DUK-2014.09.30-10Q


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
ý
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2014
OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to
________________________
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
Commission file number
Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number
 
Commission file number
Registrant, State of Incorporation or Organization, Address of Principal Executive Offices, Telephone Number and IRS Employer Identification Number
1-4928
DUKE ENERGY CAROLINAS, LLC
(a North Carolina limited liability company)
526 South Church Street
Charlotte, North Carolina 28202-1803
704-382-3853
56-0205520
 
1-3274
DUKE ENERGY FLORIDA, INC.
(a Florida corporation)
299 First Avenue North
St. Petersburg, Florida 33701
704-382-3853
59-0247770
1-15929
PROGRESS ENERGY, INC.
(a North Carolina corporation)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
56-2155481
 
1-1232
DUKE ENERGY OHIO, INC.
(an Ohio corporation)
139 East Fourth Street
Cincinnati, Ohio 45202
704-382-3853
31-0240030
1-3382
DUKE ENERGY PROGRESS, INC.
(a North Carolina corporation)
410 South Wilmington Street
Raleigh, North Carolina 27601-1748
704-382-3853
56-0165465
 
1-3543
DUKE ENERGY INDIANA, INC.
(an Indiana corporation)
1000 East Main Street
Plainfield, Indiana 46168
704-382-3853
35-0594457
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Duke Energy Corporation (Duke Energy)
Yes x
No ¨
 
Duke Energy Florida, Inc. (Duke Energy Florida)
Yes x
No ¨
Duke Energy Carolinas, LLC (Duke Energy Carolinas)
Yes x
No ¨
 
Duke Energy Ohio, Inc. (Duke Energy Ohio)
Yes x
No ¨
Progress Energy, Inc. (Progress Energy)
Yes x
No ¨
 
Duke Energy Indiana, Inc. (Duke Energy Indiana)
Yes x
No ¨
Duke Energy Progress, Inc. (Duke Energy Progress)
Yes x
No ¨
 
 
 
 



Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Duke Energy
Yes x 
No ¨
 
Duke Energy Florida
Yes x 
No ¨
Duke Energy Carolinas
Yes x 
No ¨
 
Duke Energy Ohio
Yes x 
No ¨
Progress Energy
Yes x 
No ¨
 
Duke Energy Indiana
Yes x 
No ¨
Duke Energy Progress
Yes x 
No ¨
 
 
 
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Duke Energy
Large accelerated filer x 
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
Duke Energy Carolinas
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Progress Energy
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Duke Energy Progress
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Duke Energy Florida
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Duke Energy Ohio
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Duke Energy Indiana
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x 
Smaller reporting company ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Duke Energy
Yes ¨
No x 
 
Duke Energy Florida
Yes ¨
No x 
Duke Energy Carolinas
Yes ¨
No x 
 
Duke Energy Ohio
Yes ¨
No x 
Progress Energy
Yes ¨
No x 
 
Duke Energy Indiana
Yes ¨
No x 
Duke Energy Progress
Yes ¨
No x 
 
 
 
 
Number of shares of Common Stock outstanding at November 4, 2014:
Registrant
Description
Shares
Duke Energy
Common Stock, $0.001 par value
707,290,608
Duke Energy Carolinas
All of the registrant's limited liability company member interests are directly owned by Duke Energy.
Progress Energy
All of the registrant's common stock is directly owned by Duke Energy.
Duke Energy Progress
All of the registrant’s common stock is indirectly owned by Duke Energy.
Duke Energy Florida
All of the registrant’s common stock is indirectly owned by Duke Energy.
Duke Energy Ohio
All of the registrant’s common stock is indirectly owned by Duke Energy.
Duke Energy Indiana
All of the registrant’s common stock is indirectly owned by Duke Energy.
This combined Form 10-Q is filed separately by seven registrants: Duke Energy, Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana (collectively the Duke Energy Registrants). Information contained herein relating to any individual registrant is filed by such registrant solely on its own behalf. Each registrant makes no representation as to information relating exclusively to the other registrants.
Duke Energy Carolinas, Progress Energy, Duke Energy Progress, Duke Energy Florida, Duke Energy Ohio and Duke Energy Indiana meet the conditions set forth in General Instructions H(1)(a) and (b) of Form 10-Q and are therefore filing this form with the reduced disclosure format specified in General Instructions H(2) of Form 10-Q.



TABLE OF CONTENTS
 
 
 
 
 
PART I. FINANCIAL INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PART II. OTHER INFORMATION
 
 
 
 
 
 
 
 
 
 
 
 
 




CAUTIONARY STATEMENT REGARDING 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 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 are currently identified and all costs may not be fully recoverable through the regulatory process;
◦
The risk that the credit ratings of the company or its subsidiaries may be different from what the companies expect;
◦
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 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;
◦
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 retained earnings of foreign subsidiaries or repatriate such earnings on a tax-free basis; and
◦
The ability to successfully complete future merger, acquisition or divestiture plans.
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 described. Forward-looking statements speak only as of the date they are made; the Duke Energy Registrants undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise that occur after that date.

PART I. FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
(in millions, except per-share amounts)
2014

 
2013

 
2014

 
2013

Operating Revenues
 
 
 
 
 
 
 
Regulated electric
$
5,861

 
$
5,685

 
$
16,549

 
$
15,355

Nonregulated electric, natural gas and other
449

 
449

 
1,403

 
1,415

Regulated natural gas
85

 
83

 
414

 
362

Total operating revenues
6,395

 
6,217

 
18,366

 
17,132

Operating Expenses
 
 
 
 
 
 
 
Fuel used in electric generation and purchased power - regulated
2,132

 
2,013

 
5,940

 
5,394

Fuel used in electric generation and purchased power - nonregulated
148

 
130

 
410

 
435

Cost of natural gas and other
27

 
18

 
181

 
132

Operation, maintenance and other
1,409

 
1,402

 
4,254

 
4,211

Depreciation and amortization
788

 
672

 
2,305

 
1,940

Property and other taxes
275

 
319

 
936

 
972

Impairment charges
1

 
2

 
81

 
388

Total operating expenses
4,780

 
4,556

 
14,107

 
13,472

Gains (Losses) on Sales of Other Assets and Other, net
4

 
(1
)
 
11

 
3

Operating Income
1,619

 
1,660

 
4,270

 
3,663

Other Income and Expenses
 
 
 
 
 
 
 
Equity in earnings of unconsolidated affiliates
28

 
32

 
97

 
91

Other income and expenses, net
109

 
55

 
293

 
182

Total other income and expenses
137

 
87

 
390

 
273

Interest Expense
405

 
378

 
1,212

 
1,125

Income From Continuing Operations Before Income Taxes
1,351

 
1,369

 
3,448

 
2,811

Income Tax Expense from Continuing Operations
460

 
423

 
1,081

 
909

Income From Continuing Operations
891

 
946

 
2,367

 
1,902

Income (Loss) From Discontinued Operations, net of tax
378

 
62

 
(578
)
 
82

Net Income
1,269

 
1,008

 
1,789

 
1,984

Less: Net Income (Loss) Attributable to Noncontrolling Interests
(5
)
 
4

 
3

 
7

Net Income Attributable to Duke Energy Corporation
$
1,274

 
$
1,004

 
$
1,786

 
$
1,977

 
 
 
 
 
 
 
 
Earnings Per Share - Basic and Diluted
 
 
 
 
 
 
 
Income from continuing operations attributable to Duke Energy Corporation common shareholders
 
 
 
 
 
 
 
Basic
$
1.25

 
$
1.33

 
$
3.33

 
$
2.67

Diluted
$
1.25

 
$
1.33

 
$
3.33

 
$
2.67

Income (Loss) from discontinued operations attributable to Duke Energy Corporation common shareholders
 
 
 
 
 
 
 
Basic
$
0.55

 
$
0.09

 
$
(0.81
)
 
$
0.12

Diluted
$
0.55

 
$
0.09

 
$
(0.81
)
 
$
0.12

Net Income attributable to Duke Energy Corporation common shareholders
 
 
 
 
 
 
 
Basic
$
1.80

 
$
1.42

 
$
2.52

 
$
2.79

Diluted
$
1.80

 
$
1.42

 
$
2.52

 
$
2.79

Weighted-average shares outstanding
 
 
 
 
 
 
 
Basic
707

 
706

 
707

 
706

Diluted
707

 
706

 
707

 
706


See Notes to Condensed Consolidated Financial Statements
5
PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
(in millions)
2014

 
2013

 
2014

 
2013

Net Income
$
1,269

 
$
1,008

 
$
1,789

 
$
1,984

Other Comprehensive Loss, net of tax
 
 
 
 
 
 
 
Foreign currency translation adjustments
(102
)
 
(8
)
 
(50
)
 
(137
)
Pension and OPEB adjustments
1

 
—

 
1

 
5

Net unrealized gains (losses) on cash flow hedges(a)
2

 
1

 
(10
)
 
55

Reclassification into earnings from cash flow hedges
2

 
1

 
5

 
1

Unrealized (losses) gains on investments in available-for-sale securities
—

 
(1
)
 
2

 
(5
)
Reclassification into earnings from available-for-sale-securities
—

 
3

 
—

 
3

Other Comprehensive Loss, net of tax
(97
)
 
(4
)
 
(52
)
 
(78
)
Comprehensive Income
1,172

 
1,004

 
1,737

 
1,906

Less: Comprehensive (Loss) Income Attributable to Noncontrolling Interests
(1
)
 
4

 
8

 
3

Comprehensive Income Attributable to Duke Energy Corporation
$
1,173

 
$
1,000

 
$
1,729

 
$
1,903


(a)
Net of insignificant tax expense and $5 million tax benefit for the three and nine months ended September 30, 2014 and $1 million tax benefit and $17 million tax expense for the three and nine months ended September 30, 2013.

See Notes to Condensed Consolidated Financial Statements
6
PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
September 30, 2014
 
December 31, 2013
ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
1,931

 
$
1,501

Short-Term investments
—

 
44

Receivables (net of allowance for doubtful accounts of $16 at September 30, 2014 and $30 at December 31, 2013)
854

 
1,286

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $52 at September 30, 2014 and $43 at December 31, 2013)
2,069

 
1,719

Inventory
3,200

 
3,250

Assets held for sale
335

 
—

Regulatory assets
1,232

 
895

Other
1,954

 
1,821

Total current assets
11,575

 
10,516

Investments and Other Assets
 
 
 
Investments in equity method unconsolidated affiliates
350

 
390

Nuclear decommissioning trust funds
5,374

 
5,132

Goodwill
16,331

 
16,340

Assets held for sale
2,718

 
107

Other
3,287

 
3,432

Total investments and other assets
28,060

 
25,401

Property, Plant and Equipment
 
 
 
Cost
104,140

 
103,115

Accumulated depreciation and amortization
(34,545
)
 
(33,625
)
Net property, plant and equipment
69,595

 
69,490

Regulatory Assets and Deferred Debits
 
 
 
Regulatory assets
10,252

 
9,191

Other
174

 
181

Total regulatory assets and deferred debits
10,426

 
9,372

Total Assets
$
119,656

 
$
114,779

LIABILITIES AND EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
1,801

 
$
2,391

Notes payable and commercial paper
1,787

 
839

Taxes accrued
704

 
551

Interest accrued
476

 
440

Current maturities of long-term debt
1,156

 
2,104

Liabilities associated with assets held for sale
284

 
7

Regulatory liabilities
175

 
316

Other
1,868

 
1,996

Total current liabilities
8,251

 
8,644

Long-Term Debt
38,702

 
38,152

Deferred Credits and Other Liabilities
 
 
 
Deferred income taxes
12,989

 
12,097

Investment tax credits
431

 
442

Accrued pension and other post-retirement benefit costs
1,231

 
1,322

Liabilities associated with assets held for sale
57

 
66

Asset retirement obligations
8,499

 
4,950

Regulatory liabilities
6,220

 
5,949

Other
1,823

 
1,749

Total deferred credits and other liabilities
31,250

 
26,575

Commitments and Contingencies


 


Equity
 
 
 
Common stock, $0.001 par value, 2 billion shares authorized; 707 million and 706 million shares outstanding at September 30, 2014 and December 31, 2013, respectively
1

 
1

Additional paid-in capital
39,388

 
39,365

Retained earnings
2,479

 
2,363

Accumulated other comprehensive loss
(456
)
 
(399
)
Total Duke Energy Corporation stockholders' equity
41,412

 
41,330

Noncontrolling interests
41

 
78

Total equity
41,453

 
41,408

Total Liabilities and Equity
$
119,656

 
$
114,779


See Notes to Condensed Consolidated Financial Statements
7
PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Nine Months Ended September 30,
(in millions)
2014

 
2013

CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net Income
$
1,789

 
$
1,984

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, amortization and accretion (including amortization of nuclear fuel)
2,641

 
2,365

Equity component of AFUDC
(99
)
 
(121
)
Community support and charitable contributions expense
—

 
34

(Gains) losses on sales of other assets
(27
)
 
8

Impairment charges
848

 
388

Deferred income taxes
562

 
1,014

Equity in earnings of unconsolidated affiliates
(97
)
 
(91
)
Accrued pension and other post-retirement benefit costs
81

 
259

Contributions to qualified pension plans
—

 
(27
)
(Increase) decrease in
 
 
 
Net realized and unrealized mark-to-market and hedging transactions
128

 
(14
)
Receivables
(24
)
 
(154
)
Inventory
(17
)
 
119

Other current assets
(315
)
 
(48
)
Increase (decrease) in
 
 
 
Accounts payable
(303
)
 
(412
)
Taxes accrued
37

 
245

Other current liabilities
(99
)
 
(31
)
Other assets
(100
)
 
(307
)
Other liabilities
162

 
(221
)
Net cash provided by operating activities
5,167

 
4,990

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Capital expenditures
(3,755
)
 
(3,854
)
Investment expenditures
(65
)
 
(53
)
Acquisitions
(16
)
 
—

Purchases of available-for-sale securities
(2,424
)
 
(4,591
)
Proceeds from sales and maturities of available-for-sale securities
2,445

 
4,687

Net proceeds from the sales of equity investments and other assets
172

 
59

Change in restricted cash
(15
)
 
166

Other
(76
)
 
20

Net cash used in investing activities
(3,734
)
 
(3,566
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Proceeds from the:
 
 
 
Issuance of long-term debt
2,217

 
2,993

Issuance of common stock related to employee benefit plans
24

 
8

Payments for the:
 
 
 
Redemption of long-term debt
(2,503
)
 
(2,506
)
Redemption of preferred stock of a subsidiary
—

 
(96
)
Notes payable and commercial paper
941

 
537

Distributions to noncontrolling interests
(45
)
 
(9
)
Dividends paid
(1,670
)
 
(1,636
)
Other
33

 
27

Net cash used in financing activities
(1,003
)
 
(682
)
Net increase in cash and cash equivalents
430

 
742

Cash and cash equivalents at beginning of period
1,501

 
1,424

Cash and cash equivalents at end of period
$
1,931

 
$
2,166

Supplemental Disclosures:
 
 
 
Significant non-cash transactions:
 
 
 
Accrued capital expenditures
$
466

 
$
383


See Notes to Condensed Consolidated Financial Statements
8
PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
 
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive Loss
 
 
 
 
 
 
(in millions)
Common
Stock
Shares

 
Common
Stock

 
Additional
Paid-in
Capital

 
Retained
Earnings

 
Foreign Currency Translation Adjustments

 
Net Gains (Losses) on Cash Flow Hedges

 
Net Gains (Losses) on Available-for-Sale Securities

 
Pension and OPEB Adjustments

 
Common
Stockholders'
Equity

 
Noncontrolling
Interests

 
Total
Equity

Balance at December 31, 2012
704

 
$
1

 
$
39,279

 
$
1,889

 
$
(116
)
 
$
(100
)
 
$
—

 
$
(90
)
 
$
40,863

 
$
78

 
$
40,941

Net income
—

 
—

 
—

 
1,977

 
—

 
—

 
—

 
—

 
1,977

 
7

 
1,984

Other comprehensive (loss) income
—

 
—

 
—

 
—

 
(133
)
 
56

 
(2
)
 
5

 
(74
)
 
(4
)
 
(78
)
Common stock issuances, including dividend reinvestment and employee benefits
2

 
—

 
38

 
—

 
—

 
—

 
—

 
—

 
38

 
—

 
38

Common stock dividends
—

 
—

 
—

 
(1,636
)
 
—

 
—

 
—

 
—

 
(1,636
)
 
—

 
(1,636
)
Premium on the redemption of preferred stock of subsidiaries
—

 
—

 
—

 
(3
)
 
—

 
—

 
—

 
—

 
(3
)
 
—

 
(3
)
Changes in noncontrolling interest in subsidiaries
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(9
)
 
(9
)
Balance at September 30, 2013
706

 
$
1

 
$
39,317

 
$
2,227

 
$
(249
)
 
$
(44
)
 
$
(2
)
 
$
(85
)
 
$
41,165

 
$
72

 
$
41,237

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2013
706

 
$
1

 
$
39,365

 
$
2,363

 
$
(307
)
 
$
(40
)
 
$
—

 
$
(52
)
 
$
41,330

 
$
78

 
$
41,408

Net income
—

 
—

 
—

 
1,786

 
—

 
—

 
—

 
—

 
1,786

 
3

 
1,789

Other comprehensive (loss) income
—

 
—

 
—

 
—

 
(55
)
 
(5
)
 
2

 
1

 
(57
)
 
5

 
(52
)
Common stock issuances, including dividend reinvestment and employee benefits
1

 
—

 
23

 
—

 
—

 
—

 
—

 
—

 
23

 
—

 
23

Common stock dividends
—

 
—

 
—

 
(1,670
)
 
—

 
—

 
—

 
—

 
(1,670
)
 
—

 
(1,670
)
Distributions to noncontrolling interest in subsidiaries
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(45
)
 
(45
)
Balance at September 30, 2014
707

 
$
1

 
$
39,388

 
$
2,479

 
$
(362
)
 
$
(45
)
 
$
2

 
$
(51
)
 
$
41,412

 
$
41

 
$
41,453


See Notes to Condensed Consolidated Financial Statements
9
PART I


DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
(in millions)
2014

 
2013

 
2014

 
2013

Operating Revenues
$
1,938

 
$
1,919

 
$
5,693

 
$
5,239

Operating Expenses
 
 
 
 
 
 
 
Fuel used in electric generation and purchased power
524

 
539

 
1,685

 
1,500

Operation, maintenance and other
465

 
456

 
1,415

 
1,392

Depreciation and amortization
260

 
228

 
750

 
676

Property and other taxes
59

 
90

 
263

 
282

Impairment charges
—

 
—

 
3

 
—

Total operating expenses
1,308

 
1,313

 
4,116

 
3,850

Losses on Sales of Other Assets and Other, net
—

 
(2
)
 
—

 
—

Operating Income
630

 
604

 
1,577

 
1,389

Other Income and Expenses, net
44

 
29

 
137

 
94

Interest Expense
104

 
82

 
307

 
255

Income Before Income Taxes
570

 
551

 
1,407

 
1,228

Income Tax Expense
193

 
209

 
474

 
461

Net Income
$
377

 
$
342

 
$
933

 
$
767

Other Comprehensive Income, net of tax
 
 
 
 
 
 
 
Reclassification into earnings from cash flow hedges
—

 
1

 
2

 
1

Comprehensive Income
$
377

 
$
343

 
$
935

 
$
768



See Notes to Condensed Consolidated Financial Statements
10
PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
September 30, 2014

 
December 31, 2013

ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
34

 
$
23

Receivables (net of allowance for doubtful accounts of $3 at September 30, 2014 and December 31, 2013)
123

 
186

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $6 at September 30, 2014 and December 31, 2013)
695

 
673

Receivables from affiliated companies
117

 
75

Notes receivable from affiliated companies
339

 
222

Inventory
973

 
1,065

Regulatory assets
388

 
295

Other
247

 
309

Total current assets
2,916

 
2,848

Investments and Other Assets
 
 
 
Nuclear decommissioning trust funds
2,965

 
2,840

Other
975

 
1,000

Total investments and other assets
3,940

 
3,840

Property, Plant and Equipment
 
 
 
Cost
37,670

 
34,906

Accumulated depreciation and amortization
(12,544
)
 
(11,894
)
Net property, plant and equipment
25,126

 
23,012

Regulatory Assets and Deferred Debits
 
 
 
Regulatory assets
1,986

 
1,527

Other
42

 
46

Total regulatory assets and deferred debits
2,028

 
1,573

Total Assets
$
34,010

 
$
31,273

LIABILITIES AND MEMBER'S EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
514

 
$
701

Accounts payable to affiliated companies
176

 
161

Taxes accrued
334

 
147

Interest accrued
130

 
97

Current maturities of long-term debt
7

 
47

Regulatory liabilities
31

 
65

Other
399

 
393

Total current liabilities
1,591


1,611

Long-Term Debt
8,087

 
8,089

Long-Term Debt Payable to Affiliated Companies
300

 
300

Deferred Credits and Other Liabilities
 
 
 
Deferred income taxes
5,725

 
5,706

Investment tax credits
205

 
210

Accrued pension and other post-retirement benefit costs
149

 
161

Asset retirement obligations
3,691

 
1,594

Regulatory liabilities
2,690

 
2,576

Other
663

 
676

Total deferred credits and other liabilities
13,123

 
10,923

Commitments and Contingencies


 


Member's Equity
 
 
 
Member's equity
10,922

 
10,365

Accumulated other comprehensive loss
(13
)
 
(15
)
Total member's equity
10,909

 
10,350

Total Liabilities and Member's Equity
$
34,010

 
$
31,273


See Notes to Condensed Consolidated Financial Statements
11
PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Nine Months Ended September 30,
(in millions)
2014

 
2013

CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income
$
933

 
$
767

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization (including amortization of nuclear fuel)
952

 
865

Equity component of AFUDC
(68
)
 
(70
)
Community support and charitable contributions expense
—

 
14

Impairment charges
3

 
—

Deferred income taxes
47

 
487

Accrued pension and other post-retirement benefit costs
16

 
29

(Increase) decrease in
 
 
 
Net realized and unrealized mark-to-market and hedging transactions
—

 
(7
)
Receivables
5

 
(24
)
Receivables from affiliated companies
(42
)
 
(37
)
Inventory
91

 
23

Other current assets
(130
)
 
35

Increase (decrease) in
 
 
 
Accounts payable
(167
)
 
(90
)
Accounts payable to affiliated companies
15

 
107

Taxes accrued
173

 
18

Other current liabilities
7

 
2

Other assets
23

 
(80
)
Other liabilities
21

 
(66
)
Net cash provided by operating activities
1,879

 
1,973

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Capital expenditures
(1,289
)
 
(1,205
)
Purchases of available-for-sale securities
(1,533
)
 
(1,883
)
Proceeds from sales and maturities of available-for-sale securities
1,516

 
1,847

Notes receivable from affiliated companies
(117
)
 
(213
)
Other
(27
)
 
(11
)
Net cash used in investing activities
(1,450
)
 
(1,465
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Payments for the redemption of long-term debt
(42
)
 
—

Distributions to parent
(376
)
 
(500
)
Other
—

 
(2
)
Net cash used in financing activities
(418
)
 
(502
)
Net increase in cash and cash equivalents
11

 
6

Cash and cash equivalents at beginning of period
23

 
19

Cash and cash equivalents at end of period
$
34

 
$
25

Supplemental Disclosures:
 
 
 
Significant non-cash transactions:
 
 
 
Accrued capital expenditures
$
177

 
$
111


See Notes to Condensed Consolidated Financial Statements
12
PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Changes in Member's Equity
(Unaudited)
 
 
 
Accumulated Other Comprehensive Loss
 
 
(in millions)
Member's
Equity

 
Net (Losses) Gains on Cash Flow Hedges

 
Unrealized Losses on Available-for-Sale Securities

 
Total

Balance at December 31, 2012
$
9,888

 
$
(15
)
 
$
(1
)
 
$
9,872

Net income
767

 
—

 
—

 
767

Other comprehensive income
—

 
1

 
—

 
1

Distributions to parent
(500
)
 
—

 
—

 
(500
)
Balance at September 30, 2013
$
10,155

 
$
(14
)
 
$
(1
)
 
$
10,140

 
 
 
 
 
 
 
 
Balance at December 31, 2013
$
10,365

 
$
(14
)
 
$
(1
)
 
$
10,350

Net income
933

 
—

 
—

 
933

Other comprehensive income
—

 
2

 
—

 
2

Distributions to parent
(376
)
 
—

 
—

 
(376
)
Balance at September 30, 2014
$
10,922

 
$
(12
)
 
$
(1
)
 
$
10,909



See Notes to Condensed Consolidated Financial Statements
13
PART I


PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
(in millions)
2014

 
2013

 
2014

 
2013

Operating Revenues
$
2,863

 
$
2,766

 
$
7,825

 
$
7,233

Operating Expenses
 
 
 
 
 
 
 
Fuel used in electric generation and purchased power
1,214

 
1,154

 
3,234

 
2,932

Operation, maintenance and other
564

 
559

 
1,714

 
1,653

Depreciation and amortization
294

 
240

 
851

 
644

Property and other taxes
127

 
141

 
415

 
423

Impairment charges
1

 
2

 
(16
)
 
368

Total operating expenses
2,200

 
2,096

 
6,198

 
6,020

Gains on Sales of Other Assets and Other, net
2

 
1

 
3

 
2

Operating Income
665

 
671

 
1,630

 
1,215

Other Income and Expenses, net
26

 
26

 
54

 
63

Interest Expense
166

 
162

 
502

 
520

Income From Continuing Operations Before Taxes
525

 
535

 
1,182

 
758

Income Tax Expense From Continuing Operations
195

 
207

 
441

 
289

Income From Continuing Operations
330

 
328

 
741

 
469

Income (Loss) From Discontinued Operations, net of tax
—

 
14

 
(6
)
 
10

Net Income
330

 
342

 
735

 
479

Less: Net Income Attributable to Noncontrolling Interest
1

 
1

 
2

 
2

Net Income Attributable to Parent
$
329

 
$
341

 
$
733

 
$
477

 
 
 
 
 
 
 
 
Net Income
$
330

 
$
342

 
$
735

 
$
479

Other Comprehensive Income, net of tax
 
 
 
 
 
 
 
Pension and OPEB adjustments
1

 
4

 
2

 
5

Net unrealized loss on cash flow hedges
—

 
(3
)
 
—

 
—

Reclassification into earnings from cash flow hedges
1

 
3

 
5

 
3

Unrealized gain on investments in available-for-sale securities
1

 
—

 
1

 
—

Other Comprehensive Income, net of tax
3


4


8


8

Comprehensive Income
333

 
346

 
743

 
487

Less: Comprehensive Income Attributable to Noncontrolling Interests
1

 
1

 
2

 
2

Comprehensive Income Attributable to Parent
$
332


$
345


$
741


$
485



See Notes to Condensed Consolidated Financial Statements
14
PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
September 30, 2014

 
December 31, 2013

ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
47

 
$
58

Receivables (net of allowance for doubtful accounts of $7 at September 30, 2014 and $14 at December 31, 2013)
184

 
528

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $8 at September 30, 2014)
877

 
417

Receivables from affiliated companies
36

 
4

Notes receivable from affiliated companies
164

 
75

Inventory
1,509

 
1,424

Regulatory assets
566

 
353

Other
622

 
726

Total current assets
4,005

 
3,585

Investments and Other Assets
 
 
 
Nuclear decommissioning trust funds
2,409

 
2,292

Goodwill
3,655

 
3,655

Other
792

 
804

Total investments and other assets
6,856

 
6,751

Property, Plant and Equipment
 
 
 
Cost
37,796

 
36,480

Accumulated depreciation and amortization
(13,397
)
 
(13,098
)
Net property, plant and equipment
24,399

 
23,382

Regulatory Assets and Deferred Debits
 
 
 
Regulatory assets
4,818

 
4,155

Other
94

 
96

Total regulatory assets and deferred debits
4,912

 
4,251

Total Assets
$
40,172

 
$
37,969

LIABILITIES AND EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
636

 
$
836

Accounts payable to affiliated companies
265

 
123

Notes payable to affiliated companies
822

 
1,213

Taxes accrued
317

 
105

Interest accrued
192

 
181

Current maturities of long-term debt
318

 
485

Regulatory liabilities
106

 
207

Other
743

 
896

Total current liabilities
3,399

 
4,046

Long-Term Debt
14,194

 
13,630

Deferred Credits and Other Liabilities
 
 
 
Deferred income taxes
3,999

 
3,283

Accrued pension and other post-retirement benefit costs
621

 
765

Asset retirement obligations
4,015

 
2,562

Regulatory liabilities
2,397

 
2,292

Other
515

 
527

Total deferred credits and other liabilities
11,547

 
9,429

Commitments and Contingencies

 

Common Stockholder's Equity
 
 
 
Common stock, $0.01 par value, 100 shares authorized and outstanding at September 30, 2014 and December 31, 2013
—

 
—

Additional paid-in capital
7,467

 
7,467

Retained earnings
3,647

 
3,452

Accumulated other comprehensive loss
(51
)
 
(59
)
Total common stockholder's equity
11,063

 
10,860

Noncontrolling interests
(31
)
 
4

Total equity
11,032

 
10,864

Total Liabilities and Common Stockholder's Equity
$
40,172

 
$
37,969


See Notes to Condensed Consolidated Financial Statements
15
PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Nine Months Ended September 30,
(in millions)
2014

 
2013

CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income
$
735

 
$
479

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, amortization and accretion (including amortization of nuclear fuel)
985

 
764

Equity component of AFUDC
(18
)
 
(39
)
Community support and charitable contributions expense
—

 
20

Losses on sales of other assets
1

 
3

Impairment charges
(16
)
 
368

Deferred income taxes
231

 
384

Accrued pension and other post-retirement benefit costs
20

 
158

Contributions to qualified pension plans
—

 
(27
)
(Increase) decrease in
 
 
 
Net realized and unrealized mark-to-market and hedging transactions
28

 
33

Receivables
(162
)
 
(219
)
Receivables from affiliated companies
(32
)
 
12

Inventory
(45
)
 
79

Other current assets
(147
)
 
(102
)
Increase (decrease) in
 
 
 
Accounts payable
(73
)
 
(227
)
Accounts payable to affiliated companies
142

 
25

Taxes accrued
166

 
161

Other current liabilities
(96
)
 
113

Other assets
(126
)
 
(223
)
Other liabilities
(9
)
 
(64
)
Net cash provided by operating activities
1,584

 
1,698

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Capital expenditures
(1,383
)
 
(1,739
)
Purchases of available-for-sale securities
(609
)
 
(1,651
)
Proceeds from sales and maturities of available-for-sale securities
594

 
1,630

Net proceeds from the sales of other assets
2

 
—

Notes receivable from affiliated companies
(89
)
 
(103
)
Other
(39
)
 
12

Net cash used in investing activities
(1,524
)
 
(1,851
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Proceeds from the:
 
 
 
Issuance of long-term debt
875

 
545

Payments for the:
 
 
 
Redemption of long-term debt
(479
)
 
(1,194
)
Redemption of preferred stock of subsidiary
—

 
(96
)
Notes payable to affiliated companies
(391
)
 
740

Distributions to noncontrolling interests
(37
)
 
(2
)
Other
(39
)
 
(5
)
Net cash used in financing activities
(71
)
 
(12
)