Duke Energy 2012 results near top of EPS guidance range - Company achieves adjusted diluted earnings per share (EPS) of $4.32 in 2012, compared to $4.38 in 2011; reported diluted EPS $3.07 for 2012, compared to $3.83 in 2011

- Fourth quarter 2012 adjusted diluted EPS of 70 cents, compared with 71 cents for the fourth quarter 2011; fourth quarter 2012 reported diluted EPS of 62 cents, compared to 65 cents in 2011

- Company will provide updates on its businesses, report on regulatory initiatives, and offer a financial and business outlook for 2013 and beyond during Feb. 28 analyst meeting

CHARLOTTE, N.C., Feb. 13, 2013 /PRNewswire/ -- Duke Energy (NYSE: DUK) today posted 2012 full-year adjusted diluted EPS of $4.32, which was near the top of its adjusted diluted EPS guidance range of $4.20 to $4.35.

(Logo: http://photos.prnewswire.com/prnh/20040414/DUKEENERGYLOGO )

For 2012, adjusted EPS reflected the addition of earnings from Progress Energy, net of the impact of shares issued in connection with the merger, the impact of the new market-based Electric Security Plan (ESP) in Ohio, and unfavorable weather. These were partially offset by revised customer rates at Duke Energy Carolinas.

Duke Energy's full-year reported diluted EPS was $3.07 for 2012, compared to $3.83 in 2011.

Fourth quarter 2012 adjusted diluted EPS was 70 cents, compared to 71 cents for fourth quarter 2011. Fourth quarter 2012 reported diluted EPS was 62 cents, compared to 65 cents for fourth quarter 2011.

"For Duke Energy, 2012 was a year of unprecedented accomplishment, highlighted by the merger with Progress Energy that has already begun providing savings for our customers," said Jim Rogers, chairman, president and chief executive officer. "We also made significant progress with our fleet modernization program by bringing online three major new power plants in North Carolina, enabling us to retire older, less efficient coal-fired units."

"I am especially pleased with the outstanding performance and resilience of our employees," he added. "During a year of change and uncertainty, they maintained their focus and strong commitment. The nuclear fleet maintained a capacity factor greater than 90 percent, excluding Crystal River 3, for the 13th consecutive year and the company achieved its best safety record ever. 

"From a financial perspective, we achieved our objectives by delivering 2012 adjusted diluted EPS near the top of our guidance range, increasing the dividend and maintaining the strength of our balance sheet," Rogers said.

The company also resolved two significant regulatory proceedings in 2012: the North Carolina Utilities Commission's merger investigation and the Indiana Utility Regulatory Commission's cost recovery settlement for the Edwardsport Integrated Gasification Combined Cycle (IGCC) Station.

BUSINESS UNIT RESULTS
The discussion below of fourth-quarter and year-end 2012 financial results includes adjusted segment income, which is a non-GAAP financial measure. The tables on pages 24 through 27 present a reconciliation of reported results to adjusted results.

U.S. Franchised Electric and Gas (USFE&G)
USFE&G recognized fourth-quarter 2012 adjusted segment income of $498 million, compared to $206 million in the fourth quarter 2011, an increase of $0.42 per share.

USFE&G's increased results were primarily driven by the addition of Progress Energy's regulated utility operations in the Carolinas and Florida (+$0.28 per share).

Other drivers, excluding the addition of Progress Energy, included:

  • Increased pricing and riders principally related to the implementation of revised customer rates at Duke Energy Carolinas as a result of the 2011 rate case (+$0.07 per share)
  • Adjustments to income taxes (+$0.07 per share)
  • More favorable weather (+$0.03 per share)

These results were partially offset by higher operating and maintenance expenses
(-$0.05 per share).

Full-year 2012 adjusted segment income for USFE&G was $2,086 million compared to $1,316 million in 2011, an increase of $1.34 per share.

Higher year-over-year results were primarily driven by the addition of Progress Energy's regulated utility operations in the Carolinas and Florida (+$1.02 per share). Excluding the addition of Progress Energy, other drivers included increased pricing and riders principally related to the implementation of revised customer rates at Duke Energy Carolinas (+$0.48 per share) and lower operating and maintenance and governance costs (+$0.06 per share).

These results were partially offset by unfavorable weather compared to the prior year
(-$0.19 per share).

International Energy
International Energy recognized fourth-quarter 2012 adjusted segment income of $89 million, compared to $96 million in the fourth quarter 2011, a decrease of $0.01 per share.

International Energy's quarterly results decreased primarily due to higher purchased power costs in Brazil because of unfavorable hydrology (-$0.02 per share) and unfavorable foreign exchange rates primarily in Brazil (-$0.01 per share).

These results were partially offset by increased volumes for our thermal generation in Central America due to drier weather (+$0.02 per share).

Full-year 2012 adjusted segment income for International Energy was $439 million compared to $466 million in 2011, a decrease of $0.05 per share.

Lower year-over-year results were primarily driven by unfavorable foreign exchange rates primarily in Brazil (-$0.06 per share) and lower results in Central America due to lower average prices (-$0.04 per share).

These results were partially offset by higher average sales prices and volumes in Brazil (+$0.03 per share) and higher average MTBE prices and volumes at National Methanol Company (+$0.03 per share).

Commercial Power
Commercial Power's adjusted segment earnings for the fourth quarter 2012 were break-even, compared to $30 million in the fourth quarter 2011, a decrease of $0.04 per share.

Commercial Power's quarterly results decreased primarily due to adjustments to income taxes (-$0.03 per share) and lower results from the Midwest gas generation fleet (-$0.01 per share) driven by lower capacity revenues, partially offset by lower operating and maintenance costs.

Results for the Midwest coal generation fleet were flat primarily due to the net impacts of the new market-based ESP in Ohio (-$0.05 per share), offset by the absence of a prior-year fee related to exiting the Midwest Independent System Operator (+$0.04 per share), and lower operating and maintenance costs (+$0.01 per share).

Full-year 2012 adjusted segment income for Commercial Power was $93 million, compared to $186 million in 2011, a decrease of $0.16 per share.

Lower year-over-year results were driven by lower results for the Midwest coal generation fleet due to the net impacts of the new market-based Ohio ESP on the Midwest coal generation fleet (-$0.21 per share) offset by the absence of a prior-year fee related to exiting MISO (+$0.04 per share), and lower operating and maintenance costs (+$0.04 per share). Additionally, lower results were due to unfavorable pricing and lower sales volumes for Duke Energy Retail (-$0.08 per share).

These were partially offset by higher results at Duke Energy Renewables (+$0.04 per share).

Results for the Midwest gas generation fleet were flat primarily due to the offsetting impacts of favorable generation volumes (+$0.06 per share), lower operating and maintenance costs (+$0.03 per share), and unfavorable capacity revenues (-$0.11 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 quarterly income tax levelization adjustments.

Other recognized fourth-quarter 2012 adjusted net expense of $91 million, compared to net expense of $17 million in the fourth quarter 2011, a difference of $0.12 per share. Other's results were primarily due to the addition of interest expense on Progress Energy's corporate debt (-$0.06 per share).

Full-year 2012 adjusted net expense for Other was $135 million compared to a net expense of $25 million in 2011, a difference of $0.19 per share.

Increased year-over-year adjusted net expense for Other was primarily driven by the addition of interest expense on Progress Energy's corporate debt (-$0.12 per share) and higher interest expense on Duke Energy corporate debt (-$0.05 per share).

Share Dilution
On July 2, 2012, Duke Energy issued approximately 258 million shares of common stock in connection with the closing of the merger with Progress Energy Inc. The issuance of these additional shares had a dilutive impact of $0.26 per share and $1.00 per share on the quarter-over-quarter and year-over-year adjusted diluted EPS results, respectively.

Earnings Conference Call for Analysts
An earnings conference call for analysts is scheduled for 10 a.m. ET Wednesday, Feb. 13, to discuss Duke Energy's financial performance for the fourth quarter 2012 as well as providing other business updates. 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 the investors' section (http://www.duke-energy.com/investors/) of Duke Energy's website or by dialing 888-695-0608 in the

United States or 719-325-2286 outside the United States. The confirmation code is 4249923. 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, Feb. 22, 2013, by calling 888-203-1112 in the United States or 719-457-0820 outside the United States and using the code 4249923. A replay and transcript also will be available by accessing the investors' section of the company's website.

Analyst Meeting Feb. 28
Duke Energy will host an investor and analyst meeting Thursday, Feb. 28, from 8:30 a.m. to 12:30 p.m. ET in New York City.

Rogers and other members of the Duke Energy management team will provide updates on the company's operating businesses, report on regulatory initiatives, and offer the company's financial and business outlook for 2013 and beyond.

A live webcast of the meeting can be accessed via the investors' section of Duke Energy's website (http://www.duke-energy.com/investors/) or by dialing 719-325-2329 outside the United States or 888-427-9376 in the United States. The confirmation code is 8401489. Please call 10 to 15 minutes prior to the scheduled start time. A replay and transcript of the meeting will be available by accessing the investors' section of the company's website.

Special Items and Non-GAAP Reconciliation
Special items affecting Duke Energy's adjusted diluted EPS for fourth quarter 2011 and fourth quarter 2012 include:

 (In millions, except per-share amounts)

Pre-Tax

Amount

Tax

Effect

4Q2012

EPS

Impact

4Q2011

EPS

Impact

Fourth Quarter 2012





-        Costs to Achieve, Progress Energy Merger

$(164)

$73

$(0.13)


-        Edwardsport Charges

$(28)

$11

$(0.02)


-        Discontinued Operations

$56

$(25)

$0.05


-        Economic Hedges (Mark-to-Market)

$26

$(10)

$0.02


Fourth Quarter 2011





-        Costs to Achieve, Progress Energy Merger

$(39)

$11


$(0.06)

-        Economic Hedges (Mark-to-Market)

$2

$(1)


--

Total diluted EPS impact



$(0.08)

$(0.06)

Special items affecting Duke Energy's adjusted diluted EPS for full-year 2011 and full-year 2012 include:

(In millions, except per-share amounts)

Pre-Tax

Amount

Tax

Effect

2012

EPS

Impact

 2011

EPS

Impact

Full-Year 2012





-        Costs to Achieve, Progress Energy Merger

$(636)

$239

$(0.70)


-        Edwardsport Charges

$(628)

$226

$(0.70)


-        DNC Host Committee Support

$(10)

$4

$(0.01)


-        Economic Hedges (Mark-to-Market)

$(9)

$3

$(0.01)


-        Voluntary Opportunity Plan Deferral

$99

$(39)

$0.11


-        Discontinued Operations

$60

$(24)

$0.06


Full-Year 2011





-        Edwardsport Impairment

$(222)

$87


$(0.30)

-        Emission Allowance Impairment

$(79)

$28


$(0.12)

-        Costs to Achieve, Progress Energy Merger

$(68)

$17


$(0.12)

-        Economic Hedges (Mark-to-Market)

$(1)

$-


$(0.01)

Total diluted EPS impact



$(1.25)

$(0.55)

Reconciliation of reported to adjusted diluted EPS for the quarters:


4Q2012

EPS

4Q2011

EPS

Diluted EPS, as reported

$0.62

$0.65

Adjustments to reported EPS:



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

$0.08

$0.06

Diluted EPS, adjusted

$0.70

$0.71

Reconciliation of reported to adjusted diluted EPS for the annual periods:


2012

EPS

2011

EPS

Diluted EPS, as reported

$3.07

$3.83

Adjustments to reported EPS:



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

$1.25

$0.55

Diluted EPS, adjusted

$4.32

$4.38

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 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 Duke Energy's consolidated effective tax rate, divided by the Duke Energy weighted-average diluted 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.

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

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 CORPORATION

EARNINGS VARIANCES

December 31, 2012 QTD vs. Prior Year


















($ per share)


U.S. Franchised

Electric & Gas


International Energy


Commercial Power


Other


Consolidated


















2011 QTD Reported Earnings Per Share, Diluted


$

0.46


$

0.22


$

0.07


$

(0.10)


$

0.65

Costs to Achieve, Progress Energy Merger



-



-



-



0.06



0.06

2011 QTD Adjusted Earnings Per Share, Diluted


$

0.46


$

0.22


$

0.07


$

(0.04)


$

0.71


















Share Differential (a)



(0.17)



(0.08)



(0.03)



0.02



(0.26)


















2011 QTD Adjusted Earnings Per Share, Diluted, Recasted for Share Issuance


$

0.29


$

0.14


$

0.04


$

(0.02)


$

0.45


















Progress Energy Contribution



0.28



-



-



(0.06)



0.22


















Weather



0.03



-



-



-



0.03


















Pricing and Riders (b)



0.07



-



-



-



0.07


















Operation and Maintenance and Governance Expenses



(0.05)



-



-



-



(0.05)


















Latin America, including Foreign Exchange Rates (c)



-



-



-



-



-


















Midwest Coal Generation (d)



-



-



-



-



-


















Midwest Gas Generation (e)



-



-



(0.01)



-



(0.01)


















Duke Energy Retail 



-



-



(0.01)



-



(0.01)


















Interest Expense 



-



-



0.01



(0.01)



-


















Adjustments to income taxes



0.07



-



(0.03)



(0.04)



-


















Other



0.02



(0.01)



-



(0.01)



-











-







2012 QTD Adjusted Earnings Per Share, Diluted


$

0.71


$

0.13


$

-


$

(0.14)


$

0.70

Costs to Achieve, Progress Energy Merger



-



-



-



(0.13)



(0.13)

Edwardsport Charges



(0.02)



-



-



-



(0.02)

Economic Hedges (Mark-to-Market)



-



-



0.02



-



0.02

Discontinued Operations



-



-



-



-



0.05

2012 QTD Reported Earnings Per Share, Diluted


$

0.69


$

0.13


$

0.02

$


(0.27)


$

0.62




Note 1: Earnings Per Share amounts are calculated using the consolidated effective income tax rate.


Note 2: Adjusted and Reported Earnings Per Share amounts by segment may not recompute from other published schedules due to rounding.


















(a)

Reflects the impact on prior period earnings per diluted share due to the increase in Duke Energy's weighted-average diluted common shares outstanding as a result of shares issued to complete the merger with

Progress Energy. Weighted-average diluted shares outstanding increased from 444 million for the quarter ended December 31, 2011 to 705 million for the quarter ended December 31, 2012.


















(b)

Primarily due to implementation of revised customer rates in North Carolina and South Carolina as a result of the 2011 Duke Energy Carolinas rate cases (+$0.09) and decreased riders (-$0.02).


















(c) 

Primarily due to increased volumes in Central America (+$0.02), net of higher purchased power in Brazil (-0.02) and unfavorable foreign currency exchange rates (-$0.01).


















(d)

Primarily due to the new market-based Ohio ESP (-$0.08), partially offset by the absence of prior year MISO exit fees (+$0.04), non-bypassable stabilization charge (+$0.02), capacity revenues received from PJM in 2012 (+$0.01), and lower operation and maintenance expenses (+$0.01).


















(e)

Primarily due to a decrease in capacity revenue (-$0.02) net of lower operation and maintenance expenses (+$0.01).