Form 8-K Duke Energy CORP For: Aug 06

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report

(Date of earliest event reported): August 6, 2015

DUKE ENERGY CORPORATION

(Exact Name of Registrant as Specified in Charter)

 

Delaware		001-32853		20-2777218
(State or Other Jurisdiction of Incorporation)		(Commission File No.)		(IRS Employer Identification No.)

550 South Tryon Street, Charlotte, North Carolina, 28202

(Address of principal executive offices, including zip code)

(704) 594-6200

(Registrant’s telephone number, including area code)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

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Item 2.02 Results of Operations and Financial Condition

On August 6, 2015, Duke Energy Corporation issued a news release announcing its financial results for the second quarter ended June 30, 2015. A copy of this news release is attached hereto as Exhibit 99.1. The information in Exhibit 99.1 is being furnished pursuant to this Item 2.02.

Item 9.01 Financial Statements and Exhibits

 

(d)

Exhibits

 

99.1

News Release issued by Duke Energy Corporation on August 6, 2015

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Dated: August 6, 2015

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EXHIBIT INDEX

 

Exhibit		Description
99.1		News Release issued by Duke Energy Corporation on August 6, 2015

Exhibit 99.1

 

Media Contact: Tom Shiel

24-Hour: 800.559.3853

Analysts: Bill Currens

Office: 704.382.1603

Aug. 6, 2015

Duke Energy reports second quarter 2015 financial results

 

•

Second quarter 2015 adjusted diluted earnings per share (EPS) were 95 cents, compared to $1.11 for the second quarter of 2014

 

•

Reported diluted EPS of 78 cents for second quarter 2015, compared to 86 cents in second quarter of 2014

 

•

Company remains on track to achieve its 2015 adjusted diluted earnings guidance range of $4.55 to $4.75 per share

CHARLOTTE, N.C. – Duke Energy today announced second quarter 2015 adjusted diluted EPS of 95 cents, compared to $1.11 for the second quarter of 2014. Second quarter 2015 reported EPS was 78 cents, compared to 86 cents for the same period last year.

Earnings for the second quarter of 2015 were lower than the prior year quarterly results, primarily due to one-time tax items that did not recur in the current year. Results also were affected by continued weakness in the International business, particularly Brazil, and the timing of O&M expenses at Regulated Utilities.

Year-to-date adjusted diluted EPS through the second quarter of 2015 is in line with the company’s expectations. The company remains on track to achieve its 2015 adjusted diluted earnings guidance range of $4.55 to $4.75 per share.

Strength in the Regulated Utility business, coupled with the execution of the Midwest Generation sale and related share buyback, have served to offset weakness in the International business thus far in 2015.

“Operationally, we met our customers’ energy needs in the second quarter during extended periods of warmer than normal temperatures particularly in the Southeast,” said Lynn Good, president and CEO. “Equally important, we continued to follow through on the growth initiatives that will provide long-term benefits for our customers.

“We also continue to focus on providing solid returns for our shareholders,” Good added. “Last month, our board approved an approximate 4 percent increase in the quarterly dividend payment, reflecting its confidence in the strength of our core businesses and cash flows.”

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Duke Energy News Release		2

 

Business unit results

In addition to the summary business unit discussion below, a comprehensive table of quarterly and year-to-date adjusted earnings per share drivers compared to the prior year is provided on pages 16 and 17.

The discussion below of second quarter results includes adjusted segment income, which is a non-GAAP financial measure. The tables on pages 25 through 28 present a reconciliation of reported results to adjusted results.

Regulated Utilities

Regulated Utilities recognized second quarter 2015 adjusted segment income of $632 million, compared to $689 million in the second quarter 2014, a decrease of 9 cents per share, excluding the benefit of the accelerated stock repurchase program.

Lower quarterly results at Regulated Utilities were primarily driven by:

 

•

Higher O&M expense (-$0.11 per share) due to the timing of planned outages in the generation fleet. This includes the impact of nuclear outage cost levelization (-$0.05 per share)

 

•

Higher depreciation and amortization expense (-$0.05 per share) primarily resulting from additional plant in-service

 

•

Higher effective tax rate (-$0.04 per share) primarily due to a favorable prior-year state tax settlement

These unfavorable drivers were partially offset by:

 

•

Higher weather-normal retail volumes (+$0.05 per share) of 1.7 percent compared to 2014

 

•

Favorable weather (+$0.03 per share) driven by warmer than normal temperatures, primarily in the Carolinas

 

•

Higher revenues from increased pricing and riders (+$0.03 per share) due to increased energy efficiency programs and prior-year true-ups that did not recur

 

•

Increased wholesale net margins (+$0.02 per share) primarily resulting from growth in contracted amounts

On a year-to-date basis, Regulated Utilities recognized adjusted segment income of $1,406 million, compared to $1,426 million in the comparable year-to-date period of 2014, a decrease of 4 cents per share, excluding the benefit of the accelerated stock repurchase program.

Decreased year-to-date results at Regulated Utilities were primarily driven by:

 

•

Higher O&M expense (-$0.12 per share) due to the timing of planned outages in the generation fleet. This includes the impact of nuclear outage cost levelization (-$0.07 per share) and is offset by lower storm costs

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Duke Energy News Release		3

 

•

Higher depreciation and amortization expense (-$0.08 per share) primarily resulting from additional plant in-service

 

•

Higher effective tax rate (-$0.04 per share) primarily due to a favorable prior-year state tax settlement

These unfavorable drivers were partially offset by:

 

•

Higher revenues from increased pricing and riders (+$0.07 per share) due to increased energy efficiency programs and prior-year true-ups that did not recur

 

•

Increased wholesale net margins (+$0.06 per share) primarily due to growth in contracted amounts

 

•

Higher AFUDC equity (+$0.03 per share) due to increased capital spending

 

•

Higher weather-normal retail volumes (+$0.02 per share) of 0.5 percent compared to 2014

 

•

Favorable weather (+$0.02 per share) across Duke Energy’s service territories

International Energy

International Energy recognized second quarter 2015 adjusted segment income of $52 million, compared to $146 million in the second quarter 2014, a decrease of 13 cents per share.

Lower quarterly results at International Energy were primarily driven by:

 

•

Unfavorable results in Latin America (-$0.13 per share) primarily due to a prior-year favorable tax adjustment in Chile (-$0.07 per share), impacts from the weak economy and lower demand for electricity in Brazil (-$0.04 per share), as well as foreign currency exchange rates (-$0.01 per share)

On a year-to-date basis, International Energy recognized adjusted segment income of $88 million, compared to $276 million in the comparable year-to-date period of 2014, a decrease of 26 cents per share.

Lower year-to-date earnings at International Energy were driven by:

 

•

Weaker results in Latin America (-$0.23 per share), primarily due to a prior-year non-recurring tax benefit in Chile (-$0.07 per share), impacts from the weak economy and lower demand for electricity in Brazil (-$0.12 per share) as well as unfavorable foreign currency exchange rates (-$0.01 per share)

 

•

Lower margins at National Methanol (-$0.03 per share), largely driven by lower MTBE and methanol prices

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Duke Energy News Release		4

 

Commercial Portfolio

Subsequent to the sale of its nonregulated Midwest Commercial Generation Business to Dynegy Inc. in April, Commercial Portfolio (formerly Commercial Power) includes Duke Energy’s unregulated renewable assets as well as its commercial electric and gas transmission investments.

Commercial Portfolio recognized second quarter 2015 adjusted segment income of $8 million, compared to $16 million in the second quarter 2014, a decrease of 1 cent per share. The decline in Commercial Portfolio’s quarterly earnings is primarily due to lower earnings from the renewables fleet resulting from lower wind resources.

On a year-to-date basis, Commercial Portfolio recognized adjusted segment income of $103 million, compared to $26 million in the comparable year-to-date period of 2014, an increase of 11 cents per share.

Commercial Portfolio’s higher year-to-date earnings were driven by higher results from the Midwest Generation fleet during the first quarter 2015 (+$0.14 per share), partially offset by lower earnings from the renewables fleet (-$0.01 per share) resulting from lower wind resources.

Other

On an adjusted basis, Other primarily includes corporate interest expense not allocated to the business units, results from Duke Energy’s captive insurance company, other investments, and quarterly income tax levelization adjustments.

Other recognized a second quarter 2015 adjusted net expense of $34 million, compared to net expense of $65 million in the second quarter 2014, an improvement of 4 cents per share.

On a year-to-date basis, Other recognized adjusted net expense of $58 million, compared to $113 million in the comparable period of 2014, an improvement of 8 cents per share. Other’s quarterly and year-to-date results were primarily driven by favorable results from the company’s captive insurance business and favorable income tax levelization adjustments.

The consolidated adjusted effective tax rate for second quarter 2015 was 31.2 percent, compared to 28.2 percent in the second quarter of 2014. On a year-to-date basis, the consolidated adjusted effective tax rate was 32 percent, compared to 31.1 percent in the prior year. Adjusted effective tax rate is a non-GAAP financial measure. The tables on pages 29 and 30 present a reconciliation of reported effective tax rate to adjusted effective tax rate.

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Duke Energy News Release		5

 

Accelerated stock repurchase program

In connection with the transaction to sell the Midwest Generation business to Dynegy for $2.8 billion, which closed on April 2, 2015, Duke Energy completed a $1.5 billion accelerated stock repurchase program (ASR). The program resulted in share retirements of approximately 19.8 million, providing a benefit to the second quarter 2015 and year-to-date results of approximately 3 cents per share.

As a result of the ASR, weighted-average shares of Duke Energy common stock outstanding in 2015 are expected to be approximately 695 million.

Earnings conference call for analysts

An earnings conference call for analysts is scheduled for 10 a.m. ET today to discuss Duke Energy’s financial performance for the quarter and other business updates.

The conference call will be hosted by Lynn Good, president and chief executive officer, and Steve Young, executive vice president and chief financial officer.

The call can be accessed via the investors’ section (http://www.duke-energy.com/investors/) of Duke Energy’s website or by dialing 877-874-1586 in the United States or 719-325-4817 outside the United States. The confirmation code is 2859838. Please call in 10 to 15 minutes prior to the scheduled start time.

A replay of the conference call will be available until 1 p.m. ET, Aug. 16, 2015, by calling 888-203-1112 in the United States or 719-457-0820 outside the United States and using the code 2859838. A replay and transcript also will be available by accessing the investors’ section of the company’s website.

Special items and non-GAAP reconciliation

Special items affecting Duke Energy’s adjusted diluted EPS for quarterly results in 2015 and 2014 include:

 

(In millions, except per-share amounts)		After-Tax Amount				2Q2015 EPS Impact				2Q2014 EPS Impact
Second Quarter 2015
•       Cost to achieve, Progress Energy merger		$	(14	)		$	(0.02	)
•       Discontinued operations (1)(2)		$	(101	)		$	(0.15	)
Second Quarter 2014
•       Cost to achieve, Progress Energy merger		$	(38	)						$	(0.06	)
•       Economic hedges (mark-to-market)		$	(3	)							—
•       Discontinued operations (1)(3)		$	(136	)						$	(0.19	)
Total diluted EPS impact						$	(0.17	)		$	(0.25	)

 

(1)	Reported discontinued operations includes the Midwest generation impairment, the economic hedges (mark-to-market) of Midwest generation, and operating results of the Midwest Generation business

 

(2)

Represents reported discontinued operations of $(0.09) per diluted share, including the impact of a litigation reserve related to the nonregulated Midwest generation business, and a tax charge resulting from the completion of the sale of the Midwest generation business but not reported as discontinued operations of $(0.06), which are treated as a special item and reflected in adjusted diluted EPS.

 

(3)	Represents reported discontinued operations of $(0.16) per diluted share less the Midwest generation operations results classified as discontinued operations of (+$0.03) per diluted share. Midwest generation operations are treated as a special item and reflected in adjusted diluted EPS.

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Duke Energy News Release		6

 

Reconciliation of reported to adjusted diluted EPS for the quarter:

 

		2Q2015 EPS				2Q2014 EPS
Diluted EPS, as reported		$	0.78			$	0.86
Adjustments to reported EPS:
•       Diluted EPS impact of special items and discontinued operations (net of tax)		$	0.17			$	0.25
Diluted EPS, adjusted		$	0.95			$	1.11

Non-GAAP financial measures

Management evaluates financial performance in part based on the non-GAAP financial measures, adjusted earnings and adjusted diluted earnings per share (EPS). These items are measured as income from continuing operations net of income (loss) attributable to non-controlling interests, adjusted for the dollar and per-share impact of mark-to-market impacts of economic hedges in the Commercial Portfolio segment and special items including the operating results of the Midwest Generation business (Disposal Group) classified as discontinued operations for GAAP purposes. 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. Operating results of the Disposal Group sold to Dynegy are reported as discontinued operations, including a portion of the mark-to-market adjustments associated with derivative contracts. Management believes that including the operating results of the Disposal Group reported as discontinued operations better reflects its financial performance and therefore has included these results in adjusted earnings and adjusted diluted EPS prior to the sale of the Disposal Group. Additionally, as a result of completing the sale of the Disposal Group during the second quarter of 2015, state income tax expense increased as state income tax apportionments changed. The additional tax expense was recognized in Continuing Operations on a GAAP basis. This impact to state income taxes has been reflected in Discontinued Operations in the Commercial Portfolio segment for adjusted diluted EPS purposes as management believes these impacts are incidental to the sale of the Disposal Group. Derivative contracts are used in Duke Energy’s hedging of a portion of the economic value of its generation assets in the Commercial Portfolio segment. The mark-to-market impact of derivative contracts is recognized in GAAP earnings immediately and, if associated with the Disposal Group, classified as discontinued operations, as such derivative contracts do not qualify for hedge accounting or regulatory treatment. The economic value of generation assets is subject to fluctuations in fair value due to market price volatility of input and output commodities (e.g. coal, electricity, natural gas). Economic hedging

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Duke Energy News Release		7

 

involves both purchases and sales of those input and output commodities related to generation assets. Operations of the generation assets are accounted for under the accrual method. Management believes excluding impacts of mark-to-market changes of the derivative contracts from adjusted earnings until settlement better matches the financial impacts of the derivative contract with the portion of economic value of the underlying hedged asset. Management believes the presentation of adjusted earnings and adjusted diluted EPS provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy’s performance across periods. Management uses these non-GAAP financial measures for planning and forecasting and for reporting results to the Board of Directors, employees, shareholders, analysts and investors concerning Duke Energy’s financial performance. Adjusted diluted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted earnings and adjusted diluted EPS are Net Income Attributable to Duke Energy Corporation and Diluted EPS Attributable to Duke Energy Corporation common shareholders, which include the dollar and per share impact of special items, mark-to-market impacts of economic hedges in the Commercial Portfolio segment and discontinued operations.

Management evaluates segment performance based on segment income. Segment income is defined as income from continuing operations net of income attributable to non-controlling interests. Segment income, as discussed below, includes intercompany revenues and expenses that are eliminated in the Consolidated Financial Statements. Management also uses adjusted segment income as a measure of historical and anticipated future segment performance. Adjusted segment income is a non-GAAP financial measure, as it is based upon segment income adjusted for the mark-to-market impacts of economic hedges in the Commercial Portfolio segment and special items, including the operating results of the Disposal Group classified as discontinued operations for GAAP purposes. Management believes the presentation of adjusted segment income as presented provides useful information to investors, as it provides them with an additional relevant comparison of a segment’s performance across periods. The most directly comparable GAAP measure for adjusted segment income is segment income, which represents segment income from continuing operations, including any special items and the mark-to-market impacts of economic hedges in the Commercial Portfolio segment.

Due to the forward-looking nature of any forecasted adjusted earnings guidance, information to reconcile this non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time, as management is unable to project all special items or mark-to-market adjustments for future periods.

Due to the forward-looking nature of any forecasted adjusted segment income or adjusted Other net expenses and any related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly

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Duke Energy News Release		8

 

comparable GAAP financial measures is not available at this time, as the company is unable to forecast all special items, the mark-to-market impacts of economic hedges in the Commercial Portfolio segment, or any amounts that may be reported as discontinued operations or extraordinary items for future periods.

Duke Energy is the largest electric power holding company in the United States with approximately $120 billion in total assets. Its regulated utility operations serve approximately 7.3 million electric customers located in six states in the Southeast and Midwest. Its Commercial Portfolio and International business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.

Headquartered in Charlotte, N.C., Duke Energy is a Fortune 250 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available at duke-energy.com.

Forward-Looking Information

This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are based on management’s beliefs and assumptions.

These forward-looking statements are identified by terms and phrases such as “anticipate,” “believe,” “intend,” “estimate,” “expect,” “continue,” “should,” “could,” “may,” “plan,” “project,” “predict,” “will,” “potential,” “forecast,” “target,” “guidance,” “outlook,” and similar expressions. Forward-looking statements involve risks and uncertainties that may cause actual results to be materially different from the results predicted. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to: state, federal and foreign legislative and regulatory initiatives, including costs of compliance with existing and future environmental requirements or climate change, as well as rulings that affect cost and investment recovery or have an impact on rate structures or market prices; the extent and timing of the costs and liabilities relating to the Dan River ash basin release and compliance with current regulations and any future regulatory changes related to the management of coal ash; the ability to recover eligible costs, including those associated with future significant weather events, and earn an adequate return on investment through the regulatory process; the costs of decommissioning Crystal River Unit 3 could prove to be more extensive than amounts estimated and all costs may not be fully recoverable through the regulatory process; credit ratings of the company or its subsidiaries may be different from what is expected; costs and effects of legal and administrative proceedings, settlements, investigations and claims; industrial, commercial and residential growth or decline in service territories or customer bases resulting from customer usage patterns, including energy efficiency efforts and use of alternative energy sources including self-generation and distributed generation

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Duke Energy News Release		9

 

technologies; additional competition in electric markets and continued industry consolidation; political and regulatory uncertainty in other countries in which Duke Energy conducts business; the influence of weather and other natural phenomena on operations, including the economic, operational and other effects of severe storms, hurricanes, droughts and tornadoes; the ability to successfully operate electric generating facilities and deliver electricity to customers; the impact on facilities and business from a terrorist attack, cybersecurity threats, data security breaches and other catastrophic events; the inherent risks associated with the operation and potential construction of nuclear facilities, including environmental, health, safety, regulatory and financial risks; the timing and extent of changes in commodity prices, interest rates and foreign currency exchange rates and the ability to recover such costs through the regulatory process, where appropriate, and their impact on liquidity positions and the value of underlying assets; the results of financing efforts, including the ability to obtain financing on favorable terms, which can be affected by various factors, including credit ratings and general economic conditions; declines in the market prices of equity and fixed income securities and resultant cash funding requirements for defined benefit pension plans, other post-retirement benefit plans and nuclear decommissioning trust funds; construction and development risks associated with the completion of Duke Energy and its subsidiaries’ capital investment projects in existing and new generation facilities, including risks related to financing, obtaining and complying with terms of permits, meeting construction budgets and schedules, and satisfying operating and environmental performance standards, as well as the ability to recover costs from customers in a timely manner or at all; changes in rules for regional transmission organizations, including changes in rate designs and new and evolving capacity markets, and risks related to obligations created by the default of other participants; the ability to control operation and maintenance costs; the level of creditworthiness of counterparties to transactions; employee workforce factors, including the potential inability to attract and retain key personnel; the ability of subsidiaries to pay dividends or distributions to Duke Energy Corporation holding company (the Parent); the performance of projects undertaken by our nonregulated businesses and the success of efforts to invest in and develop new opportunities; the effect of accounting pronouncements issued periodically by accounting standard-setting bodies; the impact of potential goodwill impairments; the ability to reinvest prospective undistributed earnings of foreign subsidiaries or repatriate such earnings on a tax-efficient basis; and the ability to successfully complete future merger, acquisition or divestiture plans.

Additional risks and uncertainties are identified and discussed in Duke Energy’s and its subsidiaries’ reports filed with the SEC and available at the SEC’s website at www.sec.gov. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than Duke Energy has described. Duke Energy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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June 2015

QUARTERLY HIGHLIGHTS

(Unaudited)

 

		Three Months Ended June 30,								Six Months Ended June 30,
(In millions, except per-share amounts and where noted)		2015				2014				2015				2014
Earnings Per Share - Basic and Diluted
Income from continuing operations attributable to Duke Energy Corporation common shareholders
Basic		$	0.87			$	1.02			$	1.96			$	2.07
Diluted		$	0.87			$	1.02			$	1.96			$	2.07
(Loss) Income from discontinued operations attributable to Duke Energy Corporation common shareholders
Basic		$	(0.09	)		$	(0.16	)		$	0.05			$	(1.35	)
Diluted		$	(0.09	)		$	(0.16	)		$	0.05			$	(1.35	)
Net income attributable to Duke Energy Corporation common shareholders
Basic		$	0.78			$	0.86			$	2.01			$	0.72
Diluted		$	0.78			$	0.86			$	2.01			$	0.72
Weighted-average shares outstanding
Basic			692				707				700				707
Diluted			692				707				700				707
SEGMENT INCOME (LOSS) BY BUSINESS SEGMENT
Regulated Utilities		$	632			$	689			$	1,406			$	1,426
International Energy			52				146				88				276
Commercial Portfolio(a)(b)			(33	)			(21	)			(32	)			(53	)
Total Reportable Segment Income			651				814				1,462				1,649
Other Net Expense(c)(d)			(48	)			(90	)			(85	)			(177	)
Intercompany Eliminations			(3	)			(2	)			(4	)			(4	)
(Loss) Income from Discontinued Operations, net of tax(e)			(57	)			(113	)			34				(956	)
Net Income Attributable to Duke Energy Corporation		$	543			$	609			$	1,407			$	512
CAPITALIZATION
Total Common Equity											49	%			48	%
Total Debt											51	%			52	%
Total Debt										$	41,331			$	42,460
Book Value Per Share										$	57.56			$	57.80
Actual Shares Outstanding											688				707
CAPITAL AND INVESTMENT EXPENDITURES
Regulated Utilities		$	1,411			$	1,073			$	2,673			$	2,175
International Energy			7				16				19				25
Commercial Portfolio			261				100				383				168
Other			56				25				114				86
Total Capital and Investment Expenditures		$	1,735			$	1,214			$	3,189			$	2,454

Note: Prior period operating results reflect reclassifications due to the impacts of discontinued operations.

 

(a)	Includes a tax charge of $41 million resulting from the completion of the sale of the nonregulated Midwest generation business for the three months and six months ended June 30, 2015.

(b)	Includes an impairment charge of $59 million for the six months ended June 30, 2014, related to OVEC (net of tax of $35 million).

(c)	Includes costs to achieve the Progress merger of $14 million for the three months ended June 30, 2015 (net of tax of $8 million) and $27 million for the six months ended June 30, 2015 (net of tax of $16 million).

(d)	Includes costs to achieve the Progress merger of $38 million for the three months ended June 30, 2014 (net of tax of $23 million) and $72 million for the six months ended June 30, 2014 (net of tax of $44 million).

(e)	Includes the impact of a litigation reserve related to the nonregulated Midwest generation business of $46 million for the three months ended June 30, 2015 (net of tax of $25 million), and $53 million for the six months ended June 30, 2015 (net of tax of $28 million).

 

10

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June 2015

QUARTERLY HIGHLIGHTS

(Unaudited)

 

		Three Months Ended								Six Months Ended
		June 30,								June 30,
(In millions, except for GWh and MW amounts)		2015				2014				2015				2014
REGULATED UTILITIES
Operating Revenues		$	5,220			$	5,283			$	10,943			$	11,088
Operating Expenses			4,003				4,019				8,308				8,446
Gains on Sales of Other Assets, net			2				—				9				1
Operating Income			1,219				1,264				2,644				2,643
Other Income and Expenses			59				62				131				131
Interest Expense			274				275				549				545
Income Before Income Taxes			1,004				1,051				2,226				2,229
Income Tax Expense			372				362				820				803
Segment Income		$	632			$	689			$	1,406			$	1,426
Depreciation and Amortization		$	707			$	688			$	1,405			$	1,365
Duke Energy Carolinas GWh sales			21,306				20,836				43,774				44,529
Duke Energy Progress GWh sales			14,952				14,693				31,717				30,854
Duke Energy Florida GWh sales			10,802				9,840				19,275				18,501
Duke Energy Ohio GWh sales			6,233				5,824				13,000				12,303
Duke Energy Indiana GWh sales			7,705				8,455				16,433				17,329
Total GWh sales			60,998				59,648				124,199				123,516
Net Proportional MW Capacity in Operation											49,528				49,452
INTERNATIONAL ENERGY
Operating Revenues		$	287			$	364			$	560			$	746
Operating Expenses			232				254				439				485
(Loss) Gains on Sales of Other Assets, net			(1	)			5				(1	)			5
Operating Income			54				115				120				266
Other Income and Expenses			31				52				45				109
Interest Expense			22				23				45				46
Income Before Income Taxes			63				144				120				329
Income Tax Expense			10				(5	)			30				46
Less: Income Attributable to Noncontrolling Interests			1				3				2				7
Segment Income		$	52			$	146			$	88			$	276
Depreciation and Amortization		$	23			$	27			$	46			$	50
Sales, GWh			4,520				4,281				8,990				9,522
Proportional MW Capacity in Operation											4,333				4,411
COMMERCIAL PORTFOLIO
Operating Revenues		$	75			$	64			$	148			$	145
Operating Expenses(a)			84				80				173				268
Losses on Sales of Other Assets, net			6				—				6				—
Operating Loss			(3	)			(16	)			(19	)			(123	)
Other Income and Expenses			(2	)			5				—				10
Interest Expense			10				13				22				27
Loss Before Income Taxes			(15	)			(24	)			(41	)			(140	)
Income Tax Expense (Benefit)(b)(c)			18				(3	)			(9	)			(87	)
Segment Loss		$	(33	)		$	(21	)		$	(32	)		$	(53	)
Depreciation and Amortization		$	26			$	19			$	50			$	46
Actual Coal-fired Plant Production, GWh			—				204				—				675
Actual Renewable Plant Production, GWh			1,373				1,469				2,683				3,058
Actual Plant Production, GWh			1,373				1,673				2,683				3,733
Net Proportional MW Capacity in Operation											1,634				1,305
OTHER
Operating Revenues		$	34			$	29			$	61			$	54
Operating Expenses(d)(e)			63				101				113				185
Gains on Sales of Other Assets, net			6				1				13				1
Operating Loss			(23	)			(71	)			(39	)			(130	)
Other Income and Expenses			9				9				10				15
Interest Expense			97				98				194				201
Loss Before Income Taxes			(111	)			(160	)			(223	)			(316	)
Income Tax Benefit(f)(g)			(66	)			(71	)			(143	)			(140	)
Less: Income Attributable to Noncontrolling Interests			3				1				5				1
Segment Net Expense		$	(48	)		$	(90	)		$	(85	)		$	(177	)
Depreciation and Amortization		$	34			$	28			$	66			$	56

Note: Prior period reflects reclassifications due to the impact of discontinued operations.

 

(a)	Includes a pre-tax impairment charge of $94 million for the six months ended June 30, 2014, related to OVEC.

(b)	Includes a tax charge of $41 million resulting from the completion of the sale of the nonregulated Midwest generation business for the three months and six months ended June 30, 2015.

(c)	Includes a tax benefit of $35 million for the six months ended June 30, 2014, related to OVEC impairment.

(d)	Includes costs to achieve the Progress merger of $22 million for the three months ended June 30, 2015, and $43 million for the six months ended June 30, 2015.

(e)	Includes costs to achieve the Progress merger of $61 million for the three months ended June 30, 2014, and $114 million for the six months ended June 30, 2014.

(f)	Includes tax benefit related to costs to achieve the Progress merger of $8 million for the three months ended June 30, 2015, and $16 million for the six months ended June 30, 2015.

(g)	Includes tax benefit related to costs to achieve the Progress merger of $23 million for the three months ended June 30, 2014, and $44 million for the six months ended June 30, 2014.

 

11

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DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per-share amounts)

 

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
Operating Revenues
Regulated electric		$	5,090			$	5,138			$	10,547			$	10,688
Nonregulated electric and other			403				463				780				954
Regulated natural gas			96				107				327				329
Total operating revenues			5,589				5,708				11,654				11,971
Operating Expenses
Fuel used in electric generation and purchased power - regulated			1,721				1,808				3,662				3,808
Fuel used in electric generation and purchased power - nonregulated			118				126				222				262
Cost of natural gas and other			26				38				137				154
Operation, maintenance and other			1,422				1,396				2,848				2,845
Depreciation and amortization			790				762				1,567				1,517
Property and other taxes			279				311				543				661
Impairment charges			—				(16	)			—				80
Total operating expenses			4,356				4,425				8,979				9,327
Gain on Sales of Other Assets and Other, net			13				6				27				7
Operating Income			1,246				1,289				2,702				2,651
Other Income and Expenses
Equity in earnings of unconsolidated affiliates			23				33				36				69
Other income and expenses, net			72				89				146				184
Total other income and expenses			95				122				182				253
Interest Expense			403				403				806				807
Income from Continuing Operations before Income Taxes			938				1,008				2,078				2,097
Income Tax Expense from Continuing Operations			334				282				698				621
Income from Continuing Operations			604				726				1,380				1,476
(Loss) Income from Discontinued Operations, net of tax			(57	)			(113	)			34				(956	)
Net Income			547				613				1,414				520
Less: Net Income Attributable to Noncontrolling Interests			4				4				7				8
Net Income Attributable to Duke Energy Corporation		$	543			$	609			$	1,407			$	512
Earnings Per Share - Basic and Diluted
Income from continuing operations attributable to Duke Energy Corporation common shareholders
Basic		$	0.87			$	1.02			$	1.96			$	2.07
Diluted		$	0.87			$	1.02			$	1.96			$	2.07
(Loss) income from discontinued operations attributable to Duke Energy Corporation common shareholders
Basic		$	(0.09	)		$	(0.16	)		$	0.05			$	(1.35	)
Diluted		$	(0.09	)		$	(0.16	)		$	0.05			$	(1.35	)
Net income attributable to Duke Energy Corporation common shareholders
Basic		$	0.78			$	0.86			$	2.01			$	0.72
Diluted		$	0.78			$	0.86			$	2.01			$	0.72
Weighted-average shares outstanding
Basic			692				707				700				707
Diluted			692				707				700				707

 

12

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DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)

 

		June 30, 2015				December 31, 2014
ASSETS
Current Assets
Cash and cash equivalents		$	960			$	2,036
Receivables (net of allowance for doubtful accounts of $17 at June 30, 2015 and December 31, 2014)			650				791
Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $55 at June 30, 2015 and $51 at December 31, 2014)			2,046				1,973
Inventory			3,469				3,459
Assets held for sale			—				364
Regulatory assets			975				1,115
Other			1,498				1,837
Total current assets			9,598				11,575
Investments and Other Assets
Investments in equity method unconsolidated affiliates			375				358
Nuclear decommissioning trust funds			5,529				5,546
Goodwill			16,328				16,321
Assets held for sale			—				2,642
Other			3,239				3,008
Total investments and other assets			25,471				27,875
Property, Plant and Equipment
Cost			107,125				104,861
Accumulated depreciation and amortization			(35,826	)			(34,824	)
Generation facilities to be retired, net			460				9
Net property, plant and equipment			71,759				70,046
Regulatory Assets and Deferred Debits
Regulatory assets			11,564				11,042
Other			183				171
Total regulatory assets and deferred debits			11,747				11,213
Total Assets		$	118,575			$	120,709
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable		$	1,920			$	2,271
Notes payable and commercial paper			2,162				2,514
Taxes accrued			550				569
Interest accrued			419				418
Current maturities of long-term debt			2,374				2,807
Liabilities associated with assets held for sale			—				262
Regulatory liabilities			245				204
Other			1,976				2,188
Total current liabilities			9,646				11,233
Long-term Debt			36,795				37,213
Deferred Credits and Other Liabilities
Deferred income taxes			13,664				13,423
Investment tax credits			420				427
Accrued pension and other post-retirement benefit costs			1,152				1,145
Liabilities associated with assets held for sale			—				35
Asset retirement obligations			9,490				8,466
Regulatory liabilities			6,203				6,193
Other			1,588				1,675
Total deferred credits and other liabilities			32,517				31,364
Commitments and Contingencies
Equity
Common stock, $0.001 par value, 2 billion shares authorized; 688 million and 707 million shares outstanding at June 30, 2015 and December 31, 2014, respectively			1				1
Additional paid-in capital			37,933				39,405
Retained earnings			2,294				2,012
Accumulated other comprehensive income			(648	)			(543	)
Total Duke Energy Corporation stockholder’s equity			39,580				40,875
Noncontrolling interests			37				24
Total equity			39,617				40,899
Total Liabilities and Equity		$	118,575			$	120,709

 

13

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DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)

 

		Six Months Ended June 30,
		2015				2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income		$	1,414			$	520
Adjustments to reconcile net income to net cash provided by operating activities			1,465				2,099
Net cash provided by operating activities			2,879				2,619
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash used in investing activities			(294	)			(2,367	)
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash (used in) provided by financing activities			(3,661	)			255
Net (decrease) increase in cash and cash equivalents			(1,076	)			507
Cash and cash equivalents at the beginning of period			2,036				1,501
Cash and cash equivalents at end of period		$	960			$	2,008

 

14

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DUKE ENERGY CORPORATION

EARNINGS VARIANCES

June 2015 QTD vs. Prior Year

 

($ per share)		Regulated Utilities				International Energy				Commercial Portfolio				Other				Consolidated
2014 QTD Reported Earnings Per Share, Diluted		$	0.97			$	0.21			$	(0.03	)		$	(0.13	)		$	0.86
Costs to Achieve, Progress Merger			—				—				—				0.06				0.06
Midwest Generation Operations (offset in Discontinued Operations)			—				—				0.05				(0.02	)			0.03
Discontinued Operations																			0.16
2014 QTD Adjusted Earnings Per Share, Diluted		$	0.97			$	0.21			$	0.02			$	(0.09	)		$	1.11
Stock Repurchase (a)			0.03				—				—				—				0.03
Weather			0.03				—				—				—				0.03
Pricing and Riders (b)			0.03				—				—				—				0.03
Volumes			0.05				—				—				—				0.05
Wholesale (c)			0.02				—				—				—				0.02
Operation and Maintenance, net of recoverables (d)			(0.11	)			—				—				—				(0.11	)
Latin America, including Foreign Exchange Rates (e)			—				(0.13	)			—				—				(0.13	)
Duke Energy Renewables (f)			—				—				(0.01	)			—				(0.01	)
Change in effective tax rates			(0.04	)			—				—				0.03				(0.01	)
Other (g)			(0.07	)			—				—				0.01				(0.06	)
2015 QTD Adjusted Earnings Per Share, Diluted		$	0.91			$	0.08			$	0.01			$	(0.05	)			0.95
Costs to Achieve, Progress Merger			—				—				—				(0.02	)			(0.02	)
Discontinued Operations											(0.06	)							(0.15	)
2015 QTD Reported Earnings Per Share, Diluted		$	0.91			$	0.08			$	(0.05	)		$	(0.07	)		$	0.78

Note 1: Earnings Per Share amounts are calculated using the consolidated effective income tax rate.

Note 2: Adjusted and Reported Earnings Per Share amounts by segment may not recompute from other published schedules due to rounding.

Note 3: Prior period operating results reflect reclassifications due to the impact of discontinued operations.

 

(a)

Reflects the impact on earnings per diluted share due to the decrease in weighted-average diluted common shares outstanding as a result of shares repurchased and retired under the Accelerated Stock Repurchase Program. Weighted-average diluted shares outstanding decreased from 707 million shares for the three months ended June 30, 2014, to 692 million shares for the three months ended June 30, 2015.

(b)

Primarily due to prior-year fuel and purchased power costs true-ups (+$0.02) and higher energy efficiency rider recovery in North Carolina and South Carolina (+$0.01), partially offset by the impact of a regulatory order that limited the ability to carry forward energy efficiency savings for Duke Energy Ohio (-$0.02).

(c)	Primarily due to higher volumes and capacity rates due to favorable weather and the implementation of new contracts.

(d)	Primarily due to an increase in planned spending and the prior-year benefit associated with the adoption of nuclear outage levelization (-$0.05), partially offset by lower storm restoration costs.

(e)

Primarily due to a prior year tax benefit related to the reorganization of the company’s operations in Chile (-$0.07), lower results in Brazil (-$0.04) due to higher purchased power costs resulting from ongoing drought conditions, lower results in Central America (-$0.01) due to lower generation and prices from increased competition, and unfavorable foreign currency exchange rates (-$0.01).

(f)	Primarily due to lower wind production and additional depreciation expense from higher depreciable base.

(g)	Amount for Regulated Utilities includes increased depreciation and amortization expense (-$0.05) due to higher depreciable base and higher non-income taxes (-$0.03), partially offset by higher AFUDC-equity (+$0.01).

 

15

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DUKE ENERGY CORPORATION

EARNINGS VARIANCES

June 2015 YTD vs. Prior Year

 

($ per share)		Regulated Utilities				International Energy				Commercial Portfolio				Other				Consolidated
2014 YTD Reported Earnings Per Share, Diluted		$	2.02			$	0.39			$	(0.08	)		$	(0.25	)		$	0.72
Costs to Achieve, Progress Merger			—				—				—				0.10				0.10
Economic Hedges (Mark-to-Market)			—				—				0.01				—				0.01
Midwest Generation Operations (offset in Discontinued Operations)			—				—				0.02				(0.01	)			0.01
Asset Impairment			—				—				0.08				—				0.08
Discontinued Operations																			1.36
2014 YTD Adjusted Earnings Per Share, Diluted		$	2.02			$	0.39			$	0.03			$	(0.16	)		$	2.28
Stock Repurchase (a)			0.03				—				—				—				0.03
Weather			0.02				—				—				—				0.02
Pricing and Riders (b)			0.07				—				—				—				0.07
Volumes			0.02				—				—				—				0.02
Wholesale (c)			0.06				—				—				—				0.06
Operation and Maintenance, net of recoverables (d)			(0.12	)			—				—				—				(0.12	)
Latin America, including Foreign Exchange Rates (e)			—				(0.23	)			—				—				(0.23	)
National Methanol Company			—				(0.03	)			—				—				(0.03	)
Duke Energy Renewables (f)			—				—				(0.01	)			—				(0.01	)
Midwest Generation (g)			—				—				0.14				—				0.14
Interest Expense			—				—				—				0.01				0.01
Change in effective tax rates			(0.04	)			—				(0.01	)			0.06				0.01
Other (h)			(0.05	)			—				(0.01	)			0.01				(0.05	)
2015 YTD Adjusted Earnings Per Share, Diluted		$	2.01			$	0.13			$	0.14			$	(0.08	)			2.20
Costs to Achieve, Progress Merger			—				—				—				(0.04	)			(0.04	)
Midwest Generation Operations (offset in Discontinued Operations)			—				—				(0.13	)			—				(0.13	)
Discontinued Operations											(0.06	)							(0.02	)
2015 YTD Reported Earnings Per Share, Diluted		$	2.01			$	0.13			$	(0.05	)		$	(0.12	)		$	2.01

Note 1: Earnings Per Share amounts are calculated using the consolidated effective income tax rate.

Note 2: Adjusted and Reported Earnings Per Share amounts by segment may not recompute from other published schedules due to rounding.

Note 3: Prior period operating results reflect reclassifications due to the impact of discontinued operations.

 

(a)

Reflects the impact on earnings per diluted share due to the decrease in weighted-average diluted common shares outstanding as a result of shares repurchased and retired under the Accelerated Stock Repurchase Program. Weighted-average diluted shares outstanding decreased from 707 million shares for the six months ended June 30, 2014, to 700 million shares for the six months ended June 30, 2015.

(b)

Primarily due to prior year fuel and purchased power costs true-ups (+$0.04) and higher energy efficiency rider recovery in North Carolina and South Carolina (+$0.03), partially offset by the impact of a regulatory order that limited the ability to carry forward energy efficiency savings for Duke Energy Ohio (-$0.02).

(c)	Primarily due to higher volumes and capacity rates due to favorable weather and the implementation of new contracts.

(d)	Primarily due to an increase in planned spending and the prior-year benefit associated with the adoption of nuclear outage levelization (-$0.07), partially offset by lower storm restoration costs.

(e)

Primarily due to lower results in Brazil (-$0.12) due to lower sales volumes and higher purchased power costs resulting from ongoing drought conditions and decreased demand, a prior year tax benefit related to the reorganization of the company’s operations in Chile (-$0.07), lower results in Central America (-$0.02) due to lower generation and prices from increased competition and unfavorable foreign currency exchange rates (-$0.01).

(f)	Primarily due to lower wind production.

(g)	Primarily due to higher capacity revenues, improved generation margins and the suspension of depreciation as a result of held for sale status prior to the sale of the nonregulated Midwest generation business.

(h)	Amount for Regulated Utilities includes increased depreciation and amortization expense (-$0.08) due to higher depreciable base, partially offset by higher AFUDC-equity (+$0.03).

 

16

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Regulated Utilities

Quarterly Highlights

Supplemental Regulated Utilities Electric Information

June 2015

 

		Three Months Ended June 30																Six Months Ended June 30
		2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)				2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)
GWH Sales (1)
Residential			17,989				17,911				0.4	%			1.8	%			42,019				42,104				(0.2	%)			(0.1	%)
General Service			18,795				18,725				0.4	%			1.3	%			37,077				36,872				0.6	%			0.6	%
Industrial			13,105				13,081				0.2	%			1.9	%			25,369				25,136				0.9	%			1.3	%
Other Energy Sales			149				153				(2.6	%)							301				303				(0.7	%)
Unbilled Sales			2,378				1,164				104.3	%			N/A				1,332				580				129.7	%			N/A
Total Retail Sales			52,416				51,034				2.7	%			1.7	%			106,098				104,995				1.1	%			0.5	%
Special Sales			8,582				8,614				(0.4	%)							18,101				18,521				(2.3	%)
Total Consolidated Electric Sales - Regulated Utilities			60,998				59,648				2.3	%							124,199				123,516				0.6	%
Average Number of Customers (Electric)
Residential			6,348,277				6,266,316				1.3	%							6,345,413				6,265,818				1.3	%
General Service			951,642				941,986				1.0	%							949,694				940,517				1.0	%
Industrial			18,159				18,308				(0.8	%)							18,172				18,341				(0.9	%)
Other Energy Sales			23,012				22,468				2.4	%							22,982				22,464				2.3	%
Total Regular Sales			7,341,090				7,249,078				1.3	%							7,336,261				7,247,140				1.2	%
Special Sales			61				60				1.7	%							64				62				3.2	%
Total Average Number of Customers - Regulated Utilities			7,341,151				7,249,138				1.3	%							7,336,325				7,247,202				1.2	%
Heating and Cooling Degree Days
Carolinas - Actual
Heating Degree Days			150				156				(3.8	%)							2,054				2,125				(3.3	%)
Cooling Degree Days			632				593				6.6	%							636				593				7.3	%
Variance from Normal
Heating Degree Days			(19.5	%)			(15.7	%)			n/a								11.6	%			15.4	%			n/a
Cooling Degree Days			15.3	%			10.2	%			n/a								14.0	%			8.2	%			n/a
Midwest - Actual
Heating Degree Days			380				443				(14.2	%)							3,500				3,756				(6.8	%)
Cooling Degree Days			378				350				8.0	%							378				350				8.0	%
Variance from Normal
Heating Degree Days			(10.4	%)			4.2	%			n/a								14.6	%			22.3	%			n/a
Cooling Degree Days			3.0	%			(0.3	%)			n/a								1.3	%			(1.7	%)			n/a
Florida - Actual
Heating Degree Days			—				1				(100.0	%)							373				418				(10.8	%)
Cooling Degree Days			1,256				1,061				18.4	%							1,490				1,205				23.7	%
Variance from Normal
Heating Degree Days			(100.0	%)			(90.9	%)			n/a								(6.3	%)			0.7	%			n/a
Cooling Degree Days			19.3	%			0.7	%			n/a								21.6	%			(2.1	%)			n/a

 

(1)	Except as indicated in footnote (2), represents non-weather normalized billed sales, with energy delivered but not yet billed (i.e. unbilled sales) reflected as a single amount and not allocated to the respective retail classes.

(2)	Represents weather normal total retail calendar sales (i.e. billed and unbilled sales).

 

17

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Duke Energy Carolinas

Quarterly Highlights

Supplemental Regulated Utilities Electric Information

June 2015

 

		Three Months Ended June 30																Six Months Ended June 30
		2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)				2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)
GWH Sales (1)
Residential			5,754				5,872				(2.0	%)							14,232				14,436				(1.4	%)
General Service			6,942				6,953				(0.2	%)							13,801				13,734				0.5	%
Industrial			5,614				5,467				2.7	%							10,689				10,381				3.0	%
Other Energy Sales			76				76				—	%							153				149				2.7	%
Unbilled Sales			843				366				(130.3	%)							354				185				(91.4	%)
Total Regular Electric Sales			19,229				18,734				2.6	%			2.0	%			39,229				38,885				0.9	%			0.9	%
Special Sales			2,077				2,102				(1.2	%)							4,545				5,644				(19.5	%)
Total Consolidated Electric Sales - Duke Energy Carolinas			21,306				20,836				2.3	%							43,774				44,529				(1.7	%)
Average Number of Customers
Residential			2,112,443				2,083,576				1.4	%							2,110,556				2,082,721				1.3	%
General Service			344,865				341,212				1.1	%							344,029				340,700				1.0	%
Industrial			6,446				6,531				(1.3	%)							6,459				6,527				(1.0	%)
Other Energy Sales			14,993				14,505				3.4	%							14,974				14,495				3.3	%
Total Regular Sales			2,478,747				2,445,824				1.3	%							2,476,018				2,444,443				1.3	%
Special Sales			24				24				—	%							25				25				—	%
Total Average Number of Customers - Duke Energy Carolinas			2,478,771				2,445,848				1.3	%							2,476,043				2,444,468				1.3	%
Heating and Cooling Degree Days
Actual
Heating Degree Days			163				181				(9.9	%)							2,104				2,223				(5.4	%)
Cooling Degree Days			623				557				11.8	%							624				557				12.0	%
Variance from Normal
Heating Degree Days			(18.9	%)			(10.0	%)			n/a								9.7	%			16.0	%			n/a
Cooling Degree Days			18.7	%			8.4	%			n/a								16.9	%			6.5	%			n/a

 

(1)	Except as indicated in footnote (2), represents non-weather normalized billed sales, with energy delivered but not yet billed (i.e. unbilled sales) reflected as a single amount and not allocated to the respective retail classes.

(2)	Represents weather normal total retail calendar sales (i.e. billed and unbilled sales).

 

18

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Duke Energy Progress

Quarterly Highlights

Supplemental Regulated Utilities Electric Information

June 2015

 

		Three Months Ended June 30																Six Months Ended June 30
		2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)				2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)
GWH Sales (1)
Residential			3,673				3,959				(7.2	%)							9,440				9,539				(1.0	%)
General Service			3,688				3,769				(2.1	%)							7,437				7,410				0.4	%
Industrial			2,565				2,616				(1.9	%)							5,002				4,997				0.1	%
Other Energy Sales			27				29				(6.9	%)							55				59				(6.8	%)
Unbilled Sales			570				(30	)			2,000.0	%							129				(27	)			577.8	%
Total Regular Electric Sales			10,523				10,343				1.7	%			2.4	%			22,063				21,978				0.4	%			0.4	%
Special Sales			4,429				4,350				1.8	%							9,654				8,876				8.8	%
Total Consolidated Electric Sales - Duke Energy Progress			14,952				14,693				1.8	%							31,717				30,854				2.8	%
Average Number of Customers
Residential			1,271,806				1,253,519				1.5	%							1,270,438				1,252,564				1.4	%
General Service			225,735				223,061				1.2	%							225,073				222,477				1.2	%
Industrial			4,229				4,277				(1.1	%)							4,229				4,284				(1.3	%)
Other Energy Sales			1,690				1,730				(2.3	%)							1,689				1,741				(3.0	%)
Total Regular Sales			1,503,460				1,482,587				1.4	%							1,501,429				1,481,066				1.4	%
Special Sales			15				15				—	%							15				15				—	%
Total Average Number of Customers - Duke Energy Progress			1,503,475				1,482,602				1.4	%							1,501,444				1,481,081				1.4	%
Heating and Cooling Degree Days
Actual
Heating Degree Days			136				131				3.8	%							2,003				2,027				(1.2	%)
Cooling Degree Days			641				629				1.9	%							648				629				3.0	%
Variance from Normal
Heating Degree Days			(19.0	%)			(22.0	%)			n/a								13.6	%			14.7	%			n/a
Cooling Degree Days			12.5	%			11.7	%			n/a								11.5	%			9.6	%			n/a

 

(1)	Except as indicated in footnote (2), represents non-weather normalized billed sales, with energy delivered but not yet billed (i.e. unbilled sales) reflected as a single amount and not allocated to the respective retail classes.

(2)	Represents weather normal total retail calendar sales (i.e. billed and unbilled sales).

 

19

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Duke Energy Florida

Quarterly Highlights

Supplemental Regulated Utilities Electric Information

June 2015

 

		Three Months Ended June 30																Six Months Ended June 30
		2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)				2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)
GWH Sales (1)
Residential			4,944				4,396				12.5	%							9,048				8,447				7.1	%
General Service			3,857				3,702				4.2	%							7,092				6,950				2.0	%
Industrial			821				803				2.2	%							1,581				1,604				(1.4	%)
Other Energy Sales			6				6				—	%							12				12				—	%
Unbilled Sales			679				592				14.7	%							793				731				8.5	%
Total Regular Electric Sales			10,307				9,499				8.5	%			3.4	%			18,526				17,744				4.4	%			0.9	%
Special Sales			495				341				45.2	%							749				757				(1.1	%)
Total Electric Sales - Duke Energy Florida			10,802				9,840				9.8	%							19,275				18,501				4.2	%
Average Number of Customers
Residential			1,521,460				1,498,175				1.6	%							1,518,985				1,495,267				1.6	%
General Service			193,278				190,979				1.2	%							192,919				190,708				1.2	%
Industrial			2,245				2,279				(1.5	%)							2,251				2,290				(1.7	%)
Other Energy Sales			1,537				1,556				(1.2	%)							1,539				1,556				(1.1	%)
Total Regular Sales			1,718,520				1,692,989				1.5	%							1,715,694				1,689,821				1.5	%
Special Sales			14				14				—	%							15				15				—	%
Total Average Number of Customers - Duke Energy Florida			1,718,534				1,693,003				1.5	%							1,715,709				1,689,836				1.5	%
Heating and Cooling Degree Days
Actual
Heating Degree Days			—				1				(100.0	%)							373				418				(10.8	%)
Cooling Degree Days			1,256				1,061				18.4	%							1,490				1,205				23.7	%
Variance from Normal
Heating Degree Days			(100.0	%)			(90.9	%)			n/a								(6.3	%)			0.7	%			n/a
Cooling Degree Days			19.3	%			0.7	%			n/a								21.6	%			(2.1	%)			n/a

 

(1)	Except as indicated in footnote (2), represents non-weather normalized billed sales, with energy delivered but not yet billed (i.e. unbilled sales) reflected as a single amount and not allocated to the respective retail classes.

(2)	Represents weather normal total retail calendar sales (i.e. billed and unbilled sales).

 

20

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Duke Energy Ohio

Quarterly Highlights

Supplemental Regulated Utilities Electric Information

June 2015

 

		Three Months Ended June 30																Six Months Ended June 30
		2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)				2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)
GWH Sales (1)
Residential			1,811				1,813				(0.1	%)							4,492				4,592				(2.2	%)
General Service			2,315				2,299				0.7	%							4,678				4,671				0.1	%
Industrial			1,479				1,494				(1.0	%)							2,927				2,930				(0.1	%)
Other Energy Sales			26				28				(7.1	%)							54				56				(3.6	%)
Unbilled Sales			182				160				13.8	%							49				(82	)			159.8	%
Total Regular Electric Sales			5,813				5,794				0.3	%			(0.4	%)			12,200				12,167				0.3	%			0.4	%
Special Sales			420				30				1,300.0	%							800				136				488.2	%
Total Electric Sales - Duke Energy Ohio			6,233				5,824				7.0	%							13,000				12,303				5.7	%
Average Number of Customers
Residential			746,005				741,069				0.7	%							746,812				742,324				0.6	%
General Service			87,200				86,497				0.8	%							87,187				86,374				0.9	%
Industrial			2,530				2,519				0.4	%							2,534				2,521				0.5	%
Other Energy Sales			3,218				3,171				1.5	%							3,212				3,171				1.3	%
Total Regular Sales			838,953				833,256				0.7	%							839,745				834,390				0.6	%
Special Sales			1				1				—	%							1				1				—	%
Total Average Number of Customers - Duke Energy Ohio			838,954				833,257				0.7	%							839,746				834,391				0.6	%
Heating and Cooling Degree Days
Actual
Heating Degree Days			348				361				(3.6	%)							3,310				3,470				(4.6	%)
Cooling Degree Days			391				382				2.4	%							391				382				2.4	%
Variance from Normal
Heating Degree Days			(14.5	%)			(11.7	%)			n/a								12.1	%			16.8	%			n/a
Cooling Degree Days			7.7	%			10.7	%			n/a								6.3	%			9.1	%			n/a

 

(1)	Except as indicated in footnote (2), represents non-weather normalized billed sales, with energy delivered but not yet billed (i.e. unbilled sales) reflected as a single amount and not allocated to the respective retail classes.

(2)	Represents weather normal total retail calendar sales (i.e. billed and unbilled sales).

 

21

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Duke Energy Ohio

Quarterly Highlights

Supplemental Regulated Utilities Gas Information

June 2015

 

		Three Months Ended June 30																Six Months Ended June 30
		2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)				2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)
MCF Sales (1)
Residential			5,052,315				5,948,555				(15.1	%)							27,231,220				29,534,496				(7.8	%)
General Service			3,553,999				3,931,932				(9.6	%)							16,625,080				17,624,423				(5.7	%)
Industrial			1,335,427				1,508,405				(11.5	%)							4,411,288				4,321,235				2.1	%
Other Energy Sales			4,538,714				4,822,263				(5.9	%)							10,754,865				11,419,293				(5.8	%)
Unbilled Sales			(2,892,000	)			(2,435,000	)			(18.8	%)							(3,245,000	)			(4,902,000	)			33.8	%
Total Gas Sales - Duke Energy Ohio			11,588,455				13,776,155				(15.9	%)			(9.3	%)			55,777,453				57,997,447				(3.8	%)			(1.7	%)
Average Number of Customers
Residential			474,973				472,847				0.4	%							476,554				474,482				0.4	%
General Service			43,003				43,330				(0.8	%)							44,171				44,316				(0.3	%)
Industrial			1,604				1,609				(0.3	%)							1,655				1,663				(0.5	%)
Other Energy Sales			143				155				(7.7	%)							144				156				(7.7	%)
Total Average Number of Gas Customers - Duke Energy Ohio			519,723				517,941				0.3	%							522,524				520,617				0.4	%
Heating and Cooling Degree Days
Actual
Heating Degree Days			348				361				(3.6	%)							3,310				3,470				(4.6	%)
Cooling Degree Days			391				382				2.4	%							391				382				2.4	%
Variance from Normal
Heating Degree Days			(14.5	%)			(11.7	%)			n/a								12.1	%			16.8	%			n/a
Cooling Degree Days			7.7	%			10.7	%			n/a								6.3	%			9.1	%			n/a

 

(1)	Except as indicated in footnote (2), represents non-weather normalized billed sales, with energy delivered but not yet billed (i.e. unbilled sales) reflected as a single amount and not allocated to the respective retail classes.

(2)	Represents weather normal total retail calendar sales (i.e. billed and unbilled sales).

 

22

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Duke Energy Indiana

Quarterly Highlights

Supplemental Regulated Utilities Electric Information

June 2015

 

		Three Months Ended June 30																Six Months Ended June 30
		2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)				2015				2014				% Inc. (Dec.)				% Inc. (Dec.) Weather Normal (2)
GWH Sales (1)
Residential			1,807				1,871				(3.4	%)							4,807				5,090				(5.6	%)
General Service			1,993				2,002				(0.4	%)							4,069				4,107				(0.9	%)
Industrial			2,626				2,701				(2.8	%)							5,170				5,224				(1.0	%)
Other Energy Sales			14				14				—	%							27				27				—	%
Unbilled Sales			104				76				36.8	%							7				(227	)			103.1	%
Total Regular Electric Sales			6,544				6,664				(1.8	%)			(1.1	%)			14,080				14,221				(1.0	%)			(0.9	%)
Special Sales			1,161				1,791				(35.2	%)							2,353				3,108				(24.3	%)
Total Electric Sales - Duke Energy Indiana			7,705				8,455				(8.9	%)							16,433				17,329				(5.2	%)
Average Number of Customers
Residential			696,563				689,977				1.0	%							698,622				692,942				0.8	%
General Service			100,564				100,237				0.3	%							100,486				100,258				0.2	%
Industrial			2,709				2,702				0.3	%							2,699				2,719				(0.7	%)
Other Energy Sales			1,574				1,506				4.5	%							1,568				1,501				4.5	%
Total Regular Sales			801,410				794,422				0.9	%							803,375				797,420				0.7	%
Special Sales			7				6				16.7	%							8				6				33.3	%
Total Average Number of Customers - Duke Energy Indiana			801,417				794,428				0.9	%							803,383				797,426				0.7	%
Heating and Cooling Degree Days
Actual
Heating Degree Days			411				525				(21.7	%)							3,689				4,042				(8.7	%)
Cooling Degree Days			364				318				14.5	%							364				318				14.5	%
Variance from Normal
Heating Degree Days			(7.0	%)			18.5	%			n/a								16.9	%			27.5	%			n/a
Cooling Degree Days			(1.4	%)			(10.9	%)			n/a								(2.9	%)			(12.2	%)			n/a

 

(1)	Except as indicated in footnote (2), represents non-weather normalized billed sales, with energy delivered but not yet billed (i.e. unbilled sales) reflected as a single amount and not allocated to the respective retail classes.

(2)	Represents weather normal total retail calendar sales (i.e. billed and unbilled sales).

 

23

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DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Three Months Ended June 30, 2015

(Dollars in millions, except per-share amounts)

 

						Special Items
		Adjusted Earnings				Costs to Achieve, Progress Merger				Discontinued Operations				Total Adjustments				Reported Earnings
SEGMENT INCOME
Regulated Utilities		$	632			$	—			$	—			$	—			$	632
International Energy			52				—				—				—				52
Commercial Portfolio			8				—				(41	)D			(41	)			(33	)
Total Reportable Segment Income			692				—				(41	)			(41	)			651
Other			(34	)			(14	)A			—				(14	)			(48	)
Intercompany Eliminations			—				—				(3	)C			(3	)			(3	)
Total Reportable Segment Income and Other Net Expense			658				(14	)			(44	)			(58	)			600
Discontinued Operations			—				—				(57	)B			(57	)			(57	)
Net Income (Loss) Attributable to Duke Energy Corporation		$	658			$	(14	)		$	(101	)		$	(115	)		$	543
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC		$	0.95			$	(0.02	)		$	(0.15	)		$	(0.17	)		$	0.78
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED		$	0.95			$	(0.02	)		$	(0.15	)		$	(0.17	)		$	0.78

 

A -	Net of $8 million tax benefit. Recorded within Operating Expenses on the Condensed Consolidated Statements of Operations.

B -	Recorded in Income (Loss) From Discontinued Operations, net of tax on the Consolidated Statements of Operations, and includes the impact of a litigation reserve related to the nonregulated Midwest generation business.

C -	Reverses the impact on eliminations of classifying the nonregulated Midwest generation business as discontinued operations.

D -	State tax expense resulting from the completion of the sale of the nonregulated Midwest generation business.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic			692
Diluted			692

 

24

---

DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Six Months Ended June 30, 2015

(Dollars in millions, except per-share amounts)

 

						Special Items
		Adjusted Earnings				Costs to Achieve, Progress Merger				Midwest Generation Operations				Discontinued Operations				Total Adjustments				Reported Earnings
SEGMENT INCOME
Regulated Utilities		$	1,406			$	—			$	—			$	—			$	—			$	1,406
International Energy			88				—				—				—				—				88
Commercial Portfolio			103				—				(94	)B			(41	)E			(135	)			(32	)
Total Reportable Segment Income			1,597				—				(94	)			(41	)			(135	)			1,462
Other			(58	)			(27	)A			—				—				(27	)			(85	)
Intercompany Eliminations			—				—				—				(4	)D			(4	)			(4	)
Total Reportable Segment Income and Other Net Expense			1,539				(27	)			(94	)			(45	)			(166	)			1,373
Discontinued Operations			—				—				94	B			(60	)C			34				34
Net Income (Loss) Attributable to Duke Energy Corporation		$	1,539			$	(27	)		$	—			$	(105	)		$	(132	)		$	1,407
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC		$	2.20			$	(0.04	)		$	—			$	(0.15	)		$	(0.19	)		$	2.01
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED		$	2.20			$	(0.04	)		$	—			$	(0.15	)		$	(0.19	)		$	2.01

 

A -	Net of $16 million tax benefit. Recorded within Operating Expenses on the Condensed Consolidated Statements of Operations.

B -	Operating results of the nonregulated Midwest generation business that had been classified from discontinued operations after adjustment for special items and economic hedges (net of $53 million tax benefit).

C -	Recorded in Income (Loss) From Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations, and includes the impact of a litigation reserve related to the nonregulated Midwest generation business.

D -	Reverses the impact on eliminations of classifying the nonregulated Midwest generation business as discontinued operations.

E -	State tax expense resulting from the completion of the sale of the nonregulated Midwest generation business.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic			700
Diluted			700

 

25

---

DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Three Months Ended June 30, 2014

(Dollars in millions, except per-share amounts)

 

						Special Items
		Adjusted Earnings				Costs to Achieve, Progress Merger				Midwest Generation Operations				Economic Hedges (Mark-to- Market) *				Discontinued Operations				Total Adjustments				Reported Earnings
SEGMENT INCOME
Regulated Utilities		$	689			$	—			$	—			$	—			$	—			$	—			$	689
International Energy			146				—				—				—				—				—				146
Commercial Portfolio			16				—				(34	)B			(3	)C			—				(37	)			(21	)
Total Reportable Segment Income			851				—				(34	)			(3	)			—				(37	)			814
Other			(65	)			(38	)A			13	B			—				—				(25	)			(90	)
Intercompany Eliminations			—				—				—				—				(2	)D			(2	)			(2	)
Total Reportable Segment Income and Other Net Expense			786				(38	)			(21	)			(3	)			(2	)			(64	)			722
Discontinued Operations			—				—				21	B			—				(134	)E			(113	)			(113	)
Net Income (Loss) Attributable to Duke Energy Corporation		$	786			$	(38	)		$	—			$	(3	)		$	(136	)		$	(177	)		$	609
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC		$	1.11			$	(0.06	)		$	—			$	—			$	(0.19	)		$	(0.25	)		$	0.86
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED		$	1.11			$	(0.06	)		$	—			$	—			$	(0.19	)		$	(0.25	)		$	0.86

 

A -	Net of $23 million tax benefit. Recorded in Operating Expenses on the Consolidated Statements of Operations.

B -	Operating results of the nonregulated Midwest generation business that had been classified from discontinued operations after adjustment for special items and economic hedges to the Commercial Portfolio segment (net of $10 million tax expense) and Other segment (net of $13 million tax benefit).

C -	Net of $2 million tax expense. Recorded in Operating Revenues on the Consolidated Statement of Operations.

D -	Reverses the impact on eliminations of classifying the nonregulated Midwest generation business as discontinued operations.

E -	Recorded in Income (Loss) From Discontinued Operations, net of tax on the Consolidated Statement of Operations. Includes the impairment of the nonregulated Midwest generation business and the mark-to-market of economic hedges of the nonregulated Midwest generation business.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic			707
Diluted			707

 

*

Mark-to-market adjustments reflect the impact of derivative contracts, which are used in Duke Energy’s hedging of a portion of the economic value of its generation assets in the Commercial Portfolio segment and also relate to existing derivative positions that may have tenors beyond the planned disposal date of the nonregulated Midwest generation business. The mark-to-market impact of derivative contracts is recognized in GAAP earnings immediately as such derivative contracts do not qualify for hedge accounting or regulatory treatment. The economic value of generation assets is subject to fluctuations in fair value due to market price volatility of input and output commodities (e.g. coal, electricity, natural gas). Economic hedging involves both purchases and sales of those input and output commodities related to generation assets. Operations of the generation assets are accounted for under the accrual method. Management believes excluding impacts of mark-to-market changes of the derivative contracts from adjusted earnings until settlement better matches the financial impacts of the derivative contract with the portion of economic value of the underlying hedged asset. However, due to the divestiture of the nonregulated Midwest generation business as mentioned above, certain derivative positions have tenors beyond the planned disposal date of these assets. As such, management has excluded settlements of these derivative positions from adjusted diluted EPS as these realized gains and losses more closely relate to the loss on disposal of these assets. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods.

 

26

---

DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Six Months Ended June 30, 2014

(Dollars in millions, except per-share amounts)

 

						Special Items
		Adjusted Earnings				Costs to Achieve, Progress Merger				Midwest Generation Impairment				Midwest Generation Operations				Economic Hedges (Mark-to- Market) *				Discontinued Operations				Total Adjustments				Reported Earnings
SEGMENT INCOME
Regulated Utilities		$	1,426			$	—			$	—			$	—			$	—			$	—			$	—			$	1,426
International Energy			276				—				—				—				—				—				—				276
Commercial Portfolio			26				—				(59	)B			(14	)C			(6	)F			—				(79	)			(53	)
Total Reportable Segment Income			1,728				—				(59	)			(14	)			(6	)			—				(79	)			1,649
Other			(113	)			(72	)A			—				8	C			—				—				(64	)			(177	)
Intercompany Eliminations			—				—				—				—				—				(4	)E			(4	)			(4	)
Total Reportable Segment Income and Other Net Expense			1,615				(72	)			(59	)			(6	)			(6	)			(4	)			(147	)			1,468
Discontinued Operations			—				—				—				6	C			—				(962	)D			(956	)			(956	)
Net Income (Loss) Attributable to Duke Energy Corporation		$	1,615			$	(72	)		$	(59	)		$	—			$	(6	)		$	(966	)		$	(1,103	)		$	512
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC		$	2.28			$	(0.10	)		$	(0.08	)		$	—			$	(0.01	)		$	(1.37	)		$	(1.56	)		$	0.72
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED		$	2.28			$	(0.10	)		$	(0.08	)		$	—			$	(0.01	)		$	(1.37	)		$	(1.56	)		$	0.72

 

A -	Net of $44 million tax benefit. $1 million recorded as a decrease in Operating Revenues, $114 million recorded within Operating Expenses and $1 million recorded within Interest Expense on the Consolidated Statements of Operations.

B -	Net of $35 million tax benefit. Recorded within Impairment Charges (Operating Expenses) on the Consolidated Statements of Operations.

C -	Operating results of the nonregulated Midwest generation business that had been classified from discontinued operations after adjustment for special items and economic hedges to the Commercial Portfolio segment (net of $19 million tax benefit) and Other segment (net of $8 million tax benefit).

D -	Recorded in Income (loss) From Discontinued Operations, net of tax on the Consolidated Statements of Operations. Includes the impairment of the nonregulated Midwest generation business and the mark-to-market of economic hedges of the nonregulated Midwest generation business.

E -	Reverses the impact on eliminations of classifying the nonregulated Midwest generation business as discontinued operations.

F -	Net of $3 million tax benefit. Recorded within Operating Revenues on the Consolidating Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions

 

Basic			707
Diluted			707

 

*

Mark-to-market adjustments reflect the impact of derivative contracts, which are used in Duke Energy’s hedging of a portion of the economic value of its generation assets in the Commercial Portfolio segment and also relate to existing derivative positions that may have tenors beyond the planned disposal date of the nonregulated Midwest generation business. The mark-to-market impact of derivative contracts is recognized in GAAP earnings immediately as such derivative contracts do not qualify for hedge accounting or regulatory treatment. The economic value of generation assets is subject to fluctuations in fair value due to market price volatility of input and output commodities (e.g. coal, electricity, natural gas). Economic hedging involves both purchases and sales of those input and output commodities related to generation assets. Operations of the generation assets are accounted for under the accrual method. Management believes excluding impacts of mark-to-market changes of the derivative contracts from adjusted earnings until settlement better matches the financial impacts of the derivative contract with the portion of economic value of the underlying hedged asset. However, due to the divestiture of the nonregulated Midwest generation business as mentioned above, certain derivative positions have tenors beyond the planned disposal date of these assets. As such, management has excluded settlements of these derivative positions from adjusted diluted EPS as these realized gains and losses more closely relate to the loss on disposal of these assets. Management believes that the presentation of adjusted diluted EPS Attributable to Duke Energy Corporation provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy Corporation’s performance across periods.

 

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DUKE ENERGY CORPORATION

ADJUSTED EFFECTIVE TAX RECONCILIATION

Three and Six Months Ended June 30, 2015

(Dollars in Millions)

 

		Three Months Ended June 30, 2015								Six Months Ended June 30, 2015
		Balance				Effective Tax Rate				Balance				Effective Tax Rate
Adjusted Earnings, Pre-Tax Income*		$	962							$	2,272
Costs to Achieve, Progress Energy Merger			(22	)							(43	)
Midwest Generation Operations			—								(147	)
Intercompany Eliminations			(2	)							(4	)
Reported Income From Continuing Operations Before Income Taxes		$	938							$	2,078
Adjusted Tax Expense*		$	300				31.2	%**		$	726				32.0	%**
Tax Adjustment Related to Midwest Generation Sale			41								41
Midwest Generation Operations			—								(53	)
Costs to Achieve, Progress Energy Merger			(8	)							(16	)
Intercompany Eliminations			1								—
Reported Income Tax Expense From Continuing Operations		$	334				35.6	%		$	698				33.6	%

 

*	Includes amounts attributable to noncontrolling interests

**

Adjusted effective tax rate is a non-GAAP financial measure as the rate is calculated using a pretax earnings and income tax expense, both adjusted for the impact of special items. The most directly comparable GAAP measure for adjusted effective tax rate is reported effective tax rate, which includes the impact of special items.

 

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DUKE ENERGY CORPORATION

ADJUSTED EFFECTIVE TAX RECONCILIATION

Three and Six Months Ended June 30, 2014

(Dollars in Millions)

 

		Three Months Ended June 30, 2014								Six Months Ended June 30, 2014
		Balance				Effective Tax Rate				Balance				Effective Tax Rate
Adjusted Earnings, Pre-Tax Income*		$	1,101							$	2,354
Costs to Achieve, Progress Energy Merger			(61	)							(116	)
Midwest Generation Operations			(24	)							(33	)
Economic Hedges (Mark-to-Market)			(5	)							(9	)
Asset Impairment			—								(94	)
Intercompany Eliminations			(3	)							(5	)
Reported Income From Continuing Operations Before Income Taxes		$	1,008							$	2,097
Adjusted Tax Expense*		$	311				28.2	%**		$	731				31.1	%**
Costs to Achieve, Progress Energy Merger			(23	)							(44	)
Midwest Generation Operations			(3	)							(27	)
Economic Hedges (Mark-to-Market)			(2	)							(3	)
Asset Impairment			—								(35	)
Intercompany Eliminations			(1	)							(1	)
Reported Income Tax Expense From Continuing Operations		$	282				28.0	%		$	621				29.6	%

 

*	Includes amounts attributable to noncontrolling interests

**

Adjusted effective tax rate is a non-GAAP financial measure as the rate is calculated using a pretax earnings and income tax expense, both adjusted for the impact of special items. The most directly comparable GAAP measure for adjusted effective tax rate is reported effective tax rate, which includes the impact of special items.

 

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