Exhibit 99.1

 

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

 

Aug. 2, 2012		MEDIA CONTACT:
		Tom Shiel		704-382-2355
		24-Hour:		800-559-3853
		ANALYSTS:
		Bob Drennan Bill Currens		704-382-4070     704-382-1603

Duke Energy Posts Higher Second Quarter 2012 Results

 

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Second quarter 2012 adjusted diluted earnings per share (EPS) were $1.02, compared to 99 cents for the second quarter 2011

 

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Reported diluted EPS for second quarter 2012 was 99 cents, compared to 98 cents for the second quarter 2011

 

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Duke Energy remains on track to achieve its 2012 adjusted diluted EPS guidance range of $4.20 to $4.35 per share for the combined company

 

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Duke Energy financial results for the second quarter 2012 are on a stand-alone basis and do not include Progress Energy’s results

CHARLOTTE, N.C. - Duke Energy today announced second quarter 2012 adjusted diluted EPS of $1.02, compared to 99 cents for second quarter 2011, and reported diluted EPS of 99 cents, compared to 98 cents for the same period last year.

Current year and prior year EPS amounts have been adjusted to reflect the one-for-three reverse stock split which was completed immediately prior to closing the merger with Progress Energy on July 2, 2012.

In connection with the merger, Progress Energy has become a wholly owned direct subsidiary of Duke Energy.

 

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As a result, the Duke Energy financial results for the second quarter 2012 are on a stand-alone basis and do not include Progress Energy’s results. Progress Energy results for the second quarter 2012 are contained in a separate news release. The financial results of Progress Energy will be included in Duke Energy’s consolidated results beginning with third quarter 2012.

Higher second quarter results were driven by revised customer rates in the Carolinas and lower storm restoration costs in U.S. Franchised Electric & Gas. These results were partially offset by less favorable weather, higher financing costs, and increased depreciation expense as a result of higher rate base investment levels. As expected, International Energy’s results were below prior year primarily due to lower earnings in Central America and unfavorable foreign exchange rates.

The company remains on track to achieve its 2012 adjusted earnings guidance range of $4.20 to $4.35 per share for the combined company, as adjusted for the one-for-three reverse stock split.

“Now that the merger has closed, our focus is on integrating these two great companies and continuing to deliver on our commitments to our 7.1 million customers,” said Jim Rogers, chairman, president and CEO. “The benefits of this merger to our customers, employees, communities and investors are compelling and we have a talented team of employees working aggressively to achieve them.”

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

 

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(In millions, except per-share amounts)		Pretax Amount				Tax Effect				2Q2012 EPS Impact				2Q2011 EPS Impact
Second Quarter 2012
•    Costs to Achieve, Progress Merger		$	(7	)			—			$	(0.02	)
•    Mark-to-market impact of economic hedges		$	(6	)		$	2			$	(0.01	)
Second Quarter 2011
•    Costs to Achieve, Progress Merger		$	(5	)		$	1							$	(0.01	)
Total diluted EPS impact										$	(0.03	)		$	(0.01	)

Reconciliation of reported to adjusted diluted EPS for the quarters:

 

		2Q2012 EPS				2Q2011 EPS
Diluted EPS, as reported		$	0.99			$	0.98
Adjustments to reported EPS:
•      Diluted EPS impact of special items and mark-to-market in Commercial Power		$	0.03			$	0.01
Diluted EPS, adjusted		$	1.02			$	0.99

BUSINESS UNIT RESULTS

The discussion below of second-quarter results includes adjusted segment income, which is a non-GAAP financial measure. The tables on pages 18 through 21 present a reconciliation of reported results to adjusted results.

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

USFE&G recognized second-quarter 2012 adjusted segment income of $337 million, compared to $297 million in the second quarter 2011, an increase of $0.09 per share.

USFE&G’s increased results were primarily driven by the implementation of revised customer rates in the Carolinas (+$0.14 per share), lower operation and maintenance

 

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costs primarily due to significant prior-year storm restoration costs (+$0.08 per share) and increased pricing and riders, including energy efficiency programs (+$0.03 per share).

These results were partially offset by higher planned depreciation expense (-$0.06 per share), less favorable weather (-$0.05 per share), and higher financing costs (-$0.02 per share).

International Energy

International Energy recognized second-quarter 2012 adjusted segment income of $105 million, compared to $127 million in the second quarter 2011, a decrease of $0.05 per share.

International Energy’s quarterly adjusted segment income results decreased primarily due to lower pricing in Central America (-$0.05 per share) and unfavorable average foreign exchange rates (-$0.03 per share). These results were partially offset by favorable pricing in Brazil (+$0.01 per share) as well as higher volumes and pricing in Peru (+$0.01 per share).

Commercial Power

Commercial Power recognized second-quarter 2012 adjusted segment income of $32 million, compared to $30 million in the second quarter 2011, reflecting no change in earnings per share contribution.

Favorable impacts for the quarter primarily included the non-bypassable stability charge under the new Electric Security Plan (ESP) in Ohio (+$0.05 per share), recovery of a Lehman Brothers receivable previously written-off (+$0.02 per share), lower

 

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operation and maintenance costs (+$0.02 per share) and the prior year impairment of the Vermillion gas-fired plant (+$0.01 per share).

Unfavorable impacts primarily included lower margins from the Midwest coal generation fleet resulting from the new ESP in Ohio (-$0.07 per share) and lower margins and volumes realized by Duke Energy Retail (-$0.03 per share).

Other

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

Other recognized a second-quarter 2012 adjusted net expense of $18 million, compared to $15 million in the second quarter 2011, a decrease of $0.01 per share.

ANALYST CONFERENCE CALL

An earnings conference call for analysts is scheduled for 11 a.m. ET Thursday, Aug. 2. The conference call will be hosted by Jim Rogers, chairman, president and chief executive officer, and Lynn Good, executive vice president and chief financial officer.

The call can be accessed via the investors’ section (http://www.duke-energy.com/investors/) of Duke Energy’s website or by dialing 800-930-1344 in the United States or 913-312-0652 outside the United States. The confirmation code is 9404035. Please call in 10 to 15 minutes prior to the scheduled start time. A replay of the conference call will be available until midnight ET, Aug. 12, 2012, by calling 888-203-1112 in the United States or 719-457-0820 outside the United States and using the code 9404035. A replay and transcript also will be available by accessing the investors’ section of the company’s website.

 

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NON-GAAP FINANCIAL MEASURES

The primary performance measure used by management to evaluate segment performance is segment income. Segment income is defined as income from continuing operations net of income attributable to non-controlling interests. In addition, direct interest expense and income taxes are included in segment income and certain governance costs are allocated to each of the segments.

Management believes segment income, which is the GAAP measure used to report segment results, is a good indicator of each segment’s operating performance as it represents the approximate net income contribution of Duke Energy’s business segments by incorporating the direct financing methods or capital structures of the business segments as well as the income tax attributes of the businesses and regions in which they operate.

Duke Energy’s management uses adjusted diluted EPS, which is a non-GAAP financial measure as it represents diluted EPS from continuing operations attributable to Duke Energy Corporation common shareholders, adjusted for the per-share impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment, as a measure to evaluate operations of the company. In addition, Duke Energy’s management calculates the EPS impact of segment income drivers to facilitate an understanding of the impacts of each income driver on consolidated adjusted diluted EPS.

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

 

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

Duke Energy also uses adjusted segment income and adjusted Other net expenses as a measure of historical and anticipated future segment and Other performance. Adjusted segment income and adjusted Other net expenses are non-GAAP financial measures, as they represent reported segment income and Other net expenses adjusted for special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Management believes that the presentation of adjusted segment income and adjusted Other net expenses provides useful information to investors, as it provides them an additional relevant comparison of a segment’s or Other’s performance across periods. When an EPS amount is provided for a segment income driver, the per share impact is derived by taking the before-tax amount of the item less income taxes based on the segment’s effective tax rate, divided by the Duke Energy weighted-average shares outstanding for the period. The most directly comparable GAAP measure for adjusted segment income or adjusted Other net expenses is reported segment income or Other net expenses, which represents segment income and Other net expenses from continuing operations, including any special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Due to the forward-looking nature of any forecasted adjusted segment income or adjusted Other net expenses and any related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items, the mark-to-market impacts of economic hedges in the Commercial Power segment, or any amounts that may be reported as discontinued operations or extraordinary items for future periods.

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

 

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

Forward-Looking Information

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

These forward-looking statements are identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook” and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to: State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements, as well as rulings that affect cost and investment recovery or have an impact on rate structures; the ability to recover eligible costs and earn an adequate return on investment through the regulatory process; costs and effects of legal and administrative proceedings, settlements, investigations and claims; industrial, commercial and residential growth or decline in Duke Energy Corporation’s (Duke Energy) service territories, customer base or customer usage patterns; additional competition in electric markets and continued industry consolidation; political and regulatory uncertainty in other countries in which Duke Energy conducts business; the influence of weather and other natural phenomena on Duke Energy operations, including the economic, operational and other effects of storms, hurricanes, droughts and tornadoes; the ability to recover in a timely manner, if at all, costs associated with future significant weather events through the regulatory process; the impact on Duke Energy’s facilities and business from a terrorist attack; the inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates; unscheduled generation outages, unusual maintenance or repairs and electric transmission system constraints; the performance of electric generation facilities and of projects undertaken by Duke Energy’s non-regulated businesses; the results of financing efforts, including Duke Energy’s ability to obtain financing on favorable terms, which can be affected by various factors, including Duke Energy’s credit ratings and general economic conditions; declines in the market prices of equity securities and resultant cash funding requirements for Duke Energy’s defined benefit pension plans and nuclear decommissioning trust funds; the level of creditworthiness of counterparties to Duke Energy’s transactions; employee workforce factors, including the potential inability to attract and retain key personnel; growth in opportunities for Duke Energy’s business units, including the timing and success of efforts to develop domestic and international

 

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power and other projects; construction and development risks associated with the completion of Duke Energy’s capital investment projects in existing and new generation facilities, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules, and satisfying operating and environmental performance standards, as well as the ability to recover costs from ratepayers in a timely manner or at all; the scope of necessary repairs of the delamination of Crystal River Unit 3 Nuclear Plant could prove more extensive than is currently identified, such repairs could prove not to be feasible resulting in early retirement of the unit, the cost of repair and/or replacement power could exceed estimates and insurance coverage or may not be recoverable through the regulatory process; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; the ability to maintain relationships with customers, employees or suppliers post merger; the ability to successfully integrate the Progress Energy businesses and realize cost savings and any other synergies expected from the merger; the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; the impact of compliance with material restrictions of conditions related to the Progress Energy merger imposed by regulators could exceed our expectations; the impact of potential goodwill impairments; the ability to successfully complete future merger, acquisition or divestiture plans.

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

 

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June 2012

QUARTERLY HIGHLIGHTS

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
(In millions, except per-share amounts and where noted)		2012				2011				2012				2011
Common Stock Data
Income from continuing operations attributable to Duke Energy Corporation common shareholders (a)
Basic		$	0.99			$	0.98			$	1.65			$	2.13
Diluted		$	0.99			$	0.98			$	1.65			$	2.13
Income from discontinued operations attributable to Duke Energy Corporation common shareholders (a)
Basic		$	—			$	—			$	—			$	—
Diluted		$	—			$	—			$	—			$	—
Net income attributable to Duke Energy Corporation common shareholders (a)
Basic		$	0.99			$	0.98			$	1.65			$	2.13
Diluted		$	0.99			$	0.98			$	1.65			$	2.13
Dividends Declared Per Share (a)		$	1.515			$	1.485			$	2.265			$	2.22
Weighted-Average Shares Outstanding (a)
Basic			446				444				446				444
Diluted			446				444				446				444
INCOME
Operating Revenues		$	3,577			$	3,534			$	7,207			$	7,197
Total Reportable Segment Income			470				454				779				972
Other Net Expense			(25	)			(19	)			(41	)			(26	)
(Loss) Income from Discontinued Operations, net of tax			(1	)			—				1				—
Net Income Attributable to Duke Energy Corporation		$	444			$	435			$	739			$	946
CAPITALIZATION
Total Common Equity											51	%			54	%
Total Debt											49	%			46	%
Total Debt										$	21,386			$	18,975
Book Value Per Share (a)										$	50.46			$	51.14
Actual Shares Outstanding (a)											446				444
CAPITAL AND INVESTMENT EXPENDITURES
U.S. Franchised Electric and Gas		$	795			$	845			$	1,590			$	1,756
Commercial Power			411				81				620				106
International Energy			9				30				24				58
Other			39				24				63				71
Total Capital and Investment Expenditures		$	1,254			$	980			$	2,297			$	1,991
SEGMENT INCOME BY BUSINESS SEGMENT
U.S. Franchised Electric and Gas (b)		$	337			$	297			$	473			$	638
Commercial Power			28				30				59				79
International Energy			105				127				247				255
Total Reportable Segment Income			470				454				779				972
Other Net Expense			(25	)			(19	)			(41	)			(26	)
Total Reportable Segment Income and Other Net Expense		$	445			$	435			$	738			$	946

 

(a)	Reflects the impact of the 1-for-3 reverse stock split on July 2, 2012. Amounts do not reflect the additional shares issued to complete the Progress Energy merger.

(b)	For the six months ended June 30, 2012, includes impairment and other charges of $268 million recorded in the first quarter of 2012 related to the Edwardsport IGCC project (net of tax of $152 million).

 

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June 2012

QUARTERLY HIGHLIGHTS

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
(In millions, except where noted)		2012				2011				2012				2011
U.S. FRANCHISED ELECTRIC AND GAS
Operating Revenues		$	2,697			$	2,549			$	5,365			$	5,232
Operating Expenses (a)			2,099				2,042				4,481				4,123
Gains on Sales of Other Assets, net			3				1				7				1
Operating Income			601				508				891				1,110
Other Income and Expenses			62				67				124				129
Interest Expense			143				134				289				274
Income Before Income Taxes			520				441				726				965
Income Tax Expense (b)			183				144				253				327
Segment Income		$	337			$	297			$	473			$	638
Depreciation and Amortization		$	362			$	333			$	730			$	680
Duke Energy Carolinas GWh sales			19,574				20,210				39,035				40,794
Duke Energy Midwest GWh sales			14,234				13,917				28,557				28,689
Net Proportional MW Capacity in Operation											27,145				26,907
COMMERCIAL POWER
Operating Revenues		$	502			$	595			$	1,082			$	1,239
Operating Expenses			460				550				990				1,114
Gains on Sales of Other Assets, net			1				11				1				13
Operating Income			43				56				93				138
Other Income and Expenses			17				9				25				17
Interest Expense			22				22				41				46
Income Before Income Taxes			38				43				77				109
Income Tax Expense			10				6				18				23
Less: Income Attributable to Noncontrolling Interests			—				7				—				7
Segment Income		$	28			$	30			$	59			$	79
Depreciation and Amortization		$	58			$	58			$	114			$	117
Actual Coal-fired Plant Production, GWh			3,299				3,716				7,367				8,407
Actual Gas-fired Plant Production, GWh			4,513				2,512				9,096				5,221
Actual Renewable Plant Production, GWh			786				844				1,784				1,741
Net Proportional MW Capacity in Operation											7,757				8,273
INTERNATIONAL ENERGY
Operating Revenues		$	397			$	406			$	799			$	754
Operating Expenses			257				265				502				476
Operating Income			140				141				297				278
Other Income and Expenses			36				55				90				114
Interest Expense			21				11				37				27
Income Before Income Taxes			155				185				350				365
Income Tax Expense			46				55				95				103
Less: Income Attributable to Noncontrolling Interests			4				3				8				7
Segment Income		$	105			$	127			$	247			$	255
Depreciation and Amortization		$	25			$	22			$	49			$	43
Sales, GWh			4,882				4,516				9,956				9,303
Proportional MW Capacity in Operation											4,225				4,190
OTHER
Operating Revenues		$	16			$	9			$	31			$	20
Operating Expenses			14				27				30				53
(Losses) Gains on Sales of Other Assets, net			—				(8	)			(1	)			—
Operating Income (Loss)			2				(26	)			—				(33	)
Other Income and Expenses			(6	)			26				(1	)			48
Interest Expense			46				36				89				75
(Loss) Income Before Income Taxes			(50	)			(36	)			(90	)			(60	)
Income Tax (Benefit) Expense			(25	)			(13	)			(49	)			(28	)
Less: Income (Loss) Attributable to Noncontrolling Interests			—				(4	)			—				(6	)
Net Expense		$	(25	)		$	(19	)		$	(41	)		$	(26	)
Depreciation and Amortization		$	30			$	24			$	61			$	51

 

(a)	For the six months ended June 30, 2012, includes a pre-tax impairment and other charges of $420 million recorded in the first quarter of 2012 related to the Edwardsport IGCC project.

(b)	For the six months ended June 30, 2012, includes a tax benefit of $152 million recorded in the first quarter of 2012 on the impairment and other charges related to the Edwardsport IGCC project.

 

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DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per-share amounts)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2012				2011				2012				2011
Operating Revenues
Regulated electric		$	2,628			$	2,576			$	5,129			$	5,149
Non-regulated electric, natural gas, and other			868				864				1,826				1,719
Regulated natural gas			81				94				252				329
Total operating revenues			3,577				3,534				7,207				7,197
Operating Expenses
Fuel used in electric generation and purchased power - regulated			849				834				1,626				1,646
Fuel used in electric generation and purchased power - non-regulated			396				388				844				764
Cost of natural gas and coal sold			42				63				144				214
Operation, maintenance and other			862				959				1,608				1,839
Depreciation and amortization			475				437				954				891
Property and other taxes			171				169				355				355
Impairment charges			—				9				402				9
Total operating expenses			2,795				2,859				5,933				5,718
Gains on Sales of Other Assets and Other, net			4				4				7				14
Operating Income			786				679				1,281				1,493
Other Income and Expenses
Equity in earnings of unconsolidated affiliates			40				48				85				80
Impairments and gains on sales of unconsolidated affiliates			(1	)			12				(6	)			14
Other income and expenses, net			70				97				159				214
Total other income and expenses			109				157				238				308
Interest Expense			232				203				456				422
Income From Continuing Operations Before Income Taxes			663				633				1,063				1,379
Income Tax Expense from Continuing Operations			214				192				317				425
Income From Continuing Operations			449				441				746				954
(Loss) Income From Discontinued Operations, net of tax			(1	)			—				1				—
Net Income			448				441				747				954
Less: Net Income Attributable to Noncontrolling Interests			4				6				8				8
Net Income Attributable to Duke Energy Corporation		$	444			$	435			$	739			$	946
Earnings Per Share - Basic and Diluted
Income from continuing operations attributable to Duke Energy Corporation common shareholders
Basic		$	0.99			$	0.98			$	1.65			$	2.13
Diluted		$	0.99			$	0.98			$	1.65			$	2.13
Income from discontinued operations attributable to Duke Energy Corporation common shareholders
Basic		$	—			$	—			$	—			$	—
Diluted		$	—			$	—			$	—			$	—
Net Income attributable to Duke Energy Corporation common shareholders
Basic		$	0.99			$	0.98			$	1.65			$	2.13
Diluted		$	0.99			$	0.98			$	1.65			$	2.13
Dividends declared per share		$	1.515			$	1.485			$	2.265			$	2.22
Weighted-average shares outstanding
Basic			446				444				446				444
Diluted			446				444				446				444

 

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DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED

BALANCE SHEETS

(Unaudited)

(In millions)

 

		June 30, 2012				December 31, 2011
ASSETS
Current Assets
Cash and cash equivalents		$	1,526			$	2,110
Short-term investments			234				190
Receivables (net of allowance for doubtful accounts of $16 at June 30, 2012 and $35 at December 31, 2011)			610				784
Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $43 at June 30, 2012 and $40 at December 31, 2011)			1,233				1,157
Inventory			1,762				1,588
Other			1,122				1,051
Total current assets			6,487				6,880
Investments and Other Assets
Investments in equity method unconsolidated affiliates			450				460
Nuclear decommissioning trust funds			2,204				2,060
Goodwill			3,842				3,849
Intangibles, net			357				363
Notes receivable			72				62
Restricted other assets of variable interest entities			133				135
Other			1,894				2,231
Total investments and other assets			8,952				9,160
Property, Plant and Equipment
Cost			61,458				60,377
Cost, variable interest entities			1,357				913
Accumulated depreciation and amortization			(19,101	)			(18,709	)
Generation facilities to be retired, net			73				80
Net property, plant and equipment			43,787				42,661
Regulatory Assets and Deferred Debits
Regulatory assets			3,646				3,672
Other			159				153
Total regulatory assets and deferred debits			3,805				3,825
Total Assets		$	63,031			$	62,526

 

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DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS - (Continued)

(Unaudited)

(In millions, except per-share amounts)

 

		June 30, 2012				December 31, 2011
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable		$	1,160			$	1,433
Notes payable and commercial paper			793				154
Non-recourse notes payable of variable interest entities			269				273
Taxes accrued			359				431
Interest accrued			254				252
Current maturities of long-term debt			1,870				1,894
Other			1,434				1,091
Total current liabilities			6,139				5,528
Long-term Debt			17,539				17,730
Non-recourse long-term debt of variable interest entities			915				949
Deferred Credits and Other Liabilities
Deferred income taxes			7,914				7,581
Investment tax credits			379				384
Accrued pension and other post-retirement benefit costs			829				856
Asset retirement obligations			1,999				1,936
Regulatory liabilities			2,981				2,919
Other			1,820				1,778
Total deferred credits and other liabilities			15,922				15,454
Commitments and Contingencies
Equity
Common Stock, $0.001 par value, 2 billion shares authorized; 446 million and 444 million shares outstanding at June 30, 2012 and December 31, 2011, respectively			1				1
Additional paid-in capital			21,140				21,132
Retained earnings			1,598				1,873
Accumulated other comprehensive loss			(320	)			(234	)
Total Duke Energy Corporation shareholders’ equity			22,419				22,772
Noncontrolling interests			97				93
Total equity			22,516				22,865
Total Liabilities and Equity		$	63,031			$	62,526

 

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DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

 

		Six Months Ended June 30,
		2012				2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$	747			$	954
Adjustments to reconcile net income to net cash provided by operating activities:			1,255				763
Net cash provided by operating activities			2,002				1,717
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities			(2,391	)			(1,838	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in financing activities			(195	)			(187	)
Net decrease in cash and cash equivalents			(584	)			(308	)
Cash and cash equivalents at beginning of period			2,110				1,670
Cash and cash equivalents at end of period		$	1,526			$	1,362

 

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Duke Energy Carolinas

Quarterly Highlights

Supplemental Franchised Electric Information

June 2012

 

		Three Months  Ended June 30,												Six Months  Ended June 30,
		2012				2011				% Inc.(Dec.)				2012				2011				% Inc.(Dec.)
GWH Sales
Residential			5,531				6,027				(8.2	%)			12,561				14,199				(11.5	%)
General Service			6,755				6,760				(0.1	%)			13,146				13,248				(0.8	%)
Industrial			5,391				5,328				1.2	%			10,270				10,117				1.5	%
Other Energy Sales			72				72				—				144				144				—
Total Regular Sales Billed			17,749				18,187				(2.4	%)			36,121				37,708				(4.2	%)
Special Sales			1,212				1,484				(18.3	%)			2,473				3,071				(19.5	%)
Total Electric Sales			18,961				19,671				(3.6	%)			38,594				40,779				(5.4	%)
Unbilled Sales			613				539				13.7	%			441				15				n/a
Total Electric Sales - Carolinas			19,574				20,210				(3.1	%)			39,035				40,794				(4.3	%)
Average Number of Customers
Residential			2,051,319				2,039,057				0.6	%			2,049,840				2,039,006				0.5	%
General Service			336,781				334,429				0.7	%			336,216				333,915				0.7	%
Industrial			6,770				7,000				(3.3	%)			6,801				7,026				(3.2	%)
Other Energy Sales			14,307				14,190				0.8	%			14,305				14,182				0.9	%
Total Regular Sales			2,409,177				2,394,676				0.6	%			2,407,162				2,394,129				0.5	%
Special Sales			24				27				(12.3	%)			23				26				(10.3	%)
Total Average Number of Customers - Carolinas			2,409,201				2,394,703				0.6	%			2,407,185				2,394,155				0.5	%
Heating and Cooling Degree Days
Actual
Heating Degree Days			161				166				(3.2	%)			1,480				1,935				(23.5	%)
Cooling Degree Days			526				628				(16.3	%)			558				640				(12.8	%)
Variance from Normal
Heating Degree Days			(22.3	%)			(24.0	%)			n/a				(24.6	%)			0.2	%			n/a
Cooling Degree Days			5.4	%			31.2	%			n/a				10.6	%			32.0	%			n/a

 

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Duke Energy Midwest

Quarterly Highlights

Supplemental Franchised Electric Information

June 2012

 

		Three Months  Ended June 30,												Six Months  Ended June 30,
		2012				2011				% Inc.(Dec.)				2012				2011				% Inc.(Dec.)
GWH Sales
Residential			3,595				3,807				(5.6	%)			8,349				9,207				(9.3	%)
General Service			4,325				4,360				(0.8	%)			8,492				8,739				(2.8	%)
Industrial			4,058				3,979				2.0	%			8,012				7,848				2.1	%
Other Energy Sales			42				42				—				84				84				—
Total Regular Electric Sales Billed			12,020				12,188				(1.4	%)			24,937				25,878				(3.6	%)
Special Sales			1,642				1,589				3.3	%			3,163				3,166				(0.1	%)
Total Electric Sales Billed - Midwest			13,662				13,777				(0.8	%)			28,100				29,044				(3.3	%)
Unbilled Sales			572				140				308.6	%			457				(355	)			228.7	%
Total Electric Sales - Midwest			14,234				13,917				2.3	%			28,557				28,689				(0.5	%)
Average Number of Customers
Residential			1,415,814				1,408,052				0.6	%			1,418,058				1,411,020				0.5	%
General Service			185,690				184,918				0.4	%			185,673				184,737				0.5	%
Industrial			5,309				5,349				(0.7	%)			5,321				5,361				(0.7	%)
Other Energy			4,325				4,242				2.0	%			4,313				4,231				1.9	%
Total Regular Sales			1,611,138				1,602,561				0.5	%			1,613,365				1,605,349				0.5	%
Special Sales			14				12				16.7	%			13				12				8.3	%
Total Average Number Electric Customers - Midwest			1,611,152				1,602,573				0.5	%			1,613,378				1,605,361				0.5	%
Heating and Cooling Degree Days
Actual
Heating Degree Days			172				214				(19.6	%)			1,746				2,427				(28.1	%)
Cooling Degree Days			460				372				23.7	%			494				376				31.4	%
Variance from Normal
Heating Degree Days			(24.2	%)			(9.3	%)			n/a				(27.6	%)			3.3	%			n/a
Cooling Degree Days			37.3	%			17.4	%			n/a				46.6	%			17.9	%			n/a

Note: Includes data for Duke Energy Indiana, Duke Energy Ohio and Duke Energy Kentucky

 

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DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Three Months Ended June 30, 2011

(Dollars in millions, except per-share amounts)

 

						Special Items
		Adjusted Earnings				Costs to Achieve, Progress Merger				Reported Earnings
SEGMENT INCOME
U.S. Franchised Electric and Gas		$	297			$	—			$	297
Commercial Power			30				—				30
International Energy			127				—				127
Total Reportable Segment Income			454				—				454
Other			(15	)			(4	) A			(19	)
Net Income (Loss) Attributable to Duke Energy Corporation		$	439			$	(4	)		$	435
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC		$	0.99			$	(0.01	)		$	0.98
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED		$	0.99			$	(0.01	)		$	0.98

 

A -	Net of $1 million tax benefit. Recorded in Operation, maintenance and other (Operating Expenses) on the Condensed Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic			444
Diluted			444

 

*

Represents the mark-to-market impact of derivative contracts in the non-native portfolio, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge or regulatory accounting, used in Duke Energy’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods.

 

18

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DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Six Months Ended June 30, 2011

(Dollars in millions, except per-share amounts)

 

						Special Items
		Adjusted Earnings				Costs to Achieve, Progress Merger				Economic Hedges  (Mark- to-Market) *				Total Adjustments				Reported Earnings
SEGMENT INCOME
U.S. Franchised Electric and Gas		$	638			$	—			$	—			$	—			$	638
Commercial Power			82				—				(3	) B			(3	)			79
International Energy			255				—				—				—				255
Total Reportable Segment Income			975				—				(3	)			(3	)			972
Other			(13	)			(13	) A			—				(13	)			(26	)
Net Income (Loss) Attributable to Duke Energy Corporation		$	962			$	(13	)		$	(3	)		$	(16	)		$	946
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC		$	2.17			$	(0.03	)		$	(0.01	)		$	(0.04	)		$	2.13
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED		$	2.17			$	(0.03	)		$	(0.01	)		$	(0.04	)		$	2.13

 

A -	Net of $3 million tax benefit. Recorded in Operation, maintenance and other (all Operating Expenses) on the Condensed Consolidated Statements of Operations.

B -

Net of $1 million tax benefit. $2 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $2 million loss recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) on the Condensed Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic			444
Diluted			444

 

*

Represents the mark-to-market impact of derivative contracts, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge or regulatory accounting, used in Duke Energy Corporation’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, gas, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods.

 

19

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DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Three Months Ended June 30, 2012

(Dollars in millions, except per-share amounts)

 

						Special Items (Note 1)
		Adjusted Earnings				Costs to Achieve, Progress Merger				Economic Hedges (Mark- to-Market) *				Discontinued Operations				Total Adjustments				Reported Earnings
SEGMENT NET INCOME FROM CONTINUING OPERATIONS ATTRIBUTABLE TO DUKE ENERGY CORPORATION
U.S. Franchised Electric and Gas		$	337			$	—			$	—			$	—			$	—			$	337
Commercial Power			32				—				(4	) B			—				(4	)			28
International Energy			105				—				—				—				—				105
Total Reportable Segment Income			474				—				(4	)			—				(4	)			470
Other			(18	)			(7	) A			—				—				(7	)			(25	)
Total Reportable Segment Income and Other Net Expense		$	456			$	(7	)		$	(4	)		$	—			$	(11	)			445
Discontined Operations			—												(1	) C			(1	)			(1	)
Net Income (Loss) Attributable to Duke Energy Corporation		$	456			$	(7	)		$	(4	)		$	(1	)		$	(12	)		$	444
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC		$	1.02			$	(0.02	)		$	(0.01	)		$	—			$	(0.03	)		$	0.99
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED		$	1.02			$	(0.02	)		$	(0.01	)		$	—			$	(0.03	)		$	0.99

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

 

A -	Net of insignificant tax benefit. Recorded in Operation, maintenance and other (Operating Expenses) on the Condensed Consolidated Statements of Operations.

B -	Net of $2 million tax benefit. Recorded within Non-regulated electric, natural gas, and other (Operating Revenues) on the Condensed Consolidated Statements of Operations.

C -	Recorded in Income (Loss) From Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic			446
Diluted			446

 

*

Represents the mark-to-market impact of derivative contracts, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge or regulatory accounting, used in Duke Energy Corporation’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, gas, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods.

 

20

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DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Six Months Ended June 30, 2012

(Dollars in millions, except per-share amounts)

 

						Special Items
		Adjusted Earnings				Costs to Achieve, Progress Merger				Voluntary Opportunity Plan Deferral				Edwardsport Impairment				Economic Hedges (Mark- to-Market)*				Discontinued Operations				Total Adjustments				Reported Earnings
SEGMENT INCOME
U.S. Franchised Electric and Gas		$	681			$	—			$	60	C		$	(268	) E		$	—			$	—			$	(208	)		$	473
Commercial Power			62				—				—				—				(3	) B			—				(3	)			59
International Energy			247				—				—				—				—				—				—				247
Total Reportable Segment Income			990				—				60				(268	)			(3	)			—				(211	)			779
Other			(28	)			(13	) A			—				—				—				—				(13	)			(41	)
Total Reportable Segment Income and Other Net Expense			962				(13	)			60				(268	)			(3	)			—				(224	)			738
Discontinued Operations			—				—				—				—				—				1	D			1				1
Net Income (Loss) Attributable to Duke Energy Corporation		$	962			$	(13	)		$	60			$	(268	)		$	(3	)		$	1			$	(223	)		$	739
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC		$	2.16			$	(0.03	)		$	0.13			$	(0.60	)		$	(0.01	)		$	—			$	(0.51	)		$	1.65
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED		$	2.16			$	(0.03	)		$	0.13			$	(0.60	)		$	(0.01	)		$	—			$	(0.51	)		$	1.65

 

A -	Net of $2 million tax benefit. Recorded in Operation, maintenance and other (Operating Expenses) on the Condensed Consolidated Statements of Operations.

B -

Net of $1 million tax benefit. $3 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $1 million loss recorded within Fuel used in electric generation and purchased power- non-regulated (Operating Expenses) on the Condensed Consolidated Statements of Operations.

C -	Net of $39 million tax expense. $101 million revenue recorded in Operation, maintenance and other and $2 million expense recorded in Depreciation and amortization (all Operating Expenses) on the Condensed Consolidated Statements of Operations.

D -	Recorded in Income (Loss) From Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations.

E -	Net of $152 million tax benefit. $400 million recorded in Impairment charges and $20 million recorded within within Operation, maintenance and other (all Operating Expenses) on the Condensed Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic			446
Diluted			446

 

*

Represents the mark-to-market impact of derivative contracts, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge or regulatory accounting, used in Duke Energy Corporation’s hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, gas, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods.

 

21