EARNINGS - PIPELINES / TransCanada Pipelines 1st Quarter Results
PART II OF II
Corporate
- Dividends Declared
In February, TransCanada's board of directors declared a quarterly
dividend of 31 cents per share for the quarter ended March 31, 1998 on the
outstanding common shares. It is the 137th consecutive dividend paid by
TransCanada on its common shares, and is payable on April 30, 1998 to
shareholders of record at the close of business on March 31, 1998. The board
also declared regular dividends on TransCanada's preferred shares.
Merger with NOVA
- Industry Groups Reach Agreement
In April, TransCanada, NOVA Corporation (NOVA), NOVA Gas Transmission
Ltd., the Canadian Association of Petroleum Producers, and the Small Explorers
and Producers Association of Canada reached an agreement to promote a
competitive environment, greater customer choice and alignment of interests in
the Western Canadian Sedimentary Basin (WCSB).
The agreement, signed April 7, endorses three guiding principles: (1)
support for competition and greater customer choice; (2) the need to construct
competitive incremental pipeline capacity from the WCSB by both new
competitors and existing pipelines alike in a timely, safe and cost-effective
manner; and (3) the need for regulatory changes that will provide existing and
new pipelines equal opportunity to compete, recognizing that such competition
is desirable and in the best interests of all industry stakeholders.
The parties to the agreement will immediately pursue the three guiding
principles through several action items in 1998, including: (1) implementation
of a pipeline interconnection policy to provide shippers with the option of
reasonable access to competing transmission systems and to minimize
duplication of facilities; (2) development of several regulatory changes and a
proposed new regulatory framework through discussions with key stakeholders
and for consideration by the NEB and the Alberta Energy and Utilities Board;
and (3) development of a process acknowledging the industry's desire to
maintain adequate separation between TransCanada's and NOVA's regulated and
non-regulated businesses.
- Regulatory and Shareholder Approvals
TransCanada and NOVA have passed two regulatory hurdles necessary for
completion of the proposed merger. FERC issued an order on April 6, 1998
granting approval of the companies' application. The companies also filed an
application with the U.S. Federal Trade Commission and the Department of
Justice. The 30-day waiting period expired on April 5, allowing TransCanada
and NOVA to proceed with the merger without further review by those agencies.
TransCanada and NOVA plan to hold shareholder meetings on June 29, 1998
to seek approval for the merger which, if obtained, may lead to completion of
the merger in the first week of July 1998.
April 24, 1998
CONSOLIDATED INCOME
For the three months ended March 31 (unaudited)
(millions of dollars except per share amounts) 1998 1997
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Revenues 3,388.4 3,645.4
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Cost of Sales 2,571.2 2,876.4
Other Costs and Expenses 395.2 336.2
Depreciation 111.8 102.5
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3,078.2 3,315.1
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Operating Income 310.2 330.3
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Other Expense/(Income)
Financial charges 153.5 132.0
Financial charges of joint ventures 26.3 21.8
Allowance for funds used during construction (7.6) (4.4)
Interest and other income (1.8) (4.3)
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170.4 145.1
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Income before Income Taxes 139.8 185.2
Income Taxes - Current and Deferred 24.7 67.8
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Net Income 115.1 117.4
Preferred Securities Charges 3.3 3.1
Preferred Share Dividends 9.1 9.1
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Net Income Applicable to Common Shares 102.7 105.2
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Net Income Per Share $0.46 $0.48
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Average Shares Outstanding (millions) 223.2 218.4
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See accompanying Notes to Summarized Consolidated Financial Statements.
CONSOLIDATED CHANGES IN FINANCIAL POSITION
For the three months ended March 31 (unaudited)
(millions of dollars) 1998 1997
------------------------------------------------------------------------
Cash Generated from Operations
Funds generated from operations 226.5 232.5
Decrease/(increase) in operating working capital 102.6 (90.3)
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329.1 142.2
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Investing Activities
Capital expenditures
Energy transmission (243.7) (231.3)
Energy processing (181.2) (7.2)
International (8.2) (17.5)
Energy marketing and corporate (4.1) (5.7)
Acquisitions, net of cash acquired - (230.3)
Deferred amounts and other (32.1) 63.4
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(469.3) (428.6)
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Financing Activities
Dividends and preferred securities charges (84.1) (75.3)
Notes payable (repaid)/issued, net (204.6) 277.1
Long-term debt issued 418.7 103.0
Reduction of long-term debt (159.4) (46.6)
Non-recourse debt of joint ventures issued 299.3 -
Reduction of non-recourse debt of joint ventures (4.5) (3.0)
Partnership units issued by a subsidiary 132.0 -
Common shares issued 33.9 28.4
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431.3 283.6
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Increase/(Decrease) in Cash and Short-Term
Investments 291.1 (2.8)
Cash and Short-Term Investments
- at beginning of period 115.2 163.2
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Cash and Short-Term Investments
- at end of period 406.3 160.4
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See accompanying Notes to Summarized Consolidated Financial Statements
CONSOLIDATED FINANCIAL POSITION
March 31, December 31,
(millions of dollars) 1998 1997
(unaudited)
------------------------------------------------------------------------
Current Assets
Cash and short-term investments 406.3 115.2
Accounts receivable 1,282.0 1,513.4
Inventories 289.1 352.5
Other 32.7 34.2
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2,010.1 2,015.3
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Long-Term Investments 300.4 274.8
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Plant, Property and Equipment
Energy transmission 10,799.9 10,671.4
Energy processing 1,470.7 1,282.1
Energy marketing, international and corporate 116.8 119.4
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12,387.4 12,072.9
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Other Assets 228.7 208.6
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14,926.6 14,571.6
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Current Liabilities
Notes payable 463.4 668.0
Accounts payable 1,447.3 1,626.4
Long-term debt due within one year 165.3 282.3
Non-recourse debt of joint ventures due within 55.5 51.0
one year --------- ---------
2,131.5 2,627.7
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Deferred Amounts 149.6 113.1
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Long-Term Debt 6,392.2 6,020.6
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Non-Recourse Debt of Joint Ventures 1,263.0 982.8
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Deferred Income Taxes 239.9 232.5
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Junior Subordinated Debentures 224.0 223.9
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Non-Controlling Interests 194.8 96.1
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Shareholders' Equity
Preferred securities 277.4 280.0
Preferred shares 512.6 512.6
Common 3,541.6 3,482.3
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4,331.6 4,274.9
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14,926.6 14,571.6
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See accompanying Notes to Summarized Consolidated Financial Statements.
NOTES TO SUMMARIZED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The results of operations for the three months ended March 31, 1998 and
1997 are not necessarily indicative of the results that may be expected for a
full fiscal year. These summarized consolidated financial statements should
be read in conjunction with the Company's 1997 annual consolidated financial
statements.
2. SEGMENTED INFORMATION
For the three months ended March 31
(millions of dollars) 1998 1997
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