Form 8-K Duke Energy Corporation Earnings Release

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 


 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report

(Date of earliest event reported): November 2, 2005

 

DUKE ENERGY CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

NORTH CAROLINA   1-4928   56-0205520

(State or Other Jurisdiction

of Incorporation)

  (Commission File No.)  

(IRS Employer

Identification No.)

 

526 South Church Street

Charlotte, North Carolina

  28202-1803
(Address of principal executive offices)   (Zip Code)

 

Registrant’s telephone number, including area code: 704-594-6200

 


 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 



Item 2.02 Results of Operations and Financial Condition

 

On November 2, 2005, Duke Energy Corporation issued a news release announcing its financial results for the third quarter ended September 30, 2005. A copy of this news release is attached hereto as Exhibit 99.1. The information in Exhibit 99.1 is being furnished pursuant to this Item 2.02.

 

Item 9.01 Financial Statements and Exhibits

 

(c) Exhibits

 

99.1    News Release dated November 2, 2005

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

 

DUKE ENERGY CORPORATION

By:   /S/    STEVEN K. YOUNG        
    Steven K. Young
    Vice President and Controller

 

Dated: November 2, 2005


EXHIBIT INDEX

 

Exhibit

  

Description


99.1    News Release dated November 2, 2005


Exhibit 99.1

 

Nov. 2, 2005    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

 

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
Impacts


    2004
EPS
Impacts


 

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
September 30,


    Nine Months Ended
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)

     5       (17 )     (44 )     (73 )

Income Tax Expense from Continuing Operations

     487       147       1,095       365  

(Loss) Income from Discontinued Operations

     (883 )     8       (894 )     183  
    


 


 


 


Net Income

     41       389       1,218       1,132  

Dividends and Premiums on Redemption of Preferred and Preference Stock

     3       2       7       7  
    


 


 


 


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 )     5       4       19  

International Energy

     8       9       20       24  

Crescent (b)

     139       122       470       406  

Other

     (1 )     —         9       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
September 30,


    Nine Months Ended
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

     1       —         2       3  

Other Income, net of expenses

     12       1       12       8  
    


 


 


 


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

     —         3       4       12  

Other Income, net of expenses

     17       19       48       39  

Minority Interest Expense

     8       7       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       1       577       1  

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

     —         5       —         6  

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

     1       1       1       1  

Other Income, net of expenses

     19       29       74       60  

Minority Interest Expense

     4       3       9       9  
    


 


 


 


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 )     —         7       2  
    


 


 


 


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       (3 )     6       4  

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 Relations

 

Web site at http://www.duke-energy.com/investors/publications/gaap/.


DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per-share amounts)

 

     Three Months Ended
September 30,


    Nine Months Ended
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 )     8       (894 )     183  
    


 


 


 


Net Income

     41       389       1,218       1,132  

Dividends and Premiums on Redemption of Preferred and Preference Stock

     3       2       7       7  
    


 


 


 


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 10-Q is filed with the Securities and Exchange Commission.


DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)

 

     September 30,
2005


   December 31,
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
    

  

 

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


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

     3       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  
    


 


 

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


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     $ 65a  

 

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


   MWs
Capacity


    Remaining 2005

    2006

 

Region


     Millions
MWh
Available


    % Contracted

    Millions
MWh
Available


    % Contracted

 
       Capacity

    Energy

      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
September 30,


    Year To Date
September 30,


 
     2005

    2004

    %
Inc. (Dec.)


    2005

    2004

    %
Inc. (Dec.)


 

GWH Sales

                                    

Residential

   7,654     6,807     12.4 %   19,696     19,469     1.2 %

General Service

   7,303     6,937     5.3 %   19,173     18,987     1.0 %

Industrial - Textile

   1,749     1,925     (9.1 %)   5,004     5,390     (7.2 %)

Industrial - Other

   5,082     4,861     4.5 %   14,101     13,415     5.1 %
    

 

 

 

 

 

Total Industrial

   6,831     6,786     0.7 %   19,105     18,805     1.6 %

Other Energy Sales

   67     67     —       201     199     1.0 %

Regular Resale

   457     438     4.3 %   1,123     1,132     (0.8 %)
    

 

 

 

 

 

Total Regular Sales Billed

   22,312     21,035     6.1 %   59,298     58,592     1.2 %

Special Sales (A)

   1,079     908     18.8 %   5,229     4,844     7.9 %
    

 

 

 

 

 

Total Electric Sales

   23,391     21,943     6.6 %   64,527     63,436     1.7 %

Unbilled Revenue

   9     (342 )   102.6 %   (164 )   (398 )   58.8 %
    

 

 

 

 

 

Total Duke Power Electric Sales

   23,400     21,601     8.3 %   64,363     63,038     2.1 %

Nantahala Electric Sales

   324     303     6.9 %   955     916     4.3 %
    

 

 

 

 

 

Total DP Consolidated Electric Sales

   23,724     21,904     8.3 %   65,318     63,954     2.1 %
    

 

 

 

 

 

Average Number of Customers

                                    

Residential

   1,843,208     1,808,955     1.9 %   1,835,402     1,801,039     1.9 %

General Service

   312,135     305,924     2.0 %   310,122     304,006     2.0 %

Industrial - Textile

   786     846     (7.1 %)   802     859     (6.6 %)

Industrial - Other

   6,661     6,670     (0.1 %)   6,665     6,674     (0.1 %)
    

 

 

 

 

 

Total Industrial

   7,447     7,516     (0.9 %)   7,467     7,533     (0.9 %)

Other Energy Sales

   12,659     12,424     1.9 %   12,977     11,936     8.7 %

Regular Resale

   15     15     —       15     15     —    
    

 

 

 

 

 

Total Regular Sales

   2,175,464     2,134,834     1.9 %   2,165,983     2,124,529     2.0 %

Special Sales (A)

   28     37     (24.3 %)   32     38     (15.8 %)
    

 

 

 

 

 

Total Duke Power Electric Sales

   2,175,492     2,134,871     1.9 %   2,166,015     2,124,567     2.0 %

Nantahala Electric Sales

   68,733     67,346     2.1 %   68,162     66,814     2.0 %
    

 

 

 

 

 

Total DP Average Number of Customers

   2,244,225     2,202,217     1.9 %   2,234,177     2,191,381     2.0 %
    

 

 

 

 

 

(A)   Excludes sales to Nantahala Power and Light Company

     

Heating and Cooling Degree Days

                                    

Actual

                                    

Heating Degree Days

   1     9     (89.9 %)   1,976     2,094     (5.6 %)

Cooling Degree Days

   1,122     831     35.0 %   1,474     1,400     5.3 %

Variance from Normal

                                    

Heating Degree Days

   (95.4 %)   (59.2 %)   n/a     1.5 %   9.0 %   n/a  

Cooling Degree Days

   18.6 %   (14.1 %)   n/a     4.5 %   (1.8 %)   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       2       —         5 A     —       —       7       269  

Field Services

    88       1       (10 )B     (16 )C     —       —       (25 )     63  

Duke Energy North America

    (23 )     (4 )D     —         —         —       —       (4 )     (27 )

International Energy

    63       —         —         1       —       —       1       64  

Crescent

    43       —         —         —         —       —       —         43  
   


 


 


 


 

 

 


 


Total reportable segment EBIT

    886       (1 )     (10 )     (10 )     —       —       (21 )     865  

Other

    (25 )     (3 )     —         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

    6       —         —         —         —       —       —         6  

Income taxes on continuing operations

    (203 )     1       4       3       48     —       56       (147 )

Discontinued operations, net of taxes

    4       —         —         —         —       4     4       8  

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 A     —         38 B     —         —         —         614       701  

Duke Energy North America

     —         —         —         —         —         —         —         —         —    

International Energy

     83       —         (20 )C     —         —         —         —         (20 )     63  

Crescent

     120       —         —         —         —         —         —         —         120  
    


 


 


 


 


 


 


 


 


Total reportable segment EBIT

     1,225       576       (20 )     38       —         —         —         594       1,819  

Other

     (188 )     —         —         —         (17 )D     30 E     —         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 )     6       (15 )     6       (11 )     —         (227 )     (487 )

Discontinued Operations, net of taxes

     1       —         —         —         —         —         (884 )F     (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       —         5 A     —         —        —        16       986  

Field Services

     267       1       (10 )B     (16 )C     1 D     —        —        (24 )     243  

Duke Energy North America

     (149 )     (373 )E     —         —         8 D,F     —        —        (365 )     (514 )

International Energy

     172       1       (13 )G     1       —         —        —        (11 )     161  

Crescent

     190       —         —         —         —         —        —        —         190  
    


 


 


 


 


 

  

  


 


Total reportable segment EBIT

     2,662       (357 )     (23 )     (10 )     9       —        —        (381 )     2,281  

Other

     (84 )     4 H     —         3       21 D     —        —        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       8       3       (11 )     48      —        172       (365 )

Discontinued operations, net of taxes

     4       —         —         —         —         —        179 I      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 C     888 A     (58 )B     —         —         —         1,406       1,784  

Duke Energy North America

     —         —         —         —         —         —         —         —         —         —    

International Energy

     237       —         —         (20 )F     —         —         —         —         (20 )     217  

Crescent

     210       —         —         —         —         —         —         —         —         210  
    


 


 


 


 


 


 


 


 


 


Total reportable segment EBIT

     3,085       —         576       868       (58 )     —         —         —         1,386       4,471  

Other

     (433 )     (28 )D     —         —         —         (64 )E     30 G     —         (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

     1       —         —         —         —         —         —         (895 )H     (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

     7       (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 )     5       —         (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 )     2               (0.01 )

TOTAL EPS IMPACT

                           $ 0.01