Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Corporate Update (January 2004)
19 slides from Duke Energy Corporation (Holding Company)'s corporate update, Jan 7, 2004
Slide 1: Analyst Call
Analyst Call Paul Anderson CEO and Chairman David Hauser Group Vice President and CFO January 7, 2004
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, including, but not limited to, changes in the utility regulatory environment, the impact of competition from other energy supplier
Slide 3: Today's Call
Today’s Call Fourth Quarter 2003 Actions and Outlook 2004 Financial Performance 8Dividend Action 8Incentive Compensation: Target for EPS Component 8Cash Flow Outlook – Sources and Uses 8Liquidity and Credit Metrics 3
Slide 4: Expectations for Fourth Quarter 2003
Expectations for Fourth Quarter 2003 4Q03 charges expected to total approximately $3.3 billion pre-tax DENA - Change in management intent and expectations for business will result in pre-tax charges of approximately $2.8 billion • More than half relates to impairments for Southeastern merchant gen
Slide 5: 2003: Impact on Full-Year Earnings
2003: Impact on Full-Year Earnings Reported earnings expected to be in the range of $(1.45) - $(1.50) per share Ongoing earnings still expected in the range of $1.20 - $1.25 per share 5
Slide 6: 2004 Dividend
2004 Dividend Maintaining current dividend of $1.10 per share supported by: • Predictable and steady cash flows from major operations – Duke Power, Gas Transmission, Field Services and Crescent Resources • Continued improvement of balance sheet metrics due to significant debt reduction, asset sale
Slide 7: 2004 Overview
2004 Overview Management EPS incentive threshold set at $1.10 per share • Target level for EPS component set at $1.20 per share • No payout for any incentive components for results below $1.10 per share Capital expenditures of approximately $2.2 billion • Maintenance of $1.5 billion • Expansion
Slide 8: Duke Energy: 2004 Cash Flow
Duke Energy: 2004 Cash Flow ($ in millions) Primary Sources: 2004 Net income (based on $1.20 per share target) $ 1,100 Depreciation & amortization 2,075 NBV of ongoing Crescent inventory sales 550 NBV of energy asset sales 1,500 Deferred income taxes 450 Other sources/(uses), net (225) Subtotal $ 5,
Slide 9: Duke Capital: 2004 Cash Flow
Duke Capital: 2004 Cash Flow ($ in millions) Primary Sources: 2004 Net income $ 450 Depreciation & amortization 1,050 NBV of ongoing Crescent inventory sales 550 NBV of energy asset sales 1,500 Deferred income taxes 475 Other sources/(uses), net 25 Total Sources $ 4,050 Primary Uses: Capital expendi
Slide 10: Duke Energy: Capital Structure
Duke Energy: Capital Structure ($ in millions) 2003E 2004E Debt Issuances $ 3,200 $ 1,700 Debt Maturities & Reductions * $ (5,190) $ (5,700) Ending Debt Balance $ 23,000 $ 19,000 Debt/Total Capitalization ** $ 60% $ 52% * Includes the effect of changes in commercial paper. ** Includes the effect of
Slide 11: Liquidity Position
Liquidity Position (as of December 31, 2003) Duke Duke Energy Capital Other * Total Credit Facilities $750 million $550 million $1.3 billion $2.6 billion LOC Facilities n/a $790 million n/a $790 million TOTAL CAPACITY $3.4 billion CP Outstanding $227 million n/a $148 million $375 million LOC Outstan
Slide 12: Debt Reductions Improve FFO Ratios
Debt Reductions Improve FFO Ratios Duke Energy Corporation FFO Interest Coverage FFO / Average Debt 6 36% 5 24% 4 12% ’02 – ’05 average: 5.3x ’02 – ’05 average: 27% 3 0% 2002A 2003 2004 2005 2002A 2003 2004 2005 Duke Energy Corporation (BBB+/Baa1) S&P ratios for “BBB” range (5) 12
Slide 13: Debt Reductions Improve FFO Ratios
Debt Reductions Improve FFO Ratios Duke Capital Corporation FFO Interest Coverage FFO / Average Debt 6 36% 5 24% 4 12% 3 ’02 – ’05 average: 4.7x ’02 – ’05 average: 26% 2 0% 2002A 2003 2004 2005 2002A 2003 2004 2005 Duke Capital Corporation (BBB/Baa3) S&P ratios for “BBB” range (6) 13
Slide 14: Summary
Summary • Approximately $3.3 billion in pre-tax charges expected in 4Q03 reflect management’s intention to operate smaller and more focused DENA and DEI businesses • Dividend of $1.10 per share supported by steady cash flow and expectation of modest growth in earnings • Financial flexibility and bal
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Slide 16: Special Items Reconciliation
Duke Energy Corporation Special Items Reconciliation 2003 (dollars in millions except per share amounts) Pre-tax Tax Amount Effect EPS Impact Ongoing EPS $1.20 to $1.25 Fourth quarter special items: DENA plant impairments and DETM charges ($2,800) $1,039 (1.95) DENA redesignation of power contracts
Slide 17: Cash Flow Reconciliation Required by SEC Regulation G
Duke Energy Corporation Consolidated and Duke Capital Corporation Consolidated Cash Flow Reconciliation Required by SEC Regulation G ($ in Millions) 2004 Duke Energy Duke Capital Excerpts from Duke Energy Corporation Analyst Call (January 7, 2004) Primary Sources of Cash per Presentation: Net income
Slide 18: Duke Energy Coverage Ratio Reconciliations
Duke Energy Corporation Consolidated Coverage Ratio Reconciliations Required by SEC Regulation G (1) ($ in Billions) Actual Forecast 2001 2002 2003 2004 2005 Funds From Operations (FFO) to Average Debt: Numerator Net cash provided by operating activities per U.S. GAAP Consolidated Statement of Cash
Slide 19: Duke Capital Coverage Ratio Reconciliations
Duke Capital Corporation Consolidated Coverage Ratio Reconciliations Required by SEC Regulation G (1) ($ in Billions) Actual Forecast 2001 2002 2003 2004 2005 Funds From Operations (FFO) to Average Debt: Numerator Net cash provided by operating activities per U.S. GAAP Consolidated Statement of Cash