Duke Energy 02/01/06_Slides

2005 Earnings Review
and 2006 Outlook
February 1, 2006

Paul Anderson
Chairman and Chief Executive Officer

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 forward-looking statements include statements regarding benefits of the
proposed mergers and restructuring transactions, integration plans and expected synergies, anticipated future financial
operating performance and results, including estimates of growth. These statements are based on the current
expectations of management of Duke Energy. There are a number of risks and uncertainties that could cause actual
results to differ materially from the forward-looking statements included in this document. For example, (1) the companies
may be unable to obtain shareholder approvals required for the transaction; (2) the companies may be unable to obtain
regulatory approvals required for the transaction, or required regulatory approvals may delay the transaction or result in
the imposition of conditions that could have a material adverse effect on the combined company or cause the companies
to abandon the transaction; (3) conditions to the closing of the transaction may not be satisfied; (4) problems may arise in
successfully integrating the businesses of the companies, which may result in the combined company not operating as
effectively and efficiently as expected; (5) the combined company may be unable to achieve cost-cutting synergies or it
may take longer than expected to achieve those synergies; (6) the transaction may involve unexpected costs or
unexpected liabilities, or the effects of purchase accounting may be different from the companies’ expectations; (7) the
credit ratings of the combined company or its subsidiaries may be different from what the companies expect; (8) the
businesses of the companies may suffer as a result of uncertainty surrounding the transaction; (9) the industry may be
subject to future regulatory or legislative actions that could adversely affect the companies; (10) commercial, industrial
and residential growth in the companies’ service territories may not increase as anticipated; (11) the weather and other
natural phenomena could adversely affect the companies; and (12) the companies may be adversely affected by other
economic, business, and/or competitive factors. Additional factors that may affect the future results of Duke Energy and
Cinergy are set forth in their most recent Form 10-Q and other filings with the Securities and Exchange Commission
(quot;SECquot;), which are available at www.duke-energy.com/investors and www.cinergy.com/investors, respectively. Duke
Energy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new
information, future events or otherwise.

2

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 Cinergy, and
other materials have been filed with the SEC and are publicly available. WE URGE INVESTORS TO READ THE DEFINITIVE
JOINT PROXY STATEMENT-PROSPECTUS WHEN IT BECOMES AVAILABLE AND THESE OTHER MATERIALS
CAREFULLY BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT DUKE ENERGY, CINERGY, DUKE ENERGY
HOLDING CORP., AND THE PROPOSED TRANSACTION. Investors will be able to obtain free copies of the joint proxy
statement-prospectus as well as other filed documents containing information about Duke Energy and Cinergy at www.sec.gov,
the SEC’s Web site. Free copies of Duke Energy’s SEC filings are also available on Duke Energy’s Web site at www.duke-
energy.com/investors, and free copies of Cinergy’s SEC filings are also available on Cinergy’s Web site at
www.cinergy.com/investors.

Participants in the Solicitation

Duke Energy, Cinergy and their respective executive officers and directors may be deemed, under SEC rules, to be participants
in the solicitation of proxies from Duke Energy’s or Cinergy’s stockholders with respect to the proposed transaction. Information
regarding the officers and directors of Duke Energy is included in its definitive proxy statement for its 2005 annual meeting filed
with the SEC on March 31, 2005. Information regarding the officers and directors of Cinergy is included in its definitive proxy
statement for its 2005 annual meeting filed with the SEC on March 28, 2005. More detailed information regarding the identity of
potential participants, and their direct or indirect interests, by securities, holdings or otherwise, will be set forth in the registration
statement and proxy statement and other materials to be filed with the SEC in connection with the proposed transaction.

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 website at: www.duke-energy.com/investors/publications/gaap/
3

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 charge for storm damage and higher O&M
Natural Gas Transmission reported higher earnings on U.S. business expansion, new
■
Canadian assets and continued benefits from the stronger Canadian dollar
Field Services delivered another record year, benefiting from strong commodity prices
■
and gas marketing
International Energy reported record earnings on improving operations in Latin
■
America, favorable foreign currency translation of the Brazilian real and higher
margins at National Methanol
Crescent Resources set an earnings record, boosted by sales of multi-family projects,
■
residential lots and legacy land
DENA’s continuing operations, which are reported in “Other”, ended the year with an
■
ongoing loss of about $120 million
4
** Adjustments include special items and discontinued operations not associated with Crescent Resources

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 transaction closed in early January
●
Essentially eliminated our credit, collateral, market and legal risks
●
associated with DENA’s derivative trading positions
● Novation process on plan
Including the Barclays transaction, about 95% of the trading and
●
marketing portfolio has been transferred
More than 85% of the gas transportation, gas storage and structured
●
contracts have been sold
● Certain contracts will go away with the sale of the generation assets
Expect to complete disposition of these operations by mid-2006
■
5

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 vote targeted for March 10th
■

6

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
Earnings per share incentive
■
Incentive target of $1.90 per ongoing diluted share, which is
●
approximately 10% above ongoing EPS results for 2005
● Minimum threshold at $1.75 per ongoing diluted share, which exceeds
the ongoing diluted EPS for 2005
5% reduction in management incentive in the event of any employee,
■
contractor or sub-contractor fatality

7

2006 Outlook

Fred Fowler
President and Chief Operating Officer

Expectations for 2006
Duke Power
■
2006 ongoing segment EBIT is anticipated to be
●
Franchised
essentially flat compared with 2005
Electric
Assumptions
■
Excludes merger-related costs-to-achieve, cost savings
●
Duke Power
and sharing
● Customer growth of 2%
● Normal weather
● Clean Air amortization continues on plan; actual cash
expenditures will be about $400 million
Expectations for Cinergy’s franchised electric and gas
■
businesses will be provided after merger closing

9

Natural Gas Transmission
■
2006 ongoing segment EBIT is also anticipated to be
●
Natural Gas
essentially flat compared with 2005
Transmission
Assumptions
■
Higher earnings from expansion projects will be offset by:
●
DEGT
● Approximately $25 million of interest expense at Gulfstream
Union Gas
● Recent formation of the Canadian income trust
● Demand growth for natural gas supplies will provide
opportunities to deliver annual long-term ongoing earnings
growth in the range of 3 – 5%

10

Field Services
■
2006 ongoing equity earnings are anticipated to be
●
Field
approximately $500 million
Services
Assumptions
■
Average crude oil price of $61 per barrel
●
DEFS
Equity earnings sensitivity
■
$1 per barrel increase in crude oil prices increases equity
●
earnings by approximately $15 million
● Partially offset by approximately $5 million in Other due to
de-designated hedges reported there

11

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 provided after merger closing

12

Crescent Resources
■
2006 ongoing segment EBIT from continuing and
●
Crescent
discontinued operations is anticipated to be approximately
Resources
$250 million
Crescent’s book value at year-end 2005 was $1.3 billion
■
Crescent
Expected to contribute at least $100 million of positive
■
Resources
net cash flow to Duke Energy

13

Other EBIT for current Duke Energy operations
■
Results for 2006 are anticipated to be approximately $330
●
million in ongoing net expenses, including DENA’s
Other
continuing operations
● $20 million increase in “Other”, excluding DENA, is due to
an accounting change related to timing of recognition of
DENA’s
executive stock awards and a shift in shared services costs
continuing
from the business units to corporate governance
operations
DukeNet
DENA’s Continuing Operations
■
Corporate
2006 ongoing losses are expected to be approximately
governance ●
Other $110 million
parent-level
● Lower gross margins in the Midwest are partially offset by
activities
lower G&A expenses and the wind-down of DETM
compared with 2005
Expectations for Cinergy’s non-regulated businesses
■
will be provided after merger closing
14

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 million for CG&E’s transmission and distribution business
●
● $10 million for ULH&P
● $10 million for PSI
Sales growth rate of approximately 1.6%
●
● No synfuel earnings - adjustments are handled at the Duke Energy level

15

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 expectations
■
Approximately $140 million in merger cost savings
●
● Approximately $140 million of cost sharing with customers
● Cost sharing assumed to commence June 1st
● $140 million in 2006; $90 million in 2007

16

2006 Outlook

David Hauser
Group Vice President and Chief Financial Officer

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 Services and National Methanol when crude
exceeds $60 per barrel
Share buybacks
■
SEC restrictions prohibit the repurchase of any meaningful number of
●
shares until after the shareholder vote on the merger
● While no definitive decisions have been made, our plans include a stock
buyback of approximately $1 billion in 2006
Ongoing mark-to-market earnings are not excluded in the $1.90
■

18

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 sources/(uses), net (650)
Total Sources $ 6,250
Primary Uses:
Capital expenditures $ (4,325)
Dividends (1,450)
Total Uses $ (5,775)

$ 475
Positive Net Cash

19

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 465 465 20 950
Total $2,195 $865 $1,265 $4,325

20

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
■
Increased interest expense associated with Cinergy’s debt is partially
●
offset by the deconsolidation of Field Services’ debt
FFO interest coverage is expected to be 4.8x
■
Effective tax rate expected to be approximately 35%
■
Approximately 5 cents related to interest income on prior period tax
■
credit

21

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 energy services
To be an energy industry leader in a new era of growth, we must:
■ Establish an industry-leading electric power platform through successful execution of the merger
with Cinergy.
■ Continue to build a high-performance culture focused on safety, diversity and inclusion.
■ Deliver on our 2006 financial objectives and position the company for growth in 2007 and beyond.
■ Complete the Duke Energy North America exit and pursue strategic portfolio opportunities.
■ Build credibility through leadership on key policy issues, transparent communications and
excellent customer service.

We will be successful when:
■ Our investors realize a superior return on their investment.
■ Our customers and suppliers benefit from our business relationships.
■ The communities in which we operate value our citizenship.
■ Every employee starts each day with a sense of purpose, and ends each day safely with a
sense of accomplishment.
22

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 of $1.75. This EPS measure is used for employee incentive
bonuses and should track ongoing diluted EPS, which is a non-GAAP financial measure as it represents diluted EPS from
continuing operations plus the per-share effect of any discontinued operations from the Company’s Crescent Resources real
estate unit, adjusted for the per-share impact of special items. Special items represent certain charges and credits which
management believes will not be recurring on a regular basis. The most directly comparable GAAP measure for ongoing diluted
EPS is reported diluted EPS from continuing operations which includes the impact of special items. Due to the forward-looking
nature of this non-GAAP financial measure, information to reconcile this non-GAAP financial measure to the most directly
comparable GAAP financial measure is not available at this time as the Company is unable to project any special items for 2006.

2006 and Beyond Ongoing Segment EBIT and Related Growth Percentages

The Company’s slides and prepared remarks for the February 1, 2006 Earnings Conference Call include a discussion of
forecasted ongoing EBIT for 2006 for certain segments, including a discussion of ongoing equity earnings for Field Services,
Other, and ongoing EBIT contributions for Cinergy’s operations post merger, in addition to, for certain segments, a discussion of
a forecasted ongoing segment EBIT growth rates, which are based on historical and forecasted ongoing segment EBIT.
Ongoing segment or Other EBIT, and related growth rates, are non-GAAP financial measures as they represent reported
segment or Other EBIT adjusted for “special items,” which represent certain charges and credits which management believes
will not be recurring on a regular basis. The most directly comparable GAAP measure for ongoing segment or Other EBIT is
reported segment or Other EBIT, which represents EBIT from continuing operations, including any “special items.” Due to the
forward-looking nature of forecasted ongoing segment or Other EBIT and related growth rates, for future periods, information to
reconcile these non-GAAP financial measures to the most directly comparable GAAP financial measures is not available at this
time as the Company is unable to project any “special items” for any future periods.

23

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 and discontinued operations for 2006. As the Company’s segment GAAP
measure is EBIT from continuing operations, the combination of segment EBIT from continuing and discontinued operations
represents a non-GAAP financial measure. The most directly comparable GAAP measure for Crescent’s segment EBIT from
continuing and discontinued operations is reported segment EBIT from continuing operations. Information to reconcile this
non-GAAP financial measure to the most directly comparable GAAP financial measure is not available at this time as the
Company is unable to forecast those Crescent operations, if any, which will be discontinued operations during 2006.

Post-2007 Ongoing Diluted EPS Growth

The Company’s prepared remarks for the February 1, 2006 Earnings Conference Call include a discussion of the expected
range of growth in ongoing diluted EPS after 2007. These percentages are based on anticipated ongoing diluted EPS amounts
for future periods. This ongoing diluted EPS measure is a non-GAAP financial measure as it represents diluted EPS from
continuing operations plus the per-share effects of any discontinued operations from the Company’s Crescent Resources real
estate unit, adjusted for the impact of special items. Special items represent certain charges and credits which management
believes will not be recurring on a regular basis. Management believes that the presentation of ongoing diluted EPS provides
useful information to investors, as it allows them to more accurately compare the Company’s ongoing performance across all
periods. The most directly comparable GAAP measure for ongoing diluted EPS is reported diluted EPS from continuing
operations which includes the impact of special items. Due to the forward-looking nature of ongoing diluted EPS for future
periods, information to reconcile such non-GAAP financial measure to the most directly comparable GAAP financial measure
is not available at this time as the Company is unable to forecast any special items for future periods.

24

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 (numerator) is defined as
net cash provided by operating activities on a GAAP basis. Adjustments to the GAAP number primarily include changes in
working capital and adjustments for off-credit entities. Cash interest paid (numerator) and interest expense (denominator) on a
GAAP basis are adjusted for interest paid on off-credit entity debt and capitalized interest, which includes AFUDC interest.

25

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 12/31/2005 1,032

Duke Energy ownership % 50%

Pro-Forma Equity Earnings 516

Adjustment for 2005 hedge impacts (238)

Pro-Forma Pretax Earnings Impact, Net of Hedging $ 278

Year-Ended
12/31/2006

Projected 2006 DEFS Equity Earnings (50%) $ 500

Pro-Forma Pretax Earnings Impact, Net of Hedging (278)

Net Increase $ 222 (approximately $220 million)

DUKE ENERGY CORPORATION
ONGOING TO REPORTED EARNINGS RECONCILIATION
December 2004 Quarter-to-date
(Dollars in Millions) Special Items (Note 1)

Discontinued
Gains (losses)
Gains Adjustment Operations,
on sales and
Total Reported
Ongoing (Losses) on to Captive Loss on excluding
impairments
Adjustments Earnings
Earnings sale Insurance Asset Crescent
of equity
of assets Reserves Exchanges Resources
investments
SEGMENT EARNINGS BEFORE INTEREST AND TAXES
FROM CONTINUING OPERATIONS

Franchised Electric $ 252 $ - $ - $ - $ - $ - $ - $ 252

Gas Transmission 328 4 11 - - - 15 343

Field Services 124 - - - - - - 124

Duke Energy North America (41) (30) A - - - - (30) (71)

International Energy 64 (3) - - - - (3) 61

Crescent 50 - - - - - - 50

Total reportable segment EBIT 777 (29) 11 - - - (18) 759

Other (80) - (1) 64 B (4) C - 59 (21)

Total reportable segment EBIT and other EBIT $ 697 $ (29) $ 10 $ 64 $ (4) $ - $ 41 $ 738

EARNINGS FOR COMMON

Total reportable segment EBIT and other EBIT $ 697 $ (29) $ 10 $ 64 $ (4) $ - $ 41 $ 738
Foreign Currency Translation Gains (Losses) 1 - - - - - - 1
Interest Income and other 18 - - - - - - 18
Interest Expense (297) - - - - - - (297)
Minority Interest (Expense) Benefit - Interest/Income Tax Expense 11 - - - - - - 11
Income taxes on continuing operations (154) 10 (3) (22) 1 - (14) (168)
Discontinued operations, net of taxes 1 - - - - 54 54 55
Trust Preferred/Preferred Dividends (2) - - - - - - (2)

Total Earnings for Common $ 275 $ (19) $ 7 $ 42 $ (3) $ 54 $ 81 $ 356

$ 0.29 $ (0.02) $ 0.01 $ 0.04 $ - $ 0.06 $ 0.09 $ 0.38
EARNINGS PER SHARE, BASIC

$ 0.28 $ (0.02) $ 0.01 $ 0.04 $ - $ 0.05 $ 0.08 $ 0.36
EARNINGS PER SHARE, DILUTED

Note 1 - Amounts for special items are entered net of minority interest

A - Net of minority interest of $20 million.

B - Recorded in Operation, maintenance and other on the Consolidated Statements of Operations.

C - Recorded in Other income and expenses, net on the Consolidated Statements of Operations.

Weighted Average Shares (reported and ongoing) - in millions

Basic 947

Diluted 983

December 2005 Quarter-to-date
Discontinued
MTM change on
Loss on MTM impact of de- Operations/
Field Services de-designated
Ongoing Southeast designated Cumulative Total Reported
hedge de- Field Services Tax Adjustments
Earnings DENA contract Southeast DENA Effect of Change Adjustments Earnings
designation, net hedges for 2005,
termination hedges in Accounting
net
Principle

Franchised Electric $ 279 $ - $ - $ - $ - $ - $ - $ - $ 279

Gas Transmission 344 - - - - - - - 344

Field Services 127 - 35 B - - - - 35 162

Duke Energy North America - - - - - - - - -

International Energy 97 - - - - - - - 97

Crescent 104 - - - - - - - 104

Total reportable segment EBIT 951 - 35 - - - - 35 986

Other (130) (75) A - 64 C (9) D - - (20) (150)

Total reportable segment EBIT and other EBIT $ 821 $ (75) $ 35 $ 64 $ (9) $ - $ - $ 15 $ 836

EARNINGS FOR COMMON

Total reportable segment EBIT and other EBIT $ 821 $ (75) $ 35 $ 64 $ (9) $ - $ - $ 15 $ 836
Foreign Currency Translation Gains (Losses) 1 - - - - - - - 1
Interest Income and other 22 - - - - - - - 22
Interest Expense (249) - - - - - - - (249)
Minority Interest (Expense) Benefit - Interest/Income Tax Expense (1) - - - - - - - (1)
Income taxes on Continuing Operations (196) 28 (13) (22) 3 12 - 8 (188)
Discontinued Operations, net of taxes 5 - - - - - 184 E,F 184 189
Cumulative Effect of Change in Accounting Principle - - - - - - (4) (4) (4)
Trust Preferred/Preferred Dividends (5) - - - - - - - (5)

Total Earnings for Common $ 398 $ (47) $ 22 $ 42 $ (6) $ 12 $ 180 $ 203 $ 601

$ 0.43 $ (0.05) $ 0.02 $ 0.05 $ (0.01) $ 0.01 $ 0.20 $ 0.22 $ 0.65

$ 0.42 $ (0.04) $ 0.02 $ 0.04 $ (0.01) $ 0.01 $ 0.19 $ 0.21 $ 0.63


A - Recorded in Gains (Losses) on Sales of Other Assets, net on the Consolidated Statements of Operations.

B - Fourth quarter settlement of the 2005 portion of the Field Services de-designated hedges as of 2/22/05, recorded in Equity in earnings of unconsolidated
affiliates on the Consolidated Statements of Operations.

C - Recorded in Other income and expenses, net on the Consolidated Statements of Operations.

D - Recorded in Non-regulated electric, natural gas, natural gas liquids and other revenues on the Consolidated Statements of Operations.

E - Excludes Crescent discontinued operations.

F - Primarily DENA discontinued operations. Recorded in (Loss) Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations.


Basic 928

Diluted 962

December 2004 Year-to-date
Gains
Discontinued
Gains (losses) on Adjustment to Tax Benefit from Operations,
Ongoing (Losses) on Enron Total Reported
sales and Captive
Impairment DEA excluding
Earnings sale Settlement Adjustments Earnings
impairments Insurance Loss on Asset Restructuring Crescent
of assets of equity Reserves Exchanges Resources
investments

Franchised Electric $ 1,464 $ 3 $ - $ - $ - $ - $ - $ - $ - $ 3 $ 1,467

Gas Transmission 1,297 16 - 16 - - - - - 32 1,329

Field Services 391 1A (10) B (16) C 1 D - - - - (24) 367

Duke Energy North America (190) (403) E - - 8 D,F - - - - (395) (585)

International Energy 236 (2) (13) D 1 - - - - - (14) 222

Crescent 240 - - - - - - - - - 240

Total reportable segment EBIT 3,438 (385) (23) 1 9 - - - - (398) 3,040

Other (164) 4 - 2 21 D 64 D (4) G - - 87 (77)

Total reportable segment EBIT and other EBIT $ 3,274 $ (381) $ (23) $ 3 $ 30 $ 64 $ (4) $ - $ - $ (311) $ 2,963

EARNINGS FOR COMMON

Total reportable segment EBIT and other EBIT $ 3,274 $ (381) $ (23) $ 3 $ 30 $ 64 $ (4) $ - $ - $ (311) $ 2,963
Foreign Currency Translation Gains (Losses) 1 - - - - - - - - - 1
Interest Income and other 64 - - - - - - - - - 64
Interest Expense (1,281) - - - - - - - - - (1,281)
Minority Interest (Expense) Benefit - Interest/Income Tax Expense 38 - - - - - - - - - 38
Income taxes on continuing operations (690) 133 8 - (11) (22) 1 48 - 157 (533)
Discontinued operations, net of taxes 5 - - - - - - - 233 233 238
Trust Preferred/Preferred Dividends (9) - - - - - - - - - (9)

Total Earnings for Common $ 1,402 $ (248) $ (15) $ 3 $ 19 $ 42 $ (3) $ 48 $ 233 $ 79 $ 1,481

$ 1.51 $ (0.27) $ (0.02) $ - $ 0.02 $ 0.05 $ - $ 0.05 $ 0.25 $ 0.08 $ 1.59

$ 1.46 $ (0.25) $ (0.02) $ - $ 0.02 $ 0.04 $ - $ 0.05 $ 0.24 $ 0.08 $ 1.54


A - Net of minority interest of $1 million.

B - Net of minority interest of $12 million.

C - Net of minority interest of $7 million.

D - Recorded in Operation, maintenance and other on the Consolidated Statements of Operations.

E - $(397) million recorded in Gains (Losses) on Sales of Other Assets, net (net of $25 million of minority interest) and $(6) million recorded in Operation, maintenance and other on the Consolidated Statements of Operations.

F - Amount is net of $5 million of minority interest.

G -Recorded in Other income and expenses, net on the Consolidated Statements of Operations.


Basic 931

Diluted 966

December 2005 Year-to-date

Initial gain and Discontinued
Loss on Gain on Gains (losses)
Mutual Field Services subsequent Operations/
Southeast transfer of on sales and
Ongoing insurance hedge de- MTM change on Tax Cumulative Effect Total Reported
DENA 19.7% impairments of
Earnings liability designation, de-designated Adjustments of Change in Adjustments Earnings
contract interest in equity
adjustment net Southeast DENA Accounting
termination DEFS investments
hedges Principle


Franchised Electric $ 1,495 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 1,495

Gas Transmission 1,388 - - - - - - - - - 1,388

Field Services 505 - - 576 C 888 A (23) B - - - 1,441 1,946

Duke Energy North America - - - - - - - - - - -

International Energy 334 - - - (20) E - - - - (20) 314

Crescent 314 - - - - - - - - - 314

Total reportable segment EBIT 4,036 - - 576 868 (23) - - - 1,421 5,457

Other (563) (75) C (28) D - - - 21 F - - (82) (645)

Total reportable segment EBIT and other EBIT $ 3,473 $ (75) $ (28) $ 576 $ 868 $ (23) $ 21 $ - $ - $ 1,339 $ 4,812

EARNINGS FOR COMMON

Total reportable segment EBIT and other EBIT $ 3,473 $ (75) $ (28) $ 576 $ 868 $ (23) $ 21 $ - $ - $ 1,339 $ 4,812
Foreign Currency Translation Gains (Losses) (11) - - - - - - - - - (11)
Interest Income and other 57 - - - - - - - - - 57
Interest Expense (1,062) - - - - - - - - - (1,062)
Minority Interest (Expense) Benefit - Interest/Income Tax Expense 20 - - - - - - - - - 20
Income taxes on Continuing Operations (798) 28 10 (213) (323) 9 (8) 12 - (485) (1,283)
Discontinued Operations, net of taxes 7 - - - - - - - (712) G,H (712) (705)
Cumulative Effect of Change in Accounting Principle - - - - - - - - (4) (4) (4)
Trust Preferred/Preferred Dividends (12) - - - - - - - - - (12)

Total Earnings for Common $ 1,674 $ (47) $ (18) $ 363 $ 545 $ (14) $ 13 $ 12 $ (716) $ 138 $ 1,812

$ 1.79 $ (0.05) $ (0.02) $ 0.39 $ 0.58 $ (0.01) $ 0.01 $ 0.01 $ (0.76) $ 0.15 $ 1.94

$ 1.73 $ (0.04) $ (0.02) $ 0.37 $ 0.56 $ (0.01) $ 0.01 $ 0.01 $ (0.73) $ 0.15 $ 1.88


A - Gain on sale of investment in units of TEPPCO LP, $97 million, and TEPPCO GP, $791 million net of $343 million of minority interest.

B - De-designation of hedges due to the transfer of 19.7% interest in DEFS to ConocoPhillips. $125 million loss recorded in Impairment and other charges on the Consolidated Statements of Operations, reduced by $29 million of hedge settlements
recorded in Non-regulated electric, natural gas, natural gas liquids and other revenues, and $73 million of hedge settlements recorded in Equity in Earnings of Unconsolidated Affiliates on the Consolidated Statements of Operations.

C - Recorded in Gains (Losses) on Sales of Other Assets, net on the Consolidated Statements of Operations.

D - Recorded in Operation, maintenance and other on the Consolidated Statements of Operations.

E - Campeche equity investment impairment, recorded in Gains (Losses) on sales and impairments of equity investments on the Consolidated Statements of Operations.

F - Recorded in Non-regulated electric, natural gas, natural gas liquids and other revenues on the Consolidated Statements of Operations.

G - Excludes Crescent discontinued operations.

H - Primarily the non-cash, after-tax charge related to the planned exit of substantially all of DENA's physical and commercial assets outside the midwestern United States
and the reclassification of DENA 2005 operations. Recorded in (Loss) Income From Discontinued Operations, net of tax on the Consolidated Statements of Operations.


Basic 934

Diluted 970

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 and equity investment sales b 1,475
Book/Tax timing differences a 700
Other sources/(uses), net a (650)
Total Sources 6,250

Primary Uses:
Capital expenditures b (4,325)
Dividends c (1,450)
Total Uses (5,775)

Positive Net Cash $ 475

Reconciliations to amounts per U.S. GAAP reporting:

Operating cash flow components from above [summation of (a)] $ 4,775
Reconciling items to GAAP operating cash flow (2) (875)
Net cash provided by operating activities per GAAP Consolidated Statement of Cash Flows $ 3,900

Investing cash flow components from above [summation of (b)] $ (2,850)
Reconciling items to GAAP investing cash flow (3) 1,400
Net cash used in investing activities per GAAP Consolidated Statement of Cash Flows $ (1,450)

Financing cash flow components from above [summation of (c)] $ (1,450)
Reconciling items to GAAP financing cash flow (4) (1,000)
Net cash used by financing activities per GAAP Consolidated Statement of Cash Flows $ (2,450)

Notes:

(1) Forecast net income of $2,225 million for 2006 is based on Duke Energy's 2006 employee incentive earnings target of $1.90
of ongoing diluted earnings per share (EPS). This EPS measure is used for employee incentive bonuses and should track
ongoing diluted EPS, which is a non-GAAP financial measure as it represents diluted EPS from continuing operations plus the
per-share effect of any discontinued operations from the Company’s Crescent Resources real estate unit, adjusted for the
per-share impact of special items. Special items represent certain charges and credits which management believes will not be
recurring on a regular basis. The most directly comparable GAAP measure for ongoing diluted EPS is reported diluted EPS
from continuing operations which includes the impact of special items. Due to the forward-looking nature of this non-GAAP
financial measure, information to reconcile this non-GAAP financial measure to the most directly comparable GAAP financial
measure is not available at this time as the Company is unable to project any special items for 2006

(2) Amount consists primarily of non-operating cash flow items such as proceeds from the sales of commercial and multi-family
real estate, and other operating cash flow reductions such as capital expenditures for residential real estate and gain on the sale
of other assets and equity investments.

(3) Amount consists primarily of proceeds from the sales of commercial and multi-family real estate, proceeds from the sale of
other assets and equity investments in excess of book value (i.e. gain on sale), capital expenditures for residentia
real estate, and net proceeds from the purchase and sale of available-for-sale securities

(4) Amount consists of estimated net other financing activities.

Duke Energy 02/01/06_Slides

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