Exhibit

4.210




 




TRANSCANADA

PIPELINES LIMITED




SIGNIFICANT

DIFFERENCES BETWEEN CANADIAN AND U.S. GAAP (unaudited)




 




 




Net Income Reconciliation




 




	

  Year ended December 31

  (millions of dollars except per share amounts)


  	

   


  	

  2002


  	

   


  	

  2001


  	

   


  
	

  Net income from continuing operations as reported in accordance with

  Canadian GAAP


  	

   


  	

  805


  	

   


  	

  753


  	

   


  
	

  U.S. GAAP adjustments


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Preferred securities charges(1)


  	

   


  	

  (58


  	

  )


  	

  (77


  	

  )


  
	

  Tax impact of preferred securities charges


  	

   


  	

  22


  	

   


  	

  32


  	

   


  
	

  Unrealized gain/(loss) on derivatives(2)


  	

   


  	

  30


  	

   


  	

  (14


  	

  )


  
	

  Tax impact of gain/(loss) on derivatives


  	

   


  	

  (12


  	

  )


  	

  6


  	

   


  
	

  Unrealized losses on energy trading contracts(3)


  	

   


  	

  (21


  	

  )


  	

  (17


  	

  )


  
	

  Tax impact of unrealized losses on energy trading contracts


  	

   


  	

  8


  	

   


  	

  6


  	

   


  
	

  Income taxes from substantively enacted tax rates(4)


  	

   


  	

  —


  	

   


  	

  28


  	

   


  
	

  Income from continuing operations in accordance with U.S. GAAP


  	

   


  	

  774


  	

   


  	

  717


  	

   


  
	

  Net loss from discontinued operations in accordance with U.S. GAAP


  	

   


  	

  —


  	

   


  	

  (67


  	

  )


  
	

  Income before cumulative effect of the application of SFAS No. 133 in

  accordance with U.S. GAAP


  	

   


  	

  774


  	

   


  	

  650


  	

   


  
	

  Cumulative effect of the application of SFAS No. 133, net of tax(2)


  	

   


  	

  —


  	

   


  	

  (2


  	

  )


  
	

  Net income in accordance with U.S. GAAP


  	

   


  	

  774


  	

   


  	

  648


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Net income/(loss) per share in accordance with U.S. GAAP


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Continuing operations


  	

   


  	

  $


  	

  1.57


  	

   


  	

  $


  	

  1.46


  	

   


  
	

  Discontinued operations


  	

   


  	

  —


  	

   


  	

  (0.14


  	

  )


  
	

  Basic


  	

   


  	

  $


  	

  1.57


  	

   


  	

  $


  	

  1.32


  	

   


  
	

  Diluted


  	

   


  	

  $


  	

  1.56


  	

   


  	

  $


  	

  1.32


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Net income per share in accordance with Canadian GAAP


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Basic


  	

   


  	

  $


  	

  1.56


  	

   


  	

  $


  	

  1.30


  	

   


  
	

  Diluted


  	

   


  	

  $


  	

  1.55


  	

   


  	

  $


  	

  1.30


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Dividends per common share


  	

   


  	

  $


  	

  1.00


  	

   


  	

  $


  	

  0.90


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Common Shares Outstanding (millions)


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Average for the period — Basic


  	

   


  	

  478.3


  	

   


  	

  475.8


  	

   


  
	

  Average for the period — Diluted


  	

   


  	

  480.7


  	

   


  	

  477.6


  	

   


  























(1)         Under U.S.

GAAP, the financial charges related to preferred securities are recognized as

an expense, rather than dividends.




(2)         In 2001, TransCanada

PipeLines Limited (TransCanada or the Company) adopted the provisions of

Statement of Financial Accounting Standards (SFAS) No. 133 “Accounting for

Derivatives and Hedging Activities”. SFAS No. 133 requires that all derivatives

be recognized as assets and liabilities on the balance sheet and measured at

fair value.




                       For derivatives

designated as fair value hedges, changes in the fair value are recognized in

earnings together with an equal or lesser amount of changes in the fair value

of the hedged item attributable to the hedged risk. For derivatives designated

as cash flow hedges, changes in the fair value of the derivative that are

effective in offsetting the hedged risk are recognized in other comprehensive

income until the hedged item is recognized in earnings. Any ineffective portion

of the change in fair value is recognized in earnings each period.




(3)         Under U.S. GAAP, energy

trading contracts are measured at fair value determined as at the balance sheet

date. In 2002, TransCanada adopted the provisions of EITF 02-3, “Accounting for

Contracts Involved in Energy Trading and Risk Management Activities” whereby

the company is presenting all mark-to-market gains and losses and all revenues

and expenses related to energy trading contracts subject to mark-to-market

accounting on a net basis.  This

accounting change has been applied retroactively with reclassification of prior

periods.




 





























 




(4)         Under U.S. GAAP, only

enacted rates can be used in measuring deferred tax assets and liabilities; use

of substantively enacted rates is not permitted.  The February 2000 and October 2000 Federal budgets would not be

considered enacted until the proposals were completely enacted into law in June

2001 and, accordingly, the related tax recoveries were recognized in 2001.




 




Condensed Statement of Consolidated Income in

Accordance with U.S. GAAP(7)




 




	

  Year ended December 31

  (millions of dollars)


  	

   


  	

  2002


  	

   


  	

  2001


  	

   


  
	

  Revenues(3) (7)


  	

   


  	

  4,284


  	

   


  	

  4,165


  	

   


  
	

  Operating expenses(3) (7)


  	

   


  	

  1,692


  	

   


  	

  1,656


  	

   


  
	

  Depreciation


  	

   


  	

  729


  	

   


  	

  675


  	

   


  
	

   


  	

   


  	

  2,421


  	

   


  	

  2,331


  	

   


  
	

  Operating income


  	

   


  	

  1,863


  	

   


  	

  1,834


  	

   


  
	

  Other (income)/expenses


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Equity income


  	

   


  	

  (260


  	

  )


  	

  (221


  	

  )


  
	

  Other expenses(5)


  	

   


  	

  850


  	

   


  	

  931


  	

   


  
	

  Income taxes


  	

   


  	

  499


  	

   


  	

  407


  	

   


  
	

   


  	

   


  	

  1,089


  	

   


  	

  1,117


  	

   


  
	

  Income from continuing operations in accordance with U.S. GAAP


  	

   


  	

  774


  	

   


  	

  717


  	

   


  
	

  Net (loss)/income from discontinued operations in accordance with

  U.S.  GAAP


  	

   


  	

  —


  	

   


  	

  (67


  	

  )


  
	

  Income before cumulative effect of the application of SFAS No. 133 in  accordance

  with U.S. GAAP


  	

   


  	

  774


  	

   


  	

  650


  	

   


  
	

  Cumulative effect of the application of SFAS No. 133, net of tax(2)


  	

   


  	

  —


  	

   


  	

  (2


  	

  )


  
	

  Net income in accordance with U.S. GAAP


  	

   


  	

  774


  	

   


  	

  648


  	

   


  





 




Comprehensive Income in Accordance with U.S. GAAP




 




	

  Year ended December 31

  (millions of dollars)


  	

   


  	

  2002


  	

   


  	

  2001


  	

   


  
	

  Net income in accordance with U.S. GAAP


  	

   


  	

  774


  	

   


  	

  648


  	

   


  
	

  Adjustments affecting comprehensive income under U.S. GAAP


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Foreign currency translation adjustment


  	

   


  	

  1


  	

   


  	

  —


  	

   


  
	

  Additional minimum liability for employee future benefits (SFAS No.

  87)(6)


  	

   


  	

  (62


  	

  )


  	

  (86


  	

  )


  
	

  Tax impact of additional minimum liability for employee future

  benefits


  	

   


  	

  22


  	

   


  	

  30


  	

   


  
	

  Unrealized loss on derivatives(2)


  	

   


  	

  (3


  	

  )


  	

  (7


  	

  )


  
	

  Tax impact of loss on derivatives


  	

   


  	

  (1


  	

  )


  	

  2


  	

   


  
	

  Comprehensive income before cumulative effect of the application of

  SFAS  No. 133 in accordance with U.S. GAAP


  	

   


  	

  731


  	

   


  	

  587


  	

   


  
	

  Cumulative effect of the application of SFAS No. 133, net of tax(2)


  	

   


  	

  —


  	

   


  	

  (4


  	

  )


  
	

  Comprehensive income in accordance with U.S. GAAP


  	

   


  	

  731


  	

   


  	

  583


  	

   


  





 





























 




Condensed Balance Sheet in Accordance with U.S. GAAP(7)




 




	

  December 31 (millions of

  dollars)


  	

   


  	

  2002


  	

   


  	

  2001


  	

   


  
	

  Current assets


  	

   


  	

  1,074


  	

   


  	

  1,162


  	

   


  
	

  Long-term energy trading assets(3)


  	

   


  	

  218


  	

   


  	

  255


  	

   


  
	

  Long-term investments


  	

   


  	

  1,629


  	

   


  	

  1,570


  	

   


  
	

  Plant, property and equipment


  	

   


  	

  14,992


  	

   


  	

  15,379


  	

   


  
	

  Regulatory asset(8)


  	

   


  	

  2,578


  	

   


  	

  2,613


  	

   


  
	

  Other assets


  	

   


  	

  893


  	

   


  	

  473


  	

   


  
	

   


  	

   


  	

  21,384


  	

   


  	

  21,452


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Current liabilities(9)


  	

   


  	

  1,918


  	

   


  	

  1,844


  	

   


  
	

  Provision for loss on discontinued operations


  	

   


  	

  234


  	

   


  	

  264


  	

   


  
	

  Long-term energy trading liabilities(3)


  	

   


  	

  41


  	

   


  	

  112


  	

   


  
	

  Deferred amounts


  	

   


  	

  593


  	

   


  	

  503


  	

   


  
	

  Long-term debt


  	

   


  	

  8,963


  	

   


  	

  9,512


  	

   


  
	

  Deferred income taxes(8)


  	

   


  	

  2,692


  	

   


  	

  2,556


  	

   


  
	

  Preferred securities(10)


  	

   


  	

  694


  	

   


  	

  694


  	

   


  
	

  Trust originated preferred securities


  	

   


  	

  218


  	

   


  	

  218


  	

   


  
	

  Shareholders’ equity


  	

   


  	

  6,031


  	

   


  	

  5,749


  	

   


  
	

   


  	

   


  	

  21,384


  	

   


  	

  21,452


  	

   


  





 




 




Statement of Other Comprehensive Income in Accordance

with U.S. GAAP




 




	

  December 31 (millions of

  dollars)


  	

   


  	

  Cumulative

  Translation Account


  	

   


  	

  Minimum

  Pension Liability


  (FAS 87)


  	

   


  	

  Cash Flow

  Hedges


  (FAS 133)


  	

   


  	

  Total


  	

   


  
	

  Balance at January 1, 2001


  	

   


  	

  13


  	

   


  	

  —


  	

   


  	

  —


  	

   


  	

  13


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Additional minimum liability for employee future benefits, net of tax(6)


  	

   


  	

  —


  	

   


  	

  (56


  	

  )


  	

  —


  	

   


  	

  (56


  	

  )


  
	

  Unrealized loss on derivatives, net of tax(2)


  	

   


  	

  —


  	

   


  	

  —


  	

   


  	

  (5


  	

  )


  	

  (5


  	

  )


  
	

  Cumulative effect of adoption of FAS 133, net of tax(2)


  	

   


  	

  —


  	

   


  	

  —


  	

   


  	

  (4


  	

  )


  	

  (4


  	

  )


  
	

  Balance at December 31, 2001


  	

   


  	

  13


  	

   


  	

  (56


  	

  )


  	

  (9


  	

  )


  	

  (52


  	

  )


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Additional minimum liability for employee future  benefits, net of tax(6)


  	

   


  	

  —


  	

   


  	

  (40


  	

  )


  	

  —


  	

   


  	

  (40


  	

  )


  
	

  Unrealized loss on derivatives, net of tax(2)


  	

   


  	

  —


  	

   


  	

  —


  	

   


  	

  (4


  	

  )


  	

  (4


  	

  )


  
	

  Foreign currency translation adjustment


  	

   


  	

  1


  	

   


  	

  —


  	

   


  	

  —


  	

   


  	

  1


  	

   


  
	

  Balance at December 31, 2002


  	

   


  	

  14


  	

   


  	

  (96


  	

  )


  	

  (13


  	

  )


  	

  (95


  	

  )


  























(5)                Other expenses

included an allowance for funds used during construction of $4 million for the

year ended December 31, 2002 (2001 - $5 million).




(6)                Under U.S. GAAP, a net loss

recognized pursuant to SFAS No. 87 “Employers’ Accounting for Pensions” as an

additional pension liability not yet recognized as net period pension cost,

must be recorded as a component of comprehensive income.




(7)                In accordance with U.S.

GAAP, the condensed Statement of Consolidated Income and Balance Sheet are

prepared using the equity method of accounting for joint ventures.  Excluding the impact of other U.S. GAAP

adjustments, the use of the proportionate consolidation method of accounting

for joint ventures, as required under Canadian GAAP, results in the same net

income and Shareholders’ Equity.




(8)                Under U.S. GAAP, the Company

is required to record a deferred income tax liability for its cost-of-service

regulated businesses. As these deferred income taxes are recoverable through

future revenues, a corresponding regulatory asset is recorded for U.S. GAAP

purposes.




 





























 




(9)                Current liabilities at

December 31, 2002 include dividends payable of $125 million (2001 - $114

million) and current taxes payable of 

$150 million (2001 - $149 million).




(10)          Under U.S. GAAP, the preferred securities are

classified as a liability.  The fair

value of the preferred securities at December 31, 2002 was $743 million (2001 -

$740 million).  The Company made

preferred securities charges payments of $58 million for the year ended

December 31, 2002 (2001 - $77 million).




 




Stock-Based Compensation




 




Under the transition rules

provided by SFAS No. 148 “Accounting for Stock-Based Compensation - Transition

and Disclosure - an amendment of FASB Statement No. 123”, the Company has

expensed stock options granted in 2002. 

The use of the fair value method of SFAS No. 123 “Accounting for

Stock-Based Compensation” for previously issued options would have resulted in

net income under U.S. GAAP of $770 million in 2002 (2001 - $643 million) and

net income per share (basic) of $1.56 in 2002 (2001 - $1.30 per share).




Other




 




In June 2001, the Financial Accounting Standards Board (FASB) issued

SFAS No. 143 “Accounting for Asset Retirement Obligations”, which addresses

financial accounting and reporting for obligations associated with asset

retirement costs.  SFAS No. 143 requires

that the fair value of a liability for an asset retirement obligation be

recognized in the period in which it is incurred if a reasonable estimate of

fair value can be made.  The fair value

is added to the carrying amount of the associated asset. The liability is

accreted at the end of each period through charges to operating expenses.  The Company is required and plans to adopt

the provisions of SFAS No. 143 for the quarter ending March 31, 2003.  The Company, at this time, has not completed

the estimation process to determine the impact of adopting this standard.




 




Summarized Financial Information of Long-Term

Investments




 




	

  Year ended December 31

  (millions of dollars)


  	

   


  	

  2002


  	

   


  	

  2001


  	

   


  
	

  Income


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Revenues


  	

   


  	

  798


  	

   


  	

  695


  	

   


  
	

  Operating expenses


  	

   


  	

  (273


  	

  )


  	

  (191


  	

  )


  
	

  Depreciation


  	

   


  	

  (146


  	

  )


  	

  (143


  	

  )


  
	

  Financial charges and other


  	

   


  	

  (112


  	

  )


  	

  (136


  	

  )


  
	

  Proportionate share of income before income taxes of long-term

  investments


  	

   


  	

  267


  	

   


  	

  225


  	

   


  
	

   


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  December 31 (millions of

  dollars)


  	

   


  	

  2002


  	

   


  	

  2001


  	

   


  
	

  Balance sheet


  	

   


  	

   


  	

   


  	

   


  	

   


  
	

  Current assets


  	

   


  	

  246


  	

   


  	

  223


  	

   


  
	

  Plant, property and equipment


  	

   


  	

  3,197


  	

   


  	

  3,171


  	

   


  
	

  Other assets and deferred amounts (net)


  	

   


  	

  112


  	

   


  	

  139


  	

   


  
	

  Current liabilities


  	

   


  	

  (216


  	

  )


  	

  (231


  	

  )


  
	

  Non-recourse debt


  	

   


  	

  (1,646


  	

  )


  	

  (1,669


  	

  )


  
	

  Deferred income taxes


  	

   


  	

  (64


  	

  )


  	

  (63


  	

  )


  
	

  Proportionate share of net assets of long-term investments


  	

   


  	

  1,629


  	

   


  	

  1,570