Duke Energy 2011 Annual Report Download - page 133

PART II
DUKE ENERGY CORPORATION •DUKE ENERGY CAROLINAS, LLC •DUKE ENERGY OHIO, INC. •DUKE ENERGY INDIANA, INC.
Combined Notes to Consolidated Financial Statements – (Continued)
No assurances can be given as to the timing of the satisfaction
of all closing conditions or that all required approvals will be received.
The Merger Agreement contains certain termination rights for
both Duke Energy and Progress Energy, and further provides for the
payment of a termination fee of $400 million by Progress Energy
under specified circumstances and a termination fee of $675 million
by Duke Energy under specified circumstances. On January 8,
2012, Duke Energy and Progress Energy mutually agreed to extend
the initial termination date of January 8, 2012 specified in the
Merger Agreement to July 8, 2012.
For the year ended December 31, 2011, Duke Energy incurred
transaction costs related to the Progress Energy merger of $68 million
which are recorded within Operating Expenses in Duke Energy’s
Consolidated Statement of Operations.
See Note 5 for information regarding litigation related to the
proposed merger with Progress Energy.
In June 2009, Duke Energy completed the purchase of the
remaining approximate 24% noncontrolling interest in the Aguaytia
Integrated Energy Project (Aguaytia), located in Peru, for $28 million.
Subsequent to this transaction, Duke Energy owns 100% of
Aguaytia. As the carrying value of the noncontrolling interest was $42
million at the date of acquisition, Duke Energy’s consolidated equity
increased $14 million as a result of this transaction. Cash paid for
acquiring this additional ownership interest is included in
Distributions to noncontrolling interests within Net cash provided by
(used in) financing activities on the Consolidated Statements of Cash
Flows.
In June 2009, Duke Energy acquired North Allegheny Wind,
LLC (North Allegheny) in Western Pennsylvania for $124 million.
The fair value of the net assets acquired were determined primarily
using a discounted cash flow model as the output of North Allegheny
is contracted for 23 1/2years under a fixed price purchased power
agreement. Substantially all of the fair value of the acquired net assets
has been attributed to property, plant and equipment. There was no
goodwill associated with this transaction. North Allegheny owns 70
MW of power generating assets that began commercially generating
electricity in the third quarter of 2009.
The pro forma results of operations for Duke Energy as if those
acquisitions discussed above which closed prior to December 31,
2011 occurred as of the beginning of the periods presented do not
materially differ from reported results.
Dispositions.
In December 2010, Duke Energy completed the previously
announced agreement with investment funds managed by Alinda to
sell a 50% ownership interest in DukeNet Communications, LLC
(DukeNet). As a result of the disposition transaction, DukeNet and
Alinda became equal 50% owners in the new joint venture. Duke
Energy received $137 million in cash. The DukeNet disposition
transaction resulted in a pre-tax gain of $139 million, which was
recorded in Gains on Sales of Other Assets and Other, net in the
Consolidated Statements of Operations. The pre-tax gain reflects the
gain on the disposition of Duke Energy’s 50% interest in DukeNet, as
well as the gain resulting from the re-measurement to fair value of
Duke Energy’s retained noncontrolling interest. Effective with the
closing of the DukeNet disposition transaction, on December 20,
2010, DukeNet is no longer consolidated into Duke Energy’s
consolidated financial statements and is now accounted for by Duke
Energy as an equity method investment.
In the first quarter of 2009, Duke Energy completed the sale of
two United Kingdom wind projects acquired in the Catamount Energy
Corporation (Catamount) acquisition. No gain or loss was recognized
on these transactions.
Sales of Other Assets.
The following table summarizes cash proceeds and related net
pre-tax gains related to the sales of the assets for the years ended
December 31, 2011, 2010 and 2009. These amounts primarily
relate to the sales of emission allowances by U.S. Franchised Electric
and Gas (USFE&G) and Commercial Power. Net pre-tax gains are
recorded in Gains on Sales of Other Assets and Other, net, in the
Consolidated Statements of Operations.
(in millions)
Duke
Energy
Duke Energy
Carolinas
Duke Energy
Ohio
Duke Energy
Indiana
For the year ended December 31, 2011
Proceeds $12 $2 $7 $1
Net pre-tax gains(a) 815—
For the year ended December 31, 2010
Proceeds 160 8 13 —
Net pre-tax gains (losses)(b) 15373(2)
For the year ended December 31, 2009
Proceeds 63 24 37 —
Net pre-tax gains (losses)(c) 36 24 12 (4)
(a) These gains primarily relate to sales of emission allowances by USFE&G and Commercial Power.
(b) These gains primarily relate to the DukeNet gain as discussed above and sales of emission allowances by USFE&G and Commercial Power. The loss at Duke Energy Indiana relates
primarily to the retirement of certain software assets.
(c) These gains primarily relate to sales of emission allowances by USFE&G and Commercial Power. The loss at Duke Energy Indiana relates primarily to the sale of NOx.
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