EX-99.1 2 dex991.htm NEWS RELEASE News Release

Exhibit 99.1

LOGO

NEWS RELEASE

 

         Duke Energy Corporation
         P.O. Box 1009
         Charlotte, NC 28201-1009

 

Aug. 3, 2010    MEDIA CONTACT    Tom Shiel
   Phone:    704-382-2355
   24-Hour:    800-559-3853
   ANALYST CONTACT    Bill Currens
   Phone:    704-382-1603

Duke Energy Posts Strong Second Quarter Adjusted Earnings;

Increases Outlook for 2010

 

  •  

2010 adjusted diluted earnings per share (EPS) outlook range increased from $1.25 - $1.30 to $1.30 - $1.35

 

  •  

Second quarter 2010 adjusted diluted EPS was 34 cents, compared with 26 cents for the second quarter 2009

 

  •  

Due to non-cash goodwill and other impairment charges, reported diluted net loss per share for second quarter 2010 was 17 cents, compared to diluted earnings per share of 21 cents for the second quarter 2009

CHARLOTTE, N.C. – Duke Energy today announced second quarter 2010 adjusted diluted EPS of 34 cents, compared to 26 cents for second quarter 2009. Reported diluted net loss per share for the second quarter 2010 was 17 cents, compared to diluted earnings per share of 21 cents for the same period last year.

The company has increased its 2010 adjusted diluted EPS guidance from $1.25 - $1.30 to $1.30 - $1.35 based upon its strong performance during the first half of 2010.

Reported results for the second quarter 2010 were impacted by non-cash impairment charges of approximately $660 million, primarily related to the remaining goodwill associated with non-regulated generation operations in the Midwest. These charges

 

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have no impact on the company’s liquidity position and have been excluded from adjusted diluted EPS. After these charges, there is no remaining goodwill associated with the non-regulated Midwest generation operations.

Duke Energy’s quarterly results were driven by temperatures that were above normal in all five of the company’s service territories for each month in the second quarter. The Carolinas experienced the hottest June on record. Also, the company saw improved weather-normalized retail sales volumes as well as increased pricing.

“Our second quarter results were very strong,” said James E. Rogers, chairman, president and chief executive officer. “We continue to see signs of an improving economy, particularly with our industrial load. Our results were also driven by higher than normal temperatures. Our generation and power delivery teams performed very well during this period of extreme weather.

“Based on our strong first half results and a continued focus on cost management, we are increasing our 2010 adjusted diluted EPS outlook range from $1.25 - $1.30 to $1.30 - $1.35 per share.”

Mark-to-market impacts of economic hedges in the Commercial Power segment and special items affecting Duke Energy’s adjusted diluted EPS for the quarters include:

 

(In millions, except per-share amounts)

    Pre-Tax
Amount		     Tax
Effect		    2Q2010
EPS
Impact		     2Q2009
EPS
Impact

Second Quarter 2010

          

•    Costs to Achieve, Cinergy Merger

    $ (7 )    $ 2      —        —  

•    Voluntary Opportunity Plan/Office Consolidation

    $ (76 )    $ 29    $ (0.04 )    —  

•    Goodwill and Other Impairments

    $ (660 )    $ 58    $ (0.46 )    —  

•    Mark-to-market impact of economic hedges

    $ (33 )    $ 11    $ (0.01 )    —  

 

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Second Quarter 2009

         

•    Costs to Achieve, Cinergy Merger

    $ (8 )    $ 3        —          —     

•    Charges related to Crescent Obligations

    $ 7      $ (13 )      —        $ (0.01 ) 

•    International Transmission Adjustment

    $ (32 )    $ 10        —        $ (0.02 ) 

•    Mark-to-market impact of economic hedges

    $ (36 )    $ 13        —        $ (0.02 ) 
                                

Total diluted EPS impact

        $ (0.51 )    $ (0.05 ) 
                                

Reconciliation of reported to adjusted diluted EPS for the quarters:

 

     2Q2010
EPS		     2Q2009
EPS

Diluted EPS, as reported

    $ (0.17 )    $ 0.21

Adjustments to reported EPS:

     

•    Diluted EPS impact of special items and mark-to-market in Commercial Power

    $ 0.51      $ 0.05
              

Diluted EPS, adjusted

    $ 0.34      $ 0.26
              

BUSINESS UNIT RESULTS (ON A REPORTED BASIS)

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

USFE&G reported second-quarter 2010 segment EBIT from continuing operations of $671 million, compared with $500 million in the second quarter of 2009. Results increased primarily due to favorable pricing, above normal weather in all jurisdictions, higher Allowance for Funds Used During Construction (AFUDC) from Duke Energy’s ongoing construction program, and increased weather-normalized volumes, most notably in the industrial sector. Partially offsetting these increases were higher operation and maintenance costs primarily due to timing of planned outages.

Commercial Power

Commercial Power reported a second-quarter 2010 segment EBIT loss from continuing operations of $604 million, compared to $79 million of segment EBIT income in the second quarter 2009. Results were impacted by non-cash impairment charges of $660

 

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million primarily related to goodwill associated with non-regulated generation operations and other asset impairments in the Midwest. These charges reflect the current estimated value of the operations, which has declined principally as a result of sustained lower power prices, as well as the potential enactment of more stringent environmental regulations.

Excluding the effects of the impairment charges, results were also impacted by lower retail sales volumes due to competition in Ohio, the effects of which were partially offset by customer acquisition efforts by our competitive retail subsidiary. Additionally, wholesale margins increased due to higher volumes and prices offset by lower gains on coal sales.

Duke Energy International (DEI)

DEI reported second-quarter 2010 segment EBIT from continuing operations of $126 million, compared to $68 million in the second quarter 2009. DEI’s results for the quarter were driven primarily by favorable foreign exchange rates, favorable hydrology in Brazil and an increased contribution from National Methanol. Additionally, results benefitted from a prior year adverse ruling on transmission fees.

Other

Other includes corporate governance expenses, costs associated with the company’s voluntary employee separation plan and results from Duke Energy’s captive insurance company.

Other reported second-quarter 2010 net expense from continuing operations of $122 million, compared to $38 million in the second quarter 2009. The increase in net expense was due primarily to severance costs associated with the voluntary employee separation program and office consolidation that was announced in the first quarter.

 

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INTEREST EXPENSE

Interest expense was $212 million for the second quarter 2010, compared to $186 million for the second quarter 2009. The increase is primarily due to increased debt balances that are the result of financing the company’s ongoing construction program.

INCOME TAX EXPENSE

Income tax expense from continuing operations for the second quarter of 2010 was $116 million, compared to $177 million for the second quarter of 2009. The effective tax rate for full-year 2010 is forecasted to be approximately 40 percent, reflecting the effect of the goodwill impairment, which is non-deductible for tax purposes. The effective tax rate excluding the impairment charge is forecasted to be approximately 31 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 income attributable to non-controlling interests.

Management believes segment EBIT from continuing operations, which is the GAAP measure used to report segment results, is a good indicator of each segment’s operating performance as it represents the results of Duke Energy’s ownership interests in continuing operations without regard to financing methods or capital structures. Duke Energy’s management uses adjusted diluted EPS, which is a non-GAAP financial measure as it represents diluted EPS from continuing operations attributable to Duke Energy Corporation common shareholders, adjusted for the per-share impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment, as a measure to evaluate operations of the company.

 

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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 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.

 

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

Duke Energy is 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

 

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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.

Analyst Call

An earnings conference call for analysts is scheduled for 10 a.m. ET Tuesday, Aug. 3. The conference call can be accessed via the investors’ section (http://www.duke-energy.com/investors/) of Duke Energy’s website or by dialing 913-312-0645 outside the United States or 866-454-4209 in the United States. The confirmation code is 4865293. 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, Sept. 3, 2010, by calling 719-457-0820 outside the United States or 888-203-1112 in the United States, and using the code 4865293. 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,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. 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

 

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environmental requirements, as well as rulings that affect cost and investment recovery or have an impact on rate structures; costs and effects of legal and administrative proceedings, settlements, investigations and claims; industrial, commercial and residential growth or decline in Duke Energy Corporation’s (Duke Energy) service territories, customer base or customer usage patterns; additional competition in electric markets and continued industry consolidation; political and regulatory uncertainty in other countries in which Duke Energy conducts business; the influence of weather and other natural phenomena on Duke Energy operations, including the economic, operational and other effects of hurricanes, droughts, and tornadoes; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates; unscheduled generation outages, unusual maintenance or repairs and electric transmission system constraints; the performance of electric generation facilities and of projects undertaken by Duke Energy’s non-regulated businesses; the results of financing efforts, including Duke Energy’s ability to obtain financing on favorable terms, which 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; construction and development risks associated with the completion of Duke Energy’s capital investment projects in existing and new generation facilities, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules, and satisfying operating and environmental performance standards, as well as the ability to recover costs from ratepayers in a timely manner or at all; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; and the ability to successfully complete merger, acquisition or divestiture plans. In light of these risks, uncertainties and assumptions,

 

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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 2010

QUARTERLY HIGHLIGHTS

(Unaudited)

 

     Three Months Ended
June 30,		     Six Months Ended
June 30,		  

(In millions, except per-share amounts and where noted)

    2010     2009     2010     2009  

Common Stock Data

         

(Loss) Income from continuing operations attributable to Duke Energy Corporation common shareholders

         

Basic

    $ (0.17 )    $ 0.22      $ 0.17      $ 0.48   

Diluted

    $ (0.17 )    $ 0.22      $ 0.17      $ 0.48   

Income (Loss) from discontinued operations attributable to Duke Energy Corporation common shareholders

         

Basic

    $ —        $ —        $ —        $ —     

Diluted

    $ —        $ —        $ —        $ —     

Net (loss) income attributable to Duke Energy Corporation common shareholders

         

Basic

    $ (0.17 )    $ 0.21      $ 0.17      $ 0.48   

Diluted

    $ (0.17 )    $ 0.21      $ 0.17      $ 0.48   

Dividends Per Share

    $ 0.485      $ 0.47      $ 0.725      $ 0.70   

Weighted-Average Shares Outstanding

         

Basic

      1,314        1,288        1,312        1,284   

Diluted

      1,314        1,289        1,313        1,285   

INCOME

         

Operating Revenues

    $ 3,287      $ 2,913      $ 6,881      $ 6,225   
                                

Total Reportable Segment EBIT

      193        647        1,206        1,411   

Other EBIT

      (122 )      (38 )      (268 )      (128 ) 

Interest Expense

      (212 )      (186 )      (422 )      (370 ) 

Interest Income and Other (a)

      39        38        53        73   

Income Tax Expense from Continuing Operations

      (116 )      (177 )      (342 )      (356 ) 

Income (Loss) from Discontinued Operations, net of tax

      1        (2 )      1        1   
                                

Net (Loss) Income

      (217 )      282        228        631   

Less: Net Income Attributable to Noncontrolling Interests

      5        6        5        11   
                                

Net (Loss) Income Attributable to Duke Energy Corporation

    $ (222 )    $ 276      $ 223      $ 620   
                                

CAPITALIZATION

         

Total Common Equity

          54 %      58 % 

Total Debt

          46 %      42 % 

Total Debt

        $ 17,791      $ 15,733   

Book Value Per Share

        $ 16.14      $ 16.51   

Actual Shares Outstanding

          1,318        1,294   

CAPITAL AND INVESTMENT EXPENDITURES

         

U.S. Franchised Electric and Gas

    $ 1,001      $ 847      $ 1,975      $ 1,557   

Commercial Power

      186        257        318        411   

International Energy

      36        27        80        39   

Other

      63        43        112        73   
                                

Total Capital and Investment Expenditures

    $ 1,286      $ 1,174      $ 2,485      $ 2,080   
                                

EBIT BY BUSINESS SEGMENT

         

U.S. Franchised Electric and Gas

    $ 671      $ 500      $ 1,415      $ 1,057   

Commercial Power (b)

      (604 )      79        (475 )      193   

International Energy

      126        68        266        161   
                                

Total Reportable Segment EBIT

      193        647        1,206        1,411   

Other EBIT

      (122 )      (38 )      (268 )      (128 ) 

Interest Expense

      (212 )      (186 )      (422 )      (370 ) 

Interest Income and Other (a)

      39        38        53        73   
                                

(Loss) Income From Continuing Operations Before Income Taxes

    $ (102 )    $ 461      $ 569      $ 986   
                                

 

(a) Other within Interest Income and Other includes foreign currency remeasurement gains and losses, an adjustment to add back the noncontrolling interest component of reportable segment and Other EBIT and additional noncontrolling interest amounts not allocated to the reportable segment and Other results.
(b) Includes non-cash impairment charges of $660 million, which consists of a $500 million goodwill impairment charge associated with the non-regulated Midwest generation operations and a $160 million charge to write-down the value of certain non-regulated Midwest generating assets and emission allowances associated with these generation assets.

 

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June 2010

QUARTERLY HIGHLIGHTS

(Unaudited)

 

     Three Months Ended
June 30,		     Six Months Ended
June 30,		  

(In millions, except where noted)

    2010     2009     2010     2009  

U.S. FRANCHISED ELECTRIC AND GAS

         

Operating Revenues

    $ 2,422      $ 2,149      $ 5,098      $ 4,657   

Operating Expenses

      1,812        1,692        3,810        3,666   

Gains on Sales of Other Assets and Other, net

      3        13        5        13   

Other Income and Expenses, net

      58        30        122        53   
                                

EBIT

    $ 671      $ 500      $ 1,415      $ 1,057   
                                

Depreciation and Amortization

    $ 326      $ 319      $ 683      $ 641   

Duke Energy Carolinas GWh sales

      20,308        18,862        41,824        39,292   

Duke Energy Midwest GWh sales

      14,443        13,369        29,604        27,921   

Net Proportional MW Capacity in Operation

          26,947        27,242   

COMMERCIAL POWER

         

Operating Revenues

    $ 540      $ 474      $ 1,119      $ 1,011   

Operating Expenses (a)

      1,155        413        1,613        849   

Gains on Sales of Other Assets and Other, net

      4        —          3        5   

Other Income and Expenses, net

      12        18        21        26   

Expense Attributable to Noncontrolling Interests

      5        —          5        —     
                                

EBIT

    $ (604 )    $ 79      $ (475 )    $ 193   
                                

Depreciation and Amortization

    $ 55      $ 49      $ 113      $ 104   

Sales, GWh

      8,681        6,809        17,278        13,840   

Actual Plant Production, GWh

      6,551        6,132        13,125        12,427   

Net Proportional MW Capacity in Operation

          8,005        8,071   

INTERNATIONAL ENERGY

         

Operating Revenues

    $ 310      $ 271      $ 646      $ 526   

Operating Expenses

      207        225        425        386   

Gains on Sales of Other Assets and Other, net

      —          —          (1 )      —     

Other Income and Expenses, net

      30        26        59        32   

Expense Attributable to Noncontrolling Interests

      7        4        13        11   
                                

EBIT

    $ 126      $ 68      $ 266      $ 161   
                                

Depreciation and Amortization

    $ 21      $ 19      $ 42      $ 38   

Sales, GWh

      5,041        4,277        10,732        8,935   

Proportional MW Capacity in Operation

          4,203        4,051   

OTHER

         

Operating Revenues

    $ 37      $ 42      $ 65      $ 78   

Operating Expenses

      154        94        340        182   

Gains on Sales of Other Assets and Other, net

      (2 )      —          —          1   

Other Income and Expenses, net

      (2 )      17        5        (21 ) 

Expense (Benefit) Attributable to Noncontrolling Interests

      1        3        (2 )      4   
                                

EBIT

    $ (122 )    $ (38 )    $ (268 )    $ (128 ) 
                                

Depreciation and Amortization

    $ 24      $ 20      $ 44      $ 38   

 

(a) Includes non-cash impairment charges of $660 million, which consists of a $500 million goodwill impairment charge associated with the non-regulated Midwest generation operations and a $160 million charge to write-down the value of certain non-regulated Midwest generating assets and emission allowances associated with these generation assets.

 

12

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,
     2010     2009     2010    2009

Operating Revenues

    $ 3,287      $ 2,913      $ 6,881    $ 6,225

Operating Expenses

      3,306        2,398        6,141      5,035

Gains on Sales of Other Assets and Other, net

      5        13        7      19
                             

Operating (Loss) Income

     (14 )      528        747      1,209
                             

Other Income and Expenses, net

      124        119        244      147

Interest Expense

     212        186        422      370
                             

(Loss) Income From Continuing Operations Before Income Taxes

      (102 )      461        569      986

Income Tax Expense from Continuing Operations

     116        177        342      356
                             

(Loss) Income From Continuing Operations

      (218 )      284        227      630

Income (Loss) From Discontinued Operations, net of tax

     1        (2 )      1      1
                             

Net (Loss) Income

     (217 )      282        228      631

Less: Net Income Attributable to Noncontrolling Interests

     5        6        5      11
                             

Net (Loss) Income Attributable to Duke Energy Corporation

   $ (222 )    $ 276      $ 223    $ 620
                             

Earnings Per Share - Basic and Diluted

          

(Loss) income from continuing operations attributable to Duke Energy Corporation common shareholders

          

Basic

    $ (0.17 )    $ 0.22      $ 0.17    $ 0.48

Diluted

    $ (0.17 )    $ 0.22      $ 0.17    $ 0.48

Income (loss) from discontinued operations attributable to Duke Energy Corporation common shareholders

          

Basic

    $ —        $ —        $ —      $ —  

Diluted

    $ —        $ —        $ —      $ —  

Net (loss) income attributable to Duke Energy Corporation common shareholders

          

Basic

    $ (0.17 )    $ 0.21      $ 0.17    $ 0.48

Diluted

    $ (0.17 )    $ 0.21      $ 0.17    $ 0.48

Dividends per share

    $ 0.485      $ 0.47      $ 0.725    $ 0.70

Weighted-average shares outstanding

          

Basic

      1,314        1,288        1,312      1,284

Diluted

      1,314        1,289        1,313      1,285

 

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DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)

 

     June 30,
2010		    December 31,
2009

ASSETS

      

Current Assets

    $ 5,443    $ 5,766

Investments and Other Assets

      9,042      9,807

Net Property, Plant and Equipment

      39,060      37,950

Regulatory Assets and Deferred Debits

      2,855      3,517
             

Total Assets

    $ 56,400    $ 57,040
             

LIABILITIES AND EQUITY

      

Current Liabilities

    $ 3,837    $ 4,088

Long-term Debt

      17,219      16,113

Deferred Credits and Other Liabilities

      14,081      14,953

Equity

      21,263      21,886
             

Total Liabilities and Equity

    $ 56,400    $ 57,040
             

 

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DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

 

     Six Months Ended
June 30,		  
     2010     2009  

CASH FLOWS FROM OPERATING ACTIVITIES

     

Net Income

    $ 228      $ 631   

Adjustments to reconcile net income to net cash provided by operating activities

      1,896        386   
                

Net cash provided by operating activities

      2,124        1,017   
                

CASH FLOWS FROM INVESTING ACTIVITIES

     

Net cash used in investing activities

      (2,508 )      (2,133 ) 
                

CASH FLOWS FROM FINANCING ACTIVITIES

     

Net cash (used in) provided by financing activities

      (148 )      836   
                

Net decrease in cash and cash equivalents

      (532 )      (280 ) 

Cash and cash equivalents at beginning of period

      1,542        986   
                

Cash and cash equivalents at end of period

    $ 1,010      $ 706   
                

 

15

Duke Energy Carolinas

Quarterly Highlights

Supplemental Franchised Electric Information

June 30, 2010

 

     Quarter To Date Ended
June 30, 		    Year To Date
June 30,		  
     2010     2009     %
Inc.(Dec.)		     2010     2009     %
Inc.(Dec.)		  

GWH Sales

             

Residential

    5,962      5,661      5.3 %    14,846      13,518      9.8 % 

General Service

    6,739      6,534      3.1 %    13,327      13,038      2.2 % 

Industrial - Textile

    1,027      896      14.6 %    1,929      1,713      12.7 % 

Industrial - Other

    4,232      3,837      10.3 %    7,981      7,481      6.7 % 
                                    

Total Industrial

    5,259      4,733      11.1 %    9,910      9,194      7.8 % 

Other Energy Sales

    72      71      0.8 %    144      143      1.1 % 

Regular Resale

    —        18      (100.0 %)    25      174      (85.8 %) 
                                    

Total Regular Sales Billed

    18,032      17,017      6.0 %    38,252      36,067      6.1 % 

Special Sales

    1,267      1,029      23.1 %    2,959      2,791      6.0 % 
                                    

Total Electric Sales

    19,299      18,046      6.9 %    41,211      38,858      6.1 % 

Unbilled Sales

    1,009      816      23.6 %    613      434      41.3 % 
                                    

Total Consolidated Electric Sales - Carolinas

    20,308      18,862      7.7 %    41,824      39,292      6.4 % 

Average Number of Customers

             

Residential

    2,032,898      2,021,159      0.6 %    2,033,159      2,021,917      0.6 % 

General Service

    332,922      331,163      0.5 %    332,599      330,976      0.5 % 

Industrial - Textile

    625      654      (4.4 %)    628      656      (4.2 %) 

Industrial - Other

    6,591      6,687      (1.4 %)    6,612      6,695      (1.2 %) 
                                    

Total Industrial

    7,216      7,341      (1.7 %)    7,240      7,351      (1.5 %) 

Other Energy Sales

    14,116      13,905      1.5 %    14,123      13,863      1.9 % 

Regular Resale

    —        6      (100.0 %)    2      9      (72.5 %) 
                                    

Total Regular Sales

    2,387,152      2,373,574      0.6 %    2,387,123      2,374,116      0.5 % 

Special Sales

    30      26      12.7 %    32      29      11.0 % 
                                    

Total Avg Number of Customers - Carolinas

    2,387,182      2,373,600      0.6 %    2,387,155      2,374,145      0.5 % 

Heating and Cooling Degree Days

             

Actual

             

Heating Degree Days

    114      199      (42.7 %)    2,188      1,984      10.3 % 

Cooling Degree Days

    701      532      31.8 %    701      539      30.1 % 

Variance from Normal

             

Heating Degree Days

    (47.4 %)    (7.6 %)    n/a      14.3 %    4.0 %    n/a   

Cooling Degree Days

    50.8 %    13.0 %    n/a      49.0 %    12.9 %    n/a   

 

16

Duke Energy - Midwest

Quarterly Highlights

Supplemental Franchised Electric Information

June 2010

 

     Quarter Ended
June 30,		     Year To Date
June 30,		  
     2010     2009     %
Inc.(Dec.)		     2010     2009     %
Inc.(Dec.)		  

GWH Sales

             

Residential

    3,688      3,567      3.4 %    9,282      9,045      2.6 % 

General Service

    4,399      4,323      1.8 %    8,770      8,754      0.2 % 

Industrial

    4,065      3,395      19.7 %    7,880      6,814      15.6 % 

Other Energy Sales

    42      42      0.0 %    85      85      0.0 % 
                                    

Total Regular Electric Sales Billed

    12,194      11,327      7.7 %    26,017      24,698      5.3 % 

Special Sales

    1,892      1,731      9.3 %    3,683      3,465      6.3 % 
                                    

Total Electric Sales Billed - Midwest

    14,086      13,058      7.9 %    29,700      28,163      5.5 % 

Unbilled Sales

    357      311      14.8 %    (96 )    (242 )    60.3 % 
                                    

Total Electric Sales - Midwest

    14,443      13,369      8.0 %    29,604      27,921      6.0 % 

Average Number of Customers

             

Residential

    1,403,184      1,397,301      0.4 %    1,408,144      1,402,242      0.4 % 

General Service

    184,759      184,201      0.3 %    185,002      184,457      0.3 % 

Industrial

    5,442      5,507      (1.2 %)    5,457      5,521      (1.2 %) 

Other Energy

    4,169      4,098      1.7 %    4,161      4,083      1.9 % 
                                    

Total Regular Sales

    1,597,554      1,591,107      0.4 %    1,602,764      1,596,303      0.4 % 

Special Sales

    15      16      (6.3 %)    16      20      (20.0 %) 
                                    

Total Avg Number Electric Customers - Midwest

    1,597,569      1,591,123      0.4 %    1,602,780      1,596,323      0.4 % 

Heating and Cooling Degree Days*

             

Actual

             

Heating Degree Days

    123      227      (45.8 %)    2,461      2,368      3.9 % 

Cooling Degree Days

    468      363      28.9 %    468      363      28.9 % 

Variance from Normal

             

Heating Degree Days

    (46.5 %)    0.9 %    n/a      5.0 %    3.5 %    n/a   

Cooling Degree Days

    50.5 %    14.9 %    n/a      49.5 %    13.4 %    n/a   

 

* Reflects HDD and CDD for Duke Energy - Indiana, Duke Energy - Ohio and Duke Energy - Kentucky

 

17

DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

June 2009 Quarter-to-Date

(Dollars in millions, except per-share amounts)

 

          Special Items (Note 1)                          
    Adjusted
Earnings		     Costs to
Achieve,
Cinergy
Merger		     Crescent
Related
Guarantees
and Tax
Adjustments		     International
Transmission
Adjustment		     Economic
Hedges
(Mark-to-
Market) * 		    Discontinued
Operations		     Total
Adjustments		     Reported
Earnings		  

SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS

               

U.S. Franchised Electric and Gas

   $ 500      $ —        $ —        $ —        $ —        $ —        $ —        $ 500   

Commercial Power

     115        —          —          —          (36 ) B      —          (36 )      79   

International Energy

     94        —          —          (26 ) E      —          —          (26 )      68   
                                                               

Total reportable segment EBIT

     709        —          —          (26 )      (36 )      —          (62 )      647   

Other

     (37 )      (8 ) A      7  D      —          —          —          (1 )      (38 ) 
                                                               

Total reportable segment EBIT and Other EBIT

   $ 672      $ (8 )    $ 7      $ (26 )    $ (36 )    $ —        $ (63 )    $ 609   

Interest Expense

     (180 )      —          —          (6 )      —          —          (6 )      (186 ) 

Interest Income and Other

     38        —          —          —          —          —          —          38   

Income Taxes from Continuing Operations

     (190 )      3        (13 )      10        13        —          13        (177 ) 

Discontinued Operations, net of taxes

     —          —          —          —          —          (2 ) C      (2 )      (2 ) 

Net Income Attributable to Noncontrolling Interests

     6        —          —          —          —          —          —          6   
                                                               

Net Income (Loss) Attributable to Duke Energy Corporation

   $ 334      $ (5 )    $ (6 )    $ (22 )    $ (23 )    $ (2 )    $ (58 )    $ 276   
                                                               

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC

   $ 0.26      $ —        $ (0.01 )    $ (0.02 )    $ (0.02 )    $ —        $ (0.05 )    $ 0.21   
                                                               

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED

   $ 0.26      $ —        $ (0.01 )    $ (0.02 )    $ (0.02 )    $ —        $ (0.05 )    $ 0.21   
                                                               

Note 1 - Amounts for special items are presented net of any related noncontrolling interest.

 

A   -   $3 million recorded in Operation, maintenance and other and $5 million recorded in Depreciation and amortization (all Operating Expenses) on the Condensed Consolidated Statements of Operations.
B   -   $20 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $16 million loss recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) on the Condensed Consolidated Statements of Operations.
C   -   Recorded in Income (Loss) From Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations.
D   -   Recorded in Other income and expenses, net on the Condensed Consolidated Statements of Operations.
E   -   $30 million recorded in Operation, maintenance, and other, $2 million recorded as reduction to fuel used in electric generation and purchased power - non-regulated, and $2 million as a reduction to Net income attributable to noncontrolling interests on the Condensed Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic

    1,288

Diluted

    1,289

 

* 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 allows them to more accurately compare the company’s performance across periods.

 

18

DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

June 2009 Year-to-Date

(Dollars in millions, except per-share amounts)

 

          Special Items (Note 1)                          
    Adjusted
Earnings		     Costs to
Achieve,
Cinergy
Merger		     Crescent
Related
Guarantees
and Tax
Adjustments		     International
Transmission
Adjustment		     Economic
Hedges
(Mark-to-
Market) * 		    Discontinued
Operations		     Total
Adjustments		     Reported
Earnings		  

SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS

                

U.S. Franchised Electric and Gas

   $ 1,057      $ —        $ —        $ —        $ —        $ —        $ —        $ 1,057   

Commercial Power

     218        —          —          —          (25 ) B      —          (25 )      193   

International Energy

     187        —          —          (26 ) E      —          —          (26 )      161   
                                                               

Total reportable segment EBIT

     1,462        —          —          (26 )      (25 )      —          (51 )      1,411   

Other

     (87 )      (15 ) A      (26 ) D      —          —          —          (41 )      (128 ) 
                                                               

Total reportable segment and Other EBIT

   $ 1,375      $ (15 )    $ (26 )    $ (26 )    $ (25 )    $ —        $ (92 )    $ 1,283   

Interest Expense

     (364 )      —          —          (6 )      —          —          (6 )      (370 ) 

Interest Income and Other

     73        —          —          —          —          —          —          73   

Income Taxes from Continuing Operations

     (381 )      6          10        9        —          25        (356 ) 

Discontinued Operations, net of taxes

     —          —          —          —          —          1  C      1        1   

Net Loss Attributable to Noncontrolling Interests

     11        —          —          —          —          —          —          11   
                                                               

Net Income (Loss) Attributable to Duke Energy Corporation

   $ 692      $ (9 )    $ (26 )    $ (22 )    $ (16 )    $ 1      $ (72 )    $ 620   
                                                               

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC

   $ 0.54      $ (0.01 )    $ (0.02 )    $ (0.02 )    $ (0.01 )    $ —        $ (0.06 )    $ 0.48   
                                                               

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED

   $ 0.54      $ (0.01 )    $ (0.02 )    $ (0.02 )    $ (0.01 )    $ —        $ (0.06 )    $ 0.48   
                                                               

Note 1 - Amounts for special items are presented net of any related noncontrolling interest.

 

A   -   $7 million recorded in Operation, maintenance and other and $8 million recorded in Depreciation and amortization (all Operating Expenses) on the Condensed Consolidated Statements of Operations.
B   -   $1 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $24 million loss recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) on the Condensed Consolidated Statements of Operations.
C   -   Recorded in Income (Loss) From Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations.
D   -   Recorded in Other income and expenses, net on the Condensed Consolidated Statements of Operations.
E   -   $30 million recorded in Operation, maintenance, and other, $2 million recorded as a reduction to fuel used in electric generation and purchased power - non-regulated, and $2 million as a reduction to Net Income attributable to noncontrolling interests on the Condensed Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic

    1,284

Diluted

    1,285

 

* 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 allows them to more accurately compare the company’s performance across periods.

 

19

DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

June 2010 Quarter-to-Date

(Dollars in millions, except per-share amounts)

 

          Special Items (Note 1)                          
    Adjusted
Earnings		     Costs to
Achieve,
Cinergy
Merger		     Voluntary
Opportunity
Plan/Office
Consolidation
Costs		     Goodwill and
Other
Impairments		     Economic
Hedges
(Mark-to-
Market) * 		    Discontinued
Operations		     Total
Adjustments		     Reported
Earnings		  

SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS

                

U.S. Franchised Electric and Gas

   $ 671      $ —        $ —        $ —        $ —        $ —        $ —        $ 671   

Commercial Power

     89        —          —          (660 ) E      (33 ) B      —          (693 )      (604 ) 

International Energy

     126        —          —          —          —          —          —          126   
                                                               

Total reportable segment EBIT

     886        —          —          (660 )      (33 )      —          (693 )      193   

Other

     (39 )      (7 ) A      (76 ) D      —          —          —          (83 )      (122 ) 
                                                               

Total reportable segment and Other EBIT

   $ 847      $ (7 )    $ (76 )    $ (660 )    $ (33 )    $ —        $ (776 )    $ 71   

Interest Expense

     (212 )      —          —          —          —          —          —          (212 ) 

Interest Income and Other

     39        —          —          —          —          —          —          39   

Income Taxes from Continuing Operations

     (216 )      2        29        58        11        —          100        (116 ) 

Discontinued Operations, net of taxes

     —          —          —          —          —          1  C      1        1   

Net Income Attributable to Non-controlling Interests

     5        —          —          —          —          —          —          5   
                                                               

Net Income (Loss) Attributable to Duke Energy Corporation

   $ 453      $ (5 )    $ (47 )    $ (602 )    $ (22 )    $ 1      $ (675 )    $ (222 ) 
                                                               

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC

   $ 0.34      $ —        $ (0.04 )    $ (0.46 )    $ (0.01 )    $ —        $ (0.51 )    $ (0.17 ) 
                                                               

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED

   $ 0.34      $ —        $ (0.04 )    $ (0.46 )    $ (0.01 )    $ —        $ (0.51 )    $ (0.17 ) 
                                                               

Note 1 - Amounts for special items are presented net of any related noncontrolling interest.

 

A   -   $6 million expense recorded in Depreciation and amortization and $1 million recorded in Operation, maintenance and other (all Operating Expenses) on the Condensed Consolidated Statements of Operations.
B   -   $38 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $5 million gain recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) 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.
D   -   $73 million recorded in Operation, maintenance and other (all Operating Expenses) and $3 million recorded in Property and other taxes on the Condensed Consolidated Statements of Operations.
E   -   Recorded in Goodwill and other impairment charges on the Condensed Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic

    1,314

Diluted

    1,314

 

* 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 allows them to more accurately compare the company’s performance across periods.

 

20

DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

June 2010 Year-to-Date

(Dollars in millions, except per-share amounts)

 

          Special Items (Note 1)                          
    Adjusted
Earnings		     Costs to
Achieve,
Cinergy
Merger		     Voluntary
Opportunity
Plan/Office
Consolidation
Costs		     Goodwill and
Other
Impairments		     Economic
Hedges
(Mark-to-
Market) * 		    Discontinued
Operations		     Total
Adjustments		     Reported
Earnings		  

SEGMENT EARNINGS BEFORE INTEREST AND TAXES FROM CONTINUING OPERATIONS

                

U.S. Franchised Electric and Gas

   $ 1,415      $ —        $ —        $ —        $ —        $ —        $ —        $ 1,415   

Commercial Power

     189        —          —          (660 ) E      (4 ) B      —          (664 )      (475 ) 

International Energy

     266        —          —          —          —          —          —          266   
                                                               

Total reportable segment EBIT

     1,870        —          —          (660 )      (4 )      —          (664 )      1,206   

Other

     (110 )      (14 ) A      (144 ) D      —          —          —          (158 )      (268 ) 
                                                               

Total reportable segment and Other EBIT

   $ 1,760      $ (14 )    $ (144 )    $ (660 )    $ (4 )    $ —        $ (822 )    $ 938   

Interest Expense

     (422 )      —          —          —          —          —          —          (422 ) 

Interest Income and Other

     53        —          —          —          —          —          —          53   

Income Taxes from Continuing Operations

     (462 )      5        56        58        1        —          120        (342 ) 

Discontinued Operations, net of taxes

     —          —          —          —          —          1  C      1        1   

Net Income Attributable to Noncontrolling Interests

     5        —          —          —          —          —          —          5   
                                                               

Net Income (Loss) Attributable to Duke Energy Corporation

   $ 924      $ (9 )    $ (88 )    $ (602 )    $ (3 )    $ 1      $ (701 )    $ 223   
                                                               

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC

   $ 0.70      $ (0.01 )    $ (0.06 )    $ (0.46 )    $ —        $ —        $ (0.53 )    $ 0.17   
                                                               

EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED

   $ 0.70      $ (0.01 )    $ (0.06 )    $ (0.46 )    $ —        $ —        $ (0.53 )    $ 0.17   
                                                               

Note 1 - Amounts for special items are presented net of any related noncontrolling interest.

 

A   -   $12 million recorded in Depreciation and amortization and $2 million recorded in Operation, maintenance and other (all Operating Expenses) on the Condensed Consolidated Statements of Operations.
B   -   $17 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $13 million gain recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) 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.
D   -   $138 million recorded in Operation, maintenance and other (all Operating Expenses) and $6 million recorded in Property and other taxes on the Condensed Consolidated Statements of Operations.
E   -   Recorded in Goodwill and other impairment charges on the Condensed Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic

    1,312

Diluted

    1,313

 

* 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 allows them to more accurately compare the company’s performance across periods.

 

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