News Release
Jan. 20, 1999


CHARLOTTE, N.C. – Spurred by growth in electric sales, pipeline operations, energy services and diversified businesses, Duke Energy posted 1998 basic earnings of $3.41 per share of common stock – up 36 percent from 1997’s earnings of $2.51 per share. For the fourth quarter of 1998, Duke Energy reported earnings of 60 cents per share – up 46 percent from the 41 cents reported in last year’s quarter.

For 1998, Duke Energy posted revenues of $17.6 billion versus $16.3 billion in 1997. Duke Energy recorded net income of $1.25 billion for 1998 versus $974 million for 1997. Earnings before interest and taxes (EBIT) for 1998 were $2.65 billion versus $2.11 billion in 1997.

"Duke Energy’s results speak volumes about the progress we’ve made in building strong, integrated-energy businesses in the United States and around the world," said Richard B. Priory, chairman, president and chief executive officer of Duke Energy. "We experienced growth in all of our key areas in 1998 and have positioned ourselves to build on those results in the future."

During 1998, Duke Energy was recognized at various times as the premier energy company in the world. The company was named the "World’s Most Respected Utility" in a survey done for England’s Financial Times newspaper. Duke Energy was named "Utility of the Year" by Electric Light & Power magazine – the only company to ever win the award twice. Duke Energy’s electric operations unit, Duke Power, was cited for best overall customer satisfaction in the industry in a survey done for Fortune magazine.

Business Groups Deliver Solid Results In 1998

During 1998, all areas of Duke Energy businesses showed better results than in 1997.

In electric operations through the Duke Power business unit, total EBIT for 1998 was $1.51 billion – up 18 percent from the $1.28 billion in 1997. Overall electric sales grew 5.3 percent for the year. Residential sales posted a 7.5 percent gain for the year while commercial and general service sales rose 7.1 percent. Overall industrial sales rose 1 percent.

"We continue to see healthy growth at Duke Power," said Priory. "We added almost 50,000 new customers in 1998. We served our customers reliably despite some wild swings in weather that challenged many utilities around the country. I’m particularly proud of how our team managed to keep power flowing this summer when power shortages affected many areas of the country."

In natural gas transmission, EBIT was $702 million – up 13 percent from last year’s $624 million. Although revenues dipped slightly for the year, that dip was more than offset by a drop in operating expenses. EBIT also includes a before-tax $39 million gain, or 7 cents per share, due to the release of reserves set aside by Texas Eastern Transmission in 1993 for resolution of gas supply realignment costs.

In November, Duke Energy announced that it would sell two of its pipelines -- Panhandle Eastern Pipe Line Co. and Trunkline Gas Co. -- to CMS Energy of Michigan. That sale should close in the first quarter of 1999.

"Duke Energy is entering into a new phase of our natural gas transmission business," said Priory. "Going forward, we’re targeting regions where our capabilities at integrating energy assets and services can deliver growing shareholder value."

Energy services reported EBIT of $288 million – up 29 percent from $224 million reported in 1997. Expansions, development and acquisitions of strategic energy facilities and strong performance in energy marketing and trading more than offset lower margins in the gas gathering and processing business resulting from depressed natural gas liquids prices.

"The business units in our energy services group took a major strategic step in 1998, finding and executing deals that are creating earnings growth and locking in our competitive advantage," said Priory. "These business units will be just as busy in 1999."

For real estate operations, increased lot, land and project sales resulted in EBIT of $142 million for 1998 – up 45 percent from last year’s $98 million.

Among the projects that highlighted 1998 for Duke Energy: The company began operating three power plants in California bought from PG&E Corp.; power plants in Indonesia began production, adding to the company’s portfolio of energy assets in that country; a totally integrated energy project was completed in Peru, which will bring gas from offshore and eventually be converted to electric power for that country; the Queensland Pipeline in Australia became the company’s first major asset in that country; and power was produced at the company’s newly built plant in Bridgeport, Conn.

Net Income And EBIT Rise In Fourth Quarter


For the fourth quarter of 1998, Duke Energy posted revenues of $4.18 billion versus $4.59 billion in 1997. Net income for the quarter was $224 million – up 21 percent from the $185 million for last year’s quarter. Total EBIT for the quarter was $516 million – a jump of 21 percent from the $425 million posted during last year’s quarter.

Earnings were helped by the absence of a $29 million after-tax expense, or 8 cents per share, due to the calls and premiums associated with the tender of preferred shares during last year’s quarter.

In electric operations through the Duke Power unit, total EBIT for the quarter was $182 million versus $212 million in last year’s quarter. Overall retail and wholesale electric sales dropped 5.7 percent due to milder weather. Residential sales dropped 5.5 percent while general service and commercial sales rose 4.2 percent. Industrial sales rose 0.7 percent.

During the quarter, Duke Power announced that it would shut down all of its remaining merchandising operations resulting in a before-tax charge of $39 million, or 7 cents per share.

Lower nuclear expenses at Duke Power’s plants and other decreased operating and maintenance expenses partially offset decreased sales and the merchandising shutdown.

In natural gas transmission, total EBIT for the quarter was $168 million versus $139 million for last year’s quarter. As with the year-end results, lower revenues were more than offset by decreased operating expenses.

In energy services, total EBIT was $88 million versus $60 million in last year’s quarter. Duke Energy Trading and Marketing posted a very strong quarter with total EBIT of $63 million versus $15 million in last year’s quarter. Duke Energy Global Asset Development also posted a much improved quarter with total EBIT of $23 million versus a loss of $2 million in last year’s quarter due to a number of projects that began producing revenues versus the previous year.

Lower natural gas liquids prices hurt margins at Duke Energy Field Services. The unit posted total EBIT of $7 million versus $38 million during last year’s quarter.

"I am encouraged at the progress in our trading and marketing of gas and electricity and the increase of our worldwide energy development projects. The energy services group should continue to carry the growth banner for the company," said Priory. "Our timely acquisition of Union Pacific Resources’ gathering and processing facilities will position us for solid growth – even more so as natural gas liquids prices rebound."

Real estate operations posted EBIT of $45 million versus $26 million during last year’s quarter.

Among the major announcements in the fourth quarter: Duke Energy Field Services reached an agreement to purchase midstream assets and marketing activities from Union Pacific Resources for $1.35 billion; Duke Energy International (DEI) agreed to purchase Broken Hill Proprietary Company Limited’s power business in Australia and New Zealand for $315 million; and DEI also announced that it had purchased the rights to develop and build the 500-mile Eastern Gas Pipeline in Australia.

Duke Energy Corporation (NYSE:DUK) is a global energy company with more than $26 billion in assets. Headquartered in Charlotte, N.C., the company reaches into more than 50 countries, producing energy, transporting energy, marketing energy and providing energy services. In the United States, Duke Energy companies provide electric service to approximately two million customers in North Carolina and South Carolina; operate interstate pipelines that deliver natural gas to various regions of the country; and are leading marketers of electricity, natural gas and natural gas liquids. Additional information about the company is available on the Internet at:

Contact: Randy Wheeless
Phone: (704) 382-8379
24 Hour Phone: (704) 594-0681