Exhibit 99.1
[LOGO]
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Media Inquiries: Kurt Kadatz/Hejdi Feick (403) 920-7877
Unitholder and Analyst Inquiries: David Moneta/Debbie Stein (877) 290-2772
NEWS RELEASE
TC PipeLines, LP Announces 2003 Fourth Quarter and
Annual Results
CALGARY, Alberta - January 29, 2004 - (Nasdaq: TCLP) - TC PipeLines, LP (the
Partnership) today reported fourth quarter 2003 net income of $12.1 million or
$0.66 per unit (all amounts in U.S. dollars) compared to $8.9 million or $0.49
per unit in fourth quarter 2002. For the twelve months ended December 31, 2003,
the Partnership reported net income of $48.0 million or $2.63 per unit compared
to $45.5 million or $2.50 per unit for the prior year. The increase in net
income is due to higher equity income from both Northern Border Pipeline Company
("Northern Border Pipeline") and Tuscarora Gas Transmission Company
("Tuscarora").
The Partnership's fourth quarter 2003 cash generated from operations was $12.4
million, compared to $13.4 million in fourth quarter 2002. The decrease is
mainly due to the classification of a portion of the cash distribution from
Northern Border Pipeline as return of capital. Cash distributions from Northern
Border Pipeline in the fourth quarter of 2003 were $12.3 million compared with
$12.6 million in the prior year. Current accounting practice requires the
classification of cumulative cash distributions in excess of cumulative earnings
to be reported as a return of capital. In fourth quarter 2003, cumulative
distributions from Northern Border Pipeline exceeded cumulative equity earnings
to the Partnership by $1.0 million. This change in classification has no impact
on the Partnership's cash available for distribution.
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For the year ended December 31, 2003, cash generated from operations amounted to
$49.6 million compared to $52.1 million for 2002. The decrease in 2003 reflects
lower cash flows from Northern Border Pipeline due to refunds paid by Northern
Border Pipeline to its shippers for electricity costs that had been previously
collected through company use gas provisions, and the classification of $1.0
million of the cash distribution from Northern Border Pipeline as a return of
capital. Cash distributions from Tuscarora in 2003 were $6.2 million compared to
$4.6 million in the prior year due to increased cash flows from the 2002
expansion.
"2003 was another year of solid financial performance for TC PipeLines, LP,"
said Ron Turner, President and Chief Executive Officer of the general partner,
TC PipeLines GP, Inc. "Successes in 2003 included Northern Border Pipeline's
recontracting of transportation capacity, additional debt paydown, and an
increase in our cash distribution for the fourth consecutive year." On January
16, 2004, the Partnership announced its fourth quarter cash distribution in the
amount of $0.55 per unit.
FINANCIAL HIGHLIGHTS
(unaudited) THREE MONTHS ENDED TWELVE MONTHS ENDED
(millions of U.S. dollars, DECEMBER 31 DECEMBER 31
except per unit amounts)
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2003 2002 2003 2002
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Net Income 12.1 8.9 48.0 45.5
Per unit (1) $0.66 $0.49 $2.63 $2.50
Cash Generated from Operations 12.4 13.4 49.6 52.1
Return of Capital from Northern Border Pipeline 1.0 - 1.0 -
Cash Distributions Paid 10.1 9.6 39.4 37.4
Cash Distributions Declared per Unit (2) $0.55 $0.525 $2.175 $2.075
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 2% interest plus an amount equal to incentive
distributions.
(2) The Partnership's 2003 fourth quarter cash distribution will be paid on
February 13, 2004 to unitholders of record as of January 30, 2004.
NET INCOME
FOURTH QUARTER 2003
The Partnership reported fourth quarter 2003 net income of $12.1 million or
$0.66 per unit, an increase of $3.2 million compared to $8.9 million or $0.49
per unit in fourth quarter 2002.
Equity income from Northern Border Pipeline was $11.0 million in fourth quarter
2003 compared to $8.2 million in the same quarter of 2002. In the fourth quarter
2002, Northern Border Pipeline recorded a reserve of $10.0 million (TC
PipeLines' share = $3.0 million) to reflect the costs related to its treatment
of
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previously collected quantities of natural gas used in utility operations to
cover electric power costs. The increase in 2003 fourth quarter equity income
was also attributable to lower interest expense resulting from a reduction in
interest rates and lower average debt balances. This was partially offset by a
$3.1 million (TC PipeLines' share = $0.9 million) provision by Northern Border
Pipeline in fourth quarter 2003 related to charges for the potential termination
costs of Enron's employee pension benefit plan. Equity income from Tuscarora
amounted to $1.5 million in fourth quarter 2003 compared to $1.4 million for
fourth quarter 2002. The increase was primarily due to additional operating
income from Tuscarora's expansion facilities.
The Partnership's fourth quarter 2003 general and administrative expenses were
$0.4 million, unchanged from fourth quarter 2002. Financial charges of less than
$0.1 million for fourth quarter 2003 were lower than the same period last year
primarily due to lower long-term debt balances.
YEAR ENDED DECEMBER 31, 2003
The Partnership reported net income of $48.0 million or $2.63 per unit for the
year ended December 31, 2003, an increase of $2.5 million compared to $45.5
million or $2.50 per unit for 2002.
The Partnership's equity income from Northern Border Pipeline was $44.5 million
for 2003, an increase of $1.7 million compared to $42.8 million in 2002. This
variance is primarily due to higher revenues and lower interest expense in 2003,
partially offset by higher salary and benefit costs including a provision for
charges for termination costs related to Enron's employee pension benefit plan.
The Partnership's equity income from Tuscarora was $5.3 million for the year
ended December 31, 2003, an increase of $0.6 million compared to $4.7 million in
2002. The increase is primarily due to incremental revenues from the 2002
expansion, which went into service December 1, 2002, partially offset by higher
operations and maintenance expenses and higher depreciation related to the new
facilities.
The Partnership's general and administrative expenses were $1.7 million in 2003
as compared to $1.5 million in 2002. Financial charges were $0.1 million for the
year ended December 31, 2003 compared to $0.5 million in 2002. The Partnership
reduced the amount outstanding on its credit facility during the year by $6.0
million, resulting in lower interest expense.
CASH FLOW
FOURTH QUARTER 2003
The Partnership reported fourth quarter 2003 cash generated from operations of
$12.4 million compared to $13.4 million for fourth quarter 2002. The decrease is
mainly due to the classification of
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a portion of the cash distribution from Northern Border Pipeline as return of
capital.
In fourth quarter 2003, the Partnership received a cash distribution from
Northern Border Pipeline amounting to $12.3 million compared to $12.6 million in
fourth quarter 2002. The decrease in distribution from Northern Border Pipeline
is primarily due to higher electricity costs incurred by Northern Border
Pipeline during third quarter 2003. Current accounting practice requires the
classification of cumulative cash distributions in excess of cumulative earnings
to be reported as a return of capital. In fourth quarter 2003, cumulative
distributions from Northern Border Pipeline exceeded cumulative equity earnings
to the Partnership by $1.0 million. Partially offsetting the decrease in the
cash distribution from Northern Border Pipeline is a $0.2 million increase in
the cash distribution from Tuscarora reflecting incremental cash inflows from
new transportation contracts related to Tuscarora's expansion facilities.
During fourth quarter 2003, the Partnership paid an aggregate $10.1 million of
cash distributions to unitholders and its general partner, compared to $9.6
million in fourth quarter 2002. This cash distribution, on a per unit basis,
represents $0.55 per unit in fourth quarter 2003, as compared to $0.525 per unit
in fourth quarter 2002, as well as the general partner interest including
incentive distributions.
YEAR ENDED DECEMBER 31, 2003
The Partnership reported 2003 cash generated from operations of $49.6 million
compared to $52.1 million for 2002. The Partnership received cash distributions
from Northern Border Pipeline in 2003 amounting to $46.2 million compared to
$49.2 million in 2002. In 2003, $1.0 million of the distribution has been
reported as a return of capital from Northern Border Pipeline. In total, 2003
distributions from Northern Border Pipeline decreased $3.0 million from 2002 due
primarily to refunds paid by Northern Border Pipeline in 2003 to its shippers
for electricity costs that had been previously collected through company use gas
provisions. The impact of this decrease was partially offset by increased cash
flow from Tuscarora. The Partnership received cash distributions from Tuscarora
in 2003 amounting to $6.2 million, an increase of $1.6 million compared to $4.6
million in the prior year. This increase reflects Tuscarora's incremental cash
inflows from new transportation contracts, including those related to
Tuscarora's expansion facilities.
During 2003, the Partnership used $4.1 million of its cash to fund a portion of
Tuscarora's expansion. The Partnership paid an aggregate $39.4 million of cash
distributions in 2003 to unitholders and its general partner compared to $37.4
million in 2002. The Partnership used $6.0 million of its cash from
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operations to reduce the balance owing on its credit facility from $11.5 million
to $5.5 million.
TC PipeLines, LP is a publicly held 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 Enron Corp., 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 with facilities of Gas Transmission Northwest Corporation
(GTN), to northern Nevada. TC PipeLines, LP is managed by its general partner,
TC PipeLines GP, Inc., an indirect wholly owned subsidiary of TransCanada
Corporation. Subsidiaries of TransCanada Corporation also hold common and
subordinated 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.
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CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
This news release includes 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 within the meaning of the
Securities Litigation Reform Act. 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. 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,
majority control of the Northern Border Pipeline management committee by
affiliates of Enron Corp., which has filed for bankruptcy protection, 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, 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, 2002.
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<Page>
TC PIPELINES, LP
FINANCIAL HIGHLIGHTS
STATEMENT OF INCOME
<Table>
<Caption>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
2003 2002 2003 2002
(millions of U.S. dollars, except per unit amounts) (unaudited) (unaudited) (unaudited)
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Equity Income from Investment in
Northern Border Pipeline Company (1) 11.0 8.2 44.5 42.8
Equity Income from Investment in
Tuscarora Gas Transmission Company (2) 1.5 1.4 5.3 4.7
General and Administrative Expenses (0.4) (0.4) (1.7) (1.5)
Financial Charges - (0.3) (0.1) (0.5)
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NET INCOME 12.1 8.9 48.0 45.5
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NET INCOME PER UNIT (3) $0.66 $0.49 $2.63 $2.50
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UNITS OUTSTANDING (MILLIONS) 17.5 17.5 17.5 17.5
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</Table>
BALANCE SHEET
<Table>
<Caption>
DECEMBER 31, 2003 December 31, 2002
(millions of U.S. dollars) (unaudited)
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ASSETS
Cash 7.5 6.4
Investment in Northern Border Pipeline Company (1) 240.7 242.9
Investment in Tuscarora Gas Transmission Company (2) 39.9 36.7
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288.1 286.0
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LIABILITIES AND PARTNERS' EQUITY
Current Liabilities 0.6 0.6
Current Portion of Long-Term Debt 5.5 -
Long-Term Debt - 11.5
Partners' Equity 282.0 273.9
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288.1 286.0
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</Table>
CASH FLOW INFORMATION
<Table>
<Caption>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
2003 2002 2003 2002
(millions of U.S. dollars) (unaudited) (unaudited) (unaudited)
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Cash Generated from Operations
Distributions Received from Equity Investments
Northern Border Pipeline Company 11.3 12.6 45.2 49.2
Tuscarora Gas Transmission Company 1.5 1.3 6.2 4.6
Other (0.4) (0.5) (1.8) (1.7)
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Cash Generated from Operations 12.4 13.4 49.6 52.1
Investment in Tuscarora Gas Transmission Company - (2.9) (4.1) (7.4)
Return of Capital from Northern Border Pipeline Company 1.0 - 1.0 -
Distributions Paid (10.1) (9.6) (39.4) (37.4)
Repayment of Long-Term Debt - - (6.0) (10.0)
Other - (0.1) - (0.1)
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Increase / (Decrease) In Cash 3.3 0.8 1.1 (2.8)
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</Table>
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<Page>
(1) NORTHERN BORDER PIPELINE COMPANY
TC PipeLines, LP holds a 30% general partner interest in Northern Border
Pipeline Company. Summarized operating and financial information of Northern
Border Pipeline for the three and twelve months ended December 31, 2003 and
2002 and as at December 31, 2003 and December 31, 2002 is as follows:
<Table>
<Caption>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
2003 2002 2003 2002
(unaudited) (unaudited) (unaudited)
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Operating Results
Gas Delivered (million cubic feet) 215,403 213,642 849,920 838,736
Average Throughput (million cubic feet per day) 2,410 2,397 2,396 2,369
FINANCIAL RESULTS (millions of U.S. dollars)
Operating Revenue 82.5 81.2 324.2 321.0
Operating Expenses
Operations and Maintenance 13.5 19.5 43.8 41.5
Depreciation and Amortization 14.5 15.2 57.8 58.7
Taxes other than Income 7.1 7.8 29.6 28.4
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Total Operating Expenses 35.1 42.5 131.2 128.6
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Operating Income 47.4 38.7 193.0 192.4
Interest Expense, Net (10.4) (11.6) (44.9) (51.5)
Other Income (0.3) 0.2 0.1 1.8
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Net Income 36.7 27.3 148.2 142.7
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CAPITAL EXPENDITURES (millions of U.S. dollars)
Maintenance 3.0 1.5 6.4 7.4
Growth 6.1 0.2 6.5 1.0
</Table>
<Table>
<Caption>
DECEMBER 31, 2003 December 31, 2002
Summary Balance Sheet Data (millions of U.S. dollars) (unaudited)
----------------------------------------------------
Total Assets 1,692.6 1,740.0
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Other Current Liabilities and
Reserves and Deferred Credits 68.7 81.3
Long-Term Debt (including current maturities) 821.5 848.9
Partners' Capital 797.2 803.0
Accumulated Other Comprehensive Income 5.2 6.8
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Total Liabilities and Partners' Equity 1,692.6 1,740.0
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</Table>
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<Page>
(2) TUSCARORA GAS TRANSMISSION COMPANY
TC PipeLines, LP holds a 49% general partner interest in Tuscarora Gas
Transmission Company. Summarized operating and financial information of
Tuscarora for the three and twelve months ended December 31, 2003 and 2002
and as at December 31, 2003 and December 31, 2002 is as follows:
<Table>
<Caption>
THREE MONTHS ENDED TWELVE MONTHS ENDED
DECEMBER 31 DECEMBER 31
2003 2002 2003 2002
(unaudited) (unaudited) (unaudited)
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Operating Results
Gas Delivered (million cubic feet) 7,573 5,705 21,974 19,792
Average Throughput (million cubic feet per day) 82 62 60 54
FINANCIAL RESULTS (millions of U.S. dollars)
Operating Revenue 7.7 6.3 29.7 23.1
Operating Expenses
Operations, Maintenance & Administrative 0.9 0.6 3.7 1.7
Depreciation and Amortization 1.6 1.3 6.4 4.9
Taxes other than Income 0.3 0.3 1.3 1.1
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Total Operating Expenses 2.8 2.2 11.4 7.7
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Operating Income 4.9 4.1 18.3 15.4
Interest Expense, Net (1.6) (1.4) (6.5) (5.7)
Other Income - 0.2 - 0.7
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Net Income 3.3 2.9 11.8 10.4
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CAPITAL EXPENDITURES (millions of U.S. dollars)
Maintenance 0.1 - 0.1 0.2
Growth 0.3 6.2 1.2 31.6
</Table>
<Table>
<Caption>
December 31, 2003 December 31, 2002
SUMMARY BALANCE SHEET DATA (millions of U.S. dollars) (unaudited)
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Total Assets 149.6 154.5
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Other Current Liabilities and
Reserves and Deferred Credits 2.1 9.9
Long-Term Debt (including current maturities) 85.4 90.0
Partners' Capital 62.0 54.2
Accumulated Other Comprehensive Income 0.1 0.4
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Total Liabilities and Partners' Equity 149.6 154.5
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</Table>
(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 2% interest plus an amount equal to incentive
distributions.
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