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April 1, 2016 8:08 AM EDT


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): April 1, 2016
Commission file
number
 
Registrant, State of Incorporation or Organization,
 Address of Principal Executive Offices, and Telephone Number
 
IRS Employer
Identification No.
 
 



 
 
 
1-32853
 
 
 
DUKE ENERGY CORPORATION
(a Delaware corporation)
550 South Tryon Street
Charlotte, North Carolina 28202-1803
704-382-3853
 
 
20-2777218
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:

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

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

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

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




Item 8.01  Other Events.

During the first quarter of 2016, the Duke Energy Corporation ("Duke Energy") chief operating decision maker began to evaluate interim period segment performance based on financial information that includes the impact of income tax levelization within segment income. This represents a change from the previous measure, where the interim period impacts of income tax levelization were included within Other, and therefore excluded from segment income. The segment measure information attached hereto, and incorporated by reference herein, as exhibit 99.1, recasts Duke Energy's historical segment measure for each of the interim financial periods for the year ended December 31, 2015, based upon this new segment measure.

Item 9.01  Financial Statements and Exhibits.

(d) Exhibits.

99.1 2015 Segment Income for Interim Periods




SIGNATURE

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

 
 
DUKE ENERGY CORPORATION
 
 
 
 
 
 
 
 
Date:
April 1, 2016
By:
/s/ Brian D. Savoy
 
 
Name:
Brian D. Savoy
 
 
Title:
Senior Vice President, Chief Accounting Officer and Controller





EXHIBIT INDEX

Exhibit
 
Description
 
 
 
99.1

 
2015 Segment Income for Interim Periods










2015 Segment Income For Interim Periods




Table of Contents
 
 
 
 
 
 
 
 
DUKE ENERGY CORPORATION (Unaudited)
 
 
Recasted Segment Income for Interim Periods
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Disclosures (Unaudited)
 
 
 
Adjusted to Reported Earnings Reconciliations
 
 
 
Non-GAAP Financial Measures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


























DUKE ENERGY CORPORATION
Recasted Segment Income for Interim Periods
(Unaudited)
 
2015
(in millions)
GAAP Reported Segment Income

Adjustment(a)

Recasted GAAP Reported Segment Income

 
Adjusted Segment Income

Adjustment(a)

Recasted Adjusted Segment Income

Three Months Ended March 31, 2015
 
 
 
 
 
 
 
 
Regulated Utilities
$
774

$
—

$
774

 
$
774

$
—

$
774

 
International Energy
36

—

36

 
36

—

36

 
Commercial Portfolio
1

6

7

 
95

6

101

 
Other
(37
)
(6
)
(43
)
 
(24
)
(6
)
(30
)
 
Total
$
774

$
—

$
774

 
$
881

$
—

$
881

Three Months Ended June 30, 2015
 
 
 
 
 
 
 
 
Regulated Utilities
$
632

$
—

$
632

 
$
632

$
—

$
632

 
International Energy
52

—

52

 
52

—

52

 
Commercial Portfolio
(33
)
3

(30
)
 
8

3

11

 
Other
(48
)
(3
)
(51
)
 
(34
)
(3
)
(37
)
 
Total
$
603

$
—

$
603

 
$
658

$
—

$
658

Six Months Ended June 30, 2015
 
 
 
 
 
 
 
 
Regulated Utilities
$
1,406

$
—

$
1,406

 
$
1,406

$
—

$
1,406

 
International Energy
88

—

88

 
88

—

88

 
Commercial Portfolio
(32
)
9

(23
)
 
103

9

112

 
Other
(85
)
(9
)
(94
)
 
(58
)
(9
)
(67
)
 
Total
$
1,377

$
—

$
1,377

 
$
1,539

$
—

$
1,539

Three Months Ended September 30, 2015
 
 
 
 
 
 
 
 
Regulated Utilities
$
905

$
—

$
905

 
$
965

$
—

$
965

 
International Energy
69

—

69

 
69

—

69

 
Commercial Portfolio
(3
)
11

8

 
(4
)
11

7

 
Other
(34
)
(11
)
(45
)
 
(19
)
(11
)
(30
)
 
Total
$
937

$
—

$
937

 
$
1,011

$
—

$
1,011

Nine Months Ended September 30, 2015
 
 
 
 
 
 
 
 
Regulated Utilities
$
2,311

$
—

$
2,311

 
$
2,371

$
—

$
2,371

 
International Energy
157

—

157

 
157

—

157

 
Commercial Portfolio
(35
)
20

(15
)
 
99

20

119

 
Other
(119
)
(20
)
(139
)
 
(77
)
(20
)
(97
)
 
Total
$
2,314

$
—

$
2,314

 
$
2,550

$
—

$
2,550

Three Months Ended December 31, 2015
 
 
 
 
 
 
 
 
Regulated Utilities
$
582

$
—

$
582

 
$
601

$
—

$
601

 
International Energy
68

—

68

 
68

—

68

 
Commercial Portfolio
39

(20
)
19

 
41

(20
)
21

 
Other
(203
)
20

(183
)
 
(108
)
20

(88
)
 
Total
$
486

$
—

$
486

 
$
602

$
—

$
602


(a)
During the first quarter of 2016, the Duke Energy Corporation (Duke Energy) chief operating decision maker began to evaluate interim period segment performance based on financial information that includes the impact of income tax levelization within segment income. This represents a change from the previous measure, where the interim period impacts of income tax levelization were included within Other, and therefore excluded from segment income. The adjustment recasts Duke Energy's historical segment measure to reflect the segment measure change. Income tax levelization is recorded within Income tax expense on the Condensed Consolidated Statements of Operations.

3


DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
Three Months Ended March 31, 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
 
$
774

 
$
—

 
$
—

 
$
—

 
$
—

 
$
774

 
 
 
 
 
 
 
 
 
 
 
 
 
International Energy
 
36

 
—

 
—

 
—

 
—

 
36

 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Portfolio
 
101

 
—

 
(94
)
B
—

 
(94
)
 
7

 
 
 
 
 
 
 
 
 
 
 
 
 
Total Reportable Segment Income
 
911

 
—

 
(94
)
 
—

 
(94
)
 
817

 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
(30
)
 
(13
)
A
—

 
—

 
(13
)
 
(43
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Intercompany Eliminations
 
—

 
—

 
—

 
(1
)
D
(1
)
 
(1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Reportable Segment Income and Other Net Expense
 
881

 
(13
)
 
(94
)
 
(1
)
 
(108
)
 
773

 
 
 
 
 
 
 
 
 
 
 
 
 
Discontinued Operations
 
—

 
—

 
94

B
(3
)
C
91

 
91

 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to Duke Energy Corporation
 
$
881

 
$
(13
)
 
$
—

 
$
(4
)
 
$
(17
)
 
$
864

 
 
 
 
 
 
 
 
 
 
 
 
 
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC
 
$
1.24

 
$
(0.02
)
 
$
—

 
$
—

 
$
(0.02
)
 
$
1.22

 
 
 
 
 
 
 
 
 
 
 
 
 
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED
 
$
1.24

 
$
(0.02
)
 
$
—

 
$
—

 
$
(0.02
)
 
$
1.22

 
 
 
 
 
 
 
 
 
 
 
 
 
A - Net of $8 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.
D - Reverses the impact on eliminations of classifying the nonregulated Midwest generation business as discontinued operations.

Weighted Average Shares (reported and adjusted) - in millions
Basic            708
Diluted            708

4


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
 
11

 
—

 
(41
)
D
(41
)
 
(30
)
 
 
 
 
 
 
 
 
 
 
 
Total Reportable Segment Income
 
695

 
—

 
(41
)
 
(41
)
 
654

 
 
 
 
 
 
 
 
 
 
 
Other
 
(37
)
 
(14
)
A
—

 
(14
)
 
(51
)
 
 
 
 
 
 
 
 
 
 
 
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 Condensed 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

5


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
 
112

 
—

 
(94
)
B
(41
)
E
(135
)
 
(23
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Reportable Segment Income
 
1,606

 
—

 
(94
)
 
(41
)
 
(135
)
 
1,471

 
 
 
 
 
 
 
 
 
 
 
 
 
Other
 
(67
)
 
(27
)
A
—

 
—

 
(27
)
 
(94
)
 
 
 
 
 
 
 
 
 
 
 
 
 
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

6


DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
Three Months Ended September 30, 2015
(Dollars in millions, except per-share amounts)
 
 
Special Items
 
 
 
 
 
 
 
 
Adjusted Earnings
 
Costs to Achieve, Progress Merger
 
Edwardsport Settlement
 
Ash Basin Settlement
 
Economic Hedges (Mark-to-Market) *
 
Discontinued Operations
 
Total Adjustments
 
Reported Earnings
SEGMENT INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulated Utilities
$
965

 
$
—

 
$
(56
)
B
$
(4
)
C
$
—

 
$
—

 
$
(60
)
 
$
905

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Energy
69

 
—

 
—

 
—

 
—

 
—

 
—

 
69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Portfolio
7

 
—

 
—

 
—

 
1

D
—

 
1

 
8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Reportable Segment Income
1,041

 
—

 
(56
)
 
(4
)
 
1

 
—

 
(59
)
 
982

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
(30
)
 
(15
)
A
—

 
—

 
—

 
—

 
(15
)
 
(45
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Reportable Segment Income and Other Net Expense
1,011

 
(15
)
 
(56
)
 
(4
)
 
1

 
—

 
(74
)
 
937

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discontinued Operations
—

 
—

 
—

 
—

 
—

 
(5
)
E
(5
)
 
(5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to Duke Energy Corporation
$
1,011

 
$
(15
)
 
$
(56
)
 
$
(4
)
 
$
1

 
$
(5
)
 
$
(79
)
 
$
932

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC
$
1.47

 
$
(0.02
)
 
$
(0.08
)
 
$
(0.01
)
 
$
—

 
$
(0.01
)
 
$
(0.12
)
 
$
1.35

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED
$
1.47

 
$
(0.02
)
 
$
(0.08
)
 
$
(0.01
)
 
$
—

 
$
(0.01
)
 
$
(0.12
)
 
$
1.35

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A - Net of $9 million tax benefit. Recorded within Operating Expenses on the Condensed Consolidated Statements of Operations.
B - Net of $34 million tax benefit. $85 million recorded within Impairment charges and $5 million recorded within Other income and expenses, net on the Duke Energy Indiana Condensed Consolidated Statements of Operations.
C - Net of $3 million tax benefit. Recorded within Operation, maintenance and other on the Condensed Consolidated Statements of Operations. Includes $1 million and $6 million at Duke Energy Carolinas and Duke Energy Progress, respectively.
D - Recorded within Operating Revenues on the Condensed Consolidated Statements of Operations.
E - Recorded in (Loss) Income From Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions
Basic            688
Diluted            688

* 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.

7


DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
Nine Months Ended September 30, 2015
(Dollars in millions, except per-share amounts)
 
 
 
Special Items
 
 
 
 
 
 
 
 
 
Adjusted Earnings
 
Costs to Achieve, Progress Merger
 
Edwardsport Settlement
 
Midwest Generation Operations
 
Ash Basin Settlement
 
Economic Hedges (Mark-to-Market) *
 
Discontinued Operations
 
Total Adjustments
 
Reported Earnings
SEGMENT INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulated Utilities
$
2,371

 
$
—

 
$
(56
)
B
$
—

 
$
(4
)
D
$
—

 
$
—

 
$
(60
)
 
$
2,311

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Energy
157

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
157

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Portfolio
119

 
—

 
—

 
(94
)
C
—

 
1

E
(41
)
F
(134
)
 
(15
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Reportable Segment Income
2,647

 
—

 
(56
)
 
(94
)
 
(4
)
 
1

 
(41
)
 
(194
)
 
2,453

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
(97
)
 
(42
)
A
—

 
—

 
—

 
—

 
—

 
(42
)
 
(139
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Intercompany Eliminations
—

 
—

 
—

 
—

 
—

 
—

 
(4
)
G
(4
)
 
(4
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Reportable Segment Income and Other Net Expense
2,550

 
(42
)
 
(56
)
 
(94
)
 
(4
)
 
1

 
(45
)
 
(240
)
 
2,310

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discontinued Operations
—

 
—

 
—

 
94

C
—

 
—

 
(65
)
H
29

 
29

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to Duke Energy Corporation
$
2,550

 
$
(42
)
 
$
(56
)
 
$
—

 
$
(4
)
 
$
1

 
$
(110
)
 
$
(211
)
 
$
2,339

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC
$
3.66

 
$
(0.05
)
 
$
(0.08
)
 
$
—

 
$
(0.01
)
 
$
—

 
$
(0.16
)
 
$
(0.30
)
 
$
3.36

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED
$
3.66

 
$
(0.05
)
 
$
(0.08
)
 
$
—

 
$
(0.01
)
 
$
—

 
$
(0.16
)
 
$
(0.30
)
 
$
3.36

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
A - Net of $25 million tax benefit. Recorded within Operating Expenses on the Condensed Consolidated Statements of Operations.
B - Net of $34 million tax benefit. $85 million recorded within Impairment charges and $5 million recorded within Other income and expenses, net on the Duke Energy Indiana Condensed 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 (net of $53 million tax benefit).
D - Net of $3 million tax benefit. Recorded within Operation, maintenance and other on the Condensed Consolidated Statements of Operations. Includes $1 million and $6 million at Duke Energy Carolinas and Duke Energy Progress, respectively.
E - Recorded within Operating Revenues on the Condensed Consolidated Statements of Operations.
F - State tax expense resulting from the completion of the sale of the nonregulated Midwest generation business.
G - Reverses the impact on eliminations of classifying the nonregulated Midwest generation business as discontinued operations.
H - Recorded in (Loss) Income 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.
Weighted Average Shares (reported and adjusted) - in millions
Basic            696
Diluted            696

* 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. 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. 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.

8


DUKE ENERGY CORPORATION
ADJUSTED TO REPORTED EARNINGS RECONCILIATION
Three Months Ended December 31, 2015
(Dollars in millions, except per-share amounts)
 
 
 
Special Items
 
 
 
 
 
 
 
 
 
Adjusted Earnings
 
Costs to Achieve, Mergers
 
Edwardsport Settlement
 
Cost Savings Initiatives
 
Ash Basin Settlement and Penalties
 
Economic Hedges (Mark-to-Market)
 
Discontinued Operations
 
Total Adjustments
 
Reported Earnings
SEGMENT INCOME
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Regulated Utilities
$
601

 
$
—

 
$
(2
)
B
$
(10
)
C
$
(7
)
F
$
—

 
$
—

 
$
(19
)
 
$
582

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Energy
68

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
68

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial Portfolio
21

 
—

 
—

 
(1
)
D
—

 
(1
)
G
—

 
(2
)
 
19

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Reportable Segment Income
690

 
—

 
(2
)
 
(11
)
 
(7
)
 
(1
)
 
—

 
(21
)
 
669

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other
(88
)
 
(18
)
A
—

 
(77
)
E
—

 
—

 
—

 
(95
)
 
(183
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Reportable Segment Income and Other Net Expense
602

 
(18
)
 
(2
)
 
(88
)
 
(7
)
 
(1
)
 
—

 
(116
)
 
486

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discontinued Operations
—

 
—

 
—

 
—

 
—

 
—

 
(9
)
H
(9
)
 
(9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to Duke Energy Corporation
$
602

 
$
(18
)
 
$
(2
)
 
$
(88
)
 
$
(7
)
 
$
(1
)
 
$
(9
)
 
$
(125
)
 
$
477

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC
$
0.87

 
$
(0.03
)
 
$
—

 
$
(0.13
)
 
$
(0.01
)
 
$
—

 
$
(0.01
)
 
$
(0.18
)
 
$
0.69

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED
$
0.87

 
$
(0.03
)
 
$
—

 
$
(0.13
)
 
$
(0.01
)
 
$
—

 
$
(0.01
)
 
$
(0.18
)
 
$
0.69

 
 
 
 
 
 
 
 
 
 
A - Net of $12 million tax benefit. Recorded within Operating Expenses on the Condensed Consolidated Statements of Operations.
B - Net of $1 million tax benefit. $3 million recorded within Impairment charges on the Duke Energy Indiana Condensed Consolidated Statements of Operations.
C - Net of $6 million tax benefit. Primarily consists of severance costs recorded within Operation, maintenance and other on the Condensed Consolidated Statements of Operations. Includes $7 million at Duke Energy Carolinas, $4 million at Duke Energy Progress, $2 million at Duke Energy Florida, $1 million at Duke Energy Ohio and $2 million at Duke Energy Indiana.
D - Net of $1 million tax benefit. Primarily consists of severance costs recorded within Operation, maintenance and other on the Condensed Consolidated Statements of Operations.
E - Net of $47 million tax benefit. Primarily consists of severance costs recorded within Operation, maintenance and other on the Condensed Consolidated Statements of Operations.
F - Recorded within Operation, maintenance and other on the Duke Energy Carolinas Condensed Consolidated Statements of Operations.
G - Recorded within Operating Revenues on the Condensed Consolidated Statements of Operations.
H - Recorded in Income (Loss) From Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations.

Weighted Average Shares (reported and adjusted) - in millions
Basic            688
Diluted            688

9


DUKE ENERGY CORPORATION
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 nonregulated Midwest generation business and Duke Energy Retail Sales, LLC (Disposal Group) sold to Dynegy Inc. and 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. 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 excluded from 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 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, stockholders, 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 stockholders, 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, includes intercompany revenues and expenses that are eliminated in the Condensed 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.
Duke Energy’s adjusted earnings, adjusted diluted EPS, and adjusted segment income may not be comparable to similarly titled measures of another company because other entities may not calculate the measures in the same manner.


10

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