Fort Chicago announces 2009 fourth quarter and annual results, and updated
2010 guidance
/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES./
Trading Symbol: FCE.UN Exchange: TSX
CALGARY, March 2 /CNW/ - Fort Chicago Energy Partners L.P. ("Fort Chicago" or "the Partnership") today announced its results for the three and 12 months ended December 31, 2009. Mr. Stephen H. White, President and Chief Executive Officer commented, "We are pleased with our performance in 2009. Our pipeline and NGL businesses either met or exceeded our expectations by generating strong results from operations. Our power business was also on track to report solid financial results, but was dealt a regulatory setback in California in August, which resulted in our taking a significant non-cash charge this quarter."
Highlights for the Three Months and Year Ended December 31, 2009 - Net income for the year of $37.6 million or $0.28 per Unit - Adjusted net income for the year of $83.5 million or $0.61 per Unit - Distributable cash for the year of $149.1 million or $1.10 per Unit - Cash from operating activities for the year of $210.7 million - Net loss for the three months of $24.5 million or $0.18 per Unit - Adjusted net income for the three months of $19.2 million or $0.14 per Unit - Distributable cash for the three months of $34.0 million or $0.25 per Unit - Cash from operating activities for the three months of $43.7 million - Aux Sable acquired Septimus Gas Plant in December - Construction of East Windsor Cogeneration Facility completed and placed into service in November - Acquisition of Glen Park hydro-power generation facility announced in December Financial Highlights ------------------------------------------------------------------------- Three months ended Year ended December 31 December 31 ------------------------------------------------------------------------- ($ Thousands, except per Unit amounts) 2009 2008 2009 2008 ------------------------------------------------------------------------- Revenues Pipeline(1) 110,269 116,963 422,912 426,999 NGL 57,534 28,291 149,709 180,351 Power 18,027 23,187 75,709 93,429 Fort Chicago - Corporate 43 188 803 651 ------------------------------------------------------------------------- 185,873 168,629 649,133 701,430 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income (loss) before tax Pipeline 25,383 26,096 105,923 113,897 NGL 27,393 (1,601) 50,805 63,926 Power (82,866) (26,658) (81,346) (17,001) Fort Chicago - Corporate (16,215) (18,822) (46,093) (72,167) ------------------------------------------------------------------------- (46,305) (20,985) 29,289 88,655 Tax recovery (expense) 21,851 3,036 8,286 (27,156) ------------------------------------------------------------------------- Net income (loss) (24,454) (17,949) 37,575 61,499 Per Unit ($) (0.18) (0.13) 0.28 0.46 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Net of intersegment eliminations.
For the three months ended December 31, 2009, Fort Chicago incurred a net loss of $24.5 million or $0.18 per Unit compared to a net loss of $17.9 million or $0.13 per Unit for the same period in 2008. The decrease is attributable to a non-cash asset impairment loss of $78.1 million recorded in the fourth quarter of 2009. Fort Chicago's California cogeneration facilities were adversely affected by a regulatory energy pricing decision. Consequently, under accounting standards Fort Chicago was required to write down the book value of these assets. The net loss for the fourth quarter of 2008 included an impairment loss of $21.1 million arising from Fort Chicago's write down of goodwill. The increased net loss for the fourth quarter of 2009 was partially offset by:
- a $9.5 million gain relating to Aux Sable's liability settlement in association with its off-gas facility; - a net $24.9 million tax recovery relating to the asset impairment loss and Aux Sable's settlement gain; and - a $20.1 million increase in margin-based lease revenues recognized by Aux Sable, from $0.3 million in the fourth quarter of 2008 to $20.4 million in the fourth quarter of 2009. Fractionation margins for the fourth quarter of 2009 were considerably higher than during the same period of the prior year, when the economic downturn severely weakened NGL market conditions. For the year ended December 31, 2009, net income was $37.6 million or $0.28 per Unit compared to $61.5 million or $0.46 per Unit for 2008. In addition to the effect of the fourth quarter asset impairment loss discussed above, the decrease in net income reflects: - an $18.4 million decrease in margin-based lease revenues, from $67.7 million in 2008 to $49.3 million in 2009, as 2009 NGL market conditions did not reach the record levels of the first nine months of 2008; and - the absence of non-recurring gains recognized in the first quarter of 2008 relating to Alliance's cash settlement with Calpine Energy Services Canada Partnership and a non-cash gain arising from the dilution of the Partnership's ownership interest in Pristine Power Inc. These decreases were partially offset by a $19.8 million reduction in the deemed realization of corporate foreign exchange losses previously deferred and recorded in other comprehensive income. ------------------------------------------------------------------------- Three months ended Year ended December 31 December 31 ------------------------------------------------------------------------- ($ Thousands, except per Unit amounts) 2009 2008 2009 2008 ------------------------------------------------------------------------- Adjusted net income (loss) before tax(2) Pipeline 25,383 26,096 105,923 103,877 NGL 17,921 (1,601) 41,333 63,926 Power (4,815) (5,553) (853) (96) Fort Chicago - Corporate (16,215) (18,822) (46,093) (72,167) ------------------------------------------------------------------------- 22,274 120 100,310 95,540 Tax recovery (expense) (3,052) 3,036 (16,771) (23,436) ------------------------------------------------------------------------- Adjusted net income 19,222 3,156 83,539 72,104 Per Unit ($) 0.14 0.02 0.61 0.54 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (2) This item is not a standard measure under GAAP and may not be comparable to similar measures presented by other entities. See reconciliation of adjusted net income to net income in the schedules attached to this news release. For more information about non-GAAP measures used by Fort Chicago, see the section entitled "Non-GAAP Financial Measures" contained in Fort Chicago's 2009 Management's Discussion and Analysis.
Adjusted net income for the three months ended December 31, 2009, which excludes non-recurring items, was $19.2 million or $0.14 per Unit compared to $3.2 million or $0.02 per Unit for the same period last year, primarily reflecting a $20.1 million increase in Aux Sable's margin-based lease revenues. Fourth quarter adjusted net income from the Partnership's pipeline and power businesses was consistent with the same period last year.
Adjusted net income for the year ended December 31, 2009 was $83.5 million or $0.61 per Unit compared to $72.1 million or $0.54 per Unit for 2008, primarily reflecting a significant decrease in the deemed realization of corporate foreign exchange losses previously deferred and recorded in other comprehensive income. This was partially offset by an $18.4 million decrease in margin-based lease revenues from Aux Sable, reflecting the year-over-year change in NGL market conditions. 2009 adjusted net income from the Partnership's pipeline and power businesses was consistent with last year.
------------------------------------------------------------------------- Three months ended Year ended December 31 December 31 ------------------------------------------------------------------------- ($ Thousands, except per Unit amounts) 2009 2008 2009 2008 ------------------------------------------------------------------------- Distributable cash(3) Pipeline 32,650 33,151 134,413 137,228 NGL 18,934 579 45,584 69,504 Power (2,006) 856 14,841 9,943 Fort Chicago - Corporate (9,760) (7,507) (29,812) (32,213) Taxes (5,817) (4,595) (15,959) (24,313) ------------------------------------------------------------------------- 34,001 22,484 149,067 160,149 ------------------------------------------------------------------------- Per Unit 0.25 0.17 1.10 1.20 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cash from operating activities 43,687 39,279 210,743 262,612 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (3) This item is not a standard measure under GAAP and may not be comparable to similar measures presented by other entities. See reconciliation of distributable cash to cash from operating activities in the schedules attached to this news release. For more information about Non-GAAP measures used by Fort Chicago, see the section entitled "Non-GAAP Financial Measures" contained in Fort Chicago's 2009 Management's Discussion and Analysis. Distributable cash for the three months ended December 31, 2009 was $34.0 million or $0.25 per Unit compared to $22.5 million or $0.17 per Unit for the same period in 2008. The increase primarily reflects: - significantly higher distributions from Aux Sable, due to the recovery of NGL market conditions in 2009 from the severe downward shift experienced in the fourth quarter of 2008; partially offset by: - lower energy margins from the power business, which was adversely affected by a regulatory decision and higher maintenance capital expenditures at the California cogeneration facilities; - higher corporate costs due to increased administration and business development activity and interest associated with the $200 million senior notes issued by the Partnership in July 2009; and - higher cash taxes associated with increased Aux Sable earnings. Distributions from the Partnership's pipeline business approximated amounts generated during the same period last year. Distributable cash for the year ended December 31, 2009 was $149.1 million or $1.10 per Unit compared to $160.1 million or $1.20 per Unit for 2008. The decrease primarily reflects: - lower distributions from Aux Sable, which generated record levels of cash flows in the first nine months of 2008; - lower distributions from Alliance due to the absence of funds received in the first quarter of 2008 from the Calpine settlement, partially offset by the effect of the weaker Canadian dollar in 2009; partially offset by: - higher distributable cash from the power business, as incremental cash flows from the London cogeneration facility and Brush, combined with lower maintenance capital costs in 2009 more than offset the lower energy margins earned at the California facilities in the latter half of the year; - lower corporate costs, primarily reflecting lower interest costs for the year and the impact of a realized foreign exchange gain; and - lower cash taxes associated with decreased Aux Sable earnings.
Fort Chicago generated cash from operating activities of $43.7 million for the three months ended December 31, 2009, a $4.4 million increase from the same period of the prior year as increased operating cash flows from Aux Sable offset lower operating cash flows from Alliance and higher corporate cash outflows.
For the year ended December 31, 2009, Fort Chicago generated cash from operating activities of $210.7 million compared to $262.6 million for the prior year. This decrease reflects significantly lower operating cash flows from Aux Sable due to overall NGL market conditions and increased cash outflows from corporate activities, reflecting a significant income tax payment in the first quarter of 2009 related to Aux Sable's 2008 earnings.
Regulatory Change in California Energy Pricing
In August 2009, the California Public Utilities Commission ("CPUC") released a decision on Short Run Avoided Cost ("SRAC") energy pricing for certain power facilities, including the Partnership's Ripon and San Gabriel cogeneration facilities. "The profitability of our California power assets was adversely impacted by a regulatory decision issued by the CPUC," commented Mr. White. "The SRAC changes make it less economic for us to dispatch electricity from these facilities. As a result, we expect annual cash flows to be lower by US$3 million to US$4 million going forward. Importantly, the regulator did not alter capacity payment calculations, which is the primary source of cash flows for these facilities."
"When this kind of change occurs, we are required to reassess the value of the affected assets for accounting purposes. The financial statement impact is a significant, one-time non-cash write down in the value of our California power facilities, offsetting a large portion of our other 2009 earnings. I am very disappointed we have had to cap an otherwise strong year with this sizable write down."
Key Accomplishments
"Our biggest power business-related achievement was completing the 86 megawatt East Windsor Cogeneration facility in November," commented Mr. White. "This new power facility, in which we hold a 50 percent ownership interest, will generate highly predictable cash flows under a 20-year contract with the Ontario Power Authority. This achievement was the culmination of years of hard work."
In December 2009, the Partnership announced an agreement to acquire the Glen Park facility, a 33 megawatt run-of-river hydro-power generation facility located on the Black River in upstate New York. "This long-life, environmentally-friendly facility will contribute a new source of cash flow for our business," said Mr. White. "The power business provides an important growth platform for Fort Chicago and we are committed to finding new opportunities to increase the value of this business segment.
Alliance continues to focus on expanding its reach and the value of its unique rich-gas system. Alliance and Aux Sable are working collaboratively to find new sources of liquids-rich gas to process at the Channahon facility. The massive shale gas discoveries in the Montney region of British Columbia and solution gas associated with the shale oil discoveries in the Bakken region of Saskatchewan and North Dakota provide exciting new opportunities for Alliance and Aux Sable.
A significant development in this area is the Prairie Rose Pipeline, developed by Pecan Pipeline (North Dakota) Inc. Pecan and Alliance have executed a 10-year firm transportation contract under which Pecan is delivering high heat content natural gas from the Bakken to Aux Sable's Channahon facility for processing through Prairie Rose's interconnection with Alliance.
Another important step in this direction is the strategic partnership Aux Sable developed with Crew Energy Inc. This partnership led to Aux Sable purchasing the Septimus Gas Plant from Crew in December 2009. The plant is located in the liquids-rich Montney region. Aux Sable is further leveraging its position by constructing a 20-inch, 20-kilometre gas pipeline. The pipeline is expected to be in service in the second quarter of 2010. It will transport sweet, rich gas from Septimus to an interconnection point on the Alliance pipeline for ultimate delivery to Channahon. Aux Sable and Crew are exploring other related initiatives, including expanding the capacity of the Septimus plant.
"While the advent of shale gas in the Montney and Bakken regions will benefit Alliance and Aux Sable, natural gas from the shale regions of North America could affect the ultimate timing of our LNG terminal and related gas pipeline projects, Jordan Cove and Pacific Connector," said Mr. White. In December, Jordan Cove and Pacific Connector reached significant project milestones, each receiving U.S. Federal Energy Regulatory Commission approval to construct and operate their respective facilities. "Further development of these facilities is dependent on our ability to secure necessary commercial commitments to drive the projects forward."
Updated 2010 Guidance
Fort Chicago today updated its guidance for 2010 distributable cash to be in the range of $0.85 per Unit to $1.30 per Unit, increasing the low end of the range from previously issued guidance by $0.05 per Unit. The updated range reflects Aux Sable's solid start to 2010 and an incremental contribution expected from the Glen Park acquisition. The updated guidance range also reflects an increase in the expected number of Units outstanding for 2010, as the forecast assumes Fort Chicago will leave its Distribution Reinvestment Plan activated for the remainder of 2010. Further details concerning 2010 guidance can be found in the "Investor Information" section of Fort Chicago's website - www.fortchicago.com.
Webcast
Fort Chicago Energy Partners L.P. will hold a conference call and webcast at 9:00 a.m. Mountain time (11:00 a.m. Eastern time) on Wednesday, March 3, 2010, to discuss the 2009 fourth quarter and annual results. The call can be accessed at 1-888-231-8191 or 1-647-427-7450 (conference ID 54742526) and will be broadcast live on the Internet. This can be accessed either through a link contained in the "Event" section located on the home page of Fort Chicago's website or through the following URL:
http://w.on24.com/r.htm?e=192215&s=1&k=C07D152ED6677363A125CCD96E9E82D2
A replay will be available shortly thereafter at 1-800-642-1687 and 1-416-849-0833. The access code is 54742526 (followed by the pound sign).
Fort Chicago is a publicly traded limited partnership based in Calgary, Alberta, that owns and operates energy infrastructure assets across North America. Its Class A Units are listed on the TSX under the symbol FCE.UN. Fort Chicago is engaged in three principal businesses: a pipeline transportation business comprised of interests in two pipeline systems, the Alliance Pipeline and the Alberta Ethane Gathering System; an NGL extraction business which includes a significant interest in a world-class extraction facility near Chicago; and a power business with cogeneration facilities in Ontario, Colorado and California, district energy systems in Ontario and Prince Edward Island and waste heat power facilities along the Alliance Pipeline. Fort Chicago and its businesses are also actively developing a number of greenfield investment opportunities that will be a key source of future growth, including LNG and pipeline facilities on the U.S. west coast, Alberta-based ethane and NGL extraction facilities, repowering and expansion opportunities at the California power facilities and a Nova Scotia-based underground natural gas storage and pipeline facilities.
Class A Unit Ownership Restrictions
Fort Chicago is organized in accordance with the terms and conditions of a limited partnership agreement which provides that no Class A Units may be transferred to, among other things, a person who is a "non-resident" of Canada, a person in which an interest would be a "tax shelter investment" or a partnership which is not a "Canadian partnership" for purposes of the Income Tax Act (Canada).
Certain information contained herein relating to, but not limited to, Fort Chicago and its businesses constitutes forward-looking information under applicable securities laws. All statements, other than statements of historical fact, which address activities, events or developments that Fort Chicago expects or anticipates may or will occur in the future, are forward-looking information. Forward-looking information typically contains statements with words such as "may", "estimate", "anticipate", "believe", "expect", "plan", "intend", "target", "project", "forecast" or similar words suggesting future outcomes or outlook. Forward-looking statements in this news release include, but are not limited to, statements with respect to: the sources of additional gas supplies for transportation on the Alliance pipeline; the potential expansion of Aux Sable's Septimus gas plant; the timing of in service for Aux Sable's Septimus pipeline; Fort Chicago's ability to realize its growth objectives; Fort Chicago's ability to secure commercial commitments for the Jordan Cove LNG terminal and Pacific Connector gas pipeline projects; the timing under which Fort Chicago's acquisition of the Glen Park facility will close; and the ability of each of its businesses to generate distributable cash in 2010. The risks and uncertainties that may affect the operations, performance, development and results of Fort Chicago's businesses include, but are not limited to, the following factors: the ability of Fort Chicago to successfully implement its strategic initiatives and achieve expected benefits; levels of oil and gas exploration and development activity; the status, credit risk and continued existence of contracted customers; the availability and price of capital; the availability and price of energy commodities; the availability of construction services and materials; fluctuations in foreign exchange and interest rates; Fort Chicago's ability to successfully obtain regulatory approvals; changes in tax, regulatory, environmental, and other laws and regulations; competitive factors in the pipeline, NGL and power industries; operational breakdowns, failures, or other disruptions; and the prevailing economic conditions in North America. Additional information on these and other risks, uncertainties and factors that could affect Fort Chicago's operations or financial results are included in its filings with the securities commissions or similar authorities in each of the provinces of Canada, as may be updated from time to time. Readers are also cautioned that the foregoing list of factors and risks is not exhaustive. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these factors are independent and management's future course of action would depend on its assessment of all information at that time. Although Fort Chicago believes that the expectations conveyed by the forward-looking information are reasonable based on information available on the date of preparation, no assurances can be given as to future results, levels of activity and achievements. Undue reliance should not be placed on the information contained herein, as actual result achieved will vary from the information provided herein and the variations may be material. Fort Chicago makes no representation that actual results achieved will be the same in whole or in part as those set out in the forward-looking information. Furthermore, the forward-looking statements contained herein are made as of the date hereof, and Fort Chicago does not undertake any obligation to update publicly or to revise any forward-looking information, whether as a result of new information, future events or otherwise. Any forward-looking information contained herein is expressly qualified by this cautionary statement.
Certain financial information contained in this news release may not be standard measures under Generally Accepted Accounting Principles ("GAAP") in Canada and may not be comparable to similar measures presented by other entities. These measures are considered to be important measures used by the investment community and should be used to supplement other performance measures prepared in accordance with GAAP in Canada. For further information on non-GAAP financial measures used by Fort Chicago see Management's Discussion and Analysis, in particular, the section entitled "Non-GAAP Financial Measures" contained in the annual Management Discussion and Analysis, filed by Fort Chicago with Canadian securities regulators.
Fort Chicago Energy Partners L.P. ------------------------------------------------------------------------- Consolidated Statement of Financial Position ------------------------------------------------------------------------- December 31, December 31, ($ Thousands; unaudited) 2009 2008 ------------------------------------------------------------------------- Assets Current assets Cash and short-term investments 57,945 53,308 Restricted cash 3,084 23,036 Transportation security deposits and revenue adjustments 8,538 7,989 Receivables 59,155 61,935 Inventory 5,071 3,913 Prepaid expenses and other 9,848 12,349 ------------------------------------------------------------------------- 143,641 162,530 Long-term receivables 351,629 273,392 Pipeline, plant and other capital assets 2,286,255 2,547,701 Intangible assets 59,647 121,267 Other assets 23,727 22,789 ------------------------------------------------------------------------- 2,864,899 3,127,679 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Liabilities Current liabilities Payables 91,264 112,623 Transportation security deposits 4,008 5,581 Distribution payable 6,406 11,162 Current portion of long-term senior debt 145,014 88,773 Subordinated convertible debentures and exchangeable debentures 49,302 25,717 ------------------------------------------------------------------------- 295,994 243,856 Long-term senior debt 1,534,689 1,753,503 Subordinated convertible debentures - 23,909 Future taxes 291,279 239,823 Other long-term liabilities 44,211 66,001 ------------------------------------------------------------------------- 2,166,173 2,327,092 ------------------------------------------------------------------------- Partners' Equity Partners' capital account 1,057,239 1,013,278 Cumulative other comprehensive loss (54,624) (7,306) Cumulative net income 583,718 546,143 Cumulative distributions (887,607) (751,528) ------------------------------------------------------------------------- 698,726 800,587 ------------------------------------------------------------------------- 2,864,899 3,127,679 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Fort Chicago Energy Partners L.P. ------------------------------------------------------------------------- Consolidated Statement of Income and Cumulative Income ------------------------------------------------------------------------- Three months ended Twelve months ended December 31 December 31 ------------------------------------------------------------------------- ($ Thousands, except per Unit amounts; unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Revenues Operating revenues 174,264 168,087 633,729 683,952 Interest and other 11,609 542 15,404 17,478 ------------------------------------------------------------------------- 185,873 168,629 649,133 701,430 ------------------------------------------------------------------------- Expenses Operations and maintenance 62,975 70,184 204,466 241,486 Depreciation and amortization 34,574 36,244 140,903 131,095 Interest and other finance 26,297 27,300 103,401 108,577 General, administrative and project development 25,272 24,718 89,146 80,474 Foreign exchange and other 5,009 10,063 1,435 30,038 Asset impairment loss 78,051 21,105 80,493 21,105 ------------------------------------------------------------------------- 232,178 189,614 619,844 612,775 ------------------------------------------------------------------------- Net income (loss) before taxes (46,305) (20,985) 29,289 88,655 Current taxes 5,923 4,597 16,330 24,378 Future taxes (27,774) (7,633) (24,616) 2,778 ------------------------------------------------------------------------- Net income (loss) (24,454) (17,949) 37,575 61,499 Cumulative net income at the beginning of the period 608,172 564,092 546,143 484,644 ------------------------------------------------------------------------- Cumulative net income at the end of the period 583,718 546,143 583,718 546,143 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Net income (loss) per Unit Basic and diluted (0.18) (0.13) 0.28 0.46 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Consolidated Statements of Comprehensive Income and Cumulative Other Comprehensive Income ------------------------------------------------------------------------- Three months ended Twelve months ended December 31 December 31 ------------------------------------------------------------------------- ($ Thousands; unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net income (loss) (24,454) (17,949) 37,575 61,499 Other comprehensive income (loss), net of taxes Cumulative translation adjustment Unrealized foreign exchange gain (loss) on translation of self-sustaining foreign operations (9,974) 68,900 (72,148) 94,140 Deemed realization of cumulative translation adjustment reclassified to net income 5,015 5,878 7,150 26,957 Gain (loss) on hedge of self-sustaining foreign operation 1,035 (18,446) 15,419 (24,190) Fair value loss transferred to net income - - 1,427 - Other (222) (1,480) 834 (2,121) ------------------------------------------------------------------------- (4,146) 54,852 (47,318) 94,786 ------------------------------------------------------------------------- Comprehensive income (loss) (28,600) 36,903 (9,743) 156,285 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Cumulative other comprehensive loss at the beginning of the period (50,478) (62,158) (7,306) (102,092) Other comprehensive income (loss), net of taxes (4,146) 54,852 (47,318) 94,786 ------------------------------------------------------------------------- Cumulative other comprehensive loss at the end of the period (54,624) (7,306) (54,624) (7,306) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Fort Chicago Energy Partners L.P. ------------------------------------------------------------------------- Consolidated Statement of Cash Flows ------------------------------------------------------------------------- Three months ended Twelve months ended December 31 December 31 ------------------------------------------------------------------------- ($ Thousands; unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Operating Net income (loss) (24,454) (17,949) 37,575 61,499 Non-cash transportation revenue (9,117) (12,316) (12,571) (18,003) Depreciation, amortization and other non-cash items 31,674 38,418 138,716 127,457 Unrealized foreign exchange loss 8,674 12,740 4,030 33,796 Future taxes (27,774) (7,633) (24,616) 2,778 Asset impairment loss 78,051 21,105 80,493 21,105 Changes in non-cash working capital (13,367) 4,914 (12,884) 33,980 ------------------------------------------------------------------------- 43,687 39,279 210,743 262,612 ------------------------------------------------------------------------- Financing Long-term debt issued, net of issue costs 64,888 - 263,003 - Long-term debt repaid (35,025) (31,551) (73,198) (68,562) Net change in credit facilities (50,029) (3,702) (249,424) 49,961 Distributions paid (20,066) (33,516) (96,876) (132,942) Other (4,661) 15,992 (4,744) 15,816 ------------------------------------------------------------------------- (44,893) (52,777) (161,239) (135,727) ------------------------------------------------------------------------- Investing Acquisition of Brush II Generation Facility, net of cash acquired - 46 - (33,969) Pipeline, plant and other capital assets (28,796) (42,125) (50,887) (139,026) Restricted cash 1,244 12,648 19,134 56,615 Other (1,460) (700) (1,610) (12,007) Changes in non-cash investing working capital 2,880 2,656 (6,455) 855 ------------------------------------------------------------------------- (26,132) (27,475) (39,818) (127,532) ------------------------------------------------------------------------- Increase (decrease) in cash and short-term investments before the effect of foreign exchange rate changes on cash and short-term investments (27,338) (40,973) 9,686 (647) Effect of foreign exchange rate changes on cash and short-term investments (1,262) 8,675 (5,049) 10,504 Cash and short-term investments at the beginning of the period 86,545 85,606 53,308 43,451 ------------------------------------------------------------------------- Cash and short-term investments at the end of the period 57,945 53,308 57,945 53,308 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Fort Chicago Energy Partners L.P. ------------------------------------------------------------------------- Distributable Cash(1) ------------------------------------------------------------------------- Three months ended Twelve months ended December 31 December 31 ------------------------------------------------------------------------- ($ Thousands, except where noted; unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Cash inflows Alliance distributions, prior to withholdings for capital expenditures and net of debt service 28,960 29,229 119,536 121,439 AEGS distributable cash, after non-recoverable capital expenditures and debt service 3,690 3,922 14,877 15,789 Aux Sable distributions, net of support payments, non-recoverable debt service costs and maintenance capital 18,934 579 45,584 69,504 Fort Chicago Power distributable cash, after maintenance capital expenditures and debt service (2,596) 856 12,931 8,918 NRGreen distributions, prior to withholding for project development costs 590 - 1,910 1,025 Realized foreign exchange gains, interest income and other 41 127 4,029 576 ------------------------------------------------------------------------- 49,619 34,713 198,867 217,251 Cash outflows General and administrative (4,231) (3,143) (16,148) (13,362) Interest and other finance (4,762) (3,580) (14,248) (16,170) Taxes (5,817) (4,595) (15,959) (24,313) Principal repayments on senior debt (808) (911) (3,445) (3,257) ------------------------------------------------------------------------- (15,618) (12,229) (49,800) (57,102) ------------------------------------------------------------------------- Distributable cash(1) 34,001 22,484 149,067 160,149 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Distributable cash per Unit ($)(2) 0.25 0.17 1.10 1.20 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Distributions paid/payable(3) 34,591 33,513 136,079 133,150 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Distributions paid/payable per Unit ($) 0.25 0.25 1.00 1.00 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Distributable cash is not a standard measure under generally accepted accounting principles in Canada and may not be comparable to similar measures presented by other entities. Distributable cash represents the cash available to Fort Chicago for distribution to holders of Units after providing for debt service obligations and any capital expenditures that are not growth-oriented or recoverable but does not include distribution reserves, if any, available in Fort Chicago's jointly held businesses, or project development costs, which represent discretionary costs, the recoverability of which has not been established, incurred to assess the commercial viability of new greenfield business initiatives unrelated to the Partnership's operating businesses. Distributable cash is an important measure used by the investment community to assess the source and sustainability of Fort Chicago's cash distributions and should be used to supplement other performance measures prepared in accordance with generally accepted accounting principles in Canada. See the following table for the reconciliation of distributable cash to cash flow from operating activities. (2) The number of Units used to calculate distributable cash per Unit is based on the average number of Units outstanding at each record date. For the three months ended December 31, 2009, the average number of Units outstanding for this calculation was 138,420,675 (2008 - 134,110,877) and 140,682,296 (2008 - 136,372,498) on a basic and diluted basis, respectively. For the year ended December 31, 2009, the average number of units outstanding for this calculation was 136,133,938 (2008 - 133,206,799) and 138,395,599 (2008 - 136,418,546) on a basic and diluted basis, respectively. The number of Units outstanding would increase by 2,261,621 (2008 - 2,261,621) Units if the outstanding Convertible Debentures as at December 31, 2009 were converted into Units. (3) Includes $14.9 million (2008 - nil) and $44.0 million (2008 - nil) of distributions for the three and 12 months ended December 31, 2009, respectively, satisfied through the issuance of Units under the Partnership's Distribution Reinvestment Plan. Fort Chicago Energy Partners L.P. ------------------------------------------------------------------------- Reconciliation of Distributable Cash to Cash Flow from Operating Activities ------------------------------------------------------------------------- Three months ended Twelve months ended December 31 December 31 ------------------------------------------------------------------------- ($ Thousands; unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Consolidated cash flow from operating activities 43,687 39,279 210,743 262,612 Add (deduct): Cash flow generated from operating activities applicable to jointly held businesses(1) (8,133) (2,347) (90,164) (70,236) ------------------------------------------------------------------------- Cash flow from operating activities applicable to wholly-owned businesses(2) 35,554 36,932 120,579 192,376 Add (deduct) amounts applicable to wholly-owned businesses: Project development costs(3) 2,224 3,506 10,632 11,628 Change in non-cash working capital (4,137) (5,512) 10,019 (19,293) Principal repayments on senior notes (1,457) (1,523) (6,001) (5,657) Maintenance capital expenditures (2,913) (685) (3,498) (7,330) Distributions earned greater than distributions received(4) 4,730 (10,234) 17,336 (11,575) ------------------------------------------------------------------------- Distributable cash 34,001 22,484 149,067 160,149 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Represents the cash flow from operating activities applicable to jointly held businesses which is not under the sole control of the Partnership and, as a consequence, is not included in distributable cash until such time as distributions are declared by the jointly held businesses. (2) Net of support payments made to Alliance Canada Marketing of $3.6 million and $10.0 million for the three and 12 months ended December 31, 2009 respectively (2008 - $0.8 million and $3.0 million, respectively). (3) Represents costs incurred by the Partnership and its wholly-owned businesses in relation to projects where the recoverability of such costs has not yet been established. Amounts incurred for the three and 12 months ended December 31, 2009 relate primarily to the Jordan Cove LNG terminal project, the Pacific Connector Gas Pipeline project, and the Alton Gas Storage project. (4) Represents the difference between distributions declared by jointly held businesses and distributions received. Reconciliation of Adjusted Net Income(5) to Net Income ------------------------------------------------------------------------- Three months ended Twelve months ended December 31 December 31 ------------------------------------------------------------------------- ($ Thousands; unaudited) 2009 2008 2009 2008 ------------------------------------------------------------------------- Net income (loss) (24,454) (17,949) 37,575 61,499 Adjustments to net income (loss) for non-recurring (gains) losses: Pipeline - Alliance shipper claim settlement(6) - - - (10,020) NGL - Aux Sable settlement(7) (9,472) - (9,472) - Power - asset impairment loss(8)(9) 78,051 21,105 78,051 21,105 Power - fair value loss reclassified from other comprehensive income(10) - - 2,442 - Power - gain on dilution of investment(6) - - - (4,200) Tax expense (recovery)(11) (24,903) - (25,057) 3,720 ------------------------------------------------------------------------- Adjusted net income 19,222 3,156 83,539 72,104 ------------------------------------------------------------------------- ------------------------------------------------------------------------- (5) Adjusted net income is not a standard measure under generally accepted accounting principles in Canada and may not be comparable to similar measures presented by other entities. Adjusted net income represents net income adjusted for specific items that are significant, but are not reflective of Fort Chicago's underlying operations. Specific items are subjective, however, the Partnership uses its judgement and informed decision-making when identifying items to be included or excluded in calculating adjusted net income. Specific items may include, but are not limited to, certain income tax adjustments, bankruptcy settlements, gains or losses on sales of assets, certain fair value adjustments, and asset impairment losses. Fort Chicago believes its use of adjusted net income provides useful information to management and its investors by improving the ability to compare financial results among reporting periods, and by enhancing the understanding of its operating performance and ability to fund distributions. (6) 2008 net income included Alliance's settlement with Calpine Energy Services Canada Partnership and a non-cash dilution gain related to the Partnership's investment in Pristine Power Inc. Fort Chicago does not expect these items to recur and, as such, has deducted them from net income in arriving at adjusted net income. (7) Net income for the three and 12 months ended December 31, 2009 included Aux Sable's off-gas facility settlement. Fort Chicago does not expect this item to recur and, as such, has deducted it from net income in arriving at adjusted net income. (8) Net income for the three and 12 months ended December 31, 2009 included a $78.1 million asset impairment loss. The Partnership recorded this non-cash charge in relation to its California cogeneration facilities, which were adversely impacted by a regulatory decision. Fort Chicago does not expect this item to recur and, as such, has deducted it from net income in arriving at adjusted net income. (9) Net income for the three and 12 months ended December 31, 2008 included a $21.1 million asset impairment loss. Fort Chicago does not expect this item to recur and, as such, has deducted it from net income in arriving at adjusted net income. (10)Net income for the year ended December 31, 2009 included a non-cash expense transferred from other comprehensive income to net income in the first quarter of 2009, representing the fair value decrease of the Partnership's investment in Pristine Power Inc. from Pristine's initial public offering in March 2008. As the Partnership considers such permanent decreases in the fair value of its investments to be non-typical, it has added this amount back to net income in arriving at adjusted net income. (11)This represents the related taxes on the adjusted items described above.
For further information: Stephen H. White, President and C.E.O., Richard G. Weech, Vice President, Finance and C.F.O., Fort Chicago Energy Partners L.P., Livingston Place, Suite 440, 222 - 3rd Avenue S.W., Calgary, AB, T2P 0B4, Phone: (403) 296-0140, Fax: (403) 213-3648, www.fortchicago.com
Share this article