NET INCOME PER COMMON UNIT

6 Months Ended

Jun. 30, 2017

NET INCOME PER COMMON UNIT

NET INCOME PER COMMON UNIT

NOTE 8                NET INCOME PER COMMON UNIT

Net income per common unit is computed by dividing net income attributable to controlling interests, after deduction of net income attributed to PNGTS’ former parent, 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.

The amount allocable to the Class B units in 2017 equals 30 percent of GTN’s distributable cash flow during the year ended December 31, 2017 less $20 million (December 31, 2016 —$20 million).

Net income per common unit was determined as follows:

	Three months ended						Six months ended
(unaudited)	June 30,						June 30,
(millions of dollars, except per common unit amounts)	2017			2016 (a)			2017			2016 (a)
Net income attributable to controlling interests (a)	55			55			132			130
Net income attributable to PNGTS’ former parent (a) (b)	—			(1		)	(2		)	(3		)
Net income attributable to General and Limited Partners	55			54			130			127
Incentive distributions allocated to the General Partner (c)	(3		)	(2		)	(5		)	(3		)
Net income attributable to the Class B units (d)	—			(1		)	—			(1		)
Net income attributable to the General Partner and common units	52			51			125			123
Net income attributable to General Partner’s two percent interest	(2		)	(1		)	(3		)	(2		)
Net income attributable to common units	50			50			122			121
Weighted average common units outstanding (millions) — basic and diluted	68.9			65.5		(e)	68.6			64.9		(e)
Net income per common unit — basic and diluted	$	0.73		$	0.76	(f)	$	1.78		$	1.86	(f)

(a) Recast to consolidate PNGTS for all periods presented  (Refer to Notes 2 and 6).

(b) Net income allocable to General and Limited Partners excludes net income attributed to PNGTS’ former parent as it was allocated to TransCanada and was not allocable to either the general partner, common units or Class B units.

(c) 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 are based on the Partnership’s available cash during the current reporting period, but declared and paid in the subsequent reporting period.

(d) During the three and six months ended June 30, 2017, no amounts were allocated to the Class B units as the annual threshold of $20 million has not been exceeded.  During the six months ended June 30, 2016, 30 percent of GTN’s total distributable cash flow was $21 million. As a result of exceeding the $20 million threshold, $1 million of net income attributable to controlling interests was allocated to the Class B units during the three and six months ended June 30, 2016.

(e) Includes the common units subject to rescission. These units are treated as outstanding for financial reporting purposes. Refer to Note 7.

(f) Net income per common unit prior to recast (Refer to Note 2).