Duke Energy 2006 Annual Report Download - page 40

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NON-GAAP FINANCIAL MEASURES
2006 AND 2005 ONGOING DILUTED EARNINGS
PER SHARE (“EPS”)
Duke Energy’s 2006 Summary Annual Report references
2006 and 2005 ongoing diluted EPS of $1.81 and $1.73,
respectively. Ongoing diluted EPS is a non-GAAP (generally
accepted accounting principles) financial measure, as it
represents diluted EPS from continuing operations plus the
per-share effect of any discontinued operations from our Crescent
Resources real estate development company (“Crescent”) prior to
the deconsolidation of Crescent in September 2006, adjusted for
the per-share impact of special items. Special items represent
certain charges and credits which management believes will not
be recurring on a regular basis. The following is a reconciliation
of reported diluted EPS from continuing operations to ongoing
diluted EPS for 2006 and 2005:
2006 2005
Diluted EPS from continuing operations, as reported $ 1.70 $ 2.60
Diluted EPS from discontinued operations, as reported (0.13) (0.72)
Diluted EPS, as reported 1.57 1.88
Adjustments to reported EPS:
Diluted EPS from discontinued operations
excluding Crescent Resources,
and cumulative effect of change
in accounting principle 0.13 0.73
Diluted EPS impact of special items
(see detail below) 0.11 (0.88)
Diluted EPS, ongoing $1.81 $1.73
The following is the detail of the $(0.11) in special items impact-
ing diluted EPS for 2006:
2006
Diluted
Pre-Tax Tax EPS
(In millions, except per-share amounts) Amount Effect Impact
Natural Gas Transmission gain on
contract settlement $ 24 $ (8) $ 0.01
Duke Energy portion of gain on
Duke Energy Field Services’
(“DEFS”) asset sale 14 (5) 0.01
Costs to achieve the Cinergy merger (128) 45 (0.07)
Costs to achieve the spinoff of Spectra Energy (60) 7 (0.05)
Impairment of Campeche investment (50) — (0.04)
Gain on sale of interest in Crescent 246 (124) 0.10
Gain related to the issuance of units
of Natural Gas Transmission’s Canadian
income fund 15 (5) 0.01
Settlement reserves (165) 58 (0.09)
Impairment of Bolivia investment (28) 31 —
Tax adjustment — 8 0.01
Total Diluted EPS impact $(0.11)
The following is the detail of the $0.88 in special items impacting
diluted EPS for 2005:
2005
Diluted
Pre-Tax Tax EPS
(In millions, except per-share amounts) Amount Effect Impact
Gain on sale of TEPPCO GP
(net of minority interest of
$343 million) $791 $(293) $ 0.51
Gain on sale of TEPPCO LP units 97 (36) 0.06
Loss on de-designation of Field Services’
hedges, net of settlements on
2005 positions (23) 9 (0.01)
Additional liabilities related to
mutual insurance companies (28) 10 (0.02)
Gain on transfer of 19.7 percent
interest in DEFS to ConocoPhillips 576 (213) 0.37
Impairment of Campeche investment (20) 6 (0.01)
Initial and subsequent net mark-to-market
gains on de-designating Southeast
Duke Energy North America
(“DENA”) hedges 21 (8) 0.01
Loss on Southeast DENA contract
termination (75) 28 (0.04)
Tax adjustments — 12 0.01
Total Diluted EPS impact $ 0.88
PROCEEDS FROM CERTAIN SIGNIFICANT 2006
DISPOSITION TRANSACTIONS
Duke Energy’s 2006 Summary Annual Report references the
nearly $2 billion in after-tax proceeds raised from selling the
commercial marketing and trading (“CMT”) operations and
effectively half of Crescent. The following represents the
components of the after-tax proceeds from these transactions:
(In millions)
Proceeds related to Creation of Crescent Joint Venture
Net proceeds from issuance of debt by Crescent $1,190
Proceeds received from sale of equity interest 415
Estimated income tax payments resulting from transaction (135)
Reduction in reported cash due to deconsolidation of Crescent (30)
Net after-tax proceeds $1,440
Proceeds on Sale of CMT
Net proceeds received (including working capital and base price) $700
Estimated income tax payments resulting from transaction (145)
Net after-tax proceeds $555
Total combined net after-tax proceeds $1,995