Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Merger or Acquisition (May 2005)
21 slides from Duke Energy Corporation (Holding Company)'s merger presentation, May 2005
Slide 1: Analyst Meeting
Analyst Meeting May 2005 Paul Anderson Chairman and CEO, Duke Energy Jim Rogers Chairman, President and CEO, Cinergy
Slide 2: Introduction
Introduction ■ Welcome ■ Introduction of speakers ● Cinergy ● Duke Energy 2
Slide 3: Forward Looking Statements
Forward Looking Statements 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
Slide 4: Additional Information and Where to Find It
Additional Information and Where to Find It In connection with the proposed transaction, a registration statement of Deer Holding Corp., which will include a joint proxy statement of Duke and Cinergy, and other materials will be filed with the SEC. WE URGE INVESTORS TO READ THE REGISTRATION STATEMEN
Slide 5: Regulation G
Regulation G This document includes certain non-GAAP financial measures as defined under SEC Regulation G. A reconciliation of those measures to the most directly comparable GAAP measures is included in the printed version of these slides which can be downloaded from our investor relations websites
Slide 6: Duke Energy Strategic Rationale
Duke Energy Strategic Rationale ■ Merger will strengthen business platforms and will increase value immediately and in the longer term ■ Creates immediate value ● DUK board intends to increase the annual dividend 12.7% to $1.24 per share effective September 2005 ● Accretive to earnings ● Approximate
Slide 7: Cinergy Strategic Rationale
Cinergy Strategic Rationale ■ Transforming transaction providing substantial value to stakeholders immediately and over the long term ● 13.4% premium for current Cinergy shareholders ● Maintains dividend neutrality ■ Brings together two premier franchised electric utility platforms ■ Mitigates risk
Slide 8: Transaction Specifics
Transaction Specifics ■ Delaware holding company – Duke Energy Corporation ■ Consideration – 100% stock ● Cinergy shareholders will receive 1.56 shares of DUK for each CIN share ● Premium of 13.4% based on May 6 closing prices ● Post merger, Cinergy shareholders will hold approximately 24% of Duke s
Slide 9: Key Operational Metrics
Key Operational Metrics As of December 31, 2004 Duke Cinergy Combined Number of employees 21,500 7,850 29,350 Electric customers (millions) 2.2 1.5 3.7 Gas distribution customers (millions) 1.2 0.5 1.7 Generation assets owned (MW) (1) 32,000 14,000 46,000 Generation assets operated (MW) (1) 35,000 1
Slide 10: Merger Combines Two Low-Cost Operators
Merger Combines Two Low-Cost Operators Cinergy Duke Energy Midwest Southeast Regulated Regulated Generation Generation Coal 5,488 MW Nuclear 5,020 MW Gas 1,263 MW Coal 7,754 MW Oil 259 MW Gas 2,446 MW Hydro 45 MW Hydro 2,810 MW Midwest Unregulated Generation Midwest Coal 4,186 MW Unregulated Generat
Slide 11: Regulatory Timeline
Regulatory Timeline ■ State regulatory approvals ● File applications by June 30 ● Expect approvals within 9 months after filing ■ FERC ● Filing expected in July ● Expect approvals within 10 months after filing ■ SEC ● Approval expected 4 – 6 weeks after obtaining all state and FERC regulatory approv
Slide 12: Merger Cost Savings
Merger Cost Savings ■ Approximately $400 million in annual Five-Year Savings Summary ($ in millions) pre-tax cost savings, before costs to ~$425 ~$450 ~$400 achieve, by year 3 ~$350 ■ Savings are ~50% non-regulated and ~$275 50% regulated, before sharing between customers and shareholders ■ Costs-to
Slide 13: Cost Savings Distribution
Cost Savings Distribution Origin of Savings before Costs to Achieve (Year 3) ($ in millions) Total ~$400 Non-Regulated Corporate Utility ~$130 ~$190 ~$80 ■ Workforce reductions of about 1,500, or about 50% of total savings: ● Corporate and shared services ● Regulated utility back-office ● Non-regula
Slide 14: Financial Highlights
Financial Highlights ■ Accretive to earnings ● Accretion of 10¢ to 15¢ after completion of costs to achieve, based on 2006/2007 consensus Wall Street estimates * ■ Tax-efficient transaction ■ Improves risk profile ■ Good cash generation ■ Dividend payout ratio expected to approximate 70% * This does
Slide 15: Other Financial Items
Other Financial Items ■ Key credit metrics ● Debt to total capitalization: about 45% ● FFO interest coverage*: 5.5 – 6.0x ■ Incremental goodwill of approximately $4 billion ■ Stock repurchase programs ● 30 million program ● 6.6 million shares repurchased as of May 6th ● Repurchase will continue ● 20
Slide 16: Other Considerations
Other Considerations ■ Initial Board of Directors – 10 named by Duke, 5 named by Cinergy ■ Corporate headquarters – Charlotte, North Carolina ■ Headquarter offices for PSI – Plainfield, Indiana ■ Headquarter offices for CG&E and Union Light Heat & Power – Cincinnati, Ohio ■ Duke Power will continue
Slide 17: Functional Organization
Functional Organization Paul Anderson Chairman Jim Rogers CEO Fred Fowler Electric President & CEO Other Operations Gas Operations Gas Pipelines Duke Power Crescent Resources Union Gas CG&E (a) Corporate Field Services PSI Merchant Generation International Energy (a) Includes Cinergy’s gas distribut
Slide 18: Total Shareholder Return
Total Shareholder Return – 5 years 200 Cinergy 150 100 Percent Duke Energy 50 0 -50 1Q00 1Q01 1Q02 1Q03 1Q04 1Q05 Source: Bloomberg 18
Slide 19: Next Steps
Next Steps ■ Transition Committee ● Anderson and Rogers to co-chair ● Subcommittees with co-chairs ■ Begin filing for approvals 19
Slide 20: Summary
Summary ■ Merger will enhance strong business platforms ■ Creates immediate and long-term value ■ Increased scale and scope provides greater portfolio flexibility ■ Merchant power business gains fuel and geographic diversity ■ 12.7% increase to current Duke annual dividend ● Maintains dividend neutr
Slide 21: Duke ERGY.
Duke ERGY. IG Energy. @IN