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Duke Energy Reports Full-Year and Fourth-Quarter 2007 Results- 2007 ongoing diluted earnings per share of $1.25 versus $0.99 in 2006; results exceed 2007 employee incentive target of $1.15, based on ongoing diluted earnings per share
CHARLOTTE, N.C., Feb. 5 /PRNewswire-FirstCall/ -- Duke Energy (NYSE: DUK) today reported ongoing diluted earnings per share (EPS) for 2007, which excludes special items and discontinued operations, of $1.25, compared to $0.99 in 2006. The higher annual ongoing results reflect improved performance by the company's core businesses and a full year of results from the former Cinergy assets, compared to only 9 months in 2006. Major drivers included favorable weather and increased wholesale volumes in U.S. Franchised Electric and Gas (USFE&G); favorable timing of recoveries of fuel and purchased power costs in Commercial Power; and favorable pricing in Latin America for Duke Energy International (DEI). These results were offset primarily by higher operation and maintenance costs in USFE&G and Commercial Power, and lower results at Crescent Resources. The company reported 2007 diluted EPS of $1.21 or $1,528 million in net income, substantially all from continuing operations. This compares to $1.57 of reported diluted EPS in 2006, or $1,863 million in net income, which includes $0.91 of EPS from continuing operations and $0.66 of EPS from discontinued operations (primarily the natural gas operations that were spun off in January 2007 to become Spectra Energy). "We had a strong year. I'm extremely proud of our employees and their many accomplishments," said James E. Rogers, Duke Energy chairman, president and CEO. "We had great financial results and excellent operations and made significant progress on our legislative and regulatory initiatives." For fourth quarter 2007, ongoing diluted EPS was $0.27, compared to $0.23 for fourth quarter 2006. The higher quarterly ongoing results reflect improved performance by all of the company's business segments. Reported EPS for fourth quarter 2007 was $0.21, compared to $0.31 for fourth quarter 2006.
Special items affecting Duke Energy's diluted EPS for the quarters
include:
(In millions, except 4Q2007 4Q2006
per-share amounts) Pre-Tax Tax EPS EPS
Amount Effect Impact Impact
Fourth-quarter 2007
-- Costs to Achieve, Cinergy Merger $(16) $5 $(0.01) --
-- Settlement Reserve Adjustment $25 $(9) $0.01 --
Fourth-quarter 2006
-- Settlement Reserves $(165) $58 -- $(0.08)
-- Adjustment to Impairment of
Campeche Investment $5 -- -- --
-- Costs to Achieve, Cinergy Merger $(31) $11 -- $(0.02)
-- Tax Adjustments -- $27 -- $0.02
Total diluted EPS impact -- $(0.08)
Reconciliation of reported to ongoing diluted EPS for the quarters:
4Q2007 4Q2006
EPS EPS
Diluted EPS from continuing operations, as reported $0.27 $0.15
Diluted EPS from discontinued operations, as reported $(0.06) $0.16
Diluted EPS, as reported $0.21 $0.31
Adjustments to reported EPS:
-- Diluted EPS from discontinued operations $0.06 $(0.16)
-- Diluted EPS impact of special items -- $0.08
Diluted EPS, ongoing $0.27 $0.23
Reconciliation of reported to ongoing diluted EPS for the annual periods:
2007 2006
EPS EPS
Diluted EPS from continuing operations, as reported $1.22 $0.91
Diluted EPS from discontinued operations, as reported $(0.01) $0.66
Diluted EPS, as reported $1.21 $1.57
Adjustments to reported EPS:
-- Diluted EPS from discontinued operations $0.01 $(0.66)
-- Diluted EPS impact of special items $0.03 $0.08
Diluted EPS, ongoing $1.25 $0.99
BUSINESS UNIT RESULTS
U.S. Franchised Electric and Gas (USFE&G) USFE&G reported fourth-quarter 2007 segment EBIT from continuing operations of $519 million, compared to $423 million in the prior year. The EBIT increase over the previous year's quarter was primarily driven by the substantial completion of rate credits related to the Cinergy merger, decreased clean air amortization, favorable weather, retail rate increases in the Midwest, and additional long-term wholesale contracts. These increases were partially offset by higher operation and maintenance costs related to employee incentives and increased plant maintenance, as well as a charge to write-off certain of the GridSouth costs as required by the North Carolina Utilities Commission order related to the North Carolina 2007 base rate case. Full-year 2007 segment EBIT from continuing operations for USFE&G was $2,305 million in 2007, compared to $1,811 million in 2006. Commercial Power Commercial Power reported fourth-quarter 2007 segment EBIT from continuing operations of $38 million, compared to a $19 million loss in the fourth quarter 2006. Commercial Power's improved results for the quarter were due primarily to a reduction in net purchase accounting charges associated with the Cinergy merger, favorable timing of recoveries of fuel and purchased power costs, and improved mark-to-market results from economic hedges due to increasing coal prices. The Midwest gas-fired assets continued to deliver improved results due to increased generation and higher capacity revenues. The contribution was partially offset by higher expenses from increased plant maintenance in the quarter. Results for the synfuel operations are now presented in discontinued operations following the wind down of those operations at the end of 2007. Full-year 2007 segment EBIT from continuing operations for Commercial Power was $278 million in 2007, compared to segment EBIT of $47 million in 2006. Duke Energy International (DEI) DEI reported fourth-quarter 2007 segment EBIT from continuing operations of $105 million, compared to a segment EBIT loss of $15 million in the fourth quarter 2006. DEI's improved results were driven primarily by the absence of a $100 million provision for LNG litigation from the prior year, as well as higher margins at National Methanol, partially offset by less favorable hydrology in Argentina. Full-year 2007 segment EBIT from continuing operations for DEI was $388 million in 2007, compared to segment EBIT of $163 million in 2006. Crescent Resources Crescent Resources reported fourth-quarter 2007 segment EBIT from continuing operations of $32 million, compared to $17 million in the previous year's quarter. The higher results for the quarter were due to increased legacy land sales and a gain on the sale of the Piedmont Town Center in Charlotte, N.C. These increased results were partially offset by impairment losses on certain residential developments. Full-year 2007 segment EBIT from continuing operations for Crescent Resources was $61 million in 2007, compared with $532 million in 2006. The lower current year results reflect the September 2006 change from 100 percent ownership to an effective 50-50 joint venture. The 2006 results also reflect a $246 million gain on the creation of the joint venture. Other Other primarily includes costs associated with corporate governance, merger costs-to-achieve and Duke Energy's captive insurance company. Other reported a fourth-quarter 2007 net expense from continuing operations of $83 million, compared to $182 million in the prior year's quarter. The reduction was primarily related to reserves for contract settlement negotiations. The full-year 2007 net expense from continuing operations for Other was $277 million in 2007, compared with a $537 million net expense from continuing operations in 2006. Discontinued Operations In fourth quarter 2007, Discontinued Operations had an after-tax loss of $70 million, compared to fourth quarter 2006 after-tax income of $195 million. The variance is primarily due to the presentation of the fourth quarter 2006 results for the natural gas businesses spun off in January 2007 as discontinued operations. Discontinued Operations had an after-tax loss of $22 million for the full year 2007, compared with after-tax income of $783 million in 2006. INTEREST EXPENSE Interest expense from continuing operations was $186 million for the fourth quarter 2007, compared to $163 million for the fourth quarter 2006. The increase is primarily due to higher interest expense related to DEI. Interest expense from continuing operations was $685 million for the full year 2007, compared to $632 million for the full year 2006. INCOME TAX Income tax expense from continuing operations was $133 million for the fourth quarter 2007, compared to income tax benefit from continuing operations of $28 million for the fourth quarter 2006. The increase reflects higher pre- tax income from continuing operations in the fourth quarter 2007, as well as the effect of certain favorable income tax items recorded in the fourth quarter 2006. The tax benefit in fourth quarter 2006 was primarily due to favorable tax settlements, tax benefits related to the impairment of the investment in Bolivia, and the reversal of previously recognized taxes related to dividends on foreign operations. Income tax expense from continuing operations was $728 million for the full year 2007, compared to $450 million for the full year 2006. Pre-tax income from continuing operations increased $748 million for the full year 2007, compared with the full year 2006. In addition, the effective tax rate for the full year 2007 was approximately 32 percent, an increase from approximately 29 percent for the full year 2006. The lower tax rate in 2006 reflects the favorable tax matters for the fourth quarter 2006 discussed above. NON-GAAP FINANCIAL MEASURES The primary performance measure used by management to evaluate segment performance is segment EBIT from continuing operations, which at the segment level represents all profits from continuing operations (both operating and nonoperating), including any equity in earnings of unconsolidated affiliates, before deducting interest and taxes, and is net of the minority interest expense related to those profits. Management believes segment EBIT from continuing operations, which is the GAAP measure used to report segment results, is a good indicator of each segment's operating performance as it represents the results of Duke Energy's ownership interests in continuing operations without regard to financing methods or capital structures. Duke Energy's management uses ongoing diluted EPS, which is a non-GAAP financial measure as it represents diluted EPS from continuing operations, adjusted for the impact of special items, as a measure to evaluate operations of the company. Special items represent certain charges and credits, which management believes will not be recurring on a regular basis. Management believes that the presentation of ongoing diluted EPS provides useful information to investors, as it allows them to more accurately compare the company's ongoing performance across periods. Ongoing diluted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measure for ongoing diluted EPS is reported diluted EPS from continuing operations, which includes the impact of special items. Due to the forward-looking nature of ongoing diluted EPS for future periods, information to reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measure is not available at this time, as the company is unable to forecast special items for future periods. Duke Energy also uses ongoing segment (including ongoing equity earnings for Crescent Resources) and Other net expenses, including diluted-EPS- equivalent amounts, as a measure of historical and anticipated future segment and other performance. When used for future periods, ongoing segment EBIT and Other net expenses may also include any amounts that may be reported as discontinued operations. Ongoing segment EBIT and Other net expenses are non- GAAP financial measures, as they represent reported segment EBIT and Other net expenses adjusted for special items. Management believes that the presentation of ongoing segment EBIT and Other net expenses provides useful information to investors, as it allows them to more accurately compare a segment's or Other's ongoing performance across all periods. The most directly comparable GAAP measure for ongoing segment EBIT or Other net expenses is reported segment EBIT or Other net expenses, which represents segment EBIT and Other net expenses from continuing operations, including any special items. Due to the forward-looking nature of any forecasted ongoing segment EBIT or Other net expenses and any related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items or any amounts that may be reported as discontinued operations for future periods. Duke Energy, one of the largest electric power companies in the United States, supplies and delivers energy to approximately 4 million U.S. customers. The company has approximately 36,000 megawatts of electric generating capacity in the Midwest and the Carolinas, and natural gas distribution services in Ohio and Kentucky. In addition, Duke Energy has more than 4,000 megawatts of electric generation in Latin America, and is a joint- venture partner in a U.S. real estate company. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: http://www.duke-energy.com. An earnings conference call for analysts is scheduled for 10 a.m. ET today. The conference call can be accessed via the investors' section of Duke Energy's Web site, or by dialing 877-719-9788 in the United States or 719-325- 4762 outside the United States. The confirmation code is 4012588. Please call in five to 10 minutes prior to the scheduled start time. A replay of the conference call will be available until midnight ET, Feb. 15, 2008, by dialing 888-203-1112 with a confirmation code of 4012588. The international replay number is 719-457-0820, confirmation code 4012588. A replay and transcript also will be available by accessing the investors' section of the company's Web site. The presentation may include certain non-GAAP financial measures as defined under SEC rules. In such event, a reconciliation of those measures to the most directly comparable GAAP measures will be available on Duke Energy's investor relations Web site at: http://www.duke-energy.com/investors/publications/gaap-reconciliation.asp . Forward-looking statement This release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management's beliefs and assumptions. These forward-looking statements are identified by terms and phrases such as "anticipate," "believe," "intend," "estimate," "target," "expect," "continue," "should," "could," "may," "plan," "project," "predict," "will," "potential," "forecast," and similar expressions. Forward- looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to: State, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements; state, federal and foreign legislation and regulatory initiatives that affect cost and investment recovery, or have an impact on rate structures; costs and effects of legal and administrative proceedings, settlements, investigations and claims; industrial, commercial and residential growth in Duke Energy Corporation's (Duke Energy) service territories; additional competition in electric markets and continued industry consolidation; political and regulatory uncertainty in other countries in which Duke Energy conducts business; the influence of weather and other natural phenomena on Duke Energy operations, including the economic, operational and other effects of hurricanes, droughts, ice storms and tornadoes; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates; unscheduled generation outages, unusual maintenance or repairs and electric transmission system constraints; the results of financing efforts, including Duke Energy's ability to obtain financing on favorable terms, which can be affected by various factors, including Duke Energy's credit ratings and general economic conditions; declines in the market prices of equity securities and resultant cash funding requirements for Duke Energy's defined benefit pension plans; the level of credit worthiness of counterparties to Duke Energy's transactions; employee workforce factors, including the potential inability to attract and retain key personnel; growth in opportunities for Duke Energy's business units, including the timing and success of efforts to develop domestic and international power and other projects; the performance of electric generation and of projects undertaken by Duke Energy's non-regulated businesses; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; and the ability to successfully complete merger, acquisition or divestiture plans. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Duke Energy has described. Duke Energy undertakes no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise.
December 2007
QUARTERLY HIGHLIGHTS
(Unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
-------------- --------------
2007 2006 2007 2006
(In millions, except per share (a) (a)
amounts and where noted)
------------------------------------------------------------------------
COMMON STOCK DATA
Earnings Per Share (from
continuing operations)
Basic $0.27 $0.15 $1.23 $0.92
Diluted $0.27 $0.15 $1.22 $0.91
(Loss) Earnings per Share
(from discontinued operations)
Basic $(0.06) $0.16 $(0.02) $0.67
Diluted $(0.06) $0.16 $(0.01) $0.66
Earnings Per Share
Basic $0.21 $0.31 $1.21 $1.59
Diluted $0.21 $0.31 $1.21 $1.57
Dividends Per Share $0.22 $0.32 $0.86 $1.26
Weighted-Average Shares
Outstanding
Basic 1,262 1,256 1,260 1,170
Diluted 1,266 1,265 1,266 1,188
------------------------------------------------------------------------
INCOME
Operating Revenues $3,031 $2,822 $12,720 $10,607
====== ====== ======= =======
Total Reportable Segment EBIT 694 406 3,032 2,553
Other EBIT (83) (182) (277) (537)
Interest Expense (186) (163) (685) (632)
Interest Income and Other (b) 49 103 208 146
Income Tax Expense from
Continuing Operations (133) 28 (728) (450)
(Loss) Income from Discontinued
Operations, net of tax (70) 195 (22) 783
------ ------ ------- -------
Net Income $271 $387 $1,528 $1,863
====== ====== ======= =======
------------------------------------------------------------------------
CAPITALIZATION
Total Common Equity 64% 55%
Minority Interests 1% 2%
Total Debt 35% 43%
------------------------------------------------------------------------
Total Debt $11,766 $20,173
Book Value Per Share $16.81 $20.77
Actual Shares Outstanding 1,262 1,257
------------------------------------------------------------------------
CAPITAL AND INVESTMENT
EXPENDITURES
U.S. Franchised Electric
and Gas $773 $924 $2,613 $2,381
Natural Gas Transmission - 287 - 790
Commercial Power 119 59 442 209
International Energy 42 15 74 58
Crescent (c) - - - 507
Other 49 13 153 131
------ ------ ------- -------
Total Capital and Investment
Expenditures $983 $1,298 $3,282 $4,076
====== ====== ======= =======
------------------------------------------------------------------------
EBIT BY BUSINESS SEGMENT
U.S. Franchised Electric
and Gas $519 $423 $2,305 $1,811
Commercial Power 38 (19) 278 47
International Energy 105 (15) 388 163
Crescent 32 17 61 532
------ ------ ------- -------
Total reportable segment EBIT 694 406 3,032 2,553
Other EBIT (83) (182) (277) (537)
Interest Expense (186) (163) (685) (632)
Interest Income and Other (b) 49 103 208 146
------ ------ ------- -------
Consolidated income from
continuing operations before
income taxes $474 $164 $2,278 $1,530
====== ====== ======= =======
------------------------------------------------------------------------
(a) Results of legacy Cinergy operations are included in Duke Energy's
results of operations from April 1, 2006 and thereafter. Additionally,
on January 2, 2007, Duke Energy completed the spin-off of its natural
gas businesses to shareholders and, accordingly, prior period results
of the natural gas businesses, including Duke Energy's 50% ownership
interest in DCP Midstream (formerly DEFS), are reflected in
discontinued operations. On September 7, 2006, Duke Energy
deconsolidated Crescent and subsequently accounts for its investment
in Crescent using the equity method of accounting. Results of
operations for the three and twelve months ended December 31, 2007
include Duke Energy's 50% equity in earnings of Crescent. Crescent was
a wholly owned subsidiary of Duke Energy until September 7, 2006.
(b) Other includes foreign currency transaction gains and losses and
additional minority interest not allocated to the segment results.
(c) Amounts include capital expenditures for residential real estate
included in operating cash flows of $322 million for the period from
January 1, 2006 through the date of deconsolidation (September 7,
2006).
Note: Certain prior period amounts have been reclassified due to
discontinued operations.
December 2007
QUARTERLY HIGHLIGHTS
(Unaudited)
Three Months Twelve Months
Ended Ended
December 31, December 31,
-------------- --------------
(In millions, except where noted) 2007 2006 2007 2006
------------------------------------------------------------------------
U.S. FRANCHISED ELECTRIC AND GAS (a)
Operating Revenues $2,336 $2,194 $9,740 $8,098
Operating Expenses 1,836 1,776 7,488 6,319
(Losses) Gains on Sales of Other
Assets and Other, net - (1) - -
Other Income and Expenses, net 19 6 53 32
-------- -------- -------- --------
EBIT $519 $423 $2,305 $1,811
-------- -------- -------- --------
Depreciation and Amortization $320 $327 $1,437 $1,280
Duke Energy Carolinas GWh sales 20,394 19,368 86,604 82,652
Duke Energy Midwest GWh sales 15,532 14,761 64,570 46,069
Net Proportional MW Capacity in
Operation 27,586 27,590
------------------------------------------------------------------------
COMMERCIAL POWER (a)(b)
Operating Revenues $407 $388 $1,881 $1,331
Operating Expenses 376 403 1,618 1,292
(Losses) Gains on Sales of Other
Assets and Other, net 4 (15) (7) (29)
Other Income and Expenses, net 3 11 22 37
-------- -------- -------- --------
EBIT $38 $(19) $278 $47
-------- -------- -------- --------
Depreciation and Amortization $42 $41 $169 $140
Actual Plant Production, GWh 5,474 5,661 23,702 17,640
Net Proportional MW Capacity in
Operation 8,020 8,100
------------------------------------------------------------------------
INTERNATIONAL ENERGY
Operating Revenues $278 $238 $1,060 $943
Operating Expenses 215 269 776 838
(Losses) Gains on Sales of Other
Assets and Other, net - - - (1)
Other Income and Expenses, net 45 20 114 76
Minority Interest Expense 3 4 10 17
-------- -------- -------- --------
EBIT $105 $(15) $388 $163
-------- -------- -------- --------
Depreciation and Amortization $21 $20 $79 $73
Sales, GWh 4,273 4,527 17,127 18,501
Proportional MW Capacity in
Operation 3,968 3,922
------------------------------------------------------------------------
CRESCENT (c)
Operating Revenues $- $- $- $221
Operating Expenses - 2 - 160
Gains on Sales of Investments in
Commercial and Multi-Family
Real Estate - - - 201
(Losses) Gains on Sales of Other
Assets and Other, net - - - 246
Other Income and Expenses, net - - - 14
Equity in Earnings of
Unconsolidated Affiliates 32 19 61 15
Minority Interest Expense - - - 5
-------- -------- -------- --------
EBIT $32 $17 $61 $532
-------- -------- -------- --------
Depreciation and Amortization $- $- $- $1
-------------------------------------------------------------------------
OTHER (a)
Operating Revenues $36 $35 $167 $140
Operating Expenses 129 225 446 707
(Losses) Gains on Sales of Other
Assets and Other, net 1 8 2 8
Other Income and Expenses, net 11 (4) (1) 13
Minority Interest Expense 2 (4) (1) (9)
-------- -------- -------- --------
EBIT $(83) $(182) $(277) $(537)
-------- -------- -------- --------
Depreciation and Amortization $18 $13 $61 $51
-------------------------------------------------------------------------
(a) Includes the results of operations for legacy Cinergy from April 1,
2006 and thereafter.
(b) Excludes the results of synfuel operations, which have been
reclassified to discontinued operations for all periods.
(c) Crescent results for the three and twelve months ended December 31,
2007 and the three months ended December 31, 2006 represent Duke
Energy's 50% equity in earnings for its investment in Crescent.
For the twelve months ended December 31, 2006, Crescent results
reflect Duke Energy's 100% ownership up through September 7, 2006 and
Duke Energy's 50% equity in earnings for its investment in Crescent
subsequent to September 7, 2006.
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per-share amounts)
Year Ended
December 31,
------------
2007 2006
-------------------------------------------------------------------------
Operating Revenues $12,720 $10,607
Operating Expenses 10,201 9,210
Gains on Sales of Investments in
Commercial and Multi-Family Real Estate - 201
(Losses) Gains on Sales of Other Assets
and Other, net (5) 223
-------------------------------------------------------------------------
Operating Income 2,514 1,821
-------------------------------------------------------------------------
Other Income and Expenses, net 451 354
Interest Expense 685 632
Minority Interest Expense 2 13
-------------------------------------------------------------------------
Income From Continuing Operations Before
Income Taxes 2,278 1,530
Income Tax Expense from Continuing Operations 728 450
-------------------------------------------------------------------------
Income From Continuing Operations 1,550 1,080
(Loss) Income From Discontinued
Operations, net of tax (22) 783
-------------------------------------------------------------------------
Net Income $1,528 $1,863
=========================================================================
Common Stock Data
Weighted-average shares outstanding
Basic 1,260 1,170
Diluted 1,266 1,188
Earnings per share (from continuing
operations)
Basic $1.23 $0.92
Diluted $1.22 $0.91
(Loss) earnings per share (from discontinued
operations)
Basic $(0.02) $0.67
Diluted $(0.01) $0.66
Earnings per share
Basic $1.21 $1.59
Diluted $1.21 $1.57
Dividends per share $0.86 $1.26
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions)
December 31,
------------
2007 2006
-------------------------------------------------------------------------
ASSETS
Current Assets $4,918 $7,047
Investments and Other Assets 11,231 16,074
Net Property, Plant and Equipment 31,110 41,447
Regulatory Assets and Deferred Debits 2,460 4,132
-------------------------------------------------------------------------
Total Assets $49,719 $68,700
=========================================================================
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current Liabilities $5,686 $6,613
Long-term Debt 9,498 18,118
Deferred Credits and Other Liabilities 13,127 17,062
Minority Interests 181 805
Common Stockholders' Equity 21,227 26,102
------------------------------------------------------------------------
Total Liabilities and Common
Stockholders' Equity $49,719 $68,700
========================================================================
DUKE ENERGY CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions)
Years Ended
December 31,
------------
2007 2006
-------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,528 $1,863
Adjustments to reconcile net
income to net cash provided by
operating activities 1,625 1,885
-------------------------------------------------------------------------
Net cash provided by
operating activities 3,153 3,748
-------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing
activities (2,096) (1,328)
-------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash used in financing
activities (1,327) (1,961)
-------------------------------------------------------------------------
Changes in cash and cash equivalents
included in assets held for sale - (22)
-------------------------------------------------------------------------
Net (decrease) increase in cash
and cash equivalents (270) 437
Cash and cash equivalents at
beginning of period 948 511
-------------------------------------------------------------------------
Cash and cash equivalents at end
of period $678 $948
=========================================================================
Duke Energy Carolinas
Quarterly Highlights
Supplemental Franchised Electric Information
Quarter-to-Date Ended Year-to-Date Ended
December 31, December 31,
--------------------------- -------------------------
% Inc. % Inc.
2007 2006 (Dec.) 2007 2006 (Dec.)
------ ------ ------ ------ ------ ------
GWH Sales
Residential 5,795 5,398 7.4% 26,782 25,147 6.5%
General Service 6,460 6,025 7.2% 26,977 25,585 5.4%
Industrial -
Textile 1,259 1,329 (5.3%) 5,224 5,791 (9.8%)
Industrial -
Other 4,573 4,500 1.6% 18,605 18,605 0.0%
--------- --------- ------ --------- --------- -------
Total
Industrial 5,832 5,829 0.1% 23,829 24,396 (2.3%)
Other Energy
Sales 69 67 3.0% 275 269 2.5%
Regular Resale 411 366 12.3% 1,653 1,557 6.2%
--------- --------- ------ --------- --------- -------
Total Regular
Sales Billed 18,567 17,685 5.0% 79,516 76,954 3.3%
Special Sales(A) 1,613 925 74.4% 5,858 4,406 32.9%
--------- --------- ------ --------- --------- -------
Total Electric
Sales 20,180 18,610 8.4% 85,374 81,360 4.9%
Unbilled Sales (125) 407 (130.8%) (105) (31)(242.0%)
--------- --------- ------ --------- --------- -------
Total Electric
Sales -
Carolinas 20,055 19,017 5.5% 85,269 81,329 4.8%
Nantahala
Electric Sales 339 351 (3.5%) 1,335 1,323 0.9%
========= ========= ====== ========= ========= =======
Total
Consolidated
Electric Sales
- Carolinas 20,394 19,368 5.3% 86,604 82,652 4.8%
--------- --------- ------ --------- --------- -------
Average Number
of Customers
Residential 1,929,159 1,891,472 2.0% 1,916,407 1,876,946 2.1%
General
Service 323,299 318,764 1.4% 321,763 316,853 1.5%
Industrial -
Textile 699 740 (5.5%) 717 755 (5.0%)
Industrial -
Other 6,546 6,584 (0.6%) 6,524 6,609 (1.3%)
--------- --------- ------ --------- --------- -------
Total
Industrial 7,245 7,324 (1.1%) 7,241 7,364 (1.7%)
Other Energy
Sales 13,540 13,222 2.4% 13,420 13,142 2.1%
Regular Resale 15 15 0.0% 15 15 0.0%
--------- --------- ------ --------- --------- -------
Total Regular
Sales 2,273,258 2,230,797 1.9% 2,258,846 2,214,320 2.0%
Special Sales(A) 35 27 29.6% 34 28 21.4%
--------- --------- ------ --------- --------- -------
Total Electric
Sales -
Carolinas 2,273,293 2,230,824 1.9% 2,258,880 2,214,348 2.0%
Nantahala Electric
Sales 71,922 70,601 1.9% 71,425 69,974 2.1%
--------- --------- ------ --------- --------- -------
Total Avg Number
of Customers -
Carolinas 2,345,215 2,301,425 1.9% 2,330,305 2,284,322 2.0%
========= ========= ====== ========= ========= =======
(A) Excludes sales
to Nantahala
Power and
Light Company
Heating and Cooling Degree Days
Actual
Heating Degree
Days 1,024 1,161 (11.8%) 2,886 2,906 (0.7%)
Cooling Degree
Days 117 17 569.4% 1,857 1,457 27.5%
Variance from
Normal
Heating Degree
Days (19.7%) (7.8%) n/a (11.7%) (8.9%) n/a
Cooling Degree
Days 224.6% (47.1%) n/a 26.9% 0.4% n/a
Duke Energy - Midwest
Quarterly Highlights
Supplemental Franchised Electric Information
Quarter-to-Date Ended Year-to-Date Ended
December 31, December 31,
--------------------------- -------------------------
% %
2007 2006 Inc.(Dec.) 2007 2006 Inc.(Dec.)
--------- ------- -------- ------- ------- --------
GWH Sales
Residential 4,184 3,930 6.5% 18,699 17,352 7.8%
General Service 4,532 4,252 6.6% 18,619 17,563 6.0%
Industrial 4,511 4,489 0.5% 18,215 18,391 (1.0%)
Other Energy
Sales 44 43 2.3% 175 177 (1.1%)
--------- ------- -------- ------- ------- --------
Total Regular
Electric Sales
Billed 13,271 12,714 4.4% 55,708 53,483 4.2%
Special Sales 2,230 1,898 17.5% 8,793 7,200 22.1%
--------- ------- -------- ------- ------- --------
Total Electric
Sales Billed
- Midwest 15,501 14,612 6.1% 64,501 60,683 6.3%
Unbilled Sales 31 149 (79.2%) 69 (17) 505.9%
--------- ------- -------- ------- ------- --------
Total Electric
Sales -
Midwest 15,532 14,761 5.2% 64,570 60,666 6.4%
========= ======= ======== ======= ======= ========
Average Number
of Customers
Residential 1,405,554 1,395,589 0.7% 1,401,218 1,390,112 0.8%
General
Service 184,412 182,800 0.9% 183,712 182,149 0.9%
Industrial 5,626 5,721 (1.7%) 5,652 5,751 (1.7%)
Other Energy 3,908 3,676 6.3% 3,818 3,552 7.5%
--------- -------- ------- -------- -------- --------
Total Regular
Sales 1,599,500 1,587,786 0.7% 1,594,400 1,581,564 0.8%
Special Sales 35 30 16.7% 33 29 13.8%
---------- --------- ------- --------- -------- --------
Total Avg Number
Electric
Customers
- Midwest 1,599,535 1,587,816 0.7% 1,594,433 1,581,593 0.8%
========== ========= ======= ========= ======== ========
Heating and Cooling
Degree Days*
Actual
Heating Degree
Days 1,304 1,267 2.9% 3,782 3,304 14.5%
Cooling Degree
Days 83 17 388.2% 1,550 1,028 50.8%
Variance from
Normal
Heating Degree
Days (6.0%) (11.3%) n/a 2.2% (13.9%) n/a
Cooling Degree
Days 361.1% 21.4% n/a 49.2% 1.6% n/a
* Reflects HDD and CDD for Duke Energy - Indiana, Duke Energy - Ohio and
Duke Energy - Kentucky
DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
December 2006 Quarter-to-Date
(Dollars in millions, except per-share amounts)
Special Items (Note 1)
-------------------------------
Adjustment
to
Impairment Costs to
of Achieve,
Ongoing Settlement Campeche Cinergy
Earnings Reserves Investment Merger
SEGMENT EARNINGS BEFORE --------- ---------- ---------- ---------
INTEREST AND TAXES FROM
CONTINUING OPERATIONS
U.S. Franchised Electric and Gas $423 $- $- $-
Commercial Power (19) - - -
International Energy 80 (100)A 5 A -
Crescent 17 - - -
--------- ---------- --------- ---------
Total reportable segment EBIT 501 (100) 5 -
Other (86) (65)A - (31)A
--------- ---------- --------- ---------
Total reportable segment EBIT
and other EBIT $415 $(165) $5 $(31)
========= ========== ========= =========
Interest Expense (163) - - -
Interest Income and Other 103 - - -
Income Taxes from Continuing
Operations (68) 58 - 11
Discontinued Operations, net of
taxes - - - -
--------- ---------- --------- ---------
Net Income $287 $(107) $5 $(20)
========= ========== ========= =========
EARNINGS PER SHARE, BASIC $0.23 $(0.08) $- $(0.02)
========= ========== ========= =========
EARNINGS PER SHARE, DILUTED $0.23 $(0.08) $- $(0.02)
========= ========== ========= =========
Special
Items
(Note 1)
----------- Discon-
tinued Total
Tax Opera- Adjust- Reported
Adjustments tions ments Earnings
SEGMENT EARNINGS BEFORE INTEREST --------- -------- -------- ---------
AND TAXES FROM CONTINUING
OPERATIONS
U.S. Franchised Electric and Gas $- $- $- $423
Commercial Power - - - (19)
International Energy - - (95) (15)
Crescent - - - 17
--------- -------- -------- ---------
Total reportable segment EBIT - - (95) 406
Other - - (96) (182)
--------- -------- -------- ---------
Total reportable segment EBIT and
other EBIT $- $- $(191) $224
========= ======== ======== =========
Interest Expense - - - (163)
Interest Income and Other - - - 103
Income Taxes from Continuing Operations 27 B - 96 28
Discontinued Operations, net of taxes - 195 C 195 195
--------- -------- -------- ---------
Net Income $27 $195 $100 $387
========= ======== ======== =========
EARNINGS PER SHARE, BASIC $0.02 $0.16 $0.08 $0.31
========= ======== ======== =========
EARNINGS PER SHARE, DILUTED $0.02 $0.16 $0.08 $0.31
========= ======== ======== =========
Note 1 - Amounts for special items are presented net of any related
minority interest.
A - Recorded in Operation, maintenance and other (Operating Expenses)
on the Consolidated Statements of Operations.
B - Primarily the income tax benefit related to a $28 million pre-tax
charge for the impairment of Bolivia investment. The pre-tax impairment
charge was reclassified to discontinued operations; however, GAAP
requires the income tax benefit to remain in continuing operations.
C - Primarily amounts reclassified to discontinued operations due to
the January 2007 spin-off of Spectra Energy. Recorded in (Loss) Income
From Discontinued Operations, net of tax on the Consolidated Statements
of Operations.
Weighted Average Shares (reported and ongoing) - in millions
Basic 1,256
Diluted 1,265
DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
December 2006 Year-to-Date
(Dollars in millions, except per-share amounts)
Special Items (Note 1)
-------------------------------
Gain on Impair-
Sale of ment of Costs to
Settle- Interest Campeche Achieve,
Ongoing ment in Invest- Cinergy
Earnings Reserves Crescent ment Merger
SEGMENT EARNINGS BEFORE -------- -------- -------- ------- --------
INTEREST AND TAXES FROM
CONTINUING OPERATIONS
U.S. Franchised Electric
and Gas $1,811 $- $- $- $-
Commercial Power 47 - - - -
International Energy 313 (100)A - (50)C -
Crescent 286 - 246 B - -
-------- -------- -------- ------- --------
Total reportable segment
EBIT 2,457 (100) 246 (50) -
Other (344) (65)A - - (128)A
-------- -------- -------- ------- --------
Total reportable segment
EBIT and other EBIT $2,113 $(165) $246 $(50) $(128)
======== ======== ======== ======= ========
Interest Expense (632) - - - -
Interest Income and Other 146 - - - -
Income Taxes from Continuing
Operations (456) 58 (124) - 45
Discontinued Operations, net of
taxes - - - - -
-------- -------- -------- ------- --------
Net Income $1,171 $(107) $122 $(50) $(83)
======== ======== ======== ======= ========
EARNINGS PER SHARE, BASIC $1.00 $(0.09) $0.10 $(0.04) $(0.07)
======== ======== ======== ======= ========
EARNINGS PER SHARE, DILUTED $0.99 $(0.09) $0.10 $(0.04) $(0.07)
======== ======== ======== ======= ========
Special
Items
(Note 1)
----------- Discon-
Tax tinued Total
Adjust- Opera- Adjust- Reported
ments tions ments Earnings
SEGMENT EARNINGS BEFORE INTEREST ------- ------- ------- ---------
AND TAXES FROM CONTINUING
OPERATIONS
U.S. Franchised Electric and Gas $- $- $- $1,811
Commercial Power - - - 47
International Energy - - (150) 163
Crescent - - 246 532
------- ------- ------- ---------
Total reportable segment EBIT - - 96 2,553
Other - - (193) (537)
------- ------- ------- ---------
Total reportable segment EBIT and
other EBIT $- $- $(97) $2,016
======= ======= ======= =========
Interest Expense - - - (632)
Interest Income and Other - - - 146
Income Taxes from Continuing
Operations 27 D - 6 (450)
Discontinued Operations, net of taxes - 783 E 783 783
------- ------- ------- ---------
Net Income $27 $783 $692 $1,863
======= ======= ======= =========
EARNINGS PER SHARE, BASIC $0.02 $0.67 $0.59 $1.59
======= ======= ======= =========
EARNINGS PER SHARE, DILUTED $0.02 $0.66 $0.58 $1.57
======= ======= ======= =========
Note 1 - Amounts for special items are presented net of any related
minority interest.
A - Recorded in Operation, maintenance and other (Operating Expenses) on
the Consolidated Statements of Operations.
B - Recorded in (Losses) Gains on Sales of Other Assets and Other, net on
the Consolidated Statements of Operations.
C - $33 million recorded in Operation, maintenance and other (Operating
Expenses) and $17 million recorded in Losses on sales and impairments of
equity investments (Other Income and Expenses, net) on the Consolidated
Statements of Operations.
D - Primarily the income tax benefit related to a $28 million pre-tax
charge for the impairment of Bolivia investment. The pre-tax impairment
charge was reclassified to discontinued operations; however, GAAP requires
the income tax benefit to remain in continuing operations.
E - Primarily amounts reclassified to discontinued operations due to the
January 2007 spin-off of Spectra Energy, net of amount for DENA. Recorded
in (Loss) Income From Discontinued Operations, net of tax on the
Consolidated Statements of Operations.
Weighted Average Shares (reported and ongoing) - in millions
Basic 1,170
Diluted 1,188
DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
December 2007 Quarter-to-Date
(Dollars in millions, except per-share amounts)
Special Items (Note 1)
---------------------
Costs to Settle- Discon-
Achieve, ment tinued Total
Ongoing Cinergy Reserve Opera- Adjust- Reported
Earnings Merger Adjustment tions ments Earnings
SEGMENT EARNINGS -------- --------- ---------- ------- ------- --------
BEFORE INTEREST
AND TAXES FROM
CONTINUING
OPERATIONS
U.S. Franchised
Electric and Gas $519 $- $- $- $- $519
Commercial Power 38 - - - - 38
International Energy 105 - - - - 105
Crescent 32 - - - - 32
-------- ---------- ---------- ------- ------- --------
Total reportable
segment EBIT 694 - - - - 694
Other (92) (16)A 25 A - 9 (83)
-------- ---------- ---------- ------- ------- --------
Total reportable
segment and
Other EBIT $602 $(16) $25 $- $9 $611
======== ========== ========== ======= ======= ========
Interest Expense (186) - - - - (186)
Interest Income and
Other 49 - - - - 49
Income Taxes from
Continuing
Operations (129) 5 (9) - (4) (133)
Discontinued
Operations, net of
taxes - - - (70)B (70) (70)
-------- ---------- ---------- ------- ------- --------
Net Income $336 $(11) $16 $(70) $(65) $271
======== ========== ========== ======= ======= ========
EARNINGS PER SHARE,
BASIC $0.27 $(0.01) $0.01 $(0.06) $(0.06) $0.21
======== ========== ========== ======= ======= ========
EARNINGS PER SHARE,
DILUTED $0.27 $(0.01) $0.01 $(0.06) $(0.06) $0.21
======== ========== ========== ======= ======= ========
Note 1 - Amounts for special items are presented net of any related
minority interest.
A - Recorded in Operation, maintenance and other (Operating Expenses) on
the Consolidated Statements of Operations.
B - Recorded in (Loss) Income From Discontinued Operations, net of tax on
the Consolidated Statements of Operations.
Weighted Average Shares (reported and ongoing) - in millions
Basic 1,262
Diluted 1,266
DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
December 2007 Year-to-Date
(Dollars in millions, except per-share amounts)
Special Items (Note 1)
---------------------------------
Convertible Settle-
Debt Costs to IT ment
Costs, Achieve, Sever- Reserve
Ongoing Gas Cinergy ance Adjust-
Earnings Spin-off Merger Costs ment
SEGMENT EARNINGS BEFORE INTEREST -------- -------- -------- ------ -------
AND TAXES FROM CONTINUING
OPERATIONS
U.S. Franchised Electric
and Gas $2,305 $- $- $- $-
Commercial Power 278 - - - -
International Energy 388 - - - -
Crescent 61 - - - -
-------- -------- -------- ------ -------
Total reportable segment
EBIT 3,032 - - - -
Other (235) (21)B (54)A (12)A 45 A
-------- -------- -------- ------ -------
Total reportable segment and
Other EBIT $2,797 $(21) $(54) $(12) $45
======== ======== ======== ====== =======
Interest Expense (685) - - - -
Interest Income and Other 208 - - - -
Income Taxes from Continuing
Operations (735) - 19 4 (16)
Discontinued Operations, net of
taxes - - - - -
-------- -------- -------- ------ -------
Net Income $1,585 $(21) $(35) $(8) $29
======== ======== ======== ====== =======
EARNINGS PER SHARE, BASIC $1.26 $(0.02) $(0.03) $- $0.02
======== ======== ======== ====== =======
EARNINGS PER SHARE, DILUTED $1.25 $(0.02) $(0.03) $- $0.02
======== ======== ======== ====== =======
Discontinued Total Reported
Operations Adjustments Earnings
SEGMENT EARNINGS BEFORE INTEREST ------------ ----------- ----------
AND TAXES FROM CONTINUING
OPERATIONS
U.S. Franchised Electric and Gas $- $- $2,305
Commercial Power - - 278
International Energy - - 388
Crescent - - 61
------------ ----------- ----------
Total reportable segment EBIT - - 3,032
Other - (42) (277)
------------ ----------- ----------
Total reportable segment and
Other EBIT $- $(42) $2,755
============ =========== ==========
Interest Expense - - (685)
Interest Income and Other - - 208
Income Taxes from Continuing
Operations - 7 (728)
Discontinued Operations, net of taxes (22)C (22) (22)
------------ ----------- ----------
Net Income $(22) $(57) $1,528
============ =========== ==========
EARNINGS PER SHARE, BASIC $(0.02) $(0.05) $1.21
============ =========== ==========
EARNINGS PER SHARE, DILUTED $(0.01) $(0.04) $1.21
============ =========== ==========
Note 1 - Amounts for special items are presented net of any related
minority interest.
A - Recorded in Operation, maintenance and other (Operating Expenses) on
the Consolidated Statements of Operations.
B - Recorded in Other income and expenses, net (Other Income and
Expenses, net) on the Consolidated Statements of Operations.
C - Recorded in (Loss) Income From Discontinued Operations, net of tax on
the Consolidated Statements of Operations.
Weighted Average Shares (reported and ongoing) - in millions
Basic 1,260
Diluted 1,266
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