Enbridge Posts Strong First Half Results of $549 Million.Energy Editors/Business Editors CALGARY, Alberta--(BUSINESS WIRE)--July 30, 2003 Enbridge Inc. today announced earnings applicable to common shareholders of $549.2 million for the six months ended June 30, 2003, or $3.33 per share, compared with $546.4 million, or $3.45 per share, for the same period in 2002. Earnings for the three months ended June 30, 2003, are $445.4 million, or $2.70 per share, compared with $433.3 million, or $2.74 per share, for the same period in 2002. The 2003 results include a $169.1 million gain on the sale of assets to Enbridge Income Fund (EIF EIF Eukaryotic Initiation Factor EIF Eukaryotic Translation Initiation Factor EIF European Investment Fund EIF Edinburgh International Festival EIF Entry Into Force EIF Entertainment Industry Foundation EIF European Interoperability Framework ), whereas the prior year reflected a $240.0 million gain on the sale of the retail services business, both after-tax and recorded in the respective second quarters. Excluding these gains, earnings have improved significantly from the prior year. This is primarily a result of higher natural gas volumes on the gas distribution system due to colder than normal weather and higher earnings from additional interests in the Alliance Pipeline. Enbridge President & Chief Executive Officer Patrick D. Daniel said, "Our results are again strong with our six-month earnings about 5% ahead of last year when significant non-recurring factors are taken into consideration. Together with our quality asset base and strong balance sheet, Enbridge is well positioned relative to our industry peers. We plan to continue to translate this strength into low-risk success." Mr. Daniel added, "More significantly, from an operating perspective, the final phase of the Terrace expansion program, Phase III Noun 1. phase III - a large clinical trial of a treatment or drug that in phase I and phase II has been shown to be efficacious with tolerable side effects; after successful conclusion of these clinical trials it will receive formal approval from the FDA , was placed into service on April 1, 2003. The 140,000 barrels per day Barrels per day (abbreviated BPD, bbl/d, bpd, bd or b/d) is a measurement used to describe the amount of crude oil (measured in barrels) produced or consumed by an entity in one day. of additional throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. capacity from Phase III, along with the recently announced Spearhead Pipeline, and other initiatives, provide producers in Western Canada
Western Canada, commonly referred to as the West , especially those in the Alberta oil sands, with increased access to United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. markets and the opportunity for higher netbacks. These initiatives provide producers with necessary capacity and delivery points in key strategic markets." On July 30, 2003, the Enbridge Board of Directors declared quarterly dividends of $0.415 per common share and $0.34375 per Series A Preferred Share. Both dividends are payable on September 1, 2003, to shareholders of record on August 15, 2003.
Consolidated Earnings
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Three months Six months
(millions of ended ended
Canadian dollars) June 30, June 30,
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2003 2002 2003 2002
---------------------------------
Energy Transportation North 251.1 59.7 317.0 121.2
Energy Transportation South 15.6 7.4 24.7 21.6
Gas Distribution and Services 174.8 126.7 202.9 139.2
International 18.6 17.5 34.2 34.0
Corporate (14.7) (12.2) (29.6) (11.9)
---------------------------------
445.4 199.1 549.2 304.1
Discontinued Operations - 234.2 - 242.3
---------------------------------
445.4 433.3 549.2 546.4
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---------------------------------
Significant non-recurring factors and variances affecting consolidated earnings are as follows: -- Energy Transportation North includes a $169.1 million after-tax gain on the sale of assets to EIF recorded in the second quarter of 2003. -- Energy Transportation South includes a $9.2 million dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. gain on an Enbridge Energy Partners, L.P. (EEP EEP Export Enhancement Program EEP Ecosystem Enhancement Program EEP Early Entrance Program (University of Washington) EEP Equal Error Protection EEP Einstein Equivalence Principle EEP Emergency Evacuation Plan ) unit issuance in the second quarter of 2003, whereas the prior year included a $6.1 million dilution gain in the first quarter. -- Gas Distribution and Services includes the positive effect of colder than normal weather of $41.7 million in 2003, including $27.4 million in the second quarter. The positive weather in 2003 is partially offset by a $7.1 million regulatory disallowance dis·al·low tr.v. dis·al·lowed, dis·al·low·ing, dis·al·lows 1. To refuse to allow: "[The government] related to a prior year and recorded in the first quarter of 2003. In 2002, warm weather negatively affected earnings by $39.4 million, including $24.0 million in the second quarter. -- Corporate included a $17.8 million after-tax gain on sale of marketable securities Marketable Securities Very liquid securities that can be converted into cash quickly at a reasonable price. Notes: Marketable securities are very liquid as they tend to have maturities less than one year, and the rate at which these securities can be bought or sold has recorded in the first quarter of 2002. -- The second quarter of each year includes the effect of the Alberta 0.5% tax rate reduction. The 2003 results also include the effect of a higher federal future tax rate since federal surtax An additional charge on an item that is already taxed. A surtax is a tax on a tax. For example, if a person pays one hundred dollars of tax on one thousand dollars of income, a 5 percent surtax would amount to an additional five dollars. will apply when large corporations tax is eliminated. These tax rate changes result in a $7.1 million net charge to earnings in the second quarter of 2003 in comparison to a net recovery of $1.4 million in the prior year. -- Discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. included a $240.0 million after-tax gain on the sale of the retail energy services business in 2002. Operating factors that enhance earnings in 2003 include the additional ownership interest in Alliance, the placing into service of Terrace Phase III, improved results from gas service activities and higher earnings from EEP. These positive factors are partially offset by higher operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. in the gas distribution utility, primarily in the first quarter.
Energy Transportation North
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Three months Six months
(millions of ended ended
Canadian dollars) June 30, June 30,
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2003 2002 2003 2002
---------------------------------
Enbridge System 40.7 33.2 70.3 68.3
Athabasca System 11.4 9.4 23.1 19.5
NW System 2.0 2.0 4.1 4.4
Saskatchewan System 1.4 1.7 3.1 3.3
Alliance Pipeline 22.2 10.5 37.3 19.8
Vector Pipeline 2.3 1.2 4.3 2.4
Other 2.0 1.7 5.7 3.5
---------------------------------
82.0 59.7 147.9 121.2
Gain on sale of assets to
Enbridge Income Fund 169.1 - 169.1 -
---------------------------------
251.1 59.7 317.0 121.2
---------------------------------
---------------------------------
-- Enbridge System earnings for the second quarter of 2003 include incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. earnings from Terrace as Phase III was placed in service on April 1, 2003. However, the results are negatively affected by a higher power Higher power is a term used in a 12-step program, such as Alcoholics Anonymous, to describe "a power greater than yourself." Although many participants equate their higher power with God, a belief in God or in formal religion is not mandatory; the higher power is intended as a allowance credit due to shippers. -- Higher earnings from the Athabasca System are primarily the result of the completion of additional facilities and tankage tankage made from heat-digested animal abattoir residues without gut contents, hide, horn, hoof. Concentrated and dried and possessing a high biological value protein content of 60%. See also meat meal. . -- Alliance earnings reflect the additional ownership interests of 15.7% acquired in the fourth quarter of 2002, 1.1% in March 2003 and 11.8% in April 2003. -- Vector earnings reflect increased volumes due to both colder than normal weather in Eastern Canada Eastern Canada (also the Eastern provinces) is the region of Canada generally considered to be east of Manitoba, consisting of the following provinces:
of 2003 and higher storage injections during the second quarter. -- On June 30, 2003, Enbridge sold the Saskatchewan System and the 50% interest in Alliance Canada to EIF for an after-tax gain of $169.1 million.
Energy Transportation South
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Three months Six months
(millions of ended ended
Canadian dollars) June 30, June 30,
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2003 2002 2003 2002
--------------------------------
Enbridge Energy Partners 5.9 4.4 13.7 8.8
Feeder Pipelines and Other 0.5 2.0 1.8 4.4
Enbridge Midcoast Energy - 0.8 - 2.3
Enbridge Energy Partners
dilution gain 9.2 0.2 9.2 6.1
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15.6 7.4 24.7 21.6
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--------------------------------
-- EEP earnings are higher due to the acquisition of the Enbridge Midcoast Energy assets in October 2002. Enbridge's effective weighted average ownership interest in EEP also increased slightly from the prior year to approximately 13.8%. -- Feeder feeder abbreviation for self-feeders. Used in feeding groups of animals at intervals of several days. Feed has to be dry and comminuted so that it will run down the spouts from the hopper into the troughs. Pipelines and Other reflect lower earnings from Frontier as a result of lower tolls and volumes. -- In each year, EEP issued additional common units. Enbridge did not participate in these offerings, resulting in dilution gains.
Gas Distribution and Services
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Three months Six months
(millions of ended ended
Canadian dollars) June 30, June 30,
-------------------------------------------------------------------
2003 2002 2003 2002
---------------------------------
Enbridge Gas Distribution 158.0 107.3 168.7 110.8
Noverco 11.8 14.6 22.0 23.3
CustomerWorks/ECS 3.7 3.7 8.8 5.5
Enbridge Gas New Brunswick 0.9 1.0 2.1 2.0
Aux Sable (4.8) (1.6) (6.6) (2.5)
Other Gas Distribution
Operations 5.1 4.3 7.3 5.8
Gas Services (0.3) (2.4) (0.6) (5.4)
Other 0.4 (0.2) 1.2 (0.3)
---------------------------------
174.8 126.7 202.9 139.2
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---------------------------------
-- Higher earnings in 2003 are attributable to the colder than normal weather experienced in the Enbridge Gas Distribution franchise area, amounting to $41.7 million. During 2002, weather was warmer than normal, resulting in a $39.4 million reduction in earnings. In 2003, degree days, which are used as a measure of coldness, were 27.9% greater than 2002 and 14.2% greater than the forecast based on normal weather.
(millions of Canadian Three months Six months
dollars except number ended ended
of degree days) June 30, June 30,
-------------------------------------------------------------------
2003 2002 2003 2002
---------------------------------
Actual degree days 2,130 1,690 3,206 2,507
Forecast degree days based on
normal weather 1,887 1,912 2,807 2,932
Earnings increase/(decrease)
due to weather 27.4 (24.0) 41.7 (39.4)
-- The positive effect of weather is offset in part by the $7.1 million regulatory disallowance related to long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. transportation contracts recognized in the first quarter of 2003, higher operating and maintenance expenses as a result of colder than normal weather and the timing of expenditures. -- The Noverco contribution reflects improved operating results from Gaz Metropolitain, combined with earlier recognition of revenues as a result of the unbundling A regulatory requirement that enables a competing service provider to purchase parts of the incumbent local exchange carrier's network in order to provide service to its customers. See ILEC. of rates. The positive operating results are more than offset by changes in tax rates recorded in the respective second quarters which decrease earnings in 2003 and increased earnings in 2002. -- The main component of CustomerWorks/ECS earnings in 2003 is the contribution from CustomerWorks. The primary operations of Enbridge Commercial Services (ECS See eComStation. ) were rebundled in Enbridge Gas Distribution at the end of 2002. Earnings from CustomerWorks/ECS are affected by service levels in 2003 compared with 2002. -- The loss from Aux Sable sable, species of marten, Martes zibellina, found in Siberia, N European Russia, and N Finland. This carnivorous mammal is highly valued for its thick, soft fur, which is dark brown or black, sometimes with white underparts and sometimes flecked with silver. reflects Enbridge's increased ownership interest as well as the combined effect of higher natural gas prices and lower ethane ethane (ĕth`ān), CH3CH3, gaseous hydrocarbon. It is a continuous-chain alkane. As a constituent of natural gas, it is used for fuel. It can be prepared by cracking and fractional distillation of petroleum. prices during the first half of 2003 and more significantly during the second quarter. -- The Gas Services results improved due primarily to the commencement of gas service management contracts with certain U.S. based companies in late 2002 and increased demand for natural gas and associated transmission service, reducing merchant capacity losses on Alliance and Vector.
International
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Three months Six months
(millions of ended ended
Canadian dollars) June 30, June 30,
------------------------------------------------------------------
2003 2002 2003 2002
-------------------------------
OCENSA/CITCol 7.5 7.8 15.9 18.3
CLH 12.7 9.9 21.1 16.3
Jose Terminal and Other (1.6) (0.2) (2.8) (0.6)
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18.6 17.5 34.2 34.0
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-------------------------------
-- Earnings from OCENSA/CITCol decreased due to lower incentive earnings from CITCol. -- Operating results from CLH CLH Hard Clam (FAO species code) CLH Compañía Logística de Hidrocarburos CLH, SA CLH California Lutheran Homes CLH Cleft-Limb-Heart Malformation Syndrome CLH Lufthansa Cityline Airlines (ICAO code) reflect increased volumes and the impact of the stronger Euro, partially offset by a reduction in marine fleet revenues due to the scheduled retirement of certain ships. -- As a result of a breach of the Jose Terminal operating agreement by PDVSA PDVSA Petroleos De Venezuela, SA , the Venezuelan state oil company, the SWEC SWEC Stone Webster Engineering Corporation SWEC Sydney Women's Endosurgery Centre (Australia) SWEC Southwestern Electric Cooperative SWEC Center for the Study of Wireless Electromagnetic Compatibility Partnership has filed a notice of contract termination Defense procurement: the cessation or cancellation, in whole or in part, of work under a prime contract or a subcontract thereunder for the convenience of, or at the option of, the government, or due to failure of the contractor to perform in accordance with the terms of the contract (default). and has filed for international arbitration International arbitration is the established method today for resolving disputes between parties to international commercial agreements. As with arbitration generally, it is a creature of contract, i.e. , as provided for in the operating agreement An operating agreement is an agreement among limited liability company ("LLC") members governing the LLC's business, and Member's financial and management rights and duties. No state requires an LLC to have an Operating agreement. . The Company ceased recognition of earnings commencing February 1, 2003. Other is primarily administration and business development costs and the results of the Technology business. Corporate Corporate costs total $29.6 million for the six months ended June 30, 2003 compared to $11.9 million for the same period in 2002. The 2002 results included a $17.8 million after-tax gain on the sale of marketable securities. For the three months ended June 30, 2003, corporate costs are $14.7 million compared with $12.2 million for the same period in 2002. Enbridge will hold a conference call at 2:15 p.m. Mountain time (4:15 p.m. Eastern time) today to discuss the second quarter results. The call will be broadcast live on the Internet at www.enbridge.com/investor. A replay will be available shortly thereafter at 1-800-408-3053. The interim financial statements and MD&A are available on Enbridge's web site at www.enbridge.com. Enbridge Inc. is a leader in energy transportation and distribution in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. and internationally. 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 has international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. and a growing involvement in the natural gas transmission and midstream mid·stream n. 1. The middle part of a stream. 2. The part of a course that is neither at the beginning nor at the end: the midstream of life. Noun 1. businesses. As a distributor of energy, Enbridge owns and operates Canada's largest natural gas distribution company, which provides distribution services in the provinces of Ontario and Quebec and in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of State; and is developing a gas distribution system for the Province of New Brunswick New Brunswick, province, Canada New Brunswick, province (2001 pop. 729,498), 28,345 sq mi (73,433 sq km), including 519 sq mi (1,345 sq km) of water surface, E Canada. . The Company employs approximately 4,000 people, primarily in Canada, the U.S. and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. . Enbridge common shares trade on the Toronto Stock Exchange Toronto Stock Exchange (TSE) Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. in Canada and on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. in the U.S. under the symbol ENB. Information about Enbridge is available on the Company's web site at www.enbridge.com. When used in this news release, the words "anticipate", "expect", "project", "believe", "estimate", "forecast" and similar expressions are intended to identify forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , which include statements relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc pending and proposed projects. Such statements are subject to certain risks, uncertainties and assumptions pertaining per·tain intr.v. per·tained, per·tain·ing, per·tains 1. To have reference; relate: evidence that pertains to the accident. 2. 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. |
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