Duke Energy reports strong first quarter 2014 adjusted earnings

By PR Newswire,  May 07, 2014, 07:00:00 AM EDT


-- First quarter 2014 adjusted diluted earnings per share (EPS) were $1.17, compared to $1.02 for the first quarter 2013

-- Reported diluted net loss per share for first quarter 2014 of 14 cents, compared to reported diluted EPS of 89 cents for the first quarter 2013

-- Reported results for first quarter 2014 include a pre-tax impairment charge of approximately $1.4 billion, or $1.23 per share, to write-down the company's Midwest Generation business to its estimated fair value

-- Company affirms its 2014 adjusted earnings guidance range of $4.45 to $4.60 per share

CHARLOTTE, N.C., May 7, 2014 /PRNewswire/ -- Duke Energy (NYSE:DUK) today announced first quarter 2014 adjusted diluted EPS of $1.17, compared to $1.02 for first quarter 2013, and a reported diluted net loss per share of 14 cents, compared to reported diluted EPS of 89 cents for the same period last year.

Higher adjusted diluted EPS results for the quarter were led by the company's largest business unit, Regulated Utilities, which benefitted from revised customer rates and strong weather-normalized retail volumes. International Energy also experienced stronger results in Latin America despite unfavorable foreign currency exchange rates.

Reported results for the quarter were affected by a pre-tax impairment charge of $1.4 billion, or $1.23 per share, to write-down the company's Midwest Generation business to its estimated fair value. In February 2014, the company announced it had initiated a process to exit this business. This impairment is a special item that has been excluded from the company's adjusted diluted EPS results.

Based upon results through the first quarter, the company is on track to achieve its 2014 adjusted earnings guidance range of $4.45 to $4.60 per share.

"I am proud of the way our team responded to challenging events in the first quarter -the severe winter weather and the Dan River coal ash release," said Lynn Good, president and CEO. "Our employees demonstrated great discipline and resolve in meeting customer needs and our financial commitments during the quarter.

"For the third consecutive quarter, we experienced improved economic growth throughout our service territories," she added. "We remain on track with our strategic initiatives to maximize value from our commercial businesses and to develop investment opportunities that underpin our financial objectives."

Business Unit Results 

The discussion below of first-quarter results includes adjusted segment income, which is a non-GAAP financial measure. The tables on pages 21 and 22 present a reconciliation of reported results to adjusted results.

Regulated Utilities 

Regulated Utilities recognized first quarter 2014 adjusted segment income of $737 million, compared to $656 million in the first quarter 2013, an increase of $0.11 per share.

Increased quarterly results at Regulated Utilities were primarily driven by:

  • Higher revenues from increased pricing and riders (+$0.12 per share) primarily related to the implementation of revised customer rates
  • Favorable weather (+$0.08 per share), driven by the extreme cold winter temperatures across Duke Energy's service territories
  • Higher weather-normal retail volumes (+$0.06 per share) of 2.6 percent compared to 2013, principally within the residential and commercial customer classes
  • Increased wholesale net margins (+$0.03 per share) primarily resulting from growth in contracted amounts as well as favorable weather

These favorable drivers were partially offset by:

  • Higher depreciation and amortization expense (-$0.07per share), including the impact of prior-year cost of removal amortization in Florida
  • Increased operating and maintenance expenses (-$0.05 per share) due to higher storm restoration costs (-$0.07 per share); excluding these storm costs, operating and maintenance expenses were lower primarily resulting from the company's ongoing cost management efforts and nuclear outage cost levelization in the Carolinas
  • Higher interest expense (-$0.03 per share), due to lower post-in-service debt returns on projects now reflected in customer rates
  • Lower AFUDC equity (-$0.02 per share), driven by the completion of capital projects

International Energy  

International Energy recognized first quarter 2014 adjusted segment income of $130 million, compared to $97 million in the first quarter 2013, an increase of $0.04 per share.

International Energy's improved quarterly earnings were driven by stronger results in Latin America (+$0.06 per share), primarily due to higher spot volumes and pricing in Brazil. This driver was partially offset by unfavorable foreign currency exchange rates (-$0.02 per share).

Commercial Power  

Commercial Power recognized first quarter 2014 adjusted segment income of $10 million, compared to a segment income of $6 million in the first quarter 2013.

Higher earnings from the renewables business (+$0.01 per share), driven by favorable wind production and lower costs, were partially offset by lower earnings from the company's competitive retail business, Duke Energy Retail (-$0.01).

Other 

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

Other recognized a first quarter 2014 adjusted net expense of $48 million, compared to $43 million in the first quarter 2013.

Earnings Conference Call for Analysts 

An earnings conference call for analysts will be held at 10 a.m. ET today to discuss Duke Energy's financial performance for the first quarter 2014 as well as providing other business updates.

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

The call can be accessed via the investors' section (http://www.duke-energy.com/investors/) of Duke Energy's website or by dialing 888-438-5449 in the United States or 719-325-2475 outside the United States. The confirmation code is 5210970. Please call in 10 to 15 minutes prior to the scheduled start time.

A replay of the conference call will be available until 1 p.m. ET, May 17, 2014, by calling 888-203-1112 in the United States or 719-457-0820 outside the United States and using the code 5210970. A replay and transcript also will be available by accessing the investors' section of the company's website.

Special Items and Non-GAAP Reconciliation 

Special items affecting Duke Energy's adjusted diluted EPS for first quarter 2014 and first quarter 2013 include:

(In millions, except per-share amounts)

Pre-Tax

Amount

Tax

Effect

1Q2014

EPS

Impact

1Q2013

EPS

Impact

First Quarter 2014









- Midwest Generation Impairment

$(1,381)

$514

$(1.23)



- Costs to Achieve, Progress Energy Merger

$(55)

$21

$(0.04)



- Economic Hedges (Mark-to-Market)

$(34)

$12

$(0.03)



- Discontinued Operations

$(1)

$(2)

$(0.01)



First Quarter 2013









- Costs to Achieve, Progress Energy Merger

$(55)

$21



$(0.05)

- Economic Hedges (Mark-to-Market)

$(75)

$27



$(0.08)

Total diluted EPS impact





$(1.31)

$(0.13)

Reconciliation of reported to adjusted diluted EPS for the quarters:



1Q2014

EPS

1Q2013

EPS

Diluted EPS, as reported

($0.14)

$0.89

Adjustments to reported EPS:





- Diluted EPS impact of special items, mark-to-market in Commercial

  Power, and discontinued operations (net of tax)

$1.31

$0.13

Diluted EPS, adjusted

$1.17

$1.02

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 after deducting income attributable to noncontrolling interests, adjusted for the dollar and per share impact of special items and mark-to-market impacts of economic hedges in the Commercial Power segment. 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. 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 Power 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 the presentation of adjusted earnings and adjusted diluted EPS provides useful information to investors, as it provides them an additional relevant comparison of Duke Energy's performance across periods. Management uses these non-GAAP financial measures for planning and forecasting and for reporting results to the Board of Directors, employees, shareholders, analysts and investors concerning Duke Energy's financial performance. The most directly comparable GAAP measures for adjusted earnings and adjusted diluted EPS are Net Income Attributable to Duke Energy Corporation and Diluted EPS attributable to Duke Energy Corporation common shareholders, which include the dollar and per share impact of special items, mark-to-market impacts of economic hedges in the Commercial Power 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 noncontrolling interests. Segment income, as discussed below, includes intercompany revenues and expenses that are eliminated in the Consolidated Financial Statements. Management also uses adjusted segment income as a measure of historical and anticipated future segment performance. Adjusted segment income is a non-GAAP financial measure, as it is based upon segment income adjusted for special items and mark-to-market impacts of economic hedges in the Commercial Power segment. Management believes the presentation of adjusted segment income 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 mark-to-market impacts of economic hedges in the Commercial Power segment.

Due to the forward-looking nature of any forecasted adjusted earnings guidance, information to reconcile this non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time, as management is unable to project all special items or mark-to-market adjustments for future periods. The earnings guidance range assumptions for 2014 include a full-year of earnings contributions from the Midwest generation fleet, which management has begun a process to exit. Irrespective of whether this business is reclassified as discontinued operations for accounting purposes, management expects to continue including any Midwest generation fleet earnings in adjusted earnings, adjusted diluted EPS, and adjusted segment income. Management believes it is unlikely a sale transaction will close in 2014.

Due to the forward-looking nature of any forecasted adjusted segment income or adjusted Other net expenses and any related growth rates for future periods, information to reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this time, as the company is unable to forecast all special items, the mark-to-market impacts of economic hedges in the Commercial Power segment, or any amounts that may be reported as discontinued operations or extraordinary items for future periods.

Duke Energy is the largest electric power holding company in the United States with more than $110 billion in total assets. Its regulated utility operations serve approximately 7.2 million electric customers located in six states in the Southeast and Midwest. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the United States.

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

Forward-Looking Information 

This release 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 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 is 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, cyber security 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 price, 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 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.

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

 

 





DUKE ENERGY CORPORATION

EARNINGS VARIANCES

March 2014 YTD vs. Prior Year



































($ per share)



Regulated

Utilities



International

Energy



Commercial

Power



Other



Consolidated



































2013 YTD Reported Earnings Per Share, Diluted



$

0.93



$

0.14



$

(0.07)



$

(0.11)



$

0.89

Costs to Achieve, Progress Merger





-





-





-





0.05





0.05

Economic Hedges (Mark-to-Market)





-





-





0.08





-





0.08

2013 YTD Adjusted Earnings Per Share, Diluted



$

0.93



$

0.14



$

0.01



$

(0.06)



$

1.02



































Weather





0.08





-





-





-





0.08



































Pricing and Riders (a)





0.12





-





-





-





0.12



































Volume





0.06





-





-





-





0.06



































Operation and Maintenance, net of recoverables (b)





(0.05)





-





-





-





(0.05)



































Latin America, including Foreign Exchange Rates (c)





-





0.04





-





-





0.04



































Midwest Coal Generation (d)





-





-





(0.01)





-





(0.01)



































Midwest Gas Generation (e)





-





-





0.01





-





0.01



































Duke Energy Retail 





-





-





(0.01)





-





(0.01)



































Interest Expense





(0.03)





-





-





(0.01)





(0.04)



































Change in effective income tax rate





-





-





-





0.01





0.01



































Other (f)(g)





(0.07)





-





0.01





-





(0.06)



































2014 YTD Adjusted Earnings Per Share, Diluted



$

1.04



$

0.18



$

0.01



$

(0.06)



$

1.17

Midwest Generation Impairment





-





-





(1.23)





-





(1.23)

Costs to Achieve, Progress Merger





-





-





-





(0.04)





(0.04)

Economic Hedges (Mark-to-Market)





-





-





(0.03)





-





(0.03)

Discontinued Operations





























(0.01)

2014 YTD Reported Earnings Per Share, Diluted



$

1.04



$

0.18



$

(1.25)



$

(0.10)



$

(0.14)



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



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



































(a)

Primarily due to the September 2013 implementation of revised base rates for Duke Energy Carolinas (+$0.06), the June 2013 implementation of revised base rates for Duke Energy Progress (+$0.03), the May 2013 implementation of revised distribution rates for Duke Energy Ohio (+$0.01), and increased recovery under the IGCC rider, net of AFUDC, for Duke Energy Indiana (+$0.01).



































(b)

Primarily driven by storm costs in the Carolinas, the 2013 deferral of Crystal River Unit 3 costs, and clean up costs related to the Dan River coal ash spill. These drivers are partially offset by the impact of nuclear outage cost levelization and lower nuclear generation operating expenses.



































(c)

Primarily driven by stronger results in Latin America (+$0.06) primarily due to higher spot volumes and pricing in Brazil, offset by unfavorable foreign exchange rates (-$0.02).



































(d) 

Primarily due to lower energy margins (-$0.01) due to lower realized power prices (including hedge settlements) and higher fuel costs, partially offset by higher volumes.



































(e)

Primarily due to increased generation margins (+$0.01) due to higher realized power prices (including hedge settlements) and lower fuel costs, partially offset by lower volumes.



































(f)

Amount for Regulated Utilities includes an increase in depreciation and amortization expense (-$0.07) due to the 2013 reduction in the cost of removal component of amortization expense for Duke Energy Florida, lower AFUDC-equity (-$0.02), and higher non-income taxes (-$0.01), partially offset by higher wholesale margins (+$0.03).



































(g)

Amount for Commercial Power includes favorable results of the renewables portfolio (+$0.01).

 

 

March 2014

QUARTERLY HIGHLIGHTS

(Unaudited)















Three Months Ended





March 31,











(In millions, except per-share amounts and where noted)



2014



2013

COMMON STOCK DATA









(Loss) Income from continuing operations attributable to Duke Energy Corporation common shareholders









    Basic



$               (0.13)



$                0.89

    Diluted



$               (0.13)



$                0.89

Loss from discontinued operations attributable to Duke Energy Corporation common shareholders









    Basic



$               (0.01)



$                      -

    Diluted



$               (0.01)



$                      -

Net (loss) income attributable to Duke Energy Corporation common shareholders









    Basic



$               (0.14)



$                0.89

    Diluted



$               (0.14)



$                0.89

  Dividends Declared Per Share



$                 0.78



$              0.765

  Weighted-Average Shares Outstanding









    Basic



706



705

    Diluted



706



705











SEGMENT INCOME BY BUSINESS SEGMENT









Regulated Utilities



$                 737



$                 656

International Energy



130



97

Commercial Power(a)



(879)



(42)

Total Reportable Segment Income



(12)



711

Other Net Expense



(82)



(77)

Loss from Discontinued Operations, net of tax



(3)



-

Net (Loss) Income Attributable to Duke Energy Corporation



$                  (97)



$                 634











CAPITALIZATION









Total Common Equity



48%



50%

Total Debt



52%



50%











Total Debt



$            41,622



$            41,350

Book Value Per Share



$              57.64



$              58.14

Actual Shares Outstanding



707



706











CAPITAL AND INVESTMENT EXPENDITURES









Regulated Utilities



$              1,130



$              1,309

International Energy



9



12

Commercial Power



68



25

Other



61



64











Total Capital and Investment Expenditures



$              1,268



$              1,410





















(a) Includes an impairment charge related to the planned disposition of the Midwest Generation business of $867 million for the three months ended March 31, 2014 (net of tax of $514 million).

 

 

March 2014

QUARTERLY HIGHLIGHTS

(Unaudited)















Three Months Ended





March 31,











(In millions, except where noted)



2014



2013

REGULATED UTILITIES









  Operating Revenues



$                       5,805



$                       5,060

  Operating Expenses



4,427



3,840

  Gains on Sales of Other Assets, net



1



2

  Operating Income



1,379



1,222

  Other Income and Expenses



69



61

  Interest Expense



270



236

  Income Before Income Taxes



1,178



1,047

  Income Tax Expense



441



391

  Segment Income



$                           737



$                           656











  Depreciation and Amortization



$                           677



$                           536











  Duke Energy Carolinas GWh sales



23,693



22,246

  Duke Energy Progress GWh sales



16,161



14,701

  Duke Energy Florida's GWh sales



8,661



8,017

  Duke Energy Ohio GWh sales



6,479



6,178

  Duke Energy Indiana GWh sales



8,874



8,505

  Total GWh sales



63,868



59,647

  Net Proportional MW Capacity in Operation



49,595



49,641











INTERNATIONAL ENERGY









  Operating Revenues



$                           382



$                           392

  Operating Expenses



231



263

  Operating Income



151



129

  Other Income and Expenses



57



33

  Interest Expense



23



21

  Income Before Income Taxes



185



141

  Income Tax Expense



51



42

  Less: Income Attributable to Noncontrolling Interests



4



2

  Segment Income



$                             130



$                              97











  Depreciation and Amortization



$                               23



$                              26











  Sales, GWh



5,241



4,756

  Proportional MW Capacity in Operation



4,600



4,584











COMMERCIAL POWER









  Operating Revenues



$                             449



$                            452

  Operating Expenses(a)



1,862



533

  Operating Loss



(1,413)



(81)

  Other Income and Expenses



5



11

  Interest Expense



15



15

  Loss Before Income Taxes



(1,423)



(85)

  Income Tax Benefit(b)



(544)



(43)

  Segment Loss



$                           (879)



$                            (42)











  Depreciation and Amortization



$                               61



$                              63











  Actual Coal-fired Plant Production, GWh



4,711



4,549

  Actual Gas-fired Plant Production, GWh



3,792



3,897

  Actual Renewable Plant Production, GWh



1,589



1,405

  Actual Plant Production, GWh



10,092



9,851

  Net Proportional MW Capacity in Operation



7,770



8,094











OTHER 









  Operating Revenues



$                              25



$                              35

  Operating Expenses



84



90

  Operating Loss



(59)



(55)

  Other Income and Expenses



7



11

  Interest Expense



105



95

  Loss Before Income Taxes



(157)



(139)

  Income Tax Benefit



(75)



(60)

  Less: Income (Loss) Attributable to Noncontrolling Interests



-



(2)

  Segment Net Expense



$                            (82)



$                            (77)











  Depreciation and Amortization



$                              29



$                              35





















(a) Includes a pretax impairment charge of $1,381 million for the three months ended March 31, 2014, related to the planned disposition of the Midwest Generation business.

(b) Includes a tax benefit of $514 million for the three months ended March 31, 2014, on the impairment related to the planned disposition of the Midwest Generation business.

 

DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In millions, except per-share amounts)





































Three Months Ended

















March 31,

















2014

2013

Operating Revenues















Regulated electric











$         5,578

$         4,889

Nonregulated electric, natural gas, and other









824

824

Regulated natural gas











222

185

Total operating revenues











6,624

5,898

Operating Expenses















Fuel used in electric generation and purchased power - regulated





2,000

1,703

Fuel used in electric generation and purchased power - nonregulated 



409

454

Cost of natural gas and other











122

104

Operation, maintenance and other











1,506

1,421

Depreciation and amortization











790

660

Property and other taxes











358

343

Impairment charges











1,382

-

Total operating expenses











6,567

4,685

Gains on Sales of Other Assets and Other, net







1

2

Operating Income













58

1,215

Other Income and Expenses















Equity in earnings of unconsolidated affiliates









36

36

Other income and expenses, net











95

80

Total other income and expenses









131

116

Interest Expense













406

367

(Loss) Income From Continuing Operations Before Income Taxes



(217)

964

Income Tax (Benefit) Expense from Continuing Operations





(127)

330

(Loss) Income From Continuing Operations









(90)

634

Loss From Discontinued Operations, net of tax







(3)

-

Net (Loss) Income 











(93)

634

Less: Net Income Attributable to Noncontrolling Interests 





4

-

Net (Loss) Income Attributable to Duke Energy Corporation





$            (97)

$            634









































Earnings Per Share - Basic and Diluted













(Loss) Income from continuing operations attributable to Duke Energy Corporation common shareholders



Basic 













$          (0.13)

$           0.89



Diluted













$          (0.13)

$           0.89

Loss from discontinued operations attributable to Duke Energy Corporation common shareholders



Basic 













$          (0.01)

$              -



Diluted













$          (0.01)

$              -

Net (Loss) Income attributable to Duke Energy Corporation common shareholders









Basic 













$          (0.14)

$           0.89



Diluted













$          (0.14)

$           0.89

Weighted-average shares outstanding















Basic













706

705



Diluted













706

705

 

DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In millions)









March 31,



December 31,







2014



2013

ASSETS









Current Assets









Cash and cash equivalents



$                1,531



$              1,501

Short-term investments



6



44

Receivables (net of allowance for doubtful accounts of 











$17 at March 31, 2014 and $30 at December 31, 2013)



597



1,286

Restricted receivables of variable interest entities (net of allowance for 











doubtful accounts of $54 at March 31, 2014 and $43 at December 31, 2013)



2,199



1,719

Inventory





2,908



3,250

Assets held for sale



515



-

Regulatory assets



1,148



895

Other



1,661



1,821



 Total current assets 



10,565



10,516

Investments and Other Assets









Investments in equity method unconsolidated affiliates



386



390

Nuclear decommissioning trust funds



5,231



5,132

Goodwill



16,342



16,340

Assets held for sale



2,341



107

Other



3,251



3,432



 Total investments and other assets 



27,551



25,401

Property, Plant and Equipment









Cost



99,874



103,115

Accumulated depreciation and amortization



(33,519)



(33,625)



 Net property, plant and equipment 



66,355



69,490

Regulatory Assets and Deferred Debits









Regulatory assets 



9,138



9,191

Other



183



181



 Total regulatory assets and deferred debits 



9,321



9,372

Total Assets



113,792



114,779

LIABILITIES AND EQUITY









Current Liabilities









Accounts payable



1,892



2,391

Notes payable and commercial paper



1,737



839

Taxes accrued



423



551

Interest accrued



478



440

Current maturities of long-term debt



885



2,104

Liabilities associated with assets held for sale



222



7

Regulatory liabilities



243



316

Other



1,612



1,996



Total current liabilities



7,492



8,644

Long-term Debt



39,000



38,152

Deferred Credits and Other Liabilities









Deferred income taxes



11,852



12,097

Investment tax credits



438



442

Accrued pension and other post-retirement benefit costs



1,270



1,322

Liabilities associated with assets held for sale



71



66

Asset retirement obligations



4,994



4,950

Regulatory liabilities



6,125



5,949

Other



1,761



1,749



Total deferred credits and other liabilities



26,511



26,575

Equity









Common stock, $0.001 par value, 2 billion shares authorized; 707 million 











and 706 million shares outstanding at March 31, 2014 and 











December 31, 2013, respectively



1



1

Additional paid-in capital



39,372



39,365

Retained earnings



1,713



2,363

Accumulated other comprehensive loss



(377)



(399)



Total Duke Energy Corporation shareholders' equity



40,709



41,330

Noncontrolling interests



80



78



Total equity



40,789



41,408

Total Liabilities and Equity



$            113,792



$          114,779

 

DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In millions)































Three Months Ended March 31,













2014



2013



















CASH FLOWS FROM OPERATING ACTIVITIES











Net (Loss) Income



$                  (93)



$                  634



Adjustments to reconcile net income to net cash provided by













operating activities:



1,466



457









Net cash provided by operating activities



1,373



1,091



















CASH FLOWS FROM INVESTING ACTIVITIES

















Net cash used in investing activities



(1,286)



(1,465)



















CASH FLOWS FROM FINANCING ACTIVITIES

















Net cash (used in) provided by financing activities

(57)



246





















Net increase (decrease) in cash and cash equivalents



30



(128)



Cash and cash equivalents at beginning of period



1,501



1,424



Cash and cash equivalents at end of period



$              1,531



$               1,296

 

 

Regulated Utilities

Quarterly Highlights

Supplemental Regulated Utilities Electric Information

March 2014





























Three Months Ended









March 31

















%



% Inc.(Dec.)





















Weather 









2014



2013



Inc. (Dec.)



Normal (2)

























GWH Sales (1)





















Residential



24,193



21,734



11.3%



2.9%





General Service



18,147



17,545



3.4%



3.6%





Industrial



12,055



11,925



1.1%



0.4%





Other Energy Sales



150



151



(0.7%)









Unbilled Sales



(584)



(206)



183.5%



N/A





    Total Retail Sales



53,961



51,149



5.5%



2.6%



























Special Sales (3)



9,907



8,498



16.6%































    Total Consolidated Electric Sales - Regulated Utilities



63,868



59,647



7.1%



















































Average Number of Customers





















Residential



6,265,318



6,201,159



1.0%









General Service



939,046



932,231



0.7%









Industrial



18,374



18,690



(1.7%)









Other Energy Sales



22,458



22,108



1.6%









  Total Regular Sales



7,245,196



7,174,188



1.0%































Special Sales



64



62



3.2%































    Total Average Number of Customers - Regulated Utilities



7,245,260



7,174,250



1.0%









































































Heating and Cooling Degree Days (4)





















Carolinas - Actual





















Heating Degree Days



1,969



1,776



10.9%









Cooling Degree Days



-



1



0.0%































Variance from Normal





















Heating Degree Days



18.8%



5.0%



n/a









Cooling Degree Days



(100.0%)



(86.4%)



n/a































Midwest - Actual





















Heating Degree Days 



3,313



2,834



16.9%









Cooling Degree Days



-



-



0.0%































Variance from Normal





















Heating Degree Days 



25.3%



5.6%



n/a









Cooling Degree Days



(100.0%)



(100.0%)



n/a





















































Florida - Actual





















Heating Degree Days



417



339



23.0%









Cooling Degree Days



144



178



(19.1%)































Variance from Normal





















Heating Degree Days



3.2%



(16.1%)



n/a









Cooling Degree Days



(18.2%)



1.1%



n/a





















































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

























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

























(3) First quarter 2014 and first quarter 2013 include 177 GWH and 184 GWH, respectively, of sales associated with the FERC mitigation contracts, for which the financial results are excluded from the Regulated Utilities segment earnings. 

























(4)  Certain 2013 data has been recast to conform to the 2014 methodology which provides for consistency across all Regulated Utilities' jurisdictions.

 

 

Duke Energy Carolinas



Quarterly Highlights



Supplemental Regulated Utilities Electric Information



March 2014

































Three Months Ended











March 31























% Inc.(Dec.)



















%



Weather 











2014



2013



Inc.(Dec.)



Normal (2)





























GWH Sales (1)























Residential



8,564



7,705



11.1%











General Service



6,781



6,526



3.9%











Industrial



4,914



4,811



2.1%











Other Energy Sales



73



74



(1.4%)











Unbilled Sales



(181)



10



(100.0%)











    Total Regular Electric Sales 



20,151



19,126



5.4%



2.5%































Special Sales (3)



3,542



3,120



13.5%



































  Total Consolidated Electric Sales - Duke Energy Carolinas



23,693



22,246



6.5%

























































Average Number of Customers























Residential



2,081,865



2,062,339



0.9%











General Service



340,187



337,515



0.8%











Industrial



6,525



6,650



(1.9%)











Other Energy Sales



14,485



14,350



0.9%











  Total Regular Sales



2,443,062



2,420,854



0.9%



































Special Sales



26



24



8.3%



































Total Average Number of Customers - Duke Energy Carolinas

2,443,088



2,420,878



0.9%

















































































Heating and Cooling Degree Days (4)























Actual























Heating Degree Days



2,042



1,857



10.0%











Cooling Degree Days



-



-



0.0%



































Variance from Normal























Heating Degree Days



19.1%



6.1%



n/a











Cooling Degree Days



(100.0%)



(100.0%)



n/a



























































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



























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



























(3)  First quarter 2014 and first quarter 2013 include 177 GWH and 184 GWH, respectively, of sales associated with the FERC mitigation contracts, for which the financial results are excluded from the Regulated Utilities segment earnings. 





























(4)  Certain 2013 data has been recast to conform to the 2014 methodology which provides for consistency across all Regulated Utilities' jurisdictions.



 

Duke Energy Progress

Quarterly Highlights

Supplemental Regulated Utilities Electric Information

March 2014



























Three Months Ended









March 31





















% Inc.(Dec.)

















%



Weather 









2014



2013



Inc.(Dec.)



Normal (2)

























GWH Sales (1)





















Residential



5,580



4,959



12.5%









General Service



3,641



3,482



4.6%









Industrial



2,381



2,444



(2.6%)









Other Energy Sales



30



30



0.0%









Unbilled Sales



3



35



(91.4%)









    Total Regular Electric Sales 



11,635



10,950



6.3%



2.3%



























Special Sales



4,526



3,751



20.7%































  Total Consolidated Electric Sales - Duke Energy Progress



16,161



14,701



9.9%



















































Average Number of Customers





















Residential



1,251,608



1,237,568



1.1%









General Service



221,892



220,208



0.8%









Industrial



4,291



4,396



(2.4%)









Other Energy Sales



1,751



1,812



(3.4%)









  Total Regular Sales



1,479,542



1,463,984



1.1%































Special Sales



15



15



0.0%































Total Average Number of Customers - Duke Energy Progress



1,479,557



1,463,999



1.1%









































































Heating and Cooling Degree Days (3)





















Actual





















Heating Degree Days



1,896



1,695



11.9%









Cooling Degree Days



-



2



0.0%































Variance from Normal





















Heating Degree Days



18.5%



3.9%



n/a









Cooling Degree Days



(100.0%)



(74.5%)



n/a































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

























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



































(3)  Certain 2013 data has been recast to conform to the 2014 methodology which provides for consistency across all Regulated Utilities' jurisdictions.

 

 

Duke Energy Florida

Quarterly Highlights

Supplemental Regulated Utilities Electric Information

March 2014





























Three Months Ended









March 31





















% Inc.(Dec.)

















%



Weather 









2014



2013



Inc.(Dec.)



Normal (2)

























GWH Sales (1)





















Residential



4,051



3,744



8.2%









General Service



3,248



3,224



0.7%









Industrial



801



755



6.1%









Other Energy Sales



6



6



0.0%









Unbilled Sales



139



34



308.8%









    Total Regular Sales



8,245



7,763



6.2%



3.3%



























Special Sales



416



254



63.8%































  Total Electric Sales - Duke Energy Florida



8,661



8,017



8.0%



















































Average Number of Customers





















Residential



1,492,358



1,473,749



1.3%









General Service



190,437



188,343



1.1%









Industrial



2,301



2,361



(2.5%)









Other Energy Sales



1,555



1,568



(0.8%)









  Total Regular Sales



1,686,651



1,666,021



1.2%































Special Sales



16



15



6.7%































Total Average Number of Customers - Duke Energy Florida



1,686,667



1,666,036



1.2%









































































Heating and Cooling Degree Days (3)





















Actual





















Heating Degree Days



417



339



23.0%









Cooling Degree Days



144



178



(19.1%)































Variance from Normal





















Heating Degree Days



3.2%



(16.1%)



n/a









Cooling Degree Days



(18.2%)



1.1%



n/a































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

























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



































(3)  Certain 2013 data has been recast to conform to the 2014 methodology which provides for consistency across all Regulated Utilities' jurisdictions.

 

 

Duke Energy Ohio

Quarterly Highlights

Supplemental Regulated Utilities Electric Information

March 2014





























Three Months Ended









March 31





















% Inc. (Dec.)

















%



Weather









2014



2013



Inc.(Dec.)



 Normal (2)

























GWH Sales (1)





















Residential



2,779



2,498



11.2%









General Service



2,372



2,282



3.9%









Industrial



1,436



1,396



2.9%









Other Energy Sales



28



28



0.0%









Unbilled Sales



(242)



(146)



(65.8%)









    Total Regular Electric Sales



6,373



6,058



5.2%



2.0%



























Special Sales



106



120



(11.7%)































    Total Electric Sales - Duke Energy Ohio



6,479



6,178



4.9%



















































Average Number of Customers





















Residential



743,580



737,283



0.9%









General Service



86,251



86,056



0.2%









Industrial 



2,522



2,562



(1.6%)









Other Energy



3,171



2,924



8.4%









  Total Regular Sales



835,524



828,825



0.8%































Special Sales



1



1



0.0%































Total Average Number of Electric Customers - Duke Energy Ohio



835,525



828,826



0.8%









































































Heating and Cooling Degree Days (3)





















Actual





















Heating Degree Days 



3,109



2,703



15.0%









Cooling Degree Days



-



-



0.0%































Variance from Normal





















Heating Degree Days 



21.4%



4.0%



n/a









Cooling Degree Days



(100.0%)



(100.0%)



n/a





















































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

























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

























(3)  Certain 2013 data has been recast to conform to the 2014 methodology which provides for consistency across all Regulated Utilities' jurisdictions.

 

Duke Energy Ohio

Quarterly Highlights

Supplemental Regulated Utilities Gas Information

March 2014





























Three Months Ended









March 31





















% Inc. (Dec.)

















%



Weather









2014



2013



Inc.(Dec.)



 Normal (2)

























MCF Sales (1)





















Residential



23,585,941



20,044,850



17.7%









General Service



13,692,491



11,648,545



17.5%









Industrial 



2,812,830



2,407,491



16.8%









Other Energy Sales



6,597,030



6,154,498



7.2%









Unbilled Sales



(2,467,000)



(912,000)



(170.5%)









    Total Gas Sales - Duke Energy Ohio



44,221,292



39,343,384



12.4%



2.0%















































Average Number of Customers





















Residential



476,115



471,571



1.0%









General Service



45,299



45,001



0.7%









Industrial



1,717



1,688



1.7%









Other Energy



158



166



(4.8%)









Total Average Number of Gas Customers - Duke Energy Ohio



523,289



518,426



0.9%



















































Heating and Cooling Degree Days (3)





















Actual





















Heating Degree Days 



3,109



2,703



15.0%









Cooling Degree Days



-



-



0.0%































Variance from Normal





















Heating Degree Days 



21.4%



4.0%



n/a









Cooling Degree Days



(100.0%)



(100.0%)



n/a





















































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

























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

























(3)  Certain 2013 data has been recast to conform to the 2014 methodology which provides for consistency across all Regulated Utilities' jurisdictions.

 

 

 

Duke Energy Indiana

Quarterly Highlights

Supplemental Regulated Utilities Electric Information

March 2014





























Three Months Ended









March 31





















% Inc. (Dec.)

















%



Weather









2014



2013



Inc.(Dec.)



 Normal (2)

























GWH Sales (1)





















Residential



3,219



2,828



13.8%









General Service



2,105



2,031



3.6%









Industrial



2,523



2,519



0.2%









Other Energy Sales



13



13



0.0%









Unbilled Sales



(303)



(139)



(118.0%)









    Total Regular Electric Sales



7,557



7,252



4.2%



2.8%



























Special Sales



1,317



1,253



5.1%































    Total Electric Sales - Duke Energy Indiana



8,874



8,505



4.3%



















































Average Number of Customers





















Residential



695,907



690,220



0.8%









General Service



100,279



100,109



0.2%









Industrial 



2,735



2,721



0.5%









Other Energy



1,496



1,454



2.9%









  Total Regular Sales



800,417



794,504



0.7%































Special Sales



6



7



(14.3%)































Total Average Number of Electric Customers - Duke Energy Indiana



800,423



794,511



0.7%









































































Heating and Cooling Degree Days (3)





















Actual





















Heating Degree Days 



3,517



2,966



18.6%









Cooling Degree Days



-



-



0.0%































Variance from Normal





















Heating Degree Days 



29.0%



7.0%



n/a









Cooling Degree Days



(100.0%)



(100.0%)



n/a





















































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

























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

























(3)  Certain 2013 data has been recast to conform to the 2014 methodology which provides for consistency across all Regulated Utilities' jurisdictions.

 

 



DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Three Months Ended March 31, 2014

(Dollars in millions, except per-share amounts)





















Special Items



































Adjusted

Earnings



Costs to

Achieve,

Progress

Merger



Midwest

Generation

Impairment



Economic

Hedges

(Mark-to-

Market) *



Discontinued

Operations



Total

Adjustments



Reported

Earnings

SEGMENT INCOME































































































Regulated Utilities



$

737



$

 ―   



$

 ―   



$

 ―   



$

 ―   



$

 ―   



$

737













































International Energy





130





 ―   





 ―   





 ―   





 ―   





 ―   





130





















































Commercial Power





10





 ―   





(867)

D



(22)

B



 ―   





(889)





(879)























































Total Reportable Segment Income





877





 ―   





(867)





(22)





 ―   





(889)





(12)





















































Other





(48)





(34)

A



 ―   





 ―   





 ―   





(34)





(82)























































Total Reportable Segment Income and Other Net Expense





829





(34)





(867)





(22)





 ―   





(923)





(94)























































Discontinued Operations





 ―   





 ―   





 ―   





 ―   





(3)

C



(3)





(3)













































Net Income (Loss) Attributable to Duke Energy Corporation



$

829



$

(34)



$

(867)



$

(22)



$

(3)



$

(926)



$

(97)





















































EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC



$

1.17



$

(0.04)



$

(1.23)



$

(0.03)



$

(0.01)



$

(1.31)



$

(0.14)





















































EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED



$

1.17



$

(0.04)



$

(1.23)



$

(0.03)



$

(0.01)



$

(1.31)



$

(0.14)





















































A

-

Net of $21 million tax benefit. $1 million recorded as a decrease in Operating Revenues, $53 million recorded within Operating Expenses and $1 million recorded within Interest

expense on the Condensed Consolidated Statements of Operations.





















































B

-

Net of $12 million tax benefit. $124 million loss recorded within Nonregulated electric, natural gas, and other (Operating Revenues) and $90 million gain recorded within Fuel used in electric generation and purchased power-nonregulated (Operating Expenses) on the Condensed Consolidated Statements of Operations.





















































C

-

Recorded in Income (Loss) From Discontinued Operations, net of tax on the Condensed Consolidated Statements of Operations.





















































D

-

Net of $514 million tax benefit. Recorded in Impairment charges (Operating Expenses) on the Condensed Consolidated Statements of Operations.









































































































Weighted Average Shares (reported and adjusted) - in millions





Basic

706

















































Diluted

706

































































































* 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 Power 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 operating 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.

 

 





DUKE ENERGY CORPORATION

ADJUSTED TO REPORTED EARNINGS RECONCILIATION

Three Months Ended March 31, 2013

(Dollars in millions, except per-share amounts)





















Special Items





























Adjusted

Earnings



Costs to

Achieve,

Progress

Merger



Economic

Hedges (Mark-

to-Market) *



Total

Adjustments



Reported

Earnings

SEGMENT INCOME







































































Regulated Utilities



$

656



$

 ―   



$

 ―   



$

 ―   



$

656

































International Energy





97





 ―   





 ―   





 ―   





97









































Commercial Power





6





 ―   





(48)

B



(48)





(42)











































Total Reportable Segment Income





759





 ―   





(48)





(48)





711









































Other





(43)





(34)

A



 ―   





(34)





(77)









































Net Income (Loss) Attributable to Duke Energy Corporation



$

716



$

(34)



$

(48)



$

(82)



$

634









































EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, BASIC



$

1.02



$

(0.05)



$

(0.08)



$

(0.13)



$

0.89









































EPS ATTRIBUTABLE TO DUKE ENERGY CORPORATION, DILUTED



$

1.02



$

(0.05)



$

(0.08)



$

(0.13)



$

0.89









































A

-

Net of $21 million tax benefit. $15 million recorded as an increase in Operating Revenues and $70 million recorded in Operating Expenses on the Condensed Consolidated

Statements of Operations.









































B

-

Net of $27 million tax benefit. $68 million loss recorded in Nonregulated electric, natural gas and other (Operating Revenues) and $7 million loss recorded within Fuel used in electric generation and purchased power-nonregulated (Operating Expenses) on the Condensed Consolidated Statements of Operations.

















































































Weighted Average Shares (reported and adjusted) - in millions





Basic

705





































Diluted

705









































































* 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 Power 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 operating 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.

 

Logo - http://photos.prnewswire.com/prnh/20130322/CL81938LOGO

Media Contact: Tom Shiel

Office: 704.382.2355 | 24-Hour: 800.559.3853

Analysts: Bill Currens

Office: 704.382.1603 

SOURCE Duke Energy



This article appears in: News Headlines

Referenced Stocks: DUK


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