April 27, 2000
Earnings Applicable to Common Shareholders for the first quarter
of 2000 of $82.6 million, or $0.55 per share, compared with $69.8
million, or $0.47 per share, for the same period in 1999. The 18%
increase in earnings reflects higher contributions from the Energy
Services and Gas Distribution businesses and the favourable impact
from the reduction in the corporate income tax rate. Higher
financing costs associated with the growth in the non-regulated
businesses partially offset these increases.
Commenting on the results, Brian F. MacNeill, President & Chief
Executive Officer, said, "For the third consecutive year, warm
weather affected earnings from our key gas distribution franchise.
Notwithstanding, first quarter earnings increased over the prior
period, consistent with our expectations for another year of
earnings growth on a weather normal basis."
Mr. MacNeill added, "Our strategies have positioned us for growth
in both core businesses as well as further integration along the
energy value chain. Business fundamentals are strong and the
improvement in commodity prices bodes well for the future.
Liquids and natural gas volumes from the Western Canadian
Sedimentary Basin are expected to rise over the next decade, and
we look forward to applying our expertise on incentive based
tolling to the gas distribution franchise. In addition to our
core business opportunities, our experience with northern
operations positions us to be a leading player in northern gas
pipeline development. Our overall commitment continues to be to
deliver superior returns to shareholders through profitable growth
while maintaining a low risk business profile."
Consistent with current profitability and the outlook for future
growth, the Board of Directors today announced an increase in the
quarterly dividend from $0.3025 per common share to $0.3225 per
common share, effective with the second quarter dividend payment
on June 1. The increase represents the fifth and largest
quarterly increase in the dividend since 1995. Also today, the
Board declared a quarterly dividend of $0.34375 per Series A
Preferred Share. Both dividends are payable on June 1, 2000, to
shareholders of record on May 12, 2000.
FINANCIAL RESULTS
LIQUIDS PIPELINES
First quarter earnings were $42.4 million, compared with $41.4
million in the first quarter of 1999, due primarily to higher
earnings from the Enbridge System as a result of the Terrace
Expansion, which was completed in 1999. The results from the
Lakehead, Enbridge (NW) and Enbridge (Athabasca) Systems are
comparable to the results for the first three months of 1999.
In April, Enbridge Pipelines Inc. and the Canadian Association of
Petroleum Producers (CAPP) announced the details of an Incentive
Tolling Agreement governing tolls on the Enbridge Canadian
mainline pipeline system for the years 2000 to 2004. The specific
terms of the settlement have been filed with the National Energy
Board, seeking its approval. The settlement follows the May 1999
Memorandum of Agreement regarding an extension and revision of the
1995 Incentive Tolling Agreement which expired at the end of 1999.
The fundamentals of the extended agreement are consistent with
the original agreement, allowing Enbridge and its customers to
continue to share in cost savings.
GAS DISTRIBUTION
Earnings from the Gas Distribution business increased $12.7
million to $33.1 million in the first quarter of 2000. The
results include contributions from Enbridge Consumers Gas for the
three month period ended December 1999 and income from the
Corporation's 32% investment in Noverco. Due to the seasonal
nature of these gas distribution operations, quarterly earnings
are not indicative of full year results.
The increased earnings of Enbridge Consumers Gas reflect higher
distribution volumes, lower operating and maintenance expense, and
lower tax expense due to the tax rate reduction. These increases
were partially offset by the impact of unbundling the retail
products and services business to Energy Services. The weather
was colder by 3% from the same period last year but was still 9.9%
warmer than normal. Enbridge Consumers Gas continues to increase
its customer base at expected rates. The results from other Gas
Distribution operations approximated last year's earnings.
INTERNATIONAL
Earnings decreased $0.9 million to $5.8 million in the first
quarter of 2000, primarily because of lower consulting fees after
the completion of a significant contract in Mexico in 1999.
Income from the Corporation's OCENSA investment in Colombia was
comparable to income for the same period last year. Receipt of
final assent from the Venezuelan government for the acquisition of
a 45% interest in the Jose Terminal remains pending.
GAS PIPELINES AND NEW BUSINESS DEVELOPMENT
Earnings from Gas Pipelines and New Business Development
activities decreased $1.7 million in the first three months of
2000 to $9.5 million. Higher AEDC from the Alliance Pipeline
Project was more than offset by reduced tax recoveries in 2000.
The earnings of AltaGas Services Inc., which was acquired in the
third quarter of 1999, and improved results from electrical
utility operations partially offset the decrease.
ENERGY SERVICES
Energy Services earnings increased to $6.0 million in 2000,
compared with a loss of $3.5 million in the first quarter of 1999.
The higher earnings were due primarily to the retail energy
products and services business activities unbundled from the
regulated operations of Enbridge Consumers Gas, effective October
1, 1999.
CORPORATE
Corporate costs totalled $8.7 million, compared with $4.7 million
in 1999. This increase was due mainly to higher financing costs
associated with higher interest rates and the growth in
non-regulated and new corporate ventures.
CONSOLIDATED RESULTS OF OPERATIONS
On a consolidated basis, operating revenue increased by $111.7
million, or 19%, to $700.1 million, compared with the same period
last year. Of the increase, $55.2 million was due to higher
transportation revenue included in the Liquids Pipelines business
which was attributed to commissioning of Terrace Expansion and the
Enbridge (Athabasca) System, completion of the Line 9 reversal and
other feeder line expansions during 1999. A further $31.0 million
included in gas sales and transportation revenue was realized in
Gas Distribution, after consideration of the transfer of the
retail business, primarily from increased distribution volumes and
the higher allowed equity rate of return. The results of this
business continue to indicate a trend towards increased
transportation service contracts rather than the traditional
system gas supply contracts. The remaining increase is the result
of the transfer and expansion of services in the Energy Services
business.
Operating and administrative expenses increased $28.0 million to
$202.2 million in the first quarter of 2000 due to increases to
support the revenue growth in the Liquids Pipelines business and
the larger customer base in Energy Services. The larger balance
of property, plant and equipment gave rise to increased
depreciation expense in the quarter. Investment and other income
decreased to $43.4 million from $53.9 million in 1999, caused
primarily by lower AEDC due to commissioning of the Enbridge
(Athabasca) System and other feeder lines subsequent to the first
quarter of 1999. The increase in the effective income tax rate is
due primarily to increased taxable earnings and timing differences
related to regulated activities, net of the impact of the
reduction in the income tax rate.
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 press 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 March 31,(unaudited; Canadian dollars in millions, except per share amounts) 2000 1999---------------------------------------------------------------------FINANCIALEarning Applicable to Common Shareholders Liquids Pipelines 42.4 41.4 Gas Distribution 33.1 20.4 International 5.8 6.7 Gas Pipelines and New Business Development 9.5 11.2 Energy Services 6.0 (3.5) Corporate (8.7) (4.7) Preferred Security Distributions (3.8) - Preferred Share Dividends (1.7) (1.7)--------------------------------------------------------------------- 82.6 69.8------------------------------------------------------------------------------------------------------------------------------------------Operating Revenue Liquids Pipelines 180.5 125.3 Gas Distribution 411.4 440.7 International 2.2 4.5 Gas Pipelines and New Business Development 16.2 6.8 Energy Services 89.8 11.1--------------------------------------------------------------------- 700.1 588.4Cash Provided By (Used In) Operating Activities Earnings plus charges (credits) not affecting cash 150.8 125.9 Changes in operating assets and liabilities (188.1) (49.3)--------------------------------------------------------------------- (37.3) 76.6------------------------------------------------------------------------------------------------------------------------------------------Common Share Dividends 47.3 44.8Per Common Share Amounts(2) Earnings 0.55 0.47 Dividends 0.3025 0.2875Weighted Average Common Shares Outstanding (millions) 151.4 150.8OPERATINGLiquids Pipelines(3) Deliveries (thousands of barrels per day) 2,139 1,926 Barrel miles (billions) 181 173 Average haul (miles) 913 999Gas Distribution(4) Volumes (billion cubic feet) 102 96 Number of active customers (thousands) 1,489 1,439 Degree day deficiency(5) Actual 1,193 1,157 Forecast based on normal weather 1,324 1,362------------------------------------------------------------------------------------------------------------------------------------------
1. Highlights of Gas Distribution reflect the results of Enbridge
Consumers Gas and other gas distribution assets on a quarter lag
basis for the three months ended December 31, 1999 and 1998.
2. Prior year per common share amounts and weighted average common
shares outstanding have been adjusted for the two-for-one stock
split that occurred on May 10, 1999.
3. Liquids Pipelines operating highlights include the statistics
of the 15.3% owned Lakehead System.
4. Gas distribution volumes and the number of active customers are
derived from the aggregate of buy/sell and transportation service
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 STATEMENT OF EARNINGS--------------------------------------------------------------------- Three months ended March 31,(unaudited; Canadian dollars in millions, except per share amounts) 2000 1999---------------------------------------------------------------------Operating Revenue Gas sales 342.2 328.0 Transportation revenue 240.5 169.3 Energy services and other 117.4 91.1--------------------------------------------------------------------- 700.1 588.4---------------------------------------------------------------------Expenses Gas costs 223.2 209.8 Operating and administrative 202.2 174.2 Depreciation 109.2 82.7--------------------------------------------------------------------- 534.6 466.7---------------------------------------------------------------------Operating Income 165.5 121.7Investment and Other Income 43.4 53.9Interest Expense (103.4) (92.8)---------------------------------------------------------------------Earnings Before Income Taxes 105.5 82.8Income Taxes (17.4) (11.3)---------------------------------------------------------------------Earnings 88.1 71.5Preferred Security Distributions (3.8) -Preferred Share Dividends (1.7) (1.7)---------------------------------------------------------------------Earnings Applicable to Common Shareholders 82.6 69.8------------------------------------------------------------------------------------------------------------------------------------------Earnings Per Common Share 0.55 0.47------------------------------------------------------------------------------------------------------------------------------------------Weighted Average Common Shares Outstanding (millions) 151.4 150.8---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENT OF RETAINED EARNINGS(unaudited; Canadian dollars in millions) 2000 1999---------------------------------------------------------------------Retained Earnings at Beginning of Period 503.1 407.6Earnings Applicable to Common Shareholders 82.6 69.8Common Share Dividends (47.3) (44.8)Effect of Change in Accounting for Income Taxes (Note 1) (112.0) ----------------------------------------------------------------------Retained Earnings at End of Period 426.4 432.6------------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to the consolidated financial statements.---------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENT OF CASH FLOWS--------------------------------------------------------------------- Three months ended March 31,(unaudited; Canadian dollars in millions) 2000 1999---------------------------------------------------------------------Cash Provided By (Used In) Operating Activities Earnings 88.1 71.5 Charges (credits) not affecting cash Depreciation 109.2 82.7 Other (46.5) (28.3) Changes in operating assets and liabilities (188.1) (49.3)--------------------------------------------------------------------- (37.3) 76.6---------------------------------------------------------------------Investing Activities Additions to property, plant and equipment (52.1) (264.0) Long term investments (96.0) (58.4) Changes in construction payable (29.6) (14.4) Other (5.9) (44.9)--------------------------------------------------------------------- (183.6) (381.7)---------------------------------------------------------------------Financing Activities Variable rate financing, net (277.1) 283.7 Fixed rate financing, net 541.2 11.2 Capital stock 3.4 2.5 Dividends and distributions (52.8) (46.5)--------------------------------------------------------------------- 214.7 250.9---------------------------------------------------------------------Decrease in Cash and Cash Equivalents (6.2) (54.2)Cash and Cash Equivalents at Beginning of Period 53.6 124.9---------------------------------------------------------------------Cash and Cash Equivalents at End of Period 47.4 70.7------------------------------------------------------------------------------------------------------------------------------------------See accompanying notes to the consolidated financial statements.---------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENT OF FINANCIAL POSITION--------------------------------------------------------------------- March 31, December 31,(unaudited; Canadian dollars in millions) 2000 1999---------------------------------------------------------------------ASSETS Cash and cash equivalents 47.4 53.6 Accounts receivable and other current assets 987.9 678.5 Gas in storage 335.0 375.1--------------------------------------------------------------------- 1,370.3 1,107.2 Long term investments 1,157.4 1,051.6 Deferred charges and other assets 363.2 278.7 Property, plant and equipment, net 7,144.8 6,770.7--------------------------------------------------------------------- 10,035.7 9,208.2---------------------------------------------------------------------LIABILITIES AND SHAREHOLDERS' EQUITY Short term borrowings 404.7 155.4 Accounts payable and other current liabilities 677.3 580.7 Current portion of long term liabilities 201.8 174.4--------------------------------------------------------------------- 1,283.8 910.5 Long term debt 5,275.9 5,284.8 Deferred liabilities 114.4 157.8 Future income taxes 833.2 254.5 Non controlling interest preference shares 100.0 100.0 Shareholders' equity 2,428.4 2,500.6--------------------------------------------------------------------- 10,035.7 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 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,
resulting 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
Three months Ended March 31, 2000---------------------------------------------------------------------(unaudited; Canadian dollars in millions) Liquids Gas Gas Pipe- Distri- Inter- Pipe- Energy Cor - Total lines bution national lines Services porate------------------------------------------------------------------------Operating Revenue 180.5 411.4 2.2 16.2 89.8 -- 700.1Operating Expenses 64.8 293.2 3.3 14.7 56.6 (7.2) 425.4Depreciation 39.0 52.4 -- 1.4 15.6 0.8 109.2Investment and Other Income 9.5 17.9 6.7 8.1 0.1 1.1 43.4Interest Expense 26.5 42.0 -- 0.6 6.9 27.4 103.4Income Taxes 17.3 8.6 (0.2) (1.9) 4.8 (11.2) 17.4------------------------------------------------------------------------Earnings 42.4 33.1 5.8 9.5 6.0 (8.7) 88.1----------------------------------------------------------------Preferred Share Dividends and Preferred Security Distributions (5.5) -------Earnings Applicable to Common Shareholders 82.6------------------------------------------------------------------------------------------------------------------------------------------------Three months Ended March 31, 1999---------------------------------------------------------------------(unaudited; Canadian dollars in millions) Liquids Gas Gas Pipe- Distri- Inter- Pipe- Energy Cor- Total lines bution national lines Services porate------------------------------------------------------------------------Operating Revenue 125.3 440.7 4.5 6.8 11.1 -- 588.4Operating Expenses 50.0 307.8 2.9 6.5 16.0 0.8 384.0Depreciation 23.9 56.7 -- 0.8 0.6 0.7 82.7Investment and Other Income 19.7 13.2 5.1 8.0 -- 7.9 53.9Interest Expense 18.9 49.6 -- 0.6 -- 23.7 92.8Income Taxes 10.8 19.4 -- (4.3) (2.0) (12.6) 11.3------------------------------------------------------------------------Earnings 41.4 20.4 6.7 11.2 (3.5) (4.7) 71.5-----------------------------------------------------------------Preferred Share Dividends (1.7) -------Earnings Applicable to Common Shareholders 69.8------------------------------------------------------------------------------------------------------------------------------------------------SUPPLEMENTARY FINANCIAL INFORMATION Number of Shares ----------------Common Shares - issued and outstanding 156,486,059(voting equity shares)Preference Shares, Series A 5,000,000(non-voting equity shares)Total vested and exercisable stock options 1,602,925
Pursuant to the Shareholder Rights Plan of the Corporation,
Enbridge Inc. has issued one right in respect of each of its
outstanding common shares. The number of common shares issuable on
exercise of such rights, if triggered, is undeterminable.
Supplementary information as at April 18, 2000.