News Release
March 12, 2003

DUKE ENERGY CHAIRMAN AND CEO RICHARD B. PRIORY TO SPEAK AT MORGAN STANLEY ELECTRICITY AND ENERGY CONFERENCE TODAY

Priory will announce $200 million decrease in 2003 capital expenditures to further enhance cash flow

 

CHARLOTTE, NC – Duke Energy Chairman and Chief Executive Officer Richard B. Priory will reiterate key initiatives for 2003 and discuss the company’s improved cash flow outlook for the next three years during his presentation at the Morgan Stanley Electricity and Energy conference today in New York. Priory is scheduled to speak at 10:20 a.m. His presentation to the conference will be a webcast and available via the investors' section of the company’s Web site, www.duke-energy.com.

 

“In response to current challenges, Duke Energy is focusing on reducing risks and restructuring our business to be well positioned as the energy marketplace regains its health and vigor,” Priory will say in prepared remarks.

 

He will review the company’s six key actions for 2003, as set forth in January. These include:

 

·         Focus on positive net cash generation, which will strengthen the company’s balance sheet and enhance liquidity,

·         Invest in strongest businesses,

·         Size businesses to market realities,

·         Strengthen relationships with customers,

·         Address merchant energy issues and

·         Reduce regulatory and legal risk and uncertainty.

 

Priory will also discuss the company’s successful efforts to reduce capital expenditures in 2003 and make comments on cash flow for 2004 and 2005.

 

Progress on 2003 Financial Initiatives

“To ensure that we have maximum financial flexibility, I directed all our business units to refocus their efforts on reducing the forecasted $3.2 billion capital expenditures for 2003. This effort has been successful, and we now expect capital expenditures to come in at $3 billion. This reduction will further enhance our cash positive position in 2003, enabling us to pay down more debt.”

 

Priory will provide an update on the company’s progress toward meeting its goal for the sale of non-strategic assets in 2003.

 

“As you know, we have forecast non-strategic asset sales for this year to be approximately $600 million. To date, we have made solid progress toward that target. In January, we completed the planned sale of the Empire State Pipeline to National Fuel Gas for a sales price of $240 million. With the assumption of $58 million of debt by the purchaser, net proceeds from the sales were approximately $180 million. We have also sold our remaining units in Northern Border Partners, LP and sold a portion of our loan portfolio held by Duke Capital Partners for combined proceeds of $75 million. As a result, in the first 60 days of the year we have realized a significant portion of our full-year divestiture target.

 

“To secure the remaining portion of our $600 million divestiture target, we have a variety of non-strategic assets that we expect to monetize in the coming months. Last week we announced our plans to exit the merchant financing business. We will monetize Duke Capital Partners' portfolio of approximately $300 million, and we expect that approximately 50 percent of this portfolio will either mature or be sold before the end of 2003. The remainder of the portfolio should be closed out during the first half of 2004."

 

Priory will also reaffirm the company’s support of its dividend.

 

“Duke Energy has paid quarterly dividends for 76 consecutive years and our plans for 2003, which have been approved by the board of directors, fully support the dividend at the current payout of $1.10 per share.”

 

Cash Flow in 2004 and 2005

Priory will discuss how the company’s cash flow outlook for 2004 and 2005 is supported by stable growth at the company’s two largest businesses, as well as reduced capital expenditure requirements.

 

“While our plans for 2003 include about $3 billion in capital expenditures, in 2004 and 2005 we can support our current operations with approximately $1.8 billion in maintenance capex. Any additional capex over this amount would be discretionary and driven by solid-growth opportunities.

 

“Positive net cash flow from 2003 through 2005 will be strongly supported by modest future earnings growth at our regulated operations. Franchised Electric's sales typically grow by about 2 percent a year and Natural Gas Transmission is expected to deliver earnings before interest and taxes growth of 5 percent to 7 percent. This long-term stable growth, coupled with lower capex and debt levels, will continue to improve Duke Energy’s cash flow over the next couple of years.”

 

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.

 

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