TSE:FTS FORTIS INC. CONSOLIDATED STA TEMENTS OF EARNINGS For the Year Ended December 31 2001 (in thousands) 2000 Operating Revenues $ 628,254 $ 580,197 Expenses Operating 418,347 417,607 Amortization 62,495 52,513 480,842 470,120 Operating Income 147,412 110,077 Finance Charges Interest and amortization (Note 10) 62,655 52,737 Dividends on preference shares 2,975 2,975 65,630 55,712 Earnings Before Income Taxes and Undernoted Items 81,782 54,365 Income Taxes (Note 11) 28,088 17,228 Earnings Before Undernoted Items 53,694 37,137 Gain on Sale of Income Producing Property (Note 12) 2,557 - Income Tax Reassessment-Canadian Niagara Power 257 - Gain on Sale of Certain Trademark Rights (Note 13) - 1,209 Gain on Sale of Surplus Land (Note 14) - 1,029 Earnings Before Non-Controlling Interest and Discontinued Operations 56,508 39,375 Non-Controlling Interest (3,787) (3,149) Earnings Before Discontinued Operations 52,721 36,226 Results of Discontinued Operations (Note 15) 721 533 Earnings Applicable to Common Shares $ 53,442 $ 36,759 Average Common Shares Outstanding (Note 9) 14,878 13,517 Earnings per Common Share ($) (Note 9) Before discontinued operations $ 3.54 $ 2.68 After discontinued operations $ 3.59 $ 2.72 2001 (in thousands) 2000 Balance at Beginning of Year $ 201,683 $ 190,661 Earnings applicable to common shares 53,442 36,759 255,125 227,420 Dividends on common shares (28,016) (25,737) Balance at End of Year $ 227,109 $ 201,683 For the Year Ended December 31 See accompanying notes to consolidated financial statements. CONSOLIDATED STATEMENTSOF RETAINED EARNINGS 43 FORTIS Inc. 2OO1 Annual Report