Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — FY2004 Earnings Presentation
24 slides from Duke Energy Corporation (Holding Company)'s earnings presentation, Feb 2, 2005
Slide 1: 2004 Earnings Review and 2005 Outlook
2004 Earnings Review and 2005 Outlook February 2, 2005 Paul Anderson Chairman and Chief Executive Officer David Hauser Group Vice President and Chief Financial Officer
Slide 2: Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Act of 1995 This document contains forward looking information which is subject to risks and uncertainties that could cause actual results to be different than those contemplated, including, but not limited to, changes in state, federal o
Slide 3: Annual Highlights for 2004
Annual Highlights for 2004 2004 2003 Reported Basic EPS $ 1.59 $ (1.48) Special Items (0.21) 2.76 EPS excluding special items $ 1.38 $ 1.28 ■ Regulated businesses delivered solid earnings and strong cash flow ■ Field Services delivered record earnings; benefited from strong NGL prices ■ Crescent Res
Slide 4: Special Items for 2004
Special Items for 2004 Franchised Natural Gas Field Crescent Total Segment Electric Transmission Services DENA International Resources Other and (Cont Ops) (Cont Ops) (Cont Ops) (Cont Ops) (Cont Ops) Other EBIT Reported Segment EBIT $ 1,467 $ 1,310 $ 380 $ (535) $ 222 $ 240 $(77) $ 3,007 Special Ite
Slide 5: 2004 Scorecard
2004 Scorecard Goal Dec 31, 2004 (1) $1.20 EPS for target incentive payout $1.20/sh $1.38/sh (2) Lower debt balances $3.5 to $4 billion $4.6 billion (3) Sell non-strategic asset positions $1.5 billion $3.1 billion Reduce regulatory and litigation risk DENA: mark-to-market exposure Mitigate Cash and
Slide 6: Highlights for Fourth Quarter 2004
Highlights for Fourth Quarter 2004 Ongoing Segment EBIT ■ Franchised Electric and Natural Gas ($ in millions) Transmission delivered solid earnings $765 ■ Field Services benefited from strong $650 Crescent Resources * commodity prices International * ■ Lower losses at DENA were primarily due to lowe
Slide 7: Expectations for 2005 and Beyond
Expectations for 2005 and Beyond ■ Franchised Electric ● Ongoing segment EBIT growth: Flat to 2% CAGR through 2007 ● Evaluating future requirements to fulfill increasing demand ■ Natural Gas Transmission ● Ongoing segment EBIT growth: 3 - 5% CAGR through 2007 ● Growing gas demand driving additional
Slide 8: Expectations for 2005 and Beyond
Expectations for 2005 and Beyond ■ Field Services ● 2005 ongoing segment EBIT expected in the range of $350 - $500 million based upon crude oil prices averaging between $30 - $40/bbl ● NGL production hedged as of Dec 31, 2004 ● 2005: 64% at $38 per barrel ● 2006: 30% at $43 per barrel ● Anticipate d
Slide 9: Expectations for 2005 and Beyond
Expectations for 2005 and Beyond ■ Duke Energy North America ● Expect 2005 ongoing segment EBIT loss of $150 million ● EBIT improvements driven by higher gross margin and lower operating costs ● Sale of last remaining deferred plant expected to close in 1Q05 ● Focus on defining a sustainable busines
Slide 10: Expectations for 2005 and Beyond
Expectations for 2005 and Beyond ■ International Energy ● Ongoing segment EBIT growth: 2 – 3% CAGR through 2007 ● Increase sales and marketing of available capacity ● Optimize energy output and operating efficiencies ● Reduce costs ■ Crescent Resources ● 2005 ongoing segment EBIT expected to trend b
Slide 11: Expectations for 2005 and Beyond
Expectations for 2005 and Beyond ■ Other ● Run rate of approximately $200 million in net expenses ● Primarily corporate overhead ■ Income Taxes ● Effective tax rate in the low- to mid-30% range 11
Slide 12: Duke Energy: Cash Flow
Duke Energy: Cash Flow ($ in millions) 2005 Estimate Primary Sources: Net income $ 1,525 (Based on $1.60 per ongoing basic share target) Depreciation & amortization 2,125 NBV of ongoing Crescent sales 475 Cash tax carryforwards 450 Other sources/(uses), net (150) Total Sources $ 4,425 Primary Uses:
Slide 13: Incentive Plans
Incentive Plans ■ 2005 short-term incentive plan ● Earnings per share incentive ● Incentive target of $1.60 per ongoing basic share ● Minimum payout at $1.45 per ongoing basic share ● Also includes ROCE and individual performance objectives ● 5% reduction in management incentive in the event of any
Slide 14: Duke Energy 2005 Charter
Duke Energy We are Duke Energy, a leading energy company located in the Americas with an 2005 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
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Slide 16: Non-GAAP Reconciliation Schedules
Duke Energy Corporation Non-GAAP Reconciliation Schedules Year-end 2004 Earnings Release 2005 and Beyond Ongoing Segment EBIT and Related Growth Percentages The Company’s slides for the Year-end 2004 Earnings Review include a discussion of forecasted ongoing EBIT for 2005 for certain segments and, f
Slide 17: Twelve Months Ended December 31, 2004 Ongoing Basic Earnings per Share
Duke Energy Corporation Twelve Months Ended December 31, 2004 Ongoing Basic Earnings per Share (amounts in millions, except EPS) Pre-tax Amount Tax Effect Basic EPS Impact Special Items: First Quarter 2004 - Gain on sale of Australian assets $256 ($18) $0 26 - Net loss on sale of DENA assets, primar
Slide 18: Twelve Months Ended December 31, 2003 Ongoing Basic Earnings per Share
Duke Energy Corpora ion Twelve Months Ended December 31, 2003 Ongoing Basic Earnings per Share (amounts in millions, except EPS) Pre-tax Amount Tax Effect Basic EPS Impact Special Items: First Quarter 2003 - Cumula ive effect of change in accounting principle ($256) $94 ($0.18) - Net gains on asset
Slide 19: Reported to Ongoing Segment and Other EBIT Reconciliation, December 2004
DUKE ENERGY REPORTED TO ONGOING SEGMENT AND OTHER EBIT RECONCILIATION December 2004 Quarter and Year-to-date (Dollars in Millions) Special Items Gains Gains (Losses) on Impairment Early Enron/ Adjustment to (Losses) Sales of and Other Contract California Captive Reported Ongoing on Sales Equity Rela
Slide 20: Reported to Ongoing Segment EBIT Reconciliation, December 2003
DUKE ENERGY REPORTED TO ONGOING SEGMENT EBIT RECONCILIATION December 2003 Quarter and Year-to-date (Dollars in Millions) Special Items Severance and Settlement DENA Related Costs with the DENA Plant Redesignation Associated Settlement Commodity Gains (Losses) Impairments of Hedging Environmental wit
Slide 21: Consolidated Cash Flow Reconciliation Required by SEC Regulation G
Duke Energy Corporation Consolidated Cash Flow Reconciliation Required by SEC Regulation G ($ in Millions) 2005 Duke Energy Excerpts from Duke Energy Corporation Earnings Call (February 2, 2005) Primary Sources of Cash per Presentation: Net income (based on $1.60 ongoing basic per share target) (a)
Slide 22: GAAP Reconciliation - Anticipated Cash Proceeds and Tax Benefits from Sale of Grays Harbor
Duke Energy Corporation Fourth Quarter 2004 Earnings and 2005 Outlook GAAP Reconciliation - Anticipated Cash Proceeds and Tax Benefits from Sale of Grays Harbor (in millions) Cash Proceeds $ 21 Tax benefits 95 Total $ 116
Slide 23: Reconciliation of Debt Pay Down to Balance Sheet
Duke Energy Reconciliation of Debt Pay Down to Balance Sheet (in millions) 12/31/2003 12/31/2004 Difference Long-term debt $20,622 $16,932 ($3,690) Current maturities of LTD and preferred stock 1,200 1,832 632 Notes payable and commercial paper 130 68 (62) Total Debt and Trust Preferred Securities 2
Slide 24: Duke Energy North America Segment EBIT Analysis
Duke Energy North America Segment EBIT Analysis ($ in millions) 1Q04 2Q04 3Q04 4Q04 YTD Actual Total Gross Margin from Accrual Portfolio $ 47 $ 103 $ 83 $ 81 $ 314 Expenses: O&M (74) (76) (61) (54) (265) Depreciation (46) (39) (39) (39) (163) General and administrative (45) (44) (35) (47) (171) Mino