Duke Energy Corporation (Duke Energy) has reported operating revenues of $13.2 billion for the year-end of 2008, compared with the operating revenues of $12.7 billion in the previous year-end. It has also reported net income of $1.36 billion, or $1.07 per diluted share, for the year-end of 2008, compared with the net income of $1.5 billion, or $1.18 per diluted share, in the previous year-end.

Fourth quarter 2008 adjusted diluted earnings per share (EPS) were 27 cents, compared with 25 cents for the fourth quarter 2007

Reported diluted EPS for fourth quarter 2008 was 26 cents, compared to

19 cents for the fourth quarter 2007

Adjusted diluted EPS for 2008 was $1.21 compared to $1.23 in 2007

Reported diluted EPS was $1.07 for 2008, compared to $1.18 in 2007

Company sets 2009 employee incentive target of $1.20, based on adjusted diluted EPS

Full-year adjusted diluted EPS was $1.21 for 2008, compared to $1.23 in 2007. Fullyear reported diluted EPS was $1.07 for 2008, compared to $1.18 in 2007.

The increase in adjusted diluted EPS for the fourth quarter is primarily due to solid results in Duke Energy’s core business segments. Although the company’s jurisdictions experienced favorable weather in the quarter compared to 2007, the positive impacts were partially offset by lower volumes due to the recessionary environment.

The decrease in full-year adjusted diluted EPS was driven primarily by lower weather-adjusted volumes, lower results at Crescent Resources (Crescent) reflecting the downturn in the real estate market, and overall less favorable weather as compared to the prior year.

“Despite the headwinds of recession, we delivered solid results for the fourth quarter and for the entire year,” said James E. Rogers, chairman, president and chief executive officer. “We said we would work hard to meet or exceed the minimum threshold of $1.20 for our employee incentive plan, and our employees delivered.

“As we enter 2009, we have put into place cost-saving measures to maintain our strong financial position in the face of the continuing recession,” he added. “These measures include freezing salaries for the majority of exempt employees. We know we have more to do, so we have a cost control target among our 2009 employee incentive goals. Anticipating a continued slow economy, we are establishing an employee incentive target of $1.20 adjusted diluted earnings per share for 2009. And of course, we remain committed to maintaining our company’s dividend and strong balance sheet.”

Starting in the first-quarter 2008, Duke Energy began presenting adjusted earnings, which excludes the impacts of special items, extraordinary items, discontinued operations, as well as the mark-to-market impacts of economic hedges in the Commercial Power segment. Prior to the first-quarter 2008, Duke Energy presented ongoing earnings, which excluded the impacts of special items, extraordinary items and discontinued operations. For comparative purposes, ongoing earnings for prior periods have been revised to present results for all periods on the same adjusted earnings basis.

BUSINESS UNIT RESULTS (ON A REPORTED BASIS)

US Franchised Electric and Gas (USFE&G)

USFE&G reported fourth quarter 2008 segment EBIT from continuing operations of $532 million, compared to $519 million in the fourth quarter 2007.

USFE&G quarterly results were driven by favorable weather and the deferral in the fourth quarter 2008 of previously recognized storm expenses in the Midwest. These positive impacts were partially offset by a decrease in volumes.

Full-year 2008 segment EBIT from continuing operations for USFE&G was $2,398 million, compared to $2,305 million in 2007.

Commercial Power

Commercial Power reported a fourth quarter 2008 segment EBIT loss from continuing operations of $9 million, compared to $38 million in positive EBIT in the fourth quarter 2007.

Commercial Power results decreased primarily due to mark-to-market losses on economic hedges driven by sharply declining commodity prices. Excluding these mark-to-market losses, Commercial Power’s results were favorable, primarily due to timing on the recovery of environmental and capacity riders, lower net purchase accounting expenses and gains on the sale of emission allowances. The business segment results also reflect improved results from its Midwest gas assets.

Full-year 2008 segment EBIT from continuing operations for Commercial Power was $264 million, compared to $278 million in 2007.

Duke Energy International (DEI)

Duke Energy International (DEI) reported fourth quarter 2008 segment EBIT from continuing operations of around $104 million, compared to $105 million in the fourth quarter 2007.

DEI’s relatively flat results for the quarter were driven primarily by favorable results in Latin America compared to the prior year’s quarter, offset by unfavorable margins at National Methanol and unfavorable average foreign exchange rates.

Full-year 2008 segment EBIT from continuing operations for DEI was $411 million, compared to $388 million in 2007.

Other

Due to a change in Duke Energy’s reportable segments, Other now includes the results of Crescent, Duke Energy’s real estate joint-venture. Duke Energy continues to have a zero book basis in its investment in Crescent. Prior period results for Other have been restated for this change in segment presentation.

Other also includes costs associated with corporate governance, costs to achieve the Cinergy merger, and Duke Energy’s captive insurance company.

Other reported a fourth quarter 2008 net expense from continuing operations of $108 million, compared to $95 million in the fourth quarter 2007. The increase in net expense for the quarter was due primarily to unfavorable returns on investments, and the continued downturn in the real estate market at Crescent, resulting in no equity earnings in the fourth quarter 2008. Partially offsetting the increases was a charge for a prior-year donation to the Duke Foundation with no comparable charge in 2008.

Full-year 2008 net expense from continuing operations for Other was $568 million, compared to $260 million in 2007. As discussed above, Other now includes Crescent, which recorded $238 million in impairment charges during 2008.

INTEREST EXPENSE

Fourth quarter 2008 interest expense was $189 million compared to $186 million in the fourth quarter 2007. Full-year 2008 interest expense was $741 million, compared to $685 million for 2007.

INCOME TAX

Income tax expense from continuing operations in fourth quarter 2008 was $95 million, compared to $117 million in fourth quarter 2007. The effective tax rate was around 27% in both the fourth quarter 2008 and the fourth quarter 2007. The decrease in income tax expense from continuing operations was primarily due to lower pre-tax income from continuing operations.

Full-year 2008 income tax expense from continuing operations was $616 million, compared to $712 million in 2007. The effective tax rate for full-year 2008 was 32.5%, compared to 31.9% in 2007.

Discontinued Operations

In the fourth quarter 2008, Discontinued Operations had after-tax income of $2 million, compared to a $70 million after-tax loss in the fourth quarter 2007. For the full-year 2008, Discontinued Operations had after-tax income of $16 million compared to a $22 million after-tax loss in 2007.

Extraordinary Item

Fourth quarter and full-year 2008 results include an Extraordinary Item of $67 million, net of tax. The Extraordinary Item resulted from the creation of a regulatory asset for certain previously recognized mark-to-market losses on open hedge contracts due to new electric legislation (SB 221) passed in Ohio as well as the approval of our Electric Security Plan in Ohio in December 2008, which resulted in Duke Energy re-applying regulatory accounting treatment to a portion of its Ohio generation serving native-load customers.