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Enbridge Reports Another Solid Quarter and a Significant Gain on the Sale of CLH Highlights Second quarter earnings increased 349% to $658 million Second quarter adjusted operating earnings increased 15% to $150 million Six month earnings increased 143% to $909 million Six month adjusted operating earnings increased 8% to $388 million Investment in Compania Logistica de Hidrocarburos CLH, S.A. sold for $1.38 billion Trailbreaker Project launched to access the U.S. Gulf Coast as well as Eastern Canadian and U.S. East Coast refineries Waupisoo Pipeline completed and ready to receive volumes CALGARY, ALBERTA--(MARKET WIRE)--Jul 31, 2008 -- Enbridge Inc. (Toronto:ENB.TO - News) (ENB - News) - "Strong earnings
for the first half of 2008 exceeded our expectations and
reflected favourable performance from our Liquids Pipelines
and Gas Distribution and Services businesses as well as
impressive results from our U.S. affiliate, Enbridge Energy
Partners," said Patrick D. Daniel, President and Chief Executive
Officer. "This performance causes us to increase our previously
communicated 2008 guidance range from $1.80 to $1.90 adjusted
operating earnings per share to $1.85 to $1.95 adjusted
operating earnings per share and leaves us well positioned
to meet our medium-term target of 10% average annual earnings
per share growth over the 2008 to 2011 period.
We expect earnings per share growth to accelerate as new projects come into service. During the second quarter of 2008, the Waupisoo Pipeline, which brings oil sands sourced crude oil to the Edmonton, Alberta area, was completed and started contributing to earnings one month ahead of schedule. We are also on track to complete the Ontario Wind Project later this year. The Light Crude Capacity Expansion Program component of the Southern Lights Project is on schedule for completion by the end of 2008 and our Line 4 Extension Project and the final phase of Southern Access Expansion are on schedule for completion in early 2009. In 2010, projects expected to come into service include the Alberta Clipper project, which is a further expansion of the Enbridge System, and our innovative Southern Lights Pipeline, which will bring diluent from Chicago to the Edmonton area. We are very pleased with the results of the sale of our 25% interest in CLH. The transaction brought in $1.38 billion in proceeds which will be redeployed towards the Company's extensive slate of pipeline projects in Canada and the United States. The Company realized a gain of $556 million on the sale which, together with previous dividends, translates to an overall average annual return on our investment of 20%." Mr. Daniel concluded, "Currently, our focus is continued efficient operation of our core businesses while diligently advancing our construction projects, which will generate new and sustainable sources of earnings over the years to come. We are also focused on configuring our system to maximize flexibility and meet the growth needs of shippers, including placing high priority on developing the timely and cost effective market access to the U.S. Gulf Coast." On July 30, 2008, the Enbridge Board of Directors declared quarterly dividends of $0.33 per common share and $0.34375 per Series A Preferred Share. Both dividends are payable on September 1, 2008 to shareholders of record on August 15, 2008. Forward Looking Information This news release contains forward looking information. Significant related assumptions and risk factors are described under the Forward Looking Information section of this news release.
CONSOLIDATED EARNINGS
----------------------------------------------------------------------------
Three months Six months
ended June 30, ended June 30,
-----------------------------------
(millions of Canadian dollars, except
per share amounts) 2008 2007 2008 2007
----------------------------------------------------------------------------
Liquids Pipelines 76.3 65.8 152.4 134.7
Gas Pipelines 8.9 13.4 27.1 39.1
Sponsored Investments 22.0 33.4 53.1 51.2
Gas Distribution and Services (15.7) 23.0 138.1 132.1
International 577.9 24.0 594.2 46.0
Corporate (11.7) (13.1) (55.9) (29.6)
----------------------------------------------------------------------------
Earnings Applicable to Common
Shareholders 657.7 146.5 909.0 373.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per Common Share 1.83 0.41 2.53 1.06
----------------------------------------------------------------------------
----------------------------------------------------------------------------Earnings applicable to common shareholders were $657.7 million for the three months ended June 30, 2008, or $1.83 per share, compared with $146.5 million, or $0.41 per share for the six months ended June 30, 2007. The $511.2 million increase reflected a $556.1 million after-tax gain on the sale of the Company's interest in Compania Logistica de Hidrocarburos CLH, S.A. (CLH) and favourable operating performance as discussed below, partially offset by unrealized fair value losses on derivative financial instruments in Energy Services. Earnings for the three months ended June 30, 2007 included an $11.8 million dilution gain resulting from Enbridge Energy Partners (EEP) issuing partnership units during the quarter. Earnings applicable to common shareholders were $909.0 million for the six months ended June 30, 2008, or $2.53 per share, compared with $373.5 million, or $1.06 per share, for the same period in 2007. The increase in earnings resulted from similar factors as for the three month results; however, earnings for the six month period ended June 30, 2008 also reflected the recognition of a $32.2 million income tax charge as a result of an unfavourable court decision related to previously owned U.S. pipeline assets. Non-GAAP Measures This news release contains references to adjusted operating earnings, which represent earnings applicable to common shareholders adjusted for non-operating factors. The non-operating factors are reconciled and discussed in the Financial Results sections for the business segments. Management believes that the presentation of adjusted operating earnings provides useful information to investors and shareholders as it provides increased predictive value. Management uses adjusted operating earnings to set targets and assess performance of the Company. Also, the Company's dividend payout target is based on adjusted operating earnings. Adjusted operating earnings is not a measure that has a standardized meaning prescribed by Canadian generally accepted accounting principles (GAAP) and is not considered a GAAP measure; therefore, this measure may not be comparable with a similar measure presented by other issuers.
ADJUSTED OPERATING EARNINGS
----------------------------------------------------------------------------
Three months Six months
ended June 30, ended June 30,
------------------------------------
(millions of Canadian dollars, except
per share amounts) 2008 2007 2008 2007
----------------------------------------------------------------------------
Liquids Pipelines 76.3 65.8 152.4 134.7
Gas Pipelines 11.2 13.4 26.6 33.8
Sponsored Investments 26.1 21.5 50.1 41.3
Gas Distribution and Services 28.6 17.9 149.8 132.7
International 19.0 24.0 38.1 46.0
Corporate (11.7) (13.1) (28.6) (29.6)
----------------------------------------------------------------------------
Adjusted Operating Earnings 149.5 129.5 388.4 358.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Adjusted Operating Earnings per
Common Share 0.42 0.36 1.08 1.01
----------------------------------------------------------------------------
----------------------------------------------------------------------------Adjusted operating earnings were $149.5 million, or $0.42 per share, for the three months ended June 30, 2008, compared with $129.5 million, or $0.36 per share, for the three months ended June 30, 2007 and $388.4 million, or $1.08 per share, for the six months ended June 30, 2008, compared with $358.9 million, or $1.02 per share, for the six months ended June 30, 2007. The increase in adjusted operating earnings in both the three and six month periods was largely due to the following factors. - Allowance for equity funds used during construction (AEDC) on Southern Lights Pipeline and, within Enbridge System, on both Southern Access Mainline Expansion and Alberta Clipper Project. - Improved earnings in Energy Services resulting from market conditions which enabled higher margins to be captured on storage and transportation contracts as well as increased transportation and storage volumes. - Increase in Aux Sable earnings due to strong fractionation margins which enabled the Company to recognize earnings from the upside sharing mechanism. - Record performance from EEP. These increases were partially offset by the impact of a weaker U.S. dollar on U.S.-based operations. While under construction, certain regulated pipelines are entitled to recognize AEDC in earnings. These amounts will contribute to earnings throughout the Company's significant growth period and will be collected in tolls once the pipelines are in service. The Company has foreign currency denominated earnings, primarily from U.S. based operations and investments. The Company uses long-term derivative contracts to economically hedge a significant portion of the cash distributions from these long-term investments. However, this does not eliminate the Canadian GAAP volatility caused by exchange rate differences. During the six months ended June 30, 2008, the Company settled foreign currency denominated cash distributions and associated hedge transactions resulting in $9.0 million (2007 - $6.7 million) in incremental after-tax cash flows, which were not included in reported earnings.
LIQUIDS PIPELINES
----------------------------------------------------------------------------
Three months Six months
ended June 30, ended June 30,
------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Enbridge System 49.8 45.1 101.5 94.2
Athabasca System 15.4 13.0 28.8 26.6
Olympic Pipeline 2.4 1.5 4.8 5.2
Spearhead Pipeline 2.2 3.1 5.4 4.4
Southern Lights Pipeline 4.2 1.3 8.9 1.3
Feeder Pipelines and Other 2.3 1.8 3.0 3.0
----------------------------------------------------------------------------
Earnings 76.3 65.8 152.4 134.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------- Enbridge System earnings increased primarily due to the AEDC on both Southern Access Mainline Expansion (Phase 2) and Alberta Clipper Project. - The increase in Athabasca System earnings reflected the initial month of tolls collected on Waupisoo Pipeline during the quarter. - Olympic Pipeline earnings decreased in the six month period due to planned maintenance in the first quarter of 2008. Second quarter results reflected higher throughputs and higher average tolls. - Spearhead Pipeline year-to-date earnings increased compared with the prior year as a result of higher throughputs. In the second quarter of 2008, lower uncommitted volumes reduced earnings. - Southern Lights Pipeline earnings reflected AEDC recognized while the project is under construction.
GAS PIPELINES
----------------------------------------------------------------------------
Three months Six months
ended June 30, ended June 30,
------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Alliance Pipeline US 5.9 7.3 11.9 14.8
Vector Pipeline 3.0 3.1 7.0 6.9
Enbridge Offshore Pipelines (Offshore) 2.3 3.0 7.7 12.1
----------------------------------------------------------------------------
Adjusted Operating Earnings 11.2 13.4 26.6 33.8
----------------------------------------------------------------------------
Alliance Pipeline US shipper claim
settlement - - 2.8 -
Offshore property insurance recovery
from 2005 hurricanes - - - 5.3
Offshore repair costs from 2005
hurricanes (2.3) - (2.3) -
----------------------------------------------------------------------------
Earnings 8.9 13.4 27.1 39.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------- Alliance Pipeline US adjusted operating earnings decreased as a result of a depreciating rate base and the weaker U.S. dollar. - Offshore adjusted operating earnings decreased as a result of continuing natural production declines and the effect of the weaker U.S. dollar partially offset by higher stand-by fees on the Neptune oil and gas pipelines as well as contributions from Atlantis platform volumes. Also, earnings for the six months ended June 30, 2007 included $6.0 million from business interruption policies related to lost revenue in 2005 and 2006 as a result of the 2005 hurricanes. A smaller final insurance claim settlement is expected later in 2008. Gas Pipelines earnings were impacted by the following non-operating adjusting items: - In the first quarter of 2008, Alliance Pipeline US received $2.8 million in proceeds from the settlement of a claim against a former shipper which repudiated its capacity commitment. - Earnings from Offshore included $2.3 million for additional repair costs related to the 2005 hurricanes, while earnings for the six months ended June 30, 2007 included insurance proceeds of $5.3 million related to the replacement of damaged infrastructure as a result of the 2005 hurricanes.
SPONSORED INVESTMENTS
----------------------------------------------------------------------------
Three months Six months
ended June 30, ended June 30,
------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Enbridge Energy Partners (EEP) 15.0 11.8 28.7 22.0
Enbridge Income Fund (EIF) 11.1 9.7 21.4 19.3
----------------------------------------------------------------------------
Adjusted Operating Earnings 26.1 21.5 50.1 41.3
----------------------------------------------------------------------------
Dilution gain on EEP Class A unit
issuance - 11.8 4.5 11.8
EEP unrealized derivative fair value
losses/(gains) (4.1) 0.4 (2.8) (1.6)
EIF - Alliance Canada shipper claim
settlement - - 1.3 -
EIF - revalue future income taxes due
to tax rate changes - (0.3) - (0.3)
----------------------------------------------------------------------------
Earnings 22.0 33.4 53.1 51.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------- EEP adjusted operating earnings increased from $11.8 million to $15.0 million for the three months ended June 30, 2008 and from $22.0 million to $28.7 million for the six months ended June 30, 2008 as a result of higher incentive income and record earnings at EEP due to higher gas and crude oil delivery volumes, tariff surcharges for recent expansions and improved unit margins in natural gas due to expanded facilities, partially offset by the weaker U.S. dollar. - Enbridge Income Fund adjusted operating earnings for the three months ended June 30, 2008 reflected a 7.5% increase in the monthly distributions received from the Fund as well as a one-time special distribution of $0.024 per unit. Sponsored Investments earnings were impacted by the following non-operating adjusting items: - Earnings in the second quarter of 2007 and the first quarter of 2008 include dilution gains because Enbridge did not full participate in EEP Class A unit offerings. Enbridge's ownership interest in EEP decreased from 15.1% to 14.6% as a result of the offering in the first quarter of 2008. - Earnings from EEP included a change in the unrealized fair value on derivative financial instruments in each period. - Earnings from EIF for the six months ended June 30, 2008 included proceeds of $1.3 million from the settlement of a claim against a former shipper on Alliance Canada which repudiated its capacity commitment.
GAS DISTRIBUTION AND SERVICES
----------------------------------------------------------------------------
Three months Six months
ended June 30, ended June 30,
------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Enbridge Gas Distribution (EGD) 10.9 7.8 95.6 92.6
Noverco 0.2 (1.0) 16.0 16.0
Enbridge Gas New Brunswick 3.5 3.1 6.7 5.9
Other Gas Distribution 0.5 0.8 6.2 6.1
Energy Services 4.1 2.1 13.5 5.0
Aux Sable 10.0 2.4 13.4 2.9
Other (0.6) 2.7 (1.6) 4.2
----------------------------------------------------------------------------
Adjusted Operating Earnings 28.6 17.9 149.8 132.7
----------------------------------------------------------------------------
(Warmer)/colder than normal weather
affecting EGD(1) (3.8) 9.8 9.9 11.2
Energy Services unrealized
derivative fair value losses (35.2) (0.2) (35.2) (4.5)
Aux Sable unrealized derivative fair
value (losses)/gains (5.3) (8.3) 13.6 (11.1)
Revalue future income taxes due to
tax rate changes - 3.8 - 3.8
----------------------------------------------------------------------------
Earnings (15.7) 23.0 138.1 132.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
1. The OEB's July 5, 2007 decision changed the method of calculating
forecast weather, retroactive to January 1, 2007. The impact of the new
method was reflected in the second quarter 2007 calculation of colder
than normal weather.- EGD's adjusted operating earnings were $10.9 million (2007 - $7.8 million) for the three months ended June 30, 2008, while earnings for the six months ended June 30, 2008 were $95.6 million (2007 - $92.6 million). Under Incentive Regulation, as initially reflected in results for the first quarter of 2008, EGD's fixed charge per customer increased with a corresponding decrease in the per unit volumetric charge. These changes modify the quarterly earnings profile, but do not materially affect full year earnings as revenues are shifted from the colder winter quarters to the warmer summer quarters. This change reduced year-to-date earnings, primarily in the first quarter; however, the decrease was more than offset by customer growth, lower tax rates and lower operating costs. - Energy Services adjusted operating earnings increased due to higher margins captured on storage and transportation contracts as well as increased transportation and storage volumes in Tidal Energy. - Aux Sable adjusted operating earnings increased from $2.9 million for the six months ended June 30, 2007 to $13.4 million for the six months ended June 30, 2008 due to strong fractionation margins which enabled the Company to recognize earnings from the upside sharing mechanism. - Other incurred a loss of $1.6 million for the six months ended June 30, 2008, compared with earnings of $4.2 million for the six months ended June 30, 2007. The earnings decrease was substantially a result of lower earnings from CustomerWorks which reflected the April 2007 transition of customer care services related to EGD to a third party service provider pursuant to an Ontario Energy Board (OEB) recommendation. Gas Distribution and Services earnings were impacted by the following non-operating adjusting items: - Energy Services earnings in 2008 reflected unrealized fair value losses on derivative instruments. These non-cash losses resulted from outstanding storage transactions in Tidal Energy that were negatively impacted by rising crude oil prices. These non-cash losses arise due to the revaluation of financial derivatives used to "lock-in" the profitability of transportation and storage transactions at Tidal Energy. At the end of each period, the financial derivatives are revalued and the corresponding change in fair value is booked to income; however, the offsetting change in value of the underlying physical crude oil inventory is not revalued. As a result, non-cash losses may be recognized in periods of rising oil prices and profitability will be deferred until the original transaction settles. - Aux Sable year-to-date earnings reflected unrealized fair value gains on derivative financial instruments. These financial instruments are used to mitigate the uncertainty of the Company's share of the contingent upside sharing mechanism, which allows Aux Sable to share in natural gas processing margins in excess of certain thresholds.
INTERNATIONAL
----------------------------------------------------------------------------
Three months Six months
ended June 30, ended June 30,
-------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
CLH 12.7 16.7 24.7 31.2
OCENSA/CITCol 8.0 8.1 16.3 16.4
Other (1.7) (0.8) (2.9) (1.6)
----------------------------------------------------------------------------
Adjusted Operating Earnings 19.0 24.0 38.1 46.0
----------------------------------------------------------------------------
Gain on sale of investment in CLH 556.1 - 556.1 -
CLH derivative fair value gains 2.8 - - -
----------------------------------------------------------------------------
Earnings 577.9 24.0 594.2 46.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------- The CLH adjusted operating earnings decrease of $4.0 million reflected two and a half months of earnings in the quarter, compared with a full quarter of earnings in 2007, as a result of the sale of CLH on June 17, 2008. International earnings were impacted by the following non-operating adjusting items: - A fair value gain of $2.8 million was recorded in the quarter related to a derivative contract to hedge the changes in the euro on CLH earnings.
CORPORATE
----------------------------------------------------------------------------
Three months Six months
ended June 30, ended June 30,
-------------------------------------
(millions of Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Corporate (11.7) (13.1) (28.6) (29.6)
----------------------------------------------------------------------------
Gain on sale of corporate aircraft - - 4.9 -
U.S. pipeline tax decision - - (32.2) -
----------------------------------------------------------------------------
Costs (11.7) (13.1) (55.9) (29.6)
----------------------------------------------------------------------------
----------------------------------------------------------------------------- Corporate costs before adjusting items were $11.7 million for the three months ended June 30, 2008, compared with $13.1 million for the three months ended June 30, 2007 and $28.6 million for the six months ended June 30, 2008, compared with $29.6 million for the six months ended June 30, 2007. The decrease in adjusted costs for both the three and six months ended was primarily due to decreased interest expense resulting from lower interest rates on short-term debt as well as lower levels of corporate debt, largely related to repayments from the proceeds of the sale of CLH. Corporate costs were impacted by the following non-operating adjusting items: - an unfavourable court decision related to the tax basis of previously owned U.S. pipeline assets which resulted in the recognition of a $32.2 million income tax expense; and - a $4.9 million gain on the sale of a corporate aircraft. CONFERENCE CALL Enbridge will hold a conference call on Thursday, July 31, 2008 at 9:00 a.m. Eastern time (7:00 a.m. Mountain time) to discuss the second quarter 2008 results. Analysts, members of the media and other interested parties can access the call at 617-614-3525 or toll-free at 1-800-561-2718 using the access code of 34836785. The call will be audio webcast live at www.enbridge.com/investor. A webcast replay will be available approximately two hours after the conclusion of the event and a transcript will be posted to the website within approximately 24 hours. The webcast replay will be available at toll-free 1-888-286-8010 or 617-801-6888. The access code for the replay is 57912486. The conference call will begin with a presentation by the Company's Chief Executive Officer and Chief Financial Officer followed by a question and answer period for investment analysts. A question and answer period for members of the media will immediately follow. The unaudited interim consolidated financial statements and Management's Discussion and Analysis, which contain additional notes and disclosures, are available on the Enbridge website. Enbridge Inc., a Canadian company, is a leader in energy transportation and distribution in North America and internationally. As a transporter of energy, Enbridge operates, in Canada and the U.S., the world's longest crude oil and liquids transportation system. The Company also has international operations and 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, and provides distribution services in Ontario, Quebec, New Brunswick and New York State. Enbridge employs approximately 5,600 people, primarily in Canada, the United States and South America. Enbridge's common shares trade on the Toronto Stock Exchange in Canada and on the New York Stock Exchange in the U.S. under the symbol ENB. Information about Enbridge is available on the Company's website at www.enbridge.com. FORWARD-LOOKING INFORMATION Forward-looking information, or forward-looking statements, have been included in this news release to provide Enbridge Inc. shareholders and potential investors with information about the Company and its subsidiaries, including management's assessment of Enbridge's and its subsidiaries' future plans and operations. This information may not be appropriate for other purposes. Forward-looking statements are typically identified by words such as "anticipate", "expect", "project", "estimate", "forecast", "plan", "intend", "target", "believe" and similar words suggesting future outcomes or statements regarding an outlook. Although Enbridge believes that these forward-looking statements are reasonable based on the information available on the date such statements are made and processes used to prepare the information, such statements are not guarantees of future performance and readers are cautioned against placing undue reliance on forward-looking statements. By their nature, these statements involve a variety of assumptions, known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements. Material assumptions include assumptions about the expected supply and demand for crude oil, natural gas and natural gas liquids; prices of crude oil, natural gas and natural gas liquids; expected exchange rates; inflation; interest rates; the availability and price of labour and pipeline construction materials; operational reliability; anticipated in-service dates and weather. Enbridge's forward-looking statements are subject to risks and uncertainties pertaining to operating performance, regulatory parameters, weather, economic conditions, exchange rates, interest rates and commodity prices, including but not limited to those risks and uncertainties discussed in this news release and in the Company's other filings with Canadian and United States securities regulators. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these are interdependent and Enbridge's future course of action depends on management's assessment of all information available at the relevant time. Except to the extent required by law, Enbridge assumes no obligation to publicly update or revise any forward-looking statements made in this news release or otherwise, whether as a result of new information, future events or otherwise. All subsequent forward-looking statements, whether written or oral, attributable to Enbridge or persons acting on the Company's behalf, are expressly qualified in their entirety by these cautionary statements.
ENBRIDGE INC.
HIGHLIGHTS
----------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
(unaudited; millions of Canadian ----------------------------------------
dollars, except per share amounts) 2008 2007 2008 2007
----------------------------------------------------------------------------
Earnings Applicable to Common
Shareholders
Liquids Pipelines 76.3 65.8 152.4 134.7
Gas Pipelines 8.9 13.4 27.1 39.1
Sponsored Investments 22.0 33.4 53.1 51.2
Gas Distribution and Services (15.7) 23.0 138.1 132.1
International 577.9 24.0 594.2 46.0
Corporate (11.7) (13.1) (55.9) (29.6)
----------------------------------------------------------------------------
657.7 146.5 909.0 373.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash Flow Data
Cash provided by operating activities
before changes in operating assets
and liabilities 247.9 305.5 705.9 722.4
Cash provided by operating
activities 326.4 415.3 1,082.3 1,181.2
Additions to property, plant and
equipment 652.8 457.8 1,264.8 901.6
Total Common Share Dividends 122.1 112.9 243.9 225.8
Per Common Share Information
Earnings per Common Share 1.83 0.41 2.53 1.06
Diluted Earnings per Common Share 1.81 0.41 2.51 1.05
Dividends per Common Share 0.3300 0.3075 0.6600 0.6150
Shares Outstanding
Weighted Average Common Shares
Outstanding (millions) 358.6 353.6
Diluted Weighted Average Common Shares
Outstanding (millions) 361.5 356.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating Data
Liquids Pipelines - Average Deliveries
(thousands of barrels per day)
Enbridge System(1) 1,954 2,074 2,018 2,153
Athabasca System(2) 173 150 177 164
Spearhead Pipeline 109 112 107 101
Olympic Pipeline 302 280 292 281
Gas Pipelines - Average Throughput
Volume (millions of cubic feet per
day)
Alliance Pipeline US 1,623 1,607 1,654 1,641
Vector Pipeline 1,260 973 1,344 990
Enbridge Offshore Pipelines 1,856 2,105 1,847 2,064
Gas Distribution and Services(3)
Volumes (billion cubic feet per
period) 71 77 263 269
Number of active customers
(thousands) 1,921 1,876 1,921 1,876
Degree day deficiency(4)
Actual 463 487 2,351 2,395
Forecast based on normal weather 489 499 2,245 2,288
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Enbridge System includes Canadian mainline deliveries in Western Canada
and to the Lakehead System at the U.S. border as well as Line 8 and
Line 9 in Eastern Canada.
(2) Volumes are for the Athabasca mainline only and do not include laterals
on the Athabasca System.
(3) Gas Distribution and Services volumes and the number of active customers
are derived from the aggregate system supply and direct purchase gas
supply arrangements.
(4) Degree day deficiency is a measure of coldness which is indicative of
volumetric requirements of natural gas utilized for heating purposes.
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
Greater Toronto Area.
ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF EARNINGS
----------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
(unaudited; millions of Canadian ----------------------------------------
dollars, except per share amounts) 2008 2007 2008 2007
----------------------------------------------------------------------------
Revenues
Commodity sales 3,305.6 2,161.0 6,550.3 4,847.6
Transportation 490.0 482.7 1,089.8 1,085.0
Energy services 75.9 85.0 199.2 154.3
----------------------------------------------------------------------------
3,871.5 2,728.7 7,839.3 6,086.9
----------------------------------------------------------------------------
Expenses
Commodity costs 3,212.9 2,047.0 6,278.4 4,578.8
Operating and administrative 309.8 274.6 600.5 554.9
Depreciation and amortization 157.8 151.9 312.0 299.0
----------------------------------------------------------------------------
3,680.5 2,473.5 7,190.9 5,432.7
----------------------------------------------------------------------------
191.0 255.2 648.4 654.2
Income from Equity Investments 29.9 36.4 90.2 80.4
Other Investment Income 42.8 67.0 97.0 108.6
Interest Expense (131.0) (133.2) (265.3) (273.8)
Gain on Sale of Investment in CLH 694.6 - 694.6 -
----------------------------------------------------------------------------
827.3 225.4 1,264.9 569.4
Non-Controlling Interests (9.3) (19.4) (26.6) (25.0)
----------------------------------------------------------------------------
818.0 206.0 1,238.3 544.4
Income Taxes (158.6) (57.8) (325.9) (167.5)
----------------------------------------------------------------------------
Earnings 659.4 148.2 912.4 376.9
Preferred Share Dividends (1.7) (1.7) (3.4) (3.4)
----------------------------------------------------------------------------
Earnings Applicable to Common
Shareholders 657.7 146.5 909.0 373.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per Common Share 1.83 0.41 2.53 1.06
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Diluted Earnings per Common Share 1.81 0.41 2.51 1.05
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
----------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
(unaudited; millions of ---------------------------------------
Canadian dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Earnings 659.4 148.2 912.4 376.9
Other Comprehensive Income/(Loss)
Change in unrealized gains/(losses)
on cash flow hedges, net of tax 7.5 32.3 3.5 41.5
Reclassification to earnings of
realized cash flow hedges, net
of tax (7.5) 9.6 (3.1) 16.9
Other comprehensive gain/(loss) from
equity investees (27.4) 5.2 (34.8) (5.0)
Non-controlling interest in other
comprehensive income 12.5 (2.8) 17.8 3.0
Change in foreign currency translation
adjustment (102.3) (247.9) 70.9 (278.7)
Change in unrealized gains/(losses) on
net investment hedges, net of tax 56.1 98.0 (36.2) 100.1
----------------------------------------------------------------------------
Other Comprehensive Income/(Loss) (61.1) (105.6) 18.1 (122.2)
----------------------------------------------------------------------------
Comprehensive Income 598.3 42.6 930.5 254.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
----------------------------------------------------------------------------
Six months ended
June 30,
---------------------
(unaudited; millions of Canadian dollars) 2008 2007
----------------------------------------------------------------------------
Preferred Shares 125.0 125.0
----------------------------------------------------------------------------
Common Shares
Balance at beginning of period 3,026.5 2,416.1
Common shares issued - 566.4
Dividend reinvestment and share purchase plan 74.2 9.2
Shares issued on exercise of stock options 27.6 18.7
----------------------------------------------------------------------------
Balance at End of Period 3,128.3 3,010.4
----------------------------------------------------------------------------
Contributed Surplus
Balance at beginning of period 25.7 18.3
Stock-based compensation 10.1 6.4
Options exercised (1.9) (1.0)
----------------------------------------------------------------------------
Balance at End of Period 33.9 23.7
----------------------------------------------------------------------------
Retained Earnings
Balance at beginning of period 2,537.3 2,322.7
Earnings applicable to common shareholders 909.0 373.5
Common share dividends (243.9) (225.8)
Dividends paid to reciprocal shareholder 7.3 6.7
Cumulative impact of change in accounting policy - (47.0)
----------------------------------------------------------------------------
Balance at End of Period 3,209.7 2,430.1
----------------------------------------------------------------------------
Accumulated Other Comprehensive Loss
Balance at beginning of period (285.0) (135.8)
Other comprehensive income/(loss) 18.1 (122.2)
Cumulative impact of change in accounting policy - 48.2
----------------------------------------------------------------------------
Balance at End of Period (266.9) (209.8)
----------------------------------------------------------------------------
Reciprocal Shareholding
Balance at beginning of period (154.3) (135.7)
Participation in common shares issued - (18.6)
----------------------------------------------------------------------------
Balance at End of Period (154.3) (154.3)
----------------------------------------------------------------------------
Total Shareholders' Equity 6,075.7 5,225.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Dividends Paid per Common Share 0.660 0.615
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
----------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
---------------------------------------
(unaudited; millions of Canadian
dollars) 2008 2007 2008 2007
----------------------------------------------------------------------------
Operating Activities
Earnings 659.4 148.2 912.4 376.9
Depreciation and amortization 157.8 151.9 312.0 299.0
Unrealized losses on derivative
instruments 56.1 6.4 21.4 13.5
Equity earnings less than/(in excess
of) cash distributions 1.6 (3.2) (40.8) (27.9)
Gain on reduction of ownership
interest - (33.9) (12.3) (33.9)
Gain on sale of investment in CLH (694.6) - (694.6) -
Future income taxes 61.9 5.6 180.0 71.3
Non-controlling interests 9.3 19.4 26.6 25.0
Other (3.6) 11.1 1.2 (1.5)
Changes in operating assets and
liabilities 78.5 109.8 376.4 458.8
----------------------------------------------------------------------------
326.4 415.3 1,082.3 1,181.2
----------------------------------------------------------------------------
Investing Activities
Long-term investments (1.6) (14.8) (6.8) (15.4)
Sale of investment in CLH 1,369.0 - 1,369.0 -
Settlement of CLH hedges (47.0) - (47.0) -
Additions to property, plant and
equipment (652.8) (457.8) (1,264.8) (901.6)
Change in construction payable 7.2 45.8 12.5 3.7
----------------------------------------------------------------------------
674.8 (426.8) 62.9 (913.3)
----------------------------------------------------------------------------
Financing Activities
Net change in short-term borrowings
and short-term debt (822.0) (536.3) (716.2) (1,110.4)
Net change in non-recourse short-term
debt 3.7 3.9 4.9 7.2
Long-term debt issues - 693.7 - 1,156.6
Long-term debt repayments - - (100.0) (534.5)
Non-recourse long-term debt issues - - 1.2 14.4
Non-recourse long-term debt
repayments (30.6) (28.2) (31.3) (28.7)
Distributions to non-controlling
interests (9.2) (7.0) (13.1) (12.7)
Common shares issued 14.1 18.7 24.3 586.2
Preferred share dividends (1.7) (1.7) (3.4) (3.4)
Common share dividends (87.0) (112.9) (170.5) (225.8)
----------------------------------------------------------------------------
(932.7) 30.2 (1,004.1) (151.1)
----------------------------------------------------------------------------
Increase in Cash and Cash Equivalents 68.5 18.7 141.1 116.8
Cash and Cash Equivalents at
Beginning of Period 239.3 237.8 166.7 139.7
----------------------------------------------------------------------------
Cash and Cash Equivalents at End of
Period 307.8 256.5 307.8 256.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
----------------------------------------------------------------------------
June 30, December 31,
(unaudited; millions of Canadian dollars) 2008 2007
----------------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents 307.8 166.7
Accounts receivable and other 2,767.2 2,388.7
Inventory 640.5 709.4
----------------------------------------------------------------------------
3,715.5 3,264.8
Property, Plant and Equipment, net 13,645.0 12,597.6
Long-Term Investments 1,482.8 2,076.3
Deferred Amounts and Other Assets 1,210.6 1,182.0
Intangible Assets 210.0 212.0
Goodwill 389.8 388.0
Future Income Taxes 144.7 186.7
----------------------------------------------------------------------------
20,798.4 19,907.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current Liabilities
Short-term borrowings 72.7 545.6
Accounts payable and other 2,896.3 2,213.8
Interest payable 87.0 89.1
Current maturities of long-term debt 872.2 605.2
Current maturities of non-recourse debt 66.0 61.1
----------------------------------------------------------------------------
3,994.2 3,514.8
Long-Term Debt 7,205.2 7,729.0
Non-Recourse Long-Term Debt 1,491.7 1,508.4
Other Long-Term Liabilities 274.2 253.9
Future Income Taxes 1,100.7 975.6
Non-Controlling Interests 656.7 650.5
----------------------------------------------------------------------------
14,722.7 14,632.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Shareholders' Equity
Share capital
Preferred shares 125.0 125.0
Common shares 3,128.3 3,026.5
Contributed surplus 33.9 25.7
Retained earnings 3,209.7 2,537.3
Accumulated other comprehensive loss (266.9) (285.0)
Reciprocal shareholding (154.3) (154.3)
----------------------------------------------------------------------------
6,075.7 5,275.2
----------------------------------------------------------------------------
20,798.4 19,907.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
ENBRIDGE INC.
SEGMENTED INFORMATION
Three months ended June 30, 2008
----------------------------------------------------------------------------
Gas
(millions of Canadian Liquids Gas Sponsored Distribution
dollars) Pipelines Pipelines Investments and Services
----------------------------------------------------------------------------
Revenues 269.8 83.5 72.4 3,440.9
Commodity costs - - - (3,212.9)
Operating and administrative (115.6) (30.1) (23.7) (128.8)
Depreciation and amortization (42.4) (23.3) (18.8) (71.4)
----------------------------------------------------------------------------
111.8 30.1 29.9 27.8
Income from equity investments - - 22.9 (4.5)
Other investment income and
gain on sale of CLH 14.0 1.2 1.5 6.0
Interest and preferred share
dividends (30.3) (16.2) (14.6) (47.0)
Non-controlling interests (0.4) - (7.0) (1.8)
Income taxes (18.8) (6.2) (10.7) 3.8
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 76.3 8.9 22.0 (15.7)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended June 30, 2008
----------------------------------------------------------------------------
(millions of Canadian
dollars) International Corporate Consolidated
----------------------------------------------------------------------------
Revenues 2.4 2.5 3,871.5
Commodity costs - - (3,212.9)
Operating and administrative (4.3) (7.3) (309.8)
Depreciation and amortization (0.2) (1.7) (157.8)
----------------------------------------------------------------------------
(2.1) (6.5) 191.0
Income from equity investments 13.1 (1.6) 29.9
Other investment income and
gain on sale of CLH 705.2 9.5 737.4
Interest and preferred share
dividends - (24.6) (132.7)
Non-controlling interests - (0.1) (9.3)
Income taxes (138.3) 11.6 (158.6)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 577.9 (11.7) 657.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended June 30, 2007
----------------------------------------------------------------------------
Gas
(millions of Canadian Liquids Gas Sponsored Distribution
dollars) Pipelines Pipelines Investments and Services
----------------------------------------------------------------------------
Revenues 258.2 78.5 69.2 2,318.4
Commodity costs - - - (2,047.0)
Operating and administrative (100.5) (20.8) (19.9) (123.8)
Depreciation and amortization (38.9) (21.3) (19.9) (70.3)
----------------------------------------------------------------------------
118.8 36.4 29.4 77.3
Income from equity investments (0.1) - 27.6 (5.3)
Other investment income 3.5 1.8 35.8 (1.0)
Interest and preferred share
dividends (24.7) (16.6) (15.3) (43.2)
Non-controlling interests (0.5) - (17.1) (1.4)
Income taxes (31.2) (8.2) (27.0) (3.4)
---------------------------------------------------------------------------
Earnings applicable to common
shareholders 65.8 13.4 33.4 23.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended June 30, 2007
----------------------------------------------------------------------------
(millions of Canadian
dollars) International Corporate Consolidated
----------------------------------------------------------------------------
Revenues 2.2 2.2 2,728.7
Commodity costs - - (2,047.0)
Operating and administrative (3.4) (6.2) (274.6)
Depreciation and amortization (0.3) (1.2) (151.9)
----------------------------------------------------------------------------
(1.5) (5.2) 255.2
Income from equity investments 14.4 (0.2) 36.4
Other investment income 12.2 14.7 67.0
Interest and preferred share
dividends - (35.1) (134.9)
Non-controlling interests - (0.4) (19.4)
Income taxes (1.1) 13.1 (57.8)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 24.0 (13.1) 146.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Six months ended June 30, 2008
----------------------------------------------------------------------------
Gas
(millions of Canadian Liquids Gas Sponsored Distribution
dollars) Pipelines Pipelines Investments and Services
----------------------------------------------------------------------------
Revenues 544.2 166.1 141.6 6,977.4
Commodity costs - - - (6,278.4)
Operating and administrative (224.7) (51.9) (43.5) (260.6)
Depreciation and amortization (82.7) (44.3) (37.9) (143.3)
----------------------------------------------------------------------------
236.8 69.9 60.2 295.1
Income from equity investments (0.3) - 58.0 9.1
Other investment income and
gain on sale of CLH 22.0 6.0 21.3 9.3
Interest and preferred share
dividends (54.9) (31.6) (30.4) (98.1)
Non-controlling interests (0.7) - (22.0) (3.4)
Income taxes (50.5) (17.2) (34.0) (73.9)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 152.4 27.1 53.1 138.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Six months ended June 30, 2008
----------------------------------------------------------------------------
(millions of Canadian
dollars) International Corporate Consolidated
----------------------------------------------------------------------------
Revenues 5.1 4.9 7,839.3
Commodity costs - - (6,278.4)
Operating and administrative (7.8) (12.0) (600.5)
Depreciation and amortization (0.4) (3.4) (312.0)
----------------------------------------------------------------------------
(3.1) (10.5) 648.4
Income from equity investments 25.0 (1.6) 90.2
Other investment income and
gain on sale of CLH 710.6 22.4 791.6
Interest and preferred share
dividends - (53.7) (268.7)
Non-controlling interests - (0.5) (26.6)
Income taxes (138.3) (12.0) (325.9)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 594.2 (55.9) 909.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Six months ended June 30, 2007
----------------------------------------------------------------------------
Gas
(millions of Canadian Liquids Gas Sponsored Distribution
dollars) Pipelines Pipelines Investments and Services
----------------------------------------------------------------------------
Revenues 531.9 165.1 132.8 5,247.8
Commodity costs - - - (4,578.8)
Operating and administrative (202.4) (41.1) (37.3) (256.2)
Depreciation and amortization (77.9) (44.3) (38.1) (135.7)
----------------------------------------------------------------------------
251.6 79.7 57.4 277.1
Income from equity investments (0.4) - 44.2 8.0
Other investment income 3.7 17.1 36.8 3.1
Interest and preferred share
dividends (49.8) (34.2) (30.5) (96.0)
Non-controlling interests (0.7) - (21.1) (2.7)
Income taxes (69.7) (23.5) (35.6) (57.4)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 134.7 39.1 51.2 132.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Six months ended June 30, 2007
----------------------------------------------------------------------------
(millions of Canadian
dollars) International Corporate Consolidated
----------------------------------------------------------------------------
Revenues 4.9 4.4 6,086.9
Commodity costs - - (4,578.8)
Operating and administrative (7.2) (10.7) (554.9)
Depreciation and amortization (0.5) (2.5) (299.0)
----------------------------------------------------------------------------
(2.8) (8.8) 654.2
Income from equity investments 29.2 (0.6) 80.4
Other investment income 21.1 26.8 108.6
Interest and preferred share
dividends - (66.7) (277.2)
Non-controlling interests - (0.5) (25.0)
Income taxes (1.5) 20.2 (167.5)
----------------------------------------------------------------------------
Earnings applicable to common
shareholders 46.0 (29.6) 373.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------Contact: Contacts:
Enbridge Inc.
Jennifer Varey
Media
(403) 508-6563
Email: jennifer.varey@enbridge.com
Enbridge Inc.
Vern Yu
Investment Community
(403) 231-3946
Email: vern.yu@enbridge.com
Website: http://www.enbridge.com
Source: Enbridge Inc.
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