Enbridge Income Fund
TSX : ENF.UN

Enbridge Income Fund

May 04, 2009 11:28 ET

Enbridge Income Fund Announces First Quarter Results

CALGARY, ALBERTA--(Marketwire - May 4, 2009) - Enbridge Income Fund (TSX:ENF.UN) (the Fund) announced today earnings of $3.3 million or $0.10 per unit, for the three months ended March 31, 2009. Earnings for the prior year three month period ending March 31, 2008 were $7.6 million or $0.22 per unit, which included a $6.1 million ($4.4 million net of tax) Calpine Energy Services Canada Partnership (CESCA) bankruptcy settlement that was received by Alliance Canada. Cash available for distribution for the three months ended March 31, 2009 was $22.5 million compared with $17.6 million in the prior year comparable period. This increase of $4.9 million included $1.7 million of current tax related to the CESCA settlement in 2008. The remaining increase in cash available for distribution is due to growth in the Saskatchewan System and higher distributions from Alliance Canada.

"Increased cash available for distribution is clear evidence of the success of the expansion projects undertaken by the Fund in 2008," said Jim Schultz, President of Enbridge Management Services Inc., the Administrator of the Fund. "The solid operating results enable the Fund to continue to meet its objective of providing unitholders with a predictable flow of distributable cash."

The proximity of the Fund's crude oil transportation assets to the emerging Bakken Play, potential growth opportunities for the Alliance Canada system from the Horn River and Montney shale deposits in northeast British Columbia, and increasing interest in clean energy technologies position the Fund well for continued organic growth.

"We are continuing to develop some very attractive expansion projects on our existing systems that will enhance the diversification of our asset base and increase operating cash flow," said Mr.Schultz. "We are committed to pursuing strategies that will add value for our unitholders in this new and challenging environment."

During the three months ended March 31, 2009, the Fund declared monthly cash distributions of $0.096 per unit, and distributions in the same amount per unit were declared on the ECT preferred units. The Fund pays cash distributions on a monthly basis to unitholders of record on the last business day of each month. Distributions are payable on or about the 15(th) day of the month following the declaration. Cash distributions paid to trust unitholders for the three months ended March 31, 2009 were $9.7 million (2008 - $8.3 million).

Based on current operations, the Fund estimates that approximately 80% of cash to be distributed in 2009 will be included in the income of unitholders for income tax purposes. The remaining 20% of cash distributed to unitholders represents a non-taxable return of capital.

FORWARD LOOKING INFORMATION

In the interest of providing the Fund's unitholders and potential investors with information about the Fund and its subsidiaries, including management's assessment of the Fund's and its subsidiaries' future plans and operations, certain information provided in this News Release constitutes forward-looking statements or information (collectively, "forward-looking statements"). 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 the Fund believes that these forward-looking statements are reasonable based on the information available on the date such statements are made, 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.

The Fund's forward-looking statements are subject to risks and uncertainties pertaining to operating performance, regulatory parameters, weather, economic conditions and commodity prices, including but not limited to those risks and uncertainties discussed in this News Release and in the Fund's other filings with Canadian 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 the Fund'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, the Fund 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 the Fund or persons acting on the Fund's behalf, are expressly qualified in their entirety by these cautionary statements.

NON-GAAP MEASURES

This News Release contains references to cash available for distribution. Cash available for distribution represents cash available to fund distributions on trust units and ECT preferred units as well as for debt repayments and reserves. This measure is important to unitholders as the Fund's objective is to provide a predictable flow of distributable cash to unitholders. Please refer to Cash Available for Distribution reconciliation on page 5. Cash available for distribution is not a measure that has 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 similar measures presented by other issuers.



----------------------------------------------------------------------------
SELECTED OPERATING AND FINANCIAL HIGHLIGHTS(1)
----------------------------------------------------------------------------
Three months ended
March 31,
-------------------
(millions of dollars, except where otherwise noted) 2009 2008
----------------------------------------------------------------------------

Average Daily Throughput Volume
Alliance Canada (millions of cubic feet per day) 1,690.0 1,685.0
Saskatchewan System(2) (thousands of barrels per day)
Westspur System 199.7 154.6
Saskatchewan Gathering System 137.6 112.5
Weyburn System 35.1 35.0
Virden System 19.3 32.3
Green Power(3) (thousands of megawatt hours produced) 96.2 78.9

Revenues 74.7 68.7

Earnings 3.3 7.6
Per Unit (dollars per unit) 0.10 0.22

Cash Provided by Operating Activities 36.5 44.5
Cash Available for Distribution(4) 22.5 17.6
Cash Distributions Declared 21.0 17.4

Cash Distributions Declared Per Unit (dollars per
unit)
Trust Units 0.2880 0.2400
ECT Preferred Units 0.2880 0.2400

Total Long-Term Liabilities 1,495.0 1,514.6

Total Assets 1,949.1 1,872.6

ECT Preferred Units (number of units) 38,023,750 38,023,750

Trust Units 34,625,000 34,625,000
----------------------------------------------------------------------------
----------------------------------------------------------------------------

(1) Financial Highlights have been extracted from financial statements
prepared in accordance with GAAP.
(2) Totals are not presented as the same volumes can be transported through
a combination of the pipelines comprising the Saskatchewan System.
(3) NRGreen's Loreburn, Estlin and Alameda waste heat recovery facilities
began operations in May, July and November of 2008, respectively
(4) See Non-GAAP Measures.



----------------------------------------------------------------------------
CONSOLIDATED EARNINGS
----------------------------------------------------------------------------
Three months ended
March 31,
----------------------------------------------------------------------------
(millions of dollars) 2009 2008
----------------------------------------------------------------------------

Alliance Canada 14.5 20.7
Saskatchewan System 4.2 3.8
Green Power 1.8 -
Corporate (17.2) (16.9)
----------------------------------------------------------------------------
Earnings 3.3 7.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------


- Alliance Canada first quarter earnings decreased primarily due to the CESCA bankruptcy settlement received in the prior year in respect of CESCA's repudiated capacity commitment. The final settlement, together with accrued interest resulted in the recognition of $6.1 million ($4.4 million net of tax) in earnings in the three months ended March 31, 2008. After removing the CESCA settlement from the comparative period, Alliance earnings were consistent year over year.

- Saskatchewan System first quarter earnings increased primarily due to the growth in rate base subsequent to the completion of the Westspur expansion which was brought into service on June 1, 2008. Increased earnings on the Westspur System were offset by lower earnings on the Virden System due to lower allowance oil sales and throughputs than in the prior year comparable period. The Virden System experienced higher than usual throughputs in the prior year due to capacity restrictions on the Westspur System while the expansion was under construction.

- Higher earnings in Green Power reflected the fact that NRGreen had four waste heat facilities operating during the quarter whereas only one facility was in service during the first quarter of 2008. The increased earnings at NRGreen are offset by interest expense related to the credit facility NRGreen secured and drew on in March 2008. Additionally, Green Power earnings have increased from the prior year comparative period primarily due to a $1.0 million non-cash gain (2008 - a loss of $0.7 million) on derivative instruments used to mitigate cash-flow fluctuations related to revenue generated by the wind power projects.

- Corporate costs incurred in the three months ended March 31, 2009 were relatively consistent with the prior period; however this is a result of offsetting factors. The distribution increases in 2008 and 2009 resulted in higher ECT preferred unit distributions and higher incentive fees in the current year. These increases are offset by lower current taxes than in the prior year due to the CESCA claim settlement in 2008, as well as reduced interest expense resulting from lower interest rates on credit facilities.



----------------------------------------------------------------------------
CASH AVAILABLE FOR DISTRIBUTION(1)
----------------------------------------------------------------------------
Three months ended
March 31,
----------------------------------------------------------------------------
(millions of dollars) 2009 2008
----------------------------------------------------------------------------

Cash Provided by Operating Activities 36.5 44.5
Add/(Deduct):
ECT preferred unit distributions(2) 11.0 9.1
Alliance Canada maintenance capital expenditures(3) (0.5) (1.8)
Alliance Canada other cash retained(4) (11.1) (18.0)
Green Power cash retained(4) (0.5) -
Saskatchewan System maintenance capital
expenditures(3) (0.4) (0.4)
Change in operating assets and liabilities in the
period(5) (12.5) (15.8)
----------------------------------------------------------------------------
Cash Available for Distribution(1) 22.5 17.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Cash Available for Distribution is comprised of the
following:
Alliance Canada distributions 17.9 16.8
Saskatchewan System operating income before
depreciation, amortization and accretion 9.1 7.4
Saskatchewan System maintenance capital expenditures (0.4) (0.4)
Green Power distributions 0.9 0.9
Corporate management and administrative expense (2.3) (1.2)
Corporate other income 0.1 0.1
Corporate interest expense (2.7) (3.1)
Corporate current taxes (0.1) (2.9)
----------------------------------------------------------------------------
Cash Available for Distribution(1) 22.5 17.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------

ECT Preferred Unit Distributions Declared 11.0 9.1
Trust Unit Distributions Declared 10.0 8.3
----------------------------------------------------------------------------
Cash Distributions Declared 21.0 17.4
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) See Non-GAAP Measures.

(2) The cash available for distribution above is compared to the total
distributions, including ECT preferred unit distributions. Since ECT
preferred units are treated as debt under GAAP with distributions
deducted from earnings, the ECT preferred unit distributions have been
added back to the cash provided from operating activities in arriving
at cash available for distribution.

(3) Maintenance capital expenditures reduce cash available for distribution
since these expenditures are funded through cash from operations.

(4) The cash retained or distributed by Alliance Canada and Green Power
reflects the cash from operations of these segments that has not been
distributed to the Fund or distributions in excess of cash earnings in
the period. While this cash from operations is proportionately
consolidated and included in the Fund's cash provided by operating
activities, it is not available for distribution by the Fund until it
has been received from Alliance Canada and the Green Power segment.
Cash retained by Alliance Canada and Green Power includes debt service
reserves, capital expenditures and other cash needed to fund working
capital or other requirements of these segments.

(5) Change in operating assets and liabilities in the period reflect changes
in non-cash working capital related to operating activities. The change
has been added back to cash available for distribution since
fluctuations in working capital are expected each period and are not
indicative of changes in cash available to be distributed.


Cash available for distribution represents cash available to fund distributions on trust units and ECT preferred units, as well as for debt repayments and reserves.

For the three months ended March 31, 2009, cash distributions declared of $21.0 million (2008 - $17.4 million) represented 93.3% (2008 - 98.9%) of cash available for distribution.

Enbridge Income Fund is an unincorporated, open-ended trust created to provide a stable and sustainable flow of distributable cash to unitholders. The Fund is a premier income fund in Canada with a low-risk profile focused on energy infrastructure assets. Its assets include a 50% interest in the Canadian segment of the Alliance Pipeline, a 100% interest in the various pipelines comprising the Saskatchewan System, and 50% interest in each of NRGreen Limited Partnership and the SunBridge wind project as well as a 33% interest in each of the Magrath and Chin Chute wind projects. Information about Enbridge Income Fund, including the interim consolidated financial statements and MD&A, is available on the Fund's web site at www.enbridgeincomefund.com.



ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF EARNINGS
Three months ended
March 31,
(unaudited; millions of dollars, -------------------
except per unit amounts) 2009 2008
----------------------------------------------------------------------------

Revenue 74.7 68.7

Expenses
Operating and maintenance 21.6 18.1
Management and administrative 2.3 1.2
Depreciation and amortization 22.5 20.8
----------------------------------------------------------------------------
46.4 40.1
----------------------------------------------------------------------------
28.3 28.6
Other Income and Expense 0.5 6.5
Interest Expense (14.2) (15.8)
ECT Preferred Unit Distributions (11.0) (9.1)
----------------------------------------------------------------------------
3.6 10.2
Income Tax Expense (0.3) (2.6)
----------------------------------------------------------------------------
Earnings 3.3 7.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Earnings per Trust Unit
Basic and Diluted 0.10 0.22
----------------------------------------------------------------------------
----------------------------------------------------------------------------


ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY
Three months ended
March 31,
------------------
(unaudited; millions of dollars) 2009 2008
----------------------------------------------------------------------------

Trust Units 333.4 333.4
----------------------------------------------------------------------------

Deficit, Beginning of Period (61.9) (48.1)
Earnings 3.3 7.6
Distributions to unitholders (10.0) (8.3)
----------------------------------------------------------------------------
Deficit, End of Period (68.6) (48.8)
----------------------------------------------------------------------------

Accumulated Other Comprehensive Loss,
Beginning of Period (9.6) (6.2)
Other comprehensive income/(loss), net of tax 4.6 (3.4)
----------------------------------------------------------------------------
Accumulated Other Comprehensive Loss, End of Period (5.0) (9.6)
----------------------------------------------------------------------------

Total Unitholders' Equity 259.8 275.0
----------------------------------------------------------------------------
----------------------------------------------------------------------------


ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three months ended
March 31,
------------------
(unaudited; millions of dollars) 2008 2008
----------------------------------------------------------------------------

Earnings 3.3 7.6
Other Comprehensive Income/(Loss)
Change in unrealized fair value on cash flow
hedges, net of tax 4.6 (3.9)
Reclassification of realized losses on cash flow
hedges to earnings, net of tax - 0.5
----------------------------------------------------------------------------
4.6 (3.4)
----------------------------------------------------------------------------
Comprehensive Income 7.9 4.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------


ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended
March 31,
-------------------
(unaudited; millions of dollars) 2009 2008
----------------------------------------------------------------------------

Cash Provided by Operating Activities
Earnings 3.3 7.6
Charges/(credits) not affecting cash
Depreciation and amortization 22.5 20.8
Amortization of deferred financing charges 0.4 0.5
Amortization of fair value increment on debt (1.2) (1.3)
Future income taxes (0.2) (0.4)
Other (0.8) 1.5
Changes in operating assets and liabilities
Change in accounts receivable and other 2.3 (0.2)
Change in accounts payable and accrued liabilities 11.6 13.1
Change in deferred amounts and other assets (2.5) (2.2)
Change in long-term liabilities 1.1 5.1
----------------------------------------------------------------------------
36.5 44.5
----------------------------------------------------------------------------
Investing Activities
Additions to property, plant and equipment (3.7) (10.7)
Additions to intangible assets (0.2) (0.2)
Change in construction payable (0.1) (1.9)
----------------------------------------------------------------------------
(4.0) (12.8)
----------------------------------------------------------------------------
Financing Activities
Net change in long-term credit facility (10.5) (18.0)
Net change in non-recourse long-term credit facility (6.9) 15.8
Trust unit distributions (9.7) (8.3)
----------------------------------------------------------------------------
(27.1) (10.5)
----------------------------------------------------------------------------
Increase in Cash and Cash Equivalents 5.4 21.2
Cash and Cash Equivalents at Beginning of Period 17.3 14.7
----------------------------------------------------------------------------
Cash and Cash Equivalents at End of Period 22.7 35.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Cash and Cash Equivalents 3.5 11.3
Cash and Cash Equivalents in Trust 19.2 24.6
----------------------------------------------------------------------------
22.7 35.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------


ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
March 31, December 31,
(unaudited; millions of dollars) 2009 2008
----------------------------------------------------------------------------

Assets
Current Assets
Cash and cash equivalents 22.7 17.3
Accounts receivable and other 36.5 38.8
----------------------------------------------------------------------------
59.2 56.1
Property, Plant and Equipment, Net 1,287.2 1,304.1
Intangible Assets 94.2 95.7
Goodwill 308.1 308.1
Deferred Amounts and Other Assets 197.6 90.7
Future Income Taxes 2.8 3.5
----------------------------------------------------------------------------
1,949.1 1,858.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Liabilities and Unitholders' Equity
Current Liabilities
Accounts payable and accrued liabilities 60.1 49.6
Distributions payable 3.3 3.0
Current portion of long-term debt 100.0 100.0
Current portion of non-recourse long-term debt 30.9 30.9
----------------------------------------------------------------------------
194.3 183.5
Long-Term Debt 168.6 178.8
Non-Recourse Long-Term Debt 756.7 764.7
ECT Preferred Units 380.2 380.2
Long-Term Liabilities 13.3 18.3
Asset Retirement Obligations 11.1 10.9
Future Income Taxes 165.1 59.9
----------------------------------------------------------------------------
1,689.3 1,596.3
Unitholders' Equity
Trust units 333.4 333.4
Deficit (68.6) (61.9)
Accumulated other comprehensive loss (5.0) (9.6)
----------------------------------------------------------------------------
259.8 261.9
----------------------------------------------------------------------------
1,949.1 1,858.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------


ENBRIDGE INCOME FUND

SEGMENTED INFORMATION

Three months ended
March 31, 2009
----------------------------------------------------------------------------
(unaudited, millions Alliance Saskatchewan Green
of dollars) Canada System Power Corporate Consolidated
----------------------------------------------------------------------------
Revenue 54.0 17.2 3.5 - 74.7
Operating and
maintenance (12.9) (8.1) (0.6) - (21.6)
Management and
administrative - - - (2.3) (2.3)
Depreciation and
amortization (15.9) (5.6) (1.0) - (22.5)
----------------------------------------------------------------------------
25.2 3.5 1.9 (2.3) 28.3
Other income and
expense 0.3 - 0.1 0.1 0.5
Interest expense (11.0) - (0.2) (3.0) (14.2)
ECT preferred unit
distributions - - - (11.0) (11.0)
Income tax
recovery/(expense) - 0.7 - (1.0) (0.3)
----------------------------------------------------------------------------
Earnings/(loss) 14.5 4.2 1.8 (17.2) 3.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditures 0.8 2.1 0.8 - 3.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Three months ended
March 31, 2008
----------------------------------------------------------------------------
(unaudited, millions Alliance Saskatchewan Green
of dollars) Canada System Power Corporate Consolidated
----------------------------------------------------------------------------
Revenue 53.8 13.8 1.1 - 68.7
Operating and
maintenance (11.2) (6.4) (0.5) - (18.1)
Management and
administrative - - - (1.2) (1.2)
Depreciation and
amortization (15.8) (4.3) (0.7) - (20.8)
----------------------------------------------------------------------------
26.8 3.1 (0.1) (1.2) 28.6
Other income and
expense 6.3 - 0.1 0.1 6.5
Interest expense (12.4) - - (3.4) (15.8)
ECT preferred unit
distributions - - - (9.1) (9.1)
Income tax
recovery/(expense) - 0.7 - (3.3) (2.6)
----------------------------------------------------------------------------
Earnings/(loss) 20.7 3.8 - (16.9) 7.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditures 3.7 6.7 0.3 - 10.7
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Contact Information