News Release
November 3, 2004

DUKE ENERGY REPORTS THIRD QUARTER 2004 RESULTS

  • Reported earnings of 41 cents per share versus 5 cents in prior year's quarter; ongoing EPS of 38 cents versus 35 cents in third quarter of 2003  
  • All business units positioned to meet or exceed 2004 financial goals
  • DEFS continuing to benefit from favorable commodity prices
  • DENA results affected by positive mark-to-market earnings of 3 cents per share
  • Debt reduction will exceed 2004 goal of $4 billion, which includes $840 million of debt retired through Australian asset sales
  • Lower interest expense driven by accelerated debt reduction

CHARLOTTE, N.C. -- Duke Energy reported net income in the third quarter of 2004 of $389 million, or $0.41 per share, compared to net income of $49 million, or $0.05 per share in the third quarter of 2003.

Excluding special items, ongoing third quarter earnings per share (EPS) were $0.38 versus $0.35 in the prior year’s quarter.

"With three solid quarters behind us, we expect to finish 2004 ahead of the financial plans we laid out at the beginning of the year," said Paul Anderson, Duke Energy chairman of the board and chief executive officer. "We are now focused on realizing further improvements to our financial and operational results for 2005."

Special items for the quarter include:

($ in Millions)
Pre-Tax
Amount
Tax
Effect
2004
EPS Impact
2003
EPS Impact
Third quarter 2004
Tax benefit from restructuring
-- 
$48 
$0.05 
 
Asset impairments, losses on asset sales and write down of equity investments at DEFS (net of minority interest)
(42)
16 
(0.03)
 
Net gains on asset sales
(2)
-- 
 
Tax true up on sale of Australian assets
-- 
0.01 
 
 
Third quarter 2003
 
 
 
 
Tax benefit on 2002 goodwill impairment of International Energy European gas trading
$52 
 
$0.06 
Net gain/loss on asset sales
(71)
28 
 
$0.05 
DENA goodwill write-off
(254)
90 
 
(0.18)
Severance cost associated with work force reduction
(105)
37 
 
(0.08)
Settlement with the S.C. Public Service Commission
(46)
18 
 
(0.03)
Settlement with the Commodity Futures Trading Commission (net of minority interest)
(17)
-- 
 
(0.02)
         
 
Total EPS Impact
 
 
$0.03 
($0.30)
EPS, as reported
 
 
$0.41 
$0.05 
EPS, ongoing *
 
 
$0.38 
$0.35 

Special items EPS year-to-date impact:

 
2004
2003
First quarter
$0.01 
($0.17)
Second quarter
0.04 
0.16 
Third quarter
0.03 
(0.30)
Impact of change in shares outstanding
(0.01)
--
Total EPS Impact
$0.07 
($0.31)
Year-to-date EPS, as reported
$1.22 
$0.76 
Year-to-date EPS, ongoing *
$1.15 
$1.07 

* Includes results from operations primarily in International Energy, DENA, Crescent Resources and Field
   Services that have been discontinued.

BUSINESS UNIT RESULTS

Franchised Electric
Third quarter 2004 earnings before interest and taxes (EBIT) from Franchised Electric were $453 million, compared to third quarter 2003 EBIT of $436 million. EBIT was affected in third quarter 2004 by higher non-nuclear operating and maintenance costs, including $10 million in storm costs primarily related to Hurricane Ivan, and lower bulk power sales.

Customer growth for Franchised Electric continues to be positive, with approximately 40,000 more customers than in third quarter 2003.

In the prior year, EBIT for Franchised Electric was reduced by $30 million due to a regulatory settlement with the South Carolina Public Service Commission and $46 million for severance and related charges.

Amortization related to the implementation of the North Carolina Clean Air Act for the quarter was $109 million versus $53 million in third quarter 2003.

Year-to-date EBIT for Franchised Electric was $1,215 million, compared with $1,206 million in 2003.

Natural Gas Transmission
Duke Energy Gas Transmission (DEGT) reported third quarter 2004 EBIT of $265 million compared to $280 million in the prior year’s quarter. Results were positively affected by pipeline expansion projects and a $12 million favorable impact from the stronger Canadian currency. During the quarter, DEGT realized a $5 million gain on the sale of its interest in the Millennium Pipeline project.

The 2003 third quarter included gains of $31 million from asset sales and $17 million of benefits related to the reversal of certain tax reserves. These items were partially offset by an $18 million charge for severance and related costs in the third quarter of last year.

The favorable Canadian currency impact on DEGT’s EBIT was partially offset in Duke Energy’s consolidated net income by currency impacts on interest and taxes.

During the third quarter, DEGT held a successful comprehensive open season in which eastern North American markets indicated substantial interest in transportation and storage infrastructure expansion opportunities on any one or a combination of Algonquin, Texas Eastern and Union Gas. In addition, DEGT filed with FERC to build an 11-mile lateral to connect Texas Eastern to British Petroleum’s proposed LNG import terminal at Logan, N.J.

Year-to-date EBIT for Natural Gas Transmission was $974 million, compared with $1,009 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 third quarter 2004 EBIT from continuing operations of $67 million, compared to $51 million in the third quarter of 2003.

The increase was primarily driven by higher commodity prices compared to last year’s quarter. During the quarter, Field Services took a $26 million impairment charge, net of minority interest, largely related to its periodic review of the carrying value of its assets and equity investments and disposal of certain assets during the quarter.

During the quarter, DEFS paid a dividend, of which Duke Energy’s portion was $98 million. This payment reflects continuing strong cash flow and earnings at DEFS.

Year-to-date EBIT from continuing operations for Field Services was $253 million, compared with $136 million in 2003.

Duke Energy North America
Duke Energy North America (DENA) reported an EBIT loss from continuing operations of $17 million in the third quarter of 2004, compared to an EBIT loss from continuing operations of $411 million in the prior year’s quarter.

For the third quarter of 2004, DENA’s results were positively impacted by continued expense reductions and a positive $40 million in mark-to-market earnings, net of minority interest. Results were negatively affected by lower margins and lower than expected production at DENA’s generation assets due to cooler than expected weather in the Midwest.

Results for the third quarter of 2003 included a number of special charges which totaled $357 million.

Overall year-to-date EBIT loss from continuing operations for DENA was $612 million – largely driven by a loss of approximately $360 million related to the sale of the southeast generation assets and $23 million in mark-to-market losses, net of minority interest. This compares to an EBIT loss from continuing operations of $177 million in 2003.

International Energy
For the third quarter of 2004, Duke Energy International (DEI) reported EBIT from continuing operations of $64 million, compared to $44 million in the third quarter of 2003.

The increase was driven by better results at National Methanol, due mainly to stronger MTBE prices, and a reduction in environmental reserves in Brazil.

Year-to-date EBIT from continuing operations for International Energy was $161 million, compared with $175 million in 2003.

Crescent Resources
Crescent Resources reported third quarter 2004 EBIT from continuing operations of $43 million, compared to $39 million in the third quarter of 2003.

Better results with commercial and residential developments were mostly offset by lower land sales during the previous year’s quarter.

Year-to-date EBIT from continuing operations for Crescent Resources was $190 million, compared with $61 million in 2003.

Other
Other, which includes corporate costs, DukeNet Communications, Duke/Fluor Daniel and Duke Energy Merchants (DEM) reported an EBIT loss of $25 million in the third quarter of 2004, compared to an EBIT loss of $88 million in the third quarter of 2003. The 2003 EBIT loss included charges of $33 million related to severance and related costs.

Year-to-date EBIT for Other was a loss of $56 million, compared with a loss of $205 million in 2003.

Discontinued Operations
The operations reported as discontinued resulted in a third quarter 2004 loss of $12 million. This compares to third quarter 2003 income of $44 million.

Year-to-date income for Discontinued Operations was $260 million, compared with $61 million in 2003.

INCOME TAXES

Third quarter 2004 income tax expense from continuing operations was $129 million. During the quarter, Duke Energy recorded a $48 million benefit related to the southeast asset sale as a result of the realignment of certain subsidiaries of Duke Energy resulting in a lower-than-normal tax rate.

INTEREST EXPENSE

Interest expense was $342 million for the third quarter of 2004, compared to $375 million for the third quarter of 2003. The decline was due mainly to overall debt reduction, which will exceed $4 billion for the current year, including approximately $840 million of non-cash debt reduction as part of the sale of the Australian assets.

LIQUIDITY AND CAPITAL RESOURCES

Duke Energy's consolidated capital structure at the end of third quarter 2004, including short-term debt, was 55 percent debt, 41 percent common equity and 4 percent minority interests.

Under various credit facilities, Duke Energy, Duke Capital and other subsidiaries had the ability to borrow up to $2.6 billion at the end of the third quarter of 2004. The companies had borrowings and letters of credit outstanding under these programs of approximately $1.1 billion as of the end of the third quarter of 2004, resulting in unused capacity of approximately $1.5 billion. The company also had approximately $2.9 billion in cash and cash equivalents at the end of third quarter 2004.

On Oct. 28, the company made a voluntary $250 million cash contribution to its U.S. pension fund. As a result of making the contribution, the company will not be required to make a contribution to this plan in 2005.

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 third 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.

The 2004 debt reduction goal of $4 billion represents a non-GAAP measure because it includes approximately $840 million that was retired by the buyer as part of the sale of the Australian assets, which represents a non-cash financing activity under GAAP. The debt retired by the buyer was included in Current and Non-Current Liabilities Associated with Assets Held for Sale as of Dec. 31, 2003.

Management believes that presentation of this non-GAAP measure is useful because it reflects the settlement of amounts of indebtedness regardless of their classification in the financial statements or of the means of settlement.

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 800/289-0572 in the United States or 913/981-5543 outside the United States. The confirmation code is 444978. 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 444978 through midnight ET, Nov. 12. The international replay number is 719/457-0820, confirmation code 444978. 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

 

SEPTEMBER 2004
QUARTERLY HIGHLIGHTS
(unaudited)
 
 
Three Months Ended September 30,
Nine Months Ended September 30,
 

(In millions, except where noted)
2004
2003
2004
2003

COMMON STOCK DATA
   Earnings Per Share (from continuing operations)
      Basic
$0.42 
$- 
$0.94 
$0.87 
      Diluted
$0.42 
$- 
$0.93 
$0.87 
   (Loss) Earnings Per Share (from discontinued operations)
      Basic
$(0.01)
$0.05 
$0.28 
$0.07 
      Diluted
$(0.01)
$0.05 
$0.28 
$0.07 
   Earnings Per Share (before cumulative effect of change
  in accounting principle)
      Basic
$0.41 
$0.05 
$1.22 
$0.94 
      Diluted
$0.41 
$0.05 
$1.21 
$0.94 
   Earnings Per Share
      Basic
$0.41 
$0.05 
$1.22 
$0.76 
      Diluted
$0.41 
$0.05 
$1.21 
$0.76 
   Dividends Per Share
$- 
$- 
$0.825 
$0.825 
   Weighted-Average Shares Outstanding
      Basic
938 
905 
925 
901 
      Diluted
940 
907 
928 
902 

INCOME
Operating Revenues
$5,507 
$5,549 
$16,466 
$16,840 
 



Total Reportable Segment EBIT
875 
439 
2,181 
2,410 
Other EBIT
(25)
(88)
(56)
(205)
Interest Expense (a)
342 
375 
1,035 
1,027 
Minority Interest (Benefit) Expense and Other (b)
(22)
(7)
(78)
11 
Income Tax Expense (Benefit) from Continuing Operations
129 
(22)
296 
368 
(Loss) Income from Discontinued Operations
(12)
44 
260 
61 
Cumulative Effect of Change in Accounting Principle, net of tax and minority interest
(162)
 



Net Income
389 
49 
1,132 
698 
Dividends and Premiums on Redemptions of Preferred and Preference Stock
13 
 



Earnings Available for Common Stockholders
$387 
$46 
$1,125 
$685 
 




CAPITALIZATION
      Common Equity
41%
38%
      Preferred Stock
0%
0%
     
   Total Common Equity and Preferred Securities
41%
38%
 
   Minority Interests
4%
4%
   Total Debt
55%
58%
 

Total Debt
$20,653
$23,964
Book Value Per Share
$16.30
$17.57
Actual Shares Outstanding
938
907

CAPITAL AND INVESTMENT EXPENDITURES
   Franchised Electric (c)
$222 
$241
$991 
$791
   Natural Gas Transmission
131 
184
387 
610
   Field Services
31 
32
163 
94
   Duke Energy North America
11
19 
268
   International Energy
18
24 
61
   Crescent (d) (e)
122 
76
406 
203
   Other
(13)
25
(27)
49
 



Total Capital and Investment Expenditures
$507 
$587
$1,963 
$2,076
 





EBIT BY BUSINESS SEGMENT
   Franchised Electric
$453 
$436 
$1,215 
$1,206 
   Natural Gas Transmission
265 
280 
974 
1,009 
   Field Services
67 
51 
253 
136 
   Duke Energy North America
(17)
(411)
(612)
(177)
   International Energy
64 
44 
161 
175 
   Crescent (d)
43 
39 
190 
61 
 



Total reportable segment EBIT
875 
439 
2,181 
2,410 
   Other EBIT
(25)
(88)
(56)
(205)
   Interest expense
(342)
(375)
(1,035)
(1,027)
   Minority interest benefit (expense) and other (b)
22 
78 
(11)
 



Consolidated earnings (loss) from continuing operations before income taxes
$530 
$(17)
$1,168 
$1,167 
 



 

(a) Financing expenses related to securities of subsidiaries is accounted for in interest expense in 2004. Minority interest includes expense related to these securities of $55 million for the nine months ended September 2003.
(b) Includes interest income, foreign currency remeasurement gains and losses, and additional minority interest expense allocated to the segment results.
(c) Current year amounts include a $262 million contribution to the nuclear decommissioning trust funds.
(d) Beginning in 2004, Crescent, formerly part of Other, is considered a reportable segment.
(e) 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.


SEPTEMBER 2004
QUARTERLY HIGHLIGHTS
(unaudited)

 
Three Months Ended
September 30,
 
 
Nine Months Ended
September 30,
 
 
 
(In millions, except where noted)
2004 
 
2003 
 
2004 
 
2003 

FRANCHISED ELECTRIC
 
 
 
 
 
 
 
   Operating Revenues
$1,419 
 
$1,359 
 
$3,918 
 
$3,720 
   Operating Expenses
967 
 
930 
 
2,714 
 
2,552 
   Gains on Sales of Other Assets, net
 
 
 
   Other Income, net of expenses
 
 
 
36 
 
 

 

 

   EBIT
$453 
 
$436 
 
$1,215 
 
$1,206 
 
 

 

 

 
 
 
 
 
 
 
 
   Sales, GWh
21,904 
 
22,163 
 
63,954 
 
63,621 
 
 
 
 
 
 
 
 

NATURAL GAS TRANSMISSION
 
 
 
 
 
 
 
   Operating Revenues
$638 
 
$641 
 
$2,364 
 
$2,301 
   Operating Expenses
387 
 
393 
 
1,422 
 
1,381 
   Gains on Sales of Other Assets, net
 
 
12 
 
   Other Income, net of expenses (a)
17 
 
38 
 
36 
 
117 
   Minority Interest Expense
 
 
16 
 
32 
 
 

 

 

   EBIT
$265 
 
$280 
 
$974 
 
$1,009 
 
 

 

 

 
 
 
 
 
 
 
 
   Proportional Throughput, TBtu
652 
 
679 
 
2,467 
 
2,502 
 
 
 
 
 
 
 
 

FIELD SERVICES (b)
 
 
 
 
 
 
 
   Operating Revenues
$2,506 
 
$2,076 
 
$7,207 
 
$6,643 
   Operating Expenses
2,380 
 
2,009 
 
6,824 
 
6,476 
   Gains on Sales of Other Assets, net
1  
 
 
 
   Other Income, net of expenses
(16)
 
14 
 
17 
 
53 
   Minority Interest Expense
44 
 
30 
 
148 
 
84 
 
 

 

 

   EBIT
$67 
 
$51 
 
$253 
 
$136 
 
 

 

 

 
 
 
 
 
 
 
 
   Natural Gas Gathered and Processed/Transported, TBtu/day
7.4 
 
7.5 
 
7.3 
 
7.5 
   Natural Gas Liquids Production, MBbl/d
371 
 
354 
 
363 
 
355 
   Average Natural Gas Price per MMBtu
$5.76 
 
$4.97 
 
$5.81 
 
$5.66 
   Average Natural Gas Liquids Price per Gallon
$0.72 
 
$0.49 
 
$0.64 
 
$0.52 
 
 
 
 
 
 
 
 

DUKE ENERGY NORTH AMERICA (b)
 
 
 
 
 
 
 
   Operating Revenues
$542 
 
$1,141 
 
$1,812 
 
$3,499 
   Operating Expenses
547 
 
1,517 
 
2,062 
 
3,844 
   Loss on Sales of Other Assets, net (c)
(6)
 
(84)
 
(374)
 
(84)
   Other Income, net of expenses (d)
 
11 
 
 
207 
   Minority Interest Expense (Benefit)
13 
 
(38)
 
(7)
 
(45)
 
 

 

 

   EBIT
$(17)
 
$(411)
 
$(612)
 
$(177)
 
 

 

 

 
 
 
 
 
 
 
 
   Actual Plant Production, GWh (e)
7,213 
 
9,130 
 
17,596 
 
18,750 
   Proportional MW Capacity in Operation
 
 
 
 
9,890 
 
15,836 
 
 
 
 
 
 
 
 

INTERNATIONAL ENERGY (b)
 
 
 
 
 
 
 
   Operating Revenues
$146 
 
$151 
 
$447 
 
$492 
   Operating Expenses
109 
 
114 
 
338 
 
339 
   Gains on Sales of Other Assets, net
 
 
 
   Other Income, net of expenses
29 
 
 
60 
 
31 
   Minority Interest Expense
 
 
 
11 
 
 

 

 

   EBIT
$64 
 
$44 
 
$161 
 
$175 
 
 

 

 

 
 
 
 
 
 
 
 
   Sales, GWh
4,277 
 
3,936 
 
13,088 
 
12,352 
   Proportional MW Capacity in Operation
 
 
 
 
4,136 
 
4,041 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

CRESCENT (b)
 
 
 
 
 
 
 
   Operating Revenues
$77 
 
$44 
 
$216 
 
$141 
   Operating Expenses
62 
 
41 
 
173 
 
126 
   Gains on Sales of Investments in Commercial and
  Multi-Family Real Estate
28 
 
36 
 
149 
 
47 
   Minority Interest Expense
 
 
 
 
 

 

 

   EBIT
$43 
 
$39 
 
$190 
 
$61 
 
 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

OTHER (b)
 
 
 
 
 
 
 
   Operating Revenues
$295 
 
$372 
 
$929 
 
$1,251 
   Operating Expenses
316 
 
473 
 
1,014 
 
1,467 
   (Loss) Gains on Sales of Other Assets, net
(3)
 
 
 
   Other Income, net of expenses
(1)
 
13 
 
25 
 
11 
 
 

 

 

   EBIT
$(25)
 
$(88)
 
$(56)
 
$(205)
 
 

 

 

 
 
 
 
 
 
 
 

 
(a) Prior year year-to-date includes $61 million gain on sale of the Alliance/Aux Sable and Foothills equity investments.
(b) Certain prior year amounts have been reclassified due to discontinued operations.
(c) Current year year-to-date amounts include DENA Southeast plant impairment of $359 million and loss on sale of Duke Energy Trading & Marketing contracts.
(d) Prior year year-to-date includes $178 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 September 30, 
Nine Months Ended September 30, 
 
 
 
2004 
 
2003 
 
2004 
 
2003 
 
 
 
 
               
Operating Revenues
$5,507 
 
$5,549 
 
$16,466 
 
$16,840 
Operating Expenses
4,652 
 
5,262 
 
14,120 
 
15,000 
Gains on Sales of Investments in Commercial and Multi-Family Real Estate
28 
 
36 
 
149 
 
47 
Losses on Sales of Other Assets, net
(4)
 
(79)
 
(353)
 
(76)
 
 
 
 
Operating Income
879 
 
244 
 
2,142 
 
1,811 
 
 
 
 
 
 
 
 
 
 
 
 
Other Income and Expenses
54 
 
103 
 
203 
 
472 
Interest Expense
342 
 
375 
 
1,035 
 
1,027 
Minority Interest Expense (Benefit)
61 
 
(11)
 
142 
 
89 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (Loss) From Continuing Operations Before Income Taxes
530 
 
(17)
 
1,168 
 
1,167 
Income Tax Expense (Benefit) from Continuing Operations
129 
 
(22)
 
296 
 
368 
 
 
 
 
 
 
 
 
 
 
 
 
Income From Continuing Operations
401 
 
 
872 
 
799 
(Loss) Income From Discontinued Operations, net of tax
(12)
 
44  
 
260 
 
61 
 
 
 
 
 
 
 
 
 
 
 
 
Income Before Cumulative Effect of Change in Accounting Principle
389 
 
49 
 
1,132 
 
860 
Cumulative Effect of Change in Accounting Principle, net of tax and minority interest
-  
 
-  
 
-  
 
(162)
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
389 
 
49 
 
1,132 
 
698 
 
 
 
 
 
 
 
 
Dividends and Premiums on Redemption of Preferred and Preference Stock
 
 
 
13 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings Available For Common Stockholders
$387 
 
$46 
 
$1,125 
 
$685 
 
 
 
 
               
Common Stock Data
 
 
 
 
 
 
 
   Weighted-average shares outstanding
 
 
 
 
 
 
 
      Basic
938 
 
905 
 
925 
 
901 
      Diluted
940 
 
907 
 
928 
 
902 
   Earnings per share (from continuing operations)
 
 
 
 
 
 
 
      Basic
$0.42 
 
$-  
 
$0.94 
 
$0.87 
      Diluted
$0.42 
 
$-  
 
$0.93 
 
$0.87 
   (Loss) Earnings per share (from discontinued operations)
 
 
 
 
 
 
 
      Basic
$(0.01) 
 
$0.05 
 
$0.28 
 
$0.07 
      Diluted
$(0.01) 
 
$0.05 
 
$0.28 
 
$0.07 
   Earnings per share (before cumulative effect of change in accounting principle)
 
 
 
 
 
 
 
      Basic
$0.41 
 
$0.05 
 
$1.22 
 
$0.94 
      Diluted
$0.41 
 
$0.05 
 
$1.21 
 
$0.94 
   Earnings per share
 
 
 
 
 
 
 
      Basic
$0.41 
 
$0.05 
 
$1.22 
 
$0.76 
      Diluted
$0.41 
 
$0.05 
 
$1.21 
 
$0.76 
   Dividends per share
$-  
 
$-  
 
$0.825 
 
$0.825 


DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
 
 
 
September 30,
2004
December 31,
2003
 
 
ASSETS
 
Current Assets
$8,648
$7,675
Investments and Other Assets
10,741
12,294
Net Property, Plant and Equipment
32,856
33,870
Regulatory Assets and Deferred Debits
2,494
2,366
 
 
       
      Total Assets
$54,739
$56,205
 

 
 
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
 
Current Liabilities
$8,730
$7,698
Long-term Debt, including debt to affiliates of $876 at December 31, 2003
17,101
20,622
Deferred Credits and Other Liabilities
11,899
12,302
Minority Interests
1,587
1,701
Preferred and preference stock without sinking fund requirements
134
134
Common Stockholders' Equity
15,288
13,748
 

 
      Total Liabilities and Common Stockholders' Equity
$54,739
$56,205
 

 


DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In millions)
               
         
Nine Months Ended
         
September 30,
         
         
2004
2003
         
 
 
CASH FLOWS FROM OPERATING ACTIVITIES        
  Net income
$1,132 
$698 
  Adjustments to reconcile net income to net cash provided by operating activities
2,291 
1,792 
   
 
    Net cash provided by operating activities
3,423 
2,490 
   
 
   
CASH FLOWS FROM INVESTING ACTIVITIES  
   
 
    Net cash used in investing activities
(220)
(439)
   
 
   
CASH FLOWS FROM FINANCING ACTIVITIES  
   
 
    Net cash used in financing activities
(1,543)
(1,174)
   
 
   
  Changes in cash and cash equivalents associated with assets held for sale
38 
   
 
   
  Net increase in cash and cash equivalents
1,698 
877 
  Cash and cash equivalents at beginning of period
1,160 
874 
   
 
  Cash and cash equivalents at end of period
$2,858 
$1,751 
   
 
         

 

Supplemental Disclosures
Quarter Ended September 30, 2004
                 
Duke Energy Corporation                

                 
   
3Q04
           
   
           
Mark-to-market Portfolio (in millions)  
$(228)
           
                 
Daily Value at Risk (DvaR) (in millions)                
                 
95% Confidence Level, One-Day Holding Period, Two-Tailed                
Average for the Period  
$20 
           
                 
                 
                 
Duke Energy North America                

(in millions unless stated otherwise)  
Q-T-D September 30, 2004
                 
   
Proprietary
 
Structured
 
Owned
   
Merchant Energy Gross Margin  
Trading
 
Contracts
 
Assets
  Total

 
 
 
 
  Mark-to-market gross margin (loss)  
$4
$36 
$7
$47 
  Accrual gross margin (loss)  
n/a
(4)
87
83 
   
 
 
 
Total Gross Margin  
$4
$32 
$94
130 
   
 
 
   
                 
Reconciliation to Segment EBIT:                
  Plant depreciation              
(39)
  Plant operating and maintenance expenses              
(61)
  General and administrative and other expenses              
(35)
  Minority interest              
(13)
  Other income, net of expenses              
  Gain (loss) on sale of other assets              
(6)
               
DENA Segment EBIT              
$(17)
               
                 
                 
                 
Owned Assets - Merchant Plant Production
                           and Hedging Information
 
2004a
 
2005
 
2006
   
   
 
 
   
Estimated available production (millions of MWh)  
16
63
63
   
  Combined cycle  
14
56
56
   
  Peaker units  
2
7
7
   
   
   
Estimated production (millions of MWh)  
4
18
19
   
  Combined cycle  
4
18
19
   
  Peaker units  
-
-
-
   
   
   
Estimated production sold  
87%
103%
94%
   
                 
Estimated average price ($/MWh)  
$48
 
$49
 
$47
   
                 
                 
aInformation for 2004 is for the remainder of the year only (October - December).                

 

Supplemental Disclosures
Quarter Ended September 30, 2004
                       
Duke Energy North America (continued)                      

(in millions)                      
                       
                 
 
Maturity/Source of Carrying Value
of Energy Contract Net Assets
2004
 
2005
 
2006
 
2007
 
Over
4 Years
 
Total
Fair Value


 
 
 
 
 
Proprietary Trading                      
  Actively quoted prices and other
  external sources
$17 
$(6)
$30 
$(7)
$(15)
$19 
  Modeled
24 
10 
48 
 
 
 
 
 
 
 
$19 
$18 
$40 
$(1)
$(9)
$67 
 
 
 
 
 
   
Structured Contracts
  Actively quoted prices and other
  external sources
$18 
$65 
$(30)
$(25)
$(24)
$4 
  Modeled
(8)
(43)
(35)
(12)
(77)
(175)
 
 
 
 
 
 
 
$10 
$22 
$(65)
$(37)
$(101)
$(171)
 
 
 
 
 
   
Owned Assets
  Actively quoted prices and other
  external sources
$119 
$336 
$268 
$130 
$174 
$1,027 
  Modeled
(4)
(5)
(9)
 
 
 
 
 
 
 
$119 
$336 
$264 
$130 
$169 
$1,018 
 
 
 
 
 
   
                     
  Total Carrying Value of Energy Contract Net Assets*  
$914 
     
       
*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 September 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.

 

Duke Energy Corporation
Quarterly Highlights
Supplemental Franchised Electric Information
September 30, 2004
                         
   
Quarter Ended
 
Year To Date
   
September 30,
 
September 30,
   
 
   
%
         
%
   
2004
2003
Inc.(Dec.)
 
2004
2003
Inc.(Dec.)
   
 
 
 
 
 
GWH Sales                      
  Residential
6,807 
6,770 
0.5% 
19,469 
18,320 
6.3% 
  General Service
6,937 
6,868 
1.0% 
18,987 
18,247 
4.1% 
   
  Industrial - Textile
1,925 
1,945 
(1.0%)
5,390 
5,801 
(7.1%)
  Industrial - Other
4,861 
4,608 
5.5% 
13,415 
12,863 
4.3% 
   
 
 
 
 
 
  Total Industrial
6,786 
6,553 
3.6% 
18,805 
18,664 
0.8% 
   
   
  Other Energy Sales
67 
69 
(2.9%)
199 
202 
(1.5%)
  Regular Resale
438 
405 
8.1% 
1,132 
1,051 
7.7% 
   
   
 
 
 
 
 
  Total Regular Sales Billed
21,035 
20,665 
1.8% 
58,592 
56,484 
3.7% 
   
  Special Sales (A)
908 
1,460 
(37.8%)
4,844 
6,239 
(22.4%)
   
   
 
 
 
 
 
  Total Electric Sales
21,943 
22,125 
(0.8%)
63,436 
62,723 
1.1% 
   
  Unbilled Revenue
(342)
(261)
(31.0%)
(398)
10 
n/m
   
   
 
 
 
 
 
  Total Duke Power Electric Sales
21,601 
21,864 
(1.2%)
63,038 
62,733 
0.5% 
   
  Nantahala Electric Sales
303 
299 
1.3% 
916 
888 
3.2% 
   
   
 
 
 
 
 
  Total DP Consolidated Electric Sales
21,904 
22,163 
(1.2%)
63,954 
63,621 
0.5% 
   
 
 
 
 
 
   
   
Average Number of Customers
  Residential
1,808,955 
1,778,236 
1.7% 
1,801,039 
1,773,195 
1.6% 
  General Service
305,924 
299,753 
2.1% 
304,006 
297,814 
2.1% 
   
  Industrial - Textile
846 
908 
(6.8%)
859 
917 
(6.3%)
  Industrial - Other
6,670 
6,769 
(1.5%)
6,674 
6,833 
(2.3%)
   
 
 
 
 
 
   
  Total Industrial
7,516 
7,677 
(2.1%)
7,533 
7,750 
(2.8%)
   
   
  Other Energy Sales
12,424 
11,368 
9.3% 
11,936 
11,345 
5.2% 
  Regular Resale
15 
16 
(6.3%)
15 
16 
(6.3%)
   
 
 
 
 
 
   
  Total Regular Sales
2,134,834 
2,097,050 
1.8% 
2,124,529 
2,090,120 
1.6% 
   
  Special Sales (A)
37 
36 
2.8% 
38 
38 
-
   
 
 
 
 
 
   
  Total Duke Power Electric Sales
2,134,871 
2,097,086 
1.8% 
2,124,567 
2,090,158 
1.6% 
   
  Nantahala Electric Sales
67,346 
65,978 
2.1% 
66,814 
65,421 
2.1% 
   
 
 
 
 
 
   
  Total DP Average Number of Customers
2,202,217 
2,163,064 
1.8% 
2,191,381 
2,155,579 
1.7% 
   
 
 
 
 
 
   
  (A) Excludes sales to Nantahala Power and Light Company
   
Heating and Cooling Degree Days
  Actual
  Heating Degree Days
18 
(50.0%)
2,094 
2,104 
(0.5%)
  Cooling Degree Days
831 
819 
1.5% 
1,400 
1,134 
23.5% 
   
  Variance from Normal
  Heating Degree Days
(59.2%)
(19.6%)
n/a
9.0% 
8.9% 
n/a
  Cooling Degree Days
(14.1%)
(14.2%)
n/a
(1.8%)
(19.3%)
n/a

 

Special items for the first and second quarters (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)
(0.01)
-- 
TOTAL EPS IMPACT
 
 
$0.01 
 
EPS, as reported
 
 
$0.34 
 
EPS, ongoing
 
 
$0.33 
 
 
 
 
 
 
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 interests)
(5)
-- 
 
Interest on related litigation reserve
(12)
(0.01)
 
TOTAL EPS IMPACT
 
 
$0.04 
 
EPS, as reported
 
 
$0.46 
 
EPS, ongoing
 
 
$0.42 
 
 
 
 
 
 
First quarter 2003
 
 
 
 
2003 gain on asset sales
16 
(5) 
-- 
$0.01 
2003 change in accounting principles
(256)
94 
-- 
(0.18)
 
 
 
 
 
TOTAL EPS IMPACT
 
 
 
($0.17)
EPS, as reported
 
 
 
$0.25 
EPS, ongoing
 
 
 
$0.42 
 
 
 
 
 
Second quarter 2003
 
 
 
 
Gains on asset sales (net of minority interest)
$229 
($83) 
 
0.16 
 
 
 
 
 
TOTAL EPS IMPACT
 
 
 
$0.16 
EPS, as reported
 
 
 
$0.46 
EPS, ongoing
 
 
 
$0.30