News Release
October 24, 2002

DUKE ENERGY REPORTS THIRD QUARTER EARNINGS


CHARLOTTE, N.C. -- Duke Energy earned 27 cents per share, or $230 million in net income, in third quarter 2002 compared with $1.02 per share, or $796 million in net income, in third quarter 2001. Before charging certain items related to strategic actions at Duke Energy North America (DENA), Duke Energy International (DEI) and the Franchised Electric business, ongoing EPS was 52 cents, or $441 million in net income.

As previously announced, the company has recorded charges in third quarter related to current market conditions and strategic actions taken to address them. These charges, which are included in 2002 reported results but are not ongoing in nature, include the following:

 
EBIT Impact
(in million $)
Termination of certain turbines on order plus write-down of other uninstalled turbines
163
Write-off of site development costs, primarily in California and Brazil
80
Demobilization costs related to deferral of three merchant power projects
12
Severance costs associated with reduction in work force
33
Partial impairment of a merchant plant as a result of current market outlook
31
TOTAL
$319

Of the $319 million in charges described above, $198 million are non-cash items. The company expects to take additional demobilization charges of approximately $25 million in fourth quarter related to the deferral of three plants in the western United States.

"We are dealing decisively with the consequences of the extremely depressed energy merchant marketplace," said Richard B. Priory, chairman, president and chief executive officer of Duke Energy. "At the same time, we are experiencing strong earnings growth in Gas Transmission, mainly due to the integration of the Westcoast Energy assets, and our Franchised Electric business continues to produce strong results. The strength of these businesses, which is reflective of our balanced portfolio strategy, will enable Duke Energy to manage effectively through this severe downturn in the energy merchant sector.

"One of Duke Energy's strengths is our operating efficiency and ability to adapt to rapidly changing market conditions," Priory continued. "To improve financial performance in the midst of this severe downturn in wholesale energy markets, we have previously announced reductions in capital spending. We have also taken several actions that eliminate costs and realign our organization for the new environment. The company will eliminate more than 1,500 staff positions and more than 400 contract positions in 2002 and 2003. These actions will reduce ongoing operating expenses by more than $100 million annually. Labor reductions related to reduced capital expenditures represent an additional $75 million of capital savings.

"Our current forecast for 2002 full-year ongoing EPS is $1.95 to $2.05," Priory continued. "This range is achievable, but with current performance and market conditions, we expect our results to be at the low end of the range.

"Our earnings outlook for 2003 is flat, assuming a modest improvement in the current extremely depressed merchant energy market. While we are confident in the performance of our Franchised Electric and Gas Transmission businesses, if the North American merchant energy market does not improve in 2003, earnings may be lower than 2002 ongoing earnings."

Earnings before interest and taxes were $668 million in third quarter 2002, compared with $1.53 billion in third quarter 2001. Year-to-date 2002 EBIT is $2.48 billion, compared with $3.69 billion year-to-date EBIT in 2001. Excluding third quarter charges described in the table above, year-to-date 2002 ongoing EBIT was $2.8 billion. The reduction is primarily due to substantially lower results at Duke Energy North America.

Duke Energy is complying with recent revisions to generally accepted accounting principles by changing the way it reports energy trading revenue. Beginning in third quarter 2002, Duke Energy is reporting its energy trading revenue on a "net basis," and has revised the revenue reported for comparative periods. Therefore, third quarter 2002 revenue was $4.21 billion, compared with $4.78 billion in third quarter 2001. Year-to-date 2002 revenue was $11.5 billion, compared with $14.88 billion during the same period in 2001.

At Sept. 30, based on actuarial estimates, the company's pension plan obligation exceeded the value of the plan assets by $439 million due the erosion of the value of its equities investments. As a result, the company was required to record a pension liability of $772 million, a combination of the $439 million excess obligation and $333 million in pre-paid pension assets. The liability was offset in other comprehensive income, net of deferred income taxes. The amount of this liability will change in future years as the market value of the assets changes.

LIQUIDITY AND CAPITAL RESOURCES

Duke Energy's consolidated capital structure as of Sept. 30, 2002, including short-term debt, was 56 percent debt, 35 percent common equity, 5 percent minority interests and 4 percent preferred securities. The company had $473 million in cash and cash equivalents as of Sept. 30, 2002.

Under its commercial paper programs, including its letter of credit facility, Duke Energy and Duke Capital had the ability to borrow up to $3.4 billion as of Sept. 30, 2002. The companies had borrowings and letters of credit outstanding under these programs of approximately $1.9 billion as of Sept. 30, 2002, resulting in unusedliquidity of approximately $1.5 billion. In addition, Duke Capital has a $500 million bank credit line available through June 2003 which is currently undrawn. For the nine months ending Sept. 30, 2002, cash flow from operations was $3.3 billion, compared to $3.9 billion the same period last year.

In October, Duke Energy raised approximately $1 billion in a public offering of 54,500,000 shares of common stock at $18.35 per share. The net proceeds from the offering were used to repay commercial paper previously issued to fund a portion of the acquisition of Westcoast Energy.

Duke Energy previously announced that as a result of depressed market conditions and lower results at its merchant energy business, it would make significant cuts in planned capital expenditures over the next two years. The company estimates 2002 full-year capital spending of no more than $6.2 billion, excluding the acquisition of Westcoast Energy. Capital expenditure plans for 2003 have been reduced to approximately $3.5 billion, which the company intends to fund through internal cash flow and asset sales, after dividend payments.

INTEREST EXPENSE

Interest expense was $316 million for third quarter 2002, compared to $191 million for third quarter 2001. The increase is primarily due to debt acquired in conjunction with the Westcoast Energy acquisition.

REGULATORY MATTERS

The energy industry has continued to be the focus of government investigations. As reported previously, Duke Energy received and responded to information requests from the Federal Energy Regulatory Commission (FERC), a request for information from the Securities & Exchange Commission, a subpoena from the Commodity Futures Trading Commission and a grand jury subpoena issued by the U.S. attorney's office in Houston. Duke Energy was advised in mid-October that the SEC has formalized its inquiry regarding so-called "round-trip" trading. All information requests and subpoenas seek documents and information related to trading activities, including "round-trip" trading. Duke Energy is continuing to cooperate with all of the respective governmental agencies.

On Oct. 22, the North Carolina Utilities Commission (NCUC), the Public Service Commission of South Carolina (PSCSC) and Duke Power announced a proposed settlement agreement in response to the previously disclosed audit of certain regulatory accounting matters. In addition to changes primarily related to nuclear insurance distributions, the proposed agreement calls for Duke Power to record a one-time $25 million credit to its deferred fuels account for the benefit of North Carolina and South Carolina customers. Also, as part of the proposed agreement, Duke Energy would reclassify $52 million of $58 million currently in a suspense account to a nuclear insurance operation reserve account. The remaining $6 million would be credited to income, which would result in a $19 million net pre-tax charge in fourth quarter 2002. The settlement agreement will be submitted for approval to the NCUC on Oct. 28 and to the PSCSC on Oct. 29. Duke Energy views the proposed settlement as a way to formally and positively resolve all matters within the scope of the review.

BUSINESS UNIT RESULTS

Gas Transmission
The Natural Gas Transmission segment reported third quarter 2002 EBIT of $287 million, a 100-percent increase over the $143 million in third quarter 2001. Results included the second full quarter of earnings from the recently acquired Westcoast Energy natural gas transmission and distribution assets, which contributed $92 million to third quarter 2002 EBIT. The other key drivers of the improved results related to reduced operating and maintenance expenses and the $18 million gain on the sale of limited partnership units in its Northern Border partnership.

Year-to-date 2002 EBIT for Gas Transmission was $867 million, compared to $460 million in 2001.

During the quarter, Gas Transmission gained key regulatory approvals toward completion of two strategically important North American projects. Last month, the Patriot natural gas pipeline project received a Final Environmental Impact Statement from FERC. The Patriot project will expand the company's existing East Tennessee Natural Gas system in Tennessee and Virginia, and extend the system into southwest Virginia and northern North Carolina through a new 94-mile natural gas pipeline.

FERC also issued a certificate of public convenience and necessity to Islander East, authorizing the construction, operation and maintenance of approximately 50 miles of interstate natural gas pipeline facilities in Connecticut and Long Island, N.Y. Islander East is an equally owned, limited-liability company formed between the subsidiaries of KeySpan Corp. and Duke Energy. The company is working to obtain all remaining timely approvals and authorizations.

Franchised Electric
Third quarter 2002 EBIT from Duke Energy's franchised electric business was $585 million, compared to $607 million for third quarter 2001. Included in these results is a charge in third quarter 2002 of $21 million for severance costs related to work force reductions. Furthermore, results were impacted by solid nuclear operations and increased revenues due to favorable weather, offset by lower industrial sales and increased costs for a scheduled nuclear outage. Third quarter 2001 results included a charge of $33 million due to the reclassification of nuclear insurance distributions from income to a balance sheet suspense account as ordered by NCUC.

Year-to-date EBIT for Franchised Electric was $1.36 billion compared to $1.43 billion in 2001.

Duke Energy North America
DENA, which includes Duke Energy's 60-percent share in Duke Energy Trading & Marketing, reported an EBIT loss of $107 million for the third quarter 2002, compared to positive EBIT of $654 million during third quarter 2001. Results for 2002 include $207 million of charges discussed earlier.

Year-to-date 2002 EBIT for DENA was $143 million compared to $1.31 billion in 2001.

DENA's results were negatively impacted by the slow economic recovery, continued low price volatility in the merchant energy sector, low spark spreads and decreased trading market liquidity. The market also continues to suffer from the credit weakness of many industry participants and regulatory uncertainty. DENA has taken actions to effectively deal with the current operating environment, including staff reductions, contraction of daily earnings at risk (DER), reduction in capital investment and the previously announced reorganization of the trading management team.

International Energy
For third quarter 2002, the International Energy segment, comprised of the Asia-Pacific, Latin American and European regional businesses of Duke Energy International (DEI), delivered an EBIT loss of $25 million, compared to third quarter 2001 EBIT of $74 million. Included in these results were $91 million in charges in the quarter as a result of the write-off of site-development costs and the write-down of uninstalled turbines, primarily related to Brazil. Results were also adversely impacted by lower trading margins and liquidity in Europe, partially offset by the additional contribution from energy assets in Mexico and Indonesia acquired as part of the Westcoast Energy acquisition.

Year-to-date 2002 EBIT for International Energy was $109 million compared to $218 million in 2001.

Other Energy Services
Other Energy Services, the financial reporting unit comprised of Duke/Fluor Daniel (D/FD) and Duke Energy Merchants (DEM), reported EBIT of $9 million for third quarter 2002 versus a $58 million loss in third quarter 2001. Last year's results were adversely impacted by the write-down of assets at DEM and the company's former Duke Engineering & Services unit. Year-to-date EBIT for Other Energy Services was $92 million compared to an EBIT loss of $102 million in 2001.

Field Services
The Field Services business segment, which represents Duke Energy's majority interest in Duke Energy Field Services (DEFS), reported third quarter 2002 EBIT of $23 million compared to $75 million in third quarter 2001. The decline was due primarily to higher operating and administrative costs, an increase in its provision for gas imbalances with customers and suppliers, and other charges related to its ongoing internal review and reconciliations of balance sheet accounts.

Year-to-date 2002 EBIT for Field Services was $99 million compared to $282 million in 2001.

Duke Ventures
The Duke Ventures business segment, comprised of Crescent Resources, DukeNet Communications and Duke Capital Partners, reported EBIT of $21 million for third quarter 2002, compared to $51 million in third quarter 2001.

Year-to-date EBIT for Duke Ventures was $83 million compared to $94 million in 2001.

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 $12 million in third quarter 2002. The average DER for third quarter 2001 was $16 million.

DENA's merchant generation portfolio (the "accrual book") -- including merchant generation facilities and hedging contracts held for power and natural gas, crude oil and petroleum products - has forecasted gross margins totaling $5.3 billion as of Sept. 30, 2002. On a cumulative basis, approximately 3 percent of this margin is expected to be realized by the end of 2002, 14 percent through 2003, 23 percent through 2004 and the remainder in 2005 and beyond. The reduction in the accrual book valuation is a result of changes in correlations and volatility.

The expected DENA North American merchant generation economic output hedged for 2003 is 94 percent, for 2004 is 64 percent and for 2005 is 65 percent.

The value of Duke Energy's mark-to-market trading portfolio was $0.7 billion. On a cumulative basis, approximately 17 percent of the fair value of these contracts is expected to be realized by the end of 2002, 35 percent through 2003, 50 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 thecurrent period. The unrealized MTM loss for third quarter 2002 was $161 million compared with a gain of $103 million for second quarter 2002.

Duke Energy is a diversified multinational energy company with an integrated network of energy assets and expertise. The company manages a dynamic portfolio of natural gas and supply, delivery and trading businesses -- meeting the energy needs of customers throughout North America and in key markets around the world. Duke Energy, headquartered in Charlotte, N.C., is a Fortune 500 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 for analysts is scheduled for 10 a.m. ET today. The conference call can be accessed via the investors' section of Duke Energy's Web site or by dialing 800/946-0783 in the United States or 719/457-2658 outside the United States. The confirmation code is 772948. Please call in 5 to10 minutes prior to the scheduled start time. A replay of the conference call will be available until Nov. 5 by dialing 888/203-1112 with a confirmation code of 772948. The international replay number is 719/457-0820, confirmation code 772948. A replay and transcript also will be available 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 legislative and regulatory developments; the outcomes of litigation and regulatory proceedings or inquiries; the effectiveness of the company's risk management and internal controls systems; 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; conditions of the capital markets and equity markets during the periods covered by the forward-looking statements; and other factors discussed in Duke Energy's filings with the Securities and Exchange Commission.

Contact: Terry Francisco
thfrancisco@duke-energy.com
Phone: 704/373-6680
24-Hour: 704/382-8333

###

 

SEPTEMBER 2002
QUARTERLY HIGHLIGHTS
(unaudited)
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
   
 
 
(In millions, except where noted)
2002
2001
2002
2001

COMMON STOCK DATA              
 Earnings Per Share (before
 cumulative effect of change in
 accounting principle)
             
   Basic
$0.27
$1.02
$1.32
$2.30
   Diluted
$0.27
$1.01
$1.31
$2.28
 Earnings Per Share
   Basic
$0.27
$1.02
$1.32
$2.17
   Diluted
$0.27
$1.01
$1.31
$2.16
 Dividends Per Share
$-
$-
$0.825
$0.825
 Weighted Average Shares
 Outstanding
   Basic
834
775
817
765
   Diluted
834
781
820
770
 

INCOME
 Operating Revenues
$4,213
$4,782
$11,497
$14,880
 
 
 
 
 Earnings Before Interest and Taxes
  (EBIT)
668
1,529
2,476
3,685
 Interest Expense
316
191
769
606
 Minority Interests (a)
14
62
108
267
 Income Taxes
108
480
513
1,043
 Cumulative Effect of Change in
 Accounting Principle, Net of Tax
-
-
-
96
 
 
 
 
 Net Income
230
796
1,086
1,673
 Preferred Stock Dividends and
 Redemption Premiums
3
4
10
12
 
 
 
 
 Earnings Available for Common
 Stockholders
$227
$792
$1,076
$1,661
 
 
 
 
 

CAPITALIZATION
   Common Equity
35%
43%
   Preferred Stock
1%
1%
   Trust Preferred Securities
3%
5%
         
 
 Total Common Equity and Preferred
 Securities
39%
49%
 
 Minority Interest
5%
8%
 Total Debt
56%
43%
 

Fixed Charges Coverage, using SEC guidelines
2.3
4.1
Total Debt
$22,869
$12,605
Book Value Per Share
$16.90
$16.11
Actual Shares Outstanding
836
776

CAPITAL AND INVESTMENT EXPENDITURES
 Franchised Electric
$300
$298
$867
$750
 Natural Gas Transmission (b)
235
238
2,508
524
 Field Services
66
148
250
455
 Duke Energy North America (c)
237
1,104
1,758
2,430
 International Energy
133
106
350
264
 Other Energy Services (c)
5
13
27
60
 Duke Ventures
100
192
383
555
 Other Operations (d)
10
24
10
83
 Cash acquired in acquisitions
-
-
(77)
(6)
 
 
 
 
Total Capital and Investment Expenditures
$1,086
$2,123
$6,076
$5,115
 
 
 
 
 

EBIT BY BUSINESS SEGMENT
 Franchised Electric
$585
$607
$1,359
$1,428
 Natural Gas Transmission
287
143
867
460
 Field Services
23
75
99
282
 Duke Energy North America
(107)
654
143
1,310
 International Energy
(25)
74
109
218
 Other Energy Services
9
(58)
92
(102)
 Duke Ventures
21
51
83
94
 Other Operations
(118)
(54)
(325)
(197)
 
 
 
 
Total Segment EBIT
675
1,492
2,427
3,493
 EBIT Attributable to Minority
 Interests
(7)
37
49
192
 
 
 
 
Total EBIT
$668
$1,529
$2,476
$3,685
 
 
 
 
               

               
(a) Includes expense related to preferred securities of subsidiaries of $33 million and $38 million for the three months ended and $103 and $125 million for the nine months ended September 30, 2002 and 2001, respectively.
(b) Nine months ended September 30, 2002 amount includes $1.7 billion (net of cash acquired) paid to Westcoast Energy shareholders related to the acquisition.
(c) Prior to June 30, 2002, the Duke Energy North America business segment was combined with Duke Energy Merchants Holdings, LLC (DEM) to form a segment called North American Wholesale Energy. During 2002, management combined DEM with the Other Energy Services segment.
(d) Other Operations includes corporate, net of elimination of intersegment capital expenditures.
Note: Prior year information has been restated to conform to current year presentation

 

SEPTEMBER 2002
QUARTERLY HIGHLIGHTS
(unaudited)
           
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
 
 
(In millions, except where noted)
2002
2001
2002
2001

FRANCHISED ELECTRIC          
 Operating Revenues
$1,460
$1,431
$3,735
$3,742
 Operating Expenses
898
840
2,434
2,367
 Other Income
23
16
58
53
 

 

 EBIT
$585
$607
$1,359
$1,428
 

 

 
 Sales, GWh
23,251
22,566
63,190
62,149
 

NATURAL GAS TRANSMISSION
 Operating Revenues
$661
$271
$1,823
$817
 Operating Expenses
375
131
954
363
 Other Income
10
3
19
6
 Minority Interest Expense
9
-
21
-
 

 

 EBIT
$287
$143
$867
$460
 

 

 
 Proportional Throughput, TBtu
802
414
2,177
1,330
 

FIELD SERVICES
 Operating Revenues
$1,081
$1,446
$3,335
$6,387
 Operating Expenses
1,051
1,330
3,208
5,960
 Other Income (Expense)
1
(5)
1
(5)
 Minority Interest Expense
8
36
29
140
 

 

 EBIT
$23
$75
$99
$282
 

 

 
 Natural Gas Gathered and
 Processed/Transported, TBtu/day
8.4
8.8
8.4
8.5
 Natural Gas Liquids Production, MBbl/d
395.1
412.8
392.0
396.9
 Natural Gas Marketed, TBtu/day
1.6
1.6
1.6
1.6
 Average Natural Gas Price per MMBtu
$3.18
$2.88
$2.97
$4.88
 Average Natural Gas Liquids Price per Gallon
$0.39
$0.39
$0.36
$0.49
 

DUKE ENERGY NORTH AMERICA
 Operating Revenues
$654
$1,230
$1,480
$2,979
 Operating Expenses
789
575
1,355
1,634
 Other (Expense) Income
-
(5)
3
(1)
 Minority Interest (Benefit) Expense
(28)
(4)
(15)
34
 

 

 EBIT
$(107)
$654
$143
$1,310
 

 

 
 Natural Gas Marketed, TBtu/day
16.3
12.4
17.5
12.4
 Electricity Marketed and Traded, GWh
195,782
88,397
395,616
198,950
 Proportional MW Capacity in Operation
13,731
6,799
 Estimated Proportional Investment in
 Operating Project Net Assets
$4,953
$2,037
 

INTERNATIONAL ENERGY
 Operating Revenues
$221
$187
$759
$562
 Operating Expenses
265
123
679
359
 Other Income
24
15
45
33
 Minority Interest Expense
5
5
16
18
 

 

 EBIT
$(25)
$74
$109
$218
 

 

 
 Sales, GWh (a)
5,637
4,845
15,583
13,882
 Natural Gas Marketed, TBtu/day
5.8
3.2
4.2
2.7
 Electricity Marketed and Traded, GWh
20,871
3,234
62,743
6,625
 Proportional MW Capacity in Operation
4,825
4,370
 Proportional Maximum Pipeline Capacity in
 Operation, MMcf/d
363
255
 Estimated Proportional Investment in
 Operating Project Net Assets
$2,823
$2,631
 

OTHER ENERGY SERVICES
 Operating Revenues
$152
$138
$497
$397
 Operating Expenses
143
195
422
503
 Other (Expense) Income
-
(1)
17
4
 

 

 EBIT
$9
$(58)
$92
$(102)
 

 

 

DUKE VENTURES
 Operating Revenues
$74
$258
$224
$393
 Operating Expenses
55
207
144
299
 Other Income
1
-
1
-
 Minority Interest Benefit
(1)
-
(2)
-
 

 

 EBIT
$21
$51
$83
$94
 

 

           

           
(a) Represents GWh sold by the operating assets to consumers, industrial users, etc.

 

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except per share amounts)
                     
       
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
         
       
 
       
2002
 
2001
 
2002
 
2001
   
 
 
 
Operating Revenues                
  Sales of natural gas and petroleum products  
$1,184
$975
$3,586
$6,069
  Generation, transmission and distribution of electricity  
2,432
2,432
5,701
5,830
  Transportation and storage of natural gas  
429
253
1,202
731
  Trading and marketing net margin  
(155)
500
84
962
  Other  
323
622
924
1,288
   
 
 
 
    Total operating revenues  
4,213
4,782
11,497
14,880
   
 
 
 
       
Operating Expenses  
  Natural gas and petroleum products purchased  
944
1,035
2,837
5,276
  Net interchange and purchased power  
291
96
521
268
  Operation and maintenance  
1,095
1,189
2,804
3,027
  Fuel used in electric generation  
708
485
1,481
1,409
  Depreciation and amortization  
425
375
1,166
1,017
  Property and other taxes  
139
110
398
329
   
 
 
 
    Total operating expenses  
3,602
3,290
9,207
11,326
   
 
 
 
       
Operating Income  
611
1,492
2,290
3,554
       
Other Income and Expenses  
57
37
186
131
Interest Expense  
316
191
769
606
Minority Interest Expense  
14
62
108
267
   
 
 
 
       
Earnings Before Income Taxes  
338
1,276
1,599
2,812
Income Taxes  
108
480
513
1,043
   
 
 
 
       
Income Before Cumulative Effect of Change in Accounting Principle  
230
796
1,086
1,769
Cumulative Effect of Change in Accounting Principle, net of tax  
-
-
-
(96)
   
 
 
 
Net Income  
230
796
1,086
1,673
       
Preferred and Preference Stock Dividends  
3
4
10
12
   
 
 
 
       
Earnings Available For Common Stockholders  
$227
$792
$1,076
$1,661
   
 
 
 
       
Common Stock Data  
  Weighted-average shares outstanding  
834
775
817
765
  Earnings per share (before cumulative effect of change
in accounting principle)
    Basic  
$0.27
$1.02
$1.32
$2.30
    Diluted  
$0.27
$1.01
$1.31
$2.28
  Earnings per share  
    Basic  
$0.27
$1.02
$1.32
$2.17
    Diluted  
$0.27
$1.01
$1.31
$2.16
  Dividends per share  
$-
$-
$0.825
$0.825

 

CONSOLIDATED BALANCE SHEETS
(In millions)
 
     
September 30,
December 31,
     
2002
2001
     
(Unaudited)
 
 

ASSETS    
         
Current Assets    
  Cash and cash equivalents
$473
$290
  Receivables
5,958
5,301
  Inventory
1,166
1,017
  Current portion of purchased capacity costs
176
160
  Unrealized gains on mark-to-market and hedging transactions
3,192
2,326
  Other
572
451
 

    Total current assets
11,537
9,545
 

     
Investments and Other Assets
  Investments in affiliates
2,196
1,480
  Nuclear decommissioning trust funds
683
716
  Prepaid pension costs
347
313
  Goodwill, net of accumulated amortization
3,942
1,730
  Notes receivable
609
576
  Unrealized gains on mark-to-market and hedging transactions
4,340
3,117
  Other
1,292
1,299
 

    Total investments and other assets
13,409
9,231
 

     
Property, Plant and Equipment
  Cost
48,455
39,464
  Less accumulated depreciation and amortization
12,124
11,049
 

    Net property, plant and equipment
36,331
28,415
 

 
Regulatory Assets and Deferred Debits
  Purchased capacity costs
22
189
  Deferred debt expense
225
203
  Regulatory asset related to income taxes
401
510
  Other
922
282
 

    Total regulatory assets and deferred debits
1,570
1,184
 

     
  Total Assets
$62,847
$48,375
 

     
CONSOLIDATED BALANCE SHEETS
(In millions)
     
 
September 30,
December 31,
 
2002
2001
 
(Unaudited)
 
 

LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
     
Current Liabilities    
  Accounts payable
$4,441
$4,231
  Notes payable and commercial paper
2,199
1,603
  Taxes accrued
1,042
443
  Interest accrued
296
239
  Current maturities of long-term debt and preferred stock
1,106
274
  Unrealized losses on mark-to-market and hedging transactions
2,712
1,519
  Other
1,639
2,118
 

    Total current liabilities
13,435
10,427
 

 
Long-term Debt
19,579
12,321
 

 
Deferred Credits and Other Liabilities
  Deferred income taxes
4,123
4,307
  Minimum pension liability
772
-
  Investment tax credit
179
189
  Nuclear decommissioning costs externally funded
683
716
  Environmental cleanup liabilities
35
85
  Unrealized losses on mark-to-market and hedging transactions
3,466
2,212
  Other
2,976
1,542
 

    Total deferred credits and other liabilities
12,234
9,051
 

 
Commitments and Contingencies
 
Guaranteed Preferred Beneficial Interests in Subordinated
  Notes of Duke Energy Corporation or Subsidiaries
1,408
1,407
 

 
Minority Interests in Financing Subsidiary
-
1,025
 

 
Minority Interests
1,905
1,221
 

 
Preferred and Preference Stock
  Preferred and preference stock with sinking fund requirements
23
25
  Preferred and preference stock without sinking fund requirements
134
209
 

    Total preferred and preference stock
157
234
 

 
Common Stockholders' Equity
  Common stock, no par, 2 billion shares authorized; 836 million and 777 million shares outstanding at September 30, 2002 and December 31, 2001, respectively
8,176
6,217
 
  Retained earnings
6,716
6,292
  Accumulated other comprehensive (loss) income
(763)
180
 

    Total common stockholders' equity
14,129
12,689
 

 
  Total Liabilities and Common Stockholders' Equity
$62,847
$48,375
 

       

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
               
       
Nine Months Ended
       
September 30,
       
         
2002
2001
       
 
 
CASH FLOWS FROM OPERATING ACTIVITIES        
  Net income  
$1,086
$1,673
  Adjustments to reconcile net income to net cash provided by
    operating activities:  
    Depreciation and amortization  
1,283
1,149
    Net unrealized mark-to-market and hedging transactions
288
(211)
    Change in working capital and other

608

1,312
       
 
      Net cash provided by operating activities
3,265
3,923
         
CASH FLOWS USED IN INVESTING ACTIVITIES  
(5,789)
(4,655)
         
CASH FLOWS FROM FINANCING ACTIVITIES
2,707
 727
       
 
       
  Net increase (decrease) in cash and cash equivalents  
183
(5)
  Cash and cash equivalents at beginning of period
          290
           622
       
 
  Cash and cash equivalents at end of period  
$473
$617