News Release
July 17, 2001

DUKE ENERGY RECORDS STRONG EARNINGS AT COMPETITIVE BUSINESSES -- POSTS EPS OF 54 CENTS A SHARE

Second Quarter 2001 Highlights

CHARLOTTE, N.C. – Continuing the growth in its competitive businesses, Duke Energy today announced second-quarter 2001 earnings of 54 cents per share -- a 23-percent increase over the 44 cents per share reported in second quarter 2000. All 2000 numbers are adjusted for a Jan. 26, 2001, two for one stock split.

Revenues for the quarter increased 43 percent over the prior-year quarter to $15.6 billion, due to continued expansion of North American wholesale natural gas and power sales and natural gas transmission growth in the eastern United States.

For the first half of 2001, Duke Energy earned $1.14 a share, an 18-percent increase over the 97 cents a share earned in the first half of 2000. Year-to-date revenue totaled $32.1 billion, a 76-percent increase from last year’s total of $18.2 billion. Year-to-date earnings before interest and taxes (EBIT) increased 29 percent to $2.2 billion from $1.7 billion last year. The company’s competitive businesses contributed 61 percent of EBIT in the first half of 2001.

"Duke Energy is demonstrating it can consistently execute its integrated energy strategy to deliver sustainable growth," said Richard B. Priory, chairman of the board, president and chief executive officer. "Looking at the full year, we are confident that we will deliver results at least at the high range of our stated annual goal of 10 percent to 15 percent growth, with upside potential."

"We are creating regional energy businesses that take advantage of continued worldwide, energy-demand growth," Priory continued. "Our intense focus on portfolio management and operational excellence is driving our ability to deliver greater than 30 percent annual EBIT growth in our competitive Energy Services businesses."

Business Unit Results

In second quarter 2001, Duke Energy’s high-growth Energy Services businesses, which include North American Wholesale Energy, International Energy and Other Energy Services business segments, posted EBIT of $328 million for the quarter, a 58-percent increase over the same period last year. Year-to-date EBIT totaled $756 million versus $400 million for 2000. Since 1997, Duke Energy Services’ EBIT as a percentage of Duke Energy’s total EBIT has grown from 2 percent to 35 percent.

The North American Wholesale Energy segment, comprised of Duke Energy North America (DENA) and Duke Energy Merchants, continues to deliver impressive quarter-on-quarter earnings growth, reporting EBIT of $251 million, a 128-percent increase over second quarter 2000. Year-to-date EBIT was $599 million, a 212-percent increase from $192 million in 2000.

DENA’s EBIT growth was fueled by tremendous expansion in its wholesale energy asset portfolio, which now has more than 12,600 net megawatts of merchant power generation in operation or under construction, compared to approximately 8,400 net megawatts a year ago. During the quarter, DENA delivered five new merchant energy facilities comprising 2,800 megawatts of generation capacity – the most by any energy company. A sixth facility is scheduled to come on line during the third quarter. For summer 2002, DENA will deliver another 10 generation facilities, totaling 6,700 megawatts. Earnings also benefited from increased structured origination activity and enhanced performance in natural gas and power trading around DENA’s assets in both its Eastern and Western regions.

The company also gained from the divestiture of its interest in the Audrain Energy Facility in Missouri, the sale of 23 percent of its interest in the McClain Energy Facility in Oklahoma and additional gain recognition from the sale of the Attala Energy Facility in Mississippi. The three divested facilities achieved commercial operation during the quarter. During the quarter, the company also announced the acquisition of a 400-megawatt peaking facility in Mississippi from Enron Corp. The sale of DENA’s remaining 77-percent ownership interest in the McClain Energy Facility is scheduled to close in third quarter.

Duke Energy International delivered EBIT of $68 million for second quarter 2001 versus $87 million for second quarter 2000. Year-to-date earnings were $144 million, which were 5 percent greater than the first six months of 2000, absent the one-time gain on the sale of LNG ships in 2000. These earnings reflect relatively little new investments in the segment, but do include the effect of water rationing in Brazil. Latin America, Asia Pacific and Europe all continue to produce strong operational results.

During the quarter, the 43-megawatt Bairnsdale Power Station in Victoria on Australia’s south coast began commercial operations, providing needed power to the Victorian market. Progress also continued on the company’s Tasmanian Gas Pipeline, Australia’s largest subsea pipeline project.

The Field Services business segment, which represents Duke Energy’s majority interest in Duke Energy Field Services (DEFS), reported EBIT of $84 million, an increase of 17 percent from the same period last year. DEFS benefited from cost reductions and asset integration. Also, DEFS benefited from the acquisitions of Canadian Midstream Services, Ltd., which doubled DEFS’ net natural gas processing capacity in western Canada, and Gas Supply Resources, Inc., a propane distribution company serving New England.

Year-to-date EBIT for DEFS increased 44 percent, due to the combination of Duke Energy’s natural gas gathering and processing businesses with Phillips Petroleum’s Gas Processing and Marketing business and the acquisition of assets from Conoco in March 2000.

The Natural Gas Transmission segment reported second quarter EBIT of $142 million compared to $128 million in the same period last year. Second quarter EBIT benefited from the earnings of Market Hub Partners, a natural gas storage business acquired in September last year, and higher earnings from the Maritimes & Northeast Pipeline, in which it owns a 37.5-percent share.

During the quarter, the Natural Gas Transmission segment broke ground for the 753-mile Gulfstream pipeline project. When complete in June 2002, this pipeline system will transport approximately 1.1 billion cubic feet of natural gas per day from Mississippi and Alabama to Florida.

The Franchised Electric business segment, comprised of Duke Power and Electric Transmission, reported revenue of $1.2 billion, basically flat as compared to second quarter 2000 revenue. The segment reported EBIT of $361 million, a 9-percent decrease from the $395 million EBIT reported in second quarter 2000. The decrease was due to increased nuclear outage costs, unfavorable weather and the impact of the slowing economy on sales to industrial customers. The decrease was partially offset by continued growth in the residential and general service customer base.

Other Energy Services, comprised of DukeSolutions, Duke Engineering & Services and Duke/Fluor Daniel reported EBIT of $9 million, or a 10-percent decrease from second quarter EBIT of $10 million in 2000.

Duke/Fluor Daniel (D/FD), which leads the North American market in power plant construction, continued to expand its market leadership. During the quarter, D/FD announced it had been awarded contracts to perform engineering, procurement and construction (EPC) services for six natural gas-fueled, combined-cycle, power-generation facilities and one solid-fueled facility with a combined capacity of 7,490 megawatts. In addition, D/FD was awarded contracts to perform preliminary engineering services for four natural gas-fired projects, which D/FD will track as prospects for the follow-on EPC work.

Duke Engineering & Services, one of the world’s leading architectural/engineering companies specializing in energy and environmental projects, delivered positive results for the quarter. During the quarter, Duke Engineering & Services completed a transmission line and substation for an AES Puerto Rico facility and completed electric substations for three DENA projects.

The Duke Ventures business segment, comprised of Crescent Resources, DukeNet Communications and Duke Capital Partners, increased EBIT by approximately 140 percent over the same period in 2000, primarily due to increased land sales and commercial project sales at Crescent Resources.

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 more than $49 billion in 2000. 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.

An earnings conference call is scheduled for 10 a.m. ET on Wednesday, July 18. Robert P. Brace, executive vice president and chief financial officer, will discuss highlights. The conference call can be accessed via Duke Energy’s Web site at http://www.duke-energy.com or by dialing 800/946-0782 in the United States or 719/457-2657 outside the United States. The confirmation code for both is 580302. Please call in 5 to 10 minutes prior to the scheduled start time. A replay of the conference call will be available through August 1, 2001, by dialing 888/203-1112.

The international replay number is 719/457-0820. The confirmation code for both is 580302. A replay also will be available on Duke Energy’s Web site by accessing the "investors" tab. Also on the site is the most recent Financial Bulletin to the investment community.

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 forward-looking statements herein include regulatory developments, the timing and extent of changes in 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.

CONTACT: Terry Francisco
Phone: 704/373-6680
24-Hour: 704/382-8333

###

 

JUNE 2001
QUARTERLY HIGHLIGHTS
(unaudited)

Three Months
Ended

Six Months
Ended

June 30,

June 30,



(In millions, except where noted)

2001

2000(a)

2001

2000(a)


COMMON STOCK DATA

Earnings Per Share (before cumulative effect of change in accounting principle)

   Basic

$0.54

$0.44

$1.27

$0.97

   Diluted

$0.53

$0.44

$1.26

$0.97

Earnings Per Share

   Basic

$0.54

$0.44

$1.14

$0.97

   Diluted

$0.53

$0.44

$1.13

$0.97

Dividends Per Share

$0.550

$0.550

$0.825

$0.825

Weighted Average Shares Outstanding

   Basic

773

735

759

734

   Diluted

779

737

765

736


INCOME

Operating Revenues

$15,580

$10,926

$32,071

$18,216





Earnings Before Interest and Taxes
(EBIT)

917

837

2,186

1,696

Interest Expense

217

228

445

413

Minority Interests (b)

45

89

205

120

Income Taxes

236

191

563

441

Cumulative Effect of Change in
Accounting Principle, net of tax

-

-

96

-





Net Income

419

329

877

722

Preferred Stock Dividends and
Redemption Premiums

4

5

8

10





Earnings Available for Common
Stockholders

$415

$324

$869

$712






CAPITALIZATION

Common Equity and Minority Interest

49%

42%

Preferred Stock

1%

1%

Trust Preferred Securities

5%

6%

Total Debt

45%

51%

SEC Fixed Charges Coverage

3.9

3.5

Total Debt

$13,086

$13,042

Book Value Per Share

$15.61

$12.71

Actual Shares Outstanding

775

736


CAPITAL AND INVESTMENT EXPENDITURES

Franchised Electric

$275

$114

$452

$291

Natural Gas Transmission

207

39

286

467

Field Services

261

87

307

215

North American Wholesale Energy

847

491

1,365

826

International Energy

135

383

158

830

Other Energy Services

3

5

8

16

Duke Ventures

189

100

363

164


EBIT BY BUSINESS SEGMENT (c)

Franchised Electric

$361

$395

$821

$860

Natural Gas Transmission

142

128

317

286

Field Services

84

72

207

144

North American Wholesale Energy

251

110

599

192

International Energy

68

87

144

191

Other Energy Services

9

10

13

17

Duke Ventures

36

15

43

33

Other Operations

(58)

(57)

(113)

(110)





Total Segment EBIT

893

760

2,031

1,613

EBIT attributable to Minority Interests

24

77

155

83





Total EBIT

$917

$837

$2,186

$1,696






(a) Share information has been restated to reflect the two-for-one stock split effective January 26, 2001.

(b) Includes expense related to preferred securities of subsidiaries of $41 million and $27 million for the three months ended and $87 million and $54 million for the six months ended June 30, 2001 and 2000, respectively.

(c) Prior year amounts restated to conform to current year corporate cost allocation.

JUNE 2001
QUARTERLY HIGHLIGHTS
(unaudited)

Three Months
Ended

Six Months
Ended

June 30,

June 30,



(In millions, except where noted)

2001

2000(d)

2001

2000(d)


FRANCHISED ELECTRIC

Operating Revenues

$1,154

$1,158

$2,311

$2,273

Operating Expenses

779

783

1,527

1,452

Other Income (Expenses)

(14)

20

37

39



EBIT

$361

$395

$821

$860



Sales, GWh

20,221

20,661

39,583

41,215


NATURAL GAS TRANSMISSION

Operating Revenues

$264

$281

$546

$567

Operating Expenses

125

155

232

295

Other Income

3

2

3

14



EBIT

$142

$128

$317

$286



Throughput, TBtu

334

372

845

877


FIELD SERVICES

Operating Revenues

$2,538

$2,155

$5,936

$3,621

Operating Expenses

2,406

2,040

5,625

3,430

Other Income (Expenses)

-

-

-

(4)

Minority Interest Expense

48

43

104

43



EBIT

$84

$72

$207

$144



Natural Gas Gathered and Processed/Transported, TBtu/day

8.5

8.0

8.4

7.0

Natural Gas Liquids Production, MBbl/d

406.7

401.5

388.9

316.3

Natural Gas Marketed, TBtu/day

1.6

0.5

1.6

0.5

Average Natural Gas Price per MMBtu

$4.67

$3.47

$5.88

$2.99

Average Natural Gas Liquids Price per Gallon

$0.48

$0.47

$0.54

$0.49


NORTH AMERICAN WHOLESALE ENERGY

Operating Revenues

$11,506

$7,330

$23,521

$11,635

Operating Expenses

11,303

7,184

22,892

11,410

Other Income (Expenses)

18

(8)

8

(4)

Minority Interest (Benefit) Expense

(30)

28

38

29



EBIT

$251

$110

$599

$192



Natural Gas Marketed, TBtu/day

11.2

11.2

12.4

11.6

Electricity Marketed and Traded, GWh

118,113

58,198

178,818

108,551

Proportional MW Capacity in Operation

6,846

5,143

Proportional MW Capacity Owned (a)

13,231

8,473

Estimated Proportional Investment in Project Net Assets (a) (b)

$5,852

$2,618


INTERNATIONAL ENERGY

Operating Revenues

$399

$249

$901

$457

Operating Expenses

334

170

762

283

Other Income

9

14

18

28

Minority Interest Expense

6

6

13

11



EBIT

$68

$87

$144

$191



Proportional MW Capacity in Operation

4,241

4,205

Proportional MW Capacity Owned (a)

4,844

4,370

Proportional Maximum Pipeline Capacity, MMcf/d (a)

363

321

Estimated Proportional Investment in Project Net Assets (a) (c)

$3,077

$2,963


OTHER ENERGY SERVICES

Operating Revenues

$132

$138

$250

$413

Operating Expenses

123

128

237

396



EBIT

$9

$10

$13

$17




DUKE VENTURES

Operating Revenues

$98

$34

$135

$71

Operating Expenses

62

19

92

38



EBIT

$36

$15

$43

$33




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

(b) Includes total proportional estimated costs to complete projects under construction or under contract of $2,010 million and $546 million as of June 30, 2001 and 2000, respectively.

(c) Includes total proportional estimated costs to complete projects under construction or under contract of $160 million and $303 million as of June 30, 2001 and 2000, respectively.

(d) Prior year amounts restated to conform to current year corporate cost allocation.