Duke Energy CEO Jim Rogers and Progress Energy CEO Bill Johnson Available to Discuss Duke Energy/Progress Energy Merger
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o $26 Billion Transaction Will Create Nation's Largest Utility with a
Combined Enterprise Value of Approximately $65 Billion
o Diversified Generation Portfolio in Six Regulated Service Territories
o Transaction Expected to be Accretive to Adjusted Diluted Earnings in
First Year
Duke Energy (NYSE: DUK) and Progress Energy (NYSE: PGN) announced today that both companies' Boards of Directors have unanimously approved a definitive merger agreement to combine the two companies in a stock-for-stock transaction.
The combined company, to be called Duke Energy, will be the country's largest utility, with:
o Approximately $65 billion in enterprise value and $37 billion in market
capitalization
o The country's largest regulated customer base, providing service to
approximately 7.1 million electric customers in six regulated service
territories -- North Carolina, South Carolina, Florida, Indiana,
Kentucky and Ohio
o Approximately 57 gigawatts of domestic generating capacity from a
diversified mix of coal, nuclear, natural gas, oil and renewable
resources
o The largest regulated nuclear fleet in the country.
WHEN: Monday, Jan. 10, 2011, at 11:15 a.m. EST
WHERE: The telephone numbers for today's teleconference are:
o Toll-free dial-in number: (866) 631-2514
o International dial-in number: (650) 521-5256
WHY: CEOs Jim Rogers of Duke Energy and Bill Johnson of Progress Energywill discuss the combination of the two companies.
About Duke Energy
Duke Energy is one of the largest electric power holding companies in the United States. Its regulated utility operations serve approximately 4 million customers located in five states in the Southeast and Midwest, representing a population of approximately 11 million people. 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 500 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com. To learn more and contribute to the discussion about the energy issues of today and the possibilities of tomorrow see www.sheddingalight.org.
About Progress Energy
Progress Energy (NYSE: PGN), headquartered in Raleigh, N.C., is a Fortune 500 energy company with about 22,000 megawatts of generation capacity and approximately $10 billion in annual revenues. Progress Energy includes two major electric utilities that serve about 3.1 million customers in the Carolinas and Florida. The company has earned the Edison Electric Institute's Edison Award, the industry's highest honor, in recognition of its operational excellence, and was the first utility to receive the prestigious J.D. Power and Associates Founder's Award for customer service. The company is pursuing a balanced strategy for a secure energy future, which includes aggressive energy-efficiency programs, investments in renewable energy technologies and a state-of-the-art electricity system. Progress Energy celebrated a century of service in 2008. Visit the company's website at www.progress-energy.com.
Non-GAAP Financial Measures
Adjusted Earnings per Share Accretion in Year One
The materials for the Duke Energy and Progress Energy presentation "Creating the Leading U.S. Utility" on January 10, 2011 include a discussion of Duke Energy's assumption that the merger transaction is anticipated to be accretive in the first year after closing, based upon adjusted diluted EPS.
This accretion assumption is a non-GAAP financial measure as it is based upon diluted EPS from continuing operations attributable to Duke Energy Corporation shareholders, adjusted for the per-share impact of special items and the mark-to-market impacts of economic hedges in the Commercial Power segment.
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 (including costs-to-achieve the merger) and the mark-to-market impacts of economic hedges in the Commercial Power segment. On a reported diluted EPS basis, this transaction is not anticipated to be accretive due to the level of costs-to-achieve the merger. Due to the forward-looking nature of this non-GAAP financial measure for future periods, information to reconcile it to the most directly comparable GAAP financial measure is not available at this time, as management is unable to project special items or mark-to-market adjustments for future periods.
CONTACT: Tom Shiel
Phone: 704-382-2355
24-Hour: 800-559-3853
SOURCE Duke Energy
Web Site: www.progress-energy.com
