Entergy Corporation · NYSE:ETR
Entergy — Morgan Stanley 12th Annual Global Electricity & Energy Conference (March 2005)
40 slides from Entergy's conference presentation, Mar 10, 2005
Slide 1: Adapting To Create Long-Term Value
Adapting To Create Long-Term Value Morgan Stanley 12" Annual Global Electricity & Energy Conference Leo Denault Executive Vice President roy and Chief Financial Officer = March 10, 2005 = Enier gy
Slide 2: Safe Harbor and Regulation G Compliance Statement
Safe Harbor and Regulation G Compliance Statement In this presentation and from time to time, Entergy makes statements concerning its expectations, beliefs, plans, objectives, goals, strategies, and future events or performance. Such statements are “forward-looking statements” within the meaning of
Slide 3: Presentation Outline
= ce o Presentation A Quick Review of 2004 Results and Achievements A Closer Look at Our Agenda for 2005 The Path to Drive Growth and Create Value Beyond 2005
Slide 4: Entergy Continued to Execute on its Strategy in 2004
Entergy Continued to Execute on its Strategy in Achieve industry leading total shareholder returns through operational excellence and portfolio management > <a Business Strategy Financial Strategy Balance Sheet Financial Corporate Wealth Creation > a Corporate Wealth Distribution
Slide 5: 2004 Actions Supported Strategy
2004 Actions Supported proposal filed Dec es TX case reed dismissal ipeesmery ismissea | ‘ISmssa ) recovery: Jan Aug Dec retums zt ra S| screens ron: a Faseified halted filed ended 5 " Earnings 8 growth and EH contracts capital z announced deployment Ecs E Jun Fe EK strategic Portfolio wc review Gea
Slide 6: Advanced Rate Cases in Support of Long-Term Growth
Advanced Rate Cases ort of Long-Term Growth $167M retail rate case Post-hearing briefs filed global settlement rate case filed after retail open EGS pursued legislation to achieve clarity that access efforts halted ROA is delayed and it is not ina rate freeze Objectives of Entergy’s Filings Recover
Slide 7: Advanced FERC Issues to Support Supply Plan and Transmission Independence
Advanced FERC Issues to Support Supply Plan and Transmission Independence Action To Date Hearings comple! Proceeding ‘coordinator of transmission filed with FERC Objectives of Entergy’s is Support goat of reducing customers’ a | | i - a fuel costs Facilitate adding efficient new generation to rate b
Slide 8: Completed Nuclear Uprates and Achieved Operational Goals
Completed Nuclear Uprates and Achieved Operational Goals Entergy Nuclear Capacity 03-04; MW 4,058 2001 Total [ Bp COUAF 13 57 MW 03 04 Safety and Efficiency Achievements 04 Gnplanned outage days declined by 53 vs. 03 Most MWhs generated in a year at Indian Paint and at Pilgrim More than 10 million h
Slide 9: Closed New Nuclear Contracts that Benefited from Higher Market Prices
Closed New Nuclear Contracts that Benefited from Higher Market Prices Energy Sold Energy Contract Price OSE-OBE; % of planned generation OSE-08E; Average $IMWh Portfolio 50 Portfolio, os, at 12104 <_ Sold in 45 we Sold > . ; Ino4 + Portfolio at 12104 30 + Portfolio at 12103 Portfolio at 12103 35 30
Slide 10: Created Value Through POV-Based Portfolio Management Decisions
Created Value Through POV-Based Portfolio Management Decisions Divestitures 04 @ Entergy-Koch Trading © Gulf South Pipeline = @ 335 MWof non-nuclear wholesale assets Asset Sales ENTERGY-KOCH, ZY : Tees ea | GULF SOUTH® ot | sou to | sou to Peaker Crete 160 Peaker Warren 75 GSES CCGT Harrison 50 Sm L
Slide 11: Delivered Continued Growth in Ongoing Businesses
Delivered Continued Growth in Ongoing Businesses Operational Earnings Operational Return on Invested Capital 00-04; Sishare 00-04:% 04-vs.03 excluding EX | 13%| 04-vs.03 excluding EK [4% | 04 vs.03 including EK (11%) 04 vs.03 including EK (8%) 4.25 3.81 3.80 ae 72 74 a7 an ai2 3.23 : oo a1 02 03 04
Slide 12: Deployed Capital Effectively By Returning Cash to Owners
Deployed Capital Effectively By Returning Cash to Owners Net Common Share Common Dividend Net Debt Ratio Repurchases 02-04; SIshare* 02-04; % 02.04; $B Initiated $158 ogg 20% share repurchase imereg program nies sills ag TatBeE SOK Reinstated option 45 45 offset repurchases oo 02 02 03 04 04 02 03 0
Slide 13: Achieved Consistent 3 and 5 Year TSR
Achieved 3 and 5 Year TSR Consistent wi Total Shareholder Return 12931199-12131104; % = ee 200 Entergy 180 100 = S&P Electrics a wo S@P 500 -100 12999 120 1211 1202 1203 12/04 Sourve: Boomer erm Aspiration Total Shareholder Return 4,3, and 5 Years at 12131104: % Entergy sa SSP Electrics S&P 500 1 Ye
Slide 14: Consistently Applied Proven Operating Principles to Drive Value Creation
Consistently Applied Proven Operating Principles to Drive Value Creati Portfolio Management Invested Capital 1Q98-4Q04; $B Capital Stewardship Return On Invested Capital 1Q98* vs. 4Q04; % 18 6) +4 7 73074 | iss = 42 1098 Divest Invest 4004 1098 4q04 Balance Sheet Optimization Capital Structure 198 v
Slide 15: Presentation Outline
Presentation Outline ee A Quick Review of 2004 Results and Achievements A Closer Look at Our Agenda for 2005 The Path to Drive Growth and Create Value Beyond 2005
Slide 16: 2005 Agenda to Advance Financial Aspirations
to Advance Financial Aspirations Timeline of Bilas Events Jan_Feb Mar_Apr_May Jun Jul__Aug Sep _Oct_Nov_Dec Mar { Mar-Dec ] Sting cent State and federal regulatory agenda anon Fall RFP planned earnings and retums Legislation in TX filed improvement Jan-Dec } Ongoing ct efforts and productivity impro
Slide 17: Regulatory Calendar Remains Active in 2005
Regulatory Calendar Remains Active in 20! Potential Timeline 05 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec States-LA Entergy Gulf “Market-Based fate Authority @ Potential Q Potential ALJ Decision Commission Decision 16
Slide 18: Resolution of Louisiana Rate Cases Eliminates Uncertainty
Resolution of Louisiana Rate Cases Eliminates Uncertaint Entergy Louisiana Retail Case assuming end of 1005 decision Financial Implic lions Rate Case Request — As-Filed in 04; $M ELI- EPS contribution of $0.00 to $0.15 inOS 167 (147) Removes nuclear uprate uncertainty 20 _l Resolves fuel audit Total
Slide 19: Legislative Progress in Texas Should Lead to Long-Anticipated Rate Relief
Legislative Progress in Texas Should Lead to Long-Anticipated Rate Relief The Beaumont Enterprise March 2, 2005 Entergy needs right to pursue rate increases Financial Implications Establishes framework for Legislation Filed 2/24/05 EGS-TX - Rate relief filing in 3Q05 peel FLED tans - Opportunity for
Slide 20: Executing Supply Plan Will Lower Costs to Customers While Growing Rate Base
Executing Supply Plan Will Lower Costs to Customers While Growing Rate Base Financial Implications Supply Plan OSE-09E; Summer MW , Reduce prices to customers - Complements 10-12,000 heat 7000 Estimated rate units with new modern, ‘Short Position i " 6,000 “\ efficient, dispatchable 7,000 heat rate
Slide 21: Nuclear Investments Support Life Extension and Increase Capacity
Nuclear Investments Support Life Extensio and Increase Capacit ANO1 Financial Implications Vessel head and SS Pies steam generators Invest $300M in rate base eS = 5 ~—sCepilacement Uprate reduces prices to Waterford 3 customers Opportunity for uplift in 06 68 MW assuming revenue deficiency power upr
Slide 22: Initiatives Contribute to 2005 Growth
Initiatives Contribute to 2005 Growth Operational Earnings 04 Actual and 05 Guidance; $/share 4.60 - 4.85 04 05 Guidance As-Reported Earnings 04 Actual and 05 Guidance; $/share 4.60 - 4.85 05 Guidance Key Drivers Entergy NUcleaey) Contract pricing Uprates Productivity improvements Accretion Sales gr
Slide 23: 2005 Earnings Drivers Will Unfold as the Year Progresses
2005 Earnings Drivers Will Unfold as the Year Progresses Operational Earnings 04; $ishare* EK Earnings: Special Item Year Over Year Observations EK earnings were treated as a Special Item following the 3@ Quarter sale announcement Some drivers occur throughout the year, i.e. higher O&M due to benefi
Slide 24: Presentation Outline
= ce o Presentation A Quick Review of 2004 Results and Achievements A Closer Look at Our Agenda for 2005 The Path to Drive Growth and Create Value Beyond 2005
Slide 25: Simple, Timeless Principles Drive Actions: Financial Aspirations
Simple, Timeless Principles Drive Actions Financial Aspirations Share Repurchases a , EPS Growth Near-term: 8-10% erpolate Long-term: 5-6% [craton | Returns 9% ROIC Balance Sheet < 50% net debt to net capital Optimization Financial Continuous improvement in credit Flexibility ratings and business pr
Slide 26: Our Efforts Focus on Long-Term Growth and Value Creation
Our Efforts Focus on Long-Term Growth and Value Creation Entergy’s Business Model Enhance the Grow Optimize the Value of What the Balance Sheet You Have Business for Flexibility ‘> Implement value creating Acquire generation Continue economic regulatory through Supply Plan refinancing program strate
Slide 27: Regulatory Mechanisms
Regulatory Mechanisms 04; % of rate base Regulatory Objective An environment that allows routine, timely and full recovery of capital investments in a manner that benefits both customers and investors ee a ae ee ee Enhance the Value of What You Have Implement Value Creating Regulator Strategies juri
Slide 28: Enhance the Value of What You Have: Comprehensive Hedging Strategy
Enhance the Value of What You Hav Implement Comprehensive Hedging Strate Unsold Energy at 12/04 Sensitivity to $9/MWh O5E-09E; % of planned generation or $1/MMBtu Price Change” Sishare 87 §2 % Unsold Ea s 1 5 Energy Prices at 12/04 O5E-09E; average $IMWh 60 Market 20 ATG Firm LD 50 « ETR Gana aD |»
Slide 29: Enhance the Value of What You Have: Execute Cost Management Strategies
Enhance the Value of What You Hav Execute Cost Management Strategies Entergy Non-Fuel O&M Entergy 02.04; $B tives Entergy 3.0 Continuous improvement 2a Model \. As-Reported " - 2.6 . ttl x baad “" Organizational Philosophy 2.4 Adjusted" Cost 3 ‘xe HealthStrides ‘Moving in a new direction 02 03 04 1
Slide 30: Grow the Business: Process for Disciplined Growth
Grow the Business: Process for Discipli . Develop Robust Point of View (POV) Industry dynamics; discontinuities! key trends! evolution Capital market perspectives and fundamental valuation Competitive advantages, privileged assets and distinctive capabilities Famitiarity Identify Portfolio of 3. Est
Slide 31: Deploy Capital Through Iterative Process
What is Entergy’s optimal capital structure? Does Entergy have excess capital to deploy? What are the investment hurdles? What is the impact of a specific investment on Entergy’s overall risk profile? Is Entergy stock a good investment? What are investor preferences io Managemen’ Deploy Capital Thro
Slide 32: Optimize the Balance Sheet: Maintain Flexibility
Optimize the Balance Sheet Maintain Flexibilit Target Capital Structure % Utility: + Nuclear: + Ecs: = Consolidated ~B1% of 04 Assets ~16% of 04 Assets = ~3% of 04 Assets 42.62 60-85 48-58" a ij Sa = Debt Equity Debt Equity Debt Equity Aspiration 45-50 Seandiard & Poor's business position 6 n
Slide 33: Optimize the Balance Sheet: Allocate Risk Capital
Optimize the Balance Shee Allocate Risk Capital Risk Capital Allocation Process Current Porffotio Strategic Atternatives - itustrative Divest Acquire Assets; Convert Nuclear Competitive Convert Nuclear Contracts to Operations Portfolio to Merchant Firm LD Asset Cap Structure
Slide 34: Adapting to Create Long-Term Value
Adapting to Create Long-Term Value LCWAIELCEMENE * Simple, timeless principles drive actions to achieve financial aspirations © We continued to execute on our strategy in 2004; actions advanced near and long-term financial aspirations © We are pursuing a full agenda for 2005 * Parallel efforts focus
Slide 35: Appendix
Appendix > | Eniergy
Slide 36: Regulation G Reconciliations
Regulation G Reconciliations Table 1; Farnings and Return on vested Capital - Reconciliation of GAAP Ts Non-GAAP Wessures Twalve Months Ended First Quarter 1849 and 2000-2004 1G millions) 42 Months Ended ast Quarter 199@ 2000 2004 2002 2003 2004 Consolidated as Reported Earninas fy 188 873 728 538 9
Slide 37: Regulation G Reconciliations
Regulation G Reconciliations Table (continued: Eamings and Retum on livested Canital- Reconciliation of GAAP to Non-GAAP Measures ‘Twelve Months Ended First Quarter 1998 and 1999-2004 12 Months Ended ‘st Quarter 1998 2000 2001 2002 2003 2004 nillions) Average Number of Conmon Shares Outstanding Dilu
Slide 38: Regulation G Reconciliations
Regulation G Reconciliations Table 2: _Earninas Reconciliation of GAAP to Hon GAAP Measures 2004 Actualand 2005 Guidance ($ per share) As-Reported Utility, Parent & Other (ay 2.86 3.35-3.50 Enteray Wuctear (b) 1.06 1.30-4.39 Eneray Commodity Services Won-nuclear wholesale assets 0.23 (0.05)-(0.04) E
Slide 39: Regulation G Reconciliations
Regulation G Reconciliations Table 3: Earnings - Reconciliation of GAAP to Non-GAAP Measures First Quarter through Fourth Quarter 2004 (6 per share) 2004 10 20 30 4a As-Reported Consolidated As-Reported Earnings (a) oss 1.14 1.22 0.69 Less Specialitems Utility, Parent& Other Tax benefits - Entergy-K
Slide 40: Regulation G Reconciliations
Regulation G Reconciliations Table 4: Credit Metrics -Reconel December 31 ation of GAAP to Non-GAAP Measures ($ in millions) Gross debt @) Less cash and cash equivalents fol Wet debt fer Total capitalization (a) Less cash and cash equivalents (2) Wet capital fe) (me) Debt to capital ratio favitay Ne
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