Duke Energy 2007 Annual Report Download - page 33

DUKE ENERGY 2007 SUMMARY ANNUAL REPORT 31
Non-GAAP Financial Measures
2007 AND 2006 ONGOING DILUTED EARNINGS
PER SHARE (“EPS”)
Duke Energy’s 2007 Summary Annual Report references 2007
and 2006 ongoing diluted EPS of $1.24 and $0.99, respectively.
Ongoing diluted EPS is a non-GAAP (generally accepted account-
ing principles) financial measure, as it represents diluted EPS from
continuing operations, 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 con-
tinuing operations to ongoing diluted EPS for 2007 and 2006:
2007 2006
Diluted EPS from continuing operations, as reported $ 1.20 $ 0.91
Diluted EPS from discontinued operations, as reported (0.02) 0.66
Diluted EPS, as reported 1.18 $ 1.57
Adjustments to reported EPS:
Diluted EPS from discontinued operations 0.02 (0.66)
Diluted EPS impact of special items (see detail below) 0.04 0.08
Diluted EPS, ongoing $ 1.24 $ 0.99
The following is the detail of the $(0.04) in special items
impacting diluted EPS for 2007:
2007
Diluted
Pre-Tax Tax EPS
(In millions, except per-share amounts) Amount Effect Impact
Convertible debt costs associated with
the spinoff of Spectra Energy $(21) — $(0.02)
Costs to achieve the Cinergy merger (54) 19 (0.03)
IT severance costs (12) 4 —
Settlement reserves and adjustments 24 (9) 0.01
Total Diluted EPS impact $(0.04)
The following is the detail of the $(0.08) in special items
impacting diluted EPS for 2006:
2006
Diluted
Pre-Tax Tax EPS
(In millions, except per-share amounts) Amount Effect Impact
Settlement reserves $(165) 58 $(0.09)
Gain on sale of interest in Crescent 246 (124) 0.10
Impairment of Campeche investment (50) — (0.04)
Costs to achieve the Cinergy merger (128) 45 (0.07)
Tax adjustments 27 0.02
Total Diluted EPS impact $(0.08)
2008 EMPLOYEE INCENTIVE TARGET MEASURE
Duke Energy’s 2007 Summary Annual Report references the
company’s 2008 employee incentive target. The EPS measure
used for employee incentive bonuses is based on ongoing diluted
EPS. Ongoing diluted EPS is a non-GAAP financial measure as it
represents diluted EPS from continuing operations 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 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 this non-GAAP
financial measure, information to reconcile it to the most directly
comparable GAAP financial measure is not available at this
time, as management is unable to forecast special items for
future periods.
ANTICIPATED ONGOING DILUTED EPS GROWTH RATES
THROUGH 2012
Duke Energy’s 2007 Summary Annual Report references the
expected range of growth of 5 to 7 percent in ongoing diluted
EPS through 2012 on a compound annual growth rate (“CAGR”)
basis. These growth percentages are based on anticipated ongoing
diluted EPS amounts for future periods. Ongoing diluted EPS is
a non-GAAP financial measure as it represents anticipated diluted
EPS from continuing operations, adjusted for the impact of special
items. Special items represent certain charges and credits which
management believes will not be recurring on a regular basis.
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 and related growth rates for future
periods, information to reconcile this non-GAAP financial measure
to the most directly comparable GAAP financial measure is not
available at this time, as management is unable to forecast special
items for future periods.
FORECASTED 2008 ONGOING SEGMENT AND
ONGOING TOTAL SEGMENT EBIT
Duke Energy’s 2007 Summary Annual Report includes a discus-
sion of forecasted 2008 ongoing EBIT for each of Duke Energy’s
reportable segments as a percentage of forecasted 2008 ongoing
total segment EBIT. Forecasted 2008 ongoing segment and total
segment EBIT amounts are non-GAAP financial measures, as
they reflect segment and total segment EBIT, adjusted for the
impact of special items. Special items represent certain charges
and credits which management believes will not be recurring on
a regular basis. The most directly comparable GAAP measure for
forecasted ongoing segment EBIT is reported segment EBIT from
continuing operations, which includes the impact of special items.
The most directly comparable GAAP measure for ongoing total
segment EBIT is reported total segment EBIT, which includes
the impact of special items. Due to the forward-looking nature of
these non-GAAP financial measures 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 management is unable to forecast special items
for future periods.