2014

Spectra Energy Reports Fourth Quarter and Year-End 2009 Results

HOUSTON, Feb. 4 /PRNewswire-FirstCall/ --

  • $1.18 ongoing 2009 diluted earnings per share (EPS); exceeded $1.15 EPS target.
  • Placed $650 million of expansion projects into service, delivering returns on capital employed of more than 12 percent.
  • Almost $3 billion in new expansion growth projects secured through customer contracts signed in 2009.
  • 2010 expectation of $1.42 EPS; 8 to 10 percent compound annual EPS growth rate for 2010 to 2012.

Spectra Energy Corp (NY SE: SE) today reported 2009 net income from controlling interests of $848 million, or $1.32 diluted EPS, compared with $1.13 billion, or $1.81 diluted EPS in 2008. Ongoing 2009 net income was $758 million, or $1.18 diluted EPS, compared with $1.14 billion, $1.83 diluted EPS, in the prior year.

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2009 year-end results reflect strong earnings growth from expansion projects brought into service in both 2008 and 2009. These results were more than offset by lower commodity prices relative to the record-high prices seen in 2008 and a weaker Canadian dollar.  

The company reported 2009 fourth quarter net income from controlling interests of $219 million, or $0.34 diluted EPS, compared with $171 million, $0.28 diluted EPS, in the prior year quarter. Ongoing net income from controlling interests for the 2009 quarter was $217 million, or $0.33 diluted EPS, versus $197 million, $0.32 diluted EPS, in the prior year quarter.

The 2009 fourth quarter results reflect the effects of improving commodity prices, a stronger Canadian dollar and increased gathering and processing revenues at Western Canada Transmission & Processing.

"We experienced solid earnings and strong performance from our core, fee-based businesses last year. We also executed extremely well on our capital expansion projects and signed multiple new customer contracts, which will fuel continued growth," said Greg Ebel, president and chief executive officer, Spectra Energy Corp.  "We finished the year financially strong and that momentum gives us confidence in our ability to achieve 20 percent earnings growth this year."

"We will continue our focus on securing new growth opportunities for the future, as well as executing on our current portfolio of attractive expansion projects – projects that will deliver returns in excess of 12 percent, and that underpin our strong, sustainable earnings growth," said Ebel.

SEGMENT RESULTS

U.S. Transmission           

U.S. Transmission reported fourth quarter 2009 earnings before interest and taxes (EBIT) of $204 million, compared with $161 million in fourth quarter 2008.  The 2008 period included a $44 million special item for an impairment of the Islander East project.

Ongoing EBIT for fourth quarter 2009 was $204 million and, excluding the above special item, compares with $205 million in the prior year quarter. The segment benefited during the 2009 quarter from business expansion projects placed into service during 2009. These earnings were offset by the timing of operating and maintenance expenses, including increased pipeline integrity and lower capitalized costs.  In addition, the 2008 quarter included a favorable customer settlement.

Year-end reported EBIT for U.S. Transmission was $894 million, compared with $844 million in 2008.

Distribution

Distribution reported fourth quarter 2009 EBIT of $96 million, compared with $90 million in fourth quarter 2008.  Excluding the effect of a stronger Canadian dollar, earnings were $7 million lower than in the 2008 quarter, primarily a result of warmer weather.

Year-end reported EBIT for Distribution was $336 million, compared with $353 million in 2008.

Western Canada Transmission & Processing

Western Canada Transmission & Processing reported fourth quarter 2009 EBIT of $120 million, compared with $65 million in fourth quarter 2008.  Beyond the effect of the stronger Canadian dollar, which added $16 million to earnings this quarter compared with last year, the increase was due mainly to higher frac spreads affecting our Empress natural gas liquids (NGL) earnings. The segment also benefited from improved results in the base gathering and processing business, primarily driven by higher contracted volumes and revenues from expansions.

Year-end reported EBIT for Western Canada Transmission & Processing was $343 million, compared with $398 million in 2008.

Field Services

Field Services reported fourth quarter 2009 EBIT of $77 million, compared with $69 million in fourth quarter 2008. The increase in earnings was driven by higher commodity prices.  During fourth quarter 2009, crude oil averaged approximately $76 per barrel, compared with approximately $59 per barrel in the prior year quarter, and the NGL to crude relationship averaged 53 percent versus 46 percent in fourth quarter 2008.

These results were partially offset by non-cash mark-to-market losses in fourth quarter 2009, compared with gains in fourth quarter 2008 on hedges used to protect distributable cash flow at DCP Midstream's master limited partnership.  Volumes were lower in fourth quarter 2009 versus 2008; however, drilling activity and rig counts around DCP Midstream's assets have continued to increase since the first half of 2009.

DCP Midstream paid distributions of $70 million to Spectra Energy for the 2009 quarter and $100 million for the year.

Year-end reported EBIT for Field Services was $296 million, compared with $716 million in 2008.

Other

"Other" reported net costs of $28 million in fourth quarter 2009, compared with net costs of $21 million in fourth quarter 2008. This increase primarily reflects higher benefit costs. 

Year-end reported net costs for "Other" were $74 million, compared with $78 million in 2008.

Interest Expense

Interest expense was $154 million for fourth quarter 2009, compared with $166 million for the 2008 quarter. The decrease was primarily due to the benefit of interest rate swaps and lower commercial paper balances, partially offset by the effects of a stronger Canadian dollar during the 2009 quarter.

Interest expense for 2009 was $610 million, compared with $636 million in 2008.

Income Taxes

Fourth quarter 2009 income tax expense from continuing operations was $93 million, compared with $43 million in fourth quarter 2008.  The increase was primarily a result of higher earnings in 2009.  The effective tax rate was 28 percent in fourth quarter 2009, compared with 19 percent in fourth quarter 2008.  The lower effective tax rate in fourth quarter 2008 was due to favorable adjustments in 2008 for final 2007 tax returns, and lower 2008 state income taxes.  

    
    
      Special Items Affecting Spectra Energy's EPS for the Quarters Include:
                        (in millions, except per-share amounts)
    
                                                    Net Income
                                                   –Controlling
                              Pre-tax                Interests
                               Amount   Tax Effect    Impact     EPS Impact
                               -------  ---------- ------------  ----------
    
    Fourth Quarter 2009           $–          $–           $–          $–
                                 ===         ===          ===         ===
    
    Fourth Quarter 2008
      Impairment on Islander
        East Project            $(44)        $14         $(30)     $(0.05)
                                ----         ---         ----      ------
    Total Special Items         $(44)        $14         $(30)     $(0.05)
                                ====         ===         ====      ======
    
    
    
                     Reconciliation of Reported to Ongoing Net Income
                                       (in millions)
    
                                          
                                            Quarters Ended    Years Ended
                                             December 31,     December 31,
                                            2009     2008    2009       2008
                                            ----     ----    ----       ----
    Net Income – Controlling Interests as
     Reported                               $219     $171    $848     $1,129
    Adjustments to Reported Net Income –
     Controlling Interests:
       Special Items                           –       30     (85)        12
       Discontinued Operations                (2)      (4)     (5)         –
                                                                           -
    Ongoing Net Income                      $217     $197    $758     $1,141
                                            ====     ====    ====     ======
    
    
    
                 Reconciliation of Reported to Ongoing Diluted EPS
                 -------------------------------------------------
                                  
                                     Quarters Ended        Years Ended
                                      December 31,         December 31,
                                     2009     2008       2009        2008
                                     ----     ----       ----        ----
    Diluted EPS as Reported         $0.34    $0.28      $1.32       $1.81
       Special Items                    –     0.05      (0.13)       0.02
          Discontinued Operations   (0.01)   (0.01)     (0.01)          –
                                    -----    -----      -----           -
    Diluted EPS, Ongoing            $0.33    $0.32      $1.18       $1.83
                                    =====    =====      =====       =====
    

Additional Information

Additional information about fourth quarter and year-end 2009 earnings can be obtained on the Spectra Energy Web site: www.spectraenergy.com. The Analyst call is scheduled for 9 a.m. CT today, February 4, to discuss Spectra Energy's fourth quarter and year-end 2009 results. The webcast can be accessed on the Investors Section of Spectra Energy's Web site and the conference call can be accessed by dialing (888) 252-3715 in the United States or Canada, or (706) 634-8942 for International. The conference code is "50016150" or "Spectra Energy Quarterly Earnings Call."

Please call five to ten minutes prior to the scheduled start time. A replay of the call will be available until 5:00 p.m. CT, May 3, 2010, by dialing (800) 642-1687 with conference ID 50016150. The international replay number is (706) 645-9291, with above conference ID. A replay and transcript also will be available by accessing the Investors Section of the company's Web site.

Non-GAAP Financial Measures

We use ongoing net income and ongoing diluted EPS, which are non-GAAP financial measures as they represent net income (controlling interests) and diluted EPS, adjusted for special items and discontinued operations, as measures to evaluate operations of the company. Special items represent certain charges and credits which we believe will not be recurring on a regular basis, and discontinued operations do not represent our ongoing core business. We believe that the presentation of ongoing net income and ongoing diluted EPS provide useful information to investors, as it allows them to more accurately compare our ongoing performance across periods.

The primary performance measure used by us to evaluate segment performance is segment EBIT from continuing operations, which at the segment level represents earnings from continuing operations (both operating and non-operating) before interest and taxes, net of noncontrolling interests related to those earnings. We consider segment EBIT, which is the GAAP measure used to report segment results, to be a good indicator of each segment's operating performance from its continuing operations as it represents the results of our ownership interest in operations without regard to financing methods or capital structures.

We also use ongoing segment and Other EBIT as a measure of performance. Ongoing segment and Other EBIT is a non-GAAP financial measure as it represents reported segment and Other EBIT adjusted for special items. We believe 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 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.

We use Return on Capital Employed (ROCE) as a measure of the profitability of capital projects. ROCE is a non-GAAP financial measure and may not be defined and calculated by other companies in the same manner. ROCE as it relates to capital expansion projects is calculated by Spectra Energy as earnings before interest and taxes generated by a project divided by the total cost of a project.

Forward-Looking Statements

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 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 outcome of litigation and regulatory investigations, proceedings or inquiries; the effect of weather and other natural phenomena, including the economic, operational and other effects of hurricanes and storms; 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; the levels of supply and demand for natural gas in our areas of operation; the results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings and general market and economic conditions; increases in the cost of goods and services required to complete capital projects; declines in the market prices of equity and debt securities and resulting funding requirements for defined benefit pension plans; the effects of accounting pronouncements issued periodically by accounting standard-setting bodies; the extent of success in connecting natural gas supplies to gathering, processing and transmission systems and in connecting to expanding gas markets; 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; and our ability to successfully complete and integrate future acquisitions.  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 2008 Form 10-K, filed on February 27, 2009, and in our other filings made with the Securities and Exchange Commission (SEC), which are available via the SEC's Web site 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 (NY SE: SE), a FORTUNE 500 company, 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 nearly a century, Spectra Energy and its predecessor companies have developed critically important pipelines and related infrastructure connecting natural gas supply sources to premium markets. Based in Houston, Texas, the company operates in the United States and Canada approximately 19,100 miles of transmission pipeline, more than 285 billion cubic feet of storage, as well as natural gas gathering and processing, natural gas liquids operations and local distribution assets. The company also has a 50 percent ownership in DCP Midstream, one of the largest natural gas gatherers and processors in the United States. Spectra Energy was recently ranked by FORTUNE as the world's "most admired" pipeline company. For more information, visit www.spectraenergy.com.

    
    
                             Spectra Energy Corp     
                            Quarterly Highlights     
                               December 2009         
                               (Unaudited)           
          (In millions, except per-share amounts and where noted) 
          
                                                                  
                                         Quarters Ended    Years Ended   
                                          December 31,     December 31,  
                                          ------------     ------------  
                                          2009    2008    2009     2008 
    ------------------------------        ------------    ------------- 
    COMMON STOCK DATA                                                   
    Earnings Per Share From Continuing
     Operations                       
       Basic                             $0.34   $0.27   $1.31    $1.82 
       Diluted                           $0.33   $0.27   $1.31    $1.81 
    Earnings Per Share                                                  
       Basic                             $0.34   $0.28   $1.32    $1.82 
       Diluted                           $0.34   $0.28   $1.32    $1.81 
    Dividends Per Share                  $0.25   $0.25   $1.00    $0.96 
    Weighted-Average Shares Outstanding                                 
       Basic                               647     611     642      622 
       Diluted                             650     612     643      624 
                                                                        
    ------------------------------        ------------    -------------
    INCOME                                                              
    Operating Revenues                  $1,298  $1,261  $4,552   $5,074 
    Total Reportable Segment EBIT          497     385   1,869    2,311 
    Income from Discontinued                                            
     Operations, Net of Tax                  2       3       5        2 
    Net Income - Controlling Interests     219     171     848    1,129 
                                                                        
    ------------------------------        ------------    -------------
    EBIT BY BUSINESS SEGMENT                                            
    U.S. Transmission                     $204    $161    $894     $844 
    Distribution                            96      90     336      353 
    Western Canada Transmission &                                       
     Processing                            120      65     343      398 
    Field Services                          77      69     296      716 
                                            --      --     ---      --- 
      Total Reportable Segment EBIT        497     385   1,869    2,311 
    Other EBIT                             (28)    (21)    (74)     (78)
                                           ---     ---     ---      --- 
       Total Reportable Segment and Other                                 
        EBIT                              $469    $364  $1,795   $2,233 
                                          ====    ====  ======   ====== 
                                                                        
    ------------------------------        ------------    -------------
    CAPITAL AND INVESTMENT EXPENDITURES (a)                             
    U.S. Transmission                                     $727   $1,400 
    Distribution                                           224      373 
    Western Canada Transmission & Processing               353      222 
    Other                                                   32       35 
                                                            --       -- 
    Total Capital and Investment Expenditures           $1,336   $2,030 
                                                        ======   ====== 
                                                                        
                                                                        
                                                        December 31,  
                                                        ------------  
                                                        2009     2008 
    ------------------------------                    ----------------
    CAPITALIZATION                                                      
    Common Equity - Controlling Interests                40%      34%
    Noncontrolling Interests and Preferred Stock          4%       4%
    Total Debt                                           56%      62%
                                                                        
    ------------------------------                    ----------------
    Total Debt                                       $9,918  $10,047 
    Book Value Per Share (b)                         $11.01    $9.07 
    Actual Shares Outstanding                           647      611 
                                                                        
                                                                        
    (a) Includes loans to affiliates for capital expansion projects. 
    (b) Represents controlling interests. 
    
    
    
                       Spectra Energy Corp                   
                       Quarterly Highlights                  
                          December 2009                      
                           (Unaudited)                       
                (In millions, except where noted)            
                                                             
                                          Quarters Ended  Years Ended   
                                           December 31,   December 31,  
                                          --------------  ------------  
                                           2009   2008    2009    2008 
    -----------------------                -----------    ------------ 
    U.S. TRANSMISSION                                        
      Operating Revenues                   $444   $395  $1,690  $1,600 
      Operating Expenses                                     
        Operating, Maintenance and Other    187    162     577     595 
        Depreciation and Amortization        64     58     246     232 
      Gains on Sales of Other Assets
       and Other, net                         -     10      11      42 
      Other Income and Expenses              31     (8)     91      86 
      Noncontrolling Interests               20     16      75      57 
                                             --     --      --      -- 
      EBIT                                 $204   $161    $894    $844 
                                           ----   ----    ----    ---- 
                                                             
      Proportional Throughput, TBtu (a)     680    622   2,574   2,218 
                                                             
    -----------------------                -----------    ------------
    DISTRIBUTION                                             
      Operating Revenues                   $509   $558  $1,745  $1,991 
      Operating Expenses                                     
        Natural Gas Purchased               261    347     878   1,094 
        Operating, Maintenance and Other    106     88     358     372 
        Depreciation and Amortization        46     37     172     175 
      Other Income and Expenses               -      4      (1)      3 
      EBIT                                  $96    $90    $336    $353 
                                            ---    ---    ----    ---- 
                                                             
      Number of Customers, Thousands                     1,325   1,309 
      Heating Degree Days, Fahrenheit     2,471  2,676   7,435   7,491 
      Pipeline Throughput, TBtu             220    269     809     900 
                                                             
    -----------------------                -----------    ------------
    WESTERN CANADA TRANSMISSION & PROCESSING                 
      Operating Revenues                   $345   $308  $1,115  $1,482 
      Operating Expenses                                     
        Natural Gas and Petroleum Products                     
         Purchased                           79    112     222     496 
        Operating, Maintenance and Other    108    103     407     445 
        Depreciation and Amortization        39     33     144     147 
      Other Income and Expenses               1      5       1       5 
      Noncontrolling Interests                -      -       -       1 
                                              -      -       -       - 
      EBIT                                 $120    $65    $343    $398 
                                           ----    ---    ----    ---- 
                                                             
      Pipeline Throughput, TBtu             158    161     604     615 
      Volumes Processed, TBtu               161    172     655     698 
      Empress Inlet Volumes, TBtu           159    176     737     820 
                                                             
    -----------------------                -----------    ------------
    FIELD SERVICES                                           
      Equity in Earnings of DCP 
       Midstream, LLC                       $77    $69    $296    $716 
      EBIT                                  $77    $69    $296    $716 
                                            ---    ---    ----    ---- 
                                                             
      Natural Gas Gathered and                               
       Processed/Transported, TBtu/day (b)  6.8    7.1     6.9     7.1 
      Natural Gas Liquids                                    
       Production, MBbl/d (b,c)             369    343     358     360 
      Average Natural Gas Price                              
       Per MMBtu (d)                      $4.17  $6.94   $3.99   $9.03 
      Average Natural Gas                                    
       Liquids Price Per Gallon           $0.96  $0.64   $0.71   $1.23 
                                                             
    -----------------------                -----------    ------------
    OTHER                                                    
      Operating Revenues                    $11    $13     $47     $45 
      Operating Expenses                     40     40     130     125 
      Other Income and Expenses               1      6       9       2 
      EBIT                                 $(28)  $(21)   $(74)   $(78)
                                           ----   ----    ----    ---- 
                                                             
                                                             
    (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)          
                                              
                                                      
                                             Quarters Ended      Years Ended 
                                              December 31,       December 31,
                                              ------------       ------------
                                               2009   2008        2009   2008
                                               ----   ----        ----   ----
                                               
    Operating Revenues                       $1,298 $1,261      $4,552 $5,074
    Operating Expenses                          918    967       3,088  3,636
    Gains on Sales of Other
     Assets and Other, net                        -     10          11     42
                                               ----   ----        ----   ----
    Operating Income                            380    304       1,475  1,480
                                               ----   ----        ----   ----
                                
    Other Income and Expenses                   104     89         406    844
    Interest Expense                            154    166         610    636
                                               ----   ----        ----   ----
    Earnings From Continuing
     Operations Before Income Taxes             330    227       1,271  1,688
    Income Tax Expense From                              
     Continuing Operations                       93     43         353    496
                                               ----   ----        ----   ----
                                
    Income From Continuing Operations           237    184         918  1,192
    Income From Discontinued                              
     Operations, net of tax                       2      3           5      2
                                               ----   ----        ----   ----
    
    Net Income                                  239    187         923  1,194
    Net Income -                               
     Noncontrolling Interests                    20     16          75     65
                                               ----   ----        ----   ----
    Net Income - Controlling                               
     Interests                                 $219   $171        $848 $1,129
                                               ====   ====        ==== ======
    
    
    
                                Spectra Energy Corp            
                        Condensed Consolidated Balance Sheets   
                                   (Unaudited)                
                                  (In millions)               
                                               
                                               
                                             December 31,    December 31,
                                                 2009            2008
                                                 ----            ----
    ASSETS                                     
                                               
    Current Assets                              $1,429          $1,450
    Investments and Other Assets                 6,356           5,950
    Net Property, Plant and Equipment           15,347          13,639
    Regulatory Assets and Deferred Debits          947             885
                                                 -----           -----
      Total Assets                             $24,079         $21,924
                                               =======         =======
                                               
    LIABILITIES AND EQUITY                     
                                               
    Current Liabilities                         $2,495          $3,044
    Long-term Debt                               8,947           8,290
    Deferred Credits and Other Liabilities       4,747           4,355
    Preferred Stock of Subsidiaries                225             225
    Equity                                       7,665           6,010
                                                 -----           -----
                                               
      Total Liabilities and Equity             $24,079         $21,924
                                               =======         =======
    
    
    
                            Spectra Energy Corp                        
              Condensed Consolidated Statements of Cash Flows          
                                (Unaudited)                            
                               (In millions)                           
                                                          Years Ended  
                                                         December 31,  
                                                         ------------  
                                                          2009    2008 
                                                          ----    ---- 
                                                                       
    CASH FLOWS FROM OPERATING ACTIVITIES                               
      Net income                                          $923  $1,194 
      Adjustments to reconcile net income to net
       cash provided by operating activities               837     611 
                                                        ------  ------
         Net cash provided by operating activities       1,760   1,805 
                                                        ------  ------
                                                                       
    CASH FLOWS FROM INVESTING ACTIVITIES                               
         Net cash used in investing activities          (1,000) (1,888)
                                                        ------  ------ 
                                                                       
    CASH FLOWS FROM FINANCING ACTIVITIES                               
         Net cash provided by (used in) financing                   
            activities                                    (803)    214 
                                                        ------  ------
                                                                       
            Effect of exchange rate changes on cash         25     (11)
                                                        ------  ------
                                                                       
                                                                       
      Net increase (decrease) in cash and cash equivalents (18)    120 
      Cash and cash equivalents at beginning of period     214      94 
                                                        ------  ------
      Cash and cash equivalents at end of period          $196    $214 
                                                        ======  ====== 
    
    
    
    
                          Spectra Energy Corp
                Reported to Ongoing Earnings Reconciliation
                      December 2009 Quarter-to-date
                (In millions, except per-share amounts)
    
                                                    Discont   Total
                                         Reported   -inued    Adjust-  Ongoing
                                         Earnings Operations  -ments  Earnings
                                         -------- ----------  ------  --------
    SEGMENT EARNINGS BEFORE INTEREST AND
     TAXES FROM CONTINUING OPERATIONS
    ------------------------------------
    U.S. Transmission                        $204         $-       $-    $204
    
    Distribution                               96          -        -      96
    
    Western Canada Transmission &
     Processing                               120          -        -     120
    
    Field Services                             77          -        -      77
                                         -------- ----------  ------  --------
        Total Reportable Segment EBIT         497          -        -     497
                                         -------- ----------  ------  --------
    Other                                     (28)         -        -     (28)
                                         -------- ----------  ------  --------
    
        Total Reportable Segment and Other
         EBIT                                $469         $-       $-    $469
                                         ======== ==========  =======  ======
    
    
    EARNINGS
    ------------------------------------
    Total Reportable Segment EBIT and
     Other EBIT                              $469         $-       $-    $469
    Interest Expense                         (154)         -        -    (154)
    Interest Income and Other                  15          -        -      15
    Income Taxes from Continuing
     Operations                               (93)        -         -     (93)
    Discontinued Operations, net of Tax         2         (2) A    (2)      -
                                         -------- ----------  ------  --------
    Total Earnings                           $239        $(2)     $(2)   $237
    
    Total Earnings -Noncontrolling Interests  (20)         -        -     (20)
                                         -------- ----------  ------  --------
    
    Total Earnings -Controlling Interests    $219        $(2)     $(2)   $217
                                         ======== ==========  =======  ======
    
    EARNINGS PER SHARE, BASIC               $0.34         $-       $-   $0.34
    ------------------------------------ ======== ==========  =======  ======
    
    EARNINGS PER SHARE, DILUTED             $0.34     $(0.01)  $(0.01)  $0.33
    ------------------------------------ ======== ==========  =======  ======
    
    A - Primarily Sonatrach settlement.
    
    Weighted Average Shares (reported and ongoing) - in millions
    
             Basic                647 
    
             Diluted              650
    
    
    
                                    
                            Spectra Energy Corp
                Reported to Ongoing Earnings Reconciliation
                       December 2008 Quarter-to-date
                  (In millions, except per-share amounts)
    
                                                        Discont-
                                                        -inued  Total  Ongoing
                                      Reported Special  Opera-  Adjust-  Earn-
                                      Earnings  Items    tions   ments   ings
                                      -------- ------- -------- ------- ------
    SEGMENT EARNINGS BEFORE INTEREST AND
     TAXES FROM CONTINUING OPERATIONS
    ---------------------------------
    
    U.S. Transmission                     $161    $44 A     $-     $44   $205
    
    Distribution                            90      -        -       -     90
    
    Western Canada Transmission &
     Processing                             65      -        -       -     65
    
    Field Services                          69      -        -       -     69
                                      -------- ------- -------- ------- ------
    
        Total Reportable Segment EBIT      385     44        -      44    429
    
    Other                                  (21)     -        -       -    (21)
                                      -------- ------- -------- ------- ------
    
        Total Reportable Segment and
         Other EBIT                       $364    $44       $-      $44  $408
                                      ======== ====== ======== ======== =====
    
    
    EARNINGS
    ---------------------------------
    Total Reportable Segment EBIT and
     Other EBIT                           $364    $44       $-      $44  $408
    Interest Expense                      (166)     -        -        -  (166)
    Interest Income and Other               29      -        -        -    29
    Income Taxes from Continuing
     Operations                            (43)   (14)       -      (14)  (57)
    Discontinued Operations, net of Tax      3      -       (3)B     (3)    -
                                      -------- ------- -------- ------- ------
    Total Earnings                        $187    $30      $(3)     $27  $214
    
    Total Earnings - Noncontrolling
     Interests                             (16)     -       (1)     $(1)  (17)
                                      -------- ------- -------- ------- ------
    
    Total Earnings - Controlling
     Interests                            $171    $30      $(4)     $26  $197
                                      ======== ====== ======== ======== =====
    
    EARNINGS PER SHARE, BASIC            $0.28  $0.05   $(0.01)   $0.04 $0.32
    --------------------------------- ======== ====== ======== ======== =====
    
    EARNINGS PER SHARE, DILUTED          $0.28  $0.05   $(0.01)   $0.04 $0.32
    --------------------------------- ======== ====== ======== ======== =====
    
    A - Impairment associated with Islander East project.
    
    B - Net results from Nevis and Brazeau River gathering and processing
        facilities in Western Canada.
    
    Weighted Average Shares (reported and ongoing) - in millions
    
                    Basic          611
    
                    Diluted        612
    
    
    
                                  Spectra Energy Corp
                     Reported to Ongoing Earnings Reconciliation
                              December 2009 Year-to-date
                       (In millions, except per-share amounts)
    
                                                        Discont-
                                                        -inued  Total  Ongoing
                                      Reported Special  Opera-  Adjust-  Earn-
                                      Earnings  Items   tions   ments    ings
                                      -------- ------- -------- ------- ------
    SEGMENT EARNINGS BEFORE INTEREST 
     AND TAXES FROM CONTINUING OPERATIONS
    -------------------------------------
    
    U.S. Transmission                    $894     $-       $-      $-    $894
    
    Distribution                          336      -        -       -     336
    
    Western Canada Transmission &
     Processing                           343      -        -       -     343
     
    Field Services                        296   (135)A      -    (135)    161
    
    
        Total Reportable Segment EBIT   1,869   (135)       -    (135)  1,734
    
    Other                                 (74)     -        -       -     (74)
                                     -------- ------- -------- ------- ------
        Total Reportable Segment and 
         Other EBIT                    $1,795  $(135)      $-   $(135) $1,660
                                     ======== ====== ======== ========  =====
    
    EARNINGS
    -------------------------------------
    Total Reportable Segment EBIT and
     Other EBIT                        $1,795  $(135)      $-   $(135) $1,660
    Interest Expense                     (610)     -        -       -    (610)
    Interest Income and Other              86      -        -       -      86
    Income Taxes from Continuing
     Operations                          (353)    50        -      50    (303)
    Discontinued Operations, net of Tax     5      -       (5)B    (5)      -
                                     -------- ------- -------- ------- ------
    Total Earnings                       $923   $(85)     $(5)   $(90)   $833
    
    Total Earnings - Noncontrolling
     Interests                            (75)     -        -       -     (75)
                                     -------- ------- -------- ------- ------
    Total Earnings - Controlling
     Interests                           $848   $(85)     $(5)    $(90)  $758
                                     ======== ====== ======== ========  =====
    EARNINGS PER SHARE, BASIC           $1.32 $(0.13)  $(0.01)  $(0.14) $1.18
    -------------------------------- ======== ====== ======== ========  =====
    
    EARNINGS PER SHARE, DILUTED         $1.32 $(0.13)  $(0.01)  $(0.14) $1.18
    --------------------------------  ======== ====== ======== ======== =====
    
    A - Recognition of a deferred gain associated with units previously issued
        by DCP Midstream's master limited partnership.
    B - Primarily Sonatrach settlement.
    
    Weighted Average Shares (reported and ongoing) - in millions
    
            Basic             642
    
            Diluted           643
    
    
    
    
    
                               Spectra Energy Corp
                    Reported to Ongoing Earnings Reconciliation
                           December 2008 Year-to-date
                      (In millions, except per-share amounts)
     
                                                        Discont-
                                                        -inued  Total  Ongoing
                                      Reported Special  Opera-  Adjust-  Earn-
                                      Earnings  Items   tions    ments   ings
                                      -------- ------- -------- ------- ------
    
    SEGMENT EARNINGS BEFORE INTEREST AND
     TAXES FROM CONTINUING OPERATIONS
    ---------------------------------
    U.S. Transmission                    $844     $17A    $-      $17    $861
    
    Distribution                          353       -      -       -      353
    
    Western Canada Transmission &
     Processing                           398       -      -       -      398
    
    Field Services                        716       -      -       -      716
    
    
        Total Reportable Segment EBIT   2,311      17      -      17    2,328
    
    Other                                 (78)      -      -       -      (78)
                                     -------- ------- ------  ------  -------
    
        Total Reportable Segment and
         Other EBIT                    $2,233     $17     $-     $17   $2,250
                                     ========  ====== ======  ======   ======
    
    EARNINGS
    ---------------------------------
    Total Reportable Segment EBIT and
     Other EBIT                        $2,233     $17     $-     $17   $2,250
    Interest Expense                     (636)      -      -       -     (636)
    Interest Income and Other              91       -      -       -       91
    Income Taxes from Continuing
     Operations                          (496)     (5)     -      (5)    (501)
    Discontinued Operations, net of Tax     2       -     (2)B    (2)       -
    
    Total Earnings                     $1,194     $12    $(2)    $10   $1,204
    
    Total Earnings - Noncontrolling
     Interests                            (65)      -      2      $2      (63)
                                     -------- ------- ------  ------  -------
    
    Total Earnings - Controlling 
     Interests                         $1,129     $12     $-     $12   $1,141
                                     ========  ====== ======  ======   ======
    
    EARNINGS PER SHARE, BASIC           $1.82   $0.02     $-   $0.02    $1.84
    -------------------------------- ========  ====== ======  ======   ======
    
    EARNINGS PER SHARE, DILUTED         $1.81   $0.02     $-   $0.02    $1.83
    -------------------------------- ========  ====== ======  ======   ======
    
    
    A - Bankruptcy settlement of customer's transportation contract and
        impairment associated with Islander East project.
    B - Net results from Nevis and Brazeau River gathering and processing
        facilities in Western Canada.
    
    Weighted Average Shares (reported and ongoing) - in millions
    
                Basic               622
    
                Diluted             624
    

SOURCE Spectra Energy



RELATED LINKS
http://www.spectraenergy.com

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