Financial Results

Net expenses in Corporate were $76 million in 2008 compared to net earnings of $23 million and $39 million in 2007 and 2006, respectively.

Corporate's net expenses in 2008 included favourable income tax reassessments and adjustments of $26 million compared to $68 million in 2007. Excluding these income tax adjustments, Corporate's comparable expenses increased $57 million in 2008 compared to 2007. The increase in comparable expenses was primarily due to net unrealized losses of $39 million after tax from changes in the fair value of derivatives, which are used to manage the Company's exposure to rising interest rates but do not qualify as hedges for accounting purposes. The fair value of these derivatives was negatively impacted as interest rates dropped to historic lows late in fourth quarter 2008. In addition, higher financial charges resulting from financing the Company's 2008 capital program, including the Ravenswood acquisition, and higher losses from the change in fair value of derivatives used to manage the Company's exposure to foreign exchange rate fluctuations were partially offset by increased capitalization of interest to finance a larger capital spending program. The losses from the foreign exchange derivatives were partially offset by the positive impact of a stronger U.S. dollar reported in the Pipelines and Energy businesses.

Corporate's net earnings in 2007 and 2006 included favourable income tax reassessments and adjustments of $68 million and $72 million, respectively. Excluding these income tax adjustments, Corporate's comparable expenses increased $12 million in 2007 compared to 2006. Net unrealized gains from the change in fair value of derivatives used to manage the Company's exposure to foreign exchange rate fluctuations and the impact of positive tax rate differentials were more than offset by higher financial charges resulting primarily from financing the ANR acquisition and additional ownership interest in Great Lakes.