Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - ENBRIDGE INC | a18-18042_1ex99d1.htm |
| 8-K - 8-K - ENBRIDGE INC | a18-18042_18k.htm |
ENBRIDGE INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On August 1, 2018, Enbridge Inc (“we,” “our,” “us,” or Enbridge”), announced that our indirect subsidiary Enbridge (U.S.) Inc. (the “Selling Subsidiary”), completed the sale of its indirect subsidiary Midcoast Operating, L.P. and its subsidiaries (collectively, “Midcoast”) (“the Transaction”), which conduct our natural gas and natural gas liquids gathering, processing, transportation and marketing businesses, to AL Midcoast Holdings, LLC, an affiliate of ArcLight Capital Partners, LLC. Pursuant to the terms of that certain Securities Purchase Agreement, dated as of May 9, 2018, by and between the Selling Subsidiary and AL Midcoast Holdings, LLC, as amended by the Amendment to Securities Purchase Agreement, dated as of July 6, 2018, we disposed of Midcoast for cash proceeds of approximately US$1.1 billion.
The accompanying unaudited pro forma condensed consolidated statement of financial position as at March 31, 2018, and the unaudited pro forma condensed consolidated statements of earnings for the three months ended March 31, 2018, and the year ended December 31, 2017, (the “Unaudited Pro Forma Statements”) have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and Regulation S-X. Accounting policies used in the preparation of the Unaudited Pro Forma Statements are consistent with those disclosed in our audited consolidated financial statements as at and for the year ended December 31, 2017, (the “Annual Financial Statements”) and the unaudited consolidated financial statements as at and for the three months ended March 31, 2018 (the “Interim Financial Statements”).
The note disclosure requirements of annual consolidated financial statements provide additional disclosures to that required for pro forma condensed consolidated financial statements. The Unaudited Pro Forma Statements have been prepared from the Interim Financial Statements and the Annual Financial Statements, and should be read in conjunction with the Interim Financial Statements and the Annual Financial Statements.
The accompanying unaudited pro forma condensed consolidated statement of financial position as at March 31, 2018, has been prepared to give effect to the Transaction as if it had occurred on March 31, 2018. The unaudited pro forma condensed consolidated statements of earnings for the three months ended March 31, 2018, and the year ended December 31, 2017 have been prepared to give effect to the Transaction as if it had occurred on January 1, 2017.
The pro forma adjustments are based on the best information available and assumptions that we believe are factually supportable and reasonable; however, such adjustments are subject to change. The unaudited pro forma condensed consolidated financial information is for illustrative and informational purposes only and is not intended to reflect what our consolidated statements of income would have been had the Transaction occurred on the dates indicated and is not necessarily indicative of our future consolidated statements of income.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited)
|
As at March 31, 2018 |
|
Enbridge |
|
Pro Forma |
|
Notes |
|
Pro Forma |
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
Current assets |
|
7,914 |
|
1,154 |
|
(a),(b) |
|
9,068 |
|
|
Property, plant and equipment, net |
|
92,521 |
|
(26 |
) |
(a) |
|
92,495 |
|
|
Long-term investments |
|
17,360 |
|
(437 |
) |
(a) |
|
16,923 |
|
|
Goodwill |
|
35,168 |
|
(257 |
) |
(j) |
|
34,911 |
|
|
Other long-term assets |
|
10,531 |
|
(225 |
) |
(a),(i) |
|
10,306 |
|
|
Total assets |
|
163,494 |
|
209 |
|
|
|
163,703 |
|
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
12,772 |
|
(243 |
) |
(a),(k) |
|
12,529 |
|
|
Long-term debt |
|
61,191 |
|
— |
|
|
|
61,191 |
|
|
Other long-term liabilities |
|
8,390 |
|
330 |
|
(a),(k) |
|
8,720 |
|
|
Deferred income taxes |
|
9,812 |
|
88 |
|
(l) |
|
9,900 |
|
|
Total liabilities |
|
92,165 |
|
175 |
|
|
|
92,340 |
|
|
Redeemable noncontrolling interests |
|
3,815 |
|
|
|
|
|
3,815 |
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
Share Capital |
|
|
|
|
|
|
|
|
|
|
Preference Shares |
|
7,747 |
|
— |
|
|
|
7,747 |
|
|
Common shares |
|
51,127 |
|
— |
|
|
|
51,127 |
|
|
Additional paid-in capital |
|
4,313 |
|
— |
|
|
|
4,313 |
|
|
Deficit |
|
(1,982 |
) |
34 |
|
(m) |
|
(1,948 |
) |
|
Accumulated other comprehensive income/(loss) |
|
329 |
|
— |
|
|
|
329 |
|
|
Reciprocal shareholding |
|
(102 |
) |
— |
|
|
|
(102 |
) |
|
Total Enbridge Inc. shareholders’ equity |
|
61,432 |
|
34 |
|
|
|
61,466 |
|
|
Noncontrolling interests |
|
6,082 |
|
— |
|
|
|
6,082 |
|
|
|
|
67,514 |
|
34 |
|
|
|
67,548 |
|
|
Total liabilities and equity |
|
163,494 |
|
209 |
|
|
|
163,703 |
|
The accompanying notes are an integral part of this unaudited pro forma condensed combined financial statement.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
|
Three months ended March 31, 2018 |
|
Enbridge |
|
Pro Forma |
|
Notes |
|
Pro Forma |
|
|
Operating revenues |
|
|
|
|
|
|
|
|
|
|
Commodity sales |
|
7,268 |
|
(647 |
) |
(c) |
|
6,621 |
|
|
Gas distribution sales |
|
1,926 |
|
— |
|
|
|
1,926 |
|
|
Transportation and other services |
|
3,532 |
|
(42 |
) |
(c) |
|
3,490 |
|
|
Total operating revenues |
|
12,726 |
|
(689 |
) |
|
|
12,037 |
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
Commodity costs |
|
6,997 |
|
(563 |
) |
(c) |
|
6,434 |
|
|
Gas distribution costs |
|
1,324 |
|
— |
|
|
|
1,324 |
|
|
Operating and administrative |
|
1,641 |
|
(78 |
) |
(d) |
|
1,563 |
|
|
Depreciation and amortization |
|
824 |
|
(3 |
) |
(d) |
|
821 |
|
|
Asset impairment |
|
1,062 |
|
(913 |
) |
(d) |
|
149 |
|
|
Total operating expenses |
|
11,848 |
|
(1,557 |
) |
|
|
10,291 |
|
|
Operating income |
|
878 |
|
868 |
|
|
|
1,746 |
|
|
Income from equity investments |
|
335 |
|
(12 |
) |
(e) |
|
323 |
|
|
Other expense |
|
(120 |
) |
— |
|
|
|
(120 |
) |
|
Interest expense |
|
(656 |
) |
— |
|
|
|
(656 |
) |
|
Earnings before income taxes |
|
437 |
|
856 |
|
|
|
1,293 |
|
|
Income tax recovery/(expense) |
|
73 |
|
(194 |
) |
(f) |
|
(121 |
) |
|
Earnings |
|
510 |
|
662 |
|
|
|
1,172 |
|
|
Loss attributable to noncontrolling interests and redeemable noncontrolling interests |
|
24 |
|
— |
|
|
|
24 |
|
|
Earnings attributable to controlling interests |
|
534 |
|
662 |
|
|
|
1,196 |
|
|
Preference share dividends |
|
(89 |
) |
— |
|
|
|
(89 |
) |
|
Earnings attributable to common shareholders |
|
445 |
|
662 |
|
|
|
1,107 |
|
|
Earnings per common share attributable to common shareholders |
|
0.26 |
|
|
|
|
|
0.66 |
|
|
Diluted earnings per common share attributable to common shareholders |
|
0.26 |
|
|
|
|
|
0.66 |
|
The accompanying notes are an integral part of this unaudited pro forma condensed combined financial statement.
|
Year ended December 31, 2017 |
|
Enbridge |
|
Pro Forma |
|
Notes |
|
Pro Forma |
|
|
Operating revenues |
|
|
|
|
|
|
|
|
|
|
Commodity sales |
|
26,286 |
|
(2,909 |
) |
(c) |
|
23,377 |
|
|
Gas distribution sales |
|
4,215 |
|
— |
|
|
|
4,215 |
|
|
Transportation and other services |
|
13,877 |
|
(167 |
) |
(c) |
|
13,710 |
|
|
Total operating revenues |
|
44,378 |
|
(3,076 |
) |
|
|
41,302 |
|
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
Commodity costs |
|
26,065 |
|
(2,620 |
) |
(c) |
|
23,445 |
|
|
Gas distribution costs |
|
2,572 |
|
— |
|
|
|
2,572 |
|
|
Operating and administrative |
|
6,442 |
|
(345 |
) |
(d),(h) |
|
6,097 |
|
|
Depreciation and amortization |
|
3,163 |
|
(213 |
) |
(d) |
|
2,950 |
|
|
Impairment of long-lived assets |
|
4,463 |
|
(4,392 |
) |
(d) |
|
71 |
|
|
Impairment of goodwill |
|
102 |
|
(102 |
) |
(d) |
|
— |
|
|
Total operating expenses |
|
42,807 |
|
(7,672 |
) |
|
|
35,135 |
|
|
Operating income |
|
1,571 |
|
4,596 |
|
|
|
6,167 |
|
|
Income from equity investments |
|
1,102 |
|
(48 |
) |
(e) |
|
1,054 |
|
|
Other income |
|
452 |
|
1 |
|
(e) |
|
453 |
|
|
Interest expense |
|
(2,556 |
) |
(1 |
) |
(e) |
|
(2,557 |
) |
|
Earnings before income taxes |
|
569 |
|
4,548 |
|
|
|
5,117 |
|
|
Income tax recovery |
|
2,697 |
|
(1,047 |
) |
(f) |
|
1,650 |
|
|
Earnings |
|
3,266 |
|
3,501 |
|
|
|
6,767 |
|
|
Earnings attributable to noncontrolling interests and redeemable noncontrolling interests |
|
(407 |
) |
29 |
|
(g) |
|
(378 |
) |
|
Earnings attributable to controlling interests |
|
2,859 |
|
3,530 |
|
|
|
6,389 |
|
|
Preference share dividends |
|
(330 |
) |
— |
|
|
|
(330 |
) |
|
Earnings attributable to common shareholders |
|
2,529 |
|
3,530 |
|
|
|
6,059 |
|
|
Earnings per common share attributable to common shareholders |
|
1.66 |
|
|
|
|
|
3.97 |
|
|
Diluted earnings per common share attributable to common shareholders |
|
1.65 |
|
|
|
|
|
3.95 |
|
The accompanying notes are an integral part of this unaudited pro forma condensed combined financial statement.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The pro forma adjustments are based on the best information available and assumptions that we believe are factually supportable and reasonable; however, such adjustments are subject to change. The unaudited pro forma condensed consolidated financial information is for illustrative and informational purposes only and is not intended to reflect what our consolidated statements of income would have been had the Transaction occurred on the dates indicated and is not necessarily indicative of our future consolidated statements of income.
The pro forma adjustments to the condensed consolidated statements of earnings, where applicable, have been translated from the United States Dollar to the Canadian Dollar using the year-to-date average rate for the period presented, except for impairments which have been translated at the monthly average rate for the month incurred. The pro forma adjustments to the condensed consolidated statement of financial position, where applicable, have been translated from the United States Dollar to the Canadian Dollar using the spot rate as at March 31, 2018.
2. PRO FORMA ADJUSTMENTS
The unaudited pro forma consolidated financial statements reflect the following adjustments:
Unaudited Pro Forma Condensed Consolidated Financial Statements Adjustments
(a) This adjustment reflects the elimination of assets and liabilities attributable to Midcoast.
(b) This adjustment represents the receipt of cash consideration of US$1.1 billion at the closing of the transaction.
(c) This adjustment reflects the elimination of revenues and commodity costs of Midcoast.
(d) This adjustment reflects the elimination of operating and administrative expenses, depreciation and amortization, asset impairment, impairment of long-lived assets, and impairment of goodwill attributable to Midcoast. Not included in the pro forma results are anticipated savings due to costs that may be reduced or eliminated.
(e) This adjustment reflects the elimination of non-operating income.
(f) This adjustment represents the estimated income tax effect of the pro forma adjustments. This adjustment represents the estimated income tax effect of the pro forma adjustments. The tax effect of the pro forma adjustments was calculated using the historical statutory rates in effect for the periods presented.
(g) This adjustment reflects the elimination of noncontrolling interest included in our historical results relating to Midcoast.
(h) This adjustment reflects the elimination of US$11 million of incremental transaction costs associated with completing the disposition, including the payment of financial advisory, legal and other professional fees and expenses, which are recorded in our historical financial statements for the year ended December 31, 2017.
(i) The $225 million pro forma adjustment to Other long-term assets includes $205 million in Property, plant and equipment classified as held for sale.
(j) Derecognition of US$199 million ($257 million) of Goodwill relating to our interest in the Texas Express NGL pipeline system.
(k) This adjustment reflects a liability of US$298 million to satisfy future volume commitments retained by us, of which US$39 million is expected to be settled in the next 12 months.
(l) This adjustment reflects the deferred income tax effects of the cumulative pro forma adjustments to the unaudited statement of financial position as at March 31, 2018.
(m) This adjustment reflects a gain of $34 million arising from the transaction based upon the cumulative pro forma adjustments to the unaudited statement of financial position as at March 31, 2018. This estimated gain has not been reflected in the pro forma consolidated statement of operations as it is considered to be nonrecurring in nature. No adjustment has been made to the sale proceeds to give effect to any working capital adjustments or other potential post-closing adjustments under the terms of the purchase agreement.