2012 SUSTAINABILITY REPORT Duke Energy Home | Sustainability | Annual Report | Feedback

Introduction Sustainability Plan and Approach Innovative Products and Services Environmental Footprint Quality Workforce Strong Communities Governance and Transparency

Financial strength supports sustainable growth Performance Excellence: Doing business better Supply Chain combines best practices of both companies Upholding high ethical standards Governance ratings Global Reporting Initiative About our data Forward-Looking Information Non-GAAP Financial Measures Engaged in the political arena Spending with diverse suppliers continues to grow Engaging stakeholders Partnerships and memberships Independent review Shedding a Light on Energy Issues

Non-GAAP Financial Measures

Adjusted earnings and adjusted diluted earnings per share
Duke Energy’s 2012 adjusted earnings were $2,483 million and adjusted diluted earnings per share (EPS) were $4.32. Adjusted earnings and adjusted diluted EPS is a non-GAAP (generally accepted accounting principles) financial measure, as it represents income from continuing operations after deducting income attributable to noncontrolling interests, adjusted for the dollar and 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, used in Duke Energy’s hedging of a portion of the economic value of certain of its generation assets in the Commercial Power segment. The economic value of the generation assets is subject to fluctuations in the 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 purchase 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 earnings and adjusted diluted EPS provides an additional relevant comparison of the company’s performance across periods. Adjusted earnings and adjusted diluted EPS is also used as a basis for employee incentive bonuses.

The most directly comparable GAAP measure for adjusted earnings and adjusted diluted EPS is net income and diluted EPS attributable to Duke Energy Corporation common shareholders, which includes the dollar and per-share impact of special items, the mark-to-market impacts of economic hedges in the Commercial Power segment and discontinued operations. The table at right is a reconciliation of net income and diluted EPS to adjusted earnings and adjusted diluted EPS for 2012, 2011 and 2010.

Duke Energy’s forecasted 2013 adjusted diluted EPS outlook range is $4.20 to $4.45 per share, which is consistent with the 2013 employee incentive earnings target. Duke Energy’s long-term targeted range of growth is 4 percent to 6 percent in adjusted diluted EPS (on a compound annual growth rate (CAGR) basis). 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 to future periods.

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