News Release
July 30, 2003

DUKE ENERGY REPORTS SECOND QUARTER 2003 RESULTS

  • EPS of 46 cents includes 16 cents of gains from asset sales
  • Sound performance from regulated businesses
  • Quarterly results include improved performances from Duke Energy International and Field Services
  • Company surpasses 2003 goal of $1.5 billion in gross proceeds from asset sales, including $280 million of assumed debt


CHARLOTTE, N.C. - Duke Energy reported second quarter 2003 earnings of 46 cents per share, or $424 million in net income, compared to 57 cents per share, or $474 million net income in second quarter 2002.

This quarter's results included $237 million of pre-tax gains on sales of equity investments and assets, or 16 cents per share, compared with $61 million in pre-tax gains for second quarter 2002, or 4 cents per share.

For the first half of 2003, Duke Energy earned 71 cents per share, or $649 million in net income, which included a first quarter 18 cent, or $162 million, after-tax charge for the cumulative effect of a change in accounting principles. Before the effect of this change in accounting principles, Duke Energy earned 89 cents, or $811 million in net income, in the first half of 2003. The company earned $1.05 a share, or $856 million in net income, in the first half of 2002.

"We are executing on the strategic directives we laid out in January and operating our businesses with discipline and efficiency," said Richard B. Priory, chairman and chief executive officer. "2003 is proving to be another challenging year with a weak merchant energy sector and a sluggish economy. Despite these challenges, we still believe we will achieve full year 2003 results in the range of $1.35 -- $1.60 earnings per share (EPS) before a charge for the cumulative effect of a previously announced change in accounting principles.

"Our strategic divestitures have bolstered cash flow without drawing from the lifeblood of the company," Priory said. "Duke Energy is becoming a leaner, stronger and more agile competitor, backed by large, profitable, regulated businesses with predictable cash flows and earnings."

BUSINESS UNIT RESULTS

Consolidated Earnings before Interest and Taxes (EBIT) was $1.02 billion, which included $237 million in pre-tax gains on sales of equity investments and assets, compared with $1.06 billion in second quarter 2002, which included $61 million in pre-tax gains from asset sales. For the first half of 2003, EBIT was $1.99 billion, an increase of 9 percent over EBIT for the first six months of 2002. Below is a reconciliation of EBIT to net income:

($ in Millions ) Three
Months Ended
6/30/03
Three
Months Ended
6/30/02

Six
Months Ended
6/30/03

Six
Months Ended
6/30/02
EBIT, as defined below
$1,020
$1,057
$1,994
$1,827
Cumulative effect of change in accounting principles, net of tax
----
----
162
----
Income taxes
195
247
390
405
Minority Interest
60
62
112
94
Interest expense
341
274
681
472
Net income
$424
$474
$649
$856

Franchised Electric
Second quarter 2003 EBIT from Franchised Electric was $316 million, compared to second quarter 2002 EBIT of $388 million. Results were primarily affected by significantly cooler than normal weather during the quarter. In second quarter 2003, cooling degree days were 30 percent below average. By comparison, cooling degree days in second quarter 2002 were 22 percent above average. Additionally, results were lower due to higher depreciation and amortization costs of $26 million, primarily related to the North Carolina 2002 clean air legislation. Those reductions were partially offset by increased plant efficiency and slightly higher wholesale power sales.

Year-to-date EBIT for Franchised Electric was $770 million, compared with $772 million in 2002.

Natural Gas Transmission
The Duke Energy Natural Gas Transmission (DEGT) segment reported second quarter 2003 EBIT of $306 million, compared to $313 million in second quarter 2002. Results included a pre-tax gain of $31 million from the sale of DEGT's ownership interest in Alliance pipeline/Aux Sable processing plant. Second quarter 2002 results included a $27 million success fee associated with the completion of the Gulfstream Natural Gas System LLC, a 50-percent joint venture of DEGT.

During the quarter, Gulfstream signed a 23-year agreement with Florida Power & Light Company (FPL) in which Gulfstream will provide up to 350 million cubic feet per day of firm natural gas transportation service to FPL for its Martin and Manatee power plant expansions beginning in 2005. With this agreement, Gulfstream will increase its pipeline capacity contracted to 65 percent with an average contract term of 21 years. Placed into service last year, Gulfstream is currently a 581-mile pipeline system with the capacity to deliver 1.1 billion cubic feet of natural gas each day to serve Florida's growing energy needs.

Year-to-date EBIT for DEGT was $729 million, compared with $579 million in 2002.

Duke Energy North America
Duke Energy North America (DENA) reported EBIT of $211 million in second quarter 2003, compared to EBIT of $196 million in second quarter 2002. Results for the second quarter included a pre-tax gain of $175 million from the sale of DENA's ownership interest in American Ref-Fuel. Second quarter 2002 results included a $46 million increase from the appreciation of the fair value of the mark-to-market portfolio as a result of applying improved and standardized valuation modeling techniques to all North American regions. Lower operating results in second quarter 2003 were due to decreased spark spreads, a reduction in mark-to-market earnings, and higher depreciation expenses related to the addition of 2,535 megawatts of new capacity.

Year-to-date EBIT for DENA was $234 million, compared with $250 million in 2002.

International Energy
For second quarter 2003, Duke Energy International (DEI) reported EBIT of $111 million, nearly doubling second quarter 2002 EBIT of $57 million. This quarter's performance was positively impacted by improved gas marketing results in Europe and cost-reduction efforts. Results for the quarter were also positively impacted by $37 million related to a favorable regulatory audit in Brazil and early termination of a natural gas sales contract. These results were partially offset by the change in the values of the Brazilian real and the Mexican peso against the U.S. dollar, from the second quarter of last year.

Year-to-date EBIT for DEI was $165 million, compared with $114 million in 2002.

Field Services
The Field Services business segment, which represents Duke Energy's 70-percent interest in Duke Energy Field Services (DEFS), reported second quarter 2003 EBIT of $76 million compared to $41 million in second quarter 2002. The effects of higher natural gas prices and hedging results related to the price movements of natural gas liquids (NGL) offset the favorable impact of higher NGL prices during the period. Results were positively impacted by a pre-tax gain on sale of assets of $18 million and a pre-tax gain on sale of TEPPCO class B units of $11 million. In second quarter 2002, results were negatively impacted by $13 million due to increased reserves primarily related to imbalances with customers and suppliers and a storage inventory write-down charge.

Year-to-date EBIT in 2003 for Field Services was $109 million compared to $76 million in 2002.

Other Operations
Other Operations, including Crescent Resources, DukeNet Communications, Duke Capital Partners, Duke/Fluor Daniel (D/FD), Duke Energy Merchants and Energy Delivery Services, reported EBIT of $18 million in second quarter 2003, compared to EBIT of $128 million in second quarter 2002.

Results were affected by reduced results at D/FD and Duke Capital Partners. D/FD's second quarter 2002 results were positively impacted by the completion of 10 plants. Second quarter 2002 results from Other Operations also benefited from $68 million in pre-tax gains on the sales of water operations, the former Duke Engineering & Services business and Duke Energy Merchants' interest in Canadian 88, offset by a pre-tax loss of $7 million due to the sale of DukeSolutions.

Year-to-date EBIT in 2003 for Other Operations was negative $8 million compared to $145 million in positive EBIT in 2002.

On July 9, Duke Energy and Fluor Corporation announced that D/FD, a partnership between affiliates of the two companies, will be dissolved. The partners will wind down the business over the next two years.

INTEREST EXPENSE

Interest expense was $341 million for second quarter 2003, compared to $274 million for second quarter 2002. The increase was primarily due to reduced capitalized interest at DENA resulting from significantly lower plant construction activity in 2003.

CASH FLOW

For the six months ending June 30, 2003, cash flow from operations was $1.9 billion, compared to $1.5 billion for the first six months ending June 30, 2002. In 2003, Duke Energy expects cash flow from operations, which includes ongoing 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.

Earlier this month the company announced that it had surpassed its 2003 goal of realizing more than $1.5 billion in gross proceeds from asset sales, including $280 million in assumed debt. Proceeds in excess of the amounts needed to help fund capital expenditures and pay the dividend will be available to pay down debt. The company believes it will pay down approximately $1.8 billion in debt and trust preferred securities this year and $5.5 billion in debt and trust preferred securities by the end of 2005.

LIQUIDITY AND CAPITAL RESOURCES

Duke Energy's consolidated capital structure as of June 30, 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 $4.7 billion as of June 30, 2003. The companies had borrowings and letters of credit outstanding under these programs of approximately $1.6 billion as of June 30, 2003, resulting in unused capacity of approximately $3.1 billion. The company also had approximately $1.5 billion in cash and cash equivalents as of June 30, 2003.

ADDITIONAL INFORMATION

Additional information, including EPS reconciliation data and a schedule for Duke Energy Field Services gas volume and margin by contract type, can be obtained at Duke Energy's second quarter 2003 earnings information Web site at: www.duke-energy.com/investors/earnings/.

FINANCIAL MEASURES

The primary performance measure used by management to evaluate segment performance is EBIT, which at the segment level represents 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.

On a consolidated basis, EBIT is also used as one of the measures to assess performance and represents the combination of operating income and other income and expenses as presented on the consolidated statements of income. The use of EBIT as one of the performance measures on a consolidated basis follows the use of EBIT for assessing segment performance, and we believe EBIT is used by our investors as a supplemental financial measure in the evaluation of our consolidated results of operations.

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 electric 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 800/946-0786 in the United States or 719/457-2662 outside the United States. The confirmation code is 159448. Please call in five to 10 minutes prior to the scheduled start time. A replay of the conference call will be available by dialing 888/203-1112 with a confirmation code of 159448. The international replay number is 719/457-0820, confirmation code 159448. A replay and transcript also will be available by accessing the investors' section of the company's Web site. 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: 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, natural 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 Phone: 704/382-8333
Analyst Contact: Greg Ebel
Phone: 704/382-8118

 

JUNE 2003
QUARTERLY HIGHLIGHTS
(unaudited)
 
         
 
Three Months Ended
June 30,
Six Months Ended
June 30,
 
 

(In millions, except where noted)
2003
2002
2003
2002

COMMON STOCK DATA        
  Earnings Per Share (before cumulative effect of change        
    in accounting principles)        
    Basic
$0.46 
$0.57 
$0.89 
$1.05 
    Diluted
$0.46 
$0.56 
$0.89 
$1.04 
  Earnings Per Share
 
 
 
 
    Basic
$0.46 
$0.57 
$0.71 
$1.05 
    Diluted
$0.46 
$0.56 
$0.71 
$1.04 
  Dividends Per Share
$0.550 
$0.550 
$0.825 
$0.825 
  Weighted-Average Shares Outstanding
 
 
 
 
    Basic
902 
831 
899 
809 
    Diluted
903 
834 
900 
813 
 
 
 
 
 

INCOME
 
 
 
 
  Operating Revenues
$5,268 
$3,873 
$11,573 
$7,181 
 



  Earnings Before Interest and Taxes (EBIT)
1,020 
1,057 
1,994 
1,827 
  Interest Expense
341 
274 
681 
472 
  Minority Interest Expense (a)
60 
62 
112 
94 
  Income Taxes
195 
247 
390 
405 
  Cumulative Effect of Change in Accounting Principles,
(162)
    net of tax and minority interest



         
  Net Income
424 
474 
649 
856 
  Dividends and Premiums on Redemptions of
10 
    Preferred and Preference Stock



         
  Earnings Available for Common Stockholders
$417 
$470 
$639 
$849 
 




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
 
 
$22,766 
$22,010 
Book Value Per Share
 
 
$17.38 
$17.89 
Actual Shares Outstanding
 
 
904 
832 

CAPITAL AND INVESTMENT EXPENDITURES
 
 
 
 
  Franchised Electric
$310 
$323 
$486 
$567 
  Natural Gas Transmission (b)
233 
253 
431 
2,290 
  Field Services
31 
74 
62 
184 
  Duke Energy North America
97 
785 
257 
1,521 
  International Energy
18 
136 
43 
217 
  Other Operations (c)
79 
171 
148 
305 
  Other
(43)
(36)
  Cash acquired in acquisitions
(77)
 



Total Capital and Investment Expenditures
$725 
$1,706 
$1,430 
$5,007 
 



 
 
 
 
 

EBIT BY BUSINESS SEGMENT
 
 
 
 
  Franchised Electric
$316 
$388 
$770 
$772 
  Natural Gas Transmission
306 
313 
729 
579 
  Field Services
76 
41 
109 
76 
  Duke Energy North America
211 
196 
234 
250 
  International Energy
111 
57 
165 
114 
  Other Operations (c)
18 
128 
(8)
145 
  Other
(80)
(131)
(111)
(238)
 



Total Segment and Other EBIT
958 
992 
1,888 
1,698 
  EBIT Attributable to:
 
 
 
 
    Minority Interests
46 
42 
92 
56 
    Third Party Interest Income
15 
11 
56 
    Foreign Currency Remeasurement Gain
17 
 



Total EBIT
$1,020 
$1,057 
$1,994 
$1,827 
 



         
(a) Includes financing expenses related to securities of subsidiaries of $28 million and $35 million for the three months ended June 30, 2003 and 2002, respectively, and $55 million and $70 million for the six months ended June 30, 2003 and 2002, respectively.
(b) 2002 six months ended amount includes $1.7 billion (net of cash acquired) paid to Westcoast Energy shareholders related to the acquisition.
(c) Beginning in 2003, Other Energy Services and Duke Ventures were combined into Other Operations.

 

JUNE 2003
QUARTERLY HIGHLIGHTS
(unaudited)
         
 
Three Months Ended
June 30,
Six Months Ended
June 30,
 
 

(In millions, except where noted)
2003
2002
2003
2002

FRANCHISED ELECTRIC        
  Operating Revenues
$1,110 
$1,162 
$2,361 
$2,275 
  Operating Expenses
809 
790 
1,622 
1,536 
  Gain on Sale of Assets
  Other Income
15 
16 
30 
33 
 



  EBIT
$316 
$388 
$770 
$772 
 



  Sales, GWh
19,415 
20,418 
41,458 
39,939 
 
 
 
 
 

NATURAL GAS TRANSMISSION
 
 
 
 
  Operating Revenues
$692 
$621 
$1,660 
$1,071 
  Operating Expenses
421 
361 
988 
579 
  Gain on Sale of Assets
  Other Income (a)
45 
62 
79 
99 
  Minority Interest Expense
10 
23 
12 
 



  EBIT
$306 
$313 
$729 
$579 
 



  Proportional Throughput, TBtu
742 
702 
1,824 
1,372 
 
 
 
 
 

FIELD SERVICES
 
 
 
 
  Operating Revenues
$1,924 
$1,376 
$4,377 
$2,510 
  Operating Expenses
1,861 
1,333 
4,268 
2,432 
  Gain on Sale of Assets
26 
26 
  Other Income (b)
24 
11 
39 
19 
  Minority Interest Expense
37 
13 
65 
21 
 



  EBIT
$76 
$41 
$109 
$76 
 



  Natural Gas Gathered and Processed/Transported, TBtu/day
7.9 
8.4 
7.9 
8.4 
  Natural Gas Liquids Production, MBbl/d
361.5 
392.0 
368.3 
390.4 
  Average Natural Gas Price per MMBtu
$5.41 
$3.40 
$6.00 
$2.86 
  Average Natural Gas Liquids Price per Gallon
$0.49 
$0.37 
$0.54 
$0.34 
 
 
 
 
 

DUKE ENERGY NORTH AMERICA
 
 
 
 
  Operating Revenues
$962 
$409 
$2,358 
$667 
  Operating Expenses
945 
220 
2,327 
420 
  Other Income (c)
187 
21 
196 
16 
  Minority Interest (Benefit) Expense
(7)
14 
(7)
13 
 



  EBIT
$211 
$196 
$234 
$250 
 



  Actual Plant Production, GWh (d)
4,510 
4,704 
9,620 
8,571 
  Proportional MW Capacity in Operation
 
 
15,206 
12,671 
 
 
 
 
 

INTERNATIONAL ENERGY
 
 
 
 
  Operating Revenues
$366 
$219 
$748 
$508 
  Operating Expenses
266 
179 
597 
414 
  Other Income
16 
23 
24 
31 
  Minority Interest Expense
10 
11 
 



  EBIT
$111 
$57 
$165 
$114 
 



  Sales, GWh
5,318 
5,014 
10,077 
9,946 
  Proportional MW Capacity in Operation
 
 
4,887 
4,971 
  Proportional Maximum Pipeline Capacity in Operation, MMcf/d
 
 
363 
363 
 
 
 
 
 

OTHER OPERATIONS
 
 
 
 
  Operating Revenues
$435 
$159 
$991 
$347 
  Operating Expenses
425 
140 
1,014 
309 
  (Loss) Gain on Sale of Assets
(8)
61 
(20)
46 
  Other Income
17 
48 
36 
60 
  Minority Interest Expense (Benefit)
(1)
 



  EBIT
$18 
$128 
$(8)
$145 
 




(a) For 2003, other income includes approximately $31 million gain on sale of the Alliance/Aux Sable equity investment.
(b) For 2003, other income includes approximately $11 million gain on sale of Teppco Class B shares.
(c) For 2003, other income includes approximately $175 million gain on sale of the American Ref-Fuel Company equity investment.
(d) Represents 100% of GWh.

 

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except per share amounts)
             
             
     
Three Months Ended
June 30,
Six Months Ended
June 30,
     
     

     
2003
2002
2003
2002
 



Operating Revenues        
  Sales of natural gas and petroleum products
$2,980 
$1,191 
$7,065 
$2,172 
  Generation, transmission and distribution of electricity
1,492 
1,582 
3,234 
3,169 
  Transportation and storage of natural gas
415 
447 
832 
773 
  Trading and marketing net margin (loss)
63 
425 
(27)
669 
  Other
318 
228 
469 
398 
 



    Total operating revenues
5,268 
3,873 
11,573 
7,181 
 



Operating Expenses
 
 
 
 
  Natural gas and petroleum products purchased
2,642 
1,245 
6,174 
2,139 
  Fuel used in electric generation
261 
312 
698 
627 
  Net interchange and purchased power
118 
122 
243 
230 
  Operation and maintenance
963 
823 
1,681 
1,660 
  Depreciation and amortization
454 
397 
903 
741 
  Property and other taxes
134 
132 
275 
259 
 



    Total operating expenses
4,572 
3,031 
9,974 
5,656 
 



Gain on Sale of Other Assets, net
18 
61 
46 
 



Operating Income
714 
903 
1,607 
1,571 
 



Other Income and Expenses
 
 
 
 
  Equity in earnings of unconsolidated affiliates
16 
100 
50 
109 
  Gain on sale of equity investments
219 
233 
14 
  Other income and expenses, net
71 
54 
104 
133 
 



    Total other income and expenses
306 
154 
387 
256 
Interest Expense
341 
274 
681 
472 
Minority Interest Expense
60
62
112
94
     



     
 
 
 
 
Earnings Before Income Taxes
619 
721 
1,201 
1,261 
Income Taxes
195 
247 
390 
405 
 



Income Before Cumulative Effect of Change in
424 
474 
811 
856 
  Accounting Principles        
Cumulative Effect of Change in Accounting Principles,
(162)
  net of tax and minority interest



         
Net Income
424 
474 
649 
856 
Dividends and Premiums on Redemptions of Preferred and
10 
  Preference Stock



         
Earnings Available For Common Stockholders
$417 
$470 
$639 
$849 
 



Common Stock Data
 
 
 
 
  Weighted-average shares outstanding
902 
831 
899 
809 
  Earnings per share (before cumulative effect of change
 
 
 
 
  in accounting principles)        
    Basic
$0.46 
$0.57 
$0.89 
$1.05 
    Diluted
$0.46 
$0.56 
$0.89 
$1.04 
  Earnings per share
 
 
 
 
    Basic
$0.46 
$0.57 
$0.71 
$1.05 
    Diluted
$0.46 
$0.56 
$0.71 
$1.04 
  Dividends per share
$0.550 
$0.550 
$0.825 
$0.825 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
           
       
Six Months Ended
June 30,
       
       
       
2003
2002
 

CASH FLOWS FROM OPERATING ACTIVITIES
 
 
  Net income
$649 
$856 
  Adjustments to reconcile net income to net cash provided by
 
 
    operating activities:
 
 
    Depreciation and amortization (including amortization of nuclear fuel)
972 
789 
    Cumulative effect of change in accounting principles
162 
    Net realized and unrealized mark-to-market and hedging transactions
(42)
(27)
    Gains on sale of equity investments and other assets, net
(241)
(60)
    Changes in working capital and other
388 
(12)
       

      Net cash provided by operating activities
1,888 
1,546 
       

       
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
    Capital and investment expenditures, net
(1,430)
(3,300)
    Acquisition of Westcoast Energy Inc., net of cash acquired
(1,707)
    Proceeds from the sale of equity investments and other assets
 
 
      and collections on notes receivable
1,279 
267 
    Other
(51)
93 
       

      Net cash used in investing activities
(202)
(4,647)
       

       
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
    Proceeds from:
 
 
      Issuance of long-term debt
1,707 
2,743 
      Issuance of common stock and the exercise of stock options
150 
211 
    Payments for the redemption of long-term debt and guaranteed
 
 
      preferred beneficial interests, and net change in notes payable
 
 
      and commercial paper
(2,387)
165 
    Dividends paid
(524)
(459)
    Other
(7)
238 
       

      Net cash (used in) provided by financing activities
(1,061)
2,898 
       

       
 
 
  Net increase (decrease) in cash and cash equivalents
625 
(203)
  Cash and cash equivalents at beginning of period
857 
290 
       

  Cash and cash equivalents at end of period
$1,482
$87 
       

       

 

CONSOLIDATED BALANCE SHEETS
(In millions)
         
         
     
June 30,
2003
(Unaudited)
December 31,
2002
     
     
ASSETS

         
Current Assets    
  Cash and cash equivalents
$1,482
$857
  Receivables
6,111
6,766
  Inventory
1,179
1,134
  Unrealized gains on mark-to-market and hedging transactions
2,601
2,144
  Other
1,162
952
     

    Total current assets
12,535
11,853
     

     
Investments and Other Assets
  Investments in unconsolidated affiliates
1,625
2,066
  Nuclear decommissioning trust funds
803
708
  Goodwill, net of accumulated amortization
3,747
3,747
  Notes receivable
535
589
  Unrealized gains on mark-to-market and hedging transactions
3,168
2,480
  Other
1,717
1,645
     

    Total investments and other assets
11,595
11,235
     

     
Property, Plant and Equipment
  Cost
50,953
48,677
  Less accumulated depreciation and amortization
13,219
12,458
     

    Net property, plant and equipment
37,734
36,219
     

     
Regulatory Assets and Deferred Debits
  Deferred debt expense
256
263
  Regulatory asset related to income taxes
1,022
936
  Other
1,036
460
     

    Total regulatory assets and deferred debits
2,314
1,659
     

         
         
         
         
         
         
         
         
  Total Assets
$64,178
$60,966
     

       

 

CONSOLIDATED BALANCE SHEETS
(In millions)
         
         
     
June 30,
2003
(Unaudited)
December 31,
2002
     
     
 

LIABILITIES AND COMMON STOCKHOLDERS' EQUITY    
         
Current Liabilities
 
 
  Accounts payable
$5,259 
$5,590 
  Notes payable and commercial paper
737 
915 
  Taxes accrued
653 
156 
  Interest accrued
332 
310 
  Current maturities of long-term debt and preferred stock
936 
1,331 
  Unrealized losses on mark-to-market and hedging transactions
2,164 
1,918 
  Other
1,820 
1,770 
 

    Total current liabilities
11,901 
11,990 
 

     
 
 
Long-term Debt
21,095 
20,221 
 

 
 
Deferred Credits and Other Liabilities
 
 
  Deferred income taxes
5,157 
4,834 
  Investment tax credit
171 
176 
  Unrealized losses on mark-to-market and hedging transactions
2,195 
1,548 
  Other
4,744 
3,784 
 

    Total deferred credits and other liabilities
12,267 
10,342 
 

     
 
 
Commitments and Contingencies
 
 
     
 
 
Guaranteed Preferred Beneficial Interests in Subordinated
 
 
Notes of Duke Energy Corporation or Subsidiaries
1,166 
1,408 
 

 
 
Minority Interests
1,884 
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; 904 million
 
 
    and 895 million shares outstanding as of June 30, 2003
    and December 31, 2002, respectively
9,389 
9,236 
       
  Retained earnings
6,314 
6,417 
  Accumulated other comprehensive income (loss)
(709)
 

    Total common stockholders' equity
15,708 
14,944 
 

  Total Liabilities and Common Stockholders' Equity
$64,178 
$60,966 
 

     
       

 

Supplemental Disclosures
Quarter Ended June 30, 2003
         
         
         
Duke Energy Corporation        

 
2Q03
     
 
     
Mark-to-market Portfolio (in billions)
$0.3 
 
 
 
 
 
 
 
 
Daily Value at Risk (DvaR) (in millions)
 
 
 
 
 
 
 
 
 
95% Confidence Level, One-Day Holding Period, Two-Tailed
 
 
 
 
    Average for the Period
$13 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Duke Energy North America
 
 
 
 

(in millions unless stated otherwise)
Q-T-D June 30, 2003
   
 
Proprietary
Trading 
Structured
Contracts 
Owned
Assets 
 Total 
Merchant Energy Gross Margin





    Mark-to-market gross margin
$10 
$59 
$- 
$69 
    Accrual gross margin (loss)
n/a 
(38)
185 
147 
 



Total Gross Margin
$10 
$21 
$185 
216 
 


 
 
 
 
 
 
Reconciliation to Segment EBIT:
 
 
 
 
        Plant depreciation
 
 
 
(58)
        Plant operating and maintenance expenses
 
 
 
(72)
        General and administrative and other expenses
 
 
 
(50)
        Gain on sale of American Ref-Fuel
 
 
 
175 
       
DENA Segment EBIT
 
 
 
$211 
       
 
 
 
 
 
 
 
 
 
 
Owned Assets - Merchant Plant Production
 
 
 
 
                and Hedging Information
2003 * 
2004 
2005 
 




 
Estimated available production (millions of MWh)
47 
99 
108 
 
        Combined cycle
38 
80 
86 
 
        Peaker units
19 
22 
 
 
 
 
 
 
Estimated production (millions of MWh)
16 
34 
37 
 
        Combined cycle
15 
32 
35 
 
        Peaker units
 
 
 
 
 
 
Hedges
 
 
 
 
        Estimated production hedged
93% 
85% 
68% 
 
        Average price hedged ($/MWh)
$50 
$44 
$39 
 
         
* Information for 2003 is for the remainder of the year only
 
 
 
 
(July - December). 

 

Supplemental Disclosures
Quarter Ended June 30, 2003
               
               
               
Duke Energy North America (continued)              

(in millions)              
               
               
Maturity/Source of Fair Value of
2003
2004
2005
2006
2007
Over5 Years
TotalFair Value
Energy Contract Net Assets








Proprietary Trading              
  Actively quoted prices and other external sources
$65
$116
$-
$(1)
$-
$6
$186
  Modeled
9
18
11
20
(1)
(7)
50
 






 
$74
$134
$11
$19
$(1)
$(1)
$236
 





 
Structured Contracts
  Actively quoted prices and other external sources
$73
$14
$19
$3
$(1)
$(1)
$107
  Modeled
(18)
(40)
(31)
29
34
71
45
 






 
$55
$(26)
$(12)
$32
$33
$70
$152
 





 
               
Owned Assets
  Actively quoted prices and other external sources
$290
$355
$149
$8
$-
$-
$802
  Modeled
-
-
78
161
124
223
586
 






 
$290
$355
$227
$169
$124
$223
$1,388
 





 
             
 
Total Fair Value of Energy Contract Net Assets *
$1,776
             
               
               
* 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 merchant 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, transportations 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 of 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 contracts, transportation contracts 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.