Exhibit 99
July 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 SECOND QUARTER 2003 RESULTS
o EPS of 46 cents includes 16 cents of gains from asset sales
o Sound performance from regulated businesses
o Quarterly results include improved performances from Duke Energy
International and Field Services
o Company surpasses 2003 goal of $1.5 billion in gross proceeds from
asset sales, including $280 million of assumed debt
CHARLOTTE, N.C. - Duke Energy reported second quarter 2003 earnings of 46 cents
per share, or $424 million in net income, compared to 57 cents per share, or
$474 million net income in second quarter 2002.
This quarter's results included $237 million of pre-tax gains on sales of equity
investments and assets, or 16 cents per share, compared with $61 million in
pre-tax gains for second quarter 2002, or 4 cents per share.
For the first half of 2003, Duke Energy earned 71 cents per share, or $649
million in net income, which included a first quarter 18 cent, or $162 million,
after-tax charge for the cumulative effect of a change in accounting principles.
Before the effect of this change in accounting principles, Duke Energy earned 89
cents, or $811 million in net income, in the first half of 2003. The company
earned $1.05 a share, or $856 million in net income, in the first half of 2002.
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"We are executing on the strategic directives we laid out in January and
operating our businesses with discipline and efficiency," said Richard B.
Priory, chairman and chief executive officer. "2003 is proving to be another
challenging year with a weak merchant energy sector and a sluggish economy.
Despite these challenges, we still believe we will achieve full year 2003
results in the range of $1.35 -- $1.60 earnings per share (EPS) before a charge
for the cumulative effect of a previously announced change in accounting
principles.
"Our strategic divestitures have bolstered cash flow without drawing from the
lifeblood of the company," Priory said. "Duke Energy is becoming a leaner,
stronger and more agile competitor, backed by large, profitable, regulated
businesses with predictable cash flows and earnings."
BUSINESS UNIT RESULTS
Consolidated Earnings before Interest and Taxes (EBIT) was $1.02 billion, which
included $237 million in pre-tax gains on sales of equity investments and
assets, compared with $1.06 billion in second quarter 2002, which included $61
million in pre-tax gains from asset sales. For the first half of 2003, EBIT was
$1.99 billion, an increase of 9 percent over EBIT for the first six months of
2002. Below is a reconciliation of EBIT to net income:
- -----------------------------------------------------------------------------------------------------------------------
Three Three Six Six
Months Months Ended Months Ended Months Ended
Ended 6/30/02 6/30/03 6/30/02
($ in Millions ) 6/30/03
- -----------------------------------------------------------------------------------------------------------------------
EBIT, as defined below $1,020 $1,057 $1,994 $1,827
- -----------------------------------------------------------------------------------------------------------------------
Cumulative effect of change in
accounting principles, net of tax ---- ---- 162 ----
- -----------------------------------------------------------------------------------------------------------------------
Income taxes 195 247 390 405
- -----------------------------------------------------------------------------------------------------------------------
Minority Interest 60 62 112 94
- -----------------------------------------------------------------------------------------------------------------------
Interest expense 341 274 681 472
- -----------------------------------------------------------------------------------------------------------------------
Net income $424 $474 $649 $856
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Franchised Electric
Second quarter 2003 EBIT from Franchised Electric was $316 million, compared to
second quarter 2002 EBIT of $388 million. Results were primarily affected by
significantly cooler than normal weather during the quarter. In second quarter
2003, cooling degree days were 30 percent below average. By comparison, cooling
degree days in second quarter 2002 were 22 percent above average. Additionally,
results were lower due to higher depreciation and amortization costs of $26
million, primarily related to the North Carolina 2002 clean air legislation.
Those reductions were partially offset by increased plant efficiency and
slightly higher wholesale power sales.
Year-to-date EBIT for Franchised Electric was $770 million, compared with $772
million in 2002.
Natural Gas Transmission
The Duke Energy Natural Gas Transmission (DEGT) segment reported second quarter
2003 EBIT of $306 million, compared to $313 million in second quarter 2002.
Results included a pre-tax gain of $31 million from the sale of DEGT's ownership
interest in Alliance pipeline/Aux Sable processing plant. Second quarter 2002
results included a $27 million success fee associated with the completion of the
Gulfstream Natural Gas System LLC, a 50-percent joint venture of DEGT.
During the quarter, Gulfstream signed a 23-year agreement with Florida Power &
Light Company (FPL) in which Gulfstream will provide up to 350 million cubic
feet per day of firm natural gas transportation service to FPL for its Martin
and Manatee power plant expansions beginning in 2005. With this agreement,
Gulfstream will increase its pipeline capacity contracted to 65 percent with an
average contract term of 21 years. Placed into service last year, Gulfstream is
currently a 581-mile pipeline system with the capacity to deliver 1.1 billion
cubic feet of natural gas each day to serve Florida's growing energy needs.
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Year-to-date EBIT for DEGT was $729 million, compared with $579 million in 2002.
Duke Energy North America
Duke Energy North America (DENA) reported EBIT of $211 million in second quarter
2003, compared to EBIT of $196 million in second quarter 2002. Results for the
second quarter included a pre-tax gain of $175 million from the sale of DENA's
ownership interest in American Ref-Fuel. Second quarter 2002 results included a
$46 million increase from the appreciation of the fair value of the
mark-to-market portfolio as a result of applying improved and standardized
valuation modeling techniques to all North American regions. Lower operating
results in second quarter 2003 were due to decreased spark spreads, a reduction
in mark-to-market earnings, and higher depreciation expenses related to the
addition of 2,535 megawatts of new capacity.
Year-to-date EBIT for DENA was $234 million, compared with $250 million in 2002.
International Energy
For second quarter 2003, Duke Energy International (DEI) reported EBIT of $111
million, nearly doubling second quarter 2002 EBIT of $57 million. This quarter's
performance was positively impacted by improved gas marketing results in Europe
and cost-reduction efforts. Results for the quarter were also positively
impacted by $37 million related to a favorable regulatory audit in Brazil and
early termination of a natural gas sales contract. These results were partially
offset by the change in the values of the Brazilian real and the Mexican peso
against the U.S. dollar, from the second quarter of last year.
Year-to-date EBIT for DEI was $165 million, compared with $114 million in 2002.
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Field Services
The Field Services business segment, which represents Duke Energy's 70-percent
interest in Duke Energy Field Services (DEFS), reported second quarter 2003 EBIT
of $76 million compared to $41 million in second quarter 2002. The effects of
higher natural gas prices and hedging results related to the price movements of
natural gas liquids (NGL) offset the favorable impact of higher NGL prices
during the period. Results were positively impacted by a pre-tax gain on sale of
assets of $18 million and a pre-tax gain on sale of TEPPCO class B units of $11
million. In second quarter 2002, results were negatively impacted by $13 million
due to increased reserves primarily related to imbalances with customers and
suppliers and a storage inventory write-down charge.
Year-to-date EBIT in 2003 for Field Services was $109 million compared to $76
million in 2002.
Other Operations
Other Operations, including Crescent Resources, DukeNet Communications, Duke
Capital Partners, Duke/Fluor Daniel (D/FD), Duke Energy Merchants and Energy
Delivery Services, reported EBIT of $18 million in second quarter 2003, compared
to EBIT of $128 million in second quarter 2002.
Results were affected by reduced results at D/FD and Duke Capital Partners.
D/FD's second quarter 2002 results were positively impacted by the completion of
10 plants. Second quarter 2002 results from Other Operations also benefited from
$68 million in pre-tax gains on the sales of water operations, the former Duke
Engineering & Services business and Duke Energy Merchants' interest in Canadian
88, offset by a pre-tax loss of $7 million due to the sale of DukeSolutions.
Year-to-date EBIT in 2003 for Other Operations was negative $8 million compared
to $145 million in positive EBIT in 2002.
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On July 9, Duke Energy and Fluor Corporation announced that D/FD, a partnership
between affiliates of the two companies, will be dissolved. The partners will
wind down the business over the next two years.
INTEREST EXPENSE
Interest expense was $341 million for second quarter 2003, compared to $274
million for second quarter 2002. The increase was primarily due to reduced
capitalized interest at DENA resulting from significantly lower plant
construction activity in 2003.
CASH FLOW
For the six months ending June 30, 2003, cash flow from operations was $1.9
billion, compared to $1.5 billion for the first six months ending June 30, 2002.
In 2003, Duke Energy expects cash flow from operations, which includes ongoing
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.
Earlier this month the company announced that it had surpassed its 2003 goal of
realizing more than $1.5 billion in gross proceeds from asset sales, including
$280 million in assumed debt. Proceeds in excess of the amounts needed to help
fund capital expenditures and pay the dividend will be available to pay down
debt. The company believes it will pay down approximately $1.8 billion in debt
and trust preferred securities this year and $5.5 billion in debt and trust
preferred securities by the end of 2005.
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LIQUIDITY AND CAPITAL RESOURCES
Duke Energy's consolidated capital structure as of June 30, 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 $4.7 billion as of June 30, 2003.
The companies had borrowings and letters of credit outstanding under these
programs of approximately $1.6 billion as of June 30, 2003, resulting in unused
capacity of approximately $3.1 billion. The company also had approximately $1.5
billion in cash and cash equivalents as of June 30, 2003.
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 second quarter 2003 earnings information Web site at:
http://www.duke-energy.com/investors/earnings/.
FINANCIAL MEASURES
The primary performance measure used by management to evaluate segment
performance is EBIT, which at the segment level represents 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.
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On a consolidated basis, EBIT is also used as one of the measures to assess
performance and represents the combination of operating income and other income
and expenses as presented on the consolidated statements of income. The use of
EBIT as one of the performance measures on a consolidated basis follows the use
of EBIT for assessing segment performance, and we believe EBIT is used by our
investors as a supplemental financial measure in the evaluation of our
consolidated results of operations.
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 electric 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 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 or by dialing 800/946-0786 in the United States or 719/457-2662 outside the
United States. The confirmation code is 159448. Please call in five to 10
minutes prior to the scheduled start time. A replay of the conference call will
be available by dialing 888/203-1112 with a confirmation code of 159448. The
international replay number is 719/457-0820, confirmation code 159448. A replay
and transcript also will be available by accessing the investors' section of the
company's Web site. The
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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: www.duke-energy.com/investors/financial/gaap.
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,
natural 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 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.
###
JUNE 2003
QUARTERLY HIGHLIGHTS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
(In millions, except where noted) 2003 2002 2003 2002
- ------------------------------------------------------------------------------------------------------
COMMON STOCK DATA
Earnings Per Share (before cumulative effect
of change in accounting principles)
Basic $ 0.46 $ 0.57 $ 0.89 $ 1.05
Diluted $ 0.46 $ 0.56 $ 0.89 $ 1.04
Earnings Per Share
Basic $ 0.46 $ 0.57 $ 0.71 $ 1.05
Diluted $ 0.46 $ 0.56 $ 0.71 $ 1.04
Dividends Per Share $ 0.550 $ 0.550 $ 0.825 $ 0.825
Weighted-Average Shares Outstanding
Basic 902 831 899 809
Diluted 903 834 900 813
- ------------------------------------------------------------------------------------------------------
INCOME
Operating Revenues $ 5,268 $ 3,873 $ 11,573 $ 7,181
======== ======== ======== =======
Earnings Before Interest and Taxes (EBIT) 1,020 1,057 1,994 1,827
Interest Expense 341 274 681 472
Minority Interest Expense (a) 60 62 112 94
Income Taxes 195 247 390 405
Cumulative Effect of Change in Accounting Principles,
net of tax and minority interest -- -- (162) --
-------- -------- -------- -------
Net Income 424 474 649 856
Dividends and Premiums on Redemptions of Preferred
and Preference Stock 7 4 10 7
-------- -------- -------- -------
Earnings Available for Common Stockholders $ 417 $ 470 $ 639 $ 849
======== ======== ======== =======
- ------------------------------------------------------------------------------------------------------
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 $ 22,766 $22,010
Book Value Per Share $ 17.38 $ 17.89
Actual Shares Outstanding 904 832
- ------------------------------------------------------------------------------------------------------
CAPITAL AND INVESTMENT EXPENDITURES
Franchised Electric $ 310 $ 323 $ 486 $ 567
Natural Gas Transmission (b) 233 253 431 2,290
Field Services 31 74 62 184
Duke Energy North America 97 785 257 1,521
International Energy 18 136 43 217
Other Operations (c) 79 171 148 305
Other (43) (36) 3 --
Cash acquired in acquisitions -- -- -- (77)
-------- -------- -------- -------
Total Capital and Investment Expenditures $ 725 $ 1,706 $ 1,430 $ 5,007
======== ======== ======== =======
- ------------------------------------------------------------------------------------------------------
EBIT BY BUSINESS SEGMENT
Franchised Electric $ 316 $ 388 $ 770 $ 772
Natural Gas Transmission 306 313 729 579
Field Services 76 41 109 76
Duke Energy North America 211 196 234 250
International Energy 111 57 165 114
Other Operations (c) 18 128 (8) 145
Other (80) (131) (111) (238)
-------- -------- -------- -------
Total Segment and Other EBIT 958 992 1,888 1,698
EBIT Attributable to:
Minority Interests 46 42 92 56
Third Party Interest Income 8 15 11 56
Foreign Currency Remeasurement Gain 8 8 3 17
-------- -------- -------- -------
Total EBIT $ 1,020 $ 1,057 $ 1,994 $ 1,827
======== ======== ======== =======
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(a) Includes financing expenses related to securities of subsidiaries of $28
million and $35 million for the three months ended June 30, 2003 and 2002,
respectively, and $55 million and $70 million for the six months ended
June 30, 2003 and 2002, respectively.
(b) 2002 six months ended amount includes $1.7 billion (net of cash acquired)
paid to Westcoast Energy shareholders related to the acquisition.
(c) Beginning in 2003, Other Energy Services and Duke Ventures were combined
into Other Operations.
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JUNE 2003
QUARTERLY HIGHLIGHTS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
(In millions, except where noted) 2003 2002 2003 2002
- ---------------------------------------------------------------------------------------------------------
FRANCHISED ELECTRIC
Operating Revenues $ 1,110 $ 1,162 $ 2,361 $ 2,275
Operating Expenses 809 790 1,622 1,536
Gain on Sale of Assets -- -- 1 --
Other Income 15 16 30 33
-------- ------- -------- --------
EBIT $ 316 $ 388 $ 770 $ 772
-------- ------- -------- --------
Sales, GWh 19,415 20,418 41,458 39,939
- ---------------------------------------------------------------------------------------------------------
NATURAL GAS TRANSMISSION
Operating Revenues $ 692 $ 621 $ 1,660 $ 1,071
Operating Expenses 421 361 988 579
Gain on Sale of Assets -- -- 1 --
Other Income (a) 45 62 79 99
Minority Interest Expense 10 9 23 12
-------- ------- -------- --------
EBIT $ 306 $ 313 $ 729 $ 579
-------- ------- -------- --------
Proportional Throughput, TBtu 742 702 1,824 1,372
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FIELD SERVICES
Operating Revenues $ 1,924 $ 1,376 $ 4,377 $ 2,510
Operating Expenses 1,861 1,333 4,268 2,432
Gain on Sale of Assets 26 -- 26 --
Other Income (b) 24 11 39 19
Minority Interest Expense 37 13 65 21
-------- ------- -------- --------
EBIT $ 76 $ 41 $ 109 $ 76
-------- ------- -------- --------
Natural Gas Gathered and Processed/Transported, TBtu/day 7.9 8.4 7.9 8.4
Natural Gas Liquids Production, MBbl/d 361.5 392.0 368.3 390.4
Average Natural Gas Price per MMBtu $ 5.41 $ 3.40 $ 6.00 $ 2.86
Average Natural Gas Liquids Price per Gallon $ 0.49 $ 0.37 $ 0.54 $ 0.34
- ---------------------------------------------------------------------------------------------------------
DUKE ENERGY NORTH AMERICA
Operating Revenues $ 962 $ 409 $ 2,358 $ 667
Operating Expenses 945 220 2,327 420
Other Income (c) 187 21 196 16
Minority Interest (Benefit) Expense (7) 14 (7) 13
-------- ------- -------- --------
EBIT $ 211 $ 196 $ 234 $ 250
-------- ------- -------- --------
Actual Plant Production, GWh (d) 4,510 4,704 9,620 8,571
Proportional MW Capacity in Operation 15,206 12,671
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INTERNATIONAL ENERGY
Operating Revenues $ 366 $ 219 $ 748 $ 508
Operating Expenses 266 179 597 414
Other Income 16 23 24 31
Minority Interest Expense 5 6 10 11
-------- ------- -------- --------
EBIT $ 111 $ 57 $ 165 $ 114
-------- ------- -------- --------
Sales, GWh 5,318 5,014 10,077 9,946
Proportional MW Capacity in Operation 4,887 4,971
Proportional Maximum Pipeline Capacity in Operation, MMcf/d 363 363
- ---------------------------------------------------------------------------------------------------------
OTHER OPERATIONS
Operating Revenues $ 435 $ 159 $ 991 $ 347
Operating Expenses 425 140 1,014 309
(Loss) Gain on Sale of Assets (8) 61 (20) 46
Other Income 17 48 36 60
Minority Interest Expense (Benefit) 1 -- 1 (1)
-------- ------- -------- --------
EBIT $ 18 $ 128 $ (8) $ 145
-------- ------- -------- --------
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(a) For 2003, other income includes approximately $31 million gain on sale of
the Alliance/Aux Sable equity investment.
(b) For 2003, other income includes approximately $11 million gain on sale of
Teppco Class B shares.
(c) For 2003, other income includes approximately $175 million gain on sale of
the American Ref-Fuel Company equity investment.
(d) Represents 100% of GWh.
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CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2003 2002 2003 2002
------ ------- -------- ------
Operating Revenues
Sales of natural gas and petroleum products $2,980 $ 1,191 $ 7,065 $2,172
Generation, transmission and distribution
of electricity 1,492 1,582 3,234 3,169
Transportation and storage of natural gas 415 447 832 773
Trading and marketing net margin (loss) 63 425 (27) 669
Other 318 228 469 398
------ ------- -------- ------
Total operating revenues 5,268 3,873 11,573 7,181
------ ------- -------- ------
Operating Expenses
Natural gas and petroleum products purchased 2,642 1,245 6,174 2,139
Fuel used in electric generation 261 312 698 627
Net interchange and purchased power 118 122 243 230
Operation and maintenance 963 823 1,681 1,660
Depreciation and amortization 454 397 903 741
Property and other taxes 134 132 275 259
------ ------- -------- ------
Total operating expenses 4,572 3,031 9,974 5,656
------ ------- -------- ------
Gain on Sale of Other Assets, net 18 61 8 46
------ ------- -------- ------
Operating Income 714 903 1,607 1,571
------ ------- -------- ------
Other Income and Expenses
Equity in earnings of unconsolidated affiliates 16 100 50 109
Gain on sale of equity investments 219 -- 233 14
Other income and expenses, net 71 54 104 133
------ ------- -------- ------
Total other income and expenses 306 154 387 256
Interest Expense 341 274 681 472
Minority Interest Expense 60 62 112 94
------ ------- -------- ------
Earnings Before Income Taxes 619 721 1,201 1,261
Income Taxes 195 247 390 405
------ ------- -------- ------
Income Before Cumulative Effect of Change in
Accounting Principles 424 474 811 856
Cumulative Effect of Change in Accounting Principles, net
of tax and minority interest -- -- (162) --
------ ------- -------- ------
Net Income 424 474 649 856
Dividends and Premiums on Redemptions of Preferred
and Preference Stock 7 4 10 7
------ ------- -------- ------
Earnings Available for Common Stockholders $ 417 $ 470 $ 639 $ 849
====== ======= ======== ======
Common Stock Data
Weighted-average shares outstanding 902 831 899 809
Earnings per share (before cumulative effect of
change in accounting principles)
Basic $ 0.46 $ 0.57 $ 0.89 $ 1.05
Diluted $ 0.46 $ 0.56 $ 0.89 $ 1.04
Earnings per share
Basic $ 0.46 $ 0.57 $ 0.71 $ 1.05
Diluted $ 0.46 $ 0.56 $ 0.71 $ 1.04
Dividends per share $0.550 $ 0.550 $ 0.825 $0.825
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Six Months Ended
June 30,
-------------------
2003 2002
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 649 $ 856
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization (including amortization of nuclear fuel) 972 789
Cumulative effect of change in accounting principles 162 --
Net realized and unrealized mark-to-market and hedging transactions (42) (27)
Gains on sale of equity investments and other assets, net (241) (60)
Changes in working capital and other 388 (12)
------- -------
Net cash provided by operating activities 1,888 1,546
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital and investment expenditures, net (1,430) (3,300)
Acquisition of Westcoast Energy Inc., net of cash acquired -- (1,707)
Proceeds from the sale of equity investments and other assets
and collections on notes receivable 1,279 267
Other (51) 93
------- -------
Net cash used in investing activities (202) (4,647)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from:
Issuance of long-term debt 1,707 2,743
Issuance of common stock and the exercise of stock options 150 211
Payments for the redemption of long-term debt and guaranteed
preferred beneficial interests, and net change in notes payable
and commercial paper (2,387) 165
Dividends paid (524) (459)
Other (7) 238
------- -------
Net cash (used in) provided by financing activities (1,061) 2,898
------- -------
Net increase (decrease) in cash and cash equivalents 625 (203)
Cash and cash equivalents at beginning of period 857 290
------- -------
Cash and cash equivalents at end of period $ 1,482 $ 87
======= =======
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CONSOLIDATED BALANCE SHEETS
(In millions)
June 30,
2003 December 31,
(Unaudited) 2002
----------- ------------
ASSETS
Current Assets
Cash and cash equivalents $ 1,482 $ 857
Receivables 6,111 6,766
Inventory 1,179 1,134
Unrealized gains on mark-to-market and
hedging transactions 2,601 2,144
Other 1,162 952
-------- --------
Total current assets 12,535 11,853
-------- --------
Investments and Other Assets
Investments in unconsolidated affiliates 1,625 2,066
Nuclear decommissioning trust funds 803 708
Goodwill, net of accumulated amortization 3,747 3,747
Notes receivable 535 589
Unrealized gains on mark-to-market
and hedging transactions 3,168 2,480
Other 1,717 1,645
-------- --------
Total investments and other assets 11,595 11,235
-------- --------
Property, Plant and Equipment
Cost 50,953 48,677
Less accumulated depreciation and amortization 13,219 12,458
-------- --------
Net property, plant and equipment 37,734 36,219
-------- --------
Regulatory Assets and Deferred Debits
Deferred debt expense 256 263
Regulatory asset related to income taxes 1,022 936
Other 1,036 460
-------- --------
Total regulatory assets and deferred debits 2,314 1,659
-------- --------
Total Assets $ 64,178 $ 60,966
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CONSOLIDATED BALANCE SHEETS
(In millions)
June 30,
2003 December 31,
(Unaudited) 2002
----------- ------------
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 5,259 $ 5,590
Notes payable and commercial paper 737 915
Taxes accrued 653 156
Interest accrued 332 310
Current maturities of long-term debt and preferred stock 936 1,331
Unrealized losses on mark-to-market and hedging transactions 2,164 1,918
Other 1,820 1,770
------- --------
Total current liabilities 11,901 11,990
------- --------
Long-term Debt 21,095 20,221
------- --------
Deferred Credits and Other Liabilities
Deferred income taxes 5,157 4,834
Investment tax credit 171 176
Unrealized losses on mark-to-market and hedging transactions 2,195 1,548
Other 4,744 3,784
------- --------
Total deferred credits and other liabilities 12,267 10,342
------- --------
Commitments and Contingencies
Guaranteed Preferred Beneficial Interests in Subordinated
Notes of Duke Energy Corporation or Subsidiaries 1,166 1,408
------- --------
Minority Interests 1,884 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; 904 million and 895 million
shares outstanding as of June 30, 2003 and December 31, 2002, respectively 9,389 9,236
Retained earnings 6,314 6,417
Accumulated other comprehensive income (loss) 5 (709)
------- --------
Total common stockholders' equity 15,708 14,944
------- --------
Total Liabilities and Common Stockholders' Equity $64,178 $ 60,966
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Page 15
Supplemental Disclosures
Quarter Ended June 30, 2003
Duke Energy Corporation
- --------------------------------------------------------------------------------
2Q03
--------
Mark-to-market Portfolio (in billions) $ 0.3
- ------------------------
Daily Value at Risk (DvaR) (in millions)
- --------------------------
95% Confidence Level, One-Day Holding Period, Two-Tailed
Average for the Period $ 13
Duke Energy North America
- -----------------------------------------------------------------------------------------------------------------
(in millions unless stated otherwise) Q-T-D June 30, 2003
Proprietary Structured Owned
Merchant Energy Gross Margin Trading Contracts Assets Total
- ------------------------------------------------------ ----------- ---------- ------ -----
Mark-to-market gross margin $ 10 $ 59 $ -- $ 69
Accrual gross margin (loss) n/a (38) 185 147
---- ---- ----- -----
Total Gross Margin $ 10 $ 21 $ 185 216
---- ---- -----
Reconciliation to Segment EBIT:
Plant depreciation (58)
Plant operating and maintenance expenses (72)
General and administrative and other expenses (50)
Gain on sale of American Ref-Fuel 175
-----
DENA Segment EBIT $ 211
=====
Owned Assets - Merchant Plant Production
and Hedging Information 2003* 2004 2005
- --------------------------------------------------------- ----- ---- -----
Estimated available production (millions of MWh) 47 99 108
Combined cycle 38 80 86
Peaker units 9 19 22
Estimated production (millions of MWh) 16 34 37
Combined cycle 15 32 35
Peaker units 1 2 2
Hedges
Estimated production hedged 93% 85% 68%
Average price hedged ($/MWh) $ 50 $ 44 $ 39
* Information for 2003 is for the remainder of the year only (July -
December).
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Supplemental Disclosures
Quarter Ended June 30, 2003
Duke Energy North America (continued)
(in millions)
- --------------------------------------------------------------------------------
Total
Maturity/Source of Fair Value of Over Fair
Energy Contract Net Assets 2003 2004 2005 2006 2007 5 Years Value
- ------------------------------------------------------ ---- ---- ---- ---- ---- ------- -----
Proprietary Trading
Actively quoted prices and other external sources $ 65 $ 116 $ -- $ (1) $ -- $ 6 $ 186
Modeled 9 18 11 20 (1) (7) 50
----- ----- ----- ----- ----- ------- ------
$ 74 $ 134 $ 11 $ 19 $ (1) $ (1) $ 236
===== ===== ===== ===== ===== =======
Structured Contracts
Actively quoted prices and other external sources $ 73 $ 14 $ 19 $ 3 $ (1) $ (1) $ 107
Modeled (18) (40) (31) 29 34 71 45
----- ----- ----- ----- ----- ------- ------
$ 55 $ (26) $ (12) $ 32 $ 33 $ 70 $ 152
===== ===== ===== ===== ===== =======
Owned Assets
Actively quoted prices and other external sources $ 290 $ 355 $ 149 $ 8 $ -- $ -- $ 802
Modeled -- -- 78 161 124 223 586
----- ----- ----- ----- ----- ------- ------
$ 290 $ 355 $ 227 $ 169 $ 124 $ 223 $1,388
===== ===== ===== ===== ===== =======
------
Total Fair Value of Energy Contract Net Assets * $1,776
======
* 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
merchant 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,
transportations 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 contracts, transportation contracts
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