News Release
Jan. 21, 1998


CHARLOTTE, N.C. -- Duke Energy Corporation, formed last June by the merger of Duke Power Co. and Houston-based PanEnergy Corp, today reported 1997 earnings of $2.51 per share of common stock, compared to $2.85 per share pro forma results of the two predecessor companies in 1996.

In the fourth quarter, Duke Energy reported common stock results of 41 cents a share on earnings of $145.0 million, compared to a pro forma 51 cents per share on earnings of $181.9 million for the same quarter in 1996.

"The first six months of operations for Duke Energy have been extraordinary," said Richard Priory, chairman and chief executive officer. "After swift approval of the merger, we quickly absorbed the associated costs and got on with creating the go-forward platform for our business. We have streamlined and re-organized; we have created new businesses; we have announced major projects around the world; we have kept our focus on existing customers. We enter 1998 as one strong company with capabilities that far surpass what either company could create alone."

Non-Recurring Items Affect 1997 Earnings

A number of non-recurring charges affected 1997 earnings. A workforce reduction at Duke’s Electric Operations unit lowered earnings by $49.5 million, or about 8 cents per share. Premiums associated with the call and tender of 10 preferred stock issues decreased fourth-quarter earnings by another 8 cents. Merger-related costs throughout the year lowered annual earnings by about 12 cents as compared to 1996. Other one-time costs, including the Year 2000 Project and expenses related to new business start-ups, reduced earnings by an additional 8 cents.

As a result, total earnings for common stock were $901.6 million, versus $1.03 billion in 1996. Overall, the company’s earnings before interest and tax (EBIT) were $2.108 billion in 1997, compared to $2.294 billion in 1996.

"The real story of Duke Energy is in the momentum created in 1997," said Priory. "Our business groups did what they needed to position themselves for the growth we expect."

Business Unit Results

Electric Operations, which serves about 2 million customers in the Carolinas, added a record 60,000 new customers in 1997. That growth, despite milder weather, helped overall electric sales increase. Industrial sales rose 2 percent, reflecting the strong economy of the Carolinas. Commercial and general service sales rose 0.5 percent, while residential sales fell 4.7 percent due to the weather.

EBIT at Electric Operations was $1 .282 billion, compared to $1.419 billion in 1996. In addition to the weather, charges associated with workforce reductions, and increased nuclear outage expenses affected earnings.

EBIT from Natural Gas Transmission rose 5 percent for the year --- from $595.5 million to $624.4 million in 1997. EBIT for the Northeast Pipelines was up $21.1 million due to market-expansion projects and expense control. EBIT for the Midwest Pipelines increased $7.8 million, primarily resulting from favorable resolution of certain regulatory matters in 1997 in excess of those in 1996.

Energy Services, made up of Duke’s unregulated energy businesses, saw strong growth on several fronts.

Duke Engineering & Services, Inc., the corporation’s engineering, technical and professional services company, has grown to nearly 3,000 employees worldwide since its inception a decade ago. Energy Services has organized a Global Asset Development division, which includes a new business unit specializing in industrial asset development — such as customer-owned cogeneration sites. Another new business unit, DukeSolutions, was created in 1997 along with a Corporate Accounts sales and marketing unit — both providing a broad range of energy-related services to customers.

The Energy Services businesses made a number of major announcements in 1997— most notable was being the successful bidder for three California power plants being sold by San Francisco-based PG&E Corp. Also, Duke Energy Trading and Marketing LLC (DETM) signed a three-year contract with Providence (R.I.) Gas Co. to administer the company’s full gas requirements at a fixed price.

The combination of new business start-up costs and loss of earnings due to discontinued operations accounted for a slight decrease in Energy Services EBIT — $224.1 million in 1997, versus $229.5 in 1996.

In Duke’s Diversified Operations, Crescent Resources, Inc., the corporation’s real estate arm, posted improved results with an EBIT of $97.6 million, an increase of $9.9 million — due mainly to a major land sale in the third quarter.

Drivers In The Fourth Quarter

Among the items that lowered fourth-quarter earnings: the previously mentioned premiums associated with the call and tender of preferred stock; increase in nuclear expenses; and lower natural gas liquids prices, along with higher natural gas costs — which caused decreased earnings for Field Services operations. Altogether, these items reduced earnings for the quarter by 16 cents.

Poised For The Future

Priory said he believes Duke Energy can continue the momentum it has created in its first six months.

"We have announced energy project investments in excess of a billion dollars since June 20," he said. "We have gotten out of the gate fast, and have invested in businesses, projects and people who will fuel our future growth. That kind of action is critical in the rapidly evolving energy industry. The results from these investments will begin flowing in 1998."

Duke Energy Corporation (NYSE:DUK) is a global energy company with more than $20 billion in assets. Duke Energy companies provide electric service to approximately 2 million customers; operate pipelines that deliver 12 percent of the natural gas consumed in the United States; and are leading marketers of electricity, natural gas and natural gas liquids. Globally the companies develop, own and operate energy facilities and provide engineering, management, operating and environmental services. Contact Duke Energy on the World Wide Web at

Contact: Randy Wheeless
Phone: 704 382-8379
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