January 24, 2000
record earnings in 1999. Earnings grew to $287.9 million, or
$1.91 per share, up from $240.9 million, or $1.66 per share,
recorded in 1998. The $47.0 million, or 20%, increase reflects
higher earnings from the Liquids Pipelines business segment and
Gas Pipelines projects. The Gas Distribution business continued
to experience warmer than normal weather, resulting in earnings
consistent with the prior year.
Cash provided from operating activities, before changes in
operating assets and liabilities, amounted to $626.9 million in
1999 compared with $490.4 million in 1998, an increase of 28%.
The Enbridge Board of Directors today also declared quarterly
dividends of $0.3025 per Common Share and $0.34375 per Series A
Preferred Share. Both dividends are payable on March 1, 2000, to
shareholders of record February 11, 2000.
"We have made further strides in implementing our strategies for
profitable growth," said Brian F. MacNeill, President & Chief
Executive Officer of Enbridge Inc. "The fundamentals of our
business remain strong and we have numerous opportunities for
growth. During 1999, in addition to achieving record earnings, we
laid the groundwork for further growth with investments totaling
$1.2 billion. We also made progress in ensuring that our
regulatory environments support and encourage maximum efficiency
in the delivery of energy for the benefit of both our customers
and shareholders. And we undertook important organizational
changes to achieve greater efficiency."
In addition to the Company's financial success last year, Enbridge
also attained a number of operational objectives. Key
accomplishments included:
- Strengthening of the existing energy delivery businesses and addition to overall pipeline capacity through completion of a number of liquids pipeline expansions and extensions including the System Expansion Program Phase II, Phase I of the Terrace expansion, the Athabasca Pipeline and a related tank terminal, the reversal of Line 9 to transport crude oil from Montreal to Sarnia, and extension of the U.S. system to deliver crude oil to a refinery in Toledo, Ohio;- Expansion of the Enbridge Consumers Gas distribution network with a 7.3% increase in rate base investment reflecting the addition of 12 new communities and 58,000 new customers, and winning the natural gas distribution franchise for the province of New Brunswick;- Successful negotiation of a five year extension to the Incentive Tolling Agreement for Enbridge Pipelines' Canadian mainline liquids pipeline system, and receipt of regulatory approval to implement Performance Based Regulation for Enbridge Consumers Gas;- Development of a significant presence in the natural gas transmission business through involvement in the Alliance and Vector pipelines, and entry into the midstream gas business with a 40% investment in AltaGas Services Inc.; - The unbundling of ancillary assets from the gas distribution utility into a fully unregulated retail products and services business; and- The establishment of a commercial services unit to provide common services in an efficient fashion to Enbridge's growing portfolio of energy distribution and services businesses, and potentially to third party customers.
Mr. MacNeill added, "These accomplishments and ongoing new
initiatives position Enbridge to continue the pattern of strong
earnings performance and return on invested capital established
over the last five years. The growth in earnings and cash flow
has supported annual increases in dividends since 1996, and it is
the Company's expectation that dividend growth will continue."
Financial results
In 1999, the Company adopted a new business segmentation which
better reflects how the business is managed and facilitates
achievement of the Company's long term growth objectives. These
segments include Liquids Pipelines, Gas Distribution,
International, Gas Pipelines and New Business Development, and
Energy Services.
The Liquids Pipelines segment recorded increased returns from the
Enbridge pipeline system. This was due to the full year impact of
the System Expansion Program Phase II which was completed in
January 1999, as well as the reversal of Line 9 and commissioning
of Phase I of the Terrace expansion. The completion of the
Athabasca pipeline system also bolstered 1999 earnings, while
throughput reductions resulting from the low crude oil prices in
1998 served to reduce earnings from Lakehead and certain U.S.
feeder systems. The 1998 results also included a favorable
settlement of an insurance claim which had been outstanding since
1991.
Gas Distribution's 1999 earnings were consistent with 1998 levels.
In the past two years, Enbridge Consumers Gas' franchise area
experienced significantly warmer than normal weather, resulting in
lower than expected sendout volumes and earnings. Degree days,
which represent a measure of coldness in the franchise area, were
3,460 in 1999 compared with an expected 4,060. Similarly, in
1998, degree days were 3,352 in 1998 compared with normal levels
of 4,079. Enbridge estimates that the significantly warmer
weather resulted in a reduction of earnings of approximately $31
million in 1999 and $40 million in 1998 when compared with
earnings expected under normal weather patterns. In response, the
Company implemented a variety of cost reduction initiatives,
operational efficiencies and other corporate actions across the
Enbridge group of companies to mitigate a large portion of the
impact of warmer weather on consolidated results.
The International segment benefited from fees earned as contract
operator of the Jose Terminal in Venezuela. Enbridge and its
partners began operating the terminal in April, and continue to
work towards completion of the acquisition of the facility. The
Gas Pipelines and New Business Development segment showed a
significant increase in Allowance for Equity Funds Used During
Construction (AEDC) reflecting higher investment levels in the
Alliance and Vector pipeline projects. Also contributing was the
commencement of equity earnings from the Company's 40% interest in
AltaGas Services Inc.
The Energy Services segment benefited from the impact of the
unbundling of ancillary services from Enbridge Consumers Gas that
occurred on October 1, 1999. Corporate costs, including the
preferred share dividends and preferred securities distributions,
increased from 1998 levels primarily as a result of higher
financing costs associated with the Company's growth initiatives.
Consistent with prior years, Enbridge recorded nominal earnings in
the fourth quarter, reflecting the seasonality of earnings at
Enbridge Consumers Gas.
Year 2000
As of January 1, 2000, Enbridge had ushered in the new year with
no significant Year 2000 related problems or service disruptions
reported by business units or affiliate companies in North America
and internationally, thanks to the Company's comprehensive Y2K
Readiness Program. The Company continues its normal monitoring of
gas delivery and distribution systems and crude oil pipelines, as
well as information technology and equipment for potential Y2K
effects.
[Enbridge will hold an analysts conference call at 3:15 p.m. MDT
today to discuss 1999 results. The call will be broadcast live
and will be available for replay on the Internet at
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 and retail services 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 "ENBRF". Information
about Enbridge is available on the World Wide Web at
When used in this news release, the words "anticipate", "expect",
"project" 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,(unaudited; Canadian dollars in millions, except per share amounts) 1999 1998 1999 1998------------------------------------------------------------------------FINANCIAL 2Earnings Attributable to Common Shareholders Liquids Pipelines 37.7 29.6 165.3 143.2 Gas Distribution (43.5) (37.8) 99.2 100.2 International 7.7 9.6 28.7 24.3 Gas Pipelines and NBD 9.1 4.9 31.2 6.3 Energy Services 6.3 (2.8) (2.5) (6.2) Corporate (9.0) (11.2) (22.1) (26.9) Preferred Securities Distributions (3.3) - (5.0) - Preferred Share Dividends (1.8) - (6.9) ------------------------------------------------------------------------ 3.2 (7.7) 287.9 240.9-----------------------------------------------------------------------Operating Revenue Liquids Pipelines 161.1 112.0 599.5 495.4 Gas Distribution 210.7 206.7 1,866.0 1,784.1 International 13.3 6.9 24.0 16.0 Gas Pipelines and NBD 13.2 16.0 54.8 24.8 Energy Services 98.9 11.6 143.4 21.4----------------------------------------------------------------------- 497.2 353.2 2,687.7 2,341.7-----------------------------------------------------------------------Cash Provided by (Used In) Operating Activities Earnings plus charges (credits) not affecting cash 143.2 63.5 626.9 490.4 Changes in operating assets and liabilities (241.3)(144.2) (131.8) (178.0)------------------------------------------------------------------------ (98.1) (80.7) 495.1 312.4------------------------------------------------------------------------Common Share Dividends 47.2 44.7 186.4 168.3Per Share Amounts 3 Earnings 0.02 (0.06) 1.91 1.66 Dividends 0.3025 0.2875 1.195 1.12Weighted Average Shares Outstanding (millions) 3 151.0 145.4-----------------------------------------------------------------------OPERATINGLiquids Pipelines 4 Deliveries (thousands of barrels per day) 2,078 2,095 2,023 2,136 Barrel miles (billions) 174 190 696 771 Average haul (miles) 918 987 946 989Gas Distribution Gas distribution volumes (billion cubic feet) 47 44 402 397 Number of active customers (thousands) 5 1,466 1,414 1,466 1,414 Degree day deficiency 6 Actual 65 43 3,460 3,352 Forecast based on normal weather 129 94 4,060 4,079------------------------------------------------------------------------
1. Highlights of Gas Distribution reflect the results of Enbridge
Consumers Gas (The Consumers' Gas Company Ltd.) and other gas
distribution assets on a quarter lag basis of consolidation for
the three months and twelve months ended September 30, 1999 and
1998.
2. Prior year amounts have been restated to conform to the
segmentation and presentation adopted in 1999.
3. Prior year per share amounts and weighted average shares
outstanding have been adjusted to give effect to the two for one
stock split that occurred on May 10, 1999.
4. Liquids Pipelines operating highlights include the statistics
of the 15.3% owned portion of the mainline system located in the
United States.
5. The number of active customers at year end reflects 58,000 new
connections made to the Gas Distribution system during 1999.
6. Degree day deficiency is a measure of coldness which is
indicative of volumetric requirements of natural gas utilized for
heating purposes in all markets. 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------------------------------------------------------------------------(Canadian dollars in millions, except per share amounts)------------------------------------------------------------------------Year ended December 31, 1999 1998 1997------------------------------------------------------------------------Operating Revenue Gas sales 1,374.2 1,416.1 1,763.9 Transportation 820.3 624.8 537.3 Energy services and other 493.2 300.8 218.8------------------------------------------------------------------------ 2,687.7 2,341.7 2,520.0Expenses Gas costs 903.1 865.0 1,036.4 Operating and administrative 821.6 675.0 638.4 Depreciation 383.8 309.0 274.0------------------------------------------------------------------------ 2,108.5 1,849.0 1,948.8------------------------------------------------------------------------Operating Income 579.2 492.7 571.2Investment and Other Income 188.7 156.4 76.5Interest Expense (380.6) (312.9) (276.1)------------------------------------------------------------------------Earnings Before Undernoted 387.3 336.2 371.6Income Taxes (87.5) (95.3) (154.3)------------------------------------------------------------------------Earnings 299.8 240.9 217.3Preferred Security Distributions (5.0) - -Preferred Share Dividends (6.9) - -------------------------------------------------------------------------Earnings Applicable to Common Shareholders 287.9 240.9 217.3------------------------------------------------------------------------Earnings Per Common Share 1.91 1.66 1.58------------------------------------------------------------------------CONSOLIDATED STATEMENT OF RETAINED EARNINGS------------------------------------------------------------------------(Canadian dollars in millions, except per share amounts)------------------------------------------------------------------------Year ended December 31, 1999 1998 1997------------------------------------------------------------------------Retained Earnings at Beginning of Year 407.6 336.7 266.5Earnings Applicable to Common Shareholders 287.9 240.9 217.3Preferred Share and Preferred Security Issue Costs (6.0) (1.7) -Common Share Dividends (186.4) (168.3) (147.1)------------------------------------------------------------------------Retained Earnings at End of Year 503.1 407.6 336.7------------------------------------------------------------------------Dividends Per Common Share 1.195 1.120 1.060------------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENT OF CASH FLOWS------------------------------------------------------------------------(Canadian dollars in millions)------------------------------------------------------------------------Year ended December 31, 1999 1998 1997------------------------------------------------------------------------Cash Provided from Operating Activities Earnings 299.8 240.9 217.3 Charges (credits) not affecting cash: Depreciation 383.8 309.0 274.0 Equity earnings exceeding cash distributions (29.7) (13.8) (9.2) Gain on long term investment dilution (18.2) (1.0) (16.3) Deferred income taxes 5.5 (26.1) (0.1) Other (14.3) (18.6) 21.2 Changes in operating assets and liabilities (131.8) (178.0) (49.1)------------------------------------------------------------------------ 495.1 312.4 437.8------------------------------------------------------------------------Investing Activities Long term investments (340.8) (181.0) (434.8) Acquisition of subsidiaries (16.7) (76.1) (3.6) Additions to property, plant and equipment (783.7) (1,388.4) (651.4) Changes in construction payable (56.0) 61.9 36.2 Other (8.5) (6.8) (5.3)------------------------------------------------------------------------ (1,205.7) (1,590.4)(1,058.9)------------------------------------------------------------------------Financing Activities Variable rate financing, net 204.3 349.0 130.6 Fixed rate financing, net 184.5 829.6 359.5 Non controlling interest preference shares 100.0 - - Preferred securities 338.5 - - Preferred shares - 123.3 - Common shares 10.3 218.0 315.6 Preferred security distributions (5.0) - - Preferred share dividends (6.9) - - Common share dividends (186.4) (168.3) (147.1)------------------------------------------------------------------------ 639.3 1,351.6 658.6------------------------------------------------------------------------Increase (Decrease) in Cash (71.3) 73.6 37.5Cash at Beginning of Year 124.9 51.3 13.8------------------------------------------------------------------------Cash at End of Year 53.6 124.9 51.3------------------------------------------------------------------------ENBRIDGE INC.CONSOLIDATED STATEMENT OF FINANCIAL POSITION------------------------------------------------------------------------(Canadian dollars in millions)------------------------------------------------------------------------December 31, 1999 1998------------------------------------------------------------------------ASSETSCurrent Assets Cash 53.6 124.9 Accounts receivable and other 678.5 611.3 Gas in storage 375.1 357.8------------------------------------------------------------------------ 1,107.2 1,094.0Long Term Investments 1,051.6 676.9Deferred Charges and Other 278.7 212.1Property, Plant and Equipment, Net 6,770.7 6,364.2------------------------------------------------------------------------ 9,208.2 8,347.2------------------------------------------------------------------------LIABILITIES AND SHAREHOLDERS' EQUITYCurrent Liabilities Short term borrowings 155.4 400.4 Accounts payable and other 494.6 540.9 Interest payable 86.1 87.9 Current portion of long term liabilities 174.4 257.5------------------------------------------------------------------------ 910.5 1,286.7Long Term Debt 5,284.8 4,502.3Deferred Credits 157.8 230.4Deferred Income Taxes 254.5 266.4Non Controlling Interest Preference Shares 100.0 ------------------------------------------------------------------------- 6,707.6 6,285.8------------------------------------------------------------------------Shareholders' Equity Share capital Preferred securities 341.1 - Preferred shares 125.0 125.0 Common shares Issued - 1999 - 156,308,000 (1998 - 155,710,000) 1,677.2 1,659.8 Retained earnings 503.1 407.6 Foreign currency translation adjustment (23.9) (9.1) Reciprocal shareholding (121.9) (121.9)------------------------------------------------------------------------ 2,500.6 2,061.4------------------------------------------------------------------------ 9,208.2 8,347.2------------------------------------------------------------------------