TC Pipelines, LP - Common Units Representing Limited Partnership Interests (MM) (NASDAQ:TCLP)
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From Jul 2019 to Jul 2024
TC PipeLines, LP (NASDAQ:TCLP) (the Partnership) today
reported second quarter 2005 net income of $9.7 million or $0.52 per
unit (all amounts in U.S. dollars) compared to $13.6 million or $0.74
per unit in the second quarter of 2004. The decrease in net income is
primarily due to lower equity income from Northern Border Pipeline.
Cash generated from investments in the second quarter of 2005
decreased $0.6 million to $17.9 million compared to $18.5 million for
the same period in 2004 primarily due to higher maintenance capital
expenditures incurred by Northern Border Pipeline during 2005. Cash
generated from investments includes $7.5 million of cash distributed
from the Partnership's investments in Northern Border Pipeline
Company and Tuscarora Gas Transmission Company classified as return
of capital.
"The Partnership's net income decrease is mainly due to the
negative impact on revenues resulting from changes in market
fundamentals experienced by Northern Border Pipeline during the
second quarter," said Ron Turner, president and chief executive
officer of the general partner, TC PipeLines GP, Inc. "During the
second quarter, Northern Border Pipeline's firm demand revenues
dropped by approximately $13.0 million (approximately $3.9 million
impact on the Partnership's net income) when compared to the prior
year as a result of uncontracted capacity and expired contracts which
were partially offset by $1.3 million of short-term and other
transportation service revenue.
"Northern Border Pipeline believes that the greatest impact of
unsold capacity occurred during the second quarter 2005. Northern
Border Pipeline has advised us that its capacity for July through
September has been sold out at more favorable rates compared to the
second quarter, and expects that throughout the duration of the
2005/2006 heating season, it will be fully contracted at or near
maximum rates. Consequently, Northern Border Pipeline now expects
that the most likely range of impact on its revenue from unsold and
discounted capacity in 2005 is $15.0 million to $18.0 million
(approximately $11.7 million of which was experienced in the second
quarter 2005). The impact on the Partnership's 2005 earnings is
approximately $5.0 million.
"As a result of this, the Partnership's earnings and cash flows
from Northern Border Pipeline will be lower in 2005 than expected.
However, we continue to believe that our strong distribution coverage
ratio(A), which is currently expected to be in excess of 1.3 times
for 2005, coupled with our strong financial position, will allow us
to continue to deliver stable cash flows to our unitholders and to
continue a disciplined approach to repaying the Partnership's
outstanding debt," Turner said.
On July 14, 2005, the Partnership announced its second quarter
cash distribution in the amount of $0.575 per unit, payable to
unitholders of record on July 29, 2005.
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*T
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(A) Reconciliation of non-GAAP financial measure: distribution
coverage ratio is a non-GAAP financial measure defined as net cash
available per unit divided by distribution per unit. Management
believes that this is an important measure to assist the
Partnership's investors in evaluating the Partnership's business
performance and stability of distributions.
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(millions of U.S. dollars except per unit amounts) 2005 Forecast
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Cash generated from operations $48.3
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Plus: Returns of capital 12.6
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Less: Available cash to the General Partner (7.2)
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Net available cash to unitholders 53.7
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Net available cash per unit (17.5 million units) $3.07
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Distribution coverage ratio (assuming $2.30 per unit) 1.33 times
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Financial Highlights
(unaudited) Three months ended Six months ended
(millions of dollars June 30 June 30
except per unit amounts) 2005 2004 2005 2004
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Net income 9.7 13.6 23.1 27.3
Per unit (1) $ 0.52 $ 0.74 $ 1.24 $ 1.49
Cash generated from operations 10.4 14.1 25.6 27.5
Return of capital (2) 7.5 4.4 11.6 6.4
Cash distributions paid 10.8 10.2 21.5 20.3
Cash distributions declared
per unit (3) $0.575 $0.575 $ 1.15 $1.125
Units outstanding (millions) 17.5 17.5 17.5 17.5
(1) Net income per unit is computed by dividing net income, after
deduction of the general partner's allocation, by the number
of common and subordinated 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.
(2) Current accounting practice requires the classification of
cumulative cash distributions in excess of cumulative equity
earnings to be reported as a return of capital.
(3) The Partnership's 2005 second quarter cash distribution will be
paid on August 12, 2005 to unitholders of record as of
July 29, 2005.
*T
Net Income
The Partnership reported second quarter 2005 net income of $9.7
million or $0.52 per unit, a decrease of $3.9 million compared to
$13.6 million or $0.74 per unit in the second quarter of 2004.
Equity income from Northern Border Pipeline was $8.6 million in
the second quarter of 2005, a decrease of $3.8 million when compared
to $12.4 million in the second quarter of 2004. This decrease in
equity income from Northern Border Pipeline is primarily due to
approximately $13.0 million in revenue reduction associated with
unsold and discounted capacity; partially offsetting this revenue
reduction were increases in short-term and other transportation
service revenues of approximately $1.3 million. The net revenue
reduction of $11.7 million contributed to a negative net income
impact to TC PipeLines, LP of approximately $3.5 million. Increases
in Northern Border Pipelines' taxes other than income and financial
charges, partially offset by decreases in operations and maintenance
expenses relative to the same period in 2004 contributed to
approximately $0.3 million decrease in equity income from Northern
Border Pipeline for the second quarter 2005.
Equity income from Tuscarora remained at $1.8 million in the
second quarter of 2005 compared to the same period in 2004.
The Partnership's second quarter 2005 general and administrative
expenses of $0.5 million were approximately the same as the second
quarter of 2004. Financial charges of $0.2 million in the second
quarter of 2005 increased compared to $0.1 million in the same period
last year primarily due to higher average interest rates.
Cash Flow
The Partnership reported second quarter 2005 cash generated from
operations of $10.4 million compared to $14.1 million in the second
quarter of 2004. Cash generated from investments decreased $0.6
million to $17.9 million in the second quarter 2005 compared to $18.5
million for the same period in 2004 when including the portion of the
cash distributions from Northern Border Pipeline and Tuscarora
classified as return of capital.
In the second quarter of 2005, the Partnership received a cash
distribution from Northern Border Pipeline of $15.7 million, $7.1
million of which has been classified as return of capital, compared
to $16.8 million in the second quarter of 2004, a decrease of $1.1
million. The decrease is primarily due to Northern Border Pipeline's
higher maintenance capital expenditures in first quarter of 2005
relative to the same period in 2004. Cash distributions received in
the quarter are based on the respective results of our equity
investments for the previous quarter.
Cash distributions from Tuscarora in the second quarter of 2005
were $2.2 million, including $0.4 million classified as return of
capital, compared to $2.1 million in the second quarter of 2004, an
increase of $0.1 million.
In the second quarter of 2005, the Partnership paid an aggregate
$10.8 million of cash distributions to unitholders and its general
partner, compared to $10.2 million in the second quarter of 2004.
This cash distribution, on a per unit basis, represents $0.575 per
unit in the second quarter of 2005, as well as the general partner
interest, including incentive distributions.
In the second quarter of 2005, the Partnership repaid $6.0
million under its revolving credit facility, reducing the
Partnership's outstanding debt balance to $24.0 million as at June
30, 2005.
Conference Call
The Partnership will hold a conference call Thursday, August 4,
2005 at 12 p.m. (Eastern). Ron Turner, president and chief executive
officer of the general partner, will discuss the second quarter 2005
financial results and general developments and issues concerning the
Partnership. Those interested in listening to the call may dial (866)
540-8136. A replay of the conference call will also be available two
hours after the call and until midnight (Eastern), August 11, 2005 by
dialing (800) 408-3053, then entering pass code 3158912.
A live webcast of the conference call will also be available
through the Partnership's website at www.tcpipelineslp.com. An audio
replay of the call will be maintained on the website.
TC PipeLines, LP is a publicly traded limited partnership. It
owns a 30 per cent interest in Northern Border Pipeline Company, a
Texas general partnership, and a 49 per cent interest in Tuscarora
Gas Transmission Company, a Nevada general partnership. Northern
Border Pipeline, which is owned 70 per cent by Northern Border
Partners, L.P., a publicly traded master limited partnership
controlled by affiliates of ONEOK, Inc., owns a 1,249-mile United
States interstate pipeline system that transports natural gas from
the Montana-Saskatchewan border to markets in the midwestern United
States. Tuscarora owns a 240-mile United States interstate pipeline
system that transports natural gas from Oregon, where it
interconnects to TransCanada's GTN System. TC PipeLines, LP is
managed by its general partner, TC PipeLines GP, Inc., an indirect
wholly owned subsidiary of TransCanada Corporation. TC PipeLines GP,
Inc., also holds common units of the Partnership. Common units of TC
PipeLines, LP are quoted on the Nasdaq Stock Market and trade under
the symbol "TCLP". For more information about TC PipeLines, LP, visit
the Partnership's Internet site at www.tcpipelineslp.com.
Cautionary Statement Regarding Forward-Looking Information
This news release may include forward-looking statements
regarding future events and the future financial performance of TC
PipeLines, LP. Words such as "believes," "expects," "intends,"
"forecasts," "projects," and similar expressions identify
forward-looking statements. All forward-looking statements are based
on the Partnership's current beliefs as well as assumptions made by
and information currently available to the Partnership. These
statements reflect the Partnership's current views with respect to
future events. The Partnership assumes no obligation to update any
such forward-looking statement to reflect events or circumstances
occurring after the date hereof. Important factors that could cause
actual results to materially differ from the Partnership's current
expectations include regulatory decisions, particularly those of the
Federal Energy Regulatory Commission, the Securities and Exchange
Commission, the ability of Northern Border Pipeline to recontract its
available capacity at maximum rates, operational decisions of
Northern Border Pipeline's operator, the failure of a shipper on
either one of the Partnership's pipelines to perform its contractual
obligations, cost of acquisitions, future demand for natural gas,
overcapacity in the industry, availability of supplies of Canadian
natural gas, natural gas development in the Western Canada
Sedimentary Basin, availability of additional storage capacity, and
other risks inherent in the transportation of natural gas as
discussed in the Partnership's filings with the Securities and
Exchange Commission, including the Partnership's Annual Report on
Form 10-K for the year ended December 31, 2004.
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*T
TC PipeLines, LP
Financial Highlights
Statement of Income
(unaudited) Three months ended Six months ended
(millions of U.S. dollars June 30 June 30
except per unit amounts) 2005 2004 2005 2004
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Equity income from investment
in Northern Border Pipeline (1) 8.6 12.4 20.8 24.9
Equity income from investment
in Tuscarora (2) 1.8 1.8 3.8 3.6
General and administrative
expenses (0.5) (0.5) (1.0) (1.0)
Financial charges and other (0.2) (0.1) (0.5) (0.2)
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Net income 9.7 13.6 23.1 27.3
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Net income per unit (3) $0.52 $0.74 $1.24 $1.49
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Units outstanding (millions) 17.5 17.5 17.5 17.5
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June 30,
Balance Sheet 2005 December 31,
(millions of U.S. dollars) (unaudited) 2004
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ASSETS
Cash 3.2 2.5
Investment in Northern
Border Pipeline (1) 278.8 290.1
Investment in Tuscarora (2) 39.0 39.5
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321.0 332.1
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LIABILITIES AND PARTNERS' EQUITY
Accrued liabilities 0.7 0.7
Current portion of long-term debt 24.0 6.5
Long-term debt - 30.0
Partners' equity 296.3 294.9
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321.0 332.1
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Cash Flow Information Three months ended Six months ended
(unaudited) June 30 June 30
(millions of U.S. dollars) 2005 2004 2005 2004
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Distributions received from
equity investments
Northern Border Pipeline
Company 8.6 12.4 20.8 24.9
Tuscarora Gas Transmission
Company 1.8 2.1 3.8 3.6
Changes in working capital
and other - (0.4) 1.0 (1.0)
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Cash Generated From Operations 10.4 14.1 25.6 27.5
Return of capital from
Northern Border
Pipeline Company 7.1 4.4 11.1 6.4
Return of capital from
Tuscarora Gas Transmission
Company 0.4 - 0.5 -
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Cash Generated From
Investments (a) 17.9 18.5 37.2 33.9
Investment in Northern
Border Pipeline Company - (19.5) - (39.0)
Distributions paid (10.8) (10.2) (21.5) (20.3)
Long-term debt issued/(repaid) (6.0) 11.0 (12.5) 20.0
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Increase/(decrease) in cash 1.1 (0.2) 3.2 (5.4)
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(a) Reconciliation of non-GAAP financial measure: Cash generated
from investments is a non-GAAP financial measure which includes
cash generated from operations and return of capital. It is
provided as a supplement to results reported in accordance with
GAAP. Management believes that this is an important measure to
assist the Partnership's investors in evaluating the
Partnership's business performance.
*T
(1) Northern Border Pipeline Company
TC PipeLines, LP holds a 30 per cent general partner interest in
Northern Border Pipeline Company. Summarized operating and financial
information of Northern Border Pipeline for the three and six months
ended June 30, 2005 and 2004 and as at June 30, 2005 and December 31,
2004 is as follows:
-0-
*T
Three months ended Six months ended
June 30 June 30
(unaudited) 2005 2004 2005 2004
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Operating Results
Gas delivered
(million cubic feet) 183,973 208,953 399,964 427,277
Average throughput
(million cubic feet per day) 2,076 2,359 2,277 2,415
Financial Results
(millions of U.S. dollars)
Operating revenue 69.8 81.5 152.6 164.8
Operating expenses
Operations and maintenance 9.2 9.7 18.8 18.8
Depreciation and amortization 14.4 14.6 28.7 29.1
Taxes other than income 7.4 6.4 15.3 14.3
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Total operating expenses 31.0 30.7 62.8 62.2
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Operating income 38.8 50.8 89.8 102.6
Interest expense, net (10.6) (9.9) (21.2) (20.1)
Other income 0.6 0.4 0.8 0.5
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Net income 28.8 41.3 69.4 83.0
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Capital Expenditures
(millions of U.S. dollars)
Maintenance 3.7 4.3 8.1 4.4
Growth 1.7 (0.1) 2.0 0.1
June 30,
Summary Balance Sheet Data 2005 December 31,
(millions of U.S. dollars) (unaudited) 2004
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Total assets 1,581.7 1,623.3
--------------------------------
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Other current liabilities and
reserves and deferred credits 49.6 52.3
Long-term debt
(including current maturities) 602.8 603.9
Partners' capital 926.3 963.3
Accumulated other comprehensive
income 3.0 3.8
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Total liabilities and partners'
equity 1,581.7 1,623.3
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*T
(2) Tuscarora Gas Transmission Company
TC PipeLines, LP holds a 49 per cent general partner interest in
Tuscarora Gas Transmission Company. Summarized operating and
financial information of Tuscarora for the three and six months ended
June 30, 2005 and 2004 and as at June 30, 2005 and December 31, 2004
is as follows:
-0-
*T
Three months ended Six months ended
June 30 June 30
(unaudited) 2005 2004 2005 2004
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Operating Results
Gas delivered
(million cubic feet) 4,382 4,306 13,612 12,231
Average throughput
(million cubic feet per day) 48 47 75 51
Financial Results
(millions of U.S. dollars)
Operating revenue 8.0 8.0 16.3 16.3
Operating expenses
Operations and maintenance 0.8 0.9 1.6 1.8
Depreciation and amortization 1.6 1.5 3.1 3.1
Taxes other than income 0.3 0.3 0.6 0.6
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Total operating expenses 2.7 2.7 5.3 5.5
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Operating income 5.3 5.3 11.0 10.8
Interest expense, net (1.4) (1.6) (2.9) (3.1)
Other Income 0.1 - 0.1 -
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Net income 4.0 3.7 8.2 7.7
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Capital Expenditures
(millions of U.S. dollars)
Maintenance - - 0.1 0.1
Growth 0.5 0.1 0.6 0.2
June 30,
Summary Balance Sheet Data 2005 December 31,
(millions of U.S. dollars) (unaudited) 2004
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Total assets 142.3 144.9
--------------------------------
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Other current liabilities and
reserves and deferred credits 2.4 2.0
Long-term debt
(including current maturities) 78.3 80.8
Partners' capital 61.5 62.0
Accumulated other comprehensive
income 0.1 0.1
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Total liabilities and partners'
equity 142.3 144.9
--------------------------------
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*T
(3) Net income per unit is computed by dividing net income, after
deduction of the general partner's allocation, by the number of
common and subordinated 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.
TC Pipelines, LP (NASDAQ:TCLP)