Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Q3 2003 Earnings Presentation
20 slides from Duke Energy Corporation (Holding Company)'s earnings presentation, Oct 30, 2003
Slide 1: Third Quarter 2003 Earnings Review
Third Quarter 2003 Earnings Review October 30, 2003
Slide 2: Disclosures
Disclosures Safe Harbor Statement Under the Private Securities Litigation Act of 1995 This document contains forward looking information which is subject to risks and uncertainties, including, but not limited to, changes in the utility regulatory environment, the impact of competition from other ene
Slide 3: Rick Priory, Chairman and CEO
Rick Priory Chairman and CEO Third Quarter 2003 Earnings October 30, 2003
Slide 4: Robert Brace, Executive Vice President and CFO
Robert Brace Executive Vice President and CFO Third Quarter 2003 Earnings October 30, 2003
Slide 5: Earnings per Share
Earnings per Share $0.51 • Primary Drivers for Third Quarter 2003 Before Special Items Solid results from Franchised Electric, Natural Gas Transmission, Field $0.35 Services and International Energy Before Downsides Special Items • Unfavorable weather conditions for Franchised Electric and DENA
Slide 6: Third Quarter 2003 - Special Items
Third Quarter 2003 - Special Items Earnings per Share, excluding special items below $0.35 • Franchised Electric SC settlement – rate decrement ($30 million) -2¢ Severance costs ($46 million) -3¢ • Gas Transmission Asset sales – gain on Foothills ($30 million) +2¢ Severance costs ($18 millio
Slide 7: Earnings Before Interest and Taxes
Earnings Before Interest and Taxes • Excluding special items, segment EBIT targets are on track for Natural Gas Transmission, Field Services and International Energy • Franchised Electric’s segment EBIT expected to be between $1.5 billion and $1.6 billion as a result of additional Clean Air amortiza
Slide 8: Progress Made on Financial Plans
Progress Made on Financial Plans 9Debt reduction has reached almost $1.7 billion, net of cash 2003 activity through September 30 ($ in millions) Reduction of long-term debt, trust preferred securities, short-term debt and preferred member’s interest $ 3,333 Long-term and short-term debt issued (2,81
Slide 9: 2003 Non-Strategic Asset Sales
2003 Non-Strategic Asset Sales Operating ($ in millions) Gross After-tax Income Proceeds Proceeds 2003 2004 Announced/Closed Empire Pipeline $ 237 (1) American Ref-Fuel 325 Alliance/Aux Sable 251 Northern Border units 24 TEPPCO units 114 DCP loan monetization 202 Field Services assets 91 Foothills P
Slide 10: Liquidity Position
Liquidity Position (as of September 30, 2003) Duke Duke Energy Capital Other * Credit Facilities $750 million $550 million $1.4 billion LOC Facilities n/a $790 million n/a TOTAL CAPACITY $3.5 billion CP Outstanding $252 million $209 million $134 million LOC Outstanding n/a $519 million n/a Other Bor
Slide 11: Duke Energy North America EBIT Analysis
Duke Energy North America EBIT Analysis ($ in millions) Actual Forecast Forecast 1Q-3Q03 4Q03 Total 2003 Total Gross Margin $ 513 $ 149 $ 662 Operating Expenses: O&M (234) (104) (338) Depreciation (175) (63) (238) General and Administrative (132) (62) (194) Minority Interest ** 33 5 38 Total Operati
Slide 12: Duke Energy North America Third Quarter Earnings
Duke Energy North America Third Quarter Earnings ($ in millions) Actual 3Q03 Results Total Gross Margin $ 104 Operating Expenses O&M (94) Depreciation (64) G&A (27) Minority Interest 27 Total Operating Expenses $ (158) EBIT before special items $ (54) Goodwill impairment (254) Net losses on asset sa
Slide 13: Causes for Lower EBIT in Third Quarter
Duke Energy North America Causes for Lower EBIT in Third Quarter ($ in millions) 3Q2003 Major Factors: Negative MTM and credit movements $50 Plants – Lower production and spark spreads $40 - $60 Reduced scale and scope of DETM and DENA - - gas storage and transportation $20 - $30 13
Slide 14: Production Levels and Spark Spreads
Duke Energy North America Production Levels and Spark Spreads 3Q2003 Plant Production Levels 3Q2003 Average Spark Spread 10.9 20.82 12 24 9.1 18.46 9 18 Million Million 6 $ 12 MWh 3 6 0 0 Actual Estimate Actual Estimate 14
Slide 15: Fourth Quarter Expectations
Duke Energy North America Fourth Quarter Expectations • Continued challenging market conditions Spark spread compression Soft demand • Expected 4th quarter EBIT – loss of $75 MM before special items Expect full year loss of $70 million before special items • Actions being taken: Aggressively
Slide 16: Cost Reduction Initiatives
Cost Reduction Initiatives Targeting cost reductions to reflect lower growth LABOR OPERATIONS • Expect at least $150 • Expect at least $50 million in annual savings million in annual savings • Headcount reduction of • Procurement and supply approximately 8%, or chain management about 1,900 employees
Slide 17: Summary
Summary • 2003 earnings expected to be in the range of $1.20 to $1.25 per share, excluding special items and cumulative effect of accounting change • Exceeding goals for asset sales, capital spending and debt reduction • Expecting at least $200 million in annual savings from cost reductions across t
Slide 18: Reconciliation between reported EPS and EPS before special items
Reconciliation between reported EPS and EPS before special items EPS Impact EPS 2003 Impact 2002 Tax benefit on 2002 goodwill impairment of International Energy $0.06 $ --- European gas trading -- $52 million DENA goodwill write-off -- $254 million (0.18) Severance cost associated with workforce red
Slide 19: Reconciliation of Net Debt Reduction
RECONCILIATION OF NET DEBT REDUCTION ($ in millions) DEC DCC Long-term debt, including current maturities $ 21,550 $ 16,851 Notes payable and CP 915 683 Trust preferred securities 1,408 825 Preferred members interest 61 61 Preferred stock with sinking fund requirements 25 - Total adjusted debt at De
Slide 20: Reconciliation of EBIT to Net Income
Reconciliation of EBIT to Net Income Three Months Ended Nine Months Ended September 30, September 30, (In millions, except where noted) 2003 2002 2003 2002 Earnings Before Interest and Taxes (EBIT) 352 666 2,346 2,493 Interest Expense 391 314 1,072 786 Minority Interest (Benefit) Expense (10) 14 102