information was recast to consolidate GTN and Bison.          
(b) Net income attributable to controlling interest allocation excludes net 
    income attributed to GTN's and Bison's former parent. Net income        
    attributed to GTN's and Bison's former parent was $14 million and $55   
    million for the three and twelve months ended December 31, 2012,        
    respectively and $26 million in 2013.                                   
(c) Net income per common unit is computed by dividing net income           
    attributable to controlling interests, after deduction of the General   
    Partner's allocation and net income attributed to GTN's and Bison's     
    former parent, 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.     
 
                              TC PipeLines, LP                              
                              Financial Summary                             
 
Consolidated Condensed Balance Sheet                                        
 
(unaudited)                                                                 
(millions of dollars)                December 31, 2013  December 31, 2012(a)
----------------------------------------------------------------------------
ASSETS                                                                      
Current assets                                      69                    69
Investment in unconsolidated                                                
 affiliates                                      1,195                 1,189
Plant, property and equipment                    2,041                 2,111
Other assets                                       137                   136
                                --------------------------------------------
                                                 3,442                 3,505
                                --------------------------------------------
 
----------------------------------------------------------------------------
LIABILITIES AND PARTNERS' EQUITY                                            
Current liabilities                                 51                    49
Other liabilities                                   24                    21
Long-term debt, including                                                   
 current portion                                 1,578                 1,013
Partners' equity                                 1,789                 2,422
                                --------------------------------------------
                                                 3,442                 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   Twelve months ended  
(unaudited)                          December 31,          December 31,     
(millions of dollars except per                                             
 common unit amounts)                 2013       2012       2013       2012 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net income attributable to                                                  
 controlling interests(d)               41         44        155        192 
Less net income attributed to                                               
 GTN's and Bison's former                                                   
 parent(d)                               -        (14)       (26)       (55)
                                --------------------------------------------
Net income as previously                                                    
 reported                               41         30        129        137 
 
Add:                                                                        
Cash distributions from GTN (a)         21          8         54         28 
Cash distributions from Northern                                            
 Border (a)                             18         25         84         96 
Cash distributions from Bison                                               
 (a)                                    11          4         29         16 
Cash distributions from Great                                               
 Lakes (a)                               2         10         17         44 
Cash flows provided by North                                                
 Baja's and Tuscarora's                                                     
 operating activities                   11         12         50         49 
                                --------------------------------------------
                                        63         59        234        233 
 
Less:                                                                       
Equity earnings as previously                                               
 reported:                                                                  
  GTN                                    -         (4)        (9)       (19)
  Northern Border                      (16)       (18)       (64)       (72)
  Bison                                  -         (3)        (6)       (11)
  Great Lakes                           (3)        (4)        (3)       (27)
                                --------------------------------------------
                                       (19)       (29)       (82)      (129)
Less:                                                                       
Other Pipes' net income as                                                  
 previously reported (e)                                                    
  GTN                                  (20)         -        (39)         - 
  Bison                                (12)         -        (23)         - 
  North Baja                            (4)        (4)       (22)       (21)
  Tuscarora                             (4)        (4)       (16)       (15)
                                --------------------------------------------
                                       (40)        (8)      (100)       (36)
Add:                                                                        
Net income attributable to non-                                             
 controlling interests after the                                            
 2013 acquisition                        9          -         18          - 
                                --------------------------------------------
 
Partnership cash flows before                                               
 General Partner distributions          54         52        199        205 
General Partner distributions                                               
 (b)                                    (1)        (1)        (4)        (3)
                                --------------------------------------------
 
Partnership cash flows                  53         51        195        202 
                                --------------------------------------------
 
Cash distributions declared            (52)       (43)      (197)      (170)
Cash distributions declared per                                             
 common unit (c)                     $0.81      $0.78      $3.21      $3.11 
Cash distributions paid                (52)       (43)      (188)      (169)
Cash distributions paid per                                                 
 common unit (c)                     $0.81      $0.78      $3.18      $3.10 
                                --------------------------------------------
                                --------------------------------------------
 
(a) In accordance with the cash distribution policies of the respective     
    entities, cash distributions from GTN, Northern Border, Bison and Great 
    Lakes, 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 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 $30
    million and $137 million for the three and twelve months ended December 
    31, 2012, respectively, reflecting 25 percent ownership in each of GTN  
    and Bison. As a result of the recast, net income attributable to        
    controlling interests is $44 million and $192 million for the three and 
    twelve months ended December 31, 2012, respectively, as if we owned 70  
    percent in each of GTN and Bison. Net income attributed to GTN's and    
    Bison's former parent of $14 million and $55 million, reflecting the 45 
    percent interests not then owned by the Partnership, for the three and  
    twelve months ended December 31, 2012, respectively, reconciles the net 
    income as previously reported and net income attributable to controlling
    interests.                                                              
(e) "Other Pipes" includes the results of North Baja and Tuscarora prior to 
    July 1, 2013, plus the results of GTN and Bison after July 1, 2013.     

  
Contacts:
TC PipeLines, LP
Media Inquiries:
Shawn Howard/Grady Semmens/Davis Sheremata
403.920.7859
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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