13. Guaranteed Preferred Beneficial Interests in Subordinated Notes of Duke Energy or Subsidiaries

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Duke Energy and Duke Capital Corporation have formed business trusts for which they own all the common securities. The trusts issue and sell preferred securities and invest the gross proceeds in junior subordinated notes issued by the respective parent companies.

		Trust Preferred Securities									December 31,
		Issued		Rate			Due				2002				2001
											(in millions)
		1997		7.20	%			2037			$	350				350
		1998		7.375	%			2038				350				350
		1998		7.375	%			2038				250				250
		1999		8.375	%			2029				250				250
		1999		7.20	%			2039				250				250
		Unamortized debt discount										(42	)			(43	)
		Total long-term debt									$	1,408			$	1,407

The trust preferred securities represent preferred undivided beneficial interests in the assets of the respective trusts. Distribution payments on the preferred securities are guaranteed by the respective parent companies, but only to the extent that the trust funds are legally and immediately available to make distributions. Dividends related to the trust preferred securities were $108 million for 2002, 2001 and 2000, and have been included in the Consolidated Statements of Income as Minority Interest Expense.

©Copyright 2003

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