TransCanada Reports 2006 Net Income of $1.1 Billion-- Board of Directors Increases Quarterly Dividend
CALGARY, Alberta –January 30, 2007 – (TSX: TRP) (NYSE: TRP)
Fourth Quarter and Year-End 2006 Financial Highlights
(All financial figures are unaudited and in Canadian dollars unless noted otherwise)
The Board of Directors of TransCanada Corporation (TransCanada or the company) today declared a quarterly dividend of $0.34 per common share for the quarter ending March 31, 2007, a six per cent increase over the $0.32 paid in each of the previous four quarters. The dividend is payable on April 30, 2007 to shareholders of record at the close of business on March 30, 2007. This is the seventh consecutive annual increase in the common share dividend.
TransCanada today announced net income and net income from continuing operations (net earnings) for fourth quarter 2006 of $269 million or $0.55 per share compared to $350 million or $0.72 per share for fourth quarter 2005.
Excluding income tax refunds and related interest of $12 million in fourth quarter 2006, and an after-tax gain of $115 million in fourth quarter 2005 from the sale of the company’s interest in PT Paiton Energy Company (Paiton Energy), net earnings for fourth quarter 2006 were $257 million compared to $235 million in fourth quarter 2005, an increase of $22 million, or $0.05 per share.
Net income for the year ended December 31, 2006 was $1,079 million or $2.21 per share, including net income from discontinued operations of $28 million or $0.06 per share. Net income for the year ended December 31, 2005 was $1,209 million or $2.49 per share.
For the year ended December 31, 2006, net earnings were $1,051 million or $2.15 per share compared to $1,209 million or $2.49 per share for the year ended December 31, 2005. In addition to the income tax refunds and related interest of $12 million recorded in fourth quarter 2006, net earnings for the year ended December 31, 2006 included an income tax benefit of approximately $50 million in the third quarter, an $18 million after-tax bankruptcy settlement receipt from a former shipper on the Gas Transmission Northwest System, a $33 million future income tax benefit as a result of reductions 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. In addition to the $115 million gain recorded in fourth quarter 2005 noted above, net earnings for the year ended December 31, 2005 included an after-tax gain of $193 million from the sale of TransCanada’s interest in TransCanada Power, L.P. (Power LP), an after-tax gain of $49 million on the sale of TC PipeLines, LP (PipeLines LP) common units, and $13 million related to 2004 as a result of a decision from the National Energy Board (NEB) in April 2005 on Phase II of the Canadian Mainline’s 2004 Tolls and Tariff Application. Excluding all of these items, net earnings for the year ended December 31, 2006 were $925 million, compared to $839 million in the same period in 2005, an increase of $86 million or $0.17 per share.
Funds generated from operations for fourth quarter 2006 were $660 million, an increase of $130 million compared to fourth quarter 2005. Funds generated from operations for the year ended December 31, 2006 were $2,378 million, an increase of $427 million compared to 2005.
“In 2006, TransCanada continued to expand its portfolio of high quality pipeline and energy assets by advancing a number of significant growth initiatives and delivering solid returns to our shareholders,” said Hal Kvisle, TransCanada’s Chief Executive Officer. “We continue to invest in our North American gas transmission and power businesses and to pursue new and complementary opportunities in natural gas storage, oil pipelines and liquefied natural gas. Over the past seven years, we have invested more than $10 billion, with $2.0 billion invested last year alone. In each of the next three years, we have already identified approximately $1.5 billion in capital investment, in addition to our pending acquisition of ANR.
“Our financial results for the year reflect our success in diligently and prudently executing our growth strategy. In 2006, excluding gains and non-recurring items, TransCanada recorded significant increases in net earnings and funds generated from operations. Our strong 2006 financial performance has enabled our Board of Directors to increase the dividend on the company’s common shares for the seventh year in a row,” added Mr. Kvisle.
During fourth quarter 2006, TransCanada announced the acquisition of the American Natural Resources Company and the ANR Storage Company (together, ANR) and an additional interest in Great Lakes Gas Transmission Limited Partnership (Great Lakes) for US$3.4 billion including US$457 million of assumed debt. TransCanada anticipates closing the acquisition in first quarter 2007. ANR operates a 17,000 kilometre (km) natural gas pipeline system with a peak-day capacity of 6.8 billion cubic feet per day (Bcf/d). ANR also owns and operates natural gas storage facilities with a total capacity of approximately 230 billion cubic feet (Bcf). Great Lakes owns and operates a 3,400 km interstate natural gas pipeline system with a design capacity of 2.5 Bcf/d.
“The ANR and Great Lakes acquisition represents a unique opportunity to acquire regulated pipeline and storage assets that are a strong fit with our existing North American footprint,” said Mr. Kvisle. “They are high quality assets that will strengthen our position as a leader in the North American gas transmission business and deliver significant value to our shareholders.”
TransCanada expects to finance the ANR acquisition in a manner that is consistent with the company’s current balance sheet capitalization. This is aligned with the company’s intention to maintain its strong financial position and TransCanada PipeLines Limited’s ‘A’ credit ratings. TransCanada expects the transaction to be accretive to earnings and cash flow in the first full year of ownership.
Mr. Kvisle concluded, “The announcement of the ANR acquisition was a high point in a year of solid growth and continued advancement of our high quality portfolio of growth opportunities. In 2006, we successfully completed several projects which are now contributing earnings and cash flow. We brought 660 megawatts of power generation into commercial production through the completion of the Bécancour cogeneration plant and the first phase of the Cartier Wind project, and began transporting gas on the Tamazunchale pipeline in Mexico. In addition, we completed commissioning of the Edson natural gas storage facility.
“We won the bid for the 683 megawatt Halton Hills Generating Station and, with our partner, Ontario Power Generation, negotiated an agreement with the Ontario Power Authority for the 550 megawatt Portlands Energy Centre. These two plants will add significant incremental generating capacity to the Ontario power market and, along with our Bécancour plant, will increase demand for environmentally friendly natural gas. We continued to advance major projects including the Keystone Oil Pipeline, the Bruce Power restart and refurbishment program, and the Cacouna and Broadwater liquefied natural gas terminals. Over the longer term, we remain a key player in projects to bring northern natural gas to market.”
Notable developments in fourth quarter 2006 and the beginning of 2007 include:
Additional developments are discussed in this News Release under the title “Other Recent Developments”.
TransCanada will hold a teleconference today at 1 p.m. (Mountain) / 3 p.m. (Eastern) to discuss the fourth 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) February 6, 2007. Please call (800) 408-3053 or (416) 695-5800 (Toronto area) and enter pass code 3210334. 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 including natural gas pipelines and storage facilities, and power generation. For 50 years, TransCanada has transported the majority of Western Canada’s natural gas production to key Canadian and U.S. markets. On closing of the acquisition of the ANR Pipeline Company and ANR Storage Company announced December 22, 2006, TransCanada’s network of wholly owned pipelines will extend more than 59,000 km (36,500 miles), tapping into virtually all major gas supply basins in North America. TransCanada will also become one of the continent’s largest providers of gas storage and related services with approximately 360 Bcf of storage capacity. A growing independent power producer, TransCanada owns, or has interests in, approximately 7,700 MW 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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