Exhibit 99.1
| | | | |
 | | | | NEWS RELEASE |
| | |
| | | | Duke Energy Corporation |
| | | | P.O. Box 1009 |
| | | | Charlotte, NC 28201-1009 |
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| Aug. 2, 2012 | | MEDIA CONTACT: | | |
| | Tom Shiel | | 704-382-2355 |
| | 24-Hour: | | 800-559-3853 |
| | |
| | ANALYSTS: | | |
| | Bob Drennan Bill Currens | | 704-382-4070 704-382-1603 |
Duke Energy Posts Higher Second Quarter 2012 Results
| | • | | Second quarter 2012 adjusted diluted earnings per share (EPS) were $1.02, compared to 99 cents for the second quarter 2011 |
| | • | | Reported diluted EPS for second quarter 2012 was 99 cents, compared to 98 cents for the second quarter 2011 |
| | • | | Duke Energy remains on track to achieve its 2012 adjusted diluted EPS guidance range of $4.20 to $4.35 per share for the combined company |
| | • | | Duke Energy financial results for the second quarter 2012 are on a stand-alone basis and do not include Progress Energy’s results |
CHARLOTTE, N.C. - Duke Energy today announced second quarter 2012 adjusted diluted EPS of $1.02, compared to 99 cents for second quarter 2011, and reported diluted EPS of 99 cents, compared to 98 cents for the same period last year.
Current year and prior year EPS amounts have been adjusted to reflect the one-for-three reverse stock split which was completed immediately prior to closing the merger with Progress Energy on July 2, 2012.
In connection with the merger, Progress Energy has become a wholly owned direct subsidiary of Duke Energy.
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As a result, the Duke Energy financial results for the second quarter 2012 are on a stand-alone basis and do not include Progress Energy’s results. Progress Energy results for the second quarter 2012 are contained in a separate news release. The financial results of Progress Energy will be included in Duke Energy’s consolidated results beginning with third quarter 2012.
Higher second quarter results were driven by revised customer rates in the Carolinas and lower storm restoration costs in U.S. Franchised Electric & Gas. These results were partially offset by less favorable weather, higher financing costs, and increased depreciation expense as a result of higher rate base investment levels. As expected, International Energy’s results were below prior year primarily due to lower earnings in Central America and unfavorable foreign exchange rates.
The company remains on track to achieve its 2012 adjusted earnings guidance range of $4.20 to $4.35 per share for the combined company, as adjusted for the one-for-three reverse stock split.
“Now that the merger has closed, our focus is on integrating these two great companies and continuing to deliver on our commitments to our 7.1 million customers,” said Jim Rogers, chairman, president and CEO. “The benefits of this merger to our customers, employees, communities and investors are compelling and we have a talented team of employees working aggressively to achieve them.”
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:
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| | | | | | | | | | | | | | | | |
(In millions, except per-share amounts) | | Pretax
Amount | | | Tax
Effect | | | 2Q2012
EPS
Impact | | | 2Q2011
EPS
Impact | |
Second Quarter 2012 | |
• Costs to Achieve, Progress Merger | | $ | (7 | ) | | | — | | | $ | (0.02 | ) | | | | |
• Mark-to-market impact of economic hedges | | $ | (6 | ) | | $ | 2 | | | $ | (0.01 | ) | | | | |
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Second Quarter 2011 | | | | | | | | | | | | | | | | |
• Costs to Achieve, Progress Merger | | $ | (5 | ) | | $ | 1 | | | | | | | $ | (0.01 | ) |
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Total diluted EPS impact | | | | | | | | | | $ | (0.03 | ) | | $ | (0.01 | ) |
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Reconciliation of reported to adjusted diluted EPS for the quarters:
| | | | | | | | |
| | | 2Q2012
EPS | | | 2Q2011
EPS | |
Diluted EPS, as reported | | $ | 0.99 | | | $ | 0.98 | |
Adjustments to reported EPS: | | | | | | | | |
• Diluted EPS impact of special items and mark-to-market in Commercial Power | | $ | 0.03 | | | $ | 0.01 | |
| | | | | | | | |
Diluted EPS, adjusted | | $ | 1.02 | | | $ | 0.99 | |
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BUSINESS UNIT RESULTS
The discussion below of second-quarter results includes adjusted segment income, which is a non-GAAP financial measure. The tables on pages 18 through 21 present a reconciliation of reported results to adjusted results.
U.S. Franchised Electric and Gas (USFE&G)
USFE&G recognized second-quarter 2012 adjusted segment income of $337 million, compared to $297 million in the second quarter 2011, an increase of $0.09 per share.
USFE&G’s increased results were primarily driven by the implementation of revised customer rates in the Carolinas (+$0.14 per share), lower operation and maintenance
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costs primarily due to significant prior-year storm restoration costs (+$0.08 per share) and increased pricing and riders, including energy efficiency programs (+$0.03 per share).
These results were partially offset by higher planned depreciation expense (-$0.06 per share), less favorable weather (-$0.05 per share), and higher financing costs (-$0.02 per share).
International Energy
International Energy recognized second-quarter 2012 adjusted segment income of $105 million, compared to $127 million in the second quarter 2011, a decrease of $0.05 per share.
International Energy’s quarterly adjusted segment income results decreased primarily due to lower pricing in Central America (-$0.05 per share) and unfavorable average foreign exchange rates (-$0.03 per share). These results were partially offset by favorable pricing in Brazil (+$0.01 per share) as well as higher volumes and pricing in Peru (+$0.01 per share).
Commercial Power
Commercial Power recognized second-quarter 2012 adjusted segment income of $32 million, compared to $30 million in the second quarter 2011, reflecting no change in earnings per share contribution.
Favorable impacts for the quarter primarily included the non-bypassable stability charge under the new Electric Security Plan (ESP) in Ohio (+$0.05 per share), recovery of a Lehman Brothers receivable previously written-off (+$0.02 per share), lower
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operation and maintenance costs (+$0.02 per share) and the prior year impairment of the Vermillion gas-fired plant (+$0.01 per share).
Unfavorable impacts primarily included lower margins from the Midwest coal generation fleet resulting from the new ESP in Ohio (-$0.07 per share) and lower margins and volumes realized by Duke Energy Retail (-$0.03 per share).
Other
On an adjusted basis, Other primarily includes corporate interest expense not allocated to the business units, results from Duke Energy’s captive insurance company, other investments, and income tax levelization adjustments.
Other recognized a second-quarter 2012 adjusted net expense of $18 million, compared to $15 million in the second quarter 2011, a decrease of $0.01 per share.
ANALYST CONFERENCE CALL
An earnings conference call for analysts is scheduled for 11 a.m. ET Thursday, Aug. 2. The conference call will be hosted by Jim Rogers, chairman, president and chief executive officer, and Lynn Good, executive vice president and chief financial officer.
The call can be accessed via theinvestors’ section (http://www.duke-energy.com/investors/) of Duke Energy’s website or by dialing 800-930-1344 in the United States or 913-312-0652 outside the United States. The confirmation code is9404035. 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. 12, 2012, by calling 888-203-1112 in the United States or 719-457-0820 outside the United States and using the code9404035. A replay and transcript also will be available by accessing theinvestors’ section of the company’s website.
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NON-GAAP FINANCIAL MEASURES
The primary performance measure used by management to evaluate segment performance is segment income. Segment income is defined as income from continuing operations net of income attributable to non-controlling interests. In addition, direct interest expense and income taxes are included in segment income and certain governance costs are allocated to each of the segments.
Management believes segment income, which is the GAAP measure used to report segment results, is a good indicator of each segment’s operating performance as it represents the approximate net income contribution of Duke Energy’s business segments by incorporating the direct financing methods or capital structures of the business segments as well as the income tax attributes of the businesses and regions in which they operate.
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. In addition, Duke Energy’s management calculates the EPS impact of segment income drivers to facilitate an understanding of the impacts of each income driver on consolidated adjusted diluted EPS.
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 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
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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 income and adjusted Other net expenses as a measure of historical and anticipated future segment and Other performance. Adjusted segment income and adjusted Other net expenses are non-GAAP financial measures, as they represent reported segment income 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 income 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. When an EPS amount is provided for a segment income driver, the per share impact is derived by taking the before-tax amount of the item less income taxes based on the segment’s effective tax rate, divided by the Duke Energy weighted-average shares outstanding for the period. The most directly comparable GAAP measure for adjusted segment income or adjusted Other net expenses is reported segment income or Other net expenses, which represents segment income 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 income 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 the largest electric power holding company in the United States with more than $100 billion in total assets. Its regulated utility operations serve approximately 7.1 million electric customers located in six states in the Southeast and Midwest. 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.
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Headquartered in Charlotte, N.C., Duke Energy is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at:www.duke-energy.com.
Forward-Looking Information
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,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook” 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, as well as rulings that affect cost and investment recovery or have an impact on rate structures; the ability to recover eligible costs and earn an adequate return on investment through the regulatory process; 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 ability to recover in a timely manner, if at all, costs associated with future significant weather events through the regulatory process; the impact on Duke Energy’s facilities and business from a terrorist attack; the inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks; 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 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 and nuclear decommissioning trust funds; 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
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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 scope of necessary repairs of the delamination of Crystal River Unit 3 Nuclear Plant could prove more extensive than is currently identified, such repairs could prove not to be feasible resulting in early retirement of the unit, the cost of repair and/or replacement power could exceed estimates and insurance coverage or may not be recoverable through the regulatory process; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; the ability to maintain relationships with customers, employees or suppliers post merger; the ability to successfully integrate the Progress Energy businesses and realize cost savings and any other synergies expected from the merger; the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; the impact of compliance with material restrictions of conditions related to the Progress Energy merger imposed by regulators could exceed our expectations; the impact of potential goodwill impairments; the ability to successfully complete future merger, acquisition or divestiture plans.
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 atwww.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 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 2012
QUARTERLY HIGHLIGHTS
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
(In millions, except per-share amounts and where noted) | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
Common Stock Data | | | | | | | | | | | | | | | | |
Income from continuing operations attributable to Duke Energy Corporation common shareholders (a) | | | | | | | | | | | | | | | | |
Basic | | $ | 0.99 | | | $ | 0.98 | | | $ | 1.65 | | | $ | 2.13 | |
Diluted | | $ | 0.99 | | | $ | 0.98 | | | $ | 1.65 | | | $ | 2.13 | |
Income from discontinued operations attributable to Duke Energy Corporation common shareholders (a) | | | | | | | | | | | | | | | | |
Basic | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Diluted | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Net income attributable to Duke Energy Corporation common shareholders (a) | | | | | | | | | | | | | | | | |
Basic | | $ | 0.99 | | | $ | 0.98 | | | $ | 1.65 | | | $ | 2.13 | |
Diluted | | $ | 0.99 | | | $ | 0.98 | | | $ | 1.65 | | | $ | 2.13 | |
Dividends Declared Per Share (a) | | $ | 1.515 | | | $ | 1.485 | | | $ | 2.265 | | | $ | 2.22 | |
Weighted-Average Shares Outstanding (a) | | | | | | | | | | | | | | | | |
Basic | | | 446 | | | | 444 | | | | 446 | | | | 444 | |
Diluted | | | 446 | | | | 444 | | | | 446 | | | | 444 | |
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INCOME | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 3,577 | | | $ | 3,534 | | | $ | 7,207 | | | $ | 7,197 | |
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Total Reportable Segment Income | | | 470 | | | | 454 | | | | 779 | | | | 972 | |
Other Net Expense | | | (25 | ) | | | (19 | ) | | | (41 | ) | | | (26 | ) |
(Loss) Income from Discontinued Operations, net of tax | | | (1 | ) | | | — | | | | 1 | | | | — | |
| | | | | | | | | | | | | | | | |
Net Income Attributable to Duke Energy Corporation | | $ | 444 | | | $ | 435 | | | $ | 739 | | | $ | 946 | |
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CAPITALIZATION | | | | | | | | | | | | | | | | |
Total Common Equity | | | | | | | | | | | 51 | % | | | 54 | % |
Total Debt | | | | | | | | | | | 49 | % | | | 46 | % |
| | | | |
Total Debt | | | | | | | | | | $ | 21,386 | | | $ | 18,975 | |
Book Value Per Share (a) | | | | | | | | | | $ | 50.46 | | | $ | 51.14 | |
Actual Shares Outstanding (a) | | | | | | | | | | | 446 | | | | 444 | |
CAPITAL AND INVESTMENT EXPENDITURES | | | | | | | | | | | | | | | | |
U.S. Franchised Electric and Gas | | $ | 795 | | | $ | 845 | | | $ | 1,590 | | | $ | 1,756 | |
Commercial Power | | | 411 | | | | 81 | | | | 620 | | | | 106 | |
International Energy | | | 9 | | | | 30 | | | | 24 | | | | 58 | |
Other | | | 39 | | | | 24 | | | | 63 | | | | 71 | |
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Total Capital and Investment Expenditures | | $ | 1,254 | | | $ | 980 | | | $ | 2,297 | | | $ | 1,991 | |
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SEGMENT INCOME BY BUSINESS SEGMENT | | | | | | | | | | | | | | | | |
U.S. Franchised Electric and Gas (b) | | $ | 337 | | | $ | 297 | | | $ | 473 | | | $ | 638 | |
Commercial Power | | | 28 | | | | 30 | | | | 59 | | | | 79 | |
International Energy | | | 105 | | | | 127 | | | | 247 | | | | 255 | |
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Total Reportable Segment Income | | | 470 | | | | 454 | | | | 779 | | | | 972 | |
Other Net Expense | | | (25 | ) | | | (19 | ) | | | (41 | ) | | | (26 | ) |
| | | | | | | | | | | | | | | | |
Total Reportable Segment Income and Other Net Expense | | $ | 445 | | | $ | 435 | | | $ | 738 | | | $ | 946 | |
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| (a) | Reflects the impact of the 1-for-3 reverse stock split on July 2, 2012. Amounts do not reflect the additional shares issued to complete the Progress Energy merger. |
| (b) | For the six months ended June 30, 2012, includes impairment and other charges of $268 million recorded in the first quarter of 2012 related to the Edwardsport IGCC project (net of tax of $152 million). |
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June 2012
QUARTERLY HIGHLIGHTS
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
(In millions, except where noted) | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
U.S. FRANCHISED ELECTRIC AND GAS | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 2,697 | | | $ | 2,549 | | | $ | 5,365 | | | $ | 5,232 | |
Operating Expenses (a) | | | 2,099 | | | | 2,042 | | | | 4,481 | | | | 4,123 | |
Gains on Sales of Other Assets, net | | | 3 | | | | 1 | | | | 7 | | | | 1 | |
| | | | | | | | | | | | | | | | |
Operating Income | | | 601 | | | | 508 | | | | 891 | | | | 1,110 | |
Other Income and Expenses | | | 62 | | | | 67 | | | | 124 | | | | 129 | |
Interest Expense | | | 143 | | | | 134 | | | | 289 | | | | 274 | |
| | | | | | | | | | | | | | | | |
Income Before Income Taxes | | | 520 | | | | 441 | | | | 726 | | | | 965 | |
Income Tax Expense (b) | | | 183 | | | | 144 | | | | 253 | | | | 327 | |
| | | | | | | | | | | | | | | | |
Segment Income | | $ | 337 | | | $ | 297 | | | $ | 473 | | | $ | 638 | |
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Depreciation and Amortization | | $ | 362 | | | $ | 333 | | | $ | 730 | | | $ | 680 | |
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Duke Energy Carolinas GWh sales | | | 19,574 | | | | 20,210 | | | | 39,035 | | | | 40,794 | |
Duke Energy Midwest GWh sales | | | 14,234 | | | | 13,917 | | | | 28,557 | | | | 28,689 | |
Net Proportional MW Capacity in Operation | | | | | | | | | | | 27,145 | | | | 26,907 | |
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COMMERCIAL POWER | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 502 | | | $ | 595 | | | $ | 1,082 | | | $ | 1,239 | |
Operating Expenses | | | 460 | | | | 550 | | | | 990 | | | | 1,114 | |
Gains on Sales of Other Assets, net | | | 1 | | | | 11 | | | | 1 | | | | 13 | |
| | | | | | | | | | | | | | | | |
Operating Income | | | 43 | | | | 56 | | | | 93 | | | | 138 | |
Other Income and Expenses | | | 17 | | | | 9 | | | | 25 | | | | 17 | |
Interest Expense | | | 22 | | | | 22 | | | | 41 | | | | 46 | |
| | | | | | | | | | | | | | | | |
Income Before Income Taxes | | | 38 | | | | 43 | | | | 77 | | | | 109 | |
Income Tax Expense | | | 10 | | | | 6 | | | | 18 | | | | 23 | |
Less: Income Attributable to Noncontrolling Interests | | | — | | | | 7 | | | | — | | | | 7 | |
| | | | | | | | | | | | | | | | |
Segment Income | | $ | 28 | | | $ | 30 | | | $ | 59 | | | $ | 79 | |
| | | | | | | | | | | | | | | | |
| | | | |
Depreciation and Amortization | | $ | 58 | | | $ | 58 | | | $ | 114 | | | $ | 117 | |
| | | | |
Actual Coal-fired Plant Production, GWh | | | 3,299 | | | | 3,716 | | | | 7,367 | | | | 8,407 | |
Actual Gas-fired Plant Production, GWh | | | 4,513 | | | | 2,512 | | | | 9,096 | | | | 5,221 | |
Actual Renewable Plant Production, GWh | | | 786 | | | | 844 | | | | 1,784 | | | | 1,741 | |
Net Proportional MW Capacity in Operation | | | | | | | | | | | 7,757 | | | | 8,273 | |
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INTERNATIONAL ENERGY | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 397 | | | $ | 406 | | | $ | 799 | | | $ | 754 | |
Operating Expenses | | | 257 | | | | 265 | | | | 502 | | | | 476 | |
| | | | | | | | | | | | | | | | |
Operating Income | | | 140 | | | | 141 | | | | 297 | | | | 278 | |
Other Income and Expenses | | | 36 | | | | 55 | | | | 90 | | | | 114 | |
Interest Expense | | | 21 | | | | 11 | | | | 37 | | | | 27 | |
| | | | | | | | | | | | | | | | |
Income Before Income Taxes | | | 155 | | | | 185 | | | | 350 | | | | 365 | |
Income Tax Expense | | | 46 | | | | 55 | | | | 95 | | | | 103 | |
Less: Income Attributable to Noncontrolling Interests | | | 4 | | | | 3 | | | | 8 | | | | 7 | |
| | | | | | | | | | | | | | | | |
Segment Income | | $ | 105 | | | $ | 127 | | | $ | 247 | | | $ | 255 | |
| | | | | | | | | | | | | | | | |
| | | | |
Depreciation and Amortization | | $ | 25 | | | $ | 22 | | | $ | 49 | | | $ | 43 | |
| | | | |
Sales, GWh | | | 4,882 | | | | 4,516 | | | | 9,956 | | | | 9,303 | |
Proportional MW Capacity in Operation | | | | | | | | | | | 4,225 | | | | 4,190 | |
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OTHER | | | | | | | | | | | | | | | | |
Operating Revenues | | $ | 16 | | | $ | 9 | | | $ | 31 | | | $ | 20 | |
Operating Expenses | | | 14 | | | | 27 | | | | 30 | | | | 53 | |
(Losses) Gains on Sales of Other Assets, net | | | — | | | | (8 | ) | | | (1 | ) | | | — | |
| | | | | | | | | | | | | | | | |
Operating Income (Loss) | | | 2 | | | | (26 | ) | | | — | | | | (33 | ) |
Other Income and Expenses | | | (6 | ) | | | 26 | | | | (1 | ) | | | 48 | |
Interest Expense | | | 46 | | | | 36 | | | | 89 | | | | 75 | |
| | | | | | | | | | | | | | | | |
(Loss) Income Before Income Taxes | | | (50 | ) | | | (36 | ) | | | (90 | ) | | | (60 | ) |
Income Tax (Benefit) Expense | | | (25 | ) | | | (13 | ) | | | (49 | ) | | | (28 | ) |
Less: Income (Loss) Attributable to Noncontrolling Interests | | | — | | | | (4 | ) | | | — | | | | (6 | ) |
| | | | | | | | | | | | | | | | |
Net Expense | | $ | (25 | ) | | $ | (19 | ) | | $ | (41 | ) | | $ | (26 | ) |
| | | | | | | | | | | | | | | | |
| | | | |
Depreciation and Amortization | | $ | 30 | | | $ | 24 | | | $ | 61 | | | $ | 51 | |
| (a) | For the six months ended June 30, 2012, includes a pre-tax impairment and other charges of $420 million recorded in the first quarter of 2012 related to the Edwardsport IGCC project. |
| (b) | For the six months ended June 30, 2012, includes a tax benefit of $152 million recorded in the first quarter of 2012 on the impairment and other charges related to the Edwardsport IGCC project. |
11
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, | |
| | | 2012 | | | 2011 | | | 2012 | | | 2011 | |
Operating Revenues | | | | | | | | | | | | | | | | |
Regulated electric | | $ | 2,628 | | | $ | 2,576 | | | $ | 5,129 | | | $ | 5,149 | |
Non-regulated electric, natural gas, and other | | | 868 | | | | 864 | | | | 1,826 | | | | 1,719 | |
Regulated natural gas | | | 81 | | | | 94 | | | | 252 | | | | 329 | |
| | | | | | | | | | | | | | | | |
Total operating revenues | | | 3,577 | | | | 3,534 | | | | 7,207 | | | | 7,197 | |
| | | | | | | | | | | | | | | | |
Operating Expenses | | | | | | | | | | | | | | | | |
Fuel used in electric generation and purchased power - regulated | | | 849 | | | | 834 | | | | 1,626 | | | | 1,646 | |
Fuel used in electric generation and purchased power - non-regulated | | | 396 | | | | 388 | | | | 844 | | | | 764 | |
Cost of natural gas and coal sold | | | 42 | | | | 63 | | | | 144 | | | | 214 | |
Operation, maintenance and other | | | 862 | | | | 959 | | | | 1,608 | | | | 1,839 | |
Depreciation and amortization | | | 475 | | | | 437 | | | | 954 | | | | 891 | |
Property and other taxes | | | 171 | | | | 169 | | | | 355 | | | | 355 | |
Impairment charges | | | — | | | | 9 | | | | 402 | | | | 9 | |
| | | | | | | | | | | | | | | | |
Total operating expenses | | | 2,795 | | | | 2,859 | | | | 5,933 | | | | 5,718 | |
| | | | | | | | | | | | | | | | |
Gains on Sales of Other Assets and Other, net | | | 4 | | | | 4 | | | | 7 | | | | 14 | |
| | | | | | | | | | | | | | | | |
Operating Income | | | 786 | | | | 679 | | | | 1,281 | | | | 1,493 | |
| | | | | | | | | | | | | | | | |
Other Income and Expenses | | | | | | | | | | | | | | | | |
Equity in earnings of unconsolidated affiliates | | | 40 | | | | 48 | | | | 85 | | | | 80 | |
Impairments and gains on sales of unconsolidated affiliates | | | (1 | ) | | | 12 | | | | (6 | ) | | | 14 | |
Other income and expenses, net | | | 70 | | | | 97 | | | | 159 | | | | 214 | |
| | | | | | | | | | | | | | | | |
Total other income and expenses | | | 109 | | | | 157 | | | | 238 | | | | 308 | |
| | | | | | | | | | | | | | | | |
Interest Expense | | | 232 | | | | 203 | | | | 456 | | | | 422 | |
| | | | | | | | | | | | | | | | |
Income From Continuing Operations Before Income Taxes | | | 663 | | | | 633 | | | | 1,063 | | | | 1,379 | |
Income Tax Expense from Continuing Operations | | | 214 | | | | 192 | | | | 317 | | | | 425 | |
| | | | | | | | | | | | | | | | |
Income From Continuing Operations | | | 449 | | | | 441 | | | | 746 | | | | 954 | |
(Loss) Income From Discontinued Operations, net of tax | | | (1 | ) | | | — | | | | 1 | | | | — | |
| | | | | | | | | | | | | | | | |
Net Income | | | 448 | | | | 441 | | | | 747 | | | | 954 | |
Less: Net Income Attributable to Noncontrolling Interests | | | 4 | | | | 6 | | | | 8 | | | | 8 | |
| | | | | | | | | | | | | | | | |
Net Income Attributable to Duke Energy Corporation | | $ | 444 | | | $ | 435 | | | $ | 739 | | | $ | 946 | |
| | | | | | | | | | | | | | | | |
| | | | |
Earnings Per Share - Basic and Diluted | | | | | | | | | | | | | | | | |
Income from continuing operations attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | | |
Basic | | $ | 0.99 | | | $ | 0.98 | | | $ | 1.65 | | | $ | 2.13 | |
Diluted | | $ | 0.99 | | | $ | 0.98 | | | $ | 1.65 | | | $ | 2.13 | |
Income from discontinued operations attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | | |
Basic | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Diluted | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Net Income attributable to Duke Energy Corporation common shareholders | | | | | | | | | | | | | | | | |
Basic | | $ | 0.99 | | | $ | 0.98 | | | $ | 1.65 | | | $ | 2.13 | |
Diluted | | $ | 0.99 | | | $ | 0.98 | | | $ | 1.65 | | | $ | 2.13 | |
Dividends declared per share | | $ | 1.515 | | | $ | 1.485 | | | $ | 2.265 | | | $ | 2.22 | |
Weighted-average shares outstanding | | | | | | | | | | | | | | | | |
Basic | | | 446 | | | | 444 | | | | 446 | | | | 444 | |
Diluted | | | 446 | | | | 444 | | | | 446 | | | | 444 | |
12
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED
BALANCE SHEETS
(Unaudited)
(In millions)
| | | | | | | | |
| | | June 30,
2012 | | | December 31,
2011 | |
ASSETS | | | | | | | | |
Current Assets | | | | | | | | |
Cash and cash equivalents | | $ | 1,526 | | | $ | 2,110 | |
Short-term investments | | | 234 | | | | 190 | |
Receivables (net of allowance for doubtful accounts of $16 at June 30, 2012 and $35 at December 31, 2011) | | | 610 | | | | 784 | |
Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $43 at June 30, 2012 and $40 at December 31, 2011) | | | 1,233 | | | | 1,157 | |
Inventory | | | 1,762 | | | | 1,588 | |
Other | | | 1,122 | | | | 1,051 | |
| | | | | | | | |
Total current assets | | | 6,487 | | | | 6,880 | |
| | | | | | | | |
Investments and Other Assets | | | | | | | | |
Investments in equity method unconsolidated affiliates | | | 450 | | | | 460 | |
Nuclear decommissioning trust funds | | | 2,204 | | | | 2,060 | |
Goodwill | | | 3,842 | | | | 3,849 | |
Intangibles, net | | | 357 | | | | 363 | |
Notes receivable | | | 72 | | | | 62 | |
Restricted other assets of variable interest entities | | | 133 | | | | 135 | |
Other | | | 1,894 | | | | 2,231 | |
| | | | | | | | |
Total investments and other assets | | | 8,952 | | | | 9,160 | |
| | | | | | | | |
Property, Plant and Equipment | | | | | | | | |
Cost | | | 61,458 | | | | 60,377 | |
Cost, variable interest entities | | | 1,357 | | | | 913 | |
Accumulated depreciation and amortization | | | (19,101 | ) | | | (18,709 | ) |
Generation facilities to be retired, net | | | 73 | | | | 80 | |
| | | | | | | | |
Net property, plant and equipment | | | 43,787 | | | | 42,661 | |
| | | | | | | | |
Regulatory Assets and Deferred Debits | | | | | | | | |
Regulatory assets | | | 3,646 | | | | 3,672 | |
Other | | | 159 | | | | 153 | |
| | | | | | | | |
Total regulatory assets and deferred debits | | | 3,805 | | | | 3,825 | |
| | | | | | | | |
Total Assets | | $ | 63,031 | | | $ | 62,526 | |
| | | | | | | | |
13
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS - (Continued)
(Unaudited)
(In millions, except per-share amounts)
| | | | | | | | |
| | | June 30,
2012 | | | December 31,
2011 | |
LIABILITIES AND EQUITY | | | | | | | | |
Current Liabilities | | | | | | | | |
Accounts payable | | $ | 1,160 | | | $ | 1,433 | |
Notes payable and commercial paper | | | 793 | | | | 154 | |
Non-recourse notes payable of variable interest entities | | | 269 | | | | 273 | |
Taxes accrued | | | 359 | | | | 431 | |
Interest accrued | | | 254 | | | | 252 | |
Current maturities of long-term debt | | | 1,870 | | | | 1,894 | |
Other | | | 1,434 | | | | 1,091 | |
| | | | | | | | |
Total current liabilities | | | 6,139 | | | | 5,528 | |
| | | | | | | | |
Long-term Debt | | | 17,539 | | | | 17,730 | |
| | | | | | | | |
Non-recourse long-term debt of variable interest entities | | | 915 | | | | 949 | |
| | | | | | | | |
Deferred Credits and Other Liabilities | | | | | | | | |
Deferred income taxes | | | 7,914 | | | | 7,581 | |
Investment tax credits | | | 379 | | | | 384 | |
Accrued pension and other post-retirement benefit costs | | | 829 | | | | 856 | |
Asset retirement obligations | | | 1,999 | | | | 1,936 | |
Regulatory liabilities | | | 2,981 | | | | 2,919 | |
Other | | | 1,820 | | | | 1,778 | |
| | | | | | | | |
Total deferred credits and other liabilities | | | 15,922 | | | | 15,454 | |
| | | | | | | | |
Commitments and Contingencies | | | | | | | | |
Equity | | | | | | | | |
Common Stock, $0.001 par value, 2 billion shares authorized; 446 million and 444 million shares outstanding at June 30, 2012 and December 31, 2011, respectively | | | 1 | | | | 1 | |
Additional paid-in capital | | | 21,140 | | | | 21,132 | |
Retained earnings | | | 1,598 | | | | 1,873 | |
Accumulated other comprehensive loss | | | (320 | ) | | | (234 | ) |
| | | | | | | | |
Total Duke Energy Corporation shareholders’ equity | | | 22,419 | | | | 22,772 | |
Noncontrolling interests | | | 97 | | | | 93 | |
| | | | | | | | |
Total equity | | | 22,516 | | | | 22,865 | |
| | | | | | | | |
Total Liabilities and Equity | | $ | 63,031 | | | $ | 62,526 | |
| | | | | | | | |
14
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
| | | | | | | | |
| | | Six Months Ended
June 30, | |
| | | 2012 | | | 2011 | |
| | |
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | |
Net income | | $ | 747 | | | $ | 954 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | 1,255 | | | | 763 | |
| | | | | | | | |
Net cash provided by operating activities | | | 2,002 | | | | 1,717 | |
| | | | | | | | |
| | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | |
Net cash used in investing activities | | | (2,391 | ) | | | (1,838 | ) |
| | | | | | | | |
| | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | |
Net cash used in financing activities | | | (195 | ) | | | (187 | ) |
| | | | | | | | |
| | |
Net decrease in cash and cash equivalents | | | (584 | ) | | | (308 | ) |
Cash and cash equivalents at beginning of period | | | 2,110 | | | | 1,670 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 1,526 | | | $ | 1,362 | |
| | | | | | | | |
15
Duke Energy Carolinas
Quarterly Highlights
Supplemental Franchised Electric Information
June 2012
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
| | | 2012 | | | 2011 | | | %
Inc.(Dec.) | | | 2012 | | | 2011 | | | %
Inc.(Dec.) | |
| | | | | | |
GWH Sales | | | | | | | | | | | | | | | | | | | | | | | | |
Residential | | | 5,531 | | | | 6,027 | | | | (8.2 | %) | | | 12,561 | | | | 14,199 | | | | (11.5 | %) |
General Service | | | 6,755 | | | | 6,760 | | | | (0.1 | %) | | | 13,146 | | | | 13,248 | | | | (0.8 | %) |
Industrial | | | 5,391 | | | | 5,328 | | | | 1.2 | % | | | 10,270 | | | | 10,117 | | | | 1.5 | % |
Other Energy Sales | | | 72 | | | | 72 | | | | — | | | | 144 | | | | 144 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Regular Sales Billed | | | 17,749 | | | | 18,187 | | | | (2.4 | %) | | | 36,121 | | | | 37,708 | | | | (4.2 | %) |
| | | | | | |
Special Sales | | | 1,212 | | | | 1,484 | | | | (18.3 | %) | | | 2,473 | | | | 3,071 | | | | (19.5 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Electric Sales | | | 18,961 | | | | 19,671 | | | | (3.6 | %) | | | 38,594 | | | | 40,779 | | | | (5.4 | %) |
| | | | | | |
Unbilled Sales | | | 613 | | | | 539 | | | | 13.7 | % | | | 441 | | | | 15 | | | | n/a | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Electric Sales - Carolinas | | | 19,574 | | | | 20,210 | | | | (3.1 | %) | | | 39,035 | | | | 40,794 | | | | (4.3 | %) |
| | | | | | |
Average Number of Customers | | | | | | | | | | | | | | | | | | | | | | | | |
Residential | | | 2,051,319 | | | | 2,039,057 | | | | 0.6 | % | | | 2,049,840 | | | | 2,039,006 | | | | 0.5 | % |
General Service | | | 336,781 | | | | 334,429 | | | | 0.7 | % | | | 336,216 | | | | 333,915 | | | | 0.7 | % |
Industrial | | | 6,770 | | | | 7,000 | | | | (3.3 | %) | | | 6,801 | | | | 7,026 | | | | (3.2 | %) |
Other Energy Sales | | | 14,307 | | | | 14,190 | | | | 0.8 | % | | | 14,305 | | | | 14,182 | | | | 0.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Regular Sales | | | 2,409,177 | | | | 2,394,676 | | | | 0.6 | % | | | 2,407,162 | | | | 2,394,129 | | | | 0.5 | % |
| | | | | | |
Special Sales | | | 24 | | | | 27 | | | | (12.3 | %) | | | 23 | | | | 26 | | | | (10.3 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Average Number of Customers - Carolinas | | | 2,409,201 | | | | 2,394,703 | | | | 0.6 | % | | | 2,407,185 | | | | 2,394,155 | | | | 0.5 | % |
| | | | | | |
Heating and Cooling Degree Days | | | | | | | | | | | | | | | | | | | | | | | | |
Actual | | | | | | | | | | | | | | | | | | | | | | | | |
Heating Degree Days | | | 161 | | | | 166 | | | | (3.2 | %) | | | 1,480 | | | | 1,935 | | | | (23.5 | %) |
Cooling Degree Days | | | 526 | | | | 628 | | | | (16.3 | %) | | | 558 | | | | 640 | | | | (12.8 | %) |
| | | | | | |
Variance from Normal | | | | | | | | | | | | | | | | | | | | | | | | |
Heating Degree Days | | | (22.3 | %) | | | (24.0 | %) | | | n/a | | | | (24.6 | %) | | | 0.2 | % | | | n/a | |
Cooling Degree Days | | | 5.4 | % | | | 31.2 | % | | | n/a | | | | 10.6 | % | | | 32.0 | % | | | n/a | |
16
Duke Energy Midwest
Quarterly Highlights
Supplemental Franchised Electric Information
June 2012
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
June 30, | | | Six Months Ended
June 30, | |
| | | 2012 | | | 2011 | | | %
Inc.(Dec.) | | | 2012 | | | 2011 | | | %
Inc.(Dec.) | |
| | | | | | |
GWH Sales | | | | | | | | | | | | | | | | | | | | | | | | |
Residential | | | 3,595 | | | | 3,807 | | | | (5.6 | %) | | | 8,349 | | | | 9,207 | | | | (9.3 | %) |
General Service | | | 4,325 | | | | 4,360 | | | | (0.8 | %) | | | 8,492 | | | | 8,739 | | | | (2.8 | %) |
Industrial | | | 4,058 | | | | 3,979 | | | | 2.0 | % | | | 8,012 | | | | 7,848 | | | | 2.1 | % |
Other Energy Sales | | | 42 | | | | 42 | | | | — | | | | 84 | | | | 84 | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Regular Electric Sales Billed | | | 12,020 | | | | 12,188 | | | | (1.4 | %) | | | 24,937 | | | | 25,878 | | | | (3.6 | %) |
| | | | | | |
Special Sales | | | 1,642 | | | | 1,589 | | | | 3.3 | % | | | 3,163 | | | | 3,166 | | | | (0.1 | %) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Electric Sales Billed - Midwest | | | 13,662 | | | | 13,777 | | | | (0.8 | %) | | | 28,100 | | | | 29,044 | | | | (3.3 | %) |
| | | | | | |
Unbilled Sales | | | 572 | | | | 140 | | | | 308.6 | % | | | 457 | | | | (355 | ) | | | 228.7 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Electric Sales - Midwest | | | 14,234 | | | | 13,917 | | | | 2.3 | % | | | 28,557 | | | | 28,689 | | | | (0.5 | %) |
| | | | | | |
Average Number of Customers | | | | | | | | | | | | | | | | | | | | | | | | |
Residential | | | 1,415,814 | | | | 1,408,052 | | | | 0.6 | % | | | 1,418,058 | | | | 1,411,020 | | | | 0.5 | % |
General Service | | | 185,690 | | | | 184,918 | | | | 0.4 | % | | | 185,673 | | | | 184,737 | | | | 0.5 | % |
Industrial | | | 5,309 | | | | 5,349 | | | | (0.7 | %) | | | 5,321 | | | | 5,361 | | | | (0.7 | %) |
| | | | | | |
Other Energy | | | 4,325 | | | | 4,242 | | | | 2.0 | % | | | 4,313 | | | | 4,231 | | | | 1.9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Regular Sales | | | 1,611,138 | | | | 1,602,561 | | | | 0.5 | % | | | 1,613,365 | | | | 1,605,349 | | | | 0.5 | % |
| | | | | | |
Special Sales | | | 14 | | | | 12 | | | | 16.7 | % | | | 13 | | | | 12 | | | | 8.3 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Average Number Electric Customers - Midwest | | | 1,611,152 | | | | 1,602,573 | | | | 0.5 | % | | | 1,613,378 | | | | 1,605,361 | | | | 0.5 | % |
| | | | | | |
Heating and Cooling Degree Days | | | | | | | | | | | | | | | | | | | | | | | | |
Actual | | | | | | | | | | | | | | | | | | | | | | | | |
Heating Degree Days | | | 172 | | | | 214 | | | | (19.6 | %) | | | 1,746 | | | | 2,427 | | | | (28.1 | %) |
Cooling Degree Days | | | 460 | | | | 372 | | | | 23.7 | % | | | 494 | | | | 376 | | | | 31.4 | % |
| | | | | | |
Variance from Normal | | | | | | | | | | | | | | | | | | | | | | | | |
Heating Degree Days | | | (24.2 | %) | | | (9.3 | %) | | | n/a | | | | (27.6 | %) | | | 3.3 | % | | | n/a | |
Cooling Degree Days | | | 37.3 | % | | | 17.4 | % | | | n/a | | | | 46.6 | % | | | 17.9 | % | | | n/a | |
Note: Includes data for Duke Energy Indiana, Duke Energy Ohio and Duke Energy Kentucky
17
DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
Three Months Ended June 30, 2011
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | |
| | | | | | Special Items | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Progress
Merger | | | Reported
Earnings | |
SEGMENT INCOME | | | | | | | | | | | | |
| | | |
U.S. Franchised Electric and Gas | | $ | 297 | | | $ | — | | | $ | 297 | |
| | | |
Commercial Power | | | 30 | | | | — | | | | 30 | |
| | | |
International Energy | | | 127 | | | | — | | | | 127 | |
| | | | | | | | | | | | |
| | | |
Total Reportable Segment Income | | | 454 | | | | — | | | | 454 | |
| | | |
Other | | | (15 | ) | | | (4 | ) A | | | (19 | ) |
| | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 439 | | | $ | (4 | ) | | $ | 435 | |
| | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 0.99 | | | $ | (0.01 | ) | | $ | 0.98 | |
| | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 0.99 | | | $ | (0.01 | ) | | $ | 0.98 | |
| | | | | | | | | | | | |
| A - | Net of $1 million tax benefit. Recorded in Operation, maintenance and other (Operating Expenses) on the Condensed 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 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. |
18
DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
Six Months Ended June 30, 2011
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items | | | | | | | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Progress
Merger | | | Economic
Hedges (Mark-
to-Market) * | | | Total
Adjustments | | | Reported
Earnings | |
SEGMENT INCOME | | | | | | | | | | | | | | | | | | | | |
| | | | | |
U.S. Franchised Electric and Gas | | $ | 638 | | | $ | — | | | $ | — | | | $ | — | | | $ | 638 | |
| | | | | |
Commercial Power | | | 82 | | | | — | | | | (3 | ) B | | | (3 | ) | | | 79 | |
| | | | | |
International Energy | | | 255 | | | | — | | | | — | | | | — | | | | 255 | |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Total Reportable Segment Income | | | 975 | | | | — | | | | (3 | ) | | | (3 | ) | | | 972 | |
| | | | | |
Other | | | (13 | ) | | | (13 | ) A | | | — | | | | (13 | ) | | | (26 | ) |
| | | | | | | | | | | | | | | | | | | | |
| | | | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 962 | | | $ | (13 | ) | | $ | (3 | ) | | $ | (16 | ) | | $ | 946 | |
| | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 2.17 | | | $ | (0.03 | ) | | $ | (0.01 | ) | | $ | (0.04 | ) | | $ | 2.13 | |
| | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 2.17 | | | $ | (0.03 | ) | | $ | (0.01 | ) | | $ | (0.04 | ) | | $ | 2.13 | |
| | | | | | | | | | | | | | | | | | | | |
| A - | Net of $3 million tax benefit. Recorded in Operation, maintenance and other (all Operating Expenses) on the Condensed Consolidated Statements of Operations. |
| B - | Net of $1 million tax benefit. $2 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $2 million loss recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) on the Condensed 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 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, gas, 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. |
19
DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
Three Months Ended June 30, 2012
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items
(Note 1) | | | | | | | | | | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Progress
Merger | | | Economic
Hedges
(Mark-
to-Market) * | | | Discontinued
Operations | | | Total
Adjustments | | | Reported
Earnings | |
SEGMENT NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO DUKE ENERGY CORPORATION | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
U.S. Franchised Electric and Gas | | $ | 337 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | | | $ | 337 | |
| | | | | | |
Commercial Power | | | 32 | | | | — | | | | (4 | ) B | | | — | | | | (4 | ) | | | 28 | |
| | | | | | |
International Energy | | | 105 | | | | — | | | | — | | | | — | | | | — | | | | 105 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Reportable Segment Income | | | 474 | | | | — | | | | (4 | ) | | | — | | | | (4 | ) | | | 470 | |
| | | | | | |
Other | | | (18 | ) | | | (7 | ) A | | | — | | | | — | | | | (7 | ) | | | (25 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Total Reportable Segment Income and Other Net Expense | | $ | 456 | | | $ | (7 | ) | | $ | (4 | ) | | $ | — | | | $ | (11 | ) | | | 445 | |
| | | | | | |
Discontined Operations | | | — | | | | | | | | | | | | (1 | ) C | | | (1 | ) | | | (1 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 456 | | | $ | (7 | ) | | $ | (4 | ) | | $ | (1 | ) | | $ | (12 | ) | | $ | 444 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 1.02 | | | $ | (0.02 | ) | | $ | (0.01 | ) | | $ | — | | | $ | (0.03 | ) | | $ | 0.99 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 1.02 | | | $ | (0.02 | ) | | $ | (0.01 | ) | | $ | — | | | $ | (0.03 | ) | | $ | 0.99 | |
| | | | | | | | | | | | | | | | | | | | | | | | |
Note 1 - Amounts for special items are presented net of any related noncontrolling interest.
| A - | Net of insignificant tax benefit. Recorded in Operation, maintenance and other (Operating Expenses) on the Condensed Consolidated Statements of Operations. |
| B - | Net of $2 million tax benefit. Recorded within Non-regulated electric, natural gas, and other (Operating Revenues) on the Condensed Consolidated Statements of Operations. |
| C - | Recorded in Income (Loss) From Discontinued Operations, net of tax on the Condensed 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 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, gas, 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
Six Months Ended June 30, 2012
(Dollars in millions, except per-share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | Special Items | | | | | | | | | | | | | |
| | | Adjusted
Earnings | | | Costs to
Achieve,
Progress
Merger | | | Voluntary
Opportunity
Plan
Deferral | | | Edwardsport
Impairment | | | Economic
Hedges
(Mark-
to-Market)* | | | Discontinued
Operations | | | Total
Adjustments | | | Reported
Earnings | |
SEGMENT INCOME | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
U.S. Franchised Electric and Gas | | $ | 681 | | | $ | — | | | $ | 60 | C | | $ | (268 | ) E | | $ | — | | | $ | — | | | $ | (208 | ) | | $ | 473 | |
| | | | | | | | |
Commercial Power | | | 62 | | | | — | | | | — | | | | — | | | | (3 | ) B | | | — | | | | (3 | ) | | | 59 | |
| | | | | | | | |
International Energy | | | 247 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 247 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Total Reportable Segment Income | | | 990 | | | | — | | | | 60 | | | | (268 | ) | | | (3 | ) | | | — | | | | (211 | ) | | | 779 | |
| | | | | | | | |
Other | | | (28 | ) | | | (13 | ) A | | | — | | | | — | | | | — | | | | — | | | | (13 | ) | | | (41 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Total Reportable Segment Income and Other Net Expense | | | 962 | | | | (13 | ) | | | 60 | | | | (268 | ) | | | (3 | ) | | | — | | | | (224 | ) | | | 738 | |
| | | | | | | | |
Discontinued Operations | | | — | | | | — | | | | — | | | | — | | | | — | | | | 1 | D | | | 1 | | | | 1 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Net Income (Loss) Attributable to Duke Energy Corporation | | $ | 962 | | | $ | (13 | ) | | $ | 60 | | | $ | (268 | ) | | $ | (3 | ) | | $ | 1 | | | $ | (223 | ) | | $ | 739 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC | | $ | 2.16 | | | $ | (0.03 | ) | | $ | 0.13 | | | $ | (0.60 | ) | | $ | (0.01 | ) | | $ | — | | | $ | (0.51 | ) | | $ | 1.65 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED | | $ | 2.16 | | | $ | (0.03 | ) | | $ | 0.13 | | | $ | (0.60 | ) | | $ | (0.01 | ) | | $ | — | | | $ | (0.51 | ) | | $ | 1.65 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| A - | Net of $2 million tax benefit. Recorded in Operation, maintenance and other (Operating Expenses) on the Condensed Consolidated Statements of Operations. |
| B - | Net of $1 million tax benefit. $3 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $1 million loss recorded within Fuel used in electric generation and purchased power- non-regulated (Operating Expenses) on the Condensed Consolidated Statements of Operations. |
| C - | Net of $39 million tax expense. $101 million revenue recorded in Operation, maintenance and other and $2 million expense recorded in Depreciation and amortization (all Operating Expenses) on the Condensed Consolidated Statements of Operations. |
| D - | Recorded in Income (Loss) From Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations. |
| E - | Net of $152 million tax benefit. $400 million recorded in Impairment charges and $20 million recorded within within Operation, maintenance and other (all Operating Expenses) on the Condensed 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 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, gas, 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
