Exhibit 99
April 30, 2003 | MEDIA CONTACT: | Terry Francisco | ||
Phone: | 704/373-6680 | |||
24-Hour: | 704/382-8333 | |||
ANALYST CONTACT: | Greg Ebel | |||
Phone: | 704/382-8118 |
DUKE ENERGY REPORTS FIRST QUARTER 2003 RESULTS
| • | EPS of 43 cents before the cumulative effect of previously announced accounting changes. |
| • | On track to meet 2003 EPS guidance of $1.35 – $1.60, excluding cumulative effect of previously announced accounting changes. |
| • | Natural Gas Transmission and Franchised Electric continue to produce strong earnings and cash flow. |
CHARLOTTE, N.C.—Duke Energy reported first quarter earnings of 25 cents per share, or $225 million in net income, compared to 48 cents per share, or $382 million net income in first quarter 2002. Results for first quarter 2003 included an 18 cent, or $162 million, after-tax charge for the cumulative effect of previously announced accounting changes. Before the effect of accounting changes, Duke Energy earned 43 cents, or $387 million, in first quarter 2003.
“We entered 2003 with an aggressive plan to deal with the merchant energy downturn by cutting our exposure to the unregulated marketplace and strengthening our balance sheet,” said Richard B. Priory, chairman and chief executive officer. “Our first quarter results show we are executing on our business plan and producing significant earnings and cash flow at our strongest businesses. As we continue to size our business for market realities and focus on cash generation and capital management, we are confident we will achieve our previously stated guidance of
- more -
$1.35 – $1.60 earnings per share (EPS) in 2003 before a charge for the cumulative effect of previously announced accounting changes,” Priory said.
The first quarter 2003 charge related to changes in accounting principles was primarily due to implementation of EITF Issue No. 02-03, “Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and for Contracts Involved in Energy Trading and Risk Management Activities,” which changes the timing of earnings recognition for certain energy contracts. This represents an after-tax charge of $151 million, or 17 cents per share. The remaining element of this charge, $11 million, or 1 cent a share, is due to implementation of SFAS No. 143, “Accounting for Asset Retirement Obligations.”
BUSINESS UNIT HIGHLIGHTS
| • | Overall Earnings before Interest and Taxes (EBIT) was $974 million, an increase of 26 percent, compared with $770 million in first quarter 2002. |
| • | Natural Gas Transmission reported EBIT of $423 million, a 59-percent increase compared with $266 million in first quarter 2002. |
| • | Franchised Electric EBIT was $454 million, an 18-percent increase from first quarter 2002 EBIT of $384 million. |
BUSINESS UNIT RESULTS
Below is a reconciliation of consolidated operating income to EBIT (in millions):
First Quarter 2003 | First Quarter 2002 | |||||
Operating income | $ | 893 | $ | 668 | ||
Other income and expenses | $ | 81 | $ | 102 | ||
EBIT | $ | 974 | $ | 770 | ||
- more -
-2-
Franchised Electric
First quarter 2003 EBIT from Franchised Electric was $454 million, an 18-percent increase from first quarter 2002 EBIT of $384 million. Higher results were due to colder than normal weather during the quarter and increased wholesale power sales. The increase was partially offset by charges of $35 million for expenses related to 2003 severe winter storms and $17 million of amortization expense related to the North Carolina 2002 clean air legislation.
Franchised Electric continues to benefit from outstanding operating performance. During the quarter, the capacity utilization at Duke Power’s nuclear stations increased to 97 percent from 95 percent in first quarter 2002.
Natural Gas Transmission
The Duke Energy Gas Transmission (DEGT) segment reported first quarter 2003 EBIT of $423 million, a 59-percent increase over the $266 million in first quarter 2002. Results included a full quarter of earnings from Westcoast Energy, acquired in March 2002. The two additional months contributed $135 million to first quarter 2003. First quarter 2003 and 2002 results both include gains of $14 million from the sales of DEGT’s limited partnership interests in Northern Border Partners L.P.
During the quarter, DEGT moved ahead on several expansion projects to meet growing demand for natural gas in various regions across North America, including the U.S. northeast corridor, the U.S. Southeast and western Canada.
In the Southeast, DEGT began construction of the Patriot project, which includes a 94-mile pipeline extension of the East Tennessee Natural Gas system into southwest Virginia and North Carolina. In the Northeast, the company’s Algonquin Gas Transmission unit has made filings with the Federal Energy Regulatory Commission (FERC) to develop HubLine Phase II, a project that will transport natural gas to the greater Boston market and increase the reliability of natural gas
- more -
-3-
infrastructure in eastern Massachusetts. In western Canada, DEGT received final approval from Canada’s National Energy Board to proceed with the construction of the Grizzly Pipeline extension in Northeastern British Columbia, which will tie new natural gas production in western Canada to growing markets in British Columbia, the U.S. Pacific Northwest and beyond. DEGT demonstrated outstanding reliability this past winter in response to strong demand due to severe cold weather. For example, DEGT’s Texas Eastern system, which transports natural gas into the northeast corridor, experienced 13 of its top 25 all-time, peak-delivery days during the winter of 2002 to 2003.
Duke Energy North America
Duke Energy North America (DENA) reported EBIT of $23 million in first quarter 2003, compared to EBIT of $54 million in first quarter 2002. The decrease was due to lower proprietary trading results, a reduction in mark-to-market earnings due in part to changes in accounting rules and higher depreciation expenses related to new plants, partially offset by lower general and administrative expenses.
Recently, DENA announced that it was exiting proprietary trading as the company continues to aggressively manage its risk profile.
International Energy
For first quarter 2003, Duke Energy International (DEI) reported EBIT of $54 million, compared to first quarter 2002 EBIT of $57 million. Included in DEI’s first quarter 2003 EBIT is a non-recurring, non-cash charge of $11 million related to the timing of revenue recognition at the Cantarell investment in Mexico, a nitrogen-production plant which was acquired with Westcoast.
Field Services
The Field Services business segment, which represents Duke Energy’s 70-percent interest in Duke Energy Field Services (DEFS), reported first quarter 2003 EBIT of
- more -
-4-
$33 million compared to $35 million in first quarter 2002. The effects of significantly higher natural gas prices and hedges on the prices of natural gas liquids (NGLs) substantially offset the favorable impact of strong NGL prices during the period.
Other Operations
The Other Operations segment, including Crescent Resources, DukeNet Communications, Duke Capital Partners, Duke/Fluor Daniel, Duke Energy Merchants and Energy Delivery Services, reported an EBIT loss of $26 million in first quarter 2003, compared to EBIT of $17 million in first quarter 2002. Results were negatively affected by charges related to the exiting of proprietary trading and hydrocarbons businesses at Duke Energy Merchants.
During the first quarter, Duke Energy announced that it is exiting the merchant finance business at its wholly owned subsidiary, Duke Capital Partners, LLC. The company expects to realize positive cash flows in 2003 and 2004 from Duke Capital Partners’ portfolio of approximately $340 million. For 2003, Duke Energy expects approximately $200 million of the portfolio to be monetized, with the remainder being closed during the first six months of 2004. Approximately $80 million of that portfolio has already been monetized in first quarter 2003.
INTEREST EXPENSE
Interest expense was $340 million for first quarter 2003, compared to $198 million for first quarter 2002. The increase was primarily due to debt related to the Westcoast Energy acquisition, reduced capitalized interest at DENA and additional debt.
- more -
-5-
CASH FLOW
For first quarter 2003, cash flow from operations was $1.4 billion, compared to $0.8 billion in first quarter 2002. In 2003, Duke Energy expects cash flow from operations, which includes real estate sales at Crescent Resources, combined with proceeds from divestitures at other business units, to more than adequately fund capital expenditures of approximately $3 billion and the approximately $1 billion needed to fund the $1.10 per share dividend. The company’s current business plans for 2003 fully support the dividend at this level.
In 2003, the company has announced or completed approximately $1.1 billion in gross proceeds from asset sales. During the quarter, Duke Energy closed on asset sales of non-strategic assets of approximately $350 million. The company expects asset sales to contribute approximately $1.5 billion in gross proceeds for 2003. Proceeds in excess of the amounts needed to help fund capital expenditures and pay the dividend will be available to pay down debt.
LIQUIDITY AND CAPITAL RESOURCES
Duke Energy’s consolidated capital structure as of March 31, 2003, including short-term debt, was 55 percent debt, 37 percent common equity, 4 percent minority interests and 4 percent preferred securities.
Under various credit facilities, Duke Energy, Duke Capital and other subsidiaries had the ability to borrow up to $5.3 billion as of March 31, 2003. The companies had borrowings and letters of credit outstanding under these programs of approximately $2.2 billion as of March 31, 2003, resulting in unused capacity of approximately $3.1 billion. The company also had approximately $1.1 billion in cash and cash equivalents as of March 31, 2003. Subsequent to March 31, 2003, a credit facility at Duke Capital of $0.5 billion matured and was replaced with a facility of $0.25 billion.
- more -
-6-
REVENUES
For first quarter 2003, revenues were $6.2 billion, up from $3.2 billion in first quarter 2002. The key drivers for the increase include significantly higher NGL pricing, two additional months of Westcoast operations, greater wholesale power sales and the adoption of the final consensus on EITF 02-03, which requires the company to present revenues for certain natural gas transactions on a gross basis in 2003. Adopting this final consensus did not require a change to prior periods and therefore the company did not change the 2002 revenue amounts.
FINANCIAL MEASURES
Earnings before interest and taxes, or EBIT, is the primary performance measure used by management to evaluate company and segment performance. On a segment basis, it includes all profits (both operating and non-operating) before deducting interest and taxes, and is net of the minority interest expense related to those profits. Management believes EBIT is a good indicator of each segment’s operating performance as it represents the results of our ownership interests in operations without regard to financing methods or capital structures. EBIT should not be considered an alternative to, or more meaningful than, net income, operating income or cash flow as determined in accordance with generally accepted accounting principles (GAAP). Duke Energy’s EBIT may not be comparable to a similarly titled measure of another company.
Duke Energy is a diversified multinational energy company with an integrated network of energy assets and expertise. The company manages a dynamic portfolio of natural gas and supply, delivery and trading businesses meeting the energy needs of customers throughout North America and in key markets around the world. Duke Energy, headquartered in Charlotte, N.C., is a Fortune 500 company traded on
- more -
-7-
the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at:www.duke-energy.com.
An earnings conference call for analysts is scheduled for 10 a.m. ET today. The conference call and related charts can be accessed via the investors’ section of Duke Energy’s Web site at: www.duke-energy.com. or by dialing 800/479-9001 in the United States or 719/457-2618 outside the United States. The confirmation code is 703998. Please call in 5 to 10 minutes prior to the scheduled start time. A replay of the conference call will be available through May 9 by dialing (888) 203-1112 with a confirmation code of 703998. The international replay number is 719/457-0820. A replay and transcript also will be available by accessing the investors’ section of the company’s Web site at: www.duke-energy.com. The presentation may include certain non-GAAP financial measures as defined under SEC rules. In such event, a reconciliation of those measures to the most directly comparable GAAP measures will be available on our investor relations Web site at:http://www.duke-energy.com/decorp/gaap.html. .
This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Duke Energy believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein include legislative and regulatory developments; the outcomes of litigation and regulatory proceedings or inquiries; general economic conditions, including any potential effects arising from terrorist attacks and any consequential hostilities or other hostilities; the effectiveness of the company’s risk management and internal controls systems; the timing and extent of changes in commodity prices for oil, gas, coal, electricity and interest rates; the extent of success in connecting natural gas supplies to gathering and processing systems and in connecting and expanding natural gas and electric markets; the performance
- more -
-8-
of electric generation, pipeline and natural gas processing facilities; the timing and success of efforts to develop domestic and international power, pipeline, gathering, processing and other infrastructure projects; conditions of the capital markets and equity markets during the periods covered by the forward-looking statements; and other factors discussed in Duke Energy’s filings with the Securities and Exchange Commission.
###
9
MARCH 2003
QUARTERLY HIGHLIGHTS
(unaudited)
Three Months Ended March 31, | ||||||||
(In millions, except where noted) | 2003 | 2002 | ||||||
COMMON STOCK DATA | ||||||||
Earnings Per Share (before cumulative effect of change in accounting principle) | ||||||||
Basic | $ | 0.43 |
| $ | 0.48 |
| ||
Diluted | $ | 0.43 |
| $ | 0.48 |
| ||
Earnings Per Share | ||||||||
Basic | $ | 0.25 |
| $ | 0.48 |
| ||
Diluted | $ | 0.25 |
| $ | 0.48 |
| ||
Dividends Per Share | $ | 0.275 |
| $ | 0.275 |
| ||
Weighted Average Shares Outstanding | ||||||||
Basic |
| 897 |
|
| 788 |
| ||
Diluted |
| 897 |
|
| 792 |
| ||
INCOME | ||||||||
Operating Revenues | $ | 6,176 |
| $ | 3,213 |
| ||
Earnings Before Interest and Taxes (EBIT) |
| 974 |
|
| 770 |
| ||
Interest Expense |
| 340 |
|
| 198 |
| ||
Minority Interests (a) |
| 52 |
|
| 32 |
| ||
Income Taxes |
| 195 |
|
| 158 |
| ||
Cumulative Effect of Change in Accounting Principle, Net of Tax |
| 162 |
|
| — |
| ||
Net Income |
| 225 |
|
| 382 |
| ||
Preferred Stock Dividends and Redemption Premiums |
| 3 |
|
| 3 |
| ||
Earnings Available for Common Stockholders | $ | 222 |
| $ | 379 |
| ||
CAPITALIZATION | ||||||||
Common Equity |
| 37 | % |
| 36 | % | ||
Preferred Stock |
| 1 | % |
| 1 | % | ||
Trust Preferred Securities |
| 3 | % |
| 3 | % | ||
Total Common Equity and Preferred Securities |
| 41 | % |
| 40 | % | ||
Minority Interest |
| 4 | % |
| 7 | % | ||
Total Debt |
| 55 | % |
| 53 | % | ||
Fixed Charges Coverage, using SEC guidelines |
| 2.6 |
|
| 2.7 |
| ||
Total Debt | $ | 22,357 |
| $ | 21,491 |
| ||
Book Value Per Share | $ | 16.99 |
| $ | 17.93 |
| ||
Actual Shares Outstanding |
| 900 |
|
| 829 |
| ||
CAPITAL AND INVESTMENT EXPENDITURES | ||||||||
Franchised Electric | $ | 176 |
| $ | 244 |
| ||
Natural Gas Transmission (b) |
| 198 |
|
| 2,020 |
| ||
Field Services |
| 31 |
|
| 110 |
| ||
Duke Energy North America |
| 160 |
|
| 736 |
| ||
International Energy |
| 25 |
|
| 81 |
| ||
Other Operations (c) |
| 69 |
|
| 134 |
| ||
Other |
| 46 |
|
| 36 |
| ||
Cash acquired in acquisitions |
| — |
|
| (77 | ) | ||
Total Capital and Investment Expenditures | $ | 705 |
| $ | 3,284 |
| ||
EBIT BY BUSINESS SEGMENT | ||||||||
Franchised Electric | $ | 454 |
| $ | 384 |
| ||
Natural Gas Transmission |
| 423 |
|
| 266 |
| ||
Field Services |
| 33 |
|
| 35 |
| ||
Duke Energy North America |
| 23 |
|
| 54 |
| ||
International Energy |
| 54 |
|
| 57 |
| ||
Other Operations (c) |
| (26 | ) |
| 17 |
| ||
Other |
| (31 | ) |
| (107 | ) | ||
Total Segment EBIT |
| 930 |
|
| 706 |
| ||
EBIT Attributable to: | ||||||||
Minority Interests |
| 46 |
|
| 14 |
| ||
Third Party Interest Income |
| 3 |
|
| 41 |
| ||
Foreign Currency (Loss) Gain |
| (5 | ) |
| 9 |
| ||
Total EBIT | $ | 974 |
| $ | 770 |
| ||
| (a) | Includes expense related to preferred securities of subsidiaries of $27 million and $35 million for the three months ended March 31, 2003 and 2002, respectively. |
| (b) | 2002 amount includes $1.7 billion (net of cash acquired) paid to Westcoast Energy shareholders related to the acquisition. |
| (c) | Beginning in 2003, the business segments formally known as Other Energy Services and Duke Ventures were combined into a segment called Other Operations. |
Page 10
MARCH 2003
QUARTERLY HIGHLIGHTS
(unaudited)
Three Months Ended | ||||||||
March 31, | ||||||||
(In millions, except where noted) | 2003 | 2002 | ||||||
FRANCHISED ELECTRIC | ||||||||
Operating Revenues | $ | 1,251 |
| $ | 1,113 |
| ||
Operating Expenses |
| 813 |
|
| 746 |
| ||
Other Income |
| 16 |
|
| 17 |
| ||
EBIT | $ | 454 |
| $ | 384 |
| ||
Sales, GWh |
| 22,043 |
|
| 19,521 |
| ||
NATURAL GAS TRANSMISSION | ||||||||
Operating Revenues | $ | 968 |
| $ | 450 |
| ||
Operating Expenses |
| 567 |
|
| 218 |
| ||
Other Income |
| 35 |
|
| 37 |
| ||
Minority Interest Expense |
| 13 |
|
| 3 |
| ||
EBIT | $ | 423 |
| $ | 266 |
| ||
Proportional Throughput, TBtu |
| 1,082 |
|
| 670 |
| ||
FIELD SERVICES | ||||||||
Operating Revenues | $ | 2,472 |
| $ | 1,068 |
| ||
Operating Expenses |
| 2,426 |
|
| 1,033 |
| ||
Other Income |
| 15 |
|
| 8 |
| ||
Minority Interest Expense |
| 28 |
|
| 8 |
| ||
EBIT | $ | 33 |
| $ | 35 |
| ||
Natural Gas Gathered and Processed/Transported, TBtu/day |
| 8.0 |
|
| 8.4 |
| ||
Natural Gas Liquids Production, MBbl/d |
| 375.2 |
|
| 388.6 |
| ||
Average Natural Gas Price per MMBtu | $ | 6.59 |
| $ | 2.32 |
| ||
Average Natural Gas Liquids Price per Gallon | $ | 0.58 |
| $ | 0.31 |
| ||
DUKE ENERGY NORTH AMERICA | ||||||||
Operating Revenues | $ | 1,396 |
| $ | 258 |
| ||
Operating Expenses |
| 1,382 |
|
| 200 |
| ||
Other Income (Expenses) |
| 9 |
|
| (4 | ) | ||
EBIT | $ | 23 |
| $ | 54 |
| ||
Actual Plant Production, GWh (a) |
| 5,110 |
|
| 3,868 |
| ||
Proportional MW Capacity in Operation |
| 14,156 |
|
| 7,515 |
| ||
INTERNATIONAL ENERGY | ||||||||
Operating Revenues | $ | 234 |
| $ | 289 |
| ||
Operating Expenses |
| 183 |
|
| 235 |
| ||
Other Income |
| 8 |
|
| 8 |
| ||
Minority Interest Expense |
| 5 |
|
| 5 |
| ||
EBIT | $ | 54 |
| $ | 57 |
| ||
Sales, GWh |
| 4,759 |
|
| 4,932 |
| ||
Proportional MW Capacity in Operation |
| 4,887 |
|
| 4,705 |
| ||
Proportional Maximum Pipeline Capacity in Operation, MMcf/d |
| 363 |
|
| 363 |
| ||
OTHER OPERATIONS | ||||||||
Operating Revenues | $ | 556 |
| $ | 188 |
| ||
Operating Expenses |
| 589 |
|
| 184 |
| ||
Other Income |
| 7 |
|
| 13 |
| ||
EBIT | $ | (26 | ) | $ | 17 |
| ||
| (a) | Represents 100% of GWh. |
Page 11
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except per share amounts)
Three Months Ended March 31, | |||||||
2003 | 2002 | ||||||
Operating Revenues | |||||||
Sales of natural gas and petroleum products | $ | 3,920 |
| $ | 901 | ||
Generation, transmission and distribution of electricity |
| 1,742 |
|
| 1,587 | ||
Transportation and storage of natural gas |
| 436 |
|
| 326 | ||
Trading and marketing net (loss) margin |
| (73 | ) |
| 229 | ||
Other |
| 151 |
|
| 170 | ||
Total operating revenues |
| 6,176 |
|
| 3,213 | ||
Operating Expenses | |||||||
Natural gas and petroleum products purchased |
| 3,541 |
|
| 799 | ||
Fuel used in electric generation |
| 299 |
|
| 315 | ||
Net interchange and purchased power |
| 125 |
|
| 108 | ||
Operation and maintenance |
| 728 |
|
| 852 | ||
Depreciation and amortization |
| 449 |
|
| 344 | ||
Property and other taxes |
| 141 |
|
| 127 | ||
Total operating expenses |
| 5,283 |
|
| 2,545 | ||
Operating Income |
| 893 |
|
| 668 | ||
Equity in earnings of unconsolidated affiliates |
| 34 |
|
| 9 | ||
Gain on sale of equity investments |
| 14 |
|
| 14 | ||
Other income and expenses, net |
| 33 |
|
| 79 | ||
Other Income and Expenses |
| 81 |
|
| 102 | ||
Interest Expense |
| 340 |
|
| 198 | ||
Minority Interest Expense |
| 52 |
|
| 32 | ||
Earnings Before Income Taxes |
| 582 |
|
| 540 | ||
Income Taxes |
| 195 |
|
| 158 | ||
Income Before Cumulative Effect of Change in Accounting Principle |
| 387 |
|
| 382 | ||
Cumulative Effect of Change in Accounting Principle, net of tax and minority interest |
| 162 |
|
| — | ||
Net Income |
| 225 |
|
| 382 | ||
Preferred and Preference Stock Dividends |
| 3 |
|
| 3 | ||
Earnings Available For Common Stockholders | $ | 222 |
| $ | 379 | ||
Common Stock Data | |||||||
Weighted-average shares outstanding |
| 897 |
|
| 788 | ||
Earnings per share (before cumulative effect of change in accounting principle) | |||||||
Basic | $ | 0.43 |
| $ | 0.48 | ||
Diluted | $ | 0.43 |
| $ | 0.48 | ||
Earnings per share | |||||||
Basic | $ | 0.25 |
| $ | 0.48 | ||
Diluted | $ | 0.25 |
| $ | 0.48 | ||
Dividends per share | $ | 0.275 |
| $ | 0.275 | ||
Page 12
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Years Ended March 31, | ||||||||
2003 | 2002 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 225 |
| $ | 382 |
| ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization (including amortization of nuclear fuel) |
| 484 |
|
| 379 |
| ||
Cumulative effect of changes in accounting principle |
| 162 |
|
| — |
| ||
Net realized and unrealized mark-to-market and hedging transactions |
| (116 | ) |
| 179 |
| ||
Changes in working capital and other |
| 656 |
|
| (120 | ) | ||
Net cash provided by operating activities |
| 1,411 |
|
| 820 |
| ||
CASH FLOWS USED IN INVESTING ACTIVITIES |
| (382 | ) |
| (3,276 | ) | ||
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES |
| (777 | ) |
| 2,317 |
| ||
Net increase (decrease) in cash and cash equivalents |
| 252 |
|
| (139 | ) | ||
Cash and cash equivalents at beginning of period |
| 857 |
|
| 290 |
| ||
Cash and cash equivalents at end of period | $ | 1,109 |
| $ | 151 |
| ||
Page 13
CONSOLIDATED BALANCE SHEETS
(In millions)
March 31, 2003 | December 31, 2002 | |||||
(Unaudited) | ||||||
ASSETS | ||||||
Current Assets | ||||||
Cash and cash equivalents | $ | 1,109 | $ | 857 | ||
Receivables |
| 7,422 |
| 6,766 | ||
Inventory |
| 946 |
| 1,134 | ||
Unrealized gains on mark-to-market and hedging transactions |
| 2,337 |
| 2,144 | ||
Other |
| 1,074 |
| 952 | ||
Total current assets |
| 12,888 |
| 11,853 | ||
Investments and Other Assets | ||||||
Investments in unconsolidated affiliates |
| 2,110 |
| 2,066 | ||
Nuclear decommissioning trust funds |
| 713 |
| 708 | ||
Goodwill, net of accumulated amortization |
| 3,730 |
| 3,747 | ||
Notes receivable |
| 463 |
| 589 | ||
Unrealized gains on mark-to-market and hedging transactions |
| 2,325 |
| 2,480 | ||
Other |
| 1,751 |
| 1,645 | ||
Total investments and other assets |
| 11,092 |
| 11,235 | ||
Property, Plant and Equipment | ||||||
Cost |
| 49,815 |
| 48,677 | ||
Less accumulated depreciation and amortization |
| 12,885 |
| 12,458 | ||
Net property, plant and equipment |
| 36,930 |
| 36,219 | ||
Regulatory Assets and Deferred Debits | ||||||
Deferred debt expense |
| 260 |
| 263 | ||
Regulatory asset related to income taxes |
| 973 |
| 936 | ||
Other |
| 1,102 |
| 460 | ||
Total regulatory assets and deferred debits |
| 2,335 |
| 1,659 | ||
Total Assets | $ | 63,245 | $ | 60,966 | ||
Page 14
CONSOLIDATED BALANCE SHEETS
(In millions)
March 31, 2003 | December 31, 2002 | |||||||
(Unaudited) | ||||||||
LIABILITIES AND COMMON STOCKHOLDERS’ EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 6,559 |
| $ | 5,590 |
| ||
Notes payable and commercial paper |
| 1,125 |
|
| 915 |
| ||
Taxes accrued |
| 473 |
|
| 156 |
| ||
Interest accrued |
| 301 |
|
| 310 |
| ||
Current maturities of long-term debt and preferred stock |
| 754 |
|
| 1,331 |
| ||
Unrealized losses on mark-to-market and hedging transactions |
| 2,004 |
|
| 1,918 |
| ||
Other |
| 1,835 |
|
| 1,770 |
| ||
Total current liabilities |
| 13,051 |
|
| 11,990 |
| ||
Long-term Debt |
| 20,480 |
|
| 20,221 |
| ||
Deferred Credits and Other Liabilities | ||||||||
Deferred income taxes |
| 4,813 |
|
| 4,834 |
| ||
Investment tax credit |
| 173 |
|
| 176 |
| ||
Unrealized losses on mark-to-market and hedging transactions |
| 1,443 |
|
| 1,548 |
| ||
Other |
| 4,798 |
|
| 3,784 |
| ||
Total deferred credits and other liabilities |
| 11,227 |
|
| 10,342 |
| ||
Guaranteed Preferred Beneficial Interests in Subordinated Notes of Duke Energy Corporation or Subsidiaries |
| 1,408 |
|
| 1,408 |
| ||
Minority Interests |
| 1,640 |
|
| 1,904 |
| ||
Preferred and Preference Stock | ||||||||
Preferred and preference stock with sinking fund requirements |
| 23 |
|
| 23 |
| ||
Preferred and preference stock without sinking fund requirements |
| 134 |
|
| 134 |
| ||
Total preferred and preference stock |
| 157 |
|
| 157 |
| ||
Common Stockholders’ Equity | ||||||||
Common stock, no par, 2 billion shares authorized; 900 million and 895 million shares outstanding as of March 31, 2003 and December 31, 2002, respectively |
| 9,316 |
|
| 9,236 |
| ||
Retained earnings |
| 6,387 |
|
| 6,417 |
| ||
Accumulated other comprehensive loss |
| (421 | ) |
| (709 | ) | ||
Total common stockholders’ equity |
| 15,282 |
|
| 14,944 |
| ||
Total Liabilities and Common Stockholders’ Equity | $ | 63,245 |
| $ | 60,966 |
| ||
Page 15
Supplemental Disclosures
Quarter Ended March 31, 2003
Duke Energy Corporation
1Q03 | |||||||||
Fair Value of Trading Contracts (in billions) | |||||||||
Mark-to-market portfolio | $ | 0.3 | |||||||
Daily Value at Risk (DvaR) (in millions) | |||||||||
95% Confidence Level, One-Day Holding Period, Two-Tailed | |||||||||
Average for the Period | $ | 21 | |||||||
Duke Energy North America
(in millions unless stated otherwise)
Merchant Energy Gross Margin | Proprietary Trading | Structured Contracts | Owned Assets | Total | |||||||||
Mark-to-market gross margin | $ | 4 | $ | 26 | $ | 1 | $ | 31 |
| ||||
Accrual gross margin |
| n/a |
| 16 |
| 146 |
| 162 |
| ||||
Total Gross Margin |
| 4 |
| 42 |
| 147 |
| 193 |
| ||||
Reconciliation to Segment EBIT: | |||||||||||||
Plant depreciation |
| (53 | ) | ||||||||||
Plant operating and maintenance expenses |
| (68 | ) | ||||||||||
General and administrative expenses |
| (49 | ) | ||||||||||
DENA Segment EBIT | $ | 23 |
| ||||||||||
Owned Assets—Merchant Plant Production and Hedging Information | 2003 * | 2004 | 2005 | |||||||||||
Estimated available production (millions of MWh) |
| 69 |
|
| 99 |
|
| 108 |
| |||||
Combined cycle |
| 55 |
|
| 80 |
|
| 86 |
| |||||
Peaker units |
| 14 |
|
| 19 |
|
| 22 |
| |||||
Estimated production (millions of MWh) |
| 22 |
|
| 36 |
|
| 40 |
| |||||
Combined cycle |
| 21 |
|
| 33 |
|
| 36 |
| |||||
Peaker units |
| 1 |
|
| 3 |
|
| 4 |
| |||||
Hedges | ||||||||||||||
Estimated production hedged |
| 96 | % |
| 76 | % |
| 63 | % | |||||
Averaged price hedged ($/MWh) | $ | 50 |
| $ | 43 |
| $ | 41 |
| |||||
* | Information for 2003 is for the remainder of the year only (April—December). | |
First quarter 2003 actual production was 5.1 million MWh. |
Page 16
Supplemental Disclosures
Quarter Ended March 31, 2003
Duke Energy North America (continued)
(in millions)
Maturity/Source of Fair Value of | 2003 | 2004 | 2005 | 2006 | 2007 | Over 5 Years | Total Fair Value | |||||||||||||||||||
Proprietary Trading | ||||||||||||||||||||||||||
Actively quoted prices and other external sources | $ | (3 | ) | $ | 110 |
| $ | (6 | ) | $ | (1 | ) | $ | — | $ | 2 |
| $ | 102 | |||||||
Modeled |
| 12 |
|
| 54 |
|
| 13 |
|
| 19 |
|
| — |
| (3 | ) |
| 95 | |||||||
$ | 9 |
| $ | 164 |
| $ | 7 |
| $ | 18 |
| $ | — | $ | (1 | ) | $ | 197 | ||||||||
Structured Contracts | ||||||||||||||||||||||||||
Actively quoted prices and other external sources | $ | 133 |
| $ | 21 |
| $ | 11 |
| $ | — |
|
| $— | $ | — |
| $ | 165 | |||||||
Modeled |
| (39 | ) |
| (64 | ) |
| (66 | ) |
| 59 |
|
| 37 |
| 125 |
|
| 52 | |||||||
$ | 94 |
| $ | (43 | ) | $ | (55 | ) | $ | 59 |
| $ | 37 | $ | 125 |
| $ | 217 | ||||||||
Owned Assets | ||||||||||||||||||||||||||
Actively quoted prices and other external sources | $ | 305 |
| $ | 251 |
| $ | 96 |
| $ | — |
| $ | — | $ | — |
| $ | 652 | |||||||
Modeled |
| — |
|
| — |
|
| 66 |
|
| 108 |
|
| 68 |
| 122 |
|
| 364 | |||||||
$ | 305 |
| $ | 251 |
| $ | 162 |
| $ | 108 |
| $ | 68 | $ | 122 |
| $ | 1,016 | ||||||||
Total Fair Value of Energy Contract Net Assets * | $ | 1,430 | ||||||||||||||||||||||||
| * | Total Fair Value of Energy Contract Net Assets represents the combination of amounts presented as assets and liabilities related to unrealized gains or losses on mark-to-market and hedging transactions for Duke Energy North America. |
Terms of Reference
Estimated Available Production
Represents the amount of electric power capable of being generated from owned assets, after adjusting for scheduled maintenance and outage factors. For simple cycle facilities, only peak demand periods were included in this calculation.
Estimated Production
Represents the amount of power expected to be sold in a future period. This figure is based on economic projections modeled by Duke Energy personnel.
Estimated Production Hedged
Represents the portion of estimated production which has been sold.
Owned Assets
Represents activity around energy assets owned or leased, including hedges of power sales and fuel purchase requirements and tolls, transmission, transportation and storage contracts that hedge owned assets. Normal purchases and sales associated with such assets are included in the Merchant Energy Gross Margin table, yet excluded from the Maturity/Sources of Fair Value of Energy Contract Net Assets table. Economic hedges of Owned Assets that do not meet hedge accounting standards will still be classified as Owned Assets in the Merchant Energy Gross Margin table.
Proprietary Trading
Standardized contracts entered into to take a market view, capture market price changes or put capital at risk.
Structured Contracts
Non-standard contracts not associated with owned or leased assets and involving significant tailoring of terms to meet customer needs, and associated hedges. This category includes tolls, transmission, transportation and storage contracts, except those that hedge Owned Assets. Economic hedges of Structured Contracts that do not meet hedge accounting standards will still be classified as Structured Contracts in the Merchant Energy Gross Margin table.
Page 17