Northland Power Inc.
TSX : NPI
TSX : NPI.DB
TSX : NPI.DB.A
TSX : NPI.PR.A

Northland Power Inc.

February 24, 2011 21:48 ET

Northland Power Announces 2010 Results

TORONTO, ONTARIO--(Marketwire - Feb. 24, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES OR ITS POSSESSIONS. ANY FAILURE TO COMPLY WITH THIS RESTRICTION MAY CONSTITUTE A VIOLATION OF U.S. SECURITIES LAW.

Northland Power Inc. ("Northland") (TSX:NPI)(TSX:NPI.PR.A)(TSX:NPI.DB)(TSX:NPI.DB.A) reported the financial results today for Northland Power Income Fund ("Northland" or the "Fund") for the quarter and year ended December 31, 2010. Total cash distributions declared to Unitholders for the year amounted to $1.08 per unit.

FINANCIAL AND OPERATING HIGHLIGHTS

  3 Months Ended Dec. 31   12 Months Ended Dec. 31  
  2010   2009   2010   2009  
FINANCIAL (thousands, except per unit amounts)                
  Sales $ 90,173   $ 57,530   $ 304,170   $ 193,370  
  Income from operations $ 28,142   $ 19,064   $ 94,651   $ 65,315  
  EBITDA $ 37,531   $ 26,254   $ 137,807   $ 91,534  
  Net income $ 40,780   $ 26,088   $ 1,418   $ 35,264  
   
  Standardized distributable cash   ($102,316 )   ($18,082 )   ($231,391 )   ($78,219 )
  Distributable cash $ 12,007   $ 20,546   $ 63,816   $ 70,522  
  Cash distributions declared to Unitholders $ 20,137   $ 19,270   $ 78,312   $ 70,400  
   
Per Trust Unit – basic                        
  Standardized distributable cash   ($1.38 )   ($0.26 )   ($3.20 )   ($1.21 )
  Distributable cash $ 0.16   $ 0.29   $ 0.88   $ 1.09  
  Cash distributions declared to Unitholders $ 0.27   $ 0.27   $ 1.08   $ 1.08  
Energy Volumes                        
  Electricity (megawatthours)   741,678     434,836     2,448,981     1,454,020  
  Steam (thousands of pounds)   516,244     271,031     1,625,182     1,031,247  
  Fuel consumption (thousands of gigajoules)   5,434     3,369     18,303     12,387  

The Fund completed a successful fourth quarter before converting to Northland Power Inc., a Canadian public corporation, effective January 1, 2011. Construction continued on the Spy Hill, North Battleford and Mont Louis projects which in aggregate represent about $1 billion of capital investment; all remain within their schedules and on budget. A $106 million debt financing for Mont Louis was closed in November. In December, the Fund won a 24 MW wind project in partnership with the community of Frampton, Quebec and sold its 54 MW Mont Miller wind farm to NextEra Energy Canada. Also in December, the Ontario Minister of Energy directed the Ontario Power Authority to initiate negotiations in 2011 on combined heat and power projects and extensions to power purchase agreements (PPAs) scheduled to end later in the decade - Northland expects to be involved in both sets of negotiations in its efforts to secure PPAs for two combined heat and power projects that it has under development and to extend the terms of the PPAs at the Cochrane and Kirkland Lake facilities that are managed by Northland. Subsequent to year end, Northland announced a 50-50 partnership with the United Chiefs and Councils of Mnidoo Mnising First Nations ("UCCM") on a 60 MW wind farm on Manitoulin Island. The wind farm has a 20- year agreement to sell power under Ontario's Feed-in Tariff (FIT) program.

The following comments are made with reference to the attached unaudited consolidated financial statements of the Fund and supplemental facility information. Where a comment refers to activities or events prior to January 1, 2011, "Northland" refers to Northland Power Income Fund. In referring to subsequent events, "Northland" refers to Northland Power Inc.

The Fund's facilities generally operated well during the year. Consolidated sales in 2010 were $304.2 million and income from operations was $94.7 million, both up over 50% from 2009 due to contributions from the Thorold facility for 9 months (nil in 2009) and the Jardin d'Éole wind farm for 12 months (about 6 weeks in 2009).

Largely as a result of Northland's aggressive growth program and one-time expenses, distributable cash in 2010 at $63.8 million was $6.7 million lower than the 2009 level. Growth-related items included $3.3 million of dividends on the preferred shares and $4.6 million of interest on the convertible debentures issued in the fourth quarter of 2009, the proceeds of which were used to invest in the $1 billion of projects currently under construction which will add to cash flow in future years. Also linked to growth was $6.7 million incurred for development-related activities (compared to $3.0 million for 5½ months in 2009). One-time expenses notably included a $5.5 million fee paid in Q4 to prepay the $40 million Thorold subordinated debt (on which the interest rate was approximately 12½%) to reduce future interest costs. One-time expenses recognized also included write-offs of a $3.4 million deferred development expense in Q4 and a $1.1 million receivable from AbitibiBowater, both of which were non-cash items in 2010 but affect cumulative distributable cash. On the plus side, $12.9 million was contributed by the Thorold facility from its nine months of operations (nil in 2009) and $2.4 million was contributed by Jardin d'Éole ($0.8 million in 2009).

Full Year 2010 Results

Gross profit in 2010 was $68.1 million higher than in 2009, mostly due to contributions from 9 months of operations at Thorold LP which owns the Thorold facility and from a full year at Jardin LP which owns the Jardin d'Éole wind farm. The $12.2 million increase in total plant operating costs is largely attributable to additional costs at Thorold LP and Jardin LP.

Management and administration costs were $7.8 million higher than 2009 as 2010 included costs associated with management of the Thorold and Jardin d'Éole facilities, costs related to the current high level of development activities for 12 months (vs. about 5½ months in 2009), and a number of one-time costs connected with corporatization, adoption of International Financial Reporting Standards and launch of a new website.

Investment income at $12.6 million was higher than last year mainly due to receipt of a one-time fee and dividend indirectly related to the prepayment of the Panda senior loan; these payments more than offset the subsequent loss of interest income.

Interest income was up slightly from 2009. Interest expense and bank charges were higher by $40 million largely due to recognition of Jardin LP and Thorold LP loan interest (which was mostly capitalized in 2009 when the facilities were under construction), the $5.5 million Thorold subordinated debt prepayment fee, interest paid on the convertible debentures issued in October 2009, and $1.3 million of amortization related to the fair value adjustment to Jardin LP's and Thorold LP's debt.

As a result of its sale, Mont Miller's operating results for 2010 and 2009 have been removed from the applicable lines in the Consolidated Statements of Income and Deficit and appear on the line "income (loss) from discontinued operations." The reported 2010 income from discontinued operations of $4.7 million includes an accounting gain of $5.7 million on the sale of Miller LP.

During the year, Northland recorded the following non-cash expenses: (i) a $53.8 million loss on the change in fair value of Northland's interest rate swaps on its project-level non-recourse debt due to falling interest rates, (ii) $3.4 million of previously deferred development costs associated with several wind projects not awarded PPAs in the most recent Hydro-Québec request for proposals, and (iii) a $0.5 million foreign exchange loss on U.S. and euro foreign exchange contracts. Positive adjustments included a $1.1 million foreign exchange gain related to the Panda senior loan which consisted of a $0.9 million realized gain on the settlement of the outstanding foreign exchange contracts and a $0.2 million unrealized non-cash gain. Contract amortization increased during the year, due to the Thorold facility becoming operational in April 2010 and a full year of amortization of contracts acquired in the NPI merger in July 2009.

The factors described above, current taxes of $1.6 million and the reversal of $34.1 million of future income tax liabilities resulted in a net loss from continuing operations of $3.2 million. Combined with income from the discontinued operation, the net income for 2010 was $1.4 million.

Distributable cash as determined by Northland at $63.8 million was $6.7 million lower than the 2009 level for reasons previously described.

The Fund ended the 2010 year with $111.5 million of cash and no short-term borrowings under its credit facility.

Fourth Quarter Results

Consolidated sales for the quarter were $90.2 million, and income from operations was $28.1 million. The results included three months of operating results from the Thorold facility (none in 2009) and from the Jardin d'Éole wind farm (about six weeks in 2009). Management and administration costs were up $0.8 million in the quarter, largely due to costs associated with Thorold and Jardin d'Éole and the same development-related and one-time factors cited above. Northland's investment in Panda generated investment income of $0.6 million this quarter, lower by $1.4 million compared to the same period last year, due to the prepayment of the senior loan in the second quarter of 2010.

As previously mentioned, Mont Miller's operating results for 2010 and 2009 have been removed from the applicable lines in the Consolidated Statements of Income and Deficit and appear on the line "income (loss) from discontinued operations."

Interest expense and bank fees increased by $14.2 million this quarter due to the recognition of interest costs for the Jardin LP and Thorold LP construction and term loans, which had been capitalized during construction, the one-time Thorold subordinated loan prepayment fee of $5.5 million and amortization of the fair value adjustments to Jardin LP's and Thorold LP's debt.

Non-cash adjustments during the quarter included the $3.4 million write-off of deferred development expenses for Quebec wind projects, $28.7 million in gains relating to interest rate swaps and a $2.1 million exchange loss on Northland's U.S. and euro foreign exchange contracts. Contract amortization expense increased during the quarter as a result of the Thorold facility becoming operational.

The above factors, combined with a $1.5 million provision for current taxes and a future tax reduction of $9.2 million, resulted in an $8.7 million increase in fourth quarter income from continuing operations compared with 2009. With the addition of $5.8 million from the Mont Miller facility (income from discontinued operations) and a $5.7 million accounting gain on the sale of Miller LP, net income for the fourth quarter of 2010 was $40.8 million, up $14.7 million from the previous year.

During the quarter, cash and cash equivalents related to continuing operations increased by $5.5 million. Construction costs at the Mont Louis wind farm, and the Spy Hill and North Battleford facilities were funded by cash reserves, proceeds from the Miller LP sale and $106 million in non- recourse construction financing for Mont Louis of which $50.5 million is included in cash reserves at December 31, 2010.

Standardized distributable cash for the quarter was down largely due to the capital expenditures for the Mont Louis and Saskatchewan projects. Distributable cash at $12 million was $8.5 million lower than last year. The factors that affected this quarter were similar to those that affected the year: the $5.5 million Thorold subordinated loan prepayment fee, a $3.4 million write-off of deferred development costs and $2 million in preferred share dividends paid. Also, investment income was down by $1.4 million due to repayment of the Panda loan earlier in the year.

Annual audited financial statements and Management, Discussion & Analysis will be filed at www.SEDAR.com and posted on the Fund's website at www.northlandpower.ca.

Outlook

Overview

Northland management is committed to maintaining a dividend of $1.08 per year, payable monthly on its Shares. This payout level is anticipated to exceed free cash flow until the second half of 2013 when the last of the three projects now under construction will be operational. Meanwhile, Northland's cash flow will benefit from about $1.5 billion in tax deduction pools available to defer the payment of any material amount of cash taxes until near the end of the decade.

Northland's Development Pipeline

Northland owns a development portfolio of power projects at various stages of maturity. Currently this pipeline includes a total potential generating capacity of roughly 2,500 MW, of which 447 MW is under construction and 240 MW is in projects that have executed PPAs. The balance of Northland's pipeline includes potential development prospects being pursued in response to specific procurement announcements, or meeting anticipated needs for new power in various jurisdictions or from innovative generation technologies.

Projects under Construction

Spy Hill Project

In September 2009, NPI executed a PPA with SaskPower for an 86 MW gas-fired peaking plant to be built near Spy Hill, Saskatchewan. The commercial operations date (COD) under the PPA is December 1, 2011. The total cost of the project is budgeted at $141 million. The project is currently on schedule and budget.

North Battleford Project

In February 2010, Northland executed a PPA with SaskPower for a 260 MW gas fired combined- cycle base load plant to be built near North Battleford, Saskatchewan. Completion under the EPC contract is scheduled for June 2013 at a budgeted cost of $700 million. The project is currently well within schedule and budget.

Mont Louis Wind Project

The Mont Louis wind project is a 100 MW wind farm located on public land secured under leases near the town of Mont Louis in the Gaspésie region of Quebec. The total project cost is expected to be $180 million or net $150 million after reimbursement of substation and collection system costs by Hydro-Québec. Investissements Québec has committed to lend $15 million for the project.

COD is scheduled for the third quarter of 2011, subject to the completion of the project's interconnection facilities by Hydro-Québec. The project is currently on schedule and budget.

Loblaw Rooftop Solar

The Loblaw Rooftop Solar pilot projects are a group of four installations in various Ontario municipalities, including Ottawa (494 kilowatts (kW)), Whitby (433 kW), Ajax (226 kW), and Toronto (10 kW). Each project is located on the roof of a Loblaws store. Installation work began in October 2010. All projects are expected to be online in the second quarter of 2011.

Projects in Advanced Development

Northland considers projects that have executed PPAs to be in the advanced stage of development.

216 MW of Ontario Feed-In Tariff Projects

Northland continues to actively develop its renewable green energy projects awarded long-term PPAs under the Ontario FIT program. In total, Northland's FIT PPAs provide for 216 MW of capacity, including 130 MW from 13 ground-mounted solar projects located across the province, 26 MW from four run-of-river hydro projects on the Kabinakagami River in partnership with Constance Lake First Nation and a 60 MW Manitoulin Island wind farm. Total investment by Northland on FIT projects could reach $1 billion over the next four years.

On February 10, 2011, Northland and UCCM announced they had formed a 50-50 partnership for the Manitoulin wind farm project. Northland has been developing the project for several years. It expects all environmental permitting and financing to be completed and construction to begin in 2011.

Frampton Wind Project

On December 21, 2010, Northland announced it had been awarded a 20-year PPA to build and operate a 24 MW wind farm in Frampton, Quebec near the south shore of the St. Lawrence. The contract was awarded by Hydro-Québec under the province's request for community and First Nations wind proposals. Northland has partnered with the municipality of Frampton, which has a 33% interest in the project. The wind turbines will be supplied by Enercon from a facility it is constructing in Quebec. Commercial operation for the Frampton wind farm is expected in 2015.

ABOUT NORTHLAND POWER INC.

Northland owns or has an economic interest in 9 projects totalling over 1,050 MW (net 815 MW). Northland's assets comprise facilities that produce electricity from "clean" natural gas and "green" renewable sources such as wind and biomass for sale under long-term PPAs with creditworthy customers to assure revenue stability. Three wholly-owned natural-gas-fired plants are located in Ontario: the 120 MW Iroquois Falls facility, the 110 MW Kingston facility and the 265 MW Thorold facility. Through its 19% equity interest in Panda Energy Corporation, Northland has an interest in the 230 MW Panda-Brandywine combined-cycle power plant located outside Washington, D.C. For the natural-gas-fired plants, long-term contracts, as appropriate, assure the supply and price of natural gas, which is Northland's largest cost. Northland owns the 127.5 MW Jardin d'Éole wind farm near Matane, Quebec, which began commercial operations in late November 2009 and sells electricity under a long- term PPA to Hydro-Québec. Northland owns two wind farms located in Germany with 21.5 MW of installed capacity with all electricity generated being supplied to local power utilities under the terms of German renewable energy legislation. Northland manages two natural-gas- and biomass-fired generation facilities in Kirkland Lake and Cochrane, Ontario on behalf of third- party owners in exchange for management, gas purchase and performance incentive fees. Northland also owns a small chipping facility located on Vancouver Island and an engineering services business. Northland owns the 86 MW Spy Hill project, the 260 MW North Battleford project, the 100 MW Mont Louis wind farm and 4 roof top solar installations, all of which are under construction. In addition, Northland owns 216 MW of wind, solar and run-of-river hydro projects awarded PPAs under the Ontario Power Authority's FIT program and was recently awarded a 20-year PPA by Hydro-Québec to build and operate a 24 MW wind farm near Frampton, Quebec. Northland also has an extensive portfolio of projects under development. Once Northland's Saskatchewan projects are operational, Northland's cash flows will be diversified over five geographically separate regions and regulatory regimes.

Northland's common shares, preferred shares and two series of convertible debentures, which trade on the Toronto Stock Exchange under the symbols NPI, NPI.PR.A, NPI.DB and NPI.DB.A, respectively, are qualified investments for RRSPs, RRIFs and DPSPs under the Canadian Income Tax Act. Northland has in place a dividend re-investment plan that allows common shareholders who are residents of Canada to automatically have their monthly cash dividends reinvested in additional common shares. Participants do not pay any costs associated with the plan, including brokerage commissions. For further information or to join the plan, contact your financial advisor or broker.

FORWARD LOOKING STATEMENTS

Certain statements in this News Release, other than statements of historical fact, are forward-looking statements based on certain assumptions and reflect the Fund's and its subsidiaries' current expectations. Forward-looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future, and readers are cautioned that such statements may not be appropriate for other purposes. These statements may include, without limitation, statements regarding the operations, business, financial condition, priorities, ongoing

objectives, strategies and outlook of Northland and its subsidiaries. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as "expects", "anticipates", "plans", "believes", "estimates", "intends", "targets", "projects", "forecasts" or negative versions thereof and other similar expressions, or future or conditional verbs such as "may", "will", "should", "would" and "could". This information is based upon certain material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking statements, including the perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. Although these forward-looking statements are based upon management's current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties. Some of the factors that could cause results or events to differ from current expectations include those set out in the management's discussion and analysis section of Northland's 2009 annual report and in Northland's Annual Information Form dated March 31, 2010, certain of which are beyond the Manager's control. Northland's actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or what benefits, including the amount of dividends, Northland and its Shareholders will derive therefrom.

The forward-looking statements contained in this press release are based on assumptions that were considered reasonable as of the date hereof for the purpose of providing readers with Northland's expectations for the coming year. The forward- looking statements may not be appropriate for other purposes. Other than as specifically required by law, Northland undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or otherwise.

NORTHLAND POWER INCOME FUND  
Consolidated Balance Sheets  
(unaudited, stated in thousands)  
   
ASSETS  
   
  Dec. 31, 2010     Dec. 31, 2009  
   
Current          
Cash and cash equivalents $ 111,546   $ 116,066  
Cash reserves   72,151     4,163  
Accounts and other receivables   78,339     71,044  
Inventories   7,933     4,873  
Prepaid expenses   5,354     2,525  
Current portion of Panda senior loan   -     2,401  
Current assets of discontinued operations   -     2,007  
Total current assets   275,323     203,079  
   
Deferred development costs   10,430     8,018  
Investment in Panda Energy Corporation   5,800     6,050  
Panda senior loan   -     61,879  
Goodwill   122,467     115,840  
Contracts   240,729     260,032  
Property, plant and equipment   1,244,115     962,015  
Long-term assets of discontinued operations   -     77,612  
  $ 1,898,864   $ 1,694,525  
   
   
LIABILITIES AND UNITHOLDERS' EQUITY  
   
   
Current  
Accounts payable and accrued liabilities $ 91,120   $ 55,019  
Current portion of long-term debt   42,943     41,157  
Distribution payable to Unitholders   6,753     6,423  
Current liabilities of discontinued operations   -     2,669  
Total current liabilities   140,816     105,268  
   
Long-term debt   697,429     561,552  
Other long-term liabilities   2,051     1,525  
Asset retirement obligation   3,417     3,191  
Derivative financial instruments   91,499     37,019  
Non-controlling interests   -     22,008  
Convertible debentures   75,463     121,021  
Future income tax liability   71,459     100,287  
Long-term liabilities of discontinued operations   -     37,056  
    1,082,134     988,927  
   
Trust Units   806,775     761,217  
Preferred shares issued by subsidiary   145,946     -  
Exchangeable units   236,491     198,821  
Replacement rights   46,883     44,716  
Accumulated other comprehensive income   381     460  
Deficit   (419,746 )   (299,616 )
Total Unitholders' equity   816,730     705,598  
  $ 1,898,864   $ 1,694,525  
NORTHLAND POWER INCOME FUND  
Consolidated Statements of Income and Deficit  
(unaudited, stated in thousands except per unit amounts)  
   
    3 Months Ended Dec. 31     12 Months Ended Dec. 31  
    2010     2009     2010     2009  
Sales                        
 Electricity $ 81,667   $ 47,662   $ 267,852   $ 158,851  
 Steam   2,869     2,029     9,263     7,922  
 Natural gas   3,651     6,150     21,336     23,115  
 Other   1,986     1,689     5,719     3,482  
Total sales   90,173     57,530     304,170     193,370  
Cost of sales   34,320     22,567     126,083     83,398  
Gross profit   55,853     34,963     178,087     109,972  
   
Expenses                        
 Plant operating costs   8,983     4,924     28,026     15,801  
 Amortization of property, plant and equipment   12,711     7,192     46,587     24,853  
 Writedown of property, plant and equipment   -     -     -     1,512  
 Write-off of accounts receivable   -     -     1,111     -  
 Management and administration costs - operations   4,172     4,068     13,377     9,311  
 Management and administration costs - development   2,341     1,631     6,688     2,956  
 Accretion expense   61     24     240     34  
    28,268     17,839     96,029     54,467  
   
Investment income   557     1,940     12,593     9,810  
Income from operations   28,142     19,064     94,651     65,315  
 Foreign exchange (gain)/loss   2,087     809     (535 )   10,036  
 Amortization of contracts   5,074     3,895     19,303     14,900  
 Change in fair value of interest rate swaps   (28,744 )   (9,298 )   53,761     (9,157 )
 Writedown in PEC investment to fair value   -     -     250     -  
 Write-off of deferred development costs   3,383     -     3,383     -  
 Convertible debenture issuance costs   -     3,935     -     3,935  
 Interest income   (166 )   (28 )   (387 )   (153 )
 Interest expense and bank fees   19,278     5,101     54,513     14,509  
   
Income (loss) before income taxes   27,230     14,650     (35,637 )   31,245  
   
Provision for (recovery of) income taxes                        
 Current   1,455     551     1,577     85  
 Future   (9,165 )   (12,144 )   (34,133 )   (4,316 )
    (7,710 )   (11,593 )   (32,556 )   (4,231 )
   
Minority interest in earnings of a subsidiary   -     -     151     -  
   
Income (loss) for the period, continuing operations $ 34,940   $ 26,243     (3,232 )   35,476  
Income (loss) for the period, discontinued operations   5,840     (155 )   4,650     (212 )
Net income   40,780     26,088     1,418     35,264  
Deficit, beginning of period   (426,977 )   (299,160 )   (299,616 )   (250,565 )
Cash distributions declared to Unitholders   (20,137 )   (19,270 )   (78,312 )   (70,400 )
Preferred share dividends, including taxes   (1,982 )   -     (3,399 )   -  
Distributions in kind   (11,430 )   (7,274 )   (39,837 )   (13,915 )
Deficit, end of period $ (419,746 ) $ (299,616 ) $ (419,746 ) $ (299,616 )
   
Average number of units outstanding - basic   100,817     94,144     97,725     75,694  
Average number of units outstanding - diluted   106,281     104,955     97,725     75,952  
Net income (loss) per trust unit, continuing operations - basic $ 0.33   $ 0.28   $ (0.07 ) $ 0.47  
Net income (loss) per trust unit, continuing operations - diluted $ 0.32   $ 0.27   $ (0.07 ) $ 0.47  
Net income (loss) per trust unit, discontinued operations - basic $ 0.06   $ -   $ 0.05   $ -  
Net income (loss) per trust unit, discontinued operations - diluted $ 0.06   $ -   $ 0.05   $ -  
NORTHLAND POWER INCOME FUND  
Consolidated Statement of Comprehensive Income  
(unaudited, stated in thousands)  
   
    3 Months Ended Dec. 31     12 Months Ended Dec. 31  
    2010     2009     2010     2009  
   
Net income for the period $ 40,780   $ 26,088   $ 1,418   $ 35,264  
Other comprehensive income(loss):                        
 Change in translation of net investment in foreign operations   (370 )   (1,604 )   (1,338 )   (2,069 )
 Change in fair value of hedged foreign currency forward 
 contracts
  637     770     1,611     1,682  
Future income tax effect of above   (172 )   (130 )   (352 )   (239 )
Total other comprehensive income (loss)   95     (964 )   (79 )   (626 )
Total comprehensive income $ 40,875     25,124   $ 1,339   $ 34,638  
NORTHLAND POWER INCOME FUND  
Consolidated Statements of Cash Flows  
(unaudited, stated in thousands except per unit amounts)  
   
    3 Months Ended Dec. 31     12 Months Ended Dec. 31  
    2010     2009     2010     2009  
Operating activities                        
Net income for the period $ 40,780   $ 26,088   $ 1,418   $ 35,264  
Items not involving cash:                        
    (Income) loss from discontinued operations   (5,840 )   155     (4,650 )   212  
    Amortization of property, plant and equipment   12,711     7,192     46,587     24,853  
    Amortization of contracts   5,074     3,895     19,303     14,900  
    Change in fair value of interest rate swaps   (28,744 )   (9,298 )   53,761     (9,157 )
    Write-off of deferred development costs   3,383     -     3,383     -  
    Foreign exchange   2,087     809     401     10,036  
    Accretion expense   61     24     240     34  
    Convertible debenture issuance costs   -     3,935     -     3,935  
    Other long term liabilities   172     130     563     (1,584 )
    Future income taxes   (9,165 )   (12,144 )   (34,133 )   (4,316 )
    Minority interest in earnings of subsidiary   -     -     151     -  
    Other   671     (587 )   (395 )   (732 )
    Distributions from discontinued operations   1,258     805     1,481     3,876  
    Cash provided by (used in) discontinued operations   218     (184 )   1,148     1,180  
   
    22,666     20,820     89,258     78,501  
Net change in non-cash working capital balances related to operations   (6,325 )   (4,372 )   391     (13,917 )
Cash provided by operating activities   16,341     16,448     89,649     64,584  
   
Investing activities                        
Cash reserves utilization (funding)   12,914     3,635     (67,988 )   61,827  
Loan to Thorold LP   -     -     -     (3,145 )
Purchase of non-controlling interests in Jardin LP   -     -     (21,500 )   -  
Deferred development costs   (4,592 )   (2,933 )   (14,642 )   (4,083 )
Net change in working capital related to investing activities   (9,784 )   (45,658 )   24,292     (45,165 )
Receipts of principal on Panda senior loan   -     818     65,649     3,205  
Net proceeds from sale of Miller LP   43,044     -     43,044     -  
Acquisition of Northland Power Inc, including cash acquired   -     -     -     5,014  
Purchase of property, plant and equipment   (118,657 )   (34,530 )   (321,040 )   (142,803 )
Cash used in investing activities   (77,075 )   (78,668 )   (292,185 )   (125,150 )
   
Financing activities                        
Public issuance receipts   -     161,392     -     161,392  
Repayment of Kingston LP term loans   -     -     (10,556 )   (9,082 )
Bank credit facility   -     (39,900 )   -     -  
Jardin LP financing (repayment), net   (10,419 )   22,000     (9,751 )   22,000  
Mont Louis financing   106,000     -     106,000     -  
Spy Hill LP financing   25,300     -     47,300     -  
Preferred share issuance by subsidiary, net   -     -     144,843     -  
Thorold LP (repayment) financing, net   (32,493 )   31,824     2,786     73,547  
Repayment of NP Holdings Inc. loan, net   -     -     -     (34,658 )
Public issuance costs   -     (7,570 )   -     (7,720 )
Preferred share dividends   (1,968 )   -     (3,349 )   -  
Distributions to Unitholders   (19,978 )   (18,667 )   (77,982 )   (72,083 )
Cash used in discontinued operations   -     (638 )   (948 )   (1,275 )
Cash provided by financing activities   66,442     148,441     198,343     132,121  
Effect of exchange rate differences on cash and cash equivalents   (33 )   (50 )   (127 )   (216 )
Net change in cash and cash equivalents   5,675     86,171     (4,320 )   71,339  
Cash and cash equivalents, beginning of the period   106,089     29,073     116,066     44,632  
Cash and cash equivalents, beginning of the period, discontinued operations   767     1,607     785     880  
Cash and cash equivalents, end of period, continuing operations $ 111,546   $ 116,066   $ 111,546   $ 116,066  
Cash and cash equivalents, end of period, discontinued operations   -     785     -     785  
PER UNIT                        
Distributions declared to Unitholders $ 0.2700   $ 0.2700   $ 1.0800   $ 1.0800  
 NORTHLAND POWER INCOME FUND  
 DISTRIBUTIONS TO UNITHOLDERS AND DISTRIBUTABLE CASH  
 (stated in thousands except per unit amounts)  
   
    3 Months ended Dec. 31     12 Months ended Dec. 31  
(unaudited, stated in thousands except per unit amounts)   2010     2009     2010     2009  
Cash provided by operating activities $ 16,341   $ 16,448   $ 89,649   $ 64,584  
Capital expenditures   (118,657 )   (34,530   (321,040 )   (142,803
   
Standardized distributable cash $ (102,316 ) $ (18,082 ) $ (231,391 ) $ (78,219 )
                         
Northland adjustments:                        
Net change in non-cash working capital balances related to operations   6,132     4,762     575     13,310  
Expansionary capital expenditures   118,534     33,736     320,309     141,728  
Scheduled receipts of principal on Panda senior loan   -     818     1,259     3,205  
PEC retructuring fee   -     -     -     -  
Scheduled repayment of Miller LP term loan   -     (638 )   (948 )   (1,275 )
Scheduled repayment of Jardin LP debt   (1,029 )   -     (4,161 )   -  
Scheduled repayment of Kingston LP term loans   -     -     (10,556 )   (9,082 )
Scheduled repayment of Thorold LP term loans   (3,292 )   -     (3,292 )   -  
Write-off of deferred development costs   (3,383 )   -     (3,383 )   -  
Funds set aside for quarterly scheduled debt repayment   -     319     -     -  
Perferred share dividends   (1,968 )   -     (3,349 )   -  
Kingston LP cash reserve drawdown(funding)   (427 )   (347 )   (937 )   943  
Thorold LP cash reserve funding   (222 )   -     (222 )   -  
Funds set aside for future maintenance   (22 )   (22 )   (88 )   (88 )
   
Distributable cash $ 12,007   $ 20,546   $ 63,816   $ 70,522  
                         
Cash Distributions paid to Unitholders $ 19,978   $ 18,667   $ 77,982   $ 72,083  
                         
Standardized distributable cash payout ratio   (20 %)   (103 %)   (34 %)   (92 %)
Distributable cash payout ratio   166 %   91 %   122 %   102 %
   
Cumulative - since inception                        
Standardized distributable cash             $ 152,355   $ 383,746  
Distributable cash             $ 697,745   $ 633,929  
Cash distributions paid to Unitholders             $ 651,387   $ 573,405  
Standardized distributable cash payout ratio               428 %   149 %
Distributable cash payout ratio               93 %   90 %
   
Average number of trust units - basic (thousands of units) (1)   74,218     70,277     72,290     64,832  
Average number of trust units - fully diluted (thousands of units) (2)   79,199     80,692     81,821     69,895  
Per trust unit ($/unit)                        
Standardized distributable cash - basic $ (1.3786 ) $ (0.2573 ) $ (3.2009 ) $ (1.2065 )
Standardized distributable cash - fully diluted $ (1.2919 ) $ (0.2573 ) $ (3.2009 ) $ (1.2065 )
   
Distributable cash - basic $ 0.1618   $ 0.2924   $ 0.8828   $ 1.0878  
Distributable cash - fully diluted $ 0.1516   $ 0.2743   $ 0.8481   $ 1.0100  
(1) The number of Units and the related per unit numbers are based solely on Trust Units of the Fund and do not include any Class A Exchangeable Units or Replacement Rights as they are not entitled to any cash distributions until January 2012.
(2) Average number of Units diluted is the sum of the weighted average number of Units in the basic calculation plus the number of Units that would be issued assuming conversion of the convertible unsecured subordinated debentures.
 
NORTHLAND POWER INCOME FUND
Supplemental Facility Information
 
Iroquois Falls Facility
  3 months ended Dec. 31 12 months ended Dec. 31
(in thousands of dollars except as indicated) 2010 2009 2010 2009
Energy Volume        
Electricity (MWh) 201,052 201,410 729,835 721,592
Steam (000 lb.) 267,701 271,031 925,745 941,913
Fuel Consumption (000 GJs) 1,850 1,831 6,748 6,630
 
Sales        
Electricity 23,590 22,327 78,059 72,647
Steam 2,207 2,029 7,764 7,146
Natural gas 864 1,603 6,707 3,945
Emission allowances and credits - - 170 80
  26,661 25,959 92,700 83,818
Cost of sales        
Gas consumed 9,758 8,728 37,248 32,434
Gas re-sold 864 1,595 6,691 4,026
  10,622 10,323 43,939 36,460
 
Gross profit 16,039 15,636 48,761 47,358
 
Plant operating costs 2,350 2,170 7,554 7,410
 
 
Kingston Facility
  3 months ended Dec. 31 12 months ended Dec 31
(in thousands of dollars except as indicated) 2010 2009 2010 2009
 
Energy Volume        
Electricity (MWh) 226,629 183,182 808,261 661,877
Steam (000 lb.) - - - 89,334
Fuel consumption (000 GJs) 1,859 1,538 6,710 5,757
 
Sales        
Electricity 24,345 21,122 90,887 79,051
Steam - - - 776
Natural gas 2,787 4,547 14,629 19,170
  27,132 25,669 105,516 98,997
Cost of sales        
Gas consumed 11,557 9,251 43,761 35,937
Gas re-sold 1,854 2,487 9,403 9,957
  13,411 11,738 53,164 45,894
 
Gross profit 13,721 13,931 52,352 53,103
 
Plant operating costs 1,475 1,621 6,477 6,224
 
NORTHLAND POWER INCOME FUND
Supplemental Facility Information
 
 
Thorold Facility
  3 months ended Dec. 31 12 months ended Dec. 31
(in thousands of dollars except as indicated) 2010 2009 2010 2009
Energy Volume        
Electricity (MWh) 206,870 - 582,441 -
Steam (000 lb.) 248,543 - 699,437 -
Fuel Consumption (000 GJs) 1,725 - 4,845 -
 
Sales        
Electricity 25,958 - 75,030 -
Steam 662 - 1,499 -
  26,620 - 76,529 -
Cost of sales        
Gas consumed 9,551 - 27,321 -
Gross profit 17,069 - 49,208 -
 
Plant operating costs 2,818 - 7,953 -
 
 
Mont Miller Facility
  3 months ended Dec. 31 12 months ended Dec. 31
(in thousands of dollars except as indicated) 2010 2009 2010 2009
 
Energy Volume        
Electricity (MWh) 37,250 34,846 128,108 143,858
 
Sales        
Electricity 2,434 2,246 8,321 9,201
  2,434 2,246 8,321 9,201
 
Gross profit 2,434 2,246 8,321 9,201
 
Plant operating costs 567 538 2,135 1,993
 
NORTHLAND POWER INCOME FUND
Supplemental Facility Information
 
Jardin d'Éole Facility
  3 months ended Dec. 31 12 months ended Dec. 31
(in thousands of dollars except as indicated) 2010 2009 2010 2009
 
Energy Volume        
Electricity (MWh) 99,027 40,672 301,662 40,672
 
Sales
Electricity 6,699 2,724 20,380 2,724
Gross profit 6,699 2,724 20,380 2,724
 
Plant operating costs 1,668 346 3,996 346
 
 
German Facilities
  3 months ended Dec. 31 12 months ended Dec. 31
(in thousands of dollars except as indicated) 2010 2009 2010 2009
 
Energy Volume        
Electricity (MWh) 8,100 9,572 26,782 29,879
 
Sales
Electricity 1,075 1,488 3,496 4,429
Gross profit 1,075 1,488 3,496 4,429
 
Plant operating costs 398 463 1,126 1,206
NORTHLAND POWER INCOME FUND
Supplemental Facility Information
 
Management, Development and Other Services
  3 months ended Dec. 31 12 months ended Dec. 31
(in thousands of dollars) 2010 2009 2010 2009
Sales, other 1,986 1,689 5,549 3,402
Cost of sales, other 736 506 1,659 1,044
Gross profit 1,250 1,183 3,890 2,358
 
Management and administration :
    -Operations 4,172 4,068 13,377 9,311
    -Development 2,341 1,631 6,688 2,956
Total management and administration 6,513 5,699 20,065 12,267
 
Panda Energy Corporation ("PEC"):
Dividends 557 68 3,266 404
Interest income - 1,872 9,327 7,828
  557 1,940 12,593 8,232
Thorold LP interest and fees - - - 1,230
Jardin LP interest and fees - - - 348
Total investment income 557 1,940 12,593 9,810

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