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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM 11-K
------------------
ANNUAL REPORT
Pursuant to Section 15(d) of the Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1998
Commission File Number 1-4928
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EMPLOYEES' SAVINGS PLAN OF
PANENERGY CORP
AND PARTICIPATING AFFILIATES
(Full title of the plan)
---------
DUKE ENERGY CORP.
(Name of issuer of the securities held pursuant to the plan)
5400 WESTHEIMER COURT
P.O. BOX 1642
HOUSTON, TEXAS 77251-1642
(Address, including zip code, of principal executive office)
(713) 627-5400
(Telephone number, including area code)
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EMPLOYEES' SAVINGS PLAN OF
PANENERGY CORP
AND PARTICIPATING AFFILIATES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
-----------
FINANCIAL STATEMENTS
Page
Independent Auditors' Report............................................................ 3
Statement of Net Assets Available for Benefits
(with Fund Information), December 31, 1998......................................... 4
Statement of Net Assets Available for Benefits
(with Fund Information), December 31, 1997......................................... 5
Statement of Changes in Net Assets Available for Benefits
(with Fund Information), year Ended December 31, 1998.............................. 6
Statement of Changes in Net Assets Available for Benefits
(with Fund Information), Year Ended December 31, 1997.............................. 7
Notes to Financial Statements........................................................... 8
-------------
SCHEDULES
Schedule IV - Item 27d - Schedule of Reportable Transactions,
Year Ended December 31, 1998....................................................... S-1
ALL OTHER SCHEDULES ARE OMITTED BECAUSE THEY ARE NOT APPLICABLE OR NOT REQUIRED.
2
INDEPENDENT AUDITORS' REPORT
The Administrative Committee
Employees' Savings Plan
of PanEnergy Corp
and Participating Affiliates:
We have audited the accompanying statements of net assets available for
benefits of the Employees' Savings Plan of PanEnergy Corp and Participating
Affiliates (the Plan) as of December 31, 1998 and 1997, and the related
statements of changes in net assets available for benefits for the years then
ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the net assets available for benefits of the Plan as
of December 31, 1998 and 1997, and the changes in net assets available for
benefits for the years then ended in conformity with generally accepted
accounting principles.
As discussed in Note 1, effective December 31, 1998 the assets and
liabilities of the Plan were transferred to, and assumed by, the Duke Energy
Corp. Retirement Savings Plan.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules as listed in
the accompanying index are presented for the purpose of additional analysis and
are not a required part of the basic financial statements but are supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The Fund Information in the statements of net assets available for
benefits of the Plan as of December 31, 1998 and 1997, and the Fund Information
in the related statements of changes in net assets available for benefits for
the years then ended is presented for the purposes of additional analysis rather
than to present the net assets available for benefits of each fund and changes
in net assets available for benefits of each fund. The supplemental schedules
and Fund Information have been subjected to the auditing procedures applied in
the audits of the basic financial statements and, in our opinion, are fairly
stated in all material respects in relation to the basic financial statements
taken as a whole.
Houston, Texas
May 28, 1999
3
EMPLOYEES' SAVINGS PLAN OF PANENERGY CORP
AND PARTICIPATING AFFILIATES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
DECEMBER 31, 1998
DUKE ENERGY MONEY
CORP EQUITY BOND MARKET
MILLIONS STOCK FUND FUND FUND FUND
- -------- ---------- ---- ---- ----
Investments:
Common stock of Duke Energy Corp. $ - $ - $ - $ -
Money market funds .............. - - - -
Other common stocks ............. - - - -
U.S. government & agencies ...... - - - -
Loans to participants ........... - - - -
--------- --------- --------- --------
Total investments .......... - - - -
--------- --------- --------- --------
Receivables:
Contributions:
Employers .................. - - - -
Employees .................. - - - -
Accrued interest ................ - - - -
Dividends ....................... - - - -
Other ........................... - - - -
--------- --------- --------- --------
Total receivables .......... - - - -
--------- --------- --------- --------
Payables:
Other Payables .................. - - - -
--------- --------- --------- --------
Net Assets Available for Benefits ... $ $ - $ - $ -
========= ========= ========= ========
SMALL TO
MID. CAP. LARGE CAP. INT'L LOAN TOTAL
MILLIONS EQUITY INDEX EQUITY INDEX EQUITY INDEX FUND PLAN
- -------- ------------ ------------ ------------ ---- ----
Investments:
Common stock of Duke Energy Corp. $ - $ - $ - $ - $ -
Money market funds .............. - - - - -
Other common stocks ............. - - - - -
U.S. government & agencies ...... - - - - -
Loans to participants ........... - - - - -
-------- --------- --------- -------- -------
Total investments .......... - - - - -
-------- --------- --------- -------- -------
Receivables:
Contributions:
Employers .................. - - - - -
Employees .................. - - - - -
Accrued interest ................ - - - - -
Dividends ....................... - - - - -
Other ........................... - - - - -
-------- --------- --------- -------- -------
Total receivables .......... - - - - -
-------- --------- --------- -------- -------
Payables:
Other Payables .................. - - - - -
-------- --------- --------- -------- -------
Net Assets Available for Benefits ... $ - $ - $ - $ - $ -
======== ========= ========= ======== =======
4
EMPLOYEES' SAVINGS PLAN OF PANENERGY CORP
AND PARTICIPATING AFFILIATES
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
DECEMBER 31, 1997
DUKE ENERGY MONEY
CORP EQUITY BOND MARKET
MILLIONS STOCK FUND FUND FUND FUND
- -------- ----------- ---- ---- ----
Investments:
Common stock of Duke Energy Corp
(cost $212.7 million)......... $ 472.5 $ - $ - $ -
Money market funds
(cost $62.7 million).......... 2.7 2.1 - 57.9
Common stock of Anadarko
Petroleum Corporation
(cost $0.0 million)........... - - - -
Other common stocks
(cost $73.2 million).......... - 96.0 - -
U.S. government & agencies.........
(cost $11.9 million).......... - - 13.0 -
Loans to participants
(cost $18.5 million).......... - - - -
---------- ---------- --------- ---------
Total investments............. 475.2 98.1 13.0 57.9
-------- -------- -------- --------
Receivables:
Contributions:
Employers..................... 0.4 - - -
Employees..................... 0.3 0.2 - -
Accrued interest................... - - - 0.3
Dividends.......................... - 0.2 - -
Other.............................. 0.2 0.1 - -
-------- -------- --------- --------
Total receivables............. 0.9 0.5 - 0.3
-------- -------- --------- --------
Payables:
Other Payables..................... - (0.1) - -
---------- ------------------- --------
Net Assets Available for Benefits...... $ 476.1 $ 98.5 $ 13.0 $ 58.2
======= ======= ====== ======
SMALL TO
MID. CAP. LARGE CAP. INT'L LOAN TOTAL
MILLIONS EQUITY INDEX EQUITY INDEX EQUITY INDEX FUND PLAN
- -------- ------------ ------------ ------------ ---- ----
Investments:
Common stock of Duke Energy Corp
(cost $212.7 million)......... $ - $ - $ - $ - $ 472.5
Money market funds
(cost $62.7 million).......... - - - - 62.7
Common stock of Anadarko
Petroleum Corporation
(cost $0.0 million)........... - - - - -
Other common stocks
(cost $73.2 million).......... 9.3 4.9 2.1 - 112.3
U.S. government & agencies.........
(cost $11.9 million).......... - - - - 13.0
Loans to participants
(cost $18.5 million).......... - - - 18.5 18.5
-------- ------- ------- ------ --------
Total investments............. 9.3 4.9 2.1 18.5 679.0
-------- ------ ------ ------ -------
Receivables:
Contributions:
Employers..................... - - - - 0.4
Employees..................... - - - - 0.5
Accrued interest................... - - - - 0.3
Dividends.......................... 0.5 - - - 0.7
Other.............................. - - - - 0.3
-------- -------- -------- -------- --------
Total receivables............. 0.5 - - - 2.2
------- -------- -------- -------- --------
Payables:
Other Payables..................... (0.5) - - - (0.6)
--------- ------- -------- -------- ---------
Net Assets Available for Benefits...... $ 9.3 $ 4.9 $ 2.1 $ 18.5 $ 680.6
====== ======= ======= ====== =======
5
EMPLOYEES' SAVINGS PLAN OF PANENERGY CORP
AND PARTICIPATING AFFILIATES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
YEAR ENDED DECEMBER 31, 1998
DUKE ENERGY MONEY SMALL TO
CORP EQUITY BOND MARKET MID. CAP.
MILLIONS STOCK FUND FUND FUND FUND EQUITY INDEX
- -------- ---------- ---- ---- ---- ------------
Receipts:
Investment income
Interest income.................. $ 0.1 $ 0.1 $ - $ 2.9 $ -
Dividend income.................. 18.9 2.1 - - 0.2
Net realized gain (loss) (Note 5) 10.8 13.0 1.2 - 0.8
-------- -------- ------ ------- -------
Total investment income....... 29.8 15.2 1.2 2.9 1.0
-------- -------- -------- --------- --------
Net unrealized appreciation
of investments (Note 4).......... 45.5 - - - -
------- -------- -------- -------- ---------
Contributions (Note 3)
Employees......................... 8.4 4.3 0.7 1.2 0.4
Employers......................... 11.6 - - - -
-------- ------- ------- ------- --------
Total contributions........... 20.0 4.3 0.7 1.2 0.4
-------- ------ ------ ------ --------
Interfund Transfers.................. (4.8) (8.7) 2.1 6.3 0.6
--------- -------- ------ ----- --------
Total Receipts................ 90.5 10.8 4.0 10.4 2.0
-------- ------ ------ ------ -------
Disbursements:
Transfer to Duke Energy Corporation RSP 536.7 100.5 15.8 48.1 9.5
Withdrawals......................... 29.5 8.4 1.2 20.5 1.3
Other............................... 0.4 0.4 - - 0.5
--------- -------- ------ ------- ----------
Total Disbursements................. 566.6 109.3 17.0 68.6 11.3
--------- -------- ------- ----- --------
Decrease in Net Assets
Available for Benefits.............. (476.1) (98.5) (13.0) (58.2) (9.3)
Net Assets Available for Benefits,
beginning of year................... 476.1 98.5 13.0 58.2 9.3
-------- ------- ------- ------- ---------
Net Assets Available for Benefits,
end of year........................ $ - - - - -
========= ======== ======== ======= =========
LARGE CAP. INT'L ANADARKO LOAN TOTAL
MILLIONS EQUITY INDEX EQUITY INDEX STOCK FUND FUND PLAN
- -------- ------------ ------------ ----- ---- ---- ----
Receipts:
Investment income
Interest income.................. $ - $ - $ - $ 1.1 $ 4.2
Dividend income.................. - - - - 21.2
Net realized gain (loss) (Note 5) 2.1 0.5 - - 28.4
------- ---------- -------- --------- ---------
Total investment income....... 2.1 0.5 - 1.1 53.8
--------- --------- -------- --------- --------
Net unrealized appreciation
of investments (Note 4).......... - - - - 45.5
--------- --------- -------- --------- --------
Contributions (Note 3)
Employees......................... 0.4 0.1 - - 15.5
Employers......................... - - - - 11.6
-------- --------- -------- ------- --------
Total contributions........... 0.4 0.1 - - 27.1
------- -------- -------- ------- --------
Interfund Transfers.................. 4.6 0.8 - (0.9) -
------- -------- -------- ------- --------
Total Receipts................ 7.1 1.4 - 0.2 126.4
------- -------- -------- -------- -------
Disbursements:
Transfer to Duke Energy Corporation RSP 11.3 3.3 - 18.2 743.4
Withdrawals......................... 0.7 0.2 - 0.5 62.3
Other............................... - - - - 1.3
-------- -------- -------- ------- ---------
Total Disbursements................. 12.0 3.5 - 18.7 807.0
------- ------- -------- -------- --------
Decrease in Net Assets
Available for Benefits.............. (4.9) (2.1) - (18.5) (680.6)
Net Assets Available for Benefits,
beginning of year................... 4.9 2.1 - 18.5 680.6
-------- -------- ------- ------- --------
Net Assets Available for Benefits,
end of year........................ - - - - -
========= ========= ======== ======= ========
6
EMPLOYEES' SAVINGS PLAN OF PANENERGY CORP
AND PARTICIPATING AFFILIATES
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(WITH FUND INFORMATION)
YEAR ENDED DECEMBER 31, 1997
DUKE ENERGY MONEY SMALL TO
CORP EQUITY BOND MARKET MID. CAP.
MILLIONS STOCK FUND FUND FUND FUND EQUITY INDEX
- -------- ---------- ---- ---- ---- ------------
Receipts:
Investment income
Interest income.................. $ 0.1 $ 0.2 $ - $ 2.5 $ -
Dividend income.................. 14.5 2.1 - - 0.5
Net realized gain (loss) (Note 5) 8.4 2.1 0.2 - 0.2
------- ------- ------ ------- -------
Total investment income....... 23.0 4.4 0.2 2.5 0.7
-------- ------- ------- ------- --------
Net unrealized appreciation
of investments (Note 4).......... 85.1 16.7 1.0 - 0.2
------- ------ ------- -------- --------
Contributions (Note 3)
Employees......................... 8.4 4.5 0.9 1.3 0.3
Employers......................... 12.1 - - - -
-------- ------- ------- ------- --------
Total contributions........... 20.5 4.5 0.9 1.3 0.3
-------- ------ ------ ------ --------
Interfund Transfers.................. (46.1) 6.1 (0.2) 31.7 8.5
--------- ------ ------- ----- --------
Total Receipts................ 82.5 31.7 1.9 35.5 9.7
-------- ------ ------ ------ --------
Disbursements:
Withdrawals......................... 33.5 9.1 1.1 17.5 0.4
Other............................... - 0.3 - 0.1 -
-------- ------ ------ ----- --------
Total Disbursements................. 33.5 9.4 1.1 17.6 0.4
-------- ------ ------ ----- --------
Increase (Decrease) in Net Assets
Available for Benefits.............. 49.0 22.3 0.8 17.9 9.3
Net Assets Available for Benefits,
beginning of year................... 427.1 76.2 12.2 40.3 -
-------- ------- ------- ------- --------
Net Assets Available for Benefits,
end of year........................ $ 476.1 98.5 13.0 58.2 9.3
======== ======= ======= ======= ========
LARGE CAP. INT'L ANADARKO LOAN TOTAL
MILLIONS EQUITY INDEX EQUITY INDEX STOCK FUND FUND PLAN
- -------- ------------ ------------ ----------- ---- ----
Receipts:
Investment income
Interest income.................. $ - $ - $ - $ 1.1 $ 3.9
Dividend income.................. - - - - 17.1
Net realized gain (loss) (Note 5) 0.2 - (0.4) - 10.7
------- -------- -------- ------- --------
Total investment income....... 0.2 - (0.4) 1.1 31.7
------- -------- -------- ------- --------
Net unrealized appreciation
of investments (Note 4).......... 0.4 (0.1) (1.6) - 101.7
------- -------- -------- ------- --------
Contributions (Note 3)
Employees......................... 0.1 0.1 - - 15.6
Employers......................... - - - - 12.1
-------- --------- -------- ------- --------
Total contributions........... 0.1 0.1 - - 27.7
-------- --------- -------- ------- --------
Interfund Transfers.................. 4.6 2.2 (5.9) (0.9) -
-------- --------- ------- ------- --------
Total Receipts................ 5.3 2.2 (7.9) 0.2 161.1
------- -------- ------- -------- --------
Disbursements:
Withdrawals......................... 0.4 0.1 1.2 0.8 64.1
Other............................... - - - - 0.4
-------- -------- ------- -------- --------
Total Disbursements................. 0.4 0.1 1.2 0.8 64.5
-------- -------- ------- ------- --------
Increase (Decrease) in Net Assets
Available for Benefits.............. 4.9 2.1 (9.1) (0.6) 96.6
Net Assets Available for Benefits,
beginning of year................... - - 9.1 19.1 584.0
-------- -------- ------- ------- --------
Net Assets Available for Benefits,
end of year........................ 4.9 2.1 - 18.5 680.6
======== ======== ======== ======== ========
7
EMPLOYEES' SAVINGS PLAN
OF
PANENERGY CORP
AND PARTICIPATING AFFILIATES
NOTES TO FINANCIAL STATEMENTS
1. DESCRIPTION OF THE PLAN
ORGANIZATION
The Employees' Savings Plan of PanEnergy Corp and Participating Affiliates
(the Plan), formerly the Employees' Savings Plan of Panhandle Eastern
Corporation and Participating Affiliates, was adopted by the Board of Directors
of PanEnergy Corp (PanEnergy), formerly Panhandle Eastern Corporation, effective
January 1, 1991, at which time the assets and obligations of the predecessor
plan and certain other related plans were transferred to the Plan. The Plan,
administered by an Administrative Committee (the Committee) which is appointed
by the Board of Directors of PanEnergy, is subject to the provisions of the
Employee Retirement Income Act of 1974, as amended (ERISA).
On December 31, 1998 there were 3,199 active employees participating in the
Plan. The companies participating in the Plan included PanEnergy Corp
(PanEnergy) and certain of its affiliated companies (the Company). Although the
Company includes PanEnergy, PanEnergy does not have employees at this time.
Therefore, no contributions are made directly by PanEnergy, but rather by
affiliated companies who participate in the Plan.
See Note 3.
On December 31, 1998, the Plan was merged into, and it's liabilities assumed
by and it's assets transferred to, the Duke Energy Corporation Retirement
Savings Plan (now the Duke Energy Retirement Savings Plan).
PLAN COMPOSITION
During the year ended December 31, 1998, the Plan was comprised of the
following investment programs (funds): the Duke Energy Stock Fund, the Equity
Fund, the Bond Fund, the Money Market Fund, Large Cap. Equity Index,
Small-to-Mid Cap. Equity Index, , International Equity Index. A separate fund ,
the Loan Fund, is used to segregate members' loans from other funds. See
discussion below regarding loans.
EXPENSES
All costs and expenses for administering the Plan, if not paid by the
Company, were paid by the trustee from Plan assets. Investment management fees
for the various funds, totaled $0.4 million in both 1998 and 1997, and were paid
by the trustee from Plan assets. All other costs and expenses in 1998 and 1997
were paid by the Company.
MANAGEMENT OF TRUST FUND
During 1998 and 1997, the Northern Trust Company was trustee of the Plan
(the Trustee). The Trustee is responsible for receiving contributions,
collecting dividends, investing cash contributions and dividends, making benefit
payments as authorized by the plan administrator and investing Plan assets in
accordance with investment manager instructions. The Trustee has Bankers Blanket
Bonds in amounts and forms which cover acting in such a capacity. The Trustee
received $0.1 million in both 1998 and 1997 from the Company for services
provided as trustee of the Plan. Effective December 31, 1998, the assets of the
trust were transferred to Wachovia Bank, the trustee for the Duke Energy
Retirement Savings Plan.
8
PROVISIONS OF THE PLAN
The Plan is a defined contribution, profit-sharing plan sponsored by
PanEnergy. The following information describes significant provisions of the
Plan as they existed during the year ended December 31, 1998. Provisions of the
Plan are further explained in the Plan documents, which may be obtained from the
Committee.
Membership in the Plan is voluntary. Under the terms of the Plan, any
eligible employee may become a member of the Plan upon the first day of the
first month coincident with or immediately following the date on which such
employee has first completed a year of vesting service, as defined. An eligible
employee is any employee of the Company other than (1) an employee whose
employment is governed by a collective bargaining agreement unless such
agreement provides for the employee's participation in the Plan, (2) an employee
who is a non-resident alien with no United States source income or who is on a
"Non-U.S. Payroll", (3) an employee employed pursuant to a written employment
contract that provides that the employee shall not participate in the Plan, or
(4) a leased employee. A leased employee is someone who is not an employee of
the Company but who provides services to the Company through a leasing
organization.
Each member may make after-tax contributions through authorized payroll
deductions. A Compensation Reduction Option under Section 401(k) of the Internal
Revenue Code (the Code) is also available under the Plan which allows employees
to defer up to 15% of Plan compensation, not to exceed $10,000 in 1998, with
such amount adjusted automatically to reflect any cost-of-living adjustments
authorized by the Code. Plan compensation is defined by the Plan and is limited
to an annual maximum imposed by the Code. Any "excess deferrals," as defined by
the Code, are distributed during the following year pursuant to provisions of
the Code. The allowed amount of a member's combined contribution ranges from 1%
to 15% of Plan compensation for each pay period. Members' contributions are
remitted semi-monthly to the Trustee.
Also on a semi-monthly basis, the Company contributed on behalf of each
member, as Company matching contributions, 100% of the member's after-tax
contributions and 110% of tax-deferred contributions, up to an aggregate maximum
of 6% of the member's Plan compensation, depending upon length of vesting
service, in accordance with the following table. Generally, Company matching
contributions are invested in the Duke Energy Stock Fund only.
CREDITED VESTING SERVICE COMPANY MATCHING CONTRIBUTIONS
------------------------ ------------------------------
Less Than Five Years 4% of a member's Plan compensation
Less Than Nine Years 5% of a member's Plan compensation
Ten Years Or More 6% of a member's Plan compensation
At the discretion of the Chief Executive Officer of PanEnergy, for each
month, the Company may contribute for members who have completed 20 or more
years of vesting service, an amount that equals 100% of the member's after-tax
contributions plus 110% of the tax-deferred contributions which, in the
aggregate, were more than 6% but not in excess of 8% of Plan compensation. Also
at the discretion of the Chief Executive Officer of PanEnergy, for each month,
the Company may contribute as supplemental matching contributions on behalf of
each member a specified dollar amount, a specified percentage of Plan
compensation or a specified percentage of members' after-tax contributions
and/or tax-deferred contributions; all of which shall be uniform for all
members. No such contributions were made during 1998 and 1997.
9
The plan was amended to prohibit any contributions made to the Plan on and
after January 1, 1995 as a result of investment tax credits claimed by PanEnergy
on its federal income tax return. Any such contributions would be made to the
Tax Credit Employee Ownership Plan of PanEnergy Corp and Participating
Affiliates, which was established effective January 1, 1995.
WITHDRAWALS/DISTRIBUTIONS
A member may withdraw all rollover contributions, as defined by the Plan,
and any after-tax contributions (and related earnings) that have been in the
Plan for 24 months or more. A member who has participated in the Plan (or a
prior plan) for five or more years may also withdraw all Company matching
contributions (and related earnings) in their account. Any member who has
participated in the Plan for less than five years may only withdraw Company
matching contributions (and related earnings) that have been in their accounts
for 24 months or more. A member's account balances may be distributed following
termination of employment with PanEnergy and all of its affiliated companies.
Any member who has a financial hardship, as determined by the Committee, may
withdraw from the member's accounts an amount not to exceed the value of such
accounts (excluding earnings on the deferred account) and not to exceed the
amount determined by the Committee as being available for withdrawal. The
decision of the Committee shall be final and binding, provided that all members
similarly situated shall be treated in a uniform and nondiscriminatory manner.
LOANS
Upon application by any member and subject to such uniform and
nondiscriminatory rules and regulations as the Committee may establish, the
Committee may, at its discretion, direct the Trustee to make a loan to such
member from the member's accounts, in an amount not to exceed a percentage of
the combined value in all the member's accounts, as defined, as follows:
COMBINED VALUE OF ALL ACCOUNTS AMOUNTS AVAILABLE FOR LOAN
------------------------------ --------------------------
Less Than $2,000 None
$2,000 Or More 50%, up to a maximum of $50,000 less the highest
outstanding loan balance in the previous 12 months
The interest rate for a regular loan is the current three-year Treasury bill
rate and for home loans is the current 10-year Treasury bill rate plus two
percentage points.
OBLIGATION FOR BENEFITS
Effective December 31, 1998 the Plan's assets and liabilities were assumed
by the Duke Energy Retirement Savings Plan. Duke Energy reserves the right to
amend or terminate the Plan, in whole or in part, at any time. Such action would
not affect any vested benefits of members (unless required in order to comply
with qualification requirements by the Code and ERISA) and no such action would
cause any part of the assets held in trust to be used for purposes other than
the exclusive benefit of the members or their beneficiaries.
2. BASIS OF PRESENTATION
The accompanying financial statements have been prepared on the accrual
basis in conformity with generally accepted accounting principles and present
the Plan's net assets available for benefits, at fair value, and changes in net
assets available for benefits.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts of assets and liabilities,
benefit
10
obligations and changes therein at the date of the financial statements. Actual
results could differ from those estimates.
INVESTMENT VALUATION
The investments in Duke Energy Corp. common stock and other equity
securities are stated at fair values based upon quotations obtained from
national security exchanges at the balance sheet date. Money market funds and
loans to participants are recorded at cost, which approximate fair values.
Purchases and sales of securities are recorded on a trade-date basis. Net
realized gains and losses on disposition of investments are reported on the
revalued cost method, which is the fair value of the investment at the beginning
of the Plan year or historical cost if the investment was acquired since the
beginning of the Plan year.
3. INVESTMENT PROGRAMS
Each member designates the manner in which the member's contributions
allocated to the after-tax or deferred account will be invested, in whole
percentage increments, from among the following options:
FUND DESCRIPTION
---- -----------
Duke Energy Shares of Duke Energy Corp. common stock.
Equity General diversified equity investments (including common investment
funds which may hold securities issued by Duke Energy), managed by Smith Barney
Capital Management. Amounts invested under this option are invested as one fund.
Bond General diversified fixed income investments (including common investment
funds which may hold debentures or other debt securities issued by Duke Energy),
managed by BZW Barclays Global Investors (BGI).
Money Market General money market investments. Amounts invested under this option are
invested as one fund.
Large Cap Equity Index Wholly invested in the BGI Daily Equity Index Fund which is held and managed
by BGI.
Small-to-Mid Cap
Equity Index Wholly invested in shares of the Extended Market Portfolio of the Vanguard Index
Trust (Vanguard Mutual Fund). The Vanguard Mutual Fund is managed by
the Core Management Group of the Vanguard Group, Inc.
International
Equity Index Wholly invested in the BGI Daily EAFE Equity Index Fund, which is held and
managed by BGI.
A separate stock fund, The Anadarko Stock Fund, was established to maintain
the common stock of Anadarko Petroleum Corporation (Anadarko) received by the
predecessor plan pursuant to the PanEnergy spin-off of Anadarko. Beginning July
1, 1997, the Anadarko Stock Fund was terminated and all investments in the fund
liquidated by the Trustee and the proceeds transferred to the Money Market Fund.
The Money Market Fund, as well as any cash held in any of the other
funds, is currently invested in the Northern Trust Company Collective Short Term
Investment Fund during 1998 and 1997.
11
A summary of contributions made to the Plan by participating employees
and their employers follows:
MILLIONS EMPLOYEES EMPLOYERS
-------- --------- ---------
1998 1997 1998 1997
---- ---- ---- ----
Texas Eastern Transmission Corporation....... $ 4.7 $ 4.7 $ 3.6 $ 3.8
Panhandle Eastern Pipe Line Company.......... 2.9 2.9 2.2 2.4
Pan Service Company.......................... 0.8 1.1 0.5 0.7
Texas Eastern Products Pipeline Company...... 1.9 1.8 1.4 1.4
Trunkline Gas Company........................ 1.0 1.0 0.9 0.9
Algonquin Gas Transmission Company........... 1.1 1.2 0.8 0.8
PanEnergy Services LP........................ 2.9 2.7 2.0 1.9
Trunkline LNG Company........................ 0.2 0.2 0.2 0.2
--------- --------- --------- ---------
Total................................. $ 15.5 $ 15.6 $ 11.6 $ 12.1
======= ======= ======= =======
At December 31, 1998, a total of 4,230 participants had investments in the
Duke Energy Stock Fund, 2,218 participants had investments in the Equity Fund,
896 participants had investments in the Bond Fund, 1,474 participants had
investments in the Money Market Fund, 406 participants had investments in the
Large-Cap Equity Fund, 417 participants had investments in the Small-to-Mid Cap
Equity Fund, and 192 participants had investments in the International Equity
Fund. In addition, 1,679 participants had loans outstanding in the Loan Fund.
4. NET UNREALIZED APPRECIATION (DEPRECIATION) OF INVESTMENTS
A summary of transactions, by fund, affecting net unrealized appreciation
(depreciation) of investments follows:
MILLIONS January 1, December 31, Transfer/ December 31,
Fund 1997 Increase Distributions 1997 Increase Distributions 1998
- -------------- ---------- -------- ------------- ------------- -------- ------------- ------------
Duke Energy Stock $ 204.4 $ 85.1 $ (29.7) $ 259.8 $ 45.5 $ (305.3) $ -
Equity 27.4 16.7 (5.5) 38.6 - (38.6) -
Bond - 1.0 0.1 1.1 - (1.1) -
Large cap - 0.4 - 0.4 - (0.4) -
Sm.-to-Mid Cap - 0.2 - 0.2 - (0.2) -
Int'l Equity - (0.1) - (0.1) - 0.1 -
Anadarko Stock 8.0 (1.6) (6.4) - - - -
-------- ---------- --------- ---------- --------- --------- ---------
Total $ 239.8 $ 101.7 $ (41.5) $ 300.0 $ 45.5 $ (345.5) $ -
======== ========== ========== ========== ========= ========== =========
12
5. NET REALIZED GAINS
A Summary of realized gains on sales/distributions of investments follows:
MILLIONS PROCEEDS/ REVALUED NET REALIZED
--------- DISTRIBUTIONS COST GAINS
------------- ----------- ------------
1998
- ----
Duke Energy Stock $ 110.9 $ 100.1 $ 10.8
Other Investments 191.4 173.8 17.6
--------- ----------- ---------
Total $ 302.3 $ 273.9 $ 28.4
======= ======= =======
1997
- ----
Duke Energy Stock $ 111.0 $ 102.6 $ 8.4
Other Investments 35.1 32.8 2.3
-------- ---------- --------
Total $ 146.1 $ 135.4 $ 10.7
======= ======= =======
6. PURCHASES OF DUKE ENERGY COMMON STOCK
On November 25, 1996, PanEnergy and Duke Power Company (Duke) announced a
merger agreement and on June 18, 1997 Duke changed its name to Duke Energy
Corporation (Duke Energy) and PanEnergy became a wholly-owned subsidiary of a
wholly-owned subsidiary of Duke Energy.
Purchases of Duke Energy common stock by the Plan may be made either in the
open market or by purchasing directly from Duke Energy any authorized but
previously unissued shares or shares previously issued and reacquired by Duke
Energy. No commission shall be charged with respect to direct purchases from
Duke Energy.
Shares purchased directly from Duke Energy shall be purchased at the lower
of (a) the unweighted average of the reported daily high and low sale prices of
a share of Duke Energy common stock as quoted on The New York Stock Exchange,
Inc. (NYSE) for the five consecutive trading days up to and including the date
on which the Trustee and Duke Energy agree to the sale or (b) the unweighted
average of the daily reported high and low sale prices for Duke Energy common
stock on the NYSE for the day on which the Trustee and Duke Energy agree to the
sale.
7. FEDERAL INCOME TAX
In a determination letter dated November 14, 1996, the Internal Revenue
Service held that the Plan met the requirements of Section 401(a) of the Code,
and that the trust established thereunder was entitled to exemption from federal
income tax under the provisions of Section 501(a) of the Code. The Plan has been
amended since receiving this determination letter. However, the Committee and
its legal counsel believe the Plan is currently designed and operated in
compliance with the applicable requirements of the Code. Therefore, they believe
the Plan was qualified and the related trust was tax-exempt as of December 31,
1998. Duke Energy intends that the Plan and its related trust, continue to so
qualify.
Contributions made by the Company for the benefit of a member will not be
required to be included in the member's taxable income until the year or years
in which such contributions are distributed to the member.
13
8. RECONCILIATION TO IRS FORM 5500
The Plan's audited financial statements are materially consistent with the
amounts reported on the IRS Form 5500.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Administrative Committee has duly caused this annual report to be
signed on its behalf by the undersigned thereunto duly authorized.
EMPLOYEES' SAVINGS PLAN OF
PANENERGY CORP
AND PARTICIPATING AFFILIATES
By
-------------------------
S.P. Meyer
Administrative Committee
May 28, 1999
15
SCHEDULE IV
EMPLOYEES' SAVINGS PLAN OF
PANENERGY CORP
AND PARTICIPATING AFFILIATES
ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS
DECEMBER 31, 1998
($ Millions)
NUMBER OF HISTORICAL REVALUED REALIZED
INVESTMENT TRANSACTIONS PRICE/PROCEEDS COST COST GAIN
- --------------------------------------------- ------------ -------------- ---------- -------- --------
PURCHASES:
Northern Trust Company Collective
Short Term Investment Fund 468 $ 448.0 $ - $ - $ -
Common Stock of Duke Energy Corp* 38 92.7 - - -
Barclay's Large Cap. Equity 137 14.9 - - -
SALES:
Northern Trust Company Collective
Short Term Investment Fund 518 $ 314.5 $ 314.5 $ - $ -
Common Stock of DukeEnergy Corp* 52 75.6 33.6 67.5 8.1
Barclay's Large Cap. Equity 96 21.9 19.5 19.8 2.1
"REPORTABLE TRANSACTIONS" REPRESENT A SINGLE OR SERIES OF RELATED TRANSACTIONS
THAT EXCEEDED 5% OF THE FAIR MARKET VALUE OF PLAN ASSETS AT THE BEGINNING OF THE
YEAR.
- --------------
* Party-in-interest
SEE ACCOMPANYING INDEPENDENT AUDITORS' REPORT.
S-1