News Release
April 30, 2003

DUKE ENERGY REPORTS FIRST QUARTER 2003 RESULTS

  • EPS of 43 cents before the cumulative effect of previously announced accounting changes.
  • On track to meet 2003 EPS guidance of $1.35 - $1.60, excluding cumulative effect of previously announced accounting changes.
  • Natural Gas Transmission and Franchised Electric continue to produce strong earnings and cash flow.


CHARLOTTE, N.C. -- Duke Energy reported first quarter earnings of 25 cents per share, or $225 million in net income, compared to 48 cents per share, or $382 million net income in first quarter 2002. Results for first quarter 2003 included an 18 cent, or $162 million, after-tax charge for the cumulative effect of previously announced accounting changes. Before the effect of accounting changes, Duke Energy earned 43 cents, or $387 million, in first quarter 2003.

"We entered 2003 with an aggressive plan to deal with the merchant energy downturn by cutting our exposure to the unregulated marketplace and strengthening our balance sheet," said Richard B. Priory, chairman and chief executive officer. "Our first quarter results show we are executing on our business plan and producing significant earnings and cash flow at our strongest businesses. As we continue to size our business for market realities and focus on cash generation and capital management, we are confident we will achieve our previously stated guidance of $1.35 - $1.60 earnings per share (EPS) in 2003 before a charge for the cumulative effect of previously announced accounting changes," Priory said.

The first quarter 2003 charge related to changes in accounting principles was primarily due to implementation of EITF Issue No. 02-03, "Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and for Contracts Involved in Energy Trading and Risk Management Activities," which changes the timing of earnings recognition for certain energy contracts. This represents an after-tax charge of $151 million, or 17 cents per share. The remaining element of this charge, $11 million, or 1 cent a share, is due to implementation of SFAS No. 143, "Accounting for Asset Retirement Obligations."

BUSINESS UNIT HIGHLIGHTS

  • Overall Earnings before Interest and Taxes (EBIT) was $974 million, an increase of 26 percent, compared with $770 million in first quarter 2002.
  • Natural Gas Transmission reported EBIT of $423 million, a 59-percent increase compared with $266 million in first quarter 2002.
  • Franchised Electric EBIT was $454 million, an 18-percent increase from first quarter 2002 EBIT of $384 million.

BUSINESS UNIT RESULTS

Below is a reconciliation of consolidated operating income to EBIT (in millions):

 
First Quarter
2003
First Quarter
2002
Operating income
$893
$668
Other income and expenses
$ 81
$102
EBIT
$974
$770

Franchised Electric
First quarter 2003 EBIT from Franchised Electric was $454 million, an 18-percent increase from first quarter 2002 EBIT of $384 million. Higher results were due to colder than normal weather during the quarter and increased wholesale power sales. The increase was partially offset by charges of $35 million for expenses related to 2003 severe winter storms and $17 million of amortization expense related to the North Carolina 2002 clean air legislation.

Franchised Electric continues to benefit from outstanding operating performance. During the quarter, the capacity utilization at Duke Power’s nuclear stations increased to 97 percent from 95 percent in first quarter 2002.

Natural Gas Transmission
The Duke Energy Gas Transmission (DEGT) segment reported first quarter 2003 EBIT of $423 million, a 59-percent increase over the $266 million in first quarter 2002. Results included a full quarter of earnings from Westcoast Energy, acquired in March 2002. The two additional months contributed $135 million to first quarter 2003. First quarter 2003 and 2002 results both include gains of $14 million from the sales of DEGT’s limited partnership interests in Northern Border Partners L.P.

During the quarter, DEGT moved ahead on several expansion projects to meet growing demand for natural gas in various regions across North America, including the U.S. northeast corridor, the U.S. Southeast and western Canada.

In the Southeast, DEGT began construction of the Patriot project, which includes a 94-mile pipeline extension of the East Tennessee Natural Gas system into southwest Virginia and North Carolina. In the Northeast, the company’s Algonquin Gas Transmission unit has made filings with the Federal Energy Regulatory Commission (FERC) to develop HubLine Phase II, a project that will transport natural gas to the greater Boston market and increase the reliability of natural gas infrastructure in eastern Massachusetts. In western Canada, DEGT received final approval from Canada’s National Energy Board to proceed with the construction of the Grizzly Pipeline extension in Northeastern British Columbia, which will tie new natural gas production in western Canada to growing markets in British Columbia, the U.S. Pacific Northwest and beyond. DEGT demonstrated outstanding reliability this past winter in response to strong demand due to severe cold weather. For example, DEGT’s Texas Eastern system, which transports natural gas into the northeast corridor, experienced 13 of its top 25 all-time, peak-delivery days during the winter of 2002 to 2003.

Duke Energy North America
Duke Energy North America (DENA) reported EBIT of $23 million in first quarter 2003, compared to EBIT of $54 million in first quarter 2002. The decrease was due to lower proprietary trading results, a reduction in mark-to-market earnings due in part to changes in accounting rules and higher depreciation expenses related to new plants, partially offset by lower general and administrative expenses.

Recently, DENA announced that it was exiting proprietary trading as the company continues to aggressively manage its risk profile.

International Energy
For first quarter 2003, Duke Energy International (DEI) reported EBIT of $54 million, compared to first quarter 2002 EBIT of $57 million. Included in DEI's first quarter 2003 EBIT is a non-recurring, non-cash charge of $11 million related to the timing of revenue recognition at the Cantarell investment in Mexico, a nitrogen-production plant which was acquired with Westcoast.

Field Services
The Field Services business segment, which represents Duke Energy's 70-percent interest in Duke Energy Field Services (DEFS), reported first quarter 2003 EBIT of $33 million compared to $35 million in first quarter 2002. The effects of significantly higher natural gas prices and hedges on the prices of natural gas liquids (NGLs) substantially offset the favorable impact of strong NGL prices during the period.

Other Operations
The Other Operations segment, including Crescent Resources, DukeNet Communications, Duke Capital Partners, Duke/Fluor Daniel, Duke Energy Merchants and Energy Delivery Services, reported an EBIT loss of $26 million in first quarter 2003, compared to EBIT of $17 million in first quarter 2002. Results were negatively affected by charges related to the exiting of proprietary trading and hydrocarbons businesses at Duke Energy Merchants.

During the first quarter, Duke Energy announced that it is exiting the merchant finance business at its wholly owned subsidiary, Duke Capital Partners, LLC. The company expects to realize positive cash flows in 2003 and 2004 from Duke Capital Partners' portfolio of approximately $340 million. For 2003, Duke Energy expects approximately $200 million of the portfolio to be monetized, with the remainder being closed during the first six months of 2004. Approximately $80 million of that portfolio has already been monetized in first quarter 2003.

INTEREST EXPENSE

Interest expense was $340 million for first quarter 2003, compared to $198 million for first quarter 2002. The increase was primarily due to debt related to the Westcoast Energy acquisition, reduced capitalized interest at DENA and additional debt.

CASH FLOW

For first quarter 2003, cash flow from operations was $1.4 billion, compared to $0.8 billion in first quarter 2002. In 2003, Duke Energy expects cash flow from operations, which includes real estate sales at Crescent Resources, combined with proceeds from divestitures at other business units, to more than adequately fund capital expenditures of approximately $3 billion and the approximately $1 billion needed to fund the $1.10 per share dividend. The company's current business plans for 2003 fully support the dividend at this level.

In 2003, the company has announced or completed approximately $1.1 billion in gross proceeds from asset sales. During the quarter, Duke Energy closed on asset sales of non-strategic assets of approximately $350 million. The company expects asset sales to contribute approximately $1.5 billion in gross proceeds for 2003. Proceeds in excess of the amounts needed to help fund capital expenditures and pay the dividend will be available to pay down debt.

LIQUIDITY AND CAPITAL RESOURCES

Duke Energy's consolidated capital structure as of March 31, 2003, including short-term debt, was 55 percent debt, 37 percent common equity, 4 percent minority interests and 4 percent preferred securities.

Under various credit facilities, Duke Energy, Duke Capital and other subsidiaries had the ability to borrow up to $5.3 billion as of March 31, 2003. The companies had borrowings and letters of credit outstanding under these programs of approximately $2.2 billion as of March 31, 2003, resulting in unused capacity of approximately $3.1 billion. The company also had approximately $1.1 billion in cash and cash equivalents as of March 31, 2003. Subsequent to March 31, 2003, a credit facility at Duke Capital of $0.5 billion matured and was replaced with a facility of $0.25 billion.

REVENUES

For first quarter 2003, revenues were $6.2 billion, up from $3.2 billion in first quarter 2002. The key drivers for the increase include significantly higher NGL pricing, two additional months of Westcoast operations, greater wholesale power sales and the adoption of the final consensus on EITF 02-03, which requires the company to present revenues for certain natural gas transactions on a gross basis in 2003. Adopting this final consensus did not require a change to prior periods and therefore the company did not change the 2002 revenue amounts.

FINANCIAL MEASURES

Earnings before interest and taxes, or EBIT, is the primary performance measure used by management to evaluate company and segment performance. On a segment basis, it includes all profits (both operating and non-operating) before deducting interest and taxes, and is net of the minority interest expense related to those profits. Management believes EBIT is a good indicator of each segment’s operating performance as it represents the results of our ownership interests in operations without regard to financing methods or capital structures. EBIT should not be considered an alternative to, or more meaningful than, net income, operating income or cash flow as determined in accordance with generally accepted accounting principles (GAAP). Duke Energy’s EBIT may not be comparable to a similarly titled measure of another company.

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 and related charts can be accessed via the investors' section of Duke Energy's Web site at: www.duke-energy.com. or by dialing 800/479-9001 in the United States or 719/457-2618 outside the United States. The confirmation code is 703998. Please call in 5 to 10 minutes prior to the scheduled start time. A replay of the conference call will be available through May 9 by dialing (888) 203-1112 with a confirmation code of 703998. The international replay number is 719/457-0820. A replay and transcript also will be available by accessing the investors' section of the company's Web site at: www.duke-energy.com. The presentation may include certain non-GAAP financial measures as defined under SEC rules. In such event, a reconciliation of those measures to the most directly comparable GAAP measures will be available on our investor relations Web site at: http://www.duke-energy.com/investors/financial/gaap.

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; general economic conditions, including any potential effects arising from terrorist attacks and any consequential hostilities or other hostilities; 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 natural gas and electric markets; the performance of electric generation, pipeline and natural 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.

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

ANALYST CONTACT: Greg Ebel
Phone: 704/382-8118

 

MARCH 2003
QUARTERLY HIGHLIGHTS
(unaudited)
     
  Three Months Ended
  March 31,
 
(In millions, except where noted) 2003 2002

COMMON STOCK DATA    
 Earnings Per Share (before cumulative effect of change in accounting principle)    
    Basic
$0.43 
$0.48 
    Diluted
$0.43 
$0.48 
 Earnings Per Share
    Basic
$0.25 
$0.48 
    Diluted
$0.25 
$0.48 
 Dividends Per Share
$0.275 
$0.275 
 Weighted Average Shares Outstanding
    Basic
897 
788 
    Diluted
897 
792 
     

INCOME
 Operating Revenues
$6,176 
$3,213 
 

 Earnings Before Interest and Taxes (EBIT)
974 
770 
 Interest Expense
340 
198 
 Minority Interests (a)
52 
32 
 Income Taxes
195 
158 
 Cumulative Effect of Change in Accounting Principle, Net of Tax
162 
 

 Net Income
225 
382 
 Preferred Stock Dividends and Redemption Premiums
 

 Earnings Available for Common Stockholders
$222 
$379 
 


CAPITALIZATION
 Common Equity
37%
36%
 Preferred Stock
1%
1%
 Trust Preferred Securities
3%
3%
 

Total Common Equity and Preferred Securities
41%
40%
 
Minority Interest
4%
7%
Total Debt
55%
53%
     

Fixed Charges Coverage, using SEC guidelines
2.6 
2.7 
Total Debt
$22,357 
$21,491 
Book Value Per Share
$16.99 
$17.93 
Actual Shares Outstanding
900 
829 

CAPITAL AND INVESTMENT EXPENDITURES
 Franchised Electric
$176 
$244 
 Natural Gas Transmission (b)
198 
2,020 
 Field Services
31 
110 
 Duke Energy North America
160 
736 
 International Energy
25 
81 
 Other Operations (c)
69 
134 
 Other
46 
36 
 Cash acquired in acquisitions
(77)
 

Total Capital and Investment Expenditures
$705 
$3,284 
 


EBIT BY BUSINESS SEGMENT
Franchised Electric
$454 
$384 
Natural Gas Transmission
423 
266 
Field Services
33 
35 
Duke Energy North America
23 
54 
International Energy
54 
57 
Other Operations (c)
(26)
17 
Other
(31)
(107)
 

Total Segment EBIT
930 
706 
EBIT Attributable to:    
Minority Interests
46 
14 
Third Party Interest Income
41 
Foreign Currency (Loss) Gain
(5)
 

Total EBIT
$974 
$770 
 


     
(a) Includes expense related to preferred securities of subsidiaries of $27 million and $35 million for the three months ended March 31, 2003 and 2002, respectively.
 
(b) 2002 amount includes $1.7 billion (net of cash acquired) paid to Westcoast Energy shareholders related to the acquisition.
 
(c) Beginning in 2003, the business segments formally known as Other Energy Services and Duke Ventures were combined into a segment called Other Operations.

 

MARCH 2003
QUARTERLY HIGHLIGHTS
(unaudited)
     
  Three Months Ended
  March 31,
 
(In millions, except where noted) 2003 2002

FRANCHISED ELECTRIC    
 Operating Revenues
$1,251 
$1,113 
 Operating Expenses
813 
746 
 Other Income
16 
17 
 

 EBIT
$454 
$384 
 

 Sales, GWh
22,043 
19,521 
 

NATURAL GAS TRANSMISSION
 Operating Revenues
$968 
$450 
 Operating Expenses
567 
218 
 Other Income
35 
37 
 Minority Interest Expense
13 
 

 EBIT
$423 
$266 
 

 Proportional Throughput, TBtu
1,082 
670 
 

FIELD SERVICES
 Operating Revenues
$2,472 
$1,068 
 Operating Expenses
2,426 
1,033 
 Other Income
15 
 Minority Interest Expense
28 
 

 EBIT
$33 
$35 
 

 Natural Gas Gathered and Processed/Transported, TBtu/day
8.0 
8.4 
 Natural Gas Liquids Production, MBbl/d
375.2 
388.6 
 Average Natural Gas Price per MMBtu
$6.59 
$2.32 
 Average Natural Gas Liquids Price per Gallon
$0.58 
$0.31 
 

DUKE ENERGY NORTH AMERICA
 Operating Revenues
$1,396 
$258 
 Operating Expenses
1,382 
200 
 Other Income (Expenses)
(4)
 

 EBIT
$23 
$54 
 

 Actual Plant Production, GWh (a)
5,110 
3,868 
 Proportional MW Capacity in Operation
14,156 
7,515 
     

INTERNATIONAL ENERGY
 Operating Revenues
$234 
$289 
 Operating Expenses
183 
235 
 Other Income
 Minority Interest Expense
 

 EBIT
$54 
$57 
 

 Sales, GWh
4,759 
4,932 
 Proportional MW Capacity in Operation
4,887 
4,705 
 Proportional Maximum Pipeline Capacity in Operation, MMcf/d
363 
363 
 

OTHER OPERATIONS
 Operating Revenues
$556 
$188 
 Operating Expenses
589 
184 
 Other Income
13 
 

 EBIT
$(26)
$17 
 

     
(a) Represents 100% of GWh.

 

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except per share amounts)
     
  Three Months Ended
  March 31,
 
  2003 2002
 

Operating Revenues    
  Sales of natural gas and petroleum products
$3,920 
$901 
  Generation, transmission and distribution of electricity
1,742 
1,587 
  Transportation and storage of natural gas
436 
326 
  Trading and marketing net (loss) margin
(73)
229 
  Other
151 
170 
 

    Total operating revenues
6,176 
3,213 
 

Operating Expenses
  Natural gas and petroleum products purchased
3,541 
799 
  Fuel used in electric generation
299 
315 
  Net interchange and purchased power
125 
108 
  Operation and maintenance
728 
852 
  Depreciation and amortization
449 
344 
  Property and other taxes
141 
127 
 

    Total operating expenses
5,283 
2,545 
 

Operating Income
893 
668 
 

  Equity in earnings of unconsolidated affiliates
34 
  Gain on sale of equity investments
14 
14 
  Other income and expenses, net
33 
79 
 

Other Income and Expenses
81 
102 
Interest Expense
340 
198 
Minority Interest Expense
52 
32 
 

Earnings Before Income Taxes
582 
540 
Income Taxes
195 
158 
 

Income Before Cumulative Effect of Change in Accounting Principle
387 
382 
Cumulative Effect of Change in Accounting Principle, net of tax and minority interest
162 
 

Net Income
225 
382 
 
Preferred and Preference Stock Dividends
 

Earnings Available For Common Stockholders
$222 
$379 
 

Common Stock Data
  Weighted-average shares outstanding
897 
788 
  Earnings per share (before cumulative effect of change in accounting principle)
    Basic
$0.43 
$0.48 
    Diluted
$0.43 
$0.48 
  Earnings per share
    Basic
$0.25 
$0.48 
    Diluted
$0.25 
$0.48 
Dividends per share
$0.275 
$0.275 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
     
  Years Ended
  March 31,
  2003 2002
 

CASH FLOWS FROM OPERATING ACTIVITIES    
  Net income
$225 
$382 
  Adjustments to reconcile net income to net cash provided by operating activities:
    Depreciation and amortization (including amortization of nuclear fuel)
484 
379 
    Cumulative effect of changes in accounting principle
162 
    Net realized and unrealized mark-to-market and hedging transactions
(116)
179 
    Changes in working capital and other
656 
(120)
 

      Net cash provided by operating activities
1,411 
820 
 
CASH FLOWS USED IN INVESTING ACTIVITIES
(382)
(3,276)
 
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES
(777)
2,317 
 

  Net increase (decrease) in cash and cash equivalents
252 
(139)
  Cash and cash equivalents at beginning of period
857 
290 
 

  Cash and cash equivalents at end of period
$1,109 
$151 
 

 

CONSOLIDATED BALANCE SHEETS
(In millions)
     
     
  March 31, December 31,
  2003 2002
  (Unaudited)  
ASSETS

     
Current Assets    
  Cash and cash equivalents
$1,109 
$857 
  Receivables
7,422 
6,766 
  Inventory
946 
1,134 
  Unrealized gains on mark-to-market and hedging transactions
2,337 
2,144 
  Other
1,074 
952 
 

    Total current assets
12,888 
11,853 
 

Investments and Other Assets
  Investments in unconsolidated affiliates
2,110 
2,066 
  Nuclear decommissioning trust funds
713 
708 
  Goodwill, net of accumulated amortization
3,730 
3,747 
  Notes receivable
463 
589 
  Unrealized gains on mark-to-market and hedging transactions
2,325 
2,480 
  Other
1,751 
1,645 
 

    Total investments and other assets
11,092 
11,235 
 

Property, Plant and Equipment
  Cost
49,815 
48,677 
  Less accumulated depreciation and amortization
12,885 
12,458 
 

    Net property, plant and equipment
36,930 
36,219 
 

Regulatory Assets and Deferred Debits
  Deferred debt expense
260 
263 
  Regulatory asset related to income taxes
973 
936 
  Other
1,102 
460 
 

    Total regulatory assets and deferred debits
2,335 
1,659 
 

  Total Assets
$63,245
$60,966
 

 

CONSOLIDATED BALANCE SHEETS
(In millions)
     
  March 31, December 31,
  2003 2002
 
(Unaudited)
 
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY

     
Current Liabilities    
  Accounts payable
$6,559 
$5,590 
  Notes payable and commercial paper
1,125 
915 
  Taxes accrued
473 
156 
  Interest accrued
301 
310 
  Current maturities of long-term debt and preferred stock
754 
1,331 
  Unrealized losses on mark-to-market and hedging transactions
2,004 
1,918 
  Other
1,835 
1,770 
 

    Total current liabilities
13,051 
11,990 
 

Long-term Debt
20,480 
20,221 
 

Deferred Credits and Other Liabilities    
  Deferred income taxes
4,813 
4,834 
  Investment tax credit
173 
176 
  Unrealized losses on mark-to-market and hedging transactions
1,443 
1,548 
  Other
4,798 
3,784 
 

    Total deferred credits and other liabilities
11,227 
10,342 
 

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

Minority Interests
1,640 
1,904 
 

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

    Total preferred and preference stock
157 
157 
 

Common Stockholders' Equity    
  Common stock, no par, 2 billion shares authorized; 900 million and 895 million shares
  outstanding as of March 31, 2003 and December 31, 2002, respectively
9,316 
9,236 
  Retained earnings
6,387 
6,417 
  Accumulated other comprehensive loss
(421)
(709)
 

    Total common stockholders' equity
15,282 
14,944 
 

  Total Liabilities and Common Stockholders' Equity
$63,245 
$60,966 
 

 

Supplemental Disclosures
Quarter Ended March 31, 2003
         
         
Duke Energy Corporation

  1Q03      
 
     
Fair Value of Trading Contracts ($ in billions)        
  Mark-to-market portfolio
$0.3 
     
 
     
Daily Value at Risk (Dvar) ($ in millions)
     
 
     
95% Confidence Level, One-Day Holding Period, Two-Tailed
     
  Average for the Period
$21 
     
         
         
Duke Energy North America        

(in millions unless stated otherwise)        
         
  Proprietary Structured Owned  
Merchant Energy Gross Margin Trading Contracts Assets Total
 



  Mark-to-market gross margin
$4 
$26 
$1 
$31 
  Accrual gross margin
n/a 
16 
146 
162 
 



Total Gross Margin
$4 
$42 
$147 
193 
 


 
Reconciliation to Segment EBIT:        
  Plant depreciation      
(53)
  Plant operating and maintenance expenses      
(68)
  General and administrative expenses      
(49)
       
DENA Segment EBIT      
$23 
       
         
         
Owned Assets - Merchant Plant Production        
      and Hedging Information 2003 * 2004 2005  
 


 
Estimated available production (millions of MWh)
69 
99 
108 
 
  Combined cycle
55 
80 
86 
 
  Peaker units
14 
19 
22 
 
 
 
Estimated production (millions of MWh)
22 
36 
40 
 
  Combined cycle
21 
33 
36 
 
  Peaker units
 
 
 
Hedges
 
  Estimated production hedged
96%
76%
63%
 
  Averaged price hedged ($/MWh)
$50 
$43 
$41 
 
         
         
         
* Information for 2003 is for the remainder of the year only (April - December).
   First quarter 2003 actual production was 5.1 million MWh.

 

Supplemental Disclosures
Quarter Ended March 31, 2003
               
               
Duke Energy North America (continued)
($ in millions)              
               
               
               
Maturity/Source of Fair Value of Energy Contract Net Assets 2003 2004 2005 2006 2007 Over 5 Years Total Fair Value








Proprietary Trading              
  Actively quoted prices and other   external sources
$(3)
$110 
$(6)
$(1)
$ - 
$2 
$102 
  Modeled
12 
54 
13 
19 
(3)
95 
 






 
$9 
$164 
$7 
$18 
$ - 
$(1)
$197 
 





 
Structured Contracts
  Actively quoted prices and other   external sources
$133 
$2 
$11 
$ - 
$ - 
$ - 
$165 
  Modeled
(39)
(64)
(66)
59 
37 
125 
52 
 






 
$94 
$(43)
$(55)
$59 
$37 
$125 
$217 
 





 
Owned Assets
  Actively quoted prices and other   external sources
$305 
$251 
$96 
$ - 
$ - 
$ - 
$652 
  Modeled
66 
108 
68 
122 
364 
 






 
$305 
$251 
$162 
$108 
$68 
$122 
$1,016 
 





 
             
    Total Fair Value of Energy Contract Net Assets *
$1,430 
             
               
* Total Fair Value of Energy Contract Net Assets represents the combination of amounts presented as assets and liabilities related to unrealized gains or losses on mark-to-market and hedging transactions for Duke Energy North America.
               
               
Terms of Reference
               
Estimated Available Production
Represents the amount of electric power capable of being generated from owned assets, after adjusting for scheduled maintenance and outage factors. For simple cycle facilities, only peak demand periods were included in this calculation.
               
Estimated Production
Represents the amount of power expected to be sold in a future period. This figure is based on economic projections modeled by Duke Energy personnel.
               
Estimated Production Hedged
Represents the portion of estimated production which has been sold.
               
Owned Assets
Represents activity around energy assets owned or leased, including hedges of power sales and fuel purchase requirements and tolls, transmission, transportation and storage contracts that hedge owned assets. Normal purchases and sales associated with such assets are included in the Merchant Energy Gross Margin table, yet excluded from the Maturity/Sources of Fair Value for Energy Contract Net Assets table. Economic hedges of Owned Assets that do not meet hedge accounting standards will still be classified as Owned Assets in the Merchant Energy Gross Margin table.
               
Proprietary Trading
Standardized contracts entered into to take a market view, capture market price changes or put capital at risk.
               
Structured Contracts
Non-standard contracts not associated with owned or leased assets and involving significant tailoring of terms to meet customer needs, and associated hedges. This category includes tolls, transmission, transportation and storage contracts, except those that hedge Owned Assets. Economic hedges of Structured Contracts that do not meet hedge accounting standards will still be classified as Structured Contracts in the Merchant Energy Gross Margin table.