Non-Wholly Owned Entities and Contingently Redeemable Noncontrolling Interest

SouthStar, a joint venture owned by us and Piedmont, is our only VIE for which we are the primary beneficiary. For additional information on SouthStar, see Note 11 to our consolidated financial statements and related notes included in Item 8 of our 2015 Form 10-K. Earnings from SouthStar in 2016 and 2015 were allocated entirely in accordance with the ownership interests.

On December 9, 2015, we notified Piedmont of our election, in accordance with the change in control provisions in the Second Amended and Restated Limited Liability Company Agreement of SouthStar, to purchase Piedmont’s remaining 15% interest in SouthStar at fair market value. This purchase is contingent upon the closing of the merger between Piedmont and Duke Energy Corporation, which is subject to various closing conditions that are beyond our control and is expected to be completed in 2016. On February 12, 2016, we and Piedmont agreed to various terms of this purchase, including a fair market value of $160 million. During the first quarter of 2016, we reclassified the noncontrolling interest related to Piedmont's 15% interest in SouthStar, whose redemption is beyond our control, as a contingently redeemable noncontrolling interest. Previously, this noncontrolling interest was included in equity. If our purchase of this noncontrolling interest is completed, the difference between the purchase price and the amount of noncontrolling interest will be recorded in equity. A roll-forward of the contingently redeemable noncontrolling interest is detailed below:



In millions
Balance as of December 31, 2015	$	—
Reclassification of noncontrolling interest	46
Net income attributable to noncontrolling interest	14
Distribution to noncontrolling interest	(19		)
Balance as of June 30, 2016	$	41

Cash flows used in our investing activities include capital expenditures for SouthStar of $2 million for the six months ended June 30, 2016 and 2015. Cash flows used in our financing activities include SouthStar’s distribution to Piedmont for its portion of SouthStar’s annual earnings from the previous year, which generally occurs in the first quarter of each fiscal year. For the six months ended June 30, 2016 and 2015, SouthStar distributed $19 million and $18 million, respectively, to Piedmont. SouthStar’s counterparties have no recourse to our general credit beyond our corporate guarantees that we have provided to SouthStar’s counterparties and natural gas suppliers. The following table provides additional information on SouthStar’s assets and liabilities as of the dates presented. The SouthStar amounts exclude intercompany eliminations and the balances of our wholly owned subsidiary with an 85% ownership interest in SouthStar.



	June 30, 2016						December 31, 2015						June 30, 2015
In millions	Consolidated		SouthStar		%		Consolidated		SouthStar		%		Consolidated		SouthStar		%
Current assets	$	1,474	$	199	14	%	$	2,115	$	245	12	%	$	1,572	$	192	12	%
Goodwill and other intangible assets	1,914		111		6		1,922		114		6		1,939		117		6
Long-term assets and other deferred debits	11,100		17		—		10,717		16		—		10,324		17		—
Total assets	$	14,488	$	327	2	%	$	14,754	$	375	3	%	$	13,835	$	326	2	%
Current liabilities	$	2,205	$	37	2	%	$	3,000	$	54	2	%	$	2,047	$	40	2	%
Long-term liabilities and other deferred credits	8,309		1		—		7,779		—		—		7,799		1		—
Total liabilities	10,514		38		—		10,779		54		1		9,846		41		—
Contingently redeemable noncontrolling interest	41		—		—		—		—		—		—		—		—
Equity	3,933		289		7		3,975		321		8		3,989		285		7
Total liabilities, redeemable noncontrolling interest and equity	$	14,488	$	327	2	%	$	14,754	$	375	3	%	$	13,835	$	326	2	%

The following table provides information on SouthStar’s operating revenues and operating expenses for the periods presented, which are consolidated within our unaudited Condensed Consolidated Statements of Income.



	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2016		2015		2016		2015
Operating revenues	$	118	$	122	$	372	$	433
Operating expenses
Cost of goods sold	77		89		234		292
Operation and maintenance	18		18		40		41
Depreciation and amortization	2		3		4		5
Taxes other than income taxes	1		—		1		1
Total operating expenses	98		110		279		339
Operating income	$	20	$	12	$	93	$	94

Equity Method Investments

For more information about our equity method investments, see Note 11 to our consolidated financial statements and related notes included in Item 8 of our 2015 Form 10-K. The carrying amounts within our unaudited Condensed Consolidated Balance Sheets of our investments that are accounted for under the equity method were as follows:



In millions	June 30, 2016		December 31, 2015		June 30, 2015
Triton	$	46	$	49	$	53
PennEast Pipeline	15		9		3
Horizon Pipeline	14		14		14
Atlantic Coast Pipeline	14		7		4
Other	1		1		1
Total	$	90	$	80	$	75

Income from our equity method investments is classified as other income on our unaudited Condensed Consolidated Statements of Income. The following table provides the income from our equity method investments for the periods presented.



	Three Months Ended June 30,				Six Months Ended June 30,
In millions	2016		2015		2016		2015
Triton	$	1	$	1	$	1	$	1
Horizon Pipeline	—		—		1		1