News Release
Oct. 18, 2000

 DUKE ENERGY’S THIRD-QUARTER EARNINGS RISE 73 PERCENT

Highlights

  • Third-quarter earnings per share: $2.08 in 2000 vs. $1.20 in 1999
  • Revenue increases 135 percent to $15.7 billion
  • Competitive energy businesses' EBIT rises 92 percent
  • North American Wholesale Energy delivers 175-percent increase in EBIT on successful execution of merchant strategy and trading and marketing activities
  • International Energy achieves 305-percent increase in EBIT due to strong performances by Latin America and Asia Pacific operations

CHARLOTTE, N.C. -- Powered by its high-growth, competitive energy businesses, Duke Energy reported record earnings of $2.08 per share for third quarter 2000, a 73-percent increase over earnings per share of $1.20 in third quarter 1999.

The results include a one-time, pre-tax gain of $407 million, or an after-tax gain of $0.67 per share, from the sale of the company’s interest in BellSouth Carolina PCS during the quarter. Excluding the gain, Duke Energy earned $1.41 per share, representing an 18-percent increase over the prior-year quarter.

For the quarter ending Sept. 30, 2000, earnings available for common shareholders totaled $766 million, including the gain from the BellSouth Carolina PCS transaction, compared with $436 million for third quarter 1999. Earnings before interest and taxes (EBIT) totaled $1.6 billion, a 71-percent increase. Revenue rose 135 percent to $15.7 billion.

"Duke Energy posted outstanding growth in earnings and our common shares reached an all-time-high price during the quarter as investors recognized the strength and delivery of our growth strategy," Duke Energy Chairman, President and Chief Executive Officer Richard B. Priory said. "We have kept our eye on the ball with disciplined, focused growth and have exceeded expectations throughout the year."

For the first three quarters of 2000, Duke Energy reported earnings available for common shareholders of $1.5 billion, or $4.02 per share, a 44-percent increase over the $1 billion, or $2.80 per share, earned in the same period last year, excluding a $1.82 extraordinary after-tax gain on the sale of the Midwest Pipelines in first quarter 1999. Excluding the gain on the BellSouth Carolina PCS transaction, the company reported earnings of $3.35 per share for the first three quarters, a 20-percent increase over the $2.80 earned per share last year. Year-to-date EBIT totaled $3.3 billion, a 51-percent increase. Year-to-date revenue increased 118 percent to $33.9 billion.

Competitive Energy Businesses Continue Rapid Growth

The increases in earnings and revenue are attributed to the continued growth of the company’s competitive energy businesses, which report earnings under the North American Wholesale Energy, International Energy, Other Energy Services, Field Services, Natural Gas Transmission and Duke Ventures business segments.

Excluding the gain from the BellSouth transaction, earnings from the company's competitive energy businesses rose 92 percent for the quarter. These businesses accounted for 91 percent of revenue in the quarter, putting the company on track to surpass revenue of $40 billion in 2000.

"We’re just beginning to harvest the results of our growth strategy," Priory said. "The bulk of Duke Energy’s revenue and an increasing percentage of earnings are now generated by our

competitive energy businesses. These businesses create a unique network of knowledge and energy assets that delivers bold solutions and real results for customers, and significant returns for shareholders."

The company’s Energy Services network of businesses, which include North American Wholesale Energy, International Energy and Other Energy Services, led the earnings gains for the company's competitive energy businesses. Energy Services businesses produced aggregate third-quarter EBIT of $243 million, a 326-percent increase over last year. Year-to-date EBIT for these businesses totaled $629 million, a 415-percent increase over 1999. Energy Services’ businesses are central to the company’s strategy of delivering energy and integrated energy services in high-growth regions of North America and within Latin America, Asia Pacific and Europe.

North American Wholesale Energy, International Energy Post Strong Gains

Again this quarter, Duke Energy recorded strong gains in its North American Wholesale Energy and International Energy business segments.

North American Wholesale Energy, comprised of Duke Energy North America (DENA) and Duke Energy Merchants (DEM), posted sharply higher gains with EBIT of $231 million, a 175-percent increase over third quarter 1999.

DENA achieved strong performance from its fleet of merchant power plants and from natural gas and power trading activities. DENA remains on schedule to deliver approximately 3,200 megawatts of new greenfield merchant generation in time for summer 2001.

"The demand for new power supply in specific regions of the country has gained much attention in recent months. Duke Energy continues to be well positioned to meet this important customer demand," Priory said. "The company’s expertise and speed-to-market delivered an unprecedented four new merchant power plants this summer, with an additional six new plants on schedule to provide electricity in key, high-demand regions next summer."

During the third quarter, DENA announced the sale of its Attala Energy Facility, a merchant power plant under construction in Mississippi. This transaction again illustrates the company’s active portfolio management strategy and ability to analyze market cycles and act upon information to increase shareholder value.

International Energy, comprised of the Asia Pacific, Latin America and European regional businesses of Duke Energy International (DEI), continued to deliver increased earnings with EBIT of $81 million, a 305-percent increase over third quarter 1999.

DEI’s results were due to the strong performance of its Latin America energy businesses, led by Paranapanema in Brazil, and solid earnings from its Asia-Pacific portfolio. Power generation and gas trading operations acquired in Argentina, Bolivia, Australia and Europe during the past 12 months all contributed positive returns. DEI also completed construction of its Eastern Gas Pipeline, a 497-mile gas pipeline that introduced gas competition to the Australian states of New South Wales and Victoria for the first time. The project highlights DEI’s growing business platform in the Asia-Pacific region.

The Other Energy Services business segment, comprised of DukeSolutions, Duke Engineering & Services (DE&S) and Duke/Fluor Daniel (D/FD), reported an EBIT loss of $69 million, compared to an EBIT loss of $47 million in the same period last year. The results include a $42 million charge by D/FD related to a financial loss on a 730-megawatt power plant project at the Rouge complex in Dearborn, Mich. Other Energy Services EBIT also was negatively affected by a change to a more conservative revenue recognition approach at DE&S to more closely align revenue with work completed for and billed to customers.

The Field Services business segment, which represents Duke Energy’s majority interest in Duke Energy Field Services (DEFS), reported third-quarter EBIT of $81 million, a 65-percent increase over the $49 million earned last year. DEFS is the nation's largest producer of natural gas liquids (NGLs), one of the largest natural gas gatherers and marketers, and one of the largest NGL marketers. The increase in EBIT is primarily due to the positive impact of the combination of Duke Energy’s gas gathering and processing business with Phillips’ GPM Gas Corporation unit earlier this year, as well as stronger NGL prices.

The Natural Gas Transmission business segment reported third-quarter EBIT of $125 million, a 6-percent increase over the $118 million reported last year, excluding a benefit of $10 million relating to the completion of an environmental cleanup program ahead of schedule in third quarter 1999. The improved operating performance during the quarter is primarily the result of profitable expansion projects, including the connection of natural gas pipelines to new electric generation projects, including two DENA merchant facilities, and completion of the East Tennessee Natural Gas pipeline acquisition earlier this year.

The Franchised Electric business segment, comprised of Duke Power and Electric Transmission, reported third-quarter EBIT of $589 million, a 5-percent decrease from last year, primarily due to milder summer weather and increased power purchasing expenses. The decrease was partially offset by a 2.5-percent increase in total average customers.

The Duke Ventures business segment, comprised of Crescent Resources, DukeNet Communications and Duke Capital Partners, reported third-quarter EBIT of $444 million, a 1,486-percent increase over the $28 million earned in the same period last year. The increase is attributable to gains realized on the sale of telecommunications interests and industrial property.

DukeNet Communications, the telecommunications arm of Duke Energy, completed the sale of its 20-percent interest in BellSouth Carolina PCS to a subsidiary of BellSouth Corporation, recording a pre-tax gain of $407 million on the transaction. The move enables DukeNet to focus exclusively on its fiber optic communications business. Crescent Resources reported increased earnings as a result of industrial real estate sales during the quarter.

Duke Energy, a diversified multinational energy company, creates value for customers and shareholders through an integrated network of energy assets and expertise. Duke Energy manages a dynamic portfolio of natural gas and electric supply, delivery and trading businesses -- generating revenues of nearly $22 billion in 1999. Duke Energy, headquartered in Charlotte, N.C., is a Fortune 100 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.

Additional details on Duke Energy's third quarter earnings are available on the company's Web site at http://www.duke-energy.com. An earnings conference call is scheduled for 2 p.m. ET on Wednesday, Oct. 18. Richard J. Osborne, Duke Energy's chief financial officer, will discuss highlights for the quarter. The conference call can be accessed via Duke Energy's Web site at http://www.duke-energy.com or by dialing 800/967-7140 in the United States or 719/457-2629 outside the United States. The confirmation code is 852173. Please call in 5-10 minutes prior to the scheduled start time. A replay of the conference call will be available through Monday, Oct. 30, on Duke Energy's Web site.

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 that could cause actual results to differ materially from those in the commodity prices for oil, gas, coal, electricity and interest rates, the extent of success in connecting natural gas supplies to gathering and processing systems and in connecting and expanding gas and electric markets, the performance of electric generation, pipeline and gas processing facilities, the timing and success of efforts to develop domestic and international power, pipeline, gathering, processing and other infrastructure projects and conditions of the capital markets and equity markets during the periods covered by the forward-looking statements.

###

 

September 2000
QUARTERLY HIGHLIGHTS
(unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,



(In millions, except where noted)

2000

1999

2000

1999


COMMON STOCK DATA

Earnings Per Share (before extraordinary item)

  Basic

$2.08

$1.20

$4.02

$2.80

  Dilutive

2.07

1.19

4.01

2.80

Earnings Per Share

  Basic

2.08

1.20

4.02

4.62

  Dilutive

2.07

1.19

4.01

4.61

Dividends Per Share

-

-

1.65

1.65

Weighted Average Shares Outstanding

  Basic

368

365

367

364

  Dilutive

371

366

369

365


INCOME

Operating Revenues

$15,691

$6,676

$33,907

$15,545

Earnings Before Interest and Taxes (EBIT)

1,556

908

3,252

2,159

Interest Expense

257

153

670

405

Minority Interests(a)

31

31

151

99

Income Taxes

498

283

939

619

Extraordinary Gain

-

-

-

660

Net Income

770

441

1,492

1,696

Preferred Stock Dividends and Redemption Premiums

4

5

14

15

Earnings Available for Common Stockholders

$766

$436

$1,478

$1,681


CAPITALIZATION

Common Equity and Minority Interest

46%

50%

Preferred Stock

1%

2%

Trust Preferred Securities

5%

6%

Total Debt

48%

42%

SEC Fixed Charges Coverage

4.3

4.6

Total Debt

$12,666

$9,092

Book Value Per Share

26.93

25.53

Actual Shares Outstanding

369

365


CAPITAL AND INVESTMENT EXPENDITURES

Franchised Electric

$166

$194

$457

$497

Natural Gas Transmission

447

80

914

187

Field Services

53

58

268

1,595

North American Wholesale Energy

558

252

1,384

605

International Energy

99

898

929

1,214

Other Energy Services

6

77

22

87

Duke Ventures

253

84

417

246


EBIT BY BUSINESS SEGMENT

Franchised Electric

$589

$617

$1,395

$1,343

Natural Gas Transmission

125

128

398

482

Field Services

81

49

218

97

North American Wholesale Energy(b)

231

84

415

156

International Energy

81

20

267

24

Other Energy Services

(69)

(47)

(53)

(58)

Duke Ventures

444

28

474

65





Other Operations

29

11

10

(5)

Total Segment EBIT

1,511

890

3,124

2,104

EBIT attributable to Minority Interests

45

18

128

55





Total EBIT

$1,556

$908

$3,252

$2,159






(a) Includes expense related to the Trust Preferred Securities of $27 million and $24 million for the three months ended and $81 million and $60 million for the nine months ended September 30, 2000 and 1999, respectively.

(b) Includes the segment that was previously known as Trading and Marketing.

September 2000
QUARTERLY HIGHLIGHTS
(unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,



(In millions, except where noted)

2000

1999

2000

1999


FRANCHISED ELECTRIC

Operating Revenues

$1,435

$1,503

$3,708

$3,659

Operating Expenses

865

908

2,371

2,379

Other Income (Expenses)

19

22

58

63





EBIT

$589

$617

$1,395

$1,343





Sales, GWh

22,639

23,141

63,854

62,462


NATURAL GAS TRANSMISSION

Operating Revenues

$279

$263

$846

$925

Operating Expenses

151

139

459

457

Other Income (Expenses)

(3)

4

11

14





EBIT

$125

$128

$398

$482





Throughput, TBtu

346

338

1,223

1,489


FIELD SERVICES

Operating Revenues

$2,527

$1,208

$6,148

$2,334

Operating Expenses

2,409

1,158

5,846

2,237

Other Income (Expenses)

9

(1)

5

-

Minority Interest Expense

46

-

89

-





EBIT

$81

$49

$218

$97





Natural Gas Gathered and Processed/Transported, TBtu/day

8.2

5.8

7.4

4.9

Natural Gas Liquids Production, MBbl/d

417.0

224.7

349.9

182.5

Natural Gas Marketed, TBtu/day

0.5

0.5

0.5

0.5

Average Natural Gas Price per MMBtu

$4.27

$2.59

$3.42

$2.16

Average Natural Gas Liquids Price per Gallon

$0.55

$0.40

$0.51

$0.31


NORTH AMERICAN WHOLESALE ENERGY

Operating Revenues

$11,186

$3,718

$22,821

$8,599

Operating Expenses

10,959

3,630

22,377

8,424

Other Income (Expenses)

(4)

3

(8)

21

Minority Interest Expense (Benefit)

(8)

7

21

40





EBIT

$231

$84

$415

$156





Natural Gas Marketed, TBtu/day

12.0

10.4

11.7

10.4

Electricity Marketed, GWh

89,967

34,131

198,518

78,147

Proportional MW Capacity Owned(a)

7,925

5,909

Estimated Proportional Investment in Project Net Assets(a)

$2,959

(b)

$1,829

(b)


INTERNATIONAL ENERGY

Operating Revenues

$270

$112

$727

$212

Operating Expenses

189

87

477

186

Other Income (Expenses)

7

6

35

13

Minority Interest Expense

7

11

18

15





EBIT

$81

$20

$267

$24





Proportional MW Capacity Owned(a)

4,394

2,019

Proportional Maximum Pipeline Capacity,
MMcf/d(a)

321

321

Estimated Proportional Investment in Project Net
Assets(a)

$2,886

(c)

$989

(c)


OTHER ENERGY SERVICES

Operating Revenues

$76

$151

$489

$464

Other Income (Expenses)

145

198

542

522





EBIT

$(69)

$(47)

$(53)

$(58)






DUKE VENTURES

Operating Revenues

$464

$65

$531

$128

Operating Expenses

20

37

57

63





EBIT

$444

$28

$474

$65






(a) Amount is as of the period end and includes projects under construction or under contract.

(b) Includes total proportional estimated costs to complete projects under construction or under contract of $212 million and $353 million as of September 30, 2000 and 1999, respectively.

(c) Includes total proportional estimated costs to complete projects under construction or under contract of $187 million as of September 30, 2000. There were no estimated costs to complete projects under construction or under contract as of September 30, 1999.

Contact: Paul Mason
Phone: 704/373-4512
24 Hour Phone: 704/382-8333
Email: pemason@duke-energy.com