November 2, 2000
announced earnings applicable to common shareholders for the nine
months ended September 30, 2000, of $322.1 million, or $2.10 per
share, compared with $284.7 million, or $1.89 per share, for the
same period in 1999. The 13% earnings increase continues to
reflect solid operating results from the Energy Services and Gas
Distribution businesses and reductions in corporate income tax
rates. These positive impacts are partially offset by reduced
earnings from the Gas Pipelines and International businesses and a
one-time charge for Enbridge's merchant capacity on the Alliance
and Vector pipelines.
Earnings for the quarter ended September 30, 2000, were $45.8
million, or $0.28 per share, compared with $36.5 million, or $0.24
per share, for the quarter ended September 30, 1999.
Commenting on nine month earnings, Brian MacNeill, Chief Executive
Officer, noted, "Our financial performance once again demonstrates
that our key strategic thrusts of enhancing operating efficiency,
growing our core businesses and integrating along the energy value
chain are being implemented profitably. Further, the nine month
results confirm that we are on track for another year of
double-digit earnings per share growth. We are particularly
pleased with the results of our Gas Distribution and Energy
Services divisions, despite the third consecutive year of warmer
than normal weather in our key franchise area."
Mr. MacNeill added, "Recent events also position Enbridge for the
continuation of profitable growth. We have received the go-ahead
from producers to proceed with the Terrace II expansion of our
main crude oil pipeline system. Enbridge was also selected to
construct a new line that will move crude oil from the Mackay
River oil sands lease to our terminal near Fort McMurray, Alberta.
These volumes will then travel on our Athabasca pipeline which
interconnects with the Enbridge System at Hardisty. Both projects
confirm the industry's positive outlook for liquids volumes,
particularly from oil sands developments, and bode well for future
expansion opportunities of our system."
Mr. MacNeill concluded by saying, "On the natural gas front, our
vision to become a major player in gas transmission is becoming a
reality as both the Alliance and Vector pipelines are expected to
be placed into service shortly. In our gas distribution
franchise, impressive growth continues with 53,000 new customers
added to the system so far this year. Construction of the new gas
distribution system in New Brunswick is underway, with first
deliveries planned before year end."
The Enbridge Board of Directors today also declared quarterly
dividends of $0.3225 per common share and $0.34375 per Series A
Preferred Share. Both dividends are payable on December 1, 2000,
to shareholders of record on November 17, 2000.
FINANCIAL RESULTS
Liquids Pipelines
Nine month contributions were $128.0 million, compared with $127.6
million in 1999. Deliveries increased to 2.2 million barrels per
day from 2.0 million barrels per day for the same period last
year. The increase reflects new volumes from Line 9, which was
placed in service in 1999, and more than offsets lower deliveries
on the Enbridge and Lakehead Systems.
The Enbridge System has experienced a $2.0 million increase in
earnings, principally due to expansions. This improvement,
combined with increased earnings from the Enbridge (Athabasca)
System, more than offset the $2.4 million lower contribution from
the Lakehead System. Throughput levels on the Lakehead System
continue to be less than in previous periods as the timing of the
expected recovery of crude oil production levels in Western Canada
continues to lag increases in price. Throughput levels do not
have a significant impact on earnings from the Enbridge System due
to protections in the incentive tolling agreement with shippers.
The Enbridge (Athabasca) System earnings reflect a higher average
investment base in 2000 as a result of construction of additional
tankage facilities.
Capacity on the Enbridge System will be increased through
construction of the second phase of the Terrace expansion project
in 2001. The expansion includes 123 kilometres of new
914-millimetre (36-inch) pipeline on three separate segments
between the main terminal at Hardisty, Alberta and Kerrobert,
Saskatchewan. Terrace Phase II will increase system capacity by
approximately 40,000 barrels per day at an estimated cost of $120
million. The decision to proceed with the expansion follows an
agreement with the Canadian Association of Petroleum Producers and
reflects the positive outlook for production growth in Western
Canada.
Gas Distribution
Earnings from the Gas Distribution business increased $24.0
million, or 17%, to $163.2 million for the first nine months of
2000. The results include contributions from Enbridge Consumers
Gas for the nine month period ended June 2000, earnings from the
Company's 32% investment in Noverco and other gas distribution
operations. Due to the seasonal nature of the gas distribution
operations, nine month earnings are not indicative of full year
results.
The increased earnings of Enbridge Consumers Gas reflect strong
operating performance during the period. Higher earnings resulted
from increased distribution volumes, lower operating and
maintenance expenses resulting from cost reduction initiatives,
higher revenue earned from third party billings, higher interest
income earned on short term investments and lower income tax
expense due to tax rate reductions. These improvements were
partially offset by the unbundling of the retail energy products
and services businesses in October 1999. Distribution volumes
have increased primarily as a result of increased industrial load
and higher average use per customer, a larger number of customers
and slightly colder weather than 1999. However, the weather
continues to be warmer than normal, which has a negative impact on
earnings. Using degree days as a measure, the weather has been
approximately 9% warmer than normal. The contribution from
Noverco has decreased in the nine month period due to the adoption
of the new accounting standards for income taxes and a one-time
gain recognized by Noverco in 1999.
Construction of the gas distribution network in New Brunswick has
commenced. This results in a contribution to earnings from
allowance for equity funds used during construction (AEDC). The
facilities are expected to be in service prior to year end.
International
Earnings from the International business decreased $3.5 million to
$17.5 million in the first nine months of 2000 compared with 1999,
primarily because of lower fees earned from operating the Jose
Terminal. Meetings with PDVSA are ongoing and a contract
operating agreement continues to be in place. On September 6, the
Company completed its previously announced acquisition of an
additional ownership interest in OCENSA. The Company acquired an
additional 7.2% interest, after the exercise of a partner's right
of first refusal, and now holds 24.7% of OCENSA. The acquisition
also included the remaining 50% interest in CITCOL, the company
that operates OCENSA. The acquisition did not have a significant
impact on earnings in the quarter.
Gas Pipelines and New Business Development
Earnings from Gas Pipelines and New Business Development
activities were $11.3 million in the first nine months of 2000,
compared with $22.0 million for the same period last year. Higher
AEDC from the Alliance Pipeline Project was more than offset by
reduced current tax recoveries and higher future income tax
expense. Positive developments included increased AEDC from the
Vector Pipeline Project, due to a larger investment base, and
improved results from electrical utility operations and the
Company's investment in AltaGas.
Natural gas pipeline capacity from the Western Canadian
Sedimentary Basin is expected to exceed supply over the next few
years. Consequently, in the third quarter, the Company recorded
losses of $8.7 million, after tax, related to its merchant
capacity commitments for the years 2000 through 2003 on Alliance
and Vector.
The Company has a 21.4% interest in the Alliance Pipeline Project
which is designed to deliver up to 1.6 billion cubic feet per day
of natural gas from Western Canada to the Chicago area. The
pipeline is expected to be in service by mid-November 2000.
Construction of the Vector Pipeline Project is also nearing
completion with an expected in-service date in December 2000. Due
primarily to adverse weather conditions encountered during
construction, total capital costs of the project are now estimated
to exceed U.S. $600 million.
During the third quarter the Company entered into a strategic
alliance with Global Thermoelectric to develop and distribute
natural-gas-fuelled fuel cell products to residential homes.
Enbridge made a $25 million investment to fund further technology,
design and product development work required to reach a commercial
launch. This investment will provide Enbridge exclusive
distribution rights in Canada for the residential units.
Energy Services
Nine month contributions from Energy Services were $21.2 million,
an increase of $29.9 million over the same period in 1999. The
higher earnings were primarily due to the results from the retail
energy products and services business unbundled from the regulated
operations of Enbridge Consumers Gas in 1999, lower income tax
expense due to tax rate reductions and higher rental revenues.
Enbridge Services continues to pursue expansion strategies and
cost synergies.
Corporate
Corporate costs totalled $2.5 million during the nine month
period, compared with $9.6 million in 1999. In 2000, the
Corporate segment reflects the positive contribution from a
central operations support group. In 1999, a gain related to a
reduction in the Company's ownership interest in the Lakehead
System was realized.
Consolidated Results of Operations
Operating revenue increased by $248.4 million, or 11%, to $2,438.9
million for the first nine months of 2000, compared with the same
period last year. Of the increase, $112.6 million was due to
higher transportation revenue generated from the Liquids Pipelines
business which was attributed to commissioning of Terrace
Expansion and the Enbridge (Athabasca) System and completion of
the Line 9 reversal during 1999. An increase of $86.7 million in
gas sales and transportation revenue was realized in Gas
Distribution primarily from increased distribution volumes, a
higher equity rate of return and increased gas costs. The results
of this business continue to indicate a trend towards increased
transportation service gas supply contracts rather than the
traditional buy/sell gas supply contracts. The remaining increase
is the result of the expansion of the Energy Services business.
Operating and administrative expenses increased $70.4 million to
$647.0 million in the first nine months of 2000 due to the
commissioning of Line 9 and the Enbridge (Athabasca) System and
the larger customer base in Energy Services. The higher balance
of property, plant and equipment gave rise to increased
depreciation expense. Investment and other income decreased to
$165.1 million from $173.1 million in 1999, caused primarily by
lower AEDC due to commissioning of the Enbridge (Athabasca) System
and the Terrace Expansion during 1999. The decrease in the
effective income tax rate is due primarily to the reduction in the
federal and Ontario provincial income tax rates.
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; 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 will host a conference call at 4:15 p.m. EST (2:15 p.m.
MST) today to provide further information. The call will be
broadcast live and will be available for replay at the Enbridge
investor web site at www.enbridge.com/investor.
-------------------------------------------------------------------ENBRIDGE INC. HIGHLIGHTS(1)-------------------------------------------------------------------(unaudited; Canadian Three months ended Nine months ended dollars in millions, September 30, September 30, except per share amounts) 2000 1999 2000 1999-------------------------------------------------------------------FINANCIALEarnings Applicable to Common Shareholders Liquids Pipelines 43.4 42.8 128.0 127.6 Gas Distribution 0.2 (6.7) 163.2 139.2 International 7.2 8.8 17.5 21.0 Gas Pipelines and New Business Development (4.0) 5.9 11.3 22.0 Energy Services 5.4 (2.3) 21.2 (8.7) Corporate (0.9) (8.6) (2.5) (9.6) Preferred Security Distributions (3.8) (1.7) (11.5) (1.7) Preferred Share Dividends (1.7) (1.7) (5.1) (5.1)------------------------------------------------------------------- 45.8 36.5 322.1 284.7--------------------------------------------------------------------------------------------------------------------------------------Operating Revenue Liquids Pipelines 186.1 167.4 551.1 438.5 Gas Distribution 341.6 351.6 1,559.0 1,655.2 International 2.8 1.6 7.7 10.7 Gas Pipelines and New Business Development 11.1 13.0 40.4 41.6 Energy Services 96.7 18.6 280.7 44.5------------------------------------------------------------------- 638.3 552.2 2,438.9 2,190.5--------------------------------------------------------------------------------------------------------------------------------------Cash Provided By Operating Activities Earnings plus charges (credits) not affecting cash 117.6 100.0 538.4 455.7 Changes in operating assets and liabilities (66.8) 99.3 (18.2) 155.7------------------------------------------------------------------- 50.8 199.3 520.2 611.4--------------------------------------------------------------------------------------------------------------------------------------Common Share Dividends 53.5 47.2 149.9 139.2 Per Common Share Amounts Earnings 0.28 0.24 2.10 1.89 Dividends 0.3225 0.3025 0.9475 0.8925Weighted Average Common Shares Outstanding (millions) 153.6 150.9OPERATINGLiquids Pipelines(2) Deliveries (thousands of barrels per day) 2,089 2,042 2,155 2,005 Barrel miles (billions) 201 175 561 522 Average haul (miles) 1,046 932 950 954Gas Distribution(3) Volumes (billion cubic feet) 89 81 372 355 Number of active customers (thousands) 1,514 1,461 1,514 1,461 Degree day deficiency(4) Actual 516 407 3,451 3,395 Forecast based on normal weather 550 576 3,806 3,931--------------------------------------------------------------------------------------------------------------------------------------
1. Highlights of Gas Distribution reflect the results of Enbridge
Consumers Gas and other gas distribution operations on a quarter
lag basis for the three and nine months ended June 30, 2000 and
1999.
2. Liquids Pipelines operating highlights include the statistics
of the 15.3% owned Lakehead System.
3. Gas 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-------------------------------------------------------------------(unaudited; Canadian Three months ended Nine months ended dollars in millions, September 30, September 30, except per share amounts) 2000 1999 2000 1999-------------------------------------------------------------------Operating Revenue Gas sales 262.1 245.8 1,267.3 1,255.2 Transportation revenue 257.0 205.6 817.3 632.2 Energy services and other 119.2 100.8 354.3 303.1------------------------------------------------------------------- 638.3 552.2 2,438.9 2,190.5-------------------------------------------------------------------Expenses Gas costs 187.6 159.2 867.8 837.0 Operating and administrative 224.3 191.7 647.0 576.6 Depreciation 102.0 96.2 334.2 266.5------------------------------------------------------------------- 513.9 447.1 1,849.0 1,680.1-------------------------------------------------------------------Operating Income 124.4 105.1 589.9 510.4Investment and Other Income 46.8 46.8 165.1 173.1Interest Expense (109.0) (94.9) (314.9) (278.3)-------------------------------------------------------------------Earnings Before Income Taxes 62.2 57.0 440.1 405.2Income Taxes (10.9) (17.1) (101.4) (113.7)-------------------------------------------------------------------Earnings 51.3 39.9 338.7 291.5Preferred Security Distributions (3.8) (1.7) (11.5) (1.7)Preferred Share Dividends (1.7) (1.7) (5.1) (5.1)-------------------------------------------------------------------Earnings Applicable to Common Shareholders 45.8 36.5 322.1 284.7--------------------------------------------------------------------------------------------------------------------------------------Earnings Per Common Share 0.28 0.24 2.10 1.89--------------------------------------------------------------------------------------------------------------------------------------Weighted Average Common Shares Outstanding (millions) 153.6 150.9--------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to the consolidated financial statements.-------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENT OF RETAINED EARNINGS------------------------------------------------------------------- Nine months ended September 30,(unaudited; Canadian dollars in millions) 2000 1999-------------------------------------------------------------------Retained Earnings at Beginning of Period 503.1 407.6Earnings Applicable to Common Shareholders 322.1 284.7Common Share Dividends (149.9) (139.2)Effect of Change in Accounting for Income Taxes (Note 1) (112.0) --------------------------------------------------------------------Retained Earnings at End of Period 563.3 553.1--------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to the consolidated financial statements.-------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENT OF CASH FLOWS------------------------------------------------------------------- Nine months ended September 30,(unaudited; Canadian dollars in millions) 2000 1999-------------------------------------------------------------------Cash Provided By (Used In) Operating Activities Earnings 338.7 291.5 Charges (credits) not affecting cash Depreciation 334.2 266.5 Other (134.5) (102.3) Changes in operating assets and liabilities (18.2) 155.7------------------------------------------------------------------- 520.2 611.4-------------------------------------------------------------------Investing Activities Additions to property, plant and equipment (226.1) (576.7) Long term investments (475.1) (299.2) Changes in construction payable (14.3) (69.5) Other 2.3 (6.4)------------------------------------------------------------------- (713.2) (951.8)-------------------------------------------------------------------Financing Activities Variable rate financing, net (561.4) 60.7 Fixed rate financing, net 733.6 203.3 Preferred securities - 171.8 Capital stock 168.3 6.3 Dividends and distributions (166.6) (146.0) Non-controlling interest 16.9 - Other - -------------------------------------------------------------------- 190.8 296.1-------------------------------------------------------------------Decrease in Cash and Cash Equivalents (2.2) (44.3)Cash and Cash Equivalents at Beginning of Period 53.6 124.9-------------------------------------------------------------------Cash and Cash Equivalents at End of Period 51.4 80.6--------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to the consolidated financial statements.-------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENT OF FINANCIAL POSITION------------------------------------------------------------------- September 30, December 31,(unaudited; Canadian dollars in millions) 2000 1999-------------------------------------------------------------------ASSETS Cash and cash equivalents 51.4 53.6 Accounts receivable and other current assets 803.2 678.5 Gas in storage 280.0 375.1------------------------------------------------------------------- 1,134.6 1,107.2 Long term investments 1,589.4 1,051.6 Deferred charges and other assets 369.6 278.7 Property, plant and equipment, net 7,117.9 6,770.7------------------------------------------------------------------- 10,211.5 9,208.2--------------------------------------------------------------------------------------------------------------------------------------LIABILITIES AND SHAREHOLDERS' EQUITY Short term borrowings 55.6 155.4 Accounts payable and other current liabilities 689.7 580.7 Current portion of long term liabilities 393.5 174.4------------------------------------------------------------------- 1,138.8 910.5 Long term debt 5,327.0 5,284.8 Deferred liabilities 88.0 157.8 Future income taxes 797.4 254.5 Non-controlling interests 120.6 100.0 Shareholders' equity 2,739.7 2,500.6------------------------------------------------------------------- 10,211.5 9,208.2--------------------------------------------------------------------------------------------------------------------------------------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
1999 Annual Report.
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 current year presentation.
1. CHANGE IN ACCOUNTING POLICIES
Income taxes
Effective January 1, 2000, the Corporation adopted the Canadian
Institute of Chartered Accountants new recommendations for
accounting for income taxes. The recommendations have been
adopted retroactively without restatement of the prior year's
results. The new standard does not impact the accounting for
income taxes for the wholly owned rate-regulated operations of the
Corporation, which use the taxes payable basis.
Under the new recommendations, income taxes for non-regulated
operations are accounted for using the liability method. Adoption
of the new standard resulted in a charge to retained earnings of
$112.0 million, of which $76.1 million related to the unbundled
rental assets, $22.4 million related to the tax effect of
differences between the carrying amount of investments and their
respective tax basis, and the remaining $13.5 million related to
other non-regulated assets. In addition, the tax effect of
differences between the assigned and underlying values of
identifiable assets in prior year's business combinations resulted
in an increase of $430.1 million in property, plant and equipment.
These adjustments, along with the recharacterization of deferred
credits and a future income tax liability to be recovered from the
ratepayers (specific to the unbundling transaction), resulted in a
cumulative adjustment of $634.1 million in future income tax
liabilities.
Employee Future Benefits
The Corporation has adopted the new recommendations for employee
future benefits, including pensions and post employment benefits,
for all operating segments on a prospective basis, except for the
Gas Distribution segment. The Gas Distribution business, conducted
primarily through a gas utility operation with a fiscal year end
of September 30, is not required to adopt the new accounting
recommendations until fiscal 2001. The adoption of the new
recommendations did not have a material impact on the
Corporation's results of operations.
2. SEGMENTED INFORMATION
Nine months ended September 30, 2000-------------------------------------------------------------------(unaudited; Canadian dollars in millions) Liquids Gas Pipe- Gas Dist- Inter- Pipe- Energy Corp- lines ribution national lines Services orate Total-------------------------------------------------------------------Operating Revenue 551.1 1,559.0 7.7 40.4 280.7 - 2,438.9Operating Expenses 186.8 1,090.8 12.0 40.3 200.2 (15.3) 1,514.8Depreciation 122.9 154.0 - 6.6 48.4 2.3 334.2Investment and Other Income 29.2 59.8 20.7 19.5 4.7 31.2 165.1Interest Expense 81.1 122.0 - 2.5 20.6 88.7 314.9Income Taxes 61.5 88.8 (1.1) (0.8) (5.0)(42.0) 101.4-------------------------------------------------------------------Earnings 128.0 163.2 17.5 11.3 21.2 (2.5) 338.7----------------------------------------------------------- Preferred Share Dividends And Preferred Security Distributions (16.6) --------Earnings Applicable to Common Shareholders 322.1--------------------------------------------------------------------------------------------------------------------------------------Nine months ended September 30, 1999-------------------------------------------------------------------(unaudited; Canadian dollars in millions) Liquids Gas Pipe- Gas Dist- Inter- Pipe- Energy Corp- lines ribution national lines Services orate Total-------------------------------------------------------------------Operating Revenue 438.5 1,655.2 10.7 41.6 44.5 - 2,190.5Operating Expenses 165.1 1,126.1 13.2 42.5 56.4 10.3 1,413.6Depreciation 82.1 176.5 0.2 3.8 1.9 2.0 266.5Investment and Other Income 43.7 36.4 25.8 21.4 - 45.8 173.1Interest Expense 61.4 139.2 - 0.6 0.7 76.4 278.3Income Taxes 46.0 110.6 2.1 (5.9) (5.8)(33.3) 113.7-------------------------------------------------------------------Earnings 127.6 139.2 21.0 22.0 (8.7) (9.6) 291.5-------------------------------------------------------------------Preferred Share Dividends (6.8) --------Earnings Applicable to Common Shareholders 284.7--------------------------------------------------------------------------------------------------------------------------------------
3. ISSUE OF COMMON SHARES
On May 26, 2000, the Corporation completed a public offering of
4.5 million common shares at $32.75 per common share. In
connection with the offering, the Corporation completed a private
placement of 600,000 common shares with Noverco at $32.75 per
common share. This transaction closed on June 6, 2000 and
maintains Noverco and its affiliates' ownership interest in
Enbridge at approximately 10%. Cash proceeds from the issues were
$167.0 million less after-tax issue costs of $3.5 million.
SUPPLEMENTARY FINANCIAL INFORMATION Number of Shares ----------------Common Shares - issued and outstanding 161,715,349(voting equity shares)Preference Shares, Series A 5,000,000(non-voting equity shares) Total vested and exercisable stock options 1,845,815Pursuant to its Shareholder Rights Plan, Enbridge Inc. has issuedone right in respect of each of its outstanding common shares.The number of common shares which would be issued is dependent uponthe number of such rights exercised.Supplementary information as at October 13, 2000.