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Acquisitions And Sales Of Other Assets | 3 Months Ended
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Mar. 31, 2013
Acquisitions And Sales Of Other Assets [Abstract] |
Acquisitions And Sales Of Other Assets | 2. A CQUISITIONS, DISPOSITIONS AND SALES OF OTHER ASSETS A CQUISITIONS The Duke Energy Registrants consolidate assets and liabilities from acquisitions as of the purchase date, and include earnings from acquisitions in consolidated earnings after the purchase date. Merger with Progress Energy On July 2, 2012, Duke Energy completed the merger with Progress Energy, a North Carolina corporation engaged in the regulated utility business of generation, transmission and distribution and sale of electricity in portions of North Carolina, South Carolina and Florida. As a result of the merger, Progress Energy became a wholly owned subsidiary of Duke Energy. Purchase Price Pursuant to the merger, all Progress Energy common shares were exchanged at the fixed exchange ratio of 0.87083 common shares of Duke Energy for each Progress Energy common share. The total consideration transferred of $18,071 million, including $62 million fair value of stock-based compensation awards, was based on the closing price of Duke Energy common shares on July 2, 2012 The fair value of Progress Energy's assets acquired and liabilities assumed was determined based on significant estimates and assumptions, including level 3 inputs, which are judgmental in nature. The estimates and assumptions include the projected timing and amount of future cash flows, discount rates reflecting risk inherent in the future cash flows and future market prices. The fair value of Progress Energy's assets acquired and liabilities assumed utilized for the purchase price allocation are preliminary. These amounts are subject to revision until the valuations are completed, and to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date, including but not limited to the resolution of matters pertaining to the retirement of Duke Energy Florida's Crystal River Nuclear Station - Unit 3 (Crystal River Unit 3) as well as certain other tax and contingency related items. The significant assets and liabilities for which preliminary valuation amounts are reflected as of the filing of this Form 10-Q include the fair value of the acquired long-term debt, asset retirement obligations, capital leases and pension and other post-retirement benefit (OPEB) plans. Additionally the February 5, 2013 announcement of the decision to retire Crystal River Unit 3, reflects additional information related to the facts and circumstances that exis ted as of the acquisition date. S ee Note 4 for additional information related to Crystal River Unit 3. As such, the Progress Energy assets acquired and liabilities assumed are presented as if the retirement of Crystal River Unit 3 occurred on the acquisition date. The fair value of the outstanding stock compensation awards is included in the purchase price as consideration transferred. The majority of Progress Energy's operations are subject to the rate-setting authority of the F ERC, NC UC, PSC SC, and FPSC and are account ed for pursuant to U.S. GAAP, including the accounting guidance for regulated operations. T he rate-setting and cost recovery provisions currently in place for Progress Energy's regulated operations provide revenues derived from costs, including a return on investment of assets and liabilities included in rate base. Except for long-term debt, asset retirement obligations, capital leases, pension and OPEB plans and the wholesale portion of Duke Energy Florida's Crystal River Unit 3, the fair values of Progress Energy's tangible and intangible assets and liabilities subject to these rate-setting provisions approximate their carrying values, and the assets and liabilities acquired and pro forma financial information do not reflect any net adjustments related to these amounts. The difference between fair value and the pre-merger carrying amounts for Progress Energy's long-term debt, asset retirement obligations, capital leases and pension and OPEB plans for the regulated operations were recorded as R egulatory asset s. The excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed was recognized as goodwill at the acquisition date. The goodwill reflects the value paid primarily for the long-term potential for enhanced access to capital as a result of the company's increased scale and diversity, opportunities for synergies, and an improved risk profile. The goodwill resulting from Duke Energy's merger with Progress Energy was preliminarily allocated entirely to the USFE&G segment, but is subject to change as additional information is obtained. None of the goodwill recognized is deductible for income tax purposes, and as such, no deferred taxes have been recorded related to goodwill. The preliminary purchase price allocation of the merger is presented in the following table.
(in millions) |  |  |
Current assets |  | $ | 3,204
Property, plant and equipment |  |  | 23,122
Goodwill |  |  | 12,477
Other long-term assets, excluding goodwill |  |  | 9,992
Total assets |  |  | 48,795
Current liabilities, including current maturities of long-term debt |  |  | 3,590
Long-term liabilities, preferred stock and noncontrolling interests |  |  | 10,388
Long-term debt |  |  | 16,746
Total liabilities and preferred stock |  |  | 30,724
Total purchase price |  | $ | 18,071
The preliminary purchase price allocation in the table above reflects refinements made to the fair values of the assets acquired and liabilities assumed, including adjustments associated with the retirement of Crystal River Unit 3, that were included in Duke Energy's Annual Report on Form 10-K for the year ended December 31, 2012. The changes primarily resulted in an increase to G oodwill of $10 million, an increase to the fair value of Current liabilities, including current maturities of long-term debt of $9 million, a decrease to Property, plant and equipment of $157 million and a decrease to Long-term liabilities, preferred stock and noncontrolling interests of $158 million. These refinements had no impact on the amortization of the purchase accounting adjustments recorded during 2012 or for the three months ended March 31, 2013. Pro Forma Financial Information The following unaudited pro forma financial information reflects the consolidated results of operations of Duke Energy for the three months ended March 31, 2012 and reflects the amortization of purchase price adjustments assuming the merger had taken place on January 1, 2011. The unaudited pro forma financial information has been presented for illustrative purposes only and is not necessarily indicative of the consolidated results of operations that would have been achieved or the future consolidated results of operations of Duke Energy. This information is preliminary in nature and subject to change based on final purchase price adjustments. Non-recurring merger consummation, integration and other costs incurred by Duke Energy during the three months ended March 31, 2012 have been excluded from the pro forma earnings p resented below. After-tax non-recurring merger consummation, integration and other costs incurred by Duke Energy were $10 million for the three months ended March 31, 2012. The pro forma financial information also excludes potential future cost savings or non-recurring charges related to the merger.
(in millions, except per share amounts) |  | Three Months Ended March 31, 2012
Revenues |  | $ | 5,724 |
Net Income Attributable to Duke Energy Corporation |  |  | 463 |
Basic and Diluted Earnings Per Share |  |  | 0.66 |
Chilean Operations In December 2012, International Energy acquired Iberoamericana de Energía Ibener, S.A. (Ibener) of Santiago, Chile for cash consideration of $415 million. This acquisition included the 140 MW Duqueco hydroelectric generation complex consisting of two run-of-the-river plants locat ed in southern Chile. The preliminary purchase accounting entries consisted primarily of $383 million of property, plant and equipment, $30 million of intangible assets, $57 million of deferred income tax liabilities, $5 3 million of goodwill, and $6 million of working capital. The fair value of the assets acquired and liabilities assumed utilized for the purchase price allocation are preliminary and subject to revision until the valuations are completed and to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. In connection with t he acquisition, a $190 million six-month bridge loan and a $200 million revolving loan under a credit agreement were executed with a commercial bank. Both loans are collateralized with cash deposits equal to 101 percent of the loan amounts, and therefore no net proceeds from the financings exist through March 31, 201 3. The $190 million brid ge loan is classified in C urrent maturities of long-term debt and the related cash collateral deposit is presented within Current A ssets o n the Condensed Consolidated Balance Sheet s as of March 31, 2013 and December 31, 2012. The $200 million, fully cash-collateralized revolving loan is due on December 20, 2013 and International Energy has the right to extend the term for additional 1 year terms, not to exceed a final maturity of thirteen years from th e date of the initial funding. The revol ving loan is classified as L ong-term D ebt and the related cash collateral deposits are presented within Investments and O ther A ssets o n the Condensed Consolidated Balance Sheet s as of March 31, 2013 and December 31, 2012. In April 2013, the $190 million six-month bridge loan was replaced with a $230 million nonrecourse secured credit facility with a term of thirteen years, and $192 million of cash collateral related to the six-month bridge loan was returned to Duke Energy. Vermillion Generating Station On January 12, 2012, after receiving approvals from the FERC and the IURC on August 12, 2011 and December 28, 2011, respectively, Duke Energy Vermillion II, LLC (Duke Energy Vermillion), an indirect wholly owned subsidiary of Duke Energy Ohio, completed the sale of its 75 percent undivided ownership interest in the Vermillion Generating Station (Vermillion) to Duke Energy Indiana and Wabash Valley Power Association (WVPA). Upon the closing of the sale, Duke Energy Indiana and WVPA held 62.5 percent and 37.5 percent interests in Vermillion, respectively. Duke Energy Ohio received net proceeds of $82 million, consisting of $68 million and $14 million from Duke Energy Indiana and WVPA, respectively. As Duke Energy Indiana is an affiliate of Duke Energy Vermillion the transaction has been accounted for as a transfer between entities under common control with no gain or loss recorded and did not have a significant impact to Duke Energy Ohio or Duke Energy Indiana's results of operations. The proceeds received from Duke Energy Indiana are included in Net proceeds from the sales of other assets on Duke Energy Ohio's Condensed Consolidated Statements of Cash Flows. The cash paid to Duke Energy Ohio is included in Capital expenditures on Duke Energy Indiana's Condensed Consolidated Statements of Cash Flows. Duke Energy Ohio and Duke Energy Indiana recognized non-cash after tax equity transfers of $2 8 million and $26 million, respectively, in their Condensed Consolidated Statements of Equity on the transaction representing the difference between cash exchanged and the net book value of Vermillion. These amounts are not reflected in Duke Energy's Condensed Consolidated Statements of Cash Flows or Condensed Consolidated Statements of Equity as the transaction is eliminated in consolidation. The proceeds from WVPA are included in Net proceeds from the sales of other assets, and sale of and collections on notes receivable on Duke Energy and Duke Energy Ohio's Condensed Consolidated Statements of Cash Flows. The sale of the proportionate share of Vermillion to WVPA did not result in a significant gain or lo ss. DISCONTINUED OPERATIONS Included in Income From Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations are amounts related to adjustments for prior sales of diversified businesses. These adjustments are generally due to indemnifications provided for certain legal, tax and environmental matters. The ultimate resolution of these matters could result in additional adjustments in future periods. For the three months ended March 31, 2012, Progress Energy's Income From Discontinued Operations, net of tax was primarily related to the reversal of certain environmental indemnification liabilities for which the indemnification period expired during the three months ended March 31, 2012.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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