TransCanada Online Annual Report 2002

NOTE 19 Discontinued Operations

In July 2001, the Board of Directors approved a plan to dispose of the Company’s Gas Marketing business. The Gas Marketing business provided supply, transportation and asset management services, as well as structured financial products and services. In December 1999, the Board of Directors approved a plan (December Plan) to dispose of the Company’s International, Canadian Midstream and certain other businesses. The Company’s disposals under both plans were substantially completed at December 31, 2001.

The Company remains contingently liable pursuant to obligations under certain energy trading contracts that relate to the divested Gas Marketing business. The contingent liability under these obligations, which could be significant, is contingent on certain future events, the occurrence of which is not determinable, and the amount, if any, is dependent upon future prevailing market prices and conditions. The purchasers of the Gas Marketing business have agreed to indemnify TransCanada in the event the Company is called upon to perform under the obligations. At December 31, 2002, the provision for loss on discontinued operations, including approximately $100 million of deferred after-tax gains and remaining obligations related to the Gas Marketing business, was reviewed and was concluded to be appropriate.

Revenues from discontinued operations for the year ended December 31, 2002, were $36 million (2001 – $12,895 million; 2000 – $15,212 million). The provision for loss on discontinued operations at December 31, 2002 was $234 million (2001 – $264 million). This was comprised of $129 million (2001 – $129 million) relating to Gas Marketing and $105 million (2001 – $135 million) relating to the December Plan.

Net Income/(Loss)

Year ended December 31
2002

2001

2000

(millions of dollars)

Net Income/(Loss)

Gas Marketing
–

5

(252)

Income taxes
–

(2)

113

Results of operations prior to plan approval
–

3

(139)

Net Gain/(Loss) from Discontinued Operations

   December Plan^⁽¹⁾
–

34

295

   Income taxes
–

(14)

(95)

–

20

200

   Gas Marketing^⁽¹⁾
–

(139)

–

   Income taxes
–

49

–

–

(90)

–

–

(67)

61

(1) The net loss on disposal in 2001 related to Gas Marketing includes the actual and estimated gains and losses on sale, the results of the discontinued operations between the date of plan approval and the expected dates of disposal, together with direct incremental costs of the dispositions, including severance and transaction expenses. The net gains in 2001 and 2000 related to the December Plan represent adjustments to the 1999 provision resulting from transactions completed and revisions to estimates.

Other Financial Information The following amounts related to discontinued operations are included in the consolidated balance sheet.

December 31
2002

2001

(millions of dollars)

Current assets
79

113

Non-current assets
109

212

Current liabilities
(98)

(116)

Non-current liabilities
–

(9)

Net Assets of Discontinued Operations
90

200