NewsRelease TC PipeLines, LP Annunces 2017 Third Quarter Financial Results HOUSTON, Texas Nvember 6, 2017 News Release- TC PipeLines, LP (NYSE: TCP) (the Partnership) tday reprted third quarter 2017 net incme attributable t cntrlling interests f $54 millin and distributable cash flw f $65 millin. During the third quarter f 2017, ur prtfli f high quality, FERC-regulated natural gas pipelines perfrmed very well, said Brandn Andersn, president f TC PipeLines, GP, Inc. Our pipelines cntinue t benefit frm increased natural gas flws and additinal cntracting. As a result f this strng demand, and in anticipatin f cntinued grwth in demand fr ur services, imprtant maintenance and ther capital wrk is being perfrmed which will ensure the cntinued safe and reliable service expected by ur custmers. We are als very pleased t reprt that bth Great Lakes and Nrthern Brder have reached tentative rate case settlements with their respective shippers and PNGTS has prgressed its expansin prject and secured additinal transprtatin vlumes under lng-term cntracts. These develpments will cntinue t prvide us with lng-term stability and cst-cmpetitive transprtatin systems in this envirnment f rbust natural gas supply, added Andersn. Third Quarter Highlights (All financial figures are unaudited) Generated net incme attributable t cntrlling interests f $54 millin Paid cash distributins f $74 millin Declared cash distributins f $1.00 per cmmn unit; a six percent increase frm the third quarter 2016 distributin f $0.94 per cmmn unit Generated distributable cash flw f $65 millin Raised net prceeds f apprximately $34 millin in cmmn equity thrugh the Partnership s At-the-Market (ATM) equity issuance prgram and thrugh a General Partner cntributin Great Lakes reached a rate settlement with its custmers and it was filed fr apprval with the Federal Energy Regulatry Cmmissin (FERC) n Octber 30, 2017 Nrthern Brder reached a rate settlement in principle with its custmers and plans t file a settlement agreement with FERC fr apprval befre the end f the year. The Partnership s financial highlights fr the third quarter f 2017 cmpared t the same perid f 2016 were: Three mnths ended Nine mnths ended (unaudited) September 30, September 30, (millins f dllars, except per cmmn unit amunts) 2017 2016 2017 2016 Net incme attributable t cntrlling interests 54 58 (a) 186 188 (a) Net incme per cmmn unit- basic and diluted (b) $0.61 $0.65 (c) $2.38 $2.51 (c) Cash distributins paid (74) (65) (210) (184) Class B distributins paid - - (22) (12) Cash distributins declared per cmmn unit $1.00 $0.94 $2.94 $2.77
Page 2 EBITDA (d) 103 102 (a) 327 325 (a) Distributable cash flw (d) 65 69 (a) 238 245 (a) Weighted average cmmn units utstanding (millins)-basic and diluted (e) 69.4 66.1 68.9 65.3 Cmmn units utstanding at the end f perid (millins) (e) 69.6 66.6 69.6 66.6 (a) (b) (c) (d) Recast infrmatin t cnslidate Prtland Natural Gas Transmissin (PNGTS) fr all perids presented as a result f the additinal 11.81 percent interest in PNGTS that was acquired frm TransCanada Crpratin (TransCanada) n June 1, 2017, increasing the Partnership s wnership in PNGTS t 61.71 percent. Prir t this transactin, the Partnership wned a 49.9 percent interest in PNGTS that was acquired frm TransCanada n January 1, 2016. Fr mre infrmatin, refer t ur Quarterly Reprt n Frm 10-Q fr the perid ended September 30, 2017, as filed with the Securities Exchange Cmmissin (SEC). Net incme per cmmn unit is cmputed by dividing net incme attributable t cntrlling interests, after deductin f net incme attributed t PNGTS frmer parent and amunts attributable t the General Partner and Class B units, by the weighted average number f cmmn units utstanding. Refer t Financial Summary- Cnslidated Statements f Incme sectin f this release. Net incme per cmmn unit prir t recast. Distributable cash flw and EBITDA are nn-gaap financial measures. Refer t the descriptin f these nn- GAAP financial measures in the sectin f this release entitled Nn-GAAP Financial Measures and the Supplemental Schedule fr further detail. (e) Under the ATM prgram, the Partnership issued 622,241 and 2,165,162 units during the three and nine mnths ended September 30, 2017, respectively. Recent Business Develpments Cash Distributins On Octber 24, 2017, the bard f directrs f ur General Partner declared the Partnership s third quarter 2017 cash distributin in the amunt f $1.00 per cmmn unit payable n Nvember 14, 2017 t unithlders f recrd as f Nvember 3, 2017. The declared distributin will include a $2 millin distributin t ur General Partner fr its effective tw percent general partner interest and an incentive distributin rights (IDR) payment amunting t $3 millin. Great Lakes Cntracting and Settlement - On April 24, 2017, Great Lakes reached an agreement n the terms f a new lng-term transprtatin capacity cntract with its affiliate, TransCanada. The cntract, which was subject t Canada s Natinal Energy Bard (NEB) apprval, is fr a term f 10 years and allws TransCanada the ability t transprt up t 0.711 billin cubic feet f natural gas per day n the Great Lakes system frm the Manitba/U.S. brder t the U.S. brder near Dawn Ontari. On September 21, 2017, TransCanada received apprval frm the NEB and as a result, this cntract cmmenced n Nvember 1, 2017. This cntract cntains vlume reductin ptins up t full cntract quantity beginning in year three. On Octber 30, 2017, Great Lakes filed a rate settlement with FERC t satisfy its bligatins frm its 2013 rate settlement fr new rates t be in effect by January 1, 2018 (2017 Great Lakes Settlement). The 2017 Great Lakes Settlement, if apprved by FERC, will decrease Great Lakes maximum transprtatin rates by 27 percent beginning Octber 1, 2017. Great Lakes expects that the impact frm ther changes, including: the recent lng-term transprtatin cntract with TransCanada as described abve, ther revenue pprtunities n the system and the eliminatin f the revenue sharing mechanism with its custmers, will mre than ffset the full year impact f the reductin in Great Lakes rates beginning in 2018. The 2017 Great Lakes Settlement des nt cntain any mratrium and Great Lakes will be required t file fr new rates n later than March 31, 2022, with new rates t be effective Octber 1, 2022. 2
Page 3 Nrthern Brder Rate Case- Nrthern Brder and its shippers have been engaged in settlement discussins, and have recently agreed t a settlement-in-principle addressing all rate and service related issues raised during the settlement discussins. Nrthern Brder plans t file a settlement agreement with FERC befre the end f the year, reflecting the settlement-in-principle, precluding the need t file a general rate case as cntemplated by its 2012 Settlement. Nrthern Brder anticipates that the Cmmissin will accept the settlement agreement and that it will be unppsed. This will prvide Nrthern Brder with rate stability ver the lnger term. At this time, we d nt believe that the final utcme f the settlement will have a material impact t the Partnership s results. Nrthern Brder remains a key cmpetitive pipeline and cntinues t perate at full capacity cnnecting majr supply basins with cmmunities in the Midwestern U.S. Prtland XPress Prject- PNGTS has executed Precedent Agreements with several Lcal Distributin Cmpanies (LDCs) in New England and Atlantic Canada t re-cntract certain system capacity set t expire in 2019 as well as expand the PNGTS system t bring its certificated capacity up t 0.3 Bcf/d. The apprximately $80 millin Prtland XPress Prject (PXP) will prceed cncurrently with upstream capacity expansins. The in-service dates f PXP are being phased-in ver a three-year perid beginning Nvember 1, 2018. Results f Operatins Fr the three mnths ended September 30, 2017, ur net incme attributable t cntrlling interests was lwer by $4 millin cmpared t the prir perid due t the net effect f lwer revenues and verall higher csts that were partially ffset by higher equity earnings. Revenues were lwer due t lwer discretinary revenues n shrt-term services sld by PNGTS. Increase in equity earnings was primarily due t the additin f equity earnings frm Irquis Gas Transmissin System (Irquis), resulting frm the additin f Irquis t ur prtfli f assets effective June 1, 2017 partially ffset by lwer equity earnings frm Nrthern Brder and Great Lakes due t higher pipeline integrity prgram spending and ther perating csts. The increase in pipeline integrity wrk at Great Lakes is in relatin t the increase in natural gas flws which have been ramping up during the year. The increase in ur perating csts was mainly attributable t higher pipeline integrity n Gas Transmissin Nrthwest LLC (GTN) and verall higher allcated management and peratinal expenses n ur pipeline systems as perfrmed by TransCanada. Interest expense increased primarily due t the additinal brrwings t finance the June 1, 2017 acquisitin f a 49.34 percent interest in Irquis and an additinal 11.81 percent interest in PNGTS frm subsidiaries f TransCanada. Our verall EBITDA was cmparable t the same perid in 2016. The slight increase was the result f the additin f ur equity interest in Irquis effective June 1, 2017 ffset by lwer revenues and increase in ur perating csts. Distributable cash flw decreased by $4 millin in the third quarter f 2017 cmpared t the same perid in 2016 primarily due t the net effect f: additin f ur 49.34 percent share f Irquis third quarter 2017 distributin; lwer distributins frm ur equity investment in Great Lakes and Nrthern Brder primarily due t their higher pipeline integrity and ther perating csts higher maintenance capital expenditures, the majrity f which related t majr cmpressin equipment verhauls n GTN s pipeline system; higher financing csts due t additinal brrwings t finance ur mst recently cmpleted acquisitin; higher incentive distributins declared t ur General Partner during the current perid; and lwer distributins allcable t the Class B units during the current perid. 3
Page 4 Cash Flw Analysis Operating Cash Flws Net cash prvided by perating activities decreased by $21 millin in the nine mnths ended September 30, 2017 cmpared t the same perid in 2016 primarily due t lwer distributins frm Great Lakes and Nrthern Brder in 2017 partially ffset by distributins received frm Irquis, resulting frm the additin f Irquis t ur prtfli f assets effective June 1, 2017. Distributins received in the first quarter f 2016 frm Great Lakes were higher than n a run-rate basis due t the reslutin f certain regulatry prceedings in the furth quarter f 2015 which inflated its results during that perid and resulted in higher cash flw which was paid t the Partnership in the first quarter f 2016 and nt applicable in the first quarter f 2017. Additinally, the Partnership received lwer distributins frm Nrthern Brder in the current perid cmpared t the same perid in 2016 primarily due t higher maintenance capital expenditures during the current 2017 perid tgether with the change in Nrthern Brder s distributin plicy during 2016 frm a lagged quarterly distributin t a mre timely mnthly distributin that resulted in a larger distributin in the third quarter f 2016. Investing Cash Flws Net cash used in investing activities increased by $541 millin in the nine mnths ended September 30, 2017 cmpared t the same perid in 2016. On January 1, 2016, we invested $193 millin t acquire a 49.9 percent interest in PNGTS and n June 1, 2017, we invested $593 millin t acquire a 49.34 percent interest in Irquis and $53 millin t acquire an additinal 11.81 percent f PNGTS. During the nine mnths ended September 30, 2017 cmpared t 2016, we incurred higher maintenance capital expenditures related t majr cmpressin equipment verhauls n GTN s pipeline system and n September 1, 2017, we cntributed $83 millin t Nrthern Brder representing ur 50 percent share f a requested capital cntributin t reduce the utstanding balance f its revlving credit facility. Financing Cash Flws The net change in cash frm ur financing activities was apprximately $549 millin in the nine mnths ended September 30, 2017 cmpared t the same perid in 2016 primarily due t the net effect f: $564 millin increase in net issuances f debt in 2017 primarily t finance the June 1, 2017 acquisitin f a 49.34 percent interest in Irquis and an additinal 11.81 percent interest in PNGTS frm subsidiaries f TransCanada; $8 millin increase in ur ATM equity issuances in 2017 as cmpared t 2016; $26 millin increase in distributins paid t ur cmmn units and t ur General Partner in respect f its tw percent general partner interest and IDRs; $10 millin increase in distributins paid t Class B units in 2017 as cmpared t 2016; $7 millin decrease in distributins paid t nn-cntrlling interest due t lwer revenues n PNGTS cmpared t the previus perids; and $8 millin decrease in distributins paid t TransCanada as the frmer parent f PNGTS primarily due t the Partnership s acquisitin f a 49.9 percent interest in PNGTS effective January 1, 2016 and additinal 11.81 percent effective June 1, 2017. At September 30, 2017, the Partnership s available brrwing capacity under its $500 millin credit facility was $245 millin. Nn-GAAP Financial Measures The fllwing nn-gaap financial measures are presented as a supplement t ur financial statements: EBITDA Ttal distributable cash flw 4
Page 5 Distributable cash flw EBITDA is an apprximate measure f ur perating cash flw during the current earnings perid and recnciles directly t the net incme amunt presented. It measures ur earnings befre deducting interest, depreciatin and amrtizatin and net incme attributable t nn-cntrlling interests and includes earnings frm ur equity investments. Ttal distributable cash flw and distributable cash flw prvide measures f distributable cash generated during the current earnings perid and recncile directly t the net incme amunts presented. Ttal distributable cash flw includes EBITDA plus: Distributins frm ur equity investments less: Earnings frm ur equity investments, Equity allwance fr funds used during cnstructin (Equity AFUDC), Interest expense, Distributins t nn-cntrlling interests, Distributins t TransCanada as the frmer parent f PNGTS and Maintenance capital expenditures frm cnslidated subsidiaries. Distributable cash flw is cmputed net f distributins declared t the General Partner and distributins allcable t Class B units. Distributins declared t the General Partner are based n its effective tw percent interest plus an amunt equal t incentive distributins. Distributins allcable t the Class B units equal 30 percent f GTN s distributable cash flw fr the year ended December 31, 2017 less $20 millin (2016 - less $20 millin). The nn-gaap financial measures described abve are perfrmance measures presented t assist investrs in evaluating ur business perfrmance. We believe these measures prvide additinal meaningful infrmatin in evaluating ur financial perfrmance and cash generating capacity. The nn-gaap financial measures presented as part f this release are prvided as a supplement t GAAP financial results and are nt meant t be cnsidered in islatin r as substitutes fr financial infrmatin prepared in accrdance with GAAP. Additinally, these measures as presented may nt be cmparable t similarly titled measures f ther cmpanies. Fr a recnciliatin f these nn-gaap financial measures t GAAP measures, please see the table captined "Recnciliatin f Net incme t Distributable Cash Flw included at the end f this release. Cnference Call Members f the investment cmmunity and ther interested parties are invited t participate in a telecnference by calling 800.377.0758 n Mnday, Nvember 6, 2017 at 10 a.m. Central time (CST)/11 a.m. Eastern time (EST). Brandn Andersn, President f the General Partner, will discuss the third quarter financial results and prvide an update n the Partnership s business, fllwed by a questin and answer sessin. Please dial in 10 minutes prir t the start f the call. N pass cde is required. A live webcast f the cnference call will als be available thrugh the Partnership s website at www.tcpipelineslp.cm. Slides fr the presentatin will be psted n the Partnership s website under Events and Presentatins prir t the webcast. A replay f the telecnference will als be available tw hurs after the cnclusin f the call and until 11 p.m. (CST) and midnight (EST) n Nvember 13, 2017, by calling 800.408.3053, then entering pass cde 5122153#. Abut TC PipeLines, LP 5
Page 6 TC PipeLines, LP is a Delaware master limited partnership with interests in eight federally regulated U.S. interstate natural gas pipelines which serve markets in the Western, Midwestern and Nrtheastern United States. The Partnership is managed by its general partner, TC PipeLines GP, Inc., a subsidiary f TransCanada Crpratin (NYSE: TRP). Fr mre infrmatin abut TC PipeLines, LP, visit the Partnership s website at www.tcpipelineslp.cm. Frward-Lking Statements Certain nn-histrical statements in this release relating t future plans, prjectins, events r cnditins are intended t be frward-lking statements. These statements are based n current expectatins and, therefre, subject t a variety f risks and uncertainties that culd cause actual results t differ materially frm the prjectins, anticipated results r ther expectatins expressed in this release, including, withut limitatin t csts f cmpliance with newly enacted regulatins, the timing, terms and clsing f future acquisitins f additinal natural gas pipeline assets and the ability f these assets t generate nging value t ur unithlders, verall increase in the allcated management and peratinal expenses n ur pipeline systems as perfrmed by TransCanada, impact f ptential impairment charges, decreases in demand n ur pipeline systems, increases in perating and cmpliance csts, the utcme f rate prceedings, the impact f recently issued and future accunting updates and ther changes in accunting plicies, ur ability t identify and cmplete expansin and grwth pprtunities, perating hazards beynd ur cntrl, disruptin in the debt and equity markets that negatively impacts the Partnership s ability t finance its capital spending. These and ther factrs that culd cause future results t differ materially frm thse anticipated are discussed in Item 1A in ur Annual Reprt n Frm 10-K fr the year-ended December 31, 2016 filed with the Securities and Exchange Cmmissin (the SEC), as updated and supplemented by subsequent filings with the SEC. All frward-lking statements are made nly as f the date made and except as required by applicable law, we undertake n bligatin t update any frward-lking statements t reflect new infrmatin, subsequent events r ther changes. Media Inquiries: Mark Cper/Grady Semmens 403.920.7859 r 800.608.7859 Unithlder and Analyst Inquiries: Rhnda Amundsn 877.290.2772 investr_relatins@tcpipelineslp.cm 30 6
Page 7 TC PipeLines, LP Financial Summary Cnslidated Statements f Incme Three mnths ended Nine mnths ended (unaudited) September 30, September 30, (millins f dllars, except per cmmn unit amunts) 2017 2016 (a) 2017 2016 (a) Transmissin revenues 100 103 313 315 Equity earnings 27 22 87 75 Operatin and maintenance expenses (16) (15) (47) (42) Prperty taxes (7) (7) (21) (20) General and administrative (1) (1) (6) (5) Depreciatin (25) (24) (73) (71) Financial charges and ther (23) (18) (59) (53) Net incme befre taxes 55 60 194 199 Incme taxes - - (1) (1) Net incme 55 60 193 198 Net incme attributable t nn-cntrlling interests 1 2 7 10 Net incme attributable t cntrlling interests 54 58 186 188 Net incme attributable t cntrlling interest allcatin Cmmn units 42 43 164 164 General Partner 4 4 12 9 TransCanada and its subsidiaries 8 11 10 15 54 58 186 188 Net incme per cmmn unit basic and diluted (b) $0.61 $0.65 (c) $2.38 $2.51 (c) Weighted average cmmn units utstanding basic and diluted (millins) 69.4 66.1 68.9 65.3 Cmmn units utstanding, end f perid (millins) 69.6 66.6 69.6 66.6 (a) (b) (c) Financial infrmatin was recast t cnslidate PNGTS fr all perids presented. Fr mre infrmatin, refer t ur Quarterly Reprt n Frm 10-Q fr the perid ended September 30, 2017, as filed with the SEC. Prir t the recast assciated with the 2017 Acquisitin, ur net incme attributable t cntrlling interests was $58 millin and $185 millin fr the three and nine mnths ended September 30, 2016, respectively, reflecting ur 49.9 percent wnership in PNGTS. After the recast, net incme attributable t cntrlling interests was $58 millin and $188 millin fr the three and nine mnths ended September 30, 2016, respectively, reflecting ur 61.7 percent wnership in PNGTS. Net incme attributable t PNGTS frmer parent f $nil millin and $3 millin, reflecting the 11.81 percent interest nt then wned by the Partnership, fr the three and nine mnths ended September 30, 2016, respectively, recnciles the net incme as previusly reprted with that after the recast. Net incme per cmmn unit is cmputed by dividing net incme attributable t cntrlling interests, after deductin f amunts attributable t PNGTS frmer parent, amunts attributable t the General Partner and Class B units, by the weighted average number f cmmn units utstanding. The amunt allcable t the General Partner equals an amunt based upn the General Partner s effective tw percent general partner interest, plus an amunt equal t incentive distributin rights. Fr the year ended December 31, 2017, the amunt allcable t the Class B units is equal t 30 percent f GTN s annual distributable cash flw, less the threshld amunt f $20 millin (2016 - $20 millin). During the three and nine mnths ended September 30, 2017, the amunt allcated t the Class B units was $8 millin. During the three and nine mnths ended September 30, 2016 the amunt allcated t the Class B units was $11 and 12 millin, respectively, Net Incme per cmmn unit prir t recast. 7
Page 8 TC PipeLines, LP Financial Summary Cnslidated Balance Sheets (unaudited) (millins f dllars) September 30, 2017 December 31, 2016 (a) ASSETS Current Assets Cash and cash equivalents 73 64 Accunts receivable and ther 35 47 Inventries 7 7 Other 6 7 121 125 Equity investments 1,207 918 Plant, prperty and equipment (Net f $1,158 accumulated depreciatin; 2016 - $1,088) 2,133 2,180 Gdwill 130 130 Other assets - 1 3,591 3,354 LIABILITIES AND PARTNERS EQUITY Current Liabilities Accunts payable and accrued liabilities 31 29 Accunts payable t affiliates 5 8 Distributin payable - 3 Accrued interest 21 10 Current prtin f lng-term debt 51 52 108 102 Lng-term debt, net 2,427 1,859 Deferred state incme taxes 10 10 Other liabilities 28 28 2,573 1,999 Cmmn units subject t rescissin (b) - 83 Partners Equity Cmmn units 790 1,002 Class B units 103 117 General partner 23 27 Accumulated ther cmprehensive lss - (2) Cntrlling interests 916 1,144 Nn-cntrlling interests 102 97 Equity f frmer parent f PNGTS - 31 1,018 1,272 3,591 3,354 8
Page 9 (a) (b) Financial infrmatin was recast t cnslidate PNGTS fr all perids presented. Fr mre infrmatin refer t ur Quarterly Reprt n Frm 10-Q fr the perid ended September 30, 2017, as filed with the SEC. In cnnectin with the late filing f an emplyee-related Frm 8-K with the SEC, we may have been ineligible t use the theneffective shelf registratin statement upn the filing f ur 2015 Frm 10-K. As a result, it was determined that the 1.6 millin cmmn units that were issued frm March 8, 2016 t May 19, 2016, inclusive, under ur ATM prgram may have had a rescissin right fr an amunt equal t the purchase price paid fr the units, plus statutry interest and less any distributins paid, upn the return f the units t us. The rescissin rights related t these units expired apprximately ne year frm the date f purchase f the units. At December 31, 2016, $83 millin was recrded as cmmn units subject t rescissin n the cnslidated balance sheet. This represents all f the 1.6 millin cmmn units sld under the ATM prgram frm March 8, 2016 t May 19, 2016, inclusive, which may have been subject t rescissin rights. The separatin n the balance sheet placed these units utside f equity given the ptential redemptin feature which was nt within the cntrl f the Partnership. N unithlder claimed r attempted t exercise any rescissin rights prir t their expiry dates and the final rights related t the sales f such units expired n May 19, 2017. As a result f the expiratin f these rights, the $83 millin was reclassified back t partners equity. At September 30,2017, there were n utstanding cmmn units subject t rescissin n the Partnership s cnslidated balance sheet. Fr mre infrmatin, refer t ur Quarterly Reprt n Frm 10-Q fr the perid ended September 30, 2017 as filed with the SEC. 9
Page 10 Cnslidated Statement f Cash Flws TC PipeLines, LP Financial Summary Nine mnths ended (unaudited) September 30, (millins f dllars) 2017 2016 (a) Cash Generated Frm Operatins Net incme 193 198 Depreciatin 73 71 Amrtizatin f debt issue csts reprted as interest expense 1 1 Amrtizatin f realized lss n derivative instrument 1 1 Deferred state incme tax recvery - - Equity earnings frm equity investments (b) (87) (75) Distributins received frm perating activities f equity investments (b) 106 125 Change in perating wrking capital 24 11 311 332 Investing Activities Investment in Nrthern Brder (83) - Investment in Great Lakes Distributin received as return f investment Acquisitin f a 49.9 percent interest in PNGTS (4) 3 - (4) - (193) Acquisitin f a 49.34 percent in Irquis and an additinal 11.81 percent in PNGTS (646) - Capital expenditures (26) (21) Other - 3 (756) (215) Financing Activities Distributins paid (210) (184) Distributins paid t Class B units (22) (12) Distributins paid t nn-cntrlling interests (5) (12) Distributins paid t frmer parent f PNGTS (1) (9) Cmmn unit issuance, net 126 35 Cmmn unit issuance subject t rescissin, net - 83 Lng-term debt issued, net f discunt 732 200 Lng-term debt repaid (164) (196) Debt issuance csts (2) - 454 (95) Decrease in cash and cash equivalents 9 22 Cash and cash equivalents, beginning f perid 64 55 Cash and cash equivalents, end f perid 73 77 (a) Financial infrmatin was recast t cnslidate PNGTS fr all perids presented. Fr mre infrmatin, refer t ur Quarterly Reprt n Frm 10-Q fr the perid ended September 30, 2017, as filed with the SEC. (b) In August 2016, the Financial Accunting Standards Bard issued Accunting Standards Update N. 2016-15 Statement f Cash Flws (Tpic 230): Classificatin f Certain Cash Receipts and Cash Payments, an amendment f previusly issued guidance, which intends t reduce diversity in practice as t hw certain transactins are classified in the statement f cash flws. The new guidance is effective January 1, 2018, hwever as early adptin is permitted, the Partnership elected t retrspectively apply this guidance effective December 31, 2016. The Partnership has elected t classify distributins received frm equity methd investees using the nature f distributins apprach as it is mre representative f the nature f the underlying activities f the investees that generated the distributins. As a result, certain cmparative perid distributins, received frm equity methd investees, amunting t $50 millin fr the nine mnths ended September 30, 2016 have been reclassified frm investing activities t cash generated frm peratins in the cnslidated statement f cash flws. 10
TC PipeLines, LP Supplemental Schedule Nn-GAAP Measures Recnciliatins f Net incme t Distributable Cash Flw Three mnths ended Nine mnths ended (unaudited) September 30, September 30, (millins f dllars) 2017 2016 (a) 2017 2016 (a) Net incme 55 60 193 198 Add: Interest expense (b) 23 18 60 55 Depreciatin and amrtizatin 25 24 73 71 Incme taxes - - 1 1 EBITDA 103 102 327 325 Add: Distributins frm equity investments (c) Nrthern Brder 21 23 61 67 Great Lakes 1 5 28 28 Irquis (d) 14-28 - 36 28 117 95 Less: Equity earnings: Nrthern Brder (16) (18) (50) (52) Great Lakes (2) (4) (24) (23) Irquis (9) - (13) - (27) (22) (87) (75) Less: Interest expense (b) (23) (18) (60) (55) Incme taxes - - (1) (1) Distributins t nn-cntrlling interests (e) (2) (3) (10) (11) Distributins t TransCanada as PNGTS frmer parent (f) - - (1) (3) Maintenance capital expenditures (g) (9) (3) (26) (9) (34) (24) (98) (79) Page 11 Ttal Distributable Cash Flw 78 84 259 266 General Partner distributins declared (h) (5) (4) (13) (9) Distributins allcable t Class B units (i) (8) (11) (8) (12) Distributable Cash Flw 65 69 238 245 11
Page 12 (a) Financial infrmatin was recast t cnslidate PNGTS fr all perids presented. Accrdingly, the ttal distributable cash flw fr the three and nine mnths ended September 30, 2016 did nt change frm the amunts reprted prir t recast. (b) Interest expense as presented includes net realized lss related t the interest rates swaps and amrtizatin f realized lss n PNGTS derivative instruments. Fr mre infrmatin, refer t ur Quarterly Reprt n Frm 10-Q fr the perid ended September 30, 2017, as filed with the SEC. (c) Amunts are calculated in accrdance with the cash distributin plicies f each f ur equity investments. Distributins frm ur equity investments represent ur respective share f these entities quarterly distributable cash during the current reprting perid. (d) These amunts represent ur prprtinal 49.34 percent share f the distributin declared by ur equity investee Irquis during the current reprting perid and includes ur 49.34 percent share f the Irquis unrestricted cash distributin amunting t apprximately $2.6 millin and $5.2 millin fr the three and nine mnths ending September 30, 2017, respectively. Fr mre infrmatin, refer t ur Quarterly Reprt n Frm 10-Q fr the perid ended September 30, 2017, as filed with the SEC. (e) Distributins t nn-cntrlling interests represent the respective share f ur cnslidated entities distributable cash nt wned by us during the perids presented. (f) Distributins t TransCanada as PNGTS frmer parent represent TransCanada s respective share f PNGTS distributable cash nt wned by us during the perids presented. (g) The Partnership s maintenance capital expenditures include cash expenditures made t maintain, ver the lng term, the perating capacity, system integrity and reliability f ur pipeline assets. This amunt represents the Partnership s and its cnslidated subsidiaries maintenance capital expenditures and des nt include the Partnership s share f maintenance capital expenditures fr ur equity investments. Such amunts are reflected in Distributins frm equity investments as thse amunts are withheld by thse entities frm their quarterly distributable cash. (h) Distributins declared t the General Partner fr the three and nine mnths ended September 30, 2017 included an incentive distributin f apprximately $3 millin and $9 millin, respectively (September 30, 2016 $2 millin and $5 millin). (i) During the nine mnths ended September 30, 2017, 30 percent f GTN s ttal distributins amunted t $28 millin. As a result f exceeding the $20 millin threshld during this quarter, $8 millin was allcated t the Class B units fr bth the three and nine mnths ended September 30, 2017. During the nine mnths ended September 30, 2016, 30 percent f GTN s ttal distributins amunted t $32 millin. As a result f exceeding the $20 millin threshld since the end f the secnd quarter f 2016, $12 millin was allcated t the Class B units at September 30, 2016, f which $1 millin and $11 millin were allcated during the three mnths ended June 30, 2016 and September 30, 2016, respectively. 12