DUKE ENERGY REPORTS SECOND QUARTER 2004 RESULTS
- Ongoing earnings of 42 cents per share versus 30 cents in second
quarter 2003; reported second quarter EPS of 46 cents versus 46 cents
in 2003
- Duke Energy Field Services and Crescent Resources
post strong quarter
- Franchised Electric and Natural Gas Transmission
continue to report solid earnings and strong cash flow
- Cash
generation, asset sales and debt reduction all expected to meet
or exceed full-year expectations
- DENA results affected
by positive mark-to-market earnings of 2 cents per share
CHARLOTTE, N.C. – Duke Energy reported net income in the second
quarter of 2004 of $432 million, or $0.46 per share, compared to net
income of $424 million, or $0.46 per share in the second quarter of
2003.
Excluding special items, ongoing second quarter earnings per share (EPS)
were $0.42 versus $0.30 in the comparable year's quarter.
"We accelerated progress on our financial objectives in the quarter,"
said Paul Anderson, Duke Energy chairman of the board and chief executive
officer. "We've already surpassed a number of our year-end targets
and our business units are showing encouraging results."
Special items for the quarter include:
| ($ in Millions) |
Pre-Tax
Amount |
Tax
Effect |
2004
EPS Impact |
2003
EPS Impact |
| Second quarter 2004 |
| Enron settlement (net of minority interest) |
$130 |
($46) |
$0.09 |
|
| True-up on net gain on sale of International Energy assets |
38 |
(9) |
0.03 |
|
| California and western U.S. energy markets settlement |
(105) |
37 |
(0.07) |
|
| Net losses on asset sales (net of minority interest) |
(5) |
2 |
--- |
|
| Interest related to litigation reserve |
(12) |
4 |
(0.01) |
|
| |
| Second quarter 2003 |
|
|
|
|
| Gains on asset sales (net of minority interest) |
$229 |
($83) |
|
0.16 |
| |
| Total EPS Impact |
|
|
$0.04 |
$0.16 |
| EPS, as reported |
|
|
$0.46 |
$0.46 |
| EPS, ongoing * |
|
|
$0.42 |
$0.30 |
Special items EPS year-to-date impact:
| |
2004 |
2003 |
| First quarter |
$0.01 |
($0.17) |
| Second quarter |
0.04 |
0.16 |
| Impact of change in shares outstanding |
(0.01) |
-- |
| Total EPS Impact |
$0.04 |
($0.01) |
| Year-to-date EPS, as reported |
$0.80 |
$0.71 |
| Year-to-date EPS, ongoing * |
$0.76 |
$0.72 |
* Includes results from operations primarily in International Energy and
Field Services that have been discontinued.
BUSINESS UNIT RESULTS
Franchised Electric
Second quarter 2004 earnings before interest and taxes (EBIT) from
Duke Power totaled $338 million, compared to $316 million in the
second quarter of 2003. The increase was primarily due to warmer
weather during the quarter, which increased EBIT from residential
and commercial sales by approximately $60 million.
The increase was partially offset by lower bulk power sales.
During the quarter, Duke Power took steps in North Carolina and South Carolina
to share half of the profits from the company's bulk power marketing sales
to fund several programs designed to make the service area more competitive
and respond to customer needs. The year-to-date total of $27 million of
shared profits was recorded as a charge in the second quarter.
Year-to-date EBIT for Franchised Electric was $762 million, compared
with
$770 million in 2003.
Natural Gas Transmission
Duke Energy Gas Transmission (DEGT) reported second quarter 2004 EBIT of
$311 million compared to $306 million in the prior year's quarter. The 2003
second quarter included gains of $31 million from asset sales and $4 million
of earnings from assets sold during 2003. The increase was primarily due
to improved operational results, U.S. business expansion contributions,
a $17 million benefit due to the positive resolution of ad valorem tax issues
in various states and a $12 million benefit from a stronger Canadian currency.
These increases were offset by certain reserve reversals of $12 million
in 2003.
The favorable Canadian currency impacts on DEGT's EBIT were partially offset
in Duke Energy's net income by currency impacts on Canadian interest and
taxes.
During the second quarter, DEGT began mainline construction on a 110-mile
expansion of the Gulfstream pipeline system. In addition, DEGT placed into
service the first phase of Texas Eastern's M-1 expansion project, which
will provide new and increased service to customers served through East
Tennessee including the Patriot expansion capacity.
Year-to-date EBIT for Natural Gas Transmission was $709 million, compared
with $729 million in 2003.
Field Services
The Field Services business segment, which represents Duke Energy's
70-percent interest in Duke Energy Field Services (DEFS), reported
second quarter 2004 EBIT of $94 million from continuing operations,
compared to $53 million in the second quarter of 2003.
The increase was primarily due to higher commodity prices compared to last
year's quarter. In June, DEFS paid an $87 million dividend, of which Duke
Energy received $61 million. This payment reflects continuing strong cash
flow and earnings at DEFS.
In second quarter 2003, results were positively affected by a pre-tax
gain on the sale of TEPPCO class B units of $11 million.
Year-to-date EBIT for Field Services from continuing operations was
$186 million, compared with $83 million in 2003.
Duke Energy North America
Duke Energy North America (DENA) reported an EBIT loss of $39 million in
the second quarter of 2004, compared to EBIT of $211 million in the prior
year's quarter.
The key factors for the quarter were: 1) a previously announced $105
million charge related to the California and western U.S. energy markets
settlement, offset by a $108 million positive settlement in the Enron
bankruptcy proceeding; 2) positive mark-to-market earnings of $24 million
as a result of changes in power and natural gas prices; and 3) a $10
million loss on the liquidation of Duke Energy Trading and Marketing
contracts.
Compared to the same quarter in 2003, DENA's losses from energy generation
increased primarily due to lower hedge value realization and higher operating
and maintenance costs. This was partially offset by improved margins on
structured contracts and lower depreciation and general and administrative
costs.
Results for the second quarter of 2003 included a pre-tax gain of $175
million from the sale of DENA's ownership interest in American Re-Fuel.
Foregone earnings associated with this sale were $14 million for this year's
quarter.
During the quarter, DENA announced two significant asset sales. In
May, it announced an agreement to sell eight power plants in the southeast
United States; and in June, it announced the sale of its unfinished
Moapa project in Nevada. These transactions are expected to close in
third quarter and fourth quarter of 2004, respectively, and will provide
Duke Energy with approximately $1.3 billion in cash proceeds and tax
benefits.
Excluding the expense related to the California and western U.S. energy
markets settlement, the gain from the Enron settlement, the mark-to-market
gain and the DETM contract liquidation loss, DENA's EBIT loss for the quarter
would have been $56 million.
Overall year-to-date EBIT loss for DENA was $596 million, compared
to a
$234 million profit in 2003.
International Energy
For the second quarter of 2004, Duke Energy International (DEI) reported
EBIT from continuing operations of $68 million, compared to $91 million
in the second quarter of 2003.
The second quarter 2003 results benefited from a positive regulatory settlement
in Brazil and early termination of a natural gas sales contract, which together
totaled $37 million. The absence of such transactions in the second quarter
of 2004 was partially offset by improved operating results in Latin America
during this year's quarter.
During the quarter, DEI announced the sale of its ownership share
of Cantarell, a nitrogen-production plant in Mexico. The sale is expected
to close in third quarter 2004.
Year-to-date EBIT from continuing operations for International Energy
was
$97 million, compared with $131 million in 2003.
Crescent Resources
Crescent Resources, Duke Energy's affiliated real estate company, reported
second quarter 2004 EBIT from continuing operations of $87 million, compared
to $21 million in the second quarter of 2003.
The increase was primarily attributed to a large commercial land sale
at Potomac Yard in northern Virginia, and greater than expected residential
developed lot sales during the quarter.
Year-to-date EBIT from continuing operations for Crescent Resources
was
$147 million, compared with $21 million in 2003.
Other
Other, which includes corporate costs, DukeNet Communications, Duke/Fluor
Daniel, Duke Energy Merchants (DEM) and Energy Delivery Services,
reported an EBIT loss of $26 million in the second quarter of 2004,
compared to an EBIT loss of
$69 million in the second quarter of 2003. The better results were
driven primarily by a $21 million portion of the Enron settlement,
which was recorded at DEM.
Year-to-date EBIT for Other was a loss of $31 million, compared with
a loss of $117 million in 2003.
Discontinued Operations
Discontinued Operations generated second quarter 2004 income of $27
million, primarily driven by a true-up of the net gain on the sale
of International Energy assets. These results compare to second quarter
2003 income of $23 million.
Year-to-date income for Discontinued Operations was $273 million, compared with $18 million in 2003.
INCOME TAXES
Income tax expense from continuing operations of $133 million is lower
than the prior year's by approximately $62 million. The decrease is driven
primarily by the release of income tax reserves of approximately $52 million
resulting from resolution in the second quarter 2004 of various outstanding
income tax issues.
INTEREST EXPENSE
Interest expense was $337 million for the second quarter of 2004,
compared to
$325 million for the second quarter of 2003.
LIQUIDITY AND CAPITAL RESOURCES
Duke Energy's consolidated capital structure at the end of second
quarter 2004, including short-term debt, was 56 percent debt, 39 percent
common equity and
5 percent minority interests.
Under various credit facilities, Duke Energy, Duke Capital and other
subsidiaries had the ability to borrow up to $2.5 billion at the end
of the second quarter of 2004. The companies had borrowings and letters
of credit outstanding under these programs of approximately $1.2 billion
as of the end of the second quarter of 2004, resulting in unused capacity
of approximately $1.3 billion. The company also had approximately $2.6
billion in cash and cash equivalents at the end of second quarter 2004.
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 2004 earnings information Web
site at: http://www.duke-energy.com/investors/.
NON-GAAP FINANCIAL MEASURES
The primary performance measure used by management to evaluate segment
performance is EBIT from continuing operations, which at the segment level
represents all profits from continuing operations (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 from continuing
operations is a good indicator of each segment's operating performance as
it represents the results of our ownership interests in continuing operations
without regard to financing methods or capital structures.
EBIT from continuing operations should not be considered an alternative
to, or more meaningful than, net income, income from continuing operations,
operating income or cash flow as determined in accordance with generally
accepted accounting principles (GAAP). Duke Energy's EBIT from continuing
operations may not be comparable to a similarly titled measure of another
company.
Duke Energy's management uses ongoing EPS, which represents net income
adjusted for special items, as one of the measures to evaluate operations
of the company. Special items represent certain charges which management
believes will not be recurring on a regular basis. Management believes that
the presentation of ongoing EPS provides useful information to investors,
as it allows them to more accurately compare the company's ongoing performance
across all periods.
Duke Energy is a diversified energy company with a portfolio of natural
gas and electric businesses, both regulated and unregulated, and an
affiliated real estate company. Duke Energy supplies, delivers and
processes energy for customers in North America and selected international
markets. In 2004, the company celebrates a century of service with
the 100th anniversary of its electric utility Duke Power. Headquartered
in Charlotte, N.C., Duke Energy 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 http://www.duke-energy.com/investors/
or by dialing 800/967-7187 in the United States or 719/457-2635 outside
the United States. The confirmation code is 601243. 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 601243. The international replay number is 719/457-0820, confirmation
code 601243. A replay and transcript also will be available by accessing
the investors' section of the company's Web site http://www.duke-energy.com/investors/.
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/publications/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 could cause actual results to differ
materially from those in the forward- looking statements herein are discussed
in Duke Energy's filings with the Securities
and Exchange Commission.
| Media Contact: |
Randy Wheeless |
| Phone: |
704/382-8379 |
| 24 Hour Phone: |
704/382-8333 |
| Email: |
crwheele@duke-energy.com |
| Analyst Contact: |
Greg Ebel |
| Phone: |
704/382-8118 |
 |
JUNE 2004
QUARTERLY HIGHLIGHTS
(unaudited) |
| |
|
|
|
|
|
|
|
| |
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
| |
|
|
|
| (In millions, except where noted) |
2004 |
|
2003 |
|
2004 |
|
2003 |
|
| COMMON STOCK DATA |
|
|
|
|
|
|
|
| Earnings Per Share (from continuing operations) |
|
|
|
|
|
|
|
| Basic |
$0.43 |
|
$0.44 |
|
$0.50 |
|
$0.87 |
| Diluted |
$0.43 |
|
$0.44 |
|
$0.50 |
|
$0.87 |
| Earnings Per Share (from discontinued operations) |
|
|
|
|
|
|
|
| Basic |
$0.03 |
|
$0.02 |
|
$0.30 |
|
$0.02 |
| Diluted |
$0.03 |
|
$0.02 |
|
$0.30 |
|
$0.02 |
| Earnings Per Share (before cumulative effect of change in accounting
principle) |
|
|
|
|
|
|
|
| Basic |
$0.46 |
|
$0.46 |
|
$0.80 |
|
$0.89 |
| Diluted |
$0.46 |
|
$0.46 |
|
$0.80 |
|
$0.89 |
| Earnings Per Share |
|
|
|
|
|
|
|
| Basic |
$0.46 |
|
$0.46 |
|
$0.80 |
|
$0.71 |
| Diluted |
$0.46 |
|
$0.46 |
|
$0.80 |
|
$0.71 |
| Dividends Per Share |
$0.550 |
|
$0.550 |
|
$0.825 |
|
$0.825 |
| Weighted-Average Shares Outstanding |
|
|
|
|
|
|
|
| Basic |
926 |
|
902 |
|
919 |
|
899 |
| Diluted |
928 |
|
903 |
|
921 |
|
900 |
| |
|
|
|
|
|
|
|
|
| INCOME |
|
|
|
|
|
|
|
| Operating Revenues |
$5,360 |
|
$5,152 |
|
$11,049 |
|
$11,322 |
| |
|
|
|
|
|
|
|
| Earnings Before Interest and Taxes (EBIT) |
916 |
|
971 |
|
1,408 |
|
1,934 |
| Interest Expense (a) |
337 |
|
325 |
|
693 |
|
651 |
| Minority Interest Expense (a) |
41 |
|
50 |
|
79 |
|
100 |
| Income Tax Expense from Continuing Operations |
133 |
|
195 |
|
166 |
|
390 |
| Income from Discontinued Operations |
27 |
|
23 |
|
273 |
|
18 |
| Cumulative Effect of Change in Accounting Principle, net of tax and
minority interest |
- |
|
- |
|
- |
|
(162) |
| |
|
|
|
|
|
|
|
| Net Income |
432 |
|
424 |
|
743 |
|
649 |
| Dividends and Premiums on Redemptions of Preferred and Preference
Stock |
3 |
|
7 |
|
5 |
|
10 |
| |
|
|
|
|
|
|
|
| Earnings Available for Common Stockholders |
$429 |
|
$417 |
|
$738 |
|
$639 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| CAPITALIZATION |
|
|
|
|
|
|
|
| Common Equity |
|
|
|
|
39% |
|
37% |
| Preferred Stock |
|
|
|
|
0% |
|
1% |
| Trust Preferred Securities |
|
|
|
|
0% |
|
3% |
| |
|
|
|
|
|
|
|
| Total Common Equity and Preferred Securities |
|
|
|
|
39% |
|
41% |
| |
|
|
|
|
|
|
|
| Minority Interests |
|
|
|
|
5% |
|
4% |
| Total Debt |
|
|
|
|
56% |
|
55% |
| |
|
|
|
|
|
|
|
|
| Total Debt |
|
|
|
|
$21,153 |
|
$22,766 |
| Book Value Per Share |
|
|
|
|
$15.52 |
|
$17.38 |
| Actual Shares Outstanding |
|
|
|
|
938 |
|
904 |
|
| CAPITAL AND INVESTMENT EXPENDITURES |
|
|
|
|
|
|
|
| Franchised Electric (b) |
$507 |
|
$292 |
|
$769 |
|
$550 |
| Natural Gas Transmission |
102 |
|
210 |
|
256 |
|
426 |
| Field Services |
107 |
|
31 |
|
132 |
|
62 |
| Duke Energy North America |
5 |
|
97 |
|
14 |
|
257 |
| International Energy |
7 |
|
18 |
|
15 |
|
43 |
| Crescent (c) (d) |
122 |
|
73 |
|
284 |
|
127 |
| Other |
(14) |
|
(37) |
|
(14) |
|
24 |
| |
|
|
|
|
|
|
|
| Total Capital and Investment Expenditures |
$836 |
|
$684 |
|
$1,456 |
|
$1,489 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| EBIT BY BUSINESS SEGMENT |
|
|
|
|
|
|
|
| Franchised Electric |
$338 |
|
$316 |
|
$762 |
|
$770 |
| Natural Gas Transmission |
311 |
|
306 |
|
709 |
|
729 |
| Field Services |
94 |
|
53 |
|
186 |
|
83 |
| Duke Energy North America |
(39) |
|
211 |
|
(596) |
|
234 |
| International Energy |
68 |
|
91 |
|
97 |
|
131 |
| Crescent (c) |
87 |
|
21 |
|
147 |
|
21 |
| Other |
(26) |
|
(69) |
|
(31) |
|
(117) |
| |
|
|
|
|
|
|
|
| Total Segment and Other EBIT |
833 |
|
929 |
|
1,274 |
|
1,851 |
| EBIT Attributable to: |
|
|
|
|
|
|
|
| Minority Interest Expense |
51 |
|
36 |
|
101 |
|
79 |
| Third Party Interest Income |
29 |
|
7 |
|
36 |
|
9 |
| Foreign Currency Remeasurement Gain (Loss) |
2 |
|
(1) |
|
(3) |
|
(5) |
| Intercompany EBIT Elimination (e) |
1 |
|
- |
|
- |
|
- |
| |
|
|
|
|
|
|
|
| Total EBIT |
$916 |
|
$971 |
|
$1,408 |
|
$1,934 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| (a) Minority interest includes financing expenses related
to securities of subsidiaries of $28 million for the three months ended
June 30, 2003 and $55 million for the six months ended June 30, 2003.
The expense related to these securities is accounted for in interest
expense in 2004.
|
| (b) Current year amounts include a $262 million contribution
to the nuclear decommissioning trust funds.
|
| (c) Beginning in 2004, Crescent, formerly part of Other,
is considered a reportable segment.
|
| (d) Capital expenditures for residential properties are
included in operating cash flows on the Consolidated Statements of Cash
Flows. Capital expenditures for commercial and multi-family properties
are included in investing cash flows on the Consolidated Statements
of Cash Flows. |
| (e) Amount relates to the elimination of intercompany
EBIT that has been reclassified to discontinued operations. |
JUNE 2004
QUARTERLY HIGHLIGHTS
(unaudited) |
| |
|
|
|
|
|
|
|
| |
Three Months Ended
June 30, |
|
Six Months Ended
June 30, |
| |
|
|
|
| (In millions, except where noted) |
2004 |
|
2003 |
|
2004 |
|
2003 |
|
| FRANCHISED ELECTRIC |
|
|
|
|
|
|
|
| Operating Revenues |
$1,228 |
|
$1,110 |
|
$2,499 |
|
$2,361 |
| Operating Expenses |
896 |
|
809 |
|
1,747 |
|
1,622 |
| Gains on Sales of Other Assets, net |
3 |
|
- |
|
3 |
|
1 |
| Other Income, net of expenses |
3 |
|
15 |
|
7 |
|
30 |
| |
|
|
|
|
|
|
|
| EBIT |
$338 |
|
$316 |
|
$762 |
|
$770 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Sales, GWh |
20,087 |
|
19,415 |
|
42,050 |
|
41,458 |
| |
|
|
|
|
|
|
|
|
| NATURAL GAS TRANSMISSION |
|
|
|
|
|
|
|
| Operating Revenues |
$688 |
|
$692 |
|
$1,726 |
|
$1,660 |
| Operating Expenses |
397 |
|
421 |
|
1,035 |
|
988 |
| Gains on Sales of Other Assets, net |
9 |
|
- |
|
9 |
|
1 |
| Other Income, net of expenses (a) |
13 |
|
45 |
|
19 |
|
79 |
| Minority Interest Expense |
2 |
|
10 |
|
10 |
|
23 |
| |
|
|
|
|
|
|
|
| EBIT |
$311 |
|
$306 |
|
$709 |
|
$729 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Proportional Throughput, TBtu |
726 |
|
742 |
|
1,815 |
|
1,824 |
| |
|
|
|
|
|
|
|
|
| FIELD SERVICES (b) |
|
|
|
|
|
|
|
| Operating Revenues |
$2,356 |
|
$2,048 |
|
$4,731 |
|
$4,598 |
| Operating Expenses |
2,225 |
|
1,991 |
|
4,474 |
|
4,500 |
| Other Income, net of expenses |
15 |
|
24 |
|
33 |
|
39 |
| Minority Interest Expense |
52 |
|
28 |
|
104 |
|
54 |
| |
|
|
|
|
|
|
|
| EBIT |
$94 |
|
$53 |
|
$186 |
|
$83 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Natural Gas Gathered and Processed/ |
|
|
|
|
|
|
|
| Transported, TBtu/day |
7.5 |
|
7.6 |
|
7.4 |
|
7.6 |
| Natural Gas Liquids Production, MBbl/d |
371 |
|
352 |
|
364 |
|
360 |
| Average Natural Gas Price per MMBtu |
$5.99 |
|
$5.41 |
|
$5.84 |
|
$6.00 |
| Average Natural Gas Liquids Price per Gallon |
$0.61 |
|
$0.49 |
|
$0.60 |
|
$0.54 |
| |
|
|
|
|
|
|
|
|
| DUKE ENERGY NORTH AMERICA |
|
|
|
|
|
|
|
| Operating Revenues |
$672 |
|
$962 |
|
$1,328 |
|
$2,358 |
| Operating Expenses |
705 |
|
945 |
|
1,576 |
|
2,327 |
| Loss on Sales of Other Assets, net (c) |
(16) |
|
- |
|
(368) |
|
- |
| Other Income, net of expenses (d) |
3 |
|
187 |
|
(1) |
|
196 |
| Minority Interest Benefit |
(7) |
|
(7) |
|
(21) |
|
(7) |
| |
|
|
|
|
|
|
|
| EBIT |
$(39) |
|
$211 |
|
$(596) |
|
$234 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Actual Plant Production, GWh (e) |
5,895 |
|
4,510 |
|
11,356 |
|
9,620 |
| Proportional MW Capacity in Operation |
|
|
|
|
15,660 |
|
15,206 |
| |
|
|
|
|
|
|
|
|
| INTERNATIONAL ENERGY (b) |
|
|
|
|
|
|
|
| Operating Revenues |
$147 |
|
$169 |
|
$301 |
|
$341 |
| Operating Expenses |
98 |
|
90 |
|
229 |
|
225 |
| Gains on Sales of Other Assets, net |
- |
|
1 |
|
- |
|
1 |
| Other Income, net of expenses |
22 |
|
15 |
|
31 |
|
22 |
| Minority Interest Expense |
3 |
|
4 |
|
6 |
|
8 |
| |
|
|
|
|
|
|
|
| EBIT |
$68 |
|
$91 |
|
$97 |
|
$131 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| Sales, GWh |
4,248 |
|
4,446 |
|
8,811 |
|
8,416 |
| Proportional MW Capacity in Operation |
|
|
|
|
4,130 |
|
4,013 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| CRESCENT (b) |
|
|
|
|
|
|
|
| Operating Revenues |
$101 |
|
$76 |
|
$140 |
|
$97 |
| Operating Expenses |
75 |
|
63 |
|
112 |
|
86 |
| Gains on Sales of Investments in Commercial and Multi-Family Real
Estate |
62 |
|
9 |
|
121 |
|
11 |
| Other Income, net of expenses |
- |
|
- |
|
- |
|
- |
| Minority Interest Expense |
1 |
|
1 |
|
2 |
|
1 |
| |
|
|
|
|
|
|
|
| EBIT |
$87 |
|
$21 |
|
$147 |
|
$21 |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
| OTHER (b) |
|
|
|
|
|
|
|
| Operating Revenues |
$290 |
|
$362 |
|
$634 |
|
$879 |
| Operating Expenses |
311 |
|
412 |
|
698 |
|
994 |
| (Loss) Gains on Sales of Other Assets, net |
(7) |
|
- |
|
7 |
|
- |
| Other Income, net of expenses |
2 |
|
(19) |
|
26 |
|
(2) |
| |
|
|
|
|
|
|
|
| EBIT |
$(26) |
|
$(69) |
|
$(31) |
|
$(117) |
| |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| (a) Prior year includes $31 million gain on sale of the
Alliance/Aux Sable equity investment.
|
| (b) Certain prior year amounts have been reclassified
due to discontinued operations.
|
| (c) Current year amounts include DENA Southeast plant
impairment of $361 million and loss on sale of Duke Energy Trading &
Marketing contracts.
|
| (d) Prior year includes $175 million gain on sale of the
American Ref-Fuel Company equity investment.
|
| (e) Represents 100% of GWh.
|
DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per-share amounts) |
| |
|
|
|
|
| |
|
|
|
|
| |
Three Months Ended |
Six Months Ended |
| |
June 30, |
June 30, |
| |
|
|
| |
2004 |
2003 |
2004 |
2003 |
| |
|
|
|
|
| Operating Revenues |
|
|
|
|
| |
Non-regulated electric, natural gas, natural gas liquids
and other |
$3,453 |
$3,394 |
$6,909 |
$7,406 |
| |
Regulated electric |
1,272 |
1,122 |
2,523 |
2,401 |
| |
Regulated natural gas |
635 |
636 |
1,617 |
1,515 |
| |
|
|
|
|
|
|
| |
|
Total operating revenues |
5,360 |
5,152 |
11,049 |
11,322 |
| |
|
|
|
|
| |
|
|
|
|
| Operating Expenses |
|
|
|
|
| |
Natural gas and petroleum products purchased |
2,594 |
2,664 |
5,626 |
6,156 |
| |
Operation, maintenance and other |
837 |
881 |
1,628 |
1,555 |
| |
Fuel used in electric generation and purchased power |
607 |
369 |
1,171 |
917 |
| |
Depreciation and amortization |
421 |
438 |
857 |
869 |
| |
Property and other taxes |
125 |
134 |
279 |
274 |
| |
|
|
|
|
|
|
| |
|
Total operating expenses |
4,584 |
4,486 |
9,561 |
9,771 |
| |
|
|
|
|
| |
|
|
|
|
| Gains on Sales of Investments in Commercial and
Multi-Family Real Estate |
62 |
9 |
121 |
11 |
| (Losses) Gains on Sales of Other Assets, net |
(11) |
1 |
(349) |
3 |
| |
|
|
|
|
| Operating Income |
827 |
676 |
1,260 |
1,565 |
| |
|
|
|
|
| |
|
|
|
|
| Other Income and Expenses |
|
|
|
|
| |
Equity in earnings of unconsolidated affiliates |
43 |
16 |
77 |
50 |
| |
Gains on sales of equity investments |
- |
219 |
- |
233 |
| |
Other income and expenses, net |
46 |
60 |
71 |
86 |
| |
|
|
|
|
|
|
| |
|
Total other income and expenses |
89 |
295 |
148 |
369 |
| |
|
|
|
|
| Interest Expense |
337 |
325 |
693 |
651 |
| Minority Interest Expense |
41 |
50 |
79 |
100 |
| |
|
|
|
|
| |
|
|
|
|
| Earnings From Continuing Operations Before Income
Taxes |
538 |
596 |
636 |
1,183 |
| Income Tax Expense from Continuing Operations |
133 |
195 |
166 |
390 |
| |
|
|
|
|
| |
|
|
|
|
| Income From Continuing Operations |
405 |
401 |
470 |
793 |
| Discontinued Operations |
|
|
|
|
| |
Net operating (loss) income, net of tax |
(3) |
17 |
4 |
20 |
| |
Net gain (loss) on dispositions, net of tax |
30 |
6 |
269 |
(2) |
| |
|
|
|
|
| Income From Discontinued Operations |
27 |
23 |
273 |
18 |
| |
|
|
|
|
| Income Before Cumulative Effect of Change in Accounting
Principle |
432 |
424 |
743 |
811 |
| Cumulative Effect of Change in Accounting Principle,
net of tax and minority interest |
- |
- |
- |
(162) |
| |
|
|
|
|
| |
|
|
|
|
| Net Income |
432 |
424 |
743 |
649 |
| |
|
|
|
|
| Dividends and Premiums on Redemption of Preferred
and Preference Stock |
3 |
7 |
5 |
10 |
| |
|
|
|
|
| |
|
|
|
|
| Earnings Available For Common Stockholders |
$429 |
$417 |
$738 |
$639 |
| |
|
|
|
|
| |
|
|
|
|
| Common Stock Data |
|
|
|
|
| |
Weighted-average shares outstanding |
|
|
|
|
| |
|
Basic |
926 |
902 |
919 |
899 |
| |
|
Diluted |
928 |
903 |
921 |
900 |
| |
Earnings per share (from continuing operations) |
|
|
|
|
| |
|
Basic |
$0.43 |
$0.44 |
$0.50 |
$0.87 |
| |
|
Diluted |
$0.43 |
$0.44 |
$0.50 |
$0.87 |
| |
Earnings per share (from discontinued operations) |
|
|
|
|
| |
|
Basic |
$0.03 |
$0.02 |
$0.30 |
$0.02 |
| |
|
Diluted |
$0.03 |
$0.02 |
$0.30 |
$0.02 |
| |
Earnings per share (before cumulative effect of change
in accounting principle) |
|
|
|
|
| |
|
Basic |
$0.46 |
$0.46 |
$0.80 |
$0.89 |
| |
|
Diluted |
$0.46 |
$0.46 |
$0.80 |
$0.89 |
| |
Earnings per share |
|
|
|
|
| |
|
Basic |
$0.46 |
$0.46 |
$0.80 |
$0.71 |
| |
|
Diluted |
$0.46 |
$0.46 |
$0.80 |
$0.71 |
| |
Dividends per share |
$0.550 |
$0.550 |
$0.825 |
$0.825 |
DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions) |
| |
|
|
|
|
|
| |
|
|
June 30, |
|
December 31, |
| |
|
|
2004 |
|
2003 |
| |
|
|
|
| ASSETS |
|
|
|
| |
|
|
|
|
|
| Current Assets |
|
|
|
| |
Cash and cash equivalents |
$2,644 |
|
$1,160 |
| |
Receivables, net |
2,982 |
|
2,888 |
| |
Inventory |
837 |
|
941 |
| |
Assets held for sale |
287 |
|
424 |
| |
Unrealized gains on mark-to-market and hedging transactions
|
1,438 |
|
1,566 |
| |
Other |
604 |
|
694 |
| |
|
|
|
|
|
| |
|
Total current assets |
8,792 |
|
7,673 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Investments and Other Assets |
|
|
|
| |
Investments in unconsolidated affiliates |
1,331 |
|
1,398 |
| |
Nuclear decommissioning trust funds |
1,243 |
|
925 |
| |
Goodwill |
3,855 |
|
3,962 |
| |
Notes receivable |
244 |
|
260 |
| |
Unrealized gains on mark-to-market and hedging transactions
|
1,828 |
|
1,857 |
| |
Assets held for sale |
570 |
|
1,444 |
| |
Investments in residential, commercial and multi-family
real estate, net |
1,228 |
|
1,331 |
| |
Other |
840 |
|
1,117 |
| |
|
|
|
|
|
| |
|
Total investments and other assets |
11,139 |
|
12,294 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Property, Plant and Equipment |
|
|
|
| |
Cost |
45,530 |
|
46,009 |
| |
Less accumulated depreciation and amortization |
12,800 |
|
12,139 |
| |
|
|
|
|
|
| |
|
Net property, plant and equipment |
32,730 |
|
33,870 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Regulatory Assets and Deferred Debits |
|
|
|
| |
Deferred debt expense |
317 |
|
275 |
| |
Regulatory assets related to income taxes |
1,175 |
|
1,152 |
| |
Other |
962 |
|
939 |
| |
|
|
|
|
|
| |
|
Total regulatory assets and deferred debits |
2,454 |
|
2,366 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
Total Assets |
$55,115 |
|
$56,203 |
| |
|
|
|
|
DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions) |
| |
|
|
|
| |
June 30, |
|
December 31, |
| |
2004 |
|
2003 |
| |
|
|
|
| LIABILITIES AND COMMON STOCKHOLDERS' EQUITY |
|
|
|
| |
|
|
|
| Current Liabilities |
|
|
|
| |
Accounts payable |
$2,112 |
|
$2,317 |
| |
Notes payable and commercial paper |
437 |
|
130 |
| |
Taxes accrued |
398 |
|
14 |
| |
Interest accrued |
309 |
|
304 |
| |
Liabilities associated with assets held for sale |
44 |
|
651 |
| |
Current maturities of long-term debt |
1,535 |
|
1,200 |
| |
Unrealized losses on mark-to-market and hedging transactions
|
1,239 |
|
1,283 |
| |
Other |
1,826 |
|
1,799 |
| |
|
|
|
|
|
| |
|
Total current liabilities |
7,900 |
|
7,698 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Long-term Debt, including debt to affiliates
of $258 at June 30, 2004 and |
|
|
|
| |
$876 at December 31, 2003 |
19,181 |
|
20,622 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Deferred Credits and Other Liabilities |
|
|
|
| |
Deferred income taxes |
4,315 |
|
4,120 |
| |
Investment tax credit |
159 |
|
165 |
| |
Unrealized losses on mark-to-market and hedging transactions
|
1,611 |
|
1,754 |
| |
Liabilities associated with assets held for sale |
- |
|
737 |
| |
Other |
5,586 |
|
5,524 |
| |
|
|
|
|
|
| |
|
Total deferred credits and other liabilities |
11,671 |
|
12,300 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Commitments and Contingencies |
|
|
|
| |
|
|
|
|
|
| Minority Interests |
1,674 |
|
1,701 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Preferred and preference stock without sinking
fund requirements |
134 |
|
134 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| Common Stockholders' Equity |
|
|
|
| |
Common stock, no par, 2 billion shares authorized; 938
million and 911 |
|
|
|
| |
million shares outstanding at June 30, 2004
and December 31, 2003, |
|
|
|
| |
respectively |
10,492 |
|
9,519 |
| |
Retained earnings |
4,053 |
|
4,060 |
| |
Accumulated other comprehensive income |
10 |
|
169 |
| |
|
|
|
|
|
| |
|
Total common stockholders' equity |
14,555 |
|
13,748 |
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
Total Liabilities and Common Stockholders' Equity |
$55,115 |
|
$56,203 |
| |
|
|
|
|
|
DUKE ENERGY CORPORATION |
CONDENSED CONSOLIDATED STATEMENTS
OF CASH FLOWS |
(unaudited) |
(In millions) |
| |
|
|
|
|
|
|
| |
|
|
|
|
Six Months Ended |
| |
|
|
|
|
June 30, |
| |
|
|
|
|
|
| |
|
|
|
|
2004 |
2003 |
| |
|
|
| CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
| |
Net income |
$743 |
$649 |
| |
Adjustments to reconcile net income to net cash provided
by |
|
|
| |
|
operating activities |
|
|
| |
|
|
Depreciation and amortization (including amortization
of nuclear fuel) |
943 |
972 |
| |
|
|
Cumulative effect of change in accounting principle |
- |
162 |
| |
|
|
Net gains on sales of equity investments and other assets |
(57) |
(250) |
| |
|
|
Net realized and unrealized mark-to-market and hedging
transactions |
229 |
(42) |
| |
|
|
Capital expenditures for residential real estate |
(138) |
(76) |
| |
|
|
Cost of residential real estate sold |
80 |
50 |
| |
|
|
Changes in working capital and other |
589 |
359 |
| |
|
|
|
|
|
|
| |
|
|
|
Net cash provided by operating activities |
2,389 |
1,824 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
| |
|
Capital and investment expenditures, net of refund |
(1,318) |
(1,413) |
| |
|
Net proceeds from the sales of equity investment and other
assets, |
|
|
| |
|
|
and sales of and collections on notes receivable |
671 |
1,279 |
| |
|
Proceeds from the sales of commercial and multi-family
real estate |
303 |
47 |
| |
|
Other |
(102) |
(51) |
| |
|
|
|
|
|
|
| |
|
|
|
Net cash used in investing activities |
(446) |
(138) |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
| |
|
Proceeds from the |
|
|
| |
|
|
Issuance of long-term debt |
112 |
1,707 |
| |
|
|
Issuance of common stock and common stock |
|
|
| |
|
|
|
related to employee benefit plans |
947 |
150 |
| |
|
Payments for the redemption of long-term debt, preferred
stock of a subsidiary,
|
|
| |
|
guaranteed preferred beneficial interests
in subordinated notes,
|
|
| |
|
and net paydown of commercial paper and notes
payable |
(917) |
(2,387) |
| |
|
Dividends paid |
(526) |
(524) |
| |
|
Other |
(63) |
(7) |
| |
|
|
|
|
|
|
| |
|
|
|
Net cash used in financing activities |
(447) |
(1,061) |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
Changes in cash and cash equivalents associated with assets
held for sale |
(12) |
- |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
Net increase in cash and cash equivalents
|
1,484 |
625 |
| |
Cash and cash equivalents at beginning of period |
1,160 |
857 |
| |
|
|
|
| |
Cash and cash equivalents at end of period |
$2,644 |
$1,482 |
| |
|
|
|
|
|
|
Supplemental Disclosures |
Quarter Ended June
30, 2004 |
| |
|
|
|
|
| |
|
|
|
|
| Duke Energy Corporation |
|
|
|
|
|
| |
2Q04 |
|
|
|
| |
|
|
|
|
| Mark-to-market Portfolio (in millions) |
$(209) |
|
|
|
| |
|
|
|
|
| Daily Value at Risk (DvaR) (in millions) |
|
|
|
|
| |
|
|
|
|
| 95% Confidence Level, One-Day Holding Period, Two-Tailed |
|
|
|
|
| Average for the Period |
$19 |
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| Duke Energy North America |
|
|
|
|
|
| (in millions unless stated otherwise) |
Q-T-D June 30, 2004 |
| |
|
|
|
|
| |
Proprietary |
Structured |
Owned |
|
| Merchant Energy Gross Margin |
Trading |
Contracts |
Assets |
Total |
|
|
|
|
|
| Mark-to-market gross margin (loss) |
$2 |
$20 |
$- |
$22 |
| Accrual gross margin (loss) |
n/a |
(5) |
109 |
104 |
| |
|
|
|
|
| Total Gross Margin |
$2 |
$15 |
$109 |
126 |
| |
|
|
|
|
| |
|
|
|
|
| Reconciliation to Segment EBIT: |
|
|
|
|
| Plant depreciation |
|
|
|
(39) |
| Plant operating and maintenance expenses |
|
|
|
(82) |
| General and administrative
and other expenses (including Enron
|
|
|
(38) |
| bankruptcy
gain of $113 and California settlement charges of $105)
|
|
|
|
| Minority interest |
|
|
|
7 |
| Other income, net of expenses |
|
|
|
3 |
| Gain (loss) on sale of other assets |
|
|
|
(16) |
| |
|
|
|
|
| DENA Segment EBIT |
|
|
|
$(39) |
| |
|
|
|
|
| |
|
|
|
|
| |
|
|
|
|
| Owned Assets - Merchant Plant Production |
|
|
|
|
| and
Hedging Information a |
2004b |
2005 |
2006 |
|
|
|
|
|
|
| Estimated available production (millions of MWh) |
32 |
63 |
63 |
|
| Combined cycle |
29 |
56 |
56 |
|
| Peaker units |
3 |
7 |
7 |
|
| |
|
|
|
|
| Estimated production (millions of MWh) |
12 |
23 |
25 |
|
| Combined cycle |
12 |
23 |
24 |
|
| Peaker units |
- |
- |
1 |
|
| |
|
|
|
|
| Estimated production sold |
93% |
77% |
68% |
|
| |
|
|
|
|
| Estimated average price ($/MWh) |
$46 |
$47 |
$45 |
|
| |
|
|
|
|
| |
|
|
|
|
| a All figures exclude Southeast plants. |
|
|
|
|
| b Information for 2004 is for the remainder of the year
only (July - December). |
|
|
|
|
| |
|
|
|
|
Supplemental
Disclosures |
Quarter
Ended June 30, 2004 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Duke Energy North America (continued) |
|
| (in millions) |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Maturity/Source of Carrying Value of |
|
|
|
|
Over |
Total |
| Energy Contract Net Assets |
2004 |
2005 |
2006 |
2007 |
4 Years |
Fair Value |
|
|
|
|
|
|
|
| Proprietary Trading |
|
|
|
|
|
|
| Actively quoted prices and other external sources |
$100 |
$6 |
$30 |
$(7) |
$(20) |
$109 |
| Modeled |
(2) |
13 |
8 |
6 |
9 |
34 |
| |
|
|
|
|
|
|
| |
$98 |
$19 |
$38 |
$(1) |
$(11) |
$143 |
| |
|
|
|
|
|
|
| Structured Contracts |
|
|
|
|
|
|
| Actively quoted prices and other external sources |
$11 |
$39 |
$(50) |
$(31) |
$(75) |
$(106) |
| Modeled |
(30) |
(30) |
(32) |
(25) |
(21) |
(138) |
| |
|
|
|
|
|
|
| |
$(19) |
$9 |
$(82) |
$(56) |
$(96) |
$(244) |
| |
|
|
|
|
|
|
| Owned Assets |
|
|
|
|
|
|
| Actively quoted prices and other external sources |
$181 |
$266 |
$193 |
$88 |
$69 |
$797 |
| Modeled |
(11) |
(9) |
(5) |
(1) |
(7) |
(33) |
| |
|
|
|
|
|
|
| |
$170 |
$257 |
$188 |
$87 |
$62 |
$764 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
Total
Fair Value of Energy Contract Net Assets * |
$663 |
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| * Total Carrying 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 Average Price |
| Represents the average price expected to be realized.
This figure is based on both existing sales (hedges) as well as expected
sales, given market conditions at June 30, 2004. |
| |
| 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 Sold |
| Represents the portion of estimated production which has
been hedged, primarily through firm physical contracts. |
| |
| 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. |
Special items for the first quarter (as summarized in this Earnings Release)
include:
|
($ in Millions) |
Pre-Tax
Amount |
Tax
Effect |
2004 EPS
Impact |
2003 EPS
Impact |
| First Quarter 2004 |
| Gain on sale of Australian assets |
$256 |
($18) |
$0.26 |
-- |
| Net loss on sale of DENA assets, primarily anticipated
sale of southeast U.S. plants |
(359) |
134 |
(0.25) |
-- |
| Gains on sale of other assets, including Caribbean Nitrogen
Co. |
14
|
(5)
|
0.01
|
--
|
| Charge related to planned sale of Cantarell investment
|
(13) |
5 |
(0.01) |
-- |
| |
| |
| First quarter 2003 |
| 2003 gain on asset sales |
16 |
(5) |
-- |
$0.01 |
| 2003 change in accounting principles |
(256) |
94 |
-- |
(0.18) |
| |
|
|
| TOTAL EPS IMPACT |
$0.01 |
($0.17) |
| EPS, as reported |
$0.34 |
$0.25 |
| EPS, ongoing |
$0.33 |
$0.42 |
|
