NET INCOME PER COMMON UNIT

6 Months Ended

Jun. 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 allocable to the General Partner 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 both the three and six months ended June 30, 2015, were $1 million. Incentive distributions allocated to the General Partner for both the three and six months ended June 30, 2014 were $0.3 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)	2015	2014	2015	2014
Net income attributable to controlling interests	44 (b)	37	101 (b)	94
Net income allocated to General Partner Incentive distributions allocated to the General Partner (a)	(1) (1)	(1) -	(2)  (1)	(2) -
Net income allocated to common units	42(b)	36	98(b)	92
Weighted average common units outstanding (millions) – basic and diluted	63.8	62.3	63.7	62.3
Net income per common unit – basic and diluted	$0.66(b)	$ 0.58	1.53(b)	$ 1.48

(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 based on achieving the annual threshold.  The distribution will be payable in the first quarter with respect to the prior year’s distributions. Consistent with the application of ASC 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. This allocation will reduce net income allocated to common units and net income per common unit.

During the three months ended June 30, 2015, GTN’s total distributable cash flow was $29 million and therefore no portion of net income attributable to controlling interests was allocated to the Class B units.