News Release
February 2, 2005

DUKE ENERGY REPORTS YEAR-END AND FOURTH QUARTER 2004 RESULTS

  • Basic earnings per share as reported rose to $1.59 in 2004; $1.38 in ongoing basic EPS
  • Field Services and Crescent Resources produced record results
  • Debt pay down exceeded 2004 goal of $3.5 billion to $4 billion; asset sales topped 2004 goal of $1.5 billion
  • Volatility at DENA reduced; continued improvement seen in company's merchant business

CHARLOTTE, N.C. – Duke Energy today reported 2004 basic earnings per share (EPS) of $1.59, or $1.49 billion in net income, compared to a loss of ($1.48) per share in 2003, or a $1.32 billion loss. On a fully diluted basis, 2004 earnings were $1.54 per share, compared to a loss of ($1.48) in 2003.

Ongoing basic EPS for 2004, which excludes special items, was $1.38 versus $1.28 in 2003.

"In 2004, we regained control of our own destiny," said Paul Anderson, Duke Energy chairman of the board and chief executive officer. "We exceeded the 2004 targets we set to rebuild our financial strength and finished this year in the driver's seat to pursue new growth opportunities.

"We maintained our dividend, exceeded our goals in reducing debt and asset sales, and improved our merchant operation. As we move into 2005, we will build on those accomplishments and continue to fine-tune our portfolio." Anderson added that the 2005 earnings target for employee incentive bonuses, which should track ongoing basic earnings, is $1.60 per share -- 33 percent higher than 2004's incentive target.

He said the anticipated increase will come primarily from higher earnings at Field Services, a smaller loss from Duke Energy North America and lower interest expenses due to the company's successful debt reduction, which should produce about $200 million in interest expense savings in 2005.

In fourth quarter 2004, Duke Energy reported basic earnings of $0.38 per share, or $358 million, compared to a loss of ($2.23) per share, or a $2.02 billion loss, in the fourth quarter 2003. Fully diluted earnings for the quarter were $0.36, compared to a loss of ($2.23) in the previous year's quarter. Excluding special items, ongoing basic earnings per share for fourth quarter 2004 were $0.24 versus $0.22 in fourth quarter 2003.

Special items impacting basic EPS for the quarter include:

($ in Millions) Pre-Tax Amount Tax Effect 2004 EPS Impact 2003 EPS Impact
 
Fourth quarter 2004
Net gain on asset sales, including a minority interest benefit of $20 million
$148 
($51)
$0.10 
--
Adjustment to captive insurance reserves
64 
(22)
0.04 
--
Net gain on sales of equity investments
10 
(3)
0.01 
--
Loss on asset exchanges
(7)
--
--
Early contract termination charges
(20)
(0.01)
--
         
Fourth quarter 2003
DENA plant impairments and DETM charges, net of minority interest
($2,826)
$1,046 
--
($1.97)
DENA redesignation of hedging contracts to mark-to-market
(262)
97 
--
(0.18)
Charges and impairments for Australia and Europe
(292)
69 
--
(0.25)
Severance and related charges
(48)
18 
--
(0.03)
Tax adjustments
--
23 
--
0.03 
DEI reserve and charges for environmental settlements in Brazil
(26)
10 
--
(0.02)
Write-off of risk management system
(51)
19 
--
(0.04)
Net gain on asset sales, including minority interest benefit
15 
(6)
--
0.01 
         
Total basic EPS impact
 
 
$0.14
($2.45)
Basic EPS, as reported
 
 
$0.38
($2.23)
Basic EPS, ongoing *
 
 
$0.24
$0.22 

Special items impact on basic EPS year-to-date:

 
2004
2003
First quarter
$0.01 
($0.17)
Second quarter
0.04 
0.16 
Third quarter
0.03 
(0.30)
Fourth quarter
0.14 
(2.45)
Impact of change in shares outstanding
(0.01)
--
Total basic EPS impact
$0.21 
($2.76)
Basic year-to-date EPS, as reported
$1.59 
($1.48)
Basic year-to-date EPS, ongoing *
$1.38 
$1.28 

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

BUSINESS UNIT RESULTS

Franchised Electric
Fourth quarter 2004 segment EBIT for Franchised Electric was $252 million, compared to fourth quarter 2003 segment EBIT of $197 million. Economic growth in North Carolina and South Carolina drove a 5 percent increase in industrial sales over the same quarter in 2003. Overall, customer growth continued to be positive as Duke Power added about 40,000 new customers during 2004. Operating and maintenance costs for the quarter were lower than fourth quarter 2003 by $59 million, driven in part by the absence of 2003's severance charges. Bulk power marketing sales were down in the fourth quarter 2004 due to coal supply constraints in the marketplace. Coal supply has since improved.

Year-end segment EBIT for Franchised Electric was $1.47 billion, compared to $1.40 billion in 2003. Ongoing segment EBIT for 2004 was $1.46 billion, compared to $1.51 billion in 2003. Going forward, Franchised Electric expects to see a segment EBIT compound annual growth rate through 2007 in the zero to 2 percent range based on 2004 ongoing segment EBIT.

Natural Gas Transmission
Duke Energy Gas Transmission (DEGT) reported fourth quarter 2004 segment EBIT of $336 million, compared to $308 million in fourth quarter 2003.

Results were positively affected by pipeline expansion projects, which more than offset losses in foregone earnings due to asset sales. Results were also favorably impacted by $11 million from the stronger Canadian currency and the absence of $11 million in severance costs from 2003's fourth quarter. Gains on asset sales of $15 million for the fourth quarter 2004 were offset by a similar amount in the previous year's quarter.

The favorable Canadian currency impacts on DEGT's segment EBIT were partially offset in Duke Energy's net income by currency impacts on Canadian interest and taxes.

Year-end 2004 segment EBIT for DEGT was $1.31 billion versus $1.32 billion in 2003. Ongoing segment EBIT for 2004 was $1.28 billion, compared to $1.25 billion in 2003. Going forward, DEGT expects to see a segment EBIT compound annual growth rate through 2007 in the 3 percent to 5 percent range based on 2004 ongoing segment EBIT.

Field Services
The Field Services business segment, which represents Duke Energy's 70 percent interest in Duke Energy Field Services (DEFS), reported fourth quarter 2004 segment EBIT from continuing operations of $128 million compared to $51 million in the fourth quarter of 2003.

The increase was primarily driven by higher commodity prices realized, compared to last year's fourth quarter. During the quarter, DEFS paid a dividend, of which Duke Energy's portion was $174 million. This payment reflects continuing strong cash flow and earnings at DEFS.

Year-end segment EBIT from continuing operations for Field Services was $380 million, compared with $187 million in 2003. For 2005, Field Services expects to see ongoing segment EBIT in the range of $350 million to $500 million based on the price of crude oil being $30 or $40 a barrel, respectively.

Duke Energy North America
Duke Energy North America (DENA) reported segment EBIT from continuing operations of $77 million in fourth quarter 2004, compared to a segment EBIT loss of $3.16 billion in fourth quarter 2003.

Excluding special items, DENA had an ongoing segment EBIT loss from continuing operations of $50 million in the fourth quarter 2004. That compares to an ongoing segment EBIT loss of $77 million in the previous year's quarter.

Results for fourth quarter 2004 were helped by lower operating costs of $82 million. DENA also recognized a $146 million net gain, including a minority interest benefit of $20 million, on asset sales during the quarter. These results were partially offset by lower margins and lower than expected electricity production due to warmer weather.

Year-end 2004 segment EBIT from continuing operations for DENA was a loss of $535 million, compared with a segment EBIT loss of $3.34 billion in 2003. Excluding special items, ongoing segment EBIT loss from continuing operations for 2004 was $288 million, which includes mark-to-market losses of $25 million. Going forward, DENA expects a 2005 ongoing segment EBIT loss of approximately $150 million.

International Energy
For the fourth quarter 2004, Duke Energy International (DEI) reported segment EBIT from continuing operations of $61 million, compared to $40 million in fourth quarter 2003.

The quarter-to-quarter increase was largely driven by the absence of a $26 million reserve and charges for environmental settlements in Brazil taken in fourth quarter 2003.

Year-end segment EBIT from continuing operations for DEI was $222 million versus $215 million in 2003. Ongoing segment EBIT from continuing operations for 2004 was $236 million, compared to $244 million in 2003. Going forward, DEI expects to see a segment EBIT compound annual growth rate through 2007 in the 2 percent to 3 percent range based on 2004 ongoing segment EBIT.

Crescent Resources
Crescent Resources reported fourth quarter 2004 segment EBIT from continuing operations of $50 million, compared to $72 million in the previous year's quarter.

The results were driven by lower legacy land sales and $38 million of impairment and other charges, net of minority interest of $12 million, related to residential developments in Texas and Arizona, which were partially offset by improved residential and commercial sales in other areas.

Year-end segment EBIT from continuing operations for Crescent Resources was $240 million versus $134 million in 2003. Crescent continues to manage a healthy portfolio of commercial and residential properties. After record earnings in 2004, segment EBIT should return to about $150 million in 2005.

Other
Other, which includes certain corporate costs, DukeNet Communications, the company's 50 percent interest in Duke/Fluor Daniel, Duke Energy Merchants and Duke Energy's captive insurance company Bison Insurance Co. Limited, reported an EBIT loss from continuing operations of $21 million in fourth quarter 2004, compared to a loss of $67 million in fourth quarter 2003.

The improvement was partially driven by a $64 million adjustment to insurance reserves related to Bison.

Year-end EBIT from continuing operations in 2004 was a $77 million loss compared to a loss of $272 million in year-end 2003. Going forward, Other should return to a normal ongoing EBIT loss of about $200 million.

Discontinued Operations
The operations reported as discontinued showed a fourth quarter 2004 loss of $2 million, compared to a loss of $219 million in 2003. The reduction was largely due to 2003's $223 million after-tax charge to complete the exit from the European market and the divestiture of DEI's Australian assets.

Year-end 2004 earnings for Discontinued Operations were $258 million, which consisted mainly of asset sales. That compared to a loss of $158 million in 2003.

INTEREST EXPENSE

Interest expense was $314 million for fourth quarter 2004, compared to $353 million for fourth quarter 2003 – primarily due to a $55 million decrease from net debt reduction and refinancing activities. This was partially offset by lower capitalized interest of $7 million and $5 million for movements in the Canadian currency.

For 2004, interest expense was $1.35 billion, compared to $1.38 billion in 2003.

INCOME TAX

Fourth quarter 2004 income tax expenses from continuing operations were $245 million, compared to a tax benefit of $1.08 billion in fourth quarter 2003, primarily due to impairments and charges in the previous year's quarter.

Due to the American Jobs Creation Act of 2004, Duke Energy expects to repatriate approximately $500 million of accumulated foreign earnings in 2005, which resulted in a $45 million tax expense in the fourth quarter of 2004.

Year-end income tax expenses from continuing operations were $540 million, compared to a tax benefit of $707 million in 2003.

LIQUIDITY AND CAPITAL RESOURCES

Duke Energy's consolidated capital structure as of Dec. 31, 2004, including short-term debt, was 51 percent debt, 45 percent common equity and 4 percent minority interests. The company had approximately $1.85 billion in cash and cash equivalents as of Dec. 31, 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 fourth 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 segment 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 segment EBIT from continuing operations, which is the GAAP measure used to report segment results, 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.

Duke Energy's management uses ongoing basic EPS, which is a non-GAAP financial measure as it represents basic EPS adjusted for the impact of 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 basic EPS provides useful information to investors, as it allows them to more accurately compare the company's ongoing performance across all periods. Ongoing basic EPS is also the basis used for employee incentive bonuses. The most directly comparable GAAP measure for ongoing basic EPS is reported basic EPS, which includes the impact of special items. Due to the forward-looking nature of ongoing basic EPS for future periods, information to reconcile such a non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time as the company is unable to forecast any special items for future periods.

Duke Energy also uses ongoing segment EBIT as a measure of historical and anticipated future segment performance. Management also uses a forecasted ongoing segment EBIT growth rate for certain segments, which is based on historical and forecasted ongoing segment EBIT, as an indicator of anticipated future compound annual growth rates. When used for future periods, ongoing segment EBIT may also include any amounts that may be reported as discontinued operations. Ongoing segment EBIT, and related growth rates, are non-GAAP financial measures as they represent reported segment EBIT adjusted for special items. Management believes that the presentation of ongoing segment EBIT, and related growth rates, provides useful information to investors, as it allows them to more accurately compare a segment's ongoing performance across all periods. The most directly comparable GAAP measure for ongoing segment EBIT is reported segment EBIT, which represents EBIT from continuing operations, including any special items. Due to the forward-looking nature of forecasted ongoing segment EBIT and related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time as the company is unable to forecast any special items or any amounts that may be reported as discontinued operations for future periods.

This release includes a statement that actual 2004 debt pay down exceeded our 2004 goal of $3.5 billion to $4 billion. The amounts referred to in this statement represent a non-GAAP measure because they include changes in amounts that are presented in the consolidated balance sheet as other than "debt," including amounts classified as liabilities associated with assets held for sale and minority interests. Management believes the presentation of this non-GAAP measure presents useful information to investors as it summarizes the overall change in amounts related to the company’s various financing instruments, other than equity, except for certain changes primarily related to the impact of changes in exchange rates.

This release also includes a statement that asset sales topped our original goal of $1.5 billion. The amounts referred to in this statement represent non-GAAP measures primarily because they include cash proceeds from asset sales, amounts related to net tax benefits triggered by the sales of these assets and amounts related to debt assumed or repaid by the buyers of the assets. Management believes that presentation of this non-GAAP measure provides useful information to investors because it presents a more complete financial impact of the sales of the assets as compared to the corresponding GAAP measure of net proceeds received directly from the purchasers of the assets. For 2004, this difference was significant due to the tax basis of many of the assets sold and the structuring of the sale of the Australian assets, whereby the buyer retired approximately $840 million of debt rather than remitting these proceeds to the company.

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 the Americas. 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 800/475-3716 in the United States or 719/457-2728 outside the United States. The confirmation code is 434060. 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 434060. The international replay number is 719/457-0820, confirmation code 434060. 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/publications/gaap/.

This release includes statements that do not directly or exclusively relate to historical facts. Such statements are "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. Those statements represent Duke Energy's intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside Duke Energy's control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements include: state, federal and foreign legislative and regulatory initiatives that affect cost and investment recovery, have an impact on rate structures, and affect the speed at and degree to which competition enters the electric and natural gas industries; the outcomes of litigation and regulatory investigations, proceedings or inquiries; industrial, commercial and residential growth in Duke Energy's service territories; the weather and other natural phenomena; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates; general economic conditions, including any potential effects arising from terrorist attacks and any consequential hostilities or other hostilities; changes in environmental and other laws and regulations to which Duke Energy and its subsidiaries are subject or other external factors over which Duke Energy has no control; the results of financing efforts, including Duke Energy's ability to obtain financing on favorable terms, which can be affected by various factors including Duke Energy's credit ratings and general economic conditions; lack of improvement or 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; growth in opportunities for Duke Energy's business units, including the timing and success of efforts to develop domestic and international power, pipeline, gathering, liquefied natural gas, processing and other infrastructure projects; the performance of electric generation, pipeline and gas processing facilities; the extent of success in connecting natural gas supplies to gathering and processing systems and in connecting and expanding gas and electric markets; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; and conditions of the capital markets and equity markets during the periods covered by the forward-looking statements.

In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Duke Energy has described. Duke Energy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Information contained in this release is unaudited, and is subject to change pending completion of the 2004 financial audit by the company's registered public accounting firm.

 

Media Contact: Randy Wheeless
Phone: 704/382-8379
24 Hour Phone: 704/382-8333
Email: crwheele@duke-energy.com
Analyst Contact: Julie Dill
Phone: 980/373-4332
DECEMBER 2004
QUARTERLY HIGHLIGHTS
(Unaudited)
 
 
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
   
 
 
(In millions, except where noted)
2004
2003
2004
2003

COMMON STOCK DATA
 Earnings (Loss) Per Share (from continuing operations)
  Basic
$0.38 
$(1.99)
$1.31 
$(1.13)
  Diluted
$0.36 
$(1.99)
$1.27 
$(1.13)
 (Loss) Earnings Per Share (from discontinued operations)
  Basic
$- 
$(0.24)
$0.28 
$(0.17)
  Diluted
$- 
$(0.24)
$0.27 
$(0.17)
 Earnings (Loss) Per Share (before cumulative effect of change in accounting principle)
  Basic
$0.38 
$(2.23)
$1.59 
$(1.30)
  Diluted
$0.36 
$(2.23)
$1.54 
$(1.30)
 Earnings (Loss) Per Share
  Basic
$0.38 
$(2.23)
$1.59 
$(1.48)
  Diluted
$0.36 
$(2.23)
$1.54 
$(1.48)
 Dividends Per Share
$0.275 
$0.275 
$1.10 
$1.10 
 Weighted-Average Shares Outstanding
  Basic
947 
908 
931 
903 
  Diluted
983 
908 
966 
903 
 

INCOME
Operating Revenues
$6,046 
$5,249 
$22,503 
$22,080 
 
 
 
 
Total Reportable Segment EBIT
904 
(2,496)
3,084 
(85)
Other EBIT
(21)
(67)
(77)
(272)
Interest Expense (a)
314 
353 
1,349 
1,380 
Minority Interest (Benefit) Expense and Other (b)
(36)
(38)
(114)
(27)
Income Tax Expense (Benefit) from Continuing Operations
245 
(1,076)
540 
(707)
(Loss) Income from Discontinued Operations
(2)
(219)
258 
(158)
Cumulative Effect of Change in Accounting Principle,
net of tax and minority interest
(162)
 
 
 
 
Net Income (Loss)
358 
(2,021)
1,490 
(1,323)
Dividends and Premiums on Redemptions of Preferred and Preference Stock
15 
 
 
 
 
Earnings (Loss) Available for Common Stockholders
$356 
$(2,023)
$1,481 
$(1,338)
 
 
 
 

CAPITALIZATION
  Common Equity
45%
37%
  Preferred Stock
0%
0%
         
 Total Common Equity and Preferred Securities
45%
37%
 
 Minority Interests
4%
5%
 Total Debt (f)
51%
58%
 

Total Debt (f)
$18,832 
$21,952 
Book Value Per Share
$17.18 
$15.09 
Actual Shares Outstanding
957 
911 

CAPITAL AND INVESTMENT EXPENDITURES
 Franchised Electric (c)
$291 
$206 
$1,282 
$997 
 Natural Gas Transmission
146 
156 
533 
766 
 Field Services
50 
117 
213 
211 
 Duke Energy North America
22 
277 
 International Energy
10 
28 
71 
 Crescent (d) (e)
162 
87 
568 
290 
 Other
67 
(22)
116 
 
 
 
 
Total Capital and Investment Expenditures
$661 
$652 
$2,624 
$2,728 
 





EBIT BY BUSINESS SEGMENT
 Franchised Electric
$252 
$197 
$1,467 
$1,403 
 Natural Gas Transmission
336 
308 
1,310 
1,317 
 Field Services
128 
51 
380 
187 
 Duke Energy North America
77 
(3,164)
(535)
(3,341)
 International Energy
61 
40 
222 
215 
 Crescent (d)
50 
72 
240 
134 
 
 
 
 
Total reportable segment EBIT
904 
(2,496)
3,084 
(85)
 Other EBIT
(21)
(67)
(77)
(272)
 Interest expense
(314)
(353)
(1,349)
(1,380)
 Minority interest benefit (expense) and other (b)
36 
38 
114 
27 
 
 
 
 
Consolidated earnings (loss) from continuing operations before income taxes
$605 
$(2,878)
$1,772
$(1,710)
 




(a) Financing expenses related to securities of subsidiaries are accounted for in interest expense in 2004. Minority interest includes expense related to these securities of $55 million for the year ended December 2003.
(b) Includes interest income, foreign currency remeasurement gains and losses, and additional minority interest not 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.
(f) For 2003, debt excludes approximately $890 million of debt that has been reclassified as liabilities associated with assets held for sale.

 

DECEMBER 2004
QUARTERLY HIGHLIGHTS
(Unaudited)
                 
   
Three Months Ended
December 31,
 
Twelve Months Ended
December 31,
     
   
 
(In millions, except where noted)  
2004
2003
2004
2003

FRANCHISED ELECTRIC                
 Operating Revenues  
$1,151 
$1,155 
$5,069 
$4,875 
 Operating Expenses  
899 
973 
3,613 
3,525 
 Gains on Sales of Other Assets, net  
 Other Income, net of expenses  
11 
47 
   



 EBIT  
$252 
$197 
$1,467 
$1,403 
   



   
 Sales, GWh  
18,754 
19,207 
82,708 
82,828 
   

NATURAL GAS TRANSMISSION  
 Operating Revenues  
$926 
$896 
$3,290 
$3,197 
 Operating Expenses  
611 
588 
2,033 
1,969 
 Gains on Sales of Other Assets, net  
17 
 Other Income, net of expenses  
22 
58 
125 
 Minority Interest Expense  
11 
22 
43 
   



 EBIT  
$336 
$308 
$1,310 
$1,317 
   



   
 Proportional Throughput, TBtu  
865 
860 
3,332 
3,362 
   

FIELD SERVICES (a)  
 Operating Revenues  
$2,906 
$1,963 
$10,104 
$8,595 
 Operating Expenses  
2,715 
1,895 
9,531 
8,360 
 Gains (Loss) on Sales of Other Assets, net  
(4)
(4)
 Other Income, net of expenses  
20 
14 
37 
67 
 Minority Interest Expense  
84 
27 
232 
111 
   



 EBIT  
$128 
$51 
$380 
$187 
   



   
 Natural Gas Gathered and Processed/Transported, TBtu/day (b)  
7.3 
7.3 
7.3 
7.4 
 Natural Gas Liquids Production, MBbl/d (b)  
370 
353 
363 
353 
 Average Natural Gas Price per MMBtu  
$7.11 
$4.58 
$6.14 
$5.39 
 Average Natural Gas Liquids Price per Gallon  
$0.80 
$0.54 
$0.68 
$0.53 
   

DUKE ENERGY NORTH AMERICA  
 Operating Revenues  
$549 
$822 
$2,361 
$4,321 
 Operating Expenses  
628 
3,923 
2,690 
7,767 
 Gains (Loss) on Sales of Other Assets, net  
126 
(124)
(248)
(208)
 Other Income (Expense), net  
(1)
12 
206 
 Minority Interest Benefit  
(23)
(62)
(30)
(107)
   



 EBIT  
$77 
$(3,164)
$(535)
$(3,341)
   



   
 Actual Plant Production, GWh (c)  
4,288 
5,376 
21,884 
24,046 
 Proportional MW Capacity in Operation  
9,890 
15,820 
   

INTERNATIONAL ENERGY (a)  
 Operating Revenues  
$172 
$105 
$619 
$597 
 Operating Expenses  
124 
87 
462 
426 
 Loss on Sales of Other Assets, net  
(4)
(2)
(3)
 Other Income, net of expenses  
18 
26 
78 
57 
 Minority Interest Expense  
10 
13 
   



 EBIT  
$61 
$40 
$222 
$215 
   



   
 Sales, GWh  
4,688 
4,022 
17,776 
16,374 
 Proportional MW Capacity in Operation  
4,139 
4,121 
   
   

CRESCENT (a)  
 Operating Revenues  
$220 
$142 
$437 
$284 
 Operating Expenses  
219 
105 
393 
231 
 Gains on Sales of Investments in Commercial
 and Multi-Family Real Estate
 
43 
37 
192 
84 
 Other Income, net of expenses  
 Minority Interest (Benefit) Expense  
(3)
(1)
   



 EBIT  
$50 
$72 
$240 
$134 
   



   
   

OTHER (a)  
 Operating Revenues  
$215 
$377 
$1,144 
$1,628 
 Operating Expenses  
243 
466 
1,257 
1,933 
 Gains on Sales of Other Assets, net  
 Other Income, net of expenses  
22 
32 
33 
   



 EBIT  
$(21)
$(67)
$(77)
$(272)
   



   

(a) Certain prior year amounts have been reclassified due to discontinued operations.
(b) Represents 100% of joint venture volumes.
(c) Represents 100% of GWh.
 
Note: See GAAP reconciliation associated with the 2004 fourth quarter Earnings Release on the Investor Relations
Web site at http://www.duke-energy.com/investors/publications/gaap/.

 

DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per-share amounts)
 
 
 
 
Years Ended
December 31,
 
 
 
2004
2003
 
 
       
Operating Revenues
$22,503 
$22,080 
Operating Expenses
19,456 
22,818 
Gains on Sales of Investments in Commercial and Multi-Family Real Estate
192 
84 
Losses on Sales of Other Assets, net
(225)
(199)
 
 
Operating Income (Loss)
3,014 
(853)
 
 
 
Other Income and Expenses
302 
584 
Interest Expense
1,349 
1,380 
Minority Interest Expense
195 
61 
 
 
 
Earnings (Loss) From Continuing Operations Before Income Taxes
1,772 
(1,710)
Income Tax Expense (Benefit) from Continuing Operations
540 
(707)
 
 
 
Income (Loss) From Continuing Operations
1,232 
(1,003)
Income (Loss) From Discontinued Operations, net of tax
258 
(158)
 
 
 
Income (Loss) Before Cumulative Effect of Change in Accounting Principle
1,490 
(1,161)
Cumulative Effect of Change in Accounting Principle, net of tax and minority interest
(162)
 
 
 
Net Income (Loss)
1,490 
(1,323)
 
Dividends and Premiums on Redemption of Preferred and Preference Stock
15 
 
 
 
Earnings (Loss) Available For Common Stockholders
$1,481 
$(1,338)
 
 
 
Common Stock Data
  Weighted-average shares outstanding
    Basic
931 
 
903 
    Diluted
966 
 
903 
  Earnings (Loss) per share (from continuing operations)
 
 
    Basic
$1.31 
 
$(1.13)
    Diluted
$1.27 
$(1.13)
  Earnings (Loss) per share (from discontinued operations)
 
    Basic
$0.28 
 
$(0.17)
    Diluted
$0.27 
 
$(0.17)
  Earnings (Loss) per share (before cumulative effect of change in accounting principle)
 
 
    Basic
$1.59 
 
$(1.30)
    Diluted
$1.54 
 
$(1.30)
  Earnings (Loss) per share
 
 
 
    Basic
$1.59 
 
$(1.48)
    Diluted
$1.54 
 
$(1.48)
  Dividends per share
$1.10 
 
$1.10 

 

DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
         
         
   
December 31, 
   
   
2004
2003
 
 
ASSETS      
       
Current Assets
$7,971 
$7,675 
Investments and Other Assets
10,513 
12,316 
Net Property, Plant and Equipment
33,506 
33,848 
Regulatory Assets and Deferred Debits
2,460 
2,366 
 
 
 
  Total Assets
$54,450 
$56,205 
 
 
 
 
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
 
Current Liabilities
$7,488 
$7,698 
Long-term Debt
16,932 
20,622 
Deferred Credits and Other Liabilities
11,969 
12,302 
Minority Interests
1,486 
1,701 
Preferred and preference stock without sinking fund requirements
134 
134 
Common Stockholders' Equity
16,441 
13,748 
 
 
   
  Total Liabilities and Common Stockholders' Equity
$54,450 
$56,205 
 
 

 

DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In millions)
               
               
         
Years Ended December 31,
         
         
2004
2003
 
 
CASH FLOWS FROM OPERATING ACTIVITIES      
  Net income (loss)
$1,490 
$(1,323)
  Adjustments to reconcile net income to net cash provided by operating activities
 
2,649 
4,725 
 
 
    Net cash provided by operating activities
4,139 
3,402 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
    Net cash used in investing activities
(208)
(404)
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
    Net cash used in financing activities
(3,278)
(2,657)
 
 
   
  Net increase (decrease) in cash and cash equivalents associated with assets held for sale
39 
(55)
 
 
         
  Net increase in cash and cash equivalents
692 
286 
  Cash and cash equivalents at beginning of year
1,160 
874 
 
 
  Cash and cash equivalents at end of year
$1,852 
$1,160 
 
 

 

Supplemental Disclosures
Quarter Ended December 31, 2004
                       
                       
                       
Duke Energy Corporation

                       
         
4Q04
         

 
                       
Mark-to-market Portfolio (in millions)  
$(250)

                     
         
Daily Earnings at Risk (DER) (in millions)  

                     
         
95% Confidence Level, One-Day Holding Period, Two-Tailed
   As of 12/31/2004
$6 
         
         
         
Duke Energy North America

(in millions unless stated otherwise)
Q-T-D December 31, 2004 
         
      Proprietary  
Structured
Owned
Merchant Energy Gross Margin Trading  
Contracts
Assets
Total


 
 
 
   
   Mark-to-market gross
   margin (loss)
 
$4 
 
$(8)
$3 
$(1)
   Accrual gross margin  
N/A 
 
78 
81 
   
 
 
 
   
Total Gross Margin  
$4 
 
$(5)
$81 
80 
   
 
 
       
     
 
Reconciliation to Segment EBIT:
 
   Plant depreciation
 
(39)
   Plant operating and maintenance expenses
 
(73)
   General and administrative and
   other expenses
 
(47)
   Minority interest  
23 
   Other income (expense), net  
   Gains on sales of other assets, net  
126 
           
   
DENA Segment EBIT  
$77 
         

         
         
         
Owned Assets - Contracted Level

         
 
MWs
Millions MWh 
 
2005
% Contracted 
2006
% Contracted 
         
 
Capacity Under Contract
Capacity
Available 
 
Capacity 
Energy 
Capacity (b)
Energy 


 
 
 
 
 
East
4,615 
37 
(a)
17% 
8% 
11% 
7% 
West
5,275 
34 
 
25% 
31% 
1% 
42% 
 
 
               
Total
9,890 
71 
 
21% 
19% 
6% 
24% 
 
 
 
 
 
 
 
               
(a) East capacity includes 7 million MWh from peaking facilities but does not include any capacity for plants where we own an equity interest only.
(b) Capacity does not include Regulatory Must Run ("RMR) elections for 2006, scheduled to occur in September 2005.

 

Supplemental Disclosures
Quarter Ended December 31, 2004
 
Terms of Reference

 
MWs Capacity
Represents the official rated capacity of DENA’s percentage ownership of its merchant assets excluding Bayside which has been classified as discontinued operations.
Millions MWhs Available
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.
% Contracted:
Capacity: Volumes contracted under tolls as well as volumes from Regulatory Must Run (“RMR”) facilities and Canadian facilities.
Energy: Volumes sold as forward power hedges.
Owned Assets
Represents activity around energy assets owned or leased, including hedges of power sales and fuel purchase requirements and tolls, transmission, transportation and storage contracts that hedge owned assets. Normal purchases and sales associated with such assets are included in the Merchant Energy Gross Margin 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
Contracts not associated with owned or leased assets and involving significant tailoring of terms to meet customer needs, and associated hedges. Disqualified hedges previously categorized as owned assets are also in this category. Contract types include tolls, transmission, transportation and storage contracts, except those that qualify as hedges of 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
December 31, 2004
               
               
   
Quarter Ended
Year To Date
   
December 31,
December 31,
   

   
%
%
   
2004
2003
Inc.(Dec.)
2004
2003
Inc.(Dec.)
   





GWH Sales
  Residential
5,074 
5,036 
0.8% 
24,543 
23,355 
5.1% 
  General Service
5,788 
5,686 
1.8% 
24,775 
23,933 
3.5% 
     
  Industrial - Textile
1,757 
1,761 
(0.2%)
7,147 
7,562 
(5.5%)
  Industrial - Other
4,523 
4,220 
7.2% 
17,938 
17,083 
5.0% 
   





    Total Industrial
6,280 
5,981 
5.0% 
25,085 
24,645 
1.8% 
     
     
  Other Energy Sales
68 
66 
3.0% 
267 
268 
(0.4%)
  Regular Resale
335 
326 
2.8% 
1,467 
1,377 
6.5% 
     





     
    Total Regular Sales Billed
17,545 
17,095 
2.6% 
76,137 
73,578 
3.5% 
     
  Special Sales (A)
541 
1,383 
(60.9%)
5,385 
7,622 
(29.3%)
               
   

 

 

 

 

 

 
      Total Electric Sales
18,086 
18,478 
(2.1%)
81,522 
81,200 
0.4% 
   
  Unbilled Revenue
342 
402 
(14.9%)
(56)
412 
(113.6%)
   
   





    Total Duke Power Electric Sales
18,428 
18,880 
(2.4%)
81,466 
81,612 
(0.2%)
   
  Nantahala Electric Sales
326 
327 
(0.3%)
1,242 
1,216 
2.1% 
   
   





    Total DP Consolidated
  Electric Sales
18,754 
19,207 
(2.4%)
82,708 
82,828 
(0.1%)
   






               
   
Average Number of Customers
  Residential
1,817,814 
1,786,074 
1.8% 
1,805,232 
1,776,415 
1.6% 
  General Service
306,806 
301,089 
1.9% 
304,706 
298,633 
2.0% 
   
  Industrial - Textile
828 
895 
(7.5%)
852 
911 
(6.5%)
  Industrial - Other
6,701 
6,726 
(0.4%)
6,681 
6,806 
(1.8%)
   





   
    Total Industrial
7,529 
7,621 
(1.2%)
7,533 
7,717 
(2.4%)
   
   
  Other Energy Sales
12,900 
11,465 
12.5% 
12,177 
11,375 
7.1% 
  Regular Resale
15 
16 
(6.3%)
15 
16 
(6.3%)
   

 

 

 

 

 

 
               
    Total Regular Sales
2,145,064 
2,106,265 
1.8% 
2,129,663 
2,094,156 
1.7% 
   
  Special Sales (A)
22 
37 
(40.5%)
34 
38 
(10.5%)
   

 

 

 

 

 

 
               
  Total Duke Power Electric Sales
2,145,086 
2,106,302 
1.8% 
2,129,697 
2,094,194 
1.7% 
   
  Nantahala Electric Sales
67,537 
66,164 
2.1% 
66,995 
65,607 
2.1% 
   

 

 

 

 

 

 
               
  Total DP Average Number of Customers
2,212,623 
2,172,466 
1.8% 
2,196,692 
2,159,801 
1.7% 
   

 

 

 

 

 

 
               
   
  (A) Excludes Sales to Nantahala Power and Light Company
   
Heating and Cooling Degree Days
  Actual
  Heating Degree Days
1,165 
1,242 
(6.2%)
3,259 
3,346 
(2.6%)
  Cooling Degree Days
40 
24 
66.7% 
1,440 
1,158 
24.4% 
 
  Variance from Normal
  Heating Degree Days
(7.2%)
(1.7%)
n/a
2.6% 
4.8% 
n/a
  Cooling Degree Days
58.8% 
(4.9%)
n/a
(0.8%)
(19.1%)
n/a