Spectra Energy Reports Second Quarter 2007 Results



    
    - Second quarter reported net income of $196 million; ongoing net income
of
    $192 million

    - Reported net income per diluted share (EPS) of $0.31; ongoing EPS of
    $0.30

    - Well positioned to achieve 2007 financial goals

    - Significant progress made toward $3 billion 2007-2009 capital expansion
    including 80 percent increase in year to date capital spend.

    - Quarterly dividend of $0.22 paid
    

    HOUSTON, Aug. 6 /CNW/ -- Spectra Energy (NYSE:   SE) today reported second
quarter 2007 net income of $196 million, or $0.31 diluted earnings per share,
compared with net income of $320 million in second quarter 2006.
    
    (Logo:  http://www.newscom.com/cgi-bin/prnh/20061030/CLM051LOGO )
    
    Results include the positive effect of special items and discontinued
operations of $4 million in second quarter 2007, and the positive effect of
special items and discontinued operations of $56 million in the prior year
quarter.  Excluding these factors in both periods, ongoing net income was $192
million this quarter compared with $264 million in the second quarter 2006.
The prior year period benefited from a $30 million tax rate reduction, which
was not repeated in the second quarter 2007.  The decline in earnings from
Field Services and Western Canada Transmission & Processing largely accounted
for the remaining variance.
    The second quarter 2007 results reflect strong ongoing operations in our
Distribution business and continued solid U.S. Transmission results, offset by
lower Earnings Before Interest and Taxes (EBIT) in the Western Canada
Transmission & Processing and Field Services businesses.  Western Canada was
affected by two scheduled plant maintenance turnarounds and Field Services
experienced severe thunderstorms resulting in power outages.  The affected
plants at both Western Canada and Field Services were back on-line by the end
of the second quarter.
    Spectra Energy Transmission 2007 year-to-date capital spending increased
more than 80 percent compared to the prior year period, reflecting significant
progress made on the $3 billion expansion program for the 2007-2009 period.  A
total of approximately $650 million of capital projects are expected to be
placed in service before the end of the year, at which time they will start
contributing to EBIT.
    In July 2007, Spectra Energy completed its initial public offering of
Spectra Energy Partners, LP (SEP).  Spectra Energy retained an 83 percent
equity interest in SEP, and received net cash of $345 million.
    "Based on the results year-to-date, the progress of our capital expansion
program, the successful launch of our master limited partnership, and the
strong commodity price environment we are now seeing, the company is well
positioned to achieve its 2007 financial goals," said Fred Fowler, president
and chief executive officer of Spectra Energy.  "We are committed to
delivering results to shareholders with solid, steady growth and an attractive
dividend."



    
      Special items affecting Spectra Energy's EPS for the quarter include:
                     (in millions, except per share amounts)
    

    
                                                         Net
                               Pre-tax       Tax        Income      EPS
                                amount      Effect      Impact     Impact
    Second Quarter 2007
      Separation costs           $(7)         $2         $(5)      $(0.01)
      DCP Midstream stand
       alone costs                (3)          1          (2)           -
    Total                       $(10)         $3         $(7)      $(0.01)
    

    
    Second Quarter 2006
      Cinergy costs to achieve   $(9)         $3         $(6)         N/A
      Separation costs            (2)          1          (1)         N/A
    Total                       $(11)         $4         $(7)         N/A*
    

    
    * There were no shares of Spectra Energy outstanding in 2006, therefore
      EPS is not applicable
    



    Reconciliation of reported to ongoing net income (in millions)

    
                                                   Three months ended June 30,
                                                        2007           2006
    

    
    Net Income as Reported                              $196           $320
    Adjustments to Reported Net Income:
      Special Items                                        7              7
      Income from Discontinued Operations*               (11)           (63)
    Ongoing Net Income                                  $192           $264
    

    
    * Related to operations transferred back to Duke Energy prior to spin-off
      of Spectra Energy from Duke Energy
    



    Reconciliation of reported to ongoing diluted EPS

    2nd Q 2007

    
    Diluted EPS as reported                            $0.31
      Special items                                     0.01
      Discontinued operations                          (0.02)
    Diluted EPS, ongoing                               $0.30
    U.S. Transmission
    
    The U.S. Transmission segment is comprised of more than 12,800 miles of
transmission pipelines and 115 billion cubic feet of storage capacity serving
customers in various regions of the Northeast and Southeast United States.
    U.S. Transmission reported second quarter 2007 segment EBIT of $223
million, compared with $230 million in second quarter 2006. The modest
decrease is primarily a result of lower gas processing volumes associated with
pipeline operations in second quarter 2007 compared with second quarter 2006.
In addition, increased revenues from the Maritimes & Northeast pipeline, and
from expansion projects, were substantially offset by higher operating costs.
    U.S. Transmission advanced a number of growth projects this quarter
including the TIME II expansion, Northeast Gateway lateral, Egan storage
expansion, and the Cape Cod Extension.  In addition, both Ramapo and Maritimes
& Northeast Phase IV received final permits.
    
    Distribution
    
    Spectra Energy's Distribution segment, through its Union Gas subsidiary,
provides natural gas distribution service to commercial, industrial and
residential customers in Ontario, as well as storage and transportation
services for other utilities and end market participants in Ontario, Quebec,
and the United States.
    Distribution reported a strong second quarter 2007 segment EBIT of $54
million compared with $39 million in second quarter of 2006, or a 38 percent
increase.  This increase is primarily attributable to increased customer usage
and distribution rates, higher storage revenues and increased transmission
volumes.
    Storage revenues increased as a result of higher prices, and transmission
revenues benefited from the completion of Phase 1 of the Dawn-Trafalgar
expansion project, which was placed into service at the end of 2006.
    
    Western Canada Transmission & Processing
    
    The Western Canada Transmission & Processing business is focused on the
gathering, processing and transmission of natural gas, and the extraction,
fractionation, transportation, storage and marketing of natural gas liquids.
    Western Canada Transmission & Processing reported second quarter 2007
segment EBIT of $48 million, compared with $89 million in second quarter 2006.
The lower earnings were driven primarily by two scheduled plant maintenance
turnarounds at the Pine River and Empress processing plants.  In addition, the
Fort Nelson region realized lower revenues due primarily to lower volumes
associated with reduced producer activity.
    
    Field Services
    
    Field Services consists of Spectra Energy's 50 percent interest in DCP
Midstream, a gathering and processing, transportation, storage and marketing
company.
    Field Services reported second quarter 2007 segment EBIT of $123 million,
compared with $148 million in second quarter 2006.  The 2007 earnings include
$3 million in costs related to the creation of stand-alone corporate
functions.  The remaining decrease resulted primarily from reduced processing
margins due to unplanned outages at plants, mostly in southeastern New Mexico
and in western Kansas, that were caused by severe thunderstorms.
    In addition, Field Services experienced higher operating costs in the
second quarter, including higher planned spending on asset integrity and other
cost increases resulting from industry price pressures.  These earnings
decreases were partially offset by favorable NGL prices over the prior year
quarter.
    During the quarter, Field Services paid tax distributions and dividends
of approximately $111 million to Spectra Energy.
    
    Other
    "Other" is primarily comprised of corporate costs and captive insurance.
    
    "Other" reported net costs of $26 million in the second quarter of 2007
which includes $7 million of separation costs, compared with net costs of $35
million in the second quarter of 2006, which includes $11 million of costs to
achieve the Duke Energy/Cinergy merger and the gas spin-off separation.
    
    Interest Expense
    
    Interest expense was $156 million for the quarter, compared with $148
million for the second quarter 2006, increasing largely as a result of
interest costs capitalized in the prior period for capital projects of
businesses transferred to Duke Energy.
    
    Income Taxes
    
    Second quarter 2007 income tax expense from continuing operations was $85
million, compared with $73 million in the second quarter of 2006.  For the
2007 quarter, Spectra Energy's effective tax rate was 32 percent, compared
with the 2006 second quarter rate of 22 percent.  The unusually low tax rate
in the prior period resulted from a state income tax benefit of $30 million
which resulted from the completion of Duke Energy's acquisition of Cinergy.
    
    Additional Information
    
    Additional information about second quarter 2007 earnings can be obtained
at the Spectra Energy Web site: www.spectraenergy.com
    The analyst call is scheduled for 9 a.m. CDT today, Monday August 6, to
discuss Spectra Energy's second quarter results. The conference call can be
accessed via the investors' section of Spectra Energy's Web site
(www.spectraenergy.com) or by dialing (888) 252-3715 in the United States or
(706) 634-8942 outside the United States. The confirmation code is "Spectra
Energy Analyst Call."
    Please call in five to 10 minutes prior to the scheduled start time. A
replay of the conference call will be available until midnight CDT, November
6, 2007, by dialing (800) 642-1687 with a Conference ID 6556421. The
international replay number is (706) 645-9291, Conference ID 6556421. A replay
and transcript also will be available by accessing the investors' section of
the company's Web site.
    
    Non-GAAP Financial Measures
    
    The primary performance measure used by management to evaluate segment
performance is segment EBIT from continuing operations, which at the segment
level represents all profits from continuing operations (both operating and
non-operating), including any equity in earnings of unconsolidated affiliates,
before deducting interest and taxes, and is net of the minority interest
expense related to those profits. Management believes segment EBIT from
continuing operations, which is the GAAP measure used to report segment
results, is a good indicator of each segment's operating performance as it
represents the results of our ownership interests in continuing operations
without regard to financing methods or capital structures.
    Spectra Energy's management uses ongoing diluted EPS, which is a non-GAAP
financial measure as it represents diluted EPS from continuing operations,
adjusted for special items, as a measure to evaluate operations of the
company. Special items represent certain charges and credits which management
believes will not be recurring on a regular basis. Management believes that
the presentation of ongoing diluted EPS provides useful information to
investors, as it allows them to more accurately compare the company's ongoing
performance across periods. Ongoing diluted EPS is also used as a basis for
employee incentive bonuses.
    The most directly comparable GAAP measure for ongoing diluted EPS is
reported diluted EPS from continuing operations, which includes the impact of
special items. Due to the forward-looking nature of ongoing diluted EPS for
future periods, information to reconcile such non-GAAP financial measures to
the most directly comparable GAAP financial measure is not available at this
time as the company is unable to forecast any special items for future
periods.
    Spectra Energy also uses ongoing segment and Other EBIT as a measure of
historical and anticipated future segment and other performance. When used for
future periods, ongoing segment and Other EBIT may also include any amounts
that may be reported as discontinued operations. Ongoing segment and Other
EBIT are non-GAAP financial measures as they represent reported segment and
Other EBIT adjusted for special items. Management believes that the
presentation of ongoing segment and Other EBIT provides useful information to
investors, as it allows them to more accurately compare a segment's or Other's
ongoing performance across all periods. The most directly comparable GAAP
measure for ongoing segment or Other EBIT is reported segment or Other EBIT,
which represents EBIT from continuing operations, including any special items.
Due to the forward-looking nature of any forecasted ongoing segment or Other
EBIT and any related growth rates for future periods, information to reconcile
these non-GAAP financial measures to the most directly comparable GAAP
financial measures is not available at this time as the company is unable to
forecast any special items or any amounts that may be reported as discontinued
operations for future periods.
    
    Forward-looking statement
    
    This release includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Forward-looking statements represent our intentions,
plans, expectations, assumptions and beliefs about future events. One can
typically identify forward-looking statements by the use of forward-looking
words such as: may, will, could, project, believe, expect, estimate, continue,
potential, plan, forecast and other similar words. Such statements are subject
to risks, uncertainties and other factors, many of which are outside our
control and could cause actual results to differ materially from the results
expressed or implied by those forward-looking statements. Those factors
include: the levels of supply and demand for natural gas in our areas of
operation; our ability to identify opportunities for our business units and
the timing and success of efforts to develop pipeline, storage, gathering,
processing and other infrastructure projects; our ability to successfully
complete and integrate future acquisitions; the extent of success in
connecting natural gas supplies to gathering, processing and transmission
systems and in connecting to expanding gas markets; the implementation of
state, federal and foreign legislative and regulatory initiatives that affect
cost and investment recovery, have an effect on rate structure, and affect the
speed at and degree to which competition enters the natural gas industries;
the timing and extent of changes in commodity prices, interest rates and
foreign currency exchange rates; our ability to obtain financing on favorable
terms, which can be affected by various factors, including our credit ratings
and general economic conditions; and our ability to operate effectively as a
stand-alone, publicly-traded company. These factors, as well as additional
factors that could affect our forward-looking statements, are described under
the headings "Risk Factors" and "Forward-Looking Statements" in our 2006 Form
10-K, filed on April 2, 2007, and in our other filings made with the
Securities and Exchange Commission, which are available at the SEC's website
at www.sec.gov. In light of these risks, uncertainties and assumptions, the
events described in the forward-looking statements might not occur or might
occur to a different extent or at a different time than we have described. We
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise.
    Spectra Energy Corp (NYSE:   SE) is one of North America's premier natural
gas infrastructure companies serving three key links in the natural gas value
chain:  gathering and processing, transmission and storage and distribution.
For close to a century, Spectra Energy and its predecessor companies have
developed critically important pipelines and related energy infrastructure
connecting natural gas supply sources to premium markets. Based in Houston,
Texas, the company operates in the United States and Canada approximately
17,500 miles of transmission pipeline, 265 billion cubic feet of storage,
natural gas gathering and processing, natural gas liquids operations and local
distribution assets. Spectra Energy Corp also has a 50 percent ownership in
DCP Midstream, one of the largest natural gas gatherers and processors in the
United States. Visit www.spectraenergy.com for more information.



    
                             Spectra Energy Corp
                                  June 2007
                             Quarterly Highlights
                                 (Unaudited)
            (In million, except per share amounts and where noted)
    

    
                                           Three Months         Six Months
                                              Ended               Ended
                                             June 30,            June 30,
                                           2007     2006      2007      2006
    COMMON STOCK DATA
      Earnings Per Share, from
       continuing operations
         Basic and Diluted                 $0.29     N/A     $0.66       N/A
      Earnings Per Share, from
       discontinued operations
         Basic and Diluted                 $0.02     N/A     $0.02       N/A
      Earnings Per Share - total
         Basic and Diluted                 $0.31     N/A     $0.68       N/A
      Dividends Per Share                  $0.22     N/A     $0.44       N/A
      Weighted-Average Shares
       Outstanding
         Basic                               632     N/A       631       N/A
         Diluted                             635     N/A       635       N/A
    

    
    INCOME
    Operating Revenues                      $985    $981    $2,386    $2,466
    Total Reportable Segment EBIT            448     506       968     1,085
    Other EBIT                               (26)    (35)      (41)      (84)
    Interest Expense                        (156)   (148)     (311)     (291)
    Interest Income and Other (a)              4       7         9        12
    Income Tax Expense from Continuing
     Operations                              (85)    (73)     (204)     (221)
    Income from Discontinued Operations       11      63        11        41
    Net Income                              $196    $320      $432      $542
    

    
    Earnings Available for Common
     Stockholders                           $196    $320      $432      $542
    

    
    CAPITALIZATION
    Common Equity                                               38%
    Minority Interests                                           4%
    Total Debt                                                  58%
    

    
    Total Debt                                              $9,278
    Book Value Per Share                                     $9.72
    Actual Shares Outstanding                                  632
    CAPITAL AND INVESTMENT EXPENDITURES
      U.S. Transmission                                       $318      $101
      Distribution                                             114       121
      Western Canada Transmission & Processing                  68        53
      Other (b)                                                 18       297
    Total Capital and Investment
     Expenditures                                             $518      $572
    

    
    EBIT BY BUSINESS SEGMENT
      U.S. Transmission                     $223    $230      $443      $465
      Distribution                            54      39       198       157
      Western Canada Transmission &
       Processing                             48      89       122       171
      Field Services                         123     148       205       292
    Total Reportable Segment EBIT           $448    $506      $968    $1,085
      Other EBIT                             (26)    (35)      (41)      (84)
      Interest Expense                      (156)   (148)     (311)     (291)
      Interest Income and Other (a)            4       7         9        12
    Consolidated Earnings from
     Continuing Operations Before Income
     Taxes                                  $270    $330      $625      $722
    

    
    (a) Other includes foreign currency transaction gains and losses and
        additional minority interest not allocated to the segment results.
    (b) Other in 2006 includes capital expenditures of operations transferred
        to Duke Energy.
    



    
                             Spectra Energy Corp
                                  June 2007
                             Quarterly Highlights
                                 (Unaudited)
                      (In millions, except where noted)
    

    
                                            Three Months      Six Months
                                               Ended            Ended
                                              June 30,         June 30,
                                            2007    2006     2007     2006
    U.S. TRANSMISSION
      Operating Revenues                    $370    $371     $747     $768
      Operating Expenses
        Operating, Maintenance and Other      97      96      202      237
        Depreciation and Amortization         52      50      105      101
      Gains on Sales of Other Assets, net      -       -        1       28
      Other Income, net of expense            11      13       22       22
      Minority Interest Expense                9       8       20       15
      EBIT                                  $223    $230     $443     $465
    


    Proportional Throughput, Tbtu (a)      502     416    1,110      974

    
    DISTRIBUTION
      Operating Revenues                    $351    $316   $1,064   $1,085
      Operating Expenses
        Natural Gas Purchased                174     159      628      693
        Operating, Maintenance and Other      83      81      161      163
        Depreciation and Amortization         40      37       77       72
      EBIT                                   $54     $39     $198     $157
    


    
      Number of customers                                   1,276    1,255
      Heating Degree Days (Fahrenheit)       947     869    4,635    4,149
      Pipeline Throughput, Tbtu              153     146      453      404
    

    
    WESTERN CANADA TRANSMISSION &
     PROCESSING
      Operating Revenues                    $262    $288     $573     $600
      Operating Expenses
        Natural Gas and Petroleum
         Products Purchased                   64      66      173      173
        Operating, Maintenance and Other     109     100      204      188
        Depreciation and Amortization         34      33       66       68
      Other Income, net of expense            (3)      1        1        4
      Minority Interest Expense                4       1        9        4
      EBIT                                   $48     $89     $122     $171
    


    
      Pipeline Throughput, Tbtu              131     148      292      299
      Volumes Processed, Tbtu                169     188      348      358
      Empress Inlet Volumes, Tbtu            141     217      333      418
    

    
    FIELD SERVICES
      Operating Expenses                      $-      $1       $-       $3
      Equity in Earnings of DCP
       Midstream, LLC                        123     149      205      295
      EBIT                                  $123    $148     $205     $292
    


    
      Natural Gas Gathered and
       Processed/Transported, Tbtu/day(b)    6.9     6.7      6.7      6.8
      Natural Gas Liquids Production,
       MBbl/d (b, c)                         362     365      354      361
      Average Natural Gas Price
       per MMBtu(d)                        $7.55   $6.79    $7.16    $7.88
      Average Natural Gas Liquids Price
       per Gallon                          $1.05   $0.98    $0.96    $0.93
    

    
    OTHER
      Operating Revenues                      $8     $25      $15      $32
      Operating Expenses                      34      59       60      112
      Other Income, net of expense             -      (1)       4       (4)
      EBIT                                  $(26)   $(35)    $(41)    $(84)
    

    
    (a) Trillion British thermal units
    (b) Includes 100% of DCP Midstream volumes.
    (c) Thousand barrels per day
    (d) Million British thermal units.  Average price based on NYMEX Henry
        Hub.
    



    
                             Spectra Energy Corp
               Condensed Consolidated Statements of Operations
                                 (Unaudited)
                   (In millions, except per-share amounts)
    

    
                                            Three Months       Six Months
                                               Ended             Ended
                                              June 30,          June 30,
                                            2007    2006      2007      2006
    

    
    Operating Revenues                      $985    $981    $2,386    $2,466
    Operating Expenses                       683     661     1,665     1,789
    Gains on Sales of Other Assets, net        -       1         1        29
    Operating Income                         302     321       722       706
    

    
    Other Income and Expense                 139     168       245       329
    Interest Expense                         156     148       311       291
    Minority Interest Expense                 15      11        31        22
    

    
    Earnings From Continuing Operations
     Before Income Taxes                     270     330       625       722
    Income Tax Expense from Continuing
     Operations                               85      73       204       221
    Income From Continuing Operations        185     257       421       501
    

    
    Income From Discontinued Operations,
     net of tax                               11      63        11        41
    

    Net Income                              $196    $320      $432      $542




    
                             Spectra Energy Corp
                    Condensed Consolidated Balance Sheets
                                 (Unaudited)
                                (In millions)
    

    
                                              June 30,            December 31,
                                                2007                   2006
    ASSETS
    

    
    Current Assets                             $1,615                 $1,625
    Investments and Other Assets                5,898                  5,346
    Net Property, Plant and Equipment          13,176                 12,394
    Regulatory Assets and Deferred Debits       1,075                    980
    

    Total Assets                            $21,764                $20,345

    LIABILITIES AND STOCKHOLDERS' EQUITY

    
    Current Liabilities                        $2,785                 $2,358
    Long-term Debt                              7,734                  7,726
    Deferred Credits and Other
     Liabilities                                4,507                  4,057
    Minority Interests                            594                    565
    Stockholders' Equity                        6,144                  5,639
    

    
      Total Liabilities and Stockholders'
       Equity                                 $21,764                $20,345
    



    
                             Spectra Energy Corp
               Condensed Consolidated Statements of Cash Flows
                                 (Unaudited)
                                (In millions)
    

    
                                                       Six Months Ended
                                                            June 30,
                                                     2007              2006
    

    
    CASH FLOWS FROM OPERATING ACTIVITIES
      Net income                                     $432              $542
      Adjustments to reconcile net income to
       net cash provided by operating activities      257              (348)
         Net cash provided by
          operating activities                        689               194
    

    
    CASH FLOWS FROM INVESTING ACTIVITIES
         Net cash provided by (used in)
          investing activities                       (504)            1,421
    

    
    CASH FLOWS FROM FINANCING ACTIVITIES
         Net cash provided by (used in)
          financing activities                         45            (1,550)
    

    
      Net increase in cash and cash
       equivalents                                    230                65
      Cash and cash equivalents at
       beginning of period                            299               491
      Cash and cash equivalents at end of
       period                                        $529              $556
    



    
                             Spectra Energy Corp
                 Reported to Ongoing Earnings Reconciliation
                          June 2007 Quarter-to-date
                   (In millions, except per-share amounts)
    

    
                                Special Items (Note 1)
                                              Gain
                                               on
                                             Sales    Discon    Total  Ongoing
                          Reported Costs to    of     tinued    Adjust   Earn
                          Earnings  Achieve  Assets Operations  ments    ings
    SEGMENT EARNINGS
     BEFORE INTEREST
     AND TAXES FROM
     CONTINUING OPERATIONS
    

    U.S. Transmission        $223        $-      $-      $-        $-    $223

    Distribution               54         -       -       -         -      54

    
    Western Canada
     Transmission &
     Processing                48         -       -       -         -      48
    

    Field Services            123         3  A    -       -         3     126

    
      Total Reportable
       Segment EBIT           448         3       -       -         3     451
    

    Other                     (26)        7  B    -       -         7    
(19)

    
      Total Reportable
       Segment EBIT and
       Other EBIT            $422       $10      $-      $-       $10    $432
    

    EARNINGS

    
    Total Reportable Segment
     EBIT and Other EBIT     $422       $10      $-      $-       $10    $432
    Interest Expense         (156)        -       -       -         -    (156)
    Interest Income
     and Other                  4         -       -       -         -       4
    Income Taxes from
     Continuing Operations    (85)       (3)      -       -        (3)    (88)
    Discontinued Operations,
     Net of Taxes              11         -       -     (11)C     (11)      -
    

    Total Earnings           $196        $7      $-    $(11)      $(4)   $192

    
    EARNINGS PER SHARE,
     BASIC                  $0.31     $0.01      $-  $(0.02)   $(0.01)  $0.30
    

    
    EARNINGS PER SHARE,
     DILUTED                $0.31     $0.01      $-  $(0.02)   $(0.01)  $0.30
    

    
    Note 1 - Amounts for special items are net of minority interest, if
             applicable
    

    A - Costs to create stand-alone corporate functions at DCP Midstream.

    B - Separation costs resulting from the spin-off from Duke Energy.

    C - Sonatrach settlement.

    Weighted Average Shares (reported and ongoing) - in millions

    Basic         632

    Diluted       635



    
                               Spectra Energy Corp
                   Reported to Ongoing Earnings Reconciliation
                            June 2006 Quarter-to-date
                     (In millions, except per-share amounts)
    


    Special Items (Note 1)

    
                                             Net
                                             Gain
                                              on
                                            Settle Gain
                                             ment   on  Discon
                                              of  Sales tinued   Total Ongoing
                          Reported Costs to  Cont   of   Opera  Adjust   Earn
                          Earnings Achieve   ract Assets tions   ments   ings
    SEGMENT EARNINGS
     BEFORE INTEREST
     AND TAXES FROM
     CONTINUING OPERATIONS
    

    U.S. Transmission       $230       $-     $-    $-    $-       $-    $230

    Distribution              39        -      -     -     -        -      39

    
    Western Canada
     Transmission &
     Processing               89        -      -     -     -        -      89
    

    Field Services           148        -      -     -     -        -     148

    
      Total Reportable
       Segment EBIT          506        -      -     -     -        -     506
    

    Other                    (35)      11 A    -     -     -       11    
(24)

    
      Total Reportable
       Segment EBIT and
       Other EBIT           $471      $11     $-    $-    $-      $11    $482
    

    EARNINGS

    
    Total Reportable Segment
     EBIT and Other EBIT    $471      $11     $-    $-    $-      $11    $482
    Interest Expense        (148)       -      -     -     -        -    (148)
    Interest Income
     and Other                 7        -      -     -     -        -       7
    Income Taxes from
     Continuing Operations   (73)      (4)     -     -     -       (4)    (77)
    Discontinued Operations,
     Net of Taxes             63        -      -     -   (63) B   (63)      -
    

    Total Earnings          $320       $7     $-    $-  $(63)    $(56)   $264

    
    EARNINGS PER SHARE,
     BASIC                   N/A       $-     $-    $-    $-       $-     N/A
    

    
    EARNINGS PER SHARE,
     DILUTED                 N/A       $-     $-    $-    $-       $-     N/A
    

    
    Note 1 - Amounts for special items are net of minority interest, if
             applicable.
    

    
    A - $2 million Gas Spin-Off costs to achieve allocated from Duke; $9
        million Cinergy merger costs to achieve allocated from Duke.
    

    
    B - Businesses transferred to Duke Energy prior to the spin-off of
        Spectra Energy recorded in Loss from Discontinued Operations, net of
        tax on the Consolidated Statement of Operations.
    

    Weighted Average Shares (reported and ongoing) - in millions

    Basic        N/A

    Diluted      N/A




For further information:

For further information: Molly Boyd, +1-713-627-5923, +1-713-627-4747 
24-hour media line, or Analysts, John Arensdorf, +1-713-627-4600, both for 
Spectra Energy Corp Web Site: http://www.spectraenergy.com

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Spectra Energy Corp.

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