Exhibit 99
Duke Energy Reports Second Quarter 2004 Results
- Ongoing earnings of 42 cents per share versus 30 cents in second
quarter 2003; reported second quarter EPS of 46 cents versus 46 cents
in 2003
- Duke Energy Field Services and Crescent Resources post strong quarter
- Franchised Electric and Natural Gas Transmission continue to report
solid earnings and strong cash flow
- Cash generation, asset sales and debt reduction all expected to meet or
exceed full-year expectations
- DENA results affected by positive mark-to-market earnings of 2 cents
per share
CHARLOTTE, N.C., July 29 /PRNewswire-FirstCall/ -- Duke Energy reported
net income in the second quarter of 2004 of $432 million, or $0.46 per share,
compared to net income of $424 million, or $0.46 per share in the second
quarter of 2003.
Excluding special items, ongoing second quarter earnings per share (EPS)
were $0.42 versus $0.30 in the comparable year's quarter.
"We accelerated progress on our financial objectives in the quarter," said
Paul Anderson, Duke Energy chairman of the board and chief executive officer.
"We've already surpassed a number of our year-end targets and our business
units are showing encouraging results."
Special items for the quarter include:
2004 2003
Pre-Tax Tax EPS EPS
($ in Millions) Amount Effect Impact Impact
Second quarter 2004
Enron settlement (net of
minority interest) $130 ($46) $0.09
True-up on net gain on sale of
International Energy assets 38 (9) 0.03
California and western U.S. energy
markets settlement (105) 37 (0.07)
Net losses on asset sales (net of
minority interest) (5) 2 ---
Interest related to litigation reserve (12) 4 (0.01)
Second quarter 2003
Gains on asset sales (net of
minority interest) $229 ($83) 0.16
Total EPS Impact $0.04 $0.16
EPS, as reported $0.46 $0.46
EPS, ongoing * $0.42 $0.30
Special items EPS year-to-date impact: 2004 2003
First quarter $0.01 ($0.17)
Second quarter 0.04 0.16
Impact of change in
shares outstanding (0.01) --
Total EPS Impact $0.04 ($0.01)
Year-to-date EPS, as reported $0.80 $0.71
Year-to-date EPS, ongoing * $0.76 $0.72
* Includes results from operations primarily in International Energy and
Field Services that have been discontinued.
BUSINESS UNIT RESULTS
Franchised Electric
Second quarter 2004 earnings before interest and taxes (EBIT) from Duke
Power totaled $338 million, compared to $316 million in the second quarter of
2003. The increase was primarily due to warmer weather during the quarter,
which increased EBIT from residential and commercial sales by approximately
$60 million.
The increase was partially offset by lower bulk power sales.
During the quarter, Duke Power took steps in North Carolina and South
Carolina to share half of the profits from the company's bulk power marketing
sales to fund several programs designed to make the service area more
competitive and respond to customer needs. The year-to-date total of
$27 million of shared profits was recorded as a charge in the second quarter.
Year-to-date EBIT for Franchised Electric was $762 million, compared with
$770 million in 2003.
Natural Gas Transmission
Duke Energy Gas Transmission (DEGT) reported second quarter 2004 EBIT of
$311 million compared to $306 million in the prior year's quarter. The 2003
second quarter included gains of $31 million from asset sales and $4 million
of earnings from assets sold during 2003. The increase was primarily due to
improved operational results, U.S. business expansion contributions, a
$17 million benefit due to the positive resolution of ad valorem tax issues in
various states and a $12 million benefit from a stronger Canadian currency.
These increases were offset by certain reserve reversals of $12 million in
2003.
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.
During the second quarter, DEGT began mainline construction on a 110-mile
expansion of the Gulfstream pipeline system. In addition, DEGT placed into
service the first phase of Texas Eastern's M-1 expansion project, which will
provide new and increased service to customers served through East Tennessee
including the Patriot expansion capacity.
Year-to-date EBIT for Natural Gas Transmission was $709 million, compared
with $729 million in 2003.
Field Services
The Field Services business segment, which represents Duke Energy's 70-
percent interest in Duke Energy Field Services (DEFS), reported second quarter
2004 EBIT of $94 million from continuing operations, compared to $53 million
in the second quarter of 2003.
The increase was primarily due to higher commodity prices compared to last
year's quarter. In June, DEFS paid an $87 million dividend, of which Duke
Energy received $61 million. This payment reflects continuing strong cash flow
and earnings at DEFS.
In second quarter 2003, results were positively affected by a pre-tax gain
on the sale of TEPPCO class B units of $11 million.
Year-to-date EBIT for Field Services from continuing operations was $186
million, compared with $83 million in 2003.
Duke Energy North America
Duke Energy North America (DENA) reported an EBIT loss of $39 million in
the second quarter of 2004, compared to EBIT of $211 million in the prior
year's quarter.
The key factors for the quarter were: 1) a previously announced $105
million charge related to the California and western U.S. energy markets
settlement, offset by a $108 million positive settlement in the Enron
bankruptcy proceeding; 2) positive mark-to-market earnings of $24 million as a
result of changes in power and natural gas prices; and 3) a $10 million loss
on the liquidation of Duke Energy Trading and Marketing contracts.
Compared to the same quarter in 2003, DENA's losses from energy generation
increased primarily due to lower hedge value realization and higher operating
and maintenance costs. This was partially offset by improved margins on
structured contracts and lower depreciation and general and administrative
costs.
Results for the second quarter of 2003 included a pre-tax gain of $175
million from the sale of DENA's ownership interest in American Re-Fuel.
Foregone earnings associated with this sale were $14 million for this year's
quarter.
During the quarter, DENA announced two significant asset sales. In May, it
announced an agreement to sell eight power plants in the southeast United
States; and in June, it announced the sale of its unfinished Moapa project in
Nevada. These transactions are expected to close in third quarter and fourth
quarter of 2004, respectively, and will provide Duke Energy with approximately
$1.3 billion in cash proceeds and tax benefits.
Excluding the expense related to the California and western U.S. energy
markets settlement, the gain from the Enron settlement, the mark-to-market
gain and the DETM contract liquidation loss, DENA's EBIT loss for the quarter
would have been $56 million.
Overall year-to-date EBIT loss for DENA was $596 million, compared to a
$234 million profit in 2003.
International Energy
For the second quarter of 2004, Duke Energy International (DEI) reported
EBIT from continuing operations of $68 million, compared to $91 million in the
second quarter of 2003.
The second quarter 2003 results benefited from a positive regulatory
settlement in Brazil and early termination of a natural gas sales contract,
which together totaled $37 million. The absence of such transactions in the
second quarter of 2004 was partially offset by improved operating results in
Latin America during this year's quarter.
During the quarter, DEI announced the sale of its ownership share of
Cantarell, a nitrogen-production plant in Mexico. The sale is expected to
close in third quarter 2004.
Year-to-date EBIT from continuing operations for International Energy was
$97 million, compared with $131 million in 2003.
Crescent Resources
Crescent Resources, Duke Energy's affiliated real estate company, reported
second quarter 2004 EBIT from continuing operations of $87 million, compared
to $21 million in the second quarter of 2003.
The increase was primarily attributed to a large commercial land sale at
Potomac Yard in northern Virginia, and greater than expected residential
developed lot sales during the quarter.
Year-to-date EBIT from continuing operations for Crescent Resources was
$147 million, compared with $21 million in 2003.
Other
Other, which includes corporate costs, DukeNet Communications, Duke/Fluor
Daniel, Duke Energy Merchants (DEM) and Energy Delivery Services, reported an
EBIT loss of $26 million in the second quarter of 2004, compared to an EBIT
loss of $69 million in the second quarter of 2003. The better results were
driven primarily by a $21 million portion of the Enron settlement, which was
recorded at DEM.
Year-to-date EBIT for Other was a loss of $31 million, compared with a
loss of $117 million in 2003.
Discontinued Operations
Discontinued Operations generated second quarter 2004 income of $27
million, primarily driven by a true-up of the net gain on the sale of
International Energy assets. These results compare to second quarter 2003
income of $23 million.
Year-to-date income for Discontinued Operations was $273 million, compared
with $18 million in 2003.
INCOME TAXES
Income tax expense from continuing operations of $133 million is lower
than the prior year's by approximately $62 million. The decrease is driven
primarily by the release of income tax reserves of approximately $52 million
resulting from resolution in the second quarter 2004 of various outstanding
income tax issues.
INTEREST EXPENSE
Interest expense was $337 million for the second quarter of 2004, compared
to $325 million for the second quarter of 2003.
LIQUIDITY AND CAPITAL RESOURCES
Duke Energy's consolidated capital structure at the end of second quarter
2004, including short-term debt, was 56 percent debt, 39 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 $2.5 billion at the end of the
second quarter of 2004. The companies had borrowings and letters of credit
outstanding under these programs of approximately $1.2 billion as of the end
of the second quarter of 2004, resulting in unused capacity of approximately
$1.3 billion. The company also had approximately $2.6 billion in cash and cash
equivalents at the end of second quarter 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 second quarter 2004 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 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/ or by dialing 800/967-
7187 in the United States or 719/457-2635 outside the United States. The
confirmation code is 601243. 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 601243. The international
replay number is 719/457-0820, confirmation code 601243. 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/. 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 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 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.
JUNE 2004
QUARTERLY HIGHLIGHTS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
(In millions, except where noted) 2004 2003 2004 2003
------ ------ ------ ------
COMMON STOCK DATA
Earnings Per Share (from
continuing operations)
Basic $0.43 $0.44 $0.50 $0.87
Diluted $0.43 $0.44 $0.50 $0.87
Earnings Per Share (from
discontinued operations)
Basic $0.03 $0.02 $0.30 $0.02
Diluted $0.03 $0.02 $0.30 $0.02
Earnings Per Share (before
cumulative effect of change in
accounting principle)
Basic $0.46 $0.46 $0.80 $0.89
Diluted $0.46 $0.46 $0.80 $0.89
Earnings Per Share
Basic $0.46 $0.46 $0.80 $0.71
Diluted $0.46 $0.46 $0.80 $0.71
Dividends Per Share $0.550 $0.550 $0.825 $0.825
Weighted-Average Shares Outstanding
Basic 926 902 919 899
Diluted 928 903 921 900
INCOME
Operating Revenues $5,360 $5,152 $11,049 $11,322
====== ====== ======= =======
Earnings Before Interest and Taxes
(EBIT) 916 971 1,408 1,934
Interest Expense (a) 337 325 693 651
Minority Interest Expense (a) 41 50 79 100
Income Tax Expense from Continuing
Operations 133 195 166 390
Income from Discontinued Operations 27 23 273 18
Cumulative Effect of Change in
Accounting Principle, net of tax and
minority interest - - - (162)
------ ------ ------- -------
Net Income 432 424 743 649
Dividends and Premiums on Redemptions
of Preferred and Preference Stock 3 7 5 10
------ ------ ------- -------
Earnings Available for Common
Stockholders $429 $417 $738 $639
====== ====== ======= =======
CAPITALIZATION
Common Equity 39% 37%
Preferred Stock 0% 1%
Trust Preferred Securities 0% 3%
------- -------
Total Common Equity and Preferred
Securities 39% 41%
Minority Interests 5% 4%
Total Debt 56% 55%
Total Debt $21,153 $22,766
Book Value Per Share $15.52 $17.38
Actual Shares Outstanding 938 904
CAPITAL AND INVESTMENT EXPENDITURES
Franchised Electric (b) $507 $292 $769 $550
Natural Gas Transmission 102 210 256 426
Field Services 107 31 132 62
Duke Energy North America 5 97 14 257
International Energy 7 18 15 43
Crescent (c) (d) 122 73 284 127
Other (14) (37) (14) 24
------ ------ ------- -------
Total Capital and Investment
Expenditures $836 $684 $1,456 $1,489
====== ====== ======= =======
EBIT BY BUSINESS SEGMENT
Franchised Electric $338 $316 $762 $770
Natural Gas Transmission 311 306 709 729
Field Services 94 53 186 83
Duke Energy North America (39) 211 (596) 234
International Energy 68 91 97 131
Crescent (c) 87 21 147 21
Other (26) (69) (31) (117)
------ ------ ------- -------
Total Segment and Other EBIT 833 929 1,274 1,851
EBIT Attributable to:
Minority Interest Expense 51 36 101 79
Third Party Interest Income 29 7 36 9
Foreign Currency Remeasurement
Gain (Loss) 2 (1) (3) (5)
Intercompany EBIT Elimination (e) 1 - - -
------ ------ ------- -------
Total EBIT $916 $971 $1,408 $1,934
====== ====== ======= =======
(a) Minority interest includes financing expenses related to securities
of subsidiaries of $28 million for the three months ended June 30,
2003 and $55 million for the six months ended June 30, 2003. The
expense related to these securities is accounted for in interest
expense in 2004.
(b) Current year amounts include a $262 million contribution to the
nuclear decommissioning trust funds.
(c) Beginning in 2004, Crescent, formerly part of Other, is considered
a reportable segment.
(d) Capital expenditures for residential properties are included in
operating cash flows on the Consolidated Statements of Cash Flows.
Capital expenditures for commercial and multi-family properties are
included in investing cash flows on the Consolidated Statements of
Cash Flows.
(e) Amount relates to the elimination of intercompany EBIT that has
been reclassified to discontinued operations.
JUNE 2004
QUARTERLY HIGHLIGHTS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
(In millions, except where noted) 2004 2003 2004 2003
------- ------- ------- -------
FRANCHISED ELECTRIC
Operating Revenues $1,228 $1,110 $2,499 $2,361
Operating Expenses 896 809 1,747 1,622
Gains on Sales of Other Assets, net 3 - 3 1
Other Income, net of expenses 3 15 7 30
------- ------- ------- -------
EBIT $338 $316 $762 $770
------- ------- ------- -------
Sales, GWh 20,087 19,415 42,050 41,458
NATURAL GAS TRANSMISSION
Operating Revenues $688 $692 $1,726 $1,660
Operating Expenses 397 421 1,035 988
Gains on Sales of Other Assets, net 9 - 9 1
Other Income, net of expenses (a) 13 45 19 79
Minority Interest Expense 2 10 10 23
------- ------- ------- -------
EBIT $311 $306 $709 $729
------- ------- ------- -------
Proportional Throughput, TBtu 726 742 1,815 1,824
FIELD SERVICES (b)
Operating Revenues $2,356 $2,048 $4,731 $4,598
Operating Expenses 2,225 1,991 4,474 4,500
Other Income, net of expenses 15 24 33 39
Minority Interest Expense 52 28 104 54
------- ------- ------- -------
EBIT $94 $53 $186 $83
------- ------- ------- -------
Natural Gas Gathered and
Processed/Transported, TBtu/day 7.5 7.6 7.4 7.6
Natural Gas Liquids Production,
MBbl/d 371 352 364 360
Average Natural Gas Price per MMBtu $5.99 $5.41 $5.84 $6.00
Average Natural Gas Liquids Price
per Gallon $0.61 $0.49 $0.60 $0.54
DUKE ENERGY NORTH AMERICA
Operating Revenues $672 $962 $1,328 $2,358
Operating Expenses 705 945 1,576 2,327
Loss on Sales of Other Assets, net (c) (16) - (368) -
Other Income, net of expenses (d) 3 187 (1) 196
Minority Interest Benefit (7) (7) (21) (7)
------- ------- ------- -------
EBIT $(39) $211 $(596) $234
------- ------- ------- -------
Actual Plant Production, GWh (e) 5,895 4,510 11,356 9,620
Proportional MW Capacity in
Operation 15,660 15,206
INTERNATIONAL ENERGY (b)
Operating Revenues $147 $169 $301 $341
Operating Expenses 98 90 229 225
Gains on Sales of Other Assets, net - 1 - 1
Other Income, net of expenses 22 15 31 22
Minority Interest Expense 3 4 6 8
------- ------- ------- -------
EBIT $68 $91 $97 $131
------- ------- ------- -------
Sales, GWh 4,248 4,446 8,811 8,416
Proportional MW Capacity in
Operation 4,130 4,013
CRESCENT (b)
Operating Revenues $101 $76 $140 $97
Operating Expenses 75 63 112 86
Gains on Sales of Investments in
Commercial and Multi-Family Real
Estate 62 9 121 11
Other Income, net of expenses - - - -
Minority Interest Expense 1 1 2 1
------- ------- ------- -------
EBIT $87 $21 $147 $21
------- ------- ------- -------
OTHER (b)
Operating Revenues $290 $362 $634 $879
Operating Expenses 311 412 698 994
(Loss) Gains on Sales of Other
Assets, net (7) - 7 -
Other Income, net of expenses 2 (19) 26 (2)
------- ------- ------- -------
EBIT $(26) $(69) $(31) $(117)
------- ------- ------- -------
(a) Prior year includes $31 million gain on sale of the Alliance/Aux
Sable equity investment.
(b) Certain prior year amounts have been reclassified due to discontinued
operations.
(c) Current year amounts include DENA Southeast plant impairment of $361
million and loss on sale of Duke Energy Trading & Marketing contracts.
(d) Prior year includes $175 million gain on sale of the American Ref-
Fuel Company equity investment.
(e) Represents 100% of GWh.
DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per-share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2004 2003 2004 2003
------- ------- ------- -------
Operating Revenues
Non-regulated electric, natural gas,
natural gas liquids and other $3,453 $3,394 $6,909 $7,406
Regulated electric 1,272 1,122 2,523 2,401
Regulated natural gas 635 636 1,617 1,515
------- ------- ------- -------
Total operating revenues 5,360 5,152 11,049 11,322
------- ------- ------- -------
Operating Expenses
Natural gas and petroleum products
purchased 2,594 2,664 5,626 6,156
Operation, maintenance and other 837 881 1,628 1,555
Fuel used in electric generation and
purchased power 607 369 1,171 917
Depreciation and amortization 421 438 857 869
Property and other taxes 125 134 279 274
------- ------- ------- -------
Total operating expenses 4,584 4,486 9,561 9,771
------- ------- ------- -------
Gains on Sales of Investments in
Commercial and Multi-Family Real
Estate 62 9 121 11
(Losses) Gains on Sales of Other
Assets, net (11) 1 (349) 3
------- ------- ------- -------
Operating Income 827 676 1,260 1,565
------- ------- ------- -------
Other Income and Expenses
Equity in earnings of unconsolidated
affiliates 43 16 77 50
Gains on sales of equity investments - 219 - 233
Other income and expenses, net 46 60 71 86
------- ------- ------- -------
Total other income and expenses 89 295 148 369
Interest Expense 337 325 693 651
Minority Interest Expense 41 50 79 100
------- ------- ------- -------
Earnings From Continuing Operations
Before Income Taxes 538 596 636 1,183
Income Tax Expense from Continuing
Operations 133 195 166 390
------- ------- ------- -------
Income From Continuing Operations 405 401 470 793
Discontinued Operations
Net operating (loss) income, net of
tax (3) 17 4 20
Net gain (loss) on dispositions, net
of tax 30 6 269 (2)
------- ------- ------- -------
Income From Discontinued Operations 27 23 273 18
Income Before Cumulative Effect of
Change in Accounting Principle 432 424 743 811
Cumulative Effect of Change in
Accounting Principle, net of tax and
minority interest - - - (162)
------- ------- ------- -------
Net Income 432 424 743 649
Dividends and Premiums on Redemption
of Preferred and Preference Stock 3 7 5 10
------- ------- ------- -------
Earnings Available For Common
Stockholders $429 $417 $738 $639
======= ======= ======= =======
Common Stock Data
Weighted-average shares outstanding
Basic 926 902 919 899
Diluted 928 903 921 900
Earnings per share (from continuing
operations)
Basic $0.43 $0.44 $0.50 $0.87
Diluted $0.43 $0.44 $0.50 $0.87
Earnings per share (from
discontinued operations)
Basic $0.03 $0.02 $0.30 $0.02
Diluted $0.03 $0.02 $0.30 $0.02
Earnings per share (before
cumulative effect of change in
accounting principle)
Basic $0.46 $0.46 $0.80 $0.89
Diluted $0.46 $0.46 $0.80 $0.89
Earnings per share
Basic $0.46 $0.46 $0.80 $0.71
Diluted $0.46 $0.46 $0.80 $0.71
Dividends per share $0.550 $0.550 $0.825 $0.825
DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
June 30, December 31,
2004 2003
-------- --------
ASSETS
Current Assets
Cash and cash equivalents $2,644 $1,160
Receivables, net 2,982 2,888
Inventory 837 941
Assets held for sale 287 424
Unrealized gains on mark-to-
market and hedging transactions 1,438 1,566
Other 604 694
-------- --------
Total current assets 8,792 7,673
-------- --------
Investments and Other Assets
Investments in unconsolidated
affiliates 1,331 1,398
Nuclear decommissioning trust
funds 1,243 925
Goodwill 3,855 3,962
Notes receivable 244 260
Unrealized gains on mark-to-
market and hedging transactions 1,828 1,857
Assets held for sale 570 1,444
Investments in residential,
commercial and multi-family real
estate, net 1,228 1,331
Other 840 1,117
-------- --------
Total investments and other assets 11,139 12,294
-------- --------
Property, Plant and Equipment
Cost 45,530 46,009
Less accumulated depreciation and
amortization 12,800 12,139
-------- --------
Net property, plant and equipment 32,730 33,870
-------- --------
Regulatory Assets and Deferred
Debits
Deferred debt expense 317 275
Regulatory assets related to
income taxes 1,175 1,152
Other 962 939
-------- --------
Total regulatory assets and
deferred debits 2,454 2,366
-------- --------
Total Assets $55,115 $56,203
======== ========
DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
June 30, December 31,
2004 2003
-------- --------
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $2,112 $2,317
Notes payable and commercial paper 437 130
Taxes accrued 398 14
Interest accrued 309 304
Liabilities associated with assets
held for sale 44 651
Current maturities of long-term
debt 1,535 1,200
Unrealized losses on mark-to-
market and hedging transactions 1,239 1,283
Other 1,826 1,799
-------- --------
Total current liabilities 7,900 7,698
-------- --------
Long-term Debt, including debt to
affiliates of $258 at June 30, 2004
and $876 at December 31, 2003 19,181 20,622
-------- --------
Deferred Credits and Other
Liabilities
Deferred income taxes 4,315 4,120
Investment tax credit 159 165
Unrealized losses on mark-to-
market and hedging transactions 1,611 1,754
Liabilities associated with assets
held for sale - 737
Other 5,586 5,524
-------- --------
Total deferred credits and other
liabilities 11,671 12,300
-------- --------
Commitments and Contingencies
Minority Interests 1,674 1,701
-------- --------
Preferred and preference stock
without sinking fund requirements 134 134
-------- --------
Common Stockholders' Equity
Common stock, no par, 2 billion
shares authorized; 938 million
and 911 million shares outstanding
at June 30, 2004 and December 31,
2003, respectively 10,492 9,519
Retained earnings 4,053 4,060
Accumulated other comprehensive income 10 169
-------- --------
Total common stockholders' equity 14,555 13,748
-------- --------
Total Liabilities and Common
Stockholders' Equity $55,115 $56,203
======== ========
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In millions)
Six Months Ended
June 30,
------------------------
2004 2003
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $743 $649
Adjustments to reconcile net income
to net cash provided by
operating activities
Depreciation and amortization
(including amortization of
nuclear fuel) 943 972
Cumulative effect of change in
accounting principle - 162
Net gains on sales of equity
investments and other assets (57) (250)
Net realized and unrealized
mark-to-market and hedging
transactions 229 (42)
Capital expenditures for
residential real estate (138) (76)
Cost of residential real
estate sold 80 50
Changes in working capital and
other 589 359
Net cash provided by ------- -------
operating activities 2,389 1,824
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital and investment
expenditures, net of refund (1,318) (1,413)
Net proceeds from the sales of
equity investment and other
assets, and sales of and collections
on notes receivable 671 1,279
Proceeds from the sales of
commercial and multi-family
real estate 303 47
Other (102) (51)
Net cash used in investing ------- -------
activities (446) (138)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the
Issuance of long-term debt 112 1,707
Issuance of common stock and
common stock related to employee benefit
plans 947 150
Payments for the redemption of
long-term debt, preferred stock
of a subsidiary, guaranteed preferred
beneficial interests in subordinated
notes, and net paydown of commercial
paper and notes payable (917) (2,387)
Dividends paid (526) (524)
Other (63) (7)
Net cash used in financing ------- -------
activities (447) (1,061)
------- -------
Changes in cash and cash
equivalents associated with assets
held for sale (12) -
------- -------
Net increase in cash and cash
equivalents 1,484 625
Cash and cash equivalents at
beginning of period 1,160 857
Cash and cash equivalents at end of ------- -------
period $2,644 $1,482
======= =======
Supplemental Disclosures
Quarter Ended June 30, 2004
Duke Energy Corporation
2Q04
-------
Mark-to-market Portfolio (in
millions) $(209)
Daily Value at Risk (DvaR) (in
millions)
95% Confidence Level, One-Day Holding
Period, Two-Tailed
Average for the Period $19
Duke Energy North America
(in millions unless stated otherwise) Q-T-D June 30, 2004
Proprietary Structured Owned
Merchant Energy Gross Margin Trading Contracts Assets Total
Mark-to-market gross margin ------- ------- ------- -------
(loss) $2 $20 $- $22
Accrual gross margin (loss) n/a (5) 109 104
------- ------- ------- -------
Total Gross Margin $2 $15 $109 126
------- ------- -------
Reconciliation to Segment EBIT:
Plant depreciation (39)
Plant operating and maintenance
expenses (82)
General and administrative and
other expenses (including Enron
bankruptcy gain of $113 and
California settlement
charges of $105) (38)
Minority interest 7
Other income, net of expenses 3
Gain (loss) on sale of other
assets (16)
-------
DENA Segment EBIT $(39)
=======
Owned Assets - Merchant Plant
Production and Hedging Information (a) 2004(b) 2005 2006
------- ------- -------
Estimated available production
(millions of MWh) 32 63 63
Combined cycle 29 56 56
Peaker units 3 7 7
Estimated production (millions of MWh) 12 23 25
Combined cycle 12 23 24
Peaker units - - 1
Estimated production sold 93% 77% 68%
Estimated average price ($/MWh) $46 $47 $45
(a) All figures exclude Southeast plants.
(b) Information for 2004 is for the remainder of the year only (July -
December).
Supplemental Disclosures
Quarter Ended June 30, 2004
Duke Energy North America (continued)
(in millions)
Maturity/Source of Carrying Value of Over Total
Energy Contract Net Assets 4 Fair
2004 2005 2006 2007 Years Value
Proprietary Trading ---- ---- ---- ---- ---- ----
Actively quoted prices and other
external sources $100 $6 $30 $(7) $(20) $109
Modeled (2) 13 8 6 9 34
---- ---- ---- ---- ---- ----
$98 $19 $38 $(1) $(11) $143
Structured Contracts ==== ==== ==== ==== ====
Actively quoted prices and other
external sources $11 $39 $(50) $(31) $(75) $(106)
Modeled (30) (30) (32) (25) (21) (138)
---- ---- ---- ---- ---- ----
$(19) $9 $(82) $(56) $(96) $(244)
==== ==== ==== ==== ====
Owned Assets
Actively quoted prices and other
external sources $181 $266 $193 $88 $69 $797
Modeled (11) (9) (5) (1) (7) (33)
---- ---- ---- ---- ---- ----
$170 $257 $188 $87 $62 $764
==== ==== ==== ==== ====
----
Total Fair Value of Energy Contract Net Assets * $663
====
* 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 Average Price
Represents the average price expected to be realized. This figure is based
on both existing sales (hedges) as well as expected sales, given market
conditions at June 30, 2004.
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.
Special items for the first quarter (as summarized in this Earnings
Release) include:
($ in Millions) Pre-Tax Tax 2004 EPS 2003 EPS
Amount Effect Impact Impact
------- ------- -------- --------
First Quarter 2004
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 (359) 134 (0.25) --
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 $0.01 ($0.17)
EPS, as reported $0.34 $0.25
EPS, ongoing $0.33 $0.42
SOURCE Duke Energy
-0- 07/29/2004
/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 /
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(DUK)
CO: Duke Energy
ST: North Carolina, Texas
IN: OIL UTI
SU: ERN ERP CCA MAV