UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): November 2, 2005
DUKE ENERGY CORPORATION
(Exact Name of Registrant as Specified in Charter)
| NORTH CAROLINA | 1-4928 | 56-0205520 | ||
(State or Other Jurisdiction of Incorporation) | (Commission File No.) | (IRS Employer Identification No.) |
526 South Church Street Charlotte, North Carolina | 28202-1803 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: 704-594-6200
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results of Operations and Financial Condition |
On November 2, 2005, Duke Energy Corporation issued a news release announcing its financial results for the third quarter ended September 30, 2005. A copy of this news release is attached hereto as Exhibit 99.1. The information in Exhibit 99.1 is being furnished pursuant to this Item 2.02.
| Item 9.01 | Financial Statements and Exhibits |
| (c) | Exhibits |
| 99.1 | News Release dated November 2, 2005 | |
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.
DUKE ENERGY CORPORATION | ||
| By: | /S/ STEVEN K. YOUNG | |
| Steven K. Young | ||
| Vice President and Controller | ||
Dated: November 2, 2005
EXHIBIT INDEX
| Exhibit | Description | |
| 99.1 | News Release dated November 2, 2005 | |
Exhibit 99.1
| Nov. 2, 2005 | MEDIA CONTACT: | Randy Wheeless | ||
| Phone: | 704/382-8379 | |||
| 24-Hour: | 704/382-8333 | |||
| ANALYST CONTACT: | Julie Dill | |||
| Phone: | 980/373-4332 | |||
| Investor Relations: | 800/488-3853 | |||
Duke Energy Reports Third Quarter 2005 Results
| • | Third quarter ongoing basic earnings per share of 59 cents versus 37 cents in prior year’s quarter |
| • | Reported basic earnings per share, which reflect charges associated with the decision to exit DENA, of 4 cents in third quarter 2005 versus 41 cents in previous year |
| • | Company confident of exceeding $1.65 employee incentive target – based on annual ongoing basic EPS |
| • | Weather, commodity prices and real estate operations help ongoing results |
CHARLOTTE, N.C. – Duke Energy today reported third quarter 2005 basic earnings per share (EPS) of $0.04, or $41 million in net income, compared to $0.41 per share in third quarter 2004, or $389 million in net income. This quarter’s results include charges related to the previously announced plan to exit substantially all of Duke Energy North America’s (DENA) business outside of the Midwest, which totaled $0.84 per share. This amount was partially offset by a gain on the transfer of a 19.7 percent interest of Duke Energy Field Services to ConocoPhillips, which totaled $0.39 per share.
Third quarter 2005 basic EPS from continuing operations was $0.99, or $924 million in income, compared to $0.40 per share in third quarter 2004, or $381 million in income. On a diluted basis, third quarter 2005 EPS from continuing operations was $0.96 per share, compared to $0.39 in the third quarter 2004.
Ongoing basic EPS for third quarter 2005 was $0.59 versus $0.37 in third quarter 2004. On a diluted basis, ongoing EPS for third quarter 2005 was $0.56 compared to $0.36 in third quarter 2004.
“The quality of our assets, along with the focused efforts of our employees, delivered outstanding results despite the external events affecting the energy industry. Not only did we perform for our customers during this period of supply disruptions, we delivered solid results for our investors,” said Paul Anderson, Duke Energy’s chairman of the board and chief executive officer.
“Our strategic decision to exit much of our merchant generation business in DENA had a large earnings impact this quarter. But that move, along with our proposed merger with Cinergy, will position us for stronger long-term results going forward,” he added.
Anderson said the company expects to exceed its employee incentive goal of $1.65 per share – based on annual ongoing basic earnings. That figure was recently revised upward from $1.60 to reflect the exit of the DENA business.
Special items for the quarter include:
($ in Millions) | Pre-Tax Amount | Tax Effect | 2005 EPS | 2004 EPS Impact | ||||||||||||
Third quarter 2005 | ||||||||||||||||
• Gain on transfer of 19.7 percent interest in DEFS to ConocoPhillips | $ | 576 | ($213 | ) | $ | 0.39 | ||||||||||
• Impairment of DEI’s investment in Campeche | ($20 | ) | $ | 6 | ($0.02 | ) | ||||||||||
• Settlement of positions on 2005 Field Services’ hedges that were de-designated | $ | 38 | ($15 | ) | $ | 0.02 | ||||||||||
• Mark-to-market loss on de-designated 2005 Field Services’ hedges | ($17 | ) | $ | 6 | ($0.01 | ) | ||||||||||
• Initial and subsequent mark-to-market gain on de-designating Southeast DENA hedges | $ | 30 | ($11 | ) | $ | 0.02 | ||||||||||
Third quarter 2004 | ||||||||||||||||
• Tax benefit from restructuring | — | $ | 48 | $ | 0.05 | |||||||||||
• Asset impairments, net gains on asset sales and write down of equity investments (net of minority interest of $19 million) | ($21 | ) | $ | 8 | ($0.02 | ) | ||||||||||
Total basic EPS impact | $ | 0.40 | $ | 0.03 | ||||||||||||
Basic EPS, as reported | $ | 0.04 | $ | 0.41 | ||||||||||||
Discontinued operations, excluding Crescent Resources | ($ | 0.95 | ) | $ | 0.01 | |||||||||||
Basic EPS from continuing operations, as reported | $ | 0.99 | $ | 0.40 | ||||||||||||
Total basic EPS impact of special items | $ | 0.40 | $ | 0.03 | ||||||||||||
Basic EPS, ongoing | $ | 0.59 | $ | 0.37 | ||||||||||||
Special items EPS year-to-date impact: | ||||||||||||||||
| 2005 | 2004 | |||||||||||||||
First quarter | $ | 0.45 | ($0.25 | ) | ||||||||||||
Second quarter | $ | 0.02 | $ | 0.01 | ||||||||||||
Third quarter | $ | 0.40 | $ | 0.03 | ||||||||||||
Impact of change in shares outstanding and rounding | $ | 0.01 | $ | 0.01 | ||||||||||||
Total EPS Impact | $ | 0.88 | ($0.20 | ) | ||||||||||||
2005 EPS | 2004 EPS Impacts | |||||||||||||||
Year-to-date basic EPS, as reported | $ | 1.29 | $ | 1.22 | ||||||||||||
Discontinued operations, excluding Crescent Resources | ($0.96 | ) | $ | 0.20 | ||||||||||||
Basic EPS from continuing operations, as reported | $ | 2.25 | $ | 1.02 | ||||||||||||
Total basic EPS impact of special items | $ | 0.88 | ($0.20 | ) | ||||||||||||
Year-to-date basic EPS, ongoing | $ | 1.37 | $ | 1.22 | ||||||||||||
BUSINESS UNIT RESULTS
Franchised Electric
Third quarter 2005 segment EBIT from continuing operations for Franchised Electric was $606 million, compared to $453 million in the prior year’s quarter. The increase was driven primarily by warmer weather, which pushed residential sales up 12.4 percent, and strong bulk power marketing (BPM) results.
Also, Franchised Electric recorded approximately $25 million less regulatory amortization this quarter than the prior year’s quarter. These increases to segment EBIT were partially offset by higher operating and maintenance expenses, primarily related to nuclear outage and maintenance costs.
Overall industrial kilowatt-hour sales were up 0.7 percent for the quarter as textile plant closings were more than offset by increased usage in other industries. Regional growth continued to add to Franchised Electric’s total customer base, with 43,000 customers – about 2 percent — over the prior year.
Year-to-date segment EBIT from continuing operations for Franchised Electric was $1.22 billion in both 2005 and 2004.
Natural Gas Transmission
Duke Energy Gas Transmission (DEGT) reported third quarter 2005 segment EBIT from continuing operations of $329 million compared to $269 million in the prior year’s quarter. The increase was driven by improved U.S. operations, domestic business expansion projects and higher earnings by natural gas distribution operations in eastern Canada. In addition, earnings benefited from operations in Canada that were purchased or transferred to DEGT in the third quarter.
DEGT’s third quarter earnings continued to benefit from the stronger Canadian currency over comparable periods. This was mainly offset by a gain of a prior year asset sale. The favorable Canadian currency impacts on DEGT’s EBIT were partially offset in Duke Energy’s net income by currency impacts on Canadian interest and taxes.
Year-to-date EBIT from continuing operations for Natural Gas Transmission was $1.04 billion, compared with $986 million in 2004.
Field Services
The Field Services business segment, which in the quarter represented Duke Energy’s 50-percent interest in Duke Energy Field Services (DEFS), reported third quarter 2005 equity earnings of $126 million — in addition to a one-time gain on the transfer of a 19.7 percent interest in DEFS of $576 million — compared to $63 million in EBIT in third quarter 2004.
The equity earnings amount for the third quarter 2005 includes deductions primarily for interest totaling $15 million, which were not included in the prior quarter’s EBIT. The equity earnings amount for third quarter 2005 does not include the negative impact of hedge settlements during the quarter, which are now reported in Other and were reported in third quarter 2004 Field Services’ EBIT.
Results were driven by strong commodity prices, operational improvements and the absence of a $26 million impairment charge reported in the prior year’s quarter. These were partly offset by higher operating costs from pipeline integrity work and lower volumes due to hurricane interruptions.
On July 5, 2005, Duke Energy transferred a 19.7 percent interest in DEFS to ConocoPhillips in exchange for cash and assets of approximately $1.1 billion. DEFS is now a 50/50 joint venture between Duke Energy and ConocoPhillips.
Duke Energy North America
As a result of the decision to exit substantially all of the Duke Energy North America (DENA) business outside of the Midwest, results for DENA’s continuing operations for 2005 is included in Other. Its discontinued results are reported in Discontinued Operations.
International Energy
For third quarter 2005, Duke Energy International (DEI) reported segment EBIT from continuing operations of $63 million, compared to $64 million in third quarter 2004.
The 2005 results include a $20 million impairment charge on DEI’s investment in the Campeche plant in Mexico. Excluding that item, results were driven by favorable hydrology and pricing in Peru and Argentina, higher commodity prices at National Methanol and favorable currency impacts in Brazil – offset by higher expenses in Ecuador and Guatemala, and lower margins in Brazil. The favorable currency impacts on DEI’s EBIT were partially offset in Duke Energy’s net income by currency impacts on Brazilian interest and taxes.
Year-to-date EBIT from continuing operations for International Energy was $217 million, compared with $161 million in 2004.
Crescent Resources
Crescent Resources reported third quarter 2005 segment EBIT from continuing operations of $120 million, compared to $43 million in the previous year’s quarter.
The increase was driven by continued active management of Crescent’s real estate holdings, which this quarter included a gain on the sale of an interest in a portfolio of office buildings, the sale of a legacy land tract in South Carolina and increased residential lot sales. These were partially offset by a $16 million impairment on a residential development in South Carolina.
Year-to-date EBIT from continuing operations for Crescent Resources was $210 million, compared with $190 million in 2004.
Other
Other primarily includes the cost of corporate governance, Duke Energy’s captive insurance company, Bison Insurance Co. Limited, de-designated hedges resulting from the decision to transfer a 19.7 percent interest in DEFS to ConocoPhillips and DENA’s continuing operations for 2005. Other reported an EBIT loss from continuing operations of $175 million in third quarter 2005, compared to a loss of $25 million in third quarter 2004. The additional losses were due mainly to mark-to-market losses on 2005 and 2006 de-designated Field Services’ hedges, realized losses on the 2005 de-designated hedges due to settlements in the quarter, timing of recognition of losses at Bison and adjustments to the mutual insurance liability.
The reported losses were partially offset by a mark-to-market gain on de-designated Southeast DENA hedges.
Year-to-date EBIT loss from continuing operations for Other was $495 million, compared with a $56 million EBIT loss in 2004.
Discontinued Operations
Discontinued Operations showed a third quarter 2005 loss of $883 million, compared to a gain of $8 million in third quarter 2004. This is primarily due to the company’s decision to exit DENA.
Year-to-date, Discontinued Operations posted a loss of $894 million, compared with a gain of $183 million in 2004.
INTEREST EXPENSE
Interest expense was $228 million for third quarter 2005, compared to $329 million for third quarter 2004. The decrease was primarily due to the company’s debt reduction efforts in 2004 and the transfer of Duke Energy’s 19.7 percent interest in DEFS, which resulted in reporting Duke Energy’s proportionate share of DEFS’ interest expense in equity earnings.
Year-to-date interest expense was $813 million, compared with interest expense of $984 million in 2004.
INCOME TAX
Third quarter 2005 income tax expense from continuing operations was $487 million, compared to $147 million in third quarter 2004. This increase was primarily due to higher earnings during the quarter compared to last year’s quarter. The effective tax rate increased from 27.9 percent in the third quarter 2004 to 34.5 percent in the third quarter 2005 primarily due to benefits resulting from a change in effective state tax rates in the prior year. The effective tax rate calculation includes equity earnings in pre-tax income.
Year-to-date income tax expense from continuing operations was $1.1 billion, compared to $365 million in 2004.
LIQUIDITY AND CAPITAL RESOURCES
Duke Energy’s consolidated capital structure at the end of third quarter 2005, including short-term debt, was 49 percent debt, 49 percent common equity and 2 percent minority interests. The company had approximately $1.44 billion in cash, cash equivalents and short-term investments at the end of third quarter 2005.
ADDITIONAL INFORMATION
Additional information, including EPS reconciliation data and a schedule for Duke Energy Field Services’ gas volume and margin by contract type can be obtained at Duke Energy’s third quarter 2005 earnings information Web site at: http://www.duke-energy.com/investors/.
NON-GAAP FINANCIAL MEASURES
The primary performance measure used by management to evaluate segment performance is segment EBIT from continuing operations, which at the segment level represents all profits from continuing operations (both operating and non-operating), including any equity in earnings of unconsolidated affiliates, before deducting interest and taxes, and is net of the minority interest expense related to those profits. Management believes segment EBIT from continuing operations, which is the GAAP measure used to report segment results, is a good indicator of each segment’s operating performance as it represents the results of our ownership interests in continuing operations without regard to financing methods or capital structures.
Duke Energy’s management uses ongoing basic and diluted EPS, which are non-GAAP financial measures as they represent basic and diluted EPS from continuing operations plus any discontinued operations from its Crescent Resources real estate unit, adjusted for the impact of special items, as two of the measures to evaluate operations of the company. Special items represent certain charges and credits which management believes will not be recurring on a regular basis. Management believes
that the presentation of ongoing basic and diluted EPS provides useful information to investors, as it allows them to more accurately compare the company’s ongoing performance across all periods. Ongoing basic EPS is also the basis used for employee incentive bonuses. The most directly comparable GAAP measures for ongoing basic and diluted EPS are reported basic and diluted EPS from continuing operations, respectively, which include the impact of special items. Due to the forward-looking nature of ongoing basic and diluted EPS for future periods, information to reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measure is not available at this time as the company is unable to forecast any special items for future periods.
Duke Energy is a diversified energy company with a portfolio of natural gas and electric businesses, both regulated and unregulated, and an affiliated real estate company. Duke Energy supplies, delivers and processes energy for customers in the Americas. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on 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 can be accessed via the investors’ section of Duke Energy’s Web site http://www.duke-energy.com/investors/ or by dialing 800/967-7185 in the United States or 719/457-2634 outside the United States. The confirmation code is 8492249. Please call in five to 10 minutes prior to the scheduled start time. A replay of the conference call will be available until Nov. 11, 2005, midnight ET, by dialing 888/203-1112 with a confirmation code of 8492249. The international replay number is 719/457-0820, confirmation code 8492249. A replay and transcript also will be available by accessing the investors’ section of the company’s Web site. 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/investors/publications/gaap/.
This release includes statements that do not directly or exclusively relate to historical facts. Such statements are “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. Those statements represent Duke Energy’s intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors, many of which are outside Duke Energy’s control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Those factors include: industrial, commercial and residential growth in Duke Energy’s service territories; the influence of weather and other natural phenomena on company operations, including the economic, operational and other effects of hurricanes Katrina and Rita; general economic conditions, including any potential effects arising from terrorist attacks and any consequential hostilities or other hostilities or other external factors over which Duke Energy has no control; changes in environmental and other laws and regulations to which Duke Energy and its subsidiaries are subject; the results of financing efforts, including Duke Energy’s ability to obtain financing on favorable terms, which can be affected by various factors, including Duke Energy’s credit ratings and general economic conditions; declines in the market prices of equity securities and resultant cash funding requirements for Duke Energy’s defined benefit pension plans; the performance of electric generation, pipeline and gas processing facilities; the extent of success in connecting natural gas supplies to gathering and processing systems and in connecting and expanding gas and electric markets; conditions of the capital markets and equity markets during the periods covered by the forward-looking statements; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; the outcomes of litigation and regulatory investigations, proceedings or inquiries and other contingencies; the level of creditworthiness of counterparties to Duke Energy’s transactions; the amount of collateral required to be posted from time to time in Duke Energy’s transactions; opportunities for Duke Energy’s business units, including the timing and success of efforts to develop domestic and international power, pipeline, gathering, liquefied natural gas, processing and other infrastructure projects; state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rate structures, and affect the speed at and the degree to which competition enters the electric and natural gas industries; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates; competition and regulatory limitations affecting the success of Duke Energy’s divestiture plans, including the prices at which Duke Energy is able to sell its assets; the ability to successfully complete merger, acquisitions or divestiture plans (including the merger
with Cinergy Corp.); regulatory or other limitations imposed as a result of a merger, acquisition or divestiture; and the success of the business following a merger, acquisition or divestiture.
In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Duke Energy has described. Duke Energy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Information contained in this release is unaudited, and is subject to change.
###
| Media Contact: | Randy Wheeless | |||||
| Phone: | 704/382-8379 | |||||
| 24-Hour: | 704/382-8333 | |||||
| Analyst Contact: | Julie Dill | |||||
| Phone: | 980/373-4332 | |||||
| Investor Relations: | 800/488-3853 | |||||
SEPTEMBER 2005
QUARTERLY HIGHLIGHTS
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In millions, except where noted) | 2005 | 2004 | 2005 | 2004 | ||||||||||||
COMMON STOCK DATA | ||||||||||||||||
Earnings Per Share (from continuing operations) | ||||||||||||||||
Basic | $ | 0.99 | $ | 0.40 | $ | 2.25 | $ | 1.02 | ||||||||
Diluted | $ | 0.96 | $ | 0.39 | $ | 2.17 | $ | 0.99 | ||||||||
(Loss) Earnings Per Share (from discontinued operations) | ||||||||||||||||
Basic | $ | (0.95 | ) | $ | 0.01 | $ | (0.96 | ) | $ | 0.20 | ||||||
Diluted | $ | (0.92 | ) | $ | 0.01 | $ | (0.92 | ) | $ | 0.19 | ||||||
Earnings Per Share | ||||||||||||||||
Basic | $ | 0.04 | $ | 0.41 | $ | 1.29 | $ | 1.22 | ||||||||
Diluted | $ | 0.04 | $ | 0.40 | $ | 1.25 | $ | 1.18 | ||||||||
Dividends Per Share | $ | — | $ | — | $ | 0.860 | $ | 0.825 | ||||||||
Weighted-Average Shares Outstanding | ||||||||||||||||
Basic | 926 | 938 | 936 | 925 | ||||||||||||
Diluted | 964 | 973 | 973 | 960 | ||||||||||||
INCOME | ||||||||||||||||
Operating Revenues | $ | 3,028 | $ | 5,081 | $ | 13,630 | $ | 15,007 | ||||||||
Total Reportable Segment EBIT | 1,819 | 865 | 4,471 | 2,281 | ||||||||||||
Other EBIT | (175 | ) | (25 | ) | (495 | ) | (56 | ) | ||||||||
Interest Expense | 228 | 329 | 813 | 984 | ||||||||||||
Interest Income and Other (a) | 5 | (17 | ) | (44 | ) | (73 | ) | |||||||||
Income Tax Expense from Continuing Operations | 487 | 147 | 1,095 | 365 | ||||||||||||
(Loss) Income from Discontinued Operations | (883 | ) | 8 | (894 | ) | 183 | ||||||||||
Net Income | 41 | 389 | 1,218 | 1,132 | ||||||||||||
Dividends and Premiums on Redemption of Preferred and Preference Stock | 3 | 2 | 7 | 7 | ||||||||||||
Earnings Available for Common Stockholders | $ | 38 | $ | 387 | $ | 1,211 | $ | 1,125 | ||||||||
CAPITALIZATION | ||||||||||||||||
Common Equity | 49 | % | 41 | % | ||||||||||||
Preferred Stock | 0 | % | 0 | % | ||||||||||||
Total Common Equity and Preferred Securities | 49 | % | 41 | % | ||||||||||||
Minority Interests | 2 | % | 4 | % | ||||||||||||
Total Debt | 49 | % | 55 | % | ||||||||||||
Total Debt | $ | 16,112 | $ | 20,653 | ||||||||||||
Book Value Per Share | $ | 17.18 | $ | 16.30 | ||||||||||||
Actual Shares Outstanding | 926 | 938 | ||||||||||||||
CAPITAL AND INVESTMENT EXPENDITURES | ||||||||||||||||
Franchised Electric | $ | 335 | $ | 253 | $ | 913 | $ | 781 | ||||||||
Natural Gas Transmission | 478 | 131 | 716 | 387 | ||||||||||||
Field Services | — | 31 | 86 | 163 | ||||||||||||
Duke Energy North America | (1 | ) | 5 | 4 | 19 | |||||||||||
International Energy | 8 | 9 | 20 | 24 | ||||||||||||
Crescent (b) | 139 | 122 | 470 | 406 | ||||||||||||
Other | (1 | ) | — | 9 | 24 | |||||||||||
Total Capital and Investment Expenditures | $ | 958 | $ | 551 | $ | 2,218 | $ | 1,804 | ||||||||
EBIT BY BUSINESS SEGMENT | ||||||||||||||||
Franchised Electric | $ | 606 | $ | 453 | $ | 1,216 | $ | 1,215 | ||||||||
Natural Gas Transmission | 329 | 269 | 1,044 | 986 | ||||||||||||
Field Services | 701 | 63 | 1,784 | 243 | ||||||||||||
Duke Energy North America | — | (27 | ) | — | (514 | ) | ||||||||||
International Energy | 63 | 64 | 217 | 161 | ||||||||||||
Crescent | 120 | 43 | 210 | 190 | ||||||||||||
Total reportable segment EBIT | 1,819 | 865 | 4,471 | 2,281 | ||||||||||||
Other EBIT | (175 | ) | (25 | ) | (495 | ) | (56 | ) | ||||||||
Interest expense | (228 | ) | (329 | ) | (813 | ) | (984 | ) | ||||||||
Equity in earnings of unconsolidated affiliates in Segment EBIT | (176 | ) | (33 | ) | (256 | ) | (110 | ) | ||||||||
Interest Income and Other (a) | (5 | ) | 17 | 44 | 73 | |||||||||||
Consolidated earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates | $ | 1,235 | $ | 495 | $ | 2,951 | $ | 1,204 | ||||||||
| (a) | Other includes foreign currency remeasurement gains and losses and additional minority interest not allocated to the segment results. |
| (b) | Amounts include capital expenditures for residential real estate included in operating cash flows of $67 million and $80 million for the three months ended September 30, 2005 and 2004 respectively, and $276 million and $218 million for the nine months ended September 30, 2005 and 2004, respectively. |
Note: Certain prior period amounts have been reclassified due to discontinued operations.
SEPTEMBER 2005
QUARTERLY HIGHLIGHTS
(Unaudited)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
(In millions, except where noted) | 2005 | 2004 | 2005 | 2004 | ||||||||||||
FRANCHISED ELECTRIC | ||||||||||||||||
Operating Revenues | $ | 1,619 | $ | 1,419 | $ | 4,118 | $ | 3,918 | ||||||||
Operating Expenses | 1,026 | 967 | 2,916 | 2,714 | ||||||||||||
Gains on Sales of Other Assets, net | 1 | — | 2 | 3 | ||||||||||||
Other Income, net of expenses | 12 | 1 | 12 | 8 | ||||||||||||
EBIT | $ | 606 | $ | 453 | $ | 1,216 | $ | 1,215 | ||||||||
Sales, GWh | 23,724 | 21,904 | 65,318 | 63,954 | ||||||||||||
NATURAL GAS TRANSMISSION | ||||||||||||||||
Operating Revenues | $ | 869 | $ | 652 | $ | 2,824 | $ | 2,408 | ||||||||
Operating Expenses | 549 | 398 | 1,809 | 1,453 | ||||||||||||
Gains on Sales of Other Assets, net | — | 3 | 4 | 12 | ||||||||||||
Other Income, net of expenses | 17 | 19 | 48 | 39 | ||||||||||||
Minority Interest Expense | 8 | 7 | 23 | 20 | ||||||||||||
EBIT | $ | 329 | $ | 269 | $ | 1,044 | $ | 986 | ||||||||
Proportional Throughput, TBtu | 759 | 652 | 2,534 | 2,467 | ||||||||||||
FIELD SERVICES(a) | ||||||||||||||||
Operating Revenues | $ | — | $ | 2,490 | $ | 5,530 | $ | 7,154 | ||||||||
Operating Expenses | — | 2,368 | 5,211 | 6,785 | ||||||||||||
Gains on Sales of Other Assets, net | 576 | 1 | 577 | 1 | ||||||||||||
Other Income (Expense), net | (1 | ) | (17 | ) | 1,259 | 17 | ||||||||||
Equity in Earnings of Unconsolidated Affiliates (b) | 126 | — | 126 | — | ||||||||||||
Minority Interest Expense | — | 43 | 497 | 144 | ||||||||||||
EBIT | $ | 701 | $ | 63 | $ | 1,784 | $ | 243 | ||||||||
Natural Gas Gathered and Processed/Transported, TBtu/day (c) | 6.7 | 6.8 | 6.8 | 6.8 | ||||||||||||
Natural Gas Liquids Production, MBbl/d (c) | 342 | 357 | 355 | 354 | ||||||||||||
Average Natural Gas Price per MMBtu | $ | 8.37 | $ | 5.76 | $ | 7.12 | $ | 5.81 | ||||||||
Average Natural Gas Liquids Price per Gallon | $ | 0.91 | $ | 0.72 | $ | 0.80 | $ | 0.64 | ||||||||
DUKE ENERGY NORTH AMERICA(a) (d) | ||||||||||||||||
Operating Revenues | $ | — | $ | 75 | $ | — | $ | 169 | ||||||||
Operating Expenses | — | 88 | — | 318 | ||||||||||||
Losses on Sales of Other Assets, net (e) | — | (4 | ) | — | (373 | ) | ||||||||||
Other Income, net of expenses | — | 5 | — | 6 | ||||||||||||
Minority Interest Expense (Benefit) | — | 15 | — | (2 | ) | |||||||||||
EBIT | $ | — | $ | (27 | ) | $ | — | $ | (514 | ) | ||||||
Actual Plant Production, GWh (DENA Continuing Operations) | 887 | 3,300 | ||||||||||||||
Proportional MW Capacity in Operation (DENA Continuing Operations) | 3,600 | |||||||||||||||
INTERNATIONAL ENERGY | ||||||||||||||||
Operating Revenues | $ | 186 | $ | 146 | $ | 536 | $ | 447 | ||||||||
Operating Expenses | 139 | 109 | 385 | 338 | ||||||||||||
Gains on Sales of Other Assets, net | 1 | 1 | 1 | 1 | ||||||||||||
Other Income, net of expenses | 19 | 29 | 74 | 60 | ||||||||||||
Minority Interest Expense | 4 | 3 | 9 | 9 | ||||||||||||
EBIT | $ | 63 | $ | 64 | $ | 217 | $ | 161 | ||||||||
Sales, GWh | 4,493 | 4,277 | 13,555 | 13,088 | ||||||||||||
Proportional MW Capacity in Operation | 4,064 | 4,136 | ||||||||||||||
CRESCENT(a) | ||||||||||||||||
Operating Revenues | $ | 105 | $ | 77 | $ | 281 | $ | 216 | ||||||||
Operating Expenses | 95 | 62 | 225 | 173 | ||||||||||||
Gains on Sales of Investments in Commercial and Multi-Family Real Estate | 63 | 28 | 117 | 149 | ||||||||||||
Other Income, net of expenses | 46 | — | 44 | — | ||||||||||||
Minority Interest (Benefit) Expense | (1 | ) | — | 7 | 2 | |||||||||||
EBIT | $ | 120 | $ | 43 | $ | 210 | $ | 190 | ||||||||
OTHER(d) | ||||||||||||||||
Operating Revenues | $ | 282 | $ | 295 | $ | 510 | $ | 929 | ||||||||
Operating Expenses | 360 | 316 | 920 | 1,014 | ||||||||||||
Gains (Losses) on Sales of Other Assets, net | 3 | (3 | ) | 6 | 4 | |||||||||||
Other (Expense) Income, net | (103 | ) | (1 | ) | (98 | ) | 25 | |||||||||
Minority Interest Benefit | (3 | ) | — | (7 | ) | — | ||||||||||
EBIT | $ | (175 | ) | $ | (25 | ) | $ | (495 | ) | $ | (56 | ) | ||||
Actual Plant Production, GWh (DENA Continuing Operations) | 958 | 1,664 | ||||||||||||||
Proportional MW Capacity in Operation (DENA Continuing Operations) | 3,600 | |||||||||||||||
| (a) | Certain prior year amounts have been reclassified due to discontinued operations. |
| (b) | Represents the 50% interest in Duke Energy Field Services LLC |
| (c) | Represents 100% of joint venture volumes. |
| (d) | 2005 Segment EBIT balances for DENA’s continuing operations are included in Other. |
| (e) | Prior year amounts for the nine months ended September 30, 2004 include DENA Southeast plant impairment of approximately $360 million. |
Note: See GAAP reconciliation associated with the 2005 third quarter Earnings Release on the Investor Relations
Web site at http://www.duke-energy.com/investors/publications/gaap/.
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per-share amounts)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Operating Revenues | $ | 3,028 | $ | 5,081 | $ | 13,630 | $ | 15,007 | ||||||||
Operating Expenses | 2,138 | 4,236 | 11,308 | 12,567 | ||||||||||||
Gains on Sales of Investments in Commercial and Multi-Family Real Estate | 63 | 28 | 117 | 149 | ||||||||||||
Gains (Losses) on Sales of Other Assets, net | 580 | (3 | ) | 589 | (353 | ) | ||||||||||
Operating Income | 1,533 | 870 | 3,028 | 2,236 | ||||||||||||
Other Income and Expenses | (60 | ) | 16 | 1,244 | 98 | |||||||||||
Interest Expense | 228 | 329 | 813 | 984 | ||||||||||||
Minority Interest Expense | 10 | 62 | 508 | 146 | ||||||||||||
Earnings From Continuing Operations Before Income Taxes and Equity in Earnings of Unconsolidated Affiliates | 1,235 | 495 | 2,951 | 1,204 | ||||||||||||
Income Tax Expense from Continuing Operations | 487 | 147 | 1,095 | 365 | ||||||||||||
Income From Continuing Operations Before Equity in Earnings of Unconsolidated Affiliates | 748 | 348 | 1,856 | 839 | ||||||||||||
Equity in Earnings of Unconsolidated Affiliates | 176 | 33 | 256 | 110 | ||||||||||||
Income From Continuing Operations | 924 | 381 | 2,112 | 949 | ||||||||||||
(Loss) Income From Discontinued Operations, net of tax | (883 | ) | 8 | (894 | ) | 183 | ||||||||||
Net Income | 41 | 389 | 1,218 | 1,132 | ||||||||||||
Dividends and Premiums on Redemption of Preferred and Preference Stock | 3 | 2 | 7 | 7 | ||||||||||||
Earnings Available For Common Stockholders | $ | 38 | $ | 387 | $ | 1,211 | $ | 1,125 | ||||||||
Common Stock Data | ||||||||||||||||
Weighted-average shares outstanding | ||||||||||||||||
Basic | 926 | 938 | 936 | 925 | ||||||||||||
Diluted | 964 | 973 | 973 | 960 | ||||||||||||
Earnings per share (from continuing operations) | ||||||||||||||||
Basic | $ | 0.99 | $ | 0.40 | $ | 2.25 | $ | 1.02 | ||||||||
Diluted | $ | 0.96 | $ | 0.39 | $ | 2.17 | $ | 0.99 | ||||||||
(Loss) Earnings per share (from discontinued operations) | ||||||||||||||||
Basic | $ | (0.95 | ) | $ | 0.01 | $ | (0.96 | ) | $ | 0.20 | ||||||
Diluted | $ | (0.92 | ) | $ | 0.01 | $ | (0.92 | ) | $ | 0.19 | ||||||
Earnings per share | ||||||||||||||||
Basic | $ | 0.04 | $ | 0.41 | $ | 1.29 | $ | 1.22 | ||||||||
Diluted | $ | 0.04 | $ | 0.40 | $ | 1.25 | $ | 1.18 | ||||||||
Dividends per share | $ | — | $ | — | $ | 0.860 | $ | 0.825 | ||||||||
Note: Amounts remain subject to change until the Company’s 10-Q is filed with the Securities and Exchange Commission.
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
| September 30, 2005 | December 31, 2004 | |||||
ASSETS | ||||||
Current Assets | $ | 8,357 | $ | 7,971 | ||
Investments and Other Assets | 14,152 | 11,533 | ||||
Net Property, Plant and Equipment | 28,600 | 33,506 | ||||
Regulatory Assets and Deferred Debits | 2,568 | 2,460 | ||||
Total Assets | $ | 53,677 | $ | 55,470 | ||
LIABILITIES AND COMMON STOCKHOLDERS’ EQUITY | ||||||
Current Liabilities | $ | 7,756 | $ | 7,502 | ||
Long-term Debt | 15,062 | 16,932 | ||||
Deferred Credits and Other Liabilities | 14,161 | 12,975 | ||||
Minority Interests | 650 | 1,486 | ||||
Preferred and preference stock without sinking fund requirements | 134 | 134 | ||||
Common Stockholders’ Equity | 15,914 | 16,441 | ||||
Total Liabilities and Common Stockholders’ Equity | $ | 53,677 | $ | 55,470 | ||
Note: Amounts remain subject to change until the Company’s 10-Q is filed with the Securities and Exchange Commission.
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
| Nine Months Ended September 30, | ||||||||
| 2005 | 2004 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net income | $ | 1,218 | $ | 1,132 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | 1,221 | 2,371 | ||||||
Net cash provided by operating activities | 2,439 | 3,503 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Net cash used in investing activities | (261 | ) | (1,601 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Net cash used in financing activities | (2,337 | ) | (1,543 | ) | ||||
Changes in cash and cash equivalents associated with assets held for sale | 3 | 38 | ||||||
Net (decrease) increase in cash and cash equivalents | (156 | ) | 397 | |||||
Cash and cash equivalents at beginning of period | 533 | 397 | ||||||
Cash and cash equivalents at end of period | $ | 377 | $ | 794 | ||||
Note: Amounts remain subject to change until the Company’s 10-Q is filed with the Securities and Exchange Commission.
Supplemental Disclosures
Quarter Ended September 30, 2005
Duke Energy Corporation
Mark-to-market Portfolio (in millions) | Non-AHFS | AHFS | Total | ||||||||
As of 09/30/2005 | $ | 15 | $ | (1,109 | ) | $ | (1,094 | ) | |||
Daily Earnings at Risk (DER) (in millions) | Continuing | Discontinued | |||||||||
95% Confidence Level, One-Day Holding Period, Two-Tailed | |||||||||||
As of 09/30/2005 | $ | 6 | $ | 61 | $ | 65a | |||||
| a | This figure excludes effects of the February 22, 2005 de-designation of certain hedges of Field Services’ commodity risk, which have been retained as undesignated derivatives. DER is higher than prior quarter due to restructuring of DENA's hedge books due to the decision to exit the components of its business outside the Midwest. |
Duke Energy North America
Owned Assets - Contracted Level | MWs Capacity | Remaining 2005 | 2006 | ||||||||||||||||||
Region | Millions MWh Available | % Contracted | Millions MWh Available | % Contracted | |||||||||||||||||
| Capacity | Energy | Capacity | Energy | ||||||||||||||||||
Midwest | 3,600 | b | 7 | c | 17 | % | 0 | % | 28 | c | 11 | % | 0 | % | |||||||
| b | Capacity excludes assets held for sale and classified as “Discontinued Operations”. |
| c | Midwest capacity includes 1.8 million MWh from peaking facilities in 2005 and 6.6 million in 2006. |
Terms of Reference
MWs Capacity
Represents the official rated capacity of DENA’s percentage ownership of its merchant assets, excluding assets held for sale and classified as discontinued operations.
Millions MWhs Available
Represents the amount of electric power capable of being generated from owned merchant assets, excluding assets held for sale and classified as discontinued operations, after adjusting for scheduled maintenance and outage factors. For simple cycle facilities, only peak demand periods were included in this calculation.
% Contracted:
Capacity: Volumes contracted under tolls as well as Regulatory Must Run (“RMR”).
Energy: Volumes sold as forward power hedges.
AHFS
Assets Held for Sale
Duke Energy Corporation
Quarterly Highlights
Supplemental Franchised Electric Information
September 30, 2005
| Quarter Ended September 30, | Year To Date September 30, | |||||||||||||||||
| 2005 | 2004 | % Inc. (Dec.) | 2005 | 2004 | % Inc. (Dec.) | |||||||||||||
GWH Sales | ||||||||||||||||||
Residential | 7,654 | 6,807 | 12.4 | % | 19,696 | 19,469 | 1.2 | % | ||||||||||
General Service | 7,303 | 6,937 | 5.3 | % | 19,173 | 18,987 | 1.0 | % | ||||||||||
Industrial - Textile | 1,749 | 1,925 | (9.1 | %) | 5,004 | 5,390 | (7.2 | %) | ||||||||||
Industrial - Other | 5,082 | 4,861 | 4.5 | % | 14,101 | 13,415 | 5.1 | % | ||||||||||
Total Industrial | 6,831 | 6,786 | 0.7 | % | 19,105 | 18,805 | 1.6 | % | ||||||||||
Other Energy Sales | 67 | 67 | — | 201 | 199 | 1.0 | % | |||||||||||
Regular Resale | 457 | 438 | 4.3 | % | 1,123 | 1,132 | (0.8 | %) | ||||||||||
Total Regular Sales Billed | 22,312 | 21,035 | 6.1 | % | 59,298 | 58,592 | 1.2 | % | ||||||||||
Special Sales (A) | 1,079 | 908 | 18.8 | % | 5,229 | 4,844 | 7.9 | % | ||||||||||
Total Electric Sales | 23,391 | 21,943 | 6.6 | % | 64,527 | 63,436 | 1.7 | % | ||||||||||
Unbilled Revenue | 9 | (342 | ) | 102.6 | % | (164 | ) | (398 | ) | 58.8 | % | |||||||
Total Duke Power Electric Sales | 23,400 | 21,601 | 8.3 | % | 64,363 | 63,038 | 2.1 | % | ||||||||||
Nantahala Electric Sales | 324 | 303 | 6.9 | % | 955 | 916 | 4.3 | % | ||||||||||
Total DP Consolidated Electric Sales | 23,724 | 21,904 | 8.3 | % | 65,318 | 63,954 | 2.1 | % | ||||||||||
Average Number of Customers | ||||||||||||||||||
Residential | 1,843,208 | 1,808,955 | 1.9 | % | 1,835,402 | 1,801,039 | 1.9 | % | ||||||||||
General Service | 312,135 | 305,924 | 2.0 | % | 310,122 | 304,006 | 2.0 | % | ||||||||||
Industrial - Textile | 786 | 846 | (7.1 | %) | 802 | 859 | (6.6 | %) | ||||||||||
Industrial - Other | 6,661 | 6,670 | (0.1 | %) | 6,665 | 6,674 | (0.1 | %) | ||||||||||
Total Industrial | 7,447 | 7,516 | (0.9 | %) | 7,467 | 7,533 | (0.9 | %) | ||||||||||
Other Energy Sales | 12,659 | 12,424 | 1.9 | % | 12,977 | 11,936 | 8.7 | % | ||||||||||
Regular Resale | 15 | 15 | — | 15 | 15 | — | ||||||||||||
Total Regular Sales | 2,175,464 | 2,134,834 | 1.9 | % | 2,165,983 | 2,124,529 | 2.0 | % | ||||||||||
Special Sales (A) | 28 | 37 | (24.3 | %) | 32 | 38 | (15.8 | %) | ||||||||||
Total Duke Power Electric Sales | 2,175,492 | 2,134,871 | 1.9 | % | 2,166,015 | 2,124,567 | 2.0 | % | ||||||||||
Nantahala Electric Sales | 68,733 | 67,346 | 2.1 | % | 68,162 | 66,814 | 2.0 | % | ||||||||||
Total DP Average Number of Customers | 2,244,225 | 2,202,217 | 1.9 | % | 2,234,177 | 2,191,381 | 2.0 | % | ||||||||||
(A) Excludes sales to Nantahala Power and Light Company |
| |||||||||||||||||
Heating and Cooling Degree Days | ||||||||||||||||||
Actual | ||||||||||||||||||
Heating Degree Days | 1 | 9 | (89.9 | %) | 1,976 | 2,094 | (5.6 | %) | ||||||||||
Cooling Degree Days | 1,122 | 831 | 35.0 | % | 1,474 | 1,400 | 5.3 | % | ||||||||||
Variance from Normal | ||||||||||||||||||
Heating Degree Days | (95.4 | %) | (59.2 | %) | n/a | 1.5 | % | 9.0 | % | n/a | ||||||||
Cooling Degree Days | 18.6 | % | (14.1 | %) | n/a | 4.5 | % | (1.8 | %) | n/a | ||||||||
DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
September 2004 Quarter-to-date
(Dollars in Millions)
| Special Items (Note 1) | ||||||||||||||||||||||||||||||
| Ongoing Earnings | Gains (Losses) on Sale of Assets | Impairment | Gains (Losses) on sales and impairments of equity investments | Tax Benefit from DEA Restructuring | Discontinued Operations, excluding Crescent Resources | Total Adjustments | Reported Earnings | |||||||||||||||||||||||
SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS | ||||||||||||||||||||||||||||||
Franchised Electric | $ | 453 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 453 | ||||||||||||||
Gas Transmission | 262 | 2 | — | 5 | A | — | — | 7 | 269 | |||||||||||||||||||||
Field Services | 88 | 1 | (10 | )B | (16 | )C | — | — | (25 | ) | 63 | |||||||||||||||||||
Duke Energy North America | (23 | ) | (4 | )D | — | — | — | — | (4 | ) | (27 | ) | ||||||||||||||||||
International Energy | 63 | — | — | 1 | — | — | 1 | 64 | ||||||||||||||||||||||
Crescent | 43 | — | — | — | — | — | — | 43 | ||||||||||||||||||||||
Total reportable segment EBIT | 886 | (1 | ) | (10 | ) | (10 | ) | — | — | (21 | ) | 865 | ||||||||||||||||||
Other | (25 | ) | (3 | ) | — | 3 | — | — | — | (25 | ) | |||||||||||||||||||
Total reportable segment EBIT and other EBIT | $ | 861 | $ | (4 | ) | $ | (10 | ) | $ | (7 | ) | $ | — | $ | — | $ | (21 | ) | $ | 840 | ||||||||||
EARNINGS FOR COMMON | ||||||||||||||||||||||||||||||
Total reportable segment EBIT and other EBIT | $ | 861 | $ | (4 | ) | $ | (10 | ) | $ | (7 | ) | $ | — | $ | — | $ | (21 | ) | $ | 840 | ||||||||||
Foreign Currency Translation Gains / (Losses) | (3 | ) | — | — | — | — | — | — | (3 | ) | ||||||||||||||||||||
Interest Income and Other | 14 | — | — | — | — | — | — | 14 | ||||||||||||||||||||||
Interest Expense | (329 | ) | — | — | — | — | — | — | (329 | ) | ||||||||||||||||||||
Minority Interest - Interest Expense | 6 | — | — | — | — | — | — | 6 | ||||||||||||||||||||||
Income taxes on continuing operations | (203 | ) | 1 | 4 | 3 | 48 | — | 56 | (147 | ) | ||||||||||||||||||||
Discontinued operations, net of taxes | 4 | — | — | — | — | 4 | 4 | 8 | ||||||||||||||||||||||
Trust Preferred/Preferred Dividends | (2 | ) | — | — | — | — | — | — | (2 | ) | ||||||||||||||||||||
Total Earnings for Common | $ | 348 | $ | (3 | ) | $ | (6 | ) | $ | (4 | ) | $ | 48 | $ | 4 | $ | 39 | $ | 387 | |||||||||||
EARNINGS PER SHARE, BASIC | $ | 0.37 | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.05 | $ | 0.01 | $ | 0.04 | $ | 0.41 | ||||||||||||
EARNINGS PER SHARE, DILUTED | $ | 0.36 | $ | — | $ | (0.01 | ) | $ | (0.01 | ) | $ | 0.05 | $ | 0.01 | $ | 0.04 | $ | 0.40 | ||||||||||||
Note 1 - Amounts for special items are entered net of minority interest
A - | Millennium Pipeline | |
B - | Recorded in Impairment and other charges on the Consolidated Statements of Operations. Amount net of $12 million of minority interest. | |
C - | Amount net of $7 million of minority interest. | |
D - | Southeast assets | |
Weighted Average Shares (reported and ongoing) - in millions
Basic | 938 | |
Diluted | 973 |
DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
September 2005 Quarter-to-date
(Dollars in Millions)
| Special Items (Note 1) | ||||||||||||||||||||||||||||||||||||
| Ongoing Earnings | Gain on transfer of 19.7% interest in DEFS | Impairment of equity investments | Field Services hedge de- designation, net | MTM change on de-designated Field Services hedges for 2005, net | Initial and Subsequent gain on de- designating Southeast DENA hedges | Discontinued Operations, excluding Crescent Resources | Total Adjustments | Reported Earnings | ||||||||||||||||||||||||||||
SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS | ||||||||||||||||||||||||||||||||||||
Franchised Electric | $ | 606 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 606 | ||||||||||||||||||
Gas Transmission | 329 | — | — | — | — | — | — | — | 329 | |||||||||||||||||||||||||||
Field Services | 87 | 576 | A | — | 38 | B | — | — | — | 614 | 701 | |||||||||||||||||||||||||
Duke Energy North America | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||
International Energy | 83 | — | (20 | )C | — | — | — | — | (20 | ) | 63 | |||||||||||||||||||||||||
Crescent | 120 | — | — | — | — | — | — | — | 120 | |||||||||||||||||||||||||||
Total reportable segment EBIT | 1,225 | 576 | (20 | ) | 38 | — | — | — | 594 | 1,819 | ||||||||||||||||||||||||||
Other | (188 | ) | — | — | — | (17 | )D | 30 | E | — | 13 | (175 | ) | |||||||||||||||||||||||
Total reportable segment EBIT and other EBIT | $ | 1,037 | $ | 576 | $ | (20 | ) | $ | 38 | $ | (17 | ) | $ | 30 | $ | — | $ | 607 | $ | 1,644 | ||||||||||||||||
EARNINGS FOR COMMON | ||||||||||||||||||||||||||||||||||||
Total reportable segment EBIT and other EBIT | $ | 1,037 | $ | 576 | $ | (20 | ) | $ | 38 | $ | (17 | ) | $ | 30 | $ | — | $ | 607 | $ | 1,644 | ||||||||||||||||
Foreign Currency Translation Gains / (Losses) | (14 | ) | — | — | — | — | — | — | — | (14 | ) | |||||||||||||||||||||||||
Interest Income and Other | 10 | — | — | — | — | — | — | — | 10 | |||||||||||||||||||||||||||
Interest Expense | (228 | ) | — | — | — | — | — | — | — | (228 | ) | |||||||||||||||||||||||||
Minority Interest (Expense) Benefit - Interest Expense | (1 | ) | — | — | — | — | — | — | — | (1 | ) | |||||||||||||||||||||||||
Income taxes on Continuing Operations | (260 | ) | (213 | ) | 6 | (15 | ) | 6 | (11 | ) | — | (227 | ) | (487 | ) | |||||||||||||||||||||
Discontinued Operations, net of taxes | 1 | — | — | — | — | — | (884 | )F | (884 | ) | (883 | ) | ||||||||||||||||||||||||
Trust Preferred/Preferred Dividends | (3 | ) | — | — | — | — | — | — | — | (3 | ) | |||||||||||||||||||||||||
Total Earnings for Common | $ | 542 | $ | 363 | $ | (14 | ) | $ | 23 | $ | (11 | ) | $ | 19 | $ | (884 | ) | $ | (504 | ) | $ | 38 | ||||||||||||||
EARNINGS PER SHARE, BASIC | $ | 0.59 | $ | 0.39 | $ | (0.02 | ) | $ | 0.02 | $ | (0.01 | ) | $ | 0.02 | $ | (0.95 | ) | $ | (0.55 | ) | $ | 0.04 | ||||||||||||||
EARNINGS PER SHARE, DILUTED | $ | 0.56 | $ | 0.38 | $ | (0.01 | ) | $ | 0.02 | $ | (0.01 | ) | $ | 0.02 | $ | (0.92 | ) | $ | (0.52 | ) | $ | 0.04 | ||||||||||||||
Note 1 - Amounts for special items are entered net of minority interest
A - | Recorded in Gains (Losses) on Sales of Other Assets, net on the Consolidated Statements of Operations. | |
B - | Third quarter settlements of the 2005 portion of the Field Services de-designated hedges as of 2/22/05, recorded in Equity in Earnings of Unconsolidated Affiliates on the Consolidated Statements of Operations. | |
C - | Equity investment impairment, recorded in (Losses) Gains on sales and impairments of equity investments on the Consolidated Statements of Operations. | |
D - | Recorded in Other income and expenses, net on the Consolidated Statements of Operations. | |
E - | Recorded in Non-regulated electric, natural gas, natural gas liquids and other revenues on the Consolidated Statements of Operations. | |
F - | Primarily the non-cash, after-tax charge related to the planned exit of substantially all of DENA’s physical and commercial assets outside the midwestern United States and the reclassification of DENA 2005 operations. Recorded in (Loss) Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations. | |
Weighted Average Shares (reported and ongoing) - in millions
Basic | 926 | |
Diluted | 964 |
DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
September 2004 Year-to-date
(Dollars in Millions)
| Special Items (Note 1) | ||||||||||||||||||||||||||||||||||
| Ongoing Earnings | Gains (Losses) on Sale of Assets | Impairment | Gains (losses) on sales and impairments of equity investments | Enron Settlement | Tax Benefit from DEA Restructuring | Discontinued Operations, excluding Crescent Resources | Total Adjustments | Reported Earnings | ||||||||||||||||||||||||||
SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS | ||||||||||||||||||||||||||||||||||
Franchised Electric | $ | 1,212 | $ | 3 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3 | $ | 1,215 | ||||||||||||||||
Gas Transmission | 970 | 11 | — | 5 | A | — | — | — | 16 | 986 | ||||||||||||||||||||||||
Field Services | 267 | 1 | (10 | )B | (16 | )C | 1 | D | — | — | (24 | ) | 243 | |||||||||||||||||||||
Duke Energy North America | (149 | ) | (373 | )E | — | — | 8 | D,F | — | — | (365 | ) | (514 | ) | ||||||||||||||||||||
International Energy | 172 | 1 | (13 | )G | 1 | — | — | — | (11 | ) | 161 | |||||||||||||||||||||||
Crescent | 190 | — | — | — | — | — | — | — | 190 | |||||||||||||||||||||||||
Total reportable segment EBIT | 2,662 | (357 | ) | (23 | ) | (10 | ) | 9 | — | — | (381 | ) | 2,281 | |||||||||||||||||||||
Other | (84 | ) | 4 | H | — | 3 | 21 | D | — | — | 28 | (56 | ) | |||||||||||||||||||||
Total reportable segment EBIT and other EBIT | $ | 2,578 | $ | (353 | ) | $ | (23 | ) | $ | (7 | ) | $ | 30 | $ | — | $ | — | $ | (353 | ) | $ | 2,225 | ||||||||||||
EARNINGS FOR COMMON | ||||||||||||||||||||||||||||||||||
Total reportable segment EBIT and other EBIT | $ | 2,578 | $ | (353 | ) | $ | (23 | ) | $ | (7 | ) | $ | 30 | $ | — | $ | — | $ | (353 | ) | $ | 2,225 | ||||||||||||
Foreign Currency Translation Gains / (Losses) | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Interest Income and Other | 46 | — | — | — | — | — | — | — | 46 | |||||||||||||||||||||||||
Interest Expense | (984 | ) | — | — | — | — | — | — | — | (984 | ) | |||||||||||||||||||||||
Minority Interest - Interest Expense | 27 | — | — | — | — | — | — | — | 27 | |||||||||||||||||||||||||
Income taxes on continuing operations | (537 | ) | 124 | 8 | 3 | (11 | ) | 48 | — | 172 | (365 | ) | ||||||||||||||||||||||
Discontinued operations, net of taxes | 4 | — | — | — | — | — | 179I | 179 | 183 | |||||||||||||||||||||||||
Trust Preferred/Preferred Dividends | (7 | ) | — | — | — | — | — | — | — | (7 | ) | |||||||||||||||||||||||
Total Earnings for Common | $ | 1,127 | $ | (229 | ) | $ | (15 | ) | $ | (4 | ) | $ | 19 | $ | 48 | $ | 179 | $ | (2 | ) | $ | 1,125 | ||||||||||||
EARNINGS PER SHARE, BASIC | $ | 1.22 | $ | (0.25 | ) | $ | (0.02 | ) | $ | — | $ | 0.02 | $ | 0.05 | $ | 0.20 | $ | — | $ | 1.22 | ||||||||||||||
EARNINGS PER SHARE, DILUTED | $ | 1.18 | $ | (0.24 | ) | $ | (0.02 | ) | $ | — | $ | 0.02 | $ | 0.05 | $ | 0.19 | $ | — | $ | 1.18 | ||||||||||||||
Note 1 - Amounts for special items are entered net of minority interest
A - | Millennium Pipeline | |
B - | Recorded in Impairment and other charges on the Consolidated Statements of Operations. Amount net of $12 million of minority interest. | |
C - | Amount net of $7 million of minority interest. | |
D - | Recorded in Operation, maintenance and other on the Consolidated Statements of Operations. | |
E - | Approximately $(360) million related to loss on sale of the Southeast assets and approximately $(9) million related to losses on liquidation of DETM contracts (net of $5 million of minority interest). $(367) million recorded in Gains (Losses) on Sales of Other Assets, net (net of $5 million of minority interest) and $(6) million recorded in Operation, maintenance and other on the Consolidated Statements of Operations. | |
F - | Amount is net of $5 million of minority interest. | |
G - | Charge related to Cantarell, recorded in Operation, maintenance and other on the Consolidated Statements of Operations. | |
H - | Includes $13 million related to the sale of Caribbean Nitrogen Co. | |
I - | Primarily the approximate $280 million gain on the sale of International Energy’s Asia-Pacific business, partially offset by DENA discontinued operations. | |
Weighted Average Shares (reported and ongoing) - in millions
Basic | 925 | |
Diluted | 960 |
DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
September 2005 Year-to-date
(Dollars in Millions)
| Special Items (Note 1) | ||||||||||||||||||||||||||||||||||||||||
| Ongoing Earnings | Mutual insurance liability adjustment | Gain on transfer of 19.7% interest in DEFS | Gains (Losses) on sales and impairments of equity investments | Field Services hedge de-designation, net | MTM change on de-designated Field Services hedges for 2005, net | Initial and Subsequent gain on de-designating Southeast DENA hedges | Discontinued Operations, excluding Crescent Resources | Total Adjustments | Reported Earnings | |||||||||||||||||||||||||||||||
SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS | ||||||||||||||||||||||||||||||||||||||||
Franchised Electric | $ | 1,216 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,216 | ||||||||||||||||||||
Gas Transmission | 1,044 | — | — | — | — | — | — | — | — | 1,044 | ||||||||||||||||||||||||||||||
Field Services | 378 | — | 576 | C | 888 | A | (58 | )B | — | — | — | 1,406 | 1,784 | |||||||||||||||||||||||||||
Duke Energy North America | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
International Energy | 237 | — | — | (20 | )F | — | — | — | — | (20 | ) | 217 | ||||||||||||||||||||||||||||
Crescent | 210 | — | — | — | — | — | — | — | — | 210 | ||||||||||||||||||||||||||||||
Total reportable segment EBIT | 3,085 | — | 576 | 868 | (58 | ) | — | — | — | 1,386 | 4,471 | |||||||||||||||||||||||||||||
Other | (433 | ) | (28 | )D | — | — | — | (64 | )E | 30 | G | — | (62 | ) | (495 | ) | ||||||||||||||||||||||||
Total reportable segment EBIT and other EBIT | $ | 2,652 | $ | (28 | ) | $ | 576 | $ | 868 | $ | (58 | ) | $ | (64 | ) | $ | 30 | $ | — | $ | 1,324 | $ | 3,976 | |||||||||||||||||
EARNINGS FOR COMMON | ||||||||||||||||||||||||||||||||||||||||
Total reportable segment EBIT and other EBIT | $ | 2,652 | $ | (28 | ) | $ | 576 | $ | 868 | $ | (58 | ) | $ | (64 | ) | $ | 30 | $ | — | $ | 1,324 | $ | 3,976 | |||||||||||||||||
Foreign Currency Translation Gains / (Losses) | (12 | ) | — | — | — | — | — | — | — | — | (12 | ) | ||||||||||||||||||||||||||||
Interest Income and Other | 34 | — | — | — | — | — | — | — | — | 34 | ||||||||||||||||||||||||||||||
Interest Expense | (813 | ) | — | — | — | — | — | — | — | — | (813 | ) | ||||||||||||||||||||||||||||
Minority Interest (Expense) Benefit - Interest Expense | 22 | — | — | — | — | — | — | — | — | 22 | ||||||||||||||||||||||||||||||
Income taxes on Continuing Operations | (599 | ) | 10 | (213 | ) | (323 | ) | 20 | 21 | (11 | ) | — | (496 | ) | (1,095 | ) | ||||||||||||||||||||||||
Discontinued Operations, net of taxes | 1 | — | — | — | — | — | — | (895 | )H | (895 | ) | (894 | ) | |||||||||||||||||||||||||||
Trust Preferred/Preferred Dividends | (7 | ) | — | — | — | — | — | — | — | — | (7 | ) | ||||||||||||||||||||||||||||
Total Earnings for Common | $ | 1,278 | $ | (18 | ) | $ | 363 | $ | 545 | $ | (38 | ) | $ | (43 | ) | $ | 19 | $ | (895 | ) | $ | (67 | ) | $ | 1,211 | |||||||||||||||
EARNINGS PER SHARE, BASIC | $ | 1.37 | $ | (0.02 | ) | $ | 0.39 | $ | 0.58 | $ | (0.04 | ) | $ | (0.05 | ) | $ | 0.02 | $ | (0.96 | ) | $ | (0.08 | ) | $ | 1.29 | |||||||||||||||
EARNINGS PER SHARE, DILUTED | $ | 1.32 | $ | (0.02 | ) | $ | 0.37 | $ | 0.56 | $ | (0.04 | ) | $ | (0.04 | ) | $ | 0.02 | $ | (0.92 | ) | $ | (0.07 | ) | $ | 1.25 | |||||||||||||||
Note 1 - Amounts for special items are entered net of minority interest
A - | Gain on sale of investment in units of TEPPCO LP, $97 million, and TEPPCO GP, $791 million net of $343 million of minority interest. | |
B - | De-designation of hedges due to proposed transfer of 19.7% interest in DEFS to ConocoPhillips. $125 million loss recorded in Impairment and other charges on the Consolidated Statements of Operations, reduced by $29 million of hedge settlements recorded in Non-regulated electric, natural gas, natural gas liquids and other revenues, and $38 million of hedge settlements recorded in Equity in Earnings of Unconsolidated Affiliates on the Consolidated Statements of Operations. | |
C - | Recorded in Gains (Losses) on Sales of Other Assets, net on the Consolidated Statements of Operations. | |
D - | Recorded in Operation, maintenance and other on the Consolidated Statements of Operations. | |
E - | $47 million loss recorded in Non-regulated electric, natural gas, natural gas liquids and other revenues, and $17 million loss recorded in Other income and expenses, net on the Consolidated Statements of Operations. | |
F - | Equity investment impairment, recorded in (Losses) Gains on sales and impairments of equity investments on the Consolidated Statements of Operations. | |
G - | Recorded in Non-regulated electric, natural gas, natural gas liquids and other revenues on the Consolidated Statements of Operations. | |
H - | Primarily the non-cash, after-tax charge related to the planned exit of substantially all of DENA’s physical and commercial assets outside the midwestern United States and the reclassification of DENA 2005 operations. Recorded in (Loss) Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations. | |
Weighted Average Shares (reported and ongoing) - in millions
Basic | 936 | |
Diluted | 973 |
Special items for the first and second quarters (as summarized in this earnings release) include:
($ in Millions) | Pre-Tax Amount | Tax Effect | 2005 EPS Impact | 2004 EPS Impact | ||||||||||||
First quarter 2005 | ||||||||||||||||
Gain on sale of TEPPCO GP (net of minority interest of $343 million) | $ | 791 | ($ | 293 | ) | $ | 0.52 | — | ||||||||
Gain on sale of TEPPCO L.P. units | 97 | (36 | ) | 0.07 | — | |||||||||||
Loss on de-designation of Field Services’ hedges as a result of the announced transaction with ConocoPhillips | (118 | ) | 44 | (0.08 | ) | — | ||||||||||
Mark-to-market losses on de-designated 2005 Field Services’ hedges | (54 | ) | 19 | (0.04 | ) | — | ||||||||||
Additional liabilities related to mutual insurance companies | (28 | ) | 10 | (0.02 | ) | — | ||||||||||
TOTAL EPS IMPACT | $ | 0.45 | ||||||||||||||
Second quarter 2005 | ||||||||||||||||
Settlement of positions on 2005 Field Services’ hedges that were de-designated | 22 | (8 | ) | 0.01 | — | |||||||||||
Mark-to-market gain on de-designated 2005 Field Services’ hedges | 7 | (2 | ) | 0.01 | — | |||||||||||
TOTAL EPS IMPACT | $ | 0.02 | ||||||||||||||
First quarter 2004 | ||||||||||||||||
Net loss on sale of DENA assets (net of $1 million of minority interest), primarily the sale of southeast U.S. plants | (359 | ) | 126 | — | (0.25 | ) | ||||||||||
Gains on sale of other assets, including Caribbean Nitrogen Co. | 14 | (5 | ) | — | 0.01 | |||||||||||
Charge related to the sale of Cantarell investment | (13 | ) | 5 | — | (0.01 | ) | ||||||||||
TOTAL EPS IMPACT | ($0.25 | ) | ||||||||||||||
Second quarter 2004 | ||||||||||||||||
Enron settlement (net of minority interest of $5 million) | $ | 30 | ($11 | ) | $ | 0.02 | ||||||||||
Net losses on asset sales (net of minority interests of $6 million) | (5 | ) | 2 | (0.01 | ) | |||||||||||
TOTAL EPS IMPACT | $ | 0.01 | ||||||||||||||