Entergy Corporation · NYSE:ETR
Entergy — Lehman Brothers Energy/Power Conference 2003
39 slides from Entergy's conference presentation, Sep 3, 2003
Slide 1: Lehman Brothers Energy/Power Conference
Lehman Brothers Energy/Power Conference C. John Wilder Executive Vice President and Chief Financial Officer September 3, 2003 © mntergy
Slide 2: Safe Harbor and Reg G Compliance
Safe Harbor and Reg G Compliance The following constitutes a "Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: Fram time ta time, Entergy makes statements concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. S
Slide 3: Entergy — Delivering Value Through Performance
Entergy — Delivering Value Through Performance e Flexible strategy based on analytically derived point of view, supported by strong asset base e Track record of delivering industry-leading financial results e Decisive, disciplined management approach stressing capital productivity and risk managemen
Slide 4: Fall Conference Schedule
Fall Conference Schedule Chapter 1: Strategy, Financial Performance, and Balanced Aspirations Chapter 2: Management Process & Discipline, POVs, and Operational Sept. 17 Excellence Chapter 3: Quarterly Update — 3"¢ Quarter 2003 Oct. 23 Conclusion: Bringing It All Together Oct. 28
Slide 5: Discussion Outline
Strategic execution offers competitive Discussion Outline Financial Performance Industry leading financial results Balanced Aspirations for the Future Near-term projections support long-term goals
Slide 6: Execution Is at the Core of Entergy's Strategy
Execution Is at the Core of Entergy’s Strategy + Core energy commodity knowledge Energy infrastructure operations skills Regulatory design and solutions + Complex transactional skills
Slide 7: Execution Is at the Core of Entergy's Strategy
Execution Is at the Core of Entergy’s Strategy + Experienced industry management Who We Are - Passionately driven to succeed + Attentive to balancing interests \ + Core energy commodity knowledge Capabilities es + Energy infrastructure operations skills : + Regulatory design and solutions + Complex
Slide 8: Execution Is at the Core of Entergy's Strategy
Execution Is at the Core of Entergy’s Strategy + Integrated utility: delivering reliable electricity + Nuclear: producing at high productivity levels + EK: providing leading risk products/services How We Compete + Experienced industry management ), Who We Are - Passionately nto succeed + Attentive t
Slide 9: Execution Is at the Core of Entergy's Strategy
Execution Is at the Core of Entergy’s Strategy What We Believe ° Creative regulatory solutions Creates Value + High operating productivity + POV-based portfolio decisions + Integrated utility: delivering reliable electricity + Nuclear: producing at high productivity levels + EK: providing leading ri
Slide 10: Execution Is at the Core of Entergy's Strategy
Execution Is at the Core of Entergy’s Strategy + Top quartile total shareholder retum + Average annual earnings growth of 8-10% near-term: 5-6% long-term + Improved business position — A credit rating + 10% long-term return on invested capital + Consistent annual dividend increases What We Want What
Slide 11: Strategy is Supported By Entergy's Diversified Asset Base
Strategy is Supported By Entergy’s Str Diversified Asset Base Entergy-Koch Trading Europe London Headquarters + Members of Amsterdam Power Exchange, Leipzig Power Exchange, Nordpool and International Petroleum Exchange Energy Commodity Services *2.6 million customers itergy-Koch, LP - Houston Headqu
Slide 12: Utility Strategy Emphasizes Customer Service, Reliability and Regulatory Relationships
Utility Strategy Emphasizes Customer Service, Reliability and Regulatory Relationships How Do We Compete? Where Do We Compete? Customers Products/ Services Competitors Growth Potential Competitive Advantages a t ?All classes — residential to industrial ?Electricity/gas distribution ?None ?Productivi
Slide 13: Operational Excellence Is at the Heart of Entergy Nuclear's Strategy
Operational Excellence Is at the Heart of Entergy Nuclear’s Strategy How Do We Compete? Where Do We Compete? Customers ?Utilities ?Single unit operators ?Nuclear plant owners Products/ ?Generation Services ?Decommissioning/license renewal services Competitors ?3-5U.S. nuclear operators Growth ?Produ
Slide 14: Gulf South Pipeline's Strategy Is Based on Sustainable Productivity Improvements
Gulf South Pipeline’s Strategy Is Based on Sustainable Productivity Improvements How Do We Compete? Where Do We Compete? Customers *Local distribution companies *Industrials/power plants/pipelines Products/ * Gas transportation/storage Services Competitors *Intrastate/interstate pipelines * Gulf Coa
Slide 15: Entergy-Koch Trading's Strategy Is Well Integrated Across Commodities and Markets
Entergy-Koch Trading’s Strategy Is Well Integrated Across Commodities and Markets How Do We Compete? Where Do We Compete? Customers 7 Utilities, LDCs, producers and industrials Products/ 7 Electricity/ gas/ weather products Services ? Asset managementifinancial optimization services ?POV trading Com
Slide 16: Discussion Outline
Business Profile d Strategy Strategic execution offers competitive Discussion Outline Industry leading financial results Balanced Aspirations for the Future Near-term projections support long-term goals 10
Slide 17: Entergy Significantly Outperformed Its Peers and the Broader Market
Entergy Significantly Outperformed Its Peers and the Broader Market ETR Total Shareholder Return Total Shareholder Return vs. 5/28/98-8/ 15/03, % S&P Electrics 5/28/98-8/15/03, % 175 a 200 150 138 150 100 166 75 SEP 50 Electrics 50 a S&P 500 t) 0 25 -50 -50 2@ 4Q 3Q 20 10 4Q 3a 20 98 98 99 00 01 01
Slide 18: Shareholders Rewarded with Tax-Efficient Distributions
Shareholders Rewarded with Tax-Efficient Distributions Cash Distributions to Shareholders Cash Distributions to Shareholders Cumulative $B; 98-03E Cumulative % of 98-02 Earnings 2.8 Buyback Dividends _— 98 99 «8000 01 02 (OE Distributed $2.5 B in Cash to Dividend Shareholders—E quivalent to Increase
Slide 19: Strong Earnings Growth Was Achieved
Strong Earnings Growth Was Achieved ETR Operational Earnings Per Share 12 Months Ended 2998-2903, $ Earnings Per Share Growth vs. S&P Electrics* 12 Months Ended 2Q98-1Q03, % 4.50 s00 “ ir ” 3.50 100 3.00 ° 2.50 100 2.00 -200 1.50 2098 2Q99 2Q00 2001 2Q02 2003 -300 *Source: Compustat; exctudes AYE Co
Slide 20: Utility Contributed to Enhanced Performance...
Utility Contributed to Enhanced Performance... Estimated Rate Base 98-02: $B 8% Operational Earnings - Utility* 107 10.6 444 14.3 144 96-02: sishare as 98 99 00 01 02 Operational Return on Equity* 98.02; % 4%* 10.7 14 407 405 M4 98 99 00 01 02 a eT) 02 *Excludes the impact of special items as shown
Slide 21: ...And Nuclear Productivity Made an Impact
...And Nuclear Productivity Made an Impact Capacity Factor and Capacity 1Q01 — 2Q03; % (Capacity Factor, refueling outages denoted with *), MW % 100 80 Capacity Factor 60 MW in Operation 40 20 1001 2001 3Q01 4001 1Q02 2Q02 302 4Q02 1903 203 Operational Earnings Per Share — Entergy Nuclear* 1Q01 — 2Q
Slide 22: Entergy-Koch Contributed Across Up, Down and Flat Markets
Entergy-Koch Contributed Across Up, Down and Flat Markets Gas and Electricity Prices 4Q00 — 2Q03; $/mmbtu (Gas), $/MWh (Power) $/mmbtu $/MWh 12 120 10 \Henry Hub Spot 100 as Price 8 80 6 60 4 40 Entergy Spot | 20 Electricity Price 1Q01 2Q01 3Q01 4Q01 1202 2002 3Q02 4Q02 1003 2003 Operational Earning
Slide 23: Net Margin More Than Doubled
Net Margin More Than Doubled ETR Operational Net Margin* 12 Months Ended 2Q98-2Q03; % Operational Net Margin Improvement vs. S&P Electrics* 12 Months Ended 1Q03; % 12 300 200 9 100 6 0 -100 3 +200 +300 0 2Q98 2299 2Q00 2Q01 2Q02 2Q03 400 *Source: Compustat; exciudes AYE Competitor data excludes afte
Slide 24: Returns On Invested Capital Increased
Returns On Invested Capital Increased ETR Return on Invested Capital Return on Invested Capital 12 Months Ended 2Q98-2Q03, % Improvement vs. S&P Electrics* 12 Months Ended 2Q98-1Q03, % é 50 ET a . 7 iii arent -50 6 -100 5 -150 ag 2Q98 2Q99 2Q00 2Q01 202 2003 “200 *Source: Compustat; exciudes AYE Com
Slide 25: The Balance Sheet Was Strengthened
The Balance Sheet Was Strengthened ETR Net Debt to Net Capital 12 Months Ended 2Q98-2Q03, % 60 55 50 45 40 35 30 a 2Q98 2Q99 2Q00 2Q01 2Q02 2Q03 * Source: Compustat; excludes AYE Net Debt to Net Capital Improvement vs. S&P Electrics* 12 Months Ended 2Q98-1Q03, % 60 50 40 30 19
Slide 26: 40% of the $9 Billion Debt Portfolio Was Restructured
40% of the $9 Billion Debt Portfolio Was Restructured Outstanding Debt Securities by Issue* 3Q02 (left) vs. 2Q03 (right) Coupon % 10 Pride ghey O No Change © Newly Issued Targetedredemptions| 4. No Change ° @ 2 ° @ 35 00 05 10 15 20 25 30 35 00 05 10 15 20 25 30 Year of Maturity Year of Maturity “Re
Slide 27: Portfolio Life and Associated Expense Position Were Vastly Improved
Portfolio Life and Associated Expense Position Were Vastly Improved Comparative Debt Life and Interest Expense 3Q02 vs. 2Q03 Before After Restructuring Restructuring 13.0 9.5 Average remaining life of bond securities in portfolio (years) 0.5 04€E Interest aL Exoenae SS . ti "Reflects estimated Utili
Slide 28: Discussion Outline
Business Profile Elare| Strategy Strategic execution offers competitive Discussion Outline Financial Performance Industry leading financial results Near-term projections support long-term goals 22
Slide 29: Entergy's Goals Emphasize Operational Results, Financial Flexibility and Returns
Entergy’s Goals Emphasize Operational Results, Goals Near-Term Deliver average annual earnings growth of 8-10% Improve net margin Achieve $145M in cost savings Maintain or improve 45-50% net debt to net capital ratio Maintain or improve 4x or better interest coverage Achieve 9% return on invested ca
Slide 30: Earnings Will Continue to Grow
Earnings Will Continue to Grow Operational Earnings Per Share* 98-04E From 03 Guidance Excluding Disproportionate Sharing Earnings F Biswesperdonaty Sharing $4.15 $4.20 4 $3.81 $3: $3.12 $3.23 $3. $2.22 $2.17 98 99 00 01 02 03E* 04E* * Based on midpoint of earings guidance; Excludes the impact of sp
Slide 31: Top-Line Growth Supports Long-Term Earnings Aspirations
Top-Line Growth Supports Long-Term Earnings Aspirations Sources of Revenue Growth* 04-05E e General sales growth of 1-2% e Rateincreases and incentives 2-3% 2-3% e Generation supply plan 04E 05E e Power uprates e Service revenue e Contract and market pricing “Utility estimates are based on retail ad
Slide 32: Expiring Contracts Create an Opportunity for Nuclear Revenue Growth
Expiring Contracts Create an Opportunity for Nuclear Revenue Growth ENI Contract Portfolio Indian Point Pricing By Contract Origination Date Original Contract vs. Market As of 2Q03 As of 2Q03 S/MWh 100% 98% (MI 03 Contracts 44 Contracts i | through 02 42 At Purchase iB io 35% 38 36 and made progress
Slide 33: Entergy Nuclear Will Improve Productivity and Reduce Costs
Entergy Nuclear Will Improve Productivity and Reduce Costs Average Production Cost $/MWh Generated we a Before ETR Ownership Entergy Nuclear Workfe # of employees 3,690 Projected Cost Savings From Productivity Improvements 03E -06E; $M 10 100 ee 2Q03 04E 05E 06E Total 27
Slide 34: The Utility Will Also Benefit From Productivity Improvements
The Utility Will Also Benefit From Productivity Improvements Total Non-Fuel O&M Expense vs. Peers Projected Cost Savings From 01; $MWh Productivity Improvements 04E - 06E; $M 04E 05E 06E Total 28
Slide 35: Strong Cash Flow Will Maintain Financial Flexibility
Strong Cash Flow Will Maintain Financial Flexibility Net Debt to Net Capital 98 — 05E; % Target Operating Cash Flow so | —— get 98 - 05E; $B a $2.1B average 30 annually* 20 98 99 00 01 02 O3E04E05E Cash Flow Interest Coverage Ratio 98— 05E; # Times 7 Target = 6 5 4 98 99 00 01 02 O3E O4E O05E 3 2 4
Slide 36: Ample Cash Will Be Available for Reinvestment
Ample Cash Will Be Available for Reinvestment Projected Liquidity* 2Q03-05E; $B Available for 5.7 Investment, Debt Retirement, Dividends (3.0) (1.0) 1.3 (0.8) 1.1 Beg. Net Debt Adj. Op. Capital Dividends Target End Cash Financing Cash Investment Liquidity Cash Flow** * Consistent with published esti
Slide 37: Entergy's Ultimate Goal: Continue to Outperform
Entergy’s Ultimate Goal: Continue to Outperform ETR Total Shareholder Return Total Shareholder Return vs. 5/28/98-8/ 15/03, % S&P Electrics 5/28/98-8/15/03, % 75 200 ‘cc willie ETR ETR 150 <r 7 125 70 : 100 460 a 6 S8P 50 Electrics 50 . 25 Median S&P 500 il I 0 0 TT IH} 2 ae 50 -50 2Q 4Q 3Q 2Q 1Q 4Q
Slide 38: Entergy — Delivering Value Through Performance
Entergy — Delivering Value Through Performance e Flexible strategy — analytically-derived POV — strong asset base e Track record of industry-leading financial results e Decisive, disciplined management e Proven operational excellence e Goals aimed at top-quartile shareholder returns e Earnings and d
Slide 39: Lehman Brothers Energy/Power Conference
Lehman Brothers Energy/Power Conference C. John Wilder Chief Financial Officer September 3, 2002 © intergy
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