Delaware
|
52-2135448
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification Number)
|
|
|
13710
FNB Parkway
|
||||
Omaha, Nebraska
|
68154-5200
|
|||
(Address
of principal executive offices)
|
(Zip
code)
|
877-290-2772
|
||
(Registrant's telephone number, including area code) |
Page
No.
|
||
TABLE
OF CONTENTS
|
||
PART
I
|
FINANCIAL
INFORMATION
|
|
Glossary
|
3
|
|
Item
1.
|
Financial
Statements
|
|
Consolidated
Statement of Income – Three and nine months ended September 30,
2008 and 2007
|
4
|
|
Consolidated
Statement of Comprehensive Income – Three and nine months ended
September 30, 2008
and 2007
|
4
|
|
Consolidated
Balance Sheet – September 30, 2008 and December 31,
2007
|
5
|
|
Consolidated
Statement of Cash Flows – Nine months ended September 30,
2008 and 2007
|
6
|
|
Consolidated
Statement of Changes in Partners’ Equity – Nine months ended
September 30, 2008
|
7
|
|
Notes
to Consolidated Financial Statements
|
8
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
15
|
Results
of Operations of TC PipeLines
|
21
|
|
Liquidity
and Capital Resources of TC PipeLines
|
25
|
|
Liquidity
and Capital Resources of our Pipeline Systems
|
27
|
|
Item
3.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
29
|
Item
4.
|
Controls
and Procedures
|
30
|
PART
II
|
OTHER
INFORMATION
|
|
Item
1A.
|
Risk
Factors
|
31
|
Item
6.
|
Exhibits
|
33
|
ANR ……………………………...... | ANR Pipeline Company |
Bcf/d……………………………......
|
Billion
cubic feet per day
|
Bison Project…………………...... | Bison Pipeline Project |
Chicago IV......................................... | Northern Border's proposed expansion project |
Collar Agreement............................. | Northern Border's zero cost interest rate collar agreement |
DCF……………………………........
|
Discounted
cash flow
|
Dth/d……………………………......
|
Dekatherms
per day
|
FASB…………………………..........
|
Financial
Accounting Standards Board
|
FERC…………………………..........
|
Federal
Energy Regulatory Commission
|
GAAP…………………………........
|
U.S.
generally accepted accounting principles
|
GLGT.............…………………........
|
Great
Lakes Gas Transmission Limited Partnership
|
Great Lakes...................................... |
Great
Lakes Gas Transmission Limited Partnership
|
INGAA…………………………........
|
Interstate
Natural Gas Association of America
|
LIBOR…………………………........
|
London
Interbank Offered Rate
|
MLP……………………………........
|
Master
Limited Partnership
|
MMcf/d……………………….........
|
Million
cubic feet per day
|
NBPC……………………….............
|
Northern
Border Pipeline Company
|
Northern
Border……………….......
|
Northern
Border Pipeline Company
|
Our
pipeline systems………….......
|
Great
Lakes, Northern Border and Tuscarora
|
Partnership…………………............ | TC PipeLines, LP and its subsidiaries |
Pathfinder Project............................. | Pathfinder Pipeline Project |
REX East…………………………... | Eastern segment of the Rockies Express Pipeline |
REX West………………………….. | Western segment of the Rockies Express Pipeline |
ROE……………………………........
|
Return
on equity
|
ROFR................................................... | Right of first refusal |
SEC…………………………….........
|
Securities
and Exchange Commission
|
SFAS…………………………..........
|
Statement
of Financial Accounting Standards
|
TC Pipelines……………………….. | TC PipeLines, LP and its subsidiaries |
TCNB………………………….........
|
TransCanada
Northern Border Inc.
|
TGTC.................................................. | Tuscarora Gas Transmission Company |
TransCanada…………………........
|
TransCanada
Corporation and its subsidiaries
|
TSA..................................................... | Transportation Security Administration |
Tuscarora………………………......
|
Tuscarora
Gas Transmission Company
|
U.S……………………………..........
|
United
States of America
|
WCSB…………………………........
|
Western
Canada Sedimentary Basin
|
(unaudited)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||||
(millions
of dollars except per common unit amounts)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Equity
income from investment in Great Lakes (Note 2)
|
12.0 | 14.2 | 44.4 | 34.3 | ||||||||||||
Equity
income from investment in Northern Border (Note 3)
|
19.9 | 16.2 | 48.1 | 44.3 | ||||||||||||
Transmission
revenues
|
8.2 | 6.7 | 23.3 | 20.3 | ||||||||||||
Operating
expenses
|
(2.3 | ) | (2.2 | ) | (6.8 | ) | (6.4 | ) | ||||||||
Depreciation
|
(1.8 | ) | (1.6 | ) | (5.1 | ) | (4.7 | ) | ||||||||
Financial
charges, net and other
|
(7.7 | ) | (8.7 | ) | (22.8 | ) | (25.5 | ) | ||||||||
Net
income
|
28.3 | 24.6 | 81.1 | 62.3 | ||||||||||||
Net
income allocation
|
||||||||||||||||
Common
units
|
25.1 | 22.4 | 72.5 | 57.0 | ||||||||||||
General
partner
|
3.2 | 2.2 | 8.6 | 5.3 | ||||||||||||
28.3 | 24.6 | 81.1 | 62.3 | |||||||||||||
Net
income per common unit (Note 6)
|
$ | 0.72 | $ | 0.64 | $ | 2.08 | $ | 1.81 | ||||||||
Weighted average common units
outstanding (millions)
|
34.9 | 34.9 | 34.9 | 31.5 | ||||||||||||
Common units outstanding, end
of the period (millions)
|
34.9 | 34.9 | 34.9 | 34.9 |
(unaudited)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||||
(millions
of dollars)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Net
income
|
28.3 | 24.6 | 81.1 | 62.3 | ||||||||||||
Other
comprehensive loss
|
||||||||||||||||
Change
associated with hedging transactions (Note 9)
|
(1.3 | ) | (7.0 | ) | (1.7 | ) | (2.3 | ) | ||||||||
Change
associated with hedging transactions of investees
|
- | (0.5 | ) | (0.7 | ) | (0.9 | ) | |||||||||
(1.3 | ) | (7.5 | ) | (2.4 | ) | (3.2 | ) | |||||||||
Total
comprehensive income
|
27.0 | 17.1 | 78.7 | 59.1 | ||||||||||||
See
accompanying notes to the consolidated financial
statements.
|
(unaudited)
|
||||||||
(millions
of dollars)
|
September
30, 2008
|
December
31, 2007
|
||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
and short-term investments
|
11.0 | 7.5 | ||||||
Accounts
receivable and other
|
3.7 | 4.2 | ||||||
14.7 | 11.7 | |||||||
Investment
in Great Lakes (Note 2)
|
710.5 | 721.1 | ||||||
Investment
in Northern Border (Note 3)
|
517.2 | 541.9 | ||||||
Plant,
property and equipment (net of $66.8 accumulated depreciation, 2007 -
$61.7)
|
135.6 | 134.1 | ||||||
Goodwill
|
81.7 | 81.7 | ||||||
Other
assets
|
1.6 | 2.1 | ||||||
1,461.3 | 1,492.6 | |||||||
LIABILITIES
AND PARTNERS' EQUITY
|
||||||||
Current
Liabilities
|
||||||||
Bank
indebtedness
|
- | 1.4 | ||||||
Accounts
payable
|
2.2 | 4.8 | ||||||
Accrued
interest
|
3.5 | 3.0 | ||||||
Current
portion of long-term debt (Note 5)
|
4.5 | 4.6 | ||||||
Other
current liabilities
|
0.5 | - | ||||||
10.7 | 13.8 | |||||||
Other
long-term liabilities
|
11.0 | 9.9 | ||||||
Long-term
debt (Note 5)
|
541.6 | 568.8 | ||||||
563.3 | 592.5 | |||||||
Partners'
Equity
|
||||||||
Common
units
|
892.6 | 892.3 | ||||||
General
partner
|
19.1 | 19.1 | ||||||
Accumulated
other comprehensive loss
|
(13.7 | ) | (11.3 | ) | ||||
898.0 | 900.1 | |||||||
1,461.3 | 1,492.6 |
Subsequent
events (Note 12)
|
|||
See
accompanying notes to the consolidated financial
statements.
|
(unaudited)
|
Nine
months ended September 30,
|
|||||||
(millions
of dollars)
|
2008
|
2007
|
||||||
CASH
GENERATED FROM OPERATIONS
|
||||||||
Net
income
|
81.1 | 62.3 | ||||||
Depreciation
|
5.1 | 4.7 | ||||||
Amortization
of other assets
|
0.4 | 0.3 | ||||||
Non-controlling
interests
|
- | 0.2 | ||||||
Increase
in long-term liabilities
|
0.1 | - | ||||||
Equity
allowance for funds used during construction
|
(0.2 | ) | - | |||||
Increase
in operating working capital (Note 10)
|
(0.2 | ) | (0.7 | ) | ||||
86.3 | 66.8 | |||||||
INVESTING
ACTIVITIES
|
||||||||
Return
of capital from Great Lakes (Note 2)
|
10.6 | 6.7 | ||||||
Return
of capital from Northern Border (Note 3)
|
23.9 | 18.2 | ||||||
Investment
in Great Lakes (Note 2)
|
- | (733.0 | ) | |||||
Investment
in Northern Border (Note 3)
|
- | (7.5 | ) | |||||
Capital
expenditures
|
(6.4 | ) | (4.4 | ) | ||||
Other
assets
|
- | (1.1 | ) | |||||
(Increase)/decrease
in investing working capital (Note 10)
|
(2.8 | ) | 1.2 | |||||
25.3 | (719.9 | ) | ||||||
FINANCING
ACTIVITIES
|
||||||||
Distributions
paid
|
(80.8 | ) | (61.3 | ) | ||||
Equity
issuances, net
|
- | 607.0 | ||||||
Long-term
debt issued
|
4.0 | 152.5 | ||||||
Long-term
debt repaid (Note 5)
|
(31.3 | ) | (34.9 | ) | ||||
(108.1 | ) | 663.3 | ||||||
Increase
in cash and short-term investments
|
3.5 | 10.2 | ||||||
Cash
and short-term investments, beginning of period
|
7.5 | 4.6 | ||||||
Cash
and short-term investments, end of period
|
11.0 | 14.8 | ||||||
Interest
payments made
|
17.9 | 23.9 | ||||||
See
accompanying notes to the consolidated
financial statements.
|
(unaudited)
|
Common
Units
|
General
Partner
|
Accumulated
Other Comprehensive Loss (1)
|
Partners'
Equity
|
||||||||||||||||||||
(millions
|
(millions
|
(millions
|
(millions
|
(millions
|
(millions
|
|||||||||||||||||||
of
units)
|
of
dollars)
|
of
dollars)
|
of
dollars)
|
of
units)
|
of
dollars)
|
|||||||||||||||||||
Partners'
equity at December 31, 2007
|
34.9 | 892.3 | 19.1 | (11.3 | ) | 34.9 | 900.1 | |||||||||||||||||
Net
income
|
- | 72.5 | 8.6 | - | - | 81.1 | ||||||||||||||||||
Distributions
paid
|
- | (72.2 | ) | (8.6 | ) | - | - | (80.8 | ) | |||||||||||||||
Other
comprehensive loss
|
- | - | - | (2.4 | ) | - | (2.4 | ) | ||||||||||||||||
Partners'
equity at September 30, 2008
|
34.9 | 892.6 | 19.1 | (13.7 | ) | 34.9 | 898.0 | |||||||||||||||||
(1)
|
TC PipeLines, LP uses derivatives to assist in managing its exposure to interest rate risk. Based on interest rates at September 30, 2008, the amount of losses related to cash flow hedges reported in accumulated other comprehensive income that will be reclassified to net income in the next 12 months is $3.8 million, which will be offset by a reduction to interest expense of a similar amount. |
See
accompanying notes to the consolidated financial
statements.
|
Note 1 | Organization and Significant Accounting Policies |
Note 2 | Investment in Great Lakes |
Summarized
Consolidated Great Lakes Income Statement
(unaudited)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
For
the period
February 23
to September
30, |
|||||||||||||
(millions
of dollars)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Transmission
revenues
|
66.7 | 65.6 | 213.9 | 162.2 | ||||||||||||
Operating
expenses
|
(17.1 | ) | (12.6 | ) | (45.9 | ) | (34.0 | ) | ||||||||
Depreciation
|
(14.7 | ) | (14.5 | ) | (43.9 | ) | (34.9 | ) | ||||||||
Financial
charges, net and other
|
(8.0 | ) | (8.1 | ) | (24.4 | ) | (19.5 | ) | ||||||||
Michigan
business tax
|
(1.2 | ) | - | (4.2 | ) | - | ||||||||||
Net
income
|
25.7 | 30.4 | 95.5 | 73.8 |
Summarized
Consolidated Great Lakes Balance Sheet
|
||||||||
(unaudited)
|
September
30,
|
December
31,
|
||||||
(millions
of dollars)
|
2008
|
2007
|
||||||
Assets
|
||||||||
Cash
and short-term investments
|
1.1 | 32.0 | ||||||
Other
current assets
|
100.6 | 55.5 | ||||||
Plant,
property and equipment, net
|
931.9 | 969.2 | ||||||
1,033.6 | 1,056.7 | |||||||
Liabilities
and Partners' Equity
|
||||||||
Current
liabilities
|
49.0 | 50.7 | ||||||
Deferred
credits
|
1.7 | 0.4 | ||||||
Long-term
debt, including current maturities
|
440.0 | 440.0 | ||||||
Partners'
capital
|
542.9 | 565.6 | ||||||
1,033.6 | 1,056.7 |
Note 3 | Investment in Northern Border |
Summarized
Northern Border Income Statement
(unaudited)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||||
(millions of dollars)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Transmission
revenues
|
67.7 | 79.6 | 212.8 | 228.0 | ||||||||||||
Operating
expenses
|
(19.3 | ) | (21.6 | ) | (57.5 | ) | (61.7 | ) | ||||||||
Depreciation
|
(15.3 | ) | (15.1 | ) | (45.8 | ) | (45.6 | ) | ||||||||
Financial
charges, net and other
|
7.1 | (10.2 | ) | (12.1 | ) | (30.9 | ) | |||||||||
Net
income
|
40.2 | 32.7 | 97.4 | 89.8 |
Summarized
Northern Border Balance Sheet
|
||||||||
(unaudited)
|
September
30,
|
December
31,
|
||||||
(millions
of dollars)
|
2008
|
2007
|
||||||
Assets
|
||||||||
Cash
and short-term investments
|
18.6 | 22.9 | ||||||
Other
current assets
|
31.1 | 39.8 | ||||||
Plant,
property and equipment, net
|
1,398.3 | 1,428.3 | ||||||
Other
assets
|
25.5 | 23.9 | ||||||
1,473.5 | 1,514.9 | |||||||
Liabilities
and Partners' Equity
|
||||||||
Current
liabilities
|
53.0 | 53.4 | ||||||
Deferred
credits and other
|
9.2 | 8.1 | ||||||
Long-term
debt, including current maturities
|
621.4 | 615.3 | ||||||
Partners'
equity
|
||||||||
Partners'
capital
|
793.8 | 840.5 | ||||||
Accumulated
other comprehensive loss
|
(3.9 | ) | (2.4 | ) | ||||
1,473.5 | 1,514.9 |
Note 4 | Investment in Tuscarora |
Summarized
Tuscarora Income Statement
(unaudited)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||||
(millions
of dollars)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Transmission
revenues
|
8.2 | 6.7 | 23.3 | 20.3 | ||||||||||||
Operating
expenses
|
(1.4 | ) | (1.2 | ) | (3.7 | ) | (3.7 | ) | ||||||||
Depreciation
|
(1.8 | ) | (1.6 | ) | (5.1 | ) | (4.7 | ) | ||||||||
Financial
charges, net and other
|
(1.1 | ) | (1.0 | ) | (3.1 | ) | (3.4 | ) | ||||||||
Net
income
|
3.9 | 2.9 | 11.4 | 8.5 |
Summarized
Tuscarora Balance Sheet
(unaudited)
|
September
30,
|
December
31,
|
||||||
(millions
of dollars)
|
2008
|
2007
|
||||||
Assets
|
||||||||
Cash
and short-term investments
|
- | 6.1 | ||||||
Other
current assets
|
13.6 | 2.6 | ||||||
Plant,
property and equipment, net
|
135.6 | 134.1 | ||||||
Other
assets
|
0.3 | 0.6 | ||||||
149.5 | 143.4 | |||||||
Liabilities
and Partners' Equity
|
||||||||
Current
liabilities
|
3.1 | 6.1 | ||||||
Long-term
debt, including current maturities
|
64.1 | 66.4 | ||||||
Partners'
capital
|
82.3 | 70.9 | ||||||
149.5 | 143.4 |
Summarized
Tuscarora Cash Flow Statement
(unaudited)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||||
(millions
of dollars)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Cash
flows provided by operating activities
|
7.2 | 4.6 | 17.3 | 13.5 | ||||||||||||
Cash
flows (used in)/provided by investing activities
|
(1.3 | ) | 0.6 | (9.2 | ) | (3.1 | ) | |||||||||
Cash
flows used in financing activities
|
(5.8 | ) | - | (14.2 | ) | (2.4 | ) | |||||||||
Increase/(decrease)
in cash and short-term investments
|
- | 5.2 | (6.1 | ) | 8.0 | |||||||||||
Cash
and short-term investments, beginning of period
|
- | 5.7 | 6.1 | 2.9 | ||||||||||||
Cash
and short-term investments, end of period
|
- | 10.9 | - | 10.9 |
Note 5 | Credit Facility and Long-Term Debt |
(unaudited)
|
September
30,
|
December
31,
|
||||||
(millions
of dollars)
|
2008
|
2007
|
||||||
Senior
Credit Facility
|
482.0 | 507.0 | ||||||
7.13%
Series A Senior Notes due 2010
|
52.9 | 54.5 | ||||||
7.99%
Series B Senior Notes due 2010
|
5.3 | 5.5 | ||||||
6.89%
Series C Senior Notes due 2012
|
5.9 | 6.4 | ||||||
546.1 | 573.4 |
Note 6 | Net Income per Common Unit |
(unaudited)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||||
(millions of dollars except per unit) |
2008
|
2007
|
2008
|
2007
|
||||||||||||
Net
income
|
28.3 | 24.6 | 81.1 | 62.3 | ||||||||||||
Net
income allocated to general partner
|
||||||||||||||||
General
partner interest
|
(0.6 | ) | (0.4 | ) | (1.6 | ) | (1.2 | ) | ||||||||
Incentive
distribution income allocation
|
(2.6 | ) | (1.8 | ) | (7.0 | ) | (4.1 | ) | ||||||||
(3.2 | ) | (2.2 | ) | (8.6 | ) | (5.3 | ) | |||||||||
Net
income allocable to common units
|
25.1 | 22.4 | 72.5 | 57.0 | ||||||||||||
Weighted
average common units outstanding (millions)
|
34.9 | 34.9 | 34.9 | 31.5 | ||||||||||||
Net
income per common unit
|
$ | 0.72 | $ | 0.64 | $ | 2.08 | $ | 1.81 |
Note 7 | Cash Distributions |
Note 8 | Related Party Transactions |
(unaudited)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||||
(millions
of dollars)
|
2008
|
2007
|
2008
|
2007
(1)
|
||||||||||||
Costs
charged by TransCanada and its affiliates:
|
||||||||||||||||
Great
Lakes
|
8.2 | 5.2 | 23.4 | 22.2 | ||||||||||||
Northern
Border
|
7.5 | 7.4 | 23.5 | 14.9 | ||||||||||||
Tuscarora
|
0.9 | 0.8 | 2.9 | 1.7 | ||||||||||||
Impact
on the Partnership's net income:
|
||||||||||||||||
Great
Lakes
|
3.6 | 2.4 | 10.1 | 10.3 | ||||||||||||
Northern
Border
|
3.2 | 3.7 | 9.6 | 7.5 | ||||||||||||
Tuscarora
|
0.7 | 0.8 | 2.0 | 1.7 | ||||||||||||
(1)
The amounts disclosed for Great Lakes are for the period February 23 to
September 30, 2007. The amounts disclosed for Northern Border are for
the period April 1 to September 30, 2007.
|
(unaudited)
|
September
30,
|
December
31,
|
|||||
(millions
of dollars)
|
2008
|
2007
|
|||||
Amount
owed to TransCanada and its affiliates:
|
|||||||
Great
Lakes
|
8.1 | 1.9 | |||||
Northern
Border
|
5.1 | 3.0 | |||||
Tuscarora
|
0.5 | 3.5 |
Note 9 | Derivative Financial Instruments |
Note 10 | Changes in Working Capital |
(unaudited)
|
Nine
months ended September 30,
|
|||||||
(millions
of dollars)
|
2008
|
2007
|
||||||
Decrease/(increase)
in accounts receivable and other
|
0.5 | (2.4 | ) | |||||
Decrease
in bank indebtedness
|
(1.4 | ) | - | |||||
Decrease
in accounts payable
|
(2.6 | ) | (0.3 | ) | ||||
Increase
in accrued interest
|
0.5 | 3.2 | ||||||
(3.0 | ) | 0.5 |
Note 11 | Accounting Pronouncements |
Note 12 | Subsequent Events |
·
|
the
ability of Great Lakes and Northern Border to continue to make
distributions at their current
levels;
|
·
|
the
impact of unsold capacity on Great Lakes and Northern Border being greater
or less than expected;
|
·
|
competitive
conditions in our industry and the ability of our pipeline systems to
market pipeline capacity on favorable terms, which is affected
by:
|
o
|
future
demand for and prices of natural
gas;
|
o
|
competitive
conditions in the overall natural gas and electricity
markets;
|
o
|
availability
of supplies of Canadian and United States (U.S.) natural
gas;
|
o
|
the
oversupply of natural gas in the Mid-continent
market;
|
o
|
availability
of additional storage capacity and current storage
levels;
|
o
|
weather
conditions;
|
o
|
competitive
developments by Canadian and U.S. natural gas transmission companies,
including the construction of the Eastern segment of the Rockies Express
Pipeline (REX East) to Clarington, Ohio;
and
|
o
|
development
of newly discovered natural gas plays such as the Horn River and Montney
shale gas plays in Western Canada, the Louisiana Haynesville shale gas
play, and the Marcellus shale gas play in West Virginia, Pennsylvania, and
New York.
|
·
|
the
Alberta (Canada) government’s decision to implement a new royalty regime
effective January 2009 may affect the amount of exploration and
drilling in the Western Canada Sedimentary Basin
(WCSB);
|
·
|
the
decision by TransCanada to advance the Pathfinder Pipeline Project or the
Bison Pipeline Project and the regulatory, financing and construction
risks related to construction of interstate natural gas
pipelines;
|
·
|
the
successful completion, timing, cost, scope and future financial
performance of our pipeline systems’ expansion projects could differ
materially from our expectations due to availability of contractors or
equipment, weather, difficulties or delays in obtaining regulatory
approvals or denied applications, land owner opposition, the lack of
adequate materials, labor difficulties or shortages, expansion costs that
are higher than anticipated and numerous other factors beyond our
control;
|
·
|
performance
of contractual obligations by customers of our pipeline
systems;
|
·
|
the
imposition of state income taxes on
partnerships;
|
·
|
operating
hazards, natural disasters, weather-related delays, casualty losses and
other matters beyond our control;
|
·
|
the
impact of current and future laws, rulings and governmental regulations,
particularly Federal Energy Regulatory Commission (FERC) regulations, on
us and our pipeline systems;
|
·
|
our
ability to control operating costs;
and
|
·
|
prevailing
economic conditions, including the current uncertainty in the global
economic markets, that impact the capital and equity markets and our
ability to access these markets.
|
The
shaded areas in the tables below disclose the results from Great Lakes and
Northern Border, representing 100 per cent of each entity's operations for
the given period.
|
||||||||||||||||||||||||||||||||||||||||
(unaudited)
|
For
the three months ended September 30, 2008
|
For
the nine months ended September 30, 2008
|
||||||||||||||||||||||||||||||||||||||
(millions
of dollars)
|
PipeLP
|
TGTC(1)
|
Other
|
GLGT(2)
|
NBPC(3)
|
PipeLP
|
TGTC(1)
|
Other
|
GLGT(2)
|
NBPC(3)
|
||||||||||||||||||||||||||||||
Transmission
revenues
|
8.2 | 8.2 | - | 66.7 | 67.7 | 23.3 | 23.3 | - | 213.9 | 212.8 | ||||||||||||||||||||||||||||||
Operating
expenses
|
(2.3 | ) | (1.4 | ) | (0.9 | ) | (17.1 | ) | (19.3 | ) | (6.8 | ) | (3.7 | ) | (3.1 | ) | (45.9 | ) | (57.5 | ) | ||||||||||||||||||||
5.9 | 6.8 | (0.9 | ) | 49.6 | 48.4 | 16.5 | 19.6 | (3.1 | ) | 168.0 | 155.3 | |||||||||||||||||||||||||||||
Depreciation
|
(1.8 | ) | (1.8 | ) | - | (14.7 | ) | (15.3 | ) | (5.1 | ) | (5.1 | ) | - | (43.9 | ) | (45.8 | ) | ||||||||||||||||||||||
Financial
charges, net and other
|
(7.7 | ) | (1.1 | ) | (6.6 | ) | (8.0 | ) | 7.1 | (22.8 | ) | (3.1 | ) | (19.7 | ) | (24.4 | ) | (12.1 | ) | |||||||||||||||||||||
Michigan
business tax
|
- | - | - | (1.2 | ) | - | - | - | - | (4.2 | ) | - | ||||||||||||||||||||||||||||
25.7 | 40.2 | 95.5 | 97.4 | |||||||||||||||||||||||||||||||||||||
Equity
income
|
31.9 | - | - | 12.0 | 19.9 | 92.5 | - | - | 44.4 | 48.1 | ||||||||||||||||||||||||||||||
Net
income
|
28.3 | 3.9 | (7.5 | ) | 12.0 | 19.9 | 81.1 | 11.4 | (22.8 | ) | 44.4 | 48.1 | ||||||||||||||||||||||||||||
(unaudited)
|
For
the three months ended September 30, 2007
|
For
the nine months ended September 30, 2007
|
||||||||||||||||||||||||||||||||||||||
(millions
of dollars)
|
PipeLP
|
TGTC(1)
|
Other
|
GLGT(2)
|
NBPC(3)
|
PipeLP
|
TGTC(1)
|
Other
|
GLGT(2)
|
NBPC(3)
|
||||||||||||||||||||||||||||||
Transmission
revenues
|
6.7 | 6.7 | - | 65.6 | 79.6 | 20.3 | 20.3 | - | 162.2 | 228.0 | ||||||||||||||||||||||||||||||
Operating
expenses
|
(2.2 | ) | (1.2 | ) | (1.0 | ) | (12.6 | ) | (21.6 | ) | (6.4 | ) | (3.7 | ) | (2.7 | ) | (34.0 | ) | (61.7 | ) | ||||||||||||||||||||
4.5 | 5.5 | (1.0 | ) | 53.0 | 58.0 | 13.9 | 16.6 | (2.7 | ) | 128.2 | 166.3 | |||||||||||||||||||||||||||||
Depreciation
|
(1.6 | ) | (1.6 | ) | - | (14.5 | ) | (15.1 | ) | (4.7 | ) | (4.7 | ) | - | (34.9 | ) | (45.6 | ) | ||||||||||||||||||||||
Financial
charges, net and other
|
(8.7 | ) | (1.0 | ) | (7.7 | ) | (8.1 | ) | (10.2 | ) | (25.5 | ) | (3.4 | ) | (22.1 | ) | (19.5 | ) | (30.9 | ) | ||||||||||||||||||||
30.4 | 32.7 | 73.8 | 89.8 | |||||||||||||||||||||||||||||||||||||
Equity
income
|
30.4 | - | - | 14.2 | 16.2 | 78.6 | - | - | 34.3 | 44.3 | ||||||||||||||||||||||||||||||
Net
income
|
24.6 | 2.9 | (8.7 | ) | 14.2 | 16.2 | 62.3 | 8.5 | (24.8 | ) | 34.3 | 44.3 |
(unaudited)
|
Three
months ended
September
30,
|
Nine
months ended
September
30,
|
||||||||||||||
(millions
of dollars except per common unit amounts)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Net
Income
|
28.3 | 24.6 | 81.1 | 62.3 | ||||||||||||
Add:
|
||||||||||||||||
Cash
flows provided by Tuscarora's operating activities
|
7.2 | 4.6 | 17.3 | 13.5 | ||||||||||||
Cash
distributions from Great Lakes
|
19.3 | 17.4 | 55.0 | 41.0 | ||||||||||||
Cash
distributions from Northern Border
|
22.6 | 14.8 | 72.0 | 62.5 | ||||||||||||
49.1 | 36.8 | 144.3 | 117.0 | |||||||||||||
Less:
|
||||||||||||||||
Tuscarora's
net income
|
(3.9 | ) | (2.9 | ) | (11.4 | ) | (8.5 | ) | ||||||||
Equity
income from investment in Great Lakes
|
(12.0 | ) | (14.2 | ) | (44.4 | ) | (34.3 | ) | ||||||||
Equity
income from investment in Northern Border
|
(19.9 | ) | (16.2 | ) | (48.1 | ) | (44.3 | ) | ||||||||
(35.8 | ) | (33.3 | ) | (103.9 | ) | (87.1 | ) | |||||||||
Partnership
cash flows
|
41.6 | 28.1 | 121.5 | 92.2 | ||||||||||||
Partnership
cash flows allocated to general partner (1)
|
(3.2 | ) | (2.3 | ) | (8.6 | ) | (5.3 | ) | ||||||||
Partnership
cash flows allocated to common units
|
38.4 | 25.8 | 112.9 | 86.9 | ||||||||||||
Cash
distributions declared
|
(27.8 | ) | (25.4 | ) | (83.0 | ) | (75.4 | ) | ||||||||
Cash
distributions declared per common unit (2)
|
$ | 0.705 | $ | 0.660 | $ | 2.110 | $ | 1.965 | ||||||||
Cash
distributions paid
|
(27.8 | ) | (25.1 | ) | (80.8 | ) | (61.3 | ) | ||||||||
Cash
distributions paid per common unit (2)
|
$ | 0.705 | $ | 0.655 | $ | 2.070 | $ | 1.905 | ||||||||
Weighted
average common units outstanding (millions)
|
34.9 | 34.9 | 34.9 | 31.5 | ||||||||||||
(1)
Partnership cash flows allocated to general partner represents the cash
distributions paid to the general partner with respect to its two per cent
interest plus an amount equal to incentive distributions.
|
||||||||||||||||
(2)
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 per cent interest plus an amount equal to
incentive distributions.
|
||||||||||||||||
Payments
Due by Period
|
||||||||||||
(unaudited)
(millions
of dollars)
|
Total
|
Less
Than 1 Year
|
Long-term
Portion
|
|||||||||
Senior
Credit Facility
|
482.0 | - | 482.0 | |||||||||
7.13%
Series A Senior Notes due 2010
|
52.9 | 3.2 | 49.7 | |||||||||
7.99%
Series B Senior Notes due 2010
|
5.3 | 0.5 | 4.8 | |||||||||
6.89%
Series C Senior Notes due 2012
|
5.9 | 0.8 | 5.1 | |||||||||
Total
|
546.1 | 4.5 | 541.6 |
Payments
Due by Period
|
||||||||||||
(unaudited)
(millions
of dollars)
|
Total
|
Less
than 1 year
|
Long-term
Portion
|
|||||||||
8.74%
series Senior Notes due 2008 to 2011
|
40.0 | 10.0 | 30.0 | |||||||||
6.73%
series Senior Notes due 2009 to 2018
|
90.0 | 9.0 | 81.0 | |||||||||
9.09%
series Senior Notes due 2012 to 2021
|
100.0 | - | 100.0 | |||||||||
6.95%
series Senior Notes due 2019 to 2028
|
110.0 | - | 110.0 | |||||||||
8.08%
series Senior Notes due 2021 to 2030
|
100.0 | - | 100.0 | |||||||||
Total
|
440.0 | 19.0 | 421.0 | |||||||||
Payments
Due by Period
|
||||||||||||
(unaudited)
(millions
of dollars)
|
Total
|
Less
than 1 year
|
Long-term
Portion
|
|||||||||
7.75%
senior notes due 2009
|
200.0 | 200.0 | - | |||||||||
7.50%
senior notes due 2021
|
250.0 | - | 250.0 | |||||||||
$250
million credit agreement due 2012(a)
|
172.0 | - | 172.0 | |||||||||
Total
|
622.0 | 200.0 | 422.0 | |||||||||
(a)
Northern Border is required to pay a facility fee of 0.05% on the
principal commitment amount of its credit agreement.
|
10.1
|
Membership
Interest Purchase Agreement as of August 28, 2008, by and between Northern
Border Pipeline Company and TransCanada Pipeline USA
Ltd.
|
10.2
|
First
Amendment to Amended and Restated Revolving Credit Agreement dated as of
July 31, 2008 between Northern Border Pipeline Company and the lenders
named therein.
|
31.1
|
Certification
of Principal Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act
of 2002.
|
31.2
|
Certification
of Principal Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification
of Principal Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
32.2
|
Certification
of Principal Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
TC
PipeLines, LP
|
|||
(a
Delaware Limited Partnership)
|
|||
By:
|
TC
PipeLines GP, Inc., its general partner
|
||
Date:
|
November
3, 2008
|
By:
|
/s/ Russell
K. Girling
Russell
K. Girling
Chairman,
Chief Executive Officer and Director
TC
PipeLines GP, Inc. (Principal Executive Officer)
|
Date:
|
November
3, 2008
|
By:
|
/s/ Amy W.
Leong
Amy
W. Leong
Controller
TC
PipeLines GP, Inc. (Principal Financial
Officer)
|