Exhibit 99.1
| | |
 | | NEWS RELEASE |
| |
| | Duke Energy Corporation |
| | P.O. Box 1009 |
| | Charlotte, NC 28201-1009 |
| | | | |
| Aug. 4, 2009 | | MEDIA CONTACT | | Tom Shiel |
| | Phone: | | 704-382-2355 |
| | 24-Hour: | | 704-382-8333 |
| | |
| | ANALYST CONTACT | | Bill Currens |
| | Phone: | | 704-382-1603 |
Duke Energy Reports Second Quarter 2009 Results
| | • | | Second quarter 2009 adjusted diluted earnings per share (EPS) was 26 cents, compared with 27 cents for the second quarter 2008 |
| | • | | Reported diluted EPS for second quarter 2009 was 21 cents, compared to 28 cents for the second quarter 2008 |
| | • | | Through second quarter, tracking slightly ahead of the employee incentive target of $1.20, based on adjusted diluted EPS; however, softened industrial volumes require continued strong focus on operations and cost management |
CHARLOTTE, N.C. – Duke Energy today announced second quarter 2009 adjusted diluted earnings per share of 26 cents, compared to 27 cents for second quarter 2008. Reported diluted EPS for the second quarter 2009 was 21 cents, compared to 28 cents for the same period last year.
Through the second quarter of 2009, based upon adjusted diluted EPS, the company is slightly ahead of its internal plan, on a year-to-date basis. The company continues to experience lower electricity sales as a result of the economy, but has been effectively managing through the downturn with aggressive cost control. Industrial volumes are expected to stabilize for the remainder of 2009. Achievement of the employee incentive target will require continued focus on operations and cost management as well as some improvement in overall economic conditions.
“I am pleased with our results through the first half of the year in this challenging environment. Our industrial sales are being negatively impacted by current economic conditions and we have largely offset this impact with our strong operational performance and cost management. Industrial sales are showing signs of stabilization, but we do not see significant improvement in the near term. We will continue to focus on the matters we can control, including our operational performance, cost management and maintaining the strength of our liquidity and balance sheet,” said James E. Rogers, chairman, president and chief executive officer.
Mark-to-market impacts of economic hedges in the Commercial Power segment and special items affecting Duke Energy’s adjusted diluted EPS for the quarters include:
| | | | | | | | | | | | | | | | |
(In millions, except per-share amounts) | | Pre-Tax
Amount | | | Tax
Effect | | | 2Q2009
EPS
Impact | | | 2Q2008
EPS
Impact | |
Second-quarter 2009 | |
• Costs to Achieve, Cinergy Merger | | $ | (8 | ) | | $ | 3 | | | | — | | | | — | |
• Crescent-related guarantees and tax adjustments | | $ | 7 | | | $ | (13 | ) | | $ | (0.01 | ) | | | — | |
• International Transmission Adjustment | | $ | (32 | ) | | $ | 10 | | | $ | (0.02 | ) | | | — | |
• Mark-to-market impact of economic hedges | | $ | (36 | ) | | $ | 13 | | | $ | (0.02 | ) | | | — | |
| | | | |
Second-quarter 2008 | | | | | | | | | | | | | | | | |
• Costs to Achieve, Cinergy Merger | | $ | (12 | ) | | $ | 5 | | | | — | | | | — | |
• Mark-to-market impact of economic hedges | | $ | 107 | | | $ | (38 | ) | | | — | | | $ | 0.05 | |
• Crescent project impairments | | $ | (100 | ) | | $ | 39 | | | | — | | | $ | (0.05 | ) |
Total diluted EPS impact | | | | | | | | | | $ | (0.05 | ) | | | — | |
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Reconciliation of reported to adjusted diluted EPS for the quarters:
| | | | | | | |
| | | 2Q2009
EPS | | 2Q2008
EPS | |
Diluted EPS from continuing operations, as reported | | $ | 0.22 | | $ | 0.27 | |
Diluted EPS from discontinued operations, as reported | | | — | | $ | 0.01 | |
Diluted EPS, as reported | | $ | 0.21 | | $ | 0.28 | |
Adjustments to reported EPS: | | | | | | | |
• Diluted EPS from discontinued operations | | | — | | $ | (0.01 | ) |
• Diluted EPS impact of special items and mark-to-market in Commercial Power | | $ | 0.05 | | | — | |
Diluted EPS, adjusted | | $ | 0.26 | | $ | 0.27 | |
BUSINESS UNIT RESULTS (ON A REPORTED BASIS)
US Franchised Electric and Gas (USFE&G)
USFE&G reported second-quarter 2009 segment EBIT of $500 million, compared with $503 million in the second quarter of 2008.
Results were adversely affected by a decline in weather-adjusted sales volumes to industrial customers. These lower results were partially offset by reduced operating and maintenance costs.
Commercial Power
Commercial Power reported second-quarter 2009 segment EBIT from continuing operations of $79 million, compared to $235 million in the second quarter 2008. Results were adversely affected by mark-to-market losses on economic hedges in 2009 as compared to gains in 2008, lower power prices for wholesale customers and lower volumes for Ohio retail customers. These results were partially offset by prior year timing of expenses on a fuel and purchased power rider, and increased native margins related to the implementation of the Electric Security Plan in Ohio at the beginning of 2009.
Duke Energy International (DEI)
DEI reported second-quarter 2009 segment EBIT from continuing operations of $68 million, compared to $116 million in the second quarter 2008. DEI’s lower results were driven primarily by an adverse ruling on prior years’ transmission fees, a lower contribution from National Methanol resulting from reduced commodity prices, and unfavorable foreign exchange rates, primarily in Brazil. Partially offsetting these decreases were favorable contract prices in Brazil.
Other
Other includes costs associated with corporate governance, costs-to-achieve the Cinergy merger, Duke Energy’s captive insurance company and the results of Crescent, Duke Energy’s real estate joint-venture.
Other reported a second-quarter 2009 net expense from continuing operations of $38 million, compared to $189 million in the second quarter 2008. The decrease in net expense for the quarter was due primarily to prior year Crescent impairments and losses, favorable governance expenses and favorable results from captive insurance in 2009.
INTEREST EXPENSE
Interest expense from continuing operations was $186 million for the second quarter 2009, compared to $194 million for the second quarter 2008. The reduction in interest expense for the quarter was primarily due to lower interest rates on floating rate debt and commercial paper, partially offset by higher debt balances.
INCOME TAX EXPENSE
Income tax expense from continuing operations for second quarter 2009 was $177 million, compared to $167 million for the second quarter 2008. The effective tax rate for the quarter was approximately 38 percent, compared to 33 percent for the same period last year. The higher effective tax rate was primarily due to adjustments of certain tax benefits. The anticipated effective tax rate for full-year 2009 is 34 percent.
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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 non-operating), including any equity in earnings of unconsolidated affiliates, before deducting interest and taxes, and is net of the income attributable to non-controlling interests. 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 attributable to Duke Energy Corporation common shareholders, 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 or regulatory accounting treatment, 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 attributable to Duke Energy Corporation common shareholders, 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 and Other net expenses (including adjusted equity earnings for Crescent Resources) as a measure of historical and anticipated future segment and Other performance. When used for future periods, adjusted segment EBIT and Other net expenses may also include any amounts that may be reported as discontinued operations or extraordinary items. 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 or extraordinary items for future periods.
Duke Energy is the third largest electric power holding company in the United States, based on kilowatt-hour sales. Its regulated utility operations serve approximately 4 million customers located in five states – North Carolina, South Carolina, Indiana, Ohio and Kentucky – representing a population of approximately 11 million people. Duke Energy’s commercial power and international business segments operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States. 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 Tuesday, Aug. 4.
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The conference call can be accessed via theinvestors’ section (http://www.duke-energy.com/investors/) of Duke Energy’s Web site or by dialing 719-325-4762 outside the United States or 877-719-9788 in the United States. The confirmation code is 9050234. Please call in 10 to 15 minutes prior to the scheduled start time. A replay of the conference call will be available until midnight ET, Aug. 14, 2009, by calling 719-457-0820 outside the United States or 888-203-1112 in the United States, and using the code 9050234. 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; construction and development risks associated with the completion of Duke Energy’s capital investment projects in existing and new generation facilities, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules, and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner; 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.
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JUNE 2009
QUARTERLY HIGHLIGHTS
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
(In millions, except per-share amounts and where noted) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
COMMON STOCK DATA | | | | | | | | | | | | | | | | |
Income from continuing operations attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | | |
Basic | | $ | 0.22 | | | $ | 0.27 | | | $ | 0.48 | | | $ | 0.63 | |
Diluted | | $ | 0.22 | | | $ | 0.27 | | | $ | 0.48 | | | $ | 0.63 | |
Income from discontinued operations attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | | |
Basic | | $ | — | | | $ | 0.01 | | | $ | — | | | $ | 0.01 | |
Diluted | | $ | — | | | $ | 0.01 | | | $ | — | | | $ | 0.01 | |
Net income attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | | |
Basic | | $ | 0.21 | | | $ | 0.28 | | | $ | 0.48 | | | $ | 0.64 | |
Diluted | | $ | 0.21 | | | $ | 0.28 | | | $ | 0.48 | | | $ | 0.64 | |
Dividends Per Share | | $ | 0.47 | | | $ | 0.45 | | | $ | 0.70 | | | $ | 0.67 | |
Weighted-Average Shares Outstanding | | | | | | | | | | | | | | | | |
Basic | | | 1,288 | | | | 1,264 | | | | 1,284 | | | | 1,264 | |
Diluted | | | 1,289 | | | | 1,266 | | | | 1,285 | | | | 1,266 | |
INCOME | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 2,913 | | | $ | 3,229 | | | $ | 6,225 | | | $ | 6,566 | |
| | | | | | | | | | | | | | | | |
Total Reportable Segment EBIT | | | 647 | | | | 854 | | | | 1,411 | | | | 1,751 | |
Other EBIT | | | (38 | ) | | | (189 | ) | | | (128 | ) | | | (265 | ) |
Interest Expense | | | (186 | ) | | | (194 | ) | | | (370 | ) | | | (376 | ) |
Interest Income and Other (a) | | | 38 | | | | 32 | | | | 73 | | | | 79 | |
Income Tax Expense from Continuing Operations | | | (177 | ) | | | (167 | ) | | | (356 | ) | | | (389 | ) |
(Loss) Income from Discontinued Operations, net of tax | | | (2 | ) | | | 13 | | | | 1 | | | | 15 | |
| | | | | | | | | | | | | | | | |
Net Income | | | 282 | | | | 349 | | | | 631 | | | | 815 | |
Less: Net Income (Loss) Attributable to Non-Controlling Interests | | | 6 | | | | (2 | ) | | | 11 | | | | (1 | ) |
| | | | | | | | | | | | | | | | |
Net Income Attributable to Duke Energy Corporation | | $ | 276 | | | $ | 351 | | | $ | 620 | | | $ | 816 | |
| | | | | | | | | | | | | | | | |
CAPITALIZATION | | | | | | | | | | | | | | | | |
Total Common Equity | | | | | | | | | | | 58 | % | | | 62 | % |
Total Debt | | | | | | | | | | | 42 | % | | | 38 | % |
Total Debt | | | | | | | | | | $ | 15,733 | | | $ | 13,288 | |
Book Value Per Share | | | | | | | | | | $ | 16.51 | | | $ | 16.99 | |
Actual Shares Outstanding | | | | | | | | | | | 1,294 | | | | 1,265 | |
CAPITAL AND INVESTMENT EXPENDITURES | | | | | | | | | | | | | | | | |
U.S. Franchised Electric and Gas | | $ | 847 | | | $ | 778 | | | $ | 1,557 | | | $ | 1,653 | |
Commercial Power | | | 257 | | | | 163 | | | | 411 | | | | 277 | |
International Energy | | | 27 | | | | 27 | | | | 39 | | | | 83 | |
Other | | | 43 | | | | 95 | | | | 73 | | | | 139 | |
| | | | | | | | | | | | | | | | |
Total Capital and Investment Expenditures | | $ | 1,174 | | | $ | 1,063 | | | $ | 2,080 | | | $ | 2,152 | |
| | | | | | | | | | | | | | | | |
EBIT BY BUSINESS SEGMENT | | | | | | | | | | | | | | | | |
U.S. Franchised Electric and Gas | | $ | 500 | | | $ | 503 | | | $ | 1,057 | | | $ | 1,140 | |
Commercial Power | | | 79 | | | | 235 | | | | 193 | | | | 381 | |
International Energy | | | 68 | | | | 116 | | | | 161 | | | | 230 | |
| | | | | | | | | | | | | | | | |
Total Reportable Segment EBIT | | | 647 | | | | 854 | | | | 1,411 | | | | 1,751 | |
Other EBIT | | | (38 | ) | | | (189 | ) | | | (128 | ) | | | (265 | ) |
Interest Expense | | | (186 | ) | | | (194 | ) | | | (370 | ) | | | (376 | ) |
Interest Income and Other (a) | | | 38 | | | | 32 | | | | 73 | | | | 79 | |
| | | | | | | | | | | | | | | | |
Income From Continuing Operations Before Income Taxes | | $ | 461 | | | $ | 503 | | | $ | 986 | | | $ | 1,189 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| (a) | Other within Interest Income and Other includes foreign currency transaction gains and losses, an adjustment to add back the non-controlling interest component of reportable segment and Other EBIT and additional non-controlling interest amounts not allocated to the reportable segment and Other results. |
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JUNE 2009
QUARTERLY HIGHLIGHTS
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
(In millions, except where noted) | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
U.S. FRANCHISED ELECTRIC AND GAS | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 2,149 | | | $ | 2,402 | | | $ | 4,657 | | | $ | 5,003 | |
Operating Expenses | | | 1,692 | | | | 1,939 | | | | 3,666 | | | | 3,938 | |
Gains on Sales of Other Assets and Other, net | | | 13 | | | | — | | | | 13 | | | | 3 | |
Other Income and Expenses, net | | | 30 | | | | 40 | | | | 53 | | | | 72 | |
| | | | | | | | | | | | | | | | |
EBIT | | $ | 500 | | | $ | 503 | | | $ | 1,057 | | | $ | 1,140 | |
| | | | | | | | | | | | | | | | |
Depreciation and Amortization | | $ | 319 | | | $ | 333 | | | $ | 641 | | | $ | 665 | |
Duke Energy Carolinas GWh sales | | | 18,862 | | | | 21,036 | | | | 39,292 | | | | 43,091 | |
Duke Energy Midwest GWh sales | | | 13,369 | | | | 15,018 | | | | 27,921 | | | | 31,294 | |
Net Proportional MW Capacity in Operation | | | | | | | | | | | 27,242 | | | | 27,333 | |
COMMERCIAL POWER | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 474 | | | $ | 481 | | | $ | 1,011 | | | $ | 931 | |
Operating Expenses | | | 413 | | | | 282 | | | | 849 | | | | 605 | |
Gains on Sales of Other Assets and Other, net | | | — | | | | 32 | | | | 5 | | | | 46 | |
Other Income and Expenses, net | | | 18 | | | | 4 | | | | 26 | | | | 9 | |
| | | | | | | | | | | | | | | | |
EBIT | | $ | 79 | | | $ | 235 | | | $ | 193 | | | $ | 381 | |
| | | | | | | | | | | | | | | | |
Depreciation and Amortization | | $ | 49 | | | $ | 42 | | | $ | 104 | | | $ | 85 | |
Actual Plant Production, GWh | | | 6,132 | | | | 4,947 | | | | 12,427 | | | | 10,866 | |
Net Proportional MW Capacity in Operation | | | | | | | | | | | 8,071 | | | | 7,550 | |
INTERNATIONAL ENERGY | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 271 | | | $ | 334 | | | $ | 526 | | | $ | 623 | |
Operating Expenses | | | 225 | | | | 254 | | | | 386 | | | | 466 | |
Gains on Sales of Other Assets and Other, net | | | — | | | | 1 | | | | — | | | | 1 | |
Other Income and Expenses, net | | | 26 | | | | 41 | | | | 32 | | | | 83 | |
Expense Attributable to Non-Controlling Interests | | | 4 | | | | 6 | | | | 11 | | | | 11 | |
| | | | | | | | | | | | | | | | |
EBIT | | $ | 68 | | | $ | 116 | | | $ | 161 | | | $ | 230 | |
| | | | | | | | | | | | | | | | |
Depreciation and Amortization | | $ | 19 | | | $ | 21 | | | $ | 38 | | | $ | 42 | |
Sales, GWh | | | 4,277 | | | | 4,918 | | | | 8,935 | | | | 9,162 | |
Proportional MW Capacity in Operation | | | | | | | | | | | 4,051 | | | | 4,010 | |
OTHER | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 42 | | | $ | 35 | | | $ | 78 | | | $ | 56 | |
Operating Expenses | | | 94 | | | | 127 | | | | 182 | | | | 221 | |
Gains on Sales of Other Assets and Other, net | | | — | | | | — | | | | 1 | | | | 1 | |
Other Income and Expenses, net | | | 17 | | | | (100 | ) | | | (21 | ) | | | (105 | ) |
Expense (Benefit) Attributable to Non-Controlling Interests | | | 3 | | | | (3 | ) | | | 4 | | | | (4 | ) |
| | | | | | | | | | | | | | | | |
EBIT | | $ | (38 | ) | | $ | (189 | ) | | $ | (128 | ) | | $ | (265 | ) |
| | | | | | | | | | | | | | | | |
Depreciation and Amortization | | $ | 20 | | | $ | 22 | | | $ | 38 | | | $ | 39 | |
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DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per-share amounts)
| | | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
| | | 2009 | | | 2008 | | | 2009 | | 2008 | |
Operating Revenues | | $ | 2,913 | | | $ | 3,229 | | | $ | 6,225 | | $ | 6,566 | |
Operating Expenses | | | 2,398 | | | | 2,579 | | | | 5,035 | | | 5,183 | |
Gains on Sales of Other Assets and Other, net | | | 13 | | | | 33 | | | | 19 | | | 51 | |
| | | | | | | | | | | | | | | |
Operating Income | | | 528 | | | | 683 | | | | 1,209 | | | 1,434 | |
| | | | | | | | | | | | | | | |
Other Income and Expenses, net | | | 119 | | | | 14 | | | | 147 | | | 131 | |
Interest Expense | | | 186 | | | | 194 | | | | 370 | | | 376 | |
| | | | | | | | | | | | | | | |
Income From Continuing Operations Before Income Taxes | | | 461 | | | | 503 | | | | 986 | | | 1,189 | |
Income Tax Expense from Continuing Operations | | | 177 | | | | 167 | | | | 356 | | | 389 | |
| | | | | | | | | | | | | | | |
Income From Continuing Operations | | | 284 | | | | 336 | | | | 630 | | | 800 | |
(Loss) Income From Discontinued Operations, net of tax | | | (2 | ) | | | 13 | | | | 1 | | | 15 | |
| | | | | | | | | | | | | | | |
Net Income | | | 282 | | | | 349 | | | | 631 | | | 815 | |
| | | | | | | | | | | | | | | |
Less: Net Income (Loss) Attributable to Non-Controlling Interests | | | 6 | | | | (2 | ) | | | 11 | | | (1 | ) |
| | | | | | | | | | | | | | | |
Net Income Attributable to Duke Energy Corporation | | $ | 276 | | | $ | 351 | | | $ | 620 | | $ | 816 | |
| | | | | | | | | | | | | | | |
Earnings Per Share – Basic and Diluted | | | | | | | | | | | | | | | |
Income from continuing operations attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | |
Basic | | $ | 0.22 | | | $ | 0.27 | | | $ | 0.48 | | $ | 0.63 | |
Diluted | | $ | 0.22 | | | $ | 0.27 | | | $ | 0.48 | | $ | 0.63 | |
Income from discontinued operations attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | |
Basic | | $ | — | | | $ | 0.01 | | | $ | — | | $ | 0.01 | |
Diluted | | $ | — | | | $ | 0.01 | | | $ | — | | $ | 0.01 | |
Net income attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | |
Basic | | $ | 0.21 | | | $ | 0.28 | | | $ | 0.48 | | $ | 0.64 | |
Diluted | | $ | 0.21 | | | $ | 0.28 | | | $ | 0.48 | | $ | 0.64 | |
Dividends per share | | $ | 0.47 | | | $ | 0.45 | | | $ | 0.70 | | $ | 0.67 | |
Weighted-average shares outstanding | | | | | | | | | | | | | | | |
Basic | | | 1,288 | | | | 1,264 | | | | 1,284 | | | 1,264 | |
Diluted | | | 1,289 | | | | 1,266 | | | | 1,285 | | | 1,266 | |
7
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
| | | | | | |
| | | June 30,
2009 | | December 31,
2008 |
ASSETS | | | | | | |
Current Assets | | $ | 5,391 | | $ | 5,273 |
Investments and Other Assets | | | 10,074 | | | 10,020 |
Net Property, Plant and Equipment | | | 35,429 | | | 34,036 |
Regulatory Assets and Deferred Debits | | | 3,815 | | | 3,748 |
| | | | | | |
Total Assets | | $ | 54,709 | | $ | 53,077 |
| | | | | | |
LIABILITIES AND EQUITY | | | | | | |
Current Liabilities | | $ | 4,141 | | $ | 4,345 |
Long-term Debt | | | 14,433 | | | 13,250 |
Deferred Credits and Other Liabilities | | | 14,775 | | | 14,331 |
Equity | | | 21,360 | | | 21,151 |
| | | | | | |
Total Liabilities and Equity | | $ | 54,709 | | $ | 53,077 |
| | | | | | |
8
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
| | | | | | | | |
| | | Six Months Ended
June 30, | |
| | | 2009 | | | 2008 | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
Net Income | | $ | 631 | | | $ | 815 | |
Adjustments to reconcile net income to net cash provided by operating activities | | | 386 | | | | 880 | |
| | | | | | | | |
Net cash provided by operating activities | | | 1,017 | | | | 1,695 | |
| | | | | | | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Net cash used in investing activities | | | (2,133 | ) | | | (2,527 | ) |
| | | | | | | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Net cash provided by financing activities | | | 836 | | | | 871 | |
| | | | | | | | |
Net (decrease) increase in cash and cash equivalents | | | (280 | ) | | | 39 | |
Cash and cash equivalents at beginning of period | | | 986 | | | | 678 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 706 | | | $ | 717 | |
| | | | | | | | |
9
Duke Energy Carolinas
Quarterly Highlights
Supplemental Franchised Electric Information
June 2009
| | | | | | | | | | | | | | | | | | |
| | | Quarter Ended
June 30, | | | Year To Date
June 30, | |
| | | 2009 | | | 2008 | | | %
Inc.(Dec.) | | | 2009 | | | 2008 | | | %
Inc.(Dec.) | |
GWH Sales | | | | | | | | | | | | | | | | | | |
Residential | | 5,661 | | | 5,729 | | | (1.2 | %) | | 13,518 | | | 13,228 | | | 2.2 | % |
General Service | | 6,534 | | | 6,629 | | | (1.4 | %) | | 13,038 | | | 13,078 | | | (0.3 | %) |
Industrial – Textile | | 896 | | | 1,177 | | | (23.8 | %) | | 1,713 | | | 2,289 | | | (25.2 | %) |
Industrial – Other | | 3,837 | | | 4,631 | | | (17.2 | %) | | 7,481 | | | 9,006 | | | (16.9 | %) |
| | | | | | | | | | | | | | | | | | |
Total Industrial | | 4,733 | | | 5,808 | | | (18.5 | %) | | 9,194 | | | 11,295 | | | (18.6 | %) |
Other Energy Sales | | 71 | | | 71 | | | 0.5 | % | | 143 | | | 142 | | | 0.9 | % |
Regular Resale | | 18 | | | 393 | | | (95.4 | %) | | 174 | | | 818 | | | (78.8 | %) |
| | | | | | | | | | | | | | | | | | |
Total Regular Sales Billed | | 17,017 | | | 18,630 | | | (8.7 | %) | | 36,067 | | | 38,561 | | | (6.5 | %) |
Special Sales | | 1,029 | | | 1,653 | | | (37.7 | %) | | 2,791 | | | 4,177 | | | (33.2 | %) |
| | | | | | | | | | | | | | | | | | |
Total Electric Sales | | 18,046 | | | 20,283 | | | (11.0 | %) | | 38,858 | | | 42,738 | | | (9.1 | %) |
Unbilled Sales | | 816 | | | 753 | | | 8.4 | % | | 434 | | | 353 | | | 22.9 | % |
| | | | | | | | | | | | | | | | | | |
Total Consolidated Electric Sales – Carolinas | | 18,862 | | | 21,036 | | | (10.3 | %) | | 39,292 | | | 43,091 | | | (8.8 | %) |
Average Number of Customers | | | | | | | | | | | | | | | | | | |
Residential | | 2,021,159 | | | 2,008,917 | | | 0.6 | % | | 2,021,917 | | | 2,006,703 | | | 0.8 | % |
General Service | | 331,163 | | | 331,299 | | | 0.0 | % | | 330,976 | | | 330,890 | | | 0.0 | % |
Industrial – Textile | | 654 | | | 672 | | | (2.6 | %) | | 656 | | | 676 | | | (3.0 | %) |
Industrial – Other | | 6,687 | | | 6,542 | | | 2.2 | % | | 6,695 | | | 6,551 | | | 2.2 | % |
| | | | | | | | | | | | | | | | | | |
Total Industrial | | 7,341 | | | 7,214 | | | 1.8 | % | | 7,351 | | | 7,227 | | | 1.7 | % |
Other Energy Sales | | 13,905 | | | 13,656 | | | 1.8 | % | | 13,863 | | | 13,618 | | | 1.8 | % |
Regular Resale | | 6 | | | 21 | | | (71.4 | %) | | 9 | | | 21 | | | (59.5 | %) |
| | | | | | | | | | | | | | | | | | |
Total Regular Sales | | 2,373,574 | | | 2,361,107 | | | 0.5 | % | | 2,374,116 | | | 2,358,459 | | | 0.7 | % |
Special Sales | | 26 | | | 31 | | | (15.1 | %) | | 29 | | | 37 | | | (22.1 | %) |
| | | | | | | | | | | | | | | | | | |
Total Avg Number of Customers – Carolinas | | 2,373,600 | | | 2,361,138 | | | 0.5 | % | | 2,374,145 | | | 2,358,496 | | | 0.7 | % |
| | | | | | |
Heating and Cooling Degree Days | | | | | | | | | | | | | | | | | | |
Actual | | | | | | | | | | | | | | | | | | |
Heating Degree Days | | 199 | | | 216 | | | (7.8 | %) | | 1,984 | | | 1,895 | | | 4.7 | % |
Cooling Degree Days | | 532 | | | 544 | | | (2.2 | %) | | 539 | | | 546 | | | (1.1 | %) |
| | | | | | |
Variance from Normal | | | | | | | | | | | | | | | | | | |
Heating Degree Days | | (7.6 | %) | | (4.6 | %) | | n/a | | | 4.0 | % | | (1.0 | %) | | n/a | |
Cooling Degree Days | | 13.0 | % | | 21.3 | % | | n/a | | | 12.9 | % | | 20.5 | % | | n/a | |
10
Duke Energy – Midwest
Quarterly Highlights
Supplemental Franchised Electric Information
June 2009
| | | | | | | | | | | | | | |
| | | Quarter Ended
June 30, | | Year To Date
June 30, |
| | | 2009 | | 2008 | | %
Inc.(Dec.) | | 2009 | | | 2008 | | | %
Inc.(Dec.) |
GWH Sales | | | | | | | | | | | | | | |
Residential | | 3,567 | | 3,651 | | (2.3%) | | 9,045 | | | 9,153 | | | (1.2%) |
General Service | | 4,323 | | 4,365 | | (1.0%) | | 8,754 | | | 8,917 | | | (1.8%) |
Industrial | | 3,395 | | 4,293 | | (20.9%) | | 6,814 | | | 8,580 | | | (20.6%) |
Other Energy Sales | | 42 | | 43 | | (2.3%) | | 85 | | | 87 | | | (2.3%) |
| | | | | | | | | | | | | | |
Total Regular Electric Sales Billed | | 11,327 | | 12,352 | | (8.3%) | | 24,698 | | | 26,737 | | | (7.6%) |
Special Sales | | 1,731 | | 2,433 | | (28.9%) | | 3,465 | | | 4,613 | | | (24.9%) |
| | | | | | | | | | | | | | |
Total Electric Sales Billed – Midwest | | 13,058 | | 14,785 | | (11.7%) | | 28,163 | | | 31,350 | | | (10.2%) |
Unbilled Sales | | 311 | | 233 | | 33.5% | | (242 | ) | | (56 | ) | | (332.1%) |
| | | | | | | | | | | | | | |
Total Electric Sales – Midwest | | 13,369 | | 15,018 | | (11.0%) | | 27,921 | | | 31,294 | | | (10.8%) |
Average Number of Customers | | | | | | | | | | | | | | |
Residential | | 1,397,301 | | 1,402,355 | | (0.4%) | | 1,402,242 | | | 1,407,411 | | | (0.4%) |
General Service | | 184,201 | | 184,745 | | (0.3%) | | 184,457 | | | 184,791 | | | (0.2%) |
Industrial | | 5,507 | | 5,605 | | (1.7%) | | 5,521 | | | 5,613 | | | (1.6%) |
Other Energy | | 4,098 | | 3,995 | | 2.6% | | 4,083 | | | 3,972 | | | 2.8% |
| | | | | | | | | | | | | | |
Total Regular Sales | | 1,591,107 | | 1,596,700 | | (0.4%) | | 1,596,303 | | | 1,601,787 | | | (0.3%) |
Special Sales | | 16 | | 37 | | (56.8%) | | 20 | | | 38 | | | (47.4%) |
| | | | | | | | | | | | | | |
Total Avg Number Electric Customers – Midwest | | 1,591,123 | | 1,596,737 | | (0.4%) | | 1,596,323 | | | 1,601,825 | | | (0.3%) |
Heating and Cooling Degree Days * | | | | | | | | | | | | | | |
Actual | | | | | | | | | | | | | | |
Heating Degree Days | | 227 | | 242 | | (6.2%) | | 2,368 | | | 2,527 | | | (6.3%) |
Cooling Degree Days | | 363 | | 290 | | 25.2% | | 363 | | | 290 | | | 25.2% |
Variance from Normal | | | | | | | | | | | | | | |
Heating Degree Days | | 0.9% | | 1.7% | | n/a | | 3.5% | | | 9.1% | | | n/a |
Cooling Degree Days | | 14.9% | | 0.0% | | n/a | | 13.4% | | | (1.0%) | | | 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
June 2008 Quarter-to-Date
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items (Note 1) | | | | | | | | | | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Cinergy
Merger | | | Crescent
Project
Impairments | | | 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 | | $ | 503 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 503 | |
Commercial Power | | | 128 | | | | — | | | | — | | | | 107 | B | | | — | | | | 107 | | | | 235 | |
International Energy | | | 116 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 116 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment EBIT | | | 747 | | | | — | | | | — | | | | 107 | | | | — | | | | 107 | | | | 854 | |
Other | | | (77 | ) | | | (12 | ) A | | | (100 | ) D | | | — | | | | — | | | | (112 | ) | | | (189 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment EBIT and other EBIT | | $ | 670 | | | $ | (12 | ) | | $ | (100 | ) | | $ | 107 | | | $ | — | | | $ | (5 | ) | | $ | 665 | |
Interest Expense | | | (194 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (194 | ) |
Interest Income and Other | | | 32 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 32 | |
Income Taxes from Continuing Operations | | | (173 | ) | | | 5 | | | | 39 | | | | (38 | ) | | | — | | | | 6 | | | | (167 | ) |
Discontinued Operations, net of taxes | | | — | | | | — | | | | — | | | | — | | | | 13 | C | | | 13 | | | | 13 | |
Less: Net Income Attributable to Non-Controlling Interests | | | (2 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (2 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 337 | | | $ | (7 | ) | | $ | (61 | ) | | $ | 69 | | | $ | 13 | | | $ | 14 | | | $ | 351 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 0.27 | | | $ | — | | | $ | (0.05 | ) | | $ | 0.05 | | | $ | 0.01 | | | $ | 0.01 | | | $ | 0.28 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 0.27 | | | $ | — | | | $ | (0.05 | ) | | $ | 0.05 | | | $ | 0.01 | | | $ | 0.01 | | | $ | 0.28 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note 1 – Amounts for special items are presented net of any related non-controlling interest.
A – $6 million recorded in Operation, maintenance and other and $6 million recorded in Depreciation and amortization (all Operating Expenses) on the Consolidated Statements of Operations.
B – $20 million gain recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $87 million gain recorded within Fuel used in electric generation and purchased power – non-regulated (Operating Expenses) on the Consolidated Statements of Operations.
C – Recorded in (Loss) Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations.
D – Recorded in Equity in earnings (losses) of unconsolidated affiliates 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 Attributable to Duke Energy Corporation 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
June 2008 Year-to-Date
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items (Note 1) | | | | | | | | | | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Cinergy
Merger | | | Crescent
Project
Impairments | | | 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 | | $ | 1,140 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,140 | |
Commercial Power | | | 227 | | | | — | | | | — | | | | 154 | B | | | — | | | | 154 | | | | 381 | |
International Energy | | | 230 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 230 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment EBIT | | | 1,597 | | | | — | | | | — | | | | 154 | | | | — | | | | 154 | | | | 1,751 | |
Other | | | (142 | ) | | | (23 | ) A | | | (100 | ) D | | | — | | | | — | | | | (123 | ) | | | (265 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment and other EBIT | | $ | 1,455 | | | $ | (23 | ) | | $ | (100 | ) | | $ | 154 | | | $ | — | | | $ | 31 | | | $ | 1,486 | |
Interest Expense | | | (376 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (376 | ) |
Interest Income and Other | | | 79 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 79 | |
Income Taxes from Continuing Operations | | | (382 | ) | | | 9 | | | | 39 | | | | (55 | ) | | | — | | | | (7 | ) | | | (389 | ) |
Discontinued Operations, net of taxes | | | — | | | | — | | | | — | | | | — | | | | 15 | C | | | 15 | | | | 15 | |
Less: Net Income Attributable to Non-Controlling Interests | | | (1 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (1 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 777 | | | $ | (14 | ) | | $ | (61 | ) | | $ | 99 | | | $ | 15 | | | $ | 39 | | | $ | 816 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 0.61 | | | $ | (0.01 | ) | | $ | (0.05 | ) | | $ | 0.08 | | | $ | 0.01 | | | $ | 0.03 | | | $ | 0.64 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 0.61 | | | $ | (0.01 | ) | | $ | (0.05 | ) | | $ | 0.08 | | | $ | 0.01 | | | $ | 0.03 | | | $ | 0.64 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note 1 – Amounts for special items are presented net of any related non-controlling interest.
A – $12 million recorded in Operation, maintenance and other and $11 million recorded in Depreciation and amortization (all Operating Expenses) on the Consolidated Statements of Operations.
B – $9 million gain recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $145 million gain recorded within Fuel used in electric generation and purchased power – non-regulated (Operating Expenses) on the Consolidated Statements of Operations.
C – Recorded in (Loss) Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations.
D – Recorded in Equity in earnings (losses) of unconsolidated affiliates 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 Attributable to Duke Energy Corporation provides useful information to investors, as it allows them to more accurately compare the company’s performance across periods. |
13
DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
June 2009 Quarter-to-Date
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items (Note 1) | | | | | | | | | | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Cinergy
Merger | | | Crescent
Related
Guarantees
and Tax
Adjustments | | | International
Transmission
Adjustment | | | 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 | | $ | 500 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 500 | |
Commercial Power | | | 115 | | | | — | | | | — | | | | — | | | | (36 | ) B | | | — | | | | (36 | ) | | | 79 | |
International Energy | | | 94 | | | | — | | | | — | | | | (26 | ) E | | | — | | | | — | | | | (26 | ) | | | 68 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment EBIT | | | 709 | | | | — | | | | — | | | | (26 | ) | | | (36 | ) | | | — | | | | (62 | ) | | | 647 | |
Other | | | (37 | ) | | | (8 | ) A | | | 7 | D | | | — | | | | — | | | | — | | | | (1 | ) | | | (38 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment and Other EBIT | | $ | 672 | | | $ | (8 | ) | | $ | 7 | | | $ | (26 | ) | | $ | (36 | ) | | $ | — | | | $ | (63 | ) | | $ | 609 | |
Interest Expense | | | (180 | ) | | | — | | | | — | | | | (6 | ) | | | — | | | | — | | | | (6 | ) | | | (186 | ) |
Interest Income and Other | | | 38 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 38 | |
Income Taxes from Continuing Operations | | | (190 | ) | | | 3 | | | | (13 | ) | | | 10 | | | | 13 | | | | — | | | | 13 | | | | (177 | ) |
Discontinued Operations, net of taxes | | | — | | | | — | | | | — | | | | — | | | | — | | | | (2 | ) C | | | (2 | ) | | | (2 | ) |
Less: Net Income Attributable to Non-Controlling Interests | | | 6 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 6 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 334 | | | $ | (5 | ) | | $ | (6 | ) | | $ | (22 | ) | | $ | (23 | ) | | $ | (2 | ) | | $ | (58 | ) | | $ | 276 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 0.26 | | | $ | — | | | $ | (0.01 | ) | | $ | (0.02 | ) | | $ | (0.02 | ) | | $ | — | | | $ | (0.05 | ) | | $ | 0.21 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 0.26 | | | $ | — | | | $ | (0.01 | ) | | $ | (0.02 | ) | | $ | (0.02 | ) | | $ | — | | | $ | (0.05 | ) | | $ | 0.21 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note 1 – Amounts for special items are presented net of any related non-controlling interest.
A – $3 million recorded in Operation, maintenance and other and $5 million recorded in Depreciation and amortization (all Operating Expenses) on the Consolidated Statements of Operations.
B – $20 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $16 million loss recorded within Fuel used in electric generation and purchased power – non-regulated (Operating Expenses) on the Consolidated Statements of Operations.
C – Recorded in (Loss) Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations.
D – Recorded in Other income and expenses, net on the Consolidated Statements of Operations.
E – $30 million recorded in Operation, maintenance and other, $2 million recorded as a reduction to fuel used in electric generation and purchased power – non-regulated, and $2 million as a reduction to Net income (loss) attributable to non-controlling interests on the Consolidated Statements of Operations.
Weighted Average Shares (reported and adjusted) – in millions
| * | Represents the mark-to-market impact of derivative contracts in the non-native portfolio, 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 Attributable to Duke Energy Corporation provides useful information to investors, as it allows them to more accurately compare the company’s performance across periods. |
14
DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
June 2009 Year-to-Date
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items (Note 1) | | | | | | | | | | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Cinergy
Merger | | | Crescent
Related
Guarantees
and Tax
Adjustments | | | International
Transmission
Adjustment | | | 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 | | $ | 1,057 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 1,057 | |
Commercial Power | | | 218 | | | | — | | | | — | | | | — | | | | (25 | ) B | | | — | | | | (25 | ) | | | 193 | |
International Energy | | | 187 | | | | — | | | | — | | | | (26 | ) E | | | — | | | | — | | | | (26 | ) | | | 161 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment EBIT | | | 1,462 | | | | — | | | | — | | | | (26 | ) | | | (25 | ) | | | — | | | | (51 | ) | | | 1,411 | |
Other | | | (87 | ) | | | (15 | ) A | | | (26 | ) D | | | — | | | | — | | | | — | | | | (41 | ) | | | (128 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total reportable segment and Other EBIT | | $ | 1,375 | | | $ | (15 | ) | | $ | (26 | ) | | $ | (26 | ) | | $ | (25 | ) | | $ | — | | | $ | (92 | ) | | $ | 1,283 | |
Interest Expense | | | (364 | ) | | | — | | | | — | | | | (6 | ) | | | — | | | | — | | | | (6 | ) | | | (370 | ) |
Interest Income and Other | | | 73 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 73 | |
Income Taxes from Continuing Operations | | | (381 | ) | | | 6 | | | | — | | | | 10 | | | | 9 | | | | — | | | | 25 | | | | (356 | ) |
Discontinued Operations, net of taxes | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1 | C | | | 1 | | | | 1 | |
Less: Net Income Attributable to Non-Controlling Interests | | | 11 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 11 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 692 | | | $ | (9 | ) | | $ | (26 | ) | | $ | (22 | ) | | $ | (16 | ) | | $ | 1 | | | $ | (72 | ) | | $ | 620 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 0.54 | | | $ | (0.01 | ) | | $ | (0.02 | ) | | $ | (0.02 | ) | | $ | (0.01 | ) | | $ | — | | | $ | (0.06 | ) | | $ | 0.48 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 0.54 | | | $ | (0.01 | ) | | $ | (0.02 | ) | | $ | (0.02 | ) | | $ | (0.01 | ) | | $ | — | | | $ | (0.06 | ) | | $ | 0.48 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note 1 – Amounts for special items are presented net of any related non-controlling interest.
A – $7 million recorded in Operation, maintenance and other and $8 million recorded in Depreciation and amortization (all Operating Expenses) on the Consolidated Statements of Operations.
B – $1 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $24 million loss recorded within Fuel used in electric generation and purchased power – non-regulated (Operating Expenses) on the Consolidated Statements of Operations.
C – Recorded in (Loss) Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations.
D – Recorded in Other income and expenses, net on the Consolidated Statements of Operations.
E – $30 million recorded in Operation, maintenance and other, $2 million recorded as a reduction to fuel used in electric generation and purchased power – non-regulated, and $2 million as a reduction to Net income (loss) attributable to non-controlling interests on the Consolidated Statements of Operations.
Weighted Average Shares (reported and adjusted) – in millions
| * | Represents the mark-to-market impact of derivative contracts in the non-native portfolio, 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 Attributable to Duke Energy Corporation provides useful information to investors, as it allows them to more accurately compare the company’s performance across periods. |
15
