Exhibit 99.1
| | |
 | | NEWS RELEASE |
| |
| | Duke Energy Corporation |
| | P.O. Box 1009 |
| | Charlotte, NC 28201-1009 |
| | | | |
| May 2, 2008 | | MEDIA CONTACT | | Tom Williams |
| | Phone: | | 980-373-4743 |
| | 24-Hour: | | 704-382-8333 |
| | |
| | ANALYST CONTACT | | Sean Trauschke |
| | Phone: | | 980-373-7905 |
Duke Energy Reports First Quarter 2008 Results
| | • | | Adjusted diluted earnings per share (EPS) of 35 cents versus 30 cents in first quarter 2007 |
| | • | | Reported diluted EPS of 37 cents, compared to 28 cents for the same period last year |
| | • | | On track to achieve 2008 employee incentive target of $1.27 per share, based on adjusted diluted EPS. |
CHARLOTTE, N.C. – Duke Energy today reported adjusted diluted earnings per share (EPS) of 35 cents for the first quarter 2008, versus 30 cents for the same period last year.
First quarter 2008 results reflect strong contributions from the company’s three largest business units – U.S. Franchised Electric and Gas, Commercial Power and Duke Energy International.
The company reported first quarter 2008 diluted EPS of 37 cents, compared to 28 cents in first quarter 2007.
“Our performance in the first three months of 2008 is a credit to the focus of the management and employees in each business group,” said Chairman, President and Chief Executive Officer James E. Rogers. “We continue to make progress in resolving regulatory uncertainties while pursuing major capital projects that ensure we can continue to provide our customers with clean, affordable and reliable electric and gas services.
“Although we’ve only completed one quarter, we are on track to accomplish our goals, including attaining our 2008 employee incentive target of $1.27 per share on an adjusted diluted basis.”
Starting in the first quarter 2008, Duke Energy has begun presenting adjusted earnings, which excludes the impacts of special items and discontinued operations, as well as the mark-to-market impacts of economic hedges in the Commercial Power segment. Prior to the first quarter 2008, Duke Energy presented ongoing earnings, which excluded the impacts of special items and discontinued operations. For comparative purposes, ongoing earnings for prior periods have been revised to present results for all periods on the same adjusted earnings basis.
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Special items and mark-to-market impacts of economic hedges in the Commercial Power segment affecting Duke Energy’s adjusted diluted EPS for the quarter include:
| | | | | | | | | | | | | | | | |
(In millions, except per-share amounts) | | Pre-Tax
Amount | | | Tax
Effect | | | 1Q2008
EPS
Impact | | | 1Q2007
EPS
Impact | |
First quarter 2008 | |
• Mark-to-market impact of economic hedges | | $ | 47 | | | $ | (17 | ) | | $ | 0.03 | | | | — | |
• Costs to achieve Cinergy merger | | $ | (11 | ) | | $ | 4 | | | $ | (0.01 | ) | | | — | |
|
First quarter 2007 | |
• Convertible debt costs, Spectra Energy spinoff | | $ | (21 | ) | | | — | | | | — | | | $ | (0.02 | ) |
• Mark-to-market impact of economic hedges | | $ | (26 | ) | | $ | 9 | | | | — | | | $ | (0.01 | ) |
• Costs to achieve Cinergy merger | | $ | (11 | ) | | $ | 4 | | | | — | | | | — | |
Total diluted EPS impact | | | | | | | | | | $ | 0.02 | | | $ | (0.03 | ) |
Reconciliation of reported to adjusted diluted EPS for the quarter:
| | | | | | | | |
| | | 1Q2008
EPS | | | 1Q2007
EPS | |
Diluted EPS from continuing operations, as reported | | $ | 0.37 | | | $ | 0.27 | |
Diluted EPS from discontinued operations, as reported | | | — | | | $ | 0.01 | |
Diluted EPS, as reported | | $ | 0.37 | | | $ | 0.28 | |
Adjustments to reported diluted EPS: | | | | | | | | |
• Diluted EPS from discontinued operations | | | — | | | $ | (0.01 | ) |
• Diluted EPS impact of special items and mark-to-market in Commercial Power | | $ | (0.02 | ) | | $ | 0.03 | |
Diluted EPS, adjusted | | $ | 0.35 | | | $ | 0.30 | |
BUSINESS UNIT RESULTS (ON A REPORTED BASIS)
U.S. Franchised Electric and Gas (USFE&G)
USFE&G reported first-quarter 2008 segment EBIT from continuing operations of $637 million, compared to $574 million in the first quarter 2007. The EBIT increase over the previous year’s quarter was primarily driven by the conclusion in the third quarter of 2007 of North Carolina clean air amortization, the substantial completion of rate credits in 2007 related to the Cinergy merger, favorable weather and higher Allowance for Funds Used During Construction (AFUDC).
These increases were partially offset by lower retail rates resulting from the North Carolina 2007 rate review, a favorable settlement with the Department of Energy that occurred in the first quarter of 2007 related to its obligation to accept and dispose of used nuclear fuel, higher depreciation expense and lower Bulk Power Marketing results, net of sharing.
Commercial Power
Commercial Power reported first-quarter 2008 segment EBIT from continuing operations of $146 million, compared to $13 million in the first quarter 2007.
Commercial Power’s improved results for the quarter were due primarily to mark-to-market impacts of economic hedges, lower purchase accounting net expenses, gains on the sale of emission allowances and improved results of the Midwest gas-fired assets.
The contribution was partially offset by higher expenses from increased plant maintenance in the quarter due to plant outages.
Duke Energy International (DEI)
DEI reported first-quarter 2008 segment EBIT from continuing operations of $114 million, compared to $94 million in the first quarter 2007. DEI’s improved results were driven primarily by higher margins at National Methanol and favorable foreign exchange rates, partially offset by less favorable hydrology in Latin America.
Crescent Resources
Duke Energy’s ownership share of Crescent Resources resulted in $2 million in equity earnings for both the first quarter 2008 and the first quarter 2007. The results for the first quarter 2008 reflect the ongoing challenges in the real estate markets.
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Other
Other primarily includes costs associated with corporate governance, costs-to-achieve the Cinergy merger and Duke Energy’s captive insurance company.
Other reported a first-quarter 2008 net expense from continuing operations of $78 million, compared to $84 million in the first quarter 2007. The improvement for the quarter was due primarily to $21 million recognized in the first quarter of 2007 related to convertible debt charges associated with the spin-off of Spectra Energy, partially offset by higher captive insurance costs in the first quarter of 2008.
INTEREST EXPENSE
Interest expense from continuing operations was $182 million for the first quarter 2008, compared to $163 million for the first quarter 2007. The increase is primarily due to higher debt balances.
INCOME TAX EXPENSE
Income tax expense from continuing operations for first quarter 2008 was $222 million, compared to $139 million for the first quarter 2007. The increase in tax expense is primarily due to an increase in pre-tax income in 2008 and a lower effective tax rate in the prior year’s quarter due to a reduction in the unitary state tax rate as a result of the spin-off of Spectra Energy.
Discontinued Operations
In the first quarter of 2008, Discontinued Operations had after-tax income of $2 million, compared to $20 million in the first quarter 2007. The variance is primarily due to the presentation of the first quarter 2007 synfuel operations as discontinued operations.
NON-GAAP FINANCIAL MEASURES
The primary performance measure used by management to evaluate segment performance is segment EBIT from continuing operations, which at the segment level represents all profits from continuing operations (both operating and nonoperating), including any equity in earnings of unconsolidated affiliates, before deducting interest and taxes, and is net of the minority interest expense related to those profits. Management believes segment EBIT from continuing operations, which is the GAAP measure used to report segment results, is a good indicator of each segment’s operating performance as it represents the results of Duke Energy’s ownership interests in continuing operations without regard to financing methods or capital structures.
Duke Energy’s management uses adjusted diluted EPS, which is a non-GAAP financial measure as it represents diluted EPS from continuing operations, adjusted for the per-share impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment, as a measure to evaluate operations of the company.
Special items represent certain charges and credits, which management believes will not be recurring on a regular basis. Mark-to-market adjustments reflect the mark-to-market impact of derivative contracts, which is recognized in GAAP earnings immediately as such derivative contracts do not qualify for hedge accounting, used in Duke Energy’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS provides useful information to investors, as it allows them to more accurately compare the company’s performance across periods. Adjusted diluted EPS is also used as a basis for employee incentive bonuses.
The most directly comparable GAAP measure for adjusted diluted EPS is reported diluted EPS from continuing operations, which includes the impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment.
Due to the forward-looking nature of adjusted diluted EPS for future periods, information to reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items and the mark-to-market impacts of economic hedges in the Commercial Power segment for future periods.
Duke Energy also uses adjusted segment EBIT (including adjusted equity earnings for Crescent Resources) and Other net expenses as a measure of historical and anticipated future segment and other performance. When used for future periods, adjusted segment EBIT
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and Other net expenses may also include any amounts that may be reported as discontinued operations. Adjusted segment EBIT and Other net expenses are non-GAAP financial measures, as they represent reported segment EBIT and Other net expenses adjusted for special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Management believes that the presentation of adjusted segment EBIT and Other net expenses provides useful information to investors, as it allows them to more accurately compare a segment’s or Other’s ongoing performance across periods. The most directly comparable GAAP measure for adjusted segment EBIT or Other net expenses is reported segment EBIT or Other net expenses, which represents segment EBIT and Other net expenses from continuing operations, including any special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Due to the forward-looking nature of any forecasted adjusted segment EBIT or Other net expenses and any related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items, the mark-to-market impacts of economic hedges in the Commercial Power segment, or any amounts that may be reported as discontinued operations for future periods.
Duke Energy, one of the largest electric power companies in the United States, supplies and delivers electricity to approximately 4.0 million U.S. customers in its regulated jurisdictions. The company has approximately 35,000 megawatts of electric generating capacity in the Midwest and the Carolinas, and natural gas distribution services in Ohio and Kentucky. In addition, Duke Energy has more than 4,000 megawatts of electric generation in Latin America, and is a joint-venture partner in a U.S. real estate company.
Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.
An earnings conference call for analysts is scheduled for 10 a.m. ET on Friday, May 2. The conference call can be accessed via theinvestors’ section of Duke Energy’s Web site or by dialing 877-719-9788 in the United States or 719-325-4762 outside the United States. The confirmation code is 6990734. Please call in 10 to 15 minutes prior to the scheduled start time. A replay of the conference call will be available until May 12, 2008, by dialing 888-203-1112 in the United States or 719-457-0820 outside the United States, with a confirmation code of 6990734. A replay and transcript also will be available by accessing theinvestors’ section of the company’s Web site.
Forward-looking statement
This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions. These forward-looking statements are identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “target,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to: State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements; state, federal and foreign legislation and regulatory initiatives that affect cost and investment recovery, or have an impact on rate structures; costs and effects of legal and administrative proceedings, settlements, investigations and claims; industrial, commercial and residential growth in Duke Energy Corporation’s (Duke Energy) service territories; additional competition in electric markets and continued industry consolidation; political and regulatory uncertainty in other countries in which Duke Energy conducts business; the influence of weather and other natural phenomena on Duke Energy operations, including the economic, operational and other effects of hurricanes, droughts, ice storms and tornadoes; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates; unscheduled generation outages, unusual maintenance or repairs and electric transmission system constraints; the results of financing efforts, including Duke Energy’s ability to obtain financing on favorable terms, which can be affected by various factors, including Duke Energy’s credit ratings and general economic conditions; declines in the market prices of equity securities and resultant cash funding requirements for Duke Energy’s defined benefit pension plans; the level of credit worthiness of counterparties to Duke Energy’s transactions; employee workforce factors, including the potential inability to attract and retain key personnel; growth in opportunities for Duke Energy’s business units, including the timing and success of efforts to develop domestic and international power and other projects; the performance of electric generation and of projects undertaken by Duke Energy’s non-regulated businesses; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; and the ability to successfully complete merger, acquisition or divestiture plans. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Duke Energy has described. Duke Energy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
###
4
MARCH 2008
QUARTERLY HIGHLIGHTS
(Unaudited)
| | | | | | | | |
| | | Three Months Ended
March 31, | |
| (In millions, except per-share amounts and where noted) | | 2008 | | | 2007 | |
COMMON STOCK DATA | | | | | | | | |
Earnings Per Share (from continuing operations) | | | | | | | | |
Basic | | $ | 0.37 | | | $ | 0.27 | |
Diluted | | $ | 0.37 | | | $ | 0.27 | |
Earnings per Share (from discontinued operations) | | | | | | | | |
Basic | | $ | — | | | $ | 0.01 | |
Diluted | | $ | — | | | $ | 0.01 | |
Earnings Per Share | | | | | | | | |
Basic | | $ | 0.37 | | | $ | 0.28 | |
Diluted | | $ | 0.37 | | | $ | 0.28 | |
Dividends Per Share | | $ | 0.22 | | | $ | 0.21 | |
Weighted-Average Shares Outstanding | | | | | | | | |
Basic | | | 1,263 | | | | 1,257 | |
Diluted | | | 1,267 | | | | 1,268 | |
INCOME | | | | | | | | |
Operating Revenues | | $ | 3,337 | | | $ | 3,035 | |
| | | | | | | | |
Total Reportable Segment EBIT | | | 899 | | | | 683 | |
Other EBIT | | | (78 | ) | | | (84 | ) |
Interest Expense | | | (182 | ) | | | (163 | ) |
Interest Income and Other (a) | | | 46 | | | | 40 | |
Income Tax Expense from Continuing Operations | | | (222 | ) | | | (139 | ) |
Income from Discontinued Operations, net of tax | | | 2 | | | | 20 | |
| | | | | | | | |
Net Income | | $ | 465 | | | $ | 357 | |
| | | | | | | | |
CAPITALIZATION | | | | | | | | |
Total Common Equity | | | 64% | | | | 64% | |
Minority Interests | | | 0% | | | | 0% | |
Total Debt | | | 36% | | | | 36% | |
Total Debt | | $ | 12,102 | | | $ | 11,538 | |
Book Value Per Share | | $ | 16.94 | | | $ | 16.39 | |
Actual Shares Outstanding | | | 1,264 | | | | 1,259 | |
CAPITAL AND INVESTMENT EXPENDITURES | | | | | | | | |
U.S. Franchised Electric and Gas | | $ | 875 | | | $ | 668 | |
Commercial Power | | | 114 | | | | 90 | |
International Energy | | | 56 | | | | 11 | |
Other | | | 44 | | | | 40 | |
| | | | | | | | |
Total Capital and Investment Expenditures | | $ | 1,089 | | | $ | 809 | |
| | | | | | | | |
EBIT BY BUSINESS SEGMENT | | | | | | | | |
U.S. Franchised Electric and Gas | | $ | 637 | | | $ | 574 | |
Commercial Power | | | 146 | | | | 13 | |
International Energy | | | 114 | | | | 94 | |
Crescent | | | 2 | | | | 2 | |
| | | | | | | | |
Total Reportable Segment EBIT | | | 899 | | | | 683 | |
Other EBIT | | | (78 | ) | | | (84 | ) |
Interest Expense | | | (182 | ) | | | (163 | ) |
Interest Income and Other (a) | | | 46 | | | | 40 | |
| | | | | | | | |
Consolidated Income From Continuing Operations Before Income Taxes | | $ | 685 | | | $ | 476 | |
| | | | | | | | |
| | | | | | | | | |
| (a) | Other within Interest Income and Other includes foreign currency transaction gains and losses and additional minority interest not allocated to the segment results. |
Note: Certain 2007 amounts have been recast due to the reclassification of Synfuel operations to discontinued operations.
5
MARCH 2008
QUARTERLY HIGHLIGHTS
(Unaudited)
| | | | | | | | |
| | | Three Months Ended
March 31, | |
(In millions, except where noted) | | 2008 | | | 2007 | |
U.S. FRANCHISED ELECTRIC AND GAS | | | | | | | | |
Operating Revenues | | $ | 2,601 | | | $ | 2,399 | |
Operating Expenses | | | 1,999 | | | | 1,835 | |
Gains (Losses) on Sales of Other Assets and Other, net | | | 3 | | | | — | |
Other Income and Expenses, net | | | 32 | | | | 10 | |
| | | | | | | | |
EBIT | | $ | 637 | | | $ | 574 | |
| | | | | | | | |
Depreciation and Amortization | | $ | 332 | | | $ | 361 | |
Duke Energy Carolinas GWh sales | | | 22,055 | | | | 21,542 | |
Duke Energy Midwest GWh sales | | | 16,276 | | | | 16,412 | |
Net Proportional MW Capacity in Operation | | | 27,333 | | | | 27,590 | |
COMMERCIAL POWER (a) | | | | | | | | |
Operating Revenues | | $ | 450 | | | $ | 380 | |
Operating Expenses | | | 323 | | | | 362 | |
Gains (Losses) on Sales of Other Assets and Other, net | | | 14 | | | | (11 | ) |
Other Income and Expenses, net | | | 5 | | | | 6 | |
| | | | | | | | |
EBIT | | $ | 146 | | | $ | 13 | |
| | | | | | | | |
Depreciation and Amortization | | $ | 43 | | | $ | 41 | |
Actual Plant Production, GWh | | | 5,919 | | | | 5,871 | |
Net Proportional MW Capacity in Operation | | | 7,550 | | | | 8,100 | |
INTERNATIONAL ENERGY | | | | | | | | |
Operating Revenues | | $ | 289 | | | $ | 245 | |
Operating Expenses | | | 212 | | | | 165 | |
Other Income and Expenses, net | | | 42 | | | | 19 | |
Minority Interest Expense | | | 5 | | | | 5 | |
| | | | | | | | |
EBIT | | $ | 114 | | | $ | 94 | |
| | | | | | | | |
Depreciation and Amortization | | $ | 21 | | | $ | 18 | |
Sales, GWh | | | 4,244 | | | | 4,654 | |
Proportional MW Capacity in Operation | | | 4,005 | | | | 3,945 | |
CRESCENT | | | | | | | | |
Equity in Earnings of Unconsolidated Affiliates | | $ | 2 | | | $ | 2 | |
| | | | | | | | |
EBIT | | $ | 2 | | | $ | 2 | |
| | | | | | | | |
OTHER | | | | | | | | |
Operating Revenues | | $ | 21 | | | $ | 36 | |
Operating Expenses | | | 94 | | | | 100 | |
Gains (Losses) on Sales of Other Assets and Other, net | | | 1 | | | | — | |
Other Income and Expenses, net | | | (7 | ) | | | (21 | ) |
Minority Interest Benefit | | | (1 | ) | | | (1 | ) |
| | | | | | | | |
EBIT | | $ | (78 | ) | | $ | (84 | ) |
| | | | | | | | |
Depreciation and Amortization | | $ | 17 | | | $ | 13 | |
| (a) | Excludes the results of Synfuel operations, which have been reclassified to discontinued operations for the three months ended March 31, 2007. |
6
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per-share amounts)
| | | | | | | |
| | | Three Months Ended
March 31, | |
| | | 2008 | | 2007 | |
Operating Revenues | | $ | 3,337 | | $ | 3,035 | |
Operating Expenses | | | 2,604 | | | 2,436 | |
Gains (Losses) on Sales of Other Assets and Other, net | | | 18 | | | (11 | ) |
| | | | | | | |
Operating Income | | | 751 | | | 588 | |
| | | | | | | |
Other Income and Expenses | | | 117 | | | 53 | |
Interest Expense | | | 182 | | | 163 | |
Minority Interest Expense | | | 1 | | | 2 | |
| | | | | | | |
Income From Continuing Operations Before Income Taxes | | | 685 | | | 476 | |
Income Tax Expense from Continuing Operations | | | 222 | | | 139 | |
| | | | | | | |
Income From Continuing Operations | | | 463 | | | 337 | |
Income From Discontinued Operations, net of tax | | | 2 | | | 20 | |
| | | | | | | |
Net Income | | $ | 465 | | $ | 357 | |
| | | | | | | |
Common Stock Data | | | | | | | |
Weighted-average shares outstanding | | | | | | | |
Basic | | | 1,263 | | | 1,257 | |
Diluted | | | 1,267 | | | 1,268 | |
Earnings per share (from continuing operations) | | | | | | | |
Basic | | $ | 0.37 | | $ | 0.27 | |
Diluted | | $ | 0.37 | | $ | 0.27 | |
Earnings per share (from discontinued operations) | | | | | | | |
Basic | | $ | — | | $ | 0.01 | |
Diluted | | $ | — | | $ | 0.01 | |
Earnings per share | | | | | | | |
Basic | | $ | 0.37 | | $ | 0.28 | |
Diluted | | $ | 0.37 | | $ | 0.28 | |
Dividends per share | | $ | 0.22 | | $ | 0.21 | |
7
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
| | | | | | |
| | | March 31,
2008 | | December 31,
2007 |
ASSETS | | | | | | |
Current Assets | | $ | 4,207 | | $ | 4,916 |
Investments and Other Assets | | | 11,200 | | | 11,199 |
Net Property, Plant and Equipment | | | 31,692 | | | 31,110 |
Regulatory Assets and Deferred Debits | | | 2,548 | | | 2,461 |
| | | | | | |
Total Assets | | $ | 49,647 | | $ | 49,686 |
| | | | | | |
LIABILITIES AND COMMON STOCKHOLDERS’ EQUITY | | | | | | |
Current Liabilities | | $ | 4,931 | | $ | 5,698 |
Long-term Debt | | | 10,083 | | | 9,498 |
Deferred Credits and Other Liabilities | | | 13,039 | | | 13,110 |
Minority Interests | | | 185 | | | 181 |
Common Stockholders’ Equity | | | 21,409 | | | 21,199 |
| | | | | | |
Total Liabilities and Common Stockholders’ Equity | | $ | 49,647 | | $ | 49,686 |
| | | | | | |
8
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
| | | | | | | | |
| | | Three Months Ended
March 31, | |
| | | 2008 | | | 2007 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
Net income | | $ | 465 | | | $ | 357 | |
Adjustments to reconcile net income to net cash provided by operating activities | | | 558 | | | | 559 | |
| | | | | | | | |
Net cash provided by operating activities | | | 1,023 | | | | 916 | |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Net cash used in investing activities | | | (1,075 | ) | | | (594 | ) |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Net cash provided by (used in) financing activities | | | 16 | | | | (700 | ) |
| | | | | | | | |
Net decrease in cash and cash equivalents | | | (36 | ) | | | (378 | ) |
Cash and cash equivalents at beginning of period | | | 678 | | | | 948 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 642 | | | $ | 570 | |
| | | | | | | | |
9
Duke Energy Carolinas
Quarterly Highlights
Supplemental Franchised Electric Information
| | | | | | | | |
| | | Three Months Ended
March 31, |
| | | 2008 | | | 2007 (1) | | | %
Inc.(Dec.) |
GWH Sales | | | | | | | | |
Residential | | 7,499 | | | 7,342 | | | 2.1% |
General Service | | 6,449 | | | 6,344 | | | 1.7% |
Industrial – Textile | | 1,112 | | | 1,243 | | | (10.5%) |
Industrial – Other | | 4,375 | | | 4,341 | | | 0.8% |
| | | | | | | | |
Total Industrial | | 5,487 | | | 5,584 | | | (1.7%) |
Other Energy Sales | | 71 | | | 70 | | | 2.1% |
Regular Resale | | 425 | | | 393 | | | 8.1% |
| | | | | | | | |
Total Regular Sales Billed | | 19,931 | | | 19,733 | | | 1.0% |
Special Sales | | 2,524 | | | 2,101 | | | 20.1% |
| | | | | | | | |
Total Electric Sales | | 22,455 | | | 21,834 | | | 2.8% |
Unbilled Sales | | (400 | ) | | (292 | ) | | (36.8%) |
| | | | | | | | |
Total Consolidated Electric Sales – Carolinas | | 22,055 | | | 21,542 | | | 2.4% |
Average Number of Customers | | | | | | | | |
Residential | | 2,004,488 | | | 1,967,248 | | | 1.9% |
General Service | | 330,482 | | | 326,391 | | | 1.3% |
Industrial – Textile | | 679 | | | 739 | | | (8.1%) |
Industrial – Other | | 6,559 | | | 6,562 | | | (0.0%) |
| | | | | | | | |
Total Industrial | | 7,238 | | | 7,301 | | | (0.9%) |
Other Energy Sales | | 13,580 | | | 13,359 | | | 1.7% |
Regular Resale | | 21 | | | 21 | | | 0.0% |
| | | | | | | | |
Total Regular Sales | | 2,355,809 | | | 2,314,320 | | | 1.8% |
Special Sales | | 42 | | | 34 | | | 23.5% |
| | | | | | | | |
Total Avg Number of Customers – Carolinas | | 2,355,851 | | | 2,314,354 | | | 1.8% |
|
(1) Amounts for prior periods have been recast to eliminate separate presentation of Nantahala amounts following the elimination of separate rates for Nantahala customers effective January 1, 2008. |
| | | |
Heating and Cooling Degree Days | | | | | | | | |
Actual | | | | | | | | |
Heating Degree Days | | 1,679 | | | 1,599 | | | 5.0% |
Cooling Degree Days | | 2 | | | 30 | | | (95.0%) |
Variance from Normal | | | | | | | | |
Heating Degree Days | | (0.6%) | | | (8.0%) | | | n/a |
Cooling Degree Days | | (62.5%) | | | 651.0% | | | n/a |
10
Duke Energy – Midwest
Quarterly Highlights
Supplemental Franchised Electric Information
| | | | | | | | |
| | | Three Months Ended
March 31, |
| | | 2008 | | | 2007 | | | %
Inc.(Dec.) |
GWH Sales | | | | | | | | |
Residential | | 5,502 | | | 5,347 | | | 2.9% |
General Service | | 4,552 | | | 4,371 | | | 4.1% |
Industrial | | 4,287 | | | 4,380 | | | (2.1%) |
Other Energy Sales | | 44 | | | 44 | | | 0.0% |
| | | | | | | | |
Total Regular Electric Sales Billed | | 14,385 | | | 14,142 | | | 1.7% |
Special Sales | | 2,180 | | | 2,632 | | | (17.2%) |
| | | | | | | | |
Total Electric Sales Billed – Midwest | | 16,565 | | | 16,774 | | | (1.2%) |
Unbilled Sales | | (289 | ) | | (362 | ) | | 20.2% |
| | | | | | | | |
Total Electric Sales – Midwest | | 16,276 | | | 16,412 | | | (0.8%) |
Average Number of Customers | | | | | | | | |
Residential | | 1,412,465 | | | 1,404,132 | | | 0.6% |
General Service | | 184,834 | | | 183,045 | | | 1.0% |
Industrial | | 5,618 | | | 5,673 | | | (1.0%) |
Other Energy | | 3,951 | | | 3,719 | | | 6.2% |
| | | | | | | | |
Total Regular Sales | | 1,606,868 | | | 1,596,569 | | | 0.6% |
Special Sales | | 38 | | | 26 | | | 46.2% |
| | | | | | | | |
Total Avg Number Electric Customers – Midwest | | 1,606,906 | | | 1,596,595 | | | 0.6% |
Heating and Cooling Degree Days* | | | | | | | | |
Actual | | | | | | | | |
Heating Degree Days | | 2,285 | | | 2,171 | | | 5.3% |
Cooling Degree Days | | — | | | 15 | | | (100.0%) |
Variance from Normal | | | | | | | | |
Heating Degree Days | | 10.0% | | | 5.5% | | | n/a |
Cooling Degree Days | | (100.0%) | | | 400.0% | | | n/a |
| * | Reflects HDD and CDD for Duke Energy – Indiana, Duke Energy – Ohio and Duke Energy – Kentucky |
11
DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
March 2007 Year-to-date
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items (Note 1) | | | | | | | | | | | | | |
| | | Adjusted
Earnings | | | Convertible
Debt Costs,
Gas Spin-off | | | Costs to
Achieve,
Cinergy
Merger | | | Economic Hedges
(Mark-to-Market) * | | | Discontinued
Operations | | | Total
Adjustments | | | Reported
Earnings | |
SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. Franchised Electric and Gas | | $ | 574 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 574 | |
Commercial Power | | | 39 | | | | — | | | | — | | | | (26 | ) D | | | — | | | | (26 | ) | | | 13 | |
International Energy | | | 94 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 94 | |
Crescent | | | 2 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment EBIT | | | 709 | | | | — | | | | — | | | | (26 | ) | | | — | | | | (26 | ) | | | 683 | |
Other | | | (52 | ) | | | (21 | ) C | | | (11 | ) A | | | — | | | | — | | | | (32 | ) | | | (84 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment EBIT and other EBIT | | $ | 657 | | | $ | (21 | ) | | $ | (11 | ) | | $ | (26 | ) | | $ | — | | | $ | (58 | ) | | $ | 599 | |
Interest Expense | | | (163 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (163 | ) |
Interest Income and Other | | | 40 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 40 | |
Income Taxes from Continuing Operations | | | (152 | ) | | | — | | | | 4 | | | | 9 | | | | — | | | | 13 | | | | (139 | ) |
Discontinued Operations, net of taxes | | | — | | | | — | | | | — | | | | — | | | | 20 | B | | | 20 | | | | 20 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income | | $ | 382 | | | $ | (21 | ) | | $ | (7 | ) | | $ | (17 | ) | | $ | 20 | | | $ | (25 | ) | | $ | 357 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EARNINGS PER SHARE, BASIC | | $ | 0.30 | | | $ | (0.02 | ) | | $ | — | | | $ | (0.01 | ) | | $ | 0.01 | | | $ | (0.02 | ) | | $ | 0.28 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EARNINGS PER SHARE, DILUTED | | $ | 0.30 | | | $ | (0.02 | ) | | $ | — | | | $ | (0.01 | ) | | $ | 0.01 | | | $ | (0.02 | ) | | $ | 0.28 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note 1 – Amounts for special items are presented net of any related minority interest.
A – Recorded in Operation, maintenance and other (Operating Expenses) on the Consolidated Statements of Operations.
B – Recorded in Income from Discontinued Operations, net of tax on the Consolidated Statements of Operations.
C – Recorded in Other income and expenses, net (Other Income and Expenses, net) on the Consolidated Statements of Operations.
D – $44 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $18 million gain recorded within Fuel used in electric generation and purchased power (Operating Expenses) on the Consolidated Statements of Operations.
Weighted Average Shares (reported and adjusted) – in millions
| * | Represents the mark-to-market impact of derivative contracts, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge accounting, used in Duke Energy’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS provides useful information to investors, as it allows them to more accurately compare the company’s performance across periods. |
12
DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
March 2008 Year-to-Date
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items
(Note 1) | | | | | | | | | | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Cinergy Merger | | | Economic Hedges
(Mark-to-Market)* | | | Discontinued
Operations | | | Total
Adjustments | | | Reported
Earnings | |
SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS | | | | | | | | | | | | | | | | | | | | | | | | |
U.S. Franchised Electric and Gas | | $ | 637 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 637 | |
Commercial Power | | | 99 | | | | — | | | | 47 | B | | | — | | | | 47 | | | | 146 | |
International Energy | | | 114 | | | | — | | | | — | | | | — | | | | — | | | | 114 | |
Crescent | | | 2 | | | | — | | | | — | | | | — | | | | — | | | | 2 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment EBIT | | | 852 | | | | — | | | | 47 | | | | — | | | | 47 | | | | 899 | |
Other | | | (67 | ) | | | (11 | ) A | | | — | | | | — | | | | (11 | ) | | | (78 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment and Other EBIT | | $ | 785 | | | $ | (11 | ) | | $ | 47 | | | $ | — | | | $ | 36 | | | $ | 821 | |
Interest Expense | | | (182 | ) | | | — | | | | — | | | | — | | | | — | | | | (182 | ) |
Interest Income and Other | | | 46 | | | | — | | | | — | | | | — | | | | — | | | | 46 | |
Income Taxes from Continuing Operations | | | (209 | ) | | | 4 | | | | (17 | ) | | | — | | | | (13 | ) | | | (222 | ) |
Discontinued Operations, net of taxes | | | — | | | | — | | | | — | | | | 2 | C | | | 2 | | | | 2 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net Income | | $ | 440 | | | $ | (7 | ) | | $ | 30 | | | $ | 2 | | | $ | 25 | | | $ | 465 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
EARNINGS PER SHARE, BASIC | | $ | 0.35 | | | $ | (0.01 | ) | | $ | 0.03 | | | $ | — | | | $ | 0.02 | | | $ | 0.37 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
EARNINGS PER SHARE, DILUTED | | $ | 0.35 | | | $ | (0.01 | ) | | $ | 0.03 | | | $ | — | | | $ | 0.02 | | | $ | 0.37 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Note 1 – Amounts for special items are presented net of any related minority interest.
A – Recorded in Operation, maintenance and other (Operating Expenses) on the Consolidated Statements of Operations.
B – $7 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $54 million gain recorded within Fuel used in electric generation and purchased power (Operating Expenses) on the Consolidated Statements of Operations.
C – Recorded in Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations.
Weighted Average Shares (reported and adjusted) – in millions
| * | Represents the mark-to-market impact of derivative contracts, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge accounting, used in Duke Energy’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS provides useful information to investors, as it allows them to more accurately compare the company’s performance across periods. |
13
