-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, OApZJhounCXHLZCcX0iUcP/ymFt7ZrC2/P6g3kIGjop7NyJl7QFycYJBc4dbGUCt ATdr2X2Jn3gomlHVco9+ww== 0000950168-99-001855.txt : 19990628 0000950168-99-001855.hdr.sgml : 19990628 ACCESSION NUMBER: 0000950168-99-001855 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990625 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DUKE ENERGY CORP CENTRAL INDEX KEY: 0000030371 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 560205520 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-04928 FILM NUMBER: 99652856 BUSINESS ADDRESS: STREET 1: 526 SOUTH CHURCH STREET CITY: CHARLOTTE STATE: NC ZIP: 28201-1006 BUSINESS PHONE: 7045946200 MAIL ADDRESS: STREET 1: 422 S CHURCH ST CITY: CHARLOTTE STATE: NC ZIP: 28242 FORMER COMPANY: FORMER CONFORMED NAME: DUKE POWER CO /NC/ DATE OF NAME CHANGE: 19920703 11-K 1 DUKE ENERGY CORP ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------------- FORM 11-K ------------------ ANNUAL REPORT Pursuant to Section 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended December 31, 1998 Commission File Number 1-4928 ----------- TAX CREDIT EMPLOYEE STOCK OWNERSHIP PLAN OF PANENERGY CORP AND PARTICIPATING AFFILIATES (Full title of the plan) --------- DUKE ENERGY CORP. (Name of issuer of the securities held pursuant to the plan) 5400 WESTHEIMER COURT P.O. BOX 1642 HOUSTON, TEXAS 77251-1642 (Address, including zip code, of principal executive office) (713) 627-5400 (Telephone number, including area code) ================================================================================ TAX CREDIT EMPLOYEE STOCK OWNERSHIP PLAN OF PANENERGY CORP AND PARTICIPATING AFFILIATES INDEX TO FINANCIAL STATEMENTS AND SCHEDULES ----------- FINANCIAL STATEMENTS
Page ---- Independent Auditors' Report............................................................ 3 Statement of Net Assets Available for Benefits December 31, 1998 and 1997......................................................... 4 Statement of Changes in Net Assets Available for Benefits Years Ended December 31, 1998 and 1997.............................................. 4 Notes to Financial Statements........................................................... 5 ------------- SCHEDULES Schedule IV - Item 27d - Schedule of Reportable Transactions, Year Ended December 31, 1998....................................................... S-1 ALL OTHER SCHEDULES ARE OMITTED BECAUSE THEY ARE NOT APPLICABLE OR NOT REQUIRED.
2 INDEPENDENT AUDITORS' REPORT The Administrative Committee Tax Credit Employee Stock Ownership Plan of PanEnergy Corp and Participating Affiliates: We have audited the accompanying statements of net assets available for benefits of the Tax Credit Employee Stock Ownership Plan of PanEnergy Corp and Participating Affiliates (the Plan) as of December 31, 1998 and 1997, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1998 and 1997, and the changes in net assets available for benefits for each of the years in the two-year period ended December 31, 1998 in conformity with generally accepted accounting principles. As discussed in Note 1, effective December 31, 1998 the assets and liabilities of the Plan were transferred to, and assumed by, the Duke Energy Corp. Retirement Savings Plan. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules as listed in the accompanying index are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. Houston, Texas May 28, 1999 3 TAX CREDIT EMPLOYEE STOCK OWNERSHIP PLAN OF PANENERGY CORP AND PARTICIPATING AFFILIATES STATEMENT OF NET ASSETS AVAILBLE FOR BENEFITS AS OF DECEMBER 31
1998 1997 ----------- ----------- Northern Trust Company Collective Short Term Investment Fund................................ $ - $ 2,043 Accrued interest receivable................................................................. - 719 Accrued dividends receivable................................................................ - 113 Common stock of Duke Energy Corporation..................................................... - 24,736,400 ---------------------- ------------ Total Investments....................................................................... - 24,739,275 ---------------------- ------------- Net Assets Available for Benefits........................................................... $ - $ 24,739,275 ===================== =============
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEARS ENDED DECEMBER 31
1998 1997 ---------- ---------- Employees' contributions (Note 1)........................................................... $ - $ 2,847,277 Employers' contributions (Note 1)........................................................... - 8,693,751 ------------------ ------------- Total contributions................................................................. - 11,541,028 ----------------- ------------- Net unrealized appreciation of investments.................................................. 3,243,776 3,962,810 ------------------ ------------- Dividend income............................................................................. 950,952 479,435 Interest income............................................................................. 9,402 46,823 Realized gain (loss)........................................................................ (33,933) (159,959) ------------------ ------------- Total investment income............................................................. 926,421 366,299 ------------------ ------------- Withdrawals................................................................................. 2,104,361 732,241 Other disbursements......................................................................... - 1,241 ------------------ ------------- Total disbursements................................................................. 2,104,361 733,482 ------------------ ------------- Increase in Net Assets Available for Benefits............................................... 2,065,836 15,136,655 Net Assets Available for Benefits, beginning of year........................................ 24,739,275 9,602,620 ------------------ ------------- Transfer of Net Assets To Duke Energy Corporation Retirement Savings Plan................... 26,805,111 - ------------------ ------------- Net Assets Available for Benefits, end of year.............................................. $ - $ 24,739,275 ================== =============
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS 4 TAX CREDIT EMPLOYEE STOCK OWNERSHIP PLAN OF PANENERGY CORP AND PARTICIPATING AFFILIATES NOTES TO FINANCIAL STATEMENTS 1. DESCRIPTION OF THE PLAN ORGANIZATION The Employees' Stock Ownership Plan of Panhandle Eastern Pipe Line Company and Participating Subsidiaries (the Original TRASOP) was adopted by the Board of Directors of Panhandle Eastern Pipe Line Company on December 3, 1975 and subsequently was assumed by PanEnergy Corp (formerly Panhandle Eastern Corporation) in 1981. In January 1991, the Original TRASOP was merged into, and the Original TRASOP accounts were thereafter maintained under, the Employees' Savings Plan of PanEnergy Corp and Participating Affiliates (the ESP), a cash or deferred profit sharing plan qualified under Sections 401(k) and 401(a) of the Internal Revenue Code (the Code). PanEnergy Corp (PanEnergy or Company) determined that utilizing the ESP for any post-1994 company tax credit or related employee contributions would substantially complicate ESP administration, resulting in significant additional costs and possible confusion among ESP participants. Accordingly, PanEnergy determined that it is in the best interests of PanEnergy and eligible employees of its participating subsidiaries to separately maintain the Tax Credit Employee Stock ownership Plan of PanEnergy Corp and Participating Affiliates (the Plan) with respect to any such contributions. The Plan was established effective January 1, 1995. On December 31, 1998, there were 4,734 individuals participating in the Plan. On December 31, 1998, the Plan was merged into, and it's liabilities assumed by and it's assets transferred to, the Duke Energy Corporation Retirement Savings Plan (now the Duke Energy Retirement Savings Plan). CONTRIBUTIONS Contributions to the Plan by PanEnergy in 1997 were made as certain investment tax credits were claimed by PanEnergy on its 1996 federal tax return. It is expected that no future contributions after 1997 will be made to the Plan. Such actions will not affect any vested benefits of members (unless required in order to comply with qualification requirements by the Code and the Employee Retirement Income Security Act of 1974 (ERISA), as amended) and no such action would cause any part of the assets held in trust to be used for purposes other than the exclusive benefit of the members or their beneficiaries. EXPENSES All costs and expenses incurred in administering the Plan, if not paid by PanEnergy or participating subsidiaries, shall be paid by the trustee from Plan assets. During 1998 and 1997, expenses totaling $49,682 and $17,959, respectively, were paid by PanEnergy and/or participating subsidiaries. PROVISIONS OF THE PLAN The Plan is a defined contribution plan sponsored by PanEnergy for the benefit of eligible employees of its participating subsidiaries. The Plan, administered by an Administrative Committee (the Committee) appointed by the Board of Directors of PanEnergy, is subject to provisions of ERISA. Under the terms of the Plan, any eligible employee may become a participant of the Plan as of January 1, 1995 or the first day of any month thereafter, upon completing a one-year period of service, as defined. An eligible 5 employee is any employee of a participating subsidiary other than (1) an employee whose employment is governed by a collective bargaining agreement unless such agreement provides for the employee's participation in the Plan, (2) a non-resident alien who has no United States source income or who is on a "Non-U.S. Payroll", (3) an employee employed pursuant to a written employment contract that provides that the employee shall not participate in the Plan , or (4) a leased employee. A leased employee is someone who is not an employee of the Company but who provides services to the Company through a leasing organization. In order to be eligible to receive an allocation of a Company Basic Contribution (a Basic Contribution), to make a Participant Contribution or to receive a subsequent Company Matching Contribution (a Matching Contribution), a participant, generally, must be eligible to participate in the Plan on the last day of the year or has terminated employment during the year while eligible to participate in the Plan and such termination was due to (1) death, (2) disability qualifying the participant for benefits under a participating subsidiary's long-term disability plan or (3) at the time of such termination, the participant was eligible to elect an immediate early or normal retirement benefit under the Retirement Income Plan of PanEnergy Corp and Participating Affiliates. The amount of a participant's allocation of Basic or Matching Contributions and the ability of the participant to make a Participant Contribution may be restricted to satisfy Code limitations. The Basic Contribution for a year is allocated to the Plan account of each eligible participant in an amount which bears proportionally to the ratio of the eligible participant's W-2, Box 1 compensation (as an eligible employee and subject to a $100,000 annual maximum per participant) to total W-2, Box 1 compensation (as an eligible employee and subject to a $100,000 annual maximum per participant) of all eligible participants for the year. Contributions by PanEnergy and participating subsidiaries of the Matching Contributions for the year are allocated to the account of each participant in an amount equal to the participant's contribution for the year. The Basic and Matching Contribution for a year shall not exceed the total tax credit available (and elected by PanEnergy) for such contribution for the year. Each participant will at all times be 100% vested in their Plan account. Generally, distribution of a participant's Plan account may not occur until the participant's separation from service or termination of the Plan. Unless a participant elects to receive a distribution of his account in cash, any distribution from the Plan will be made in shares of Duke Energy common stock, with the value of any fractional shares paid in cash. 2. BASIS OF PRESENTATION The accompanying financial statements have been prepared on the accrual basis in conformity with generally accepted accounting principles and present the Plan's net assets available for benefits, at fair values, and changes in net assets available for benefits. The investment in Duke Energy Corp. common stock is stated at fair value based upon quotations obtained from a National Security Exchange at the balance sheet date. Purchases and sales of securities are recorded on a trade date basis. Net realized gains and losses on disposition of investments are reported on the revalued cost method, which is the fair value of the investment at the beginning of the Plan year or historical cost if the investment was acquired during the Plan year. 3. INVESTMENT PROGRAMS Contributions and earnings received by the Plan's trust will be invested in Duke Energy Corp. common stock. During 1998 and 1997, The Northern Trust Company, Chicago, Illinois, was trustee of the Plan. Dividend income is reinvested in Duke Energy Corp. common stock and is allocated annually on the basis of each participant's pro rata holdings in the Plan. Generally, the Plan passes through to participants the right to vote shares of Duke Energy common stock allocated to their plan accounts and to tender such shares in response to a tender or exchange offer. 6 4. FEDERAL INCOME TAXES In a determination letter dated November 18, 1996, the Internal Revenue Service held that the Plan met the requirements of Section 401(a) of the Code, and that the trust established thereunder was entitled to exemption from federal income tax under the provisions of Section 501(a) of the Code. The Plan has been amended since receiving this determination letter. However, the Committee and its legal counsel believe the Plan is currently designed and operated in compliance with the applicable requirements of the Code. Therefore, they believe the Plan was qualified and the related trust was tax-exempt as of December 31, 1998. PanEnergy intends that the Plan and its related trust, continue to so qualify. Contributions made by the Company for the benefit of a member will not be required to be included in the member's taxable income until the year or years in which such contributions are distributed to the member. 5. RECONCILIATION TO IRS FORM 5500 The Plan's audited financial statements are materially consistent with the amounts reported on the IRS Form 5500. 7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Administrative Committee has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized. TAX CREDIT EMPLOYEE STOCK OWNERSHIP PLAN OF PANENERGY CORP AND PARTICIPATING AFFILIATES By_______________________________________ S.P. Meyer Administrative Committee Date: May 28, 1999 8 SCHEDULE IV TAX CREDIT EMPLOYEE STOCK OWNERSHIP PLAN OF PANENERGY CORP AND PARTICIPATING AFFILIATES ITEM 27D - SCHEDULE OF REPORTABLE TRANSACTIONS DECEMBER 31, 1998 ($ Millions)
NUMBER OF HISTORICAL REVALUED REALIZED INVESTMENT TRANSACTIONS PRICE/PROCEEDS COST COST GAIN(LOSS) - ------------------------------------ -------------- -------------- ----------- --------- ----------- PURCHASES: Northern Trust Company Collective Short Term Investment Fund 22 $ 2,092,330 $ - $ - $ - Common Stock of Duke Energy Corp* 8 948,620 - - - SALES: Northern Trust Company Collective Short Term Investment Fund 16 $ 2,338,724 $ 2,338,724 $ - $ - Common Stock of Duke Energy Corp* 11 1,133,095 884,197 1,167,028 (33,933) "REPORTABLE TRANSACTIONS" REPRESENT A SINGLE OR SERIES OF RELATED TRANSACTIONS THAT EXCEEDED 5% OF THE FAIR MARKET VALUE OF PLAN ASSETS AT THE BEGINNING OF THE YEAR.
-------------- o Party-in-interest SEE ACCOMPANYING INDEPENDENT AUDITORS' REPORT. S-1 EX-23 2 EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT The Board of Directors Duke Energy Corporation: We consent to incorporation by reference in the registration statement (No. 333-29587) on Form S-8 of Duke Energy Corporation of our report dated May 28, 1999, relating to the statements of net assets available for benefits of the Tax Credit Employee Stock Ownership Plan of PanEnergy Corp and Participating Affiliates as of December 31, 1998 and 1997, and the related statements of changes in net assets available for benefits for the years then ended; and the related schedules, which report appears in the December 31, 1998 Annual Report on Form 11-K of the Tax Credit Employee Stock Ownership Plan of PanEnergy Corp and Participating Affiliates. /s/ KPMG LLP --------------- KPMG LLP Houston, Texas June 25, 1999 -----END PRIVACY-ENHANCED MESSAGE-----