Non-GAAP Financial Information

Adjusted Diluted Earnings Per Share (“EPS”)

Management evaluates financial performance in part based on adjusted diluted EPS, a non-GAAP financial measure. Adjusted diluted EPS represents diluted EPS from continuing operations attributable to Duke Energy Corporation common stockholders, adjusted for the per-share impact of special items. As discussed below, special items include certain charges and credits which management believes are not indicative of Duke Energy’s ongoing performance. Management believes the presentation of adjusted diluted EPS provides useful information to investors, as it provides them with an additional relevant comparison of Duke Energy’s performance across periods.

Management uses this non-GAAP financial measure for planning and forecasting, and for reporting financial results to the Duke Energy Board of Directors (Board of Directors), employees, stockholders, analysts and investors. Adjusted diluted EPS is also used as a basis for employee incentive bonuses. The most directly comparable GAAP measures for adjusted diluted EPS is reported diluted EPS attributable to Duke Energy Corporation common stockholders.

Special items included in the periods presented include the following items which management believes do not reflect ongoing costs:

  • Costs to Achieve Mergers represents charges that result from potential or completed strategic acquisitions.
  • Cost Savings Initiatives represents severance charges related to company-wide initiatives to standardize processes and systems, leverage technology and workforce optimization.
  • Commercial Renewables Impairment and Asset Impairment represent other-than-temporary impairments.
  • Edwardsport Settlement, Ash Basin Settlement and Penalties, and Coal Ash Plea Agreements Reserve represent charges related to Plea Agreements and settlement agreements with regulators and other governmental entities.

Adjusted diluted EPS also includes the operating results of the nonregulated Midwest generation business and Duke Energy Retail Sales (collectively, the Midwest Generation Disposal Group) and the International Disposal Group, which have been classified as discontinued operations. Management believes inclusion of the operating results of the disposal groups within adjusted diluted EPS results in a better reflection of Duke Energy’s financial performance during the period.

Duke Energy’s adjusted diluted EPS may not be comparable to a similarly titled measure of another company because other companies may not calculate the measure in the same manner.

The following table presents a reconciliation of reported diluted EPS to adjusted diluted EPS.

Adjusted Diluted EPS Outlook

Duke Energy’s 2016 Sustainability Report references the five-year, long-term range of annual growth of 4 to 6 percent in adjusted diluted EPS (on a compound annual growth rate (“CAGR”) basis). Due to the forward-looking nature of this non-GAAP financial measure for future periods, information to reconcile it to the most directly comparable GAAP financial measure is not available at this time, as management is unable to project all special items for future periods, such as legal settlements, the impact of regulatory orders or asset impairments.