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Content
Notes to Consolidated Financial Statements
25. POST EMPLOYMENT BENEFITS
PENSION PLANS
The Company has three basic pension plans which provide either defined benefit or defined contribution pension benefits, or both to employees of the Company. The Liquids Pipelines and Gas Distribution and Services pension plans provide Company funded defined benefit pension and/or defined contribution benefits to Canadian employees of Enbridge. The Enbridge U.S. pension plan provides Company funded defined benefit pension benefits for U.S. based employees. The Company has four supplemental pension plans which provide pension benefits in excess of the basic plans for certain employees.
The measurement date used to determine the plan assets and the accrued benefit obligation was September 30, 2008 for the Canadian pension plans and December 31, 2008 for the U.S. pension plan.
Defined Benefit Plans
Benefits payable from the defined benefit plans are based on members' years of service and final average remuneration. These benefits are partially inflation indexed after a member's retirement. Contributions by the Company are made in accordance with independent actuarial valuations and are invested primarily in publicly-traded equity and fixed income securities. The effective dates of the most recent actuarial valuations and the next required actuarial valuations for the basic plans are as follows:
| Effective Date of Most Recently Filed Actuarial Valuation |
Effective Date of Next Required Actuarial Valuation |
||||
| Liquids Pipelines | December 31, 2006 | December 31, 2009 | |||
| Enbridge U.S. | December 31, 2007 | December 31, 2008 | |||
| Gas Distribution and Services | December 31, 2006 | December 31, 2009 |
The defined benefit pension plan costs have been determined based on management's best estimates and assumptions of the rate of return on pension plan assets, rate of salary increases and various other factors including mortality rates, terminations and retirement ages.
Defined Contribution Plans
Contributions are generally based on the employee's age, years of service and remuneration. For defined contribution plans, pension costs equal amounts required to be contributed by the Company. Pension costs in respect of these plans during the year were $3.9 million (2007 – $3.6 million; 2006 – $3.0 million).
POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS
Post-employment benefits other than pensions primarily include supplemental health, dental, health spending account and life insurance coverage for qualifying retired employees.
The following tables detail the changes in the benefit obligation, the fair value of plan assets and the recorded asset or liability for the Company's defined benefit pension plans and OPEB plans using the accrual method.
| OPEB |
Pension Benefits |
||||||||||||
| 2008 | 2007 | 2008 | 2007 | ||||||||||
(millions of Canadian dollars) |
|||||||||||||
Change in Accrued Benefit Obligation |
|||||||||||||
| Benefit obligation at beginning of year | 183.4 | 193.2 | 1,100.4 | 1,109.0 | |||||||||
| Service cost | 5.2 | 4.7 | 52.4 | 43.8 | |||||||||
| Interest cost | 11.5 | 10.1 | 64.9 | 57.9 | |||||||||
| Amendments | – | – | (3.5 | ) | 0.1 | ||||||||
| Employees' contributions | 0.6 | 0.4 | – | – | |||||||||
| Actuarial loss/(gain) | (26.8 | ) | (10.2 | ) | (125.0 | ) | (46.4 | ) | |||||
| Benefits paid | (7.3 | ) | (6.7 | ) | (45.6 | ) | (42.2 | ) | |||||
| Effect of exchange rate changes | 12.7 | (8.1 | ) | 31.7 | (21.8 | ) | |||||||
| Benefit obligation at end of year | 179.3 | 183.4 | 1,075.3 | 1,100.4 | |||||||||
| Change in Plan Assets | |||||||||||||
| Fair value of plan assets at beginning of year | 47.8 | 50.2 | 1,309.9 | 1,227.1 | |||||||||
| Actual return on plan assets | (11.7 | ) | 1.7 | (179.7 | ) | 104.8 | |||||||
| Employer's contributions | 8.2 | 8.1 | 33.3 | 44.1 | |||||||||
| Employees' contributions | 0.6 | 0.4 | – | – | |||||||||
| Benefits paid | (7.3 | ) | (6.7 | ) | (45.6 | ) | (42.2 | ) | |||||
| Other | – | – | (1.4 | ) | (1.5 | ) | |||||||
| Effect of exchange rate changes | 8.2 | (5.9 | ) | 24.8 | (22.4 | ) | |||||||
| Fair value of plan assets at end of year | 45.8 | 47.8 | 1,141.3 | 1,309.9 | |||||||||
| Funded Status | |||||||||||||
| Benefit obligation | (179.3 | ) | (183.4 | ) | (1,075.3 | ) | (1,100.4 | ) | |||||
| Fair value of plan assets | 45.8 | 47.8 | 1,141.3 | 1,309.9 | |||||||||
| Overfunded/(Underfunded) status at end of year | (133.5 | ) | (135.6 | ) | 66.0 | 209.5 | |||||||
| Contribution after measurement date | 1.1 | 1.0 | 1.9 | – | |||||||||
| Unamortized prior service cost | – | – | 7.4 | 12.8 | |||||||||
| Unamortized transitional obligation/(asset) | 10.8 | 12.1 | (15.4 | ) | (17.6 | ) | |||||||
| Unamortized net loss | 24.6 | 32.9 | 167.0 | 13.5 | |||||||||
| Net amount recognized at end of year | (97.0 | ) | (89.6 | ) | 226.9 | 218.2 | |||||||
The amounts recognized include all of the Company's plans; however, the Gas Distribution and Services plans are funded through regulated rates on a cash basis and are not recorded as net pension assets or liabilities. Excluding Gas Distribution and Services plans, the Company's plans using the accrual method provide for a net pension asset of $73.8 million (2007 – $72.3 million) and a net OPEB liability of $21.5 million (2007 – $18.8 million). The pension asset is recorded on the balance sheet in Deferred Amounts and Other Assets while the pension liability is recorded in Other Long-Term Liabilities, with the current portion for each recorded in working capital accounts.
The weighted average assumptions made in the measurement of the projected benefit obligations of the pension plans and OPEB are as follows:
| OPEB |
Pension Benefits |
|||||||||||||
| Year ended December 31, | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 | ||||||||
| Discount rate | 6.42% | 5.71% | 5.37% | 6.59% | 5.65% | 5.27% | ||||||||
| Average rate of salary increases | 5.00% | 5.00% | 5.00% | |||||||||||
NET PENSION PLAN AND OPEB COSTS RECOGNIZED
| Year ended December 31, | 2008 | 2007 | 2006 | |||||
(millions of Canadian dollars) |
||||||||
| Benefits earned during the year | 57.6 | 52.1 | 45.7 | |||||
| Interest cost on projected benefit obligations | 76.4 | 68.0 | 64.2 | |||||
| Actual return on plan assets | 191.4 | (106.5 | ) | (80.3 | ) | |||
| Difference between actual and expected return on plan assets | (287.7 | ) | 19.9 | (3.4 | ) | |||
| Amortization of prior service costs | 2.0 | 2.0 | 2.0 | |||||
| Amortization of transitional obligation | (0.9 | ) | (0.9 | ) | (0.8 | ) | ||
| Amortization of actuarial loss | 4.9 | 13.9 | 15.3 | |||||
| Amount charged to EEP | (10.8 | ) | (11.3 | ) | (10.5 | ) | ||
| Pension and OPEB cost recognized | 32.9 | 37.2 | 32.2 |
The table reflects the pension and OPEB cost for all of the Company's benefit plans on an accrual basis. Using the cash basis for Gas Distribution and Services rate regulated plans and the accrual method for all other plans, the Company's pension cost was $27.4 million (2007 – $23.4 million; 2006 – $20.1 million), and its OPEB cost was $6.8 million for 2008 (2007 – $6.9 million; 2006 – $7.0 million).
The weighted average assumptions made in the measurement of the cost of the pension plans and OPEB are as follows:
| OPEB |
Pension Benefits |
|||||||||||||
| Year ended December 31, | 2008 | 2007 | 2006 | 2008 | 2007 | 2006 | ||||||||
| Discount rate | 5.71% | 5.37% | 5.30% | 5.65% | 5.27% | 5.24% | ||||||||
| Average rate of return on pension plan assets | 6.00% | 4.50% | 4.50% | 7.30% | 7.31% | 7.31% | ||||||||
| Average rate of salary increases | 5.00% | 5.00% | 4.44% | |||||||||||
MEDICAL COST TREND RATES
The assumed rates for the next year used to measure the expected cost of benefits are as follows:
| Medical Cost Trend Rate Assumption for Next Fiscal Year |
Ultimate Medical Cost Trend Rate Assumption |
Year in which Ultimate Medical Cost Trend Rate Assumption is Achieved |
|||||
| Canadian Plans | |||||||
| Drugs | 10% | 5% | 2016 | ||||
| Other Medical and Dental | 5% | 5% | 2008 | ||||
| U.S. Plan | 10% | 5% | 2013 | ||||
A one percent increase in the assumed medical and dental care trend rate would result in an increase of $25.0 million in the accumulated post-employment benefit obligations and an increase of $2.3 million in benefit and interest costs. A one percent decrease in the assumed medical and dental care trend rate would result in a decrease of $20.3 million in the accumulated post-employment benefit obligations and a decrease of $1.8 million in benefit and interest costs.
MAJOR CATEGORIES OF PLAN ASSETS
| OPEB |
Pension Benefits |
|||||||||||||||
| 2008 |
2007 |
2008 |
2007 |
|||||||||||||
| Year ended December 31, | Actual | Amount | Actual | Actual | Amount | Actual | ||||||||||
(millions of Canadian dollars) |
||||||||||||||||
| Equity securities | – | – | – | 57.3% | 653.5 | 60.7% | ||||||||||
| Fixed income securities | 84.2% | 38.6 | 85.4% | 35.1% | 400.5 | 33.5% | ||||||||||
| Other | 15.8% | 7.2 | 14.6% | 7.6% | 87.3 | 5.8% | ||||||||||
| Total Assets | 100% | 45.8 | 100% | 100% | 1,141.3 | 100% | ||||||||||
Plan assets are invested primarily in readily marketable investments with constraints on the credit quality of fixed income securities.
The Company manages the investment risk of its pension funds by setting a long term asset mix policy for each plan after consideration of: (i) the nature of pension plan liabilities; (ii) the investment horizon of the plan; (iii) the going concern and solvency funded status and cash flow requirements of the plans; (iv) the operating environment and financial situation of the Company and its ability to withstand fluctuations in pension contributions; and (v) the future economic and capital markets outlook with respect to investment returns, volatility of returns and correlation between assets. The overall expected rate of return is based on the asset allocation targets with estimates for returns on equity and debt securities based on long-term expectations.
The target asset mix for each of the pension plans are as follows:
| Enbridge Inc. and Affiliates |
Enbridge Gas Distribution Inc. and Affiliates |
Enbridge (U.S.) Inc. | ||||
| Equity securities | 62.5% | 52.5% | 57.5% | |||
| Fixed income securities | 32.5% | 42.5% | 37.5% | |||
| Other | 5% | 5% | 5% |
EXPECTED RATE OF RETURN ON PLAN ASSETS
| OPEB |
Pension Benefits |
|||||||||
| Year ended December 31, | 2008 | 2007 | 2008 | 2007 | ||||||
| Canadian Plans | 6.00% | 4.50% | 7.25% | 7.25% | ||||||
| U.S. Plan | 6.00% | 4.50% | 7.75% | 7.75% | ||||||
PLAN CONTRIBUTIONS BY THE COMPANY
| OPEB |
Pension Benefits |
|||||||||
| Year ended December 31, | 2008 | 2007 | 2008 | 2007 | ||||||
(millions of Canadian dollars) |
||||||||||
| Total contributions | 8.2 | 8.1 | 33.3 | 44.1 | ||||||
| Contributions expected to be paid in 2009 | 10.1 | 48.4 | ||||||||
BENEFITS EXPECTED TO BE PAID BY THE COMPANY
| Year ended December 31, | 2009 | 2010 | 2011 | 2012 | 2013 | 2014-2018 | |||||||
(millions of dollars) |
|||||||||||||
| Expected future benefit payments | 54.8 | 57.8 | 60.5 | 63.7 | 67.1 | 395.8 |
26. OTHER INVESTMENT INCOME
| Year ended December 31, | 2008 | 2007 | 2006 | ||||
(millions of Canadian dollars) |
|||||||
| Interest income on affiliate loans | 33.5 | 32.7 | 29.3 | ||||
| Gain on reduction of EEP ownership interest | 12.5 | 33.9 | – | ||||
| Noverco preferred dividends income | 16.1 | 15.8 | 15.6 | ||||
| OCENSA investment income | 23.4 | 24.7 | 26.8 | ||||
| Net foreign currency gains | 43.0 | 26.2 | 13.3 | ||||
| Allowance for equity funds used during construction (AEDC) | 58.9 | 15.1 | 1.5 | ||||
| Hurricane insurance recoveries | – | 14.6 | 6.0 | ||||
| Other | 15.3 | 32.1 | 15.3 | ||||
| 202.7 | 195.1 | 107.8 |
27. CHANGES IN OPERATING ASSETS AND LIABILITIES
| Year ended December 31, | 2008 | 2007 | 2006 | |||||
(millions of Canadian dollars) |
||||||||
| Accounts receivable and other | 201.6 | (502.1 | ) | 3.9 | ||||
| Inventory | (135.3 | ) | 159.5 | 134.1 | ||||
| Deferred amounts and other assets | 95.5 | (134.6 | ) | (67.3 | ) | |||
| Accounts payable and other 1 | (181.4 | ) | 503.8 | 43.5 | ||||
| Interest payable | 9.3 | (5.9 | ) | 12.5 | ||||
| (10.3 | ) | 20.7 | 126.7 |
- Changes in construction payable are included in investing activities.
28. RELATED PARTY TRANSACTIONS
EEP does not have employees and uses the services of the Company for managing and operating its businesses. Vector Pipeline, a joint venture, contracts the services of Enbridge to operate the pipeline. Amounts for these services, which are charged at cost in accordance with service agreements, are:
| Year ended December 31, | 2008 | 2007 | 2006 | ||||
(millions of Canadian dollars) |
|||||||
| EEP | 301.9 | 267.1 | 244.9 | ||||
| Vector Pipeline | 5.8 | 4.8 | 4.1 | ||||
| 307.7 | 271.9 | 249.0 |
At December 31, 2008, the Company has accounts receivable from EEP of $40.9 million (2007 – $32.4 million).
The Company has provided EEP with an unsecured revolving credit agreement. The credit facility provides for a maximum principle amount of US$500.0 million for a three-year term maturing in December 2010. At December 31, 2008 and 2007, there were no amounts outstanding on this facility.
EGD, a subsidiary of the Company, has contracts for gas transportation services from Alliance Pipeline and Vector Pipeline. EGD is charged market prices for these services:
| Year ended December 31, | 2008 | 2007 | 2006 | ||||
(millions of Canadian dollars) |
|||||||
| Alliance Pipeline Canada | 23.6 | 21.3 | 23.6 | ||||
| Alliance Pipeline US | 17.1 | 15.1 | 14.1 | ||||
| Vector Pipeline | 27.0 | 25.0 | 27.3 | ||||
| 67.7 | 61.4 | 65.0 |
CustomerWorks Limited Partnership (CustomerWorks), a joint venture, provided customer care services to EGD under an agreement having a five-year term which expired in 2007 and was not renewed. EGD was charged market prices for these services. CustomerWorks also rented an automated billing system from Enbridge Commercial Services Inc. (ECS), a subsidiary of the Company. Amounts charged by/(to) CustomerWorks are as follows:
| Year ended December 31, | 2008 | 2007 | 2006 | |||||
(millions of Canadian dollars) |
||||||||
| EGD | – | 26.3 | 108.5 | |||||
| ECS | (2.0 | ) | (1.8 | ) | (8.1 | ) | ||
| (2.0 | ) | 24.5 | 100.4 |
Enbridge Gas Services (US) Inc., a subsidiary of the Company, purchases and sells gas at prevailing market prices with Enbridge Marketing (US) Inc., a subsidiary of EEP. Amounts paid/(recovered) are as follows:
| Year ended December 31, | 2008 | 2007 | 2006 | |||||
(millions of Canadian dollars) |
||||||||
| Purchases | 52.1 | 43.5 | 29.2 | |||||
| Sales | (7.5 | ) | (4.1 | ) | (6.3 | ) | ||
| 44.6 | 39.4 | 22.9 |
Enbridge Gas Services Inc., a subsidiary of the Company, has transportation commitments, measured at market value, through 2015 on Alliance Pipeline Canada and Vector Pipeline. Amounts paid are as follows:
| Year ended December 31, | 2008 | 2007 | 2006 | ||||
(millions of Canadian dollars) |
|||||||
| Alliance Pipeline Canada | 9.3 | 8.5 | 8.3 | ||||
| Vector Pipeline | 0.6 | 0.6 | 0.6 | ||||
| 9.9 | 9.1 | 8.9 |
Enbridge Gas Services (US) Inc., a subsidiary of the Company, has transportation commitments, measured at market value, through 2015 on Alliance Pipeline US and Vector Pipeline. Amounts paid are as follows:
| Year ended December 31, | 2008 | 2007 | 2006 | ||||
(millions of Canadian dollars) |
|||||||
| Alliance Pipeline US | 7.0 | 6.6 | 6.9 | ||||
| Vector Pipeline | 15.4 | 15.6 | 16.5 | ||||
| 22.4 | 22.2 | 23.4 |
Tidal Energy Marketing Inc., a subsidiary of the Company, purchases and sells commodities at prevailing market prices with EEP and a subsidiary of EEP as follows:
| Year ended December 31, | 2008 | 2007 | 2006 | |||||
(millions of Canadian dollars) |
||||||||
| Purchases | 24.5 | 4.6 | 17.0 | |||||
| Sales | (9.4 | ) | (5.5 | ) | (6.7 | ) | ||
| 15.1 | (0.9 | ) | 10.3 |
RECEIVABLE FROM AFFILIATE
The receivable from affiliate of $159.2 million (2007 – $128.5 million), included in Deferred Amounts and Other Assets, initially resulted from the sale of Enbridge Midcoast Energy to EEP. During 2007, the original loan receivable was repaid and a new loan was entered into. The loan, denominated in U.S. dollars, bears interest at 8.4% and matures in 2017. Interest income related to the note was $11.6 million, $10.0 million and $11.8 million, in 2008, 2007 and 2006, respectively.
TRANSFER OF LINE PIPE
The Company and EEP, an equity investee, regularly collaborate on construction projects. Examples of such projects include the Southern Access and Alberta Clipper projects where the Company is constructing the Canadian portion of the projects and EEP is constructing the United States portion. In August 2008, the Company transferred $22.5 million, measured at market value, of 36 inch diameter line pipe to EEP for use in constructing the Alberta Clipper project. The line pipe was initially obtained by the Company for use in constructing the Southern Access Extension, which has been delayed due to a prolonged regulatory process.
29. COMMITMENTS AND CONTINGENCIES
COMMITMENTS
The Company has significant signed contracts for the purchase of services, pipe and other materials totaling $1,986.0 million, to be used in the construction of several Liquids Pipelines projects including Southern Lights Pipeline, Alberta Clipper Project, Southern Access Expansion, Hardisty Terminal, Fort Hills Pipeline and Line 4 Extension and certain other administrative services.
ENBRIDGE GAS DISTRIBUTION INC.
Bloor Street Incident
The Company had been charged under both the Ontario Technical Standards and Safety Act (TSSA) and the Ontario Occupational Health and Safety Act (OHSA) in connection with an explosion that occurred on Bloor Street West in Toronto in April 2003. In October 2007, all of the TSSA and OHSA charges laid against the Company were dismissed by the Ontario Court of Justice. The decision has been appealed by the Crown to the Ontario Superior Court of Justice. The appeal is scheduled to be heard by the Court during 2009. The maximum possible fine upon conviction would not result in any material financial impact on the Company.
The Company has also been named as a defendant in a number of civil actions related to the explosion. All significant civil actions have been settled without any material financial impact on the Company. A Coroner's Inquest in connection with the explosion is also possible.
GST Overpayment
In December 2007, EGD discovered that it had remitted excess GST to the Canada Revenue Agency (CRA). In respect of certain months within the 2003 to 2005 calendar year periods, the amount of such overpayment is approximately $40 million and is included in accounts receivable. The Company expects that it will recover the overpayment from the CRA during 2009.
Harper Gardens Incident
On February 14, 2007, an explosion and fire occurred at a residence on Harper Gardens in Toronto. The home was destroyed and a resident of the home was killed. A natural gas contractor working in the home at the time of the explosion was seriously injured. Several public authorities commenced investigations in connection with the incident. The Company has also been named as a defendant in civil actions related to the incident, but does not expect these actions to result in any material financial impact.
Remediation of Discontinued Manufactured Gas Plant Sites
EGD may incur future costs due to claims relating to alleged coal tar contamination at or near former manufactured gas plant (MGP) sites. In October 2002, a claim was filed for $55.0 million in damages relating to a certain MGP site. EGD filed a statement of defence in June 2003 denying liability. Although the Company believes that it has a valid defence to this claim, certain risks exist. The probable overall cost cannot be determined at this time due to uncertainty about the presence and extent of damage in addition to the potential alternative remediation approaches which vary in cost. EGD expects that costs, if any, not recovered through insurance may be recovered through rates. As such, EGD does not believe the outcome will have any material financial impact.
ENBRIDGE ENERGY COMPANY, INC.
Enbridge Energy Company, Inc. (EEC), a subsidiary of the Company and the general partner of EEP, is the former owner of Enbridge Midcoast Energy Inc. (Midcoast). The IRS challenged Midcoast's tax treatment of its 1999 acquisition of several partnerships that owned a natural gas pipeline system in Kansas (these assets were sold to EEP in 2002 and subsequently sold by EEP in 2007). In March 2008, an unfavourable court decision was received sustaining the IRS position, decreasing the U.S. tax basis for the pipeline assets. The Company's earnings for 2008 reflected a decrease of $32.2 million in consideration of the adverse court decision which, when combined with amounts previously recorded, provides fully for the liability. Given loss carryforwards in EEC prior to the decision, the cash tax impact of the decision was not significant. The Company continues to believe the tax treatment of the acquisition and the related tax deductions claimed were appropriate and has appealed the decision.
OTHER TAX MATTERS
Enbridge and its subsidiaries maintain tax liabilities related to uncertain tax positions. While fully supportable in the Company's view, these tax positions, if challenged by tax authorities, may not be fully sustained on review.
OTHER LITIGATION
The Company and its subsidiaries are subject to various other legal actions and proceedings which arise in the normal course of business. While the final outcome of such actions and proceedings cannot be predicted with certainty, Management believes that the resolution of such actions and proceedings will not have a material impact on the Company's consolidated financial position or results of operations.
30. GUARANTEES
EEC, as the general partner of EEP, has agreed to indemnify EEP from and against substantially all liabilities, including liabilities relating to environmental matters, arising from operations prior to the transfer of its pipeline operations to EEP in 1991. This indemnification does not apply to amounts that EEP would be able to recover in its tariff rates if not recovered through insurance or to any liabilities relating to a change in laws after December 27, 1991.
In addition, in the event of default, EEC is subject to recourse with respect to US$93.0 million of EEP's long-term debt at December 31, 2008 (2007 – US$124.0 million).
The Company has also agreed to indemnify EEM for any tax liability related to EEM's formation, management of EEP and ownership of i-units of EEP. The Company has not made any significant payment under these tax indemnifications. The Company does not believe there is a material exposure at this time.
In the normal course of conducting business, the Company enters into agreements which indemnify third parties. The Company cannot reasonably estimate the maximum potential amounts that could become payable to third parties under these agreements; however, historically, the Company has not made any significant payments under these indemnification provisions. While many of these agreements may specify a maximum potential exposure, or a specified duration to the indemnification obligation, there are circumstances where the amount and duration are unlimited. Examples where such indemnification obligations have been issued include:
Sale Agreements for Assets or Businesses:
- breaches of representations, warranties or covenants;
- loss or damages to property;
- environmental liabilities;
- changes in laws;
- valuation differences;
- litigation; and
- contingent liabilities.
Provision of Services and Other Agreements:
- breaches of representations, warranties or covenants;
- changes in laws;
- intellectual property rights infringement; and
- litigation.
When disposing of assets or businesses, the Company may indemnify the purchaser for certain tax liabilities incurred while the Company owned the assets or for a misrepresentation related to taxes that result in a loss to the purchaser. Similarly, the Company may indemnify the purchaser of assets for certain tax liabilities related to those assets.
31. SUBSEQUENT EVENT
In January, 2009, the Company secured incremental credit of $225 million from its banking group for an existing credit facility established in December 2008. The new commitments provide additional liquidity and increase the total credit facilities to $8.8 billion.
32. UNITED STATES ACCOUNTING PRINCIPLES
These consolidated financial statements have been prepared in accordance with Canadian GAAP. The effects of significant differences between Canadian GAAP and U.S. GAAP for the Company are described below.
EARNINGS AND COMPREHENSIVE INCOME
| Year ended December 31, | 2008 | 2007 | 2006 | ||||||
(millions of Canadian dollars, except per share amounts) |
|||||||||
| Earnings under Canadian and U.S. GAAP Applicable to Common Shareholders | 1,320.8 | 700.2 | 615.4 | ||||||
| Earnings under Canadian and U.S. GAAP | 1,327.7 | 707.1 | 622.3 | ||||||
| Other comprehensive income/(loss) under Canadian GAAP | 317.8 | (197.4 | ) | 36.0 | |||||
| Underfunded pension adjustment (net of tax) 4 | (56.6 | ) | 23.3 | – | |||||
| Unrealized net gain/(loss) on cash flow hedges | – | – | (64.2 | ) | |||||
| Comprehensive income under U.S. GAAP | 1,588.9 | 533.0 | 594.1 | ||||||
| Earnings per common share under U.S. GAAP | 3.67 | 1.97 | 1.81 | ||||||
| Diluted earnings per common share under U.S. GAAP | 3.64 | 1.95 | 1.79 | ||||||