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First Quarter 2006Earnings Discussion
May 2, 2006
1
Safe Harbor StatementThis presentation contains forward-looking statements, which are subject to various risks and uncertainties. Discussion of risks and uncertainties that could cause actual results to differ materially from management's current projections, forecasts, estimates and expectations is contained in the company's SEC filings. In addition to the risks and uncertainties set forth in the company's SEC filings, the forward-looking statements in this release could be affected by actions of rating agencies, delays in implementing any future price-to-beat fuel factor adjustments, the ability of the company to attract and retain profitable customers, changes in demand for electricity, the impact of weather, changes in wholesale electricity prices or energy commodity prices, the company’s ability to hedge against changes in commodity prices and market heat rates, the company’s ability to fund certain investments described herein, delays in approval of, or failure to obtain, air and other environmental permits, changes in competitive market rules, changes in environmental laws or regulations, changes in electric generation and emissions control technologies, changes in projected demand for electricity in Texas, the ability of the company to attract and retain skilled labor for planning and building new generating units, changes in the cost and availability of materials necessary for the planned new generation units, the ability of the company to manage the significant construction program to a timely conclusion with limited cost overruns, the ability of the company to implement the initiatives that are part of its performance improvement program and growth strategy, and the terms under which the company executes those initiatives, and the decisions made and actions taken as a result of the company’s financial and growth strategies.
Regulation GThis presentation includes certain non-GAAP financial measures. A reconciliation of these measures to the most directly comparable GAAP measures is included in the appendix of the printed version of the slides and the version included on the company’s website at www.txucorp.com under Investor Resources/Presentations.
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Today’s Agenda
Q&AQ&A
Operational & Clean Coal Investment
Highlights
Operational & Clean Coal Investment
Highlights
Financial & Risk Management Overview
Financial & Risk Management Overview
C. John WilderChairman & CEO
Clean Coal Investment Drivers
Clean Coal Investment Drivers
Jonathan SieglerVice PresidentStrategy, Mergers & Acquisitions
David CampbellExecutive Vice President &Acting CFO
3
Reported earnings per shareQ1 05 vs. Q1 06; $ per diluted share
TXU’s Operational Earnings Improved Substantially
Q1 06Q1 05
Q1 06Q1 05
Operational earningsQ1 05 vs. Q1 06; $ millions
Q1 06Q1 05
Operational earnings per shareQ1 05 vs. Q1 06; $ per diluted share
(0.10)
1.221.09
0.51
38%38% 110%110%
Reported earningsQ1 05 vs. Q1 06; $ millions
114%114%
Q1 06Q1 05
576
416516
246
4
TXU Power Achieved Record Production Levels…
ProductionQ1 05 vs. Q1 06; GWh
Capacity factor1
Q1 05 vs. Q1 06; PercentCapacity factor1
Q1 05 vs. Q1 06; Percent
Lignite Units
3.4%3.4%
ProductionQ1 05 vs. Q1 06; GWh
Nuclear Units
5.9%5.9%
1 Excludes planned outages and economic back-down.
1.6%1.6%
Improved production added ~ $27 million of contribution margin for the quarterImproved production added ~ $27 million of contribution margin for the quarter
2.6%2.6%
Q1 05 Q1 06
10,520 10,874 4,797 5,080
Q1 05 Q1 06
96.0 97.5
Q1 05 Q1 06
100.1 102.7
Q1 05 Q1 06
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…TXU Energy Has Introduced An Innovative Suite Of New Offerings In North Texas…
14.5-15.73 new plans that allow customers to contribute to the environment, featuring either 100% or 10% renewable energy on a month-to-month basis and an 18-month term option.
EarthWiseSM, 100% EarthWiseSM, and EarthWise 18SM
10-13 off; 25-35 peak
Empowers customers to use electricity wisely while saving as much as 20% during off-peak times over a 2-year term.
Time-of-Use Plan (available July 2006)
12.4-15.7A 2-year plan that provides an immediate discount off the current PTB rates and the opportunity for further savings if natural gasprices continue to trend lower; includes additional price protection features such as a maximum and minimum price.
MarketTracker+SM
14.1Provides customers with savings year-round, with significant discounts during the summer. Includes a 2-year term.
SummerSavings 24SM
(available May 19, 2006)
14.6Provides price protection for the duration of 2006, while allowing customers to change plans at any time without penalty.
Freedom Plan
14.5Features two years of price protection due to rising fuel costs;priced below the current price-to-beat (PTB).
PriceGuarantee24SM
Low Income Assistance Plan
SureValueSM (available June 1, 2006)
ProductAvg. Annual
Price (¢/kWh)1Description
13.2Provides a 10% discount for low-income customers who previously received this discount as part of a discontinued state program.
13.2Provides up to 10% off current PTB rates for a 5-year term.
1 Based on average monthly usage of 1,500 kWh over a 12 month period. Estimated savings based on current PTB as of April 2006.
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Annualized Residential single family prices from incumbents (cents/kWh)
For Residential customers with an average usage of 1,500 kWh per month (average for single family). Shows all offers by incumbent providers in their traditional service areas including renewable products as of April 20, 2006. TXU Energy low income discount funded by TXU Energy.
Offer
Provider
12.0
13.0
14.0
15.0
16.0
17.0
18.0
19.0
20.0
Low
Inco
me
(on
PTB)
Sure
Valu
e
Mar
ket T
rack
er+
Sum
mer
Savi
ngs
24
Easy
Pric
e
Pric
eGua
rant
ee 2
4
Earth
Wis
e 18
Pric
e to
Bea
t
Free
dom
Pla
n
Earth
Wis
e
Low
Inco
me
Pric
e to
Bea
t
100%
Ear
thW
ise
Low
Inco
me
Low
Inco
me
Dis
coun
ted
Pric
e to
Beat
Sim
ple
Solu
tions
Flex
Hea
t Rel
ief
Pric
e to
Bea
t
Sim
ple
Solu
tions
Ren
ewab
le
Pric
e to
Bea
t
Dis
coun
ted
Pric
e to
Beat
Pric
e to
Bea
t
t t t t FC t t t t t CPL FC t WTU RRI CPL RRI RRI RRI RRI CPL WTU WTU
Average Undiscounted PTB 16.4 cents/kWh
Residential customers also have competitive offers available from new entrantsResidential customers also have competitive offers available from new entrants
…Establishing TXU As The Clear Leader Among Texas Incumbents
TXU EnergyOther incumbentsPrice-to-Beat*
* *
**
*
7
Attractive Returns Of TXU’s Clean Coal Investment Program Driven By Six Factors
Fuel strategy combining TXU lignite, other Texas lignite, and PRB coal reserves to ensure low-cost, stable supply
Long-Term Fuel Partnerships3Annual Texas electric demand growth forecasted at nearly 2%, or >1 GW/yearExpanding Power Needs In Texas4Non-recourse project debt financing
Significant commodity hedging
Potential sale of project equity
Risk/Return Optimization5Advantaged business model to replicate scaled 5-8 GW build ex-ERCOT
Site selection advisors engaged
Advantaged Platform In Other Markets6
90% capacity factors and O&M of ~$3.70/MWhHigh Performance Operations2
<80% of the cost and 30% less time than typical competitorStep Change In Capital Efficiency1
DescriptionFactor
8
Hedging Protects A Portion Of The Value While Retaining Asymmetric Upside To Commodity Moves
Scenario 1: Power and/or gas prices fall significantly (-$1.00/MMBtu)
• Opportunity to monetize hedge gains
Scenario 2: Power and/or gas prices rise (+$1.00/MMBtu) from forward curve or drop in interest rates
• Hedge losses offset portion of asset appreciation
• TXU realizes additional gains through additional builds in ERCOT or other markets
The combination of hedging and the option to further expand the strategy provide TXU with asymmetric upside
The combination of hedging and the option to further expand the strategy provide TXU with asymmetric upside
Expected value of new builds
Hedge value
Expansion of new build program
Total captured value
Expected value of new builds
Hedge value
Expansion of new build program
Total captured value
Incremental $0.6 B
Incremental $1.3 B
7.32.00.76.0
3.600.63.0
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Today’s Agenda
Q&AQ&A
Operational & Clean Coal Investment
Highlights
Operational & Clean Coal Investment
Highlights
Financial & Risk Management Overview
Financial & Risk Management Overview
C. John WilderChairman & CEO
Clean Coal InvestmentDrivers
Clean Coal InvestmentDrivers
Jonathan SieglerVice PresidentStrategy, Mergers & Acquisitions
David CampbellExecutive Vice President &Acting CFO
10
Critical componentslead time
24
Air permit
20
24
TXU Has Been Able To Reduce The Typical Build Schedule By Nearly 30%...
Months
Original critical path
Revised critical path
56 6 18
4 63
Permitprep
1
13
4
2 14
9 3 45
Critical componentconstruction
EngineeringSourcing
Commissioning and testing
18 months
17
0 10 20 30 40 50 60
Wetlands permit
March 1, 2006
34
Site construction
Pre-permitsite prep
28
• Every month saved adds ~$20/KW of value
• Across the entire new build strategy the lean schedule adds almost $3.0 billion
• Every month saved adds ~$20/KW of value
• Across the entire new build strategy the lean schedule adds almost $3.0 billion
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…While Reducing Costs By Almost 20%
Cost to construct reference plants including access to dual rail06; $/KW
Design improvements
and existing site advantages
Overhead scale
Scale procurement
savings
TXU all-in costTypical build estimate
TXU continues to focus on driving down the all-in cost of construction TXU continues to focus on driving down the all-in cost of construction
Lean construction
1,1003550602051,450
12
10
5015
TXU’s Construction Strategy Has Limited Cost Variability To Less Than $75/KW
The combination of turnkey deals, competitive sourcing and superior construction expertise has limited the potential increase in cost to <$75/KW or 7%
The combination of turnkey deals, competitive sourcing and superior construction expertise has limited the potential increase in cost to <$75/KW or 7%
335
340
425
1,100
Major equipment & engineering
Cost to construct reference plant$/KW
Variability in costs$/KW
Balance of plant
Labor, fee & contingency
75
13
0
25
50
75
100
125
150
0 10 20 30 40 50 60 70 80 90
The New Build Program Will Ensure The Market Remains Efficient
ERCOT generation portfolio: Average variable cost1
05-10; $/MWh
After the new capacity comes on line, the combination of strong demand growth and a relatively flat supply curve will help maintain 7X24 heat rates at current levels of ~8 MMBtu/MWh
Each additional 1 GW of capacity impacts the 7X24 heat rate by ~0.1MMBtu/MWh
After the new capacity comes on line, the combination of strong demand growth and a relatively flat supply curve will help maintain 7X24 heat rates at current levels of ~8 MMBtu/MWh
Each additional 1 GW of capacity impacts the 7X24 heat rate by ~0.1MMBtu/MWh
Cumulative CapacityGW
1 Based on gas price of $8/MMBtu2 Assumes 10 GW of coal capacity brought on line
05 supply curve
10 supply curve2
05 peak demand 10 peak
demand
New coal plants
12
3
14
TXU’s Build Program Can Deliver Attractive Returns
36.9
2.7
39.6
2.2
3.9
1.3
16
63$/MWh
230EBIT
20Depreciation
250EBITDA
15Property taxes and insurance
100Fuel cost
400Revenue
25O&M expense
10Emissions expense
$ MillionsComponent
800 MW reference plant pro forma1
10E; $/MWh, $ millions
On average, each 800 MW plant will have a PV/I of 1.5 and will return45% of cash in the first 5 years
On average, each 800 MW plant will have a PV/I of 1.5 and will return45% of cash in the first 5 years
1 Pro forma for reference plants with a full year of operation in 2010
15
Today’s Agenda
Q&AQ&A
Operational & Clean Coal Investment
Highlights
Operational & Clean Coal Investment
Highlights
Financial & Risk Management Overview
Financial & Risk Management Overview
C. John WilderChairman & CEO
Clean Coal Investment Drivers
Clean Coal Investment Drivers
Jonathan SieglerVice PresidentStrategy, Mergers & Acquisitions
David CampbellExecutive Vice President &Acting CFO
16
Impact Of One-Time Costs, Weather And Hedge Ineffectiveness On Q1 06 Operational Earnings
(0.02)One-time severance and transition costs
(0.05)Impact of mild weather relative to normal
(0.09)Total impact on Q1 06 (included in operational earnings)
(0.02)Impact of hedge ineffectiveness related to long-term hedge program
$ Per ShareComponent
Impact of one-time costs on operational EPSQ1 06; $ per share
17
TXU Corp. Consolidated
114%114%
Operational earnings contribution by segmentQ1 05 vs. Q1 06; $ per diluted share
TXU Energy Holdings
TXU Electric Delivery
162%162%
Growth Driven By TXU Energy Holdings Performance
7%7%
0.42
1.10
Q1 05 Q1 060.51
1.09
Q1 05 Q1 06
0.15 0.14
Q1 05 Q1 06
18
Operating cash flowQ1 05 vs. Q1 06; $ millions
TXU’s Financial Flexibility Measures Improved Substantially
Q1 06Q1 05
Q1 06Q1 05
EBITDA/interestQ1 05 vs. Q1 06; Ratio
Q1 06Q1 05
Free cash flowQ1 05 vs. Q1 06; $ millions
197
1,046 712
(52)
29%29%
Debt/EBITDAQ1 05 vs. Q1 06; Percent
Q1 06Q1 05
2.84.1
5.34.1
431%431%
32%32%
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(10)-0(10)-0(10)-0Expected underlying position
>95>95>95Percentage hedged
(135)
(322)
45208E
(111)
(340)
44407E
(44)Forward power and gas sales
(301)Retail “short”position2
336Total “generation long” position
Bal 06E
Natural gas positionBalance of 06E-08E; Million MMBtu
Heat rate positionBalance of 06E-08E; Million MWh
~27~23~8Expected underlying position
~59~65~83Percentage hedged
2
(42)
6708E
4
(47)
6607E
(3)Forward power and gas sales
(36)Retail “short”position2
47Total “generation long” position1
Bal 06E
TXU Has Significantly Reduced Its 3-Year Natural Gas Price Exposure…
TXU has mitigated over 95% of its estimated natural gas exposure from 06-08 while maintaining the majority of its long-term heat rate exposure. Since November 2005, TXU has also reduced its 2009-2011 natural gas exposure by a cumulative 340 million MMBtu
TXU has mitigated over 95% of its estimated natural gas exposure from 06-08 while maintaining the majority of its long-term heat rate exposure. Since November 2005, TXU has also reduced its 2009-2011 natural gas exposure by a cumulative 340 million MMBtu
1 Includes solid fuel and gas plants; excludes any new plant construction.2 Assumes native market retail position diminishes over time (currently approximately 8% annually) due to competitor activity and acts as a short position
while net margin remains at or below sustainable range of 5 to 10%.
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…Resulting In Low Exposure To Near Term Commodity And Heat Rate Movements
~0-10~0-10~0-10
06E 07E 08E
EBITDA impact of $1/MMBtu change in natural gas1
06E-08E; $ millions
EBITDA impact of 0.2 MMBtu/MWh change in market heat rate1
06E-08E; $ millions
Over the next three years, TXU has a relatively low sensitivityto natural gas price and heat rate changes
Over the next three years, TXU has a relatively low sensitivityto natural gas price and heat rate changes
~50~45
~15
06E 07E 08E
Change in EBITDA (%)
<1% <1% <1% <1% <1% ~1%
1 Based on NYMEX natural gas prices as of 3/31/06; based on estimated natural gas and heat rate exposure as described in position tables.
21
TXU commodity exposure
Hedge growth invest-ments
YesEnsure financial flexibility
Meet debt obligations, base business capexneeds and preserve flexibility for dividends in 2 sigma (2%) downside commodity scenario
Meet debt obligations, base business capexneeds and preserve flexibility for dividends in 2 sigma (2%) downside commodity scenario
Ensure investment requirement of 25-35% cash returned in <5 years is met
Ensure investment requirement of 25-35% cash returned in <5 years is met
Yes
TXU hedge
strategy
No
1 2
Optimize risk-return trade-offs
TXU’s Hedging Philosophy Reflects Three Screens
Point of view on hedges
Management point of view on hedge pricing and effectiveness
Commodity pricing and volatilityCost/liquidity
Management point of view on hedge pricing and effectiveness
Commodity pricing and volatilityCost/liquidity
No
3
No Yes
Optimize risk-return trade-offs
Forward salesForward sales
Financial hedgesFinancial hedgesCapital structure
Capital structure Third party equity
22
5-Year Growth Estimates Including Only The Oak Grove And Sandow New Build Projects
0.30Retail market penetration, T&D system growth
7.05 – 7.3010E operational EPS5.5% – 6.5%06E-10E annual growth rate (percent CAGR)
+ / - 0.40EPS change with +/-$1/MMBtu in 2010 natural gas1
0.60Performance improvements
5.50-5.75 06E operational EPS
0.85Debt repurchases and share repurchases1.15Oak Grove and Sandow 5
4.5% – 8.5%
(1.35)
06E-10E
06E-10E CAGR with +/- $1/MMBtu in 2010 natural gas (%)
06E-10E commodity impacts and retail churn1
Performance Driver
Prior five-year estimates included only the Oak Grove and Sandow new builds. With these projects, TXU’s estimated 5-year annual growth estimate is 5.5% to 6.5%
Prior five-year estimates included only the Oak Grove and Sandow new builds. With these projects, TXU’s estimated 5-year annual growth estimate is 5.5% to 6.5%
TXU estimated long-term growth – as of April 19, 200606E-10E; $ per share, percent
1 Based on forward natural gas prices as of April 19, 2006; includes impact of Sandow and Oak Grove in estimate of natural gas exposure and assumes that retail mass market load acts as a short position while net margin remains at or below sustainable range of 5% to 10%.
23
The Clean Coal Program Will Drive Significant Growth
(680)Taxes(660)Interest
1,245Net income
(185)Depreciation & amortization2,770EBITDA(155)Property taxes and insurance
(920)Fuel cost4,250Revenue
(285)O&M and SG&A expense(120)Emissions expense
$ MillionsComponent
Indicative Texas clean coal investment pro forma – all plants1
10E; Mixed measures
By 2010, all plants in the clean coal investment program are expected to be on-line, generating more than $1 billion of incremental earnings
By 2010, all plants in the clean coal investment program are expected to be on-line, generating more than $1 billion of incremental earnings
1 Indicative pro forma for 2010, including Oak Grove and Sandow. Assumes that Oak Grove, Sandow, and 4 reference plants are in operation for the full year, while 4 additional reference plants come into operation by early 2010. The indicative pro forma will change as financing, hedging, and equity sell-down and other key terms are finalized and as the permitting and construction process unfolds. Reflects forward natural gas and power curves as of April 19, 2006.
24
TXU’s Sources And Uses Analysis And Capital Allocation Framework Focus At The Corporate/Parent Level…
While the cash scrubber is used for capital allocation decisions at the consolidated level, TXU operating entities are capitalized according to their risk profile
While the cash scrubber is used for capital allocation decisions at the consolidated level, TXU operating entities are capitalized according to their risk profile
ElectricDeliveryElectricDelivery
TXU CorpTXU Corp
Energy Holdings LLC
Energy Holdings LLC
Texas New Generation Co
Texas New Generation Co
Focus of “sources and uses”analysis and TXU’s capital allocation framework (the “cash scrubber”)
06E Interest Coverage
4 X + 11 X + N/A
25
…Over The Next Five Years, TXU Corp. Will Have Significant Cash Flow For Investment Or Distribution…
Through its current business operations, TXU Corp. expects to generate nearly $10 billion of discretionary FCF over the next five years for investment/distribution
Through its current business operations, TXU Corp. expects to generate nearly $10 billion of discretionary FCF over the next five years for investment/distribution
20.0
2.0
06E-10E
21 - 23
Core portfolio capex
Cash for investment/distribution
OCF
Sources of cash 06E-10E (indicative); $ billions
6.5
4.0
2.0
9.5
06E-10E
Uses of cash 06E-10E (indicative); $ billions
DividendsCorp/Energy LLC debt
Electric Delivery debt
21 - 23
26
Excess
Yes
Payout 30-40% of operational earnings
Payout 30-40% of operational earnings
ExcessDividendPayout
EquityHolders
Cash FlowfromOper-ations
andAssetSalesTX
U B
usin
ess
Uni
ts “Customer”Capital
Yes
Quality serviceProduction reliability
Quality serviceProduction reliability
Repurchasesor Distributions
Retained forInvestment
Excess
…And Will Deploy Cash Flow And Manage Risk By Applying The “Cash Scrubber”
The cash scrubber will govern the allocation of operating cash flow and the deployment of growth capital at the TXU Corp. level
The cash scrubber will govern the allocation of operating cash flow and the deployment of growth capital at the TXU Corp. level
Growth capital
Yes, if
PV/Investment threshold of 1.325-35% cash returned <5 yrs in competitive markets
PV/Investment threshold of 1.325-35% cash returned <5 yrs in competitive markets
DebtHolders
FinancialFlexibility
Yes
EBITDA/Interest: >5.0Debt/EBITDA: <2.5Debt/MEV: 30% to 50%
EBITDA/Interest: >5.0Debt/EBITDA: <2.5Debt/MEV: 30% to 50%
27
TXU’s Clean Coal Investment Program Enables Strong Five-Year Growth
(0.45)Commodity impacts, operational improvements, retail and T&D growth1
1.25Debt repurchases and share repurchases1
9.75 – 10.0010E operational EPS including indicative clean coal pro forma
6.30 – 6.5510E operational EPS – existing businesses
3.45Earnings from clean coal project project company2
14% - 16%06E-10E annual growth rate (percent CAGR)
5.50-5.75 06E operational EPS outlook range
3% – 4%06E-10E annual growth rate (percent CAGR)
06E-10EPerformance Driver
Including the impact of the clean coal investment program, TXU’s estimated 5-year annual growth rate ranges from 14-16%
Including the impact of the clean coal investment program, TXU’s estimated 5-year annual growth rate ranges from 14-16%
TXU estimated long-term growth including indicative clean coal pro forma06E-10E; $ per share, percent
1 Reflects performance drivers discussed on slide 22 plus an additional $0.40 per share relating to share repurchases resulting from free cash flows not deployed for Oak Grove and Sandow.
2 Indicative pro forma for 2010, including Oak Grove and Sandow. Assumes that Oak Grove, Sandow, and 4 reference plants are in operation for the full year, while 4 additional reference plants come into operation by early 2010. The indicative pro forma will change as financing, hedging, and equity sell-down and other key terms are finalized and as the permitting and construction process unfolds. Reflects forward natural gas and power curves as of April 19, 2006.
28
Today’s Agenda
Q&AQ&A
Operational & Clean Coal Investment
Highlights
Operational & Clean Coal Investment
Highlights
Financial & Risk Management Overview
Financial & Risk Management Overview
C. John WilderChairman & CEO
Clean Coal InvestmentDrivers
Clean Coal InvestmentDrivers
Jonathan SieglerVice PresidentStrategy, Mergers & Acquisitions
David CampbellExecutive Vice President &Acting CFO
Appendix –Regulation G Reconciliations
30
Financial Definitions
Cash provided by operating activities.Operating Cash Flow (GAAP)
Income from continuing operations net of preference stock dividends, excluding special items. TXU relies on operational earnings for evaluation of performance and believes that analysis of the business by external users is enhanced by visibility to both reported GAAP earnings and operational earnings.
Operational Earnings (non-GAAP)
Total debt less transition bonds and debt-related restricted cash.Debt
Total debt less transition bonds and debt-related restricted cash divided by EBITDA. Transition, or securitization, bonds are serviced by a regulatory transition charge on wires rates and are therefore excluded from debt in credit reviews. Debt-related restricted cash is treated as net debt in credit reviews. Debt/EBITDA is a measure used by TXU to assess credit quality.
Debt/EBITDA (non-GAAP)
Operating revenues (GAAP) less fuel and purchased power costs and delivery fees (GAAP).Contribution Margin
Cash from operating activities, less capital expenditures and nuclear fuel. Used by TXU predominantly as a forecasting tool to estimate cash available for dividends, debt reduction, and other investments.
Free Cash Flow (non-GAAP)
EBITDA divided by cash interest expense is a measure used by TXU to assess credit quality.EBITDA/Interest (non-GAAP)
Income from continuing operations before interest income, interest expense and related charges, and income tax plus depreciation and amortization and special items. EBITDA is a measure used by TXU to assess performance.
EBITDA (non-GAAP)
Interest expense and related charges less amortization of discount and reacquired debt expense plus capitalized interest. Cash interest expense is a measure used by TXU to assess credit quality.
Cash Interest Expense(non-GAAP)
Capital expenditures.Cap ex
DefinitionMeasure
31
Financial Definitions – cont.
Per share (diluted) net income available to common shareholders.Reported Earnings per Share (GAAP)
Per share (diluted) income from continuing operations net of preference stock dividends, excluding special items. Operational earnings for first quarter 2005 excludes the effect of the adjustment in 2005 for the cost of the true-up payment on the 52.5 million-share accelerated common stock repurchase.
Operational Earnings per Share (non-GAAP)
Long-term debt (including current portion), plus bank loans and commercial paper, plus preferred securities of subsidiaries, including exchangeable preferred membership interests (EPMIs).
Total Debt (GAAP)
Operational earnings (non-GAAP) plus preference stock dividends plus after-tax interest expense and related charges, net of interest income on restricted cash related to debt, divided by the average of the beginning and ending total capitalization less debt-related restricted cash. This measure is used to evaluate operational performance and management effectiveness.
Return on Invested Capital (ROIC) - (non-GAAP)
Unusual charges related to the implementation of the performance improvement program and other charges, credits or gains, that are unusual or nonrecurring. Special items are included in reported GAAP earnings, but are excluded from operational earnings. Special items associated with the performance improvement program include debt extinguishment losses and costs related to severance programs, asset impairments and facility closures.
Special Items (Non-GAAP)
DefinitionMeasure
32
Table 1: TXU Corp. Operational Earnings Reconciliation Quarter Ended March 31, 2006 and 2005 $ millions and $ per share after tax
0.97---Effect of share repurchase dilution
(0.01)---Effect of share dilution/rounding
246
(155)
(5)
406
5
(15)
416
Q1 05
1.09
-
-
1.09
-
(0.13)
1.22
Q1 06
0.51516Operational earnings
(0.32)-Special items
(0.01)-Preference stock dividends
(0.12)516Income from continuing operations
0.01-Preference stock dividends
(0.03)(60)Discontinued operations
(0.10)576Net income available for common
Q1 05Q1 06
33
Table 2: TXU Energy Holdings Operational Earnings ReconciliationQuarter Ended March 31, 2006 and 2005 $ millions and $ per share after tax
0.432031.10520Income from continuing operations
(0.01)1--Effect of share dilution/rounding
0.422001.10520Net income available for common
-2--Special items
206
3
Q1 05
1.10
-
Q1 06
0.42520Operational earnings
0.01-Discontinued operations
Q1 05Q1 06
34
Table 3: TXU Electric Delivery Operational Earnings Reconciliation Quarter Ended March 31, 2006 and 2005 $ millions and $ per share after tax
-1--Special items
72
71
Q1 05
0.14
0.14
Q1 06
0.1565Operational earnings
0.1565Income from continuing operations
Q1 05Q1 06
35
Table 4: TXU Corp. Total Debt As of March 31, 2006 and 2005$ millions
13,027
38
11,970
624
-
395
3/31/05
1,236Commercial paper
11,327All other long-term debt, less due currently
45Notes payable
-Preferred securities of subs
13,458Total debt
850Long-term debt due currently
Debt
3/31/06
36
Table 5: TXU Corp. Interest and Debt Coverage RatiosTwelve Months Ended March 31, 2006 and 2005$ millions unless otherwise noted
8.1
3.3
4.1
4.1
11,790
-
(1,237)
13,027
693
14
(27)
706
2,866
1,133
1,733
757
(43)
706
(45)
358
(1,259)
1,617
3/31/05
910Income tax expense
A3,642Cash provided by operating activities
B(1,758)Reconciling adjustments from cash flow statement
793Depreciation and amortization
3.7
5.4
2.8
5.3
12,213
(99)
(1,146)
13,458
824
18
(15)
821
4,377
7
4,370
(38)
821
1,884
3/31/06
EBITDA/interest – ratio (C/D)
Debt/EBITDA – ratio (F/C)
Cash provided by operating activities + cash interest expense/cash interest expense–ratio (A+D/D)
Total debt/cash flow from operating activities – ratio (E/A)
ETotal debt
Interest expense and related charges
FTotal debt less transition bonds and debt-related restricted cash
Debt-related restricted cash
EBITDA
Transition bonds
DCash interest expense
Capitalized interest
Amortization of discount and reacquired debt expense
CEBITDA (excluding special items)
Special Items
Interest income
Interest expense and related charges
Income from continuing operations before taxes and extraordinary items
Ref