July 25, 2001
earnings applicable to common shareholders for the six months
ended June 30, 2001, of $353.9 million, or $2.25 per share,
compared with $276.3 million, or $1.82 per share, for the same
period in 2000. Earnings reflect the positive impacts of
provincial income tax rate reductions, strong operating results
from Enbridge Consumers Gas, the acquisition of Midcoast Energy
Resources Inc. in May, and an improved contribution from
International activities. These increases were partially offset
by a loss from Aux Sable and lower Vector earnings. First half
earnings also include a dilution gain resulting from the issuance
of units by the Lakehead Partnership.
Earnings for the three months ended June 30, 2001, were $270.4
million, or $1.72 per share, compared with $193.7 million, or
$1.27 per share, for the three months ended June 30, 2000.
"Our financial results are right on track with our expectations,"
said Enbridge President & Chief Executive Officer, Patrick D.
Daniel. "The results also indicate that we should once again
achieve year-over-year double-digit earnings per share growth in
2001. We view the consistency and quality of our earnings growth,
while maintaining the Company's low risk profile, as a significant
investment attribute - one that sets us apart in our sector."
Mr. Daniel added, "Over the past six months, we have made
excellent progress on our operational targets and core strategies,
including the acquisition of Midcoast Energy of Houston. The
acquisition furthers several objectives and provides a great
platform for expanding our North American presence. That said, I
am most pleased with the level of organic growth within our Energy
Transportation business given that we are proceeding with Phase
III of the Terrace expansion. Not only does the expansion confirm
industry's confidence in the outlook for additional crude oil
supply from the basin, it also means that our mainline earnings
profile will benefit significantly, beginning in the second half
of the year. The depth of both our core and new business
opportunities will allow us to continue to deliver superior
returns to shareholders."
The Enbridge Board of Directors today also declared quarterly
dividends of $0.35 per common share and $0.34375 per Series A
preferred share. Both dividends are payable on September 1, 2001,
to shareholders of record on August 10, 2001.
BUSINESS OUTLOOK
Acquisition of Midcoast Energy
On May 11, 2001, Enbridge successfully closed the acquisition of
Midcoast Energy at a cost of approximately US$362 million. This
acquisition expands Enbridge's North American presence and
corresponds with strategic objectives. It will also provide
increased exposure to additional business opportunities and future
earnings growth. Midcoast earnings were accretive during the
period.
This acquisition has resulted in the decision to relocate the
Duluth office of Lakehead Pipe Line Partners, L.P. to Houston.
This will facilitate the achievement of Lakehead's strategic plan
of pursuing additional growth opportunities through acquisitions
and to capitalize on Midcoast's business development experience.
This growth strategy will include potential purchases of Enbridge
assets in the United States and third-party acquisitions.
Terrace Expansion
Construction of Terrace Phase II commenced in June upon receipt of
regulatory approvals. Construction is scheduled to be complete by
the beginning of 2002 at an estimated cost of approximately $120
million. The Canadian Association of Petroleum Producers provided
notification on June 27, 2001, for Enbridge to proceed with the
application to the National Energy Board for approval of Phase
III. Following regulatory approval, it is anticipated that
construction will commence in 2002 and will cost $450 million. Of
the total amount, $135 million will be spent in Canada by Enbridge
and US$210 million will be spent in the United States by Lakehead.
The triggering of Phase III will have a positive impact on
Enbridge System earnings, commencing in the third quarter of 2001.
Enbridge Athabasca System
On June 22, Enbridge announced that it will provide transportation
service for PanCanadian's Christina Lake oil sands operation.
Beginning in late 2002, Enbridge will transport up to 10,000
barrels per day of bitumen to Enbridge's Kirby Lake Pipeline
Terminal. The crude will be blended with diluent and then will
travel on the Enbridge Athabasca System, which connects with the
Enbridge System at Hardisty, Alberta. PanCanadian will have the
right to ship up to 115,000 barrels per day of Christina Lake
heavy blend on the pipeline. This is in addition to the 60,000
barrels per day committed to PetroCanada's MacKay River project
last fall and the initial 170,000 barrels per day contracted to
Suncor in 1998. Enbridge expects to benefit from the additional
investment in the Christina Lake facilities and generate improved
returns from the additional volumes shipped on the Enbridge
Athabasca System.
Oman Natural Gas System Operating Contract
During the quarter, a consortium of companies, including a
wholly-owned subsidiary of Enbridge, was awarded a five-year
contract to operate and maintain the natural gas transmission
system owned by Oman Gas Company in the Sultanate of Oman. This
contract will allow Enbridge to demonstrate its expertise, as well
as develop strong working relationships and pursue other
opportunities in the area.
Energy Services
In July, Enbridge entered into a limited partnership with BC Gas
Inc. to develop and operate a new company that will provide full
service customer management solutions to utilities, municipalities
and retail energy companies across Canada. The new company, to be
called CustomerWorks, will support a complete set of business
service offerings covering the entire meter-to-cash process,
including meter reading, billing, call centres, credit and
collections, e-commerce, and field work appointment scheduling.
Full-scale operations are planned to start on January 1, 2002.
The new company will initially provide services for more than 3.5
million customers of BC Gas Utility and Enbridge's gas
distribution and services businesses.
Emerging Energy Technologies
Construction of the SunBridge wind power project in Saskatchewan
has commenced. Enbridge has also received the first prototype
residential fuel cell system from Global Thermoelectric for
testing and evaluation.
FINANCIAL RESULTS
Energy Transportation North
First half earnings were $89.8 million, compared with $87.6
million for the first six months of 2000. The higher earnings are
primarily the result of increased contributions from Alliance and
the Enbridge Athabasca System, as well as the positive earnings
effect of tax rate reductions. These increases were partially
offset by a loss from the Aux Sable facilities, losses on merchant
capacity commitments and lower earnings from the Vector Pipeline.
Higher earnings from the Enbridge Athabasca System resulted from
increases in the investment base for both tankage and terminal
facilities. Alliance's increased contribution also reflects
earnings on a higher rate base because the pipeline was under
construction in 2000. Last year, Alliance earnings represented an
allowance for equity funds during construction. Aux Sable losses
were lower in the second quarter and reflect the ongoing, but
improved, unfavourable differential between natural gas and
natural gas liquids prices. Vector earnings were affected by
higher depreciation and interest expense.
Energy Transportation South
Earnings for the six months ended June 2001 were $23.4 million and
are $10.5 million higher than the same period last year. The
increase is primarily the result of Midcoast earnings and a
dilution gain on the Company's investment in the Lakehead
Partnership, resulting from an issuance of units by the
partnership in the second quarter in which Enbridge did not
participate. The Company now owns 14.5% of the Lakehead
Partnership. Lakehead System earnings were lower during the period
due to reduced throughput levels and one-time costs associated
with relocating the Lakehead System office to Houston.
Energy Distribution
Earnings from Energy Distribution increased $53.0 million to
$218.9 million in the first six months of 2001. The results
include contributions from Enbridge Consumers Gas for the
six-month period ended March 2001 and income from the Company's
32% investment in Noverco. Due to the seasonal nature of energy
distribution operations, quarterly earnings are not indicative of
full year results.
The increased earnings of Enbridge Consumers Gas reflect the
decrease in provincial income tax rates, earnings on a higher rate
base, higher distribution volumes resulting from colder than
normal weather and cost savings achieved under performance-based
regulation. The weather was colder by 10% compared with the same
period last year and only slightly colder than normal. Enbridge
Consumers Gas continues to add customers at expected rates.
Results from other Energy Distribution operations approximated
last year.
Energy Services
Six-month contributions from Energy Services were $35.0 million in
2001, an increase of $10.6 million over the same period in 2000.
This increase is primarily the result of the positive impacts of
tax rate reductions that were greater in 2001 than in 2000. Sales
in the retail services business are consistent or have increased,
compared with last year. The majority of Energy Services earnings
are realized in the last six months of the year as a result of
increased air conditioning sales in the summer months and as
customers prepare for the winter heating season in the fall.
International
Earnings increased by $7.4 million to $17.7 million in the first
six months of 2001. The increase was due to the additional OCENSA
and CITCOL ownership interests acquired in the third quarter of
2000 and higher operating fees for the Jose Terminal. A ten-year
operating contract for the Jose Terminal was signed during the
quarter and replaces the previous interim agreement. The signing
of the agreement ratifies the basic conditions agreed to in a term
sheet executed in January 2001.
Corporate
Corporate costs totalled $30.9 million, compared with $24.8
million in 2000. This increase was mainly due to increased
financing costs associated with investments made in the second
half of 2000 and the Midcoast acquisition.
Enbridge will hold a conference call at 2:15 p.m. Mountain time
(4:15 p.m. Eastern time) today to discuss First Half 2001 results.
The call, with accompanying slide show, will be broadcast live on
the Internet at www.enbridge.com/investor. A replay will be
available shortly after the live event.
Enbridge Inc. is a leader in energy transportation, distribution
and services in North America and internationally. As a
transporter of energy, Enbridge operates, in Canada and the U.S.,
the world's longest crude oil and liquids transportation system.
The Company also is involved in international energy projects and
has 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 gas and retail services in Ontario, Quebec and New
York State; and is developing a gas distribution system for the
province of New Brunswick. In addition, Enbridge provides retail
energy products and services to a growing number of Canadian and
U.S. markets. The Company employs approximately 6,000 people,
primarily in Canada, the U.S. and South America. Enbridge common
shares trade on The Toronto Stock Exchange in Canada under the
symbol "ENB" and on The NASDAQ National Market in the U.S. under
the symbol "ENBR". Information about Enbridge is available on the
Company's web site at www.enbridge.com.
When used in this news release, the words "anticipate", "expect",
"project", "believe", "estimate", "forecast" and similar
expressions are intended to identify forward-looking statements,
which include statements relating to pending and proposed
projects. Such statements are subject to certain risks,
uncertainties and assumptions pertaining to operating performance,
regulatory parameters, weather and economic conditions and, in the
case of pending and proposed projects, risks relating to design
and construction, regulatory processes, obtaining financing and
performance of other parties, including partners, contractors and
suppliers.
ENBRIDGE INC.HIGHLIGHTS(1)------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, ------------------ ----------------- (unaudited; millions of dollars, except per share amounts) 2001 2000 2001 2000 -------------------------------------------------------------------FINANCIAL Earnings Applicable to Common Shareholders Energy Transportation North 47.0 42.2 89.8 87.6 Energy Transportation South 18.4 6.7 23.4 12.9 Energy Distribution 179.5 131.5 218.9 165.9 Energy Services 29.0 13.8 35.0 24.4 International 8.3 4.5 17.7 10.3 Corporate (11.8) (5.0) (30.9) (24.8)------------------------------------------------------------------- 270.4 193.7 353.9 276.3 --------------------------------------------------------------------------------------------------------------------------------------Operating Revenue Energy Transportation North 182.2 176.8 349.2 349.8 Energy Transportation South 210.3 7.6 217.9 15.1 Energy Distribution 1,207.0 818.2 1,793.6 1,245.2 Energy Services 112.0 92.7 217.4 180.8 International 6.8 4.5 13.5 8.5 Corporate and Other 2.2 1.7 2.2 3.3 ------------------------------------------------------------------- 1,720.5 1,101.5 2,593.8 1,802.7 --------------------------------------------------------------------------------------------------------------------------------------Cash Provided By/(Used In) Operating Activities Earnings plus charges/(credits) not affecting cash 301.7 270.0 486.9 420.8 Changes in operating assets and liabilities (135.0) 236.7 (261.6) 48.6 ------------------------------------------------------------------- 166.7 506.7 225.3 469.4 --------------------------------------------------------------------------------------------------------------------------------------Common Share Dividends 56.9 49.1 113.6 96.4 Per Common Share Amounts Earnings 1.72 1.27 2.25 1.82 Dividends 0.35 0.3225 0.70 0.6250 Weighted Average Common Shares Outstanding (millions) 157.3 152.2 OPERATING Energy Transportation(2) Deliveries (thousands of barrels per day) 2,246 2,238 2,229 2,189 Barrel miles (billions) 181 179 360 360 Average haul (miles) 869 864 875 888 Energy Distribution(3) Volumes (billion cubic feet) 184 182 297 284 Number of active customers (thousands) 1,553 1,507 1,553 1,507 Degree day deficiency(4) Actual 1,817 1,742 3,225 2,935 Forecast based on normal Weather 1,877 1,932 3,181 3,256 --------------------------------------------------------------------------------------------------------------------------------------
1. Highlights of Energy Distribution reflect the results of
Enbridge Consumers Gas and other gas distribution operations on a
quarter lag basis for the three and six months ended March 31,
2001 and 2000.
2. Energy Transportation operating highlights include the
statistics of the 14.5% owned Lakehead System and other
wholly-owned liquid pipeline operations.
3. Energy Distribution volumes and the number of active customers
are derived from the aggregate of buy/sell and transportation
service supply arrangements.
4. 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 STATEMENT OF EARNINGS------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, ------------------ -----------------(unaudited; millions of dollars, except per share amounts) 2001 2000 2001 2000 -------------------------------------------------------------------Revenues Gas sales 1,189.8 663.0 1,668.3 1,005.2 Transportation 371.6 319.8 630.3 560.3 Energy services 159.1 118.7 295.2 237.2 ------------------------------------------------------------------- 1,720.5 1,101.5 2,593.8 1,802.7 -------------------------------------------------------------------Expenses Gas costs 997.1 456.9 1,361.3 680.1 Operating and administrative 246.9 219.6 472.1 421.1 Depreciation 117.8 122.9 225.3 232.1 ------------------------------------------------------------------- 1,361.8 799.4 2,058.7 1,333.3 -------------------------------------------------------------------Operating Income 358.7 302.1 535.1 469.4 Investment and Other Income 78.7 72.3 123.5 112.8 Interest Expense (111.6) (101.7) (220.1) (204.0)------------------------------------------------------------------- 325.8 272.7 438.5 378.2 Income Taxes (49.2) (73.4) (72.5) (90.8)------------------------------------------------------------------- 276.6 199.3 366.0 287.4 Preferred Security Distributions (4.5) (3.9) (8.7) (7.7)Preferred Share Dividends (1.7) (1.7) (3.4) (3.4)-------------------------------------------------------------------Earnings Applicable to Common Shareholders 270.4 193.7 353.9 276.3 --------------------------------------------------------------------------------------------------------------------------------------Earnings Per Common Share 1.72 1.27 2.25 1.82 Diluted Earnings Per Common Share 1.69 1.27 2.22 1.82 --------------------------------------------------------------------------------------------------------------------------------------Weighted Average Common Shares Outstanding (millions) 157.3 152.2--------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to the consolidated financial statements.ENBRIDGE INC.CONSOLIDATED STATEMENT OF RETAINED EARNINGS------------------------------------------------------------------- Six months ended June 30, ----------------- (unaudited; millions of dollars) 2001 2000 -------------------------------------------------------------------Retained Earnings at Beginning of Period 581.3 503.1 Earnings Applicable to Common Shareholders 353.9 276.3 Common Share Dividends (113.6) (96.4)Effect of Change in Accounting for Income Taxes - (112.0)------------------------------------------------------------------- Retained Earnings at End of Period 821.6 571.0 --------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to the consolidated financial statements.ENBRIDGE INC.CONSOLIDATED STATEMENT OF CASH FLOWS------------------------------------------------------------------- Three months ended Six months ended June 30, June 30, ------------------ -----------------(unaudited; millions of dollars) 2001 2000 2001 2000 -------------------------------------------------------------------Cash Provided By/(Used in) Operating Activities Earnings 276.6 199.3 366.0 287.4 Changes/(Credits) not affecting cash Depreciation 117.8 122.9 225.3 232.1 Equity earnings in excess of cash distributions (1.5) (22.3) (11.4) (34.1) Gain on reduction of ownership interest (11.5) - (11.5) - Future income taxes (64.6) (14.5) (54.9) (53.1) Other (15.1) (15.4) (26.6) (11.5) Changes in operating assets and liabilities (135.0) 236.7 (261.6) 48.6 ------------------------------------------------------------------- 166.7 506.7 225.3 469.4 -------------------------------------------------------------------Investing Activities Acquisition of Midcoast Energy Resources, Inc. (561.8) - (561.8) - Long-term investments (17.3) (122.8) (35.1) (218.8) Additions to property, plant and equipment (112.3) (89.6) (219.5) (141.7) Changes in construction payable (7.5) 0.4 (33.9) (29.2) Other 1.8 3.9 (3.0) (0.9)------------------------------------------------------------------- (697.1) (208.1) (853.3) (390.6)-------------------------------------------------------------------Financing Activities Variable rate financing, net 450.9 (445.5) 644.2 (722.6) Fixed rate debt issued 210.0 - 505.6 641.2 Fixed rate debt repayments (37.7) (1.4) (347.8) (101.4) Non-controlling interests (0.6) 19.2 (1.8) 18.1 Common shares issued 12.7 159.4 17.3 162.8 Preferred security distributions (4.5) (3.9) (8.7) (7.7) Preferred share dividends (1.7) (1.7) (3.4) (3.4) Common share dividends (56.9) (49.1) (113.6) (96.4)------------------------------------------------------------------- 572.2 (323.0) 691.8 (109.4)-------------------------------------------------------------------Increase/(Decrease) in Cash 41.8 (24.4) 63.8 (30.6)Cash at Beginning of Period 89.0 47.4 67.0 53.6 -------------------------------------------------------------------Cash at End of Period 130.8 23.0 130.8 23.0 --------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to the consolidated financial statements.ENBRIDGE INC.CONSOLIDATED STATEMENT OF FINANCIAL POSITION------------------------------------------------------------------- June 30, December 31,(millions of dollars) 2001 2000 ------------------------------------------------------------------- (unaudited)Assets Cash 130.8 67.0 Accounts receivable and other 1,651.6 747.5 Gas in storage 340.4 519.8 ------------------------------------------------------------------- 2,122.8 1,334.3 Property, plant and equipment, net 7,793.3 7,160.0 Long-term investments 1,746.9 1,689.5 Deferred charges and other assets 456.2 384.4 Goodwill 269.8 - ------------------------------------------------------------------- 12,389.0 10,568.2 --------------------------------------------------------------------------------------------------------------------------------------Liabilities and Shareholders' Equity Short-term borrowings 558.7 261.3 Accounts payable and other 899.2 420.7 Interest payable 109.0 109.3 Current portion of long-term liabilities 225.3 468.6 ------------------------------------------------------------------- 1,792.2 1,259.9 Long-term debt 6,740.7 5,592.7 Deferred credits 42.9 69.2 Future income taxes 672.4 756.6 Non-controlling interests 127.1 126.4 ------------------------------------------------------------------- 9,375.3 7,804.8 Shareholders' equity Share capital Preferred securities 340.1 340.4 Preferred shares 125.0 125.0 Common shares 1,869.9 1,852.6 Retained earnings 821.6 581.3 Foreign currency translation adjustment (14.7) (7.7) Reciprocal shareholding (128.2) (128.2)------------------------------------------------------------------- 3,013.7 2,763.4 ------------------------------------------------------------------- 12,389.0 10,568.2 --------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to the consolidated financial statements.
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles and should be read in conjunction with the consolidated
financial statements and notes thereto included in Enbridge Inc.'s
2000 Annual Report. These interim financial statements are
prepared on a consistent basis as those included in the 2000
Annual Report and follow the same accounting policies and methods
of application.
Earnings for interim periods may not be indicative of results for
the fiscal year due to weather variations and other factors.
Certain reclassifications have been made to the prior period
financial statements to conform to the current year presentation.
1. SEGMENTED INFORMATION(unaudited; millions of dollars)Three months ended June 30, 2001------------------------------------------------------------------- Energy Transportation Energy Energy North South Distribution Services-------------------------------------------------------------------Revenues 182.2 210.3 1,207.0 112.0 Gas costs - 169.9 819.8 7.4 Operating and administration 67.1 17.5 91.6 60.2 Depreciation 32.9 8.0 49.2 26.5 ------ ----- -------- ------Operating income/(loss) 82.2 14.9 246.4 17.9 Investment and other income 10.6 18.3 15.1 3.8 Interest and preferred equity Charges (25.0) (4.8) (39.0) (9.1)Income taxes (20.8) (10.0) (43.0) 16.4 ------ ----- -------- ------Earnings/(loss) applicable to common shareholders 47.0 18.4 179.5 29.0 ------ ----- -------- ------ ------ ----- -------- ------------------------------------------------------------------------- Corporate International and Other Consolidated-------------------------------------------------------------------Revenues 6.8 2.2 1720.5 Gas costs - - 997.1Operating and administration 5.2 5.3 246.9Depreciation 0.3 0.9 117.8 ------------- --------- --------------Operating income/(loss) 1.3 (4.0) 358.7Investment and other income 7.6 23.3 78.7Interest and preferred equity charges - (39.9) (117.8)Income taxes (0.6) 8.8 (49.2) ------------- --------- --------------Earnings/(loss) applicable to common shareholders 8.3 (11.8) 270.4 ------------- --------- -------------- ------------- --------- --------------Three months ended June 30, 2000------------------------------------------------------------------- Energy Transportation Energy Energy North South Distribution Services-------------------------------------------------------------------Revenues 176.8 7.6 818.2 92.7 Gas costs - - 455.1 1.8 Operating and administration 55.4 4.0 89.9 59.2 Depreciation 41.2 1.9 50.3 25.8 ----- ----- -------- -----Operating income/(loss) 80.2 1.7 222.9 5.9 Investment and other income 14.1 9.2 26.1 4.7 Interest and preferred equity charges (27.4) (0.5) (39.6) (7.0)Income taxes (24.7) (3.7) (77.9) 10.2 ----- ----- -------- ----- Earnings/(loss) applicable to common shareholders 42.2 6.7 131.5 13.8 ----- ----- -------- ----- ----- ----- -------- ------------------------------------------------------------------------ Corporate International and Other Consolidated-------------------------------------------------------------------Revenues 4.5 1.7 1,101.5 Gas costs - - 456.9 Operating and administration 5.0 6.1 219.6 Depreciation - 3.7 122.9 Operating income/(loss) (0.5) (8.1) 302.1 ------------- --------- ------------Investment and other income 4.5 13.7 72.3 Interest and preferred equity charges 0.0 (32.8) (107.3)Income taxes 0.5 22.2 (73.4) ------------- --------- ------------Earnings/(loss) applicable to common shareholders 4.5 (5.0) 193.7 ------------- --------- ------------ ------------- --------- ------------Six months ended June 30, 2001------------------------------------------------------------------- Energy Transportation Energy Energy North South Distribution Services-------------------------------------------------------------------Revenues 349.2 217.9 1,793.6 217.4 Gas costs - 169.9 1,174.7 16.7 Operating and Administration 128.3 23.2 183.5 118.3 Depreciation 66.9 9.9 96.5 49.5 ----- ----- ------- ------Operating income/(loss) 154.0 14.9 338.9 32.9 Investment and other income 22.7 26.3 28.6 8.1 Interest and preferred equity charges (52.2) (5.2) (80.1) (18.2)Income taxes (34.7) (12.6) (68.5) 12.2 ----- ----- ------- ------ Earnings/(loss) applicable to common shareholders 89.8 23.4 218.9 35.0 ----- ----- ------- ------ ----- ----- ------- ------ ------------------------------------------------------------------- Corporate International and Other Consolidated-------------------------------------------------------------------Revenues 13.5 2.2 2,593.8 Gas costs - - 1,361.3 Operating and administration 9.6 9.2 472.1 Depreciation 0.6 1.9 225.3 ----- ------ --------Operating income/(loss) 3.3 (8.9) 535.1 Investment and other income 15.0 22.8 123.5 Interest and preferred equity charges (0.1) (76.4) (232.2)Income taxes (0.5) 31.6 (72.5) ----- ------ --------Earnings/(loss) applicable to common shareholders 17.7 (30.9) 353.9 ----- ------ -------- ----- ------ --------Six months ended June 30, 2000------------------------------------------------------------------- Energy Transportation Energy Energy North South Distribution Services-------------------------------------------------------------------Revenues 349.8 15.1 1,245.2 180.8 Gas costs - - 676.5 3.6 Operating and Administration 115.8 8.6 174.2 103.7 Depreciation 78.4 3.7 103.7 41.3 ----- ---- -------- -----Operating income/(loss) 155.6 2.8 290.8 32.2 Investment and other income 22.4 18.6 43.9 4.8 Interest and preferred equity charges (53.4) (1.0) (82.0) (14.1)Income taxes (37.0) (7.5) (86.8) 1.5 ----- ---- -------- ----- Earnings/(loss) applicable to common shareholders 87.6 12.9 165.9 24.4 ----- ---- -------- ----- ----- ---- -------- ----- ------------------------------------------------------------------- Corporate International and Other Consolidated-------------------------------------------------------------------Revenues 8.5 3.3 1,802.7 Gas costs - - 680.1 Operating and administration 8.3 10.5 421.1 Depreciation 0.0 5.0 232.1 ---- ------ -------Operating income/(loss) 0.2 (12.2) 469.4 Investment and other income 9.5 13.6 112.8 Interest and preferred equity charges 0.0 (64.6) (215.1)Income taxes 0.6 38.4 (90.8) ---- ------ -------Earnings/(loss) applicable to common shareholders 10.3 (24.8) 276.3 ---- ------ ------- ---- ------ ---------------------------------------------------------------------------------------------------------------------------------------------
Segmented information has been restated to reflect the changes in
management responsibilities, effective in the second quarter of
2001.
2. ACQUISITION
(unaudited; millions of dollars)
On May 11, 2001, the Company acquired all the outstanding shares
of Midcoast Energy Resources Inc., a Houston-based energy company,
for cash consideration of $561.8 million and the assumption of
long-term debt. The acquisition has been accounted for using the
purchase method with the results of operations included in the
consolidated financial statements from the date of acquisition.
Goodwill is being amortized over 30 years.
Fair Value of Assets Acquired: Property, plant and equipment $ 677.3 Working capital 9.9 Goodwill 271.3 Future income taxes (28.5) Other non-current assets 37.8 ------- 967.8 ------- Purchase Price: Cash 554.5 Long-term debt assumed 406.0 Transaction costs 7.3 ------- 967.8 ------- -------------------------------------------------------------------Supplementary Financial Information Number of Shares ----------------Common Shares - issued and outstanding 162,705,209(voting equity shares)Preference Shares, Series A 5,000,000(non-voting equity shares)Total vested and exercisable stock options 2,172,210
The Company has a Shareholder Rights plan designed to encourage
the fair treatment of shareholders in connection with any takeover
offer for the Company. Rights issued under the plan become
exercisable when a person, and any related parties, acquires or
announces its intention to acquire 20% or more of the Company's
outstanding common shares without complying with certain
provisions set out in the plan or without approval of the Board of
Directors of the Company. Should such an acquisition or
announcement occur, each rights holder, other than the acquiring
person and related parties, will have the right to purchase common
shares of the Company at a 50% discount to the market price at
that time.
Supplementary information as at July 16, 2001.