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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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): June 18, 1997
DUKE ENERGY CORPORATION
(Exact name of Registrant as Specified in its Charter)
NORTH CAROLINA 1-4928 56-0205520
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
422 South Church Street
Charlotte, NC 28242-0001 28242-0001
(Address of Principal Executive Offices) (Zip code)
Registrant's telephone number, including area code: 704-594-0887
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 18, 1997, Duke Energy Corporation (the "registrant") acquired
all of the outstanding Common Stock, par value $1.00 per share, of PanEnergy
Corp, a Delaware corporation ("PanEnergy"), upon the merger of a wholly owned
subsidiary of the registrant with and into PanEnergy, with PanEnergy being the
surviving corporation (the "Merger"). As a result, PanEnergy became a wholly
owned subsidiary of the registrant. PanEnergy operates approximately 37,500
miles of natural gas pipeline with deliveries that account for approximately
12% of the natural gas consumed in the United States. PanEnergy is also the
nation's fourth largest natural gas liquids producer, the third largest
marketer of natural gas in Canada and the United States and a leading marketer
of electricity, liquefied petroleum gases and related energy services.
The transaction is being accounted for as a pooling of interests.
Under the terms of the Agreement and Plan of Merger dated as of
November 24, 1996, as amended and restated as of March 10, 1997 ("the Merger
Agreement"), each share of PanEnergy Common Stock outstanding immediately prior
to the effective time of the Merger, upon consummation of the Merger on June
18, 1997, was converted into the right to receive 1.0444 shares of the
registrant's Common Stock, without par value ("Duke Common Stock"). Such
exchange ratio was determined through arm's length negotiation between the
registrant and PanEnergy. In addition, each option to purchase PanEnergy
Common Stock outstanding at the effective time was assumed by the registrant
and became an option to purchase Duke Common Stock, appropriately adjusted.
No fractional shares will be issued in connection with the Merger. The Merger
Agreement provides that holders of certificates for PanEnergy Common Stock who
otherwise would be entitled to receive fractional shares of Duke Common Stock
will receive cash, without interest, as set forth in the Merger Agreement.
Based upon 151,544,966 shares of PanEnergy Common Stock outstanding
at the effective time of the Merger, the registrant will issue approximately
158,262,606 shares of Duke Common Stock pursuant to the Merger and pay
approximately $500,347 for the fractional shares. In addition, based upon
options to purchase a total of 3,172,867 shares of PanEnergy Common Stock
outstanding at the effective time of the Merger, the registrant assumed the
obligation to issue pursuant to exercise of options a total of approximately
3,313,344 shares of its Common Stock.
Also as a result of the consummation of the Merger, the registrant's
corporate name was changed from Duke Power Company to Duke Energy Corporation.
1
<PAGE>
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
Financial Statements:
The following documents, previously filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended,
are hereby incorporated by reference:
1. Duke Power Company's Annual Report on Form 10-K for the year ended
December 31, 1996 (File No. 1-4928)
2. Duke Power Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997 (File No. 1-4928)
3. PanEnergy Corp's Annual Report on Form 10-K for the year ended December
31, 1996 (File No. 1-8157)
4. PanEnergy Corp's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1997 (File No. 1-8157)
Unaudited Pro Forma Combined Financial Statements:
The unaudited pro forma combined financial information included as
Exhibit 99.1 combines the historical consolidated balance sheets and statements
of income of the registrant and PanEnergy, including their respective
subsidiaries, after giving effect to the Merger. The unaudited pro forma
combined balance sheets at March 31, 1997, December 31, 1996 and December 31,
1995 give effect to the Merger under the pooling of interests accounting method
as if the Merger had occurred as of December 31, 1995. The unaudited pro forma
combined statements of income for the three months ended March 31, 1997 and 1996
and for the years ended December 31, 1996, 1995 and 1994 give effect to the
Merger under the pooling of interests accounting method as if it had occurred as
of January 1, 1994. These statements are prepared on the basis of accounting for
the Merger as a pooling of interests and are based on the assumptions set forth
in the notes thereto.
The pro forma financial information included as Exhibit 99.1 has been
prepared from, and should be read in conjunction with, the historical
consolidated financial statements and related notes thereto of the registrant
and PanEnergy incorporated by reference herein. The following information is not
necessarily indicative of the financial position or operating results that would
have occurred had the Merger been completed on the date, or at the beginning of
the periods, for which the Merger is being given effect, nor is it necessarily
indicative of future operating results or financial position.
2
<PAGE>
EXHIBITS
Exhibit No. Exhibit
2 Agreement and Plan of Merger dated as of November 24,
1996, as amended and restated as of March 10, 1997, by and
among Duke Power Company, Duke Transaction Corporation and
PanEnergy Corp (Incorporated by reference to Exhibit 2(a)
to Form 8-K Current Report of Duke Power Company filed
March 20, 1997)
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of KPMG Peat Marwick LLP
99.1 Unaudited Pro Forma Combined Financial Statements
3
<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
June 27, 1997
4
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
2 Agreement and Plan of Merger dated as of November 24, 1996, as
amended and restated as of March 10, 1997, by and among Duke
Power Company, Duke Transaction Corporation and PanEnergy Corp
(Incorporated by reference to Exhibit 2(a) to Form 8-K Current
Report of Duke Power Company filed March 20, 1997)
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of KPMG Peat Marwick LLP
99.1 Unaudited Pro Forma Combined Financial Statements
The following unaudited pro forma combined financial information
of Duke Energy Corporation is set forth in this Form 8-K:
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
is set forth in this Form 8-K:
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
5
<PAGE>
EXHIBIT 23.1 - CONSENT OF DELOITTE & TOUCHE LLP
[DELOITTE & TOUCHE LLP LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Current Report on Form 8-K
of Duke Energy Corporation of our report dated February 7, 1997, appearing in
the Annual Report on Form 10-K of Duke Power Company for the year ended December
31, 1996.
/S/ DELOITTE & TOUCHE LLP
JUNE 27, 1997
6
<PAGE>
EXHIBIT 23.2 - CONSENT OF KPMG PEAT MARWICK LLP
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Current Report on Form 8-K
of Duke Energy Corporation of our report dated January 16, 1997 on the
consolidated financial statements of PanEnergy Corp as of December 31, 1996 and
1995, and for each of the years in the three year period ended December 31,
1996, appearing in the Annual Report on Form 10-K of PanEnergy Corp for the
year ended December 31, 1996.
/S/ KPMG PEAT MARWICK LLP
HOUSTON, TEXAS
JUNE 27, 1997
7
<PAGE>
DUKE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1997
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DUKE PANENERGY PRO FORMA PRO FORMA
(AS REPORTED) (RECLASSIFIED) ADJUSTMENTS COMBINED
<S> <C> <C> <C> <C>
OPERATING REVENUE
Operating revenues $ 1,133.3 $ -- $ (1,133.3) $ --
Natural gas and petroleum products
Sales from trading and marketing of natural gas -- 1,553.0 -- 1,553.0
Sales of natural gas and petroleum products -- 574.3 -- 574.3
Transportation and storage of natural gas -- 410.0 -- 410.0
Electric -- 82.5 1,024.3 1,106.8
Other -- 32.7 109.0 141.7
------------- ------------ ------------- ----------
Total operating revenues 1,133.3 2,652.5 -- 3,785.8
OPERATING EXPENSES
Natural gas purchased for trading and marketing -- 1,507.8 -- 1,507.8
Natural gas and petroleum products purchased -- 461.1 -- 461.1
Fuel used in electric generation 171.0 -- -- 171.0
Net interchange and purchased power 79.0 82.4 -- 161.4
Other operation and maintenance 359.3 214.3 -- 573.6
Depreciation and amortization 125.8 78.2 -- 204.0
Property and other taxes 67.2 29.7 -- 96.9
------------- ------------ ------------- ----------
Total operating expenses 802.3 2,373.5 -- 3,175.8
------------- ------------ ------------- ----------
OPERATING INCOME 331.0 279.0 -- 610.0
------------- ------------ ------------- ----------
OTHER INCOME AND EXPENSES
Deferred returns and allowance for funds used
during construction 28.8 0.3 (2.9) 26.2
Other, net 3.4 4.7 -- 8.1
------------- ------------ ------------- ----------
Total other income and expense 32.2 5.0 (2.9) 34.3
------------- ------------ ------------- ----------
EARNINGS BEFORE INTEREST AND TAXES 363.2 284.0 (2.9) 644.3
INTEREST EXPENSE 70.0 50.5 (2.9) 117.6
MINORITY INTEREST -- 10.5 -- 10.5
------------- ------------ ------------- ----------
EARNINGS BEFORE INCOME TAXES 293.2 223.0 -- 516.2
INCOME TAXES 117.8 86.7 -- 204.5
------------- ------------ ------------- ----------
NET INCOME $ 175.4 $ 136.3 $ -- $ 311.7
============= ============ ============= ==========
COMMON STOCK DATA
Average shares outstanding 201.6 151.3 6.7 359.6
Earnings per share $ 0.82 $ 0.90 $ 0.84
Dividends per share $ 0.53 $ 0.24 $ 0.40
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
Page 8
<PAGE>
DUKE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1996
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Duke PanEnergy Pro Forma Pro Forma
(As Reported) (Reclassified) Adjustments Combined
<S> <C> <C> <C> <C>
Operating Revenues
Operating revenues $ 1,162.1 $ -- $ (1,162.1) $ --
Natural gas and petroleum products
Sales from trading and marketing of natural gas -- 898.3 -- 898.3
Sales of natural gas and petroleum products -- 371.9 -- 371.9
Transportation and storage of natural gas -- 400.9 -- 400.9
Electric -- 1.0 1,100.4 1,101.4
Other -- 24.9 61.7 86.6
------------- ------------ ------------- ----------
Total operating revenues 1,162.1 1,697.0 -- 2,859.1
------------- ------------ ------------- ----------
Operating Expenses
Natural gas purchased for trading and marketing -- 864.6 -- 864.6
Natural gas and petroleum products purchased -- 291.1 -- 291.1
Fuel used in electric generation 176.6 -- -- 176.6
Net interchange and purchased power 109.3 0.9 -- 110.2
Other operation and maintenance 330.1 227.4 -- 557.5
Depreciation and amortization 122.7 72.1 -- 194.8
Property and other taxes 66.0 22.6 -- 88.6
------------- ------------ ------------- ----------
Total operating expenses 804.7 1,478.7 -- 2,283.4
------------- ------------ ------------- ----------
Operating Income 357.4 218.3 -- 575.7
------------- ------------ ------------- ----------
Other Income and Expenses
Deferred returns and allowance for funds used
during construction 28.9 0.4 (2.3) 27.0
Other, net 2.9 3.3 -- 6.2
------------- ------------ ------------- ----------
Total interest expense and other income 31.8 3.7 (2.3) 33.2
------------- ------------ ------------- ----------
Earnings Before Interest and Taxes 389.2 222.0 (2.3) 608.9
Interest Expense 71.4 58.3 (2.3) 127.4
------------- ------------ ------------- ----------
Earnings Before Income Taxes 317.8 163.7 -- 481.5
Income Taxes 126.5 61.9 -- 188.4
------------- ------------ ------------- ----------
Net Income $ 191.3 $ 101.8 $ -- $ 293.1
============= ============ ============= ==========
Common Stock Data
Average shares outstanding 204.9 150.5 6.7 362.1
Earnings per share $ 0.88 $ 0.68 $ 0.78
Dividends per share $ 0.51 $ 0.225 $ 0.38
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
Page 9
<PAGE>
DUKE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Duke PanEnergy Pro Forma Pro Forma
(As Reported) (Reclassified) Adjustments Combined
<S> <C> <C> <C> <C>
Operating Revenues
Operating revenues $ 4,758.0 $ -- $ (4,758.0) $ --
Natural gas and petroleum products
Sales from trading and marketing of natural gas -- 3,763.1 -- 3,763.1
Sales of natural gas and petroleum products -- 2,116.1 -- 2,116.1
Transportation and storage of natural gas -- 1,522.9 -- 1,522.9
Electric -- 77.8 4,436.6 4,514.4
Other -- 95.7 321.4 417.1
----------- ------------ ------------ -----------
Total operating revenues 4,758.0 7,575.6 -- 12,333.6
----------- ------------ ------------ -----------
Operating Expenses
Natural gas purchased for trading and marketing -- 3,665.9 -- 3,665.9
Natural gas and petroleum products purchased -- 1,779.6 -- 1,779.6
Fuel used in electric generation 758.5 -- -- 758.5
Net interchange and purchased power 378.7 78.1 -- 456.8
Other operation and maintenance 1,505.1 877.7 -- 2,382.8
Depreciation and amortization 492.2 297.2 -- 789.4
Property and other taxes 261.3 80.7 -- 342.0
----------- ------------ ------------ -----------
Total operating expenses 3,395.8 6,779.2 -- 10,175.0
----------- ------------ ------------ -----------
Operating Income 1,362.2 796.4 -- 2,158.6
----------- ------------ ------------ -----------
Other Income and Expenses
Deferred returns and allowance for funds used
during construction 111.9 1.9 (9.0) 104.8
Other, net 14.6 16.2 -- 30.8
----------- ------------ ------------ -----------
Total other income and expense 126.5 18.1 (9.0) 135.6
----------- ------------ ------------ -----------
Earnings Before Interest and Taxes 1,488.7 814.5 (9.0) 2,294.2
Interest Expense 283.1 225.1 (9.0) 499.2
Minority Interest -- 6.2 -- 6.2
----------- ------------ ------------ -----------
Earnings Before Income Taxes 1,205.6 583.2 -- 1,788.8
Income Taxes 475.7 222.1 -- 697.8
----------- ------------ ------------ -----------
Income Before Extraordinary Item $ 729.9 $ 361.1 $ -- $ 1,091.0
=========== ============ ============ ===========
Common Stock Data
Average shares outstanding 203.6 150.9 6.7 361.2
Earnings per share before extraordinary item $ 3.37 $ 2.39 $ 2.90
Dividends per share $ 2.08 $ 0.945 $ 1.57
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
Page 10
<PAGE>
DUKE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Duke PanEnergy Pro Forma Pro Forma
(As Reported) (Reclassified) Adjustments Combined
<S> <C> <C> <C> <C>
Operating Revenues
Operating revenues $ 4,676.6 $ -- $ (4,676.6) $ --
Natural gas and petroleum products
Sales from trading and marketing of natural gas -- 1,865.4 -- 1,865.4
Sales of natural gas and petroleum products -- 1,531.8 -- 1,531.8
Transportation and storage of natural gas -- 1,500.6 -- 1,500.6
Electric -- 9.8 4,454.6 4,464.4
Other -- 110.5 222.0 332.5
----------- ------------- ------------- -----------
Total operating revenues 4,676.6 5,018.1 -- 9,694.7
----------- ------------- ------------- -----------
Operating Expenses
Natural gas purchased for trading and marketing -- 1,815.4 -- 1,815.4
Natural gas and petroleum products purchased -- 1,303.9 -- 1,303.9
Fuel used in electric generation 744.2 -- -- 744.2
Net interchange and purchased power 468.3 11.9 -- 480.2
Other operation and maintenance 1,403.6 805.4 -- 2,209.0
Depreciation and amortization 458.1 279.0 -- 737.1
Property and other taxes 253.4 83.2 -- 336.6
----------- ------------- ------------- -----------
Total operating expenses 3,327.6 4,298.8 -- 7,626.4
----------- ------------- ------------- -----------
Operating Income 1,349.0 719.3 -- 2,068.3
----------- ------------- ------------- -----------
Other Income and Expenses
Deferred returns and allowance for funds used
during construction 125.0 3.7 (14.8) 113.9
Other, net (3.8) 12.1 -- 8.3
----------- ------------- ------------- -----------
Total other income and expense 121.2 15.8 (14.8) 122.2
----------- ------------- ------------- -----------
Earnings Before Interest and Taxes 1,470.2 735.1 (14.8) 2,190.5
Interest Expense 289.3 233.7 (14.8) 508.2
----------- ------------- ------------- -----------
Earnings Before Income Taxes 1,180.9 501.4 -- 1,682.3
Income Taxes 466.4 197.8 -- 664.2
----------- ------------- ------------- -----------
Net Income $ 714.5 $ 303.6 $ -- $ 1,018.1
=========== ============= ============ ===========
Common Stock Data
Average shares outstanding 204.9 149.7 6.6 361.2
Earnings per share $ 3.25 $ 2.03 $ 2.68
Dividends per share $ 2.00 $ 0.885 $ 1.50
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
Page 11
<PAGE>
DUKE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
(In millions, except per share amounts)
<TABLE>
<CAPTION>
Duke PanEnergy Pro Forma Pro Forma
(As Reported) (Reclassified) Adjustments Combined
<S> <C> <C> <C> <C>
Operating Revenues
Operating revenues $ 4,489.0 $ -- $ (4,489.0) $ --
Natural gas and petroleum products
Sales from trading and marketing of natural gas -- 1,635.9 -- 1,635.9
Sales of natural gas and petroleum products -- 1,408.1 -- 1,408.1
Transportation and storage of natural gas -- 1,432.8 -- 1,432.8
Electric -- -- 4,312.4 4,312.4
Other -- 149.2 176.6 325.8
----------- ---------- ---------- ----------
Total operating revenues 4,489.0 4,626.0 -- 9,115.0
----------- ---------- ---------- ----------
Operating Expenses
Natural gas purchased for trading and marketing -- 1,606.4 -- 1,606.4
Natural gas and petroleum products purchased -- 1,223.0 -- 1,223.0
Fuel used in electric generation 705.0 -- -- 705.0
Net interchange and purchased power 553.4 -- -- 553.4
Other operation and maintenance 1,341.7 829.4 -- 2,171.1
Depreciation and amortization 459.8 257.0 -- 716.8
Property and other taxes 249.3 84.0 -- 333.3
----------- ---------- ---------- ----------
Total operating expenses 3,309.2 3,999.8 -- 7,309.0
----------- ---------- ---------- ----------
Operating Income 1,179.8 626.2 -- 1,806.0
----------- ---------- ---------- ----------
Other Income and Expenses
Deferred returns and allowance for funds used
during construction 111.9 9.4 (14.3) 107.0
Other, net 14.4 (20.4) -- (6.0)
----------- ---------- ---------- ----------
Total other income and expense 126.3 (11.0) (14.3) 101.0
----------- ---------- ---------- ----------
Earnings Before Interest and Taxes 1,306.1 615.2 (14.3) 1,907.0
Interest Expense 270.2 228.6 (14.3) 484.5
----------- ---------- ---------- ----------
Earnings Before Income Taxes 1,035.9 386.6 -- 1,422.5
Income Taxes 397.0 161.4 -- 558.4
----------- ---------- ---------- ----------
Net Income $ 638.9 $ 225.2 $ -- $ 864.1
=========== =========== =========== ==========
Common Stock Data
Average shares outstanding 204.9 148.7 6.6 360.2
Earnings per share $ 2.88 $ 1.51 $ 2.26
Dividends per share $ 1.92 $ 0.84 $ 1.44
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
Page 12
<PAGE>
DUKE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
March 31, 1997
(In millions)
<TABLE>
<CAPTION>
Duke PanEnergy Pro Forma Pro Forma
(As Reported) (Reclassified) Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ -- $ 25.8 $ 93.6 $ 119.4
Cash 23.1 -- (23.1) --
Short-term investments 70.5 -- (70.5) --
Receivables 673.4 928.4 -- 1,601.8
Inventory 321.3 103.3 -- 424.6
Current portion of natural gas pipeline transition costs -- 67.0 -- 67.0
Current portion of purchased capacity costs -- -- 65.2 65.2
Other 28.1 298.5 -- 326.6
------------ ------------ ------------- -----------
Total current assets 1,116.4 1,423.0 65.2 2,604.6
------------ ------------ ------------- -----------
Investments and Other Assets
Investments in affiliates 182.7 340.7 -- 523.4
Other investments 117.4 -- (117.4) --
Nuclear decommissioning trust funds 381.5 -- -- 381.5
Pre-funded pension costs 80.0 286.4 -- 366.4
Goodwill, net -- 189.1 30.1 219.2
Other -- 56.9 87.3 144.2
------------ ------------ ------------- -----------
Total investments and other assets 761.6 873.1 -- 1,634.7
------------ ------------ ------------- -----------
Property, Plant and Equipment
Electric plant in service 14,291.3 (14,291.3) --
Original cost -- 8,867.7 15,799.8 24,667.5
Less accumulated depreciation and amortization 5,524.9 3,436.3 419.5 9,380.7
Nuclear fuel 632.1 -- (632.1) --
Less accumulated amortization 386.7 -- (386.7) --
Construction work in progress 377.2 -- (377.2) --
Other property - at cost (less accumulated depreciation) 466.4 -- (466.4) --
------------ ------------ ------------- -----------
Net property, plant and equipment 9,855.4 5,431.4 -- 15,286.8
------------ ------------ ------------- -----------
Regulatory Assets
Purchased capacity costs 877.9 -- (65.2) 812.7
Debt expense 167.1 72.0 -- 239.1
Regulatory asset related to income taxes 488.6 11.0 -- 499.6
Regulatory assets related to DOE assessment fee 94.7 -- (94.7) --
Natural gas pipeline transition costs -- 235.2 -- 235.2
Environmental clean-up costs -- 115.2 -- 115.2
Other 113.5 116.0 94.7 324.2
------------ ------------ ------------- -----------
Total regulatory assets 1,741.8 549.4 (65.2) 2,226.0
------------ ------------ ------------- -----------
Total Assets $ 13,475.2 $ 8,276.9 $ -- $ 21,752.1
============ ============ ============= ===========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
Page 13
<PAGE>
DUKE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
March 31, 1997
(In millions)
<TABLE>
<CAPTION>
Duke PanEnergy Pro Forma Pro Forma
(As Reported) (Reclassified) Adjustments Combined
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 176.7 $ 700.1 $ -- $ 876.8
Notes payable 54.5 -- (54.5) --
Notes payable and commercial paper -- 275.3 54.5 329.8
Taxes accrued 128.9 114.6 -- 243.5
Interest accrued 44.5 52.4 -- 96.9
Current portion of natural gas transition liabilities -- 115.4 -- 115.4
Current portion of environmental clean-up liabilities -- 27.8 -- 27.8
Current maturities of long-term debt and preferred stock 193.3 23.8 -- 217.1
Other 128.9 562.0 -- 690.9
------------ ---------- ---------- -----------
Total current liabilities 726.8 1,871.4 -- 2,598.2
------------ ---------- ---------- -----------
Long-term Debt 3,588.2 1,947.4 -- 5,535.6
------------ ---------- ---------- -----------
Accumulated Deferred Income Taxes 2,382.1 -- (2,382.1) --
------------ ---------- ---------- -----------
Deferred Credits and Other Liabilities
Deferred income taxes -- 1,235.1 2,382.1 3,617.2
Investment tax credit 247.3 -- -- 247.3
DOE assessment fee 94.7 -- (94.7) --
Nuclear decommissioning costs externally funded 381.6 -- -- 381.6
Natural gas transition liabilities -- 66.6 -- 66.6
Environmental clean-up liabilities -- 185.6 -- 185.6
Other 425.1 356.5 93.5 875.1
------------ ---------- ---------- -----------
Total deferred credits and other liabilities 1,148.7 1,843.8 2,380.9 5,373.4
------------ ---------- ---------- -----------
Minority Interests -- 57.4 1.2 58.6
------------ ---------- ---------- -----------
Preferred and Preference Stock
Preferred & preference stock with sinking fund requirements 234.0 -- -- 234.0
Preferred & preference stock without sinking fund requirements 450.0 -- -- 450.0
------------ ---------- ---------- -----------
Total preferred and preference stock 684.0 -- -- 684.0
------------ ---------- ---------- -----------
Common Stockholders' Equity
Common stock 1,896.1 2,397.9 -- 4,294.0
Retained earnings 3,049.3 159.0 -- 3,208.3
------------ ---------- ---------- -----------
Total common stockholders' equity 4,945.4 2,556.9 -- 7,502.3
------------ ---------- ---------- -----------
Total Liabilities and Stockholders' Equity $ 13,475.2 $ 8,276.9 $ -- $ 21,752.1
============ ========== ========== ===========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
Page 14
<PAGE>
DUKE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
December 31, 1996
(In millions)
<TABLE>
<CAPTION>
Duke PanEnergy Pro Forma Pro Forma
(As Reported) (Reclassified) Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ -- $ 57.2 $ 108.8 $ 166.0
Cash 36.1 -- (36.1) --
Short-term investments 72.7 -- (72.7) --
Receivables 710.0 1,178.0 -- 1,888.0
Inventory 301.4 132.1 -- 433.5
Current portion of natural gas pipeline transition costs -- 67.9 -- 67.9
Current portion of purchased capacity costs -- -- 51.3 51.3
Other 23.9 133.2 -- 157.1
----------- ----------- ------------ -----------
Total current assets 1,144.1 1,568.4 51.3 2,763.8
----------- ----------- ------------ -----------
Investments and Other Assets
Investments in affiliates 189.0 313.9 -- 502.9
Other investments 114.7 -- (114.7) --
Nuclear decommissioning trust funds 362.6 -- -- 362.6
Pre-funded pension costs 80.0 280.6 -- 360.6
Goodwill, net -- 191.4 30.7 222.1
Other -- 58.4 84.0 142.4
----------- ----------- ------------ -----------
Total investments and other assets 746.3 844.3 -- 1,590.6
----------- ----------- ------------ -----------
Property, Plant and Equipment
Electric plant in service 14,194.4 (14,194.4) --
Original cost -- 8,822.5 15,645.7 24,468.2
Less accumulated depreciation and amortization 5,438.5 3,365.8 394.8 9,199.1
Nuclear fuel 604.8 -- (604.8) --
Less accumulated amortization 363.3 -- (363.3) --
Construction work in progress 389.0 -- (389.0) --
Other property - at cost (less accumulated depreciation) 426.0 -- (426.0) --
----------- ----------- ------------ -----------
Net property, plant and equipment 9,812.4 5,456.7 -- 15,269.1
----------- ----------- ------------ -----------
Regulatory Assets
Purchased capacity costs 892.0 -- (51.3) 840.7
Debt expense 169.8 74.2 -- 244.0
Regulatory asset related to income taxes 489.0 4.5 -- 493.5
Regulatory assets related to DOE assessment fee 94.7 -- (94.7) --
Natural gas pipeline transition costs -- 250.0 -- 250.0
Environmental clean-up costs -- 153.2 -- 153.2
Other 121.4 133.9 94.7 350.0
----------- ----------- ------------ -----------
Total regulatory assets 1,766.9 615.8 (51.3) 2,331.4
----------- ----------- ------------ -----------
Total Assets $ 13,469.7 $ 8,485.2 $ -- $ 21,954.9
=========== =========== ============ ===========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
Page 15
<PAGE>
DUKE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
December 31, 1996
(In millions)
<TABLE>
<CAPTION>
Duke PanEnergy Pro Forma Pro Forma
(As Reported) (Reclassified) Adjustments Combined
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 327.3 $ 959.2 $ -- $ 1,286.5
Notes payable 105.6 -- (105.6) --
Notes payable and commercial paper -- 354.1 105.6 459.7
Taxes accrued 1.0 73.8 -- 74.8
Interest accrued 64.6 59.7 -- 124.3
Current portion of natural gas transition liabilities -- 84.4 -- 84.4
Current portion of environmental clean-up liabilities -- 32.4 -- 32.4
Current maturities of long-term debt 212.3 138.3 -- 350.6
Other 152.2 356.1 -- 508.3
----------- ---------- ----------- -----------
Total current liabilities 863.0 2,058.0 -- 2,921.0
----------- ---------- ----------- -----------
Long-term Debt 3,538.1 1,947.0 -- 5,485.1
----------- ---------- ----------- -----------
Accumulated Deferred Income Taxes 2,376.0 -- (2,376.0) --
----------- ---------- ----------- -----------
Deferred Credits and Other Liabilities
Deferred income taxes -- 1,192.5 2,376.0 3,568.5
Investment tax credit 250.1 -- -- 250.1
DOE assessment fee 94.7 -- (94.7) --
Nuclear decommissioning costs externally funded 362.6 -- -- 362.6
Natural gas transition liabilities -- 121.9 -- 121.9
Environmental clean-up liabilities -- 188.9 -- 188.9
Other 412.5 442.1 93.6 948.2
----------- ---------- ----------- -----------
Total deferred credits and other liabilities 1,119.9 1,945.4 2,374.9 5,440.2
----------- ---------- ----------- -----------
Minority Interests -- 82.3 1.1 83.4
----------- ---------- ----------- -----------
Preferred and Preference Stock
Preferred & preference stock with sinking fund requirements 234.0 -- -- 234.0
Preferred & preference stock without sinking fund requirements 450.0 -- -- 450.0
----------- ---------- ----------- -----------
Total preferred and preference stock 684.0 -- -- 684.0
----------- ---------- ----------- -----------
Common Stockholders' Equity
Common stock 1,896.1 2,393.2 -- 4,289.3
Retained earnings 2,992.6 59.3 -- 3,051.9
----------- ---------- ----------- -----------
Total common stockholders' equity 4,888.7 2,452.5 -- 7,341.2
----------- ---------- ----------- -----------
Total Liabilities and Stockholders' Equity $ 13,469.7 $ 8,485.2 $ -- $ 21,954.9
=========== ========== =========== ===========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
Page 16
<PAGE>
DUKE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
December 31, 1995
(In millions)
<TABLE>
<CAPTION>
Duke PanEnergy Pro Forma Pro Forma
(As Reported) (Reclassified) Adjustments Combined
<S> <C> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ -- $ 50.8 $ 121.7 $ 172.5
Cash 45.4 -- (45.4) --
Short-term investments 76.3 -- (76.3) --
Receivables 689.7 505.1 -- 1,194.8
Inventory 341.8 135.8 -- 477.6
Current portion of natural gas pipeline transition costs -- 70.0 -- 70.0
Current portion of purchased capacity costs -- -- 73.5 73.5
Other 22.9 148.5 -- 171.4
----------- ----------- ------------ -----------
Total current assets 1,176.1 910.2 73.5 2,159.8
----------- ----------- ------------ -----------
Investments and Other Assets
Investments in affiliates 163.3 164.3 -- 327.6
Other investments 85.2 -- (85.2) --
Nuclear decommissioning trust funds 273.5 -- -- 273.5
Pre-funded pension costs 80.0 259.3 -- 339.3
Goodwill, net -- 239.7 7.8 247.5
Other -- 65.8 77.4 143.2
----------- ----------- ------------ -----------
Total investments and other assets 602.0 729.1 -- 1,331.1
----------- ----------- ------------ -----------
Property, Plant and Equipment
Electric plant in service 13,822.3 (13,822.3) --
Original cost -- 8,400.7 15,321.3 23,722.0
Less accumulated depreciation and amortization 5,122.2 3,250.9 483.9 8,857.0
Nuclear fuel 731.7 -- (731.7) --
Less accumulated amortization 453.9 -- (453.9) --
Construction work in progress 382.6 -- (382.6) --
Other property - at cost (less accumulated depreciation) 354.7 -- (354.7) --
----------- ----------- ------------ -----------
Net property, plant and equipment 9,715.2 5,149.8 -- 14,865.0
----------- ----------- ------------ -----------
Regulatory Assets
Purchased capacity costs 965.5 -- (73.5) 892.0
Debt expense 180.9 67.4 -- 248.3
Regulatory asset related to income taxes 490.7 0.9 -- 491.6
Regulatory assets related to DOE assessment fee 101.3 -- (101.3) --
Natural gas pipeline transition costs -- 310.0 -- 310.0
Environmental clean-up costs -- 197.9 -- 197.9
Other 126.8 144.1 101.3 372.2
----------- ----------- ------------ -----------
Total regulatory assets 1,865.2 720.3 (73.5) 2,512.0
----------- ----------- ------------ -----------
Total Assets $ 13,358.5 $ 7,509.4 $ -- $ 20,867.9
=========== =========== ============ ===========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
Page 17
<PAGE>
DUKE ENERGY CORPORATION
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
December 31, 1995
(In millions)
<TABLE>
<CAPTION>
Duke PanEnergy Pro Forma Pro Forma
(As Reported) (Reclassified) Adjustments Combined
<S> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 343.7 $ 391.2 $ -- $ 734.9
Notes payable 155.3 -- (155.3) --
Notes payable and commercial paper -- 145.0 155.3 300.3
Taxes accrued 34.9 65.0 -- 99.9
Interest accrued 73.7 69.1 -- 142.8
Current portion of natural gas transition liabilities -- 125.0 -- 125.0
Current portion of environmental clean-up liabilities -- 56.3 -- 56.3
Current maturities of long-term debt and preferred stock 12.1 179.6 -- 191.7
Other 149.5 292.2 -- 441.7
----------- ---------- ---------- -----------
Total current liabilities 769.2 1,323.4 -- 2,092.6
----------- ---------- ---------- -----------
Long-term Debt 3,711.4 2,091.6 -- 5,803.0
----------- ---------- ---------- -----------
Accumulated Deferred Income Taxes 2,382.2 -- (2,382.2) --
----------- ---------- ---------- -----------
Deferred Credits and Other Liabilities
Deferred income taxes -- 1,102.1 2,382.2 3,484.3
Investment tax credit 261.3 -- -- 261.3
DOE assessment fee 101.3 -- (101.3) --
Nuclear decommissioning costs externally funded 273.5 -- -- 273.5
Natural gas transition liabilities -- 165.0 -- 165.0
Environmental clean-up liabilities -- 225.8 -- 225.8
Other 390.4 374.2 100.1 864.7
----------- ---------- ---------- -----------
Total deferred credits and other liabilities 1,026.5 1,867.1 2,381.0 5,274.6
----------- ---------- ---------- -----------
Minority Interests -- -- 1.2 1.2
----------- ---------- ---------- -----------
Preferred and Preference Stock
Preferred & preference stock with sinking fund requirements 234.0 -- -- 234.0
Preferred & preference stock without sinking fund requirements 450.0 -- -- 450.0
----------- ---------- ---------- -----------
Total preferred and preference stock 684.0 -- -- 684.0
----------- ---------- ---------- -----------
Common Stockholders' Equity
Common stock 1,926.9 2,369.9 -- 4,296.8
Retained earnings (deficit) 2,858.3 (142.6) -- 2,715.7
----------- ---------- ---------- -----------
Total common stockholders' equity 4,785.2 2,227.3 -- 7,012.5
----------- ---------- ---------- -----------
Total Liabilities and Stockholders' Equity $ 13,358.5 $ 7,509.4 $ -- $ 20,867.9
=========== ========== ========== ===========
</TABLE>
See Accompanying Notes to Unaudited Pro Forma Combined Financial Statements
Page 18
<PAGE>
DUKE ENERGY CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The preceding unaudited pro forma combined statements of income and balance
sheets reflect the effect of the Merger of the registrant and PanEnergy Corp as
described in Item 2 of this Form 8-K report. The preceding financial statements
were prepared on the pooling of interests basis of accounting. Certain pro forma
adjustments have been made to the statement of income and balance sheet
classifications to be consistent with the presentation expected to be used by
the registrant.
1. The Merger Agreement established a conversion ratio of 1.0444 shares of
the registrant's Common Stock for each share of PanEnergy Corp Common
Stock. The pro forma average shares were computed as the aggregate of
the average shares outstanding of the registrant and PanEnergy Corp for
the period presented, adjusted by the exchange ratio. The unaudited pro
forma combined financial statements are presented as if the companies
were combined during all periods included herein.
2. Earnings per share amounts were calculated based on the pro forma
average share figures described above and earnings for common
stockholders for the period.
3. There were no material intercompany transactions between the registrant
and PanEnergy during the periods presented.
4. The effects of accounting policy differences are immaterial and have
not been adjusted in the selected unaudited pro forma combined
financial statements presented.
5. The following unaudited reclassifying financial data reflect the
reclassifying entries necessary to adjust PanEnergy Corp's consolidated
statement of income and balance sheet classifications to be consistent
with the presentation expected to be used by the registrant.
Page 19
<PAGE>
PANENERGY CORP
UNAUDITED RECLASSIFYING STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1997
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PANENERGY PANENERGY PANENERGY
(AS REPORTED) (RECLASSES) (RECLASSIFIED)
<S> <C> <C> <C>
OPERATING REVENUES
Natural gas and petroleum products
Sales from trading and marketing of natural gas $ 1,553.0 $ 1,553.0
Sales of natural gas, petroleum products and power $ 2,209.8 (1,635.5) 574.3
Transportation and storage of natural gas 410.0 -- 410.0
Electric -- 82.5 82.5
Other 23.2 9.5 32.7
----------- ------------ -----------
Total operating revenues 2,643.0 9.5 2,652.5
----------- ------------ -----------
OPERATING EXPENSES
Natural gas purchased for trading and marketing -- 1,507.8 1,507.8
Natural gas, petroleum products and power purchased 2,051.3 (1,590.2) 461.1
Net interchange and purchased power -- 82.4 82.4
Other operation and maintenance -- 214.3 214.3
Operating and maintenance 159.7 (159.7) --
General and administrative 54.6 (54.6) --
Depreciation and amortization 78.2 -- 78.2
Miscellaneous taxes 29.7 -- 29.7
----------- ------------ -----------
Total operating expenses 2,373.5 -- 2,373.5
----------- ------------ -----------
OPERATING INCOME 269.5 9.5 279.0
----------- ------------ -----------
OTHER INCOME AND EXPENSES
Deferred returns and allowance FOR FUNDS USED
during construction -- 0.3 0.3
Equity in earnings of unconsolidated affiliates 9.5 (9.5) --
Other, net 5.0 (0.3) 4.7
----------- ------------ -----------
Total other income and expense 14.5 (9.5) 5.0
----------- ------------ -----------
EARNINGS BEFORE INTEREST AND TAXES 284.0 -- 284.0
INTEREST EXPENSE 50.5 -- 50.5
MINORITY INTEREST 10.5 -- 10.5
----------- ------------ -----------
EARNINGS BEFORE INCOME TAXES 223.0 -- 223.0
INCOME TAXES 86.7 -- 86.7
----------- ------------ -----------
NET INCOME $ 136.3 $ -- $ 136.3
=========== ============ ===========
COMMON STOCK DATA
Average shares outstanding 151.3 151.3
Earnings per share $ 0.90 $ 0.90
Dividends per share $ 0.24 $ 0.24
</TABLE>
Page 20
<PAGE>
PANENERGY CORP
UNAUDITED RECLASSIFYING STATEMENT OF INCOME
THREE MONTHS ENDED MARCH 31, 1996
(In millions, except per share amounts)
<TABLE>
<CAPTION>
PanEnergy PanEnergy PanEnergy
(As Reported) (Reclasses) (Reclassified)
<S> <C> <C> <C>
Operating Revenues
Natural gas and petroleum products
Sales from trading and marketing of natural gas $ 898.3 $ 898.3
Sales of natural gas, petroleum products and power $ 1,271.2 $ (899.3) 371.9
Transportation and storage of natural gas 400.9 -- 400.9
Electric -- 1.0 1.0
Other 19.8 5.1 24.9
------------ ----------- ----------
Total operating revenues 1,691.9 5.1 1,697.0
------------ ----------- ----------
Operating Expenses
Natural gas purchased for trading and marketing -- 864.6 864.6
Natural gas, petroleum products and power purchased 1,156.6 (865.5) 291.1
Net interchange and purchased power -- 0.9 0.9
Other operation and maintenance -- 227.4 227.4
Operating and maintenance 152.6 (152.6) --
General and administrative 74.8 (74.8) --
Depreciation and amortization 72.1 -- 72.1
Miscellaneous taxes 22.6 -- 22.6
------------ ----------- ----------
Total operating expenses 1,478.7 -- 1,478.7
------------ ----------- ----------
Operating Income 213.2 5.1 218.3
------------ ----------- ----------
Other Income and Expenses
Deferred returns and allowance for funds used
during construction -- 0.4 0.4
Equity in earnings of unconsolidated affiliates 5.1 (5.1) --
Other, net 3.7 (0.4) 3.3
------------ ----------- ----------
Total other income and expense 8.8 (5.1) 3.7
------------ ----------- ----------
Earnings Before Interest and Taxes 222.0 -- 222.0
Interest Expense 58.3 -- 58.3
------------ ----------- ----------
Earnings Before Income Taxes 163.7 -- 163.7
Income Taxes 61.9 -- 61.9
------------ ----------- ----------
Net Income $ 101.8 $ -- $ 101.8
============ =========== ==========
Common Stock Data
Average shares outstanding 150.5 150.5
Earnings per share $ 0.68 $ 0.68
Dividends per share $ 0.225 $ 0.225
</TABLE>
Page 21
<PAGE>
PANENERGY CORP
UNAUDITED RECLASSIFYING STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1996
(In millions, except per share amounts)
<TABLE>
<CAPTION>
PanEnergy PanEnergy PanEnergy
(As Reported) (Reclasses) (Reclassified)
<S> <C> <C> <C>
Operating Revenues
Natural gas and petroleum products
Sales from trading and marketing of natural gas $ 3,763.1 $ 3,763.1
Sales of natural gas, petroleum products and power $ 5,957.0 (3,840.9) 2,116.1
Transportation and storage of natural gas 1,522.9 -- 1,522.9
Electric -- 77.8 77.8
Other 56.9 38.8 95.7
------------ ------------- -----------
Total operating revenues 7,536.8 38.8 7,575.6
------------ ------------- -----------
Operating Expenses
Natural gas purchased for trading and marketing -- 3,665.9 3,665.9
Natural gas, petroleum products and power purchased 5,523.6 (3,744.0) 1,779.6
Net interchange and purchased power -- 78.1 78.1
Other operation and maintenance -- 877.7 877.7
Operating and maintenance 605.4 (605.4) --
General and administrative 272.3 (272.3) --
Depreciation and amortization 297.2 -- 297.2
Miscellaneous taxes 80.7 -- 80.7
------------ ------------- -----------
Total operating expenses 6,779.2 -- 6,779.2
------------ ------------- -----------
Operating Income 757.6 38.8 796.4
------------ ------------- -----------
Other Income and Expenses
Deferred returns and allowance for funds used
during construction -- 1.9 1.9
Equity in earnings of unconsolidated affiliates 38.8 (38.8) --
Interest and miscellaneous income 38.9 (38.9) --
Miscellaneous deductions (20.8) 20.8 --
Other, net -- 16.2 16.2
------------ ------------- -----------
Total other income and expense 56.9 (38.8) 18.1
------------ ------------- -----------
Earnings Before Interest and Taxes 814.5 -- 814.5
Interest Expense 225.1 -- 225.1
Minority Interest 6.2 -- 6.2
------------ ------------- -----------
Earnings Before Income Taxes 583.2 -- 583.2
Income Taxes 222.1 -- 222.1
------------ ------------- -----------
Income Before Extraordinary Item $ 361.1 $ -- $ 361.1
============ ============= ===========
Common Stock Data
Average shares outstanding 150.9 150.9
Earnings per share before extraordinary item $ 2.39 $ 2.39
Dividends per share $ 0.945 $ 0.945
</TABLE>
Page 22
<PAGE>
PANENERGY CORP
UNAUDITED RECLASSIFYING STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(In millions, except per share amounts)
<TABLE>
<CAPTION>
PanEnergy PanEnergy PanEnergy
(As Reported) (Reclasses) (Reclassified)
<S> <C> <C> <C>
Operating Revenues
Natural gas and petroleum products
Sales from trading and marketing of natural gas $ 1,865.4 $ 1,865.4
Sales of natural gas, petroleum products and power $ 3,407.0 (1,875.2) 1,531.8
Transportation and storage of natural gas 1,500.6 -- 1,500.6
Electric -- 9.8 9.8
Other 59.9 50.6 110.5
------------ ------------- ------------
Total operating revenues 4,967.5 50.6 5,018.1
------------ ------------- ------------
Operating Expenses
Natural gas purchased for trading and marketing -- 1,815.4 1,815.4
Natural gas, petroleum products and power purchased 3,131.2 (1,827.3) 1,303.9
Net interchange and purchased power -- 11.9 11.9
Other operation and maintenance -- 805.4 805.4
Operating and maintenance 598.4 (598.4) --
General and administrative 207.0 (207.0) --
Depreciation and amortization 279.0 -- 279.0
Miscellaneous taxes 83.2 -- 83.2
------------ ------------- ------------
Total operating expenses 4,298.8 -- 4,298.8
------------ ------------- ------------
Operating Income 668.7 50.6 719.3
------------ ------------- ------------
Other Income and Expenses
Deferred returns and allowance for funds used
during construction -- 3.7 3.7
Equity in earnings of unconsolidated affiliates 50.6 (50.6) --
Interest and miscellaneous income 36.8 (36.8) --
Miscellaneous deductions (21.0) 21.0 --
Other, net -- 12.1 12.1
------------ ------------- ------------
Total other income and expense 66.4 (50.6) 15.8
------------ ------------- ------------
Earnings Before Interest and Taxes 735.1 -- 735.1
Interest Expense 233.7 -- 233.7
------------ ------------- ------------
Earnings Before Income Taxes 501.4 -- 501.4
Income Taxes 197.8 -- 197.8
------------ ------------- ------------
Net Income $ 303.6 $ -- $ 303.6
============ ============= ===========
Common Stock Data
Average shares outstanding 149.7 149.7
Earnings per share $ 2.03 $ 2.03
Dividends per share $ 0.885 $ 0.885
</TABLE>
Page 23
<PAGE>
PANENERGY CORP
UNAUDITED RECLASSIFYING STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1994
(In millions, except per share amounts)
<TABLE>
<CAPTION>
PanEnergy PanEnergy PanEnergy
(As Reported) (Reclasses) (Reclassified)
<S> <C> <C> <C>
Operating Revenues
Natural gas and petroleum products
Sales from trading and marketing of natural gas $ 1,635.9 $ 1,635.9
Sales of natural gas and petroleum products $ 3,044.0 (1,635.9) 1,408.1
Transportation and storage of natural gas 1,432.8 -- 1,432.8
Other 108.3 40.9 149.2
----------- ------------ ------------
Total operating revenues 4,585.1 40.9 4,626.0
----------- ------------ ------------
Operating Expenses
Natural gas purchased for trading and marketing -- 1,606.4 1,606.4
Natural gas and petroleum products purchased 2,829.4 (1,606.4) 1,223.0
Other operation and maintenance -- 829.4 829.4
Operating and maintenance 570.6 (570.6) --
General and administrative 258.8 (258.8) --
Depreciation and amortization 257.0 -- 257.0
Miscellaneous taxes 84.0 -- 84.0
----------- ------------ ------------
Total operating expenses 3,999.8 -- 3,999.8
----------- ------------ ------------
Operating Income 585.3 40.9 626.2
----------- ------------ ------------
Other Income and Expenses
Deferred returns and allowance for funds used
during construction -- 9.4 9.4
Equity in earnings of unconsolidated affiliates 40.9 (40.9) --
Interest and miscellaneous income 23.0 (23.0) --
Miscellaneous deductions (34.0) 34.0 --
Other, net -- (20.4) (20.4)
----------- ------------ ------------
Total other income and expense 29.9 (40.9) (11.0)
----------- ------------ ------------
Earnings Before Interest and Taxes 615.2 -- 615.2
Interest Expense 228.6 -- 228.6
----------- ------------ ------------
Earnings Before Income Taxes 386.6 -- 386.6
Income Taxes 161.4 -- 161.4
----------- ------------ ------------
Net Income $ 225.2 $ -- $ 225.2
=========== ============ ============
Common Stock Data
Average shares outstanding 148.7 148.7
Earnings per share $ 1.51 $ 1.51
Dividends per share $ 0.84 $ 0.84
</TABLE>
Page 24
<PAGE>
PANENERGY CORP
UNAUDITED RECLASSIFYING BALANCE SHEET
March 31, 1997
(In millions)
<TABLE>
<CAPTION>
PanEnergy PanEnergy PanEnergy
(As Reported) (Reclasses) (Reclassified)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 25.8 $ -- $ 25.8
Receivables 928.4 -- 928.4
Inventory and supplies 103.3 -- 103.3
Current deferred income tax 61.6 (61.6) --
Current portion of natural gas pipeline transition costs -- 67.0 67.0
Other 382.5 (84.0) 298.5
---------- --------- ----------
Total current assets 1,501.6 (78.6) 1,423.0
---------- --------- ----------
Investments and Other Assets
Affiliates 340.7 -- 340.7
Pre-funded pension cost -- 286.4 286.4
Goodwill, net -- 189.1 189.1
Other 56.9 -- 56.9
---------- --------- ----------
Total investments and other assets 397.6 475.5 873.1
---------- --------- ----------
Property, Plant, and Equipment
Original cost 8,867.7 -- 8,867.7
Less accumulated depreciation and amortization 3,436.3 -- 3,436.3
---------- --------- ----------
Net property, plant and equipment 5,431.4 -- 5,431.4
---------- --------- ----------
Deferred Charges
Prepaid pension 286.4 (286.4) --
Goodwill, net 189.1 (189.1) --
Debt expense -- 72.0 72.0
Regulatory asset related to income taxes -- 11.0 11.0
Natural gas pipeline transition costs -- 235.2 235.2
Environmental clean-up costs -- 115.2 115.2
Other 557.1 (441.1) 116.0
---------- --------- ----------
Total deferred charges 1,032.6 (483.2) 549.4
---------- --------- ----------
Total Assets $ 8,363.2 $ (86.3) $ 8,276.9
========== ========= ==========
</TABLE>
Page 25
<PAGE>
PANENERGY CORP
UNAUDITED RECLASSIFYING BALANCE SHEET
March 31, 1997
(In millions)
<TABLE>
<CAPTION>
PanEnergy PanEnergy PanEnergy
(As Reported) (Reclasses) (Reclassified)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 700.1 $ -- $ 700.1
Notes payable and commercial paper 275.3 -- 275.3
Taxes payable 114.6 -- 114.6
Accrued interest 52.4 -- 52.4
Current portion of natural gas transition liabilities -- 115.4 115.4
Current portion of environmental clean-up liabilities -- 27.8 27.8
Long-term debt due within one year 23.8 -- 23.8
Rate refund provisions 37.8 (37.8) --
Other 667.4 (105.4) 562.0
---------- ----------- ----------
Total current liabilities 1,871.4 -- 1,871.4
---------- ----------- ----------
Long-term Debt 1,947.4 -- 1,947.4
---------- ----------- ----------
Deferred Credits and Other Liabilities
Deferred income taxes 1,296.7 (61.6) 1,235.1
Natural gas transition liabilities -- 66.6 66.6
Environmental clean-up liabilities -- 185.6 185.6
Other 633.4 (276.9) 356.5
---------- ----------- ----------
Total deferred credits and other liabilities 1,930.1 (86.3) 1,843.8
---------- ----------- ----------
Minority Interest 57.4 -- 57.4
---------- ----------- ----------
Common Stockholders' Equity
Common stock 151.5 2,246.4 2,397.9
Paid-in capital 2,246.4 (2,246.4) --
Retained earnings 159.0 -- 159.0
---------- ----------- ----------
Total common stockholders' equity 2,556.9 -- 2,556.9
---------- ----------- ----------
Total Liabilities and Stockholders' Equity $ 8,363.2 $ (86.3) $ 8,276.9
========== =========== ==========
</TABLE>
Page 26
<PAGE>
PANENERGY CORP
UNAUDITED RECLASSIFYING BALANCE SHEET
December 31, 1996
(In millions)
<TABLE>
<CAPTION>
PanEnergy PanEnergy PanEnergy
(As Reported) (Reclasses) (Reclassified)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 57.2 $ -- $ 57.2
Receivables -- 1,178.0 1,178.0
Accounts and notes receivable
Customers 1,151.3 (1,151.3) --
Other 26.7 (26.7) --
Inventory and supplies 132.1 -- 132.1
Current deferred income tax 50.4 (50.4) --
Current portion of natural gas pipeline transition costs -- 67.9 67.9
Other 217.8 (84.6) 133.2
----------- ----------- ----------
Total current assets 1,635.5 (67.1) 1,568.4
----------- ----------- ----------
Investments and Other Assets
Affiliates 313.9 -- 313.9
Pre-funded pension cost -- 280.6 280.6
Goodwill, net -- 191.4 191.4
Other 58.4 -- 58.4
----------- ----------- ----------
Total investments and other assets 372.3 472.0 844.3
----------- ----------- ----------
Property, Plant, and Equipment
Original cost 8,822.5 -- 8,822.5
Less accumulated depreciation and amortization 3,365.8 -- 3,365.8
----------- ----------- ----------
Net property, plant and equipment 5,456.7 -- 5,456.7
----------- ----------- ----------
Deferred Charges
Prepaid pension 280.6 (280.6) --
Goodwill, net 191.4 (191.4) --
Debt expense -- 74.2 74.2
Regulatory asset related to income taxes -- 4.5 4.5
Natural gas pipeline transition costs -- 250.0 250.0
Environmental clean-up costs -- 153.2 153.2
Other 631.3 (497.4) 133.9
----------- ----------- ----------
Total deferred charges 1,103.3 (487.5) 615.8
----------- ----------- ----------
Total Assets $ 8,567.8 $ (82.6) $ 8,485.2
=========== =========== ==========
</TABLE>
Page 27
<PAGE>
PANENERGY CORP
UNAUDITED RECLASSIFYING BALANCE SHEET
December 31, 1996
(In millions)
<TABLE>
<CAPTION>
PanEnergy PanEnergy PanEnergy
(As Reported) (Reclasses) (Reclassified)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 959.2 $ -- $ 959.2
Notes payable and commercial paper 354.1 -- 354.1
Taxes payable 73.8 -- 73.8
Accrued interest 59.7 -- 59.7
Current portion of natural gas transition liabilities -- 84.4 84.4
Current portion of environmental clean-up liabilities -- 32.4 32.4
Long-term debt due within one year 138.3 -- 138.3
Rate refund provisions 37.0 (37.0) --
Accrued wages and benefits 61.8 (61.8) --
Other 374.1 (18.0) 356.1
---------- ----------- ----------
Total current liabilities 2,058.0 -- 2,058.0
---------- ----------- ----------
Long-term Debt -- 1,947.0 1,947.0
Notes payable 1,320.2 (1,320.2) --
Debentures 298.8 (298.8) --
Revenue bonds 328.0 (328.0) --
---------- ----------- ----------
Total long-term debt 1,947.0 -- 1,947.0
---------- ----------- ----------
Deferred Credits and Other Liabilities
Deferred income taxes 1,242.9 (50.4) 1,192.5
Natural gas transition liabilities -- 121.9 121.9
Environmental clean-up liabilities -- 188.9 188.9
Other 785.1 (343.0) 442.1
---------- ----------- ----------
Total deferred credits and other liabilities 2,028.0 (82.6) 1,945.4
---------- ----------- ----------
Minority Interest 82.3 -- 82.3
---------- ----------- ----------
Common Stockholders' Equity
Common stock 151.1 2,242.1 2,393.2
Paid-in capital 2,242.1 (2,242.1) --
Retained earnings 59.3 -- 59.3
---------- ----------- ----------
Total common stockholders' equity 2,452.5 -- 2,452.5
---------- ----------- ----------
Total Liabilities and Stockholders' Equity $ 8,567.8 $ (82.6) $ 8,485.2
========== =========== ==========
</TABLE>
Page 28
<PAGE>
PANENERGY CORP
UNAUDITED RECLASSIFYING BALANCE SHEET
December 31, 1995
(In millions)
<TABLE>
<CAPTION>
PanEnergy PanEnergy PanEnergy
(As Reported) (Reclasses) (Reclassified)
<S> <C> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 50.8 $ -- $ 50.8
Receivables -- 505.1 505.1
Accounts and notes receivable
Customers 487.7 (487.7) --
Other 17.4 (17.4) --
Inventory and supplies 135.8 -- 135.8
Current deferred income tax 80.8 (80.8) --
Current portion of natural gas pipeline transition costs -- 70.0 70.0
Other 239.8 (91.3) 148.5
---------- --------- ----------
Total current assets 1,012.3 (102.1) 910.2
---------- --------- ----------
Investments and Other Assets
Affiliates 164.3 -- 164.3
Pre-funded pension cost -- 259.3 259.3
Goodwill, net -- 239.7 239.7
Other 65.8 -- 65.8
---------- --------- ----------
Total investments and other assets 230.1 499.0 729.1
---------- --------- ----------
Property, Plant, and Equipment
Original cost 8,400.7 -- 8,400.7
Less accumulated depreciation and amortization 3,250.9 -- 3,250.9
---------- --------- ----------
Net property, plant and equipment 5,149.8 -- 5,149.8
---------- --------- ----------
Deferred Charges
Prepaid pension 259.3 (259.3) --
Goodwill, net 239.7 (239.7) --
Debt expense -- 67.4 67.4
Regulatory asset related to income taxes -- 0.9 0.9
Natural gas pipeline transition costs -- 310.0 310.0
Environmental clean-up costs -- 197.9 197.9
Other 736.1 (592.0) 144.1
---------- --------- ----------
Total deferred charges 1,235.1 (514.8) 720.3
---------- --------- ----------
Total Assets $ 7,627.3 $ (117.9) $ 7,509.4
========== ========= ==========
</TABLE>
Page 29
<PAGE>
PANENERGY CORP
UNAUDITED RECLASSIFYING BALANCE SHEET
December 31, 1995
(In millions)
<TABLE>
<CAPTION>
PanEnergy PanEnergy PanEnergy
(As Reported) (Reclasses) (Reclassified)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 391.2 $ -- $ 391.2
Notes payable and commercial paper 145.0 -- 145.0
Taxes payable 65.0 -- 65.0
Accrued interest 69.1 -- 69.1
Current portion of natural gas transition liabilities -- 125.0 125.0
Current portion of environmental clean-up liabilities -- 56.3 56.3
Long-term debt due within one year 179.6 -- 179.6
Rate refund provisions 53.6 (53.6) --
Accrued wages and benefits 64.7 (64.7) --
Other 355.2 (63.0) 292.2
---------- ----------- ----------
Total current liabilities 1,323.4 -- 1,323.4
---------- ----------- ----------
Long-term Debt -- 2,091.6 2,091.6
Notes payable 1,244.2 (1,244.2) --
Debentures 519.4 (519.4) --
Revenue bonds 328.0 (328.0) --
---------- ----------- ----------
Total long-term debt 2,091.6 -- 2,091.6
---------- ----------- ----------
Deferred Credits and Other Liabilities
Deferred income taxes 1,182.9 (80.8) 1,102.1
Natural gas transition liabilities -- 165.0 165.0
Environmental clean-up liabilities -- 225.8 225.8
Other 802.1 (427.9) 374.2
---------- ----------- ----------
Total deferred credits and other liabilities 1,985.0 (117.9) 1,867.1
---------- ----------- ----------
Common Stockholders' Equity
Common stock 150.2 2,219.7 2,369.9
Paid-in capital 2,219.7 (2,219.7) --
Retained deficit (142.6) -- (142.6)
---------- ----------- ----------
Total common stockholders' equity 2,227.3 -- 2,227.3
---------- ----------- ----------
Total Liabilities and Stockholders' Equity $ 7,627.3 $ (117.9) $ 7,509.4
========== =========== ==========
</TABLE>
Page 30
<PAGE>
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