- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
Amendment No. 1 to
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED JUNE 30, 1997 COMMISSION FILE NUMBER 1-4928
DUKE ENERGY CORPORATION
(Exact name of Registrant as Specified in its Charter)
NORTH CAROLINA 56-0205520
(State or Other Jurisdiction (IRS Employer
of Incorporation) Identification No.)
422 SOUTH CHURCH STREET
CHARLOTTE, NC 28202-1904
(Address of Principal Executive Offices)
(Zip code)
Registrant's telephone number, including area code: 704-594-0887
DUKE POWER COMPANY
422 SOUTH CHURCH STREET
CHARLOTTE, NORTH CAROLINA 28242-0001
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No __
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of shares of Common Stock, without par value, outstanding at
July 31, 1997:
359,852,202 shares
<PAGE>
DUKE ENERGY CORPORATION
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
<S> <C>
Consolidated Statements of Income for the Three Months Ended and Year to Date
June 30, 1997 and 1996
2
Consolidated Statements of Cash Flows for the Year to Date June 30, 1997 and
1996 3
Consolidated Balance Sheets as of June 30, 1997 and December 31, 1996 4
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of Results of Operations and Financial Condition 12
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
</TABLE>
1
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In millions, except per share amounts)
Three Months Ended Year To Date
June 30 June 30
---------------------------------- ----------------------------------
1997 1996 1997 1996
-------------- ---------------- -------------- ----------------
<S> <C> <C> <C> <C>
Operating Revenues
Natural gas and petroleum products
Sales of natural gas and petroleum products $ 1,507.1 $ 1,047.6 $ 3,634.4 $ 2,317.8
Transportation and storage of natural gas 358.2 359.7 768.2 760.6
Electric
Generation, transmission, and distribution 982.9 1,053.0 2,007.2 2,153.4
Trading and marketing of electricity 112.5 7.8 195.0 8.8
Other 152.1 91.2 293.8 177.8
-------------- ---------------- -------------- ----------------
Total operating revenues 3,112.8 2,559.3 6,898.6 5,418.4
-------------- ---------------- -------------- ----------------
Operating Expenses
Natural gas and petroleum products purchased 1,416.6 976.9 3,385.5 2,132.6
Fuel used in electric generation 167.5 182.2 338.5 358.8
Net interchange and purchased power 196.6 98.8 358.0 209.0
Other operation and maintenance 685.5 543.1 1,259.1 1,100.6
Depreciation and amortization 205.4 195.8 409.4 390.6
Property and other taxes 89.2 83.3 186.1 171.9
-------------- ---------------- -------------- ----------------
Total operating expenses 2,760.8 2,080.1 5,936.6 4,363.5
-------------- ---------------- -------------- ----------------
Operating Income 352.0 479.2 962.0 1,054.9
-------------- ---------------- -------------- ----------------
Other Income and Expenses
Deferred returns and allowance for funds used
during construction 37.2 26.2 63.4 53.2
Other, net 17.8 7.8 25.9 14.0
-------------- ---------------- -------------- ----------------
Total other income and expenses 55.0 34.0 89.3 67.2
-------------- ---------------- -------------- ----------------
Earnings Before Interest and Taxes 407.0 513.2 1,051.3 1,122.1
Interest Expense 111.6 123.8 229.2 251.2
Minority Interests 1.8 - 12.3 -
-------------- ---------------- -------------- ----------------
Earnings Before Income Taxes 293.6 389.4 809.8 870.9
Income Taxes 125.0 152.3 329.5 340.7
-------------- ---------------- -------------- ----------------
Net Income 168.6 237.1 480.3 530.2
Dividends on Preferred and Preference Stock 11.0 11.0 22.1 22.2
-------------- ---------------- -------------- ----------------
Earnings Available For Common $ 157.6 $ 226.1 $ 458.2 $ 508.0
============== ================ ============== ================
Common Stock Data
Average shares outstanding 359.8 362.4 359.7 362.2
Earnings per share $ 0.43 $ 0.62 $ 1.27 $ 1.40
Dividends per share $ 0.40 $ 0.39 $ 0.80 $ 0.77
See Notes to Consolidated Financial Statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
DUKE ENERGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Year To Date
June 30
-----------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 480.3 $ 530.2
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 475.2 487.8
Deferred income taxes 35.7 27.2
Purchased capacity levelization 28.9 57.1
(Increase) Decrease in
Receivables 296.0 (61.3)
Inventory (33.3) 29.4
Other current assets (175.9) (19.6)
Increase (Decrease) in
Accounts payable (412.2) (5.8)
Taxes accrued 133.6 20.1
Interest accrued (9.0) (44.2)
Other current liabilities 103.0 (4.8)
Other, net (46.9) (41.8)
--------------- ---------------
Net cash provided by operating activities 875.4 974.3
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (557.5) (508.4)
Investment expenditures (74.7) (38.4)
Decommissioning, retirements and other investing 32.9 (13.7)
--------------- ---------------
Net cash used in investing activities (599.3) (560.5)
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of
Long-term debt 155.6 9.2
Common stock 7.6
Payments for the redemption of long-term debt (205.1) (60.7)
Net change in notes payable and commercial paper 75.8 (120.2)
Dividends paid (308.4) (301.4)
Other (46.1) 3.3
--------------- ---------------
Net cash used in financing activities (328.2) (462.2)
--------------- ---------------
Net increase (decrease) in cash and cash equivalents (52.1) (48.4)
Cash and cash equivalents at beginning of period 166.0 172.5
--------------- ---------------
Cash and cash equivalents at end of period $ 113.9 $ 124.1
=============== ===============
See Notes to Consolidated Financial Statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
June 30, December 31,
1997 1996
---------------- ----------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 113.9 $ 166.0
Receivables 1,718.5 1,888.0
Inventory 466.8 433.5
Current portion of natural gas transition costs 66.4 67.9
Current portion of purchased capacity costs 63.7 51.3
Other 358.9 157.1
---------------- ----------------
Total current assets 2,788.2 2,763.8
---------------- ----------------
Investments and Other Assets
Investments in affiliates 476.7 502.9
Nuclear decommissioning trust funds 425.2 362.6
Pre-funded pension costs 372.3 360.6
Goodwill, net 492.7 222.1
Other 160.7 142.4
---------------- ----------------
Total investments and other assets 1,927.6 1,590.6
---------------- ----------------
Property, Plant and Equipment
Cost 24,907.4 24,468.2
Less accumulated depreciation and amortization 9,498.0 9,199.1
---------------- ----------------
Net property, plant and equipment 15,409.4 15,269.1
---------------- ----------------
Regulatory Assets
Purchased capacity costs 799.4 840.7
Debt expense 234.3 244.0
Regulatory asset related to income taxes 507.7 493.5
Natural gas transition costs 220.7 250.0
Environmental clean-up costs 111.4 153.2
Other 315.5 350.0
---------------- ----------------
Total regulatory assets 2,189.0 2,331.4
---------------- ----------------
Total Assets $ 22,314.2 $ 21,954.9
================ ================
See Notes to Consolidated Financial Statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
DUKE ENERGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
June 30, December 31,
1997 1996
---------------- ----------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 1,002.9 $1,286.5
Notes payable and commercial paper 782.5 459.7
Taxes accrued 208.4 74.8
Interest accrued 115.3 124.3
Current portion of natural gas transition liabilities 102.1 84.4
Current portion of environmental clean-up liabilities 31.1 32.4
Current maturities of long-term debt and preferred stock 139.4 350.6
Other 611.3 508.3
---------------- ----------------
Total current liabilities 2,993.0 2,921.0
---------------- ----------------
Long-term Debt 5,643.0 5,485.1
---------------- ----------------
Deferred Credits and Other Liabilities
Deferred income taxes 3,623.1 3,568.5
Investment tax credit 244.5 250.1
Nuclear decommissioning costs externally funded 425.2 362.6
Natural gas transition liabilities 52.2 121.9
Environmental clean-up liabilities 177.4 188.9
Other 902.4 948.2
---------------- ----------------
Total deferred credits and other liabilities 5,424.8 5,440.2
---------------- ----------------
Minority Interests 67.4 83.4
---------------- ----------------
Preferred and Preference Stock
Preferred & preference stock with sinking fund requirements 229.8 234.0
Preferred & preference stock without sinking fund requirements 450.0 450.0
---------------- ----------------
Total preferred and preference stock 679.8 684.0
---------------- ----------------
Common Stockholders' Equity
Common stock , no par, 500 million shares authorized; 359.9 million 4,296.9 4,289.3
and 359.4 million shares outstanding at June 30, 1997 and December 31,
December 31, 1996, respectively
Retained earnings 3,209.3 3,051.9
---------------- ----------------
Total common stockholders' equity 7,506.2 7,341.2
---------------- ----------------
Total Liabilities and Stockholders' Equity $ 22,314.2 $ 21,954.9
================ ================
See Notes to Consolidated Financial Statements.
</TABLE>
5
<PAGE>
DUKE ENERGY CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. OPERATIONS AND BUSINESS COMBINATIONS
Duke Energy Corporation (the Company) is one of North America's leading
energy and energy services companies, involved in the production,
transmission and sales of energy and delivery of energy related services
worldwide.
On June 18, 1997, Duke Power Company (Duke Power) changed its name to Duke
Energy Corporation in accordance with the terms of a merger agreement with
PanEnergy Corp (PanEnergy), pursuant to which the Company issued 158.3 million
shares of its common stock in exchange for all of the outstanding common stock
of PanEnergy. PanEnergy is involved in the transportation, storage, gathering
and processing of natural gas, the production of natural gas liquids and is a
marketer of natural gas, electricity, liquefied petroleum gases and related
energy services. Pursuant to the merger, each share of PanEnergy common stock
outstanding was converted into the right to receive 1.0444 shares of the
Company's common stock. In addition, each outstanding option to purchase
PanEnergy common stock became an option to purchase common stock of the Company,
adjusted accordingly. The merger was accounted for as a pooling of interests
and, accordingly, the consolidated financial statements for periods prior to the
combination were restated to include the results of operations of PanEnergy.
Operating revenues and net income previously reported by the separate companies
and the combined amounts presented in the accompanying consolidated financial
statements are as follows:
<TABLE>
<CAPTION>
Duke
IN MILLIONS Power PanEnergy Adjustments Combined
----------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Three Months Ended June 30, 1996
Operating revenues $ 1,119.8 $ 1,431.5 $ 8.0 $ 2,559.3
Net income $ 157.3 $ 79.8 - $ 237.1
Year To Date June 30, 1996
Operating revenues $ 2,281.9 $ 3,123.4 $ 13.1 $ 5,418.4
Net income $ 348.6 $ 181.6 - $ 530.2
</TABLE>
The adjustment to operating revenues reflects a reclassification of PanEnergy's
equity in earnings of unconsolidated affiliates from other income to revenues to
be consistent with the Company's presentation.
The Company participated in marketing electric power and
natural gas through its 50% ownership interest in Duke/Louis Dreyfus LLC
(Duke/Louis Dreyfus). On June 17, 1997, the Company acquired the remaining 50%
ownership interest in Duke/Louis Dreyfus from affiliates of Louis Dreyfus Corp.
in exchange for two notes totaling $247 million due August 15, 1997. The
acquisition was accounted for by the purchase method. The assets and liabilities
of Duke/Louis Dreyfus have been consolidated in the Company's financial
statements as of June 30, 1997. The purchase price substantially represents
goodwill and intangibles, which will be amortized over 10 years.
6
<PAGE>
2. ACCOUNTING POLICIES
General - The consolidated financial statements include the accounts of the
Company and all majority-owned subsidiaries. These quarterly financial
statements reflect all normal recurring adjustments that are, in the opinion of
management, necessary to present fairly the financial position and results of
operations for the respective periods. Amounts reported in the Consolidated
Statements of Income are not necessarily indicative of amounts expected for the
respective years due to the effects of seasonal temperature variations on energy
consumption and the timing of maintenance of certain electric generating units.
Derivative Instruments - The Company, primarily through its subsidiaries, holds
and issues instruments that reduce the Company's exposure to market fluctuations
in the price and transportation costs of natural gas, petroleum products and
electric power marketed. The Company uses futures, swaps and options to manage
and hedge price and location risk related to market exposures. In order to
qualify as a hedge, the price movements in the commodity derivatives must be
highly correlated with the underlying hedged commodity. Gains and losses related
to commodity derivatives which qualify as hedges of commodity commitments are
recognized in income when the underlying hedged physical transaction closes (the
deferral method) and are included in natural gas and petroleum products
purchased or net interchange and purchased power in the Consolidated Statements
of Income. Gains and losses related to such instruments, to the extent settled
in cash, are reported as other current assets or liabilities, as appropriate, in
the Consolidated Balance Sheets until recognized in income. If the derivative
instrument is no longer sufficiently correlated to the underlying commodity, or
if the derivative transaction closes earlier than anticipated, the deferred
gains or losses are recognized in income. In addition to hedging activities, the
Company also engages in the trading of such instruments, and therefore
experiences net open positions in terms of price, volume and specified delivery
point. Gains and losses on derivatives utilized for trading are recognized in
income on a current basis (the mark to market method) and are also included in
natural gas and petroleum products purchased or net interchange and purchased
power. At June 30, 1997, the Company had unrealized gains of $245.1 million and
unrealized losses of $201.6 million recorded as other current assets and other
current liabilities, respectively, related to derivatives utilized for hedging
and trading purposes.
Supplemental Cash Flow Information - Total income taxes paid for the year to
date June 30, 1997 and 1996 were $203.4 million and $301.1 million,
respectively. Interest paid, net of amounts capitalized, for the year to date
June 30, 1997 and 1996 was $232.4 million and $242.6 million, respectively.
Reclassification - Certain amounts for the prior periods have been reclassified
in the consolidated financial statements to conform to the current presentation.
3. BUSINESS SEGMENTS
The Company is an integrated energy and energy services provider with the
ability to offer physical delivery and management of both electricity and
natural gas throughout the United States and abroad. The Company provides these
services primarily through four business segments: Electric Operations, Natural
Gas Transmission, Energy Services, and Parent and Other Operations.
7
<PAGE>
The Electric Operations segment is engaged in the generation, transmission,
distribution and sale of electric energy in central and western North Carolina
and the western portion of South Carolina, comprising the area known as the
Piedmont Carolinas. The Electric Operations in North Carolina and South Carolina
are subject to the rules and regulations of the Federal Energy Regulatory
Commission (FERC), the North Carolina Utilities Commission and The Public
Service Commission of South Carolina.
The Natural Gas Transmission segment is involved in interstate transportation
and storage of natural gas for customers in the Mid-Atlantic, New England,
Midwest and Gulf Coast states. The interstate natural gas transmission and
storage operations of the Company's wholly owned subsidiaries Texas Eastern
Transmission Corporation (TETCO), Algonquin Gas Transmission Company
(Algonquin), Panhandle Eastern Pipe Line Company (PEPL), and Trunkline Gas
Company (Trunkline) are also subject to the rules and regulations of the FERC.
The Energy Services segment is comprised of several separate business units.
Field Services gathers and processes natural gas and produces natural gas
liquids. The Trading and Marketing operations focus on marketing of natural gas,
electricity and liquefied petroleum gases. Other business activities conducted
in this segment include ownership and operation of electric power facilities,
engineering consulting, construction and other related energy services.
Parent and Other Operations include real estate operations, communications
services, corporate costs and intersegment eliminations.
<TABLE>
<CAPTION>
- ------------------------------------- ----------- ----------- --------------- ----------------
Earnings
Operating Before Interest Depreciation &
IN MILLIONS Revenues Income & Taxes Amortization
- ------------------------------------- ----------- ----------- --------------- ----------------
<S> <C> <C> <C> <C>
- -------------------------------------
THREE MONTHS ENDED JUNE 30, 1997
- -------------------------------------
Electric Operations $ 998.9 $ 244.2 $ 270.6 $ 124.3
Natural Gas Transmission 371.3 137.8 144.7 57.3
Field Services 697.9 31.8 31.9 17.4
Trading & Marketing 1,072.5 4.1 4.2 1.6
Other Energy Services 116.9 1.0 10.4 3.2
Parent & Other Operations (144.7) (66.9) (54.8) 1.6
-------- -------- ---------- --------
Total Consolidated $3,112.8 $ 352.0 $ 407.0 $ 205.4
======== ======== ========== ========
- -------------------------------------
THREE MONTHS ENDED JUNE 30, 1996
- -------------------------------------
Electric Operations $1,071.8 $ 285.6 $ 312.6 $ 120.9
Natural Gas Transmission 368.5 139.0 142.5 57.5
Field Services 592.9 26.2 26.2 12.2
Trading & Marketing 555.2 10.1 10.4 0.9
Other Energy Services 47.3 4.8 5.3 2.5
Parent & Other Operations (76.4) 13.5 16.2 1.8
-------- -------- ---------- --------
Total Consolidated $2,559.3 $ 479.2 $ 513.2 $ 195.8
======== ======== ========== ========
- ---------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------- ----------- ----------- --------------- ----------------
Earnings
Operating Before Interest Depreciation &
IN MILLIONS Revenues Income & Taxes Amortization
- ------------------------------------- ----------- ----------- --------------- ----------------
<S> <C> <C> <C> <C>
- -------------------------------------
YEAR TO DATE JUNE 30, 1997
- -------------------------------------
Electric Operations $2,039.3 $ 560.6 $ 616.2 $ 247.3
Natural Gas Transmission 809.2 333.7 350.7 114.5
Field Services 1,470.1 82.6 82.8 34.9
Trading & Marketing 2,702.0 33.7 34.3 2.9
Other Energy Services 222.5 4.4 9.3 6.6
Parent & Other Operations (344.5) (53.0) (42.0) 3.2
---------- ---------- ----------- ---------
Total Consolidated $6,898.6 $ 962.0 $1,051.3 $ 409.4
======== ======= ======== =========
- -------------------------------------
YEAR TO DATE JUNE 30, 1996
- -------------------------------------
Electric Operations $2,185.1 $ 624.2 $ 679.8 $ 241.2
Natural Gas Transmission 785.7 295.5 300.5 115.0
Field Services 1,095.9 60.7 62.8 24.0
Trading & Marketing 1,449.0 35.5 36.0 1.8
Other Energy Services 100.3 8.0 9.4 5.2
Parent & Other Operations (197.6) 31.0 33.6 3.4
-------- ------- --------- ---------
Total Consolidated $5,418.4 $1,054.9 $1,122.1 $ 390.6
======== ======== ======== ========
____________________________________________________________________________________________
</TABLE>
- -
- ------------------------------------------------------------------------------
Capital and Investment
IN MILLIONS Expenditures Identifiable Assets
- ------------------------------------------------------------------------------
Year To Year To
Date June Date June June 30, December 31,
30, 1997 30, 1996 1997 1996
--------------------------------------------------
Electric Operations $ 319.8 $ 358.4 $ 12,702.9 $ 12,625.2
Natural Gas Transmission 75.7 52.8 5,038.1 5,216.4
Field Services 74.3 50.9 1,828.4 1,769.4
Trading & Marketing 4.3 3.8 1,012.7 992.2
Other Energy Services 46.2 12.1 725.9 652.4
Parent & Other Operations 111.9 68.8 1,006.2 699.3
------- ------ ---------- ----------
Total Consolidated $ 632.2 $ 546.8 $ 22,314.2 $ 21,954.9
======= ======= ========== ==========
- -----------------------------------------------------------------------------
4. COMMITMENTS AND CONTINGENCIES
Environmental Matters
In July 1997, the Environmental Protection Agency (EPA) revised both the ozone
and particulate matter national ambient air quality standards. The revised
levels required by both of these standards are significantly more stringent than
previous levels. The EPA is in the process of finalizing the implementation
plans and schedules for both standards. The Company is currently evaluating the
potential effects the changes in the standards may have on results of operations
and financial position. The Company supports the objective of the Clean Air Act,
and has reduced emissions through the use of low-sulfur coal and installation of
low nitrogen-oxide burners at its fossil generating plants, through efficient
operations and by utilizing nuclear generation.
9
<PAGE>
Litigation
On December 16, 1996, TETCO received notification that Marathon Oil Company
(Marathon) intended to commence substitution of other gas reserves,
deliverability and leases for those dedicated to a certain natural gas purchase
contract (the Marathon Contract) with TETCO. In TETCO's view, the tendered
substitute gas reserves, deliverability and leases are not subject to the
Marathon Contract and TETCO filed a declaratory judgment action on December 17,
1996 in the U.S. District Court for the Eastern District of Louisiana seeking a
ruling that Marathon's interpretation of the Marathon Contract is incorrect. On
January 7, 1997, Marathon filed an answer and a counterclaim to TETCO's
complaint seeking a declaratory judgment enforcing its interpretation of the
Marathon Contract.
On February 18, 1997, Amerada Hess Corporation (Amerada Hess) notified TETCO
that it intended to commence substitution of other gas reserves, deliverability
and leases for those dedicated to its natural gas purchase contract (the Amerada
Hess Contract) with TETCO. On the same date, Amerada Hess also filed a petition
in the District Court of Harris County, Texas, 157th Judicial District, seeking
a declaratory judgment that its interpretation of the Amerada Hess Contract,
which covers the same leases and reserves as the Marathon Contract, is correct.
TETCO filed a declaratory judgment action with respect to Amerada Hess'
contentions in the U.S. District Court for the Eastern District of Louisiana on
February 21, 1997. The two actions have been transferred to the judge presiding
over the Marathon Contract matter.
The potential liability of the Company associated with both the Marathon
Contract and the Amerada Hess Contract should TETCO be contractually obligated
to purchase natural gas based upon the substitute gas reserves, deliverability
and leases, and the effect of transition cost recoveries pursuant to TETCO's
Order 636 settlement involve numerous complex legal and factual matters which
will take a substantial period of time to resolve. Because these matters are in
the early stages of litigation, the Company cannot estimate the effects on
results of operations or financial position.
On April 25, 1997, a group of affiliated plaintiffs that own and/or operate
various pipeline and marketing partnerships in Kansas and Missouri filed suit
against PEPL in the U.S. District Court for the Western District of
Missouri. The plaintiffs allege that PEPL has engaged in unlawful and
anti-competitive conduct with regard to requests for interconnects with the PEPL
system for service to the Kansas City area. Asserting that PEPL has violated the
antitrust laws and tortiously interfered with the plaintiffs' contracts with
third parties, the plaintiffs seek compensatory and punitive damages in
unspecified amounts. Because these matters are in the early stages of
litigation, the Company cannot estimate the effects on results of operations or
financial position.
The Company is also involved in various other legal, tax and regulatory
proceedings before various courts, regulatory commissions and government
agencies arising in the ordinary course of business, some of which involve
substantial amounts. Where appropriate, the Company has made accruals in
accordance with Statement of Financial Accounting Standards No. 5, "Accounting
for Contingencies," in order to provide for such matters. Management is of the
opinion that the final disposition of these proceedings will not have a material
adverse effect on the results of operations or financial position of the
Company.
10
<PAGE>
Other Commitments and Contingencies
The Company has a 10% ownership interest in TEPPCO Partners, L.P., a master
limited partnership (MLP) that owns and operates a petroleum products pipeline.
A subsidiary partnership of the MLP had $309.5 million in First Mortgage Notes
outstanding at June 30, 1997 with recourse to the general partner, a subsidiary
of the Company.
In the normal course of business, certain of the Company's affiliates enter into
contractual agreements to exchange natural gas, electric power, futures, swaps
and options; and construction contracts which contain certain schedule and
performance requirements. Such affiliates use risk management procedures to
control their exposure associated with the contracts. Certain subsidiaries of
the Company have guaranteed performance by such affiliates under some of these
contracts.
Management is of the opinion that these commitments and contingencies will not
have a material adverse effect on the results of operations or the financial
position of the Company.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
On June 18, 1997, Duke Power and PanEnergy consummated a stock-for-stock merger.
At the same time, the name of Duke Power Company was changed to Duke Energy
Corporation (the Company). This business combination was accounted for as a
pooling of interests and, accordingly, the consolidated financial statements for
periods prior to the combination were restated to include the results of
operations and financial position of PanEnergy. See Note 1 to the Consolidated
Financial Statements for further information. All information presented herein
relates to the combined entity.
OPERATIONS AND BUSINESS UNITS
Duke Energy Corporation is an integrated energy and energy services provider
with the ability to offer physical delivery and management of both electricity
and natural gas throughout the United States and abroad. The Company provides
these services primarily through four business segments: Electric Operations,
Natural Gas Transmission, Energy Services, and Parent and Other Operations. The
Electric Operations segment is engaged in the generation, transmission,
distribution and sale of electric energy in central and western North Carolina
and the western portion of South Carolina, comprising the area known as the
Piedmont Carolinas. The Natural Gas Transmission segment is involved in
interstate transportation and storage of natural gas for customers in the
Mid-Atlantic, New England, Midwest and Gulf Coast states. The Energy Services
segment is comprised of several separate business units whose pursuits include
gathering and processing of natural gas; the production of natural gas liquids;
marketing of natural gas, electricity and liquefied petroleum gases; ownership
and operation of electric power facilities and other related energy services.
Parent and Other Operations include the real estate operations of Crescent
Resources, Inc., communications services, corporate costs and intersegment
eliminations.
RESULTS OF OPERATIONS
Overview:
Earnings available for common stockholders was $157.6 million for the three
months ended June 30, 1997, or $.43 per share, compared with $226.1 million, or
$.62 per share, for the same period in 1996. The decrease was primarily due to a
decrease in sales of electricity by electric operations associated with milder
weather and non-recurring costs associated with the merger.
Earnings available for common stockholders was $458.2 million for the year to
date June 30, 1997, or $1.27 per share, compared with $508.0 million, or $1.40
per share, for the same period in 1996. The decrease was primarily due to lower
electric operations revenues and non-recurring costs associated with the merger,
partially offset by reduced electric operations operating and maintenance costs.
Operating income for the three months ended June 30, 1997 decreased to $352
million compared to $479.2 million for the same period in 1996 and decreased to
$962 million for the year to date June 30, 1997 compared to $1,054.9 million for
the same period in 1996.
12
<PAGE>
These decreases were primarily the result of lower electric operations revenues
due to milder than normal weather, and merger related costs recorded during the
period. Operating income and earnings before interest and taxes are not
materially different, and are affected by the same fluctuations for the Company
and each of its business segments. Earnings before interest and taxes by
business segment are summarized below, and the explanation of these results by
business segment are discussed thereafter. Net income for the quarter and year
to date reflect minority interests associated primarily with Mobil Corporation's
investment in the trading and marketing operations portion of the Energy
Services segment.
Earnings Before Interest and Taxes (EBIT) by Business Segment:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Three Months Ended Year To Date
June 30, June 30, June 30, June 30,
IN MILLIONS 1997 1996 1997 1996
-------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Electric Operations $ 270.6 $ 312.6 $ 616.2 $ 679.8
Natural Gas Transmission 144.7 142.5 350.7 300.5
Energy Services
Field Services 31.9 26.2 82.8 62.8
Trading and Marketing 4.2 10.4 34.3 36.0
Global Asset Development 4.5 .1 4.6 5.8
Other Energy Services 5.9 5.2 4.7 3.6
--------- ---------- --------- ---------
Total Energy Services 46.5 41.9 126.4 108.2
Parent and Other Operations
Crescent Resources 15.7 17.4 37.9 35.2
Parent and Other Operations (70.5) (1.2) (79.9) (1.6)
---------- --------- -------- --------
Consolidated EBIT $ 407.0 $ 513.2 $1,051.3 $1,122.1
========== ========= ======== ========
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
Electric Operations
- ------------------------------------------ ------------------------------ -- -------------------------------
Three Months Ended Year To Date
June 30, June 30, June 30, June 30, 1996
IN MILLIONS 1997 1996 1997
-------------- --------------- -------------- ----------------
Operating Revenues $ 998.9 $1,071.8 $2,039.3 $2,185.1
Operating Expenses 754.7 786.2 1,478.8 1,560.9
--------- -------- -------- --------
Operating Income 244.2 285.6 560.5 624.2
Other Income, Net 26.4 27.0 55.7 55.6
--------- -------- -------- --------
EBIT $ 270.6 $ 312.6 $ 616.2 $ 679.8
========= ========= ========= =========
Volumes, GWh Electric Sales 18,156 18,814 36,290 38,064
- ------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
Earnings before interest and taxes for Electric Operations decreased to $270.6
million for the three months ended June 30, 1997 compared to $312.6 million for
the same period in 1996, primarily due to lower electric sales volumes. Total
kilowatt-hour sales for the quarter decreased 3.5% resulting from mild weather.
Sales to weather-sensitive customers, however, were down substantially more than
the total decrease, with sales to residential and general service customers down
12.4% and 2.6%, respectively. Industrial kilowatt-hour sales increased 2.3%,
with textile sales up 2.2%.
Earnings before interest and taxes for Electric Operations was $616.2 million
for the year to date June 30, 1997 compared to $679.8 million for the same
period in 1996, due primarily to milder winter and spring weather. Lower
kilowatt-hour sales were driven by decreased sales to residential and general
service customers of 12.4% and 2.9%, respectively. The decrease in electric
revenues was partially offset by reduced operating and maintenance costs.
Natural Gas Transmission
<TABLE>
<CAPTION>
- ------------------------------------------ ------------------------------ -- -------------------------------
Three Months Ended Year To Date
June 30, June 30, June 30, June 30,
IN MILLIONS 1997 1996 1997 1996
-------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
Operating Revenues $ 371.3 $ 368.5 $ 809.2 $ 785.7
Operating Expenses 233.5 229.5 475.5 490.2
--------- --------- --------- ---------
Operating Income 137.8 139.0 333.7 295.5
Other Income, Net 6.9 3.5 17.0 5.0
--------- --------- --------- ---------
EBIT $ 144.7 $ 142.5 $ 350.7 $ 300.5
========= ========= ========= =========
Volumes, TBtu Throughput 644 631 1,486 1,556
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Earnings before interest and taxes for Natural Gas Transmission and revenues
increased slightly for the three months ended June 30, 1997 compared to the same
period in 1996 due primarily to market-expansion projects.
Earnings before interest and taxes for Natural Gas Transmission increased $50.2
million for the year to date June 30, 1997 compared to the same period in 1996
primarily due to reversals of provisions of $32.7 million in 1997 resulting from
rate case resolutions and due to market expansion projects. The provision
reversals are reflected as additional revenue and other income.
Energy Services
The Energy Services segment is comprised of several separate business units.
Field Services gathers and processes natural gas and produces natural gas
liquids. The Trading and Marketing operations focus on marketing of natural gas,
electricity and liquefied petroleum gases. Other Energy Services operations
include ownership and operation of electric power facilities, engineering
consulting, construction and other energy related services.
14
<PAGE>
Earnings before interest and taxes for Energy Services increased $4.6 million
for the three months ended June 30, 1997 compared to the same period in 1996
primarily due to increased amounts of natural gas gathered and processed.
Earnings before interest and taxes increased $18.2 million for the year to date
June 30, 1997 compared to the same period in 1996, also due primarily to Field
Services operations.
Field Services
<TABLE>
<CAPTION>
- ------------------------------------------ ------------------------------ -- -------------------------------
Three Months Ended Year To Date
June 30, June 30, June 30, June 30, 1996
IN MILLIONS 1997 1996 1997
-------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
Operating Revenues $ 697.9 $ 592.9 $1,470.1 $1,095.9
Operating Expenses 666.1 566.7 1,387.5 1,035.2
--------- --------- -------- --------
Operating Income 31.8 26.2 82.6 60.7
Other Income, Net .1 - .2 2.1
--------- --------- -------- --------
EBIT $ 31.9 $ 26.2 $ 82.8 $ 62.8
========== ========== ========== ==========
Volumes TBtu/day Natural Gas
Gathered/Processed 3.4 2.5 3.4 2.5
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Earnings before interest and taxes for Field Services increased $5.7 million for
the three months ended June 30, 1997 compared to the same period in 1996 due to
higher volumes resulting primarily from acquisitions, offset partially by lower
natural gas liquids prices. Year to date earnings before interest and taxes
increased $20 million compared to the same period in 1996. Both operating
revenues and operating expenses increased as a result of increased gathering and
processing volumes related to acquisitions and expansion projects.
Trading and Marketing
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Three Months Ended Year To Date
June 30, June 30, June 30, June 30, 1996
IN MILLIONS 1997 1996 1997
-------------- --------------- -------------- ----------------
<S> <C> <C> <C> <C>
Operating Revenues $1,072.5 $ 555.2 $2,702.0 $1,449.0
Operating Expenses 1,068.4 545.1 2,668.3 1,413.5
-------- --------- -------- --------
Operating Income 4.1 10.1 33.7 35.5
Other Income, Net .1 .3 .6 .5
----------- ----------- ----------- -------------
EBIT $ 4.2 $ 10.4 $ 34.3 $ 36.0
=========== ========== ========== ==========
Volumes:
Natural Gas Marketed, TBtu/day 5.5 3.7 6.1 3.9
Electricity Marketed, GWh 5,560 526 9,353 697
- ------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
Earnings before interest and taxes for Trading and Marketing decreased $6.2
million for the three months ended June 30, 1997 compared with the same period
in 1996. Lower margins were partially offset by higher natural gas and
electricity volumes. Natural gas and electricity volumes marketed increased
primarily as a result of the formation of the joint venture with Mobil
Corporation in the third quarter of 1996.
Earnings before interest and taxes for Trading and Marketing decreased $1.7
million for the year to date ended June 30, 1997 compared with the same period
in 1996. Lower margins were partially offset by higher volumes. Natural gas and
electricity volumes marketed increased primarily as a result of the formation of
the joint venture with Mobil Corporation in the third quarter of 1996.
Other Operations
Results for the three months ended and year to date June 30, 1997 reflect merger
costs of $70.4 million and $71.2 million, respectively. Merger costs consist
primarily of advisory fees and workforce reduction costs.
LIQUIDITY AND CAPITAL RESOURCES
Operating Cash Flow
Operating cash flows decreased $98.9 million comparing the year to date June 30,
1997 with the year to date June 30, 1996. This decrease primarily reflects the
cash impact of lower electric revenues.
Investing Cash Flow
Capital and investment expenditures totaled $632.2 million for year to date June
30, 1997, compared with $546.8 million for the same period in 1996. Increased
capital and investment expenditures during the period were primarily due to
business expansion for the Natural Gas Transmission and Energy Services segments
and real estate construction costs, offset by a decrease in ElectricOperations
construction expenditures.
During 1997, the Company sold its ownership in trading and marketing operations
in the United Kingdom and its equity interests in certain affiliates. Proceeds
from these sales were $85 million.
The Company participated in marketing electric power and natural gas through its
50% ownership interest in Duke/Louis Dreyfus. On June 17, 1997, the Company
acquired the remaining 50% ownership interest in Duke/Louis Dreyfus from
affiliates of Louis Dreyfus Corp. in exchange for two notes totaling $247
million due August 15, 1997. The purchase price substantially represents
goodwill and intangibles, which will be amortized over 10 years.
16
<PAGE>
Financing Cash Flow
The Company's consolidated capital structure at June 30, 1997, including
short-term debt, was 44.5% debt, 4.6% preferred stock and 50.9% common equity.
Fixed charges coverage for the year to date June 30, 1997, using the SEC method,
was 4.1 times compared to 4.2 times year to date June 30, 1996.
Subsequent to the merger, several rating agencies revised their ratings for the
Company and its subsidiaries, PanEnergy Corp, Panhandle Eastern Pipe Line
Company (PEPL) and Texas Eastern Transmission Company (TETCO). A summary of the
corporate debt ratings for each entity follows. Management is of the opinion
that these changes will not impact the ability of the Company to obtain capital
in the marketplace upon favorable terms.
<TABLE>
<CAPTION>
STANDARD & POOR'S FITCH DUFF & PHELPS MOODY'S
CURRENT PRIOR CURRENT PRIOR CURRENT PRIOR CURRENT PRIOR
<S> <C> <C> <C> <C> <C> <C> <C>
DUKE ENERGY
CORPORATION A+ AA- AA- AA AA AA Aa3 Aa2
PANENERGY CORP A- BBB A BBB BBB+ BBB A3 Baa2
PEPL A BBB+ A+ BBB+ BBB+ BBB+ A2 Baa1
TETCO A BBB+ A+ BBB+ BBB+ BBB+ A2 Baa1
</TABLE>
The Company increased its available commercial paper facilities to $1,180
million at June 30, 1997 from $780 million at December 31, 1996. The commercial
paper facilities are supported by various bank credit agreements. Total bank
credit facilities at June 30, 1997 were $1,536 million. At June 30, 1997, $702
million of commercial paper and $135.8 million under the bank credit facilities
were outstanding. The Company is currently evaluating the expansion of
its commercial paper and bank credit facilities.
Dividends and debt repayments, along with operating and
investing requirements, are expected to be funded by cash from operations, debt
and commercial paper issuances and/or available credit facilities. The Company
is seeking to significantly grow its Energy Services businesses, which will
likely require additional financing to be issued by subsidiaries of the Company.
OTHER
Electric Operations Retail Competition
Competition for retail electric customers is not generally allowed in the
Company's service territory. However, there are discussions and events at the
national level and within certain states regarding retail competition which
could result in changes in the industry. Such changes,
17
<PAGE>
should they occur, could impact all entities owning electric generating assets .
During 1997, both North and South Carolina have taken steps to address retail
competition among electric utilities.
In May 1997, North Carolina passed a bill which creates a study commission to
assess deregulation of electric utilities in the state. The commission's report
to the state General Assembly is expected to be completed by early 1999. Members
of the study commission include legislators, utility representatives, customers
and a member of an environmental group.
South Carolina has considered several proposals during 1997 to restructure the
electric industry, the most significant of which would have provided retail
customers with a choice of suppliers by January 1, 1998. None of these proposals
have been approved. However, in May 1997, The South Carolina Public Service
Commission (SCPSC ), requested interested parties to file restructuring
proposals for the electric industry. On June 30, 1997 the Company filed its
proposal for introducing electric competition in South Carolina with the SCPSC.
The Company's plan proposes that electric generation be deregulated while
transmission and distribution continue to be regulated by the FERC and the
SCPSC. The Company's plan also provides for recovery of stranded investment. The
SCPSC will hold hearings on August 19, 1997 on the various restructuring
proposals it has received.
Currently, the electric utility industry is predominantly regulated on a basis
designed to recover the cost of providing electric power to its customers. If
cost-based regulation were to be discontinued in the industry, for any reason,
including competitive pressure on the cost-based prices of electricity, profits
could be reduced and electric utilities might be required to reduce their asset
balances to reflect a market basis less than cost. Discontinuance of cost-based
regulation would also require affected utilities to write off their associated
regulatory assets. The regulatory assets of the Company are indicated on the
Consolidated Balance Sheets. Management cannot predict the potential impact, if
any, of these competitive forces on the Company's future financial position and
results of operations. However, the Company continues to position itself to
effectively meet these challenges by maintaining electric prices that are
locally, regionally and nationally competitive.
Computer Software Changes For The Year 2000
The Company expects to incur development costs to modify existing computer
programs to accommodate the year 2000 and beyond. The Company is currently
evaluating its alternatives for the most cost-effective means for these
modifications. Management is of the opinion that the costs associated with these
modifications will not have a material adverse effect on the result of
operations or financial position of the Company.
Environmental Matters, Litigation and Contingencies
For information concerning environmental matters, litigation and other
contingencies, see Note 4 to the Consolidated Financial Statements.
18
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Duke Power Annual Meeting of Shareholders on April 24, 1997, the
shareholders voted to approve the issuance by Duke Power of its Common Stock
pursuant to the terms of the merger agreement with PanEnergy, to increase the
number of authorized shares of common stock from 300 million to 500
million and to change the name of Duke Power to Duke Energy Corporation.
146,795,932 shares were voted for the proposal and 1,784,873 shares were voted
against it. There were 1,431,101 abstentions and 19,874,505 broker non-votes.
In addition, the shareholders elected Robert J. Brown, George Dean Johnson,
Jr., James G. Martin, and Richard B. Priory as Class III directors to serve
until the Annual Meeting of Shareholders to be held in 2000, or until their
successors are elected and qualified. The shareholders also voted to ratify
the selection of Deloitte & Touche LLP to act as independent auditors to make
an examination of the Company's accounts for the year 1997.
ITEM 5. OTHER INFORMATIONForward-looking Statements--------------------------
From time to time, the Company may make statements regarding its expectations,
intent or beliefs about future events. These statements are intended as
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995. The Company cautions that assumptions, projections and expectations
about future events may and often do vary from actual results, the differences
between assumptions, projections and expectations and actual results can be
material, and there can be no assurance that the forward-looking statements
will be realized. The following are some of the factors that could cause actual
achievements and events to differ materially from those expressed or implied in
such forward-looking statements: state and federal legislative and regulatory
initiatives that increase competition, affect cost and investment recovery and
have an impact on rate structures; the speed and degree to which competition
enters the electric and natural gas industries; industrial, commercial and
residential growth in the service territory of the Company and its subsidiaries;
the weather and other natural phenomena; the timing and extent of changes in
commodity prices and interest rates; changes in environmental and other laws
and regulations to which the Company and its subsidiaries are subject or other
external factors over which the Company has no control; the results of
financing efforts; the effect of the Company's accounting policies; and
growth in opportunities for the Company's subsidiaries and diversified
operations, in each case during the periods covered by the forward-looking
statements.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule (included in electronic filing only)
(b) Reports on Form 8-K
The Company filed four reports on Form 8-K during the second quarter
of 1997. The Form 8-K report filed April 25, 1997 contained
disclosures under Item 5, Other Events, and Item 7, Financial
Statements and Exhibits.
The Form 8-K report filed May 30, 1997 contained disclosures under
Item 5, Other Events, and Item 7, Financial Statements and Exhibits.
The Form 8-K report filed June 18, 1997 contained disclosures under
Item 5, Other Events, and Item 7, Financial Statements and Exhibits.
The Form 8-K report filed June 27, 1997 contained disclosures under
Item 2, Acquisition or Disposition of Assets, and Item 7, Financial
Statements and Exhibits. The following unaudited pro forma combined
financial information of Duke Energy Corporation was filed as part of
Exhibit 99.1 to such report:
19
<PAGE>
Combined Statement of Income for the Three Months Ended March 31, 1997
Combined Statement of Income for the Three Months Ended March 31, 1996
Combined Statement of Income for the Year Ended December 31, 1996
Combined Statement of Income for the Year Ended December 31, 1995
Combined Statement of Income for the Year Ended December 31, 1994
Combined Balance Sheet as of March 31, 1997
Combined Balance Sheet as of December 31, 1996
Combined Balance Sheet as of December 31, 1995
Notes to Combined Financial Statements
The following unaudited financial information of PanEnergy Corp was
also filed as part of Exhibit 99.1 to such report:
Reclassifying Statement of Income for the Three Months Ended March 31, 1997
Reclassifying Statement of Income for the Three Months Ended March 31, 1996
Reclassifying Statement of Income for the Year Ended December 31, 1996
Reclassifying Statement of Income for the Year Ended December 31, 1995
Reclassifying Statement of Income for the Year Ended December 31, 1994
Reclassifying Balance Sheet as of March 31, 1997
Reclassifying Balance Sheet as of December 31, 1996
Reclassifying Balance Sheet as of December 31, 1995
20
<PAGE>
SIGNATURES
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
-----------------------------
Richard J. Osborne
Executive Vice President and
Chief Financial Officer
-----------------------------
Jeffrey L. Boyer
Vice President and Controller
August 21, 1997
21
<PAGE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statements of Income, Consolidated Statements of Cash Flows and
Consolidated Balance Sheets for the six months ended 06/30/97 and isqualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 9,461,100
<OTHER-PROPERTY-AND-INVEST> 7,875,900
<TOTAL-CURRENT-ASSETS> 2,788,200
<TOTAL-DEFERRED-CHARGES> 2,189,000
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 22,314,200
<COMMON> 4,296,900
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 3,209,300
<TOTAL-COMMON-STOCKHOLDERS-EQ> 7,506,200
229,800
450,000
<LONG-TERM-DEBT-NET> 5,643,000
<SHORT-TERM-NOTES> 420,600
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 361,900
<LONG-TERM-DEBT-CURRENT-PORT> 135,200
4,200
<CAPITAL-LEASE-OBLIGATIONS> 9,000
<LEASES-CURRENT> 1,600
<OTHER-ITEMS-CAPITAL-AND-LIAB> 7,563,300
<TOT-CAPITALIZATION-AND-LIAB> 22,314,200
<GROSS-OPERATING-REVENUE> 6,898,600
<INCOME-TAX-EXPENSE> 329,500
<OTHER-OPERATING-EXPENSES> 5,936,600
<TOTAL-OPERATING-EXPENSES> 6,266,100
<OPERATING-INCOME-LOSS> 962,000
<OTHER-INCOME-NET> 89,300
<INCOME-BEFORE-INTEREST-EXPEN> 709,500
<TOTAL-INTEREST-EXPENSE> 229,200
<NET-INCOME> 480,300
22,100
<EARNINGS-AVAILABLE-FOR-COMM> 458,200
<COMMON-STOCK-DIVIDENDS> 286,254
<TOTAL-INTEREST-ON-BONDS> 120,760
<CASH-FLOW-OPERATIONS> 875,400
<EPS-PRIMARY> 1.27
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED STATEMENTS OF INCOME FOR YEAR TO DATE 06/30/96
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENT
</LEGEND>
<RESTATED>
<CIK> 0000030371
<NAME> DUKE ENERGY CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 0
<OTHER-PROPERTY-AND-INVEST> 0
<TOTAL-CURRENT-ASSETS> 0
<TOTAL-DEFERRED-CHARGES> 0
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 0
<COMMON> 0
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 0
<TOTAL-COMMON-STOCKHOLDERS-EQ> 0
0
0
<LONG-TERM-DEBT-NET> 0
<SHORT-TERM-NOTES> 0
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 0
<LONG-TERM-DEBT-CURRENT-PORT> 0
0
<CAPITAL-LEASE-OBLIGATIONS> 0
<LEASES-CURRENT> 0
<OTHER-ITEMS-CAPITAL-AND-LIAB> 0
<TOT-CAPITALIZATION-AND-LIAB> 0
<GROSS-OPERATING-REVENUE> 5,418,400
<INCOME-TAX-EXPENSE> 340,700
<OTHER-OPERATING-EXPENSES> 4,363,500
<TOTAL-OPERATING-EXPENSES> 4,704,200
<OPERATING-INCOME-LOSS> 1,054,900
<OTHER-INCOME-NET> 67,200
<INCOME-BEFORE-INTEREST-EXPEN> 781,400
<TOTAL-INTEREST-EXPENSE> 251,200
<NET-INCOME> 530,200
22,200
<EARNINGS-AVAILABLE-FOR-COMM> 508,040
<COMMON-STOCK-DIVIDENDS> 278,894
<TOTAL-INTEREST-ON-BONDS> 121,882
<CASH-FLOW-OPERATIONS> 0
<EPS-PRIMARY> 1.40
<EPS-DILUTED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> UT
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED BALANCE SHEET AS OF 12/31/96 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENT
</LEGEND>
<RESTATED>
<CIK> 0000030371
<NAME> DUKE ENERGY CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> DEC-31-1996
<BOOK-VALUE> PER-BOOK
<TOTAL-NET-UTILITY-PLANT> 9,368,378
<OTHER-PROPERTY-AND-INVEST> 7,491,322
<TOTAL-CURRENT-ASSETS> 2,763,800
<TOTAL-DEFERRED-CHARGES> 2,331,400
<OTHER-ASSETS> 0
<TOTAL-ASSETS> 21,954,900
<COMMON> 4,289,300
<CAPITAL-SURPLUS-PAID-IN> 0
<RETAINED-EARNINGS> 3,051,900
<TOTAL-COMMON-STOCKHOLDERS-EQ> 7,341,200
234,000
450,000
<LONG-TERM-DEBT-NET> 5,485,100
<SHORT-TERM-NOTES> 265,400
<LONG-TERM-NOTES-PAYABLE> 0
<COMMERCIAL-PAPER-OBLIGATIONS> 194,300
<LONG-TERM-DEBT-CURRENT-PORT> 350,600
0
<CAPITAL-LEASE-OBLIGATIONS> 9,758
<LEASES-CURRENT> 1,507
<OTHER-ITEMS-CAPITAL-AND-LIAB> 7,634,300
<TOT-CAPITALIZATION-AND-LIAB> 21,954,900
<GROSS-OPERATING-REVENUE> 0
<INCOME-TAX-EXPENSE> 0
<OTHER-OPERATING-EXPENSES> 0
<TOTAL-OPERATING-EXPENSES> 0
<OPERATING-INCOME-LOSS> 0
<OTHER-INCOME-NET> 0
<INCOME-BEFORE-INTEREST-EXPEN> 0
<TOTAL-INTEREST-EXPENSE> 0
<NET-INCOME> 0
0
<EARNINGS-AVAILABLE-FOR-COMM> 0
<COMMON-STOCK-DIVIDENDS> 0
<TOTAL-INTEREST-ON-BONDS> 0
<CASH-FLOW-OPERATIONS> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
