Entergy Corporation · NYSE:ETR
Entergy — 37th Edison Electric Institute Financial Conference 2002
38 slides from Entergy's conference presentation, Oct 18, 2002
Slide 1: Financing, Liquidity and Risk Management Summary
Financing, Liquidity and Risk Management Summary 37th Edison Electric Institute Financial Conference October 20 — 22, 2002 2 intergy
Slide 2: Safe Harbor
Safe Harbor The following constitutes_a “Safe Harbor” statement _under_ the Private Securities Litigation Reform Act of 1995: Investors are cautioned that forward- looking statements contained herein with respect to the revenues, earnings, performance, strategies, prospects and other aspects of the
Slide 3: Entergy Adheres to Solid Financing, Liquidity and Risk Management Principles
Entergy Adheres to Solid Financing Liquidity and Risk Management Principles * Establish capitalization and coverage targets consistent with each business’ risk profile * Use internally-generated funds for investment - Fi ¥ earn the right to grow Inancing * Design financings to balance low cost and a
Slide 4: Entergy Adheres to Solid Financing, Liquidity and Risk Management Principles
Entergy Adheres to Solid Financing Liquidity and Risk Management Principles * Establish capitalization and coverage targets consistent with each business’ risk profile * Use internally-generated funds for investment - Fi ” earn the right to grow Inancing * Design financings to balance low cost and a
Slide 5: Capitalization Is Balanced between Equity and Debt
Capitalization ls Balanced between Equity and Debt, with Minimal Short Term Financing Book versus Market Capitalization %, Ended 3Q02 Net Short-Term Debt Long-Term Debt Equity Book Market *Note: All 3002 financial data in this report is unaudited
Slide 6: Entergy's Debt Structure
Entergy’s Debt Structure On Balance Sheet Debt 3202, $B Entergy $0.8 4) ; Fe Regulated Nuclear 7 Utility Whole IP3/Fitz* EAI EGsI Damhead** Top of lowa* 90855 $1.3 $1.99 CC | ELI EMI $1.1 $0.6 5 ENO! SERI $0.2) $0.9 *Bached by Entergy guarantees 5 Nonrecourse to Entergy
Slide 7: Entergy's Off Balance Sheet Debt Is Minimal
Entergy’s Off Balance Sheet Debt Is Minimal Operating Leases $M Real Estate 273 Vehicle 99 Other _23 Total 395 Joint Venture Debt (50% share)* $M RS Cogen 137 EK 144A 150 EK Revolver _38 Total 325 X d “Joint venture debt is nonrecourse to Entergy Net Debt to Net Capital Ratio 9/30/02, % 48 49 50 Exc
Slide 8: Entergy's Bank Revolvers Are a Small Portion of Overall Capitalization
Entergy’s Bank Revolvers Are a Small Portion of Overall Capitalization Undrawn Corporate Bank Revolvers Capacity* ($M) Maturity $1.45 B 364-day revolver (ETR) $735 5/14/04* $63 M 364-day revolver (EAI) 63 5/31/03 $15 M 364-day revolver (ELI) 0 1/31/03 $25 M 364-day revolver (EMI) 25 5/31/03 Total $8
Slide 9: Utility Dominates Entergy's Debt Structure
Utility Dominates Entergy’s Debt Structure Debt Composition Utility Debt vs. Total Debt % of Total S&P Electric and Multi-Utility Companies, %, as Of 2Q02 100 80 : al ° on ee 40 20 | “Lil i i a
Slide 10: Entergy's Debt Ratio is Below Most Peers
Entergy’s Debt Ratio is Below Most Peers Net Debt to Net Capital Ratio Net Debt to Net Capital Ratio % S&P Electric and Multi-Utility Companies, %, as Of 2Q02 60 100 55 if < 80 {I 50 S&P Elec. lll ins Median 60 1 \ Multi-Uty. 45 Median 40 40 35 20 30 2Q 4Q 2Q 4Q 2 4Q 2Q 40 2a 98 98 99 99 00 00 01 01
Slide 11: Liability Portfolio Designed to Balance Cost and Asset/Liability Matching Goals
Liability Portfolio Designed to Balance Cost and Asset/Liability Matching Goals Distribution of Asset Life Distribution of Liability Life Asset Retirement, % Debt Maturity, % 40
Slide 12: 2003 Maturities Comprise about 17% of Total Debt
2003 Maturities Comprise about 17% of Total Deb Most Will Be Refinanced in Advance Debt Refinancing / Maturities Plan $B 1.2 aN 0.8 Debt \ Refinancing 0.4 Cumulative Net Change in Debt 0.0 -0.4 . Debt Maturities -0.8 7 4Q02 1Q03 2Q03 3Q03 4Q03 (i Utility [-] Nuclear [) eEcs oh
Slide 13: Current Year Debt Issuances Are About Double Historical Average
Current Year Debt Issuances Are About Double Historical Average Long Term Utility Securities Issued $B 1.4 Early 03 Refinancing {to be completed in 1.0 remainder of 02) Average 0.8 ay 0.6 1.2 0.4 Early 04 Year Refinancing 0.2 date 0.0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 12
Slide 14: Entergy's Near Term Maturities Are Below Industry Median
Entergy’s Near Term Maturities Are Below Industry Median Distribution of Debt Maturity Maturities <12 Months vs. Total Maturities % of Total* S&P Electric and Multi-Utility Companies, %, as Of 2Q02 50 40 30 |) 20 Mra a —e Multi-Uty. Median LE Mott, 0 ETR 413
Slide 15: Utility Debt Continues to Be Marketable
Utility Debt Continues to Be Marketable Utility Industry Debt Issued* Entergy Utility Financing in 2002 YTD 2002, $B Issue Date Rate Amount($M) Maturity ELI-Nuclear Fuel Notes 1/15/02 5.86% 25 1/1505 EGS/Nuclear Fuel Notes 1/24/02 6.46% 25 124.05 12.7 ELLRevolver 1/31/02 Floating 15 1/3003 EGSLRailc
Slide 16: Entergy Has No Equity or Credit Rating Triggers That Accelerate Debt Repayment
Entergy Has No Equity or Credit Rating Triggers That Accelerate Debt Repayment Obligation of Estimated Annual Company Trigger Consequence Liquidity Impact ($M) ETR Downgrade to below Increased pricing on Up to $16 M BBB. at utility operating © $145 B revolver company * $60 M term loan + $5 M guarant
Slide 17: Entergy's Default Provisions that Cross Among Business Units Are Limited
Entergy’s Default Provisions that Cross Among Business Units Are Limited Debt of Cross Defaults Compan Compa Provi Cash Impact $B ETR EAI, EGSI, If a.utility subsidiary 1) cannot pay its debts or Revolvers: up to 1.51B ELI, EMI, goes bankrupt, or 2) cannot pay other obligations IP3/Fitz guarantee: 0
Slide 18: Entergy Adheres to Solid Financing, Liquidity and Risk Management Principles
Entergy Adheres to Solid Financing Liquidity and Risk Management Principles Financing Risk Management Liquidity * Maintain access to ample, diverse sources of liquidity — liquidity strength is worth the incremental cost * Improve liquidity access through building ratings into strategy; establishing
Slide 19: Entergy Has Focused on Liquidity Access
Entergy Has Focused on Liquidity Access Strategies to Improve Liquidity Access Objective Entergy’s Approach Building ratings into strategy Key corporate performance drivers affecting ratings discerned; rating agency decision processes modeled to understand effect of strategic choices on company rati
Slide 20: Maintaining Bank and Credit Rating Agency Relationships Is Key
Maintaining Bank and Credit Rating Agency Relationships Is Key a Bank Relationships * Expand bank relationships (increased 50% since the mid 1990s) * Borrow from traditional investment banks * Proactively market Entergy to banks worldwide * Utilize traditional commercial banks to participate in mana
Slide 21: Entergy's Liquidity Position Is Solid
Entergy’s Liquidity Position Is Solid Exceeds $1B Net Liquidity Target through 2005 Liquidity — Sources and Uses $B From From From 9130/02 9/30/02 9/30/02 through through through 12131102 12131103 12131104 Cash 0.9 0.9 0.9 Credit Revolver - unused portion 0.7 0.7 O77; OCF 0.5 22 4.2 Planned Refinanc
Slide 22: Entergy's Liquidity from 1998 through 2001 Was Also Quite Strong
Entergy’s Liquidity from 1998 through 2001 Was Also Quite Strong Liquidity $B As of As of As of As of 12131198 12/31/99 12131100 = 12/31/01 Lee ag | 0.1] 1| 1.0| 1.0 Gross Liquidity 1.3 1.3 2.4 1.8 241
Slide 23: Even If Parent Revolver Is Not Renewed, Excess Liquidity Is Available
Even If Parent Revolver Is Not Renewed, Excess Liquidity Is Available Net Liquidity Excluding Renewal of Parent Revolvers $B From From From 9/30/02 9/30/02 9/30/02 through through through 12131102 12131103 12/3 1104 Net Liquidity 2, 2 1.8 Less Parent Revolver* = = (1.4) Net Liquidity Excluding Revol
Slide 24: Entergy Has Numerous Liquidity Levers, If Needed
Entergy Has Numerous Liquidity Levers, If Needed Liquidity Levers Potential Liquidity $B Issue Entergy Corporation term debt $0.5 Reduce annual utility capital spending and $0.4/yr O&M expense by 15% Increase net debt to net capital to 55% at utility $0.3 operating companies under 55% leveraged at e
Slide 25: Key Uncertainties are Identified and Managed
Key Uncertainties are Identified and Managed Integrated Risk Assessment Process What are the Whatisthe Is this risk How should we Driving risks of each magnitude of | acceptablein reduce any Questions: scenario under each risk? light of the unacceptable consideration? corporation's _ risk exposure?
Slide 26: Future Cash Flow Is Stable, with Limited Sensitivity to Market Uncertainties
Future Cash Flow Is Stable, with Limited Sensitivity to Market Uncertainties Distribution of 2003 OCF, $B -20 18 | 20 «i in 1.9 2.0 241 ——_.—_’ 95% Confidence Interval: $250 million Uncertainties: Weather Nuclear generation Spark spreads Interest rates EK dividends Inflation Event Risks: Regulatory
Slide 27: Earnings Mostly Derived from Regulated Sources; Dividend Payout Is Conservative vs. Peers
Earnings Mostly Derived from Regulated Sources; Dividend Payout Is Conservative vs. Peers Earnings Breakdown Dividend Payout Ratio ‘% of Non-Parent Earnings S&P Electric and Multi-Utility Companies, %, as Of 2Q02 Trading Pipeline \ 100 “a 80 60 S&P Elec. A Median a 40 q a a 2 a q q ol i __Multi-Uty.
Slide 28: New Disclosures Help Keep Relative Volatility Low
New Disclosures Help Keep Relative Volatility Low New Disclosures Operational metrics by business Mark to Market earnings as percent of total * Liquidity, on and off balance sheet debt metrics Detailed multi-year earnings guidance Multi-year sources and uses of cash Summarized utility regulatory act
Slide 29: Entergy Adheres to Solid Financing, Liquidity and Risk Management Principles
Entergy Adheres to Solid Financing Liquidity and Risk Management Principles Financing * Identify cash flow risk exposures and use probabilistic analysis in forecasting future cash flows * Invest at positive spreads to investment specific cost of capital and maintain clear point of view of commodity
Slide 30: Entergy-Koch's Trading Activities Do Not Impact Entergy's Liquidity
Entergy-Koch’s Trading Activities Do Not Impact Entergy’s Liquidity Balanced Business Model combines pipeline stability with trading volatility Rated A/A3 No Entergy Guarantee* No Koch Industries Guarantee Stringent Credit Analysis EK Debt to Total Capital** 25% EK Counterparty Credit Rating* n-Inv.
Slide 31: Entergy's Return Standards Match Business Risk Profiles
Entergy’s Return Standards Match Business Risk Profiles WACC by Business* % Minimum 17.1 Acceptable 15.8 15.8 iil 11.4 | WAcc 8.7 8.4 8.7 7.1 Utility Pipeline Merchant PPA Fossil Trading Nuclear Nuclear Generation % Debt Assumed 50 60 0 0 0 50 “Estimated based on generic assumptions; WACCs assigned
Slide 32: Historical Results Demonstrate Entergy Has Invested at Positive Spreads
Historical Results Demonstrate Entergy Has Invested at Positive Spreads... RoIc* RoIc* 12 Months Ended 3Q02, % S&P Electric and Multi. 12 months ended 2Q02: % lity Companies, 30 20 10 Mdoana, S&P Elec. Median t i Utility EWO Entergy Entergy- Total Nuclear Koch “Operational ETR and Multi-Utility oper
Slide 33: ...by Executing on Its Point of View to Take Advantage of Exit Strategies
...by Executing on Its Point of View to Take Advantage of Exit Strategies Timeline of Acquisitions and Divestitures = esi |] cH |] tendon | desur || wyperin || E° || pesoto || satena || america || turbines |) Seam Power Electricity county, ke ‘stone esoe. = Projects Sites Divestments Gains/Losses Fr
Slide 34: Entergy's Counterparty Credit Is Strong
Entergy’s Counterparty Credit Is Stro Counterparty Credit Rating* $B 02 99% Investment Grade ———_{-_ ————-=. 01 1% Non Investment Grade lommiemn\ 0.0 —_—_ AAA At A A- BBB+ BBB- BB "Excludes Entergy-Koch, LP. 48
Slide 35: Summary
Summary Principled-Based Financing Decisions Get Results Debt Structure that is Balanced in Real and Relative Terms Maturities that are Manageable and Marketable Deep, Versatile Liquidity, Supported by Sustainable Cash Minimal Exposure to Triggers, Cross-defaults, and Collateral Calls Counterparty R
Slide 36: Appendix - Detailed Listing of Entergy's On Sheet Debt
Appendix-Detailed Listing of Entergy’s On Sheet Debt [As of Sentember 30. 7007 % of Total Enteray Arkansas, In. Fist Mortgage Bond sivies2 10000 Freed 7720% 100.00 122% anv2oce Fist Mortgage Bond worwiess 18500, Freed 000% 146.00 129% 10/1/2003, Fist Mortgage Bond 72001 10000, Foced 6.125% 100.00 42
Slide 37: Appendix - Detailed Listing of Entergy's On Sheet Debt (cont'd)
Appendix-Detailed Listing of Entergy’s On Sheet Debt (cont'd) As of Sentember 30. 2002 Interest Ratos As of 93002_ Amount (3K) % of Total Issue Date Commitment Fixed/Float Debt Maturity Entergy Louisiana, nc. Fist Mortgage Bond suwie72 2600 Feed 750% 1528 oa0% 142002 Fist Mortgage Bond erv2000 16000
Slide 38: Appendix - Detailed Listing of Entergy's On Sheet Debt (cont'd)
Appendix-Detailed Listing of Entergy’s On Sheet Debt (cont'd) As of Sentember 30. 2002 % of Total Entergy New Orleans Ine, General & Refund sive: 2800 Ficed 700% = 250 030% 32008 General 2 Refund 2001 3000, Ficed a50% 3000 37% 3/2008 General 2 Refund qez000 3000, Fixed 225% 30.00 037% 7As2006 Genera
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