10-QPeriod: Q1 FY2009

Duke Energy CORP Quarterly Report for Q1 Ended Mar 31, 2009

Filed May 8, 2009For Securities:DUKDUKBDUK-PA

Summary

Duke Energy Corporation's (DUK) first quarter 2009 filing indicates a decrease in net income attributable to common shareholders to $344 million, or $0.27 per diluted share, compared to $465 million, or $0.37 per diluted share, in the same period of 2008. This decline was primarily driven by lower operating income, reduced equity earnings from unconsolidated affiliates, and a substantial increase in pension contributions. Total operating revenues saw a slight decrease, influenced by lower sales volumes in the U.S. Franchised Electric and Gas segment due to economic conditions, partially offset by higher revenues in the Commercial Power segment due to regulatory plan implementation and mark-to-market adjustments. Despite the decline in profitability, the company maintained robust financing activities, with a significant increase in net cash provided by financing activities due to higher net issuances of long-term debt. This reflects proactive management of its capital structure in a challenging economic environment. The company remains compliant with its debt covenants. Investors should note the ongoing focus on regulatory matters across its various operating jurisdictions, including rate filings, energy efficiency programs, and environmental compliance projects, which will continue to shape future financial performance.

Financial Highlights

5 data points
Beta

Revenue

$3.31B

Net Income

$344.00M

10.4% Net Margin

EPS (Diluted)

$0.81

Financial Statements
Beta
Revenue$3.31B
Operating Income$681.00M
Net Income$344.00M
EPS (Basic)$0.81
EPS (Diluted)$0.81

Key Highlights

  • 1Net income attributable to Duke Energy Corporation decreased by $121 million to $344 million in Q1 2009 compared to Q1 2008.
  • 2Diluted earnings per share (EPS) decreased to $0.27 in Q1 2009 from $0.37 in Q1 2008.
  • 3Total operating revenues decreased slightly by $25 million to $3,312 million in Q1 2009.
  • 4Operating expenses increased by $33 million to $2,637 million in Q1 2009.
  • 5Cash flow from operating activities significantly decreased from $1,012 million in Q1 2008 to $190 million in Q1 2009, largely due to a $500 million increase in pension contributions.
  • 6Net cash provided by financing activities increased substantially to $919 million in Q1 2009 from $27 million in Q1 2008, driven by higher long-term debt issuances.
  • 7The company has $1,457 million in available credit facility capacity as of March 31, 2009.

Frequently Asked Questions

The primary driver for the decrease in net income for the first quarter of 2009 was lower operating income, which was impacted by a decrease in U.S. Franchised Electric and Gas revenues due to lower sales volumes and a decrease in International Energy revenues. Additionally, equity earnings from unconsolidated affiliates declined, and pension contributions significantly increased, contributing to the overall reduction in net income.

Duke Energy significantly increased its net cash provided by financing activities in the first quarter of 2009, largely due to higher net issuances of long-term debt. The company also issued common stock under its Dividend Reinvestment Plan and 401(k) plans. As of March 31, 2009, Duke Energy maintained substantial available credit facility capacity of $1,457 million, indicating a strong liquidity position.

Duke Energy is involved in numerous regulatory and legal proceedings across its operating jurisdictions. Key matters include rate case filings, energy efficiency program approvals (e.g., save-a-watt programs), environmental compliance projects (e.g., Clean Air Act regulations), capital expansion projects (e.g., Cliffside Unit 6, Edwardsport IGCC plant), and ongoing litigation related to New Source Review (NSR) violations and environmental concerns. These matters could materially affect the company's financial condition and future results.

As of March 31, 2009, Duke Energy had goodwill of approximately $4.7 billion allocated across its business segments. The company regularly assesses its goodwill for impairment. As of the latest annual impairment test in August 2008, the fair value of its reporting units exceeded their carrying values, and no goodwill impairment charges were recorded. However, management continues to monitor market and economic events, and further impairment charges are possible if triggering events occur before the next annual test.