Enbridge Income Fund
TSX : ENF.UN

Enbridge Income Fund

July 26, 2005 16:15 ET

Enbridge Income Fund Announces Quarterly Results

CALGARY, ALBERTA--(CCNMatthews - July 26, 2005) - Enbridge Income Fund (TSX:ENF.UN) (the "Fund") today announced earnings of $7.7 million for the six months ended June 30, 2005, or $0.22 per unit, compared with $6.3 million, or $0.18 per unit, for the same period in 2004. The increase in earnings of $1.4 million is due primarily to the collection of an income tax allowance in the tolls of Alliance Canada for the first time beginning in 2005.

Stephen J. Wuori, President of the Fund, commented, "The Fund continues to perform as expected in the second quarter of 2005 enabling stable and predictable cash returns to investors. Consistent with management expectations, the Fund has distributed 83% of cash available for distribution in 2005 to date."

Based on current operations, the Fund estimates that approximately 90% of cash to be distributed during 2005 will be included in the income of unitholders for tax purposes.



SELECTED OPERATING AND FINANCIAL HIGHLIGHTS

Three months ended Six months ended
June 30, June 30,
(millions of dollars ----------------------------------------
except where otherwise noted) 2005 2004 2005 2004
------------------------------------------------------------------------

Average Daily Throughput Volume
Alliance Canada (millions of
cubic feet per day) 1,561.0 1,547.0 1,622.0 1,598.0
Saskatchewan System (1)
(thousands of barrels per day)
Westspur System 142.3 136.8 143.4 138.8
Saskatchewan Gathering System 101.6 97.1 102.7 96.7
Weyburn System 33.7 30.6 33.3 30.8
Virden System 19.1 18.5 20.8 18.4


Transportation Revenues 61.7 62.1 122.0 121.5

Earnings 3.7 3.6 7.7 6.3
Per Unit (dollars per unit) 0.10 0.10 0.22 0.18

Cash Available for Distribution 19.8 19.3 39.6 35.4

Cash Distributions Declared
Per Unit (dollars per unit)
Ordinary Units 0.2275 0.2125 0.4550 0.4229
Subordinated Units 0.2275 0.2125 0.4550 0.4229
ECT Preferred Units 0.2275 0.2125 0.4550 0.4229

Total Long-Term Liabilities 1,500.8 1,339.8

Total Assets 1,863.1 1,918.6

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

Ordinary Units
(number of units) 20,125,000 20,125,000
Subordinated Units
(number of units) 14,500,000 14,500,000
------------------------------------------------------------------------
Total Number of Units 34,625,000 34,625,000
------------------------------------------------------------------------
------------------------------------------------------------------------

(1) Totals are not presented as the same volumes can be transported
through a combination of the pipelines comprising the Saskatchewan
System.


------------------------------------------------------------------------
CONSOLIDATED EARNINGS
------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
----------------------------------------
(millions of dollars) 2005 2004 2005 2004
------------------------------------------------------------------------

Alliance Canada 13.3 10.9 27.1 22.1
Saskatchewan System 2.9 2.7 5.5 4.9
Corporate (12.5) (10.0) (24.9) (20.7)
------------------------------------------------------------------------
Earnings 3.7 3.6 7.7 6.3
------------------------------------------------------------------------
------------------------------------------------------------------------



- The increase in earnings is primarily due to the collection of an income tax allowance in the tolls of Alliance Canada due to it becoming notionally taxable for the first time in 2005.

- Offsetting this increase somewhat are higher Corporate costs primarily due to an increase in the annualized distribution for ECT preferred units and higher incentive fees. In addition, higher Corporate costs are attributable to higher interest rates on long-term debt and the amortization of deferred financing charges.



------------------------------------------------------------------------
ALLIANCE CANADA
------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
----------------------------------------
(millions of dollars) 2005 2004 2005 2004
------------------------------------------------------------------------

Transportation revenue 50.8 51.4 100.8 100.9
Operating and maintenance (8.3) (10.7) (15.5) (19.3)
Capital taxes (0.3) (0.5) (0.7) (0.9)
Depreciation and amortization (15.5) (15.5) (30.8) (31.0)
Other income and expense 0.3 0.2 0.4 0.3
Interest expense (12.9) (13.3) (25.7) (26.7)
Current and future taxes (0.8) (0.7) (1.4) (1.2)
------------------------------------------------------------------------
Earnings 13.3 10.9 27.1 22.1
------------------------------------------------------------------------
------------------------------------------------------------------------


- Earnings have increased in the period due to the allowance for current income taxes included in the 2005 toll revenue as Alliance Canada became notionally taxable in the current period. Offsetting this slightly is a reduction in the equity return resulting from the depreciated rate base.

- Lower insurance, personnel costs, in-line inspection and compressor overhaul expenditures have contributed to lower operating and maintenance costs in the current period.

- The increase in revenue attributable to the income tax allowance is partially offset by lower operating and maintenance costs as revenue is dependent upon actual costs of service incurred.



------------------------------------------------------------------------
SASKATCHEWAN SYSTEM
------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
----------------------------------------
(millions of dollars) 2005 2004 2005 2004
------------------------------------------------------------------------

Transportation revenue 10.9 10.7 21.2 20.6
Operating and maintenance (5.0) (4.9) (9.4) (9.6)
Capital taxes (0.1) (0.4) (0.3) (0.5)
Depreciation and amortization (3.8) (3.6) (7.6) (7.2)
Accretion on asset retirement
obligation (0.1) (0.1) (0.2) (0.2)
Current and future taxes 1.0 1.0 1.8 1.8
------------------------------------------------------------------------
Earnings 2.9 2.7 5.5 4.9
------------------------------------------------------------------------
------------------------------------------------------------------------


- Earnings from the Saskatchewan System have not changed significantly
from the comparable period in the prior year.


------------------------------------------------------------------------
CORPORATE
------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
----------------------------------------
(millions of dollars) 2005 2004 2005 2004
------------------------------------------------------------------------

Management and administrative (0.9) (0.2) (1.9) (0.8)
Interest expense (2.9) (1.7) (5.6) (3.5)
ECT preferred unit distributions (8.6) (8.1) (17.3) (16.1)
Other (0.1) - (0.1) (0.3)
------------------------------------------------------------------------
Total costs (12.5) (10.0) (24.9) (20.7)
------------------------------------------------------------------------
------------------------------------------------------------------------


- Incentive fees, included in management and administrative costs, and ECT preferred unit distributions are higher following the approval of a 3% increase in distributions in February, 2004, an additional 1% increase in distributions in July, 2004 and a further 6% increase in distributions in November, 2004.

- Interest expense is higher due to higher interest rates upon refinancing the $190 million acquisition facility with fixed rate debt in December 2004 as well as the amortization of the associated deferred financing charges.



------------------------------------------------------------------------
CASH AVAILABLE FOR DISTRIBUTION (1),(2)
------------------------------------------------------------------------
Three months ended Six months ended
June 30, June 30,
----------------------------------------
(millions of dollars) 2005 2004 2005 2004
------------------------------------------------------------------------

Cash Provided by Operating
Activities 5.2 4.6 41.6 37.7
Add/(Deduct):
ECT preferred unit
distributions 8.6 8.1 17.3 16.1
Alliance Canada cash retained (10.0) (9.4) (20.0) (20.2)
Saskatchewan System
maintenance capital
expenditures (0.3) (0.7) (0.4) (0.9)
Change in operating assets
and liabilities in the period 16.3 16.7 1.1 2.7
------------------------------------------------------------------------
Cash Available for Distribution 19.8 19.3 39.6 35.4
------------------------------------------------------------------------
------------------------------------------------------------------------

Cash Available for Distribution
is comprised of the following:
Alliance Canada distributions 18.7 16.9 37.7 32.6
Alliance Canada capital tax (0.3) (0.5) (0.7) (0.9)
Alliance Canada large
corporations tax (0.7) (0.7) (1.3) (1.5)
Saskatchewan System operating
income before depreciation,
amortization and accretion 5.8 5.4 11.5 10.5
Saskatchewan System maintenance
capital expenditures (0.3) (0.7) (0.4) (0.9)
Saskatchewan System large
corporations tax - - (0.1) (0.1)
Corporate management and
administrative expense (0.9) (0.2) (1.9) (0.8)
Corporate interest expense (2.4) (1.5) (4.9) (3.3)
Corporate current taxes (0.1) 0.6 (0.3) (0.2)
------------------------------------------------------------------------
Cash Available for Distribution 19.8 19.3 39.6 35.4
------------------------------------------------------------------------
------------------------------------------------------------------------

Cash Distributions Declared 16.5 15.4 33.0 30.7
------------------------------------------------------------------------
------------------------------------------------------------------------

(1) Cash available for distribution is not a standardized measure under
Canadian Generally Accepted Accounting Principles; therefore, it
may not be comparable to similarly titled measures used by other
issuers.

(2) Cash available for distribution has been reclassified from the prior
period. In the prior period, the measure was shown both gross and
net of the impact of changes in operating assets and liabilities.
The current measure does not adjust cash available for changes in
operating assets and liabilities in order to eliminate fluctuations
due to the timing of receipts and payments.


The above calculations of cash available for distribution represent cash available to fund distributions on ordinary units, subordinated 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 stable and sustainable flow of distributable cash to unitholders.

The cash retained by Alliance Canada reflects the cash from operations of Alliance Canada that has not been distributed to the Fund. While the cash from operations is proportionately consolidated and is included in the results of the Fund, it is not available for distribution by the Fund until it has been received from Alliance Canada. The cash available for distribution from Alliance Canada is reduced to reflect debt service reserves, capital expenditures and other cash that is needed to fund working capital or other requirements at Alliance Canada. Cash retained by Alliance Canada is included above under 'Alliance Canada cash retained' except for cash needed to fund working capital which is included in 'Change in operating assets and liabilities in the period'. Distributions from Alliance Canada, which are subject to the approval of the Board of Directors of the General Partner of Alliance Canada, are made on a quarterly basis and paid in the month subsequent to the quarter end.

The Saskatchewan System maintenance capital expenditures are determined based on the capital requirements necessary to maintain the service capability of the existing assets and include the replacement of system components and equipment, which are worn, obsolete or completing their useful life.

For the three months ended June 30, 2005, cash distributions declared of $16.5 million (2004 - $15.4 million) represent 83.3% (2004 - 79.8%) of cash available for distribution, whereas for the six months ended June 30, 2005, cash distributions declared of $33.0 million (2004 - $30.7 million) represent 83.3% (2004 - 86.7%) of cash available for distribution. The decrease in the current period is primarily due to the timing of certain expenditures as well as a $2.1 million distribution from Alliance Canada in 2005 to true up owners' equity with the target capital structure. The Fund's policy is to distribute on-average approximately 95% of cash available for distribution over a five-year period.

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 15th day of the month following the declaration. During the six months ended June 30, 2005, the Fund declared monthly cash distributions of $0.0758333 per ordinary unit (2004 - $0.06875 in January and $0.0708333 for the months February through June). Cash distributions of the same amount per unit were also declared on the subordinated units and the ECT preferred units.

The Board of Trustees approves distributions periodically based on cash flow to meet the Fund's distribution policy. The timing of the regular annual review of the distribution rate has been moved from mid-year to year-end to better align with the Fund's budgeting and reporting cycles.

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 pipeline transportation assets. Its assets include a 50% interest in the Canadian segment of the Alliance Pipeline and a 100% interest in the various pipelines comprising the Saskatchewan System. 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.

Certain information provided in this news release constitutes forward-looking statements. The words "anticipate", "expect", "project", "estimate", "forecast" and similar expressions are intended to identify such forward-looking statements. Although Enbridge Income Fund believes that these statements are based on information and assumptions which are current, reasonable and complete, these statements are necessarily subject to a variety of risks and uncertainties pertaining to operating performance, regulatory parameters, economic conditions and commodity prices. You can find a discussion of those risks and uncertainties in our Canadian securities filings. While Enbridge Income Fund makes these forward-looking statements in good faith, should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. Enbridge Income Fund assumes no obligation to publicly update or revise any forward-looking statements made herein or otherwise, whether as a result of new information, future events or otherwise.



ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF EARNINGS

Three months ended Six months ended
June 30, June 30,
(unaudited; millions of dollars, ------------------ ------------------
except per unit amounts) 2005 2004 2005 2004
------------------------------------------------------------------------

Transportation Revenue 61.7 62.1 122.0 121.5

Expenses
Operating and maintenance 13.3 15.6 24.9 28.9
Management and administrative 0.9 0.2 1.9 0.8
Capital taxes 0.4 0.9 1.0 1.4
Depreciation and amortization 19.3 19.1 38.4 38.2
Accretion on asset retirement
obligation 0.1 0.1 0.2 0.2
------------------------------------------------------------------------
34.0 35.9 66.4 69.5
------------------------------------------------------------------------
Operating Income 27.7 26.2 55.6 52.0
Other Income and Expense 0.3 0.2 0.4 0.3
Interest Expense and
Amortization of Deferred
Financing Charges (15.8) (15.0) (31.3) (30.2)
ECT Preferred Unit Distributions (8.6) (8.1) (17.3) (16.1)
------------------------------------------------------------------------
3.6 3.3 7.4 6.0
Taxes
Current (0.8) (0.1) (1.7) (1.8)
Future 0.9 0.4 2.0 2.1
------------------------------------------------------------------------
0.1 0.3 0.3 0.3
------------------------------------------------------------------------
Earnings 3.7 3.6 7.7 6.3
------------------------------------------------------------------------
------------------------------------------------------------------------
Earnings per Trust Unit
Basic and Diluted 0.10 0.10 0.22 0.18
------------------------------------------------------------------------
------------------------------------------------------------------------


ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF UNITHOLDERS' EQUITY

Six months ended
June 30,
------------------
(unaudited; millions of dollars) 2005 2004
------------------------------------------------------------------------

Opening Unitholders' Equity 310.4 329.8
Earnings Applicable to Unitholders 7.7 6.3
Distributions to Unitholders (15.8) (14.6)
------------------------------------------------------------------------
Ending Unitholders' Equity 302.3 321.5
------------------------------------------------------------------------
------------------------------------------------------------------------


ENBRIDGE INCOME FUND
CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended Six months ended
June 30, June 30,
------------------ ------------------
(unaudited; millions of dollars) 2005 2004 2005 2004
------------------------------------------------------------------------

Cash Provided by Operating
Activities
Earnings 3.7 3.6 7.7 6.3
Charges/(credits) not
affecting cash
Depreciation and amortization 19.3 19.1 38.4 38.2
Amortization of deferred
financing charges 0.6 0.4 1.1 0.6
Accretion on asset retirement
obligation 0.1 0.1 0.2 0.2
Amortization of fair value
increment on debt (1.3) (1.5) (2.7) (2.8)
Future income taxes (0.9) (0.4) (2.0) (2.1)
Changes in operating assets
and liabilities
Change in accounts receivable
and other 0.3 (1.1) (2.9) 0.2
Change in accounts payable
and accrued liabilities (16.5) (13.5) (2.1) (2.1)
Change in deferred amounts
and other assets (0.1) (2.1) 3.9 (0.8)
------------------------------------------------------------------------
5.2 4.6 41.6 37.7
------------------------------------------------------------------------
Investing Activities
Additions to property,
plant and equipment (1.6) (1.3) (2.8) (2.3)
Change in construction payable (0.2) (0.9) (0.3) (0.9)
------------------------------------------------------------------------
(1.8) (2.2) (3.1) (3.2)
------------------------------------------------------------------------
Financing Activities
Net change in long-term credit
facility (2.0) (2.9) (5.0) (4.0)
Net change in non-recourse
long-term credit facility 1.6 0.8 0.4 (11.0)
Repayment of non-recourse
long-term debt (20.6) (19.9) (20.6) (19.9)
Ordinary and subordinated trust
unit distributions (7.9) (7.4) (15.8) (14.6)
Financing fees - - (0.2) -
Change in distributions payable - - - 0.1
------------------------------------------------------------------------
(28.9) (29.4) (41.2) (49.4)
------------------------------------------------------------------------
Decrease in Cash (25.5) (27.0) (2.7) (14.9)
Cash at Beginning of Period 37.6 39.7 14.8 27.6
------------------------------------------------------------------------
Cash at End of Period 12.1 12.7 12.1 12.7
------------------------------------------------------------------------
------------------------------------------------------------------------

Cash 4.0 0.6
Cash in trust 8.1 12.1
------------------------------------------------------------------------
12.1 12.7
------------------------------------------------------------------------
------------------------------------------------------------------------


ENBRIDGE INCOME FUND
CONSOLIDATED BALANCE SHEETS

June 30, December 31,
(unaudited; millions of dollars) 2005 2004
------------------------------------------------------------------------

Assets
Current Assets
Cash 12.1 14.8
Accounts receivable and other 30.0 27.1
------------------------------------------------------------------------
42.1 41.9
Property, Plant and Equipment 1,370.0 1,403.0
Intangible Assets 105.7 108.3
Goodwill 308.1 308.1
Deferred Amounts and Other Assets 37.2 42.0
------------------------------------------------------------------------
1,863.1 1,903.3
------------------------------------------------------------------------
------------------------------------------------------------------------

Liabilities and Equity
Current Liabilities
Accounts payable and accrued liabilities 22.1 24.5
Distributions payable 2.6 2.6
Current portion of non-recourse
long-term debt 35.3 41.5
------------------------------------------------------------------------
60.0 68.6
Long-Term Debt 202.0 207.0
Non-Recourse Long-Term Debt 821.6 838.3
ECT Preferred Units 380.2 380.2
Asset Retirement Obligations 6.9 6.7
Future Income Taxes 90.1 92.1
------------------------------------------------------------------------
1,560.8 1,592.9
Unitholders' Equity
Trust units 333.4 333.4
Cumulative earnings 28.8 21.1
Cumulative distributions (59.9) (44.1)
------------------------------------------------------------------------
302.3 310.4
------------------------------------------------------------------------
1,863.1 1,903.3
------------------------------------------------------------------------
------------------------------------------------------------------------


ENBRIDGE INCOME FUND
SEGMENTED INFORMATION

Three months ended June 30, 2005
------------------------------------------------------------------------
Alliance Saskatchewan
(millions of dollars) Canada System Corporate Consolidated
------------------------------------------------------------------------
Transportation revenue 50.8 10.9 - 61.7
Operating and
maintenance (8.3) (5.0) - (13.3)
Management and
administrative - - (0.9) (0.9)
Capital taxes (0.3) (0.1) - (0.4)
Depreciation and
amortization (15.5) (3.8) - (19.3)
Accretion on asset
retirement obligation - (0.1) - (0.1)
------------------------------------------------------------------------
Operating income/(loss) 26.7 1.9 (0.9) 27.7
Other income and expense 0.3 - - 0.3
Interest expense and
amortization of deferred
financing charges (12.9) - (2.9) (15.8)
ECT preferred unit
distributions - - (8.6) (8.6)
Current taxes (0.7) - (0.1) (0.8)
Future taxes (0.1) 1.0 - 0.9
------------------------------------------------------------------------
Earnings 13.3 2.9 (12.5) 3.7
------------------------------------------------------------------------
------------------------------------------------------------------------


Three months ended June 30, 2004
------------------------------------------------------------------------
Alliance Saskatchewan
(millions of dollars) Canada System Corporate Consolidated
------------------------------------------------------------------------
Transportation revenue 51.4 10.7 - 62.1
Operating and
maintenance (10.7) (4.9) - (15.6)
Management and
administrative - - (0.2) (0.2)
Capital taxes (0.5) (0.4) - (0.9)
Depreciation and
amortization (15.5) (3.6) - (19.1)
Accretion on asset
retirement obligation - (0.1) - (0.1)
------------------------------------------------------------------------
Operating income/(loss) 24.7 1.7 (0.2) 26.2
Other income and expense 0.2 - - 0.2
Interest expense and
amortization of deferred
financing charges (13.3) - (1.7) (15.0)
ECT preferred unit
distributions - - (8.1) (8.1)
Current taxes (0.7) - 0.6 (0.1)
Future taxes - 1.0 (0.6) 0.4
------------------------------------------------------------------------
Earnings 10.9 2.7 (10.0) 3.6
------------------------------------------------------------------------
------------------------------------------------------------------------


Six months ended June 30, 2005
------------------------------------------------------------------------
Alliance Saskatchewan
(millions of dollars) Canada System Corporate Consolidated
------------------------------------------------------------------------
Transportation revenue 100.8 21.2 - 122.0
Operating and
maintenance (15.5) (9.4) - (24.9)
Management and
administrative - - (1.9) (1.9)
Capital taxes (0.7) (0.3) - (1.0)
Depreciation and
amortization (30.8) (7.6) - (38.4)
Accretion on asset
retirement obligation - (0.2) - (0.2)
------------------------------------------------------------------------
Operating income/(loss) 53.8 3.7 (1.9) 55.6
Other income and expense 0.4 - - 0.4
Interest expense and
amortization of deferred
financing charges (25.7) - (5.6) (31.3)
ECT preferred unit
distributions - - (17.3) (17.3)
Current taxes (1.3) (0.1) (0.3) (1.7)
Future taxes (0.1) 1.9 0.2 2.0
------------------------------------------------------------------------
Earnings 27.1 5.5 (24.9) 7.7
------------------------------------------------------------------------
------------------------------------------------------------------------


Six months ended June 30, 2004
------------------------------------------------------------------------
Alliance Saskatchewan
(millions of dollars) Canada System Corporate Consolidated
------------------------------------------------------------------------
Transportation revenue 100.9 20.6 - 121.5
Operating and
maintenance (19.3) (9.6) - (28.9)
Management and
administrative - - (0.8) (0.8)
Capital taxes (0.9) (0.5) - (1.4)
Depreciation and
amortization (31.0) (7.2) - (38.2)
Accretion on asset
retirement obligation - (0.2) - (0.2)
------------------------------------------------------------------------
Operating income/(loss) 49.7 3.1 (0.8) 52.0
Other income and expense 0.3 - - 0.3
Interest expense and
amortization of deferred
financing charges (26.7) - (3.5) (30.2)
ECT preferred unit
distributions - - (16.1) (16.1)
Current taxes (1.5) (0.1) (0.2) (1.8)
Future taxes 0.3 1.9 (0.1) 2.1
------------------------------------------------------------------------
Earnings 22.1 4.9 (20.7) 6.3
------------------------------------------------------------------------
------------------------------------------------------------------------



Contact Information