Duke Energy 2010 Annual Report Download - page 5

DELIVERING RESULTS TODAY: A FINANCIAL REPORT CARD
Duke Energy delivered exceptional 2010 results, both financially and operationally.
During 2010, we met our financial commitments as we grew earnings, increased
the quarterly dividend, and maintained the strength of our balance sheet. Extreme
weather boosted sales and earnings during 2010. We ended the year with adjusted diluted
earnings per share of $1.43, above our original adjusted diluted earnings guidance range
of $1.25 to $1.30.
The exceptional performance of our fleet and our employees’ dedication to delivering
high-quality customer service allowed us to capture the value of increased weather-related
sales. The company is positioned to achieve a long-term adjusted diluted earnings growth
rate of 4 to 6 percent.
1
In 2010, we increased our quarterly cash dividend to shareholders from $0.24 per share
to $0.245 per share. We are committed to growing the dividend and have targeted a long-
term dividend payout ratio of 65 to 70 percent, based on adjusted diluted earnings per share.
In 2010, we continued to focus on maintaining the
strength of our balance sheet. We are taking advantage of
historically low interest rates to issue debt to finance our
modernization programs. Over the past two years, we have
issued just over $5 billion of fixed-rate debt at an average
interest rate of 4.8 percent. These low interest rates will
help us mitigate customer rate impacts.
Our strong investment-grade credit ratings have stable
outlooks with both S&P and Moody’s. We had total avail-
able liquidity of approximately $3.4 billion at year-end.
Our shareholders enjoyed a total return (including
dividends and the change in stock price) of 9.5 percent in
2010, outperforming the Philadelphia Utility Index, which
returned 5.7 percent. Longer term, too, Duke Energy has
outperformed the utility index, with cumulative three-year
returns of 4.7 percent and five-year returns of 44.2 percent,
compared to -15.4 percent and 20.9 percent, respectively,
for the utility index.
INTENDED MERGER WITH PROGRESS ENERGY
In January 2011, we announced our intended merger with Progress Energy. (See Creating
the Leading U.S. Utility, Page 2.) Headquartered in Raleigh, N.C., Progress Energy
has regulated utility operations in the Carolinas and Florida, with more than 3 million
customers. Our combined company will be unsurpassed in size and scale, serving more
than 7 million customers with around 57,000 megawatts (MW) of domestic nuclear, coal,
hydro and alternative energy generation. We are targeting closing the transaction by the end
of 2011, subject to shareholder and regulatory approval.
This strategic transaction involves more than just becoming the largest utility. The
size and scale of the combined company gives us the ability to achieve efficiencies and
effectively manage the transformation occurring in our industry. Additionally, we add an
outstanding group of teammates to help navigate the combined company into the future.
Over time, we believe that our customers will benefit from productivity gains and that our
employees will benefit from increased opportunities. We expect shareholders to realize earn-
ings accretion, based on adjusted diluted earnings per share, in the first year after closing.
We are very excited about this transaction. Our combined strength will exceed the
strength we have as separate companies. It will allow us to provide benefits to all our
LETTER TO STAKEHOLDERS (CONTINUED)
TOTAL SHAREHOLDER RETURN
(for periods ending Dec. 31, 2010)
One Year Three Years Five Years
45%
30
15
0
-15
Duke Energy Corporation
Philadelphia Stock Exchange Utility Sector Index
S&P 500 Index
1 From a base of 2009 adjusted diluted earnings per share of $1.22.
DUKE ENERGY CORPORATION / 2010 ANNUAL REPORT
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