CALGARY, ALBERTA--(CCNMatthews - July 29, 2004) - Enbridge Inc.
today announced earnings applicable to common shareholders of
$360.8 million for the six months ended June 30, 2004, or $2.16
per share compared with $549.2 million, or $3.33 per share, in
2003. A $169.1 million gain on the sale of assets to Enbridge
Income Fund recorded June 30, 2003 and a $45.4 million charge to
earnings in 2004 related to provincial tax rate changes are the
primary factors for the variance from the prior year. Positive
factors increasing earnings in 2004 include a higher contribution
from the Enbridge crude oil pipeline system and the gas
distribution utility.
Earnings for the three months ended June 30, 2004 are $248.4
million, or $1.49 per share compared with $445.4 million, or
$2.70 per share, for the three months ended June 30, 2003. The
prior year earnings of $445.4 million include the $169.1 million
gain on sale of assets and other factors including weather that
was warmer than the prior year.
Patrick D. Daniel, President & Chief Executive Officer stated,
"Enbridge posted another quarter of solid earnings and cash
flows, with adjusted operating earnings for the six months ended
June 30, 2004 increasing by $13.2 million or 4% from the prior
year. This further strengthens our financial position and leaves
us on track to meet our expectations for the year. Continental
supply-demand fundamentals are very strong, providing Enbridge
opportunities to grow through the decade. We continue to work to
develop a variety of new feeder and export oil and gas pipeline
projects, seeking to add value for our customers and
shareholders. We also continue to prudently assess acquisition
opportunities, however we remain patient and disciplined long
term investors."
On July 29, 2004, the Enbridge Board of Directors declared
quarterly dividends of $0.4575 per common share and $0.34375 per
Series A Preferred Share. Both dividends are payable on September
1, 2004 to shareholders of record on August 16, 2004.
--------------------------------------------------------------------Consolidated Earnings-------------------------------------------------------------------- Three months ended Six months ended(millions of Canadian dollars) June 30, June 30,-------------------------------------------------------------------- 2004 2003 2004 2003 ------ ------ ------ ------Liquids Pipelines 53.7 55.5 106.3 101.9Gas Pipelines 13.9 24.5 26.9 41.6Sponsored Investments 14.6 184.2 30.0 192.0Gas Distribution and Services 170.9 177.3 210.4 209.1International 21.3 18.6 37.5 34.2Corporate (26.0) (14.7) (50.3) (29.6) ------ ------ ------ ------ 248.4 445.4 360.8 549.2 ------ ------ ------ ------ ------ ------ ------ ------Significant non-operating factors and variances affectingconsolidated earnings are as follows:-------------------------------------------------------------------- Three months ended Six months ended(millions of Canadian dollars) June 30, June 30,-------------------------------------------------------------------- 2004 2003 2004 2003 ------ ------ ------ ------Sponsored Investments Gain on sale of assets to Enbridge Income Fund - 169.1 - 169.1 Dilution gains on the issue of EEP units - 9.2 0.9 9.2 ------ ------ ------ ------ - 178.3 0.9 178.3Gas Distribution and Services Colder than normal weather 16.5 27.4 18.6 41.7 Regulatory disallowances - - (4.6) (7.1) Dilution gain in Noverco (Gaz Metro unit issuance) - - 1.1 - Dilution gain - AltaGas Income Trust 8.0 - 8.0 - Revalue future income taxes due to tax rate changes - (6.1) (45.4) (6.1) ------ ------ ------ ------ 24.5 21.3 (22.3) 28.5Corporate Revalue future income taxes due to tax rate changes - (1.0) - (1.0) ------ ------ ------ ------Total significant non-operating factors and variances increasing/(decreasing) earnings 24.5 198.6 (21.4) 205.8 ------ ------ ------ ------ ------ ------ ------ ------
Significant operating factors affecting earnings in the first
half of 2004 include the following:
- Enbridge crude oil pipeline system earnings are higher in the
first half of 2004 as they include incremental earnings from the
Terrace Phase III expansion placed into service on April 1, 2003.
- Enbridge Gas Distribution (EGD) results include $25.6 million
related to unbilled revenue, as well as the effects of the 2004
rate increase. The decrease in earnings within the second quarter
includes the $9.4 million partial reversal of unbilled revenue,
which was recorded in the first quarter of 2004, and the timing
of the implementation of fiscal 2003 rates. In March 2003, EGD
settled the primary elements of the 2003 rate application and
accrued the approved rate increase relating to the first two
quarters, whereas, in 2004 rates were in place at the beginning
of the year.
- The Aux Sable liquids extraction plant continues to show an
improvement over the prior year.
- Earnings are also lower in 2004 due to the absence of earnings
from Alliance Pipeline (Canada) and Enbridge Saskatchewan,
partially offset with earnings from Enbridge Income Fund (EIF),
formed with the acquisition of these assets on June 30, 2003.
- Corporate costs were higher in 2004 due to increased business
development activity, stock-based compensation expense, and a
higher effective tax rate.
Non-GAAP Measures
This news release contains a reference to adjusted operating
earnings which represents earnings applicable to common
shareholders adjusted for non-operating factors, as detailed in
the above table, as well as unbilled revenue. This is not a
measure that has a standardized meaning prescribed by Canadian
GAAP and is not considered a GAAP measure. Therefore, this
measure may not be comparable to a similar measure presented by
other issuers. Management believes that the presentation of
adjusted operating earnings provides more useful information to
investors and shareholders as it provides increased predictive
value and allows them to more accurately identify the trend in
earnings.
--------------------------------------------------------------------Liquids Pipelines-------------------------------------------------------------------- Three months ended Six months ended(millions of Canadian dollars) June 30, June 30,-------------------------------------------------------------------- 2004 2003 2004 2003 ------ ------ ------ ------Enbridge System 41.5 40.7 82.7 70.3Athabasca System 10.3 11.4 21.0 23.1NW System 2.0 2.0 3.9 4.1Saskatchewan System - 1.4 - 3.1Feeder Pipelines and Other (0.1) - (1.3) 1.3 ------ ------ ------ ------ 53.7 55.5 106.3 101.9 ------ ------ ------ ------ ------ ------ ------ ------
- Enbridge System earnings are higher as they include incremental
earnings from the Terrace Phase III expansion placed into service
on April 1, 2003.
- The Athabasca System includes the earnings contribution from
the Hardisty storage caverns completed in the fourth quarter of
2003. This is more than offset by higher tax expense as the prior
year included the utilization of loss carryforwards.
- The Saskatchewan System is included in the results of EIF, a
component of the Sponsored Investments segment, effective June
30, 2003.
- The earnings variance in Feeder Pipelines and Other is the
result of higher costs than provided for in 2003, associated with
the final settlement of Federal Energy Regulatory Commission
reparations on the Frontier Pipeline recorded in the first
quarter of 2004, as well as higher Liquids Pipelines' business
development costs.
--------------------------------------------------------------------Gas Pipelines-------------------------------------------------------------------- Three months ended Six months ended(millions of Canadian dollars) June 30, June 30,-------------------------------------------------------------------- 2004 2003 2004 2003 ------ ------ ------ ------Alliance Pipeline (US) 9.7 9.8 18.7 17.7Alliance Pipeline (Canada) - 12.4 - 19.6Vector Pipeline 4.2 2.3 8.2 4.3 ------ ------ ------ ------ 13.9 24.5 26.9 41.6 ------ ------ ------ ------ ------ ------ ------ ------
- Alliance Pipeline (US) earnings reflect the additional
ownership interests of 1.1% in March 2003. 10.7% in April 2003
and 1.1% in October 2003, partially offset by the impact of the
stronger Canadian dollar in 2004.
- Alliance Pipeline (Canada) is included in the results of EIF, a
component of the Sponsored Investments segment, effective June
30, 2003.
- Vector Pipeline earnings reflect a higher proportion of firm
transportation volumes as a result of increased demand for
service on the pipeline due to new interconnect facilities and
customer storage developments, as well as lower interest costs.
This is further enhanced by an additional ownership interest of
15% acquired in the fourth quarter of 2003.
--------------------------------------------------------------------Sponsored Investments-------------------------------------------------------------------- Three months ended Six months ended(millions of Canadian dollars) June 30, June 30,-------------------------------------------------------------------- 2004 2003 2004 2003 ------ ------ ------ ------Enbridge Energy Partners (EEP) 7.1 5.9 14.1 13.7Enbridge Income Fund (EIF) 7.5 - 15.0 -Gain on sale of assets to Enbridge Income Fund - 169.1 - 169.1Dilution Gains - 9.2 0.9 9.2 ------ ------ ------ ------ 14.6 184.2 30.0 192.0 ------ ------ ------ ------ ------ ------ ------ ------
- EEP reflects higher operating earnings, primarily in the second
quarter of 2004, partially offset by both the stronger Canadian
dollar and the lower ownership interest in 2004. The higher
operating earnings include incremental contributions from the
acquisition of the North Texas assets, for US$250.0 million,
which closed on December 31, 2003, and the Mid-Continent assets,
US$117.0 million, which closed on March 1, 2004. In addition,
increased volumes on the main crude oil liquids pipeline system,
as well as increased throughput on various natural gas assets
have had a positive impact.
- EIF commenced operations on June 30, 2003 with the acquisition
of a 50% interest in Alliance Pipeline (Canada) and the
Saskatchewan System. Enbridge previously owned these assets
directly and their results, prior to the disposition, were
separately included in the Gas Pipelines and Liquids Pipelines
segments, respectively. The Company recognized a $169.1 million
gain on the sale of assets to EIF.
- In each year, EEP issued additional common units and as
Enbridge did not participate in these offerings, dilution gains
resulted. The lower dilution gain in 2004 related to the exercise
of an over-allotment option rather than a larger primary
offering.
--------------------------------------------------------------------Gas Distribution and Services-------------------------------------------------------------------- Three months ended Six months ended(millions of Canadian dollars) June 30, June 30,-------------------------------------------------------------------- 2004 2003 2004 2003 ------ ------ ------ ------Enbridge Gas Distribution 132.4 158.0 143.9 168.7CustomerWorks/ECS 4.3 3.7 9.2 8.8Noverco 15.0 11.8 28.6 22.0Other Gas Distribution Operations 4.9 5.1 6.9 7.3Enbridge Gas New Brunswick 0.6 0.9 1.7 2.1Gas Services (0.6) (0.3) (1.0) (0.6)Aux Sable (1.8) (4.8) (0.5) (6.6)Other 16.1 2.9 21.6 7.4 ------ ------ ------ ------ 170.9 177.3 210.4 209.1 ------ ------ ------ ------ ------ ------ ------ ------
- Various factors, including the weather, affected EGD's
distribution volumes and earnings in 2004. While the weather was
colder than normal in 2004 and increased earnings by $20.0
million ($12.7 million in the second quarter), it was not as cold
as the prior year when weather increased earnings by $41.7
million ($27.4 million in the second quarter).
- The Ontario tax rate increase and the related revalue of future
income taxes result in a first quarter 2004 charge to earnings of
$47.6 million for EGD, whereas the second quarter of 2003
included a charge to earnings of $3.8 million also related to tax
rate changes. EGD's earnings include a $4.6 million outsourcing
disallowance in 2004, whereas the prior year included a $7.1
million gas costs disallowance related to a long-term
transportation contract, both in the first quarter.
- Commencing in 2004, EGD refined its process for estimating
unbilled revenue resulting in a $25.6 million increase in
earnings. Had EGD experienced normal weather during the unbilled
period, additional earnings of $1.4 million would have resulted.
The impact is a timing difference of reported earnings among
quarters. The second quarter of 2004 reflects the reversal of
$9.4 million related to the unbilled revenue recorded in the
first quarter. If EGD had employed the new estimation procedures
in 2003, first half earnings would have increased by $23.1
million and had weather been normal, earnings would have included
an additional $0.6 million.
- Enbridge Gas Distribution was also positively impacted by the
2004 rate increase, as well as the addition of new customers
partially offset with an increase in operating costs. The
decrease in earnings within the second quarter reflects the
impact in 2003 of final rates not being approved and accrued
until the second quarter, whereas, 2004 rates were in place at
the beginning of 2004.
- The Noverco earnings include a $1.1 million dilution gain in
the first quarter of 2004, resulting from a Gaz Metro Limited
Partnership unit issuance that Noverco did not participate in.
The Alberta tax rate reduction in the first quarter of 2004 also
increased earnings by $1.6 million, whereas the prior year
reflected a tax rate increase and a $2.3 million charge to
earnings in the second quarter.
- Aux Sable's operating results improved in the first half of
2004 as a result of positive fractionation margins and the
benefits of a comprehensive risk management strategy. Enbridge's
ownership interest in Aux Sable was also higher in 2004 as an
additional 11.8% was acquired in April 2003 resulting in the
current ownership of 42.7%. As the acquisition of the additional
interest was at a discount to the book value, depreciation
expense is lower on the additional interest.
- The primary component of Other is the Company's investment in
AltaGas Income Trust (AltaGas), a publicly traded income trust.
During the second quarter of 2004, AltaGas issued additional
trust units. Enbridge did not participate in this offering,
causing a dilution of its ownership to approximately 36% and the
recognition of an $8.0 million after-tax dilution gain. The
re-value of the future income tax liability related to this
investment, primarily as a result of the first quarter Alberta
tax rate reduction, also increased earnings.
--------------------------------------------------------------------International-------------------------------------------------------------------- Three months ended Six months ended(millions of Canadian dollars) June 30, June 30,-------------------------------------------------------------------- 2004 2003 2004 2003 ------ ------ ------ ------OCENSA/CITCol 8.1 7.5 15.9 15.9CLH 14.7 12.7 24.5 21.1Other (1.5) (1.6) (2.9) (2.8) ------ ------ ------ ------ 21.3 18.6 37.5 34.2 ------ ------ ------ ------ ------ ------ ------ ------
- Operating results from CLH reflect increased volumes due to
greater demand for refined products throughout Spain, lower
operating costs and the translation impact of the stronger Euro.
--------------------------------------------------------------------Corporate-------------------------------------------------------------------- Three months ended Six months ended(millions of Canadian dollars) June 30, June 30,-------------------------------------------------------------------- 2004 2003 2004 2003 ------ ------ ------ ------Corporate (26.0) (14.7) (50.3) (29.6) ------ ------ ------ ------ ------ ------ ------ ------
- Corporate costs were higher in 2004 due to increased business
development activity, stock-based compensation expense, and a
higher effective tax rate. In 2003, Corporate costs were offset
by interest income on a loan to EEP.
Enbridge will hold a conference call at 1:00 p.m. Mountain time
(3:00 p.m. Eastern time) today to discuss the second quarter
results. The call can be accessed at 1-800-387-6216 and will be
audio webcast live at www.enbridge.com/investor. A replay will be
available shortly thereafter at 1-800-408-3053 using the access
code 3079947#.
The unaudited interim consolidated financial statements and MD&A
are available on our website.
Enbridge Inc. is a leader in energy transportation and
distribution in North America and internationally. As a
transporter of energy, Enbridge operates, in Canada and the
United States, the world's longest crude oil and liquids pipeline
system. The Company also has international operations and a
growing involvement in the natural gas transmission and midstream
businesses. As a distributor of energy, Enbridge owns and
operates Canada's largest natural gas distribution company, which
provides distribution services in the provinces of Ontario and
Quebec, and in New York State; and is developing a gas
distribution system for the Province of New Brunswick. The
Company employs approximately 4,000 people, primarily in Canada,
the United States and South America. Enbridge common shares trade
on the Toronto Stock Exchange in Canada and on the New York Stock
Exchange in the United States under the symbol ENB. Information
about Enbridge is available on the Company's website at
Certain information provided in this news release constitutes
forward-looking statements. The words "anticipate", "expect",
"project", "estimate", "forecast" and similar expressions are
intended to identify such forward-looking statements. Although
Enbridge believes that these statements are based on information
and assumptions which are current, reasonable and complete, these
statements are necessarily subject to a variety of risks and
uncertainties pertaining to operating performance, regulatory
parameters, weather, economic conditions and commodity prices.
You can find a discussion of those risks and uncertainties in our
Canadian securities filings and American SEC filings. While
Enbridge makes these forward-looking statements in good faith,
should one or more of these risks or uncertainties materialize,
or should underlying assumptions prove incorrect, actual results
may vary significantly from those expected. Enbridge assumes no
obligation to publicly update or revise any forward-looking
statements made herein or otherwise, whether as a result of new
information, future events or otherwise.
ENBRIDGE INC.HIGHLIGHTS(1)--------------------------------------------------------------------(unaudited; millions of Canadian dollars Three months ended Six months ended except per share amounts) June 30, June 30,-------------------------------------------------------------------- 2004 2003 2004 2003 ------ ------ ------ ------FINANCIAL Earnings Applicable to Common Shareholders Liquids Pipelines 53.7 55.5 106.3 101.9 Gas Pipelines 13.9 24.5 26.9 41.6 Sponsored Investments 14.6 184.2 30.0 192.0 Gas Distribution and Services 170.9 177.3 210.4 209.1 International 21.3 18.6 37.5 34.2 Corporate (26.0) (14.7) (50.3) (29.6)-------------------------------------------------------------------- 248.4 445.4 360.8 549.2---------------------------------------------------------------------------------------------------------------------------------------- Cash Provided By Operating Activities Earnings plus charges/(credits) not affecting cash 375.1 412.4 621.8 623.1 Changes in operating assets and liabilities 331.7 4.4 284.1 (174.7)-------------------------------------------------------------------- 706.8 416.8 905.9 448.4---------------------------------------------------------------------------------------------------------------------------------------- Common Share Dividends 78.9 70.7 157.6 141.4---------------------------------------------------------------------------------------------------------------------------------------- Earnings per Common Share 1.49 2.70 2.16 3.33---------------------------------------------------------------------------------------------------------------------------------------- Dividends per Common Share 0.4575 0.4150 0.9150 0.8300---------------------------------------------------------------------------------------------------------------------------------------- Weighted Average Common Shares Outstanding (millions) 167.0 164.8---------------------------------------------------------------------------------------------------------------------------------------- Diluted Weighted Average Common Shares Outstanding (millions) 168.5 166.1----------------------------------------------------------------------------------------------------------------------------------------OPERATING Liquids Pipelines(2) Deliveries (thousands of barrels per day)(3) 2,156 2,127 2,131 2,143 Barrel miles (billions) 191 170 376 343 Average haul (miles) 974 877 975 885 Gas Distribution and Services(4) Volumes (billion cubic feet) 192 203 322 319 Number of active customers (thousands) 1,726 1,669 1,726 1,669 Degree day deficiency(5) Actual 1,987 2,130 3,010 3,206 Forecast based on normal weather 1,870 1,887 2,807 2,807----------------------------------------------------------------------------------------------------------------------------------------
1. Highlights of Gas Distribution and Services reflect the
results of Enbridge Gas Distribution and other gas distribution
operations on a one quarter lag basis for the three and six
months ended March 31, 2004 and 2003.
2. Liquids Pipelines operating highlights include the statistics
of the 12.2% owned Lakehead System and other wholly-owned liquid
pipeline operations.
3. The 2003 deliveries for the six months ended include average
daily volumes of 192.5 (187.3 for the three months ended) on the
Saskatchewan System. These volumes are not included in 2004 as
the Saskatchewan System was sold to EIF on June 30, 2003.
4. Gas Distribution and Services volumes and the number of active
customers are derived from the aggregate system supply and direct
purchase gas supply arrangements.
5. Degree-day deficiency is a measure of coldness. It is
calculated by accumulating for each day in the period the total
number of degrees each day by which the daily mean temperature
falls below 18 degrees Celsius. The figures given are those
accumulated in the Toronto area.
ENBRIDGE INC.CONSOLIDATED STATEMENTS OF EARNINGS-------------------------------------------------------------------- Three months ended Six months ended(unaudited; June 30, June 30, millions of Canadian dollars) ------------------------------------ except per share amounts) 2004 2003 2004 2003--------------------------------------------------------------------Revenues Gas sales 1,323.1 1,260.1 2,292.9 1,946.7 Transportation 452.4 567.7 861.4 879.3 Energy services 68.4 59.3 142.8 106.9-------------------------------------------------------------------- 1,843.9 1,887.1 3,297.1 2,932.9--------------------------------------------------------------------Expenses Gas costs 1,093.7 1,096.5 1,948.6 1,703.6 Operating and administrative 237.5 212.7 439.8 396.2 Depreciation 115.0 128.6 225.5 226.6-------------------------------------------------------------------- 1,446.2 1,437.8 2,613.9 2,326.4--------------------------------------------------------------------Operating Income 397.7 449.3 683.2 606.5Investment and Other Income 95.2 45.9 171.4 105.5Gain on Sale of Assets to Enbridge Income Fund - 239.9 - 239.9Interest Expense (112.7) (127.5) (226.4) (228.6)-------------------------------------------------------------------- 380.2 607.6 628.2 723.3Income Taxes (123.2) (154.1) (250.1) (157.3)--------------------------------------------------------------------Earnings 257.0 453.5 378.1 566.0Preferred Security Distributions (6.9) (6.4) (13.9) (13.4)Preferred Share Dividends (1.7) (1.7) (3.4) (3.4)--------------------------------------------------------------------Earnings Applicable to Common Shareholders 248.4 445.4 360.8 549.2----------------------------------------------------------------------------------------------------------------------------------------Earnings Per Common Share 1.49 2.70 2.16 3.33----------------------------------------------------------------------------------------------------------------------------------------Diluted Earnings Per Common Share 1.47 2.68 2.14 3.31----------------------------------------------------------------------------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENTS OF RETAINED EARNINGS-------------------------------------------------------------------- Six months ended June 30, ----------------(unaudited; millions of Canadian dollars) 2004 2003--------------------------------------------------------------------Retained Earnings at Beginning of Period 1,511.4 1,128.1Earnings Appliable to Common Shareholders 360.8 549.2Common Share Dividends (157.6) (141.4)--------------------------------------------------------------------Retained Earnings at End of Period 1,714.6 1,535.9----------------------------------------------------------------------------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENTS OF CASH FLOWS-------------------------------------------------------------------- Three months ended Six months ended June 30, June 30,(unaudited; ------------------------------------ millions of Canadian dollars) 2004 2003 2004 2003--------------------------------------------------------------------Cash Provided by Operating Activites Earnings 257.0 453.5 378.1 566.0 Charges/(credits) not affecting cash Depreciation 115.0 128.6 225.5 226.6 Equity earnings in excess of cash distributions (23.4) (25.9) (55.1) (33.0) Gain on assets sold to Enbridge Income Fund - (239.9) - (239.9) Gain on reduction of ownership interest (9.8) (19.2) (12.3) (19.2) Future income taxes 33.0 115.5 82.0 123.5 Other 3.3 (0.2) 3.6 (0.9) Changes in operating assets and liabilities 331.7 4.4 284.1 (174.7)-------------------------------------------------------------------- 706.8 416.8 905.9 448.4--------------------------------------------------------------------Investing Activities Acquisitions (13.7) - (17.4) - Long-term investments - (21.8) (16.2) (45.7) Sale of assets to Enbridge Income Fund - 331.2 - 331.2 Additions to property, plant and equipment (82.9) (90.2) (154.2) (175.6) Changes in construction payable 2.1 (2.7) (3.1) (5.3) Affiliate loan - 434.5 - 434.5 Other - (0.5) - --------------------------------------------------------------------- (94.5) 650.5 (190.9) 539.1--------------------------------------------------------------------Financing Activities Net change in short-term borrowings and short-term debt (417.2) (598.3) (582.7) (466.3) Long-term debt issues - - 300.0 150.0 Long-term debt repayments (100.0) (100.0) (250.0) (225.0) Non-recourse long-term debt issued by joint ventures - 525.6 - 525.6 Non-recourse long-term debt repaid by joint ventures (15.3) (654.0) (29.5) (654.0) Non-controlling interests (1.3) (1.7) (1.9) (1.9) Common shares issued 4.8 24.9 24.3 29.0 Preferred security distributions (6.9) (6.4) (13.9) (13.4) Preferred share dividends (1.7) (1.7) (3.4) (3.4) Common share dividends (78.9) (70.7) (157.6) (141.4)-------------------------------------------------------------------- (616.5) (882.3) (714.7) (800.8)--------------------------------------------------------------------Increase/(Decrease) in Cash (4.2) 185.0 0.3 186.7Cash at Beginning of Period 108.6 42.4 104.1 40.7--------------------------------------------------------------------Cash at End of Period 104.4 227.4 104.4 227.4----------------------------------------------------------------------------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENTS OF FINANCIAL POSITION-------------------------------------------------------------------- June 30, December 31,(unaudited; millions of Canadian dollars) 2004 2003--------------------------------------------------------------------AssetsCurrent Assets Cash 104.4 104.1 Accounts receivable and other 1,192.9 1,138.8 Gas in storage 220.8 809.8-------------------------------------------------------------------- 1,518.1 2,052.7Property, Plant and Equipment, net 8,549.7 8,530.9Long-Term Investments 2,505.6 2,390.9Receivable from Affiliate 183.3 169.8Deferred Amounts 526.0 486.5Future Income Taxes 120.1 192.5-------------------------------------------------------------------- 13,402.8 13,823.3----------------------------------------------------------------------------------------------------------------------------------------Liabilities and Shareholers's EquityCurrent Liabilities Short-term borrowings 91.1 649.6 Accounts payable and other 717.6 894.1 Interest payable 96.7 97.0 Current maturities and short-term debt 823.5 674.9 Current portion of non-recourse long-term debt 31.4 34.2-------------------------------------------------------------------- 1,760.3 2,349.8Long-Term Debt 5,104.7 5,243.1Non-Recourse Long-Term Debt 756.2 752.4Future Income Taxes 847.9 829.0Non-Controlling Interests 545.3 523.0-------------------------------------------------------------------- 9,014.4 9,697.3----------------------------------------------------------------------------------------------------------------------------------------Shareholders' Equity Share capital Preferred securities 531.7 532.4 Preferred shares 125.0 125.0 Common shares 2,260.6 2,238.0 Contributed surplus 3.6 1.9 Retained earnings 1,714.6 1,511.4 Foreign currency translation adjustment (111.4) (147.0) Reciprocal shareholding (135.7) (135.7)-------------------------------------------------------------------- 4,388.4 4,126.0-------------------------------------------------------------------- 13,402.8 13,823.3----------------------------------------------------------------------------------------------------------------------------------------NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS1. SEGMENTED INFORMATIONThree months ended June 30, 2004-------------------------------------------------------------------- Gas(millions of Liquids Gas Sponsored Distribution Canadian dollars) Pipelines Pipelines Investments and Services--------------------------------------------------------------------Revenues 220.0 72.2 - 1,543.0Gas costs - - - (1,093.7)Operating and administrative (81.1) (15.6) - (124.9)Depreciation (35.8) (17.1) - (60.8)--------------------------------------------------------------------Operating income/(loss) 103.1 39.5 - 263.6Investment and other income - 0.2 25.2 37.5Interest and preferred equity charges (25.4) (17.2) - (43.7)Income taxes (24.0) (8.6) (10.6) (86.5)--------------------------------------------------------------------Earnings/(loss) applicable to common shareholders 53.7 13.9 14.6 170.9----------------------------------------------------------------------------------------------------------------------------------------Three months ended June 30, 2004--------------------------------------------------------------------(millions of Canadian dollars) International Corporate Consolidated--------------------------------------------------------------------Revenues 8.7 - 1,843.9Gas costs - - (1,093.7)Operating and administrative (9.7) (6.2) (237.5)Depreciation (0.5) (0.8) (115.0)--------------------------------------------------------------------Operating income/(loss) (1.5) (7.0) 397.7Investment and other income 23.0 9.3 95.2Interest and preferred equity charges (0.1) (34.9) (121.3)Income taxes (0.1) 6.6 (123.2)--------------------------------------------------------------------Earnings/(loss) applicable to common shareholders 21.3 (26.0) 248.4----------------------------------------------------------------------------------------------------------------------------------------Three months ended June 30, 2003-------------------------------------------------------------------- Gas(millions of Liquids Gas Sponsored Distribution Canadian dollars) Pipelines Pipelines Investments and Services--------------------------------------------------------------------Revenues 211.4 96.6 - 1,575.6Gas costs - - - (1,096.5)Operating and administrative (73.6) (17.3) - (114.6)Depreciation (38.9) (28.2) - (60.2)--------------------------------------------------------------------Operating income/(loss) 98.9 51.1 - 304.3Investment and other income/(expense) 0.6 6.9 28.1 20.6Gain on sale of assets - - 239.9 -Interest and preferred equity charges (26.1) (27.4) - (39.8)Income taxes (17.9) (6.1) (83.8) (107.8)--------------------------------------------------------------------Earnings/(loss) applicable to common shareholders 55.5 24.5 184.2 177.3----------------------------------------------------------------------------------------------------------------------------------------Three months ended June 30, 2003--------------------------------------------------------------------(millions of Canadian dollars) International Corporate Consolidated--------------------------------------------------------------------Revenues 3.5 - 1,887.1Gas costs - - (1,096.5)Operating and administrative (4.4) (2.8) (212.7)Depreciation (0.5) (0.8) (128.6)--------------------------------------------------------------------Operating income/(loss) (1.4) (3.6) 449.3Investment and other income/(expense) 19.3 (29.6) 45.9Gain on sale of assets - - 239.9Interest and preferred equity charges - (42.3) (135.6)Income taxes 0.7 60.8 (154.1)--------------------------------------------------------------------Earnings/(loss) applicable to common shareholders 18.6 (14.7) 445.4----------------------------------------------------------------------------------------------------------------------------------------Six months ended June 30, 2004-------------------------------------------------------------------- Gas(millions of Liquids Gas Sponsored Distribution Canadian dollars) Pipelines Pipelines Investments and Services--------------------------------------------------------------------Revenues 424.9 139.7 - 2,716.4Gas costs - - - (1,948.6)Operating and administrative (149.2) (28.4) - (232.8)Depreciation (71.7) (33.9) - (117.5)--------------------------------------------------------------------Operating income/(loss) 204.0 77.4 - 417.5Investment and other income 1.0 0.4 50.8 59.3Interest and preferred equity charges (50.4) (34.0) - (86.7)Income taxes (48.3) (16.9) (20.8) (179.7)--------------------------------------------------------------------Earnings/(loss) applicable to common shareholders 106.3 26.9 30.0 210.4----------------------------------------------------------------------------------------------------------------------------------------Six months ended June 30, 2004--------------------------------------------------------------------(millions of Canadian dollars) International Corporate Consolidated--------------------------------------------------------------------Revenues 16.1 - 3,297.1Gas costs - - (1,948.6)Operating and administrative (18.7) (10.7) (439.8)Depreciation (0.9) (1.5) (225.5)--------------------------------------------------------------------Operating income/(loss) (3.5) (12.2) 683.2Investment and other income 42.3 17.6 171.4Interest and preferred equity charges (0.1) (72.5) (243.7)Income taxes (1.2) 16.8 (250.1)--------------------------------------------------------------------Earnings/(loss) applicable to common shareholders 37.5 (50.3) 360.8----------------------------------------------------------------------------------------------------------------------------------------Six months ended June 30, 2003-------------------------------------------------------------------- Gas(millions of Liquids Gas Sponsored Distribution Canadian dollars) Pipelines Pipelines Investments and Services--------------------------------------------------------------------Revenues 406.4 96.6 - 2,422.6Gas costs - - - (1,703.6)Operating and administrative (144.4) (17.3) - (215.5)Depreciation (76.6) (28.2) - (119.1)--------------------------------------------------------------------Operating income/(loss) 185.4 51.1 - 384.4Investment and other income/(expense) 1.6 31.0 43.2 34.9Gain on sale of assets - - 239.9 -Interest and preferred equity charges (51.4) (27.4) - (81.9)Income taxes (33.7) (13.1) (91.1) (128.3)--------------------------------------------------------------------Earnings/(loss) applicable to common shareholders 101.9 41.6 192.0 209.1----------------------------------------------------------------------------------------------------------------------------------------Six months ended June 30, 2003--------------------------------------------------------------------(millions of Canadian dollars) International Corporate Consolidated--------------------------------------------------------------------Revenues 7.3 - 2,932.9Gas costs - - (1,703.6)Operating and administrative (8.6) (10.4) (396.2)Depreciation (1.1) (1.6) (226.6)--------------------------------------------------------------------Operating income/(loss) (2.4) (12.0) 606.5Investment and other income/(expense) 35.7 (40.9) 105.5Gain on sale of assets - - 239.9Interest and preferred equity charges (0.4) (84.3) (245.4)Income taxes 1.3 107.6 (157.3)--------------------------------------------------------------------Earnings/(loss) applicable to common shareholders 34.2 (29.6) 549.2----------------------------------------------------------------------------------------------------------------------------------------
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