Duke Energy Announces First Post-merger Quarterly Earnings

- Third quarter 2012 adjusted diluted earnings per share (EPS) were $1.47, compared with $1.50 for the third quarter 2011

- Reported diluted EPS for third quarter 2012 was $0.85, compared to $1.06 for the third quarter 2011

- Company is on pace to achieve its 2012 adjusted diluted earnings guidance range of $4.20 to $4.35 per share

08 Nov, 2012, 07:00 ET from Duke Energy

CHARLOTTE, N.C., Nov. 8, 2012 /PRNewswire/ -- Duke Energy (NYSE: DUK) today announced third quarter earnings that for the first time reflect its merger with Progress Energy.

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

Third quarter 2012 adjusted diluted EPS was $1.47, compared to $1.50 for the third quarter of 2011. Reported diluted EPS for the third quarter 2012 was $0.85, compared to $1.06 for the same period last year. Last year's quarterly results have been adjusted to reflect the one-for-three stock split that occurred just prior to the merger closing on July 2, 2012.

Reported results include special items that are excluded from the company's adjusted diluted EPS results. Special items for the third quarter 2012 primarily include $0.42 per share in charges related to the merger's closing, and $0.17 per share in impairment charges related to the company's Edwardsport, Ind., Integrated Gasification Combined Cycle (IGCC) project. Special items for the third quarter 2011 primarily included $0.30 per share of impairment charges related to Edwardsport as well as $0.12 per share of emission allowance impairment charges.

On an adjusted earnings basis, Duke Energy continued to see strength in its regulated businesses in the third quarter of 2012. Revised customer rates, principally resulting from the company's modernization program, helped offset less favorable weather and the expected reduced earnings from International Energy and Commercial Power.

International Energy was affected by unfavorable average foreign exchange rates, while Commercial Power's reduced earnings were principally due to the new market-based Electric Security Plan (ESP) in Ohio.

The earnings contribution from the inclusion of Progress Energy's regulated utility operations in the Carolinas and Florida was substantially offset by dilution related to the issuance of additional shares in connection with the merger.

"Our strong quarterly performance keeps us on track to achieve our targeted 2012 adjusted diluted EPS guidance range of $4.20 to $4.35," said Jim Rogers, chairman, president and CEO.

"We recently celebrated the first 100 days as the 'new' Duke Energy and are coming together as one stronger, more efficient organization," he added. "Our employees are focused on delivering on our merger commitments to customers, regulators and shareholders. We're off to a great start."

BUSINESS UNIT RESULTS The discussion below of third-quarter results includes adjusted segment income, which is a non-GAAP financial measure. The tables on pages 23 through 26 present a reconciliation of reported results to adjusted results.

U.S. Franchised Electric and Gas (USFE&G) USFE&G recognized third-quarter 2012 adjusted segment income of $907 million, compared to $472 million in the third quarter 2011, an increase of $0.62 per share.

USFE&G's increased quarterly results were primarily driven by the addition of Progress Energy's regulated utility operations in the Carolinas and Florida (+$0.55 per share). Additionally, quarterly results were higher due to increased pricing and riders (+$0.12 per share) principally related to the implementation of revised customer rates at Duke Energy Carolinas, energy efficiency programs, and lower governance and operating and maintenance costs (+$0.01 per share).  

These results were partially offset by less favorable weather (-$0.06 per share).

International Energy International Energy recognized third-quarter 2012 adjusted segment income of $103 million, compared to $115 million in the third quarter 2011, a decrease of $0.02 per share.

International Energy's quarterly results decreased primarily due to unfavorable average foreign currency exchange rates (-$0.01 per share).

Commercial Power Commercial Power recognized third-quarter 2012 adjusted segment income of $31 million, compared to $74 million in the third quarter 2011, a decrease of $0.06 per share.

Commercial Power's quarterly results decreased primarily due to lower results for the Midwest coal generation fleet (-$0.06 per share) resulting from the new market-based ESP in Ohio, partially offset by the ESP's non-bypassable stability charge. The new market-based ESP became effective Jan. 1, 2012.

Other On an adjusted basis, Other primarily includes corporate interest expense not allocated to the business units, results from Duke Energy's captive insurance company, other investments, and income tax levelization adjustments.

Other recognized a third-quarter 2012 adjusted net expense of $16 million, compared to income of $5 million in the third quarter 2011, a decrease of $0.03 per share. Other's results decreased primarily due to the addition of interest expense on Progress Energy's 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 $0.54 per share on the quarter-over-quarter adjusted diluted EPS results.

Reconciliation of quarterly reported to adjusted diluted EPS Mark-to-market impacts of economic hedges in the Commercial Power segment and special items excluded from Duke Energy's adjusted diluted EPS for the quarters include:

 

 

(In millions, except per-share amounts)

 

Pre-Tax Amount

 

Tax Effect

3Q2012

EPS

Impact

3Q2011

EPS

Impact

Third Quarter 2012

Costs to Achieve, Progress Merger

$(457)

$164

$(0.42)

-   Edwardsport Impairment

$(180)

$63

$(0.17)

-  Other

$(10)

$4

$(0.01)

-   Mark-to-market impact of economic hedges

$(31)

$12

$(0.03)

Third Quarter 2011

-   Edwardsport Impairment

$(222)

$87

$(0.30)

-   Emission Allowances Impairment

$(79)

$28

$(0.12)

-   Costs to Achieve, Progress Merger

$(13)

$3

$(0.02)

-   Mark-to-market impact of economic hedges

$1

--

$0.00

Total diluted EPS impact

$(0.63)

$(0.44)

Reconciliation of reported to adjusted diluted EPS for the quarters:

3Q2012

EPS

3Q2011

EPS

Diluted EPS, as reported

$0.85

$1.06

Adjustments to reported EPS:

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

-  Discontinued operations, net of tax

$0.63

$(0.01)

 

 

$0.44

--

Diluted EPS, adjusted

$1.47

$1.50

Analyst Conference Call An earnings conference call for analysts is scheduled for 10 a.m. ET Thursday, Nov. 8, to discuss Duke Energy's financial performance for the third 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 866-454-4209 in the United States or 913-312-1393 outside the United States. The confirmation code is 3151154. 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, Nov. 18, 2012, by calling 888-203-1112 in the United States or 719-457-0820 outside the United States and using the code 3151154. A replay and transcript also will be available by accessing the investors' section of the company's website.

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 the segment's effective tax rate, divided by the Duke Energy weighted-average shares outstanding for the period. The most directly comparable GAAP measure for adjusted segment income or adjusted Other net expenses is reported segment income or Other net expenses, which represents segment income and Other net expenses from continuing operations, including any special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Due to the forward-looking nature of any forecasted adjusted segment income or adjusted Other net expenses and any related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items, the mark-to-market impacts of economic hedges in the Commercial Power segment, or any amounts that may be reported as discontinued operations or extraordinary items for future periods.

Duke Energy is the largest electric power holding company in the United States with more than $100 billion in total assets. Its regulated utility operations serve approximately 7.1 million electric customers located in six states in the Southeast and Midwest. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.

Headquartered in Charlotte, N.C., Duke Energy is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at: www.duke-energy.com

Forward-Looking Information This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions.

These forward-looking statements are identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential," "forecast," "target," "guidance," "outlook" and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to: state, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, as well as rulings that affect cost and investment recovery or have an impact on rate structures; the ability to recover eligible costs and earn an adequate return on investment through the regulatory process; the scope of necessary repairs of the delamination of Crystal River Unit 3 Nuclear Plant could prove more extensive or costly than is currently identified, such repairs could prove not to be feasible resulting in early retirement of the unit, the cost of repair and/or replacement power could exceed estimates and insurance coverage or may not be recoverable through the regulatory process; the ability to maintain relationships with customers, employees or suppliers post-merger; the ability to successfully integrate the Progress Energy businesses and realize cost savings and any other synergies expected from the merger; the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; the impact of compliance with material restrictions of conditions related to the Progress Energy merger imposed by regulators could exceed our expectations; costs and effects of legal and administrative proceedings, settlements, investigations and claims; industrial, commercial and residential growth or decline in the respective Duke Energy Registrants' 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 each of the Duke Energy Registrants' operations, including the economic, operational and other effects of storms, hurricanes, droughts and tornadoes; the ability to successfully operate electric generating facilities and deliver electricity to customers; the ability to recover, in a timely manner, if at all, costs associated with future significant weather events through the regulatory process; the impact on the Duke Energy Registrants' facilities and business from a terrorist attack, cyber security threats and other catastrophic events; the inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates and the ability to recover such costs through the regulatory process, where appropriate; 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 the Duke Energy Registrants' ability to obtain financing on favorable terms, which can be affected by various factors, including the respective Duke Energy Registrants' credit ratings and general economic conditions; declines in the market prices of equity securities and resultant cash funding requirements for Duke Energy's defined benefit pension plans and nuclear decommissioning trust funds; the level of creditworthiness of counterparties to Duke Energy Registrants' transactions; employee workforce factors, including the potential inability to attract and retain key personnel; growth in opportunities for the respective Duke Energy Registrants' 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 Registrants' 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 subsidiaries ability to pay dividends or distributions to Duke Energy Corporation holding company (the Parent); the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; the impact of potential goodwill impairments; and the ability to successfully complete future merger, acquisition or divestiture plans.

Additional risks and uncertainties are identified and discussed in Progress Energy's and Duke Energy's reports filed with the SEC and available at the SEC's website at www.sec.gov.

In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at 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.

 

DUKE ENERGY CORPORATION

EARNINGS VARIANCES

September 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

$                   0.76

$                   0.26

$                   0.05

$                  (0.01)

$                   1.06

Costs to Achieve, Progress Merger

-

-

-

0.02

0.02

Edwardsport Impairment

0.30

-

-

-

0.30

Emission Allowances Impairment

-

-

0.12

-

0.12

2011 QTD Adjusted Earnings Per Share, Diluted

$                   1.06

$                   0.26

$                   0.17

$                   0.01

$                   1.50

Share Differential (a)

(0.38)

(0.09)

(0.07)

-

(0.54)

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

$                   0.68

$                   0.17

$                   0.10

$                   0.01

$                   0.96

Progress Energy Contribution

0.55

-

-

(0.05)

0.50

Weather

(0.06)

-

-

-

(0.06)

Pricing and Riders (b)

0.12

-

-

-

0.12

Operation and Maintenance and Governance Expenses

0.01

-

-

-

0.01

Latin America, including Foreign Exchange Rates (c)

-

(0.02)

-

-

(0.02)

Midwest Coal Generation (d)

-

-

(0.06)

-

(0.06)

Midwest Gas Generation (e)

-

-

(0.02)

-

(0.02)

Duke Energy Retail 

-

-

(0.01)

-

(0.01)

Duke Energy Renewables

-

-

0.02

-

0.02

-

Interest Expense 

-

-

-

(0.01)

(0.01)

Income Tax Expense (f)

-

-

-

0.01

0.01

Other (g)

-

-

0.01

0.02

0.03

-

2012 QTD Adjusted Earnings Per Share, Diluted

$                   1.30

$                   0.15

$                   0.04

$                  (0.02)

$                   1.47

Costs to Achieve, Progress Merger

-

-

-

(0.42)

(0.42)

Edwardsport Impairment

(0.17)

-

-

-

(0.17)

Democratic National Convention Host Committee Support

-

-

-

(0.01)

(0.01)

Economic Hedges (Mark-to-Market)

-

-

(0.03)

-

(0.03)

Discontinued Operations

-

-

-

-

0.01

2012 QTD Reported Earnings Per Share, Diluted

$                   1.13

$                   0.15

$                   0.01

$                  (0.45)

$                   0.85

(a) Reflects the impact on prior period earnings per diluted share due to the increase in Duke Energy's average diluted common shares outstanding as a result of shares issued to complete the merger with Progress Energy. Weighted average shares outstanding increased from 444 million for the quarter ended September 30, 2011 to 699 million for the quarter ended September 30, 2012.

(b) Primarily due to implementation of revised customer rates in North Carolina and South Carolina as a result of the 2011 rate case (+$0.11) and increased riders (+$0.02).

(c) Primarily due to Central America (-$0.01) and unfavorable foreign currency exchange rates (-$0.01).

(d) Primarily due to the new market-based Ohio ESP (-$0.10), partially offset by the non-bypassable stabilization charge (+$0.03).

(e) Primarily due to a decrease in capacity revenue (-$0.03) and favorable generation volumes, net of lower pricing (+$0.01).

(f) Primarily represents the change in effective tax rates for the period. 

(g) Amount for U.S. Franchised Electric & Gas is primarily due to an increase in depreciation and amortization expense (-$0.02), offset by other miscellaneous items (+$0.02).

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

 

DUKE ENERGY CORPORATION

EARNINGS VARIANCES

September 2012 YTD vs. Prior Year

($ per share)

U.S. Franchised Electric & Gas

International Energy

Commercial Power

Other

Consolidated

2011 YTD Reported Earnings Per Share, Diluted

$                   2.20

$                0.83

$                  0.22

$              (0.06)

$              3.19

Costs to Achieve, Progress Merger

-

-

-

0.05

0.05

Edwardsport Impairment

0.30

-

-

-

0.30

Emission Allowances Impairment

-

-

0.12

-

0.12

Economic Hedges (Mark-to-Market)

-

-

0.01

-

0.01

2011 YTD Adjusted Earnings Per Share, Diluted

$                   2.50

$                0.83

$                  0.35

$              (0.01)

$              3.67

Share Differential (a)

(0.41)

(0.13)

(0.06)

(0.01)

(0.61)

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

$                   2.09

$                0.70

$                  0.29

$              (0.02)

$              3.06

Progress Energy Contribution

0.73

-

-

(0.07)

0.66

Weather

(0.23)

-

-

-

(0.23)

Pricing and Riders (b)

0.40

-

-

-

0.40

Operation and Maintenance and Governance Expenses

0.12

-

-

-

0.12

Latin America, including Foreign Exchange Rates (c)

-

(0.09)

-

-

(0.09)

NMC

-

0.03

-

-

0.03

Midwest Coal Generation (d)

-

-

(0.13)

-

(0.13)

Midwest Gas Generation (e)

-

-

0.02

-

0.02

Duke Energy Retail 

-

-

(0.07)

-

(0.07)

Duke Energy Renewables

-

-

0.05

-

0.05

Interest Expense

(0.02)

-

-

(0.02)

(0.04)

Income Tax Expense (f)

(0.01)

-

-

0.01

-

Other (g)

(0.09)

0.02

0.02

0.01

(0.04)

2012 YTD Adjusted Earnings Per Share, Diluted

$                   2.99

$                0.66

$                  0.18

$              (0.09)

$              3.74

Costs to Achieve, Progress Merger

(0.58)

(0.58)

Voluntary Opportunity Plan Deferral

0.11

-

-

-

0.11

Edwardsport Impairment

(0.72)

-

-

-

(0.72)

Democratic National Convention Host Committee Support

-

-

-

(0.01)

(0.01)

Economic Hedges (Mark-to-Market)

-

-

(0.04)

-

(0.04)

Discontinued Operations

-

-

-

-

0.01

2012 YTD Reported Earnings Per Share, Diluted

$                   2.38

$                0.66

$                  0.14

$              (0.68)

$              2.51

(a) Reflects the impact on prior period earnings per diluted share due to the increase in Duke Energy's average diluted common shares outstanding as a result of shares issued to complete the merger with Progress Energy.  Weighted average shares outstanding increased from 444 million for the nine months ended September 30, 2011 to 531 million for the nine months ended September 30, 2012.

(b) Primarily due to implementation of revised customer rates (+$0.32) and increased riders (+$0.07).

(c) Primarily driven by lower average prices in Central America and absence of prior year arbitration award in Peru (-$0.07) and unfavorable foreign exchange rates (-$0.06), partially offset by higher average sales prices and volumes in Brazil (+$0.06).

(d) Primarily due to the new market-based Ohio ESP (-$0.34), partially offset by the non-bypassable stabilization charge (+$0.10), favorable capacity revenues (+$0.09), and lower operation and maintenance (+$0.01).

(e) Primarily due to favorable generation volumes (+$0.07) and recovery of a Lehman Brothers receivable previously written-off (+$0.02), partially offset by a decrease in capacity revenue (-$0.08).

(f) Primarily represents the change in effective tax rates for the period. 

(g)  Amount for U.S. Franchised Electric & Gas is primarily due to an increase in depreciation and amortization expense (-$0.11), partially offset by other miscellaneous items (+$0.02).

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

 

September 2012

QUARTERLY HIGHLIGHTS

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

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

2012

2011

2012

2011

COMMON STOCK DATA

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

    Basic

$              0.84

$              1.06

$              2.50

$              3.19

    Diluted

$              0.84

$              1.06

$              2.50

$              3.19

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

    Basic

$              0.01

$                  -

$              0.01

$                  -

    Diluted

$              0.01

$                  -

$              0.01

$                  -

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

    Basic

$              0.85

$              1.06

$              2.51

$              3.19

    Diluted

$              0.85

$              1.06

$              2.51

$              3.19

  Dividends Declared Per Share(a)

$                    -

$                    -

$            2.265

$              2.22

  Weighted-Average Shares Outstanding(a)

    Basic

699

444

531

444

    Diluted

699

444

531

444

SEGMENT INCOME BY BUSINESS SEGMENT

U.S. Franchised Electric and Gas(b)(c)

$               790

$               337

$            1,263

$               975

Commercial Power(d)

12

24

71

103

International Energy

103

115

350

370

Total Reportable Segment Income

905

476

1,684

1,448

Other Net Expense(e)

(315)

(5)

(356)

(31)

(Loss) Income from Discontinued Operations, net of tax

4

1

5

1

Total Reportable Segment Income and Other Net Expense

$               594

$               472

$            1,333

$            1,418

CAPITALIZATION

Total Common Equity

51%

54%

Preferred Stock of Subsidiaries

-

-

Total Debt

49%

46%

Total Debt

$          39,472

$          19,866

Book Value Per Share(a)

$            58.38

$            51.57

Actual Shares Outstanding(a)

704

444

CAPITAL AND INVESTMENT EXPENDITURES

U.S. Franchised Electric and Gas

$            1,270

$               900

$            2,860

$            2,656

Commercial Power

205

118

825

224

International Energy

95

38

119

96

Other

21

29

84

100

Total Capital and Investment Expenditures

$            1,591

$            1,085

$            3,888

$            3,076

(a) Reflects the impact of the 1-for-3 reverse stock split on July 2, 2012.

(b) Includes impairment and other charges of $268 million in the first quarter of 2012 related to the Edwardsport IGCC project (net of tax of $152 million), and includes impairment and other charges of $117 million in the third quarter of 2012 related to the Edwardsport IGCC project (net of tax of $63 million).

(c) Includes impairment and other charges of $135 million in the third quarter of 2011 related to the Edwardsport IGCC project (net of tax of $87 million).

(d) Includes non-cash impairment charges of $79 million in 2011 related to an emission allowances impairment.

(e) Includes costs to achieve of $293 million in the third quarter of 2012 related to the Progress merger on July 2, 2012 (net of tax of $164 million).

 

September 2012

QUARTERLY HIGHLIGHTS

(Unaudited)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(In millions, except where noted)

2012

2011

2012

2011

U.S. FRANCHISED ELECTRIC AND GAS

  Operating Revenues

$                   5,842

$                   2,926

$                  11,207

$                                  8,158

  Operating Expenses (a)

4,433

2,323

8,914

6,446

  Gains on Sales of Other Assets, net

6

1

13

2

  Operating Income

1,415

604

2,306

1,714

  Other Income and Expenses

103

72

227

201

  Interest Expense

257

145

546

419

  Income Before Income Taxes

1,261

531

1,987

1,496

  Income Tax Expense (b)

470

194

723

521

  Less: Income Attributable to Noncontrolling Interests

1

-

1

-

  Segment Income

$                        790

$                        337

$                    1,263

$                                      975

  Depreciation and Amortization

$                        545

$                        352

$                    1,275

$                                  1,032

  Duke Energy Carolinas GWh sales

22,780

22,832

61,815

63,626

  Progress Energy Carolinas GwH sales

16,754

16,028

43,387

43,614

  Progress Energy Florida Gwh sales

11,466

12,000

29,814

31,306

  Duke Energy Ohio GWh sales

6,804

7,056

18,600

19,315

  Duke Energy Indiana GWh sales

8,923

9,071

25,684

25,501

  Net Proportional MW Capacity in Operation

47,450

26,907

COMMERCIAL POWER

  Operating Revenues

$                        525

$                        687

$                    1,607

$                                  1,926

  Operating Expenses

522

627

1,512

1,741

  Gains on Sales of Other Assets, net

10

2

11

15

  Operating Income 

13

62

106

200

  Other Income and Expenses

1

4

26

21

  Interest Expense

14

21

55

67

  Income Before Income Taxes

-

45

77

154

  Income Tax Expense

(13)

20

5

43

  Less: Income Attributable to Noncontrolling Interests

1

1

1

8

  Segment Income

$                            12

$                           24

$                            71

$                                       103

  Depreciation and Amortization

$                           58

$                           56

$                         172

$                                       173

Actual Coal-fired Plant Production, GWh

5,054

5,013

12,421

13,420

Actual Gas-fired Plant Production, GWh

4,387

3,255

13,483

8,476

Actual Renewable Plant Production, GWh

615

545

2,399

2,286

Actual Plant Production, GWh

10,056

8,813

28,303

24,182

  Net Proportional MW Capacity in Operation

7,760

8,300

INTERNATIONAL ENERGY

  Operating Revenues

$                        382

$                        360

$                      1,181

$                                    1,114

  Operating Expenses

266

239

768

715

  Operating Income 

116

121

413

399

  Other Income and Expenses

46

52

136

166

  Interest Expense

23

4

60

31

  Income Before Income Taxes

139

169

489

534

  Income Tax Expense

34

51

129

154

  Less: Income Attributable to Noncontrolling Interests

2

3

10

10

  Segment Income

$                         103

$                          115

$                        350

$                                      370

  Depreciation and Amortization

$                           25

$                           23

$                           74

$                                         66

  Sales, GWh

5,308

4,565

15,264

13,868

  Proportional MW Capacity in Operation

4,465

4,190

OTHER 

  Operating Revenues

$                           20

$                            14

$                            51

$                                         34

  Operating Expenses (c)

484

26

514

79

  Losses on Sales of Other Assets, net

(2)

(8)

(3)

(8)

  Operating Loss

(466)

(20)

(466)

(53)

  Other Income and Expenses

15

(5)

14

43

  Interest Expense

107

43

196

118

  Loss Before Income Taxes

(558)

(68)

(648)

(128)

  Income Tax Benefit (d)

(243)

(57)

(292)

(85)

  Less: Loss Attributable to Noncontrolling Interests

-

(6)

-

(12)

  Net Expense

$                       (315)

$                            (5)

$                      (356)

$                                        (31)

  Depreciation and Amortization

$                           38

$                           24

$                           99

$                                         75

(a) Includes pre-tax impairment and other charges related to the Edwardsport IGCC project of $180 million and $600 million for the three and nine months ended September 30, 2012, respectively, and $222 million for both the three and nine months ending September 30, 2011.

(b) Includes a tax benefit related to the Edwardsport IGCC project of $63 million and $215 million for the three and nine months ended September 30, 2012, respectively, and $87 million for both the three and nine months ending September 30, 2011.

(c) Includes costs to achieve of $366 million and $381 million for the three and nine months ended September 30, 2012, respectively, recorded in Operation, maintenance and other and costs to achieve of $86 million for both the three and nine months ended September 30, 2012 recorded in Impairment charges (all Operating Expenses).

(d) Includes a tax benefit related to costs to achieve of $164 million and $166 million for the three and nine months ended September 30, 2012, respectively.

 

DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per-share amounts)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Operating Revenues

Regulated electric

$         5,763

$         3,016

$       10,892

$         8,165

Non-regulated electric, natural gas, and other

882

867

2,708

2,586

Regulated natural gas

77

81

329

410

Total operating revenues

6,722

3,964

13,929

11,161

Operating Expenses

Fuel used in electric generation and purchased power - regulated

2,222

957

3,848

2,603

Fuel used in electric generation and purchased power - non-regulated 

484

383

1,328

1,147

Cost of natural gas and coal sold

40

48

184

262

Operation, maintenance and other

1,654

866

3,262

2,705

Depreciation and amortization

666

455

1,620

1,346

Property and other taxes

326

183

681

538

Impairment charges

266

300

668

309

Total operating expenses

5,658

3,192

11,591

8,910

Gains (Losses) on Sales of Other Assets and Other, net

14

(5)

21

9

Operating Income

1,078

767

2,359

2,260

Other Income and Expenses

Equity in earnings of unconsolidated affiliates

33

43

118

123

Impairments and gains on sales of unconsolidated affiliates

-

(3)

(6)

11

Other income and expenses, net

132

83

291

297

Total other income and expenses

165

123

403

431

Interest Expense

401

213

857

635

Income From Continuing Operations Before Income Taxes

842

677

1,905

2,056

Income Tax Expense from Continuing Operations

248

208

565

633

Income From Continuing Operations

594

469

1,340

1,423

Income From Discontinued Operations, net of tax

4

1

5

1

Net Income 

598

470

1,345

1,424

Less: Net Income (Loss) Attributable to Noncontrolling Interests 

4

(2)

12

6

Net Income Attributable to Duke Energy Corporation

$            594

$            472

$         1,333

$         1,418

Earnings Per Share - Basic and Diluted

Income from continuing operations attributable to Duke Energy Corporation common shareholders

Basic 

$           0.84

$           1.06

$           2.50

$           3.19

Diluted

$           0.84

$           1.06

$           2.50

$           3.19

Income from discontinued operations attributable to Duke Energy Corporation common shareholders

Basic 

$           0.01

$                -

$           0.01

$                -

Diluted

$           0.01

$                -

$           0.01

$                -

Net Income attributable to Duke Energy Corporation common shareholders

Basic 

$           0.85

$           1.06

$           2.51

$           3.19

Diluted

$           0.85

$           1.06

$           2.51

$           3.19

Dividends declared per share

$                 -

$                 -

$         2.265

$           2.22

Weighted-average shares outstanding

Basic

699

444

531

444

Diluted

699

444

531

444

 

DUKE ENERGY CORPORATION

CONSOLIDATED

BALANCE SHEETS

(Unaudited)

(In millions)

September 30,

December 31,

2012

2011

ASSETS

Current Assets

Cash and cash equivalents

$               1,761

$               2,110

Short-term investments

335

190

Receivables (net of allowance for doubtful accounts of 

$31 at September 30, 2012 and $35 at December 31, 2011)

1,596

784

Restricted receivables of variable interest entities (net of

allowance for doubtful accounts of $43 at September 30, 2012 and $40 at December 31, 2011)

1,250

1,157

Inventory

3,041

1,588

Other

2,123

1,051

Total current assets

10,106

6,880

Investments and Other Assets

Investments in equity method unconsolidated affiliates

542

460

Nuclear decommissioning trust funds

4,155

2,060

Goodwill

16,180

3,849

Intangibles, net

359

363

Notes receivable

74

62

Restricted other assets of variable interest entities

115

135

Other

2,186

2,231

Total investments and other assets

23,611

9,160

Property, Plant and Equipment

Cost

100,156

60,377

Cost, variable interest entities

961

913

Accumulated depreciation and amortization

(32,318)

(18,709)

Generation facilities to be retired, net

232

80

Net property, plant and equipment

69,031

42,661

Regulatory Assets and Deferred Debits

Regulatory assets 

9,097

3,672

Other

163

153

Total regulatory assets and deferred debits

9,260

3,825

Total Assets

$           112,008

$             62,526

LIABILITIES AND EQUITY

Current Liabilities

Accounts payable

$               1,912

$               1,433

Notes payable and commercial paper

600

154

Non-recourse notes payable of variable interest entities

275

273

Taxes accrued

601

431

Interest accrued

474

252

Current maturities of long-term debt

2,488

1,894

Other

2,206

1,091

Total current liabilities

8,556

5,528

Long-term Debt

35,198

17,730

Non-recourse long-term debt of variable interest entities

911

949

Deferred Credits and Other Liabilities

Deferred income taxes

10,317

7,581

Investment tax credits

462

384

Accrued pension and other post-retirement benefit costs

2,542

856

Asset retirement obligations

4,846

1,936

Regulatory liabilities

5,739

2,919

Other

2,349

1,778

Total deferred credits and other liabilities

26,255

15,454

Commitments and Contingencies

Preferred stock of subsidiaries

93

-

Equity

Common stock, $0.001 par value, 2 billion shares authorized;  

704 million and 445 million shares outstanding at September 30, 2012 and December 31, 2011, respectively

1

1

Additional paid-in capital

39,249

21,132

Retained earnings

1,995

1,873

Accumulated other comprehensive loss

(340)

(234)

Total Duke Energy Corporation shareholders' equity

40,905

22,772

Noncontrolling interests

90

93

Total equity

40,995

22,865

Total Liabilities and Equity

$           112,008

$             62,526

 

DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

Nine Months Ended

September 30,

2012

2011

CASH FLOWS FROM OPERATING ACTIVITIES

Net income 

$             1,345

$             1,424

Adjustments to reconcile net income to net cash provided by

operating activities:

2,634

1,603

Net cash provided by operating activities

3,979

3,027

CASH FLOWS FROM INVESTING ACTIVITIES

Net cash used in investing activities

(3,989)

(3,070)

CASH FLOWS FROM FINANCING ACTIVITIES

Net cash (used in) provided by financing activities

(339)

405

Net (decrease) increase in cash and cash equivalents

(349)

362

Cash and cash equivalents at beginning of period

2,110

1,670

Cash and cash equivalents at end of period

$             1,761

$             2,032