Enbridge Inc.
TSX : ENB
NYSE : ENB

Enbridge Inc.

November 03, 2005 07:30 ET

Enbridge Reports Strong Nine-Month Earnings and Increases Dividend by 15%

CALGARY, ALBERTA--(CCNMatthews - Nov. 3, 2005) - Enbridge Inc. (TSX:ENB) (NYSE:ENB)

Highlights

- Adjusted operating earnings increase 11% for the nine months ended September 30, 2005

- Adjusted operating earnings for the third quarter increase 17% to $73.9 million

- Continued progress on multiple liquids pipeline development projects

- Recent hurricanes cause temporary volume declines for offshore gas transmission assets

- Board of Directors approves an increase in common share dividends of 15%

"This has been another strong quarter for Enbridge, notwithstanding the effects of two severe hurricanes and the resulting stress on our employees," said Patrick D. Daniel, President & Chief Executive Officer of Enbridge Inc. "While our offshore assets will continue to be negatively affected in the fourth quarter, Enbridge's full year performance and longer term outlook remain very bright, due to the diversity and quality of our asset base. Enbridge continues to anticipate full year 2005 adjusted operating earnings will be within the previously noted $1.60 to $1.65 per share range."

"Enbridge continues to actively develop and advance an unprecedented number of organic growth projects totaling more than $8 billion. During a busy quarter, we achieved some key milestones, evidencing our progress. We announced founding shipper agreements underpinning our $400 million Waupisoo oil sands feeder pipeline to Edmonton and successfully completed our shipper open season processes for the $1.3 billion Southern Access pipeline expansion to the U.S. Midwest and the $1.7 billion Gateway import condensate pipeline from Kitimat, B.C. to Edmonton, Alberta".

Mr. Daniel concluded, "As a result of this tremendous portfolio of opportunities, we are very confident that we will achieve organic growth rates on average over the next five years of 6% or more. We will continue to pursue accretive acquisitions on an opportunistic basis, as a supplementary source of growth, acknowledging that the current M&A price environment is challenging."

Based on this positive outlook, and taking into consideration the increased attractiveness that many investors are assigning to dividend income, the Board of Directors has approved a revised dividend policy for Enbridge. Going forward, Enbridge will target to pay out approximately 60%-70% of earnings, an increase from the recent 50% to 60% target range. The Board also determined that it would be appropriate to adjust the quarterly dividend immediately to bring it into alignment with the new target range. Enbridge retains ample balance sheet capacity, together with internally generated funds and access to capital markets, to maintain our strong credit rating and fund our large portfolio of organic growth projects as they are put in place, plus opportunistic acquisitions. The resulting combination of strong long term growth and favourable near term cash payout will provide our investors with an attractive value proposition and one that is unparalleled in our industry."

On November 2, 2005, the Enbridge Board of Directors declared quarterly dividends of $0.2875 per common share reflecting a 15% increase and $0.34375 per Series A Preferred Share. Both dividends are payable on December 1, 2005 to shareholders of record on November 15, 2005.

Earnings applicable to common shareholders are $382.0 million for the nine months ended September 30, 2005, or $1.13 per share, compared with $540.5 million, or $1.62 per share, in 2004. The $158.5 million decrease in earnings is primarily the result of the prior year including an after tax $97.8 million gain on the sale of Altagas Trust Units as well as the resulting absence of earnings from this investment in 2005. In addition, the 2004 earnings were higher as a result of the previously announced change in the year-end of the gas distribution operations that creates a lack of comparability between periods. Positive factors in 2005 include the earnings contribution from the recently acquired Enbridge Offshore Pipelines and lower interest expense.

Earnings applicable to common shareholders are $67.8 million for the three months ended September 30, 2005, or $0.20 per share, compared with $179.7 million, or $0.54 per share, in 2004. The third quarter results reflect similar factors as the nine month results with the largest item being the $97.8 million gain on the sale of AltaGas in the prior year.



Consolidated Earnings

Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
Liquids Pipelines 61.6 61.6 168.2 167.9
Gas Pipelines 9.9 12.3 46.9 39.2
Sponsored Investments 11.4 19.5 44.3 49.5
Gas Distribution and Services(1) (20.8) 86.1 109.9 296.5
International 21.0 16.1 59.6 53.6
Corporate (15.3) (15.9) (46.9) (66.2)
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67.8 179.7 382.0 540.5
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(1) Consolidated earnings for 2005 reflect earnings from Enbridge
Gas Distribution (EGD), Noverco and Other Gas Distribution
Operations on a calendar year basis for the three and nine months
ended September 30, 2005; whereas, earnings for 2004 reflect
earnings from EGD, Noverco and Other Gas Distribution Operations
on a quarter-lag basis for the three and nine months ended
June 30, 2004. Effective December 31, 2004, EGD changed its
fiscal year-end for financial reporting purposes from September
30 to December 31. Accordingly, the 2004 earnings from EGD,
Noverco and Other Gas Distribution Operations are not comparable
to earnings for 2005. Reconciliations are provided below.


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 to 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 clear earnings trends and increased predictive value.




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Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
Consolidated GAAP earnings 67.8 179.7 382.0 540.5
Non-operating factors and
variances as per table below 6.1 (116.7) (7.5) (203.4)
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Adjusted Operating Earnings 73.9 63.0 374.5 337.1
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Significant non-operating factors and variances (after tax) affecting
consolidated earnings are as follows:

---------------------------------------------------------------------
Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
Sponsored Investments
Dilution gains on EEP
unit issuance - 6.7 4.6 7.6
EEP non-cash derivative
fair value losses (5.9) - (5.9) -

Gas Distribution and Services
Quarter lag earnings of EGD,
Noverco and other(1) - (21.7) - 157.7
Calendar basis earnings
of EGD, Noverco and other(1) - 41.1 - (89.6)
Colder/(warmer) than normal
weather at EGD (0.2) 1.1 1.5 21.3
Elimination of seasonal
distribution rates at EGD - (8.3) - -
Dilution gain in Noverco
(Gaz Metro unit issuance) - - 7.3 -
Gain on sale of investment
in AltaGas Income Trust - 97.8 - 97.8
Dilution gain
(AltaGas Income Trust) - - - 8.0
Revalue future income taxes
due to tax rate changes - - - 0.6
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Total significant
non-operating factors
and variances increasing/
(decreasing) earnings (6.1) 116.7 7.5 203.4
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(1) Effective December 31, 2004, EGD's fiscal year-end changed from
September 30 to December 31 and EGD is no longer consolidated on
a quarter-lag basis. In order to compare 2004 earnings to 2005,
the 2004 earnings for EGD, Noverco and Other Gas Distribution
Operations for the three and nine months ended June 30, 2004,
have been eliminated and earnings, for the three and nine months
ended September 30, 2004, have been added. Other non-operating
factors and variances that affected these businesses in 2004 are
for the three and nine months ended September 30, 2004, as was
reported in the Company's fourth quarter results for 2004.


Significant operating factors affecting consolidated earnings in 2005 include the following:

- Enbridge Offshore Pipelines, acquired December 31, 2004, contributes positive earnings.

- There are no earnings from AltaGas in 2005 as the investment was sold in 2004.

- Corporate costs are lower primarily as a result of lower interest expense.

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 related to these long-term investments. However, this does not eliminate the earnings volatility caused by exchange rate differences. During the nine months ended September 30, 2005, the Company received foreign currency denominated cash distributions and settled associated hedge transactions resulting in $9.9 million (2004 - $5.1 million) of incremental cash flows, which is not included in reported earnings.



Liquids Pipelines

Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
Enbridge System 45.4 47.9 123.8 130.6
Athabasca System 13.1 11.6 36.8 32.6
NW System 2.0 1.8 5.7 5.7
Feeder Pipelines and Other 1.1 0.3 1.9 (1.0)
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61.6 61.6 168.2 167.9
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- Enbridge System earnings include a lower earnings base from the Incentive Tolling Settlement (ITS) component of the Enbridge System reflecting the terms of the ITS memorandum of understanding, recently negotiated with the Canadian Association of Petroleum Producers and filed with the National Energy Board. Also contributing to the earnings variance in the Enbridge System are increased oil losses, predominantly in the first quarter, and higher taxes relating to Terrace.

- Increased earnings from the Athabasca System are consistent with the overall return underpinning the long-term take or pay contract with its major shipper as well as lower operating costs due to leak remediation in the prior year.

- The year to date earnings variance in Feeder Pipelines and Other is the result of Federal Energy Regulatory Commission ordered reparations on the Frontier Pipeline recorded in the first quarter of 2004.



Gas Pipelines

Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
Alliance Pipeline (US) 8.0 8.8 24.4 27.5
Enbridge Offshore Pipelines (1.7) - 10.9 -
Vector Pipeline 3.6 3.5 11.6 11.7
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9.9 12.3 46.9 39.2
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- Alliance Pipeline (US) earnings variance primarily reflects the impact of the stronger Canadian dollar in 2005.

- Enbridge Offshore Pipelines was acquired on December 31, 2004. Hurricanes Katrina and Rita have negatively affected transmission volumes and the results of this business. The quarterly result includes property insurance deductibles as well as lost revenue on various systems prior to the commencement of contingent business interruption insurance coverage. The combined effect of the property damage deductibles and the estimated lost revenue reduced expected third quarter earnings by approximately $10 million.

- Vector Pipeline earnings reflect the positive effect of continued growth in short haul firm transportation volumes offset by the negative impact of the stronger Canadian dollar in 2005.



Sponsored Investments

Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
Enbridge Income Fund (EIF) 9.1 6.9 25.8 21.9
Enbridge Energy Partners (EEP) 2.3 5.9 13.9 20.0
Dilution Gains (EEP) - 6.7 4.6 7.6
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11.4 19.5 44.3 49.5
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- The 2005 results from EIF include higher preferred unit distributions as well as higher incentive income consistent with EIF's cash distribution increases in 2004. EIF's operating results benefited from enhanced performance at both Alliance Canada and the Saskatchewan System.

- EEP's 2005 results reflect a number of factors including positive contributions from natural gas systems offset by lower Lakehead System volumes, a stronger Canadian dollar, a lower ownership interest and $5.9 million (net to Enbridge) of unrealized mark-to-market losses on derivative financial instruments which do not qualify for hedge accounting treatment. While Enbridge believes the hedging strategies are sound economic hedging techniques, they do not qualify for hedge accounting and must be accounted for on a mark-to-market basis through earnings.

- EEP issued partnership units in 2005 and 2004 and because Enbridge did not fully participate in these offerings, dilution gains resulted.



Gas Distribution and Services

Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------

Enbridge Gas Distribution(1) (32.9) (22.7) 55.4 121.2
Noverco(1) 1.9 (0.1) 21.7 28.5
CustomerWorks/ECS 6.6 3.4 18.9 12.6
Other Gas Distribution
Operations(1) (1.0) 1.1 4.9 8.0
Enbridge Gas New Brunswick 1.8 1.1 3.8 2.8
Gas Services (0.8) 0.8 (0.9) (0.2)
Aux Sable 2.4 3.9 6.2 3.4
AltaGas Income Trust
(investment sold in 2004) - 0.8 - 21.1
Gain on sale of AltaGas
Income Trust Units - 97.8 - 97.8
Other 1.2 - (0.1) 1.3
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(20.8) 86.1 109.9 296.5
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(1) Earnings for 2005 are on a calendar year basis for the three and
nine months ended September 30, 2005; whereas earnings for 2004
reflect earnings on a quarter-lag basis for the three and nine
months ended June 30, 2004. Effective December 31, 2004, EGD
changed its fiscal year-end for financial reporting purposes from
September 30 to December 31. Accordingly, the 2004 earnings from
EGD, Noverco and Other Gas Distribution Operations are not
comparable to earnings for 2005. Reconciliations are
provided below.


Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------

Enbridge Gas Distribution
- as reported (32.9) (22.7) 55.4 121.2
Significant non-operating
factors and variances:
quarter lag earnings(1) - 22.7 - (121.2)
calendar basis earnings(2) - (36.1) - 73.6
warmer/(colder) than
normal weather 0.2 (1.1) (1.5) (21.3)
elimination of seasonal
distribution rates - 8.3 - -
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(32.7) (28.9) 53.9 52.3
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(1) These earnings are for the three and nine months ended June 30,
2004 and were included in Enbridge's consolidated earnings for
the period ended September 30, 2004.
(2) These earnings are for the three and nine months ended September
30, 2004 and were included in Enbridge's consolidated earnings
for the year ended December 31, 2004.


- EGD's 2005 regulatory decision eliminated seasonal distribution rates, which were higher in the winter months and lower in the summer months, and replaced them with a uniform annual rate. Commencing in 2005, this shifts a portion of earnings from the winter months to the summer months. The seasonal distribution rate variance, noted in the above table, is the effect of applying the uniform rate to 2004 results and volumes.

- EGD earnings are consistent with the prior year. The third quarter variance at EGD reflects the timing of various expenses as compared to the forecast cost of service that is included in revenues, and is a reversal of the trend identified in the prior quarter.



Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------

Noverco - as reported 1.9 (0.1) 21.7 28.5
Significant non-operating
factors and variances:
quarter lag earnings(1) - 0.1 - (28.5)
calendar basis earnings(2) - (3.7) - 11.2
dilution gain in Noverco
(Gaz Metro unit issuance) - - (7.3) -
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1.9 (3.7) 14.4 11.2
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(1) These earnings are for the three and nine months ended June 30,
2004 and were included in Enbridge's consolidated earnings for
the period ended September 30, 2004.
(2) These earnings are for the three and nine months ended September
30, 2004 and were included in Enbridge's consolidated earnings
for the year ended December 31, 2004.


- During the year, the Company received a $70 million cash dividend from Noverco and recorded a $50 million adjustment for reciprocal dividends, both of which affect the accounting base of the investment and create a net future income tax recovery. Half of the dividend, and the related future income tax recovery, was recorded in the third quarter, resulting in increased earnings compared to the prior year. The net income tax recovery in the nine month period includes the future income tax expense recorded in respect of these items in the second quarter.



Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------

Other Gas Distribution
Operations - as reported (1.0) 1.1 4.9 8.0
Significant non-operating
factors and variances:
quarter lag earnings (1) - (1.1) - (8.0)
calendar basis earnings (2) - (1.3) - 4.8
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(1.0) (1.3) 4.9 4.8
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(1) These earnings are for the three and nine months ended June 30,
2004 and were included in Enbridge's consolidated earnings for
the period ended September 30, 2004.
(2) These earnings are for the three and nine months ended
September 30, 2004 and were included in Enbridge's consolidated
earnings for the year ended December 31, 2004.


International
Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------

CLH 14.2 10.9 39.8 35.4
OCENSA/CITCol 8.2 7.9 24.4 23.8
Other (1.4) (2.7) (4.6) (5.6)
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21.0 16.1 59.6 53.6
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---------------------------------------------------------------------


- The Company's international investments continue to show strong performance. Earnings from CLH during the third quarter are higher due to an increase in average tariffs and lower operating costs.



Corporate

Three months ended Nine months ended
(millions of Canadian dollars) September 30, September 30,
---------------------------------------------------------------------
2005 2004 2005 2004
---------------------------------------------------------------------
Corporate (15.3) (15.9) (46.9) (66.2)
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---------------------------------------------------------------------


- The decrease in corporate costs is primarily the result of lower interest expense in 2005 and higher business development activity in 2004. The lower interest expense is a function of lower interest rates and lower average debt balances, including the December 2004 redemption of preferred securities with the proceeds from the AltaGas disposition.

Conference Call

Enbridge will hold a conference call on November 3, 2005 at 9:30 a.m. Eastern time (7:30 a.m. Mountain time) to discuss the third quarter 2005 results. The call can be accessed at 1-800-299-7635, pass code of 11068310, 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 18670455; in addition, the webcast replay and transcript will be available on the website, later in the day.

The unaudited interim consolidated financial statements and MD&A, 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; and is developing a gas distribution system for the Province of New Brunswick. Enbridge employs approximately 4,400 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. 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(1)

(unaudited; millions of
Canadian dollars Three months ended Nine months ended
except per share amounts) September 30, September 30,
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2005 2004 2005 2004
---------------------------------------------------------------------

FINANCIAL
Earnings Applicable to
Common Shareholders
Liquids Pipelines 61.6 61.6 168.2 167.9
Gas Pipelines 9.9 12.3 46.9 39.2
Sponsored Investments 11.4 19.5 44.3 49.5
Gas Distribution and
Services (20.8) 86.1 109.9 296.5
International 21.0 16.1 59.6 53.6
Corporate (15.3) (15.9) (46.9) (66.2)
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67.8 179.7 382.0 540.5
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---------------------------------------------------------------------
Cash Provided By Operating
Activities
Earnings plus charges/
(credits) not affecting
cash 251.3 188.4 916.1 796.3
Changes in operating assets
and liabilities (350.2) 229.8 6.2 513.9
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(98.9) 418.2 922.3 1,310.2
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---------------------------------------------------------------------
Common Share Dividends 86.9 79.0 260.7 236.6
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Earnings per Common Share 0.20 0.54 1.13 1.62
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Diluted Earnings per Common
Share 0.20 0.54 1.12 1.61
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Dividends per Common Share 0.2500 0.2288 0.7500 0.6863
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Weighted Average Common
Shares Outstanding (millions) 337.2 334.2
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Diluted Weighted Average
Common Shares Outstanding
(millions) 340.7 337.1
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OPERATING
Liquids Pipelines(2)
Deliveries (thousands
of barrels per day) 1,908 2,110 1,979 2,125
Barrel miles (billions) 168 189 513 565
Average haul (miles) 959 975 949 971
Gas Distribution and Services(3)
Volumes (billion cubic feet) 45 76 309 398
Number of active customers
(thousands) 1,782 1,737 1,782 1,737
Degree day deficiency(4)
Actual 23 723 2,476 3,733
Forecast based on normal
weather 60 714 2,500 3,521
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(1) Financial and operating highlights of Gas Distribution and
Services for 2004 reflect the results of Enbridge Gas
Distribution (EGD) and other gas distribution operations on a
one-quarter lag basis for the three and nine months ended June
30, 2004. For 2005, as a result of EGD's change in fiscal year
end from September 30 to December 31, financial and operating
highlights reflect the results of EGD and other gas distribution
operations for the three and nine months ended September 30,
2005.
(2) Liquids Pipelines operating highlights include the statistics of
the 11.2% owned Lakehead System and other wholly-owned liquid
pipeline operations.
(3) Gas Distribution and Services volumes and the number of active
customers are derived from the aggregate system supply and direct
purchase gas supply arrangements.
(4) Degree-day deficiency is a measure of coldness. 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 Toronto area.


ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF EARNINGS

Three months ended Nine months ended
September 30, September 30,
---------------------------------------------------------------------
(unaudited; millions of Canadian
dollars, except per share
amounts) 2005 2004 2005 2004
---------------------------------------------------------------------
Revenues
Commodity sales 1,142.1 1,202.1 4,108.0 4,070.7
Transportation 430.7 396.6 1,439.3 1,258.0
Energy services 84.3 16.8 238.0 155.5
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1,657.1 1,615.5 5,785.3 5,484.2
---------------------------------------------------------------------
Expenses
Commodity costs 1,076.9 1,114.0 3,789.9 3,634.2
Operating and administrative 267.4 217.6 782.0 657.4
Depreciation 141.2 115.1 427.5 340.6
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1,485.5 1,446.7 4,999.4 4,632.2
---------------------------------------------------------------------
Operating Income 171.6 168.8 785.9 852.0
Investment and Other Income 21.1 51.7 143.9 223.1
Gain on Sale of Investment in
AltaGas Income Trust Units - 121.5 - 121.5
Interest Expense (133.0) (119.7) (402.4) (366.9)
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59.7 222.3 527.4 829.7
Income Taxes 9.8 (40.8) (140.3) (284.0)
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Earnings 69.5 181.5 387.1 545.7
Preferred Share Dividends (1.7) (1.8) (5.1) (5.2)
---------------------------------------------------------------------
Earnings Applicable to Common
Shareholders 67.8 179.7 382.0 540.5
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---------------------------------------------------------------------

Earnings Per Common Share 0.20 0.54 1.13 1.62
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Diluted Earnings Per Common Share 0.20 0.54 1.12 1.61
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ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS

---------------------------------------------------------------------
Nine months ended
September 30,
---------------------------------------------------------------------
(unaudited; millions of Canadian dollars) 2005 2004
---------------------------------------------------------------------
Retained Earnings at Beginning of Period 1,840.9 1,511.4
Earnings Applicable to Common Shareholders 382.0 540.5
Common Share Dividends (260.7) (236.6)
Dividends Paid to Reciprocal Shareholder 8.1 -
Dividend Reclassification Adjustment (Note 3) 51.2 -
---------------------------------------------------------------------
Retained Earnings at End of Period 2,021.5 1,815.3
---------------------------------------------------------------------
---------------------------------------------------------------------


ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended Nine months ended
September 30, September 30,
---------------------------------------------------------------------
(unaudited; millions of Canadian
dollars, amounts) 2005 2004 2005 2004
---------------------------------------------------------------------

Cash Provided By Operating
Activities
Earnings 69.5 181.5 387.1 545.7
Charges/(credits)
not affecting cash
Depreciation 141.2 115.1 427.5 340.6
Equity earnings less
than/(in excess of)
cash distributions 82.8 1.5 61.3 (53.6)
Gain on reduction of
ownership interest - (17.3) (15.6) (29.6)
Gain on sale of investment
in AltaGas Income Trust Units - (121.5) - (121.5)
Future income taxes (44.5) (7.3) 40.5 74.7
Other 2.3 36.4 15.3 40.0
Changes in operating
assets and liabilities (350.2) 229.8 6.2 513.9
---------------------------------------------------------------------
(98.9) 418.2 922.3 1,310.2
---------------------------------------------------------------------
Investing Activities
Acquisitions (28.3) - (86.4) (17.4)
Changes in long-term investments (0.3) (0.7) (62.1) (16.9)
Additions to property, plant
and equipment (141.5) (97.4) (341.0) (251.6)
Sale of investment in
AltaGas Income Trust Units - 251.4 - 251.4
Changes in construction payable (2.1) 0.9 (2.4) (2.2)
Changes in long-term notes
receivable 0.5 - (0.1) -
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(171.7) 154.2 (492.0) (36.7)
---------------------------------------------------------------------
Financing Activities
Net change in short-term
borrowings and short-term debt 377.2 (434.4) (332.6)(1,017.1)
Non-recourse short-term
debt of joint ventures (6.5) - 5.4 (5.0)
Long-term debt issues - - 620.1 300.0
Long-term debt repayments - - (396.9) (250.0)
Non-recourse long-term debt
repaid by joint ventures (2.4) - (54.8) (24.5)
Non-recourse long-term debt
issued by joint ventures - - 6.8 -
Non-controlling interests 7.4 1.6 (4.5) (0.3)
Common shares issued 7.5 7.4 46.9 31.7
Preferred share dividends (1.7) (1.8) (5.1) (5.2)
Common share dividends (86.9) (79.0) (260.7) (236.6)
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294.6 (506.2) (375.4)(1,207.0)
---------------------------------------------------------------------
Increase in Cash 24.0 66.2 54.9 66.5
Cash at Beginning of Period 136.4 104.4 105.5 104.1
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Cash at End of Period 160.4 170.6 160.4 170.6
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ENBRIDGE INC.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

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

Assets
Current Assets
Cash 160.4 105.5
Accounts receivable and other 1,295.4 1,451.9
Inventory 1,042.5 791.6
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2,498.3 2,349.0
Property, Plant and Equipment, net 10,265.2 9,066.5
Long-Term Investments 1,809.0 2,278.3
Receivable from Affiliate 174.0 171.7
Deferred Amounts and Other Assets 856.7 729.2
Goodwill 357.7 31.5
Intangible Assets 238.9 133.9
Future Income Taxes 147.0 145.0
---------------------------------------------------------------------
16,346.8 14,905.1
---------------------------------------------------------------------
---------------------------------------------------------------------

Liabilities and Shareholders' Equity
Current Liabilities
Short-term borrowings 742.8 650.6
Accounts payable and other 1,408.7 1,275.9
Interest payable 71.7 83.8
Current maturities and short-term debt 541.2 703.9
Current portion of non-recourse
long-term debt 76.1 30.2
---------------------------------------------------------------------
2,840.5 2,744.4
Long-Term Debt 5,998.1 6,053.3
Non-Recourse Long-Term Debt 1,634.9 665.2
Other Long-Term Liabilities 93.6 151.8
Future Income Taxes 944.8 797.3
Non-Controlling Interests 672.3 514.9
---------------------------------------------------------------------
12,184.2 10,926.9
Shareholders' Equity
Share capital
Preferred shares 125.0 125.0
Common shares 2,329.3 2,282.4
Contributed surplus 8.4 5.4
Retained earnings 2,021.5 1,840.9
Foreign currency translation adjustment (185.9) (139.8)
Reciprocal shareholding (135.7) (135.7)
---------------------------------------------------------------------
4,162.6 3,978.2
---------------------------------------------------------------------
16,346.8 14,905.1
---------------------------------------------------------------------
---------------------------------------------------------------------


SEGMENTED INFORMATION

Three months ended September 30, 2005
---------------------------------------------------------------------
Gas
(millions of Liquids Gas Sponsored Distribution
Canadian dollars) Pipelines Pipelines Investments and Services(1)
---------------------------------------------------------------------

Revenues 222.8 83.9 63.3 1,284.3
Commodity costs - - - (1,076.9)
Operating and
administrative (76.8) (25.7) (15.4) (139.5)
Depreciation (37.0) (21.9) (17.8) (62.7)
---------------------------------------------------------------------
Operating income 109.0 36.3 30.1 5.2
Investment and
other income 0.8 0.3 0.4 (4.4)
Interest and preferred
equity charges (24.5) (19.9) (15.2) (44.6)
Income taxes (23.7) (6.8) (3.9) 23.0
---------------------------------------------------------------------
Earnings applicable
to common shareholders 61.6 9.9 11.4 (20.8)
---------------------------------------------------------------------
---------------------------------------------------------------------

---------------------------------------------------------------------
(millions of
Canadian dollars) International Corporate Consolidated
---------------------------------------------------------------------

Revenues 2.8 - 1,657.1
Commodity costs - - (1,076.9)
Operating and administrative (3.6) (6.4) (267.4)
Depreciation (0.2) (1.6) (141.2)
---------------------------------------------------------------------
Operating income (1.0) (8.0) 171.6
Investment and other income 23.3 0.7 21.1
Interest and preferred
equity charges - (30.5) (134.7)
Income taxes (1.3) 22.5 9.8
---------------------------------------------------------------------
Earnings applicable
to common shareholders 21.0 (15.3) 67.8
---------------------------------------------------------------------
---------------------------------------------------------------------


Three months ended September 30, 2004
---------------------------------------------------------------------
Gas
(millions of Liquids Gas Sponsored Distribution
Canadian dollars) Pipelines Pipelines Investments and Services(1)
---------------------------------------------------------------------

Revenues 221.6 66.7 - 1,320.1
Commodity costs - - - (1,114.0)
Operating and
administrative (70.7) (13.5) - (114.6)
Depreciation (36.0) (16.5) - (61.3)
---------------------------------------------------------------------
Operating income 114.9 36.7 - 30.2
Investment and
other income 0.7 0.1 36.0 (1.9)
Gain on sale of
investment - - - 121.5
Interest and preferred
equity charges (25.9) (16.4) - (40.6)
Income taxes (28.1) (8.1) (16.5) (23.1)
---------------------------------------------------------------------
Earnings applicable
to common shareholders 61.6 12.3 19.5 86.1
---------------------------------------------------------------------
---------------------------------------------------------------------

---------------------------------------------------------------------
(millions of
Canadian dollars) International Corporate Consolidated
---------------------------------------------------------------------

Revenues 7.1 - 1,615.5
Commodity costs - - (1,114.0)
Operating and administrative (9.8) (9.0) (217.6)
Depreciation (0.4) (0.9) (115.1)
---------------------------------------------------------------------
Operating income (3.1) (9.9) 168.8
Investment and other income 19.6 (2.8) 51.7
Gain on sale of investment - - 121.5
Interest and preferred
equity charges - (38.6) (121.5)
Income taxes (0.4) 35.4 (40.8)
---------------------------------------------------------------------
Earnings applicable
to common shareholders 16.1 (15.9) 179.7
---------------------------------------------------------------------
---------------------------------------------------------------------


Nine months ended September 30, 2005
---------------------------------------------------------------------
Gas
(millions of Liquids Gas Sponsored Distribution
Canadian dollars) Pipelines Pipelines Investments and Services(1)
---------------------------------------------------------------------

Revenues 648.7 278.7 185.3 4,664.3
Commodity costs - - - (3,789.9)
Operating and
administrative (228.0) (70.0) (43.5) (413.5)
Depreciation (110.7) (70.0) (53.2) (188.3)
---------------------------------------------------------------------
Operating income 310.0 138.7 88.6 272.6
Investment and
other income (0.4) 1.6 31.2 20.8
Interest and preferred
equity charges (73.0) (62.6) (46.5) (131.9)
Income taxes (68.4) (30.8) (29.0) (51.6)
---------------------------------------------------------------------
Earnings applicable
to common shareholders 168.2 46.9 44.3 109.9
---------------------------------------------------------------------
---------------------------------------------------------------------

---------------------------------------------------------------------
(millions of
Canadian dollars) International Corporate Consolidated
---------------------------------------------------------------------

Revenues 8.3 - 5,785.3
Commodity costs - - (3,789.9)
Operating and
administrative (11.7) (15.3) (782.0)
Depreciation (0.8) (4.5) (427.5)
---------------------------------------------------------------------
Operating income (4.2) (19.8) 785.9
Investment and other income 66.2 24.5 143.9
Interest and preferred
equity charges - (93.5) (407.5)
Income taxes (2.4) 41.9 (140.3)
---------------------------------------------------------------------
Earnings applicable
to common shareholders 59.6 (46.9) 382.0
---------------------------------------------------------------------
---------------------------------------------------------------------


Nine months ended September 30, 2004
---------------------------------------------------------------------
Gas
(millions of Liquids Gas Sponsored Distribution
Canadian dollars) Pipelines Pipelines Investments and Services(1)
---------------------------------------------------------------------

Revenues 646.5 206.4 - 4,608.1
Commodity costs - - - (3,634.2)
Operating and
administrative (219.9) (41.9) - (347.4)
Depreciation (107.7) (50.4) - (178.8)
---------------------------------------------------------------------
Operating income 318.9 114.1 - 447.7
Investment and
other income 1.7 0.5 86.8 57.4
Gain on sale of
investment - - - 121.5
Interest and preferred
equity charges (76.3) (50.4) - (127.3)
Income taxes (76.4) (25.0) (37.3) (202.8)
---------------------------------------------------------------------
Earnings applicable
to common shareholders 167.9 39.2 49.5 296.5
---------------------------------------------------------------------
---------------------------------------------------------------------

---------------------------------------------------------------------
(millions of
Canadian dollars) International Corporate Consolidated
---------------------------------------------------------------------

Revenues 23.2 - 5,484.2
Commodity costs - - (3,634.2)
Operating and administrative (28.5) (19.7) (657.4)
Depreciation (1.3) (2.4) (340.6)
---------------------------------------------------------------------
Operating income (6.6) (22.1) 852.0
Investment and other income 61.9 14.8 223.1
Gain on sale of investment - - 121.5
Interest and preferred
equity charges (0.1) (118.0) (372.1)
Income taxes (1.6) 59.1 (284.0)
---------------------------------------------------------------------
Earnings applicable -
to common shareholders 53.6 (66.2) 540.5
---------------------------------------------------------------------
---------------------------------------------------------------------

(1) Gas Distribution and Services results for 2004 were consolidated
on a one-quarter-lag basis and therefore reflect the three and
nine month periods ended June 30, 2004. Starting at the end of
2004, EGD changed its fiscal year end from September 30 to
December 31. Therefore, the quarter lag basis of consolidation
was eliminated. Gas Distribution and Services results for 2005
reflect the three and nine month periods ended September 30,
2005.


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