<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): April 16, 1999
LAKEHEAD PIPE LINE COMPANY, LIMITED
PARTNERSHIP
(Exact name of registrant as specified in its charter)
DELAWARE 333-59597 39-1715851
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
LAKE SUPERIOR PLACE, 21 WEST SUPERIOR STREET, DULUTH, MN 55802-2067
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (218) 725-0100
<PAGE> 2
ITEM 5. OTHER EVENTS
On April 15, 1999, Lakehead Pipe Line Partners, L.P., the owner of 98.99%
of Lakehead Pipe Line Company, Limited Partnership issued a press release
announcing a cash distribution and first quarter 1999 net income. This press
release is filed as Exhibit 99.1 hereto, is incorporated by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
( c) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
99.1 Press release of Lakehead Pipe Line Partners, L.P., announcing a cash distribution and first
quarter net income.
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LAKEHEAD PIPE LINE COMPANY, LIMITED
PARTNERSHIP
(registrant)
By: Lakehead Pipe Line Company, Inc.
as General Partner
-----------------------------------
M. A. Maki
Chief Accountant
(Principal Financial and
Accounting Officer)
Date: April 16, 1999
<PAGE> 1
NEWS RELEASE
For immediate release LK99-02
April 15, 1999
LAKEHEAD PIPE LINE PARTNERS, L.P. ANNOUNCES INCREASED CASH DISTRIBUTION AND
REPORTS FIRST QUARTER FINANCIAL RESULTS
(DULUTH, MINNESOTA, APRIL 15, 1999) LAKEHEAD PIPELINE PARTNERS, L.P. (NYSE: LHP)
today announced that it will increase its quarterly cash distribution to $0.875
per unit from $0.86 per unit. The distribution is payable May 14, 1999, to
unitholders of record on April 30, 1999. The increase in cash distribution is
the fourth consecutive annual increase and results in an annualized cash
distribution of $3.50 per unit.
Commenting on the distribution increase, Mr. Stephen Wuori, President of
Lakehead Pipe Line Company, Inc., the General Partner, said, "The increase
reflects our continued positive outlook for the future. We are encouraged by the
recent increase in crude oil prices which bodes well for western Canadian crude
oil producers and for the long-term utilization of the Partnership's pipeline
system."
The Partnership reported first quarter net income of $21.7 million, or $0.75 per
unit, compared with 1998 first quarter net income of $22.9 million, or $0.80 per
unit. Due to changes in working capital, cash from operating activities for the
three months ended March 31, 1999 was $29.4 million compared with $41.8 million
for the same period last year.
Operating revenue for the first quarter of 1999 was approximately the same as
first quarter 1998 as a decline in deliveries was largely offset by increased
tariffs. Total operating expenses for the first quarter decreased $4.1 million,
or 9.1%, from the corresponding period last year. The decline resulted from
lower power costs associated with reduced deliveries and lower operating and
administrative costs due to cost control efforts by the Partnership and timing
of maintenance activities. These savings were partially offset by increased
depreciation expense resulting from the placing in service of System Expansion
Program II. Interest expense increased $5.0 million due to higher borrowings
associated with the Partnership's expansion projects.
First quarter deliveries averaged approximately 1.4 million barrels per day,
194,000 barrels per day lower than the same period in 1998. This decrease stems
primarily from low crude oil prices since mid-1998 which reduced the supply of
crude oil available to the Partnership. First quarter deliveries were also
impacted by the process of filling new lines with crude oil and by maintenance
activities at a number of refinery sites. The Partnership expects that average
daily deliveries for 1999 will be approximately 1.5 million barrels per day,
which is consistent with the estimate made in December 1998. Volumes nominated
for transportation on the Lakehead System during April have increased over
March, consistent with the recent improvement in world crude oil prices.
<PAGE> 2
Construction on the Terrace expansion is proceeding on schedule. The mainline
expansion adds 95,000 barrels per day to capacity and is currently being filled
with crude oil. The second stage of the project, to increase capacity a further
75,000 barrels per day by addition of pumping units, is on-target for service in
the fourth quarter of this year. A tariff increase associated with the Terrace
expansion became effective on April 1, 1999. During the first quarter, the
Enbridge Toledo pipeline went into service connecting Partnership facilities in
Michigan with refineries in Ohio. This pipeline benefits the Partnership by
providing shippers with enhanced access to the Toledo market area.
This press release includes forward-looking statements within the meaning of the
Securities Litigation Reform Act. Such statements are subject to various risks,
including the availability of western Canadian crude oil and regulatory
uncertainties, as well as other risks discussed in detail in the Partnership's
SEC filings, including its Annual Report on Form 10-K for the year ended
December 31, 1998.
Lakehead Pipe Line Partners, L.P. owns the United States portion of the world's
longest liquid petroleum pipeline. Lakehead Pipe Line Company, Inc., an indirect
wholly owned subsidiary of Enbridge Inc. of Calgary, Alberta, holds a 16.6%
interest in the Partnership and serves as General Partner. The Partnership's
Class A Common Units are traded on the New York Stock Exchange under the symbol
"LHP." Enbridge Inc. common shares are traded on the Toronto and Montreal stock
exchanges under the symbol "ENB" and on the NASDAQ under the symbol "ENBRF." The
Partnership's internet home page is located at http://www.lakehead.com
<TABLE>
<CAPTION>
Investor Relations Contact: Media Contact:
<S> <C>
Tracy Barker Denise Hamsher
Telephone: (403) 231-5949 Telephone: (218) 725-0140
Facsimile: (403) 231-5989 Facsimile: (218) 725-0169
E-mail: [email protected] E-mail: [email protected]
TOLL-FREE: (877) 575-3282
</TABLE>
<PAGE> 3
LAKEHEAD PIPE LINE PARTNERS, L.P.
CONSOLIDATED STATEMENT OF INCOME
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Three months ended
March 31,
(unaudited; dollars in millions, except per unit amounts) 1999 1998
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Operating Revenue $ 74.0 $ 72.9
- ---------------------------------------------------------------------------------------------
Expenses
Power 13.5 17.7
Operating and administrative 13.8 16.8
Depreciation(1) 13.5 10.4
- ---------------------------------------------------------------------------------------------
40.8 44.9
- ---------------------------------------------------------------------------------------------
Operating Income 33.2 28.0
Interest and Other Income 1.5 2.9
Interest Expense (12.7) (7.7)
Minority Interest (0.3) (0.3)
- ---------------------------------------------------------------------------------------------
Net Income $ 21.7 $ 22.9
=============================================================================================
Net Income Per Unit (2) $ 0.75 $ 0.80
=============================================================================================
Units Outstanding (millions) 26.2 26.2
=============================================================================================
</TABLE>
OTHER FINANCIAL & OPERATING HIGHLIGHTS
<TABLE>
<CAPTION>
(unaudited; three months ended March 31,) 1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Provided from Operating Activities (3) (millions) $ 29.4 $ 41.8
Cash Distributions to Partners and Minority Interest (millions) $ 24.8 $ 22.0
Capital Expenditures (millions) $ 17.3 $ 81.8
Deliveries (thousands of barrels per day) 1,394 1,588
Barrel Miles (billions) 89 99
Average Haul (miles) 705 691
==============================================================================================
</TABLE>
(1) Revised depreciation rates were filed with the Federal Energy Regulatory
Commission to be effective on January 1, 1999, to better represent the expected
remaining service life of the pipeline system and to coincide with the
in-service date for System Expansion Program II. Depreciation expense for the
three-months ended March 31, 1999, is $1.6 million lower than it would have been
under previous depreciation rates.
(2) Net income per unit is computed by dividing net income, after deduction of
the General Partner's allocation, by the number of Class A and Class B Common
Units outstanding. Net income allocated to the General Partner for the
three-month period ended March 31, 1999, was $2.1 million as compared with $2.0
million for the same period last year.
(3) Certain comparative amounts are reclassified to conform with the current
quarter's financial statement information presentation.
