Entergy Corporation · NYSE:ETR
Entergy — UBS Natural Gas & Electric Utilities Conference (February 2005)
43 slides from Entergy's conference presentation, Feb 17, 2005
Slide 1: The Simple Life
The Simple Life UBS Natural Gas & Electric Utilities Conference J. Wayne Leonard roy Chief Executive Officer => February 17, 2005 = Enier gy
Slide 2: Safe Harbor and Reg G Compliance
Safe Harbor and Reg G Compliance In this presentation and tom tine to time, Enteray makes statements concerning its expectations, beliefs, plans, objectives, goals, strateaies, and fulure events or perform ance. Such statements are “orwardlooking statements” within the meaning of the Private’ Securt
Slide 3: Entergy's Business Model
Entergy’s Business Model Suppiy/Demand —_CifmateWeather Data Environment Compotiive Bohayior Fuol Prices Logisiation/Reguiation CroditMarkets Caplial Markets Markets Skills wf Scale Operational Scope Excellenc Positions
Slide 4: Strategic Principles Are the Cornerstones of Our Business Model
Strategic Principles Are the Cornerstones of Our Business Model Business Strategy Financial Strategy jalance Sheet Financial > a Corporate Wealth Creation > <a Corporate Wealth Distribution
Slide 5: Business Strategy Is Grounded in Four Key Concepts
Business Strategy Is Grounded in Four Key Concepts BUSINESS STRATEGY POV - Driven Develop robust POV; use it to drive all decisions Narrow Strategic Disciplined Capital Conservation of —_Identify every risk; price, mitigate and monitor the ones
Slide 6: Simple But Timeless Principles Guided Our Past Actions
imple But Timeles Principles Guided Our Past Actions
Slide 7: Dynamic POV Drove Decisive Actions
Dynamic POV Drove De: e Aci Divestitures 98-04 FPL Merger Security Latin Hyperion America a Fossil EIS lusiaa) Edesur mre st | Turbines cree Wholesale Results G&S Ge
Slide 8: Including Divesting to Extract Maximum Value
Including esting to Extract Maximum Value ENTERC Pe) gS. GULF SO! | sou to | sora to A TExas Gas Lynch N_reansmission, Lee : of Loews Comp Announced 9/2/04 Announced 11/22/04 Closed 11/1/04 Closed 12/29/04 Undisclosed price $1.136B price, 2"¢ Ongoing contract with highest among ML for services compa
Slide 9: Strategic POV - Exit
Strategic POV - Exit Example #1 TRADING BUSINESS STRATEGY PO’ Natural owners: Big ba Sideline bi Global market del Complex fuel price interrelationships More risk, less margin Conservation o} Example #2 PO! Natural owners: ; EBITDA multiple for Master limited partners comparable transa (financing ad
Slide 10: Strategic POV - Grow
Strategic POV - Grow NUCLEAR BUSINESS STRATEGY Scale advantage Poor operators in indust Talent pool shrinking NRG pressures Environmental benefits ¢ “zero emission: Pov: High gas prices /low technology [ fe Bid-ask spread in Io Bid-ask spread (51 PPAS until...) Credit risk in PPAS State regulatory p
Slide 11: Protecting Wealth
Protecting Weal FINANCIAL STRATEGY Balance Sheet Align leverage (including debt, guarantees and Optimization contractual obligations) with business risk profile iquidityipursue 0
Slide 12: Balance Sheet Optimization
Balance Sheet Optimizatio Capital Structure 1098 vs. 4Q04; % a Del EC B aBB mm ¢ BBB+ amp A J BBB+ mm A- 1098 4004 CI) Gee BBB- = BBB Cash Flow Interest Coverage 97-04; times 8 pt : 6 _ eee Al = Baal ELI Baa2 => Baal 4 ENO! Neg = Stable 2 Issued Baa3 issuer rating 0 for Entergy Parent ‘Senior secure
Slide 13: Cash Enabled Entergy to Act
Cash Enabled Entergy to Act Cash Generation and Investment 99.04; $B tility Nuclear 16 Cash Flow from Operating Activities Ek/Other 12 $12.78. Total ag) ‘ S 99-04 = $0.98 / year _ /Debt reduction Net share 1 repurchases Inve: Cap {4 = o8 — Operating Maintenance FreeCash Proceeds Investments Ending C
Slide 14: Business + Financial Strategy = Wealth Creation
ess + Financial Strategy = Weal real CORPORATE WEALTH CREATION "
Slide 15: Operational Earnings in a Mature Industry
in a “Mature” | Operational Earnings 99-04 and 05 Guidance; $Ishare 4,604.85 4.25 Sold 3.81 ee 3.80 Weather Impact 3.42 3.23 90.32, 217 99 oo 1 02 03 04 05 Guidance As- Reported 2.25 297 3.23 2.64 4.01 3.93 460-485 4
Slide 16: Share Price Grows with Earnings / Cash Flows
hare Price Grows with Earnings / Cash Flows Entergy Share Price 111198-211 1105; Sishare $71.58ishare 8 Fas 60 40 20 \s16.69!share ‘i Mar 00 198 189 1100 1101 1102 1103 1104 1105 5 ‘Sousa Raby
Slide 17: Wealth Creation: Market Cap Grows with Share Price
Wealth Creatio) Market Cap Grows with Share Price ization Entergy Shares Outstanding iB 111998-12131104; M Market Capi 111198-1213 110 250 71) 12% 240 230 220 210 200 4498 1799 1700 1101 1102 103 104 7730199 - ETR announced $0.75B share repurchase program @ 20204 - ETR announced $1.58 share repurcha
Slide 18: Wealth Creation + Owner Focus = Wealth Distribution
Wealth Creation + Owner Focus Wealth Distribution CORPORATE WEALTH DISTRIBUTION "
Slide 19: Distributing Wealth to Owners
Distributing Wealth to Owners Dividends Paid and Net Common Share Repurchases 99.04; $B 08 05 Net Share —- 03 03 Repurchases Dividends —- Do 99 oo o1 02 03 04 Announced(G0.758 2R)ivitend Announced share reput increase §=— C$ 1.5E)share program repurchase program an&20% dividend increase * includes o
Slide 20: Total Shareholder Return
tal Shareholder Return Total Shareholder Return Five years ending 9130/03 and 9130/04; % 9130198 through 9/30/03 ac 9 150 100 so S&P 500 ° saP Electrics 60 9798 9/99 «900 901 902 913 Sourve: Boomer Back to Back 9130199 through 9/30/04 150 so S&P Electrics 0 ‘S&P 500 60 999 900 91 902 903 9/04 oy
Slide 21: The Same Timeless Principles Will Determine Our Future
The Same ‘Timeless’ Principles Will Determine Our Future
Slide 22: Initiatives Have Been Identified for 2005
Initiatives Have Been Identified for 2005 Operational and As-Reported Guidance 05; $ishare $4.60 - $4.65 $1.30 - $1 (80.05) -{ 05 Guidance Key Drivers Entergy NUcleae) Contract pricing Uprates Productivity improvements Accretion Utility! ParentiOtneny| Sales growth Rate actions Interest savings High
Slide 23: As Well As Strategic Opportunities for the Future
As Well As Strategic Opportunities for the Future Future Strategic Opportunities Utility | Recover ongoing investments in rate base to Growth | Long-term: 5.6% improve reliability and service i Earn incentives under performance-based Returns 9% ROIC rates and/or incentive regulation _——— Acquire gen
Slide 24: Grow Rate Base to Improve Reliability and Service
Grow Rate Base to Improve Reliability and Service Utility Rate Base Examples of Growth Capital Expenditures 99 vs. 04; $B Perryville plant acquisition (application filed with LPSG March 04) Additional supply plan acquisitions 12.0 ANO steam generators and vessel head 10.6 replacement (declaratory or
Slide 25: Increase ROE Through Incentives
__ Increase ROE Through Incentives 11.6 10.7 04 As- Reported 9.9 1.6 Entergy Gulf Proposed States-LA 10.65% ROE (proposes) = and 7S bp bandwidth Entergy Proposed Louisiana anism Entergy 10.77% ROE Mississippi and 143 bp bandwidth Entergy New 11.25% ROE Orleans with 100 bp bandwidth & {props z an to
Slide 26: Acquire Generating Resources through Supply Plan
Acquire Generating Resources through Su Plan New Generation by Region that reduce prices to customers Generation Stati ID, Merchant Capacity ~aew Entergy Short sew Pasition Entergy Units > ‘35yrs old 76cw Total ~9-11GW A Mothballed @ Onerstionst he Active Conmiruction ME Suspended Corsstruction Excl
Slide 27: Aggressively Pursue Solutions for Entergy Gulf States - Texas
Aggressively Pursue Solutions for Entergy Gulf States — Texas Legislation ‘Objectives Legislative Sponsors Clarify that Entergy Gulf States is no longer operating under a rate freeze | Expedite recovery of transition costs Provide reque: idance to the Senator Tommy Williams Representative Allan Ritt
Slide 28: And Contingency Plan if Legislative and Regulatory Solutions Stall
And Contingency Plan if Legislative and Regulatory Solutions Stall Alternatives to Legislative or Regulatory Solutions 41. Filed Appeal of rate case dismissal in Travis County, ‘ - No prescribed timeline - Past experience indicates at least six months 2. Evaluate separating Entergy Gulf States into
Slide 29: Resolve Market Power Proceeding
_ Resolve Market Power Proceedin a Uncommitted pivotal Pass in all Delivered Price Test supplier screen markets Uncommitted market —_Fail in the share analysis Entergy control area 20% market Pas: native load properly considered Loss of market-based rate authori jot expected to have material impact
Slide 30: Achieve Approval of Transmission Proposal
Generation ransmission Achieve Approval of Transmission Proposal Distribution Customers ‘Independent Coordinator Merchants Key Functions: Administer OASIS Calculate available flowgate capacity Grant or deny service Also: Oversee Entergy's transmission planning process Facilitate regional planning pr
Slide 31: Effectively Manage Nuclear Portfolio
Effectively Manage Nuclear Portfolio Unsold Energy at 12/04 Sensitivity to $9/MWh O5E-09E; % of Planned Generation or $1/MMBtu Price Change” Sishare Sesenred C&Unsoid >———— —> Gus > 62 31 5 0.0 0.04 5 " OSE O06E O7E OBE O09E 10 Energy Prices at 12/04 O5E-09E; Average SIMWh 60 Market 20 0 ATC Firm LD
Slide 32: Expand Capacity, Reduce Costs at Entergy Nuclear
Expand Capacity, Reduce Costs at Entergy Nuclear Planned Uprates Entergy Nuclear Non-Fuel O&M 04-06E; MW 02-05E; $M 4,200 ee 700 ‘Adjusted* 4,058 \ 600 As-Reported 04 O5E O6E 02 03 04 OSE "02 adjusted for full year of Vermont Yankee and RFO amortization; 03 exciudes voluntary severance progrant 34
Slide 33: Grow Nuclear Business
~ Grow Nuclear Business h Acquisitions and Contracts Potential Market U.S. Nuclear Market... i Single owner! 4-2 units Duane Amold 1* ™ small scale (22) vs. 14 to come on 3 3 aX market since 03 é Production cost $22vs.$15-20 Every $1/MWh x above $20/MWh per MWh savings = $8M S 0 Low capacity 87% vs.
Slide 34: Cooper Success - More Reliable / Less Risk
Cooper Success — More Reliable / Less Risk BS umonaex 03-04; Index Gooper 764 MW 04 Year in Review |WANO Index Factors! 89 93% capability factor Record run of 321 days Operational 68 , - performance Security systems Radiological Chemistry Fuel 03 04 "We inspected you often and thoroughly and you pas
Slide 35: Pursue Additional Opportunities?
_ Pursue Additional Opportunities? includes: Transform nuclear asset portfolio into a business {i.e., add other generation types or short position) Evaluate M&A opportunities u
Slide 36: Aspiring to Maintain Flexibility
Aspiring to Maintain Flexibility FINANCIAL STRATEGY Aspiration Status <50% net debt to net capital Currently at 45% net debt to net capital Debt to capital at 47% Also monitoring total debttotal capital to remain within rating agency ranges Aspiration Status Continuous improvement in ratings and bus
Slide 37: Aspiring to Create Long-Term Wealth
Aspiring to Create Long-Term Wealth CORPORATE WEALTH CREATION rol eturns Aspiration | Near-term: 8-10% Aspiration | 9% ROIC Long-term: 56% Status 05 EPS guidance Status Currently at consistent with near- ROIC as term 8-10% target intrinsic growth 68-10% EPS grawth initiatives, share targeted in 06 d
Slide 38: Aspiring to Distribute Wealth to Owners
Aspiring to Distribute Wealth to Owners CORPORATE WEALTH DISTRIBUTION Dividends Share Repurchases Aspiration Status Targeting top quartile annual dividend grawth (5%) 20% increase announced 10104 Second stepwise increase in two years (29% increase announced 7103) Aspiration | Invest at positive spre
Slide 39: Appendix
Appendix > | Eniergy
Slide 40: Appendix: Reg G Reconciliations
Appendix: Reg G Reconciliations Table 1: Cash Generation and Investment - Reconciliation of GAAP to Non-G AAP Measures 1999-2004 (8 in billions) 1999-2004 Beginning cash, January 1, 1999 oy 1.2 Cash flow provided by operating activities () 12.7 Less: Net nuclear fuel purchases (0.3) Decommissioning
Slide 41: Appendix: Reg G Reconciliations
Appendix: Reg G Reconciliations Table 2: Consolidated Earnings - Reconciliation of GAAP te Non GAAP Measures 1999-20056 (8 per share) 1999 zoo 2004 2002 2009 2004 2005 As-Reported Earnings © 2.26 297 3.23 2.64 4.04 393 4604.85 Less Special tems UW hlity, Parent § Other Regulatory and reserve adjustm
Slide 42: Appendix: Reg G Reconciliations
Appendix: Reg G Reconciliations Table 3: Utility Return on Equity - Reconciliation of GAAP to Non-GAAP Measures 1999 and 2004 1%) 1999 2004 Utility As-Reported Return on Equity @) 9.9 11.6 Less Utility Special Items Regulatory and reserve adjustments Change in unbilled revenue estimate Depreciation
Slide 43: Appendix: Reg G Reconciliations
Appendix: Reg G Reconciliations ation of GAAP to Non-GAAP Measures Table 5: Credit Metrics -Recone December 31, 2004 ($ in millions) 2004 Gross debt @) 7,807 Less cash and cash equivalents ) 808 Net debt ©) 6.999 Total capitalization co 16,466 Less cash and cash equivalents () 808 Net capital te) 15
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