10-Q


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, 2015
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, LLC
(formerly DUKE ENERGY FLORIDA, INC.)
(a Florida limited liability company)
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, LLC
(formerly DUKE ENERGY PROGRESS, INC.)
(a North Carolina limited liability company)
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, LLC (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, LLC (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 3, 2015:
Registrant
Description
Shares
Duke Energy
Common stock, $0.001 par value
688,334,378
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 limited liability company member interests are indirectly owned by Duke Energy.
Duke Energy Florida
All of the registrant's limited liability company member interests are 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 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 Duke Energy Registrants 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 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 Registrants’ 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;
◦
The expected timing and likelihood of completion of the proposed acquisition of Piedmont Natural Gas Company, Inc. (Piedmont), including the timing, receipt and terms and conditions of any required governmental and regulatory approvals of the proposed acquisition that could reduce anticipated benefits or cause the parties to abandon the acquisition, as well as the ability to successfully integrate the businesses and realize anticipated benefits and the risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect; 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)
2015

 
2014

 
2015

 
2014

Operating Revenues
 
 
 
 
 
 
 
Regulated electric
$
6,017

 
$
5,861

 
$
16,564

 
$
16,549

Nonregulated electric and other
377

 
449

 
1,157

 
1,403

Regulated natural gas
89

 
85

 
416

 
414

Total operating revenues
6,483

 
6,395

 
18,137

 
18,366

Operating Expenses
 
 
 
 
 
 
 
Fuel used in electric generation and purchased power – regulated
2,113

 
2,132

 
5,775

 
5,940

Fuel used in electric generation and purchased power – nonregulated
61

 
148

 
283

 
410

Cost of natural gas and other
21

 
27

 
158

 
181

Operation, maintenance and other
1,426

 
1,409

 
4,274

 
4,254

Depreciation and amortization
774

 
788

 
2,341

 
2,305

Property and other taxes
293

 
275

 
836

 
936

Impairment charges
111

 
1

 
111

 
81

Total operating expenses
4,799

 
4,780

 
13,778

 
14,107

Gains on Sales of Other Assets and Other, net
4

 
4

 
31

 
11

Operating Income
1,688

 
1,619

 
4,390

 
4,270

Other Income and Expenses
 
 
 
 
 
 
 
Equity in earnings of unconsolidated affiliates
17

 
28

 
53

 
97

Other income and expenses, net
57

 
109

 
203

 
293

Total other income and expenses
74

 
137

 
256

 
390

Interest Expense
402

 
405

 
1,208

 
1,212

Income From Continuing Operations Before Income Taxes
1,360

 
1,351

 
3,438

 
3,448

Income Tax Expense from Continuing Operations
420

 
460

 
1,118

 
1,081

Income From Continuing Operations
940

 
891

 
2,320

 
2,367

(Loss) Income From Discontinued Operations, net of tax
(5
)
 
378

 
29

 
(578
)
Net Income
935

 
1,269

 
2,349

 
1,789

Less: Net Income (Loss) Attributable to Noncontrolling Interests
3

 
(5
)
 
10

 
3

Net Income Attributable to Duke Energy Corporation
$
932

 
$
1,274

 
$
2,339

 
$
1,786

 
 
 
 
 
 
 
 
Earnings Per Share – Basic and Diluted
 
 
 
 
 
 
 
Income from continuing operations attributable to Duke Energy Corporation common stockholders
 
 
 
 
 
 
 
Basic
$
1.36

 
$
1.25

 
$
3.31

 
$
3.33

Diluted
$
1.36

 
$
1.25

 
$
3.31

 
$
3.33

(Loss) Income from discontinued operations attributable to Duke Energy Corporation common stockholders
 
 
 
 
 
 
 
Basic
$
(0.01
)
 
$
0.55

 
$
0.05

 
$
(0.81
)
Diluted
$
(0.01
)
 
$
0.55

 
$
0.05

 
$
(0.81
)
Net income attributable to Duke Energy Corporation common stockholders
 
 
 
 
 
 
 
Basic
$
1.35

 
$
1.80

 
$
3.36

 
$
2.52

Diluted
$
1.35

 
$
1.80

 
$
3.36

 
$
2.52

Weighted-average shares outstanding
 
 
 
 
 
 
 
Basic
688

 
707

 
696

 
707

Diluted
688

 
707

 
696

 
707


See Notes to Condensed Consolidated Financial Statements
6

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
(in millions)
2015

 
2014

 
2015

 
2014

Net Income
$
935

 
$
1,269

 
$
2,349

 
$
1,789

Other Comprehensive Loss, net of tax
 
 
 
 
 
 
 
Foreign currency translation adjustments
(122
)
 
(102
)
 
(238
)
 
(50
)
Pension and OPEB adjustments
(3
)
 
1

 
(1
)
 
1

Net unrealized (losses) gains on cash flow hedges
(9
)
 
2

 
(7
)
 
(10
)
Reclassification into earnings from cash flow hedges
1

 
2

 
6

 
5

Unrealized (losses) gains on available-for-sale securities
(2
)
 
—

 
(5
)
 
2

Other Comprehensive Loss, net of tax
(135
)
 
(97
)
 
(245
)
 
(52
)
Comprehensive Income
800

 
1,172

 
2,104

 
1,737

Less: Comprehensive (Loss) Income Attributable to Noncontrolling Interests
(2
)
 
(1
)
 
—

 
8

Comprehensive Income Attributable to Duke Energy Corporation
$
802

 
$
1,173

 
$
2,104

 
$
1,729



See Notes to Condensed Consolidated Financial Statements
7

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
September 30, 2015
 
December 31, 2014
ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
1,370

 
$
2,036

Receivables (net of allowance for doubtful accounts of $17 at September 30, 2015 and December 31, 2014)
722

 
791

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $54 at September 30, 2015 and $51 at December 31, 2014)
2,037

 
1,973

Inventory
3,537

 
3,459

Assets held for sale
—

 
364

Regulatory assets
963

 
1,115

Other
1,566

 
1,837

Total current assets
10,195

 
11,575

Investments and Other Assets
 
 
 
Investments in equity method unconsolidated affiliates
501

 
358

Nuclear decommissioning trust funds
5,566

 
5,546

Goodwill
16,312

 
16,321

Assets held for sale
—

 
2,642

Other
3,205

 
3,008

Total investments and other assets
25,584

 
27,875

Property, Plant and Equipment
 
 
 
Cost
110,795

 
104,861

Accumulated depreciation and amortization
(37,479
)
 
(34,824
)
Generation facilities to be retired, net
460

 
9

Net property, plant and equipment
73,776

 
70,046

Regulatory Assets and Deferred Debits
 
 
 
Regulatory assets
11,290

 
11,042

Other
188

 
171

Total regulatory assets and deferred debits
11,478

 
11,213

Total Assets
$
121,033

 
$
120,709

LIABILITIES AND EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
2,078

 
$
2,271

Notes payable and commercial paper
2,419

 
2,514

Taxes accrued
628

 
569

Interest accrued
483

 
418

Current maturities of long-term debt
2,536

 
2,807

Liabilities associated with assets held for sale
—

 
262

Regulatory liabilities
320

 
204

Other
2,052

 
2,188

Total current liabilities
10,516

 
11,233

Long-Term Debt
37,667

 
37,213

Deferred Credits and Other Liabilities
 
 
 
Deferred income taxes
13,999

 
13,423

Investment tax credits
416

 
427

Accrued pension and other post-retirement benefit costs
1,130

 
1,145

Liabilities associated with assets held for sale
—

 
35

Asset retirement obligations
9,713

 
8,466

Regulatory liabilities
6,129

 
6,193

Other
1,595

 
1,675

Total deferred credits and other liabilities
32,982

 
31,364

Commitments and Contingencies


 


Equity
 
 
 
Common stock, $0.001 par value, 2 billion shares authorized; 688 million and 707 million shares outstanding at September 30, 2015 and December 31, 2014, respectively
1

 
1

Additional paid-in capital
37,953

 
39,405

Retained earnings
2,656

 
2,012

Accumulated other comprehensive loss
(778
)
 
(543
)
Total Duke Energy Corporation stockholders' equity
39,832

 
40,875

Noncontrolling interests
36

 
24

Total equity
39,868

 
40,899

Total Liabilities and Equity
$
121,033

 
$
120,709


See Notes to Condensed Consolidated Financial Statements
8

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Nine Months Ended
 
September 30,
(in millions)
2015

 
2014

CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income
$
2,349

 
$
1,789

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, amortization and accretion (including amortization of nuclear fuel)
2,680

 
2,641

Equity component of AFUDC
(123
)
 
(99
)
Gains on sales of other assets
(44
)
 
(27
)
Impairment charges
145

 
848

Deferred income taxes
1,104

 
562

Equity in earnings of unconsolidated affiliates
(53
)
 
(97
)
Accrued pension and other post-retirement benefit costs
53

 
81

Contributions to qualified pension plans
(143
)
 
—

Payments for asset retirement obligations
(208
)
 
(52
)
(Increase) decrease in
 
 
 
Net realized and unrealized mark-to-market and hedging transactions
(23
)
 
128

Receivables
67

 
(24
)
Inventory
(13
)
 
(17
)
Other current assets
(119
)
 
(315
)
Increase (decrease) in
 
 
 
Accounts payable
(182
)
 
(303
)
Taxes accrued
41

 
37

Other current liabilities
79

 
(99
)
Other assets
(143
)
 
(100
)
Other liabilities
(71
)
 
214

Net cash provided by operating activities
5,396

 
5,167

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Capital expenditures
(4,642
)
 
(3,755
)
Investment expenditures
(209
)
 
(65
)
Acquisitions
(1,317
)
 
(16
)
Purchases of available-for-sale securities
(3,017
)
 
(2,424
)
Proceeds from sales and maturities of available-for-sale securities
3,037

 
2,445

Net proceeds from the sale of Midwest generation business and sales of equity investments and other assets
2,916

 
172

Change in restricted cash
(49
)
 
(15
)
Other
(10
)
 
(76
)
Net cash used in investing activities
(3,291
)
 
(3,734
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Proceeds from the:
 
 
 
Issuance of long-term debt
1,780

 
2,217

Issuance of common stock related to employee benefit plans
16

 
24

Payments for the redemption of long-term debt
(1,264
)
 
(2,503
)
Proceeds from the issuance of short-term debt with original maturities greater than 90 days
287

 
—

Payments for the redemption of short-term debt with original maturities greater than 90 days
(931
)
 
—

Notes payable and commercial paper
531

 
941

Distributions to noncontrolling interests
(7
)
 
(45
)
Dividends paid
(1,685
)
 
(1,670
)
Repurchase of common shares
(1,500
)
 
—

Other
2

 
33

Net cash used in financing activities
(2,771
)
 
(1,003
)
Net (decrease) increase in cash and cash equivalents
(666
)
 
430

Cash and cash equivalents at beginning of period
2,036

 
1,501

Cash and cash equivalents at end of period
$
1,370

 
$
1,931

Supplemental Disclosures:
 
 
 
Significant non-cash transactions:
 
 
 
Accrued capital expenditures
$
610

 
$
466


See Notes to Condensed Consolidated Financial Statements
9

PART I

DUKE ENERGY CORPORATION
Condensed Consolidated Statements of Changes in Equity
(Unaudited)
 
 
 
 
 
 
 
 
 
Accumulated Other Comprehensive Loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Unrealized

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign

 
Net

 
Gains (Losses)

 
 
 
 
 
 
 
 
 
Common

 
 
 
Additional

 
 
 
Currency

 
Losses on

 
on Available-

 
Pension and

 
Common

 
 
 
 
 
Stock

 
Common

 
Paid-in

 
Retained

 
Translation

 
Cash Flow

 
for-Sale-

 
OPEB

 
Stockholders'

 
Noncontrolling

 
Total

(in millions)
Shares

 
Stock

 
Capital

 
Earnings

 
Adjustments

 
Hedges

 
Securities

 
Adjustments

 
Equity

 
Interests

 
Equity

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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
707

 
$
1

 
$
39,405

 
$
2,012

 
$
(439
)
 
$
(59
)
 
$
3

 
$
(48
)
 
$
40,875

 
$
24

 
$
40,899

Net income
—

 
—

 
—

 
2,339

 
—

 
—

 
—

 
—

 
2,339

 
10

 
2,349

Other comprehensive loss
—

 
—

 
—

 
—

 
(228
)
 
(1
)
 
(5
)
 
(1
)
 
(235
)
 
(10
)
 
(245
)
Common stock issuances, including dividend reinvestment and employee benefits
1

 
—

 
48

 
—

 
—

 
—

 
—

 
—

 
48

 
—

 
48

Stock repurchase
(20
)
 
—

 
(1,500
)
 
—

 
—

 
—

 
—

 
—

 
(1,500
)
 
—

 
(1,500
)
Common stock dividends
—

 
—

 
—

 
(1,685
)
 
—

 
—

 
—

 
—

 
(1,685
)
 
—

 
(1,685
)
Distributions to noncontrolling interest in subsidiaries
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
—

 
(7
)
 
(7
)
Other (a)
—

 
—

 
—

 
(10
)
 
—

 
—

 
—

 
—

 
(10
)
 
19

 
9

Balance at September 30, 2015
688


$
1


$
37,953


$
2,656


$
(667
)

$
(60
)

$
(2
)

$
(49
)

$
39,832


$
36


$
39,868

(a)
The $19 million change in Noncontrolling Interests is primarily related to an acquisition of majority interest in a solar company for an insignificant amount of cash consideration.

See Notes to Condensed Consolidated Financial Statements
10

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)
2015

 
2014

 
2015

 
2014

Operating Revenues
$
2,061

 
$
1,938

 
$
5,669

 
$
5,693

Operating Expenses
 
 
 
 
 
 
 
Fuel used in electric generation and purchased power
548

 
524

 
1,553

 
1,685

Operation, maintenance and other
511

 
465

 
1,469

 
1,415

Depreciation and amortization
269

 
260

 
779

 
750

Property and other taxes
67

 
59

 
204

 
263

Impairment charges
—

 
—

 
—

 
3

Total operating expenses
1,395

 
1,308

 
4,005

 
4,116

Operating Income
666

 
630

 
1,664

 
1,577

Other Income and Expenses, net
42

 
44

 
125

 
137

Interest Expense
105

 
104

 
313

 
307

Income Before Income Taxes
603

 
570

 
1,476

 
1,407

Income Tax Expense
220

 
193

 
536

 
474

Net Income
$
383

 
$
377

 
$
940

 
$
933

Other Comprehensive Income, net of tax
 
 
 
 
 
 
 
Reclassification into earnings from cash flow hedges
1

 
—

 
1

 
2

Unrealized gains on available-for-sale securities
1

 
—

 
1

 
—

Other Comprehensive Income, net of tax
2

 
—

 
2

 
2

Comprehensive Income
$
385

 
$
377

 
$
942

 
$
935



See Notes to Condensed Consolidated Financial Statements
11

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
September 30, 2015

 
December 31, 2014

ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
198

 
$
13

Receivables (net of allowance for doubtful accounts of $3 at September 30, 2015 and
December 31, 2014)
110

 
129

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $6 at September 30, 2015 and December 31, 2014)
687

 
647

Receivables from affiliated companies
75

 
75

Notes receivable from affiliated companies
699

 
150

Inventory
1,167

 
1,124

Regulatory assets
322

 
399

Other
164

 
77

Total current assets
3,422

 
2,614

Investments and Other Assets
 
 
 
Nuclear decommissioning trust funds
2,953

 
3,042

Other
1,018

 
959

Total investments and other assets
3,971

 
4,001

Property, Plant and Equipment
 
 
 
Cost
38,653

 
37,372

Accumulated depreciation and amortization
(13,445
)
 
(12,700
)
Net property, plant and equipment
25,208

 
24,672

Regulatory Assets and Deferred Debits
 
 
 
Regulatory assets
2,741

 
2,465

Other
43

 
42

Total regulatory assets and deferred debits
2,784

 
2,507

Total Assets
$
35,385

 
$
33,794

LIABILITIES AND MEMBER'S EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
623

 
$
709

Accounts payable to affiliated companies
143

 
154

Taxes accrued
335

 
146

Interest accrued
146

 
95

Current maturities of long-term debt
506

 
507

Regulatory liabilities
36

 
34

Other
415

 
434

Total current liabilities
2,204


2,079

Long-Term Debt
8,078

 
7,584

Long-Term Debt Payable to Affiliated Companies
300

 
300

Deferred Credits and Other Liabilities
 
 
 
Deferred income taxes
6,067

 
5,812

Investment tax credits
200

 
204

Accrued pension and other post-retirement benefit costs
107

 
111

Asset retirement obligations
3,599

 
3,428

Regulatory liabilities
2,747

 
2,710

Other
618

 
642

Total deferred credits and other liabilities
13,338

 
12,907

Commitments and Contingencies


 


Member's Equity
 
 
 
Member's equity
11,476

 
10,937

Accumulated other comprehensive loss
(11
)
 
(13
)
Total member's equity
11,465

 
10,924

Total Liabilities and Member's Equity
$
35,385

 
$
33,794


See Notes to Condensed Consolidated Financial Statements
12

PART I

DUKE ENERGY CAROLINAS, LLC
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Nine Months Ended
 
September 30,
(in millions)
2015

 
2014

CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income
$
940

 
$
933

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization (including amortization of nuclear fuel)
1,016

 
952

Equity component of AFUDC
(73
)
 
(68
)
Impairment charges
—

 
3

Deferred income taxes
183

 
47

Accrued pension and other post-retirement benefit costs
11

 
16

Contributions to qualified pension plans
(42
)
 
—

Payments for asset retirement obligations
(104
)
 
—

(Increase) decrease in
 
 
 
Receivables
(9
)
 
5

Receivables from affiliated companies
—

 
(42
)
Inventory
(48
)
 
91

Other current assets
42

 
(130
)
Increase (decrease) in
 
 
 
Accounts payable
(141
)
 
(167
)
Accounts payable to affiliated companies
(11
)
 
15

Taxes accrued
182

 
173

Other current liabilities
49

 
7

Other assets
97

 
23

Other liabilities
(61
)
 
21

Net cash provided by operating activities
2,031

 
1,879

CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
Capital expenditures
(1,372
)
 
(1,289
)
Purchases of available-for-sale securities
(1,926
)
 
(1,533
)
Proceeds from sales and maturities of available-for-sale securities
1,926

 
1,516

Notes receivable from affiliated companies
(549
)
 
(117
)
Other
(13
)
 
(27
)
Net cash used in investing activities
(1,934
)
 
(1,450
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Proceeds from the issuance of long-term debt
496

 
—

Payments for the redemption of long-term debt
(3
)
 
(42
)
Distributions to parent
(401
)
 
(376
)
Other
(4
)
 
—

Net cash provided by (used in) financing activities
88

 
(418
)
Net increase in cash and cash equivalents
185

 
11

Cash and cash equivalents at beginning of period
13

 
23

Cash and cash equivalents at end of period
$
198

 
$
34

Supplemental Disclosures:
 
 
 
Significant non-cash transactions:
 
 
 
Accrued capital expenditures
$
229

 
$
177


See Notes to Condensed Consolidated Financial Statements
13

PART I

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

 
Net Losses on

 
 
 
Member's

 
Cash Flow

 
Available-for-

 
 
(in millions)
Equity

 
Hedges

 
Sale Securities

 
Total

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

 
 
 
 
 
 
 
 
Balance at December 31, 2014
$
10,937

 
$
(12
)
 
$
(1
)
 
$
10,924

Net income
940

 
—

 
—

 
940

Other comprehensive income
—

 
1

 
1

 
2

Distributions to parent
(401
)
 
—

 
—

 
(401
)
Balance at September 30, 2015
$
11,476

 
$
(11
)
 
$
—

 
$
11,465



See Notes to Condensed Consolidated Financial Statements
14

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)
2015

 
2014

 
2015

 
2014

Operating Revenues
$
2,929

 
$
2,863

 
$
7,941

 
$
7,825

Operating Expenses
 
 
 
 
 
 
 
Fuel used in electric generation and purchased power
1,238

 
1,214

 
3,273

 
3,234

Operation, maintenance and other
539

 
564

 
1,672

 
1,714

Depreciation and amortization
261

 
294

 
831

 
851

Property and other taxes
132

 
127

 
367

 
415

Impairment charges
7

 
1

 
7

 
(16
)
Total operating expenses
2,177

 
2,200

 
6,150

 
6,198

Gains on Sales of Other Assets and Other, net
4

 
2

 
18

 
3

Operating Income
756

 
665

 
1,809

 
1,630

Other Income and Expenses, net
17

 
26

 
63

 
54

Interest Expense
170

 
166

 
504

 
502

Income From Continuing Operations Before Income Taxes
603

 
525

 
1,368

 
1,182

Income Tax Expense From Continuing Operations
151

 
195

 
435

 
441

Income From Continuing Operations
452

 
330

 
933

 
741

Loss From Discontinued Operations, net of tax
(1
)
 
—

 
(2
)
 
(6
)
Net Income
451

 
330

 
931

 
735

Less: Net Income Attributable to Noncontrolling Interests
3

 
1

 
8

 
2

Net Income Attributable to Parent
$
448

 
$
329

 
$
923

 
$
733

 
 
 
 
 
 
 
 
Net Income
$
451

 
$
330

 
$
931

 
$
735

Other Comprehensive Income, net of tax
 
 
 
 
 
 
 
Pension and OPEB adjustments
(3
)
 
1

 
(1
)
 
2

Reclassification into earnings from cash flow hedges
3

 
1

 
2

 
5

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

 
1

 
(1
)
 
1

Other Comprehensive Income, net of tax
—


3


—


8

Comprehensive Income
451

 
333

 
931

 
743

Less: Comprehensive Income Attributable to Noncontrolling Interests
3

 
1

 
8

 
2

Comprehensive Income Attributable to Parent
$
448


$
332


$
923


$
741



See Notes to Condensed Consolidated Financial Statements
15

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(in millions)
September 30, 2015

 
December 31, 2014

ASSETS
 
 
 
Current Assets
 
 
 
Cash and cash equivalents
$
158

 
$
42

Receivables (net of allowance for doubtful accounts of $6 at September 30, 2015 and $8 at December 31, 2014)
172

 
129

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $9 at September 30, 2015 and $8 at December 31, 2014)
863

 
741

Receivables from affiliated companies
121

 
59

Notes receivable from affiliated companies
251

 
220

Inventory
1,604

 
1,590

Regulatory assets
442

 
491

Other
633

 
1,285

Total current assets
4,244

 
4,557

Investments and Other Assets
 
 
 
Nuclear decommissioning trust funds
2,612

 
2,503

Goodwill
3,655

 
3,655

Other
850

 
670

Total investments and other assets
7,117

 
6,828

Property, Plant and Equipment
 
 
 
Cost
41,940

 
38,650

Accumulated depreciation and amortization
(14,862
)
 
(13,506
)
Generation facilities to be retired, net
460

 
—

Net property, plant and equipment
27,538

 
25,144

Regulatory Assets and Deferred Debits
 
 
 
Regulatory assets
5,535

 
5,408

Other
92

 
91

Total regulatory assets and deferred debits
5,627

 
5,499

Total Assets
$
44,526

 
$
42,028

LIABILITIES AND EQUITY
 
 
 
Current Liabilities
 
 
 
Accounts payable
$
697

 
$
847

Accounts payable to affiliated companies
238

 
203

Notes payable to affiliated companies
434

 
835

Taxes accrued
192

 
114

Interest accrued
198

 
184

Current maturities of long-term debt
1,265

 
1,507

Regulatory liabilities
193

 
106

Other
954

 
1,021

Total current liabilities
4,171

 
4,817

Long-Term Debt
14,131

 
13,247

Deferred Credits and Other Liabilities
 
 
 
Deferred income taxes
5,001

 
4,759

Accrued pension and other post-retirement benefit costs
545

 
533

Asset retirement obligations
5,222

 
4,711

Regulatory liabilities
2,382

 
2,379

Other
345

 
406

Total deferred credits and other liabilities
13,495

 
12,788

Commitments and Contingencies

 

Equity
 
 
 
Common stock, $0.01 par value, 100 shares authorized and outstanding at September 30, 2015 and December 31, 2014
—

 
—

Additional paid-in capital
8,092

 
7,467

Retained earnings
4,703

 
3,782

Accumulated other comprehensive loss
(41
)
 
(41
)
Total Progress Energy Inc. stockholder's equity
12,754

 
11,208

Noncontrolling interests
(25
)
 
(32
)
Total equity
12,729

 
11,176

Total Liabilities and Equity
$
44,526

 
$
42,028


See Notes to Condensed Consolidated Financial Statements
16

PART I

PROGRESS ENERGY, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
 
Nine Months Ended
 
September 30,
(in millions)
2015

 
2014

CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net income
$
931

 
$
735

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation, amortization and accretion (including amortization of nuclear fuel)
962

 
985

Equity component of AFUDC
(40
)
 
(18
)
(Gains) losses on sales of other assets
(24
)
 
1

Impairment charges
7

 
(16
)
Deferred income taxes
512

 
231

Accrued pension and other post-retirement benefit costs
(4
)
 
20