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Press release from PR Newswire

Duke Energy 2012 results near top of EPS guidance range

Wednesday, February 13, 2013

Duke Energy 2012 results near top of EPS guidance range07:00 EST Wednesday, February 13, 2013- Company achieves adjusted diluted earnings per share (EPS) of $4.32 in 2012, compared to $4.38 in 2011; reported diluted EPS $3.07 for 2012, compared to $3.83 in 2011 - Fourth quarter 2012 adjusted diluted EPS of 70 cents, compared with 71 cents for the fourth quarter 2011; fourth quarter 2012 reported diluted EPS of 62 cents, compared to 65 cents in 2011 - Company will provide updates on its businesses, report on regulatory initiatives, and offer a financial and business outlook for 2013 and beyond during Feb. 28 analyst meetingCHARLOTTE, N.C., Feb. 13, 2013 /PRNewswire/ -- Duke Energy (NYSE: DUK) today posted 2012 full-year adjusted diluted EPS of $4.32, which was near the top of its adjusted diluted EPS guidance range of $4.20 to $4.35.(Logo: http://photos.prnewswire.com/prnh/20040414/DUKEENERGYLOGO )For 2012, adjusted EPS reflected the addition of earnings from Progress Energy, net of the impact of shares issued in connection with the merger, the impact of the new market-based Electric Security Plan (ESP) in Ohio, and unfavorable weather. These were partially offset by revised customer rates at Duke Energy Carolinas. Duke Energy's full-year reported diluted EPS was $3.07 for 2012, compared to $3.83 in 2011.Fourth quarter 2012 adjusted diluted EPS was 70 cents, compared to 71 cents for fourth quarter 2011. Fourth quarter 2012 reported diluted EPS was 62 cents, compared to 65 cents for fourth quarter 2011. "For Duke Energy, 2012 was a year of unprecedented accomplishment, highlighted by the merger with Progress Energy that has already begun providing savings for our customers," said Jim Rogers, chairman, president and chief executive officer. "We also made significant progress with our fleet modernization program by bringing online three major new power plants in North Carolina, enabling us to retire older, less efficient coal-fired units." "I am especially pleased with the outstanding performance and resilience of our employees," he added. "During a year of change and uncertainty, they maintained their focus and strong commitment. The nuclear fleet maintained a capacity factor greater than 90 percent, excluding Crystal River 3, for the 13th consecutive year and the company achieved its best safety record ever.  "From a financial perspective, we achieved our objectives by delivering 2012 adjusted diluted EPS near the top of our guidance range, increasing the dividend and maintaining the strength of our balance sheet," Rogers said.The company also resolved two significant regulatory proceedings in 2012: the North Carolina Utilities Commission's merger investigation and the Indiana Utility Regulatory Commission's cost recovery settlement for the Edwardsport Integrated Gasification Combined Cycle (IGCC) Station. BUSINESS UNIT RESULTS The discussion below of fourth-quarter and year-end 2012 financial results includes adjusted segment income, which is a non-GAAP financial measure. The tables on pages 24 through 27 present a reconciliation of reported results to adjusted results.U.S. Franchised Electric and Gas (USFE&G)USFE&G recognized fourth-quarter 2012 adjusted segment income of $498 million, compared to $206 million in the fourth quarter 2011, an increase of $0.42 per share.USFE&G's increased results were primarily driven by the addition of Progress Energy's regulated utility operations in the Carolinas and Florida (+$0.28 per share).Other drivers, excluding the addition of Progress Energy, included:Increased pricing and riders principally related to the implementation of revised customer rates at Duke Energy Carolinas as a result of the 2011 rate case (+$0.07 per share) Adjustments to income taxes (+$0.07 per share) More favorable weather (+$0.03 per share)These results were partially offset by higher operating and maintenance expenses (-$0.05 per share). Full-year 2012 adjusted segment income for USFE&G was $2,086 million compared to $1,316 million in 2011, an increase of $1.34 per share.Higher year-over-year results were primarily driven by the addition of Progress Energy's regulated utility operations in the Carolinas and Florida (+$1.02 per share). Excluding the addition of Progress Energy, other drivers included increased pricing and riders principally related to the implementation of revised customer rates at Duke Energy Carolinas (+$0.48 per share) and lower operating and maintenance and governance costs (+$0.06 per share).These results were partially offset by unfavorable weather compared to the prior year (-$0.19 per share).International Energy International Energy recognized fourth-quarter 2012 adjusted segment income of $89 million, compared to $96 million in the fourth quarter 2011, a decrease of $0.01 per share. International Energy's quarterly results decreased primarily due to higher purchased power costs in Brazil because of unfavorable hydrology (-$0.02 per share) and unfavorable foreign exchange rates primarily in Brazil (-$0.01 per share). These results were partially offset by increased volumes for our thermal generation in Central America due to drier weather (+$0.02 per share).Full-year 2012 adjusted segment income for International Energy was $439 million compared to $466 million in 2011, a decrease of $0.05 per share.Lower year-over-year results were primarily driven by unfavorable foreign exchange rates primarily in Brazil (-$0.06 per share) and lower results in Central America due to lower average prices (-$0.04 per share).These results were partially offset by higher average sales prices and volumes in Brazil (+$0.03 per share) and higher average MTBE prices and volumes at National Methanol Company (+$0.03 per share).Commercial Power Commercial Power's adjusted segment earnings for the fourth quarter 2012 were break-even, compared to $30 million in the fourth quarter 2011, a decrease of $0.04 per share. Commercial Power's quarterly results decreased primarily due to adjustments to income taxes (-$0.03 per share) and lower results from the Midwest gas generation fleet (-$0.01 per share) driven by lower capacity revenues, partially offset by lower operating and maintenance costs. Results for the Midwest coal generation fleet were flat primarily due to the net impacts of the new market-based ESP in Ohio (-$0.05 per share), offset by the absence of a prior-year fee related to exiting the Midwest Independent System Operator (+$0.04 per share), and lower operating and maintenance costs (+$0.01 per share).Full-year 2012 adjusted segment income for Commercial Power was $93 million, compared to $186 million in 2011, a decrease of $0.16 per share.Lower year-over-year results were driven by lower results for the Midwest coal generation fleet due to the net impacts of the new market-based Ohio ESP on the Midwest coal generation fleet (-$0.21 per share) offset by the absence of a prior-year fee related to exiting MISO (+$0.04 per share), and lower operating and maintenance costs (+$0.04 per share). Additionally, lower results were due to unfavorable pricing and lower sales volumes for Duke Energy Retail (-$0.08 per share).These were partially offset by higher results at Duke Energy Renewables (+$0.04 per share).Results for the Midwest gas generation fleet were flat primarily due to the offsetting impacts of favorable generation volumes (+$0.06 per share), lower operating and maintenance costs (+$0.03 per share), and unfavorable capacity revenues (-$0.11 per share).Other On an adjusted basis, Other primarily includes corporate interest expense not allocated to the business units, results from Duke Energy's captive insurance company, other investments, and quarterly income tax levelization adjustments. Other recognized fourth-quarter 2012 adjusted net expense of $91 million, compared to net expense of $17 million in the fourth quarter 2011, a difference of $0.12 per share. Other's results were primarily due to the addition of interest expense on Progress Energy's corporate debt (-$0.06 per share).Full-year 2012 adjusted net expense for Other was $135 million compared to a net expense of $25 million in 2011, a difference of $0.19 per share.Increased year-over-year adjusted net expense for Other was primarily driven by the addition of interest expense on Progress Energy's corporate debt (-$0.12 per share) and higher interest expense on Duke Energy corporate debt (-$0.05 per share).Share Dilution On July 2, 2012, Duke Energy issued approximately 258 million shares of common stock in connection with the closing of the merger with Progress Energy Inc. The issuance of these additional shares had a dilutive impact of $0.26 per share and $1.00 per share on the quarter-over-quarter and year-over-year adjusted diluted EPS results, respectively.Earnings Conference Call for Analysts An earnings conference call for analysts is scheduled for 10 a.m. ET Wednesday, Feb. 13, to discuss Duke Energy's financial performance for the fourth quarter 2012 as well as providing other business updates. The conference call will be hosted by Jim Rogers, chairman, president and chief executive officer, and Lynn Good, executive vice president and chief financial officer. The call can be accessed via the investors' section (http://www.duke-energy.com/investors/) of Duke Energy's website or by dialing 888-695-0608 in the United States or 719-325-2286 outside the United States. The confirmation code is 4249923. Please call in 10 to 15 minutes prior to the scheduled start time. A replay of the conference call will be available until midnight ET, Feb. 22, 2013, by calling 888-203-1112 in the United States or 719-457-0820 outside the United States and using the code 4249923. A replay and transcript also will be available by accessing the investors' section of the company's website.Analyst Meeting Feb. 28 Duke Energy will host an investor and analyst meeting Thursday, Feb. 28, from 8:30 a.m. to 12:30 p.m. ET in New York City.Rogers and other members of the Duke Energy management team will provide updates on the company's operating businesses, report on regulatory initiatives, and offer the company's financial and business outlook for 2013 and beyond.A live webcast of the meeting can be accessed via the investors' section of Duke Energy's website (http://www.duke-energy.com/investors/) or by dialing 719-325-2329 outside the United States or 888-427-9376 in the United States. The confirmation code is 8401489. Please call 10 to 15 minutes prior to the scheduled start time. A replay and transcript of the meeting will be available by accessing the investors' section of the company's website.Special Items and Non-GAAP Reconciliation Special items affecting Duke Energy's adjusted diluted EPS for fourth quarter 2011 and fourth quarter 2012 include: (In millions, except per-share amounts)Pre-TaxAmountTaxEffect4Q2012EPSImpact4Q2011EPSImpactFourth Quarter 2012-        Costs to Achieve, Progress Energy Merger$(164)$73$(0.13)-        Edwardsport Charges$(28)$11$(0.02)-        Discontinued Operations$56$(25)$0.05-        Economic Hedges (Mark-to-Market)$26$(10)$0.02Fourth Quarter 2011-        Costs to Achieve, Progress Energy Merger$(39)$11$(0.06)-        Economic Hedges (Mark-to-Market)$2$(1)--Total diluted EPS impact$(0.08)$(0.06)Special items affecting Duke Energy's adjusted diluted EPS for full-year 2011 and full-year 2012 include:(In millions, except per-share amounts)Pre-TaxAmountTaxEffect2012EPSImpact 2011EPSImpactFull-Year 2012-        Costs to Achieve, Progress Energy Merger$(636)$239$(0.70)-        Edwardsport Charges$(628)$226$(0.70)-        DNC Host Committee Support$(10)$4$(0.01)-        Economic Hedges (Mark-to-Market)$(9)$3$(0.01)-        Voluntary Opportunity Plan Deferral$99$(39)$0.11-        Discontinued Operations$60$(24)$0.06Full-Year 2011-        Edwardsport Impairment$(222)$87$(0.30)-        Emission Allowance Impairment$(79)$28$(0.12)-        Costs to Achieve, Progress Energy Merger$(68)$17$(0.12)-        Economic Hedges (Mark-to-Market)$(1)$-$(0.01)Total diluted EPS impact$(1.25)$(0.55)Reconciliation of reported to adjusted diluted EPS for the quarters:4Q2012EPS4Q2011EPS Diluted EPS, as reported$0.62$0.65Adjustments to reported EPS:-        Diluted EPS impact of special items and mark-to-market in Commercial Power$0.08$0.06Diluted EPS, adjusted$0.70$0.71Reconciliation of reported to adjusted diluted EPS for the annual periods:2012EPS2011EPS Diluted EPS, as reported$3.07$3.83Adjustments to reported EPS:-        Diluted EPS impact of special items and mark-to-market in Commercial Power$1.25$0.55Diluted EPS, adjusted$4.32$4.38NON-GAAP FINANCIAL MEASURESThe primary performance measure used by management to evaluate segment performance is segment income. Segment income is defined as income from continuing operations net of income attributable to non-controlling interests. In addition, direct interest expense and income taxes are included in segment income and certain governance costs are allocated to each of the segments. Management believes segment income, which is the GAAP measure used to report segment results, is a good indicator of each segment's operating performance as it represents the approximate net income contribution of Duke Energy's business segments by incorporating the direct financing methods or capital structures of the business segments as well as the income tax attributes of the businesses and regions in which they operate.Duke Energy's management uses adjusted diluted EPS, which is a non-GAAP financial measure as it represents diluted EPS from continuing operations attributable to Duke Energy Corporation common shareholders, adjusted for the per-share impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment, as a measure to evaluate operations of the company. In addition, Duke Energy's management calculates the EPS impact of segment income drivers to facilitate an understanding of the impacts of each income driver on consolidated adjusted diluted EPS.Special items represent certain charges and credits, which management believes will not be recurring on a regular basis, although it is reasonably possible such charges and credits could recur. Mark-to-market adjustments reflect the mark-to-market impact of derivative contracts, which is recognized in GAAP earnings immediately as such derivative contracts do not qualify for hedge accounting or regulatory accounting treatment, used in Duke Energy's hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS provides useful information to investors, as it provides them an additional relevant comparison of the company's performance across periods. Adjusted diluted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measure for adjusted diluted EPS is reported diluted EPS from continuing operations attributable to Duke Energy Corporation common shareholders, which includes the impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Due to the forward-looking nature of adjusted diluted EPS for future periods, information to reconcile such non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items and the mark-to-market impacts of economic hedges in the Commercial Power segment for future periods.Duke Energy also uses adjusted segment income and adjusted Other net expenses as a measure of historical and anticipated future segment and Other performance. Adjusted segment income and adjusted Other net expenses are non-GAAP financial measures, as they represent reported segment income and Other net expenses adjusted for special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Management believes that the presentation of adjusted segment income and adjusted Other net expenses provides useful information to investors, as it provides them an additional relevant comparison of a segment's or Other's performance across periods. When an EPS amount is provided for a segment income driver, the per share impact is derived by taking the before-tax amount of the item less income taxes based on Duke Energy's consolidated effective tax rate, divided by the Duke Energy weighted-average diluted shares outstanding for the period. The most directly comparable GAAP measure for adjusted segment income or adjusted Other net expenses is reported segment income or Other net expenses, which represents segment income and Other net expenses from continuing operations, including any special items and the mark-to-market impacts of economic hedges in the Commercial Power segment. Due to the forward-looking nature of any forecasted adjusted segment income or adjusted Other net expenses and any related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast special items, the mark-to-market impacts of economic hedges in the Commercial Power segment, or any amounts that may be reported as discontinued operations or extraordinary items for future periods.Duke Energy is the largest electric power holding company in the United States with more than $100 billion in total assets. Its regulated utility operations serve approximately 7.1 million electric customers located in six states in the Southeast and Midwest. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States. Headquartered in Charlotte, N.C., Duke Energy is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at: www.duke-energy.com.  MEDIA CONTACT:Tom Shiel704-382-235524-Hour:800-559-3853ANALYSTS:Bob DrennanBill Currens704-382-4070704-382-1603 DUKE ENERGY CORPORATIONEARNINGS VARIANCESDecember 31, 2012 QTD vs. Prior Year($ per share)U.S. FranchisedElectric & GasInternational EnergyCommercial PowerOtherConsolidated2011 QTD Reported Earnings Per Share, Diluted$0.46$0.22$0.07$(0.10)$0.65Costs to Achieve, Progress Energy Merger---0.060.062011 QTD Adjusted Earnings Per Share, Diluted$0.46$0.22$0.07$(0.04)$0.71Share Differential (a)(0.17)(0.08)(0.03)0.02(0.26)2011 QTD Adjusted Earnings Per Share, Diluted, Recasted for Share Issuance$0.29$0.14$0.04$(0.02)$0.45Progress Energy Contribution0.28--(0.06)0.22Weather0.03---0.03Pricing and Riders (b)0.07---0.07Operation and Maintenance and Governance Expenses(0.05)---(0.05)Latin America, including Foreign Exchange Rates (c)-----Midwest Coal Generation (d)-----Midwest Gas Generation (e)--(0.01)-(0.01)Duke Energy Retail --(0.01)-(0.01)Interest Expense --0.01(0.01)-Adjustments to income taxes0.07-(0.03)(0.04)-Other0.02(0.01)-(0.01)--2012 QTD Adjusted Earnings Per Share, Diluted$0.71$0.13$-$(0.14)$0.70Costs to Achieve, Progress Energy Merger---(0.13)(0.13)Edwardsport Charges(0.02)---(0.02)Economic Hedges (Mark-to-Market)--0.02-0.02Discontinued Operations----0.052012 QTD Reported Earnings Per Share, Diluted$0.69$0.13$0.02$(0.27)$0.62Note 1: Earnings Per Share amounts are calculated using the consolidated effective income tax rate.Note 2: Adjusted and Reported Earnings Per Share amounts by segment may not recompute from other published schedules due to rounding.(a)Reflects the impact on prior period earnings per diluted share due to the increase in Duke Energy's weighted-average diluted common shares outstanding as a result of shares issued to complete the merger with Progress Energy. Weighted-average diluted shares outstanding increased from 444 million for the quarter ended December 31, 2011 to 705 million for the quarter ended December 31, 2012.(b)Primarily due to implementation of revised customer rates in North Carolina and South Carolina as a result of the 2011 Duke Energy Carolinas rate cases (+$0.09) and decreased riders (-$0.02).(c) Primarily due to increased volumes in Central America (+$0.02), net of higher purchased power in Brazil (-0.02) and unfavorable foreign currency exchange rates (-$0.01).(d)Primarily due to the new market-based Ohio ESP (-$0.08), partially offset by the absence of prior year MISO exit fees (+$0.04), non-bypassable stabilization charge (+$0.02), capacity revenues received from PJM in 2012 (+$0.01), and lower operation and maintenance expenses (+$0.01).(e)Primarily due to a decrease in capacity revenue (-$0.02) net of lower operation and maintenance expenses (+$0.01). DUKE ENERGY CORPORATIONEARNINGS VARIANCESDecember 31, 2012 YTD vs. Prior Year($ per share)U.S. FranchisedElectric & GasInternational EnergyCommercial PowerOtherConsolidated2011 YTD Reported Earnings Per Share, Diluted$2.66$1.05$0.29$(0.17)$3.83Costs to Achieve, Progress Merger---0.120.12Edwardsport Charges0.30---0.30Emission Allowances Impairment--0.12-0.12Economic Hedges (Mark-to-Market)--0.01-0.012011 YTD Adjusted Earnings Per Share, Diluted$2.96$1.05$0.42$(0.05)$4.38Share Differential (a)(0.67)(0.24)(0.10)0.01(1.00)2011 YTD Adjusted Earnings Per Share, Diluted, Recasted for Share Issuance$2.29$0.81$0.32$(0.04)$3.38Progress Energy Contribution1.02--(0.12)0.90Weather(0.19)---(0.19)Pricing and Riders (b)0.48---0.48Volume0.04---0.04Operation and Maintenance and Governance Expenses0.06---0.06Latin America, including Foreign Exchange Rates (c)-(0.09)--(0.09)National Methanol Company-0.03--0.03Midwest Coal Generation (d)--(0.13)-(0.13)Midwest Gas Generation (e)-----Duke Energy Retail --(0.08)-(0.08)Duke Energy Renewables--0.04-0.04Interest Expense(0.02)-0.01(0.05)(0.06)Adjustments to income taxes0.06-(0.02)(0.02)0.02Other (f)(0.11)0.010.02-(0.08)2012 YTD Adjusted Earnings Per Share, Diluted$3.63$0.76$0.16$(0.23)$4.32Costs to Achieve, Progress Merger---(0.70)(0.70)Voluntary Opportunity Plan Deferral0.11---0.11Edwardsport Charges(0.70)---(0.70)Democratic National Convention Host Committee Support---(0.01)(0.01)Economic Hedges (Mark-to-Market)--(0.01)-(0.01)Discontinued Operations----0.062012 YTD Reported Earnings Per Share, Diluted$3.04$0.76$0.15$(0.94)$3.07Note 1: Earnings Per Share amounts are calculated using the consolidated effective income tax rate.Note 2: Adjusted and Reported Earnings Per Share amounts by segment may not recompute from other published schedules due to rounding.(a)Reflects the impact on prior period earnings per diluted share due to the increase in Duke Energy's weighted-average diluted common shares outstanding as a result of shares issued to complete the merger with Progress Energy.  Weighted-average diluted shares outstanding increased from 444 million for the year ended December 31, 2011 to 575 million for the year ended December 31, 2012.(b)Primarily due to implementation of revised customer rates in North and South Carolina as a result of the 2011 Duke Energy Carolinas rate cases (+$0.44) and increased riders (+$0.04).(c) Primarily driven by unfavorable foreign exchange rates (-$0.06), lower average prices and lower capitalized interest in Central America (-$0.04), and the absence of prior year arbitration award net of higher pricing in Peru (-$0.01), partially offset by higher average sales prices and volumes in Brazil (+$0.03).(d)Primarily due to the new market-based Ohio ESP (-$0.44), partially offset by the non-bypassable stabilization charge (+$0.13), capacity revenues received from PJM in 2012 (+$0.10), absence of prior year MISO exit fees (+$0.04) and lower operation and maintenance expenses between years (+$0.04).(e)Primarily due to favorable generation volumes (+$0.06), lower operation and maintenance expenses between years (+$0.03), and recovery of a Lehman Brothers receivable previously written-off (+$0.02), partially offset by a decrease in capacity revenue (-$0.11).(f)Amount for U.S. Franchised Electric & Gas is primarily due to an increase in depreciation and amortization expense (-$0.14), partially offset by other miscellaneous items (+$0.03). December 2012QUARTERLY HIGHLIGHTS(Unaudited)Three Months EndedYears EndedDecember 31,December 31,(In millions, except per-share amounts and where noted)2012201120122011COMMON STOCK DATAIncome from continuing operations attributable to Duke Energy Corporation common shareholders(a)    Basic$              0.57$              0.65$              3.01$                       3.83    Diluted$              0.57$              0.65$              3.01$                       3.83Income from discontinued operations attributable to Duke Energy Corporation common shareholders(a)    Basic$              0.05$                   -$              0.06$                             -    Diluted$              0.05$                   -$              0.06$                             -Net income attributable to Duke Energy Corporation common shareholders(a)    Basic$              0.62$              0.65$              3.07$                       3.83    Diluted$              0.62$              0.65$              3.07$                       3.83  Dividends Declared Per Share(a)$                    -$                   -$              3.03$                       2.97  Weighted-Average Shares Outstanding(a)    Basic704444574444    Diluted705444575444SEGMENT INCOME BY BUSINESS SEGMENTU.S. Franchised Electric and Gas(b)(c)(d)$               481$               206$            1,744$                     1,181Commercial Power(e)163187134International Energy8996439466Total Reportable Segment Income5863332,2701,781Other Net Expense(f)(g)(182)(45)(538)(76)Income from Discontinued Operations, net of tax31-361Net Income Attributable to Duke Energy Corporation$               435$               288$            1,768$                     1,706$                    -$                 (1)$                    -$                             -CAPITALIZATIONTotal Common Equity50%52%Preferred Stock of Subsidiaries--Total Debt50%48%Total Debt$          40,518$                   21,000Book Value Per Share(a)$            58.12$                     51.36Actual Shares Outstanding(a)704445CAPITAL AND INVESTMENT EXPENDITURESU.S. Franchised Electric and Gas$            1,360$            1,061$            4,220$                     3,717Commercial Power2132681,038492International Energy43218551114Other6541149141Total Capital and Investment Expenditures$            2,070$            1,388$            5,958$                     4,464(a) Reflects the impact of the 1-for-3 reverse stock split on July 2, 2012.(b) Includes charges of $17 million in the fourth quarter of 2012 related to the Edwardsport IGCC project (net of tax of $11 million).(c) Includes impairment and other charges of $402 million for the year ended December 31, 2012, related to the Edwardsport IGCC project (net of tax of $226 million).(d) Includes impairment and other charges of $135 million for the year ended December 31, 2011, related to the Edwardsport IGCC project (net of tax of $87 million).(e) Includes non-cash impairment charges of $51 million for the year ended December 31, 2011, related to an emission allowance impairment (net of tax of $28 million).(f) Includes costs to achieve of $91 million in the fourth quarter of 2012 related to the Progress Energy merger (net of tax of $73 million).(g) Includes costs to achieve of $397 million for the year ended December 31, 2012, related to the Progress Energy merger (net of tax of $239 million). December 2012QUARTERLY HIGHLIGHTS(Unaudited)Three Months EndedYears EndedDecember 31,December 31,(In millions, except where noted)2012201120122011U.S. FRANCHISED ELECTRIC AND GAS  Operating Revenues (a)$                     4,873$                     2,461$                 16,080$                                  10,619  Operating Expenses (b)4,0292,02712,9438,473  Gains on Sales of Other Assets, net2-152  Operating Income (Loss)8464343,1522,148  Other Income and Expenses11473341274  Interest Expense260149806568  Income Before Income Taxes7003582,6871,854  Income Tax Expense (c)218152941673  Less: Income Attributable to Noncontrolling Interests1-2-  Segment Income$                         481$                         206$                    1,744$                                    1,181  Depreciation and Amortization$                         552$                         351$                    1,827$                                    1,383  Duke Energy Carolinas GWh sales19,54718,50181,36282,127  Progress Energy Carolinas GWh sales (g)14,42512,60958,39056,223  Progress Energy Florida's GWh sales (h)8,6298,27238,44339,578  Duke Energy Ohio GWh sales5,7445,60824,34424,923  Duke Energy Indiana GWh sales7,8937,68033,57733,181  Net Proportional MW Capacity in Operation49,65427,397COMMERCIAL POWER  Operating Revenues$                         471$                        565$                   2,078$                                    2,491  Operating Expenses (d)4695591,9812,300  Gains on Sales of Other Assets, net(3)-815  Operating Income (Loss)(1)6105206  Other Income and Expenses13-3921  Interest Expense8206387  Income Before Income Taxes4(14)81140  Income Tax Expense(12)(45)(7)(2)  Less: Income Attributable to Noncontrolling Interests--18  Segment Income$                            16$                            31$                           87$                                       134  Depreciation and Amortization$                            56$                            57$                         228$                                       230Actual Coal-fired Plant Production, GWh3,7433,95816,16417,378Actual Gas-fired Plant Production, GWh3,6393,54517,12212,021Actual Renewable Plant Production, GWh1,0538463,4523,132Actual Plant Production, GWh8,4358,34936,73832,531  Net Proportional MW Capacity in Operation8,0948,325INTERNATIONAL ENERGY  Operating Revenues$                         368$                        353$                      1,549$                                    1,467  Operating Expenses2752311,043946  Gains on Sales of Other Assets, net-(1)-(1)  Operating Income (Loss)93121506520  Other Income and Expenses3537171203  Interest Expense16167647  Income Before Income Taxes112142601676  Income Tax Expense2041149195  Less: Income Attributable to Noncontrolling Interests351315  Segment Income$                           89$                           96$                         439$                                       466  Depreciation and Amortization$                           25$                           24$                           99$                                         90  Sales, GWh4,8685,02120,13218,889  Proportional MW Capacity in Operation4,5844,277OTHER   Operating Revenues$                           23$                            10$                           74$                                         44  Operating Expenses (e)19054704133  (Losses) Gains on Sales of Other Assets, net(4)-(7)(8)  Operating Income (Loss)(171)(44)(637)(97)  Other Income and Expenses261649  Interest Expense10139297157  (Loss) Income Before Income Taxes(270)(77)(918)(205)  Income Tax (Benefit) Expense (f)(86)(29)(378)(114)  Less: Income (Loss) Attributable to Noncontrolling Interests(2)(3)(2)(15)  Net Expense$                       (182)$                         (45)$                       (538)$                                       (76)  Depreciation and Amortization$                           36$                           28$                         135$                                       103(a)Includes pre-tax charges of $28 million for the three months and year ended December 31, 2012, related to the Edwardsport IGCC project.(b)Includes pre-tax impairment and other charges of $600 million and $222 million for the years ended December, 2012 and 2011, respectively, related to the Edwardsport IGCC project.(c)Includes a tax benefit of $226 million and $87 million for the years ended December 31, 2012 and 2011, respectively, on the impairment and other charges related to the Edwardsport IGCC project.(d)Includes pre-tax non-cash impairment charges of $79 million for the year ended December 31, 2011, related to an impairment of emission allowances due  to the Cross State Air Pollution Rule.(e)Includes costs to achieve of $166 million recorded in Operating Expense for the three months ended December 31, 2012, and $628 million recorded in Operating Expense for the year ended December 31, 2012.(f)Includes a tax benefit related to costs to achieve of $73 million for the three months ended December 31, 2012, and $239 million for the year ended December 31, 2012.(g)All of Progress Energy Carolinas' GWh sales for the three months and year ended December 31, 2011, and 26,634 GWh sales for the year ended December 31, 2012, occurred prior to the merger with Progress Energy.(h)All of Progress Energy Florida's GWh sales for the three months and year ended December 31, 2011, and 18,348 GWh sales for the year ended December 31, 2012, occurred prior to the merger with Progress Energy. DUKE ENERGY CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In millions, except per-share amounts)Years Ended December 31,December 31,201220112010Operating RevenuesRegulated electric$       15,621$       10,589$   10,723Non-regulated electric, natural gas, and other3,5343,3832,930Regulated natural gas469557619Total operating revenues19,62414,52914,272Operating ExpensesFuel used in electric generation and purchased power - regulated5,5823,3093,345Fuel used in electric generation and purchased power - non-regulated 1,7221,4881,199Cost of natural gas and coal sold264348381Operation, maintenance and other5,0063,7703,825Depreciation and amortization2,2891,8061,786Property and other taxes985704702Goodwill and other impairment charges666335726Total operating expenses16,51411,76011,964Gains on Sales of Other Assets and Other, net168153Operating Income3,1262,7772,461Other Income and ExpensesEquity in earnings of unconsolidated affiliates148160116Impairments and gains on sales of unconsolidated affiliates2211103Other income and expenses, net397376370Total other income and expenses567547589Interest Expense1,242859840Income From Continuing Operations Before Income Taxes2,4512,4652,210Income Tax Expense from Continuing Operations705752890Income From Continuing Operations1,7461,7131,320Income From Discontinued Operations, net of tax3613Net Income 1,7821,7141,323Less: Net Income Attributable to Noncontrolling Interests 1483Net Income Attributable to Duke Energy Corporation$         1,768$         1,706$    1,320---Earnings Per Share - Basic and DilutedIncome from continuing operations attributable to Duke Energy Corporation common shareholdersBasic $           3.01$           3.83$      2.99Diluted$           3.01$           3.83$      2.99Income from discontinued operations attributable to Duke Energy Corporation common shareholdersBasic $           0.06$              -$      0.01Diluted$           0.06$              -$      0.01Net Income attributable to Duke Energy Corporation common shareholdersBasic $           3.07$           3.83$      3.00Diluted$           3.07$           3.83$      3.00Dividends declared per share$           3.03$           2.97$      2.91Weighted-average shares outstandingBasic574444439Diluted575444440 DUKE ENERGY CORPORATIONCONSOLIDATEDBALANCE SHEETS(Unaudited)(In millions)December 31,December 31,20122011ASSETSCurrent AssetsCash and cash equivalents$               1,424$               2,110Short-term investments333190Receivables (net of allowance for doubtful accounts of $34 at December 31, 2012 and $35 at December 31, 2011)1,516784Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $44 at December 31, 2012 and $40 at December 31, 2011)1,2011,157Inventory3,2231,588Other2,4251,051Total current assets10,1226,880Investments and Other AssetsInvestments in equity method unconsolidated affiliates483460Nuclear decommissioning trust funds4,2422,060Goodwill16,3653,849Intangibles, net372363Notes receivable7162Restricted other assets of variable interest entities62135Other2,3992,231Total investments and other assets23,9949,160Property, Plant and EquipmentCost98,83360,377Cost, variable interest entities1,558913Accumulated depreciation and amortization(31,969)(18,709)Generation facilities to be retired, net13680Net property, plant and equipment68,55842,661Regulatory Assets and Deferred DebitsRegulatory assets 11,0043,672Other178153Total regulatory assets and deferred debits11,1823,825Total Assets$           113,856$             62,526LIABILITIES AND EQUITYCurrent LiabilitiesAccounts payable$               2,444$               1,433Notes payable and commercial paper745154Non-recourse notes payable of variable interest entities312273Taxes accrued459431Interest accrued448252Current maturities of long-term debt3,1101,894Other2,5111,091Total current liabilities10,0295,528Long-term Debt35,49917,730Non-recourse long-term debt of variable interest entities852949Deferred Credits and Other LiabilitiesDeferred income taxes10,4907,581Investment tax credits458384Accrued pension and other post-retirement benefit costs2,520856Asset retirement obligations5,1691,936Regulatory liabilities5,5842,919Other2,2211,778Total deferred credits and other liabilities26,44215,454Commitments and ContingenciesPreferred stock of subsidiaries93-EquityCommon stock, $0.001 par value, 2 billion shares authorized; 704 million  and 445 million shares outstanding at December 31, 2012 and December 31, 2011, respectively11Additional paid-in capital39,27921,132Retained earnings1,8891,873Accumulated other comprehensive loss(306)(234)Total Duke Energy Corporation shareholders' equity40,86322,772Noncontrolling interests7893Total equity40,94122,865Total Liabilities and Equity$           113,856$             62,526 DUKE ENERGY CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In millions)Years Ended December 31,20122011CASH FLOWS FROM OPERATING ACTIVITIESNet income $             1,782$             1,714Adjustments to reconcile net income to net cash provided byoperating activities:3,4391,958Net cash provided by operating activities5,2213,672CASH FLOWS FROM INVESTING ACTIVITIESNet cash used in investing activities(6,174)(4,434)CASH FLOWS FROM FINANCING ACTIVITIESNet cash provided by financing activities2671,202Net (decrease) increase in cash and cash equivalents(686)440Cash and cash equivalents at beginning of period2,1101,670Cash and cash equivalents at end of period$             1,424$             2,110 Duke Energy CarolinasQuarterly HighlightsSupplemental Franchised Electric InformationDecember 2012Three Months EndedYears EndedDecember 31December 31%%20122011Inc.(Dec.)20122011Inc.(Dec.)GWH Sales Residential5,7455,6312.0%26,27928,323(7.2%)General Service6,4196,3571.0%27,47627,593(0.4%)Industrial5,0795,0011.6%20,97820,7830.9%Other Energy Sales73711.6%2902861.1%    Total Regular Sales Billed17,31617,0601.5%75,02376,985(2.5%)Special Sales (1)1,6661,22536.0%6,1305,9113.7%      Total Electric Sales18,98218,2853.8%81,15382,896(2.1%)Unbilled Sales565216161.3%209(769)n/a  Total Electric Sales - Duke Energy Carolinas19,54718,5015.7%81,36282,127(0.9%)Average Number of CustomersResidential2,056,7852,043,1140.7%2,052,7992,040,8480.6%General Service337,316335,2180.6%336,756334,5310.7%Industrial6,6796,872(2.8%)6,7496,958(3.0%)Other Energy Sales14,36314,2620.7%14,34214,2180.9%  Total Regular Sales2,415,1432,399,4660.7%2,410,6462,396,5550.6%Special Sales2124(10.5%)2326(11.5%)Total Average Number of Customers - Duke Energy Carolinas2,415,1642,399,4900.7%2,410,6692,396,5810.6%Heating and Cooling Degree DaysActualHeating Degree Days1,2061,1108.6%2,6943,063(12.0%)Cooling Degree Days2410149.8%1,5681,776(11.7%)Variance from NormalHeating Degree Days(3.5%)(11.7%)n/a(16.5%)(4.4%)n/aCooling Degree Days(44.7%)(77.5%)n/a1.3%19.1%n/a(1)  Fourth quarter 2012 and year-to-date 2012 include 103 GWH and 421 GWH, respectively, of sales associated with the FERC mitigation contracts, for which the financial results are excluded from the U.S. Franchised Electric & Gas segment earnings.  Progress Energy CarolinasQuarterly HighlightsSupplemental Franchised Electric InformationDecember 2012Three Months EndedYears EndedDecember 31December 31%%20122011Inc.(Dec.)20122011Inc.(Dec.)GWH Sales Residential3,7483,6682.2%16,66318,148(8.2%)General Service3,4973,544(1.3%)15,06215,331(1.8%)Industrial2,6242,5732.0%10,50810,613(1.0%)Other Energy Sales31310.0%122124(1.6%)    Total Regular Sales Billed9,9009,8160.9%42,35544,216(4.2%)Special Sales (a)4,1532,76550.2%15,87012,60525.9%      Total Electric Sales14,05312,58111.7%58,22556,8212.5%Unbilled Sales37228n/a165(598)n/a  Total Electric Sales - Progress Energy Carolinas14,42512,60914.4%58,39056,2233.9%Average Number of CustomersResidential1,234,3211,223,2510.9%1,231,0651,221,4260.8%General Service220,156217,9441.0%219,477217,2961.0%Industrial4,4204,469(1.1%)4,4314,486(1.2%)Other Energy Sales1,8111,900(4.7%)1,8361,950(5.8%)  Total Regular Sales1,460,7081,447,5640.9%1,456,8091,445,1580.8%Special Sales1518(16.7%)18180.0%Total Average Number of Customers - Progress Energy Carolinas1,460,7231,447,5820.9%1,456,8271,445,1760.8%Heating and Cooling Degree DaysActualHeating Degree Days1,11698113.8%2,5082,821(11.1%)Cooling Degree Days604922.4%1,8872,122(11.1%)Variance from NormalHeating Degree Days(5.0%)(16.4%)n/a(19.1%)(9.1%)n/aCooling Degree Days(18.9%)(36.4%)n/a3.3%19.1%n/a(a)  Year-to-date 2012 includes 577 GWH of sales associated with the FERC mitigation contracts, for which the financial results are excluded from the U.S. Franchised Electric & Gas segment earnings.  Progress Energy FloridaQuarterly HighlightsSupplemental Franchised Electric InformationDecember 2012Three Months EndedYears EndedDecember 31December 31%%20122011Inc.(Dec.)20122011Inc.(Dec.)GWH Sales Residential4,3094,0945.3%18,25119,238(5.1%)General Service3,6613,6550.2%14,94515,091(1.0%)Industrial776783(0.9%)3,1603,243(2.5%)Other Energy Sales662.4%25250.6%    Total Regular Sales Billed8,7538,5392.5%36,38137,597(3.2%)Special Sales428532(19.6%)1,8182,763(34.2%)      Total Electric Sales9,1819,0711.2%38,19940,360(5.4%)Unbilled Sales(552)(798)(30.9%)244(781)n/a  Total Consolidated Electric Sales - Progress Energy Florida8,6298,2724.3%38,44339,578(2.9%)Average Number of CustomersResidential1,467,2351,453,9820.9%1,464,1541,452,4970.8%General Service188,266186,4321.0%187,445185,8790.8%Industrial2,3662,392(1.1%)2,3712,413(1.7%)Other Energy Sales1,5761,5501.7%1,5601,573(0.8%)  Total Regular Sales1,659,4431,644,3560.9%1,655,5301,642,3620.8%Special Sales181520.0%15150.0%Total Average Number of Customers - Progress Energy Florida1,659,4611,644,3710.9%1,655,5451,642,3770.8%Heating and Cooling Degree DaysActualHeating Degree Days15610647.2%367411(10.7%)Cooling Degree Days42037711.4%3,1113,155(1.4%)Variance from NormalHeating Degree Days(7.3%)(36.9%)n/a(21.5%)(12.0%)n/aCooling Degree Days(4.8%)(14.5%)n/a3.7%5.2%n/a Duke Energy OhioQuarterly HighlightsSupplemental Franchised Electric InformationDecember 2012Three Months EndedYears EndedDecember 31, 2012December 31, 2012%%20122011Inc.(Dec.)20122011Inc.(Dec.)GWH Sales Residential1,8211,7792.4%8,5918,880(3.3%)General Service2,1872,1860.0%9,3759,626(2.6%)Industrial1,4211,3594.6%5,7615,7280.6%Other Energy Sales2835(20.0%)113114(0.9%)    Total Regular Electric Sales Billed5,4575,3591.8%23,84024,348(2.1%)Special Sales 18916117.4%425663(35.9%)      Total Electric Sales5,6465,5202.3%24,26525,011(3.0%)Unbilled Sales988811.4%79(88)n/a  Total Electric Sales - Duke Energy Ohio5,7445,6082.4%24,34424,923(2.3%)Average Number of CustomersResidential735,557732,3590.4%734,270730,8390.5%General Service85,93885,3310.7%85,67285,1430.6%Industrial 2,5712,589(0.7%)2,5822,601(0.7%)Other Energy2,9162,8651.8%2,8982,8501.7%  Total Regular Sales826,982823,1440.5%825,422821,4330.5%Special Sales110.0%110.0%Total Average Number Electric Customers - Duke Energy Ohio826,983823,1450.5%825,423821,4340.5%Heating and Cooling Degree DaysActualHeating Degree Days1,2841,09017.8%3,0023,435(12.6%)Cooling Degree Days514(64.3%)1,3891,3036.6%Variance from NormalHeating Degree Days(3.7%)(19.6%)n/a(17.9%)(5.2%)n/aCooling Degree Days(77.3%)(39.1%)n/a21.2%19.7%n/a   Note: Includes data for Duke Energy Ohio and Duke Energy Kentucky Duke Energy IndianaQuarterly HighlightsSupplemental Franchised Electric InformationDecember 2012Three Months EndedYears EndedDecember 31, 2012December 31, 2012%%20122011Inc.(Dec.)20122011Inc.(Dec.)GWH Sales Residential1,9281,9140.7%8,8679,316(4.8%)General Service1,9311,945(0.7%)8,3148,359(0.5%)Industrial2,5402,555(0.6%)10,41210,2371.7%Other Energy Sales1314(7.1%)5354(1.9%)    Total Regular Electric Sales Billed6,4126,428(0.2%)27,64627,966(1.1%)Special Sales 1,3411,12719.0%5,7965,3707.9%      Total Electric Sales 7,7537,5552.6%33,44233,3360.3%Unbilled Sales14012512.0%135(155)n/a  Total Electric Sales - Duke Energy Indiana7,8937,6802.8%33,57733,1811.2%Average Number of CustomersResidential685,700680,6490.7%683,335678,9310.6%General Service100,171100,0130.2%100,12099,7950.3%Industrial 2,7232,744(0.8%)2,7342,754(0.7%)Other Energy1,4411,4102.2%1,4331,3992.4%  Total Regular Sales790,035784,8160.7%787,622782,8790.6%Special Sales911(18.2%)1011(9.1%)Total Average Number Electric Customers - Duke Energy Indiana790,044784,8270.7%787,632782,8900.6%Heating and Cooling Degree DaysActualHeating Degree Days1,4261,15723.2%3,2423,701(12.4%)Cooling Degree Days512(58.3%)1,4831,3847.2%Variance from NormalHeating Degree Days(1.0%)(21.2%)n/a(18.1%)(5.9%)n/aCooling Degree Days(78.3%)(47.8%)n/a30.8%28.7%n/a DUKE ENERGY CORPORATIONADJUSTED TO REPORTED EARNINGS RECONCILIATIONThree Months Ended December 31, 2012(Dollars in millions, except per-share amounts)Special Items Adjusted EarningsCosts toAchieve,ProgressEnergy MergerEdwardsport ChargesEconomicHedges(Mark-to-Market) *Discontinued OperationsTotal AdjustmentsReported EarningsSEGMENT INCOME U.S. Franchised Electric and Gas$ 498$ -$ (17)D$ -$ -$ (17)$ 481Commercial Power---16B -1616International Energy89-----89Total Reportable Segment Income587-(17)16-(1)586Other(91)(91)A --(91)(182)Total Reportable Segment Income and Other Net Expense$ 496$ (91)$ (17)$ 16$ -$ (92)404Discontinued Operations-31C 3131Net Income (Loss) Attributable to Duke Energy Corporation$ 496$ (91)$ (17)$ 16$ 31$ (61)$ 435EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC$ 0.70$ (0.13)$ (0.02)$ 0.02$ 0.05$ (0.08)$ 0.62EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED$ 0.70$ (0.13)$ (0.02)$ 0.02$ 0.05$ (0.08)$ 0.62A - Net of $73 million tax benefit. $3 million of gain recorded in Regulated electric (Operating Revenues), $166 million recorded within Operating Expenses and $1 million recorded in Interest Expense on the Consolidated Statements of Operations.B - Net of $10 million tax expense. $27 million gain 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 Consolidated Statements of Operations.C - Recorded in Income (Loss) From Discontinued Operations, net of tax on the Consolidated Statements of Operations.D - Net of $11 million tax benefit. Recorded in Regulated Electric within Operating Revenues on the Consolidated Statements of Operations.Weighted Average Shares (reported and adjusted) - in millionsBasic704Diluted705* Represents the mark-to-market impact of derivative contracts, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge or regulatory accounting, used in Duke Energy Corporation's hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, gas, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation's performance across periods.DUKE ENERGY CORPORATIONADJUSTED TO REPORTED EARNINGS RECONCILIATIONDecember 2012 Year-to-Date(Dollars in millions, except per-share amounts)Special Items Adjusted EarningsCosts toAchieve,ProgressEnergy MergerVoluntaryOpportunityPlan DeferralEdwardsport ChargesDNC Host Committee SupportEconomicHedges (Mark-to-Market) *Discontinued OperationsTotal AdjustmentsReported EarningsSEGMENT INCOMEU.S. Franchised Electric and Gas$ 2,086$ -$ 60C $ (402)E$ -$ -$ -$ (342)$ 1,744Commercial Power93----(6)B -(6)87International Energy439-------439Total Reportable Segment Income2,618-60(402)-(6)-(348)2,270Other(135)(397)A --(6)F --(403)(538)Total Reportable Segment Income and Other Net Expense2,483(397)60(402)(6)(6)-(751)1,732Discontinued Operations------36D 3636Net Income (Loss) Attributable to Duke Energy Corporation$ 2,483$ (397)$ 60$ (402)$ (6)$ (6)$ 36$ (715)$ 1,768EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC$ 4.33$ (0.70)$ 0.10$ (0.70)$ (0.01)$ (0.01)$ 0.06$ (1.26)$ 3.07EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED$ 4.32$ (0.70)$ 0.11$ (0.70)$ (0.01)$ (0.01)$ 0.06$ (1.25)$ 3.07A - Net of $239 million tax benefit. $2 million recorded in Regulated electric (Operating Revenues), $628 million recorded within Operating Expenses and $6 million recorded in Interest Expense on the Consolidated Statements of Operations.B - Net of $3 million tax benefit. $6 million loss recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $3 million loss recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) on the Consolidated Statements of Operations.C - Net of $39 million tax expense. $101 million recorded in Operation, maintenance and other and $2 million expense recorded in Depreciation and amortization (all Operating Expenses) on the Consolidated Statements of Operations.D - Recorded in Income (Loss) From Discontinued Operations, net of tax on the Consolidated Statements of Operations.E - Net of $226 million tax benefit. $28 million recorded in Regulated electric within Operating Revenues, $580 million recorded in Impairment charges(Operating Expenses) and $20 million recorded within within Operation, maintenance and other (Operating Expenses) on the Consolidated Statements of Operations.F - Net of $4 million tax benefit. Recorded within within Operation, maintenance and other (Operating Expenses) on the Consolidated Statements of Operations.Weighted Average Shares (reported and adjusted) - in millionsBasic574Diluted575* Represents the mark-to-market impact of derivative contracts, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge or regulatory accounting, used in Duke Energy Corporation's hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, gas, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation's performance across periods. DUKE ENERGY CORPORATIONADJUSTED TO REPORTED EARNINGS RECONCILIATIONThree Months Ended December 31, 2011(Dollars in millions, except per-share amounts)Special Items Adjusted EarningsCosts toAchieve,ProgressEnergy MergerEconomicHedges(Mark-to-Market) *Total AdjustmentsReported EarningsSEGMENT INCOMEU.S. Franchised Electric and Gas$          206$                 -$                  -$                -$          206Commercial Power30-1 B 131International Energy96--96    Total Reportable Segment Income332-11333Other(17)(28) A -(28)(45)Net Income (Loss) Attributable to Duke Energy Corporation$          315$               (28)$                   1$             (27)$          288EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC$         0.71$           (0.06)$                  -$          (0.06)$         0.65EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED$         0.71$           (0.06)$                  -$          (0.06)$         0.65A - Net of $11 million tax benefit. Recorded in Operation, maintenance and other (Operating Expenses) on the Consolidated Statements of Operations. B - Net of $1 million tax expense. Recorded within Non-regulated electric, natural gas, and other (Operating Revenues) on the Consolidated Statements of Operations. Weighted Average Shares (reported and adjusted) - in millionsBasic444Diluted444* Represents the mark-to-market impact of derivative contracts in the non-native portfolio, which is recognized in earnings immediately as such derivative contracts do not qualify for hedge or regulatory accounting, used in Duke Energy's hedging of a portion of the economic value of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in fair value due to market price volatility of the input and output commodities (e.g. coal, power) and, as such, the economic hedging involves both purchases and sales of those input and output commodities related to the generation assets. Because the operations of the generation assets are accounted for under the accrual method, management believes that excluding the impact of mark-to-market changes of the economic hedge contracts from adjusted earnings until settlement better matches the financial impacts of the hedge contract with the portion of the economic value of the underlying hedged asset. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation's performance across periods. DUKE ENERGY CORPORATIONADJUSTED TO REPORTED EARNINGS RECONCILIATIONTwelve Months Ended December 31, 2011(Dollars in millions, except per-share amounts)Special ItemsAdjusted EarningsCosts toAchieve,ProgressEnergy MergerEdwardsport ImpairmentEmission Allowances ImpairmentEconomicHedges(Mark-to-Market) *Discontinued OperationsTotal AdjustmentsReported EarningsSEGMENT INCOME U.S. Franchised Electric and Gas$       1,316$              -$             (135) C $                  -$                  -$                   -$              (135)$       1,181Commercial Power186--(51) E (1) B -(52)134International Energy466-----466    Total Reportable Segment Income1,968-(135)(51)(1)-(187)1,781Other(25)(51) A ---(51)(76)    Total Reportable Segment Income and Other Net Expense1,943(51)(135)(51)(1)-(238)1,705    Discontinued Operations-1 D 11Net Income (Loss) Attributable to Duke Energy Corporation$       1,943$           (51)$             (135)$               (51)$                 (1)$                    1$              (237)$       1,706EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC$          4.38$        (0.12)$            (0.30)$            (0.12)$            (0.01)$                   -$             (0.55)$         3.83EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED$          4.38$        (0.12)$            (0.30)$            (0.12)$            (0.01)$                   -$             (0.55)$         3.83A - Net of $17 million tax benefit. Recorded in Operation, maintenance and other (Operating Expenses) on the Consolidated Statements of Operations. B - Net of an insignificant tax amount. $2 million of gain recorded within Non-regulated electric, natural gas, and other (Operating Revenues) and $3 million loss recorded within Fuel used in electric generation and purchased power-non-regulated (Operating Expenses) on the Consolidated Statements of Operations.C - Net of $87 million tax benefit. Recorded in Impairment charges within Operating Expenses on the Consolidated Statements of Operations.D - Recorded in Income (Loss) From Discontinued Operations, net of tax on the Consolidated Statements of Operations.E - Net of $28 million tax benefit. Recorded in Impairment charges within Operating Expenses on the Consolidated Statements of Operations.Weighted Average Shares (reported and adjusted) - in millionsBasic444Diluted444* 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. Duke Energy CorporationOperations and Maintenance ExpenseFor the Three Months and Years Ended December 31, 2012 and 2011(In millions)Three Months EndedYears EndedDecember 31, 2012December 31, 2011December 31, 2012December 31, 2011Operation, maintenance and other (a)$1,744$1,065$5,006$3,770Adjustments:Costs to Achieve, Progress Merger (b)(153)(39)(493)(68)Voluntary Opportunity Plan Deferral (b)--101-Edwardsport Legal Fees (b)(c)--(20)-DNC Host Committee Support (b)--(10)-Reagents Recoverable (d)(14)(12)(58)(51)Energy Efficiency Recoverables (d)(72)(33)(201)(97)Other Deferrals and Recoverables (d)(24)(10)(60)(50)RTO Costs (d)3(5)(3)(36)Other (e)62(31)139137Adjusted Operation, maintenance and other $1,546$935$4,401$3,605(a) As reported in the Consolidated Statements of Operations(b) Presented as a special item for purposes of calculating adjusted diluted earnings per share(c) Recorded in the first quarter of 2012 as part of the Edwardsport Impairment resulting from the settlement agreement with the Indiana Office of Consumer Counselor, the DukeEnergy Industrial Group, and Nucor Steel - Indiana.(d) Primarily represents expenses to be deferred or recovered through rate riders (e) Primarily intercompany and other eliminations / adjustmentsNote: Includes Progress Energy expenses beginning July 2, 2012. SOURCE Duke Energy