Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — FY2005 Earnings Presentation
31 slides from Duke Energy Corporation (holding Company)'s earnings presentation, Feb 1, 2006
Slide 1: 2005 Earnings Review and 2006 Outlook
2005 Earnings Review and 2006 Outlook February 1, 2006 Paul Anderson Chairman and Chief Executive Officer
Slide 2: Safe Harbor Statement
Safe Harbor Statement This document includes statements that do not directly or exclusively relate to historical facts. Such statements are “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. These forwa
Slide 3: Disclosure Statements
Disclosure Statements Additional Information and Where to Find It In connection with the proposed transaction, a registration statement of Duke Energy Holding Corp. (Registration No. 333- 126318), which includes a preliminary prospectus and a preliminary joint proxy statement of Duke Energy and Cine
Slide 4: Highlights for 2005
Highlights for 2005 4Q05 4Q04 2005 2004 Reported Basic EPS $ 0.65 $ 0.38 $ 1.94 $ 1.59 Adjustments ** (0.22) (0.09) (0.15) (0.08) Ongoing Basic EPS $ 0.43 $ 0.29 $ 1.79 $ 1.51 ■ Franchised Electric benefited from favorable summer weather and strong bulk power sales; partially offset by a $46 million
Slide 5: Disposition of DENA's Discontinued Operations
Disposition of DENA’s Discontinued Operations ■ Generation assets ● Agreed to sell DENA’s plants in the West and Northeast to LS Power for $1.54 billion, assuming certain performance measures are met, and no less than $1.48 billion ● Expect to close before June 2006 ■ Contracts ● Barclays Capital tr
Slide 6: Merger Update
Merger Update ■ State approvals ● Received approvals from the state commissions in South Carolina, Kentucky and Ohio ● Hearings completed in Indiana and North Carolina ■ Nuclear Regulatory Commission approval expected shortly ■ Filed amendment to the SEC S-4 filing on January 31, 2006 ■ Shareholder
Slide 7: Duke Energy 2006 Short-Term Incentive Plan
Duke Energy 2006 Short-Term Incentive Plan ■ Assumptions ● Includes 9 months of Cinergy’s operations ● Assumes merger closing at April 1st, which is our internal ready date ● Includes synergy savings and sharing with customers ● Excludes costs-to-achieve, which will be classified as special item ■ E
Slide 8: 2006 Outlook
2006 Outlook Fred Fowler President and Chief Operating Officer
Slide 9: Expectations for 2006: Franchised Electric
Expectations for 2006 ■ Duke Power Franchised ● 2006 ongoing segment EBIT is anticipated to be Electric essentially flat compared with 2005 ■ Assumptions ● Excludes merger-related costs-to-achieve, cost savings Duke Power and sharing ● Customer growth of 2% ● Normal weather ● Clean Air amortizatio
Slide 10: Expectations for 2006: Natural Gas Transmission
Expectations for 2006 ■ Natural Gas Transmission Natural Gas ● 2006 ongoing segment EBIT is also anticipated to be Transmission essentially flat compared with 2005 ■ Assumptions ● Higher earnings from expansion projects will be offset by: DEGT Union Gas ● Approximately $25 million of interest ex
Slide 11: Expectations for 2006: Field Services
Expectations for 2006 ■ Field Services Field ● 2006 ongoing equity earnings are anticipated to be Services approximately $500 million ■ Assumptions ● Average crude oil price of $61 per barrel DEFS ■ Equity earnings sensitivity ● $1 per barrel increase in crude oil prices increases equity earnings
Slide 12: Expectations for 2006: International
Expectations for 2006 ■ Duke Energy International ● 2006 ongoing segment EBIT is anticipated to be International approximately $275 million ■ Assumptions ● 96% contracted in Brazil DEI ● Normal hydrology for Latin American operations ■ Expectations for Cinergy’s international businesses will be pr
Slide 13: Expectations for 2006: Crescent Resources
Expectations for 2006 ■ Crescent Resources Crescent ● 2006 ongoing segment EBIT from continuing and Resources discontinued operations is anticipated to be approximately $250 million ■ Crescent’s book value at year-end 2005 was $1.3 billion Crescent Resources ■ Expected to contribute at least $100
Slide 14: Expectations for 2006: Other EBIT
Expectations for 2006 ■ Other EBIT for current Duke Energy operations ● Results for 2006 are anticipated to be approximately $330 Other million in ongoing net expenses, including DENA’s continuing operations ● $20 million increase in “Other”, excluding DENA, is due to DENA’s an accounting change r
Slide 15: Expectations for 2006: Cinergy's operations
Expectations for 2006 ■ Cinergy’s operations ● Ongoing EBIT contribution for nine months of 2006 is anticipated to be approximately $800 million ■ Assumptions ● Excludes merger-related costs-to-achieve, cost savings and revenue reductions ● Base rate increases as already publicly disclosed ● $50 mil
Slide 16: Merger Savings and Costs-to-Achieve
Merger Savings and Costs-to-Achieve ■ Extremely confident in ability to meet merger targets as presented on September 15, 2005 ■ Five-year targets ● Gross savings of slightly more than $1.3 billion ● Costs to achieve of approximately $675 million ● Net savings of about $650 million ■ 2006 expectatio
Slide 17: 2006 Outlook
2006 Outlook David Hauser Group Vice President and Chief Financial Officer
Slide 18: 2006 Earnings per Share Assumptions
2006 Earnings per Share Assumptions ■ Net income of $2.225 billion relates to $1.90 incentive target ● 3-cent benefit due to purchase accounting adjustments ● 5-cent benefit related to synfuel ● Current oil prices may prohibit operation of these facilities this year ● Natural hedge with Field Servic
Slide 19: Combined Company: Cash Flow
Combined Company: Cash Flow ($ in millions) 2006 Estimate Primary Sources: Net income $ 2,225 (Based on $1.90 per ongoing diluted share target) Depreciation & amortization 2,075 NBV of ongoing Crescent sales 425 NBV of asset and equity investment sales 1,475 Book/tax timing differences 700 Other sou
Slide 20: 2006 Capital Expenditures
2006 Capital Expenditures ($ in millions) Maintenance Environmental Expansion Total Franchised Electric $1,200 $400 $100 $1,700 Natural Gas Transmission 475 -- 475 950 Crescent Resources -- -- 650 650 International 30 -- 20 50 Other 25 -- -- 25 Duke Energy Total $1,730 $400 $1,245 $3,375 Cinergy 465
Slide 21: Other Financial Items
Other Financial Items ■ Assumptions are for the combined company ■ Total debt at year-end 2005 was $21.7 billion; no material changes expected for 2006 ■ Debt to capitalization should be approximately 46% at year-end 2006 ■ Interest expense for 2006 is expected to be approximately $1.2 billion ● Inc
Slide 22: Duke Energy 2006 Charter
Duke Energy We are Duke Energy, a leading energy company located in the Americas with an 2006 Charter affiliate real estate operation Our purpose is to create superior value for our customers, employees, communities and investors through the production, conversion, delivery and sale of energy and en
Slide 23: Non-GAAP Reconciliation Schedules: 2006 EPS Incentive Target
Duke Energy Corporation Non-GAAP Reconciliation Schedules 2006 Earnings per Share (“EPS”) Incentive Target Measure The slides and prepared remarks for the February 1, 2006 Earnings Conference Call include a discussion of the Company's 2006 EPS incentive target of $1.90 and the minimum payout level o
Slide 24: Non-GAAP Reconciliation Schedules: Crescent Segment EBIT
Duke Energy Corporation Non-GAAP Reconciliation Schedules 2006 Segment EBIT from Continuing and Discontinued Operations for Crescent The Company’s slides and prepared remarks for the February 1, 2006 Earnings Conference Call include a discussion of Crescent Resources’ segment EBIT from continuing an
Slide 25: Non-GAAP Reconciliation Schedules: FFO Interest Coverage
Duke Energy Corporation Non-GAAP Reconciliation Schedules FFO Interest Coverage The Company's slides and script for the February 1, 2006 Earnings Conference Call include a discussion of expected FFO Interest Coverage Ratios for 2006, which is a non-GAAP financial measure. Funds from Operations (nume
Slide 26: Field Services Pro-Forma Segment Earnings Reg G Reconciliation
Duke Energy Corporation Field Services Pro-Forma Segment Earnings Reg G Reconciliation (Amounts in millions) Year-Ended 12/31/2005 DEFS LLC Net Income (100%) - Year Ended 12/31/2005 $ 2,166 Less Special Items: Gain on sale of TEPPCO (1,134) Pro-Forma DEFS LLC Net Income (100%) - Year Ended 12/31/200
Slide 27: Ongoing to Reported Earnings Reconciliation: December 2004 Quarter
DUKE ENERGY CORPORATION ONGOING TO REPORTED EARNINGS RECONCILIATION December 2004 Quarter-to-date (Dollars in Millions) Special Items (Note 1) Gains (losses) Discontinued Gains Adjustment on sales and Operations, Ongoing (Losses) on to Captive Loss on Total Reported impairments excluding Earnings sa
Slide 28: Ongoing to Reported Earnings Reconciliation: December 2005 Quarter
DUKE ENERGY CORPORATION ONGOING TO REPORTED EARNINGS RECONCILIATION December 2005 Quarter-to-date (Dollars in Millions) Special Items (Note 1) Discontinued MTM change on Loss on MTM impact of de- Operations/ Field Services de-designated Ongoing Southeast designated Cumulative Total Reported hedge de
Slide 29: Ongoing to Reported Earnings Reconciliation: December 2004 Year-to-date
DUKE ENERGY CORPORATION ONGOING TO REPORTED EARNINGS RECONCILIATION December 2004 Year-to-date (Dollars in Millions) Special Items (Note 1) Gains Discontinued Gains (losses) on Adjustment to Tax Benefit from Operations, Ongoing (Losses) on sales and Enron Captive Total Reported Impairment DEA exclud
Slide 30: Ongoing to Reported Earnings Reconciliation: December 2005 Year-to-date
DUKE ENERGY CORPORATION ONGOING TO REPORTED EARNINGS RECONCILIATION December 2005 Year-to-date (Dollars in Millions) Special Items (Note 1) Initial gain and Discontinued Loss on Gain on Gains (losses) Mutual Field Services subsequent Operations/ Southeast transfer of on sales and Ongoing insurance h
Slide 31: Consolidated Cash Flow Reconciliation Required by SEC Regulation G
Duke Energy Corporation Consolidated Cash Flow Reconciliation Required by SEC Regulation G ($ in Millions) 2006 Estimate Primary Sources: Net income (Based on $1.90 per ongoing diluted share target) (1) a $ 2,225 Depreciation & amortization a 2,075 NBV of ongoing Crescent sales a 425 NBV of asset an