News Release
April 17, 2002

DUKE ENERGY EARNS 48 CENTS PER SHARE IN FIRST QUARTER

CHARLOTTE, N.C. - Duke Energy, on track to meet 2002 financial goals through execution of its balanced energy portfolio strategy, earned 48 cents per share in first quarter 2002, compared with 61 cents per share in first quarter 2001.

Results for first quarter 2001 included a one-time charge for the cumulative effect of a change in accounting principle due to the adoption of SFAS 133. This resulted in a 13-cent per share charge to first-quarter earnings, or $96 million after tax.

"We are on plan to achieve toward the higher end of the range of our stated goal of 10 percent to 15 percent compounded annual EPS growth from a base of $2.10 in 2000," said Richard B. Priory, chairman, president and chief executive officer of Duke Energy. "Historically our greatest earnings contributions have occurred in the second and third quarters. This year our merchant generation portfolio will nearly double before the end of second quarter.

"Looking ahead, we believe that our strong balance sheet and sustainable cash flow provide us with the capability to seize attractive opportunities to enhance our energy portfolio," Priory said.

Last month Duke Energy significantly enhanced its already strong position in the North American energy market by closing its previously announced acquisition of Vancouver, British Columbia-based Westcoast Energy Inc. The transaction, valued at approximately US$8 billion, is immediately accretive to Duke Energy's earnings and is expected to contribute approximately 3 cents per share in 2002 earnings, after recognizing issuance of 49.9 million shares of common stock.

The transaction adds a network of mostly Canadian-based natural gas assets to Duke Energy's growing portfolio, including 6,900 miles of transmission pipeline, 141 billion cubic feet of storage capacity, major processing plants and more than 1 million natural gas distribution customers. It provides significant access to North America's major natural gas supply basins and markets and better positions the company for the coming expansion of North America's natural gas infrastructure.

BUSINESS UNIT RESULTS

The company's Energy Services businesses, which include the North American Wholesale Energy, International Energy and Other Energy Services segments, delivered combined earnings before interest and taxes (EBIT) of $132 million for first quarter, compared to $428 million during the same period last year.

North American Wholesale Energy

North American Wholesale Energy (NAWE), comprised of Duke Energy North America (DENA), Duke Energy Trading and Marketing and Duke Energy Merchants (DEM), reported EBIT of $67 million for the quarter, as compared to $348 million in EBIT during first quarter 2001. The earnings for first quarter 2001 were the result of DENA's ability to create value from unusual levels of market volatility. This quarter's results reflect a return to more normal commodity pricing and volatility. NAWE expects to achieve its earnings growth target for 2002.

During the quarter, DENA origination activities continued to be strong. This summer, DENA expects to complete construction of 11 new plants with 6,700 additional megawatts, nearly doubling its current operating portfolio to 15,300 megawatts. These new facilities will provide NAWE with significant earnings growth in third quarter.

DEM delivered good results for the quarter due to improved margins in refined products and crude oil trading.

International Energy

For first quarter 2002, the International Energy segment, comprised of the Asia-Pacific, Latin American and European regional businesses of Duke Energy International (DEI), delivered EBIT of $67 million, as compared to first quarter EBIT for 2001 of $76 million.

Earnings for the quarter were down as a result of lower earnings from the company's regional energy businesses in Latin America and Europe. The Latin American operations were affected by lower demand, primarily in Brazil, where power rationing was in effect until mid-March. Demand levels are expected to increase to more normal levels over time. European trading operations were affected by lower margins in the trading business.

During the quarter, DEI broke ground on a new 165-megawatt thermal generation plant in San Jose, Guatemala. The $150 million project is scheduled for completion by November 2002. Additionally, DEI launched onshore construction of the $200 million Tasmanian Gas Pipeline in Australia and brought on line an expansion to the Bairnsdale Power Station in Victoria. The expansion more than doubled the plant's capacity, providing additional peaking capacity for that region.

Other Energy Services

Other Energy Services, the financial reporting unit comprised of Duke/Fluor Daniel (D/FD), Duke Engineering & Services (DE&S) and DukeSolutions, reported an EBIT loss of $2 million for first quarter 2002 versus a $4 million gain in first quarter 2001.

During the quarter, Duke Energy announced the sale of DE&S to French-based Framatome ANP Inc. The company also announced the sale of DukeSolutions to Framingham, Mass.-based Ameresco Inc. and booked a reserve of $15 million associated with the sale. Both sales were initiated as the company further aligns its businesses, portfolio and resources to focus on growing wholesale energy markets. The pending sales are expected to close during second quarter.

For the quarter, D/FD continued to position itself for future success with announcements of engineering, procurement and construction contracts for power generating plants totaling more than 5,800 megawatts.

Gas Transmission

The Natural Gas Transmission segment reported first quarter EBIT of $268 million, a 53-percent increase over the $175 million in first quarter 2001. Results included one month of earnings from the acquired Westcoast Energy natural-gas transmission and distribution assets, which contributed $62 million to first quarter EBIT. Also contributing to 2002 results was a $9 million after-tax gain on the sale of a portion of Natural Gas Transmission's ownership interest in Northern Border Partners, L.P.

During the quarter, Duke Energy received several Federal Energy Regulatory Commission (FERC) approvals for its pipeline-expansion projects into the northeastern United States, where demand for natural gas continues to increase.

Islander East Pipeline Company L.L.C., equally owned with KeySpan Corporation, received a positive preliminary determination and a draft environmental impact statement from FERC to construct, own and operate approximately 50 miles of interstate natural gas pipeline in Connecticut and on Long Island, N.Y. Maritimes & Northeast Pipeline, L.L.C. (Maritimes) and Algonquin Gas Transmission Company (Algonquin) received final approval from FERC for the Maritimes Phase III and Algonquin HubLine natural gas pipeline projects that will interconnect the 650-mile Maritimes pipeline with the 1,000-mile Algonquin system. Maritimes also filed its Phase IV expansion. Maritimes is owned by affiliates of Duke Energy (75 percent), ExxonMobil (12.5 percent) and Emera Inc. (12.5 percent). Algonquin is a wholly owned subsidiary of Duke Energy.

Also, FERC granted a positive preliminary determination for the $289 million Patriot project, which will transport natural gas along a new pipeline route - the Patriot Extension - to meet growing demand for natural gas in the Southeast.

Field Services

The Field Services business segment, which represents Duke Energy's majority interest in Duke Energy Field Services (DEFS), reported EBIT of $35 million as compared to $123 million in first quarter 2001. Results were primarily affected by a significant decrease in natural gas liquids (NGL) prices. The average NGL price per gallon was 31 cents in the quarter, as opposed to 60 cents in first quarter 2001.

During the quarter, DEFS signed agreements to acquire ChevronTexaco's 33.3 percent-ownership interest in Discovery Producer Services LLC. The transaction, expected to close during second quarter 2002, will significantly increase DEFS' midstream presence in the Eastern Gulf of Mexico.

Franchised Electric

EBIT from Duke Energy's franchised electric business was $385 million versus $460 million for first quarter 2001. This decrease is principally due to nuclear insurance distributions recorded as income and the favorable settlement of forward power sales contracts in first quarter 2001. The insurance distributions were deferred and are not reflected in 2002 income, pending the outcome of a regulatory audit. Lower industrial sales and a warmer winter, partially offset by continued growth in the residential and general service customer base, also dampened earnings.

Duke Ventures

The Duke Ventures business segment, comprised of Crescent Resources, DukeNet Communications and Duke Capital Partners, reported EBIT of $6 million for first quarter 2002, essentially flat from the same period last year.

TRADING AND RISK MANAGEMENT

Duke Energy released the following metrics for its trading and marketing operations:

Daily earnings at risk (DER), a measure of the likely one-day favorable or unfavorable movements in commodity prices and their corresponding effects on EBIT within Duke Energy's trading portfolio, averaged $17 million in first quarter 2002. This amount does not include Westcoast Energy trading activity. The average DER for first quarter 2001 was $30 million.

Duke Energy's North American merchant generation portfolio (the "accrual book") -- including merchant generation facilities and hedging contracts held for power, natural gas, crude oil and petroleum products -- had a total estimated value of $6.8 billion as of March 31. On a cumulative basis, approximately 11 percent of the fair value of these contracts is expected to be realized by the end of 2002, 22 percent through 2003, 35 percent through 2004 and the remainder in 2005 and beyond.

The North American merchant generation capacity hedged for 2003 is 74 percent, for 2004 is 60 percent, and for 2005 is 59 percent.

The portion of Duke Energy's portfolio attributable to trading contracts, or its mark-to-market (MTM) portfolio book, was $1 billion, or 13 percent of the total. On a cumulative basis, approximately 23 percent of the fair value of these contracts is expected to be realized by the end of 2002, 40 percent through 2003, 54 percent through 2004 and the remainder in 2005 and beyond. Under MTM accounting rules, the change in the fair value of trading contracts is recognized in earnings during the current period. The unrealized MTM margin for first quarter 2002 was a negative margin of $68 million compared with a positive margin of approximately $560 million for first quarter 2001.

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 $59 billion in 2001. 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, April 17. The conference call can be accessed via Duke Energy's Web site at www.duke-energy.com or by dialing 800/946-0783 in the United States or 719/457-2658 outside the United States. The confirmation code is 753813. Please call in 5 to 10 minutes prior to the scheduled start time. A replay of the conference call will be available for 30 days by dialing 888/203-1112 with a confirmation code of 753813. The international replay number is 719/457-0820, confirmation code 753813. A replay also will be available on Duke Energy's Web site by accessing the investors' section of the company'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 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
thfrancisco@duke-energy.com

Phone: 704/373-6680
24-Hour: 704/382-8333

MARCH 2002
QUARTERLY HIGHLIGHTS
(unaudited)
   
    Three Months Ended
    March 31,

(In millions, except where noted)   2002   2001

COMMON STOCK DATA        
  Earnings Per Share (before cumulative effect of change in accounting
  principle)
    Basic   $0.48   $0.74
    Diluted   $0.48   $0.73
  Earnings Per Share        
    Basic   $0.48   $0.61
    Diluted   $0.48   $0.60
  Dividends Per Share   $0.275   $0.275
  Weighted Average Shares Outstanding        
    Basic   788   745
    Diluted   792   752
         

INCOME        
  Operating Revenues   $11,875   $16,491


  Earnings Before Interest and Taxes (EBIT)   761   1,254
  Interest Expense   189   213
  Minority Interests (a)   32   160
  Income Taxes   158   327
  Cumulative Effect of Change in Accounting
  Principle, Net of Tax
  -   96


  Net Income   382   458
  Preferred Stock Dividends and
  Redemption Premiums
  3   4


  Earnings Available for Common
  Stockholders
  $379   $454


         

CAPITALIZATION        
  Common Equity   36%   42%
  Minority Interest   7%   8%
  Preferred Stock   1%   1%
  Trust Preferred Securities   3%   5%
  Total Debt   53%   44%
     

  Fixed Charges Coverage, using SEC
  guidelines
  2.7   4.3
  Total Debt   $21,491   $12,704
  Book Value Per Share   $17.43   $14.98
  Actual Shares Outstanding   829   771

CAPITAL AND INVESTMENT EXPENDITURES    
  Franchised Electric   $244   $177
  Natural Gas Transmission (b)   2,020   79
  Field Services   110   46
  North American Wholesale Energy   744   518
  International Energy   81   23
  Other Energy Services   1   5
  Duke Ventures   125   174
         

EBIT BY BUSINESS SEGMENT        
  Franchised Electric   $385   $460
  Natural Gas Transmission   268   175
  Field Services   35   123
  North American Wholesale Energy   67   348
  International Energy   67   76
  Other Energy Services   (2)   4
  Duke Ventures   6   7
  Other Operations   (79)   (70)


Total Segment EBIT   747   1,123
  EBIT Attributable to Minority Interests   14   131


Total EBIT   $761   $1,254


 

       

 

       
(a) Includes expense related to preferred securities of subsidiaries of $35 million and $46 million for the three months ended March 31, 2002 and 2001, respectively.
(b) Amount includes $1.7 billion (net of cash acquired) paid to Westcoast Energy shareholders related to the acquisition.

Note: Prior year information has been restated to conform to current year presentation.


 

MARCH 2002
QUARTERLY HIGHLIGHTS
(unaudited)
   
  Three Months Ended
  March 31,

(In millions, except where noted) 2002   2001

FRANCHISED ELECTRIC      
  Operating Revenues $1,113   $1,157
  Operating Expenses 746   748
  Other Income 18   51


  EBIT $385   $460


       
  Sales, GWh 19,521   19,362
       

NATURAL GAS TRANSMISSION      
  Operating Revenues $484   $282
  Operating Expenses 218   107
  Other Income 5   -
  Minority Interest Expense 3   -


  EBIT $268   $175


       
  Proportional Throughput, TBtu 759   548
       

FIELD SERVICES      
  Operating Revenues $1,566   $3,398
  Operating Expenses 1,523   3,219
  Other Income -   -
  Minority Interest Expense 8   56


  EBIT $35   $123


       
  Natural Gas Gathered and   Processed/Transported, TBtu/day 8.4   8.2
  Natural Gas Liquids Production, MBbl/d 388.6   371.1
  Natural Gas Marketed, TBtu/day 1.6   1.6
  Average Natural Gas Price per MMBtu $2.32   $7.09
  Average Natural Gas Liquids Price per Gallon $0.31   $0.60
       

NORTH AMERICAN WHOLESALE ENERGY      
  Operating Revenues $7,964   $12,015
  Operating Expenses 7,897   11,589
  Other Expense (1)   (10)
  Minority Interest (Benefit) Expense (1)   68


  EBIT $67   $348


       
  Natural Gas Marketed, TBtu/day 13.8   13.6
  Electricity Marketed and Traded, GWh 108,220   44,617
  Proportional MW Capacity in Operation 7,515   5,064
  Proportional MW Capacity Owned (a) 18,605   10,054
  Estimated Proportional Investment
  in Project Net Assets (a) (b)
$8,354   $4,139
       

INTERNATIONAL ENERGY      
  Operating Revenues $986   $502
  Operating Expenses 927   428
  Other Income 13   9
  Minority Interest Expense 5   7


  EBIT $67   $76


       
  Proportional MW Capacity in Operation 4,705   4,199
  Proportional MW Capacity Owned (a) 5,748   4,847
  Proportional Maximum Pipeline Capacity in
  Operation, MMcf/d
363   255
  Proportional Maximum Pipeline Capacity
  Owned, MMcf/d (a)
363   363
  Estimated Proportional Investment in Project
  Net Assets (a) (c)
$4,410   $2,908
       

OTHER ENERGY SERVICES      
  Operating Revenues $136   $118
  Operating Expenses 138   114


  EBIT $(2)   $4


       

DUKE VENTURES      
  Operating Revenues $39   $37
  Operating Expenses 34   30
  Minority Interest Benefit (1)   -


  EBIT $6   $7


       
       
(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 $2,242 million and $526 million as of March 31, 2002 and 2001, respectively. 

(c) Includes total proportional estimated costs to complete projects under construction or under contract of $721 million and $124 million as of March 31, 2002 and 2001, respectively.