spectra energy 3Q08Earnings_RegGCombined

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spectra energy 3Q08Earnings_RegGCombined

  1. 1. Spectra Energy Corp Non-GAAP Reconciliation for SEC Regulation G Earnings Release call November 6, 2008 Ongoing Net Income The materials for Spectra Energy’s Earnings Release call on November 6, 2008 include a discussion of ongoing net income. Ongoing net income is a non-GAAP financial measure, as it represents net income adjusted for the impact of special items. Special items represent certain charges and credits which management believes will not be recurring on a regular basis. The most directly comparable GAAP measure for ongoing net income is reported net income, which includes the impact of special items. Ongoing Diluted Earnings-per-Share (“EPS”) The materials for Spectra Energy’s Earnings Release call on November 6, 2008 include a discussion of ongoing diluted EPS. Ongoing diluted EPS is a non- GAAP financial measure, as it represents diluted EPS from continuing operations adjusted for the per-share impact of special items. Special items represent certain charges and credits which management believes will not be recurring on a regular basis. The most directly comparable GAAP measure for ongoing diluted EPS is reported diluted EPS, which includes the impact of special items. Employee Incentive Targets The materials for Spectra Energy’s Earnings Release call on November 6, 2008 include a discussion of the 2008 employee incentive target for Spectra Energy. The EPS measure used for employee incentive bonuses is based on ongoing fully diluted EPS from continuing operations. Ongoing fully diluted EPS from continuing operations is a non-GAAP financial measure as it represents fully diluted EPS from continuing operations adjusted for the per-share impact of special items. Due to the forward-looking nature of this non-GAAP financial measure for future periods, information to reconcile this non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time, as management is unable to forecast any special items for future periods. Ongoing Segment and Other EBIT and EBITDA The materials for Spectra Energy’s Earnings Release call on November 6, 2008 include a discussion of ongoing EBIT (earnings before interest and taxes) and EBITDA (earnings before interest, taxes and depreciation and amortization) for Spectra Energy’s reportable segments and for Other, which represents the remainder of Spectra Energy’s operations. Ongoing segment and Other EBIT and EBITDA amounts are non-GAAP financial measures as they reflect segment and Other EBIT and EBITDA adjusted for the impact of special items. Special 1
  2. 2. items represent certain charges and credits which management believes will not be recurring on a regular basis. The most directly comparable GAAP measures for ongoing segment and Other EBIT and EBITDA are reported segment and Other EBIT and depreciation and amortization from continuing operations, which includes the impact of special items. Due to the forward-looking nature of this non-GAAP financial measure for future periods, information to reconcile this non- GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time, as management is unable to forecast any special items for future periods. 2
  3. 3. Spectra Energy Corp Reported to Ongoing Earnings Reconciliation September 2008 Quarter-to-date (In millions, except per-share amounts) Reported Discontinued Total Ongoing Special Items Earnings Operations Adjustments Earnings SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS $ 213 $ 4 $ - $ 4 $ 217 U.S. Transmission A 44 - - - 44 Distribution 113 - - - 113 Western Canada Transmission & Processing 239 - - - 239 Field Services 609 4 - 4 613 Total Reportable Segment EBIT (9) - - - (9) Other Total Reportable Segment EBIT and Other EBIT $ 600 $ 4 $ - $ 4 $ 604 EARNINGS Total Reportable Segment EBIT and Other EBIT $ 600 $ 4 $ - $ 4 $ 604 Interest Expense (163) - - - (163) Interest Income and Other 7 - - - 7 Income Taxes from Continuing Operations (145) (1) - (1) (146) Discontinued Operations, Net of Tax (3) - 3B 3 - $ 296 $ 3 $ 3 $ 6 $ 302 Total Earnings $ 0.48 $ - $ 0.01 $ 0.01 $ 0.49 EARNINGS PER SHARE, BASIC $ 0.48 $ - $ 0.01 $ 0.01 $ 0.49 EARNINGS PER SHARE, DILUTED Note 1 - Amounts for special items are net of minority interest, if applicable A - Bankruptcy settlement of a customer's transportation contract. B - Net results from Nevis and Brazeau River gathering and processing facilities in Western Canada. Weighted Average Shares (reported and ongoing) - in millions 615 Basic 617 Diluted 3
  4. 4. Spectra Energy Corp Reported to Ongoing Earnings Reconciliation September 2007 Quarter-to-date (In millions, except per-share amounts) Reported Discontinued Extraordinary Total Ongoing Special Items Earnings Operations Item Adjustments Earnings SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS $ 230 $ - $ - $ - $ - $ 230 U.S. Transmission 40 - - - - 40 Distribution 101 - - - - 101 Western Canada Transmission & Processing 140 3 - - 3 143 Field Services A 511 3 - - 3 514 Total Reportable Segment EBIT (15) 5 - - 5 (10) Other B Total Reportable Segment EBIT and Other EBIT $ 496 $ 8 $ - $ - $ 8 $ 504 EARNINGS Total Reportable Segment EBIT and Other EBIT $ 496 $ 8 $ - $ - $ 8 $ 504 Interest Expense (156) - - - - (156) Interest Income and Other 5 - - - - 5 Income Taxes from Continuing Operations (110) (3) - - (3) (113) Discontinued Operations, Net of Taxes 3 - (3) C - (3) - Extraordinary Items, Net of Taxes (4) - - 4D 4 - $ 234 $ 5 $ (3) $ 4 $ 6 $ 240 Total Earnings $ 0.37 $ 0.01 $ (0.01) $ 0.01 $ 0.01 $ 0.38 EARNINGS PER SHARE, BASIC $ 0.37 $ 0.01 $ (0.01) $ 0.01 $ 0.01 $ 0.38 EARNINGS PER SHARE, DILUTED 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 - Primarily income from Ft Frances revenue sharing and results for Nevis and Brazeau River gathering and processing facilities in Western Canada. D - Loss from deregulated storage assets at Distribution. Weighted Average Shares (reported and ongoing) - in millions 632 Basic 635 Diluted 4
  5. 5. SPECTRA ENERGY CORP U.S. Transmission Segment Reconciliation of Ongoing EBITDA September 2008 (Dollars in millions) QTD 08 QTD 07 YTD 08 YTD 07 Reported EBIT(Includes 50% Gulfstream's Net Income) $ 213 $ 230 $ 683 $ 673 Depreciation and Amortization 58 57 174 162 271 287 857 835 50% of Gulfstream D&A 4 3 11 11 50% of Gulfstream Interest 6 6 17 18 50% of SESH D&A 1 - 1 - 50% of SESH Interest (1) - (3) - 281 296 883 864 Special Item 4 - (27) - $ 285 $ 296 $ 856 $ 864 SPECTRA ENERGY CORP Distribution Segment Reconciliation of Ongoing EBITDA September 2008 (Dollars in millions) QTD 08 QTD 07 YTD 08 YTD 07 Reported EBIT $ 44 $ 40 $ 263 $ 238 Depreciation and Amortization 45 42 138 119 Reported EBITDA 89 82 401 357 Special Item - - - - Ongoing EBITDA $ 89 $ 82 $ 401 $ 357 SPECTRA ENERGY CORP Western Canada Transmission & Processing Segment Reconciliation of Ongoing EBITDA September 2008 (Dollars in millions) QTD 08 QTD 07 YTD 08 YTD 07 Reported EBIT $ 113 $ 101 $ 333 $ 218 Depreciation and Amortization 38 35 115 97 Reported EBITDA 151 136 448 315 Special Item - - - - Ongoing EBITDA $ 151 $ 136 $ 448 $ 315 SPECTRA ENERGY CORP Field Services Segment Reconciliation of Ongoing EBITDA September 2008 (Dollars in millions) QTD 08 QTD 07 YTD 08 YTD 07 Equity Earnings (50% of DCP Midstream's Net Income) $ 239 $ 140 $ 647 $ 345 O&M Expense - - - - Reported EBIT 239 140 647 345 50% of DCP Midstream D&A 47 40 135 114 50% of DCP Midstream Interest 21 18 61 51 50% of DCP Midstream Income Taxes 2 2 3 5 Reported EBITDA 309 200 846 515 Special Items 3 - 9 Ongoing EBITDA $ 309 $ 203 $ 846 $ 524 SPECTRA ENERGY CORP Other Segment Reconciliation of Ongoing EBITDA September 2008 (Dollars in millions) QTD 08 QTD 07 YTD 08 YTD 07 Reported EBIT $ (9) $ (15) $ (57) $ (56) Depreciation and Amortization 4 2 11 2 Reported EBITDA (5) (13) (46) (54) Special Item - 5 - 16 Ongoing EBITDA $ (5) $ (8) $ (46) $ (38) 5

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