EX-99 2 e17670ex99.txt PRESS RELEASE Exhibit 99 Duke Energy Reports First Quarter 2004 Results -- Ongoing first quarter earnings per share (EPS) of 32 cents versus 42 cents in previous year; reported EPS of 36 cents versus 25 cents in prior year's quarter -- Company expects to exceed full-year asset sales and cash flow targets; debt reduction ahead of schedule -- Proceeds from announced asset sales year-to-date to generate approximately $1.5 billion -- Field Services posts more than 200-percent increase in EBIT from continuing operations -- Franchised Electric and Natural Gas Transmission continue to post solid earnings and cash flow -- DENA results affected by mark-to-market loss of 6 cents per share CHARLOTTE, N.C., April 29 /PRNewswire-FirstCall/ -- Duke Energy (NYSE: DUK) reported net income in the first quarter of 2004 of $334 million, or $0.36 per share, compared to net income of $225 million, or $0.25 per share in the first quarter of 2003. Ongoing earnings per share (EPS) for the first quarter of 2004, which excludes special items, was $0.32 versus $0.42 for the comparable quarter. "We have made exceptional progress in executing our 2004 business and financial plan. By closing the sale of our Australian assets, we have already met our asset sales target of $1.5 billion for 2004," said Paul Anderson, Duke Energy chairman of the board and chief executive officer. "Overall, ongoing earnings were in line with our expectations except for DENA, which was affected by mark-to-market losses. Thanks to our asset sales and continued solid earnings and cash flow from our franchised electric and natural gas pipeline businesses, Duke Energy's financial strength and flexibility are rapidly improving. As a result, our key businesses are positioned to selectively pursue growth opportunities." Special items for the quarter include: ($ in Millions) Pre-Tax Amount Tax Effect 2004 EPS 2003 EPS Impact Impact First Quarter * Gain on sale of Australian assets $256 ($18) $0.26 -- * Net loss on sale of DENA assets, primarily anticipated sale of southeast U.S. plants (322) 119 (0.22) -- * Gains on sale of other assets, including Caribbean Nitrogen Co. 14 (5) 0.01 -- * Charge related to planned sale of Cantarell investment (13) 5 (0.01) -- First quarter 2003 * 2003 gain on asset sales 16 (5) -- $0.01 * 2003 change in accounting principles (256) 94 -- ($0.18) TOTAL EPS IMPACT $0.04 ($0.17) EPS, as reported $0.36 $0.25 EPS, ongoing $0.32 $0.42 BUSINESS UNIT RESULTS Franchised Electric First quarter 2004 earnings before interest and taxes (EBIT) from Duke Power totaled $424 million, compared to the first quarter of 2003 EBIT of $454 million. The decrease for the quarter was driven primarily by reduced wholesale power sales and additional costs for planned nuclear outages compared to the previous year's quarter. Storm repair costs were lower during the quarter than in the prior year's quarter. Storm damages, most notably a wind storm in early March 2004 in North Carolina, cost $11 million, compared to last year's first quarter ice storm costs of $35 million. Favorable weather pushed residential sales up 3.4 percent during the quarter while industrial sales continued to decrease - down 4 percent from last year's quarter. As part of Duke Power's 100th anniversary of service, the utility has put a renewed emphasis on economic development in North Carolina and South Carolina to increase commercial and industrial sales. Natural Gas Transmission Duke Energy Gas Transmission (DEGT) reported first quarter 2004 EBIT of $398 million compared to $423 million in the prior year's quarter. The decrease is primarily a result of gains of $16 million from asset sales recorded in the prior year's quarter, and foregone earnings of $17 million in this year's quarter from various assets sold during 2003. Excluding these amounts related to assets sold, EBIT increased $8 million as a result of contributions from U.S. business expansions and foreign exchange impacts from the strengthening Canadian currency. This was partly offset by warmer weather affecting Union Gas, the Canadian gas distribution business, and project development costs capitalized in the prior year's period. The favorable Canadian currency impacts on DEGT's EBIT were partially offset in Duke Energy's net income by currency impacts on Canadian interest, taxes and other hedging strategies. Field Services The Field Services business segment, which represents Duke Energy's 70- percent interest in Duke Energy Field Services (DEFS), reported first quarter 2004 EBIT of $92 million from continuing operations, compared to $30 million in the first quarter of 2003. The more than 200-percent increase was primarily due to the favorable effects of commodity prices, net of hedging, compared to last year's quarter and improved results from trading and marketing activities. During the first quarter of 2004, DEFS declared and paid a $50 million dividend, of which $35 million was paid to Duke Energy. Duke Energy North America Duke Energy North America (DENA) reported an EBIT loss of $521 million in the first quarter of 2004, compared to EBIT of $23 million in the prior year's quarter. The most significant factors in the loss were: 1) an additional $325 million non-cash loss associated with the anticipated sale of DENA's southeast U.S. plants, and 2) a mark-to-market loss of $93 million, $87 million after minority interest, taken during the quarter as a result of changes in power and gas prices. Excluding the net loss on the sale of assets and mark-to-market changes, DENA's first quarter 2004 EBIT loss would have been $106 million. International Energy For the first quarter of 2004, Duke Energy International (DEI) reported EBIT from continuing operations of $29 million, compared to $40 million in the first quarter of 2003. During the quarter, DEI recorded a $13 million non- cash charge to EBIT from continuing operations associated with its intention to sell its ownership share of Cantarell, a nitrogen-production plant in Mexico. Crescent Resources Crescent Resources, Duke Energy's affiliated real estate company, is now reporting earnings as a separate segment. Crescent reported first quarter 2004 EBIT from continuing operations of $60 million versus a break-even first quarter 2003, due to increased land and commercial sales. Other Other, including DukeNet Communications, Duke/Fluor Daniel, Duke Energy Merchants, Energy Delivery Services and corporate costs, reported an EBIT loss of $5 million in the first quarter of 2004, compared to an EBIT loss of $48 million in the first quarter of 2003. This improvement is primarily a result of charges taken in 2003 related to exiting proprietary trading at Duke Energy Merchants and the 2004 gain on the sale of Caribbean Nitrogen Co. Discontinued Operations At the end of 2003, in accordance with generally accepted accounting principles, Duke Energy re-classified the results for certain operations to a separate line on the statement of operations called "Income (Loss) from Discontinued Operations." The amounts reported as discontinued operations are reported net of tax. The business units affected by this reclassification are International Energy, Field Services and Other. All reported periods have been restated. Discontinued Operations generated first quarter 2004 results of $246 million, compared to a first quarter 2003 loss of $5 million, as a result of a $238 million gain, net of tax, on the sale of the Australian assets. INTEREST EXPENSE Interest expense was $356 million for the first quarter of 2004, compared to $326 million for the first quarter of 2003. Interest increased primarily due to lower capitalized interest of $14 million, $16 million of interest associated with the re-classification of certain trust preferred securities from minority interest to long-term debt, an $11 million charge related to the re-marketing costs associated with the equity units at Duke Capital and $9 million associated with the Canadian exchange rate. These increases were offset by a $20 million decrease from net debt reduction, refinancing activities and lower interest cost in Brazil. LIQUIDITY AND CAPITAL RESOURCES Duke Energy's consolidated capital structure at the end of first quarter 2004, including short-term debt, was 58 percent debt, 37 percent common equity and 5 percent minority interests. Under various credit facilities, Duke Energy, Duke Capital and other subsidiaries had the ability to borrow up to $3.3 billion at the end of the first quarter of 2004. The companies had borrowings and letters of credit outstanding under these programs of approximately $1.4 billion as of the end of the first quarter of 2004, resulting in unused capacity of approximately $1.9 billion. The company also had approximately $1.5 billion in cash and cash equivalents as of the end of the first quarter of 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 first quarter 2004 earnings information Web site at: http://www.duke-energy.com/investors/financial/latest/default.asp. NON-GAAP FINANCIAL MEASURES The primary performance measure used by management to evaluate segment performance is EBIT from continuing operations, which at the segment level represents all profits from continuing operations (both operating and non- operating) before deducting interest and taxes, and is net of the minority interest expense related to those profits. Management believes EBIT from continuing operations is a good indicator of each segment's operating performance as it represents the results of our ownership interests in continuing operations without regard to financing methods or capital structures. EBIT from continuing operations should not be considered an alternative to, or more meaningful than, net income, income from continuing operations, operating income or cash flow as determined in accordance with generally accepted accounting principles (GAAP). Duke Energy's EBIT from continuing operations may not be comparable to a similarly titled measure of another company. Duke Energy's management uses ongoing EPS, which represents net income adjusted for special items, as one of the measures to evaluate operations of the company. Special items represent certain charges which management believes will not be recurring on a regular basis. Management believes that the presentation of ongoing EPS provides useful information to investors, as it allows them to more accurately compare the company's ongoing performance across all periods. Duke Energy is a diversified energy company with a portfolio of natural gas and electric businesses, both regulated and unregulated, and an affiliated real estate company. Duke Energy supplies, delivers and processes energy for customers in North America and selected international markets. In 2004, the company celebrates a century of service with the 100th anniversary of its electric utility Duke Power. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com. An earnings conference call for analysts is scheduled for 10 a.m. ET today. The conference call can be accessed via the investors' section of Duke Energy's Web site http://www.duke-energy.com/investors/financial/latest/default.asp or by dialing 800/946-0742 in the United States or 719/457-2650 outside the United States. The confirmation code is 598456. 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 598456. The international replay number is 719/457-0820, confirmation code 598456. A replay and transcript also will be available by accessing the investors' section of the company's Web site http://www.duke-energy.com/investors/financial/latest/default.asp. The presentation may include certain non-GAAP financial measures as defined under SEC rules. In such event, a reconciliation of those measures to the most directly comparable GAAP measures will be available on our investor relations Web site at: http://www.duke-energy.com/investors/financial/gaap/default.asp. This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Although Duke Energy believes that its expectations are based on reasonable assumptions, it can give no assurance that its goals will be achieved. Important factors that could cause actual results to differ materially from those in the forward-looking statements herein are discussed in Duke Energy's filings with the Securities and Exchange Commission. MARCH 2004 QUARTERLY HIGHLIGHTS (unaudited) Three Months Ended March 31, ------------------------ (In millions, except where noted) 2004 2003 -------------------------------------------------------------------------- COMMON STOCK DATA Earnings Per Share (from continuing operations) Basic $0.09 $0.43 Diluted $0.09 $0.43 Earnings Per Share (from discontinued operations) Basic $0.27 $- Diluted $0.27 $- Earnings Per Share (before cumulative effect of change in accounting principle) Basic $0.36 $0.43 Diluted $0.36 $0.43 Earnings Per Share Basic $0.36 $0.25 Diluted $0.36 $0.25 Dividends Per Share $0.275 $0.275 Weighted-Average Shares Outstanding Basic 912 897 Diluted 915 897 -------------------------------------------------------------------------- INCOME Operating Revenues $5,845 $6,172 ====== ====== Earnings Before Interest and Taxes (EBIT) 528 963 Interest Expense (a) 356 326 Minority Interest Expense (a) 38 50 Income Tax Expense 46 195 Income (Loss) from Discontinued Operations 246 (5) Cumulative Effect of Change in Accounting Principle, net of tax and minority interest - (162) ------- ------- Net Income 334 225 Dividends and Premiums on Redemptions of Preferred and Preference Stock 2 3 ------- ------- Earnings Available for Common Stockholders $332 $222 ======= ======= -------------------------------------------------------------------------- CAPITALIZATION Common Equity 37% 37% Preferred Stock 0% 1% Trust Preferred Securities 0% 3% ------- ------- Total Common Equity and Preferred Securities 37% 41% Minority Interests 5% 4% Total Debt 58% 55% -------------------------------------------------------------------------- Total Debt $21,798 $22,357 Book Value Per Share $15.32 $16.99 Actual Shares Outstanding 914 900 -------------------------------------------------------------------------- CAPITAL AND INVESTMENT EXPENDITURES Franchised Electric $262 $258 Natural Gas Transmission 154 216 Field Services 25 31 Duke Energy North America 9 160 International Energy 8 25 Crescent (b) 162 54 Other - 61 ------- ------- Total Capital and Investment Expenditures $620 $805 ======= ======= -------------------------------------------------------------------------- EBIT BY BUSINESS SEGMENT Franchised Electric $424 $454 Natural Gas Transmission 398 423 Field Services 92 30 Duke Energy North America (521) 23 International Energy 29 40 Crescent (b) 60 - Other (5) (48) ------- ------- Total Segment and Other EBIT 477 922 EBIT Attributable to: Minority Interest Expense 50 43 Third Party Interest Income 7 2 Foreign Currency Remeasurement Loss (5) (4) Intercompany EBIT Elimination (c) (1) - ------- ------- Total EBIT $528 $963 ======= ======= -------------------------------------------------------------------------- (a) Minority interest includes financing expenses related to securities of subsidiaries of $27 million for the three months ended March 31, 2003. The expense related to these securities is accounted for in interest expense in 2004. (b) Beginning in 2004, Crescent, formerly part of Other, is considered a reportable segment. (c) Amount relates to the elimination of intercompany EBIT that has been reclassified to discontinued operations. MARCH 2004 QUARTERLY HIGHLIGHTS (unaudited) Three Months Ended March 31, ------------------------- (In millions, except where noted) 2004 2003 -------------------------------------------------------------------------- FRANCHISED ELECTRIC Operating Revenues $1,271 $1,251 Operating Expenses 851 813 Other Income, net of expenses 4 16 ------- ------- EBIT $424 $454 ------- ------- Sales, GWh 21,963 22,043 -------------------------------------------------------------------------- NATURAL GAS TRANSMISSION Operating Revenues $1,038 $968 Operating Expenses 638 567 Other Income, net of expenses (e) 6 35 Minority Interest Expense 8 13 ------- ------- EBIT $398 $423 ------- ------- Proportional Throughput, TBtu 1,089 1,082 -------------------------------------------------------------------------- FIELD SERVICES (d) Operating Revenues $2,375 $2,550 Operating Expenses 2,249 2,509 Other Income, net of expenses 18 15 Minority Interest Expense 52 26 ------- ------- EBIT $92 $30 ------- ------- Natural Gas Gathered and Processed/Transported, TBtu/day 7.3 7.7 Natural Gas Liquids Production, MBbl/d 356.7 367.9 Average Natural Gas Price per MMBtu $5.69 $6.59 Average Natural Gas Liquids Price per Gallon $0.59 $0.58 -------------------------------------------------------------------------- DUKE ENERGY NORTH AMERICA Operating Revenues $656 $1,396 Operating Expenses 865 1,382 Loss on Sales of Other Assets, net (a) (322) - Other Income, net of expenses (4) 9 Minority Interest Benefit (14) - ------- ------- EBIT $(521) $23 ------- ------- Actual Plant Production, GWh (c) 5,461 5,110 Proportional MW Capacity in Operation 15,821 14,156 -------------------------------------------------------------------------- INTERNATIONAL ENERGY (d) Operating Revenues $154 $172 Operating Expenses 131 135 Other Income, net of expenses 9 7 Minority Interest Expense 3 4 ------- ------- EBIT $29 $40 ------- ------- Sales, GWh 4,564 3,969 Proportional MW Capacity in Operation 4,121 4,013 -------------------------------------------------------------------------- CRESCENT (d) Operating Revenues $195 $23 Operating Expenses 134 23 Minority Interest Expense 1 - ------- ------- EBIT $60 $- ------- ------- Residential Developed Lot Sales $32 $14 Commercial Project Sales $116 $- Real Estate Land Sales $1 $2 Land Management Land Sales $39 $2 -------------------------------------------------------------------------- OTHER (d) Operating Revenues $344 $517 Operating Expenses 387 582 Gains on Sales of Other Assets, net (b) 14 - Other Income, net of expenses 24 17 ------- ------- EBIT $(5) $(48) ------- ------- -------------------------------------------------------------------------- (a) Amount includes DENA Southeast plant impairment of $325 million and gain on sale of Duke Energy Trading & Marketing contracts. (b) Primarily represents Duke Energy Merchant's gain on sale of interest in Carribean Nitrogen Company (c) Represents 100% of GWh. (d) Prior year amounts have been reclassified due to discontinued operations. (e) Prior year includes gain on sale of limited partnership interests in Northern Border Partners L.P. of $14 million. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In millions, except per-share amounts) Three Months Ended March 31, ------------------------ 2004 2003 ------- -------- Operating Revenues Non-regulated electric, natural gas, natural gas liquids, and other $3,612 $4,014 Regulated electric 1,251 1,279 Regulated natural gas 982 879 ------- -------- Total operating revenues 5,845 6,172 ------- -------- Operating Expenses Natural gas and petroleum products purchased 3,032 3,492 Operation and maintenance 882 674 Fuel used in electric generation and purchased power 564 548 Depreciation and amortization 436 431 Property and other taxes 154 140 ------- -------- Total operating expenses 5,068 5,285 ------- -------- (Losses) Gains on Sales of Other Assets, net (308) 2 ------- -------- Operating Income 469 889 ------- -------- Other Income and Expenses Equity in earnings of unconsolidated affiliates 34 34 Gains on sales of equity investments - 14 Other income and expenses, net 25 26 ------- -------- Total other income and expenses 59 74 Interest Expense 356 326 Minority Interest Expense 38 50 ------- -------- Earnings From Continuing Operations Before Income Taxes 134 587 Income Tax Expense from Continuing Operations 46 195 ------- -------- Income From Continuing Operations 88 392 Discontinued Operations Net operating income, net of tax 7 3 Net income (loss) on dispositions, net of tax 239 (8) ------- -------- Income (Loss) From Discontinued Operations 246 (5) Income Before Cumulative Effect of Change in Accounting Principle 334 387 Cumulative Effect of Change in Accounting Principle, net of tax and minority interest - (162) ------- -------- Net Income 334 225 Dividends and Premiums on Redemption of Preferred and Preference Stock 2 3 ------- -------- Earnings Available For Common Stockholders $332 $222 ------- -------- Common Stock Data Weighted-average shares outstanding Basic 912 897 Diluted 915 897 Earnings per share (from continuing operations) Basic $0.09 $0.43 Diluted $0.09 $0.43 Earnings per share (from discontinued operations) Basic $0.27 $- Diluted $0.27 $- Earnings per share (before cumulative effect of change in accounting principle) Basic $0.36 $0.43 Diluted $0.36 $0.43 Earnings per share Basic $0.36 $0.25 Diluted $0.36 $0.25 Dividends per share $0.275 $0.275 CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions) March 31, December 31, 2004 2003 -------- --------- ASSETS Current Assets Cash and cash equivalents $1,500 $1,160 Receivables 2,689 2,888 Inventory 878 1,156 Assets held for sale 297 424 Unrealized gains on mark-to-market and hedging transactions 1,320 1,566 Other 1,056 694 -------- --------- Total current assets 7,740 7,888 -------- --------- Investments and Other Assets Investments in unconsolidated affiliates 1,365 1,398 Nuclear decommissioning trust funds 960 925 Goodwill 3,932 3,962 Notes receivable 232 260 Unrealized gains on mark-to-market and hedging transactions 1,635 1,857 Assets held for sale 2,119 1,444 Other 887 1,117 -------- --------- Total investments and other assets 11,130 10,963 -------- --------- Property, Plant and Equipment Cost 46,719 47,157 Less accumulated depreciation and amortization 12,641 12,171 -------- --------- Net property, plant and equipment 34,078 34,986 -------- --------- Regulatory Assets and Deferred Debits Deferred debt expense 326 275 Regulatory assets related to income taxes 1,194 1,152 Other 913 939 Total regulatory assets and -------- --------- deferred debits 2,433 2,366 -------- --------- Total Assets $55,381 $56,203 ======== ======== CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions) March 31, December 31, 2004 2003 ----------- ------------ LIABILITIES AND COMMON STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $2,000 $2,317 Notes payable and commercial paper 275 130 Taxes accrued 293 14 Interest accrued 305 304 Liabilities associated with assets held for sale 883 651 Current maturities of long-term debt 1,489 1,200 Unrealized losses on mark-to- market and hedging transactions 993 1,283 Other 1,396 1,799 ----------- ------------ Total current liabilities 7,634 7,698 ----------- ------------ Long-term Debt, including debt to affiliates of $516 at March 31, 2004 and $876 at December 31, 2003 20,034 20,622 ----------- ------------ Deferred Credits and Other Liabilities Deferred income taxes 4,290 4,120 Investment tax credit 162 165 Unrealized losses on mark-to- market and hedging transactions 1,556 1,754 Liabilities associated with assets held for sale 305 737 Other 5,541 5,524 Total deferred credits and other ----------- ------------ liabilities 11,854 12,300 ----------- ------------ Commitments and Contingencies Minority Interests 1,723 1,701 ----------- ------------ Preferred and preference stock without sinking fund requirements 134 134 ----------- ------------ Common Stockholders' Equity Common stock, no par, 2 billion shares authorized; 914 million and 911 million shares outstanding at March 31, 2004 and December 31, 2003, respectively 9,598 9,519 Retained earnings 4,145 4,060 Accumulated other comprehensive income 259 169 ----------- ------------ Total common stockholders' equity 14,002 13,748 ----------- ------------ Total Liabilities and Common Stockholders' Equity $55,381 $56,203 =========== =========== DUKE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) Three Months Ended March 31, ------------------------- 2004 2003 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $334 $225 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization (including amortization of nuclear fuel) 476 484 Cumulative effect of change in accounting principle - 162 Net losses (gains) on sales of equity investments and other assets 50 (4) Net realized and unrealized mark-to-market and hedging transactions 221 (116) Changes in working capital and other 225 753 Net cash provided by ------- ------- operating activities 1,306 1,504 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Capital and investment expenditures, net of refund (620) (805) Net proceeds from the sales of equity investment and other assets, and sales of and collections on notes receivable 166 306 Other (5) 24 ------- ------- Net cash used in investing activities (459) (475) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from the Issuance of long-term debt 72 824 Issuance of common stock and common stock related to employee benefit plans 59 80 Payments for the redemption of long-term debt, and net paydown of commercial paper and notes payable (288) (1,189) Dividends paid (265) (258) Other (54) (234) ------- ------- Net cash used in financing activities (476) (777) ------- ------- Changes in cash and cash equivalents associated with assets held for sale (31) - ------- ------- Net increase in cash and cash equivalents 340 252 Cash and cash equivalents at beginning of period 1,160 857 ------- ------- Cash and cash equivalents at end of period $1,500 $1,109 ======= ======= Supplemental Disclosures Quarter Ended March 31, 2004 Duke Energy Corporation -------------------------------------------------------------------------- 1Q04 -------- Mark-to-market Portfolio (in millions) $(264) Daily Value at Risk (DvaR) (in millions) 95% Confidence Level, One-Day Holding Period, Two-Tailed Average for the Period $23 Duke Energy North America -------------------------------------------------------------------------- (in millions unless stated otherwise) Q-T-D March 31, 2004 Proprietary Structured Owned Merchant Energy Gross Margin Trading Contracts Assets Total ---------------------------- ----------- ---------- ------- ------ Mark-to-market gross margin (loss) $3 $(95) $(1) $(93) Accrual gross margin (loss) n/a (11) 65 54 ----------- ---------- ------- ------ Total Gross Margin $3 $(106) $64 (39) ----------- ---------- ------- Reconciliation to Segment EBIT: Plant depreciation (47) Plant operating and maintenance expenses (79) General and administrative and other expenses (48) Minority interest 14 Gain (loss) on sale of other assets (322) ------- DENA Segment EBIT $(521) ======= Owned Assets - Merchant Plant Production and Hedging Information(a) ----------------------------------------- 2004(b) 2005 2006 -------- ------ ------ Estimated available production (millions of MWh) 48 64 64 Combined cycle 42 56 56 Peaker units 6 8 8 Estimated production (millions of MWh) 15 24 27 Combined cycle 15 23 26 Peaker units - 1 1 Hedges Estimated production sold 95% 70% 63% Average price sold ($/MWh) $46 $45 $42 (a) All figures exclude Southeast plants. (b) Information for 2004 is for the remainder of the year only (April - December). Supplemental Disclosures Quarter Ended March 31, 2004 Duke Energy North America (continued) -------------------------------------------------------------------------- (in millions) Total Maturity/Source of Carrying Value of Over Fair Energy Contract Net Assets 2004 2005 2006 2007 4 Years Value ---- ---- ---- ---- ------- ----- Proprietary Trading Actively quoted prices and other external sources $109 $6 $28 $(9) $(19) $115 Modeled (4) 13 8 7 10 34 ---- ---- ---- ---- ------- ----- $105 $19 $36 $(2) $(9) $149 ==== ==== ==== ==== ======= Structured Contracts Actively quoted prices and other external sources $47 $36 $(70) $(62) $(87) $(136) Modeled (48) (22) (31) (7) (23) (131) ---- ---- ---- ---- ------- ----- $(1) $14 $(101) $(69) $(110) $(267) ==== ==== ==== ==== ======= Owned Assets Actively quoted prices and other external sources $260 $213 $149 $74 $53 $749 Modeled - - - - 21 21 ---- ---- ---- ---- ------- ----- $260 $213 $149 $74 $74 $770 ==== ==== ==== ==== ======= Total Fair Value of Energy Contract Net Assets * $652 * Total Carrying Value of Energy Contract Net Assets represents the combination of amounts presented as assets and (liabilities) related to unrealized gains or losses on mark-to-market and hedging transactions for Duke Energy North America. Terms of Reference -------------------------------------------------------------------------- Estimated Available Production ------------------------------ Represents the amount of electric power capable of being generated from owned merchant assets, after adjusting for scheduled maintenance and outage factors. For simple cycle facilities, only peak demand periods were included in this calculation. Estimated Production -------------------- Represents the amount of power expected to be sold in a future period. This figure is based on economic projections modeled by Duke Energy personnel. Estimated Production Sold ------------------------- Represents the portion of estimated production which has been hedged, primarily through firm physical contracts. Owned Assets ------------ Represents activity around energy assets owned or leased, including hedges of power sales and fuel purchase requirements and tolls, transmission, transportations and storage contracts that hedge owned assets. Normal purchases and sales associated with such assets are included in the Merchant Energy Gross Margin table, yet excluded from the Maturity/Sources of Fair Value of Energy Contract Net Assets table. Economic hedges of Owned Assets that do not meet hedge accounting standards will still be classified as Owned Assets in the Merchant Energy Gross Margin table. Proprietary Trading ------------------- Standardized contracts entered into to take a market view, capture market price changes or put capital at risk. Structured Contracts -------------------- Non-standard contracts not associated with owned or leased assets and involving significant tailoring of terms to meet customer needs, and associated hedges. This category includes tolls, transmission contracts, transportation contracts and storage contracts, except those that hedge Owned Assets. Economic hedges of Structured Contracts that do not meet hedge accounting standards will still be classified as Structured Contracts in the Merchant Energy Gross Margin table. MEDIA CONTACT: Randy Wheeless Phone: 704/382-8379 24-Hour: 704/382-8333 ANALYST CONTACT: Greg Ebel Phone: 704/382-8118 SOURCE Duke Energy -0- 04/29/2004 /CONTACT: Media, Randy Wheeless, +1-704-382-8379, or 24-Hour, +1-704-382-8333, or Analysts, Greg Ebel, +1-704-382-8118, both of Duke Energy/ /Company News On-Call: http://www.prnewswire.com/comp/257451.html/ /Photo: http://www.newscom.com/cgi-bin/prnh/20040414/DUKEENERGYLOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, photodesk@prnewswire.com/ /Web site: http://www.duke-energy.com / (DUK) CO: Duke Energy ST: North Carolina IN: OIL UTI SU: ERN CCA MAV