Entergy Corporation · NYSE:ETR
Entergy — Lehman Brothers CEO Energy/Power Conference (September 2004)
29 slides from Entergy's conference presentation, Sep 7, 2004
Slide 1: Nip and Tuck (the Ageless Super Model)
Nip and Tuck (the Ageless Super Model) Lehman Brothers CEO Energy/Power Conference J. Wayne Leonard Chief Executive Officer = September 7, 2004 = Entergy
Slide 2: Safe Harbor and Reg G Compliance
Safe Harbor and Reg G Compliance In this presentation and from time to time in press releases and filings made with the Securities Exchange Commission, Entergy makes statements conceming its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statement
Slide 3: Strategy Is Consistent as Entergy Transitions from Recovery to Recovered
Strategy Is Consistent as Entergy Transitions from Category Operational Growth platform Financial flexibility Risk manage- ment ” to “Recovered” Recovery Phase Improved customer service and lity; mended regulatory relationships Fixed portfolio by divesting international distribution, merchant genera
Slide 4: Entergy's Strategic Focus
Entergy’s Strategic Focus “Prof lfessee eel ene Profile Bond Proxy Local Utility Interstate Utility Nuclear Company Retail Company ‘Trader'Generator Technology Company Multinational Energy Company Vertical Expansion Broad Diversification Low-growth dividend engine LDGs, Wires business Fully integrat
Slide 5: Entergy's Business Model Stands the Test of Time
supe? Entergy’s Business Model Stands the Test of Time Entergy's Business Model Suppiy/Demand —_CifmatedWsather Data Environmental Compotlilve Bahavior Fual Prices Logisiative/Roguiatory CredliMarkeis _Caplial Markeis
Slide 6: But it still comes down to
But it still comes down to PRC CUTIGIN
Slide 7: Dereg. not in immediate future
Dereg. not in immediate future g| relabity... Fa 3 z 2 g & 2 & 3 Ea efforts resulted in strong regulatory or " relationships es PP doom Regulatory Swmergies Cost of Power Rin... till Ria... Ei. till Successful “Back to Basics” Transformation Preparation for deregulation tightened operational skills
Slide 8: Better Service = Customer Loyalty
Better Service = Customer Loyalty Capital Expenditures Outage Frequency 99-03, $B per customer per year Dowr 178 oe 49% depr| zx 12 98 99 OO Of O2 O83 Outage Duration average minutes Dow 278 48% 229 172 162 164 144 Target
Slide 9: Better Relationships = Better Returns/Less Risk
Better Relationsh Better Returns/Less Risk Operational Return on Equity 99.03, % Regulatory Outage Complaints akc # per year SL inary averge| % 35 420 196 113 8 99 00 (Ot Utility Operating Company ROE* 110 gy on 02 03 Call Center Abandoned Calls thousands Down!| 63% ies a a Reported 99 11.1 100 107
Slide 10: Non-utility nuclear and underperforming investments
S under performing invest sites; UC PPAs at obast teen boat! Financial! operation t= plant's bus; turnaround record. | | driven divestiture 5 counterparties E ® s Hy & 7 8 | 98: Hedging program: ean Bisciiire> 30+ PAs; 3] ariven aici: pipeiateler ad Unproven outside & | divestitures p auctions legac
Slide 11: But No Two Nuclear Plants Are Exactly Alike
“| never saw a nuclear plant | didn’t like” pon Hintz But No Two Nuclear Plants Are Exactly Alike Plants Accomplishments ANO Unit 1 836 MW te —- Babcox & Wilcox PWR 01 - Set record for B&W refueling outage (RFO} at 23 days 96 - First OSHA VPP Star status designation in country Indian Point 2 &3 1939
Slide 12: Nuclear plant accomplishments (continued)
4 never saw a nuclear plant I didn’t like” pon tintz Accomplishments Grand Gulf 1207 MW GE - BWR 03 - Most Whs generated in nation by nuclear plant 02 - OSHA VPP Star status designation 01 - 22 day RFO set U.S. record for same-type reactor River Bend 966 MW GE - BWR 02 - 17 day RFO set U.S. record f
Slide 13: Skills/Standardization = Reduced Risk/Higher Margins
Skills/Standardization = Reduced Risk/Higher Margins INPO Plant Performance Entergy Nuclear Production Cost 99.03; Index 3 Year Average Before ETR Ownership vs 03; Average SIMWh 100 a0 29 80 70 w| J 50 Fleet in 03 40 98 99 00 01 02 03 Before Higher Power Reduced 03 ETR Capacity Uprates Overall —Pilg
Slide 14: Risk Management Focus
Risk Managemen Focus 0 ou Know/Control; Transfer What Portfolio Energy Sales as of 604 O4E-08E; % Planned Generation 100 95 [sold under contracts at Plant acquisition 72 [New contracts 48 29 Rem. OSE O6E O7E O8E Earnings Sensitivity O4E-06E; $/share Sensitivity” Average Energy Prices as of 6104 O4E-
Slide 15: Merchant Generation
Merchant Generation ama 6 buildout ned Operating?Construction d Investment, we NG ‘Attractiveness to ETR ‘Synergies ‘Spark Spread — = Initial non-recourse debt and turbine cancellation provisions provided off-ramp as financial and commodity risk increased Risk of sourcing power in spot market mitiga
Slide 16: Improved Heat Rates
Improved Heat Rates ower Fuel Costs / Prices to Customers Supply Plan Contracts Investment < O4E -08E; Summer MW uel Saving 6,000 Estimated 5,000 Short Position som Additional capacity needed 3,000 to fill short position 2,000 O4E OSE O6E O7E OBE ote: Actitional supp plan esouces wil cotnue to be pr
Slide 17: Entergy-Koch trading
OnE 98 tin-house Cresied) trading) ody <——o 2 ‘Created) i ry 4 —— i Fe 2 Today 3 04 (Partner i as Ringfence} | 98 nnouse 98 {in-house S| trading) realy trading} Financial Synergies Value To Others — <= — Reduced operating and financial risk by partnering to expertise in @ringfenced, structure reduce
Slide 18: EKT's Core Skills Present Bigger Opportunities for Big Diversified Buyer
EKT’s Core Skills Present Bigger Opportunities for Big Diversified Buyer Entergy-Koch Growth Components O1-Teday Mtustrative Xpand Europe| New Gustomers| New Customers, _New Products New Products 01 02 03 04 = Evolution over Time |] ____, 23] Deregulation likely Ne deregulation &| Big generation bui
Slide 19: Market Conditions Point to Favorable Timing for EK's Pipeline
Market Conditions Point to Favorable Timing for EK’s Pipeline As Well Pipeline Transactions Recent Transactions/New Entrants EBITDA Multiple, Times “Enron Corp. Announces Sale of 2% CrassCauntry ta Southern Union and GE for $2.35 Billion” (MEN Money, 6124/04) Qionetize> “EI Paso Corp. Sells 9.9% Sta
Slide 20: Entergy Stock
Entergy Stock 98: leverage 1; trading; poor = e reg relations Z z ie Fd 2 & 4 ¥ so a a ‘Nuclear Buyback Flexbiliy BIE wa: Risk Profile Commodity/Regutatory Entergy's overall risk profile has decreased significantly since new strategy was adopted in 98; disciplined decision-making process emphasizes
Slide 21: Enhancing power to distribute cash
Enhancing power to distribute cash corporate wealth
Slide 22: Make Good Investments Then Execute Well
Make Good Investments Then Execute Well Operationalarning Operationa(ROIE> 99.03 and Aspiratign’ Sishare 99.03 and Aspiration; % ee par bs a gncrout® zk ot 4.25 9% Aspiration As-Reported a ta OTT As-Reported. aa \ : 3.12 59 2.1 | 99 oo a1 02 03 99 oo a1 02 03 As. Reported 2.25 297 3.23 264 4.01 64 6
Slide 23: Conserve Business Risk
Conserve Business Risk Then (98) > Deregulation potential + Poor operations / regulatory relations = Weak balance sheet > 1 decommissioning contract + Idea for growing business + Unproven operating expertise + Under-utilized talent pool > Development plans in$ countries + Ambitious wholesale energy
Slide 24: Conserve Financial Risk
Conserve Financial Risk Timeline - Rating Agency Action 96-Present Caml am Issued BBB rating Uitince eutie for Entergy Parent ses gk & raised ELI rating” en ELL BBE = BBB+ Bo OS sap ELL 6m 5 EM 7 mp 6 ENOL 7) 6 1999 2000 2001 2002 2003 ama oma Placed EAI & EL! Moody's Placed ENO! on baad negative ou
Slide 25: Don't Destroy Wealth with Sub-Optimal Capital Structure or Lazy Cash
Don’t Destroy Wealth with “Sub-Optimal” Capital Structure or Lazy Cash Net Debt to Net Capital, % Cash Flow Interest Coverage, times 6 (as of 2004) Actual 50 Headroom N . S ‘Headroom’ WN 5 ‘46 (as of 2G04) Target 98 Today 98 Today * Debt to Capital Ratio = 47% as of 2004 a4
Slide 26: Don't Destroy Wealth with Investments
Don’t Destroy Wealth with Stn DOW hee os analale wiauc rv Bhen and Noyd Monitor Invest Outside Energy Sector International Expansion Nuclear + Value | Pipeline | yest Monitor Business Fit (Knowledge, Skills) +
Slide 27: Never Be Satisfied
_ Never Be Satisfied Financial Aspirations and Status a EPS Growth Nearterm: 8-10% +05 EPS guidance exceeding near-term 8-10% Long+term: 5-6% target 0% EPS growth targeted in 06 driven by intrinsic growth and accretion + 5-6% targeted thereafter Retums 9% ROIG = Currently at ~ 7%; ROIG aspiration re
Slide 28: Appendix: Regulation G Reconciliations
Appendix: Regulation G Reconciliations Is rations) 309 AS-REPORTED ERRNINGS (4), 209128 Prefered vidends 2 ‘2 24 Tax Efected terest Expense sos at AS-REPORTED EARNINGS [nclusina prefered dvidends Stax effectedirterest expense! (B) oss tnae 181 Tiny SPECHL TEMS Fer Band iss prousion « 7 SFAS 143 impl
Slide 29: Appendix: Regulation G Reconciliations
Appendix: Regulation G Reconciliations raion) mag 200 oot OPERATIONAL EARNINGS fincludna prderred dvidends Bax dfected interest expensel (ED) Ce a en AVERAGE INVESTED CAPITAL (E) tese4 18883 tena tear AS-REPORTED ROIC (BYE bik 68% 12k aR a OPERATIONAL ROIC [EO)E so 884724 TATE AVERAGE FULLY DILUTED
Entergy — Lehman Brothers CEO Energy/Power Conference (September 2004) on 6ix