DUKE ENERGY REPORTS THIRD QUARTER 2003 RESULTS
- Reported EPS of 5 cents in third quarter 2003 – excluding
charges of 30 cents related to special items, EPS was 35 cents
- Excluding special items and change in accounting principles,
the company now expects 2003 ongoing EPS to be between $1.20 -- $1.25
- Company implements cost-reduction plan – expected
to reduce annual pretax expenses by more than $200 million
- Company is on track to pay down debt $1.8 billion by year
end, and $5.5 billion by the end of 2005
CHARLOTTE, N.C. – Duke Energy reported third quarter 2003 earnings
of 5 cents per share, or $49 million in net income, compared to 27 cents
per share, or $230 million in net income in third quarter 2002.
Ongoing earnings per share (EPS) for third quarter 2003, which excludes
special items, was 35 cents versus 51 cents in ongoing EPS in third
quarter 2002.
Duke Energy’s focus on generating positive cash flow and reducing
debt continues to show favorable results. The company has generated
gross proceeds of $1.9 billion, including $346 million of assumed debt,
in 2003 from asset sales that have been announced or closed. The company
reduced $1.7 billion of net debt and trust preferred securities during
the first nine months of 2003. By year end, the company expects to meet
its target to reduce net debt and trust preferred securities by $1.8
billion. Duke Energy’s capital expenditures for 2003 are now expected
to be $2.8 billion, $200 million lower than the previously forecasted
$3 billion. Liquidity remains strong, with $1.8 billion in cash and
cash equivalents as of Sept. 30, 2003.
“We have made tough decisions necessary to strengthen our financial
position, and will continue that discipline as we move into 2004,”
said Richard B. Priory, chairman and chief executive officer.
Priory added that despite the continuous steady performance from our
regulated businesses, as well as Field Services and International Energy,
the lower than expected results at Duke Energy North America (DENA)
will likely cause full-year ongoing 2003 EPS to be between $1.20 --
$1.25. This guidance excludes any impacts from special items and changes
in accounting principles.
Special items for the quarter include:
Third Quarter |
EPS Impact 2003 |
EPS Impact 2002 |
| • |
Tax benefit on 2002 goodwill impairment of International Energy
European gas trading -- $52 million |
$ 0.06 |
$ --- |
| • |
DENA goodwill write-off -- $254 million |
(0.18) |
--- |
| • |
Severance cost associated with work force reduction -- $105 million
in 2003; $33 million in 2002 |
(0.08) |
(0.02) |
| • |
Net gain/(loss) on asset sales – ($71 million) in 2003; $14 million
in 2002 |
(0.05) |
0.01 |
| • |
Settlement with the S.C. Public Service Commission -- $46 million |
(0.03) |
--- |
| • |
Settlement with the Commodity Futures Trading Commission -- $17
million |
(0.02) |
--- |
| • |
Write-offs of site development costs, termination of certain turbines
on order; plus write-down of other uninstalled turbines, demobilization
costs related to deferred plants and partial impairment of a merchant
plant -- $286 million |
--- |
(0.23) |
| TOTAL |
$ (0.30) |
$ (0.24) |
| EPS, as reported |
0.05 |
0.27 |
| EPS, ongoing |
0.35 |
0.51 |
COST-REDUCTION PLAN
Duke Energy began to implement a broad-based, cost-reduction plan during
the quarter. Actions taken to date will result in reduced annual pretax
expenses of more than $200 million beginning in 2004. As part of this
ongoing initiative, the company took a pretax severance-related charge
of $105 million, or 8 cents per share, in third quarter 2003. The company
expects to take additional severance-related charges in fourth quarter
2003 of about $30 million.
The company expects its global work force of 25,000 to be reduced by
about 8 percent as a result of the current initiative.
“Through the corporatewide, cost-reduction plan, we are examining
all aspects of our business operations,” said Fred Fowler, president
and chief operating officer of Duke Energy. “These actions are
fundamental to our efforts to position the company for future growth.”
BUSINESS UNIT RESULTS
Consolidated earnings before interest and taxes (EBIT) was $352 million,
compared with $666 million in third quarter 2002. For the first nine
months of 2003, consolidated EBIT was $2.3 billion, compared to $2.5
billion in the prior year.
Below is a reconciliation of consolidated EBIT to net income:
| ($ in Millions ) |
Three
Months
Ended
9/30/03
|
Three
Months
Ended
9/30/02
|
Nine
Months
Ended
9/30/03
|
Nine
Months
Ended
9/30/02
|
| Consolidated EBIT, as defined below |
$352 |
$666 |
$2,346 |
$2,493 |
| Cumulative effect of change in accounting principles, net of tax |
--- |
--- |
162 |
--- |
| Interest expense |
391 |
314 |
1,072 |
786 |
| Income tax expense (benefit) |
(78) |
108 |
312 |
513 |
| Minority interest expense (benefit) |
(10) |
14 |
102 |
108 |
| Net income |
$49 |
$230 |
$698 |
$1,086 |
Franchised Electric
Third quarter 2003 EBIT from Franchised Electric was $436 million, compared
to third quarter 2002 EBIT of $575 million. Cooler than normal weather
and a sluggish economy had a negative impact on results for the quarter.
During the quarter, Duke Power took an amortization charge of $53 million
related to the N.C. clean air legislation, which was $35 million more
than anticipated. EBIT was further reduced by $30 million due to a regulatory
settlement with the South Carolina Public Service Commission. Franchised
Electric also recorded severance charges of about $46 million in third
quarter 2003 compared with $21 million in third quarter 2002. As a result
of the additional clean air amortization, Duke Power now expects full-year
2003 EBIT to be between $1.5 billion and $1.6 billion, excluding special
items.
Cooling degree days were 21 percent below last year’s quarter
and 16 percent below normal. The effects of milder weather compared
with last year had a negative impact on EBIT of about $35 million for
the quarter.
Overall kilowatt-hour sales dropped 4.7 percent for the quarter versus
third quarter of last year. The sluggish economy in North Carolina and
South Carolina particularly affected industrial sales, which fell 8.9
percent for the quarter. Milder weather hurt residential sales, which
fell 5 percent versus last year’s quarter.
However, overall customer growth continues its upward track –
with an increase of another 40,000 customers compared to last year’s
quarter.
Year-to-date EBIT for Franchised Electric was $1,206 million, compared
with $1,347 million year to date in 2002.
Natural Gas Transmission
Duke Energy Gas Transmission (DEGT) reported third quarter 2003 EBIT
of $280 million, compared to $288 million in third quarter 2002. DEGT
had gains on asset sales of $31 million during third quarter 2003, compared
with $18 million in third quarter 2002. DEGT also recorded $18 million
in severance charges during third quarter 2003.
Increased earnings from completed expansion projects also contributed
to DEGT’s quarterly results. DEGT’s major 2003 expansion
projects, Patriot and HubLine, are slated to begin operations in the
fourth quarter.
Year-to-date EBIT for DEGT was $1,009 million, compared with $867 million
year to date in 2002.
Duke Energy North America
Duke Energy North America (DENA) reported an EBIT loss of $411 million
in third quarter 2003, compared to an EBIT loss of $107 million in third
quarter 2002. In third quarter 2003, mild weather, high natural gas
prices and low spark spreads in many parts of the nation combined to
severely impact DENA’s earnings. During the quarter, the company
wrote off $254 million of goodwill, which was primarily related to the
formation of DENA’s trading and marketing business. This charge
reflects the reduction in scope and scale of Duke Energy Trading and
Marketing’s business and the continued deterioration of market
conditions affecting DENA.
DENA was also affected in the quarter by an $81 million EBIT loss on
various pending asset sales and assets held for sale and a $17 million
charge related to its portion of Duke Energy Trading and Marketing’s
settlement with the Commodity Futures Trading Commission.
DENA also took a $5 million charge for severance costs during the third
quarter, compared to $12 million in the prior year’s third quarter.
Third quarter 2002 included $207 million of charges related to impairments
of turbines, site development costs, demobilization, severance costs
and impairment of a merchant plant.
Year-to-date EBIT loss for DENA was $177 million, compared with positive
EBIT of $143 million year to date in 2002.
International Energy
For third quarter 2003, Duke Energy International (DEI) reported EBIT
of $44 million, compared to third quarter 2002 EBIT loss of $41 million
which included $91 million in development cost write-offs and turbine
impairments. Third quarter 2003 results include a $7 million charge
for environmental reserves relating to a prior period. Excluding this
charge and the write-offs and impairments from last year, results for
the third quarter were essentially flat compared with the same period
last year. Positive results from the Latin American and European operations
offset foregone earnings associated with the sale of the company’s
interest in generating facilities in Indonesia earlier in 2003 and a
$3 million severance charge during third quarter 2003.
Year-to-date EBIT for DEI was $209 million, compared with $73 million
year to date in 2002.
Field Services
The Field Services business segment, which represents Duke Energy's
70-percent interest in Duke Energy Field Services reported third quarter
2003 EBIT of $53 million compared to $23 million in third quarter 2002.
The favorable impact of higher natural gas liquids (NGL) prices during
the period was partially offset by the effects of higher natural gas
prices and hedging results related to the price movements of NGLs during
the period. In third quarter 2002, results were negatively impacted
by higher operating and administrative costs, an increase in its provision
for gas imbalances with customers and suppliers, and other charges related
to its internal review and reconciliations of balance sheet accounts.
Year-to-date EBIT in 2003 for Field Services was $162 million compared
to $99 million year to date in 2002.
Other Operations
Other Operations, including Crescent Resources, DukeNet Communications,
Duke Capital Partners, Duke/Fluor Daniel, Duke Energy Merchants and
Energy Delivery Services, reported EBIT of $21 million in third quarter
2003, compared to EBIT of $30 million in third quarter 2002.
Year-to-date EBIT in 2003 for Other Operations was $13 million compared
to
$175 million in year-to-date EBIT in 2002. Lower results were driven
by fewer plant completions by Duke/Fluor Daniel in 2003 and wind-down
costs at Duke Capital
Partners, including write-downs on investments, partially offset by
improved results
from Crescent Resources. Year-to-date results for 2002 included $30
million in net gains related to asset sales.
INTEREST EXPENSE
Interest expense was $391 million for third quarter 2003, compared
to $314 million for third quarter 2002. The increase was primarily due
to lower capitalized interest of
$33 million and $24 million of interest associated with the reclassification
in the third quarter of certain trust preferred securities from minority
interest to long-term debt. Interest expense also increased $16 million
this quarter as a result of the settlement with the South Carolina Public
Service Commission which required the write-off of a portion of previously
capitalized debt costs.
INCOME TAX
Duke Energy had a $52 million income tax benefit in third quarter 2003
related to the goodwill impairment of its gas trading business in Europe,
recorded in 2002.
CASH FLOW
For the nine months ending Sept. 30, 2003, cash flow from operations
was $2.9 billion, compared to $3.3 billion for the first nine months
ending Sept. 30, 2002.
LIQUIDITY AND CAPITAL RESOURCES
Duke Energy's consolidated capital structure as of Sept. 30, 2003,
including short-term debt, was 58 percent debt, 38 percent common equity
and 4 percent minority interests. Total debt to capitalization increased
as a result of a new accounting
requirement to reclassify certain trust preferred securities totaling
approximately $1.2 billion from minority interest to long-term debt
during the quarter.
Under various credit facilities, Duke Energy, Duke Capital and other
subsidiaries had the ability to borrow up to $3.5 billion as of Sept.
30, 2003. The companies had
borrowings and letters of credit outstanding under these programs of
approximately
$1.4 billion as of Sept. 30, 2003, resulting in unused capacity of approximately
$2.1 billion. The company also had approximately $1.8 billion in cash
and cash equivalents as of Sept. 30, 2003.
During third quarter, the company continued its efforts to reduce and
refinance debt in order to strengthen the balance sheet and reduce future
interest expense. These efforts include calling $328 million of 7.75
percent long-term debt and refinancing $500 million of First Mortgage
Bonds which were redeemed in October 2003.
During the quarter, the company made a voluntary cash contribution
of $181 million to its U.S. pension plan. As a result of making the
contribution, the company will not be required to make a contribution
to this plan in 2004.
ADDITIONAL INFORMATION
The company is unable to estimate forward-looking, generally accepted
accounting principle (GAAP) EPS for 2003 because the amount of special
items, if any,
impacting EPS in the fourth quarter cannot be reasonably estimated at
present. 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 third quarter 2003 earnings information Web site
at: http://www.duke-energy.com/investors/financial/latest/.
FINANCIAL MEASURES AND RECONCILIATION OF CHANGES IN NET DEBT
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 refers to changes in net debt and trust preferred securities
as representing the results of financing activities during the period,
net of changes in cash and cash equivalents. Other changes to debt balances,
including impacts of foreign currency translation, are excluded from
changes to net debt and trust preferred securities. Changes to cash
and cash equivalents are included, as management may elect to use a
portion of cash and cash equivalents to pay down debt. Accordingly,
the balance of cash and cash equivalents on hand at any point in time
can fluctuate depending upon management intent and other factors, including
desired levels of debt and financing opportunities. Management believes
that a discussion of changes to net debt and trust preferred securities
related to financing activities, combined with changes to cash and cash
equivalents, provides meaningful information to investors because it
presents a combined view of the net changes in these items over a period
of time.
Reconciliation of net debt to balance sheet debt as of Sept. 30, 2003:
| |
($ in millions) |
|
| Long-term debt, including current maturities |
$ 21,550 |
|
| Notes payable and CP |
915 |
|
| Trust preferred securities |
1,408 |
|
| Preferred members interest |
61 |
|
| Preferred stock with sinking fund requirements |
25 |
|
| Total adjusted debt at Dec. 31, 2002 |
$ 23,959 |
(a) |
| |
|
|
| Year-to-date 2003 financing activity: |
|
|
| Issuance of long-term debt |
$2,819 |
|
Redemption of long-term debt, guaranteed preferred
beneficial interests and preferred member interests, and
net paydown of commercial paper and notes payable |
|
|
| |
|
|
| |
(3,333) |
|
| Non-cash reduction of long-term debt related to asset sales |
(317) |
|
| Net reduction in debt as of Sept. 30 |
$(831) |
(b) |
| Net increase in cash and cash equivalents |
894 |
|
| Total change to debt from financing activities, net of cash, as
of Sept. 30 |
|
|
| |
$(1,725) |
|
| |
|
|
| Total debt as of Sept. 30, 2003 |
$23,964 |
|
| Adjusted debt as of Sept. 30, 2003 |
23,128 |
(a+b) |
| Other increase in debt due primarily to foreign currency translation |
$ 836 |
|
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: http://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 800/500-0311
in the United States or 719/457-2698 outside the United States. The
confirmation code is 142066. 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 142066.
The international replay number is 719/457-0820, confirmation code 140266.
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:
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; industrial,
commercial and residential growth in our service territories; the weather
and other natural phenomena; general economic conditions, including
any potential effects arising from terrorist attacks, the situation
in Iraq and any consequential hostilities or other hostilities; the
results of financing efforts, including Duke Energy’s ability
to obtain financing on favorable terms; lack of improvement or further
declines in the market prices of equity securities and resultant cash
funding requirements for Duke Energy’s defined benefit pension
plans; the level of creditworthiness of counterparties to Duke Energy’s
transactions; the amount of collateral required to be posted from time
to time in Duke Energy’s transactions; 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.
| Contact: |
Randy Wheeless |
| Phone: |
704/382-8379 |
| 24 Hour Phone: |
704/382-8333 |
| Email: |
crwheele@duke-energy.com |
 |
SEPTEMBER 2003
QUARTERLY HIGHLIGHTS
(unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Three Months Ended |
|
Nine Months Ended |
| |
|
|
|
September 30, |
|
September 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 |
|
|
$0.05 |
|
$0.27 |
|
$0.94 |
|
$1.32 |
| |
Diluted |
|
|
$0.05 |
|
$0.27 |
|
$0.94 |
|
$1.31 |
| |
Earnings Per Share |
|
|
|
|
|
|
|
|
|
| |
Basic |
|
|
$0.05 |
|
$0.27 |
|
$0.76 |
|
$1.32 |
| |
Diluted |
|
|
$0.05 |
|
$0.27 |
|
$0.76 |
|
$1.31 |
| |
Dividends Per Share |
|
|
$- |
|
$- |
|
$0.825 |
|
$0.825 |
| |
Weighted-Average Shares Outstanding |
|
|
|
|
|
|
|
|
|
| |
Basic |
|
|
905 |
|
834 |
|
901 |
|
817 |
| |
Diluted |
|
|
907 |
|
834 |
|
902 |
|
820 |
| |
|
|
|
|
|
|
|
|
|
|
|
| INCOME |
|
|
|
|
|
|
|
|
|
| |
Operating Revenues |
|
|
$5,539 |
|
$3,982 |
|
$17,112 |
|
$10,907 |
| |
|
|
|
|
|
|
|
|
|
|
| |
Earnings Before Interest and Taxes (EBIT) |
|
|
352 |
|
666 |
|
2,346 |
|
2,493 |
| |
Interest Expense |
|
|
391 |
|
314 |
|
1,072 |
|
786 |
| |
Minority Interest (Benefit) Expense (a) |
|
|
(10) |
|
14 |
|
102 |
|
108 |
| |
Income Tax (Benefit) Expense |
|
|
(78) |
|
108 |
|
312 |
|
513 |
| |
Cumulative Effect of Change in Accounting Principles, |
|
|
- |
|
- |
|
(162) |
|
- |
| |
net of tax and minority interest |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
Net Income |
|
|
49 |
|
230 |
|
698 |
|
1,086 |
| |
Dividends and Premiums on Redemptions of |
|
|
3 |
|
3 |
|
13 |
|
10 |
| |
Preferred and Preference Stock |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
| |
Earnings Available for Common Stockholders |
|
|
$46 |
|
$227 |
|
$685 |
|
$1,076 |
| |
|
|
|
|
|
|
|
|
|
|
|
| CAPITALIZATION |
|
|
|
|
|
|
|
|
|
| |
Common Equity |
|
|
|
|
|
|
38% |
|
35% |
| |
Preferred Stock (b) |
|
|
|
|
|
|
0% |
|
1% |
| |
Trust Preferred Securities (b) |
|
|
|
|
|
|
0% |
|
3% |
| |
|
|
|
|
|
|
|
|
|
|
| |
Total Common Equity and Preferred Securities |
|
|
|
|
|
|
38% |
|
39% |
| |
Minority Interests (b) |
|
|
|
|
|
|
4% |
|
5% |
| |
Total Debt (b) |
|
|
|
|
|
|
58% |
|
56% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Fixed Charges Coverage, using SEC guidelines |
|
|
|
|
|
|
2.0 |
|
2.3 |
| Total Debt (b) |
|
|
|
|
|
|
$23,964 |
|
$22,869 |
| Book Value Per Share |
|
|
|
|
|
|
$17.57 |
|
$16.90 |
| Actual Shares Outstanding |
|
|
|
|
|
|
907 |
|
836 |
|
| CAPITAL AND INVESTMENT EXPENDITURES |
|
|
|
|
|
|
|
|
| |
Franchised Electric |
$282 |
|
$300 |
|
$768 |
|
$867 |
| |
Natural Gas Transmission (c) |
172 |
|
235 |
|
603 |
|
2,525 |
| |
Field Services |
32 |
|
66 |
|
94 |
|
250 |
| |
Duke Energy North America |
11 |
|
237 |
|
268 |
|
1,758 |
| |
International Energy |
18 |
|
133 |
|
61 |
|
350 |
| |
Other Operations (d) |
78 |
|
105 |
|
226 |
|
410 |
| |
Other |
23 |
|
10 |
|
26 |
|
10 |
| |
Cash acquired in acquisitions |
- |
|
- |
|
- |
|
(77) |
| |
|
|
|
|
|
|
|
|
| Total Capital and Investment Expenditures |
$616 |
|
$1,086 |
|
$2,046 |
|
$6,093 |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| EBIT BY BUSINESS SEGMENT |
|
|
|
|
|
|
|
|
|
| |
Franchised Electric |
|
|
$436 |
|
$575 |
|
$1,206 |
|
$1,347 |
| |
Natural Gas Transmission |
|
|
280 |
|
288 |
|
1,009 |
|
867 |
| |
Field Services |
|
|
53 |
|
23 |
|
162 |
|
99 |
| |
Duke Energy North America |
|
|
(411) |
|
(107) |
|
(177) |
|
143 |
| |
International Energy |
|
|
44 |
|
(41) |
|
209 |
|
73 |
| |
Other Operations (d) |
|
|
21 |
|
30 |
|
13 |
|
175 |
| |
Other |
|
|
(89) |
|
(124) |
|
(200) |
|
(362) |
| |
|
|
|
|
|
|
|
|
|
|
| Total Segment and Other EBIT |
|
|
334 |
|
644 |
|
2,222 |
|
2,342 |
| |
EBIT Attributable to: |
|
|
|
|
|
|
|
|
|
| |
Minority Interest Expense
(Benefit) |
|
|
5 |
|
(7) |
|
97 |
|
49 |
| |
Third Party Interest Income |
|
|
6 |
|
32 |
|
17 |
|
88 |
| |
Foreign Currency Remeasurement
Gain (Loss) |
|
|
7 |
|
(3) |
|
10 |
|
14 |
| |
|
|
|
|
|
|
|
|
|
|
| Total EBIT |
|
|
$352 |
|
$666 |
|
$2,346 |
|
$2,493 |
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| (a) Includes financing expenses related to securities
of subsidiaries of $33 million for the three months ended September
30, 2002, and $55 million and $103 million for the nine months ended
September 30, 2003 and 2002, respectively. |
| (b) Upon the implementation of SFAS No. 150 (effective
July 1, 2003), approximately $1.2 billion related to trust preferred
securities, preferred stock with sinking fund requirements and minority
interests have been reclassified to debt. |
| (c) 2002 nine months ended amount includes $1.7 billion
(net of cash acquired) paid to Westcoast Energy shareholders related
to the acquisition. |
| (d) Beginning in 2003, Other Energy Services and
Duke Ventures were combined into Other Operations. |
SEPTEMBER 2003
QUARTERLY HIGHLIGHTS
(unaudited) |
| |
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
Three Months Ended |
|
Nine Months Ended |
| |
|
|
|
September 30, |
|
September 30, |
| |
|
|
|
|
|
|
| (In millions, except where noted) |
|
|
2003 |
|
2002 |
|
2003 |
|
2002 |
|
| FRANCHISED ELECTRIC |
|
|
|
|
|
|
|
|
|
| |
Operating Revenues |
|
|
$1,357 |
|
$1,460 |
|
$3,718 |
|
$3,735 |
| |
Operating Expenses |
|
|
928 |
|
898 |
|
2,550 |
|
2,434 |
| |
Gain on Sales of Other Assets, net |
|
|
1 |
|
- |
|
2 |
|
- |
| |
Other Income, net of Expenses |
|
|
6 |
|
13 |
|
36 |
|
46 |
| |
|
|
|
|
|
|
|
|
|
|
| |
EBIT |
|
|
$436 |
|
$575 |
|
$1,206 |
|
$1,347 |
| |
|
|
|
|
|
|
|
|
|
|
| |
Sales, GWh |
|
|
22,163 |
|
23,251 |
|
63,621 |
|
63,190 |
| |
|
|
|
|
|
|
|
|
|
|
|
| NATURAL GAS TRANSMISSION |
|
|
|
|
|
|
|
|
|
| |
Operating Revenues |
|
|
$641 |
|
$628 |
|
$2,301 |
|
$1,699 |
| |
Operating Expenses |
|
|
393 |
|
375 |
|
1,381 |
|
954 |
| |
Gain on Sales of Other Assets, net |
|
|
3 |
|
- |
|
4 |
|
- |
| |
Other Income, net of Expenses (a) |
|
|
38 |
|
44 |
|
117 |
|
143 |
| |
Minority Interest Expense |
|
|
9 |
|
9 |
|
32 |
|
21 |
| |
|
|
|
|
|
|
|
|
|
|
| |
EBIT |
|
|
$280 |
|
$288 |
|
$1,009 |
|
$867 |
| |
|
|
|
|
|
|
|
|
|
|
| |
Proportional Throughput, TBtu |
|
|
679 |
|
802 |
|
2,502 |
|
2,177 |
| |
|
|
|
|
|
|
|
|
|
|
|
| FIELD SERVICES |
|
|
|
|
|
|
|
|
|
| |
Operating Revenues |
|
|
$1,841 |
|
$1,318 |
|
$6,218 |
|
$3,828 |
| |
Operating Expenses |
|
|
1,772 |
|
1,303 |
|
6,040 |
|
3,735 |
| |
Gain on Sales of Other Assets, net |
|
|
1 |
|
- |
|
27 |
|
- |
| |
Other Income, net of Expenses (b) |
|
|
14 |
|
16 |
|
53 |
|
35 |
| |
Minority Interest Expense |
|
|
31 |
|
8 |
|
96 |
|
29 |
| |
|
|
|
|
|
|
|
|
|
|
| |
EBIT |
|
|
$53 |
|
$23 |
|
$162 |
|
$99 |
| |
|
|
|
|
|
|
|
|
|
|
| |
Natural Gas Gathered and |
|
|
|
|
|
|
|
|
|
| |
Processed/Transported, TBtu/day |
|
|
7.7 |
|
8.4 |
|
7.9 |
|
8.4 |
| |
Natural Gas Liquids Production, MBbl/d |
|
|
366.2 |
|
395.1 |
|
367.6 |
|
392.0 |
| |
Average Natural Gas Price per MMBtu |
|
|
$4.97 |
|
$3.18 |
|
$5.66 |
|
$2.97 |
| |
Average Natural Gas Liquids Price per Gallon |
|
|
$0.49 |
|
$0.39 |
|
$0.52 |
|
$0.36 |
| |
|
|
|
|
|
|
|
|
|
|
|
| DUKE ENERGY NORTH AMERICA |
|
|
|
|
|
|
|
|
|
| |
Operating Revenues |
|
|
$1,141 |
|
$486 |
|
$3,499 |
|
$1,153 |
| |
Operating Expenses |
|
|
1,517 |
|
634 |
|
3,844 |
|
1,054 |
| |
Loss on Sales of Other Assets, net (c) |
|
|
(84) |
|
- |
|
(84) |
|
- |
| |
Other Income, net of Expenses (d) |
|
|
11 |
|
13 |
|
207 |
|
29 |
| |
Minority Interest Benefit |
|
|
(38) |
|
(28) |
|
(45) |
|
(15) |
| |
|
|
|
|
|
|
|
|
|
|
| |
EBIT |
|
|
$(411) |
|
$(107) |
|
$(177) |
|
$143 |
| |
|
|
|
|
|
|
|
|
|
|
| |
Actual Plant Production, GWh (e) |
|
|
9,130 |
|
9,662 |
|
18,750 |
|
19,188 |
| |
Proportional MW Capacity in Operation |
|
|
|
|
|
|
15,836 |
|
14,211 |
| |
|
|
|
|
|
|
|
|
|
|
|
| INTERNATIONAL ENERGY |
|
|
|
|
|
|
|
|
|
| |
Operating Revenues |
|
|
$295 |
|
$203 |
|
$1,043 |
|
$711 |
| |
Operating Expenses |
|
|
256 |
|
265 |
|
853 |
|
679 |
| |
Loss on Sales of Other Assets, net |
|
|
(1) |
|
- |
|
(1) |
|
- |
| |
Other Income, net of Expenses |
|
|
9 |
|
26 |
|
33 |
|
57 |
| |
Minority Interest Expense |
|
|
3 |
|
5 |
|
13 |
|
16 |
| |
|
|
|
|
|
|
|
|
|
|
| |
EBIT |
|
|
$44 |
|
$(41) |
|
$209 |
|
$73 |
| |
|
|
|
|
|
|
|
|
|
|
| |
Sales, GWh |
|
|
4,301 |
|
5,637 |
|
14,378 |
|
15,583 |
| |
Proportional MW Capacity in Operation |
|
|
|
|
|
|
4,585 |
|
4,825 |
| |
Proportional Maximum Pipeline Capacity in Operation, MMcf/d |
|
|
|
|
|
|
363 |
|
363 |
| |
|
|
|
|
|
|
|
|
|
|
|
| OTHER OPERATIONS |
|
|
|
|
|
|
|
|
|
| |
Operating Revenues |
|
|
$454 |
|
$241 |
|
$1,445 |
|
$588 |
| |
Operating Expenses |
|
|
426 |
|
243 |
|
1,440 |
|
552 |
| |
(Loss) Gain on Sales of Other Assets, net |
|
|
(23) |
|
(5) |
|
(43) |
|
41 |
| |
Other Income, net of Expenses |
|
|
16 |
|
36 |
|
52 |
|
96 |
| |
Minority Interest (Benefit) Expense |
|
|
- |
|
(1) |
|
1 |
|
(2) |
| |
|
|
|
|
|
|
|
|
|
|
| |
EBIT |
|
|
$21 |
|
$30 |
|
$13 |
|
$175 |
| |
|
|
|
|
|
|
|
|
|
|
|
(a) For the nine months ended September 30, 2003,
other income includes approximately $61 million gain on sale of
the Alliance/Aux Sable and Foothills equity investments.
(b) For the nine months ended September 30, 2003, other income
includes approximately $11 million gain on sale of TEPPCO Class
B shares.
(c) For 2003, amount includes approximately $18 million loss on
the anticipated sale of 25% interest in Vermillion and $66 million
loss on the anticipated sale of turbines.
(d) For the the nine months ended September 30, 2003, other income
includes approximately $178 million gain on sale of the American
Ref-Fuel Company equity investment.
(e) Represents 100% of GWh. |
CONSOLIDATED STATEMENTS
OF INCOME
(Unaudited)
(In millions, except per share amounts) |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
Three Months
Ended
September 30, |
Nine Months
Ended
September 30, |
| |
|
|
| |
|
|
|
|
| |
|
|
2003 |
2002 |
2003 |
2002 |
| |
|
|
|
|
|
|
| Operating Revenues |
|
|
|
|
|
|
Sales of natural gas and petroleum products |
|
$2,888 |
$1,184 |
$9,953 |
$3,586 |
|
Generation, transmission and distribution of electricity |
|
1,953 |
2,238 |
5,187 |
5,407 |
|
Transportation and storage of natural gas |
|
447 |
429 |
1,279 |
1,202 |
|
Other |
|
251 |
131 |
693 |
712 |
| |
|
|
|
|
|
|
| Total
operating revenues |
5,539 |
3,982 |
17,112 |
10,907 |
| |
|
|
|
|
|
|
| Operating Expenses |
|
|
|
|
|
|
Natural gas and petroleum products purchased |
|
2,614 |
944 |
8,788 |
2,827 |
|
Fuel used in electric generation |
|
567 |
553 |
1,265 |
1,180 |
|
Net interchange and purchased power |
|
138 |
291 |
381 |
521 |
|
Operation and maintenance |
|
1,003 |
1,090 |
2,684 |
2,750 |
|
Depreciation and amortization |
|
487 |
425 |
1,390 |
1,166 |
|
Property and other taxes |
|
127 |
139 |
402 |
398 |
|
Impairment of goodwill |
|
254 |
- |
254 |
- |
| |
|
|
|
|
|
|
| Total
operating expenses |
5,190 |
3,442 |
15,164 |
8,842 |
| |
|
|
|
|
|
|
| (Loss) Gain on Sales of Other Assets, net |
|
(104) |
(4) |
(96) |
42 |
| |
|
|
|
|
|
|
| Operating Income |
|
245 |
536 |
1,852 |
2,107 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Other Income and Expenses |
|
|
|
|
|
|
Equity in earnings of unconsolidated affiliates |
|
35 |
57 |
85 |
166 |
|
Gain on sale of equity investments |
|
33 |
18 |
266 |
32 |
|
Other income and expenses, net |
|
39 |
55 |
143 |
188 |
| |
|
|
|
|
|
|
| Total
other income and expenses |
107 |
130 |
494 |
386 |
| |
|
|
|
|
|
|
| Interest Expense |
|
391 |
314 |
1,072 |
786 |
| Minority Interest (Benefit) Expense |
|
(10) |
14 |
102 |
108 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| (Loss) Earnings Before Income Taxes |
|
(29) |
338 |
1,172 |
1,599 |
| Income Tax (Benefit) Expense |
|
(78) |
108 |
312 |
513 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Income Before Cumulative Effect of Change
in Accounting Principles |
49 |
230 |
860 |
1,086 |
| Cumulative Effect of Change in Accounting
Principles, net of tax and minority interest |
- |
- |
(162) |
- |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Net Income |
|
49 |
230 |
698 |
1,086 |
| Dividends and Premiums on Redemptions of Preferred
and Preference Stock |
3 |
3 |
13 |
10 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Earnings Available For Common Stockholders |
|
$46 |
$227 |
$685 |
$1,076 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Common Stock Data |
|
|
|
|
|
|
Weighted-average shares outstanding |
|
905 |
834 |
901 |
817 |
|
Earnings per share (before cumulative effect of change in accounting
principles) |
|
|
|
|
|
|
Basic |
|
$0.05 |
$0.27 |
$0.94 |
$1.32 |
|
Diluted |
|
$0.05 |
$0.27 |
$0.94 |
$1.31 |
|
Earnings per share |
|
|
|
|
|
|
Basic |
|
$0.05 |
$0.27 |
$0.76 |
$1.32 |
|
Diluted |
|
$0.05 |
$0.27 |
$0.76 |
$1.31 |
|
Dividends per share |
|
$- |
$- |
$0.825 |
$0.825 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Duke Energy's reported results for the three and nine-month
periods ended September 30, 2003 do not include any effects for
the application of Statement of Financial Accounting Standards (SFAS)
No. 150, "Accounting for Certain Financial Instruments with Characteristics
of both Liabilities and Equity" to minority interests in consolidated
limited life entities, as the Financial Accounting Standards Board
was scheduled to re-evaluate the applicability of SFAS No. 150 to
these financial instruments at its October 29, 2003 meeting. The
resolution of this aspect of SFAS No. 150 is not expected to have
an impact on Duke Energy's consolidated EBIT, and all other provisions
of SFAS No. 150 have been adopted by Duke Energy effective July
1, 2003. Duke Energy is still assessing the impact of this aspect
of SFAS No. 150 to its consolidated financial statements. |
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions) |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Nine Months Ended |
| |
|
|
|
|
|
September 30, |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
2003 |
|
2002 |
| |
|
|
|
|
|
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
| |
Net income |
|
|
$698 |
|
$1,086 |
| |
Adjustments to reconcile net income to net cash provided
by |
|
|
|
|
|
| |
operating activities: |
|
|
|
|
|
| |
Depreciation and amortization (including
amortization of nuclear fuel) |
|
|
1,493 |
|
1,269 |
| |
Cumulative effect of change in accounting
principles |
|
|
162 |
|
- |
| |
Impairment charges |
|
|
254 |
|
274 |
| |
Net realized and unrealized mark-to-market
and hedging transactions |
|
|
12 |
|
288 |
| |
Gains on sale of equity investments
and other assets |
|
|
(170) |
|
(74) |
| |
Changes in working capital and other |
|
|
430 |
|
422 |
| |
|
|
|
|
|
|
| |
Net cash provided
by operating activities |
|
|
2,879 |
|
3,265 |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
| |
Capital and investment expenditures, net |
|
|
(2,046) |
|
(4,386) |
| |
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 |
|
|
1,540 |
|
309 |
| |
Contribution to company-sponsored pension plan |
|
|
(181) |
|
- |
| |
Other |
|
|
(124) |
|
(5) |
| |
|
|
|
|
|
|
| |
Net cash used
in investing activities |
|
|
(811) |
|
(5,789) |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
| |
|
Proceeds from: |
|
|
|
|
|
| |
|
Issuance of long-term debt |
|
|
2,819 |
|
3,447 |
| |
|
Issuance of common stock related
to employee benefit plans |
|
|
214 |
|
265 |
| |
|
Payments for the redemption of long-term debt, guaranteed
|
|
|
|
|
|
| |
|
preferred beneficial interests and
preferred member interests, |
|
|
|
|
|
| |
|
and net pay down of commercial paper
and notes payable |
|
|
(3,333) |
|
(605) |
| |
|
Dividends paid |
|
|
(786) |
|
(697) |
| |
|
Other |
|
|
(88) |
|
297 |
| |
|
|
|
|
|
|
|
| |
|
Net cash (used
in) provided by financing activities |
|
|
(1,174) |
|
2,707 |
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
Net increase in cash and cash equivalents |
|
|
|
894 |
|
183 |
| |
|
Cash and cash equivalents at beginning of period |
|
|
|
857 |
|
290 |
| |
|
|
|
|
|
|
|
|
| |
|
Cash and cash equivalents at end of period |
|
|
|
$1,751 |
|
$473 |
| |
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Millions) |
| |
|
|
|
| |
|
September 30, |
December 31, |
| |
|
2003 |
2002 |
| |
|
|
|
| ASSETS |
|
|
| |
|
|
|
| Current Assets |
|
|
| Cash and cash equivalents |
$1,751 |
$857 |
| Receivables |
3,219 |
4,796 |
| Inventory |
1,279 |
1,134 |
| Unrealized gains on mark-to-market
and hedging transactions |
2,295 |
2,144 |
| Other |
844 |
952 |
| |
|
|
|
| Total current
assets |
9,388 |
9,883 |
| |
|
|
|
| |
|
|
|
| Investments and Other Assets |
|
|
| Investments in unconsolidated
affiliates |
1,490 |
2,015 |
| Nuclear decommissioning trust
funds |
838 |
708 |
| Goodwill, net of accumulated
amortization |
3,870 |
3,747 |
| Notes receivable |
358 |
589 |
| Unrealized gains on mark-to-market
and hedging transactions |
2,880 |
2,480 |
| Assets held for sale |
257 |
- |
| Other |
1,103 |
1,645 |
| |
|
|
|
| |
Total investments and other
assets |
10,796 |
11,184 |
| |
|
|
|
| |
|
|
|
| Property, Plant and Equipment |
|
|
| Cost |
51,145 |
48,677 |
| Less accumulated depreciation
and amortization |
13,451 |
12,458 |
| |
|
|
|
| |
Net property, plant and equipment |
37,694 |
36,219 |
| |
|
|
|
| |
|
|
|
| Regulatory Assets and Deferred Debits |
|
|
| Deferred debt expense |
266 |
263 |
| Regulatory asset related to
income taxes |
1,015 |
936 |
| Other |
1,006 |
460 |
| |
|
|
|
| |
Total regulatory assets and
deferred debits |
2,287 |
1,659 |
| |
|
|
|
| |
|
|
|
| Total Assets |
$60,165 |
$58,945 |
| |
|
|
|
| |
|
|
|
| |
|
|
|
Duke Energy's reported results for
the three and nine-month periods ended September 30, 2003 do not
include any effects for the application of Statement of Financial
Accounting Standards (SFAS) No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity"
to minority interests in consolidated limited life entities, as
the Financial Accounting Standards Board was scheduled to re-evaluate
the applicability of SFAS No. 150 to these financial instruments
at its October 29, 2003 meeting. The resolution of this aspect
of SFAS No. 150 is not expected to have an impact on Duke Energy's
consolidated EBIT, and all other provisions of SFAS No. 150 have
been adopted by Duke Energy effective July 1, 2003. Duke Energy
is still assessing the impact of this aspect of SFAS No. 150 to
its consolidated financial statements. |
| CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions) |
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
September 30, |
December 31, |
| |
|
|
2003 |
2002 |
| |
|
|
| LIABILITIES AND COMMON STOCKHOLDERS' EQUITY |
|
|
| |
|
|
|
|
| Current Liabilities |
|
|
|
|
| Accounts payable |
|
$2,448 |
$3,620 |
| Notes payable and commercial
paper |
|
494 |
915 |
| Taxes accrued |
|
560 |
156 |
| Interest accrued |
|
306 |
310 |
| Current maturities of long-term
debt and preferred stock |
|
756 |
1,331 |
| Unrealized losses on mark-to-market
and hedging transactions |
|
1,843 |
1,918 |
| Other |
|
1,472 |
1,770 |
| |
|
|
| Total current
liabilities |
7,879 |
10,020 |
| |
|
|
| |
|
|
|
|
| Long-term Debt |
|
|
22,714 |
20,221 |
| |
|
|
| |
|
|
|
|
| Deferred Credits and Other Liabilities |
|
|
|
| Deferred income taxes |
|
5,058 |
4,834 |
| Investment tax credit |
|
168 |
176 |
| Unrealized losses on mark-to-market
and hedging transactions |
2,235 |
1,548 |
| Other |
|
4,329 |
3,733 |
| |
|
|
| Total deferred
credits and other liabilities |
11,790 |
10,291 |
| |
|
|
| |
|
|
|
|
| Commitments and Contingencies |
|
|
|
| |
|
|
|
|
| Guaranteed Preferred Beneficial Interests
in Subordinated |
|
|
|
| Notes of Duke Energy
Corporation or Subsidiaries |
|
- |
1,408 |
| |
|
|
| |
|
|
|
|
| Minority Interests |
|
|
1,716 |
1,904 |
| |
|
|
| |
|
|
|
|
| Preferred and Preference Stock |
|
|
|
| Preferred and preference stock
with sinking fund requirements |
|
- |
23 |
| Preferred and preference stock
without sinking fund requirements |
|
134 |
134 |
| |
|
|
| Total
preferred and preference stock |
134 |
157 |
| |
|
|
| |
|
|
|
|
| Common Stockholders' Equity |
|
|
|
| Common stock, no par, 2 billion
shares authorized; 907 million and |
|
|
| 895 million
shares outstanding as of September 30, 2003 and |
|
|
| December 31, 2002,
respectively |
|
9,448 |
9,236 |
| Retained earnings |
|
6,336 |
6,417 |
| Accumulated other comprehensive
income (loss) |
|
148 |
(709) |
| |
|
|
| Total
common stockholders' equity |
15,932 |
14,944 |
| |
|
|
| |
|
|
|
|
| Total Liabilities and Common Stockholders'
Equity |
|
$60,165 |
$58,945 |
| |
|
|
| |
|
|
|
| |
Supplemental Disclosures
Quarter Ended September 30, 2003
|
| |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| Duke Energy Corporation |
|
|
|
|
|
|
|
|
|
| |
|
|
3Q03 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| Mark-to-market Portfolio (in billions) |
|
$0.2 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| Daily Value at Risk (DvaR) (in millions) |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
95% Confidence Level, One-Day Holding Period,
Two-Tailed |
|
|
|
|
|
|
|
|
| |
Average for the Period |
|
$11 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| Duke Energy North America |
|
|
|
|
|
|
|
|
|
| (in millions unless stated otherwise) |
|
Q-T-D September 30, 2003 |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
Proprietary |
|
Structured |
|
Owned |
|
|
| Merchant Energy Gross Margin |
|
Trading |
|
Contracts |
|
Assets |
|
Total |
|
|
|
|
|
|
|
|
|
| |
Mark-to-market gross margin (loss) |
|
$(2) |
|
$(65) |
|
$7 |
|
$(60) |
| |
Accrual gross margin (loss) |
|
n/a |
|
(11) |
|
175 |
|
164 |
| |
|
|
|
|
|
|
|
|
|
| |
Total Gross Margin |
|
$(2) |
|
$(76) |
|
$182 |
|
104 |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
Reconciliation to Segment EBIT: |
|
|
|
|
|
|
|
|
| |
Plant depreciation |
|
|
|
|
|
|
|
(64) |
| |
Plant operating and maintenance
expenses |
|
|
|
|
|
|
|
(94) |
| |
General and administrative
and other expenses |
|
|
|
|
|
|
|
(60) |
| |
Minority interest |
|
|
|
|
|
|
|
38 |
| |
Goodwill impairment |
|
|
|
|
|
|
|
(254) |
| |
Gain (loss) on sale of other
assets |
|
|
|
|
|
|
|
(81) |
| |
|
|
|
|
|
|
|
|
|
| |
DENA Segment EBIT |
|
|
|
|
|
|
|
$(411) |
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Owned Assets - Merchant
Plant Production |
|
|
|
|
|
|
|
|
|
and Hedging Information |
|
2003 * |
|
2004 |
|
2005 |
|
|
| |
|
|
|
|
|
|
|
|
|
| |
Estimated available production (millions of MWh) |
|
24 |
|
101 |
|
107 |
|
|
| |
Combined cycle |
|
19 |
|
78 |
|
84 |
|
|
| |
Peaker units |
|
5 |
|
23 |
|
23 |
|
|
| |
|
|
|
|
|
|
|
|
|
| |
Estimated production (millions of MWh) |
|
5 |
|
30 |
|
36 |
|
|
| |
Combined cycle |
|
5 |
|
29 |
|
34 |
|
|
| |
Peaker units |
|
- |
|
1 |
|
2 |
|
|
| |
|
|
|
|
|
|
|
|
|
| |
Hedges |
|
|
|
|
|
|
|
|
| |
Estimated production hedged |
|
142% |
|
98% |
|
74% |
|
|
| |
Average price hedged ($/MWh) |
|
$56 |
|
$42 |
|
$42 |
|
|
| |
|
|
|
|
|
|
|
|
|
| |
* Information for 2003 is for the remainder of the year only (October
- December). |
|
|
|
|
|
|
|
|
Supplemental Disclosures
Quarter Ended September 30, 2003
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Duke Energy North America (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| (in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Maturity/Source of Fair Value of |
|
|
|
|
|
|
|
|
|
|
Over 5 |
|
Total Fair |
| Energy Contract Net Assets |
2003 |
|
2004 |
|
2005 |
|
2006 |
|
2007 |
|
Years |
|
Value |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Proprietary Trading |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Actively quoted prices and other external sources |
$15 |
|
$135 |
|
$10 |
|
$- |
|
$- |
|
$6 |
|
$166 |
| |
Modeled |
(4) |
|
(1) |
|
14 |
|
17 |
|
1 |
|
(4) |
|
23 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$11 |
|
$134 |
|
$24 |
|
$17 |
|
$1 |
|
$2 |
|
$189 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Structured Contracts |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Actively quoted prices and other external sources |
$32 |
|
$55 |
|
$(10) |
|
$(13) |
|
$(1) |
|
$(2) |
|
$61 |
| |
Modeled |
(9) |
|
(43) |
|
(11) |
|
24 |
|
12 |
|
12 |
|
(15) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$23 |
|
$12 |
|
$(21) |
|
$11 |
|
$11 |
|
$10 |
|
$46 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Owned Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Actively quoted prices and other external sources |
$182 |
|
$330 |
|
$155 |
|
$45 |
|
$- |
|
$- |
|
$712 |
| |
Modeled |
- |
|
- |
|
41 |
|
88 |
|
85 |
|
147 |
|
361 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
$182 |
|
$330 |
|
$196 |
|
$133 |
|
$85 |
|
$147 |
|
$1,073 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Total Fair Value of Energy
Contract Net Assets * |
|
$1,308 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| * 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.
|
|
