<PAGE>
Filed Pursuant to Rule 424(b)(2)
File No. 333-14209
PROSPECTUS SUPPLEMENT
(To Prospectus dated April 7, 1999) March 7, 2000
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$300,000,000
Duke Energy Corporation
Series D 7 3/8% Senior Notes due 2010
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The Series D Senior Notes will mature on March 1, 2010. Interest on the Series
D Senior Notes is payable semiannually on March 1 and September 1, beginning
September 1, 2000. The Series D Senior Notes will not be listed on any national
securities exchange. Currently, there is no public market for the Series D
Senior Notes.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus Supplement or the accompanying
Prospectus. Any representation to the contrary is a criminal offense.
<TABLE>
<CAPTION>
Public Offering Underwriting Proceeds to
Price Discounts Duke Energy
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<S> <C> <C> <C>
Per Series D Senior Note 98.258% 0.272% 97.986%
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Total $294,774,000 $816,000 $293,958,000
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</TABLE>
Interest on the Series D Senior Notes will accrue from March 10, 2000 to the
date of delivery.
The Underwriter is offering the Series D Senior Notes subject to various
conditions. The Underwriter expects to deliver the Series D Senior Notes, in
book-entry form only, to purchasers through The Depository Trust Company on or
about March 10, 2000.
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Warburg Dillon Read LLC
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<PAGE>
You should rely only on the information contained or incorporated by reference
in this Prospectus Supplement and the accompanying Prospectus. Neither we nor
the Underwriter has authorized any other person to provide you with different
information. If anyone provides you with different or inconsistent information,
you should not rely on it. If this Prospectus Supplement is inconsistent with
the accompanying Prospectus, you should rely on this Prospectus Supplement.
Neither we nor the Underwriter is making an offer to sell these securities in
any jurisdiction where the offer or sale is not permitted. You should assume
that the information in this Prospectus Supplement and the accompanying
Prospectus is accurate only as of the respective dates on the front of those
documents or earlier dates specified therein. Our business, financial
condition, results of operations and prospects may have changed since those
dates.
TABLE OF CONTENTS
Prospectus Supplement
<TABLE>
<CAPTION>
Page
----
<S> <C>
Recent Developments........................................................ S-3
Recent Financial Data...................................................... S-5
Capitalization............................................................. S-6
Description of the Series D Senior Notes................................... S-7
Underwriting............................................................... S-12
Experts.................................................................... S-13
Legal Matters.............................................................. S-13
Prospectus
About This Prospectus...................................................... 3
Where You Can Find More Information........................................ 3
Forward-Looking Statements................................................. 4
Duke Energy Corporation.................................................... 5
Use of Proceeds............................................................ 7
Description of the New Bonds............................................... 7
Description of the New Debt Securities..................................... 11
Plan of Distribution....................................................... 21
Experts.................................................................... 22
Legal Matters.............................................................. 22
</TABLE>
S-2
<PAGE>
RECENT DEVELOPMENTS
Global Asset Development
On March 7, 2000, our wholly owned subsidiary, Duke Energy North America, LLC
(DENA), announced the start of construction of three new merchant generation
projects totaling 1,500 megawatts. The cost of construction for the projects is
expected to total $678 million. The three 500-megawatt, natural gas-fired,
combined-cycle generating facilities are being built to serve growing demand
and reliability needs in the Southeast and Southcentral United States.
Construction has already commenced on the McClain Energy Facility in Newcastle,
Oklahoma and the Hinds Energy Facility in Jackson, Mississippi and will begin
soon at the Attala Energy Facility located between McAdams and Kosciusko,
Mississippi. At the same time, DENA agreed to sell its remaining effective
78.5% interest in the 500-megawatt Hidalgo Energy Facility located in Edinburg,
Texas to an affiliate of Calpine Corporation for $235 million, subject to
governmental approvals. DENA sold 21.5% of the facility's electric output in
the fourth quarter of 1999 for $59 million.
In August 1999, our wholly owned subsidiary, Duke Energy International, LLC
(Duke Energy International), agreed with Dominion Resources, Inc. (Dominion
Resources) to acquire its portfolio of hydroelectric, natural gas and diesel
power generation businesses in Argentina, Belize, Bolivia and Peru for
approximately $405 million. The businesses being purchased total approximately
1,200 megawatts of gross generation capacity. In October 1999, Duke Energy
International completed the purchase of the businesses in Belize and Peru from
Dominion Resources, and also acquired additional ownership interests in the
Peru business (Empresa de Generacion Electrica NorPeru S.A.A.) from two other
parties for $152 million in cash and certain other ownership interests in South
America. The purchase increased Duke Energy International's ownership in the
Peru business from approximately 30% to 90%. The completion of the purchases in
Argentina and Bolivia are subject to receiving appropriate governmental
consents and approvals and are expected to close by mid-2000.
Duke Energy International also entered a series of transactions in August 1999
to complete a $761 million purchase of a controlling voting interest and an
approximate 44% economic interest in Companhia de Geracao de Energia Electrica
Paranapanema (Paranapanema), an electric generating company in Brazil.
Paranapanema is Brazil's eleventh largest electric generating company,
operating 2,307 megawatts of hydroelectric generation facilities. In January
2000, Duke Energy International completed a tender offer to the minority
shareholders of Paranapanema and successfully acquired an additional 51%
economic interest in the company for approximately $280 million. This increased
Duke Energy International's economic ownership from approximately 44% to
approximately 95%.
Field Services
In December 1999, our wholly owned subsidiary, Duke Energy Field Services
L.L.C. (Field Services), and Phillips Petroleum Company (Phillips Petroleum)
agreed to combine Field Services' natural gas gathering and processing business
and Phillips Petroleum's gas gathering, processing and marketing unit to form a
new midstream gas gathering, processing, marketing and transportation
S-3
<PAGE>
company that would be owned approximately 70% by our subsidiary and
approximately 30% by Phillips Petroleum at closing. The transaction is
scheduled to close the latter part of March 2000, subject to regulatory
approval.
Natural Gas Transmission
In February 2000, our wholly owned subsidiary, Duke Energy Southeast Pipeline
Corporation, formed a joint venture with a subsidiary of The Williams Companies
Inc. to develop and build the $1.5 billion Buccaneer Pipeline. The joint
venture, which has commitments for over 50% of the project's total capacity,
will operate the 674-mile pipeline system to transport natural gas to utilities
and other-end users throughout Florida. Construction of the Buccaneer Pipeline,
which will traverse the Gulf of Mexico and come ashore on Florida's western
coast, is scheduled to begin in January 2001 and is expected to be completed as
early as April 2002. The project is subject to the approval of the Federal
Energy Regulatory Commission.
Our wholly owned subsidiary, PanEnergy Corp, agreed in December 1999 to acquire
the East Tennessee Natural Gas Company, which operates a 1,100 mile natural gas
pipeline, for approximately $386 million from El Paso Energy Corporation. East
Tennessee operates two gas systems in central Tennessee. The transaction is
scheduled to close the latter part of March 2000, subject to regulatory
approval.
Electric Operations
In the last quarter of 1999, we recorded an $800 million accrual to reflect the
purchase of a third-party insurance policy as well as estimated amounts for
future claims relating to damages for personal injuries not recoverable under
such policy. The personal injuries are alleged to have arisen from the exposure
to or use of asbestos in connection with construction and maintenance
activities at our electric generating facilities during the 1960s and 1970s.
The insurance policy, combined with amounts covered by self-insurance reserves,
provides for claims paid up to an aggregate of $1.6 billion. We currently
believe the estimated claims relating to this exposure will not exceed this
amount. While we are uncertain as to the timing of when claims will be
received, portions of the estimated claims may not be received and paid for 30
or more years.
S-4
<PAGE>
RECENT FINANCIAL DATA
The following shows only selected consolidated financial information. You
should refer to our consolidated financial statements, including the notes to
such financial statements, included in the documents incorporated by reference
herein for additional information. See "Where You Can Find More Information" in
the accompanying Prospectus.
<TABLE>
<CAPTION>
Year Ended December 31,
Income Statement Data --------------------------
1999(1) 1998 1997(2)
------- ------- -------
(millions, except per
share data)
<S> <C> <C> <C>
Operating Revenues................................. $21,742 $17,610 $16,309
Operating Expenses................................. 19,947 15,177 14,339
------- ------- -------
Operating Income................................ 1,795 2,433 1,970
Other Income, Net.................................. 248 214 138
------- ------- -------
Earnings Before Interest and Taxes................. 2,043 2,647 2,108
Interest Expense................................... 601 514 472
Minority Interests................................. 142 96 23
Income Before Extraordinary Item................... 847 1,260 974
Net Income......................................... 1,507(3) 1,252 974
Earnings Available for Common Stock................ 1,487(3) 1,231 902
Earnings per share of Common Stock (before extraor-
dinary item)
Basic........................................... $ 2.26 $ 3.43 $ 2.51
Dilutive........................................ 2.25 3.42 2.50
Earnings per share of Common Stock
Basic........................................... 4.08(3) 3.41 2.51
Dilutive........................................ 4.07(3) 3.40 2.50
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(1) Reflects a pre-tax $800 million charge for estimated injury and damages
claims. The effect per basic share of Common Stock of this charge was
$1.34.
(2) Data reflects accounting for the combination with PanEnergy Corp on June
18, 1997 as a pooling of interests. As a result, the data gives effect to
the combination as if it had occurred as of January 1, 1997.
(3) Reflects a one-time after-tax extraordinary gain of approximately $660
million, or $1.82 per basic share of Common Stock, attributable to the
sale of certain pipeline operations on March 29, 1999.
<CAPTION>
As of December 31,
Balance Sheet Data --------------------------
1999 1998 1997(1)
------- ------- -------
<S> <C> <C> <C>
(millions)
Current Assets..................................... $ 6,171 $ 4,843 $ 3,685
Investments and Other Assets....................... 4,710 3,232 2,448
Property, Plant and Equipment, Net................. 20,995 16,875 15,736
Regulatory Assets and Deferred Debits.............. 1,533 1,856 2,160
Total Assets....................................... 33,409 26,806 24,029
</TABLE>
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(1) Data reflects accounting for the combination with PanEnergy Corp on June
18, 1997 as a pooling of interests. As a result, the data gives effect to
the combination as if it had occurred as of December 31, 1997.
Financial Ratios
(unaudited)
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
1999 1998 1997(1) 1996(1) 1995(1)
---- ---- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges............ 2.9 4.7 4.1 4.3 4.0
</TABLE>
For purposes of this ratio (a) earnings consist of income from continuing
operations before income taxes and fixed charges, and (b) fixed charges consist
of all interest deductions and the interest component of rentals.
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(1) Data reflects accounting for the combination with PanEnergy Corp on June
18, 1997 as a pooling of interests. As a result, the data gives effect to
the combination as if it had occurred as of January 1, 1995.
S-5
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization on a consolidated basis at
December 31, 1999 and as adjusted to give effect to the issuance of the Series
D Senior Notes. No other change in our consolidated capitalization since
December 31, 1999 is reflected therein. You should refer to our consolidated
financial statements, including the notes to such financial statements,
included in the documents incorporated by reference herein for additional
information. See "Where You Can Find More Information" in the accompanying
Prospectus.
<TABLE>
<CAPTION>
December 31,
December 31, 1999
1999 (as adjusted)
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(millions)
<S> <C> <C> <C>
Short-term Debt, including commercial paper...... $ 267 $ 267 1%
------- --------
Long-term Debt, including current maturities:
First and Refunding Mortgage Bonds............. 1,768 1,768
Other Long-term Debt........................... 1,801 1,801
Long-term Debt of subsidiaries................. 5,596 5,596
Series D Senior Notes offered hereby........... -- 300
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Total Long-term Debt......................... 9,165 9,465 44
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Minority Interests............................... 1,200 1,200 6
------- --------
Guaranteed Preferred Beneficial Interests in
Subordinated Notes of
Duke Energy or Subsidiaries..................... 1,404 1,404 6
------- --------
Preferred and Preference Stock, including current
sinking fund obligations:
With sinking fund requirements................. 104 104
Without sinking fund requirements.............. 209 209
------- --------
313 313 1
------- --------
Common Stockholders' Equity:
Common Stock................................... 4,603 4,603
Retained Earnings.............................. 4,397 4,397
Accumulated other comprehensive income......... (2) (2)
------- --------
Total Common Stockholders' Equity............ 8,998 8,998 42
------- -------- ----
Total Capitalization....................... 21,347 21,647 100%
======= ========
</TABLE>
S-6
<PAGE>
DESCRIPTION OF THE SERIES D SENIOR NOTES
The following description of the Series D Senior Notes is only a summary and is
not intended to be comprehensive. The description should be read together with
the description of the general terms and provisions of Senior Notes provided
under the caption "Description of the New Debt Securities" in the accompanying
Prospectus.
General
The Series D Senior Notes will be limited in principal amount to $300,000,000
and will be issued as a series of Senior Notes under our Senior Indenture.
The entire principal amount of the Series D Senior Notes will mature and become
due and payable, together with any accrued and unpaid interest, on March 1,
2010.
The Series D Senior Notes will not be subject to any sinking fund provision.
Interest
Each Series D Senior Note will bear interest at the rate of 7 3/8% per year
from the date of original issuance. We will pay interest semiannually on March
1 and September 1 of each year, beginning September 1, 2000, to the person in
whose name the Series D Senior Note is registered at the close of business on
the fifteenth calendar day before the relevant interest payment date, except
that we will pay interest payable at the maturity date of the Series D Senior
Notes or on a redemption date to the person or persons to whom principal is
payable. The amount of interest payable will be computed on the basis of a 360-
day year of twelve 30-day months. If any date on which interest is payable is
not a Business Day, we will pay that interest on the next Business Day without
any interest or other payment due to the delay.
Optional Redemption
We will have the right to redeem the Series D Senior Notes, in whole or in
part, at any time at a redemption price equal to the greater of (1) 100% of the
principal amount of the Series D Senior Notes to be redeemed and (2) the sum of
the present values of the remaining scheduled payments of principal and
interest on such Series D Senior Notes (exclusive of interest accrued to the
redemption date) discounted to the redemption date on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Treasury
Rate plus 15 basis points, plus, in either case, accrued and unpaid interest on
the principal amount being redeemed to such redemption date.
"Treasury Rate" means, with respect to any redemption date, (1) the yield,
under the heading which represents the average for the immediately preceding
week, appearing in the most recently published statistical release designated
"H.15(519)" or any successor publication which is published weekly by the Board
of Governors of the Federal Reserve System and which establishes yields on
actively traded United States Treasury securities adjusted to constant maturity
under the caption "Treasury Constant Maturities," for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is within three
months before or after the maturity date of the Series D Senior
S-7
<PAGE>
Notes, yields for the two published maturities most closely corresponding to
the Comparable Treasury Issue will be determined, and the Treasury Rate will be
interpolated or extrapolated from such yields on a straight-line basis,
rounding to the nearest month) or (2) if such release (or any successor
release) is not published during the week preceding the calculation date or
does not contain such yields, the rate per year equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue, calculated using
a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such redemption
date. The Treasury Rate will be calculated on the third Business Day preceding
the redemption date.
"Comparable Treasury Issue" means the United States Treasury security selected
by the Independent Investment Banker as having a maturity comparable to the
remaining term of the Series D Senior Notes to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of such Series D Senior Notes.
"Independent Investment Banker" means Warburg Dillon Read LLC and any successor
firm or, if such firm is unwilling or unable to select the Comparable Treasury
Issue, an independent investment banking institution of national standing
appointed by the Trustee after consultation with us.
"Comparable Treasury Price" means with respect to any redemption date for the
Series D Senior Notes (1) the average of five Reference Treasury Dealer
Quotations for such redemption date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations, or (2) if the Trustee obtains fewer
than five such Reference Treasury Dealer Quotations, the average of all such
quotations.
"Reference Treasury Dealer" means (1) Warburg Dillon Read LLC and its
successors and (2) any other primary U.S. government securities dealer (a
"Primary Treasury Dealer") selected by the Independent Investment Banker after
consultation with us. If Warburg Dillon Read LLC shall cease to be a Primary
Treasury Dealer, we will substitute another nationally recognized investment
banking firm that is a Primary Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to each Reference
Treasury Dealer and any redemption date, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City time, on the third Business Day preceding such redemption date.
Redemption Procedures
We will provide not less than 30 nor more than 60 days' notice mailed to each
registered holder of the Series D Senior Notes to be redeemed. If the
redemption notice is given and funds deposited as required, then interest will
cease to accrue on and after the redemption date on the Series D Senior Notes
or portions of Series D Senior Notes called for redemption. In the event that
any redemption date is not a Business Day, we will pay the redemption price on
the next Business Day without any interest or other payment due to the delay.
S-8
<PAGE>
Ranking
The Series D Senior Notes will be our direct, unsecured and unsubordinated
obligations. The Series D Senior Notes will rank equal in priority with all of
our other unsecured and unsubordinated indebtedness and senior in right of
payment to all of our existing and future subordinated debt. At December 31,
1999, we had outstanding approximately $1,948,000,000 of unsecured and
unsubordinated indebtedness and approximately $1,859,000,000 of secured
indebtedness. The Senior Indenture contains no restrictions on the amount of
additional indebtedness that we may issue under it.
Denominations
The Series D Senior Notes will be issuable in denominations of $1,000 and
integral multiples of $1,000.
Defeasance and Covenant Defeasance
The Series D Senior Notes will be subject to Defeasance and Covenant Defeasance
as described in the Senior Indenture. See "Description of the New Debt
Securities--Defeasance and Covenant Defeasance" in the accompanying Prospectus.
Under current United States federal income tax law, a Defeasance would be
treated as an exchange of the relevant Series D Senior Notes in which holders
of such Series D Senior Notes might recognize gain or loss. In addition, the
amount, timing and character of amounts that holders would thereafter be
required to include in income might be different from what would be includible
absent that Defeasance. We urge investors to consult their own tax advisors as
to the specific consequences of a Defeasance, including the applicability and
effect of tax laws other than United States federal income tax laws.
Under current United States federal income tax law, unless accompanied by other
changes in the terms of the Series D Senior Notes, Covenant Defeasance should
not be treated as a taxable exchange.
Book-Entry Only Issuance--The Depository Trust Company
The Depository Trust Company ("DTC") will act as the initial securities
depositary for the Series D Senior Notes. The Series D Senior Notes will be
initially issued as fully registered securities registered in the name of Cede
& Co., DTC's nominee. One or more fully registered global certificates will be
issued, representing the total principal amount of the Series D Senior Notes,
and will be deposited with DTC.
DTC is a limited-purpose trust company organized under the New York Banking
Law, a "banking organization" within the meaning of the New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC holds securities that its participants
("participants") deposit with DTC. DTC also facilitates the settlement among
participants of securities transactions, such as transfers and pledges, in
deposited securities through electronic computerized book-entry changes in
participants' accounts, thereby eliminating the need for physical movement of
securities
S-9
<PAGE>
certificates. Direct participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations
("direct participants"). DTC is owned by a number of its direct participants
and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc.,
and the National Association of Securities Dealers, Inc. Access to the DTC
system is also available to others such as securities brokers and dealers,
banks and trust companies that clear through or maintain a custodial
relationship with a direct participant, either directly or indirectly
("indirect participants"). The rules applicable to DTC and its participants are
on file with the Securities and Exchange Commission.
Purchases of Series D Senior Notes within the DTC system must be made by or
through direct participants, which will receive a credit for the Series D
Senior Notes on DTC's records. The ownership interest of each actual purchaser
of Series D Senior Notes ("beneficial owner") is in turn to be recorded on the
direct and indirect participants' records. Beneficial owners will not receive
written confirmation from DTC of their purchases, but beneficial owners are
expected to receive written confirmations providing details of the
transactions, as well as periodic statements of their holdings, from the direct
or indirect participants through which the beneficial owners entered into the
transaction. Transfers of ownership interests in the Series D Senior Notes are
to be accomplished by entries made on the books of participants acting on
behalf of beneficial owners. Beneficial owners will not receive certificates
representing their ownership interests in Series D Senior Notes, except in the
event that use of the book-entry system for the Series D Senior Notes is
discontinued.
To facilitate subsequent transfers, all Series D Senior Notes deposited by
participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. The deposit of Series D Senior Notes with DTC and their registration
in the name of Cede & Co. effect no change in beneficial ownership. DTC has no
knowledge of the actual beneficial owners of the Series D Senior Notes. DTC's
records reflect only the identity of the direct participants to whose accounts
such Series D Senior Notes are credited, which may or may not be the beneficial
owners. The participants will remain responsible for keeping account of their
holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct participants,
by direct participants to indirect participants, and by direct participants and
indirect participants to beneficial owners will be governed by arrangements
among them, subject to any statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices will be sent to DTC. If less than all of the Series D Senior
Notes are being redeemed, DTC will reduce the amount of interest of each direct
participant in the Series D Senior Notes in accordance with its procedures.
Neither DTC nor Cede & Co. will consent or vote with respect to Series D Senior
Notes. Under its usual procedures, DTC would mail an Omnibus Proxy to us as
soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those direct participants to whose accounts the
Series D Senior Notes are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
S-10
<PAGE>
Payments on the Series D Senior Notes will be made to Cede & Co., as nominee of
DTC. DTC's practice is to credit direct participants' accounts, upon DTC's
receipt of funds and corresponding detailed information, on the relevant
payment date in accordance with their respective holdings shown on DTC's
records. Payments by participants to beneficial owners will be governed by
standing instructions and customary practices, as is the case with securities
held for the account of customers in bearer form or registered in "street
name," and will be the responsibility of such participant and not our
responsibility or the responsibility of DTC, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment to Cede
& Co. is our responsibility or the responsibility of the paying agent,
disbursement of such payments to direct participants is the responsibility of
Cede & Co. and disbursement of such payments to the beneficial owners is the
responsibility of direct and indirect participants.
Except as provided herein, a beneficial owner of an interest in a global Series
D Senior Note will not be entitled to receive physical delivery of Series D
Senior Notes. Accordingly, each beneficial owner must rely on the procedures of
DTC to exercise any rights under the Series D Senior Notes. The laws of some
jurisdictions require that certain purchasers of securities take physical
delivery of securities in definitive form. Such laws may impair the ability to
transfer beneficial interests in a global Series D Senior Note.
DTC may discontinue providing its services as securities depositary with
respect to the Series D Senior Notes at any time by giving us reasonable
notice. Under such circumstances, if a successor securities depositary is not
obtained within 90 days, Series D Senior Note certificates will be printed and
delivered to the holders of record. Additionally, we may decide to discontinue
use of the system of book-entry transfers through DTC (or a successor
securities depositary) with respect to the Series D Senior Notes. In that
event, certificates for the Series D Senior Notes will be printed and delivered
to the holders of record.
The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that we believe to be reliable, but neither we nor
any Underwriter takes any responsibility for its accuracy. We have no
responsibility for the performance by DTC or its participants of their
respective obligations, including obligations that they have under the rules
and procedures that govern their operations.
S-11
<PAGE>
UNDERWRITING
Subject to the terms and conditions of the Underwriting Agreement dated the
date hereof, Warburg Dillon Read LLC, as Underwriter, has agreed to purchase,
and we have agreed to sell to the Underwriter, $300,000,000 principal amount of
the Series D Senior Notes.
In the Underwriting Agreement, the Underwriter has agreed, subject to certain
conditions, to purchase all of the Series D Senior Notes if any of the Series D
Senior Notes are purchased.
The Underwriter proposes initially to offer the Series D Senior Notes to the
public at the initial public offering price set forth on the cover page of this
Prospectus Supplement, and to certain dealers at that price less a concession
not in excess of 0.25% of the principal amount of the Series D Senior Notes.
The Underwriter may allow, and those dealers may reallow, a discount not in
excess of 0.125% of the principal amount of the Series D Senior Notes to
certain other dealers. The initial public offering price, selling concession
and discount may be changed after the initial public offering.
The Series D Senior Notes are a new issue of securities with no established
trading market. The Underwriter has advised us that the Underwriter intends to
make a market in the Series D Senior Notes but is not obligated to do so and
may discontinue market-making at any time without notice. Neither we nor the
Underwriter can assure you as to the liquidity of the trading market for the
Series D Senior Notes.
The Underwriter may purchase and sell the Series D Senior Notes in the open
market in connection with the offering. These transactions may include over-
allotment and stabilizing transactions and purchases to cover syndicate short
positions created in connection with the offering. Stabilizing transactions
consist of certain bids or purchases for the purpose of preventing or retarding
a decline in the market price of the Series D Senior Notes. Syndicate short
positions involve the sale by the Underwriter of a greater number of Series D
Senior Notes than it is required to purchase from us in the offering. The
Underwriter also may impose a penalty bid, by which selling concessions allowed
to syndicate members or other broker dealers with respect to the securities
sold in the offering for its account may be reclaimed by the syndicate if those
Series D Senior Notes are repurchased by the syndicate in stabilizing or
covering transactions. These activities may stabilize, maintain or otherwise
affect the market price of the Series D Senior Notes, which may be higher than
the price that might otherwise prevail in the open market. These activities, if
commenced, may be discontinued at any time.
We estimate that our expenses in connection with this offering, excluding
underwriting discounts and commissions, will be approximately $175,000.
We have agreed to indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act of 1933.
The Underwriter and its affiliates engage in transactions with, and, from time
to time, have performed services for us or certain of our affiliates in the
ordinary course of business and may do so in the future.
S-12
<PAGE>
EXPERTS
Our consolidated financial statements as of December 31, 1999 and 1998 and for
each of the three years in the period ended December 31, 1999 included in our
special report on Form 8-K dated March 3, 2000, which are incorporated herein
by reference, have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report, which is incorporated herein by reference, and have
been so incorporated in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
LEGAL MATTERS
Ellen T. Ruff, Esq., who is our Vice President and General Counsel, Corporate
and Electric Operations, and Dewey Ballantine LLP will issue opinions about the
validity of the Series D Senior Notes and certain related matters on our
behalf. Willkie Farr & Gallagher will issue an opinion about the validity of
the Series D Senior Notes for the Underwriter. In giving their respective
opinions, Dewey Ballantine LLP and Willkie Farr & Gallagher may rely as to
matters of North Carolina law upon the opinion of Ms. Ruff. As of January 31,
2000, Ms. Ruff owned 9,018 shares of our Common Stock and options to purchase
44,800 shares, 2,300 of which were exercisable.
S-13
<PAGE>
P R O S P E C T U S
$1,300,000,000
Duke Energy Corporation
First and Refunding Mortgage Bonds
Debt Securities
----------------
This Prospectus contains summaries of the general terms of these securities. We
will provide specific terms of these securities, and the manner in which they
are being offered, in supplements to this Prospectus. You should read this
Prospectus and any supplement carefully before you invest. We cannot sell any
of these securities unless this Prospectus is accompanied by a Prospectus
Supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is
a criminal offense.
----------------
The date of this Prospectus is April 7, 1999.
<PAGE>
You should rely only on the information provided or incorporated by reference
in this Prospectus or any accompanying Prospectus Supplement. We have not
authorized anyone else to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this Prospectus or any
accompanying Prospectus Supplement is accurate as of any date other than the
date on the front of those documents.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
About This Prospectus...................................................... 3
Where You Can Find More Information........................................ 3
Forward-Looking Statements................................................. 4
Duke Energy Corporation.................................................... 5
Use of Proceeds............................................................ 7
Description of the New Bonds............................................... 7
Description of the New Debt Securities..................................... 11
Plan of Distribution....................................................... 21
Experts.................................................................... 22
Legal Matters.............................................................. 22
</TABLE>
2
<PAGE>
ABOUT THIS PROSPECTUS
This Prospectus is part of a Registration Statement that we filed with the
Securities and Exchange Commission ("SEC") utilizing a "shelf" registration
process. Under the shelf registration process, we may sell any combination of
the securities described in this Prospectus in one or more offerings up to a
total dollar amount of $1,300,000,000. The securities that we may offer are
First and Refunding Mortgage Bonds, Senior Notes and Subordinated Notes.
This Prospectus provides you with a general description of the securities we
may offer. Each time we sell securities, we will provide a Prospectus
Supplement that will contain specific information about the terms of that
offering. The Prospectus Supplement may also add, update or change information
contained in this Prospectus. The Registration Statement we filed with the SEC
includes exhibits that provide more details about the matters discussed in this
Prospectus. You should read this Prospectus and the related exhibits filed with
the SEC and any Prospectus Supplement together with the additional information
described under the next caption, "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with the
SEC. You may read and copy any document we file at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please
call the SEC's toll-free telephone number at 1-800-SEC-0330 for further
information about the operation of the public reference rooms. In addition, you
may inspect our reports and other information at the offices of the New York
Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, where certain
of our securities are listed. Our SEC filings are available on the SEC's Web
site at http://www.sec.gov. Information about us is also available on our Web
site at http://www.duke-energy.com.
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this Prospectus and should be read with the same care.
Information that we file later with the SEC will automatically update and
supersede this information.
The following documents are incorporated in and made a part of this Prospectus
by reference:
. our annual report on Form 10-K for the year ended December 31, 1998;
. our current reports on Form 8-K dated January 25, 1999, February 11,
1999, March 8, 1999 and March 10, 1999;
. the definitive joint proxy statement-prospectus that we and PanEnergy
Corp filed dated March 13, 1997;
. the annual report on Form 10-K of PanEnergy Corp for the year ended
December 31, 1996; and
. the quarterly reports on Form 10-Q of PanEnergy Corp for the quarters
ended March 31, 1997 and June 30, 1997.
Any documents that we file with the SEC in the future under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 will also be
incorporated by reference into this Prospectus until we sell all of the
securities being registered.
3
<PAGE>
You may request a copy of these filings at no cost by writing or calling us
at the following address or one of the following telephone numbers:
Investor Relations Department
Duke Energy Corporation
P.O. Box 1005
Charlotte, North Carolina 28201
(704) 382-3853 or (800) 488-3853 (toll-free)
FORWARD-LOOKING STATEMENTS
This Prospectus contains or incorporates by reference statements that do not
directly or exclusively relate to historical facts. Such statements are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. You can typically identify forward-looking
statements by the use of forward-looking words, such as "may," "will," "could,"
"project," "believe," "anticipate," "expect," "estimate," "continue,"
"potential," "plan," "forecasts" and the like. These statements represent our
intentions, plans, expectations and beliefs about future events and are subject
to risks, uncertainties and other factors. Many of these factors are outside
our control and could cause actual results to differ materially from the
results expressed or implied by those forward-looking statements. These factors
include:
. state and federal legislative and regulatory initiatives that affect
cost and investment recovery, have an impact on rate structures, and
affect the speed and degree to which competition enters the electric and
natural gas industries;
. industrial, commercial and residential growth in our service territories
or the service territories of our 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 we and
our subsidiaries are subject or other external factors over which we
have no control;
. the results of financing efforts;
. growth in opportunities for our business units;
. achievement of Year 2000 readiness; and
. the effect of accounting policies issued periodically by accounting
standard-setting bodies.
We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
In light of these risks, uncertainties and assumptions, the forward-looking
events referred to in this Prospectus and any accompanying Prospectus
Supplement might not occur.
4
<PAGE>
DUKE ENERGY CORPORATION
We, together with our subsidiaries, are 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. We,
directly or through our subsidiaries, provide these and other services through
seven business segments:
. Electric Operations
. Natural Gas Transmission
. Field Services
. Trading and Marketing
. Global Asset Development
. Other Energy Services
. Real Estate Operations
Electric Operations generates, transmits, distributes and sells electric
energy in central and western North Carolina and the western portion of
South Carolina (doing business as Duke Power or Nantahala Power and Light).
Natural Gas Transmission, through its northeast pipelines, provides
interstate transportation and storage of natural gas for customers
primarily in the Mid-Atlantic and New England states. Until the sale of the
midwest pipelines to a subsidiary of CMS Energy Corporation, which was
consummated on March 29, 1999, Natural Gas Transmission provided interstate
transportation and storage services in the midwest states.
Field Services gathers, processes, transports and markets natural gas and
produces and markets natural gas liquids. Field Services operates gathering
systems in ten states that serve major gas-producing regions in the Rocky
Mountains, Permian Basin, Mid-Continent and Gulf Coast areas. Field
Services significantly expanded its operations by the acquisition on March
31, 1999 of the natural gas gathering, processing, fractionation and
natural gas liquids pipeline business of a unit of Union Pacific Resources.
Trading and Marketing markets natural gas, electricity and other energy-
related products across North America. We own a 60% interest in Trading and
Marketing, with Mobil Corporation owning a 40% minority interest.
Global Asset Development develops, owns and operates energy-related
facilities worldwide. Global Asset Development conducts its operations
primarily through Duke Energy Power Services, LLC and Duke Energy
International, LLC.
Other Energy Services provides engineering, consulting, construction and
integrated energy solutions worldwide, primarily through Duke Engineering &
Services, Inc., Duke/Fluor Daniel and DukeSolutions, Inc.
Real Estate Operations develops high-quality commercial and residential
real estate projects and manages forest holdings in the southeastern United
States. Real Estate Operations conducts its business through Crescent
Resources, Inc.
5
<PAGE>
We completed a merger with PanEnergy Corp on June 18, 1997 which was accounted
for as a pooling of interests. PanEnergy Corp was involved in the gathering,
processing, transportation and storage of natural gas, the production of
natural gas liquids and the marketing of natural gas, electricity and other
energy-related products.
The foregoing information about us and our subsidiaries is only a general
summary and is not intended to be comprehensive. For additional information
about us and our subsidiaries you should refer to the information described
under the caption "Where You Can Find More Information."
Our principal executive offices are located at 526 South Church Street,
Charlotte, North Carolina 28202, telephone (704) 594-6200.
Recent Financial Data
The following shows only selected consolidated financial information. You
should refer to the financial statements included in the documents incorporated
by reference in this Prospectus for additional information. See "Where You Can
Find More Information."
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------
1998 1997(1) 1996(1)
------- ------- -------
(Millions, except per
share data)
<S> <C> <C> <C>
Operating Revenues.................................... $17,610 $16,309 $12,302
Net Income............................................ 1,252 974 1,074
Earnings Available for Common Stock................... 1,231 902 1,030
Earnings per share of Common Stock (before
extraordinary item)
Basic............................................... $3.43 $2.51 $2.90
Dilutive............................................ 3.42 2.50 2.88
Earnings per share of Common Stock
Basic............................................... 3.41 2.51 2.85
Dilutive............................................ 3.40 2.50 2.83
</TABLE>
- --------
(1) Data reflects accounting for the combination with PanEnergy Corp on June
18, 1997 as a pooling of interests. As a result, the data gives effect to
the combination as if it had occurred as of January 1, 1996.
<TABLE>
<CAPTION>
Capitalization as of
December 31, 1998
--------------------
(Millions)
<S> <C> <C>
Common Stock Equity........................................ $ 8,150 49%
Preferred Stocks........................................... 333 2
Trust Preferred Securities................................. 919 6
Debt (including short-term debt)........................... 7,168 43
----------- --------
Total.................................................... $ 16,570 100%
=========== ========
</TABLE>
Ratio of Earnings to Fixed Charges
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------
1998 1997(1) 1996(1) 1995(1) 1994(1)
---- ------- ------ ------- -------
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges........ 4.7 4.1 4.3 4.0 3.6
</TABLE>
For purposes of this ratio (a) earnings consist of income from continuing
operations before income taxes and fixed charges, and (b) fixed charges consist
of all interest deductions and the interest component of rentals.
- --------
(1) Data reflects accounting for the combination with PanEnergy Corp on June
18, 1997 as a pooling of interests. As a result, the data gives effect to
the combination as if it had occurred as of January 1, 1994.
6
<PAGE>
USE OF PROCEEDS
Unless we state otherwise in any Prospectus Supplement, we will use the net
proceeds from the sale of the First and Refunding Mortgage Bonds, Senior Notes
and Subordinated Notes being offered:
. to redeem or purchase from time to time presently outstanding securities
when we anticipate those transactions will result in an overall cost
savings;
. to repay maturing securities;
. to finance our ongoing construction program; or
. for general corporate purposes.
If we do not use the net proceeds immediately, we may temporarily invest them
in short-term interest-bearing obligations or deposit them with banks.
DESCRIPTION OF THE NEW BONDS
We will issue the First and Refunding Mortgage Bonds as one or more series
under our First and Refunding Mortgage, dated as of December 1, 1927, to The
Chase Manhattan Bank, as Trustee, as supplemented and amended. In the following
discussion, we will refer to the First and Refunding Mortgage as the
"Mortgage." We will refer to all of our First and Refunding Mortgage Bonds as
"Bonds" and the Bonds to be issued under this shelf registration as the "New
Bonds." We will refer to the Trustee under the Mortgage as the "Bond Trustee."
The Mortgage and the form of supplemental indenture to the Mortgage relating to
the New Bonds are exhibits to the Registration Statement.
The following description of the New Bonds is only a summary and is not
intended to be comprehensive. For additional information you should refer to
the Mortgage.
General
The amount of Bonds which we may issue under the Mortgage is unlimited. Our
Board of Directors will determine the terms of each series of the New Bonds,
including denominations, maturity, interest rate and payment terms and whether
the series will have redemption or sinking fund provisions.
Unless we state otherwise in the applicable Prospectus Supplement, we will
issue the New Bonds only in fully registered form, without coupons. There will
be no service charge for any transfers and exchanges of the New Bonds. We may,
however, require payment to cover any stamp tax or other governmental charge
payable in connection with any transfer or exchange. Transfers and exchanges of
the New Bonds may be made at The Chase Manhattan Bank, 55 Water Street, New
York, New York 10041.
The New Bonds will be issuable in denominations of $1,000 and multiples of
$1,000, unless we state otherwise in the applicable Prospectus Supplement. New
Bonds will be exchangeable for an equivalent principal amount of New Bonds of
other authorized denominations of the same series.
7
<PAGE>
The applicable Prospectus Supplement will describe the maturity, interest rate
and payment terms of the New Bonds and any relevant redemption or sinking fund
provisions.
Security
The Mortgage creates a continuing lien to secure the payment of principal and
interest on the Bonds. All the Bonds are equally and ratably secured without
preference, priority or distinction. The lien of the Mortgage covers
substantially all of our properties, real, personal and mixed, and our
franchises, including properties acquired after the date of the Mortgage, with
certain exceptions. Those exceptions include cash, accounts receivable,
inventories of materials and supplies, merchandise held for sale, securities
that we hold, certain after-acquired property not useful in our electric
business, certain after-acquired franchises and certain after-acquired non-
electric properties.
The lien of the Mortgage is subject to certain permitted liens and to liens
that exist upon properties that we acquired after we entered into the Mortgage
to the extent of the amounts of prior lien bonds secured by those properties
(not, however, exceeding 75% of the cost or value of those properties) and
additions to those properties. "Prior lien bonds" are bonds or other
indebtedness that are secured at the time of acquisition by a lien upon
property that we acquire after the date of the Mortgage that becomes subject to
the lien of the Mortgage.
Issuance of Additional Bonds
If we satisfy the conditions in the Mortgage, the Bond Trustee may authenticate
and deliver additional Bonds in an aggregate principal amount not exceeding:
. the amount of cash that we have deposited with the Bond Trustee for that
purpose;
. the amount of previously authenticated and delivered Bonds or refundable
prior lien bonds that have been or are to be retired which, with certain
exceptions, we have deposited with the Bond Trustee for that purpose; or
. 66 2/3% of the aggregate of the net amounts of additional property
(electric) certified to the Bond Trustee after February 18, 1949.
The Bond Trustee may not authenticate and deliver any additional Bonds under
the Mortgage, other than certain types of refunding Bonds, unless our available
net earnings for twelve consecutive calendar months within the immediately
preceding fifteen calendar months have been at least twice the amount of the
annual interest charges on all Bonds outstanding under the Mortgage, including
the Bonds proposed to be issued, and on all outstanding prior lien bonds that
the Bond Trustee does not hold under the Mortgage.
We may not apply to the Bond Trustee to authenticate and deliver any Bonds (1)
in an aggregate principal amount exceeding $26,000,000 on the basis of
additional property (electric) that we acquired or constructed prior to January
1, 1949 or (2) on the basis of Bonds or prior lien bonds paid, purchased or
redeemed prior to February 1, 1949. We may not certify any additional property
(electric) which is subject to the lien of any prior lien bonds for the purpose
of establishing those prior lien bonds as refundable if the aggregate principal
amount of those prior lien bonds exceeds 66 2/3% of the net amount of the
additional property that is subject to the lien of such prior lien bonds.
8
<PAGE>
Release Provisions
The Mortgage permits us to dispose of certain property and to take other
actions without the Bond Trustee releasing that property. The Mortgage also
permits the release of mortgaged property if we deposit cash or other
consideration equal to the value of the mortgaged property to be released. In
certain events and within certain limitations, the Bond Trustee is required to
pay out cash that the Bond Trustee receives--other than for the Replacement
Fund or as the basis for issuing Bonds--upon our application.
We may withdraw cash that we deposited with the Bond Trustee as the basis for
issuing Bonds in an amount equal to the principal amount of any Bonds that we
are entitled to have authenticated and delivered on the basis of additional
property (electric), on the basis of Bonds previously authenticated and
delivered or on the basis of refundable prior lien bonds.
Replacement Fund
The Mortgage requires us to deposit with the Bond Trustee annually, for the
Replacement Fund established under the Mortgage, the sum of the "replacement
requirements" for all years beginning with 1949 and ending with the last
calendar year preceding the deposit date, less certain deductions. Those
deductions are (1) the aggregate original cost of all fixed property (electric)
retired during that time period, not exceeding the aggregate of the gross
amounts of additional property (electric) that we acquired or constructed
during the same period, and (2) the aggregate amount of cash that we deposited
with the Bond Trustee up to that time, or that we would have been required to
deposit except for permitted reductions, under the Replacement Fund.
The "replacement requirement" for any year is 2 1/2% of the average "amount of
depreciable fixed property" (electric) owned by us at the beginning and end of
that year, not exceeding, however, the amount we are permitted to charge as an
operating expense for depreciation or retirement by any governmental authority,
or the amount deductible as depreciation or similar expense for federal income
tax purposes. The "amount of depreciable fixed property" (electric) is the
amount by which the sum of $192,913,385 plus the aggregate gross amount of all
depreciable additional property (electric) that we acquired or constructed from
January 1, 1949 to the date as of which such amount is determined exceeds the
original cost of all of our depreciable fixed property (electric) retired
during that period or released from the lien of the Mortgage.
We may reduce the amount of cash at any time required to be deposited in the
Replacement Fund and may withdraw any cash that we previously deposited that is
held in the Replacement Fund:
. in an amount equal to 150% of the principal amount of Bonds previously
authenticated and delivered under the Mortgage, or refundable prior lien
bonds, deposited with the Bond Trustee and on the basis of which we
would otherwise have been entitled to have additional Bonds
authenticated and delivered; and
. in an amount equal to 150% of the principal amount of Bonds which we
would otherwise be entitled to have authenticated and delivered on the
basis of additional property (electric).
9
<PAGE>
Upon our application, the Bond Trustee will apply cash that we deposited in the
Replacement Fund and have not previously withdrawn to the payment, purchase or
redemption of Bonds issued under the Mortgage or to the purchase of refundable
prior lien bonds.
We have never deposited any cash with the Bond Trustee for the Replacement
Fund. If we deposit any cash in the future, we have agreed not to apply that
cash to the redemption of the New Bonds as long as any Bonds now outstanding
remain outstanding.
Amendments of the Mortgage
We may amend the Mortgage with the consent of the holders of 66 2/3% of the
Bonds, except that no such amendment may:
. affect the terms of payment of principal at maturity or of interest or
premium on any Bond;
. affect the rights of Bondholders to sue to enforce any such payment at
maturity; or
. reduce the percentage of Bonds required to consent to an amendment.
No amendment may affect the rights under the Mortgage of the holders of less
than all of the series of Bonds outstanding unless the holders of 66 2/3% of
the Bonds of each series affected consent to the amendment.
The covenants included in the supplemental indenture for any series of New
Bonds will be solely for the benefit of the holders of those New Bonds. We may
modify any such covenant only with the consent of the holders of 66 2/3% of
those New Bonds outstanding, without the consent of Bondholders of any other
series.
Events of Default
The Bond Trustee may, and at the written request of the holders of a majority
of the outstanding Bonds will, declare the principal of all outstanding Bonds
due when any event of default under the Mortgage occurs. The holders of a
majority of the outstanding Bonds may, however, waive the default and rescind
the declaration if we cure the default.
Events of default under the Mortgage include:
. default in the payment of principal;
. default for 60 days in the payment of interest;
. default in the performance of any other covenant in the Mortgage
continuing for 60 days after the Bond Trustee or the holders of not less
than 10% in principal amount of the Bonds then outstanding give notice
of the default; and
. certain bankruptcy or insolvency events with respect to the Corporation.
The Bond Trustee is under no obligation to exercise any of its powers at the
request of any of the holders of the Bonds unless those Bondholders have
offered to the Bond Trustee security or indemnity satisfactory to it against
the cost, expenses and liabilities it might incur as a result. The
10
<PAGE>
holders of a majority of the Bonds outstanding may direct the time, method and
place of conducting any proceeding for any remedy available to the Bond
Trustee, or the exercise of any trust or power of the Bond Trustee. The Bond
Trustee will not be liable for any action that it takes or omits to take in
good faith in accordance with any such direction.
We provide an officers' certificate each year to the Bond Trustee stating
whether we have complied with the covenants of the Mortgage.
Concerning the Bond Trustee
The Chase Manhattan Bank is the Bond Trustee. We and certain of our affiliates
maintain deposit accounts and banking relationships with The Chase Manhattan
Bank.
DESCRIPTION OF THE NEW DEBT SECURITIES
The New Debt Securities will be either senior unsecured debt securities or
subordinated unsecured debt securities. In the following discussion, we
sometimes refer to the senior unsecured debt securities as "Senior Notes" and
to the subordinated unsecured debt securities as "Subordinated Notes."
We will issue New Debt Securities that are Senior Notes in one or more series
under our Senior Indenture dated as of September 1, 1998 between us and The
Chase Manhattan Bank, as Trustee, as supplemented and amended. We will issue
New Debt Securities that are Subordinated Notes in one or more series under our
Subordinated Indenture dated as of December 1, 1997 between us and The Chase
Manhattan Bank, as Trustee, as supplemented and amended. Each of the Senior
Indenture and the Subordinated Indenture is, as applicable, sometimes called
the "Indenture." The Senior Indenture and the Subordinated Indenture, together,
are sometimes called the "Indentures." Each of the Trustee under the Senior
Indenture and the Trustee under the Subordinated Indenture is, as applicable,
called the "Trustee." The Indentures and the forms of supplemental indenture to
the Indentures are exhibits to the Registration Statement.
The Debt Securities are unsecured obligations. The Bonds are effectively senior
to the Debt Securities to the extent of the value of the properties securing
them. As of December 31, 1998, we had approximately $2,265,000,000 of Bonds
outstanding.
We conduct our non-electric operations, and certain of our electric operations
outside our service area in the Carolinas, through subsidiaries. Accordingly,
our ability to meet our obligations under the Debt Securities is partly
dependent on the earnings and cash flows of those subsidiaries and the ability
of those subsidiaries to pay dividends or to advance or repay funds to us. In
addition, the rights that we and our creditors would have to participate in the
assets of any such subsidiary upon the subsidiary's liquidation or
recapitalization will be subject to the prior claims of the subsidiary's
creditors. We anticipate that certain of our subsidiaries will incur
substantial amounts of debt in the expansion of their businesses.
Neither Indenture protects the holders of Debt Securities if we engage in a
highly leveraged transaction.
11
<PAGE>
The following description of the Debt Securities is only a summary and is not
intended to be comprehensive. For additional information you should refer to
the applicable Indenture.
General
Neither Indenture limits the amount of Debt Securities that we may issue under
it. We may issue Debt Securities from time to time under each Indenture in one
or more series by entering into supplemental indentures or by our Board of
Directors or a duly authorized committee authorizing the issuance. The Debt
Securities of a series need not be issued at the same time, bear interest at
the same rate or mature on the same date.
Provisions Applicable to Particular Series
The Prospectus Supplement for a particular series of Debt Securities will
specify the terms of that series, including, if applicable:
. the title of the series;
. any limit on the principal amount of the Debt Securities of the series;
. the date or dates on which principal is payable or the method for
determining the date or dates, and any right that we have to change the
date on which principal is payable;
. the interest rate or rates, if any, or the method for determining the
rate or rates, and the date or dates from which interest will accrue;
. any interest payment dates and the regular record date, if any;
. whether we may extend the interest payment periods and, if so, the terms
of the extension;
. the place or places where payments will be made, if other than the
principal corporate trust office of the Trustee;
. any obligation that we have to redeem the Debt Securities through a
sinking fund or purchase the Debt Securities through a purchase fund or
at the option of the holder;
. whether we have the option to redeem the Debt Securities and, if so, the
terms of our redemption option;
. whether the provisions described under the caption "Defeasance and
Covenant Defeasance" will not apply to the Debt Securities;
. the currency in which payments will be made if other than U.S. dollars,
and the manner of determining the equivalent of those amounts in U.S.
dollars;
. if payments may be made, at our election or at the holder's election, in
a currency other than that in which the Debt Securities are stated to be
payable, then the currency in which those payments may be made, the
terms and conditions of the election and the manner of determining those
amounts;
. the portion of the principal payable upon acceleration of maturity, if
other than the entire principal;
. whether the Debt Securities will be issuable as global securities and,
if so, the depositary;
. any changes in the events of default or covenants with respect to the
Debt Securities;
12
<PAGE>
. any index or formula used for determining principal, premium or
interest;
. if the principal payable on the maturity date will not be determinable
on one or more dates prior to the maturity date, the amount which will
be deemed to be such principal amount (or the manner of determining it);
. the subordination of the Debt Securities to any other of our
indebtedness, including other series of Subordinated Notes (for series
of Subordinated Notes only); and
. any other terms.
Unless we state otherwise in the applicable Prospectus Supplement, we will
issue the New Debt Securities only in fully registered form, without coupons.
There will be no service charge for any registration of transfer or exchange of
the Debt Securities. We may, however, require payment to cover any tax or other
governmental charge payable in connection with any transfer or exchange.
Transfers and exchanges of the Debt Securities may be made at The Chase
Manhattan Bank, 55 Water Street, New York, New York 10041.
The New Debt Securities will be issuable in denominations of $1,000 and any
multiples of $1,000, unless we state otherwise in the applicable Prospectus
Supplement.
We may offer and sell the New Debt Securities, including original issue
discount Debt Securities, at a substantial discount below their principal
amount. The applicable Prospectus Supplement will describe special United
States federal income tax and any other considerations applicable to those
securities. In addition, the applicable Prospectus Supplement may describe
certain special United States federal income tax or other considerations, if
any, applicable to any New Debt Securities which are denominated in a currency
other than U.S. dollars.
Global Securities
We may issue some or all of the Debt Securities of any series as Global
Securities. We will register each Global Security in the name of a depositary
identified in the applicable Prospectus Supplement. The Global Securities will
be deposited with the depositary or nominee or custodian for the depositary.
As long as the depositary or its nominee is the registered holder of a Global
Security, that person will be considered the sole owner and holder of the
Global Security and the Debt Securities it represents for all purposes. Except
in limited circumstances, owners of a beneficial interest in a Global Security:
. may not have the Global Security or any Debt Securities it represents
registered in their names;
. may not receive or be entitled to receive physical delivery of
certificated Debt Securities in exchange for the Global Security; and
. will not be considered the owners or holders of the Global Security or
any Debt Securities it represents for any purposes under the Debt
Securities or the applicable Indenture.
We will make all payments of principal and any premium and interest on a Global
Security to the depositary or its nominee as the holder of the Global Security.
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. These laws may impair
the ability to transfer beneficial interests in a Global Security.
13
<PAGE>
Ownership of beneficial interests in a Global Security will be limited to
institutions having accounts with the depositary or its nominee, which are
called "participants" in this discussion, and to persons that hold beneficial
interests through participants. When a Global Security is issued, the
depositary will credit on its book entry, registration and transfer system the
principal amounts of Debt Securities the Global Security represents to the
accounts of its participants. Ownership of beneficial interests in a Global
Security will be shown only on, and the transfer of those ownership interests
will be effected only through, records maintained by:
. the depositary, with respect to participants' interests; and
. any participant, with respect to interests the participant holds on behalf
of other persons.
Payments participants make to owners of beneficial interests held through those
participants will be the responsibility of those participants. The depositary
may from time to time adopt various policies and procedures governing payments,
transfers, exchanges and other matters relating to beneficial interests in a
Global Security. None of the following will have any responsibility or
liability for any aspect of the depositary's or any participant's records
relating to beneficial interests in a Global Security, for payments made on
account of those beneficial interests or for maintaining, supervising or
reviewing any records relating to those beneficial interests:
. the Corporation;
. the Trustee under the Senior Indenture;
. the Trustee under the Subordinated Indenture; or
. an agent of any of the above.
Redemption
Any provisions relating to the redemption of Debt Securities will be set forth
in the applicable Prospectus Supplement. Unless we state otherwise in the
applicable Prospectus Supplement, we may redeem Debt Securities only upon
notice mailed at least 30 but not more than 60 days before the date fixed for
redemption. Unless we state otherwise in the applicable Prospectus Supplement,
that notice may state that the redemption will be conditional upon the Trustee,
or the applicable Paying Agent, receiving sufficient funds to pay the
principal, premium and interest on those Debt Securities on the date fixed for
redemption and that if the Trustee or the applicable Paying Agent does not
receive those funds, the redemption notice will not apply, and we will not be
required to redeem those Debt Securities.
We will not be required to:
. issue, register the transfer of, or exchange any Debt Securities of a
series during the period beginning 15 days before the date the notice is
mailed identifying the Debt Securities of that series that have been
selected for redemption; or
. register the transfer of, or exchange any Debt Security of that series
selected for redemption except the unredeemed portion of a Debt Security
being partially redeemed.
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Consolidation, Merger, Conveyance or Transfer
Each Indenture provides that we may consolidate or merge with or into, or
convey or transfer all or substantially all of our properties and assets to,
another corporation or other entity. Any successor must, however, assume our
obligations under that Indenture and the Debt Securities issued under it, and
we must deliver an officers' certificate and an opinion of counsel to the
Trustee that affirm compliance with all conditions in the Indenture relating to
the transaction. When those conditions are satisfied, the successor will
succeed to and be substituted for us under the Indenture, and we will be
relieved of our obligations under that Indenture and the Debt Securities issued
under it.
Modification; Waiver
We may amend or modify either Indenture with the consent of the holders of a
majority of the outstanding Debt Securities of all series of Debt Securities
issued under the Indenture that are affected by the amendment or modification,
voting as one class. The consent of the holder of each outstanding Debt
Security affected is, however, required to:
. change the maturity date of the principal, or any installment of
principal or interest on that Debt Security;
. reduce the principal amount, the interest rate or any premium payable
upon redemption on that Debt Security;
. reduce the amount of principal due and payable upon acceleration of
maturity;
. change the currency of payment of principal, premium or interest on that
Debt Security;
. impair the right to institute suit to enforce any such payment on or
after the maturity date or redemption date;
. reduce the percentage in principal amount of Debt Securities of any
series required to amend or modify the applicable Indenture, to waive
compliance with certain restrictive provisions of the applicable
Indenture or to waive certain defaults; or
. with certain exceptions, modify the provisions of the applicable
Indenture governing amendments of the Indenture or governing waiver of
covenants or past defaults.
In addition, we may supplement either Indenture to create new series of Debt
Securities and for other purposes, without the consent of any holders of Debt
Securities issued under that Indenture.
The holders of a majority of the outstanding Debt Securities of any series may
waive, for that series, our compliance with certain restrictive provisions of
the Indenture under which those Debt Securities were issued. The holders of a
majority of the outstanding Debt Securities of all series under an Indenture
with respect to which a default has occurred and is continuing, all holders of
those series voting as one class, may waive that default for all those series,
except a default in the payment of principal or any premium or interest on any
Debt Security or a default with respect to a covenant or provision which cannot
be amended or modified without the consent of the holder of each outstanding
Debt Security of the series affected.
We may not amend the Subordinated Indenture to change the subordination of any
outstanding Subordinated Notes without the consent of each holder of Senior
Indebtedness that the amendment would adversely affect.
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If certain payments on a series of Debt Securities are insured by a financial
guaranty insurance policy or other policy, terms other than those that are
described in the preceding two paragraphs may apply to that series.
Events of Default
The following are Events of Default under each Indenture with respect to any
series, unless we state otherwise in the applicable Prospectus Supplement:
. failure to pay principal of or any premium on any Debt Security of that
series when due;
. failure to pay any interest on any Debt Security of that series, when
due, that continues for 60 days; for this purpose, the date on which
interest is due is the date on which we are required to make payment
following any deferral of interest payments by us under the terms of
Debt Securities that permit such deferrals;
. failure to make any sinking fund payment when required for any Debt
Security of that series that continues for 60 days;
. failure to perform any covenant in the applicable Indenture (other than
a covenant expressly included solely for the benefit of other series)
that continues for 90 days after the Trustee or the holders of at least
33% of the outstanding Debt Securities of that series give us written
notice of the default; and
. certain bankruptcy, insolvency or reorganization events with respect to
the Corporation.
In the case of the fourth Event of Default listed above, the Trustee may extend
the grace period. In addition, if holders of a particular series have given a
notice of default, then holders of at least the same percentage of Debt
Securities of that series, together with the Trustee, may also extend the grace
period. The grace period will be automatically extended if we have initiated
and are diligently pursuing corrective action.
Additional Events of Default may be established for a particular series and, if
established, will be described in the applicable Prospectus Supplement.
If an Event of Default with respect to Debt Securities of a series occurs and
is continuing, then the Trustee or the holders of at least 33% of the
outstanding Debt Securities of that series may declare the principal amount of
all Debt Securities of that series to be immediately due and payable. However,
that Event of Default will be deemed waived at any time after the declaration
but before a judgment for payment of the money due has been obtained if:
. we have paid or deposited with the Trustee all overdue interest, the
principal and any premium due otherwise than by the declaration and any
interest on such amounts, and any interest on overdue interest, to the
extent legally permitted, in each case with respect to that series, and
all amounts due to the Trustee under the applicable Indenture; and
. all Events of Default with respect to that series, other than the
nonpayment of the principal which became due solely by virtue of the
declaration, have been cured or waived.
The Trustee is under no obligation to exercise any of its rights or powers at
the request or direction of any holders of Debt Securities unless those holders
have offered the Trustee security or indemnity against the costs, expenses and
liabilities which it might incur as a result. The holders of a majority
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of the outstanding Debt Securities of any series have, with certain exceptions,
the right to direct the time, method and place of conducting any proceedings
for any remedy available to the Trustee or the exercise of any trust or power
of the Trustee with respect to those Debt Securities. The Trustee may withhold
notice of any default (except a default in the payment of principal or
interest) from the holders of any series if the Trustee in good faith considers
it in the interest of the holders to do so.
The holder of any Debt Security will have an absolute and unconditional right
to receive payment of the principal, any premium and, within certain
limitations, any interest on that Debt Security on its maturity date or
redemption date and to enforce those payments.
If certain payments on a series of Debt Securities are insured by a financial
guaranty insurance policy or other policy, terms other than those that are
described in the preceding three paragraphs may apply to that series.
We are required to furnish each year to the Trustee under each Indenture an
officers' certificate to the effect that we are not in default under the
applicable Indenture or, if there has been a default, specifying the default
and its status.
Paying Agent
Unless we state otherwise in the applicable Prospectus Supplement, the Trustee
will act as Paying Agent for the Debt Securities, and the principal corporate
trust office of the Trustee will be the office through which the Paying Agent
acts. We may, however, change or add Paying Agents or approve a change in the
office through which a Paying Agent acts.
Any money that we have paid to a Paying Agent for principal or interest on any
Debt Securities which remains unclaimed at the end of two years after that
principal or interest has become due will be repaid to us at our request. After
repayment to us, holders should look only to us for those payments.
Negative Pledge
While any of the Senior Notes remain outstanding, we will not create, or permit
to be created or to exist, any mortgage, lien, pledge, security interest or
other encumbrance upon any of our property, whether owned on or acquired after
the date of the Senior Indenture, to secure any of our indebtedness for
borrowed money, unless the Senior Notes then outstanding are equally and
ratably secured for so long as any such indebtedness is so secured.
The foregoing restriction does not apply to, among other things:
. purchase money mortgages, or other purchase money liens, pledges,
security interests or encumbrances upon property that we acquired after
the date of the Senior Indenture;
. mortgages, liens, pledges, security interests or other encumbrances
existing on any property at the time we acquired it, including those
which exist on any property of an entity with which we are consolidated
or merged or which transfers or leases all or substantially all of its
properties to us;
. mortgages, liens, pledges, security interests or other encumbrances upon
any of our property that existed on the date of the initial issuance of
the Senior Notes;
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. pledges or deposits to secure performance in connection with bids,
tenders, contracts--other than contracts for the payment of money--or
leases to which we are a party;
. liens created by or resulting from any litigation or proceeding which at
the time is being contested in good faith by appropriate proceedings;
. liens incurred in connection with the issuance of bankers' acceptances
and lines of credit, bankers' liens or rights of offset and any security
given in the ordinary course of business to banks or others to secure
any indebtedness payable on demand or maturing within 12 months of the
date that such indebtedness is originally incurred;
. liens incurred in connection with repurchase, swap or other similar
agreements (including commodity price, currency exchange and interest
rate protection agreements);
. liens securing industrial revenue or pollution control bonds;
. liens, pledges, security interests or other encumbrances on any property
arising in connection with any defeasance, covenant defeasance or in-
substance defeasance of any of our indebtedness;
. liens created in connection with, and created to secure, a non-recourse
obligation;
. Bonds issued or to be issued from time to time under the Mortgage, and
the "permitted liens" specified in the Mortgage;
. indebtedness which we issue in connection with our consolidation or
merger with any other entity, which may be our affiliate, in exchange or
in substitution for secured indebtedness of that entity ("Third Party
Debt") which by its terms (1) is secured by a mortgage on all or a
portion of the property of that entity, (2) prevents that entity from
incurring secured indebtedness, unless the Third Party Debt is secured
equally and ratably with such secured indebtedness or (3) prevents that
entity from incurring secured indebtedness;
. indebtedness of any entity which we are required to assume in connection
with a consolidation or merger of that entity, with respect to which any
of our property is subjected to a mortgage, lien, pledge, security
interest or other encumbrance;
. mortgages, liens, pledges, security interests or other encumbrances upon
any property that we acquired, constructed, developed or improved after
the date of the Senior Indenture which are created before, at the time
of, or within 18 months after such acquisition--or in the case of
property constructed, developed or improved, after the completion of the
construction, development or improvement and commencement of full
commercial operation of that property, whichever is later--to secure or
provide for the payment of any part of its purchase price or cost;
provided that, in the case of such construction, development or
improvement, the mortgages, liens, pledges, security interests or other
encumbrances shall not apply to any property that we own other than real
property that is unimproved up to that time; and
. the replacement, extension or renewal of any mortgage, lien, pledge,
security interest or other encumbrance described above; or the
replacement, extension or renewal (not exceeding the principal amount of
indebtedness so secured together with any premium, interest, fee or
expense payable in connection with any such replacement, extension or
renewal) of the indebtedness so secured; provided that such replacement,
extension or
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renewal is limited to all or a part of the same property that secured
the mortgage, lien, pledge, security interest or other encumbrance
replaced, extended or renewed, plus improvements on it or additions or
accessions to it.
In addition, we may create or assume any other mortgage, lien, pledge, security
interest or other encumbrance not excepted in the Senior Indenture without
equally and ratably securing the Senior Notes, if immediately after that
creation or assumption, the principal amount of our indebtedness for borrowed
money that all such other mortgages, liens, pledges, security interests and
other encumbrances secure does not exceed an amount equal to 10% of our common
stockholders' equity as shown on our consolidated balance sheet for the
accounting period occurring immediately before the creation or assumption of
that mortgage, lien, pledge, security interest or other encumbrance.
Defeasance and Covenant Defeasance
Unless the particular series of Debt Securities provides otherwise, we may be:
. discharged from our obligations (with certain exceptions) with respect
to any series of Debt Securities, such a discharge being called a
"Defeasance" in this Prospectus; and
. released from our obligations under certain restrictive covenants
especially established with respect to any series of Debt Securities,
including the obligations described above under the caption "Negative
Pledge" with respect to any series of Senior Notes, such a release being
called a "Covenant Defeasance" in this Prospectus.
To effect a Defeasance or Covenant Defeasance, we must satisfy certain
conditions. Those conditions include the irrevocable deposit with the Trustee,
in trust, of money or government obligations which through their scheduled
payments of principal and interest would provide sufficient money to pay the
principal and any premium and interest on such Debt Securities on the maturity
dates of such payments or upon redemption.
Following a Defeasance, payment of the Debt Securities defeased may not be
accelerated because of an Event of Default. Following a Covenant Defeasance,
the payment of Debt Securities may not be accelerated by reference to the
covenants from which we have been released. A Defeasance may occur after a
Covenant Defeasance.
Under current United States federal income tax law, a Defeasance would be
treated as an exchange of the relevant Debt Securities in which holders of Debt
Securities might recognize gain or loss. In addition, the amount, timing and
character of amounts that holders would thereafter be required to include in
income might be different from what would be includible absent that Defeasance.
We urge investors to consult their own tax advisors as to the specific
consequences of a Defeasance, including the applicability and effect of tax
laws other than United States federal income tax laws.
Under current United States federal income tax law, unless accompanied by other
changes in the terms of the Debt Securities, Covenant Defeasance should not be
treated as a taxable exchange.
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Subordination
Each series of Subordinated Notes will be subordinate and junior in right of
payment, to the extent set forth in the Subordinated Indenture, to all "Senior
Indebtedness" as defined below. If:
. we make a payment or distribution of any of our assets to creditors upon
our dissolution, winding-up, liquidation or reorganization, whether in
bankruptcy, insolvency or otherwise;
. a default beyond any grace period has occurred and is continuing with
respect to the payment of principal, interest or any other monetary
amounts due and payable on any Senior Indebtedness; or
. the maturity of any Senior Indebtedness has been accelerated because of
a default on that Senior Indebtedness,
then the holders of Senior Indebtedness generally will have the right to
receive payment, in the case of the first instance, of all amounts due or to
become due upon that Senior Indebtedness, and, in the case of the second and
third instances, of all amounts due on that Senior Indebtedness, or we will
make provision for those payments, before the holders of any Subordinated Notes
have the right to receive any payments of principal or interest on their
Subordinated Notes.
"Senior Indebtedness" means, with respect to any series of Subordinated Notes,
the principal, premium, interest and any other payment in respect of any of the
following:
. all of our indebtedness that is evidenced by notes, debentures, bonds or
other securities we sell for money or other obligations for money
borrowed;
. all indebtedness of others of the kinds described in the preceding
category which we have assumed or guaranteed or which we have in effect
guaranteed through an agreement to purchase, contingent or otherwise;
and
. all renewals, extensions or refundings of indebtedness of the kinds
described in either of the preceding two categories.
Any such indebtedness, renewal, extension or refunding, however, will not be
"Senior Indebtedness" if the instrument creating or evidencing it or the
assumption or guarantee of it provides that it is not superior in right of
payment to or is equal in right of payment with those Subordinated Notes.
Senior Indebtedness will be entitled to the benefits of the subordination
provisions in the Subordinated Indenture irrespective of the amendment,
modification or waiver of any term of the Senior Indebtedness.
Some future series of Subordinated Notes may rank senior to other series of
Subordinated Notes and would constitute Senior Indebtedness with respect to
those series.
The Subordinated Indenture does not limit the amount of Senior Indebtedness
that we may issue. As of December 31, 1998, our Senior Indebtedness totaled
approximately $4,044,000,000.
Concerning the Trustee
The Chase Manhattan Bank is the Bond Trustee under the Mortgage and the Trustee
under each Indenture. We and some of our affiliates maintain deposit accounts
and banking relationships with The Chase Manhattan Bank.
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PLAN OF DISTRIBUTION
We may sell the New Bonds and the New Debt Securities in any of three ways:
. through underwriters or dealers;
. directly to a limited number of institutional purchasers or to a single
purchaser; or
. through agents.
The applicable Prospectus Supplement will describe the terms under which the
New Bonds and the New Debt Securities are offered, including:
. the names of any underwriters, dealers or agents;
. the purchase price and our net proceeds from the sale;
. any underwriting discounts and other items constituting underwriters'
compensation;
. any initial public offering price; and
. any discounts or concessions allowed, re-allowed or paid to dealers.
We or any underwriters or dealers may change from time to time any initial
public offering price and any discounts or concessions allowed, re-allowed or
paid to dealers.
If we use underwriters in the sale of New Bonds and New Debt Securities, those
underwriters will acquire the New Bonds and the New Debt Securities for their
own account and may resell them in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of the sale. Unless we state otherwise in the applicable
Prospectus Supplement, the obligations of any underwriter to purchase the New
Bonds and the New Debt Securities will be subject to conditions, and the
underwriter will be obligated to purchase all the New Bonds and the New Debt
Securities, except that in some cases involving a default by an underwriter,
less than all of the New Bonds and the New Debt Securities may be purchased. If
we sell the New Bonds and the New Debt Securities through an agent, the
applicable Prospectus Supplement will state the name and any commission we may
pay to the agent. Unless we state otherwise in the Prospectus Supplement, that
agent will be acting on a best-efforts basis for the period of its appointment.
The applicable Prospectus Supplement will state whether we will authorize
agents, underwriters or dealers to solicit offers by certain specified
institutions to purchase securities at the public offering price specified in
the Prospectus Supplement under delayed delivery contracts providing for
payment and delivery on a specified future date. These contracts will be
subject to the conditions specified in the applicable Prospectus Supplement.
Additionally, the applicable Prospectus Supplement will set forth the
commission payable for solicitation of those contracts.
Agents and underwriters may be entitled under agreements entered into with us
to indemnification against certain civil liabilities, including liabilities
under the Securities Act of 1933.
Underwriters and their affiliates may engage in transactions with, or perform
services for, us or our affiliates in the ordinary course of their business.
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EXPERTS
Our consolidated financial statements as of December 31, 1998 and 1997 and for
each of the three years in the period ended December 31, 1998, except PanEnergy
Corp and subsidiaries as of and for the period ended December 31, 1996,
included in our annual report on Form 10-K, which are incorporated by reference
in this Prospectus, have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report which is incorporated by reference in this
Prospectus. The financial statements of PanEnergy Corp and subsidiaries
(consolidated with our financial statements) as of and for the period ended
December 31, 1996 have been audited by KPMG LLP, independent auditors, as
stated in their report incorporated by reference in this Prospectus. Those
financial statements are incorporated in this Prospectus in reliance upon the
respective reports of such firms given upon their authority as experts in
accounting and auditing.
LEGAL MATTERS
Ellen T. Ruff, Esq., who is our Vice President and General Counsel, Corporate,
Gas and Electric Operations, or another of our lawyers and Dewey Ballantine
LLP, our outside counsel, will issue opinions about the legality of the New
Bonds and the New Debt Securities. Ms. Ruff owns, and such other lawyer likely
would own, our Common Stock and options to purchase shares of our Common Stock.
Counsel named in the applicable Prospectus Supplement will issue opinions about
the legality of the New Bonds and the New Debt Securities on behalf of any
underwriters, dealers or agents.
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PROSPECTUS SUPPLEMENT March 7, 2000
$300,000,000
Duke Energy Corporation
Series D 7 3/8% Senior Notes
due 2010
Warburg Dillon Read LLC
