XFRA:D2MN Duke Energy Corporation Quarterly Report 10-Q Filing - 6/30/2012

Effective Date 6/30/2012

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

(Mark One)

 

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended June 30, 2012 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

 

Exact name of registrants as specified in their charters, addresses of principal executive offices, 

telephone numbers and states of incorporation

 

IRS Employer

Identification No.

 

1-32853

DUKE ENERGY CORPORATION

550 South Tryon Street

Charlotte, NC 28202-1803

704-382-3853

State of Incorporation: Delaware

20-2777218

 

 

 

1-4928

DUKE ENERGY CAROLINAS, LLC

526 South Church Street

Charlotte, NC 28202-1803

704-382-3853

State of Incorporation: North Carolina

56-0205520

 

 

 

1-1232

DUKE ENERGY OHIO, INC.

139 East Fourth Street

Cincinnati, OH 45202

704-382-3853

State of Incorporation: Ohio

31-0240030

 

 

 

1-3543

DUKE ENERGY INDIANA, INC.

1000 East Main Street

Plainfield, IN 46168

704-382-3853

State of Incorporation: Indiana

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

No ¨ 

 

Duke Energy Ohio, Inc. (Duke Energy Ohio)

Yes

No ¨ 

Energy Carolinas, LLC (Duke Energy Carolinas)

Yes

No ¨ 

 

Duke Energy Indiana, Inc. (Duke Energy Indiana)

Yes

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

No ¨ 

 

Duke Energy Ohio

Yes

No ¨ 

Duke Energy Carolinas

Yes

No ¨ 

 

Duke Energy Indiana

Yes

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. (Check one):

Duke Energy

Large accelerated filer

Accelerated filer ¨ 

Non-accelerated filer ¨ 

Smaller reporting company ¨ 

Duke Energy Carolinas

Large accelerated filer ¨ 

Accelerated filer ¨ 

Non-accelerated filer

Smaller reporting company ¨ 

Duke Energy Ohio

Large accelerated filer ¨ 

Accelerated filer ¨ 

Non-accelerated filer

Smaller reporting company ¨ 

Duke Energy Indiana

Large accelerated filer ¨ 

Accelerated filer ¨ 

Non-accelerated filer

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

 

Duke Energy Ohio

Yes ¨ 

No

Duke Energy Carolinas

Yes ¨ 

No

 

Duke Energy Indiana

Yes ¨ 

No

 

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock, as of the latest practicable date.

 

Outstanding as of

August 3, 2012

Registrant

 

Description

 

Shares

 

Duke Energy

Common Stock, par value $0.001

      704,125,200 

Duke Energy Carolinas

All of the registrant’s limited liability company member interests are directly 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 four registrants: Duke Energy, Duke Energy Carolinas, 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, 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.  

 

 


 

 

INDEX

  

  

  

  

  

FORM 10-Q FOR THE QUARTER ENDED JUNE 30,  2012

  

  

  

  

  

  

  

  

  

Page

PART I. FINANCIAL INFORMATION

  

  

  

  

  

  

Item 1.

Financial Statements

4

  

  

  

  

  

  

Duke Energy Corporation (Duke Energy)

  

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Operations

4

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Comprehensive Income

5

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Balance Sheets

6

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Cash Flows

8

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Equity

9

  

  

  

  

  

  

Duke Energy Carolinas, LLC (Duke Energy Carolinas)

  

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income

10

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Balance Sheets

11

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Cash Flows

13

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Member’s Equity

14

  

  

  

  

  

  

Duke Energy Ohio, Inc. (Duke Energy Ohio)

  

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income

15

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Balance Sheets

16

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Cash Flows

18

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Common Stockholder’s Equity

19

  

  

  

  

  

  

Duke Energy Indiana, Inc. (Duke Energy Indiana)

  

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income

20

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Balance Sheets

21

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Cash Flows

23

  

  

  

  

  

  

  

Unaudited Condensed Consolidated Statements of Common Stockholder’s Equity

24

  

  

  

  

  

  

Combined Notes to Unaudited Condensed Consolidated Financial Statements for Duke Energy, Duke Energy Carolinas,

  

  

Duke Energy Ohio and Duke Energy Indiana

25

  

  

  

  

  

Management’s Discussion and Analysis of Financial Condition and Results of Operations

76

  

  

  

  

  

Quantitative and Qualitative Disclosures About Market Risk

91

  

  

  

  

  

Controls and Procedures

92

  

  

  

  

  

PART II. OTHER INFORMATION

  

  

  

  

  

  

Legal Proceedings

93

  

  

  

  

  

1A.

Risk Factors

93

  

  

  

  

  

Unregistered Sales of Equity Securities and Use of Proceeds

93

  

  

  

  

  

Other Information

93

  

  

  

  

  

Exhibits

95

  

  

  

  

  

  

Signatures

96

 


 

 

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, which are intended to cover Duke Energy and the applicable Duke Energy Registrants, 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, as well as rulings that affect cost and investment recovery or have an impact on rate structures;

·       The ability to recover eligible costs and earn an adequate return on investment through the regulatory process;

·       The scope of necessary repairs of the delamination of Crystal River Unit 3 Nuclear Plant could prove more extensive than is currently identified, such repairs could prove not to be feasible resulting in early retirement of the unit, the cost of repair and/or replacement power could exceed estimates and insurance coverage or may not be recoverable through the regulatory process;

·       The ability to maintain relationships with customers, employees or suppliers post-merger;

·       The ability to successfully integrate the Progress Energy businesses and realize cost savings and any other synergies expected from the merger;

·       The risk that the credit ratings of the combined company or its subsidiaries may be different from what the companies expect;

·       The impact of compliance with material restrictions of conditions related to the Progress Energy merger imposed by regulators could exceed our expectations;

·       Costs and effects of legal and administrative proceedings, settlements, investigations and claims;

·       Industrial, commercial and residential growth or decline in the respective Duke Energy Registrants’ service territories, customer base or customer usage patterns;

·       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 each of the Duke Energy Registrants’ operations, including the economic, operational and other effects of storms, hurricanes, droughts and tornadoes;

·       The ability to recover, in a timely manner, if at all, costs associated with future significant weather events through the regulatory process;

·       The impact on the Duke Energy Registrants’ facilities and business from a terrorist attack;

·       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;

·       Unscheduled generation outages, unusual maintenance or repairs and electric transmission system constraints;

·       The performance of electric generation facilities and of projects undertaken by Duke Energy’s non-regulated businesses;

·       The results of financing efforts, including the Duke Energy Registrants’ ability to obtain financing on favorable terms, which can be affected by various factors, including the respective Duke Energy Registrants’ credit ratings and general economic conditions;

·       Declines in the market prices of equity securities and resultant cash funding requirements for Duke Energy’s defined benefit pension plans and nuclear decommissioning trust funds;

·       The level of creditworthiness of counterparties to Duke Energy Registrants’ transactions;

·       Employee workforce factors, including the potential inability to attract and retain key personnel;

·       Growth in opportunities for the respective Duke Energy Registrants’ business units, including the timing and success of efforts to develop domestic and international power and other projects;

·       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 ratepayers in a timely manner or at all;

·       The effect of accounting pronouncements issued periodically by accounting standard-setting bodies;

·       The impact of potential goodwill impairments;

·       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 Duke Energy has described. 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.

 


 

 

PART I. FINANCIAL INFORMATION

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Item 1. Financial Statements

  

  

  

  

  

  

  

  

  

  

  

  

  

  

DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Three Months Ended

  

Six Months Ended

  

  

  

June 30,

  

June 30,

(in millions, except per-share amounts)

2012 

  

2011 

  

2012 

  

2011 

Operating Revenues

  

  

  

  

  

  

  

  

  

  

  

  

Regulated electric

$

 2,628 

  

$

 2,576 

  

$

 5,129 

  

$

 5,149 

  

Non-regulated electric, natural gas, and other

  

 868 

  

  

 864 

  

  

 1,826 

  

  

 1,719 

  

Regulated natural gas

  

 81 

  

  

 94 

  

  

 252 

  

  

 329 

  

Total operating revenues

  

 3,577 

  

  

 3,534 

  

  

 7,207 

  

  

 7,197 

Operating Expenses

  

  

  

  

  

  

  

  

  

  

  

  

Fuel used in electric generation and purchased power - regulated

  

 849 

  

  

 834 

  

  

 1,626 

  

  

 1,646 

  

Fuel used in electric generation and purchased power - non-regulated

  

 396 

  

  

 388 

  

  

 844 

  

  

 764 

  

Cost of natural gas and coal sold

  

 42 

  

  

 63 

  

  

 144 

  

  

 214 

  

Operation, maintenance and other

  

 862 

  

  

 959 

  

  

 1,608 

  

  

 1,839 

  

Depreciation and amortization

  

 475 

  

  

 437 

  

  

 954 

  

  

 891 

  

Property and other taxes

  

 171 

  

  

 169 

  

  

 355 

  

  

 355 

  

Impairment charges

  

 ― 

  

  

 9 

  

  

 402 

  

  

 9 

  

  

Total operating expenses

  

 2,795 

  

  

 2,859 

  

  

 5,933 

  

  

 5,718 

Gains on Sales of Other Assets and Other, net

  

 4 

  

  

 4 

  

  

 7 

  

  

 14 

Operating Income

  

 786 

  

  

 679 

  

  

 1,281 

  

  

 1,493 

Other Income and Expenses

  

  

  

  

  

  

  

  

  

  

  

  

Equity in earnings of unconsolidated affiliates

  

 40 

  

  

 48 

  

  

 85 

  

  

 80 

  

Impairments and gains on sales of unconsolidated affiliates

  

 (1) 

  

  

 12 

  

  

 (6) 

  

  

 14 

  

Other income and expenses, net

  

 70 

  

  

 97 

  

  

 159 

  

  

 214 

  

  

Total other income and expenses

  

 109 

  

  

 157 

  

  

 238 

  

  

 308 

Interest Expense

  

 232 

  

  

 203 

  

  

 456 

  

  

 422 

Income From Continuing Operations Before Income Taxes

  

 663 

  

  

 633 

  

  

 1,063 

  

  

 1,379 

Income Tax Expense from Continuing Operations

  

 214 

  

  

 192 

  

  

 317 

  

  

 425 

Income From Continuing Operations

  

 449 

  

  

 441 

  

  

 746 

  

  

 954 

(Loss) Income From Discontinued Operations, net of tax

  

 (1) 

  

  

 ― 

  

  

 1 

  

  

 ― 

Net Income

  

 448 

  

  

 441 

  

  

 747 

  

  

 954 

Less: Net Income Attributable to Noncontrolling Interests

  

 4 

  

  

 6 

  

  

 8 

  

  

 8 

Net Income Attributable to Duke Energy Corporation

$

 444 

  

$

 435 

  

$

 739 

  

$

 946 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Earnings Per Share - Basic and Diluted

  

  

  

  

  

  

  

  

  

  

  

  

Income from continuing operations attributable to Duke Energy Corporation common shareholders

  

  

  

  

  

  

  

  

  

  

  

  

  

Basic

$

 0.99 

  

$

 0.98 

  

$

 1.65 

  

$

 2.13 

  

  

Diluted

$

 0.99 

  

$

 0.98 

  

$

 1.65 

  

$

 2.13 

  

Income from discontinued operations attributable to Duke Energy Corporation common shareholders

  

  

  

  

  

  

  

  

  

  

  

  

  

Basic

$

 ― 

  

$

 ― 

  

$

 ― 

  

$

 ― 

  

  

Diluted

$

 ― 

  

$

 ― 

  

$

 ― 

  

$

 ― 

  

Net Income attributable to Duke Energy Corporation common shareholders

  

  

  

  

  

  

  

  

  

  

  

  

  

Basic

$

 0.99 

  

$

 0.98 

  

$

 1.65 

  

$

 2.13 

  

  

Diluted

$

 0.99 

  

$

 0.98 

  

$

 1.65 

  

$

 2.13 

  

Dividends declared per share

$

 1.515 

  

$

 1.485 

  

$

 2.265 

  

$

 2.22 

  

Weighted-average shares outstanding

  

  

  

  

  

  

  

  

  

  

  

  

  

Basic

  

 446 

  

  

 444 

  

  

 446 

  

  

 444 

  

  

Diluted

  

 446 

  

  

 444 

  

  

 446 

  

  

 444 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

 


 

 

DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

  

   

  

  

  

  

  

  

  

  

  

  

  

  

   

Three Months Ended

  

Six Months Ended

  

   

June 30,

  

June 30,

(in millions)  

2012 

  

2011 

  

2012 

  

2011 

Net income  

$

 448 

  

$

 441 

  

$

 747 

  

$

 954 

Other comprehensive (loss) income, net of tax  

  

  

  

  

  

  

  

  

  

  

  

  

Foreign currency translation adjustments  

  

 (131) 

  

  

 65 

  

  

 (87) 

  

  

 96 

  

Pension and OPEB adjustments(a)

  

 2 

  

  

 2 

  

  

 6 

  

  

 (7) 

  

Net unrealized loss on cash flow hedges(b)

  

 (30) 

  

  

 (7) 

  

  

 (17) 

  

  

 (5) 

  

Reclassification into earnings from cash flow hedges(c)

  

 3 

  

  

 1 

  

  

 2 

  

  

 2 

  

Unrealized gain on investments in auction rate securities(d)

  

 6 

  

  

 1 

  

  

 6 

  

  

 4 

  

Unrealized gain on investments in available for sale securities(e)

  

 2 

  

  

 ― 

  

  

 3 

  

  

 ― 

  

Reclassification into earnings from available for sale securities(f)

  

 (2) 

  

  

 ― 

  

  

 (3) 

  

  

 ― 

Other comprehensive (loss) income, net of tax  

  

 (150) 

  

  

 62 

  

  

 (90) 

  

  

 90 

Comprehensive income    

  

 298 

  

  

 503 

  

  

 657 

  

  

 1,044 

Less:  Comprehensive income attributable to Noncontrolling Interests  

  

 ― 

  

  

 9 

  

  

 4 

  

  

 11 

Comprehensive income attributable to Duke Energy Corporation  

$

 298 

  

$

 494 

  

$

 653 

  

$

 1,033 

  

   

  

  

  

  

  

  

  

  

  

  

  

  

   

  

  

  

  

  

  

  

  

  

  

  

(a)

Net of $1 million tax expense and $3 million tax expense for the three and six months ended June 30, 2012 and insignificant tax expense and $3 tax benefit for the three and six months ended June 30, 2011.

(b)

Net of $14 million tax benefit and $9 million tax benefit for the three and six months ended June 30, 2012 and $3 million tax benefit and $2 million tax benefit for the three and six months ended June 30, 2011.

(c)

Net of $2 million tax benefit and insignificant tax expense for the three and six months ended June 30, 2012 and $1 million tax expense for the three and six months ended June 30, 2011, respectively.

(d)

Net of $2 million tax expense and $3 million tax expense for the three and six months ended June 30, 2012 and $2 million tax benefit and $1 million tax expense for the three and six months ended June 30, 2011.

(e)

Net of insignificant tax expense for the three and six months ended June 30, 2012.

(f)

Net of insignificant tax benefit for the three and six months ended June 30, 2012.

  

   

  

  

  

  

  

  

  

  

  

  

  

See Notes to Unaudited Condensed Consolidated Financial Statements

4 

 


 

PART I  

DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

  

  

  

  

  

  

  

  

  

June 30,

  

December 31,

(in millions)

2012 

  

2011 

ASSETS

  

  

  

  

  

Current Assets

  

  

  

  

  

Cash and cash equivalents

$

 1,526 

  

$

 2,110 

Short-term investments

  

 234 

  

  

 190 

Receivables (net of allowance for doubtful accounts of $16 at June 30, 2012 and $35 at December 31, 2011)

  

 610 

  

  

 784 

Restricted receivables of variable interest entities (net of allowance for doubtful accounts of $43 at June 30, 2012 and $40 at December 31, 2011)

  

 1,233 

  

  

 1,157 

Inventory

  

 1,762 

  

  

 1,588 

Other

  

 1,122 

  

  

 1,051 

  

Total current assets

  

 6,487 

  

  

 6,880 

Investments and Other Assets

  

  

  

  

  

Investments in equity method unconsolidated affiliates

  

 450 

  

  

 460 

Nuclear decommissioning trust funds

  

 2,204 

  

  

 2,060 

Goodwill

  

 3,842 

  

  

 3,849 

Intangibles, net

  

 357 

  

  

 363 

Notes receivable

  

 72 

  

  

 62 

Restricted other assets of variable interest entities

  

 133 

  

  

 135 

Other

  

 1,894 

  

  

 2,231 

  

Total investments and other assets

  

 8,952 

  

  

 9,160 

Property, Plant and Equipment

  

  

  

  

  

Cost

  

 61,458 

  

  

 60,377 

Cost, variable interest entities

  

 1,357 

  

  

 913 

Accumulated depreciation and amortization

  

 (19,101) 

  

  

 (18,709) 

Generation facilities to be retired, net

  

 73 

  

  

 80 

  

Net property, plant and equipment

  

 43,787 

  

  

 42,661 

Regulatory Assets and Deferred Debits

  

  

  

  

  

Regulatory assets

  

 3,646 

  

  

 3,672 

Other

  

 159 

  

  

 153 

  

Total regulatory assets and deferred debits

  

 3,805 

  

  

 3,825 

Total Assets

$

 63,031 

  

$

 62,526 

  

  

  

  

  

  

  

  

See Notes to Unaudited Condensed Consolidated Financial Statements

5 

 


 

PART I  

DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS — (Continued)

(Unaudited)

  

  

  

  

  

  

  

  

  

June 30,

  

December 31,

(in millions, except per-share amounts)

2012 

  

2011 

LIABILITIES AND EQUITY

  

  

  

  

  

Current Liabilities

  

  

  

  

  

Accounts payable

$

 1,160 

  

$

 1,433 

Notes payable and commercial paper

  

 793 

  

  

 154 

Non-recourse notes payable of variable interest entities

  

 269 

  

  

 273 

Taxes accrued

  

 359 

  

  

 431 

Interest accrued

  

 254 

  

  

 252 

Current maturities of long-term debt

  

 1,870 

  

  

 1,894 

Other

  

 1,434 

  

  

 1,091 

  

Total current liabilities

  

 6,139 

  

  

 5,528 

Long-term Debt

  

 17,539 

  

  

 17,730 

Non-recourse long-term debt of variable interest entities

  

 915 

  

  

 949 

Deferred Credits and Other Liabilities

  

  

  

  

  

Deferred income taxes

  

 7,914 

  

  

 7,581 

Investment tax credits

  

 379 

  

  

 384 

Accrued pension and other post-retirement benefit costs

  

 829 

  

  

 856 

Asset retirement obligations

  

 1,999 

  

  

 1,936 

Regulatory liabilities

  

 2,981 

  

  

 2,919 

Other

  

 1,820 

  

  

 1,778 

  

Total deferred credits and other liabilities

  

 15,922 

  

  

 15,454 

Commitments and Contingencies

  

  

  

  

  

Equity

  

  

  

  

  

Common Stock, $0.001 par value, 2 billion shared authorized; 446 million and 444 million shares outstanding at June 30, 2012 and December 31, 2011, respectively

  

 1 

  

  

 1 

Additional paid-in capital

  

 21,140 

  

  

 21,132 

Retained earnings

  

 1,598 

  

  

 1,873 

Accumulated other comprehensive loss

  

 (320) 

  

  

 (234) 

  

Total Duke Energy Corporation shareholders' equity

  

 22,419 

  

  

 22,772 

Noncontrolling interests

  

 97 

  

  

 93 

  

Total equity

  

 22,516 

  

  

 22,865 

Total Liabilities and Equity

$

 63,031 

  

$

 62,526 

  

  

  

  

  

  

  

See Notes to Unaudited Condensed Consolidated Financial Statements

6 

 


 

PART I  

DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Six Months Ended

  

  

  

  

  

June 30,

(in millions)

2012 

  

2011 

CASH FLOWS FROM OPERATING ACTIVITIES

  

  

  

  

  

  

Net income

$

 747 

  

$

 954 

  

Adjustments to reconcile net income to net cash provided by operating activities:

  

  

  

  

  

  

  

  

Depreciation and amortization (including amortization of nuclear fuel)

  

 1,077 

  

  

 991 

  

  

  

Equity component of AFUDC

  

 (116) 

  

  

 (123) 

  

  

  

Gains on sales of other assets

  

 (7) 

  

  

 (27) 

  

  

  

Impairment of other long-lived assets

  

 408 

  

  

 9 

  

  

  

Deferred income taxes

  

 230 

  

  

 461 

  

  

  

Equity in earnings of unconsolidated affiliates

  

 (85) 

  

  

 (80) 

  

  

  

Voluntary opportunity cost deferral

  

 (101) 

  

  

 ― 

  

  

  

Accrued pension and other post-retirement benefit costs

  

 57 

  

  

 52 

  

  

  

(Increase) decrease in

  

  

  

  

  

  

  

  

  

Net realized and unrealized mark-to-market and hedging transactions

  

 (10) 

  

  

 13 

  

  

  

  

Receivables

  

 61 

  

  

 166 

  

  

  

  

Inventory

  

 (165) 

  

  

 (85) 

  

  

  

  

Other current assets

  

 105 

  

  

 128 

  

  

  

Increase (decrease) in

  

  

  

  

  

  

  

  

  

Accounts payable

  

 (102) 

  

  

 (338) 

  

  

  

  

Taxes accrued

  

 (67) 

  

  

 (99) 

  

  

  

  

Other current liabilities

  

 34 

  

  

 (179) 

  

  

  

Other assets

  

 22 

  

  

 81 

  

  

  

Other liabilities

  

 (86) 

  

  

 (207) 

  

  

  

  

Net cash provided by operating activities

  

 2,002 

  

  

 1,717 

CASH FLOWS FROM INVESTING ACTIVITIES

  

  

  

  

  

  

Capital expenditures

  

 (2,252) 

  

  

 (1,938) 

  

Investment expenditures

  

 (9) 

  

  

 (49) 

  

Acquisitions

  

 (36) 

  

  

 (4) 

  

Purchases of available-for-sale securities

  

 (1,240) 

  

  

 (1,266) 

  

Proceeds from sales and maturities of available-for-sale securities

  

 1,155 

  

  

 1,281 

  

Net proceeds from the sales of other assets, and sales of and collections on notes receivable

  

 23 

  

  

 109 

  

Change in restricted cash

  

 (51) 

  

  

 24 

  

Other

  

 19 

  

  

 5 

  

  

  

  

Net cash used in investing activities

  

 (2,391) 

  

  

 (1,838) 

CASH FLOWS FROM FINANCING ACTIVITIES

  

  

  

  

  

  

Proceeds from the:

  

  

  

  

  

  

  

Issuance of long-term debt

  

 721 

  

  

 499 

  

  

Issuance of common stock related to employee benefit plans

  

 14 

  

  

 10 

  

Payments for the redemption of long-term debt

  

 (878) 

  

  

 (82) 

  

Notes payable and commercial paper

  

 631 

  

  

 63 

  

Distributions to noncontrolling interests

  

 (5) 

  

  

 (18) 

  

Dividends paid

  

 (670) 

  

  

 (657) 

  

Other

  

 (8) 

  

  

 (2) 

  

  

  

  

Net cash used in financing activities

  

 (195) 

  

  

 (187) 

  

Net decrease in cash and cash equivalents

  

 (584) 

  

  

 (308) 

  

Cash and cash equivalents at beginning of period

  

 2,110 

  

  

 1,670 

  

Cash and cash equivalents at end of period

$

 1,526 

  

$

 1,362 

  

Supplemental Disclosures:

  

  

  

  

  

  

Significant non-cash transactions:

  

  

  

  

  

  

  

Accrued capital expenditures

$

 216 

  

$

 317 

  

  

Dividends declared but not paid

$

 344 

  

$

 337 

  

  

Extinguishment of debt related to investment in Attiki Gas Supply, S. A.

$

 66 

  

$

 ― 

  

  

  

  

  

  

  

  

See Notes to Unaudited Condensed Consolidated Financial Statements

7 

 


 

PART I  

DUKE ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Duke Energy Corporation Shareholders

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Accumulated Other Comprehensive Income (Loss)

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Net Gains

  

  

  

  

Pension and

  

  

  

  

  

  

  

  

  

  

  

  

Common

  

  

  

  

Additional

  

  

  

  

Foreign

  

(Losses) on

  

  

  

  

OPEB Related

  

Common

  

  

  

  

  

  

  

  

  

Stock

  

Common

  

Paid-in

  

Retained

  

Currency

  

Cash Flow

  

  

  

  

Adjustments

  

Stockholders'

  

Noncontrolling

  

Total

(in millions)

Shares

  

Stock

  

Capital

  

Earnings

  

Adjustments

  

Hedges

  

Other

  

to AOCI

  

Equity

  

Interests

  

Equity

Balance at December 31, 2010

 443 

  

$

 1 

  

$

 21,023 

  

$

 1,496 

  

$

 97 

  

$

 (18) 

  

$

 (17) 

  

$

 (60) 

  

$

 22,522 

  

$

 131 

  

$

 22,653 

  

Net income

 ― 

  

  

 ― 

  

  

 ― 

  

  

 946 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 946 

  

  

 8 

  

  

 954 

  

Other comprehensive income (loss)

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 93 

  

  

 (3) 

  

  

 4 

  

  

 (7) 

  

  

 87 

  

  

 3 

  

  

 90 

  

Common stock issuances, including dividend reinvestment and employee benefits

 1 

  

  

 ― 

  

  

 22 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 22 

  

  

 ― 

  

  

 22 

  

Common stock dividends

 ― 

  

  

 ― 

  

  

 ― 

  

  

 (994) 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 (994) 

  

  

 ― 

  

  

 (994) 

  

Changes in noncontrolling interest in subsidiaries

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 (23) 

  

  

 (23) 

Balance at June 30, 2011

 444 

  

$

 1 

  

$

 21,045 

  

$

 1,448 

  

$

 190 

  

$

 (21) 

  

$

 (13) 

  

$

 (67) 

  

$

 22,583 

  

$

 119 

  

$

 22,702 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Balance at December 31, 2011

 445 

  

$

 1 

  

$

 21,132 

  

$

 1,873 

  

$

 (45) 

  

$

 (71) 

  

$

 (9) 

  

$

 (109) 

  

$

 22,772 

  

$

 93 

  

$

 22,865 

  

Net income

 ― 

  

  

 ― 

  

  

 ― 

  

  

 739 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 739 

  

  

 8 

  

  

 747 

  

Other comprehensive (loss) income

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 (83) 

  

  

 (15) 

  

  

 6 

  

  

 6 

  

  

 (86) 

  

  

 (4) 

  

  

 (90) 

  

Common stock issuances, including dividend reinvestment and employee benefits

 1 

  

  

 ― 

  

  

 8 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 8 

  

  

 ― 

  

  

 8 

  

Common stock dividends

 ― 

  

  

 ― 

  

  

 ― 

  

  

 (1,014) 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 ― 

  

  

 (1,014) 

  

  

 ― 

  

  

 (1,014) 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

Balance at June 30, 2012

 446 

  

$

 1 

  

$

 21,140 

  

$

 1,598 

  

$

 (128) 

  

$

 (86) 

  

$

 (3) 

  

$

 (103) 

  

$

 22,419 

  

$

 97 

  

$

 22,516 

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

  

See Notes to Unaudited Condensed Consolidated Financial Statements

8 

 


 

PART I  

DUKE ENERGY CAROLINAS, LLC

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

(Unaudited)

  

  

   

  

  

  

  

  

  

  

  

  

  

  

  

  

   

Three Months Ended

  

Six Months Ended

  

  

   

June 30,

  

June 30,

(in millions)   

2012 

  

2011 

  

2012 

  

2011 

Operating Revenues-Regulated Electric  

$

 1,616 

  

$

 1,607 

  

$

 3,117 

  

$

 3,159 

Operating Expenses  

  

  

  

  

  

  

  

  

  

  

  

  

Fuel used in electric generation and purchased power  

  

 442 

  

  

 511 

  

  

 822 

  

  

 980