TransCanada Announces Second Quarter Results, Board Declares Dividend of $0.32 per Share
CALGARY, Alberta – July 27, 2006 – (TSX: TRP) (NYSE: TRP)
Second Quarter 2006 Highlights:
(All financial figures are in Canadian dollars unless noted otherwise).
TransCanada Corporation today announced net income and net income from continuing operations (net earnings) for second quarter 2006 of $244 million or $0.50 per share, compared to $200 million or $0.41 per share for second quarter 2005. The increase was primarily due to significantly higher net earnings from the Energy segment and lower net expenses in Corporate, partially offset by lower net earnings from the Pipelines segment. Second quarter 2006 net earnings included a $33 million future income tax benefit ($23 million in the Energy segment and $10 million in Corporate) as a result of a reduction in Canadian federal and provincial corporate income tax rates and a $13 million after-tax gain related to the sale of the company’s general partnership interest in Northern Border Partners, L.P. Second quarter 2005 net earnings included $13 million related to 2004 as a result of a decision from the National Energy Board in April 2005 on Phase II of the Canadian Mainline’s 2004 Tolls and Tariff Application. Excluding these items, net earnings for second quarter 2006 increased by $11 million or $0.02 per share compared to second quarter 2005.
For the six months ended June 30, 2006, TransCanada’s net earnings were $489 million or $1.00 per share compared to $432 million or $0.89 per share for the same period in 2005. In addition to the items noted above, net earnings for the six months ended June 30, 2006 include an $18 million after-tax bankruptcy settlement receipt from a former shipper on the Gas Transmission Northwest System and net earnings for the six months ended June 30, 2005 include an after-tax gain of $49 million on the sale of TC PipeLines, LP common units. Excluding all of the above noted items, net earnings for the six months ended June 30, 2006 increased by $55 million or $0.11 per share compared to the same period in 2005.
Net income for the six months ended June 30, 2006 includes $28 million or $0.06 per share from discontinued operations reflecting settlements received in the first quarter 2006 from bankruptcy claims related to TransCanada’s Gas Marketing business which was divested in 2001. Net income for the six months ended June 30, 2006 totalled $517 million or $1.06 per share compared to $432 million or $0.89 per share for the same period in 2005.
Funds generated from operations of $539 million and $1,056 million for the three and six months ended June 30, 2006 increased $41 million and $138 million, respectively, when compared to the same periods in 2005.
“TransCanada’s strong operating performance during the first six months of 2006 contributed to continued growth in earnings and funds generated from operations,” said Hal Kvisle, president and chief executive officer.
“The increase in net earnings from our Energy business is evidence that our disciplined approach to growth and value creation is working. Our focus on acquiring low-cost, competitive power facilities and developing low risk, greenfield power projects is creating real value for our shareholders,” he said. “TransCanada’s Pipelines business continued to deliver solid results although net earnings declined primarily as a result of lower rates of return on common equity and lower average investment bases on the Canadian Mainline and Alberta System.
“Going forward,” said Mr. Kvisle, “TransCanada remains focused on maximizing the long-term value of our existing asset base and prudently growing our portfolio of high quality, long-life energy infrastructure assets. We have an excellent portfolio of growth opportunities, with several projects, including the 550 megawatt Bécancour cogeneration plant, the initial phase of the 740 megawatt Cartier Wind facilities, the Edson natural gas storage facility and the Tamazunchale pipeline in Mexico, all expected to begin commercial operations by the end of the year.
“We also continue to make solid progress on the Bruce Power restart and refurbishment project and to advance the Keystone oil pipeline and the Cacouna and Broadwater LNG facilities through the regulatory process. We remain committed to pursuing pipeline opportunities to move northern frontier natural gas to growing North American markets.”
Effective June 1, 2006, TransCanada revised the composition and names of its reportable business segments to Pipelines and Energy. Pipelines is principally comprised of the company’s pipelines in Canada, the United States and Mexico. Energy includes the company’s power operations, natural gas storage and liquefied natural gas (LNG) businesses in Canada and the United States. These changes had no impact on consolidated net income.
TransCanada expects to file an application with the NEB for a certificate of public convenience and necessity to construct the required new facilities later this year once environmental assessment work is completed. TransCanada filed its Preliminary Information Package for the required new facilities with the NEB on July 10, 2006.
TransCanada also continued to consult with stakeholders along the proposed route of the Keystone pipeline in May and June 2006. Public consultations included a series of open houses relating to the proposed extension of the Keystone pipeline to Cushing, Oklahoma. TransCanada anticipates holding a binding Open Season on the proposed Cushing Extension later this year.
TransCanada will hold a teleconference today at 2 p.m. (Mountain) / 4 p.m. (Eastern) to discuss the second quarter 2006 financial results and general developments and issues concerning the company. Analysts, members of the media and other interested parties wanting to participate should phone 1-866-898-9626 or 416-340-2216 (Toronto area) at least 10 minutes prior to the start of the teleconference. No passcode is required. A live webcast of the teleconference will also be available on TransCanada's website at www.transcanada.com.
The conference will begin with a short address by members of TransCanada's executive management, followed by a question and answer period for investment analysts. A question and answer period for members of the media will immediately follow.
A replay of the teleconference will be available two hours after the conclusion of the call until midnight (Eastern) August 3, 2006. Please call 1-800-408-3053 or 416-695-5800 (Toronto area) and enter passcode 3192148. The webcast will be archived and available for replay on www.transcanada.com.
TransCanada is a leader in the responsible development and reliable operation of North American energy infrastructure. TransCanada’s network of more than 41,000 kilometres (25,600 miles) of wholly-owned pipeline transports the majority of Western Canada’s natural gas production to key Canadian and U.S. markets. A growing independent power producer, TransCanada owns, or has interests in, approximately 6,700 megawatts of power generation in Canada and the United States. TransCanada’s common shares trade on the Toronto and New York stock exchanges under the symbol TRP.
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