Exhibit 99
Duke Energy to Maintain Dividend at Current Level;
Announces Fourth Quarter Charges
* Annual dividend of $1.10 per share supported by 2004 plan
* Approximately $3.3 billion in pre-tax charges to be taken in
4th quarter 2003
* Smaller, more focused merchant and international businesses
* Strengthened balance sheet through debt reduction of $3.5 billion
to $4.0 billion in 2004
CHARLOTTE, N.C., Jan. 7 /PRNewswire-FirstCall/ -- Duke Energy announced
today it will continue to pay an annual dividend of $1.10 per share while
reducing debt by $3.5 billion to $4.0 billion in 2004.
The company also said it would take a non-cash, pre-tax charge of
approximately $3.3 billion, which will be reported in fourth quarter 2003
earnings. The charge is primarily related to actions being taken to reduce
exposure in its merchant energy and international businesses.
Chairman and Chief Executive Officer Paul Anderson shared the decision to
maintain the company's current dividend and to focus on more modest growth in
a letter sent to shareholders today. Since assuming his position in November
2003, Anderson has taken a number of steps to strengthen the company's
financial outlook and streamline its business and management structure.
"Having considered our shareholder base, current capital structure,
investment opportunities and future earnings potential, we have adopted an
investment proposition of income with modest growth," Anderson said in the
letter.
"We feel that this approach will generate the greatest shareholder value
over time and will provide attractive returns for long-term investors in Duke
Energy securities. To demonstrate our commitment to this proposition, the
management incentive plan has been designed to provide no payout at the most
senior level if the company's earnings per share fall below the dividend
objective of $1.10 a share," Anderson said. "Target earnings for the incentive
plan have been set at $1.20 per share, which reflects a realistic base from
which we can reestablish earnings momentum."
Anderson said that in addition to supporting the $1.10 per share dividend,
Duke Energy's cash flow in 2004 will fund $2.2 billion in capital
expenditures, and, when coupled with divestitures, will allow it to reduce
debt by $3.5 billion to $4.0 billion.
Citing current market realities, Anderson announced steps that will reduce
the company's exposure to merchant energy and international markets. They
include decisions to: a) sell Duke Energy North America's (DENA) merchant
plants in the Southeast United States; b) reduce DENA's interest in deferred
plants; and c) wind down its trading and marketing joint venture with
ExxonMobil. Additionally, the company will reduce its international exposure
by completing its exit from the European market and divesting its Australian
assets.
These actions account for most of the approximately $3.3 billion in fourth
quarter charges. Including these charges, Duke Energy expects to report a loss
per share in the range of $1.45 to $1.50 for the full year 2003. Excluding the
special items for 2003, the company expects ongoing earnings for the year to
be between $1.20 and $1.25.
Anderson said although DENA is expected to be a drag on earnings for the
next year at a minimum, the company's franchised electric, gas transmission
and distribution operations, gas gathering and processing business and other
operations provide significant and dependable earnings and cash flows.
Duke Energy is a diversified energy company with a portfolio of natural
gas and electric businesses, both regulated and unregulated, which supply,
deliver and process energy for customers in North America and selected
international markets. In 2004, Duke Energy celebrates a century of service
with the 100th anniversary of its electric utility Duke Power. 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.
The full text of Anderson's letter sent to shareholders is available on
the company's Web site. Anderson will discuss these strategic decisions during
a conference call with analysts at 10 a.m. EST today. The conference call can
be accessed via the Investor's Section of Duke Energy's Web site or by dialing
800/946-0783 in the United States or 719/457-2658 outside the United States.
The confirmation code is 321720. 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 321720. The international
replay number is 719/457-0820, confirmation code 321720. The replay will run
through midnight on Jan. 16, 2004. A replay and transcript also will be
available by accessing the Investor's 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: www.duke-energy.com/investors/financial/gaap. Duke
Energy's management uses ongoing EPS as one of the measures to evaluate
operations of the company. Management believes that presentation of this
measure provides useful information to investors as it allows them to more
accurately compare the company's ongoing performance across periods.
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; industrial, commercial and residential
growth in our service territories; the weather and other natural phenomena;
general economic conditions, including any potential effects arising from
terrorist attacks, the situation in Iraq and any consequential hostilities or
other hostilities; changes in environmental and other laws and regulations to
which Duke Energy and its subsidiaries are subject or other external factors
over which Duke Energy has no control; the results of financing efforts,
including Duke Energy's ability to obtain financing on favorable terms; lack
of improvement or further declines in the market prices of equity securities
and resultant cash funding requirements for Duke Energy's defined benefit
pension plans; 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; the timing and extent of changes
in commodity prices, interest rates and foreign currency exchange 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 and the effect of accounting pronouncements issued periodically by
accounting standard-setting bodies; 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.
Duke Energy Corporation
Special Items Reconciliation
2003
(dollars in millions except per share amounts)
Pre-tax Tax
Amount Effect EPS Impact
Ongoing EPS $1.20 to $1.25
Fourth quarter special items:
DENA plant impairments and DETM
charges ($2,800) $1,039 (1.95)
DENA redesignation of power contracts
to mark-to-market (235) 90 (0.16)
DEI charges and impairments (280) 26 (0.28)
subtotal - 4th quarter (2.39)
Prior 2003 special items:
Net gain on asset sales 170 (60) 0.12
Tax benefit on 2002 goodwill
impairment of International Energy
European gas trading - 52 0.06
Cumulative effect of accounting
changes (256) 94 (0.18)
DENA goodwill writeoff (254) 90 (0.18)
Severance associated with work force
reductions (105) 37 (0.08)
Settlement with the South Carolina
Public Service Commission (46) 18 (0.03)
Settlement with the Commodities
Futures Trading Commission (17) - (0.02)
subtotal - prior 2003 (0.31)
Reported EPS ($1.50) to ($1.45)
MEDIA CONTACT: Peter Sheffield
Phone: 704/373-4503
24-Hour: 704/382-8333
INVESTOR CONTACT: Greg Ebel
Phone: 704/382-8118
SOURCE Duke Energy
-0- 01/07/2004
/CONTACT: Media - Peter Sheffield, +1-704-373-4503, 24-Hour -
+1-704-382-8333, or Investors - Greg Ebel, +1-704-382-8118, both for Duke
Energy/
/Company News On-Call: http://www.prnewswire.com/comp/257451.html /
/Web site: http://www.duke-energy.com
http://www.duke-energy.com/investors/financial/gaap /
(DUK)
CO: Duke Energy
ST: North Carolina
IN: OIL UTI
SU: DIV