January 23, 2001
announced another year of record earnings. Earnings applicable to
common shareholders grew to $392.3 million, or $2.54 per common
share, compared with $287.9 million, or $1.91 per common share, in
1999. The 36% increase in earnings primarily reflects the effects
of reductions in income tax rates, solid operating performance of
the Energy Distribution and Energy Services businesses, and higher
contributions from gas transmission pipelines. These improvements
were partially offset by higher financing costs and a one-time
charge of $8.7 million related to Enbridge's merchant capacity on
Alliance and Vector. In both 2000 and 1999, warmer than normal
weather negatively affected Energy Distribution's results by $22.1
million and $31.3 million, respectively. The 1999 contribution
for Energy Services includes a fifth quarter due to the timing of
the unbundling of the retail products and services from Enbridge
Consumers Gas. A gain recognized in 1999 related to the reduction
in the Company's ownership interest in the Lakehead System did not
recur in 2000.
The effects of the income tax rate reductions resulted in an $88.1
million increase in earnings. The Federal and Ontario tax rate
reductions reduce the value of income tax assets and liabilities
and the change is included in earnings in the year that the rate
reduction is substantially enacted. The tax rate reductions also
resulted in the recognition of losses on foreign exchange
transactions of $15.6 million. After-tax future cash flows, based
on previously enacted tax rates, had been fully hedged which
caused the future cash flows to be overhedged when the tax rates
were reduced.
Consistent with this profitability and the Company's positive
outlook for the future, the Board of Directors also announced
today an increase in the quarterly dividend from $0.3225 per
common share to $0.35 per common share. The increase of 8.5%
represents the sixth and largest increase in the dividend since
1995. The Board of Directors also declared a quarterly dividend
of $0.34375 per Series A Preferred Share. Both dividends are
payable on March 1, 2001, to shareholders of record on February 9,
2001.
Commenting on the financial results and dividend increase, Patrick
D. Daniel, President and Chief Executive Officer noted, "Enbridge
continues to deliver on its commitment to add value for
shareholders. Despite the third consecutive year of warmer than
normal weather, we have once again achieved double-digit earnings
per share growth. The 2000 performance reflects the strength and
continued growth of our core transportation and distribution
businesses. We have also established a new core business, natural
gas transmission, that has made a substantial contribution and
positions us for growth in the future. The dividend increase
reflects our confidence in the earnings outlook and our desire to
provide superior returns to our shareholders through both
dividends and capital appreciation."
"Notwithstanding these strong results," said Mr. Daniel, "we
continue to aggressively implement our key strategic thrusts of
enhancing operating efficiency, growing our core businesses and
integrating along the energy value chain. We believe that these
strategies lay the groundwork for extension of the growth profile
that our shareholders have become accustomed to."
In addition to the Company's financial success, Enbridge also
achieved a number of significant operational objectives in 2000.
Key accomplishments in each of the Company's four major operating
businesses included the following:
* ENERGY TRANSPORTATION: In the liquids pipelines business,
Enbridge announced regulatory approval for the new Incentive
Tolling Settlement for 2000 through 2004: the agreement extends
incentive tolling on the Enbridge Pipelines Canadian mainline
system (the Enbridge System) for another five years, enabling
Enbridge and its customers to continue to share in cost savings
from efficient operation of the pipeline. Enbridge announced
plans for Phase II of its Terrace expansion program to add 40,000
barrels per day of capacity to the Enbridge System by 2002.
Enbridge also announced plans to double capacity at its Athabasca
terminal near Fort McMurray, Alberta, to 1.2 million barrels, and
was awarded the transportation and handling services contract for
Petro-Canada's new oil sands operation being constructed in
northern Alberta for start-up in late 2002.
Natural gas transmission is Enbridge's newest core business, and
the start-up in December of the Alliance and Vector Pipelines
represented a milestone. The Company has a 21.4 per cent interest
in Alliance, and operates the Vector Pipeline while holding a 45
per cent interest. Completion of both systems marked the
realization of Enbridge's west-to-east gas strategy, and
positioned Enbridge as a major player in the gas transmission
industry.
* ENERGY DISTRIBUTION: Enbridge Consumers Gas, which distributes
gas to 1.5 million customers in Ontario, Quebec and parts of New
York state, continued to add customers at a rate of more than
50,000 per year. The first full year of Performance-Based
Regulation had a positive impact on financial results, and the
Company is preparing for implementation of Comprehensive
Performance-Based Regulation beginning in 2003. Farther east,
Enbridge Gas New Brunswick began construction of a gas
distribution network that is planned to serve customers throughout
many areas of New Brunswick.
* ENERGY SERVICES: Enbridge Services, the Company's unregulated
retail energy services business that provides heating,
ventilation, air conditioning and other products and services,
completed its first full year of operations following the October
1999 unbundling of assets from Enbridge Consumers Gas. The
Company was encouraged that the first full year was a profitable
one and the outlook for further growth is positive. Enbridge also
launched a shared services business in 2000 to provide information
technology, billing and fleet management services to Enbridge
businesses in Central and Atlantic Canada, and potentially to
third-party customers.
* INTERNATIONAL: Enbridge increased its interest in the OCENSA
crude oil pipeline in Colombia from 17.5 per cent to 24.7 per
cent, and also became sole operator of the system through an
increase in Enbridge's interest from 50 per cent to 100 per cent
in CITCOL, the entity which operates the OCENSA system. Due to a
government decision not to privatize the Jose Terminal crude oil
storage and marine facility in Venezuela, Enbridge and its
partners have instead reached a preliminary alternative agreement
for a ten-year contract to operate the facility.
"In addition to these accomplishments, we also continued to take
steps to ensure our long-term energy future," Mr. Daniel said.
"Enbridge entered into a strategic alliance for development and
marketing of fuel cell products for residential use. These fuel
cells, which we expect to begin field testing this year, are
natural gas-fuelled, and Enbridge will have exclusive distribution
rights in Canada. The Company also continues to work with
producers in Canada and the United States to position itself as a
valuable partner in any future natural gas transportation from the
Alaskan North Slope and the Mackenzie Delta, and we are working
with partners to extend delivery of East Coast natural gas to
customers in northern New Brunswick, Quebec and Ontario."
Financial results
Energy Transportation recorded earnings of $197.7 million before
the impact of income tax rate reductions of $6.1 million. The
liquids pipelines operations posted strong operating results and
construction on the Vector and Alliance Pipelines generated a
higher allowance for equity funds used during construction. This
business was negatively affected by a one-time charge for the
Company's merchant capacity of $8.7 million (after tax) on the
Alliance and Vector Pipelines for the years 2000 through 2003. In
1999, an $11.5 million after-tax gain related to a reduction in
the Company's ownership interest in the Lakehead Pipeline was
recorded.
Energy Distribution earnings were $103.0 million, before tax rate
reductions of $87.9 million, increasing from earnings of $99.5
million in 1999. Enbridge Consumers Gas contributed earnings of
$76.6 million in 2000, consistent with the 1999 contribution.
This reflects very strong operating performance as the negative
effect on earnings of the unbundling of the retail products and
services business on October 1, 1999, has been completely offset.
The 1999 results include the results of the unbundled services.
Increases to earnings include higher revenue rates, the favourable
impact of strong economic conditions in Ontario, slightly colder
weather than in 1999 and cost saving initiatives.
Energy Services earnings of $31.8 million, before the effect of
the tax rate reductions amounting to $32.1 million, represent a
$36.1 million increase over the 1999 loss of $4.3 million. While
the transfer of assets from the unbundling process was responsible
for a significant component of earnings growth in the business,
there were additional positive contributors to the results,
including higher revenues from the hot water tank rental program,
the expansion of services, increased market penetration and
service area development.
International earnings of $27.3 million, before the increase in
tax expense of $0.9 million related to tax rate reductions, were
comparable to 1999 results. Earnings from the OCENSA pipeline
increased to $30.3 million from $24.0 million in 1999, reflecting
Enbridge's additional ownership interest acquired in 2000.
Offsetting this are lower earnings from operating the Jose
Terminal due to a change in the interim operating agreement in
late 1999.
Corporate costs for 2000 increased to $92.7 million, compared with
$47.6 million in 1999. The tax rate reduction reduced the benefit
of tax loss carryforwards, resulting in increased future income
tax expense of $21.5 million. The tax rate reductions also
resulted in the recognition of foreign exchange losses of $15.6
million, after tax, as the Company had hedged after-tax future
cash flows based on previously enacted tax rates. Financing costs
increased due to increased average debt and preferred securities
required to fund the Company's expansion into non-regulated
business activities.
[Enbridge will hold a conference call at 2:30 p.m. Mountain
time/4:30 p.m. Eastern time today to discuss 2000 results. The
call will be broadcast live and will be available for replay on
the Internet at www.enbridge.com/investor.]
Enbridge Inc. is a leader in energy transportation, distribution
and services. As a transporter of energy, Enbridge operates, in
Canada and the U.S., the world's longest crude oil and liquids
pipeline system. The Company also is involved in liquids
marketing and 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 in Ontario, Quebec and New York State; is developing
a gas distribution network for the province of New Brunswick; and
is involved in the distribution of electricity. In addition,
Enbridge provides retail energy products and services to a growing
number of Canadian and U.S. markets. The Company employs
approximately 5,500 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
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 Year ended December 31, December 31,(Canadian dollars in millions, except per share amounts) 2000 1999 2000 1999------------------------------------------------------------------------FINANCIAL (unaudited)Earnings Applicable to Common Shareholders Energy Transportation 43.3 47.8 197.7 211.6 Energy Distribution (41.8) (40.0) 103.0 99.5 Energy Services 7.4 6.1 31.8 (4.3) International 9.8 7.7 27.3 28.7 Corporate (21.3) (18.4) (55.6) (47.6) Unusual Items 72.8 - 88.1 ------------------------------------------------------------------------- 70.2 3.2 392.3 287.9------------------------------------------------------------------------Operating Revenue Energy Transportation 178.5 161.1 729.6 599.5 Energy Distribution 202.0 221.9 1,799.7 1,913.3 Energy Services 112.8 97.6 390.2 138.9 International 8.9 13.3 22.2 30.3 Corporate and Other (1.7) 3.3 3.3 12.0------------------------------------------------------------------------ 500.5 497.2 2,945.0 2,694.0------------------------------------------------------------------------Cash Provided By Operating Activities Earnings plus charges (credits) not affecting cash 122.0 143.2 660.4 626.9 Changes in operating assets and liabilities (378.2) (241.3) (396.4) (131.8)------------------------------------------------------------------------ (256.2) (98.1) 264.0 495.1------------------------------------------------------------------------Common Share Dividends 52.2 47.2 202.1 186.4 Per Common Share Amounts Earnings 0.44 0.02 2.54 1.91 Dividends 0.3225 0.3025 1.27 1.195Weighted Average Common Shares Outstanding (millions) 154.5 151.0OPERATINGEnergy Transportation (2) Deliveries (thousands of barrels per day) 2,168 2,078 2,164 2,023 Barrel miles (billions) 182 174 743 696 Average haul (miles) 913 918 941 946Energy Distribution (3) Volumes (billion cubic feet) 49 47 421 402 Number of active customers (thousands) 1,520 1,466 1,520 1,466 Degree day deficiency (4) Actual 118 65 3,569 3,460 Forecast based on normal weather 123 129 3,929 4,060------------------------------------------------------------------------------------------------------------------------------------------------
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 months and year ended September
30, 2000 and 1999.
2. Energy Transportation operating highlights include the
statistics of the 15.3% owned Lakehead System.
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 from October 1 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 Year ended December 31, December 31,(Canadian dollars in millions, except per share amounts) 2000 1999 2000 1999------------------------------------------------------------------------ (unaudited) Revenue Gas sales 147.4 119.0 1,414.7 1,374.2 Transportation 214.8 188.1 1,032.1 820.3 Energy services 138.3 190.1 498.2 499.5------------------------------------------------------------------------ 500.5 497.2 2,945.0 2,694.0------------------------------------------------------------------------Expenses Gas costs 98.7 66.1 966.5 903.1 Operating and administrative 223.3 245.0 870.3 821.6 Depreciation 119.3 117.3 453.5 383.8------------------------------------------------------------------------ 441.3 428.4 2,290.3 2,108.5------------------------------------------------------------------------Operating Income 59.2 68.8 654.7 585.5Investment and Other Income 26.1 15.6 185.6 182.4Interest Expense (112.8) (102.3) (427.7) (380.6)------------------------------------------------------------------------Earnings/(Loss) Before Undernoted (27.5) (17.9) 412.6 387.3Income Taxes 103.3 26.2 1.9 (87.5)------------------------------------------------------------------------Earnings 75.8 8.3 414.5 299.8Preferred Security Distributions (3.8) (3.3) (15.3) (5.0)Preferred Share Dividends (1.8) (1.8) (6.9) (6.9)------------------------------------------------------------------------Earnings Applicable to Common Shareholders 70.2 3.2 392.3 287.9------------------------------------------------------------------------Earnings Per Common Share 0.44 0.02 2.54 1.91------------------------------------------------------------------------Weighted Average Common Shares Outstanding (millions) 154.5 151.0------------------------------------------------------------------------------------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENT OF RETAINED EARNINGS------------------------------------------------------------------------ Year ended December 31,(Canadian dollars in millions) 2000 1999------------------------------------------------------------------------Retained Earnings at Beginning of Year 503.1 407.6Earnings Applicable to Common Shareholders 392.3 287.9Effect of Change in Accounting for Income Taxes (112.0) -Preferred Share and Preferred Security Issue Costs - (6.0)Common Share Dividends (202.1) (186.4)------------------------------------------------------------------------Retained Earnings at End of Year 581.3 503.1------------------------------------------------------------------------Dividends Paid Per Common Share 1.270 1.195------------------------------------------------------------------------------------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENT OF CASH FLOWS------------------------------------------------------------------------ Year ended December 31,(Canadian dollars in millions) 2000 1999------------------------------------------------------------------------ Cash Provided from Operating Activities Earnings 414.5 299.8 Charges/(credits) not affecting cash Depreciation 453.5 383.8 Equity earnings in excess of cash distributions (52.0) (29.7) Gain on reduction of ownership interest - (18.2) Loss on foreign exchange contracts 24.5 - Future income taxes (157.1) 5.5 Other (23.0) (14.3)Changes in operating assets and liabilities (396.4) (131.8)------------------------------------------------------------------------ 264.0 495.1------------------------------------------------------------------------Investing Activities Long term investments (554.9) (340.8) Acquisitions of subsidiaries (16.5) (16.7) Additions to property, plant and equipment (364.3) (783.7) Changes in construction payable (5.7) (56.0) Other (8.4) (8.5)------------------------------------------------------------------------ (949.8) (1,205.7)------------------------------------------------------------------------Financing Activities Variable rate financing, net (105.2) 204.3 Fixed rate debt issued 965.4 367.6 Fixed rate debt repayments (133.3) (183.1) Non-controlling interest 21.2 100.0 Preferred securities issued - 338.5 Common shares issued 175.4 10.3 Preferred security distributions (15.3) (5.0) Preferred share dividends (6.9) (6.9) Common share dividends (202.1) (186.4)------------------------------------------------------------------------ 699.2 639.3------------------------------------------------------------------------Increase/(Decrease) in Cash 13.4 (71.3)Cash at Beginning of Year 53.6 124.9------------------------------------------------------------------------Cash at End of Year 67.0 53.6------------------------------------------------------------------------------------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENT OF FINANCIAL POSITION------------------------------------------------------------------------ December 31, December 31,(Canadian dollars in millions) 2000 1999------------------------------------------------------------------------ASSETS Cash 67.0 53.6 Accounts receivable and other 747.5 678.5 Gas in storage 519.8 375.1------------------------------------------------------------------------ 1,334.3 1,107.2 Property, plant and equipment, net 7,160.0 6,770.7 Long-term investments 1,689.5 1,051.6 Deferred charges and other assets 384.4 278.7 ------------------------------------------------------------------------ 10,568.2 9,208.2------------------------------------------------------------------------------------------------------------------------------------------------LIABILITIES AND SHAREHOLDERS' EQUITY Short-term borrowings 261.3 155.4 Accounts payable and other 420.7 494.6 Interest payable 109.3 86.1 Current portion of long-term liabilities 468.6 174.4------------------------------------------------------------------------ 1,259.9 910.5 Long-term debt 5,592.7 5,284.8 Deferred credits 69.2 157.8 Future income taxes 756.6 254.5 Non-controlling interests 126.4 100.0------------------------------------------------------------------------ 7,804.8 6,707.6Shareholders' equity Share capital Preferred securities 340.4 341.1 Preferred shares 125.0 125.0 Common shares 1,852.6 1,677.2 Retained earnings 581.3 503.1 Foreign currency translation adjustment (7.7) (23.9) Reciprocal shareholding (128.2) (121.9)------------------------------------------------------------------------ 2,763.4 2,500.6------------------------------------------------------------------------ 10,568.2 9,208.2------------------------------------------------------------------------