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Non-GAAP Financial Measures

2007 Ongoing Diluted Earnings per share (“EPS”)

Duke Energy’s 2007/2008 Sustainability Report references 2007 ongoing diluted EPS of $1.24. The Sustainability Report also references the company’s 2007 employee incentive target of $1.15. The EPS measure used for employee incentive bonuses is based on ongoing diluted EPS. Ongoing diluted EPS is a non-GAAP (generally accepted accounting principles) financial measure, as it represents diluted EPS from continuing operations, adjusted for the per-share impact of special items. Special items represent certain charges and credits which management believes will not be recurring on a regular basis. The following is a reconciliation of reported diluted EPS from continuing operations to ongoing diluted EPS for 2007:

Diluted EPS from continuing operations, as reported $1.20
Diluted EPS from discontinued operations, as reported (0.02)
Diluted EPS, as reported 1.18
Adjustments to reported EPS:  
Diluted EPS from discontinued operations 0.02
Diluted EPS impact of special items (see detail below) 0.04
Diluted EPS, ongoing $1.24

The following is the detail of the $(0.04) in special items impacting diluted EPS for 2007:

(In millions, except per-share amounts) Pre-Tax Amount Tax Effect 2007 Diluted EPS Impact
Convertible debt costs associated with the spin-off of Spectra $(21) $(0.02)
Costs to achieve the Cinergy merger (54) 19 (0.03)
IT severance costs (12) 4
Settlement reserves and adjustments 24 (9) 0.01
Total Diluted EPS impact     $(0.04)

Anticipated Ongoing Diluted EPS Growth Rates through 2012

Duke Energy’s 2007|2008 Sustainability Report references the expected range of growth of 5 to 7% in ongoing diluted EPS through 2012 (on a compound annual growth rate (“CAGR”) basis). These growth percentages are based on anticipated ongoing diluted EPS amounts for future periods. Ongoing diluted EPS measure is a non-GAAP financial measure as it represents anticipated diluted EPS from continuing operations, adjusted for the impact of special items. Special items represent certain charges and credits which management believes will not be recurring on a regular basis. The most directly comparable GAAP measure for ongoing diluted EPS is reported diluted EPS from continuing operations which includes the impact of special items. Due to the forward-looking nature of ongoing diluted EPS, and related growth rates, for future periods, information to reconcile such non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time, as management is unable to forecast special items for future periods.

Forecasted 2008 Ongoing Segment and Total Segment EBIT

Duke Energy’s 2007/2008 Sustainability Report includes a discussion of forecasted 2008 ongoing EBIT for each of Duke Energy’s reportable segments as a percentage of forecasted 2008 ongoing total segment EBIT. Forecasted 2008 ongoing segment and total segment EBIT amounts are non-GAAP financial measures, as they reflect segment and total segment EBIT, adjusted for the impact of special items. Special items represent certain charges and credits which management believes will not be recurring on a regular basis. The most directly comparable GAAP measure for forecasted ongoing segment EBIT is reported segment EBIT from continuing operations, which includes the impact of special items. The most directly comparable GAAP measure for ongoing total segment EBIT is reported total segment EBIT, which includes the impact of special items. Due to the forward-looking nature of these non-GAAP financial measures for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as management is unable to forecast special items for future periods.