Entergy Corporation · NYSE:ETR
Entergy — Edison Electric Institute 42nd Financial Conference 2007
50 slides from Entergy's conference presentation, Nov 5, 2007
Slide 1: Einstein's Theory
a -.. Einstein's Theory 42"¢ Edison Electric institute Financial Conference J. Wayne Leonard a Chairman and Chief Executive Officer == Entergy, November 6, 2007
Slide 2: Caution Regarding Forward-Looking Statements and Reg G Compliance
Caution Regarding Forward-Looking Statements and Reg G Compliance In this presentation, from time to time, Entergy Corporation makes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Except to the extent required by the federal securitie
Slide 3: Albert Brooks' Theory
Albert Brooks’ Theory
Slide 4: Albert Brooks' Theory: Overcoming Fears
Albert Brooks’ The: Overcoming Fears
Slide 5: To Review — Why Consider?
To Review — Why Consider?
Slide 6: Entergy Has Two Principal Lines of Business
To Review — Why Consider? Entergy Has Two Principal Lines of Business Principal Lines of Business Entergy Nuclear Operations/Services Business Utility \JA6 non-utility units at § sites + Selectric utilities (5 regulators} (4.998 MW) + 4 contiguous states — Arkansas, AX1 plant managed (a00 MW) Louisi
Slide 7: To Review — Why Consider?
To Review — MN Consider? ¥ Accomplished in safe work practices ¥ Tested skills in extreme weather conditions Y Diverse generation resource capabilities ¥ Track record in safe and secure operations Y Deep knowledge of PWR and BWR technology Y Expertise in regulated and competitive environments Y Tech
Slide 8: Efficient Management of Financial Risk
To Review — Why Consider? Efficient Management of Financial Risk Entergy’s Business Model Excellence Enhance Grow the Value of the What You Have Business = Implement Acquire generation Maintain financial flexibility constructive through Supply Plan ct = regulatory strategies Build new solid ermines
Slide 9: Commodity Exposure Affects Businesses Differently
To Review — Why Consider? Commodity Exposure Affects Businesses Differently Leng Gas Short Gas Natural Position Execute POV Hedger Objective Able to Execute without Credit Implications As presented 9/6/07 ©
Slide 10: To Review — Options
To Review — Options What to Consider » Stay Togethen, v Entergy Corporation Financing v Entergy Nuclear Finance Holding v Plant Level SLL Lee Ring Fence Risk y Entergy Nuclear Finance Holding Reduce Commodity Risk? Financing (Business Risk = Same) enh Enteray Nuclear Finance Holding Expand Strategy
Slide 11: Directional Decision
rectional De c The Status en Brooks: snow this youd? ‘Wife Brooks a to nownere- "You know the ‘The Nowbere Road- carrot on & stick and the yatel ou’re 70- But no ove told me itwas 3 eukde-sac! g road.
Slide 12: Spin-Off With NRC Structure
Spin-Off With NRC Structure Cowie! othe Answer Spin-Off Opportunities Potential Future Structure — NRC Filing* Entergy Nuclear Operations, Inc. (Services) Regulated Utility and Other Subsidiaries Entergy Nuclear Finance Holding market enthusiasm / Spin off business via of NewCe shares te exi: ETR ew
Slide 13: Directional Decision — It Seems Obvious
Directional Decision — It Seems Obvious... Structure Comparisons Status Financing Que Only Valuation O Optimal Capital Structure @ Efficiency O Option Value O Stakeholders = () @ ve: reremers teen Sale Split-Of — Spin-Off Oo ®@ ® «) cc) ie) Least Incremental Benefits G/O0/G/e|G @\|e\e\e O}O|/O/O;e/o
Slide 14: Based Upon What We Believe
Based Upon What We Believe Alternatives: © Status Que A Lever [ll Commodity Hadge seit Apart Low Price POV - Commodity Prices nd Invester Preferences Srewt! Stay Tegether Business Medel Pure Pla Higher Cast of Capital Lower: Ring Fence lot Poczible w/o Lenger-term Other Investment As presented 9/6/0
Slide 15: How It Will Be Accomplished — The Transaction Flow
How It Be Accomplished — The Transaction Flow Transaction Overview; $B Newly Created 3h cenid waned bo wicked ooresan masiivane 4
Slide 16: How It Will Be Accomplished — The Transaction Steps
How It Will Be Accomplished — The Transaction Steps Transaction Ste, SpinCo receives cash for anote and uses cash to repay intercompany debt previously incurred by the non-utility nuclear business Entergy contributes its non-utility nuclear assets (stock of subsidiaries andlor assets) to SpinCo in e
Slide 17: How It Will Be Structured — Who Owns, Who Operates
How It Will Be Structured Who Owns, Who Operates 100% Owner » [eno ] 100% Owner FitzPatrick FitePatrick > | indian Point 23 tndian Point 2 & 3 Palisades Palisades Pagein Vermont Yankee Pilgrim Cooper Contract
Slide 18: How It Will Be Structured — And Who Does What
How It Will Be Structured And Who Does What Board (tentative) Donald C. Hintz J. Wayne Leonai Richard J. Smith Leo P. Denaul } John R. McGaha Mark T. Savoi J. Wayne Leonard, Chairman & CEO Donald C. Hintz, Chairman 100% Owner Richart. smith, |= | wicnactR. xansier, cEO CEO, CNO Mark T. Savoff, Eve C
Slide 19: When It Should Be Done — The Timeline
When It Should Be Done — The Timeline Projected Spin-Off Timeline ttustrative [Sep 07 Jan 08 Apr Jul Oct Jan 09 Directional Decision Internal Approvals Conclude Sirafegio Review Final Recommendation Sign Agreements Accpuntina Analysis OT Financials Filing ra fora 8K Filing A Reports! \ Accounting j
Slide 20: What Needs to Be Done — The Checklist
Preparation What Needs to Be Done — The Checklist IRS Tax Filing (optional) — TBD Ruling confirms tax free status of spin-off Timing to complete request/obtain ruling is ~3 -6 months Form 10 Filing - Dec 07 thru Sep 08 34 Securities Act registration statement SEG reviews/provides comments before dec
Slide 21: It Matters — The Nest Egg Principle
It Matters The Nest Egg Principle
Slide 22: Owners
Owners. Joint Venture Entergy Company Nuclear Asset | Nuclear Operations Utility Benefits Business Business Business ‘Open EBITDA; Pure® No investment; Productive Valuation play (one of a kind) Profit from value investment; multiple added eR Retumsé Optimal Capital ‘Cost of capital reduced; High yie
Slide 23: Why You're Better Off — Valuation
Why You're Better Off Valuation Entergy’s Equity Value Miustrative @ Current Utility Nuclear Market @ Market i @ Market Prices Multiples Multiples As presented 9/6/07 22
Slide 24: Why You're Better Off — Value Proposition
Why You're Better Off — _. Value Proposition Unique, Productive} Ut ity Investment Opportunity Portfolio Transformation ( Replace fuel cost with baseload investment (~$5 - 10B opportunity over next § - 10 years) Pergvite Gas-Fired Capacity Acquire or contract some of the 15 GW of merchant capacity t
Slide 25: The Aspiration
The Aspiration EPS Growth and “Real” Decrease in Customer Rates < Past 9 Years> 2 iniery itustrative Base Rates Operational EPS - UtilityiParentiOther Actual Residential Base Rates . {ominal flat, real decrease) 7 Guidance Inflation a 3.05" oe Rates 98 2.02" Grex 5 Years» a Base Rates Operational EP
Slide 26: Why You're Better Off — Value Proposition
Why You're Better Off Value Proposition Value of Divergent Valuation Methodologies for Utilities and Merchants ai et X Multiple; Non-Comps {7 - 12x), Multiple Drivers Calpine v 12.1 ¥ Clean nuclear Dynegy 94 v Asymmetric risk (upside > downside} Mirant 84 ¥ Value (carbon play} NRG 78 Y Scarcity
Slide 27: Combination Could Lead to $2B EBITDA
Believe...Combination of Could Lead to $2B EBIT SpiaCo EBITDA Drivers Mustrative ea vs. Long-term Opportunity; $I Today's Market Prices Bullish POV (Entergy) Gas Prices rs | a | Up to o4 Up to 26 2012E Assumptions Upto —_o.2 ij ~31 TWh open @375 os +$0-1.507 ~4 GW open 3 @ $3.8/K-mo, Up to P| P. MMB
Slide 28: An Attractive Multiple Relative to Others
And an Attractive Multiple Relative to Others ©25) SrcCocomparison to Merchant “Peers” Concentration Concentration 5 5 4 GE Base Load Ste Base Load Credit Credit co, co, Commodity Commodity Position Position NRG SpinCo ”
Slide 29: Why You're Better Off at Entergy — Ring Fence Nuclear
Why re Better Off at Entergy — Ring Fence Nuclear = Entergy Dividend Payout/Leverage Ratio tttustrative Yo 100 After Dividend Payout a s ai(osaeren)i id Payeut ~54%" Gress Debt/Cap ~57% v Business position upgrade ¥ Commodity risk aligned with business Qo ¥ Event risk reduced 50 100 Leverage "$3.00
Slide 30: Why You're Better Off at SpinCo — Cost of Capital Is Reduced
Why You're Better Off at SpinCo — Cost of Capital Is Reduced WO Sale Weighted Average Cost of Capital iMustrative Cost of Capital BB? Debt: $B
Slide 31: Why You're Better Off — Efficiency
Why You're Better Off — Efficiency The Benefits Opportunity to _- optimize the capital structures _of both companies and reinforce capital discipline Align commodity risks with each business Management focus on unique initiatives for each company going forward Greater flexibility when developing and
Slide 32: Why You're Better Off — Option Value
Why You're Better Off — Option Value Value of Two Stocks > One? (X2 not 2x} Provide option value of having two stocks instead of one Investors can diversify the unique commodity and market risks of each business Liquid “stop loss” option _ not available to shareholders or the company today Investors
Slide 33: Why You're Better Off — Stakeholders
Why You're Better Off — Stakeholders Owners - Value/Options Customers — Unique Initiatives
Slide 34: Could It Change
Could It Change For Example tlustrative Timeline? Sepo7 Jan 0g Apr Jul Oct Jan 03 Capital Markets Collepse | ©Baley > Structural Change? Transact with spenser? e.g., Cash up frent> risk-adjusted POV? < Execute separate jeint venture? IPO? Then Spin?
Slide 35: The Financial Goal
The Financial Geal: tur ing Capital te Own “
Slide 36: Financial Aspirations
Financial Aspirations —
Slide 37: Financial Aspirations (07 — Opportunity)
Financial Aspirations (07 — 12 Opportunity) Tetal Sharehelder Return Earnings Profile ‘Owners’ Distribution Profile Wgace son eprTDA gas $0.5 - 18 annual (existing portfolio) repurchase capacity 70 - 75% div payout Qinergy So Bares PZ inepgy $2.5B repurchase growthyyr capacity after spin-o Credit Qr
Slide 38: Brooks That was very exciting stuff. Itwas like watching a Mutual of Omaha commercial
Brooks That was very exciting stuff. Itwas like watching a Mutual of Omaha commercial Meryl Streep (another defendant) You’re just jealous. Brooks More than you'll ever know. Defending Your Life 100% Owner 100% Owner Utility, {Other Subs 3 g a e Aunique growth proposition, meeting customer pfretie w
Slide 39: Unsure? Unconvinced?
Unsure? Unconvinced?
Slide 40: Slide 40
Slide 41: And the Board Considered That
And the Board Considered That Issues? Concentrated portfolio increases financial risk from an outage or other negative operational event Numerous statistical tools used to evaluate likelihood of such event and impact of plant failure calculated Plant material condition assessments Growth prospects a
Slide 42: Prog ir
Prog ir eater | te ed ke ‘Mex bat WOrth $36 miltion Do you day eae M een remember what happened to the cattle? How yest oh Re sy five, sts Your ty episode Bn te Tr iond along onee & Brooks dinner Ee nat com Taever got 2 5 informal iter ‘Wetimes- a trnighe 2Dy wer, ANT know 4&8 their, teeth fen out,
Slide 43: Years of "Being Different"
9 Years of “Being Different”
Slide 44: Years of Making a Difference
9 Years of Making a Difference Eny sasaces Safety above st eee Safety
Slide 45: Slide 45
Slide 46: Your Company, Your Board/Management, Your Choice
Your Company Your Board/Management Your Choice
Slide 47: Slide 47
Slide 48: Einstein's Theory
-.. Einstein's Theory ¥ 42"¢ Edison Electric institute Financial Conference J. Wayne Leonard aa Chairman and Chief Executive Officer => Enter, LY.
Slide 49: Appendix
Appendix == Entergy.
Slide 50: Reg G Reconciliations
Reg G Reconciliations Table 1: Earnings - Reconciliation of GAAP to Non-GAAP Measures 1993 Actual per share) 1998 Actual Utility and Parent As-Reported Earnings te) 1.62 Less Special tems Regulatory Reserves (0.25) Texas Regulatory & Reserve Adjustments 0.15) Total Special Items, ) (0.40) Utility an
Entergy — Edison Electric Institute 42nd Financial Conference 2007 on 6ix