Exhibit 99.1
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 | | NEWS RELEASE |
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| | Duke Energy Corporation P.O. Box 1009 Charlotte, NC 28201-1009 |
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| Feb. 17, 2011 | | MEDIA CONTACT | | Tom Shiel |
| | Phone: | | 704-382-2355 |
| | 24-Hour: | | 704-382-8333 |
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| | ANALYST CONTACT | | Bill Currens |
| | Phone: | | 704-382-1603 |
Duke Energy Reports Strong 2010 Results
| | • | | Company attains adjusted diluted earnings per share (EPS) of $1.43 in 2010, compared to $1.22 in 2009; reported diluted EPS $1.00 for 2010, compared to $0.83 in 2009 |
| | • | | Fourth quarter 2010 adjusted diluted EPS 21 cents, compared with 28 cents for the fourth quarter 2009; reported diluted EPS 32 cents, compared to 26 cents in 2009 |
| | • | | Significantly favorable weather and strong operational performance drive results for the year |
| | • | | Company establishes 2011 adjusted diluted earnings guidance range of $1.35 to $1.40 per share |
CHARLOTTE, N.C. – Favorable weather and solid operational performance resulted in Duke Energy posting full-year adjusted diluted EPS of $1.43, achieving its increased guidance range of $1.40 to $1.45 per share for 2010. Adjusted diluted EPS in 2009 was $1.22. Duke Energy’s full-year reported diluted EPS was $1.00 for 2010, compared to $0.83 in 2009.
The company has established its 2011 adjusted diluted earnings guidance range at $1.35 to $1.40 per share.
“Weather grabbed the headlines in 2010, but the real story was the performance of our employees,” said Jim Rogers, chairman, president and chief executive officer.
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“We consistently delivered strong operational and financial results during the year.
“In 2011, we will first and foremost continue to deliver on our obligations to our customers, investors and the communities we serve,” he added. “We also will work toward timely approval of our merger and subsequent integration with Progress Energy.”
Duke Energy’s regulated generation fleet met the challenge of increased load requirements resulting from the weather, led by the nuclear fleet’s record-setting capacity factor of approximately 95.9 percent in 2010, eclipsing its previous fleet record of approximately 95.2 percent in 2002. This is the 11th consecutive year that the nuclear fleet has had a capacity factor above 90 percent. Additionally, the company’s non-regulated Midwest generation fleet experienced strong operational results during the year and generating levels were at an all time high.
The economy continues to show signs of recovery in the company’s regulated service territories. Excluding the impact of weather, customer demand in 2010 was up nearly 2 percent compared to 2009 levels, principally driven by a 7 percent increase in the industrial class.
Fourth quarter 2010 adjusted diluted EPS was 21 cents, compared to 28 cents for fourth quarter 2009.
Fourth quarter 2010 reported diluted EPS was 32 cents, compared to 26 cents for fourth quarter 2009. Reported results for the quarter include gains on sales of non-core businesses.
Special items affecting Duke Energy’s adjusted diluted EPS for fourth quarter 2009 and fourth quarter 2010 include:
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(In millions, except per-share amounts) | | Pre-Tax
Amount | | | Tax
Effect | | | 4Q2010
EPS
Impact | | | 4Q2009
EPS
Impact | |
Fourth Quarter 2010 | | | | | | | | | | | | | | | | |
• Costs to Achieve, Cinergy Merger | | $ | (6 | ) | | $ | 2 | | | | — | | | | — | |
• Voluntary Opportunity Plan/Office Consolidation | | $ | (8 | ) | | $ | 3 | | | $ | (0.01 | ) | | | — | |
• Asset Sales | | $ | 248 | | | $ | (94 | ) | | $ | 0.12 | | | | — | |
• Mark-to-market impact of economic hedges | | $ | 4 | | | $ | (2 | ) | | | — | | | | | |
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Fourth Quarter 2009 | | | | | | | | | | | | | | | | |
• Costs to Achieve, Cinergy Merger | | $ | (2 | ) | | $ | 1 | | | | — | | | | — | |
• Impairments | | $ | (18 | ) | | $ | 6 | | | | — | | | | — | |
• Mark-to-market impact of economic hedges | | $ | (32 | ) | | $ | 12 | | | | — | | | $ | (0.02 | ) |
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Total diluted EPS impact | | | | | | | | | | $ | 0.11 | | | $ | (0.02 | ) |
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Reconciliation of reported to adjusted diluted EPS for the quarters:
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| | | 4Q2010
EPS | | | 4Q2009
EPS | |
Diluted EPS from continuing operations, as reported | | $ | 0.32 | | | $ | 0.26 | |
Diluted EPS, as reported | | $ | 0.32 | | | $ | 0.26 | |
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Adjustments to reported EPS: | | | | | | | | |
• Diluted EPS impact of special items and mark-to-market in Commercial Power | | $ | (0.11 | ) | | $ | 0.02 | |
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Diluted EPS, adjusted | | $ | 0.21 | | | $ | 0.28 | |
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Reconciliation of reported to adjusted diluted EPS for the annual periods:
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| | | 2010
EPS | | | 2009
EPS | |
Diluted EPS from continuing operations, as reported | | $ | 1.00 | | | $ | 0.82 | |
Diluted EPS from discontinued operations, as reported | | | — | | | $ | 0.01 | |
Diluted EPS, as reported | | $ | 1.00 | | | $ | 0.83 | |
Adjustments to reported EPS: | | | | | | | | |
• Diluted EPS from discontinued operations | | | | | | $ | (0.01 | ) |
• Diluted EPS impact of special items and mark-to-market in Commercial Power | | $ | 0.43 | | | $ | 0.40 | |
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Diluted EPS, adjusted | | $ | 1.43 | | | $ | 1.22 | |
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BUSINESS UNIT RESULTS (ON A REPORTED BASIS)
U.S. Franchised Electric and Gas (USFE&G)
USFE&G reported fourth-quarter 2010 segment EBIT from continuing operations of $605 million, compared to $548 million in the fourth quarter 2009.
USFE&G results increased due to favorable pricing principally caused by rate adjustments in the Carolinas, favorable weather and higher Allowance for Funds Used During Construction (AFUDC) from Duke Energy’s ongoing construction program. These increases were partially offset by higher operation and maintenance expenses and higher depreciation expenses.
Full-year 2010 segment EBIT from continuing operations for USFE&G was $2,966 million, compared to $2,321 million in 2009. The increase in full-year results was principally due to the favorable weather in 2010, favorable pricing and increased earnings from Duke Energy’s ongoing construction program.
Commercial Power
Commercial Power reported fourth-quarter 2010 segment EBIT from continuing operations of $58 million, compared to $68 million in the fourth quarter 2009.
Commercial Power results decreased primarily because of lower retail sales volumes due to competition in Ohio, net of customer acquisition efforts by our competitive retail subsidiary, and higher operation and maintenance costs caused by planned outage timing.
Full-year 2010 segment EBIT from continuing operations for Commercial Power was a loss of $229 million, compared to income of $27 million in 2009. The reduction from 2009 was primarily due to 2010 non-cash goodwill and other impairment charges of approximately $660 million related to non-regulated generation
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operations in the Midwest, as compared to similar non-cash goodwill and other impairment charges of approximately $400 million in 2009.
Duke Energy International (DEI)
Duke Energy International (DEI) reported fourth-quarter 2010 segment EBIT from continuing operations of $110 million, compared to $104 million in the fourth quarter 2009.
DEI’s results for the quarter were driven primarily by favorable pricing in Brazil, offset by unfavorable results in Central America.
Full-year 2010 segment EBIT from continuing operations for DEI was $486 million, compared to $365 million in 2009.
Other
Other includes corporate governance expenses, costs associated with the company’s voluntary employee separation plan and results from Duke Energy’s captive insurance company.
Other reported fourth-quarter 2010 net pretax earnings from continuing operations of $113 million, compared to a net expense of $58 million in the fourth quarter 2009. The improvement was the result of gains on sales of non-core businesses offset by lower results from our captive insurance company and a donation to the Duke Energy Foundation, which supports the communities in which we serve.
Full-year 2010 net expense from continuing operations for Other was $255 million, compared to $251 million in 2009. In addition to the quarterly drivers noted above, the 2010 results included the offsetting impacts of gains on the sale of non-core businesses and severance costs associated with the company’s voluntary employee separation program and office consolidation.
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INTEREST EXPENSE
Fourth quarter 2010 interest expense was $216 million compared to $191 million in the fourth quarter 2009. Full-year 2010 interest expense was $840 million, compared to $751 million for 2009. The increase in interest expense for the fourth quarter and full-year 2010 was primarily due to higher debt balances that are the result of financing the company’s ongoing construction program.
INCOME TAX
Income tax expense from continuing operations in fourth quarter 2010 was $247 million, compared to $158 million in fourth quarter 2009. The effective tax rate in fourth quarter 2010 was approximately 37 percent, compared to 32 percent in fourth quarter 2009. The increase was principally driven by the elimination of the company’s ability to utilize the manufacturing tax deduction.
Full-year 2010 income tax expense from continuing operations was $890 million, compared to $758 million in 2009. The effective tax rate for full-year 2010 was approximately 40 percent, compared to approximately 41 percent in 2009. The effective tax rate for both 2010 and 2009 reflects the effect of goodwill impairments, which are non-deductible for tax purposes.
ANALYST CONFERENCE CALL
An earnings conference call for investors and analysts is scheduled for 10 a.m. EST Thursday, Feb. 17. In addition to discussing fourth quarter and year-end 2010 earnings, the company will provide details on its 2011 adjusted diluted earnings per share guidance range.
The conference call can be accessed via theinvestors’ section (http://www.duke-energy.com/investors/) of Duke Energy’s website or by dialing 888-820-9409 in the United States or 913-981-5534 outside the United States. The confirmation code is 4503920. Please call in 10 to 15 minutes prior to the scheduled start time. A replay
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of the conference call will be available until midnight EST, Feb. 26, 2011, by calling 888-203-1112 in the United States or 719-457-0820 outside the United States, and using the code 4503920. A replay and transcript also will be available by accessing theinvestors’ section of the company’s website.
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, although it is reasonably possible such charges and credits could recur. 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
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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 provides them an additional relevant comparison of 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 adjusted Other net expenses as a measure of historical and anticipated future segment and Other performance. When used for future periods, adjusted segment EBIT and adjusted Other net expenses may also include any amounts that may be reported as discontinued operations or extraordinary items. Adjusted segment EBIT and adjusted 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
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impacts of economic hedges in the Commercial Power segment. Management believes that the presentation of adjusted segment EBIT and adjusted Other net expenses provides useful information to investors, as it provides them an additional relevant comparison of a segment’s or Other’s performance across periods. The most directly comparable GAAP measure for adjusted segment EBIT or adjusted 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 adjusted 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 one of the largest electric power holding companies in the United States. Its regulated utility operations serve approximately 4 million customers located in five states in the Southeast and Midwest, representing a population of approximately 11 million people. Its commercial power and international business segments own and 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.
Forward-looking statement
This release includes forward-looking statements within the meaning of Section 27A
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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,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Such forward-looking statements include, but are not limited to, statements about Duke Energy’s plans, objectives, expectations and intentions, the expected timing of completion of the proposed merger with Progress Energy, and other statements that are not historical facts. 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, as well as rulings 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 or decline in Duke Energy Corporation’s (Duke Energy) service territories, customer base or customer usage patterns; 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 storms, hurricanes, droughts 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 performance of electric generation facilities and of projects undertaken by Duke Energy’s non-regulated businesses; the results of financing efforts, including Duke Energy’s ability to obtain financing on favorable terms, which
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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 creditworthiness 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; 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 ratepayers in a timely manner or at all; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; the ability to obtain the requisite Duke Energy and Progress Energy shareholder approvals to complete the merger; the risk that Progress Energy or Duke Energy may be unable to obtain governmental and regulatory approvals required for the merger, or required governmental and regulatory approvals may delay the merger or result in the imposition of conditions that could cause the parties to abandon the merger; the risk that a condition to closing of the merger may not be satisfied; the timing to consummate the proposed mergers; the diversion of management time on merger-related issues and other factors. These risks, as well as other risks associated with the merger, will be more fully discussed in the joint proxy statement/prospectus that will be included in the Registration Statement on Form S-4 that will be filed with the SEC in connection with the merger. Additional risks and uncertainties are identified and discussed in Progress Energy’s and Duke Energy’s reports filed with the SEC and available at the SEC’s website at www.sec.gov.
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
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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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December 2010
QUARTERLY HIGHLIGHTS
(Unaudited)
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| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | |
(In millions, except per-share amounts and where noted) | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
Common Stock Data | | | | | | | | | | | | | | | | |
Income from continuing operations attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | | |
Basic | | $ | 0.32 | | | $ | 0.26 | | | $ | 1.00 | | | $ | 0.82 | |
Diluted | | $ | 0.32 | | | $ | 0.26 | | | $ | 1.00 | | | $ | 0.82 | |
Income from discontinued operations attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | | |
Basic | | $ | — | | | $ | — | | | $ | — | | | $ | 0.01 | |
Diluted | | $ | — | | | $ | — | | | $ | — | | | $ | 0.01 | |
Net income attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | | |
Basic | | $ | 0.32 | | | $ | 0.26 | | | $ | 1.00 | | | $ | 0.83 | |
Diluted | | $ | 0.32 | | | $ | 0.26 | | | $ | 1.00 | | | $ | 0.83 | |
Dividends Per Share | | $ | 0.245 | | | $ | 0.24 | | | $ | 0.97 | | | $ | 0.94 | |
Weighted-Average Shares Outstanding | | | | | | | | | | | | | | | | |
Basic | | | 1,326 | | | | 1,306 | | | | 1,318 | | | | 1,293 | |
Diluted | | | 1,327 | | | | 1,307 | | | | 1,319 | | | | 1,294 | |
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INCOME | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 3,445 | | | $ | 3,110 | | | $ | 14,272 | | | $ | 12,731 | |
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Total Reportable Segment EBIT | | | 773 | | | | 720 | | | | 3,223 | | | | 2,713 | |
Other EBIT | | | 113 | | | | (58 | ) | | | (255 | ) | | | (251 | ) |
Interest Expense | | | (216 | ) | | | (191 | ) | | | (840 | ) | | | (751 | ) |
Interest Income and Other (a) | | | 4 | | | | 23 | | | | 82 | | | | 120 | |
Income Tax Expense from Continuing Operations | | | (247 | ) | | | (158 | ) | | | (890 | ) | | | (758 | ) |
Income from Discontinued Operations, net of tax | | | 2 | | | | 12 | | | | 3 | | | | 12 | |
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Net Income | | | 429 | | | | 348 | | | | 1,323 | | | | 1,085 | |
Less: Net Income Attributable to Noncontrolling Interests | | | 2 | | | | 2 | | | | 3 | | | | 10 | |
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Net Income Attributable to Duke Energy Corporation | | $ | 427 | | | $ | 346 | | | $ | 1,320 | | | $ | 1,075 | |
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CAPITALIZATION | | | | | | | | | | | | | | | | |
Total Common Equity | | | | | | | | | | | 55 | % | | | 56 | % |
Total Debt | | | | | | | | | | | 45 | % | | | 44 | % |
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Total Debt | | | | | | | | | | $ | 18,426 | | | $ | 17,015 | |
Book Value Per Share | | | | | | | | | | $ | 16.85 | | | $ | 16.72 | |
Actual Shares Outstanding | | | | | | | | | | | 1,329 | | | | 1,309 | |
CAPITAL AND INVESTMENT EXPENDITURES | | | | | | | | | | | | | | | | |
U.S. Franchised Electric and Gas | | $ | 1,043 | | | $ | 1,062 | | | $ | 3,891 | | | $ | 3,560 | |
Commercial Power | | | 125 | | | | 126 | | | | 525 | | | | 688 | |
International Energy | | | 71 | | | | 60 | | | | 181 | | | | 128 | |
Other | | | 74 | | | | 58 | | | | 258 | | | | 181 | |
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Total Capital and Investment Expenditures | | $ | 1,313 | | | $ | 1,306 | | | $ | 4,855 | | | $ | 4,557 | |
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EBIT BY BUSINESS SEGMENT | | | | | | | | | | | | | | | | |
U.S. Franchised Electric and Gas | | $ | 605 | | | $ | 548 | | | $ | 2,966 | | | $ | 2,321 | |
Commercial Power (b) | | | 58 | | | | 68 | | | | (229 | ) | | | 27 | |
International Energy | | | 110 | | | | 104 | | | | 486 | | | | 365 | |
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Total Reportable Segment EBIT | | | 773 | | | | 720 | | | | 3,223 | | | | 2,713 | |
Other EBIT (c) | | | 113 | | | | (58 | ) | | | (255 | ) | | | (251 | ) |
Interest Expense | | | (216 | ) | | | (191 | ) | | | (840 | ) | | | (751 | ) |
Interest Income and Other (a) | | | 4 | | | | 23 | | | | 82 | | | | 120 | |
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Income From Continuing Operations Before Income Taxes | | $ | 674 | | | $ | 494 | | | $ | 2,210 | | | $ | 1,831 | |
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| (a) | Other within Interest Income and Other includes foreign currency remeasurement gains and losses, an adjustment to add back the noncontrolling interest component of reportable segment and Other EBIT and additional noncontrolling interest amounts not allocated to the reportable segment and Other results. |
| (b) | Includes non-cash impairment charges of $660 million in the second quarter of 2010, which consists of a $500 million goodwill impairment charge associated with the non-regulated Midwest generation operations and a $160 million charge to write-down the value of certain non-regulated Midwest generating assets and emission allowances associated with these generation assets. Includes non-cash impairment charges of $413 million in the third quarter of 2009, which consists primarily of a goodwill impairment charge associated with the non-regulated generation operations in the Midwest. |
| (c) | The fourth quarter of 2010 includes a $139 million gain from the sale of a 50% ownership interest in DukeNet Communications, LLC, a $109 million gain from the sale of Q-Comm Corporation, and a $40 million contribution to the Duke Energy Foundation. The twelve months ended December 31, 2010 also includes costs of $172 million associated with the 2010 voluntary severance plan and office consolidation. |
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December 2010
QUARTERLY HIGHLIGHTS
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Twelve Months Ended
December 31, | |
(In millions, except where noted) | | 2010 | | | 2009 | | | 2010 | | | 2009 | |
U.S. FRANCHISED ELECTRIC AND GAS | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 2,555 | | | $ | 2,276 | | | $ | 10,597 | | | $ | 9,433 | |
Operating Expenses | | | 2,012 | | | | 1,764 | | | | 7,887 | | | | 7,263 | |
Gains (Losses) on Sales of Other Assets and Other, net | | | (1 | ) | | | (1 | ) | | | 5 | | | | 20 | |
Other Income and Expenses, net | | | 63 | | | | 37 | | | | 251 | | | | 131 | |
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EBIT | | $ | 605 | | | $ | 548 | | | $ | 2,966 | | | $ | 2,321 | |
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Depreciation and Amortization | | $ | 353 | | | $ | 310 | | | $ | 1,386 | | | $ | 1,290 | |
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Duke Energy Carolinas GWh sales | | | 20,009 | | | | 19,180 | | | | 85,441 | | | | 79,830 | |
Duke Energy Midwest GWh sales | | | 14,222 | | | | 14,277 | | | | 60,418 | | | | 56,753 | |
Net Proportional MW Capacity in Operation | | | | | | | | | | | 26,869 | | | | 26,957 | |
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COMMERCIAL POWER | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 592 | | | $ | 494 | | | $ | 2,448 | | | $ | 2,114 | |
Operating Expenses (a) | | | 544 | | | | 439 | | | | 2,710 | | | | 2,134 | |
Gains (Losses) on Sales of Other Assets and Other, net | | | 2 | | | | 4 | | | | 6 | | | | 12 | |
Other Income and Expenses, net | | | 9 | | | | 9 | | | | 35 | | | | 35 | |
Expense Attributable to Noncontrolling Interests | | | 1 | | | | — | | | | 8 | | | | — | |
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EBIT | | $ | 58 | | | $ | 68 | | | $ | (229 | ) | | $ | 27 | |
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Depreciation and Amortization | | $ | 58 | | | $ | 51 | | | $ | 225 | | | $ | 206 | |
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Sales, GWh | | | 10,516 | | | | 8,503 | | | | 38,103 | | | | 31,432 | |
Actual Plant Production, GWh | | | 8,023 | | | | 6,828 | | | | 28,754 | | | | 26,962 | |
Net Proportional MW Capacity in Operation | | | | | | | | | | | 8,272 | | | | 8,005 | |
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INTERNATIONAL ENERGY | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 285 | | | $ | 339 | | | $ | 1,204 | | | $ | 1,158 | |
Operating Expenses | | | 201 | | | | 240 | | | | 806 | | | | 834 | |
Gains (Losses) on Sales of Other Assets and Other, net | | | (2 | ) | | | 1 | | | | (3 | ) | | | — | |
Other Income and Expenses, net | | | 28 | | | | 10 | | | | 110 | | | | 63 | |
Expense Attributable to Noncontrolling Interests | | | — | | | | 6 | | | | 19 | | | | 22 | |
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EBIT | | $ | 110 | | | $ | 104 | | | $ | 486 | | | $ | 365 | |
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Depreciation and Amortization | | $ | 23 | | | $ | 21 | | | $ | 86 | | | $ | 81 | |
| | | | |
Sales, GWh | | | 4,346 | | | | 6,174 | | | | 19,504 | | | | 19,978 | |
Proportional MW Capacity in Operation | | | | | | | | | | | 4,203 | | | | 4,053 | |
| | | | |
OTHER | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 36 | | | $ | 31 | | | $ | 118 | | | $ | 128 | |
Operating Expenses (b) | | | 174 | | | | 106 | | | | 656 | | | | 389 | |
Gains (Losses) on Sales of Other Assets and Other, net (c) | | | 145 | | | | — | | | | 145 | | | | 4 | |
Other Income and Expenses, net (d) | | | 107 | | | | 15 | | | | 129 | | | | 2 | |
Expense (Benefit) Attributable to Noncontrolling Interests | | | 1 | | | | (2 | ) | | | (9 | ) | | | (4 | ) |
| | | | | | | | | | | | | | | | |
EBIT | | $ | 113 | | | $ | (58 | ) | | $ | (255 | ) | | $ | (251 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Depreciation and Amortization | | $ | 23 | | | $ | 21 | | | $ | 89 | | | $ | 79 | |
| (a) | Includes non-cash impairment charges of $660 million in the second quarter of 2010, which consists of a $500 million goodwill impairment charge associated with the non-regulated Midwest generation operations and a $160 million charge to write-down the value of certain non-regulated Midwest generating assets and emission allowances associated with these generation assets. Includes non-cash impairment charges of $413 million in the third quarter of 2009, which consists primarily of a goodwill impairment charge associated with the non-regulated generation operations in the Midwest. |
| (b) | Includes costs of $172 million associated with the 2010 voluntary severance plan and office consolidation for the twelve months ended December 31, 2010, and a $40 million contribution to the Duke Energy Foundation in the fourth quarter of 2010. |
| (c) | Includes a $139 million gain from the sale of a 50% ownership interest in DukeNet Communications, LLC in the fourth quarter of 2010. |
| (d) | Includes a $109 million gain from the sale of Q-Comm Corporation in the fourth quarter of 2010. |
14
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per-share amounts)
| | | | | | | | |
| | | Years Ended
December 31, | |
| | | 2010 | | | 2009 | |
Operating Revenues | | $ | 14,272 | | | $ | 12,731 | |
Operating Expenses | | | 11,964 | | | | 10,518 | |
Gains on Sales of Other Assets and Other, net | | | 153 | | | | 36 | |
| | | | | | | | |
Operating Income | | | 2,461 | | | | 2,249 | |
| | | | | | | | |
Other Income and Expenses, net | | | 589 | | | | 333 | |
Interest Expense | | | 840 | | | | 751 | |
| | | | | | | | |
Income From Continuing Operations Before Income Taxes | | | 2,210 | | | | 1,831 | |
Income Tax Expense from Continuing Operations | | | 890 | | | | 758 | |
| | | | | | | | |
Income From Continuing Operations | | | 1,320 | | | | 1,073 | |
Income From Discontinued Operations, net of tax | | | 3 | | | | 12 | |
| | | | | | | | |
Net Income | | | 1,323 | | | | 1,085 | |
Less: Net Income Attributable to Noncontrolling Interests | | | 3 | | | | 10 | |
| | | | | | | | |
Net Income Attributable to Duke Energy Corporation | | $ | 1,320 | | | $ | 1,075 | |
| | | | | | | | |
| | |
Earnings Per Share - Basic and Diluted | | | | | | | | |
Income from continuing operations attributable to Duke Energy Corporation common shareholders | | | | | | | | |
Basic | | $ | 1.00 | | | $ | 0.82 | |
Diluted | | $ | 1.00 | | | $ | 0.82 | |
Income from discontinued operations attributable to Duke Energy Corporation common shareholders | | | | | | | | |
Basic | | $ | — | | | $ | 0.01 | |
Diluted | | $ | — | | | $ | 0.01 | |
Net income attributable to Duke Energy Corporation common shareholders | | | | | | | | |
Basic | | $ | 1.00 | | | $ | 0.83 | |
Diluted | | $ | 1.00 | | | $ | 0.83 | |
Dividends per share | | $ | 0.97 | | | $ | 0.94 | |
Weighted-average shares outstanding | | | | | | | | |
Basic | | | 1,318 | | | | 1,293 | |
Diluted | | | 1,319 | | | | 1,294 | |
15
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
| | | | | | | | |
| | | December 31, | |
| | | 2010 | | | 2009 | |
ASSETS | | | | | | | | |
| | |
Current Assets | | $ | 6,223 | | | $ | 5,766 | |
Investments and Other Assets | | | 9,264 | | | | 9,807 | |
Net Property, Plant and Equipment | | | 40,344 | | | | 37,950 | |
Regulatory Assets and Deferred Debits | | | 3,259 | | | | 3,517 | |
| | | | | | | | |
| | |
Total Assets | | $ | 59,090 | | | $ | 57,040 | |
| | | | | | | | |
| | |
LIABILITIES AND EQUITY | | | | | | | | |
| | |
Current Liabilities | | $ | 3,897 | | | $ | 4,088 | |
Long-term Debt | | | 17,935 | | | | 16,113 | |
Deferred Credits and Other Liabilities | | | 14,605 | | | | 14,953 | |
Equity | | | 22,653 | | | | 21,886 | |
| | | | | | | | |
| | |
Total Liabilities and Equity | | $ | 59,090 | | | $ | 57,040 | |
| | | | | | | | |
16
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
| | | | | | | | |
| | | Years Ended December 31, | |
| | | 2010 | | | 2009 | |
| | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
Net Income | | $ | 1,323 | | | $ | 1,085 | |
Adjustments to reconcile net income to net cash provided by operating activities | | $ | 3,188 | | | | 2,378 | |
| | | | | | | | |
Net cash provided by operating activities | | | 4,511 | | | | 3,463 | |
| | | | | | | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Net cash used in investing activities | | | (4,423 | ) | | | (4,492 | ) |
| | | | | | | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Net cash provided by financing activities | | | 40 | | | | 1,585 | |
| | | | | | | | |
| | |
Net increase in cash and cash equivalents | | | 128 | | | | 556 | |
Cash and cash equivalents at beginning of period | | | 1,542 | | | | 986 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 1,670 | | | $ | 1,542 | |
| | | | | | | | |
17
Duke Energy Carolinas
Quarterly Highlights
Supplemental Franchised Electric Information
December 31, 2010
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended
December 31, | | | Year To Date
December 31, | |
| | | 2010 | | | 2009 | | | %
Inc. (Dec.) | | | 2010 | | | 2009 | | | %
Inc. (Dec.) | |
| | | | | | |
GWH Sales | | | | | | | | | | | | | | | | | | | | | | | | |
Residential | | | 6,330 | | | | 5,961 | | | | 6.2 | % | | | 30,049 | | | | 27,273 | | | | 10.2 | % |
General Service | | | 6,514 | | | | 6,330 | | | | 2.9 | % | | | 27,968 | | | | 26,977 | | | | 3.7 | % |
| | | | | | |
Industrial - Textile | | | 977 | | | | 917 | | | | 6.5 | % | | | 4,002 | | | | 3,616 | | | | 10.7 | % |
Industrial - Other | | | 4,063 | | | | 3,885 | | | | 4.6 | % | | | 16,616 | | | | 15,588 | | | | 6.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Industrial | | | 5,040 | | | | 4,802 | | | | 5.0 | % | | | 20,618 | | | | 19,204 | | | | 7.4 | % |
| | | | | | |
Other Energy Sales | | | 71 | | | | 71 | | | | — | | | | 287 | | | | 286 | | | | 0.2 | % |
Regular Resale | | | — | | | | 23 | | | | (100.0 | %) | | | 25 | | | | 216 | | | | (88.6 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Regular Sales Billed | | | 17,955 | | | | 17,187 | | | | 4.5 | % | | | 78,947 | | | | 73,956 | | | | 6.7 | % |
| | | | | | |
Special Sales | | | 1,337 | | | | 1,352 | | | | (1.1 | %) | | | 5,863 | | | | 5,301 | | | | 10.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Electric Sales | | | 19,292 | | | | 18,539 | | | | 4.1 | % | | | 84,810 | | | | 79,257 | | | | 7.0 | % |
| | | | | | |
Unbilled Sales | | | 717 | | | | 641 | | | | 11.9 | % | | | 631 | | | | 573 | | | | 10.2 | % |
| | | | | | | | | | | | | | | | | �� | | | | | | | |
| | | | | | |
Total Consolidated Electric Sales - Carolinas | | | 20,009 | | | | 19,180 | | | | 4.3 | % | | | 85,441 | | | | 79,830 | | | | 7.0 | % |
| | | | | | |
Average Number of Customers | | | | | | | | | | | | | | | | | | | | | | | | |
Residential | | | 2,036,269 | | | | 2,027,762 | | | | 0.4 | % | | | 2,034,357 | | | | 2,024,098 | | | | 0.5 | % |
General Service | | | 333,403 | | | | 332,056 | | | | 0.4 | % | | | 332,911 | | | | 331,457 | | | | 0.4 | % |
| | | | | | |
Industrial - Textile | | | 624 | | | | 635 | | | | (1.7 | %) | | | 626 | | | | 648 | | | | (3.4 | %) |
Industrial - Other | | | 6,494 | | | | 6,663 | | | | (2.5 | %) | | | 6,563 | | | | 6,690 | | | | (1.9 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Industrial | | | 7,118 | | | | 7,298 | | | | (2.5 | %) | | | 7,189 | | | | 7,338 | | | | (2.0 | %) |
| | | | | | |
Other Energy Sales | | | 14,125 | | | | 14,054 | | | | 0.5 | % | | | 14,123 | | | | 13,960 | | | | 1.2 | % |
Regular Resale | | | — | | | | 6 | | | | (100.0 | %) | | | — | | | | 8 | | | | (100.0 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Regular Sales | | | 2,390,915 | | | | 2,381,176 | | | | 0.4 | % | | | 2,388,580 | | | | 2,376,861 | | | | 0.5 | % |
| | | | | | |
Special Sales | | | 29 | | | | 29 | | | | (1.1 | %) | | | 31 | | | | 28 | | | | 10.4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Avg Number of Customers - Carolinas | | | 2,390,944 | | | | 2,381,205 | | | | 0.4 | % | | | 2,388,611 | | | | 2,376,889 | | | | 0.5 | % |
| | | | | | |
Heating and Cooling Degree Days | | | | | | | | | | | | | | | | | | | | | | | | |
Actual | | | | | | | | | | | | | | | | | | | | | | | | |
Heating Degree Days | | | 1,488 | | | | 1,343 | | | | 10.8 | % | | | 3,680 | | | | 3,339 | | | | 10.2 | % |
Cooling Degree Days | | | 39 | | | | 22 | | | | 74.9 | % | | | 1,975 | | | | 1,502 | | | | 31.5 | % |
| | | | | | |
Variance from Normal | | | | | | | | | | | | | | | | | | | | | | | | |
Heating Degree Days | | | 20.6 | % | | | 11.2 | % | | | n/a | | | | 16.2 | % | | | 6.5 | % | | | n/a | |
Cooling Degree Days | | | (7.3 | %) | | | (47.8 | %) | | | n/a | | | | 33.2 | % | | | 0.2 | % | | | n/a | |
18
Duke Energy Midwest
Quarterly Highlights
Supplemental Franchised Electric Information
December 2010
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended
December 31, | | | Year To Date
December 31, | |
| | | 2010 | | | 2009 | | | %
Inc. (Dec.) | | | 2010 | | | 2009 | | | %
Inc. (Dec.) | |
| | | | | | |
GWH Sales | | | | | | | | | | | | | | | | | | | | | | | | |
Residential | | | 4,030 | | | | 3,881 | | | | 3.8% | | | | 18,784 | | | | 17,363 | | | | 8.2% | |
General Service | | | 4,283 | | | | 4,193 | | | | 2.1% | | | | 18,229 | | | | 17,755 | | | | 2.7% | |
Industrial | | | 3,920 | | | | 3,832 | | | | 2.3% | | | | 15,982 | | | | 14,483 | | | | 10.4% | |
| | | | | | |
Other Energy Sales | | | 43 | | | | 43 | | | | — | | | | 170 | | | | 170 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Regular Electric Sales Billed | | | 12,276 | | | | 11,949 | | | | 2.7% | | | | 53,165 | | | | 49,771 | | | | 6.8% | |
| | | | | | |
Special Sales | | | 1,742 | | | | 2,105 | | | | (17.2%) | | | | 7,212 | | | | 7,065 | | | | 2.1% | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Electric Sales Billed - Midwest | | | 14,018 | | | | 14,054 | | | | (0.3%) | | | | 60,377 | | | | 56,836 | | | | 6.2% | |
| | | | | | |
Unbilled Sales | | | 204 | | | | 223 | | | | (8.5%) | | | | 41 | | | | (83 | ) | | | 149.4% | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Electric Sales - Midwest | | | 14,222 | | | | 14,277 | | | | (0.4%) | | | | 60,418 | | | | 56,753 | | | | 6.5% | |
| | | | | | |
Average Number of Customers | | | | | | | | | | | | | | | | | | | | | | | | |
Residential | | | 1,409,141 | | | | 1,402,816 | | | | 0.5% | | | | 1,407,058 | | | | 1,400,467 | | | | 0.5% | |
General Service | | | 184,909 | | | | 184,709 | | | | 0.1% | | | | 184,887 | | | | 184,493 | | | | 0.2% | |
Industrial | | | 5,404 | | | | 5,473 | | | | (1.3%) | | | | 5,437 | | | | 5,503 | | | | (1.2%) | |
| | | | | | |
Other Energy | | | 4,206 | | | | 4,136 | | | | 1.7% | | | | 4,179 | | | | 4,107 | | | | 1.8% | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Regular Sales | | | 1,603,660 | | | | 1,597,134 | | | | 0.4% | | | | 1,601,561 | | | | 1,594,570 | | | | 0.4% | |
| | | | | | |
Special Sales | | | 14 | | | | 17 | | | | (17.6%) | | | | 15 | | | | 18 | | | | (16.7%) | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Avg Number Electric Customers - Midwest | | | 1,603,674 | | | | 1,597,151 | | | | 0.4% | | | | 1,601,576 | | | | 1,594,588 | | | | 0.4% | |
| | | | | | |
Heating and Cooling Degree Days* | | | | | | | | | | | | | | | | | | | | | | | | |
Actual | | | | | | | | | | | | | | | | | | | | | | | | |
Heating Degree Days | | | 1,570 | | | | 1,407 | | | | 11.6% | | | | 4,035 | | | | 3,784 | | | | 6.6% | |
Cooling Degree Days | | | 16 | | | | 2 | | | | 700.0% | | | | 1,492 | | | | 892 | | | | 67.3% | |
| | | | | | |
Variance from Normal | | | | | | | | | | | | | | | | | | | | | | | | |
Heating Degree Days | | | 12.5 | % | | | 3.2 | % | | | n/a | | | | 7.4 | % | | | 3.2 | % | | | n/a | |
Cooling Degree Days | | | (27.3 | %) | | | (90.9 | %) | | | n/a | | | | 35.5 | % | | | (19.7 | %) | | | n/a | |
| * | Reflects HDD and CDD for Duke Energy - Indiana, Duke Energy - Ohio and Duke Energy - Kentucky |
19
DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
December 2009 Quarter-to-Date
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items (Note 1) | | | | | | | | | | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Cinergy
Merger | | | 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 | | $ | 548 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 548 | |
| | | | | | | |
Commercial Power | | | 100 | | | | — | | | | — | | | | (32 | ) B | | | — | | | | (32 | ) | | | 68 | |
| | | | | | | |
International Energy | | | 122 | | | | — | | | | (18 | ) D | | | — | | | | — | | | | (18 | ) | | | 104 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Total reportable segment EBIT | | | 770 | | | | — | | | | (18 | ) | | | (32 | ) | | | — | | | | (50 | ) | | | 720 | |
| | | | | | | |
Other | | | (56 | ) | | | (2 | ) A | | | — | | | | — | | | | — | | | | (2 | ) | | | (58 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Total reportable segment EBIT and Other EBIT | | $ | 714 | | | $ | (2 | ) | | $ | (18 | ) | | $ | (32 | ) | | $ | — | | | $ | (52 | ) | | $ | 662 | |
| | | | | | | |
Interest Expense | | | (191 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (191 | ) |
Interest Income and Other | | | 23 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 23 | |
Income Taxes from Continuing Operations | | | (177 | ) | | | 1 | | | | 6 | | | | 12 | | | | — | | | | 19 | | | | (158 | ) |
Discontinued Operations, net of taxes | | | — | | | | — | | | | — | | | | — | | | | 12 | C | | | 12 | | | | 12 | |
Net Loss Attributable to Noncontrolling Interests | | | 2 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 367 | | | $ | (1 | ) | | $ | (12 | ) | | $ | (20 | ) | | $ | 12 | | | $ | (21 | ) | | $ | 346 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 0.28 | | | $ | — | | | $ | — | | | $ | (0.02 | ) | | $ | — | | | $ | (0.02 | ) | | $ | 0.26 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 0.28 | | | $ | — | | | $ | — | | | $ | (0.02 | ) | | $ | — | | | $ | (0.02 | ) | | $ | 0.26 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note 1 - Amounts for special items are presented net of any related noncontrolling interest.
A - $4 million credit recorded in Operation, maintenance and other and $6 million expense recorded in Depreciation and amortization (all Operating Expenses) on the Consolidated Statements of Operations.
B - $7 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $25 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 Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations.
D - Recorded in Losses on sales and impairments of unconsolidated affiliates within Other income and expenses on the Consolidated Statements of Operations.
Weighted Average Shares (reported and adjusted) - in millions
| | | | |
Basic | | | 1,306 | |
| |
Diluted | | | 1,307 | |
| * | 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 or regulatory 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 provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods. |
20
DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
December 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 | | | Goodwill and
Other
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 | | $ | 2,321 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,321 | |
| | | | | | | | | |
Commercial Power | | | 500 | | | | — | | | | — | | | | — | | | | (413 | ) D | | | (60 | ) B | | | — | | | | (473 | ) | | | 27 | |
| | | | | | | | | |
International Energy | | | 409 | | | | — | | | | — | | | | (26 | ) E | | | (18 | ) D | | | — | | | | — | | | | (44 | ) | | | 365 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Total reportable segment EBIT | | | 3,230 | | | | — | | | | — | | | | (26 | ) | | | (431 | ) | | | (60 | ) | | | — | | | | (517 | ) | | | 2,713 | |
| | | | | | | | | |
Other | | | (200 | ) | | | (25 | ) A | | | (26 | ) F | | | — | | | | — | | | | — | | | | — | | | | (51 | ) | | | (251 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | |
Total reportable segment and Other EBIT | | $ | 3,030 | | | $ | (25 | ) | | $ | (26 | ) | | $ | (26 | ) | | $ | (431 | ) | | $ | (60 | ) | | $ | — | | | $ | (568 | ) | | $ | 2,462 | |
| | | | | | | | | |
Interest Expense | | | (745 | ) | | | — | | | | — | | | | (6 | ) | | | — | | | | — | | | | — | | | | (6 | ) | | | (751 | ) |
Interest Income and Other | | | 120 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 120 | |
Income Taxes from Continuing Operations | | | (818 | ) | | | 10 | | | | (3 | ) | | | 10 | | | | 21 | | | | 22 | | | | — | | | | 60 | | | | (758 | ) |
Discontinued Operations, net of taxes | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12 | C | | | 12 | | | | 12 | |
Net Income Attributable to Noncontrolling Interests | | | 10 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 10 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 1,577 | | | $ | (15 | ) | | $ | (29 | ) | | $ | (22 | ) | | $ | (410 | ) | | $ | (38 | ) | | $ | 12 | | | $ | (502 | ) | | $ | 1,075 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 1.22 | | | $ | (0.01 | ) | | $ | (0.02 | ) | | $ | (0.02 | ) | | $ | (0.32 | ) | | $ | (0.03 | ) | | $ | 0.01 | | | $ | (0.39 | ) | | $ | 0.83 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 1.22 | | | $ | (0.01 | ) | | $ | (0.02 | ) | | $ | (0.02 | ) | | $ | (0.32 | ) | | $ | (0.03 | ) | | $ | 0.01 | | | $ | (0.39 | ) | | $ | 0.83 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note 1 - Amounts for special items are presented net of any related noncontrolling interest.
A - $5 million recorded in Operation, maintenance and other and $20 million recorded in Depreciation and amortization (all Operating Expenses) on the Consolidated Statements of Operations.
B - $2 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $58 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 Income from Discontinued Operations, net of tax on the Consolidated Statements of Operations.
D - $413 million recorded in Goodwill and other impairment charges within Operating Expenses and $18 million recorded in Losses on sales and impairments of unconsolidated affiliates within Other income and expenses on the Consolidated Statements of Operations.
E - $30 million recorded in Operations, 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 noncontrolling interests on the Consolidated Statements of Operations.
F- Recorded in Other income and expenses, net on the Consolidated Statement of Operations.
Weighted Average Shares (reported and adjusted) - in millions
| | | | |
Basic | | | 1,293 | |
| |
Diluted | | | 1,294 | |
| * | 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 or regulatory 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 provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods. |
21
DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
December 2010 Quarter-to-Date
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items (Note 1) | | | | | | | | | | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Cinergy
Merger | | | Voluntary
Opportunity
Plan/Office
Consolidation
Costs | | | Asset Sales | | | 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 | | $ | 605 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 605 | |
| | | | | | | | |
Commercial Power | | | 54 | | | | — | | | | — | | | | — | | | | 4 | B | | | — | | | | 4 | | | | 58 | |
| | | | | | | | |
International Energy | | | 110 | | | | — | | | | — | | | | | | | | — | | | | — | | | | — | | | | 110 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Total reportable segment EBIT | | | 769 | | | | — | | | | — | | | | — | | | | 4 | | | | — | | | | 4 | | | | 773 | |
| | | | | | | | |
Other | | | (121 | ) | | | (6 | ) A | | | (8 | ) C | | | 248 | D | | | — | | | | — | | | | 234 | | | | 113 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Total reportable segment and Other EBIT | | $ | 648 | | | $ | (6 | ) | | $ | (8 | ) | | $ | 248 | | | $ | 4 | | | $ | — | | | $ | 238 | | | $ | 886 | |
| | | | | | | | |
Interest Expense | | | (216 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (216 | ) |
Interest Income and Other | | | 4 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 4 | |
Income Taxes from Continuing Operations | | | (156 | ) | | | 2 | | | | 3 | | | | (94 | ) | | | (2 | ) | | | — | | | | (91 | ) | | | (247 | ) |
Discontinued Operations, net of taxes | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2 | E | | | 2 | | | | 2 | |
Net Income Attributable to Noncontrolling Interests | | | 2 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 2 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 278 | | | $ | (4 | ) | | $ | (5 | ) | | $ | 154 | | | $ | 2 | | | $ | 2 | | | $ | 149 | | | $ | 427 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 0.21 | | | $ | — | | | $ | (0.01 | ) | | $ | 0.12 | | | $ | — | | | $ | — | | | $ | 0.11 | | | $ | 0.32 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 0.21 | | | $ | — | | | $ | (0.01 | ) | | $ | 0.12 | | | $ | — | | | $ | — | | | $ | 0.11 | | | $ | 0.32 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note 1 - Amounts for special items are presented net of any related noncontrolling interest.
A - $5 million expense recorded in Depreciation and amortization and $1 million recorded in Operation, maintenance and other (all Operating Expenses) on the Consolidated Statements of Operations.
B - $3 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $7 million gain recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) on the Consolidated Statements of Operations.
C - $7 million recorded in Operation, maintenance and other (all Operating Expenses) and $1 million recorded in Property and other taxes on the Consolidated Statements of Operations.
D - $109 million gain on Q-Comm sale recorded in Gains on sales and impairments of unconsolidated affiliates within Other Income and Expense and $139 million gain on DukeNet sale recorded in Gains on sales of Other assets and Other, net on the Consolidated Statements of Operations.
E - Recorded in Income (Loss) From Discontinued Operations, net of tax on the Consolidated Statements of Operations.
Weighted Average Shares (reported and adjusted) - in millions
| | | | |
Basic | | | 1,326 | |
| |
Diluted | | | 1,327 | |
| * | 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 or regulatory accounting, used in Duke Energy Corporation’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 provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods. |
22
DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
December 2010 Year-to-Date
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items (Note 1) | | | | | | | | | | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Cinergy
Merger | | | Voluntary
Opportunity
Plan/Office
Consolidation
Costs | | | Goodwill and
Other
Impairments | | | Litigation
Reserve | | | Asset Sales | | | 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 | | $ | 2,966 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 2,966 | |
| | | | | | | | | | |
Commercial Power | | | 398 | | | | — | | | | — | | | | (660 | ) E | | | — | | | | — | | | | 33 | B | | | — | | | | (627 | ) | | | (229 | ) |
| | | | | | | | | | |
International Energy | | | 486 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 486 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Total reportable segment EBIT | | | 3,850 | | | | — | | | | — | | | | (660 | ) | | | — | | | | — | | | | 33 | | | | — | | | | (627 | ) | | | 3,223 | |
| | | | | | | | | | |
Other | | | (278 | ) | | | (27 | ) A | | | (172 | ) D | | | — | | | | (26 | ) F | | | 248 | G | | | — | | | | — | | | | 23 | | | | (255 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
Total reportable segment and Other EBIT | | $ | 3,572 | | | $ | (27 | ) | | $ | (172 | ) | | $ | (660 | ) | | $ | (26 | ) | | $ | 248 | | | $ | 33 | | | $ | — | | | $ | (604 | ) | | $ | 2,968 | |
| | | | | | | | | | |
Interest Expense | | | (840 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | (840 | ) |
Interest Income and Other | | | 82 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 82 | |
Income Taxes from Continuing Operations | | | (929 | ) | | | 10 | | | | 67 | | | | 58 | | | | 10 | | | | (94 | ) | | | (12 | ) | | | — | | | | 39 | | | | (890 | ) |
Discontinued Operations, net of taxes | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3 | C | | | 3 | | | | 3 | |
Net Income Attributable to Noncontrolling Interests | | | 3 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 3 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 1,882 | | | $ | (17 | ) | | $ | (105 | ) | | $ | (602 | ) | | $ | (16 | ) | | $ | 154 | | | $ | 21 | | | $ | 3 | | | $ | (562 | ) | | $ | 1,320 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 1.43 | | | $ | (0.01 | ) | | $ | (0.08 | ) | | $ | (0.46 | ) | | $ | (0.01 | ) | | $ | 0.12 | | | $ | 0.01 | | | $ | — | | | $ | (0.43 | ) | | $ | 1.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 1.43 | | | $ | (0.01 | ) | | $ | (0.08 | ) | | $ | (0.46 | ) | | $ | (0.01 | ) | | $ | 0.12 | | | $ | 0.01 | | | $ | — | | | $ | (0.43 | ) | | $ | 1.00 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Note 1 - Amounts for special items are presented net of any related noncontrolling interest.
A - $23 million recorded in Depreciation and amortization and $4 million recorded in Operation, maintenance and other (all Operating Expenses) on the Consolidated Statements of Operations.
B - $6 million gain recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $27 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 Income (Loss) From Discontinued Operations, net of tax on the Consolidated Statements of Operations.
D - $164 million recorded in Operation, maintenance and other (all Operating Expenses) and $8 million recorded in Property and other taxes on the Consolidated Statements of Operations.
E - Recorded in Goodwill and other impairment charges within Operating Expenses on the Consolidated Statements of Operations.
F - Recorded in Operation, maintenance and other on the Consolidated Statements of Operations.
G - $109 million gain on Q-Comm sale recorded in Gains on sales and impairments of unconsolidated affiliates within Other Income and Expense and $139 million gain on DukeNet sale recorded in Gains on sales of Other assets and Other, net on the Consolidated Statements of Operations.
Weighted Average Shares (reported and adjusted) - in millions
| | | | |
Basic | | | 1,318 | |
| |
Diluted | | | 1,319 | |
| * | 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 or regulatory accounting, used in Duke Energy Corporation’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 provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods. |
23
