Enbridge Inc.
TSX : ENB
NYSE : ENB

Enbridge Inc.

August 02, 2006 07:30 ET

Enbridge Reports First Half Earnings of $348.8 Million

CALGARY, ALBERTA--(CCNMatthews - Aug. 2, 2006) - Enbridge Inc. (TSX:ENB) (NYSE:ENB)

Highlights

- Adjusted operating earnings for the second quarter increase 24% to $118.7 million

- Adjusted operating earnings for the first half increase 9% to $328.2 million

- US$920 million Southern Lights diluent pipeline receives commitments exceeding the planned capacity

- US$350 million Southern Access Extension Project receives shipper support

- $250 million contract storage terminal to be constructed at Hardisty, Alberta

"Our financial results are again very strong, with second quarter adjusted operating earnings per share increasing markedly, which leaves us well positioned to meet our previously stated objectives for the year," said Patrick D. Daniel, President & Chief Executive Officer of Enbridge Inc. "Over the last few years we have announced a large number of projects that respond to increasingly strong industry fundamentals. These projects span an array of oil and gas transportation and storage opportunities and are in various stages of development."

Mr. Daniel added, "Most notably, Enbridge continues to develop new crude oil market access pipelines including our Gateway, Alberta Clipper and Southern Access projects as well as a variety of alternatives to move Canadian oil sands crude oil to the Gulf of Mexico. These initiatives and projects will ensure that our customers have sufficient access to the right markets at the right time. This robust slate of projects provides us with significant growth opportunities in our existing lines of business, where we have historically been very successful, and will enable us to generate superior returns to shareholders."

On August 1, 2006, the Enbridge Board of Directors declared quarterly dividends of $0.2875 per common share and $0.34375 per Series A Preferred Share. Both dividends are payable on September 1, 2006 to shareholders of record on August 15, 2006.

The Board of Directors also announced that it had accepted, with regret, the resignation of William R. Fatt, a Director since 2000, due to increasing commitments associated with Mr. Fatt's role as Chief Executive Officer of Fairmont Hotels & Resorts Inc.

Earnings applicable to common shareholders were $348.8 million for the six months ended June 30, 2006, or $1.03 per share, compared with $314.2 million or $0.93 per share in 2005. The $34.6 million increase in earnings was attributed to strong performance from the Enbridge crude oil mainline system and $48.9 million from the revaluation of future income tax balances due to tax rate reductions. These positive factors were partially offset by a lower contribution from the gas distribution utility, as weather in the Ontario market area was significantly warmer than normal.

Earnings applicable to common shareholders were $157.9 million for the three months ended June 30, 2006, or $0.47 per share, compared with $93.6 million, or $0.27 per share in 2005. The $64.3 million increase in earnings reflected similar factors as those identified in the six month analysis except the weather impact at the gas distribution utility was less significant as the second quarter is seasonally a quarter in which lower volumes are distributed.



Three months ended Six months ended
(millions of Canadian dollars) June 30, June 30,
------------------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------------------

Liquids Pipelines 68.6 53.6 134.9 106.6
Gas Pipelines 15.9 18.7 31.9 37.0
Sponsored Investments 23.2 14.5 43.4 32.9
Gas Distribution and Services 34.0 2.9 120.0 130.7
International 21.3 20.4 43.1 38.6
Corporate (5.1) (16.5) (24.5) (31.6)
------------------------------------------------------------------------
157.9 93.6 348.8 314.2
------------------------------------------------------------------------
------------------------------------------------------------------------


Non-GAAP Measures

This news release contains references to adjusted operating earnings, which represent earnings applicable to common shareholders adjusted for non-operating factors. This 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. Management believes that the presentation of adjusted operating earnings provides useful information to investors and shareholders as it provides increased predictive value and performance trends.



(millions of Canadian
dollars, except per Three months ended Six months ended
share amounts) June 30, June 30,
------------------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------------------
GAAP earnings as reported 157.9 93.6 348.8 314.2
Non-operating factors and
variances as per table below (39.2) 2.0 (20.6) (13.6)
------------------------------------------------------------------------
Adjusted Operating Earnings 118.7 95.6 328.2 300.6
------------------------------------------------------------------------
------------------------------------------------------------------------
Adjusted Operating Earnings
per Common Share 0.35 0.28 0.97 0.89
------------------------------------------------------------------------
------------------------------------------------------------------------

Significant after-tax non-operating factors and variances affecting
consolidated earnings were as follows:

Three months ended Six months ended
(millions of Canadian dollars) June 30, June 30,
------------------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------------------
Sponsored Investments
Dilution gain on EEP unit
issuance - - - 4.6
EEP non-cash derivative fair
value gains/(losses) (0.3) - 2.4 -
Revalue future income taxes
due to tax rate changes 6.0 - 6.0 -
Gas Distribution and Services
Colder/(warmer) than normal
weather affecting EGD (9.4) (2.0) (30.7) 1.7
Dilution gain in Noverco (Gaz
Metro unit issuance) - - - 7.3
Revalue future income taxes
due to tax rate changes 28.9 - 28.9 -
Corporate
Revalue future income taxes
due to tax rate changes 14.0 - 14.0 -
------------------------------------------------------------------------
Total significant after-tax
non-operating factors
and variances increasing/
(decreasing) earnings 39.2 (2.0) 20.6 13.6
------------------------------------------------------------------------
------------------------------------------------------------------------


Significant operating factors affecting consolidated earnings in 2006 included the following:

- Enbridge crude oil mainline system earnings were higher primarily due to lower oil losses, higher earnings from Terrace and the Incentive Tolling Settlement (ITS).

- Enbridge Energy Partners earnings have increased significantly with higher crude oil throughput, strong margins and increased volumes in the natural gas gathering and processing businesses.

- Corporate costs increased as certain floating interest rate financings were replaced with longer term fixed rate debt.

The Company has foreign currency denominated earnings, primarily from U.S. based operations and investments, as well as its Euro investment in CLH. 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 GAAP earnings volatility caused by exchange rate differences. During the first half of 2006, the Company received foreign currency denominated cash distributions and settled associated hedge transactions resulting in $9.8 million (2005 - $5.4 million) of incremental cash flows, which were not included in reported earnings.



Liquids Pipelines

Three months ended Six months ended
(millions of Canadian dollars) June 30, June 30,
------------------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------------------
Enbridge System 48.9 39.5 100.9 78.4
Athabasca System 13.8 11.4 26.1 23.7
Spearhead Pipeline 2.4 (0.1) 2.7 (0.6)
Olympic Pipeline 2.0 - 2.6 -
NW System 1.6 1.9 2.6 3.7
Feeder Pipelines and Other (0.1) 0.9 - 1.4
------------------------------------------------------------------------
68.6 53.6 134.9 106.6
------------------------------------------------------------------------
------------------------------------------------------------------------


- The Enbridge System reflected higher earnings from a number of factors including lower oil losses, performance incentives under the ITS and, within Terrace, lower taxes, higher toll revenues and the impact of higher volumes on the surcharge revenue.

- Athabasca System earnings continued to grow as infrastructure additions contributed positively, but were partially offset by higher operating expenses.

- Spearhead Pipeline commenced commercial operations in early March, 2006.

- Olympic Pipeline was acquired effective February 1, 2006.



Gas Pipelines

Three months ended Six months ended
(millions of Canadian dollars) June 30, June 30,
------------------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------------------
Alliance Pipeline US 7.2 8.5 14.5 16.4
Vector Pipeline 2.7 3.6 6.8 8.0
Enbridge Offshore Pipelines 6.0 6.6 10.6 12.6
------------------------------------------------------------------------
15.9 18.7 31.9 37.0
------------------------------------------------------------------------
------------------------------------------------------------------------


- Alliance Pipeline US earnings were lower due to the stronger Canadian dollar in the first half of 2006 in comparison with the first half of 2005.

- Vector Pipeline earnings were also impacted by the stronger Canadian dollar and higher operating costs in the second quarter of 2006 due to scheduled integrity inspections required by the regulator within the first six years of operation.

- Enbridge Offshore Pipelines earnings are lower than the prior year; however, volumes returned to pre-hurricane levels during the second quarter of 2006. The stronger Canadian dollar also reduced earnings.



Sponsored Investments

Three months ended Six months ended
(millions of Canadian dollars) June 30, June 30,
------------------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------------------
Enbridge Income Fund (EIF) 8.7 8.4 18.0 16.7
Enbridge Energy Partners (EEP) 8.5 6.1 19.4 11.6
Dilution gains in EEP - - - 4.6
Revalue future income taxes due
to tax rate changes 6.0 - 6.0 -
------------------------------------------------------------------------
23.2 14.5 43.4 32.9
------------------------------------------------------------------------
------------------------------------------------------------------------


- EEP's contribution to 2006 results improved significantly, despite the stronger Canadian dollar, and reflected considerably higher liquids throughput on the Lakehead System, higher margins and increased volumes in the natural gas gathering and processing businesses. The first half of 2006 also included $2.4 million (net to Enbridge) of unrealized mark-to-market gains on derivative financial instruments that do not qualify for hedge accounting treatment (loss of $0.3 million in the second quarter of 2006).

- EEP issued partnership units in the first quarter of 2005 and because Enbridge did not fully participate in these offerings, dilution gains resulted. There were no unit issuances in the first half of 2006.



Gas Distribution and Services

Three months ended Six months ended
(millions of Canadian dollars) June 30, June 30,
------------------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------------------
Enbridge Gas Distribution (EGD) (5.1) (2.8) 53.2 88.3
Noverco 1.2 (2.1) 15.1 19.8
CustomerWorks/ECS 3.7 6.2 10.3 12.3
Other Gas Distribution 0.6 1.1 5.3 5.9
Enbridge Gas New Brunswick 2.5 1.0 4.3 2.0
Gas Services (1.3) (1.0) (0.3) (0.1)
Aux Sable 0.2 0.6 1.2 3.8
Other 3.3 (0.1) 2.0 (1.3)
Revalue future income taxes due
to tax rate changes 28.9 - 28.9 -
------------------------------------------------------------------------
34.0 2.9 120.0 130.7
------------------------------------------------------------------------
------------------------------------------------------------------------


- EGD's distribution volumes and earnings in 2006 were impacted by warmer weather. The weather in Ontario was warmer than normal in 2006 and reduced earnings by $30.7 million ($9.4 million in the second quarter) whereas weather was colder than normal and increased earnings by $1.7 million in the prior year ($2.0 million warmer than normal in the second quarter). EGD earnings were also reduced by a lower regulated rate of return on common equity, partially offset by a higher regulator approved rate base. The timing of operating and maintenance activities also increased earnings in the second quarter of 2006.

- Noverco earnings were higher in the second quarter as the prior year included increased future income tax expense due to adjustments for reciprocal dividends and a significant cash dividend. In addition, the first quarter of the prior year included a $7.3 million dilution gain from a Gaz Metro LP unit issuance in which Noverco did not participate.

- Aux Sable earnings were lower despite positive fractionation margins during the first half of 2006. Aux Sable entered into an output arrangement effective January 1, 2006, that eliminates substantially all negative earnings variability. Aux Sable now receives a fixed annual fee and upside sharing above a certain fractionation margin level. As the upside sharing is an annual measure, earnings in the first half of 2006 reflect only the fixed fee portion of the payment. Any upside sharing will be recorded when earned, in accordance with accounting rules for revenue recognition.



International

Three months ended Six months ended
(millions of Canadian dollars) June 30, June 30,
------------------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------------------

CLH 14.7 14.0 28.0 25.6
OCENSA/CITCol 8.1 8.0 16.3 16.2
Other (1.5) (1.6) (1.2) (3.2)
------------------------------------------------------------------------
21.3 20.4 43.1 38.6
------------------------------------------------------------------------
------------------------------------------------------------------------


- The Company's international investments continued to show strong performance with no significant variances to note.



Corporate

Three months ended Six months ended
(millions of Canadian dollars) June 30, June 30,
------------------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------------------
Corporate (19.1) (16.5) (38.5) (31.6)
Revalue future income taxes
due to tax rate changes 14.0 - 14.0 -
------------------------------------------------------------------------
(5.1) (16.5) (24.5) (31.6)
------------------------------------------------------------------------
------------------------------------------------------------------------


The increase in Corporate costs was primarily due to higher interest expense as a portion of the Company's floating rate debt was repaid through the issuance of long-term fixed rate debt.

Conference Call

Enbridge will hold a conference call on Wednesday, August 2, 2006 at 9:30 a.m. Eastern time (7:30 a.m. Mountain time) to discuss the second quarter 2006 results. The call can be accessed at 1-866-578-5784 using the access code of 47924483, and will be audio webcast live at www.enbridge.com/investor. An audio replay will be available shortly thereafter at 1-888-286-8010 using the access code 32632815; in addition, the webcast replay and transcript will be available on the website, later in the day.

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 United States, the world's longest crude oil and liquids pipeline 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 4,600 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 United States under the symbol ENB. Information about Enbridge is available on the Company's website at www.enbridge.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 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, weather, economic conditions and commodity prices. You can find a discussion of those risks and uncertainties in our Canadian securities filings and American SEC filings. While Enbridge 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. Except to the extent required by applicable securities laws and regulations, Enbridge 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 INC.
HIGHLIGHTS
------------------------------------------------------------------------
(unaudited; millions of
Canadian dollars, Three months ended Six months ended
except per share amounts) June 30, June 30,
------------------------------------------------------------------------
2006 2005 2006 2005
------------------------------------------------------------------------
Earnings Applicable to Common
Shareholders
Liquids Pipelines 68.6 53.6 134.9 106.6
Gas Pipelines 15.9 18.7 31.9 37.0
Sponsored Investments 23.2 14.5 43.4 32.9
Gas Distribution and Services 34.0 2.9 120.0 130.7
International 21.3 20.4 43.1 38.6
Corporate (5.1) (16.5) (24.5) (31.6)
------------------------------------------------------------------------
157.9 93.6 348.8 314.2
------------------------------------------------------------------------
------------------------------------------------------------------------

Cash Flow Data

Cash provided by operating
activities before changes
in operating assets and
liabilities 253.9 295.9 577.5 664.8
Cash provided by operating
activities 477.2 351.6 1,191.7 1,021.2
Expenditures on property,
plant and equipment 231.9 116.4 392.6 199.5
Acquisitions and long-term
investments 0.2 16.2 156.3 119.9
Common share dividends 100.8 86.9 201.4 173.8
------------------------------------------------------------------------
Per Share Information

Earnings per Common Share 0.47 0.27 1.03 0.93
Diluted Earnings per Common
Share 0.46 0.27 1.02 0.92
Dividends per Common Share 0.2875 0.2500 0.5750 0.5000
------------------------------------------------------------------------
Shares Outstanding (millions)

Weighted Average Common
Shares Outstanding 339.3 336.9
Diluted Weighted Average
Common Shares Outstanding 342.5 340.2
------------------------------------------------------------------------
------------------------------------------------------------------------

Operating

Liquids Pipelines (1)
Deliveries (thousands of
barrels per day) 2,054 1,999 2,103 2,015
Barrel miles (billions) 186 173 384 345
Average haul (miles) 997 951 1,010 945
Gas Pipelines - Average
Daily Throughput Volume
(millions of cubic feet
per day)
Alliance Pipeline US 1,592 1,561 1,636 1,622
Vector Pipeline 1,011 979 1,082 1,036
Enbridge Offshore Pipelines 2,229 2,435 2,149 2,520
Gas Distribution and
Services (2)
Volumes (billion cubic feet) 70 75 240 264
Number of active customers
(thousands) 1,825 1,779 1,825 1,779
Degree day deficiency(3)
Actual 439 487 2,105 2,453
Forecast based on normal
weather 546 546 2,440 2,440
------------------------------------------------------------------------
------------------------------------------------------------------------

(1) Liquids Pipelines operating highlights include the statistics of the
10.9% owned Lakehead System and other wholly- owned liquid pipeline
operations, excluding Spearhead Pipeline and Olympic Pipeline.

(2) Gas Distribution and Services volumes and the number of active
customers are derived from the aggregate system supply and direct
purchase gas supply arrangements.

(3) 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) 2006 2005 2006 2005
------------------------------------------------------------------------
Revenues
Commodity sales 1,791.1 1,035.1 4,496.5 2,966.0
Transportation 478.3 463.1 1,062.2 1,008.6
Energy services 57.8 74.2 115.2 153.6
------------------------------------------------------------------------
2,327.2 1,572.4 5,673.9 4,128.2
------------------------------------------------------------------------
Expenses
Commodity costs 1,695.6 943.2 4,287.6 2,713.0
Operating and administrative 248.9 255.2 503.3 514.6
Depreciation and amortization 146.2 143.0 292.2 286.3
------------------------------------------------------------------------
2,090.7 1,341.4 5,083.1 3,513.9
------------------------------------------------------------------------
236.5 231.0 590.8 614.3
Income from Equity
Investments 43.3 23.0 98.1 68.8
Other Investment Income 2.9 17.6 17.0 54.0
Interest Expense (136.8) (134.1) (275.1) (269.4)
------------------------------------------------------------------------
145.9 137.5 430.8 467.7
Income Taxes 13.7 (42.2) (78.6) (150.1)
------------------------------------------------------------------------
Earnings 159.6 95.3 352.2 317.6
Preferred Share Dividends (1.7) (1.7) (3.4) (3.4)
------------------------------------------------------------------------
Earnings Applicable to Common
Shareholders 157.9 93.6 348.8 314.2
------------------------------------------------------------------------
------------------------------------------------------------------------
Earnings Per Common Share 0.47 0.27 1.03 0.93
------------------------------------------------------------------------
------------------------------------------------------------------------
Diluted Earnings Per Common
Share 0.46 0.27 1.02 0.92
------------------------------------------------------------------------
------------------------------------------------------------------------


ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

Six months ended
(unaudited; millions of Canadian dollars) June 30,
------------------------------------------------------------------------
2006 2005
------------------------------------------------------------------------

Retained Earnings at Beginning of Period 2,098.2 1,840.9
Earnings Applicable to Common Shareholders 348.8 314.2
Common Share Dividends (201.4) (173.8)
Dividends Paid to Reciprocal Shareholder 6.1 5.4
Dividend Reclassification Adjustment - 51.2
------------------------------------------------------------------------
Retained Earnings at End of Period 2,251.7 2,037.9
------------------------------------------------------------------------
------------------------------------------------------------------------

ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

------------------------------------------------------------------------
Three month ended Six month ended
June 30, June 30,
------------------------------------------------------------------------
(unaudited; millions of
Canadian dollars) 2006 2005 2006 2005
------------------------------------------------------------------------
Cash Provided By Operating
Activities
Earnings 159.6 95.3 352.2 317.6
Depreciation and
amortization 146.2 143.0 292.2 286.3
Equity earnings less than/
(in excess of) cash
distributions (8.2) 6.7 (42.8) (21.5)
Gain on reduction of
ownership interest - - - (15.6)
Future income taxes (49.7) 47.9 (48.1) 85.0
Other 6.0 3.0 24.0 13.0
Changes in operating assets
and liabilities 223.3 55.7 614.2 356.4
------------------------------------------------------------------------
477.2 351.6 1,191.7 1,021.2
------------------------------------------------------------------------
Investing Activities
Acquisitions - (15.4) (101.4) (58.1)
Long-term investments (0.2) (0.8) (54.9) (61.8)
Additions to property, plant
and equipment (239.1) (116.4) (392.6) (199.5)
Change in construction
payable 6.6 (14.3) (14.3) (0.3)
Change in long-term notes
receivable 28.0 (0.6) 28.0 (0.6)
------------------------------------------------------------------------
(204.7) (147.5) (535.2) (320.3)
------------------------------------------------------------------------
Financing Activities
Net change in short-term
borrowings and short-term
debt 214.4 (8.6) (553.2) (709.8)
Net change in non-recourse
short-term debt of joint
ventures 4.5 12.5 4.5 11.9
Long-term debt issues - - 500.0 620.1
Long-term debt repayments (400.0) (100.0) (400.0) (396.9)
Non-recourse long-term debt
repaid by joint ventures (27.1) (48.1) (29.7) (52.4)
Non-recourse long-term debt
issued by joint ventures 0.8 - 2.8 6.8
Changes in non-controlling
interests (13.8) (7.4) (19.9) (11.9)
Common shares issued 18.4 12.0 38.5 39.4
Preferred share dividends (1.7) (1.7) (3.4) (3.4)
Common share dividends (100.8) (86.9) (201.4) (173.8)
------------------------------------------------------------------------
(305.3) (228.2) (661.8) (670.0)
------------------------------------------------------------------------
Increase/(Decrease) in Cash
and Cash Equivalents (32.8) (24.1) (5.3) 30.9
Cash and Cash Equivalents at
Beginning of Period 181.4 160.5 153.9 105.5
------------------------------------------------------------------------
Cash and Cash Equivalents at
End of Period 148.6 136.4 148.6 136.4
------------------------------------------------------------------------
------------------------------------------------------------------------


ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
------------------------------------------------------------------------
------------------------------------------------------------------------
June 30, December 31,
(unaudited; millions of Canadian dollars) 2006 2005
------------------------------------------------------------------------
Assets
Current Assets
Cash and cash equivalents 148.6 153.9
Accounts receivable and other 1,709.9 1,900.3
Inventory 597.4 1,021.4
------------------------------------------------------------------------
2,455.9 3,075.6
Property, Plant and Equipment, net 10,590.0 10,466.6
Long-Term Investments 1,877.8 1,842.8
Receivable from Affiliate 147.0 177.0
Deferred Amounts and Other Assets 929.9 894.2
Intangible Assets 241.4 252.6
Goodwill 391.5 367.2
Future Income Taxes 160.8 134.9
------------------------------------------------------------------------
16,794.3 17,210.9
------------------------------------------------------------------------
------------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current Liabilities
Short-term borrowings 192.4 1,074.8
Accounts payable and other 1,630.6 1,624.8
Interest payable 84.3 81.7
Current maturities and short-term debt 331.2 401.2
Current portion of non-recourse long-term debt 57.7 68.2
------------------------------------------------------------------------
2,296.2 3,250.7
Long-Term Debt 6,745.2 6,279.1
Non-Recourse Long-Term Debt 1,576.4 1,619.9
Other Long-Term Liabilities 81.3 91.7
Future Income Taxes 991.0 1,009.0
Non-Controlling Interests 687.8 691.0
------------------------------------------------------------------------
12,377.9 12,941.4
------------------------------------------------------------------------
------------------------------------------------------------------------
Shareholders' Equity
Share capital
Preferred shares 125.0 125.0
Common shares 2,388.3 2,343.8
Contributed surplus 12.3 10.0
Retained earnings 2,251.7 2,098.2
Foreign currency translation adjustment (225.2) (171.8)
Reciprocal shareholding (135.7) (135.7)
------------------------------------------------------------------------
4,416.4 4,269.5
------------------------------------------------------------------------
16,794.3 17,210.9
------------------------------------------------------------------------
------------------------------------------------------------------------

SEGMENTED INFORMATION

Three months ended June 30, 2006
------------------------------------------------------------------------

Gas
(millions of Canadian Liquids Gas Sponsored Distribution
dollars) Pipelines Pipelines Investments and Services
------------------------------------------------------------------------
Revenues 246.1 86.4 63.4 1,928.5
Commodity costs - - - (1,695.6)
Operating and
administrative (85.2) (24.7) (18.0) (113.5)
Depreciation and
amortization (40.1) (20.4) (17.9) (66.4)
------------------------------------------------------------------------
120.8 41.3 27.5 53.0
Investment and other
income 0.2 3.2 5.6 11.3
Interest and preferred
share dividends (27.6) (18.5) (15.0) (46.1)
Income taxes (24.8) (10.1) 5.1 15.8
------------------------------------------------------------------------
Earnings applicable to
common shareholders 68.6 15.9 23.2 34.0
------------------------------------------------------------------------
------------------------------------------------------------------------


Three months ended June 30, 2006
------------------------------------------------------------------------

(millions of Canadian dollars) International Corporate Consolidated
------------------------------------------------------------------------
Revenues 2.8 - 2,327.2
Commodity costs - - (1,695.6)
Operating and administrative (4.6) (2.9) (248.9)
Depreciation and amortization (0.1) (1.3) (146.2)
------------------------------------------------------------------------
(1.9) (4.2) 236.5
Investment and other income 27.7 (1.8) 46.2
Interest and preferred share
dividends - (31.3) (138.5)
Income taxes (4.5) 32.2 13.7
------------------------------------------------------------------------
Earnings applicable to common
shareholders 21.3 (5.1) 157.9
------------------------------------------------------------------------
------------------------------------------------------------------------


Three months ended June 30, 2005
------------------------------------------------------------------------

Gas
(millions of Canadian Liquids Gas Sponsored Distribution
dollars) Pipelines Pipelines Investments and Services
------------------------------------------------------------------------
Revenues 214.1 98.3 61.7 1,196.3
Commodity costs - - - (943.2)
Operating and
administrative (77.0) (23.1) (14.9) (133.8)
Depreciation and
amortization (36.5) (23.9) (17.9) (62.5)
------------------------------------------------------------------------
100.6 51.3 28.9 56.8
Investment and other
income (0.4) 1.3 10.1 (1.4)
Interest and preferred
share dividends (24.2) (21.6) (15.8) (42.6)
Income taxes (22.4) (12.3) (8.7) (9.9)
------------------------------------------------------------------------
Earnings applicable to
common shareholders 53.6 18.7 14.5 2.9
------------------------------------------------------------------------
------------------------------------------------------------------------


Three months ended June 30, 2005
------------------------------------------------------------------------

(millions of Canadian dollars) International Corporate Consolidated
------------------------------------------------------------------------
Revenues 2.0 - 1,572.4
Commodity costs - - (943.2)
Operating and administrative (3.5) (2.9) (255.2)
Depreciation and amortization (0.3) (1.9) (143.0)
------------------------------------------------------------------------
(1.8) (4.8) 231.0
Investment and other income 22.8 8.2 40.6
Interest and preferred share
dividends - (31.6) (135.8)
Income taxes (0.6) 11.7 (42.2)
------------------------------------------------------------------------
Earnings applicable to common
shareholders 20.4 (16.5) 93.6
------------------------------------------------------------------------
------------------------------------------------------------------------


Six months ended June 30, 2006
------------------------------------------------------------------------

Gas
(millions of Canadian Liquids Gas Sponsored Distribution
dollars) Pipelines Pipelines Investments and Services
------------------------------------------------------------------------
Revenues 493.9 173.1 125.4 4,876.2
Commodity costs - - - (4,287.6)
Operating and
administrative (170.0) (47.1) (32.9) (238.9)
Depreciation and
amortization (78.7) (42.4) (36.0) (132.1)
------------------------------------------------------------------------
245.2 83.6 56.5 217.6
Investment and other
income - 6.0 25.9 25.7
Interest and preferred
share dividends (50.8) (37.3) (30.0) (94.8)
Income taxes (59.5) (20.4) (9.0) (28.5)
------------------------------------------------------------------------
Earnings applicable to
common shareholders 134.9 31.9 43.4 120.0
------------------------------------------------------------------------
------------------------------------------------------------------------


Six months ended June 30, 2006
------------------------------------------------------------------------

(millions of Canadian dollars) International Corporate Consolidated
------------------------------------------------------------------------
Revenues 5.3 - 5,673.9
Commodity costs - - (4,287.6)
Operating and administrative (7.8) (6.6) (503.3)
Depreciation and amortization (0.4) (2.6) (292.2)
------------------------------------------------------------------------
(2.9) (9.2) 590.8
Investment and other income 52.1 5.4 115.1
Interest and preferred share
dividends - (65.6) (278.5)
Income taxes (6.1) 44.9 (78.6)
------------------------------------------------------------------------
Earnings applicable to common
shareholders 43.1 (24.5) 348.8
------------------------------------------------------------------------
------------------------------------------------------------------------


Six months ended June 30, 2005
------------------------------------------------------------------------

Gas
(millions of Canadian Liquids Gas Sponsored Distribution
dollars) Pipelines Pipelines Investments and Services
------------------------------------------------------------------------
Revenues 425.9 194.8 122.0 3,380.0
Commodity costs - - - (2,713.0)
Operating and
administrative (151.2) (44.3) (28.1) (274.0)
Depreciation and
amortization (73.7) (48.1) (35.4) (125.6)
------------------------------------------------------------------------
201.0 102.4 58.5 267.4
Investment and other
income (1.2) 1.3 30.8 25.2
Interest and preferred
share dividends (48.5) (42.7) (31.3) (87.3)
Income taxes (44.7) (24.0) (25.1) (74.6)
------------------------------------------------------------------------
Earnings applicable to
common shareholders 106.6 37.0 32.9 130.7
------------------------------------------------------------------------
------------------------------------------------------------------------


Six months ended June 30, 2005
------------------------------------------------------------------------

(millions of Canadian dollars) International Corporate Consolidated
------------------------------------------------------------------------
Revenues 5.5 - 4,128.2
Commodity costs - - (2,713.0)
Operating and administrative (8.1) (8.9) (514.6)
Depreciation and amortization (0.6) (2.9) (286.3)
------------------------------------------------------------------------
(3.2) (11.8) 614.3
Investment and other income 42.9 23.8 122.8
Interest and preferred share
dividends - (63.0) (272.8)
Income taxes (1.1) 19.4 (150.1)
------------------------------------------------------------------------
Earnings applicable to common
shareholders 38.6 (31.6) 314.2
------------------------------------------------------------------------
------------------------------------------------------------------------


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