Exhibit 99
Duke Energy Reports Third Quarter 2004 Results
- Reported earnings of 41 cents per share versus 5 cents in prior year's
quarter; ongoing EPS of 38 cents versus 35 cents in third quarter of
2003
- All business units positioned to meet or exceed 2004 financial goals
- DEFS continuing to benefit from favorable commodity prices
- DENA results affected by positive mark-to-market earnings of 3 cents
per share
- Debt reduction will exceed 2004 goal of $4 billion, which includes
$840 million of debt retired through Australian asset sales
- Lower interest expense driven by accelerated debt reduction
CHARLOTTE, N.C., Nov. 3 /PRNewswire-FirstCall/ -- Duke Energy (NYSE: DUK)
reported net income in the third quarter of 2004 of $389 million, or $0.41 per
share, compared to net income of $49 million, or $0.05 per share in the third
quarter of 2003.
Excluding special items, ongoing third quarter earnings per share (EPS)
were $0.38 versus $0.35 in the prior year's quarter.
"With three solid quarters behind us, we expect to finish 2004 ahead of
the financial plans we laid out at the beginning of the year," said Paul
Anderson, Duke Energy chairman of the board and chief executive officer. "We
are now focused on realizing further improvements to our financial and
operational results for 2005."
Special items for the quarter include:
2004 2003
Pre-Tax Tax EPS EPS
($ in Millions) Amount Effect Impact Impact
Third quarter 2004
- Tax benefit from restructuring -- $48 $0.05
- Asset impairments, losses on asset
sales and write down of equity
investments at DEFS (net of minority
interest) (42) 16 (0.03)
- Net gains on asset sales 4 (2) --
- Tax true up on sale of Australian
assets -- 5 0.01
Third quarter 2003
- Tax benefit on 2002 goodwill
impairment of International Energy
European gas trading -- $52 $0.06
- Net gain/loss on asset sales (71) 28 (0.05)
- DENA goodwill write-off (254) 90 (0.18)
- Severance cost associated with work
force reduction (105) 37 (0.08)
- Settlement with the S.C. Public
Service Commission (46) 18 (0.03)
- Settlement with the Commodity
Futures Trading Commission (net of
minority interest) (17) -- (0.02)
Total EPS Impact $0.03 ($0.30)
EPS, as reported $0.41 $0.05
EPS, ongoing * $0.38 $0.35
Special items EPS year-to-date impact:
2004 2003
First quarter $0.01 ($0.17)
Second quarter 0.04 0.16
Third quarter 0.03 (0.30)
Impact of change in shares outstanding (0.01) --
Total EPS Impact $0.07 ($0.31)
Year-to-date EPS, as reported $1.22 $0.76
Year-to-date EPS, ongoing * $1.15 $1.07
* Includes results from operations in International Energy, DENA,
Crescent Resources and Field Services that have been discontinued.
BUSINESS UNIT RESULTS
Franchised Electric
Third quarter 2004 earnings before interest and taxes (EBIT) from
Franchised Electric were $453 million, compared to third quarter 2003 EBIT of
$436 million.
EBIT was affected in third quarter 2004 by higher non-nuclear operating
and maintenance costs, including $10 million in storm costs primarily related
to Hurricane Ivan, and lower bulk power sales.
Customer growth for Franchised Electric continues to be positive, with
approximately 40,000 more customers than in third quarter 2003.
In the prior year, EBIT for Franchised Electric was reduced by $30 million
due to a regulatory settlement with the South Carolina Public Service
Commission and $46 million for severance and related charges.
Amortization related to the implementation of the North Carolina Clean Air
Act for the quarter was $109 million versus $53 million in third quarter 2003.
Year-to-date EBIT for Franchised Electric was $1,215 million, compared
with $1,206 million in 2003.
Natural Gas Transmission
Duke Energy Gas Transmission (DEGT) reported third quarter 2004 EBIT of
$265 million compared to $280 million in the prior year's quarter. Results
were positively affected by pipeline expansion projects and a $12 million
favorable impact from the stronger Canadian currency. During the quarter, DEGT
realized a $5 million gain on the sale of its interest in the Millennium
Pipeline project.
The 2003 third quarter included gains of $31 million from asset sales and
$17 million of benefits related to the reversal of certain tax reserves. These
items were partially offset by an $18 million charge for severance and related
costs in the third quarter of last year.
The favorable Canadian currency impact on DEGT's EBIT was partially offset
in Duke Energy's consolidated net income by currency impacts on interest and
taxes.
During the third quarter, DEGT held a successful comprehensive open season
in which eastern North American markets indicated substantial interest in
transportation and storage infrastructure expansion opportunities on any one
or a combination of Algonquin, Texas Eastern and Union Gas. In addition, DEGT
filed with FERC to build an 11-mile lateral to connect Texas Eastern to
British Petroleum's proposed LNG import terminal at Logan, N.J.
Year-to-date EBIT for Natural Gas Transmission was $974 million, compared
with $1,009 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 third
quarter 2004 EBIT from continuing operations of $67 million, compared to
$51 million in the third quarter of 2003.
The increase was primarily driven by higher commodity prices compared to
last year's quarter. During the quarter, Field Services took a $26 million
impairment charge, net of minority interest, largely related to its periodic
review of the carrying value of its assets and equity investments and disposal
of certain assets during the quarter.
During the quarter, DEFS paid a dividend, of which Duke Energy's portion
was $98 million. This payment reflects continuing strong cash flow and
earnings at DEFS.
Year-to-date EBIT from continuing operations for Field Services was
$253 million, compared with $136 million in 2003.
Duke Energy North America
Duke Energy North America (DENA) reported an EBIT loss from continuing
operations of $17 million in the third quarter of 2004, compared to an EBIT
loss from continuing operations of $411 million in the prior year's quarter.
For the third quarter of 2004, DENA's results were positively impacted by
continued expense reductions and a positive $40 million in mark-to-market
earnings, net of minority interest. Results were negatively affected by lower
margins and lower than expected production at DENA's generation assets due to
cooler than expected weather in the Midwest.
Results for the third quarter of 2003 included a number of special charges
which totaled $357 million.
Overall year-to-date EBIT loss from continuing operations for DENA was
$612 million -- largely driven by a loss of approximately $360 million related
to the sale of the southeast generation assets and $23 million in mark-to-
market losses, net of minority interest. This compares to an EBIT loss from
continuing operations of $177 million in 2003.
International Energy
For the third quarter of 2004, Duke Energy International (DEI) reported
EBIT from continuing operations of $64 million, compared to $44 million in the
third quarter of 2003.
The increase was driven by better results at National Methanol, due mainly
to stronger MTBE prices, and a reduction in environmental reserves in Brazil.
Year-to-date EBIT from continuing operations for International Energy was
$161 million, compared with $175 million in 2003.
Crescent Resources
Crescent Resources reported third quarter 2004 EBIT from continuing
operations of $43 million, compared to $39 million in the third quarter of
2003.
Better results with commercial and residential developments were mostly
offset by lower land sales during the previous year's quarter.
Year-to-date EBIT from continuing operations for Crescent Resources was
$190 million, compared with $61 million in 2003.
Other
Other, which includes corporate costs, DukeNet Communications, Duke/Fluor
Daniel and Duke Energy Merchants (DEM) reported an EBIT loss of $25 million in
the third quarter of 2004, compared to an EBIT loss of $88 million in the
third quarter of 2003. The 2003 EBIT loss included charges of $33 million
related to severance and related costs.
Year-to-date EBIT for Other was a loss of $56 million, compared with a
loss of $205 million in 2003.
Discontinued Operations
The operations reported as discontinued resulted in a third quarter 2004
loss of $12 million. This compares to third quarter 2003 income of $44
million.
Year-to-date income for Discontinued Operations was $260 million, compared
with $61 million in 2003.
INCOME TAXES
Third quarter 2004 income tax expense from continuing operations was
$129 million. During the quarter, Duke Energy recorded a $48 million benefit
related to the southeast asset sale as a result of the realignment of certain
subsidiaries of Duke Energy resulting in a lower-than-normal tax rate.
INTEREST EXPENSE
Interest expense was $342 million for the third quarter of 2004, compared
to $375 million for the third quarter of 2003. The decline was due mainly to
overall debt reduction, which will exceed $4 billion for the current year,
including approximately $840 million of non-cash debt reduction as part of the
sale of the Australian assets.
LIQUIDITY AND CAPITAL RESOURCES
Duke Energy's consolidated capital structure at the end of third quarter
2004, including short-term debt, was 55 percent debt, 41 percent common equity
and 4 percent minority interests.
Under various credit facilities, Duke Energy, Duke Capital and other
subsidiaries had the ability to borrow up to $2.6 billion at the end of the
third quarter of 2004. The companies had borrowings and letters of credit
outstanding under these programs of approximately $1.1 billion as of the end
of the third quarter of 2004, resulting in unused capacity of approximately
$1.5 billion. The company also had approximately $2.9 billion in cash and cash
equivalents at the end of third quarter 2004.
On Oct. 28, the company made a voluntary $250 million cash contribution to
its U.S. pension fund. As a result of making the contribution, the company
will not be required to make a contribution to this plan in 2005.
ADDITIONAL INFORMATION
Additional information, including EPS reconciliation data and a schedule
for Duke Energy Field Services gas volume and margin by contract type can be
obtained at Duke Energy's third quarter 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.
The 2004 debt reduction goal of $4 billion represents a non-GAAP measure
because it includes approximately $840 million that was retired by the buyer
as part of the sale of the Australian assets, which represents a non-cash
financing activity under GAAP. The debt retired by the buyer was included in
Current and Non-Current Liabilities Associated with Assets Held for Sale as of
Dec. 31, 2003.
Management believes that presentation of this non-GAAP measure is useful
because it reflects the settlement of amounts of indebtedness regardless of
their classification in the financial statements or of the means of
settlement.
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: http://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
800/289-0572 in the United States or 913/981-5543 outside the United States.
The confirmation code is 444978. 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 444978 through midnight ET,
Nov. 12. The international replay number is 719/457-0820, confirmation code
444978. 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.
MEDIA CONTACT: Randy Wheeless
Phone: 704/382-8379
24-Hour: 704/382-8333
ANALYST CONTACT: Greg Ebel
Phone: 704/382-8118
SEPTEMBER 2004
QUARTERLY HIGHLIGHTS
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
(In millions, except where noted) 2004 2003 2004 2003
-------------------------------------------------------------------------
COMMON STOCK DATA
Earnings Per Share (from
continuing operations)
Basic $0.42 $- $0.94 $0.87
Diluted $0.42 $- $0.93 $0.87
(Loss) Earnings Per Share (from
discontinued operations)
Basic $(0.01) $0.05 $0.28 $0.07
Diluted $(0.01) $0.05 $0.28 $0.07
Earnings Per Share (before
cumulative effect of change in
accounting principle)
Basic $0.41 $0.05 $1.22 $0.94
Diluted $0.41 $0.05 $1.21 $0.94
Earnings Per Share
Basic $0.41 $0.05 $1.22 $0.76
Diluted $0.41 $0.05 $1.21 $0.76
Dividends Per Share $- $- $0.825 $0.825
Weighted-Average Shares Outstanding
Basic 938 905 925 901
Diluted 940 907 928 902
-------------------------------------------------------------------------
INCOME
Operating Revenues $5,507 $5,549 $16,466 $16,840
------- ------- ------- -------
Total Reportable Segment EBIT 875 439 2,181 2,410
Other EBIT (25) (88) (56) (205)
Interest Expense (a) 342 375 1,035 1,027
Minority Interest (Benefit) Expense
and Other (b) (22) (7) (78) 11
Income Tax Expense (Benefit) from
Continuing Operations 129 (22) 296 368
(Loss) Income from Discontinued
Operations (12) 44 260 61
Cumulative Effect of Change in
Accounting Principle, net of tax and
minority interest - - - (162)
------- ------- ------- -------
Net Income 389 49 1,132 698
Dividends and Premiums on Redemptions
of Preferred and Preference Stock 2 3 7 13
------- ------- ------- -------
Earnings Available for Common
Stockholders $387 $46 $1,125 $685
======= ======= ======= =======
-------------------------------------------------------------------------
CAPITALIZATION
Common Equity 41% 38%
Preferred Stock 0% 0%
----------------
Total Common Equity and Preferred
Securities 41% 38%
Minority Interests 4% 4%
Total Debt 55% 58%
-------------------------------------------------------------------------
Total Debt $20,653 $23,964
Book Value Per Share $16.30 $17.57
Actual Shares Outstanding 938 907
-------------------------------------------------------------------------
CAPITAL AND INVESTMENT EXPENDITURES
Franchised Electric (c) $222 $241 $991 $791
Natural Gas Transmission 131 184 387 610
Field Services 31 32 163 94
Duke Energy North America 5 11 19 268
International Energy 9 18 24 61
Crescent (d) (e) 122 76 406 203
Other (13) 25 (27) 49
------- ------- ------- -------
Total Capital and Investment
Expenditures $507 $587 $1,963 $2,076
======= ======= ======= =======
-------------------------------------------------------------------------
EBIT BY BUSINESS SEGMENT
Franchised Electric $453 $436 $1,215 $1,206
Natural Gas Transmission 265 280 974 1,009
Field Services 67 51 253 136
Duke Energy North America (17) (411) (612) (177)
International Energy 64 44 161 175
Crescent (d) 43 39 190 61
------- ------- ------- -------
Total reportable segment EBIT 875 439 2,181 2,410
Other EBIT (25) (88) (56) (205)
Interest expense (342) (375) (1,035) (1,027)
Minority interest benefit (expense)
and other (b) 22 7 78 (11)
------- ------- ------- -------
Consolidated earnings (loss) from
continuing operations before income
taxes $530 $(17) $1,168 $1,167
======= ======= ======= =======
-------------------------------------------------------------------------
(a) Financing expenses related to securities of subsidiaries is
accounted for in interest expense in 2004. Minority interest includes
expense related to these securities of $55 million for the nine months
ended September 2003.
(b) Includes interest income, foreign currency remeasurement gains and
losses, and additional minority interest expense allocated to the
segment results.
(c) Current year amounts include a $262 million contribution to the
nuclear decommissioning trust funds.
(d) Beginning in 2004, Crescent, formerly part of Other, is considered
a reportable segment.
(e) 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.
SEPTEMBER 2004
QUARTERLY HIGHLIGHTS
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
(In millions, except where noted) 2004 2003 2004 2003
--------------------------------------------------------------------------
FRANCHISED ELECTRIC
Operating Revenues $1,419 $1,359 $3,918 $3,720
Operating Expenses 967 930 2,714 2,552
Gains on Sales of Other Assets, net - 1 3 2
Other Income, net of expenses 1 6 8 36
------- ------- ------- -------
EBIT $453 $436 $1,215 $1,206
------- ------- ------- -------
Sales, GWh 21,904 22,163 63,954 63,621
--------------------------------------------------------------------------
NATURAL GAS TRANSMISSION
Operating Revenues $638 $641 $2,364 $2,301
Operating Expenses 387 393 1,422 1,381
Gains on Sales of Other Assets, net 3 3 12 4
Other Income, net of expenses (a) 17 38 36 117
Minority Interest Expense 6 9 16 32
------- ------- ------- -------
EBIT $265 $280 $974 $1,009
------- ------- ------- -------
Proportional Throughput, TBtu 652 679 2,467 2,502
--------------------------------------------------------------------------
FIELD SERVICES (b)
Operating Revenues $2,506 $2,076 $7,207 $6,643
Operating Expenses 2,380 2,009 6,824 6,476
Gains on Sales of Other Assets, net 1 - 1 -
Other Income, net of expenses (16) 14 17 53
Minority Interest Expense 44 30 148 84
------- ------- ------- -------
EBIT $67 $51 $253 $136
------- ------- ------- -------
Natural Gas Gathered and
Processed/Transported, TBtu/day 7.4 7.5 7.3 7.5
Natural Gas Liquids Production,
MBbl/d 371 354 363 355
Average Natural Gas Price per MMBtu $5.76 $4.97 $5.81 $5.66
Average Natural Gas Liquids Price
per Gallon $0.72 $0.49 $0.64 $0.52
--------------------------------------------------------------------------
DUKE ENERGY NORTH AMERICA (b)
Operating Revenues $542 $1,141 $1,812 $3,499
Operating Expenses 547 1,517 2,062 3,844
Loss on Sales of Other Assets, net (c) (6) (84) (374) (84)
Other Income, net of expenses (d) 7 11 5 207
Minority Interest Expense (Benefit) 13 (38) (7) (45)
------- ------- ------- -------
EBIT $(17) $(411) $(612) $(177)
------- ------- ------- -------
Actual Plant Production, GWh (e) 7,213 9,130 17,596 18,750
Proportional MW Capacity in
Operation 9,890 15,836
--------------------------------------------------------------------------
INTERNATIONAL ENERGY (b)
Operating Revenues $146 $151 $447 $492
Operating Expenses 109 114 338 339
Gains on Sales of Other Assets, net 1 1 1 2
Other Income, net of expenses 29 9 60 31
Minority Interest Expense 3 3 9 11
------- ------- ------- -------
EBIT $64 $44 $161 $175
------- ------- ------- -------
Sales, GWh 4,277 3,936 13,088 12,352
Proportional MW Capacity in
Operation 4,136 4,041
--------------------------------------------------------------------------
CRESCENT (b)
Operating Revenues $77 $44 $216 $141
Operating Expenses 62 41 173 126
Gains on Sales of Investments in
Commercial and Multi-Family Real
Estate 28 36 149 47
Minority Interest Expense - - 2 1
------- ------- ------- -------
EBIT $43 $39 $190 $61
------- ------- ------- -------
--------------------------------------------------------------------------
OTHER (b)
Operating Revenues $295 $372 $929 $1,251
Operating Expenses 316 473 1,014 1,467
(Loss) Gains on Sales of Other
Assets, net (3) - 4 -
Other Income, net of expenses (1) 13 25 11
------- ------- ------- -------
EBIT $(25) $(88) $(56) $(205)
------- ------- ------- -------
--------------------------------------------------------------------------
(a) Prior year year-to-date includes $61 million gain on sale of the
Alliance/Aux Sable and Foothills equity investments.
(b) Certain prior year amounts have been reclassified due to discontinued
operations.
(c) Current year year-to-date amounts include DENA Southeast plant
impairment of $359 million and loss on sale of Duke Energy Trading &
Marketing contracts.
(d) Prior year year-to-date includes $178 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 Nine Months Ended
September 30, September 30,
------------------ -----------------
2004 2003 2004 2003
--------- -------- ------- ---------
Operating Revenues $5,507 $5,549 $16,466 $16,840
Operating Expenses 4,652 5,262 14,120 15,000
Gains on Sales of Investments in
Commercial and Multi-Family Real
Estate 28 36 149 47
Losses on Sales of Other Assets, net (4) (79) (353) (76)
--------- -------- ------- ---------
Operating Income 879 244 2,142 1,811
--------- -------- ------- ---------
Other Income and Expenses 54 103 203 472
Interest Expense 342 375 1,035 1,027
Minority Interest Expense (Benefit) 61 (11) 142 89
--------- -------- ------- ---------
Earnings (Loss) From Continuing
Operations Before Income Taxes 530 (17) 1,168 1,167
Income Tax Expense (Benefit) from
Continuing Operations 129 (22) 296 368
--------- -------- ------- ---------
Income From Continuing Operations 401 5 872 799
(Loss) Income From Discontinued
Operations, net of tax (12) 44 260 61
--------- -------- ------- ---------
Income Before Cumulative Effect of
Change in Accounting Principle 389 49 1,132 860
Cumulative Effect of Change in
Accounting Principle, net of tax and
minority interest - - - (162)
--------- -------- ------- ---------
Net Income 389 49 1,132 698
Dividends and Premiums on Redemption
of Preferred and Preference Stock 2 3 7 13
--------- -------- ------- ---------
Earnings Available For Common
Stockholders $387 $46 $1,125 $685
========= ======== ======= =========
Common Stock Data
Weighted-average shares outstanding
Basic 938 905 925 901
Diluted 940 907 928 902
Earnings per share (from continuing
operations)
Basic $0.42 $- $0.94 $0.87
Diluted $0.42 $- $0.93 $0.87
(Loss) Earnings per share (from
discontinued operations)
Basic $(0.01) $0.05 $0.28 $0.07
Diluted $(0.01) $0.05 $0.28 $0.07
Earnings per share (before
cumulative effect of change in
accounting principle)
Basic $0.41 $0.05 $1.22 $0.94
Diluted $0.41 $0.05 $1.21 $0.94
Earnings per share
Basic $0.41 $0.05 $1.22 $0.76
Diluted $0.41 $0.05 $1.21 $0.76
Dividends per share $- $- $0.825 $0.825
DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
September 30, December 31,
2004 2003
------------- ------------
ASSETS
Current Assets $8,648 $7,675
Investments and Other Assets 10,741 12,294
Net Property, Plant and Equipment 32,856 33,870
Regulatory Assets and Deferred Debits 2,494 2,366
------------- ------------
Total Assets $54,739 $56,205
============= ============
LIABILITIES AND COMMON STOCKHOLDERS'
EQUITY
Current Liabilities $8,730 $7,698
Long-term Debt, including debt to
affiliates of $876 at December 31, 2003 17,101 20,622
Deferred Credits and Other Liabilities 11,899 12,302
Minority Interests 1,587 1,701
Preferred and preference stock
without sinking fund requirements 134 134
Common Stockholders' Equity 15,288 13,748
------------- ------------
Total Liabilities and Common
Stockholders' Equity $54,739 $56,205
============= ============
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In millions)
Nine Months Ended
September 30,
--------------------------
2004 2003
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,132 $698
Adjustments to reconcile net income
to net cash provided by
operating activities 2,291 1,792
-------- --------
Net cash provided by
operating activities 3,423 2,490
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
-------- --------
Net cash used in investing
activities (220) (439)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
-------- --------
Net cash used in financing
activities (1,543) (1,174)
-------- --------
Changes in cash and cash
equivalents associated with assets
held for sale 38 -
-------- --------
Net increase in cash and cash
equivalents 1,698 877
Cash and cash equivalents at
beginning of period 1,160 874
-------- --------
Cash and cash equivalents at end of
period $2,858 $1,751
======== ========
Supplemental Disclosures
Quarter Ended September 30, 2004
Duke Energy Corporation
--------------------------------------------------------------------------
3Q04
--------
Mark-to-market Portfolio (in
millions) $(228)
Daily Value at Risk (DvaR) (in
millions)
95% Confidence Level, One-Day Holding
Period, Two-Tailed Average for the
Period $20
Duke Energy North America
--------------------------------------------------------------------------
(in millions unless stated otherwise) Q-T-D September 30, 2004
Proprietary Structured Owned
Merchant Energy Gross Margin Trading Contracts Assets Total
----------------------------------- ----------- ---------- ------ -------
Mark-to-market gross margin
(loss) $4 $36 $7 $47
Accrual gross margin (loss) n/a (4) 87 83
----------- ---------- ------ -------
Total Gross Margin $4 $32 $94 130
----------- ---------- ------
Reconciliation to Segment EBIT:
Plant depreciation (39)
Plant operating and maintenance
expenses (61)
General and administrative and
other expenses (35)
Minority interest (13)
Other income, net of expenses 7
Gain (loss) on sale of other
assets (6)
-------
DENA Segment EBIT $(17)
=======
Owned Assets - Merchant Plant Production
and Hedging Information 2004(a) 2005 2006
----------------------------------------- ---------- -------- --------
Estimated available production
(millions of MWh) 16 63 63
Combined cycle 14 56 56
Peaker units 2 7 7
Estimated production (millions of
MWh) 4 18 19
Combined cycle 4 18 19
Peaker units - - -
Estimated production sold 87% 103% 94%
Estimated average price ($/MWh) $48 $49 $47
(a) Information for 2004 is for the remainder of the year only (October -
December).
Supplemental Disclosures
Quarter Ended September 30, 2004
Duke Energy North America (continued)
--------------------------------------------------------------------------
(in millions)
Total
Maturity/Source of Carrying Value Over Fair
of Energy Contract Net Assets 2004 2005 2006 2007 4 Years Value
---------------------------------- ---- ---- ---- ---- ------- -------
Proprietary Trading
Actively quoted prices and other
external sources $17 $(6) $30 $(7) $(15) $19
Modeled 2 24 10 6 6 48
---- ---- ---- ---- ------- -------
$19 $18 $40 $(1) $(9) $67
==== ==== ==== ==== =======
Structured Contracts
Actively quoted prices and other
external sources $18 $65 $(30) $(25) $(24) $4
Modeled (8) (43) (35) (12) (77) (175)
---- ---- ---- ---- ------- -------
$10 $22 $(65) $(37) $(101) $(171)
==== ==== ==== ==== =======
Owned Assets
Actively quoted prices and other
external sources $119 $336 $268 $130 $174 $1,027
Modeled - - (4) - (5) (9)
---- ---- ---- ---- ------- ------
$119 $336 $264 $130 $169 $1,018
==== ==== ==== ==== =======
------
Total Carrying Value of Energy Contract Net Assets * $914
======
* 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 September 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.
Duke Energy Corporation
Quarterly Highlights
Supplemental Franchised Electric Information
September 30, 2004
Quarter Ended
September 30,
-----------------------------------
%
2004 2003 Inc.(Dec.)
----------- ----------- ----------
GWH Sales
Residential 6,807 6,770 0.5%
General Service 6,937 6,868 1.0%
Industrial - Textile 1,925 1,945 (1.0%)
Industrial - Other 4,861 4,608 5.5%
----------- ----------- ----------
Total Industrial 6,786 6,553 3.6%
Other Energy Sales 67 69 (2.9%)
Regular Resale 438 405 8.1%
----------- ----------- ----------
Total Regular Sales Billed 21,035 20,665 1.8%
Special Sales (A) 908 1,460 (37.8%)
----------- ----------- ----------
Total Electric Sales 21,943 22,125 (0.8%)
Unbilled Revenue (342) (261) (31.0%)
----------- ----------- ----------
Total Duke Power Electric Sales 21,601 21,864 (1.2%)
Nantahala Electric Sales 303 299 1.3%
Total DP Consolidated Electric ----------- ----------- ----------
Sales 21,904 22,163 (1.2%)
=========== =========== ==========
Average Number of Customers
Residential 1,808,955 1,778,236 1.7%
General Service 305,924 299,753 2.1%
Industrial - Textile 846 908 (6.8%)
Industrial - Other 6,670 6,769 (1.5%)
----------- ----------- ----------
Total Industrial 7,516 7,677 (2.1%)
Other Energy Sales 12,424 11,368 9.3%
Regular Resale 15 16 (6.3%)
----------- ----------- ----------
Total Regular Sales 2,134,834 2,097,050 1.8%
Special Sales (A) 37 36 2.8%
----------- ----------- ----------
Total Duke Power Electric Sales 2,134,871 2,097,086 1.8%
Nantahala Electric Sales 67,346 65,978 2.1%
----------- ----------- ----------
Total DP Average Number of
Customers 2,202,217 2,163,064 1.8%
=========== =========== ==========
(A) Excludes sales to Nantahala Power and Light Company
Heating and Cooling Degree Days
Actual
Heating Degree Days 9 18 (50.0%)
Cooling Degree Days 831 819 1.5%
Variance from Normal
Heating Degree Days (59.2%) (19.6%) n/a
Cooling Degree Days (14.1%) (14.2%) n/a
Duke Energy Corporation
Quarterly Highlights
Supplemental Franchised Electric Information
September 30, 2004
Year To Date
September 30,
-----------------------------------
%
2004 2003 Inc.(Dec.)
----------- ----------- ----------
GWH Sales
Residential 19,469 18,320 6.3%
General Service 18,987 18,247 4.1%
Industrial - Textile 5,390 5,801 (7.1%)
Industrial - Other 13,415 12,863 4.3%
----------- ----------- ----------
Total Industrial 18,805 18,664 0.8%
Other Energy Sales 199 202 (1.5%)
Regular Resale 1,132 1,051 7.7%
----------- ----------- ----------
Total Regular Sales Billed 58,592 56,484 3.7%
Special Sales (A) 4,844 6,239 (22.4%)
----------- ----------- ----------
Total Electric Sales 63,436 62,723 1.1%
Unbilled Revenue (398) 10 n/m
----------- ----------- ----------
Total Duke Power Electric Sales 63,038 62,733 0.5%
Nantahala Electric Sales 916 888 3.2%
Total DP Consolidated Electric ----------- ----------- ----------
Sales 63,954 63,621 0.5%
=========== =========== ==========
Average Number of Customers
Residential 1,801,039 1,773,195 1.6%
General Service 304,006 297,814 2.1%
Industrial - Textile 859 917 (6.3%)
Industrial - Other 6,674 6,833 (2.3%)
----------- ----------- ----------
Total Industrial 7,533 7,750 (2.8%)
Other Energy Sales 11,936 11,345 5.2%
Regular Resale 15 16 (6.3%)
----------- ----------- ----------
Total Regular Sales 2,124,529 2,090,120 1.6%
Special Sales (A) 38 38 -
----------- ----------- ----------
Total Duke Power Electric Sales 2,124,567 2,090,158 1.6%
Nantahala Electric Sales 66,814 65,421 2.1%
----------- ----------- ----------
Total DP Average Number of
Customers 2,191,381 2,155,579 1.7%
=========== =========== ==========
(A) Excludes sales to Nantahala Power and Light Company
Heating and Cooling Degree Days
Actual
Heating Degree Days 2,094 2,104 (0.5%)
Cooling Degree Days 1,400 1,134 23.5%
Variance from Normal
Heating Degree Days 9.0% 8.9% n/a
Cooling Degree Days (1.8%) (19.3%) n/a
Special items for the first and second quarters (as summarized in this
earnings release) include:
Pre-Tax 2004 EPS 2003 EPS
($ in Millions) Amount Tax 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) --
TOTAL EPS IMPACT $0.01
EPS, as reported $0.34
EPS, ongoing $0.33
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 interests) (5) 2 --
Interest on related litigation
reserve (12) 4 (0.01)
TOTAL EPS IMPACT $0.04
EPS, as reported $0.46
EPS, ongoing $0.42
First quarter 2003
2003 gain on asset sales 16 (5) -- $0.01
2003 change in accounting
principles (256) 94 -- (0.18)
TOTAL EPS IMPACT ($0.17)
EPS, as reported $0.25
EPS, ongoing $0.42
Second quarter 2003
Gains on asset sales
(net of minority interest) $229 ($83) 0.16
TOTAL EPS IMPACT $0.16
EPS, as reported $0.46
EPS, ongoing $0.30
SOURCE Duke Energy
-0- 11/03/2004
/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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/Web site: http://www.duke-energy.com
http://www.duke-energy.com/investors
http://www.duke-energy.com/investors/publications/gaap /
(DUK)
CO: Duke Energy
ST: North Carolina, Texas
IN: OIL UTI
SU: ERN ERP CCA