Exhibit 99
Duke Energy Reports First Quarter 2004 Results
-- Ongoing first quarter earnings per share (EPS) of 32 cents versus
42 cents in previous year; reported EPS of 36 cents versus 25 cents in
prior year's quarter
-- Company expects to exceed full-year asset sales and cash flow targets;
debt reduction ahead of schedule
-- Proceeds from announced asset sales year-to-date to generate
approximately $1.5 billion
-- Field Services posts more than 200-percent increase in EBIT from
continuing operations
-- Franchised Electric and Natural Gas Transmission continue to post
solid earnings and cash flow
-- DENA results affected by mark-to-market loss of 6 cents per share
CHARLOTTE, N.C., April 29 /PRNewswire-FirstCall/ -- Duke Energy
(NYSE: DUK) reported net income in the first quarter of 2004 of $334 million,
or $0.36 per share, compared to net income of $225 million, or $0.25 per share
in the first quarter of 2003.
Ongoing earnings per share (EPS) for the first quarter of 2004, which
excludes special items, was $0.32 versus $0.42 for the comparable quarter.
"We have made exceptional progress in executing our 2004 business and
financial plan. By closing the sale of our Australian assets, we have already
met our asset sales target of $1.5 billion for 2004," said Paul Anderson, Duke
Energy chairman of the board and chief executive officer. "Overall, ongoing
earnings were in line with our expectations except for DENA, which was
affected by mark-to-market losses. Thanks to our asset sales and continued
solid earnings and cash flow from our franchised electric and natural gas
pipeline businesses, Duke Energy's financial strength and flexibility are
rapidly improving. As a result, our key businesses are positioned to
selectively pursue growth opportunities."
Special items for the quarter include:
($ in Millions)
Pre-Tax Amount Tax Effect 2004 EPS 2003 EPS
Impact Impact
First Quarter
* Gain on sale of Australian
assets $256 ($18) $0.26 --
* Net loss on sale of DENA
assets, primarily
anticipated sale of
southeast U.S. plants (322) 119 (0.22) --
* Gains on sale of other
assets, including
Caribbean Nitrogen Co. 14 (5) 0.01 --
* Charge related to planned
sale of Cantarell
investment (13) 5 (0.01) --
First quarter 2003
* 2003 gain on asset sales 16 (5) -- $0.01
* 2003 change in accounting
principles (256) 94 -- ($0.18)
TOTAL EPS IMPACT $0.04 ($0.17)
EPS, as reported $0.36 $0.25
EPS, ongoing $0.32 $0.42
BUSINESS UNIT RESULTS
Franchised Electric
First quarter 2004 earnings before interest and taxes (EBIT) from Duke
Power totaled $424 million, compared to the first quarter of 2003 EBIT of $454
million. The decrease for the quarter was driven primarily by reduced
wholesale power sales and additional costs for planned nuclear outages
compared to the previous year's quarter. Storm repair costs were lower during
the quarter than in the prior year's quarter. Storm damages, most notably a
wind storm in early March 2004 in North Carolina, cost $11 million, compared
to last year's first quarter ice storm costs of $35 million.
Favorable weather pushed residential sales up 3.4 percent during the
quarter while industrial sales continued to decrease - down 4 percent from
last year's quarter. As part of Duke Power's 100th anniversary of service, the
utility has put a renewed emphasis on economic development in North Carolina
and South Carolina to increase commercial and industrial sales.
Natural Gas Transmission
Duke Energy Gas Transmission (DEGT) reported first quarter 2004 EBIT of
$398 million compared to $423 million in the prior year's quarter. The
decrease is primarily a result of gains of $16 million from asset sales
recorded in the prior year's quarter, and foregone earnings of $17 million in
this year's quarter from various assets sold during 2003. Excluding these
amounts related to assets sold, EBIT increased $8 million as a result of
contributions from U.S. business expansions and foreign exchange impacts from
the strengthening Canadian currency. This was partly offset by warmer weather
affecting Union Gas, the Canadian gas distribution business, and project
development costs capitalized in the prior year's period.
The favorable Canadian currency impacts on DEGT's EBIT were partially
offset in Duke Energy's net income by currency impacts on Canadian interest,
taxes and other hedging strategies.
Field Services
The Field Services business segment, which represents Duke Energy's 70-
percent interest in Duke Energy Field Services (DEFS), reported first quarter
2004 EBIT of $92 million from continuing operations, compared to $30 million
in the first quarter of 2003. The more than 200-percent increase was primarily
due to the favorable effects of commodity prices, net of hedging, compared to
last year's quarter and improved results from trading and marketing
activities.
During the first quarter of 2004, DEFS declared and paid a $50 million
dividend, of which $35 million was paid to Duke Energy.
Duke Energy North America
Duke Energy North America (DENA) reported an EBIT loss of $521 million in
the first quarter of 2004, compared to EBIT of $23 million in the prior year's
quarter.
The most significant factors in the loss were: 1) an additional $325
million non-cash loss associated with the anticipated sale of DENA's southeast
U.S. plants, and 2) a mark-to-market loss of $93 million, $87 million after
minority interest, taken during the quarter as a result of changes in power
and gas prices.
Excluding the net loss on the sale of assets and mark-to-market changes,
DENA's first quarter 2004 EBIT loss would have been $106 million.
International Energy
For the first quarter of 2004, Duke Energy International (DEI) reported
EBIT from continuing operations of $29 million, compared to $40 million in the
first quarter of 2003. During the quarter, DEI recorded a $13 million non-
cash charge to EBIT from continuing operations associated with its intention
to sell its ownership share of Cantarell, a nitrogen-production plant in
Mexico.
Crescent Resources
Crescent Resources, Duke Energy's affiliated real estate company, is now
reporting earnings as a separate segment. Crescent reported first quarter 2004
EBIT from continuing operations of $60 million versus a break-even first
quarter 2003, due to increased land and commercial sales.
Other
Other, including DukeNet Communications, Duke/Fluor Daniel, Duke Energy
Merchants, Energy Delivery Services and corporate costs, reported an EBIT loss
of $5 million in the first quarter of 2004, compared to an EBIT loss of $48
million in the first quarter of 2003. This improvement is primarily a result
of charges taken in 2003 related to exiting proprietary trading at Duke Energy
Merchants and the 2004 gain on the sale of Caribbean Nitrogen Co.
Discontinued Operations
At the end of 2003, in accordance with generally accepted accounting
principles, Duke Energy re-classified the results for certain operations to a
separate line on the statement of operations called "Income (Loss) from
Discontinued Operations." The amounts reported as discontinued operations are
reported net of tax. The business units affected by this reclassification are
International Energy, Field Services and Other. All reported periods have been
restated.
Discontinued Operations generated first quarter 2004 results of $246
million, compared to a first quarter 2003 loss of $5 million, as a result of a
$238 million gain, net of tax, on the sale of the Australian assets.
INTEREST EXPENSE
Interest expense was $356 million for the first quarter of 2004, compared
to $326 million for the first quarter of 2003. Interest increased primarily
due to lower capitalized interest of $14 million, $16 million of interest
associated with the re-classification of certain trust preferred securities
from minority interest to long-term debt, an $11 million charge related to the
re-marketing costs associated with the equity units at Duke Capital and $9
million associated with the Canadian exchange rate. These increases were
offset by a $20 million decrease from net debt reduction, refinancing
activities and lower interest cost in Brazil.
LIQUIDITY AND CAPITAL RESOURCES
Duke Energy's consolidated capital structure at the end of first quarter
2004, including short-term debt, was 58 percent debt, 37 percent common equity
and 5 percent minority interests.
Under various credit facilities, Duke Energy, Duke Capital and other
subsidiaries had the ability to borrow up to $3.3 billion at the end of the
first quarter of 2004. The companies had borrowings and letters of credit
outstanding under these programs of approximately $1.4 billion as of the end
of the first quarter of 2004, resulting in unused capacity of approximately
$1.9 billion. The company also had approximately $1.5 billion in cash and cash
equivalents as of the end of the first quarter of 2004.
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 first quarter 2004 earnings information Web site
at: http://www.duke-energy.com/investors/financial/latest/default.asp.
NON-GAAP FINANCIAL MEASURES
The primary performance measure used by management to evaluate segment
performance is EBIT from continuing operations, which at the segment level
represents all profits from continuing operations (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 from
continuing operations 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.
EBIT from continuing operations should not be considered an alternative
to, or more meaningful than, net income, income from continuing operations,
operating income or cash flow as determined in accordance with generally
accepted accounting principles (GAAP). Duke Energy's EBIT from continuing
operations may not be comparable to a similarly titled measure of another
company.
Duke Energy's management uses ongoing EPS, which represents net income
adjusted for special items, as one of the measures to evaluate operations of
the company. Special items represent certain charges which management believes
will not be recurring on a regular basis. Management believes that the
presentation of ongoing EPS provides useful information to investors, as it
allows them to more accurately compare the company's ongoing performance
across all 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 North America and selected international markets. In 2004, the
company 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.
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/financial/latest/default.asp or
by dialing 800/946-0742 in the United States or 719/457-2650 outside the
United States. The confirmation code is 598456. 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 598456.
The international replay number is 719/457-0820, confirmation code 598456. A
replay and transcript also will be available by accessing the investors'
section of the company's Web site
http://www.duke-energy.com/investors/financial/latest/default.asp.
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/financial/gaap/default.asp.
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 are discussed
in Duke Energy's filings with the Securities and Exchange Commission.
MARCH 2004
QUARTERLY HIGHLIGHTS
(unaudited)
Three Months Ended
March 31,
------------------------
(In millions, except where noted) 2004 2003
--------------------------------------------------------------------------
COMMON STOCK DATA
Earnings Per Share (from
continuing operations)
Basic $0.09 $0.43
Diluted $0.09 $0.43
Earnings Per Share (from
discontinued operations)
Basic $0.27 $-
Diluted $0.27 $-
Earnings Per Share (before
cumulative effect of change in
accounting principle)
Basic $0.36 $0.43
Diluted $0.36 $0.43
Earnings Per Share
Basic $0.36 $0.25
Diluted $0.36 $0.25
Dividends Per Share $0.275 $0.275
Weighted-Average Shares
Outstanding
Basic 912 897
Diluted 915 897
--------------------------------------------------------------------------
INCOME
Operating Revenues $5,845 $6,172
====== ======
Earnings Before Interest and Taxes
(EBIT) 528 963
Interest Expense (a) 356 326
Minority Interest Expense (a) 38 50
Income Tax Expense 46 195
Income (Loss) from Discontinued
Operations 246 (5)
Cumulative Effect of Change in
Accounting Principle, net of tax
and minority interest - (162)
------- -------
Net Income 334 225
Dividends and Premiums on
Redemptions of Preferred and
Preference Stock 2 3
------- -------
Earnings Available for Common
Stockholders $332 $222
======= =======
--------------------------------------------------------------------------
CAPITALIZATION
Common Equity 37% 37%
Preferred Stock 0% 1%
Trust Preferred Securities 0% 3%
------- -------
Total Common Equity and Preferred
Securities 37% 41%
Minority Interests 5% 4%
Total Debt 58% 55%
--------------------------------------------------------------------------
Total Debt $21,798 $22,357
Book Value Per Share $15.32 $16.99
Actual Shares Outstanding 914 900
--------------------------------------------------------------------------
CAPITAL AND INVESTMENT EXPENDITURES
Franchised Electric $262 $258
Natural Gas Transmission 154 216
Field Services 25 31
Duke Energy North America 9 160
International Energy 8 25
Crescent (b) 162 54
Other - 61
------- -------
Total Capital and Investment
Expenditures $620 $805
======= =======
--------------------------------------------------------------------------
EBIT BY BUSINESS SEGMENT
Franchised Electric $424 $454
Natural Gas Transmission 398 423
Field Services 92 30
Duke Energy North America (521) 23
International Energy 29 40
Crescent (b) 60 -
Other (5) (48)
------- -------
Total Segment and Other EBIT 477 922
EBIT Attributable to:
Minority Interest Expense 50 43
Third Party Interest Income 7 2
Foreign Currency Remeasurement
Loss (5) (4)
Intercompany EBIT Elimination (c) (1) -
------- -------
Total EBIT $528 $963
======= =======
--------------------------------------------------------------------------
(a) Minority interest includes financing expenses related to securities of
subsidiaries of $27 million for the three months ended March 31, 2003.
The expense related to these securities is accounted for in interest
expense in 2004.
(b) Beginning in 2004, Crescent, formerly part of Other, is considered a
reportable segment.
(c) Amount relates to the elimination of intercompany EBIT that has been
reclassified to discontinued operations.
MARCH 2004
QUARTERLY HIGHLIGHTS
(unaudited)
Three Months Ended
March 31,
-------------------------
(In millions, except where noted) 2004 2003
--------------------------------------------------------------------------
FRANCHISED ELECTRIC
Operating Revenues $1,271 $1,251
Operating Expenses 851 813
Other Income, net of expenses 4 16
------- -------
EBIT $424 $454
------- -------
Sales, GWh 21,963 22,043
--------------------------------------------------------------------------
NATURAL GAS TRANSMISSION
Operating Revenues $1,038 $968
Operating Expenses 638 567
Other Income, net of expenses (e) 6 35
Minority Interest Expense 8 13
------- -------
EBIT $398 $423
------- -------
Proportional Throughput, TBtu 1,089 1,082
--------------------------------------------------------------------------
FIELD SERVICES (d)
Operating Revenues $2,375 $2,550
Operating Expenses 2,249 2,509
Other Income, net of expenses 18 15
Minority Interest Expense 52 26
------- -------
EBIT $92 $30
------- -------
Natural Gas Gathered and
Processed/Transported, TBtu/day 7.3 7.7
Natural Gas Liquids Production,
MBbl/d 356.7 367.9
Average Natural Gas Price per MMBtu $5.69 $6.59
Average Natural Gas Liquids Price
per Gallon $0.59 $0.58
--------------------------------------------------------------------------
DUKE ENERGY NORTH AMERICA
Operating Revenues $656 $1,396
Operating Expenses 865 1,382
Loss on Sales of Other Assets, net (a) (322) -
Other Income, net of expenses (4) 9
Minority Interest Benefit (14) -
------- -------
EBIT $(521) $23
------- -------
Actual Plant Production, GWh (c) 5,461 5,110
Proportional MW Capacity in
Operation 15,821 14,156
--------------------------------------------------------------------------
INTERNATIONAL ENERGY (d)
Operating Revenues $154 $172
Operating Expenses 131 135
Other Income, net of expenses 9 7
Minority Interest Expense 3 4
------- -------
EBIT $29 $40
------- -------
Sales, GWh 4,564 3,969
Proportional MW Capacity in
Operation 4,121 4,013
--------------------------------------------------------------------------
CRESCENT (d)
Operating Revenues $195 $23
Operating Expenses 134 23
Minority Interest Expense 1 -
------- -------
EBIT $60 $-
------- -------
Residential Developed Lot Sales $32 $14
Commercial Project Sales $116 $-
Real Estate Land Sales $1 $2
Land Management Land Sales $39 $2
--------------------------------------------------------------------------
OTHER (d)
Operating Revenues $344 $517
Operating Expenses 387 582
Gains on Sales of Other Assets, net (b) 14 -
Other Income, net of expenses 24 17
------- -------
EBIT $(5) $(48)
------- -------
--------------------------------------------------------------------------
(a) Amount includes DENA Southeast plant impairment of $325 million and
gain on sale of Duke Energy Trading & Marketing contracts.
(b) Primarily represents Duke Energy Merchant's gain on sale of interest
in Carribean Nitrogen Company
(c) Represents 100% of GWh.
(d) Prior year amounts have been reclassified due to discontinued
operations.
(e) Prior year includes gain on sale of limited partnership interests in
Northern Border Partners L.P. of $14 million.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per-share amounts)
Three Months Ended
March 31,
------------------------
2004 2003
------- --------
Operating Revenues
Non-regulated electric, natural gas,
natural gas liquids, and other $3,612 $4,014
Regulated electric 1,251 1,279
Regulated natural gas 982 879
------- --------
Total operating revenues 5,845 6,172
------- --------
Operating Expenses
Natural gas and petroleum products
purchased 3,032 3,492
Operation and maintenance 882 674
Fuel used in electric generation and
purchased power 564 548
Depreciation and amortization 436 431
Property and other taxes 154 140
------- --------
Total operating expenses 5,068 5,285
------- --------
(Losses) Gains on Sales of Other
Assets, net (308) 2
------- --------
Operating Income 469 889
------- --------
Other Income and Expenses
Equity in earnings of unconsolidated
affiliates 34 34
Gains on sales of equity investments - 14
Other income and expenses, net 25 26
------- --------
Total other income and expenses 59 74
Interest Expense 356 326
Minority Interest Expense 38 50
------- --------
Earnings From Continuing Operations
Before Income Taxes 134 587
Income Tax Expense from Continuing
Operations 46 195
------- --------
Income From Continuing Operations 88 392
Discontinued Operations
Net operating income, net of tax 7 3
Net income (loss) on dispositions,
net of tax 239 (8)
------- --------
Income (Loss) From Discontinued
Operations 246 (5)
Income Before Cumulative Effect of
Change in Accounting Principle 334 387
Cumulative Effect of Change in
Accounting Principle, net of tax and
minority interest - (162)
------- --------
Net Income 334 225
Dividends and Premiums on Redemption
of Preferred and Preference Stock 2 3
------- --------
Earnings Available For Common
Stockholders $332 $222
------- --------
Common Stock Data
Weighted-average shares outstanding
Basic 912 897
Diluted 915 897
Earnings per share (from continuing
operations)
Basic $0.09 $0.43
Diluted $0.09 $0.43
Earnings per share (from
discontinued operations)
Basic $0.27 $-
Diluted $0.27 $-
Earnings per share (before
cumulative effect of change in
accounting principle)
Basic $0.36 $0.43
Diluted $0.36 $0.43
Earnings per share
Basic $0.36 $0.25
Diluted $0.36 $0.25
Dividends per share $0.275 $0.275
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
March 31, December 31,
2004 2003
-------- ---------
ASSETS
Current Assets
Cash and cash equivalents $1,500 $1,160
Receivables 2,689 2,888
Inventory 878 1,156
Assets held for sale 297 424
Unrealized gains on mark-to-market
and hedging transactions 1,320 1,566
Other 1,056 694
-------- ---------
Total current assets 7,740 7,888
-------- ---------
Investments and Other Assets
Investments in unconsolidated
affiliates 1,365 1,398
Nuclear decommissioning trust funds 960 925
Goodwill 3,932 3,962
Notes receivable 232 260
Unrealized gains on mark-to-market
and hedging transactions 1,635 1,857
Assets held for sale 2,119 1,444
Other 887 1,117
-------- ---------
Total investments and other assets 11,130 10,963
-------- ---------
Property, Plant and Equipment
Cost 46,719 47,157
Less accumulated depreciation and
amortization 12,641 12,171
-------- ---------
Net property, plant and equipment 34,078 34,986
-------- ---------
Regulatory Assets and Deferred Debits
Deferred debt expense 326 275
Regulatory assets related to income
taxes 1,194 1,152
Other 913 939
Total regulatory assets and -------- ---------
deferred debits 2,433 2,366
-------- ---------
Total Assets $55,381 $56,203
======== ========
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
March 31, December 31,
2004 2003
----------- ------------
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $2,000 $2,317
Notes payable and commercial paper 275 130
Taxes accrued 293 14
Interest accrued 305 304
Liabilities associated with assets
held for sale 883 651
Current maturities of long-term
debt 1,489 1,200
Unrealized losses on mark-to-
market and hedging transactions 993 1,283
Other 1,396 1,799
----------- ------------
Total current liabilities 7,634 7,698
----------- ------------
Long-term Debt, including debt to
affiliates of $516 at March 31,
2004 and $876 at December 31, 2003 20,034 20,622
----------- ------------
Deferred Credits and Other
Liabilities
Deferred income taxes 4,290 4,120
Investment tax credit 162 165
Unrealized losses on mark-to-
market and hedging transactions 1,556 1,754
Liabilities associated with assets
held for sale 305 737
Other 5,541 5,524
Total deferred credits and other ----------- ------------
liabilities 11,854 12,300
----------- ------------
Commitments and Contingencies
Minority Interests 1,723 1,701
----------- ------------
Preferred and preference stock
without sinking fund requirements 134 134
----------- ------------
Common Stockholders' Equity
Common stock, no par, 2 billion
shares authorized; 914 million
and 911 million shares outstanding
at March 31, 2004 and December 31,
2003, respectively 9,598 9,519
Retained earnings 4,145 4,060
Accumulated other comprehensive
income 259 169
----------- ------------
Total common stockholders' equity 14,002 13,748
----------- ------------
Total Liabilities and Common
Stockholders' Equity $55,381 $56,203
=========== ===========
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Three Months Ended
March 31,
-------------------------
2004 2003
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $334 $225
Adjustments to reconcile net income
to net cash provided by
operating activities
Depreciation and amortization
(including amortization of nuclear fuel) 476 484
Cumulative effect of change in
accounting principle - 162
Net losses (gains) on sales of
equity investments and other
assets 50 (4)
Net realized and unrealized
mark-to-market and hedging
transactions 221 (116)
Changes in working capital and
other 225 753
Net cash provided by ------- -------
operating activities 1,306 1,504
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital and investment
expenditures, net of refund (620) (805)
Net proceeds from the sales of
equity investment and other
assets, and sales of and collections
on notes receivable 166 306
Other (5) 24
------- -------
Net cash used in investing activities (459) (475)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the
Issuance of long-term debt 72 824
Issuance of common stock and
common stock related to employee
benefit plans 59 80
Payments for the redemption of
long-term debt, and net paydown
of commercial paper and notes payable (288) (1,189)
Dividends paid (265) (258)
Other (54) (234)
------- -------
Net cash used in financing activities (476) (777)
------- -------
Changes in cash and cash
equivalents associated with assets
held for sale (31) -
------- -------
Net increase in cash and cash
equivalents 340 252
Cash and cash equivalents at
beginning of period 1,160 857
------- -------
Cash and cash equivalents at end of period $1,500 $1,109
======= =======
Supplemental Disclosures
Quarter Ended March 31, 2004
Duke Energy Corporation
--------------------------------------------------------------------------
1Q04
--------
Mark-to-market Portfolio (in millions) $(264)
Daily Value at Risk (DvaR) (in millions)
95% Confidence Level, One-Day Holding
Period, Two-Tailed Average for the Period $23
Duke Energy North America
--------------------------------------------------------------------------
(in millions unless stated otherwise) Q-T-D March 31, 2004
Proprietary Structured Owned
Merchant Energy Gross Margin Trading Contracts Assets Total
---------------------------- ----------- ---------- ------- ------
Mark-to-market gross margin
(loss) $3 $(95) $(1) $(93)
Accrual gross margin (loss) n/a (11) 65 54
----------- ---------- ------- ------
Total Gross Margin $3 $(106) $64 (39)
----------- ---------- -------
Reconciliation to Segment EBIT:
Plant depreciation (47)
Plant operating and
maintenance expenses (79)
General and administrative
and other expenses (48)
Minority interest 14
Gain (loss) on sale of
other assets (322)
-------
DENA Segment EBIT $(521)
=======
Owned Assets - Merchant Plant Production
and Hedging Information(a)
-----------------------------------------
2004(b) 2005 2006
-------- ------ ------
Estimated available production
(millions of MWh) 48 64 64
Combined cycle 42 56 56
Peaker units 6 8 8
Estimated production
(millions of MWh) 15 24 27
Combined cycle 15 23 26
Peaker units - 1 1
Hedges
Estimated production sold 95% 70% 63%
Average price sold ($/MWh) $46 $45 $42
(a) All figures exclude Southeast plants.
(b) Information for 2004 is for the remainder of the year only (April -
December).
Supplemental Disclosures
Quarter Ended March 31, 2004
Duke Energy North America (continued)
--------------------------------------------------------------------------
(in millions)
Total
Maturity/Source of Carrying Value of Over Fair
Energy Contract Net Assets 2004 2005 2006 2007 4 Years Value
---- ---- ---- ---- ------- -----
Proprietary Trading
Actively quoted prices and other
external sources $109 $6 $28 $(9) $(19) $115
Modeled (4) 13 8 7 10 34
---- ---- ---- ---- ------- -----
$105 $19 $36 $(2) $(9) $149
==== ==== ==== ==== =======
Structured Contracts
Actively quoted prices and other
external sources $47 $36 $(70) $(62) $(87) $(136)
Modeled (48) (22) (31) (7) (23) (131)
---- ---- ---- ---- ------- -----
$(1) $14 $(101) $(69) $(110) $(267)
==== ==== ==== ==== =======
Owned Assets
Actively quoted prices and other
external sources $260 $213 $149 $74 $53 $749
Modeled - - - - 21 21
---- ---- ---- ---- ------- -----
$260 $213 $149 $74 $74 $770
==== ==== ==== ==== =======
Total Fair Value of Energy Contract Net Assets * $652
* Total Carrying 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 Sold
-------------------------
Represents the portion of estimated production which has been hedged,
primarily through firm physical contracts.
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.
MEDIA CONTACT: Randy Wheeless
Phone: 704/382-8379
24-Hour: 704/382-8333
ANALYST CONTACT: Greg Ebel
Phone: 704/382-8118
SOURCE Duke Energy
-0- 04/29/2004
/CONTACT: Media, Randy Wheeless, +1-704-382-8379, or 24-Hour,
+1-704-382-8333, or Analysts, Greg Ebel, +1-704-382-8118, both of
Duke Energy/
/Company News On-Call: http://www.prnewswire.com/comp/257451.html/
/Photo: http://www.newscom.com/cgi-bin/prnh/20040414/DUKEENERGYLOGO
AP Archive: http://photoarchive.ap.org
PRN Photo Desk, photodesk@prnewswire.com/
/Web site: http://www.duke-energy.com /
(DUK)
CO: Duke Energy
ST: North Carolina
IN: OIL UTI
SU: ERN CCA MAV