NET INCOME PER COMMON UNIT

9 Months Ended

Sep. 30, 2015

NET INCOME PER COMMON UNIT

NET INCOME PER COMMON UNIT

NOTE 8NET INCOME PER COMMON UNIT

Net income per common unit is computed by dividing net income attributable to controlling interests, after deduction of amounts attributable to the General Partner and Class B units by the weighted average number of common units outstanding.

The amounts allocable to the General Partner equals an amount based upon the General Partner’s effective two percent general partner interest, plus an amount equal to incentive distributions. Incentive distributions are paid to the General Partner if quarterly cash distributions on the common units exceed levels specified in the Partnership Agreement. Incentive distributions allocated to the General Partner for the three and nine months ended September 30, 2015, were $1 million and $2 million, respectively (2014 – nil).

The amount allocable to the Class B units in 2015 equals an amount based upon 30 percent of GTN’s distributable cash flow during the nine months ending December 31, 2015  less $15 million (refer to Note 6).

Net income per common unit was determined as follows:

	Three months ended		Nine months ended
(unaudited)	September 30,		September 30,
(millions of dollars, except per common unit amounts)	2015	2014	2015	2014
Net income attributable to controlling interests	49	31	150	125
Net income attributable to the General Partner	(1)	(1)	(3)	(3)
Incentive distributions attributable to the General Partner (a)	(1)	-	(2)	-
Net income attributable to the Class B units (b)	(2)	-	(2)	-
Net income attributable to common units	45	30	143	122
Weighted average common units outstanding (millions) – basic and diluted	64.0	62.6	63.8	62.4
Net income per common unit – basic and diluted	$ 0.70	$ 0.48	$ 2.23	$ 1.96

(a)    Under the terms of the Partnership Agreement, for any quarterly period, the participation of the incentive distribution rights (IDRs) is limited to the available cash distributions declared. Accordingly, incentive distributions allocated to the General Partner was based from the Partnership’s available cash during the current reporting period, but declared and paid in the subsequent reporting period.

(b)    As discussed in Notes 6 and 7, the Class B units entitle TransCanada to a distribution which is an amount based on 30 percent of GTN’s distributions after achieving certain annual thresholds.  The distribution will be payable in the first quarter with respect to the prior year’s distributions. Consistent with the application of Accounting Standards Codification (ASC) Topic 260 - “Earnings per share,” the Partnership will allocate a portion of net income attributable to controlling interests to the Class B units upon 30 percent of GTN’s total distributable cash flows exceeding $15 million for the nine month period ending December 31, 2015.

During the six months ended September 30, 2015, 30 percent of GTN’s total distributable cash flow was $17 million. As a result, $2 million of net income attributable to controlling interests was allocated to the Class B units for both the three and nine months ended September 30, 2015.