Duke Energy Reports Third Quarter 2005 Results - Duke Energy

News Release
November 02, 2005

Duke Energy Reports Third Quarter 2005 Results

  • Third quarter ongoing basic earnings per share of 59 cents versus 37 cents in prior year’s quarter
     
  • Reported basic earnings per share, which reflect charges associated with the decision to exit DENA, of 4 cents in third quarter 2005 versus 41 cents in previous year
     
  • Company confident of exceeding $1.65 employee incentive target based on annual ongoing basic EPS
     
  • Weather, commodity prices and real estate operations help ongoing results

CHARLOTTE, N.C. -- Duke Energy today reported third quarter 2005 basic earnings per share (EPS) of $0.04, or $41 million in net income, compared to $0.41 per share in third quarter 2004, or $389 million in net income. This quarter’s results include charges related to the previously announced plan to exit substantially all of Duke Energy North America’s (DENA) business outside of the Midwest, which totaled $0.84 per share. This amount was partially offset by a gain on the transfer of a 19.7 percent interest of Duke Energy Field Services to ConocoPhillips, which totaled $0.39 per share.

Third quarter 2005 basic EPS from continuing operations was $0.99, or $924 million in income, compared to $0.40 per share in third quarter 2004, or $381 million in income. On a diluted basis, third quarter 2005 EPS from continuing operations was $0.96 per share, compared to $0.39 in the third quarter 2004.

Ongoing basic EPS for third quarter 2005 was $0.59 versus $0.37 in third quarter 2004. On a diluted basis, ongoing EPS for third quarter 2005 was $0.56 compared to $0.36 in third quarter 2004.

"The quality of our assets, along with the focused efforts of our employees, delivered outstanding results despite the external events affecting the energy industry. Not only did we perform for our customers during this period of supply disruptions, we delivered solid results for our investors," said Paul Anderson, Duke Energy’s chairman of the board and chief executive officer.

"Our strategic decision to exit much of our merchant generation business in DENA had a large earnings impact this quarter. But that move, along with our proposed merger with Cinergy, will position us for stronger long-term results going forward," he added.

Anderson said the company expects to exceed its employee incentive goal of $1.65 per share -- based on annual ongoing basic earnings. That figure was recently revised upward from $1.60 to reflect the exit of the DENA business.

Special items for the quarter include:

($ in Millions) Pre-Tax Amount Tax Effect 2005 EPS Impact 2004 EPS Impact
Third quarter 2005        
  • Gain on transfer of 19.7 percent interest in DEFS to ConocoPhillips
$576 
($213)
$0.39 
 
  • Impairment of DEI’s investment in Campeche
($20)
$6 
($0.02)
 
  • Settlement of positions on 2005 Field Services’ hedges that were de-designated
$38 
($15)
$0.02 
 
  • Mark-to-market loss on de-designated 2005 Field Services’ hedges
($17)
$6 
($0.01)
 
  • Initial and subsequent mark-to-market gain on de-designating Southeast DENA hedges
$30 
($11)
$0.02 
 
Third quarter 2004
 
 
 
 
  • Tax benefit from restructuring
--
$48 
 
$0.05 
  • Asset impairments, net gains on asset sales and write down of equity investments (net of minority interest of $19 million)
($21)
$8 
 
($0.02)
Total basic EPS impact
 
 
$0.40 
$0.03 
 
 
 
 
 
Basic EPS, as reported
 
 
$0.04 
$0.41 
Discontinued operations, excluding Crescent Resources
 
 
($0.95)
$0.01 
Basic EPS from continuing operations, as reported
 
 
$0.99 
$0.40 
Total basic EPS impact of special items
 
 
$0.40 
$0.03 
Basic EPS, ongoing
 
 
$0.59 
$0.37 

Special items EPS year-to-date impact:

  2005 2004
First quarter
$0.45 
($0.25)
Second quarter
$0.02 
$0.01 
Third quarter
$0.40 
$0.03 
Impact of change in shares outstanding and rounding
$0.01 
$0.01 
Total EPS Impact
$0.88 
($0.20)
  2005 EPS Impact 2004 EPS Impact
Year-to-date basic EPS, as reported
$1.29 
$1.22 
Discontinued operations, excluding Crescent Resources
($0.96)
$0.20 
Basic EPS from continuing operations, as reported
$2.25 
$1.02 
Total basic EPS impact of special items
$0.88 
($0.20)
Year-to-date basic EPS, ongoing
$1.37 
$1.22 

BUSINESS UNIT RESULTS

Franchised Electric
Third quarter 2005 segment EBIT from continuing operations for Franchised Electric was $606 million, compared to $453 million in the prior year’s quarter. The increase was driven primarily by warmer weather, which pushed residential sales up 12.4 percent, and strong bulk power marketing (BPM) results.

Also, Franchised Electric recorded approximately $25 million less regulatory amortization this quarter than the prior year’s quarter. These increases to segment EBIT were partially offset by higher operating and maintenance expenses, primarily related to nuclear outage and maintenance costs.

Overall industrial kilowatt-hour sales were up 0.7 percent for the quarter as textile plant closings were more than offset by increased usage in other industries. Regional growth continued to add to Franchised Electric’s total customer base, with 43,000 customers -- about 2 percent -- over the prior year.

Year-to-date segment EBIT from continuing operations for Franchised Electric was $1.22 billion in both 2005 and 2004.

Natural Gas Transmission
Duke Energy Gas Transmission (DEGT) reported third quarter 2005 segment EBIT from continuing operations of $329 million compared to $269 million in the prior year’s quarter. The increase was driven by improved U.S. operations, domestic business expansion projects and higher earnings by natural gas distribution operations in eastern Canada. In addition, earnings benefited from operations in Canada that were purchased or transferred to DEGT in the third quarter.

DEGT’s third quarter earnings continued to benefit from the stronger Canadian currency over comparable periods. This was mainly offset by a gain of a prior year asset sale. 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.

Year-to-date EBIT from continuing operations for Natural Gas Transmission was $1.04 billion, compared with $986 million in 2004.

Field Services
The Field Services business segment, which in the quarter represented Duke Energy's 50-percent interest in Duke Energy Field Services (DEFS), reported third quarter 2005 equity earnings of $126 million -- in addition to a one-time gain on the transfer of a 19.7 percent interest in DEFS of $576 million -- compared to $63 million in EBIT in third quarter 2004.

The equity earnings amount for the third quarter 2005 includes deductions primarily for interest totaling $15 million, which were not included in the prior quarter’s EBIT. The equity earnings amount for third quarter 2005 does not include the negative impact of hedge settlements during the quarter, which are now reported in Other and were reported in third quarter 2004 Field Services’ EBIT.

Results were driven by strong commodity prices, operational improvements and the absence of a $26 million impairment charge reported in the prior year’s quarter. These were partly offset by higher operating costs from pipeline integrity work and lower volumes due to hurricane interruptions.

On July 5, 2005, Duke Energy transferred a 19.7 percent interest in DEFS to ConocoPhillips in exchange for cash and assets of approximately $1.1 billion. DEFS is now a 50/50 joint venture between Duke Energy and ConocoPhillips.

Duke Energy North America
As a result of the decision to exit substantially all of the Duke Energy North America (DENA) business outside of the Midwest, results for DENA’s continuing operations for 2005 is included in Other. Its discontinued results are reported in Discontinued Operations.

International Energy
For third quarter 2005, Duke Energy International (DEI) reported segment EBIT from continuing operations of $63 million, compared to $64 million in third quarter 2004.

The 2005 results include a $20 million impairment charge on DEI’s investment in the Campeche plant in Mexico. Excluding that item, results were driven by favorable hydrology and pricing in Peru and Argentina, higher commodity prices at National Methanol and favorable currency impacts in Brazil – offset by higher expenses in Ecuador and Guatemala, and lower margins in Brazil. The favorable currency impacts on DEI’s EBIT were partially offset in Duke Energy’s net income by currency impacts on Brazilian interest and taxes.

Year-to-date EBIT from continuing operations for International Energy was $217 million, compared with $161 million in 2004.

Crescent Resources
Crescent Resources reported third quarter 2005 segment EBIT from continuing operations of $120 million, compared to $43 million in the previous year’s quarter.

The increase was driven by continued active management of Crescent’s real estate holdings, which this quarter included a gain on the sale of an interest in a portfolio of office buildings, the sale of a legacy land tract in South Carolina and increased residential lot sales. These were partially offset by a $16 million impairment on a residential development in South Carolina.

Year-to-date EBIT from continuing operations for Crescent Resources was $210 million, compared with $190 million in 2004.

Other
Other primarily includes the cost of corporate governance, Duke Energy’s captive insurance company, Bison Insurance Co. Limited, de-designated hedges resulting from the decision to transfer a 19.7 percent interest in DEFS to ConocoPhillips and DENA’s continuing operations for 2005. Other reported an EBIT loss from continuing operations of $175 million in third quarter 2005, compared to a loss of $25 million in third quarter 2004. The additional losses were due mainly to mark-to-market losses on 2005 and 2006 de-designated Field Services’ hedges, realized losses on the 2005 de-designated hedges due to settlements in the quarter, timing of recognition of losses at Bison and adjustments to the mutual insurance liability.

The reported losses were partially offset by a mark-to-market gain on de-designated Southeast DENA hedges.

Year-to-date EBIT loss from continuing operations for Other was $495 million, compared with a $56 million EBIT loss in 2004.

Discontinued Operations
Discontinued Operations showed a third quarter 2005 loss of $883 million, compared to a gain of $8 million in third quarter 2004. This is primarily due to the company’s decision to exit DENA.

Year-to-date, Discontinued Operations posted a loss of $894 million, compared with a gain of $183 million in 2004.

INTEREST EXPENSE

Interest expense was $228 million for third quarter 2005, compared to $329 million for third quarter 2004. The decrease was primarily due to the company’s debt reduction efforts in 2004 and the transfer of Duke Energy’s 19.7 percent interest in DEFS, which resulted in reporting Duke Energy’s proportionate share of DEFS’ interest expense in equity earnings.

Year-to-date interest expense was $813 million, compared with interest expense of $984 million in 2004.

INCOME TAX

Third quarter 2005 income tax expense from continuing operations was $487 million, compared to $147 million in third quarter 2004. This increase was primarily due to higher earnings during the quarter compared to last year’s quarter. The effective tax rate increased from 27.9 percent in the third quarter 2004 to 34.5 percent in the third quarter 2005 primarily due to benefits resulting from a change in effective state tax rates in the prior year. The effective tax rate calculation includes equity earnings in pre-tax income.

Year-to-date income tax expense from continuing operations was $1.1 billion, compared to $365 million in 2004.

LIQUIDITY AND CAPITAL RESOURCES

Duke Energy's consolidated capital structure at the end of third quarter 2005, including short-term debt, was 49 percent debt, 49 percent common equity and 2 percent minority interests. The company had approximately $1.44 billion in cash, cash equivalents and short-term investments at the end of third quarter 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 2005 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), including any equity in earnings of unconsolidated affiliates, 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 and diluted EPS, which are non-GAAP financial measures as they represent basic and diluted EPS from continuing operations plus any discontinued operations from its Crescent Resources real estate unit, adjusted for the impact of special items, as two of the measures to evaluate operations of the company. Special items represent certain charges and credits which management believes will not be recurring on a regular basis. Management believes that the presentation of ongoing basic and diluted 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 measures for ongoing basic and diluted EPS are reported basic and diluted EPS from continuing operations, respectively, which include the impact of special items. Due to the forward-looking nature of ongoing basic and diluted EPS for future periods, information to reconcile such non-GAAP financial measures 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 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 800/967-7185 in the United States or 719/457-2634 outside the United States. The confirmation code is 8492249. Please call in five to 10 minutes prior to the scheduled start time. A replay of the conference call will be available until Nov. 11, 2005, midnight ET, by dialing 888/203-1112 with a confirmation code of 8492249. The international replay number is 719/457-0820, confirmation code 8492249. 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 which 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. Those factors include: industrial, commercial and residential growth in Duke Energy’s service territories; the influence of weather and other natural phenomena on company operations, including the economic, operational and other effects of hurricanes Katrina and Rita; general economic conditions, including any potential effects arising from terrorist attacks and any consequential hostilities or other hostilities or other external factors over which Duke Energy has no control; changes in environmental and other laws and regulations to which Duke Energy and its subsidiaries are subject; 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; declines in the market prices of equity securities and resultant cash funding requirements for Duke Energy’s defined benefit pension plans; 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; conditions of the capital markets and equity markets during the periods covered by the forward-looking statements; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; the outcomes of litigation and regulatory investigations, proceedings or inquiries and other contingencies; 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; 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; 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 the degree to which competition enters the electric and natural gas industries; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates; competition and regulatory limitations affecting the success of Duke Energy’s divestiture plans, including the prices at which Duke Energy is able to sell its assets; the ability to successfully complete merger, acquisitions or divestiture plans (including the merger with Cinergy Corp.); regulatory or other limitations imposed as a result of a merger, acquisition or divestiture; and the success of the business following a merger, acquisition or divestiture.

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.

MEDIA CONTACT: Randy Wheeless
Phone: 704/382-8379
24-Hour: 704/382-8333
ANALYST CONTACT:
Julie Dill
Phone: 980/373-4332
Investor Relations: 800/488-3853

SEPTEMBER 2005
QUARTERLY HIGHLIGHTS
(Unaudited)

 
Three Months Ended
Nine Months Ended
 
September 30,
September 30,
(In millions, except where noted)
2005
2004
2005
2004

COMMON STOCK DATA
 
 
 
 
 
 
 
Earnings Per Share (from continuing operations)
 
 
 
 
 
 
 
Basic
$0.99 
 
$0.40 
 
$2.25 
 
$1.02 
Diluted
$0.96 
 
$0.39 
 
$2.17 
 
$0.99 
(Loss) Earnings Per Share (from discontinued operations)
 
 
 
 
 
 
 
Basic
$(0.95)
 
$0.01 
 
$(0.96)
 
$0.20 
Diluted
$(0.92)
 
$0.01 
 
$(0.92)
 
$0.19 
Earnings Per Share
 
 
 
 
 
 
 
Basic
$0.04 
 
$0.41 
 
$1.29 
 
$1.22 
Diluted
$0.04 
 
$0.40 
 
$1.25 
 
$1.18 
Dividends Per Share
$- 
 
$- 
 
$0.860 
 
$0.825 
Weighted-Average Shares Outstanding
 
 
 
 
 
 
 
Basic
926 
 
938 
 
936 
 
925 
Diluted
964 
 
973 
 
973 
 
960 

INCOME
 
 
 
 
 
 
 
Operating Revenues
$3,028 
 
$5,081 
 
$13,630 
 
$15,007 
Total Reportable Segment EBIT
1,819 
 
865 
 
4,471 
 
2,281 
Other EBIT
(175)
 
(25)
 
(495)
 
(56)
Interest Expense
228 
 
329 
 
813 
 
984 
Interest Income and Other (a)
 
(17)
 
(44)
 
(73)
Income Tax Expense from Continuing Operations
487 
 
147 
 
1,095 
 
365 
(Loss) Income from Discontinued Operations
(883)
 
 
(894)
 
183 
Net Income
41 
 
389 
 
1,218 
 
1,132 
Dividends and Premiums on Redemption of Preferred and Preference Stock
 
 
 
Earnings Available for Common Stockholders
$38 
 
$387 
 
$1,211 
 
$1,125 

CAPITALIZATION
 
 
 
 
 
 
 
Common Equity
 
 
 
 
49%
 
41%
Preferred Stock
 
 
 
 
0%
 
0%
Total Common Equity and Preferred Securities
 
 
 
 
49%
 
41%
 
 
 
 
 
 
 
 
Minority Interests
 
 
 
 
2%
 
4%
Total Debt
 
 
 
 
49%
 
55%

Total Debt
 
 
 
 
$16,112 
 
$20,653 
Book Value Per Share
 
 
 
 
$17.18 
 
$16.30 
Actual Shares Outstanding
 
 
 
 
926 
 
938 

CAPITAL AND INVESTMENT EXPENDITURES
 
 
 
 
 
 
 
Franchised Electric
$335 
 
$253 
 
$913 
 
$781 
Natural Gas Transmission
478 
 
131 
 
716 
 
387 
Field Services
 
31 
 
86 
 
163 
Duke Energy North America
(1)
 
 
 
19 
International Energy
 
 
20 
 
24 
Crescent (b)
139 
 
122 
 
470 
 
406 
Other
(1)
 
 
 
24 
Total Capital and Investment Expenditures
$958 
 
$551 
 
$2,218 
 
$1,804 

EBIT BY BUSINESS SEGMENT
 
 
 
 
 
 
 
Franchised Electric
$606 
 
$453 
 
$1,216 
 
$1,215 
Natural Gas Transmission
329 
 
269 
 
1,044 
 
986 
Field Services
701 
 
63 
 
1,784 
 
243 
Duke Energy North America
 
(27)
 
 
(514)
International Energy
63 
 
64 
 
217 
 
161 
Crescent
120 
 
43 
 
210 
 
190 
Total reportable segment EBIT
1,819 
 
865 
 
4,471 
 
2,281 
Other EBIT
(175)
 
(25)
 
(495)
 
(56)
Interest expense
(228)
 
(329)
 
(813)
 
(984)
Equity in earnings of unconsolidated affiliates in Segment EBIT
(176)
 
(33)
 
(256)
 
(110)
Interest Income and Other (a)
(5)
 
17 
 
44 
 
73 
Consolidated earnings from continuing operations before income taxes and equity in earnings of unconsolidated affiliates
$1,235 
 
$495 
 
$2,951 
 
$1,204 

(a) Other includes foreign currency remeasurement gains and losses and additional minority interest not allocated to the segment results.
(b) Amounts include capital expenditures for residential real estate included in operating cash flows of $67 million and $80 million for the three months ended September 30, 2005 and 2004 respectively, and $276 million and $218 million for the nine months ended September 30, 2005 and 2004, respectively.

Note: Certain prior period amounts have been reclassified due to discontinued operations.

 

SEPTEMBER 2005
QUARTERLY HIGHLIGHTS
(Unaudited)

 
Three Months Ended
Nine Months Ended
 
September 30,
September 30,
(In millions, except where noted)
2005
2004
2005
2004
FRANCHISED ELECTRIC              
Operating Revenues
$1,619 
 
$1,419 
 
$4,118 
 
$3,918 
Operating Expenses
1,026 
 
967 
 
2,916 
 
2,714 
Gains on Sales of Other Assets, net
 
 
 
Other Income, net of expenses
12 
 
 
12 
 
EBIT
$606 
 
$453 
 
$1,216 
 
$1,215 
 
 
 
 
 
 
 
 
Sales, GWh
23,724 
 
21,904 
 
65,318 
 
63,954 

NATURAL GAS TRANSMISSION
 
 
 
 
 
 
 
Operating Revenues
$869 
 
$652 
 
$2,824 
 
$2,408 
Operating Expenses
549 
 
398 
 
1,809 
 
1,453 
Gains on Sales of Other Assets, net
 
 
 
12 
Other Income, net of expenses
17 
 
19 
 
48 
 
39 
Minority Interest Expense
 
 
23 
 
20 
EBIT
$329 
 
$269 
 
$1,044 
 
$986 
 
 
 
 
 
 
 
 
Proportional Throughput, TBtu
759 
 
652 
 
2,534 
 
2,467 

FIELD SERVICES (a)
 
 
 
 
 
 
 
Operating Revenues
$- 
 
$2,490 
 
$5,530 
 
$7,154 
Operating Expenses
 
2,368 
 
5,211 
 
6,785 
Gains on Sales of Other Assets, net
576 
 
 
577 
 
Other Income (Expense), net
(1)
 
(17)
 
1,259 
 
17 
Equity in Earnings of Unconsolidated Affiliates (b)
126 
 
 
126 
 
Minority Interest Expense
 
43 
 
497 
 
144 
EBIT
$701 
 
$63 
 
$1,784 
 
$243 
 
Natural Gas Gathered and Processed/Transported, TBtu/day (c)
6.7 
 
6.8 
 
6.8 
 
6.8 
Natural Gas Liquids Production, MBbl/d (c)
342 
 
357 
 
355 
 
354 
Average Natural Gas Price per MMBtu
$8.37 
 
$5.76 
 
$7.12 
 
$5.81 
Average Natural Gas Liquids Price per Gallon
$0.91 
 
$0.72 
 
$0.80 
 
$0.64 

DUKE ENERGY NORTH AMERICA (a) (d)
 
 
 
 
 
 
 
Operating Revenues
$- 
 
$75 
 
$- 
 
$169 
Operating Expenses
 
88 
 
 
318 
Losses on Sales of Other Assets, net (e)
 
(4)
 
 
(373)
Other Income, net of expenses
 
 
 
Minority Interest Expense (Benefit)
 
15 
 
 
(2)
EBIT
$- 
 
$(27)
 
$- 
 
$(514)
 
 
 
 
 
 
 
 
Actual Plant Production, GWh (DENA Continuing Operations)
 
 
887 
 
 
 
3,300 
Proportional MW Capacity in Operation (DENA Continuing Operations)
 
 
 
 
 
 
3,600 

INTERNATIONAL ENERGY
 
 
 
 
 
 
 
Operating Revenues
$186 
 
$146 
 
$536 
 
$447 
Operating Expenses
139 
 
109 
 
385 
 
338 
Gains on Sales of Other Assets, net
 
 
 
Other Income, net of expenses
19 
 
29 
 
74 
 
60 
Minority Interest Expense
 
 
 
EBIT
$63 
 
$64 
 
$217 
 
$161 
 
 
 
 
 
 
 
 
Sales, GWh
4,493 
 
4,277 
 
13,555 
 
13,088 
Proportional MW Capacity in Operation
 
 
 
 
4,064 
 
4,136 

CRESCENT (a)
 
 
 
 
 
 
 
Operating Revenues
$105 
 
$77 
 
$281 
 
$216 
Operating Expenses
95 
 
62 
 
225 
 
173 
Gains on Sales of Investments in Commercial and Multi-Family Real Estate
63 
 
28 
 
117 
 
149 
Other Income, net of expenses
46 
 
 
44 
 
Minority Interest (Benefit) Expense
(1)
 
 
 
EBIT
$120 
 
$43 
 
$210 
 
$190 

OTHER (d)
 
 
 
 
 
 
 
Operating Revenues
$282 
 
$295 
 
$510 
 
$929 
Operating Expenses
360 
 
316 
 
920 
 
1,014 
Gains (Losses) on Sales of Other Assets, net
 
(3)
 
 
Other (Expense) Income, net
(103)
 
(1)
 
(98)
 
25 
Minority Interest Benefit
(3)
 
 
(7)
 
EBIT
$(175)
 
$(25)
 
$(495)
 
$(56)
 
 
 
 
 
 
 
 
Actual Plant Production, GWh (DENA Continuing Operations)
958 
 
 
 
1,664 
 
 
Proportional MW Capacity in Operation (DENA Continuing Operations)
 
 
 
 
3,600 
 
 

(a) Certain prior year amounts have been reclassified due to discontinued operations.
(b) Represents the 50% interest in Duke Energy Field Services LLC
(c) Represents 100% of joint venture volumes.
(d) 2005 Segment EBIT balances for DENA's continuing operations are included in Other.
(e) Prior year amounts for the nine months ended September 30, 2004 include DENA Southeast plant impairment of approximately $360 million.

Note: See GAAP reconciliation associated with the 2005 third quarter Earnings Release on the Investor Relation 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)

   
Three Months Ended
Nine Months Ended
   
September 30,
September 30,
   
2005
2004
2005
2004
                 
Operating Revenues  
$3,028 
 
$5,081 
 
$13,630 
 
$15,007 
Operating Expenses  
2,138 
 
4,236 
 
11,308 
 
12,567 
Gains on Sales of Investments in Commercial and Multi-Family Real Estate  
63 
 
28 
 
117 
 
149 
Gains (Losses) on Sales of Other Assets, net  
580 
 
(3)
 
589 
 
(353)
Operating Income  
1,533 
 
870 
 
3,028 
 
2,236 
   
 
 
 
 
 
 
 
Other Income and Expenses  
(60)
 
16 
 
1,244 
 
98 
Interest Expense  
228 
 
329 
 
813 
 
984 
Minority Interest Expense  
10 
 
62 
 
508 
 
146 
   
 
 
 
 
 
 
 
Earnings From Continuing Operations Before Income Taxes and Equity in Earnings of Unconsolidated Affiliates  
1,235 
 
495 
 
2,951 
 
1,204 
Income Tax Expense from Continuing Operations  
487 
 
147 
 
1,095 
 
365 
Income From Continuing Operations Before Equity in Earnings of Unconsolidated Affiliates  
748 
 
348 
 
1,856 
 
839 
Equity in Earnings of Unconsolidated Affiliates  
176 
 
33 
 
256 
 
110 
   
 
 
 
 
 
 
 
Income From Continuing Operations  
924 
 
381 
 
2,112 
 
949 
   
 
 
 
 
 
 
 
(Loss) Income From Discontinued Operations, net of tax  
(883)
 
 
(894)
 
183 
   
 
 
 
 
 
 
 
Net Income  
41 
 
389 
 
1,218 
 
1,132 
   
 
 
 
 
 
 
 
Dividends and Premiums on Redemption of Preferred and Preference Stock  
 
 
 
   
 
 
 
 
 
 
 
Earnings Available For Common Stockholders  
$38 
 
$387 
 
$1,211 
 
$1,125 
   
 
 
 
 
 
 
 
Common Stock Data  
 
 
 
 
 
 
 
Weighted-average shares outstanding  
 
 
 
 
 
 
 
Basic  
926 
 
938 
 
936 
 
925 
Diluted  
964 
 
973 
 
973 
 
960 
Earnings per share (from continuing operations)  
 
 
 
 
 
 
 
Basic  
$0.99 
 
$0.40 
 
$2.25 
 
$1.02 
Diluted  
$0.96 
 
$0.39 
 
$2.17 
 
$0.99 
(Loss) Earnings per share (from discontinued operations)  
 
 
 
 
 
 
 
Basic  
$(0.95)
 
$0.01 
 
$(0.96)
 
$0.20 
Diluted  
$(0.92)
 
$0.01 
 
$(0.92)
 
$0.19 
Earnings per share  
 
 
 
 
 
 
 
Basic  
$0.04 
 
$0.41 
 
$1.29 
 
$1.22 
Diluted  
$0.04 
 
$0.40 
 
$1.25 
 
$1.18 
Dividends per share  
$- 
 
$- 
 
$0.860 
 
$0.825 

Note: Amounts remain subject to change until the Company's Form 10-Q is filed with the Securities and Exchange Commission.


DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)

   
September 30,
December 31,
   
2005
2004
ASSETS        
         
Current Assets  
$8,357 
 
$7,971 
Investments and Other Assets  
14,152 
 
11,533 
Net Property, Plant and Equipment  
28,600 
 
33,506 
Regulatory Assets and Deferred Debits  
2,568 
 
2,460 
   
 
 
 
Total Assets  
$53,677 
 
$55,470 
   
 
 
 
   
 
 
 
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY  
 
 
 
   
 
 
 
Current Liabilities  
$7,756 
 
$7,502 
Long-term Debt  
15,062 
 
16,932 
Deferred Credits and Other Liabilities  
14,161 
 
12,975 
Minority Interests  
650 
 
1,486 
Preferred and preference stock without sinking fund requirements  
134 
 
134 
Common Stockholders' Equity  
15,914 
 
16,441 
   
 
 
 
Total Liabilities and Common Stockholders' Equity  
$53,677 
 
$55,470 

DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)

 
Nine Months Ended
 
September 30,
 
2005
2004
       
CASH FLOWS FROM OPERATING ACTIVITIES      
Net income
$1,218 
 
$1,132 
Adjustments to reconcile net income to net cash provided by operating activities
1,221 
 
2,371 
Net cash provided by operating activities
2,439 
 
3,503 
 
 
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Net cash used in investing activities
(261)
 
(1,601)
 
 
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Net cash used in financing activities
(2,337)
 
(1,543)
 
 
 
 
Changes in cash and cash equivalents associated with assets held for sale
 
38 
 
 
 
 
Net (decrease) increase in cash and cash equivalents
(156)
 
397 
Cash and cash equivalents at beginning of period
533 
 
397 
Cash and cash equivalents at end of period
$377 
 
$794 

Supplemental Disclosures
Quarter Ended September 30, 2005

Duke Energy Corporation
Mark-to-market Portfolio (in millions)
Non-AHFS
AHFS
Total
 
As of 09/30/2005
$15
$(1,109)
$(1,094)
 
 
 
Daily Earnings at Risk (DER) (in millions)
Continuing
Discontinued
 
 
 
95% Confidence Level, One-Day Holding Period, Two-Tailed
 
As of 09/30/2005
$6
$61
$65
a

a This figure excludes effects of the February 22, 2005 de-designation of certain hedges of Field Services' commodity risk, which have been retained as undesignated derivatives. DER is higher than prior quarter due to restructuring of DENA's hedge books due to the decision to exit the components of its business outside the Midwest.

Duke Energy North America
Owned Assets - Contracted Level
Remaining 2005
2006
 
Millions
Millions
     
 
MWs
MWh 
% Contracted 
MWh 
  % Contracted  
Region
Capacity
Available 
Capacity 
Energy 
Available 
  Capacity Energy
Midwest
3,600
b
7
c
17%
0%
 
28
c
11%
0%

b Capacity excludes assets held for sale and classified as "Discontinued Operations".
c Midwest capacity includes 1.8 million MWh from peaking facilities in 2005 and 6.6 million in 2006.

Terms of Reference

MWs Capacity
Represents the official rated capacity of DENA’s percentage ownership of its merchant assets, excluding assets held for sale and classified as discontinued operations.

Millions MWhs Available
Represents the amount of electric power capable of being generated from owned merchant assets, excluding assets held for sale and classified as discontinued operations, 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 Regulatory Must Run (“RMR”).

Energy: Volumes sold as forward power hedges.

AHFS
Assets Held For Sale.


Duke Energy Corporation
Quarterly Highlights
Supplemental Franchised Electric Information
September 30, 2005

 
Quarter Ended
Year To Date
 
September 30,
September 30,
 
%
%
 
2005
2004
Inc.(Dec.)
2005
2004
Inc.(Dec.)
GWH Sales                      
Residential
7,654
 
6,807
 
12.40%
 
19,696
 
19,469
 
1.20%
General Service
7,303
 
6,937
 
5.30%
 
19,173
 
18,987
 
1.00%
                       
Industrial - Textile
1,749
 
1,925
 
-9.10%
 
5,004
 
5,390
 
-7.20%
Industrial - Other
5,082
 
4,861
 
4.50%
 
14,101
 
13,415
 
5.10%
Total Industrial
6,831
 
6,786
 
0.70%
 
19,105
 
18,805
 
1.60%
                       
                       
Other Energy Sales
67
 
67
 
 
201
 
199
 
1.00%
                       
Regular Resale
457
 
438
 
4.30%
 
1,123
 
1,132
 
-0.80%
                       
Total Regular Sales Billed
22,312
 
21,035
 
6.10%
 
59,298
 
58,592
 
1.20%
                       
Special Sales (A)
1,079
 
908
 
18.80%
 
5,229
 
4,844
 
7.90%
                       
Total Electric Sales
23,391
 
21,943
 
6.60%
 
64,527
 
63,436
 
1.70%
                       
Unbilled Revenue
9
 
-342
 
102.60%
 
-164
 
-398
 
58.80%
                       
Total Duke Power Electric Sales
23,400
 
21,601
 
8.30%
 
64,363
 
63,038
 
2.10%
                       
Nantahala Electric Sales
324
 
303
 
6.90%
 
955
 
916
 
4.30%
                       
Total DP Consolidated Electric Sales
23,724
 
21,904
 
8.30%
 
65,318
 
63,954
 
2.10%
                       
 
 
 
 
 
 
 
 
 
 
 
 
Average Number of Customers
 
 
 
 
 
 
 
 
 
 
 
Residential
1,843,208
 
1,808,955
 
1.90%
 
1,835,402
 
1,801,039
 
1.90%
General Service
312,135
 
305,924
 
2.00%
 
310,122
 
304,006
 
2.00%
                       
Industrial - Textile
786
 
846
 
-7.10%
 
802
 
859
 
-6.60%
Industrial - Other
6,661
 
6,670
 
-0.10%
 
6,665
 
6,674
 
-0.10%
                       
Total Industrial
7,447
 
7,516
 
-0.90%
 
7,467
 
7,533
 
-0.90%
                       
                       
Other Energy Sales
12,659
 
12,424
 
1.90%
 
12,977
 
11,936
 
8.70%
Regular Resale
15
 
15
 
 
15
 
15
 
                       
Total Regular Sales
2,175,464
 
2,134,834
 
1.90%
 
2,165,983
 
2,124,529
 
2.00%
                       
Special Sales (A)
28
 
37
 
-24.30%
 
32
 
38
 
-15.80%
                       
Total Duke Power Electric Sales
2,175,492
 
2,134,871
 
1.90%
 
2,166,015
 
2,124,567
 
2.00%
                       
Nantahala Electric Sales
68,733
 
67,346
 
2.10%
 
68,162
 
66,814
 
2.00%
                       
Total DP Average Number of Customers
2,244,225
 
2,202,217
 
1.90%
 
2,234,177
 
2,191,381
 
2.00%
                       
(A) Excludes sales to Nantahala Power and Light Company
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Heating and Cooling Degree Days
 
 
 
 
 
 
 
 
 
 
 
Actual
 
 
 
 
 
 
 
 
 
 
 
Heating Degree Days
1
 
9
 
-89.90%
 
1,976
 
2,094
 
-5.60%
Cooling Degree Days
1,122
 
831
 
35.00%
 
1,474
 
1,400
 
5.30%
                       
Variance from Normal
 
 
 
 
 
 
 
 
 
 
 
Heating Degree Days
-95.40%
 
-59.20%
 
n/a
 
1.50%
 
9.00%
 
n/a
Cooling Degree Days
18.60%
 
-14.10%
 
n/a
 
4.50%
 
-1.80%
 
n/a

DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
September 2004 Quarter-to-date
(Dollars in Millions)

 
Special Items (Note 1)
 
Ongoing Earnings
Gains (Losses) on Sale
of Assets
Impairment
Gains (Losses) on sales and impairments of equity investments
Tax Benefit from DEA Restructuring
Discontinued Operations, excluding Crescent Resources
Total Adjustments
Reported Earnings
SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS                              
                               
Franchised Electric
$453 
 
$- 
 
$- 
 
$- 
 
$- 
 
$- 
 
$- 
 
$453 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas Transmission
262 
 
 
 
 
 
 
269 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Field Services
88 
 
 
(10)
(16)
 
 
(25)
 
63 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Duke Energy North America
(23)
 
(4)
 
 
 
 
(4)
 
(27)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Energy
63 
 
 
 
 
 
 
 
64 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Crescent
43 
 
 
 
 
 
 
 
43 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT
886 
 
(1)
 
(10)
 
(10)
 
 
 
(21)
 
865 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
(25)
 
(3)
 
 
 
 
 
 
(25)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT and other EBIT
$861 
 
$(4)
 
$(10)
 
$(7)
 
$- 
 
$- 
 
$(21)
 
$840 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS FOR COMMON
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT and other EBIT
$861 
 
$(4)
 
$(10)
 
$(7)
 
$- 
 
$- 
 
$(21)
 
$840 
Foreign Currency Translation Gains / (Losses)
(3)
 
 
 
 
 
 
 
(3)
Interest Income and Other
14 
 
 
 
 
 
 
 
14 
Interest Expense
(329)
 
 
 
 
 
 
 
(329)
Minority Interest - Interest Expense
 
 
 
 
 
 
 
Income taxes on continuing operations
(203)
 
 
 
 
48 
 
 
56 
 
(147)
Discontinued operations, net of taxes
 
 
 
 
 
 
 
Trust Preferred/Preferred Dividends
(2)
 
 
 
 
 
 
 
(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Earnings for Common
$348 
 
$(3)
 
$(6)
 
$(4)
 
$48 
 
$4 
 
$39 
 
$387 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE, BASIC
$0.37 
 
$- 
 
$(0.01)
 
$(0.01)
 
$0.05 
 
$0.01 
 
$0.04 
 
$0.41 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE, DILUTED
$0.36 
 
$- 
 
$(0.01)
 
$(0.01)
 
$0.05 
 
$0.01 
 
$0.04 
 
$0.40 

Note 1 - Amounts for special items are entered net of minority interest

A - Millennium Pipeline
B - Recorded in Impairment and other charges on the Consolidated Statements of Operations. Amount net of $12 million of minority interest.
C - Amount net of $7 million of minority interest.
D - Southeast assets

Weighted Average Shares (reported and ongoing) - in millions
    Basic 938
    Diluted 973

DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
September 2005 Quarter-to-date
(Dollars in Millions)

 
Special Items (Note 1)
 
Ongoing Earnings
Gain on transfer of 19.7% interest in DEFS
Impairment of equity investments
Field Services hedge de-designation, net
MTM change on de-designated Field Services hedges for 2005, net
Initial and Subsequent gain on de-designating Southeast DENA hedges
Discontinued Operations, excluding Crescent Resources
Total Adjustments
Reported Earnings
SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franchised Electric
$606 
 
$- 
 
$- 
 
$- 
 
$- 
 
$- 
 
$- 
 
$- 
 
$606 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas Transmission
329 
 
 
 
 
 
 
 
 
329 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Field Services
87 
 
576 
 
38 
 
 
 
614 
 
701 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Duke Energy North America
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Energy
83 
 
 
(20)
 
 
 
 
(20)
 
63 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Crescent
120 
 
 
 
 
 
 
 
 
120 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT
1,225 
 
576 
 
(20)
 
38 
 
 
 
 
594 
 
1,819 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
(188)
 
-
 
 
 
(17)
30 
 
13 
 
(175)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT and other EBIT
$1,037 
 
$576 
 
$(20)
 
$38 
 
$(17)
 
$30 
 
$- 
 
$607 
 
$1,644 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS FOR COMMON
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT and other EBIT
$1,037 
 
$576 
 
$(20)
 
$38 
 
$(17)
 
$30 
 
$- 
 
$607 
 
$1,644 
Foreign Currency Translation Gains / (Losses)
(14)
 
 
 
 
 
 
 
 
(14)
Interest Income and Other
10 
 
 
 
 
 
 
 
 
10 
Interest Expense
(228)
 
 
 
 
 
 
 
 
(228)
Minority Interest (Expense) Benefit - Interest Expense
(1)
 
 
 
 
 
 
 
 
(1)
Income taxes on Continuing Operations
(260)
 
(213)
 
 
(15)
 
 
(11)
 
 
(227)
 
(487)
Discontinued Operations, net of taxes
 
 
 
 
-
 
-
 
(884)
(884)
 
(883)
Trust Preferred/Preferred Dividends
(3)
 
 
 
 
 
 
 
 
(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Earnings for Common
$542 
 
$363 
 
$(14)
 
$23 
 
$(11)
 
$19 
 
$(884)
 
$(504)
 
$38 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE, BASIC
$0.59 
 
$0.39 
 
$(0.02)
 
$0.02 
 
$(0.01)
 
$0.02 
 
$(0.95)
 
$(0.55)
 
$0.04 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE, DILUTED
$0.56 
 
$0.38 
 
$(0.01)
 
$0.02 
 
$(0.01)
 
$0.02 
 
$(0.92)
 
$(0.52)
 
$0.04 

Note 1 - Amounts for special items are entered net of minority interest

A - Recorded in Gains (Losses) on Sales of Other Assets, net on the Consolidated Statements of Operations.
B - Third quarter settlements of the 2005 portion of the Field Services de-designated hedges as of 2/22/05, recorded in Equity in Earnings of Unconsolidated Affiliates on the Consolidated Statements of Operations.
C - Equity investment impairment, recorded in (Losses) Gains on sales and impairments of equity investments on the Consolidated Statements of Operations.
D - Recorded in Other income and expenses, net on the Consolidated Statements of Operations.
E - Recorded in Non-regulated electric, natural gas, natural gas liquids and other revenues on the Consolidated Statements of Operations.
F - Primarily the non-cash, after-tax charge related to the planned exit of substantially all of DENA's physical and commercial assets outside the midwestern United States and the reclassification of DENA 2005 operations. Recorded in (Loss) Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations.

Weighted Average Shares (reported and ongoing) - in millions
    Basic 926
    Diluted 964

DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
September 2004 Year-to-date
(Dollars in Millions)

 
Special Items (Note 1)
 
Ongoing Earnings
Gains (Losses) on Sale
of Assets
Impairment
Gains (losses) on sales and impairments of equity investments
Enron Settlement
Tax Benefit from DEA Restructuring
Discontinued Operations, excluding Crescent Resources
Total Adjustments
Reported Earnings
SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS                              
                               
Franchised Electric
$1,212 
 
$3 
 
$- 
 
$- 
 
$- 
 
$- 
$- 
 
$3 
$1,215 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas Transmission
970 
 
11 
 
 
 
 
16 
986 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Field Services
267 
 
 
(10)
(16)
 
(24)
243 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Duke Energy North America
(149)
 
(373)
 
 
D,F 
 
(365)
(514)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Energy
172 
 
 
(13)
 
 
 
(11)
161 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Crescent
190 
 
 
 
 
 
 
190 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT
2,662 
 
(357)
 
(23)
 
(10)
 
 
 
(381)
2,281 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
(84)
 
 
 
21 
 
28 
(56)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT and other EBIT
$2,578 
 
$(353)
 
$(23)
 
$(7)
 
$30 
 
$- 
$- 
 
$(353)
$2,225 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS FOR COMMON
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT and other EBIT
$2,578 
 
$(353)
 
$(23)
 
$(7)
 
$30 
 
$- 
$- 
 
$(353)
$2,225 
Foreign Currency Translation Gains / (Losses)
 
 
 
 
 
 
Interest Income and Other
46 
 
 
 
 
 
 
46 
Interest Expense
(984)
 
 
 
 
 
 
(984)
Minority Interest - Interest Expense
27 
 
 
 
 
 
 
27 
Income taxes on continuing operations
(537)
 
124 
 
 
 
(11)
 
48 
 
172 
(365)
Discontinued operations, net of taxes
 
 
 
 
 
179 
179 
183 
Trust Preferred/Preferred Dividends
(7)
 
 
 
 
 
 
(7)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Earnings for Common
$1,127
 
$(229)
 
$(15)
 
$(4)
 
$19 
 
$48 
$179 
 
$(2)
$1,125 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE, BASIC
$1.22
 
$(0.25)
 
$(0.02)
 
$- 
 
$0.02 
 
$0.05 
$0.20 
 
$1.22 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE, DILUTED
$1.18
 
$(0.24)
 
$(0.02)
 
$- 
 
$0.02 
 
$0.05 
$0.19 
 
 
$1.18 

Note 1 - Amounts for special items are entered net of minority interest

A - Millennium Pipeline
B - Recorded in Impairment and other charges on the Consolidated Statements of Operations. Amount net of $12 million of minority interest.
C - Amount net of $7 million of minority interest.
D - Recorded in Operation, maintenance and other on the Consolidated Statements of Operations.
E - Approximately $(360) million related to loss on sale of the Southeast assets and approximately $(9) million related to losses on liquidation of DETM contracts (net of $5 million of minority interest). $(367) million recorded in Gains (Losses) on Sales of Other Assets, net (net of $5 million of minority interest) and $(6) million recorded in Operation, maintenance and other on the Consolidated Statements of Operations.
F - Amount is net of $5 million of minority interest.
G - Charge related to Cantarell, recorded in Operation, maintenance and other on the Consolidated Statements of Operations.
H - Includes $13 million related to the sale of Caribbean Nitrogen Co.
I - Primarily the approximate $280 million gain on the sale of International Energy's Asia-Pacific business, partially offset by DENA discontinued operations.

Weighted Average Shares (reported and ongoing) - in millions
    Basic 925
    Diluted 960

DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
September 2005 Year-to-date
(Dollars in Millions)

   
Special Items (Note 1)
   
Ongoing Earnings
Mutual insurance liability adjustment
Gain on transfer of 19.7% interest in DEFS
Gains (Losses) on sales and impairments of equity investments
Field Services hedge de-designation, net
MTM change on de-designated Field Services hedges for 2005, net
Initial and Subsequent gain on de-designating Southeast DENA hedges
Discontinued Operations, excluding Crescent Resources
Total Adjustments
Reported Earnings
SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franchised Electric  
$1,216 
 
$- 
 
$- 
 
$- 
 
$- 
 
$- 
 
$- 
 
$- 
 
$- 
 
$1,216 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gas Transmission  
1,044 
 
 
 
 
 
 
 
 
 
1,044 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Field Services  
378 
 
 
576 
888 
(58)
 
 
 
1,406 
 
1,784 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Duke Energy North America  
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Energy  
237 
 
 
 
(20)
 
 
 
 
(20)
 
217 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Crescent  
210 
 
 
 
 
 
 
 
 
 
210 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT  
3,085 
 
 
576 
 
868 
 
(58)
 
 
 
 
1,386 
 
4,471 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other  
(433)
 
(28)
 
 
 
(64)
30 
 
(62)
 
(495)
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT and other EBIT  
$2,652 
 
$(28)
 
$576 
 
$868 
 
$(58)
 
$(64)
 
$30 
 
$- 
 
$1,324 
 
$3,976 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS FOR COMMON  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total reportable segment EBIT and other EBIT  
$2,652 
 
$(28)
 
$576 
 
$868 
 
$(58)
 
$(64)
 
$30 
 
$- 
 
$1,324 
 
$3,976 
Foreign Currency Translation Gains / (Losses)  
(12)
 
 
 
 
 
 
 
 
 
(12)
Interest Income and Other  
34 
 
 
 
 
 
 
 
 
 
34 
Interest Expense  
(813)
 
 
 
 
 
 
 
 
 
(813)
Minority Interest (Expense) Benefit - Interest Expense  
22 
 
 
 
 
 
 
 
 
 
22 
Income taxes on Continuing Operations  
(599)
 
10 
 
(213)
 
(323)
 
20 
 
21 
 
(11)
 
 
(496)
 
(1,095)
Discontinued Operations, net of taxes  
 
 
 
 
 
 
 
(895)
(895)
 
(894)
Trust Preferred/Preferred Dividends  
(7)
 
 
 
 
 
 
 
 
 
(7)
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Earnings for Common  
$1,278 
 
$(18)
 
$363 
 
$545 
 
$(38)
 
$(43)
 
$19 
 
$(895)
 
$(67)
 
$1,211 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE, BASIC  
$1.37 
 
$(0.02)
 
$0.39 
 
$0.58 
 
$(0.04)
 
$(0.05)
 
$0.02 
 
$(0.96)
 
$(0.08)
 
$1.29 
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EARNINGS PER SHARE, DILUTED  
$1.32 
 
$(0.02)
 
$0.37 
 
$0.56 
 
$(0.04)
 
$(0.04)
 
$0.02 
 
$(0.92)
 
$(0.07)
 
$1.25 

Note 1 - Amounts for special items are entered net of minority interest

A - Gain on sale of investment in units of TEPPCO LP, $97 million, and TEPPCO GP, $791 million net of $343 million of minority interest.
B - De-designation of hedges due to proposed transfer of 19.7% interest in DEFS to ConocoPhillips. $125 million loss recorded in Impairment and other charges on the Consolidated Statements of Operations, reduced by $29 million of hedge settlements recorded in Non-regulated electric, natural gas, natural gas liquids and other revenues, and $38 million of hedge settlements recorded in Equity in Earnings of Unconsolidated Affiliates on the Consolidated Statements of Operations.
C - Recorded in Gains (Losses) on Sales of Other Assets, net on the Consolidated Statements of Operations.
D - Recorded in Operation, maintenance and other on the Consolidated Statements of Operations.
E - $47 million loss recorded in Non-regulated electric, natural gas, natural gas liquids and other revenues, and $17 million loss recorded in Other income and expenses, net on the Consolidated Statements of Operations.
F - Equity investment impairment, recorded in (Losses) Gains on sales and impairments of equity investments on the Consolidated Statements of Operations.
G - Recorded in Non-regulated electric, natural gas, natural gas liquids and other revenues on the Consolidated Statements of Operations.
H - Primarily the non-cash, after-tax charge related to the planned exit of substantially all of DENA's physical and commercial assets outside the midwestern United States and the reclassification of DENA 2005 operations. Recorded in (Loss) Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations.

Weighted Average Shares (reported and ongoing) - in millions
    Basic 936
    Diluted 973

Special items for the first and second quarters (as summarized in this earnings release) include:

         
($ in Millions) Pre-Tax Amount Tax Effect 2005 EPS Impact 2004 EPS Impact
First quarter 2005        
Gain on sale of TEPPCO GP (net of minority interest of $343 million)
$791 
($293)
$0.52 
--
Gain on sale of TEPPCO L.P. units
97 
(36)
0.07 
--
Loss on de-designation of Field Services’ hedges as a result of the announced transaction with ConocoPhillips
(118)
44 
(0.08)
--
Mark-to-market losses on de-designated 2005 Field Services’ hedges
(54)
19 
(0.04)
--
Additional liabilities related to mutual insurance companies
(28)
10 
(0.02)
--
TOTAL EPS IMPACT
 
 
$0.45 
 
 
 
 
 
 
Second quarter 2005
 
 
 
 
Settlement of positions on 2005 Field Services' hedges that were de-designated
22 
(8)
0.01 
--
Mark-to-market gain on de-designated 2005 Field Services’ hedges
(2)
0.01 
--
TOTAL EPS IMPACT
 
 
$0.02 
 
 
 
 
 
 
First quarter 2004
 
 
 
 
Net loss on sale of DENA assets (net of $1 million of minority interest), primarily the sale of southeast U.S. plants
(359)
126 
--
(0.25)
Gains on sale of other assets, including Caribbean Nitrogen Co.
14 
(5)
--
0.01 
Charge related to the sale of Cantarell investment
(13)
--
(0.01)
TOTAL EPS IMPACT
 
 
 
($0.25)
 
 
 
 
 
Second quarter 2004
 
 
 
 
Enron settlement (net of minority interest of $5 million)
$30 
($11)
 
$0.02 
Net losses on asset sales (net of minority interests of $6 million)
(5)
 
(0.01)
TOTAL EPS IMPACT
 
 
 
$0.01