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Duke Energy Reports First-Quarter 2009 Results

Posted on: Tuesday, 5 May 2009, 06:00 CDT

- First quarter 2009 adjusted diluted earnings per share (EPS) was 28 cents, compared with 35 cents for the first quarter 2008

- Reported diluted EPS for first quarter 2009 was 27 cents, compared to 37 cents for the first quarter 2008

- After first quarter, on track to achieve 2009 employee incentive target of $1.20 per share, based on adjusted diluted EPS

- Issued $1.65 billion of fixed-rate debt in the first quarter and continue to have strong access to capital markets

CHARLOTTE, N.C., May 5 /PRNewswire-FirstCall/ -- Duke Energy (NYSE: DUK) today announced first quarter 2009 adjusted diluted EPS of 28 cents, compared to 35 cents for first quarter 2008. Reported diluted EPS for the first quarter 2009 was 27 cents, compared to 37 cents for the same period last year.

(Logo: http://www.newscom.com/cgi-bin/prnh/20040414/DUKEENERGYLOGO )

The quarter's results were impacted primarily by two items - lower sales to the industrial customer class due to the continuing global recession, and increased operating and maintenance expense due to significant winter storms in the quarter.

"Despite the effects of the recession and storm-related expenses, our businesses remain fundamentally strong," said James E. Rogers, chairman, president and chief executive officer. "We can't control the weather or the economy so we're focused on issues we can control - managing our costs, improving operational performance, maintaining our liquidity, and making progress on our regulatory and legislative initiatives. After the first quarter, we are on track to achieve our 2009 employee incentive target of $1.20 per share on an adjusted diluted basis. But, of course, the third quarter is usually the most significant for our company."

"With our strong balance sheet, we maintain access to the capital markets, as demonstrated by the issuance of $1.65 billion of fixed-rate debt at an average rate of 6.1 percent during the first quarter of 2009," said David L. Hauser, group executive and chief financial officer. "We also expect tax incentive provisions from the federal stimulus package to generate approximately $400 million in positive cash flow in 2009, further strengthening our liquidity."

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:

1Q2009 1Q2008 Pre-Tax Tax EPS EPS (In millions, except per-share amounts) Amount Effect Impact Impact First-quarter 2009 - Costs to Achieve, Cinergy Merger $(7) $3 -- -- - Charges related to Crescent Obligations $(33) $13 $(0.02) -- - Mark-to-market impact of economic hedges $11 $(4) $0.01 -- First-quarter 2008 - Costs to Achieve, Cinergy Merger $(11) $4 -- $(0.01) - Mark-to-market impact of economic hedges $47 $(17) -- $0.03 - Total diluted EPS impact $(0.01) $0.02

Reconciliation of reported to adjusted diluted EPS for the quarters:

BUSINESS UNIT RESULTS (ON A REPORTED BASIS)

U.S. Franchised Electric and Gas (USFE&G)

USFE&G reported first-quarter 2009 segment EBIT of $557 million, compared with $637 million in the first quarter of 2008.

Results were adversely affected by increased costs caused primarily by significant winter storms in the Midwest and Southeast, and a decline in weather-adjusted sales volumes to our industrial customers.

Commercial Power

Commercial Power reported first-quarter 2009 segment EBIT from continuing operations of $114 million, compared to $146 million in the first quarter 2008. Results were adversely affected by lower mark-to-market gains on economic hedges and higher operations and maintenance costs due to the timing of plant outages. These results were partially offset by increased native margins related to the implementation of the Electric Security Plan in Ohio at the beginning of 2009.

Duke Energy International (DEI)

DEI reported first-quarter 2009 segment EBIT from continuing operations of $93 million, compared to $114 million in the first quarter 2008. DEI's lower results were driven primarily by lower margins due to lower commodity prices at National Methanol and unfavorable foreign exchange rates, primarily in Brazil. Partially offsetting these decreases were favorable prices and hydrology in Brazil.

Other

Due to a change in Duke Energy's reportable segments in 2008, Other now includes the results of Crescent, Duke Energy's real estate joint-venture. Other also includes costs associated with corporate governance, costs-to-achieve the Cinergy merger and Duke Energy's captive insurance company.

Other reported a first-quarter 2009 net expense from continuing operations of $90 million, compared to $76 million in the first quarter 2008. The increase in net expense for the quarter was due primarily to charges related to Crescent obligations for which Duke Energy is a named guarantor. Partially offsetting this increase is a decrease in governance expenses.

INTEREST EXPENSE

Interest expense from continuing operations was $184 million for the first quarter 2009, compared to $182 million for the first quarter 2008.

INCOME TAX EXPENSE

Income tax expense from continuing operations for first quarter 2009 was $179 million, compared to $222 million for the first quarter 2008. The effective tax rate for the quarter was approximately 34 percent, compared to 32 percent for the same period last year. The anticipated effective tax rate for 2009 is 34 percent.

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 non-controlling interest expense related to those profits. Management believes segment EBIT from continuing operations, which is the GAAP measure used to report segment results, is a good indicator of each segment's operating performance as it represents the results of Duke Energy's ownership interests in continuing operations without regard to financing methods or capital structures.

Duke Energy's management uses adjusted diluted EPS, which is a non-GAAP financial measure as it represents diluted EPS from continuing operations attributable to Duke Energy Corporation common shareholders, adjusted for the per-share impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment, as a measure to evaluate operations of the company.

Special items represent certain charges and credits, which management believes will not be recurring on a regular basis. Mark-to-market adjustments reflect the mark-to-market impact of derivative contracts, which is recognized in GAAP earnings immediately as such derivative contracts do not qualify for hedge accounting or regulatory accounting treatment, used in Duke Energy's hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS provides useful information to investors, as it allows them to more accurately compare the company's performance across periods. Adjusted diluted EPS is also used as a basis for employee incentive bonuses.

The most directly comparable GAAP measure for adjusted diluted EPS is reported diluted EPS from continuing operations attributable to Duke Energy Corporation common shareholders, which includes the impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment.

Due to the forward-looking nature of adjusted diluted EPS for future periods, information to reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items and the mark-to-market impacts of economic hedges in the Commercial Power segment for future periods.

Duke Energy also uses adjusted segment EBIT and Other net expenses (including adjusted equity earnings for Crescent Resources) as a measure of historical and anticipated future segment and Other performance. When used for future periods, adjusted segment EBIT and Other net expenses may also include any amounts that may be reported as discontinued operations or extraordinary items. Adjusted segment EBIT and Other net expenses are non-GAAP financial measures, as they represent reported segment EBIT and Other net expenses adjusted for special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Management believes that the presentation of adjusted segment EBIT and Other net expenses provides useful information to investors, as it allows them to more accurately compare a segment's or Other's ongoing performance across periods. The most directly comparable GAAP measure for adjusted segment EBIT or Other net expenses is reported segment EBIT or Other net expenses, which represents segment EBIT and Other net expenses from continuing operations, including any special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Due to the forward-looking nature of any forecasted adjusted segment EBIT or Other net expenses and any related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items, the mark-to-market impacts of economic hedges in the Commercial Power segment, or any amounts that may be reported as discontinued operations or extraordinary items for future periods.

Duke Energy is the third largest electric power holding company in the United States, based on kilowatt-hour sales. Its regulated utility operations serve approximately 4 million customers located in five states - North Carolina, South Carolina, Indiana, Ohio and Kentucky -- representing a population of approximately 11 million people. Duke Energy's commercial power and international business segments operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.

An earnings conference call for analysts is scheduled for 10 a.m. ET Tuesday, May 5. The conference call can be accessed via the investors' section (http://www.duke-energy.com/investors/) of Duke Energy's Web site or by dialing 719-325-4762 outside the United States or 877-719-9788 in the United States. The confirmation code is 8532465. 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, May 15, 2009, by calling 719-457-0820 outside the United States or 888-203-1112 in the United States, and using the code 8532465. A replay and transcript also will be available by accessing the investors' section of the company's Web site.

Forward-looking statement

This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions. These forward-looking statements are identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "target," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential," "forecast," and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to: State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements; state, federal and foreign legislation and regulatory initiatives that affect cost and investment recovery, or have an impact on rate structures; costs and effects of legal and administrative proceedings, settlements, investigations and claims; industrial, commercial and residential growth in Duke Energy Corporation's (Duke Energy) service territories; additional competition in electric markets and continued industry consolidation; political and regulatory uncertainty in other countries in which Duke Energy conducts business; the influence of weather and other natural phenomena on Duke Energy operations, including the economic, operational and other effects of hurricanes, droughts, ice storms and tornadoes; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates; unscheduled generation outages, unusual maintenance or repairs and electric transmission system constraints; the results of financing efforts, including Duke Energy's ability to obtain financing on favorable terms, which can be affected by various factors, including Duke Energy's credit ratings and general economic conditions; declines in the market prices of equity securities and resultant cash funding requirements for Duke Energy's defined benefit pension plans; the level of credit worthiness of counterparties to Duke Energy's transactions; employee workforce factors, including the potential inability to attract and retain key personnel; growth in opportunities for Duke Energy's business units, including the timing and success of efforts to develop domestic and international power and other projects; the performance of electric generation and of projects undertaken by Duke Energy's non-regulated businesses; construction and development risks associated with the completion of Duke Energy's capital investment projects in existing and new generation facilities, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules, and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; and the ability to successfully complete merger, acquisition or divestiture plans. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Duke Energy has described. Duke Energy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

MEDIA CONTACT: Tom Shiel Phone: (704) 382-2355 24-Hour: (704) 382-8333 ANALYST CONTACT: Bill Currens Phone: (704) 382-1603

March 2009 QUARTERLY HIGHLIGHTS (Unaudited) Three Months Ended March 31, ------------------ (In millions, except per-share amounts and where noted) 2009 2008 ------------------------------------------------------------------------- COMMON STOCK DATA Income from continuing operations attributable to Duke Energy Corporation common shareholders Basic $0.27 $0.37 Diluted $0.27 $0.37 Income from discontinued operations attributable to Duke Energy Corporation common shareholders Basic $- $- Diluted $- $- Net income attributable to Duke Energy Corporation common shareholders Basic $0.27 $0.37 Diluted $0.27 $0.37 Dividends Per Share $0.23 $0.22 Weighted-Average Shares Outstanding Basic 1,282 1,266 Diluted 1,283 1,268 ------------------------------------------------------------------------- INCOME Operating Revenues $3,312 $3,337 ====== ====== Total Reportable Segment EBIT 764 897 Other EBIT (90) (76) Interest Expense (184) (182) Interest Income and Other (a) 35 47 Income Tax Expense from Continuing Operations (179) (222) Income from Discontinued Operations, net of tax 3 2 --- --- Net Income 349 466 Less: Net Income Attributable to Non-Controlling Interests 5 1 --- --- Net Income Attributable to Duke Energy Corporation $344 $465 ==== ==== ------------------------------------------------------------------------- CAPITALIZATION Total Common Equity 58% 64% Total Debt 42% 36% ------------------------------------------------------------------------- Total Debt $15,495 $12,102 Book Value Per Share $16.64 $17.09 Actual Shares Outstanding 1,285 1,264 ------------------------------------------------------------------------- CAPITAL AND INVESTMENT EXPENDITURES U.S. Franchised Electric and Gas $710 $875 Commercial Power 154 114 International Energy 12 56 Other 30 44 --- --- Total Capital and Investment Expenditures $906 $1,089 ==== ====== ------------------------------------------------------------------------- EBIT BY BUSINESS SEGMENT U.S. Franchised Electric and Gas $557 $637 Commercial Power 114 146 International Energy 93 114 --- --- Total Reportable Segment EBIT 764 897 Other EBIT (90) (76) Interest Expense (184) (182) Interest Income and Other (a) 35 47 --- --- Income From Continuing Operations Before Income Taxes $525 $686 ==== ==== ------------------------------------------------------------------------- (a) Other within Interest Income and Other includes foreign currency transaction gains and losses, an adjustment to add back the non- controlling interest component of reportable segment and Other EBIT and additional non-controlling interest amounts not allocated to the reportable segment and Other results. March 2009 QUARTERLY HIGHLIGHTS (Unaudited) Three Months Ended March 31, ------------------ (In millions, except where noted) 2009 2008 ------------------------------------------------------------------------ U.S. FRANCHISED ELECTRIC AND GAS Operating Revenues $2,508 $2,601 Operating Expenses 1,974 1,999 Gains on Sales of Other Assets and Other, net - 3 Other Income and Expenses, net 23 32 --- --- EBIT $557 $637 ---- ---- Depreciation and Amortization $322 $332 Duke Energy Carolinas GWh sales 20,430 22,055 Duke Energy Midwest GWh sales 14,552 16,276 Net Proportional MW Capacity in Operation 27,438 27,333 ------------------------------------------------------------------------ COMMERCIAL POWER Operating Revenues $537 $450 Operating Expenses 436 323 Gains on Sales of Other Assets and Other, net 5 14 Other Income and Expenses, net 8 5 --- --- EBIT $114 $146 ---- ---- Depreciation and Amortization $55 $43 Actual Plant Production, GWh 6,296 5,919 Net Proportional MW Capacity in Operation 7,920 7,550 ------------------------------------------------------------------------ INTERNATIONAL ENERGY Operating Revenues $255 $289 Operating Expenses 161 212 Other Income and Expenses, net 6 42 Expense Attributable to Non-Controlling Interests 7 5 --- --- EBIT $93 $114 --- ---- Depreciation and Amortization $19 $21 Sales, GWh 4,658 4,244 Proportional MW Capacity in Operation 4,014 4,005 ------------------------------------------------------------------------ OTHER Operating Revenues $36 $21 Operating Expenses 88 94 Gains on Sales of Other Assets and Other, net 1 1 Other Income and Expenses, net (38) (5) Expense (Benefit) Attributable to Non-Controlling Interests 1 (1) --- --- EBIT $(90) $(76) ---- ---- Depreciation and Amortization $18 $17 ------------------------------------------------------------------------ DUKE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In millions, except per-share amounts) Three Months Ended March 31, ------------------ 2009 2008 ------------------------------------------------------------------------ Operating Revenues $3,312 $3,337 Operating Expenses 2,637 2,604 Gains on Sales of Other Assets and Other, net 6 18 ------------------------------------------------------------------------ Operating Income 681 751 ------------------------------------------------------------------------ Other Income and Expenses, net 28 117 Interest Expense 184 182 ------------------------------------------------------------------------ Income From Continuing Operations Before Income Taxes 525 686 Income Tax Expense from Continuing Operations 179 222 ------------------------------------------------------------------------ Income From Continuing Operations 346 464 Income From Discontinued Operations, net of tax 3 2 ------------------------------------------------------------------------ Net Income 349 466 ------------------------------------------------------------------------ Less: Net Income Attributable to Non- Controlling Interests 5 1 ------------------------------------------------------------------------ Net Income Attributable to Duke Energy Corporation $344 $465 ======================================================================== Earnings Per Share - Basic and Diluted Income from continuing operations attributable to Duke Energy Corporation common shareholders Basic $0.27 $0.37 Diluted $0.27 $0.37 Income from discontinued operations attributable to Duke Energy Corporation common shareholders Basic $- $- Diluted $- $- Net income attributable to Duke Energy Corporation common shareholders Basic $0.27 $0.37 Diluted $0.27 $0.37 Dividends per share $0.23 $0.22 Weighted-average shares outstanding Basic 1,282 1,266 Diluted 1,283 1,268 DUKE ENERGY CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In millions) March 31, December 31, 2009 2008 ------- ------- ASSETS Current Assets $5,320 $5,273 Investments and Other Assets 9,808 10,020 Net Property, Plant and Equipment 34,505 34,036 Regulatory Assets and Deferred Debits 3,951 3,748 ------- ------- Total Assets $53,584 $53,077 ======= ======= LIABILITIES AND EQUITY Current Liabilities $3,524 $4,345 Long-term Debt 14,569 13,250 Deferred Credits and Other Liabilities 14,109 14,331 Equity 21,382 21,151 ------- ------- Total Liabilities and Equity $53,584 $53,077 ======= ======= DUKE ENERGY CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In millions) Three Months Ended March 31, 2009 2008 ------ ------ CASH FLOWS FROM OPERATING ACTIVITIES Net Income $349 $466 Adjustments to reconcile net income to net cash provided by operating activities (159) 546 ------ ------ Net cash provided by operating activities 190 1,012 ------ ------ CASH FLOWS FROM INVESTING ACTIVITIES Net cash used in investing activities (894) (1,075) ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES Net cash provided by financing activities 919 27 ------ ------ Net increase (decrease) in cash and cash equivalents 215 (36) Cash and cash equivalents at beginning of period 986 678 ------ ------ Cash and cash equivalents at end of period $1,201 $642 ====== ======

Duke Energy Carolinas Quarterly Highlights Supplemental Franchised Electric Information March 31, 2009 Three Months Ended March 31, --------- % 2009 2008 Inc.(Dec.) ---- ---- ---------- GWH Sales Residential 7,858 7,499 4.8% General Service 6,504 6,449 0.9% Industrial - Textile 816 1,112 (26.6%) Industrial - Other 3,644 4,375 (16.7%) ----- ----- ----- Total Industrial 4,460 5,487 (18.7%) Other Energy Sales 72 71 1.4% Regular Resale 156 425 (63.3%) ------ ------ ---- Total Regular Sales Billed 19,050 19,931 (4.4%) Special Sales 1,763 2,524 (30.2%) ------ ------ ---- Total Electric Sales 20,813 22,455 (7.3%) Unbilled Sales (383) (400) 4.3% ------ ------ ---- Total Consolidated Electric Sales -Carolinas 20,430 22,055 (7.4%) Average Number of Customers Residential 2,022,676 2,004,488 0.9% General Service 330,790 330,482 0.1% Industrial - Textile 657 679 (3.2%) Industrial - Other 6,703 6,559 2.2% ----- ----- --- Total Industrial 7,360 7,238 1.7% Other Energy Sales 13,821 13,580 1.8% Regular Resale 11 21 (47.6%) -- -- ----- Total Regular Sales 2,374,658 2,355,809 0.8% Special Sales 31 42 (26.2%) -- -- ----- Total Avg Number of Customers - Carolinas 2,374,689 2,355,851 0.8% Heating and Cooling Degree Days Actual Heating Degree Days 1,785 1,679 6.3% Cooling Degree Days 7 2 250.0% Variance from Normal Heating Degree Days 5.5% (0.6%) n/a Cooling Degree Days 0.0% (62.5%) n/a Duke Energy - Midwest Quarterly Highlights Supplemental Franchised Electric Information March 2009 Three Months Ended March 31, --------------------------- % Inc. 2009 2008 (Dec.) ------ ------ ------ GWH Sales Residential 5,478 5,502 (0.4%) General Service 4,431 4,552 (2.7%) Industrial 3,419 4,287 (20.2%) Other Energy Sales 43 44 (2.3%) ------ ------ ---- Total Regular Electric Sales Billed 13,371 14,385 (7.0%) Special Sales 1,734 2,180 (20.5%) ------ ------ ---- Total Electric Sales Billed - Midwest 15,105 16,565 (8.8%) Unbilled Sales (553) (289) (91.3%) ------ ------ ----- Total Electric Sales - Midwest 14,552 16,276 (10.6%) Average Number of Customers Residential 1,407,184 1,412,465 (0.4%) General Service 184,711 184,834 (0.1%) Industrial 5,533 5,618 (1.5%) Other Energy 4,068 3,951 3.0% --------- --------- ---- Total Regular Sales 1,601,496 1,606,868 (0.3%) Special Sales 24 38 (36.8%) ------ ------ ----- Total Avg Number Electric Customers - Midwest 1,601,520 1,606,906 (0.3%) Heating and Cooling Degree Days* Actual Heating Degree Days 2,141 2,285 (6.3%) Cooling Degree Days - - 0.0% Variance from Normal Heating Degree Days 3.8% 10.0% n/a Cooling Degree Days (100.0%) (100.0%) n/a * Reflects HDD and CDD for Duke Energy - Indiana, Duke Energy - Ohio and Duke Energy - Kentucky DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION March 2008 Year-to-Date (Dollars in millions, except per-share amounts) Special Items (Note 1) ------------- Costs to Economic Achieve, Hedges Discon- Total Adjusted Cinergy (Mark-to- tinued Adjust- Reported Earnings Merger Market)* Operations ments Earnings -------- -------- --------- ---------- ------- -------- SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS U.S. Franchised Electric and Gas $637 $- $- $- $- $637 Commercial Power 99 - 47 B - 47 146 International Energy 114 - - - - 114 -------- -------- --------- ---------- ------- -------- Total reportable segment EBIT 850 - 47 - 47 897 Other (65) (11)A - - (11) (76) -------- -------- --------- ---------- ------- -------- Total reportable segment and other EBIT $785 $(11) $47 $- $36 $821 Interest Expense (182) - - - - (182) Interest Income and Other 47 - - - - 47 Income Taxes from Continuing Operations (209) 4 (17) - (13) (222) Discontinued Operations, net of taxes - - - 2 C 2 2 Less: Net Income attributable to non- controlling interests 1 - - - - 1 -------- -------- --------- ---------- ------- -------- Net Income (Loss) Attributable to Duke Energy Corporation $440 $(7) $30 $2 $25 $465 ======== ======== ========= ========== ======= ======== EARNINGS PER SHARE ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC $0.35 $(0.01) $0.03 $- $0.02 $0.37 ======== ======== ========= ========== ======= ======== EARNINGS PER SHARE ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED $0.35 $(0.01) $0.03 $- $0.02 $0.37 ======== ======== ========= ========== ======= ======== Note 1 - Amounts for special items are presented net of any related non- controlling interest. A - $7 million recorded in Operation, maintenance and other and $4 million recorded in Depreciation and amortization (all Operating Expenses) on the Consolidated Statements of Operations. B - $11 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $58 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 From Discontinued Operations, net of tax on the Consolidated Statements of Operations. Weighted Average Shares (reported and adjusted) - in millions Basic 1,266 Diluted 1,268 * Represents the mark-to-market impact of derivative contracts, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge accounting, used in Duke Energy's hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Controlling Interest provides useful information to investors, as it allows them to more accurately compare the company's performance across periods. DUKE ENERGY CORPORATION ADJUSTED TO REPORTED EARNINGS RECONCILIATION March 2009 Year-to-Date (Dollars in millions, except per-share amounts) Special Items (Note 1) --------------------- Costs to Economic Discon- Achieve, Crescent Hedges tinued Total Adjusted Cinergy Related (Mark-to- Oper- Adjust- Reported Earnings Merger Guarantees Market)* ations ments Earnings -------- -------- ---------- -------- ------- ------ -------- SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS U.S. Franchised Electric and Gas $557 $- $- $- $- $- $557 Commercial Power 103 - - 11 B - 11 114 International Energy 93 - - - - - 93 -------- -------- ---------- -------- ------- ------ -------- Total reportable segment EBIT 753 - - 11 - 11 764 Other (50) (7)A (33)D - - (40) (90) -------- -------- ---------- -------- ------- ------ -------- Total reportable segment and Other EBIT $703 $(7) $(33) $11 $- $(29) $674 Interest Expense (184) - - - - - (184) Interest Income and Other 35 - - - - - 35 Income Taxes from Continuing Operations (191) 3 13 (4) - 12 (179) Discontinued Operations, net of taxes - - - - 3 C 3 3 Less: Net Income Attributable to Non- Controlling Interests 5 - - - - - 5 -------- -------- ---------- -------- ------- ------ -------- Net Income (Loss) Attributable to Duke Energy Corporation $358 $(4) $(20) $7 $3 $(14) $344 ======== ======== ========== ======== ======= ====== ======== EARNINGS PER SHARE ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC $0.28 $- $(0.02) $0.01 $- $(0.01) $0.27 ======== ======== ========== ======== ======= ====== ======== EARNINGS PER SHARE ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED $0.28 $- $(0.02) $0.01 $- $(0.01) $0.27 ======== ======== ========== ======== ======= ====== ======== Note 1 - Amounts for special items are presented net of any related non- controlling interest. A - $4 million recorded in Operation, maintenance and other and $3 million recorded in Depreciation and amortization (all Operating Expenses) on the Consolidated Statements of Operations. B - $19 million gain recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $8 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 Other income and expenses, net on the Consolidated Statements of Operations. Weighted Average Shares (reported and adjusted) - in millions Basic 1,282 Diluted 1,283 * Represents the mark-to-market impact of derivative contracts in the non- native portfolio, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge accounting, used in Duke Energy's hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Controlling Interest provides useful information to investors, as it allows them to more accurately compare the company's performance across periods.

SOURCE Duke Energy

Source: PR Newswire

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