Filed by Entergy Corporation
Pursuant to Rule 425 under the Securities Act of 1933
And deemed filed pursuant to Rule 14a-12
Of the Securities Exchange Act of 1934
Subject Company: Entergy Corporation
Commission File No. 1-11299
Slide Show Presentation given by J. Wayne Leonard on September 13,
2000 for Merrill Lynch (Power & Gas Leaders Conference)
Slide 1
Logo of FPL Group Logo of Entergy
FPL Group-Entergy:
Building Franchises
J. Wayne Leonard
Chief Executive Officer
Merrill Lynch
Power & Gas Leaders Conference
September 13, 2000
Slide 2
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995:
This presentation contains forward looking statements within the meaning of
the "safe harbor" provisions of the United States Private Securities
Litigation Reform Act of 1995. Investors are cautioned that such forward-
looking statements with respect to revenues, earnings, performance,
strategies, prospects and other aspects of the businesses of FPL Group,
Inc. and Entergy Corporation are based on current expectations that are
subject to risk and uncertainties. A number of factors could cause actual
results or outcomes to differ materially from those indicated by such
forward looking statements. These factors include, but are not limited to,
risks and uncertainties relating to: changes in laws or regulations,
changing governmental policies and regulatory actions with respect to
allowed rates of return including but not limited to return on equity and
equity ratio limits, industry and rate structure, operation of nuclear
power facilities, acquisition, disposal, depreciation and amortization of
assets and facilities, operation and construction of plant facilities,
recovery of fuel and purchased power costs, decommissioning costs, present
or prospective wholesale and retail competition (included but not limited
to retail wheeling and transmission costs), political and economic risks,
changes in and compliance with environmental and safety laws and policies,
weather conditions (including natural disasters such as hurricanes),
population growth rates and demographic patterns, competition for retail
and wholesale customers, availability, pricing and transportation of fuel
and other energy commodities, market demand for energy from plants or
facilities, changes in tax rates or policies or in rates of inflation or in
accounting standards, unanticipated delays or changes in costs for capital
projects, unanticipated changes in operating expenses and capital
expenditures, capital market conditions, competition for new energy
development opportunities and legal and administrative proceedings (whether
civil, such as environmental, or criminal) and settlements and other
factors. Readers are referred to FPL Group, Inc.'s and Entergy
Corporation's most recent reports filed with the Securities and Exchange
Commission.
Slide 3
A Powerful Combination
FPL Group Creating FRANCHISES through virtual integration
Entergy
"FRANCHISE"
- Unique sustainable business opportunity
- Products and brand preferred by customers
- Leadership position relative to competitors
- Superior opportunities for value creation
Slide 4
Franchises Built Around Partners
April 2000 - Entergy, Koch Industries create top tier energy company
June 2000 - Entergy, Shaw Group join forces
June 2000 - Entergy and Framatome will team up
July 2000 - FPL Group, Entergy create nation's largest power company
Slide 5
Partners for Success: Koch Industries
Koch: The Best Kept Secret in Trading
- Owner of 10,000 mile Gateway pipeline and biggest gas storage in the
Gulf South
- A top electricity and gas trader
- Largest trader in U.S. in residual fuel oil
- PhD laboratory for research and product development
- An innovator with 50% of revenue from new products developed in the
last five years
o The market leader in weather derivatives
Slide 6
Partners for Success: The Shaw Group
Shaw: The Intel of the Power Plant World
o Supplier of 75% of integrated piping fabrication worldwide
o Piping fabrication for over 120,000 MW in U.S.
o Custodial contractor for all of ABB's North American power plant
development
o Supplier of 90% of piping for GE's gas turbines being produced from
1999-2004
o Lead contractor on 1,100 MW Midloathian, the largest power project in
North America
o Extensive refining and petrochemical engineering and erection
experience
o Recent acquisition of Stone & Webster
Slide 7
Partners for Success: Framatome Technologies Group
Framatome: At the Core of the Nuclear Industry
o Provides full range of nuclear services for inspection, maintenance,
and improvement: #1 in Europe, #2 in U.S.
o World leader in nuclear fuel
o Designed, manufactured and installed 69 reactors worldwide - 72,000 MW
capacity
o Outage contractor for FPL
o Nearly 10,000 nuclear specialists worldwide
o Provider of parts or service to every single U.S. reactor
Slide 8
Partners for Success: FPL Group
FPL: The Crown Jewel of Utility Franchises
The merged company will be:
o #1 in utility customers - 6.3 million
o #1 power producer - 48,000 MW total capacity
o #1 in clean generation - 44,000 MW gas, nuclear and renewables - 92%
of total capacity
o #2 nuclear generator - 10,000+ MW
o #2 utility in market cap - $16+ billion*
* as of merger announcement, 7/28/00
Slide 9
Partners Fill Gaps
Without Acquisition Premiums
What's Needed for Success FPL Group-ETR Strategy
Strong regional supply portfolios Complementary existing portfolios
Focused project development
Gas/electric trading skills and scale ETR-Koch venture
Assets with optionality Koch Gateway Pipeline
Gas development projects
Low cost construction ETR-Shaw joint venture
Site & equipment options Turbine options - multiple sites
Growth products Weather derivatives (Koch)
Telecom - bandwidth trading
Talent and skills Hire or ally with the best
Slide 10
Building Franchises in Both Regulated
and Non-regulated Markets
Existing Franchises Emerging Franchises
Regional Vertically Regulated DISTCO
Integrated
Regulated Utilities TRANSCO
Competitive Wholesale Business Power Development
Generation Operator
National Nuclear Company
Telecom
Pipeline
Trading and Risk Management
Regulated Markets Deregulated Markets
Slide 11
Partners:
Entergy
FPL Group
Utility Franchise
Critical Success Factors Cleanest Generation in the Industry
o Customers
- Scale Gas 59%
- Mix Nuclear 20%
- Growth Coal 8%
o Clean capacity Oil/other 13%
o Outstanding service
1998 Capacity by Generation Type (%)
Solid and Growing Customer Base Balanced Customer Base
Residential 41%
Map of Entergy and FPL Service Areas Commercial 31%
Industrial 25%
Other 3%
1999 Retail MWh by Customer Class (%)
Slide 12
ETR Service Levels Improving
to Achieve FPL's Record
o Call centers
- from 71 seconds to 15 seconds
- abandoned calls down 73%
- busy signals 400,000 to 0
- 95% favorable rating from callers
- Calls down 4 million /year
o Outage complaints decreased 67%
- Frequency down 26%
- Duration down 40%
o Customer satisfaction up over 9%
o Safety improved 41% in 1999 (lost-time incidents)
Slide 13
Partners:
Entergy
FPL Group
Others
Transco Franchise
[Various Newspaper Articles on TRANSCO]
Slide 14
"Independent" For Profit Transco
Conditions Solutions Partners
Scale MR > MC ETR
Growth Pricing FPL
Sinks - Phase in Others
Source - LMP
Congestion
Slide 15
Bringing Transmission
Supply and Demand in Balance
Public Policy Impact on
Option Market Impact TRANSCO
Increase Restores balance by Allow monopoly
Prices reducing demand rent$
BEST ECONOMIC EFFICIENCY
Fix prices Increases profits if: Gives incentives for
Incr. Volume* price > increasing volume
marginal cost of supply and reducing costs
Reduce Prices go down as No incentives for
Prices supply increases to suppliers to
meet demand innovate
Slide 16
Transmission Demand Growing
(Sources, Sinks, & Service)
[Map of transmission regions]
SPP
Generation located close to coal sources export energy to higher valued
markets
Environmental costs for coal units make gas-supplied energy more attractive
New co-generation and combined cycle generation located near gas supplies
export energy
SERC
Limited gas pipeline capacity creates potential for "gas by wire"
Environmental costs for coal units make gas-supplied energy more attractive
FRCC
Arbitrage opportunities in price and load diversity
Fast-growing demand combined with geographic constraint
ERCOT
Arbitrage between ERCOT and eastern US energy prices
Slide 17
Partners:
Entergy
FPL Group
Shaw
Power "Generation" Franchise
Scale 48,000 - 70,000+ MW
Clean 79% clean and growing
Operating Skills Top quartile - top decile
Mix Primarily gas, nuclear
Proj.
Fuel Mix 2004
Nuclear 25 - 30%
Gas 60 - 65%
Renewables 3 - 5%
Other 3 - 5%
Location SE, NE and West
Slide 18
Partners:
Entergy
FPL Group
Shaw
Power "Development" Franchise
Scale 19,000 MW
Equipment 98 GE turbines
Location Multiple delivery points
Projects 3 sites per turbine
Skills Proven capabilities
- 16 "A" teams
- 6-sigma processes
- Labor management
- BOP (piping, fabrication, DCS)
- Erection (scheduling, controls)
- Procurement & assembly
Project mgmt. 6-sigma, experience curve
Low cost 15% less per plant
Slide 19
Shaw JV Enhances Value
Illustrative Savings for 100% Owned
1000 MW CCGT
Engineering/Design
Indirects/Overheads
Equipment Wrap
Procurement
Middleman Markup
Total $45 - 60 million
Slide 20
No Silver Bullet
Increasing Returns with Increasing Skills/Scale
% ROE
One-off Merchant Plant 10 - 12%
Scale 3%
Financing Costs 0.1%
Portfolio 1.1 - 2.2%
Price Risk Mgmt. & Trade-around 0.7 - 1.1%
Reputation/Skills ????%
Environ. Advantage ????%
20% [with an arrow pointing up]
Slide 21
Partners:
Entergy
FPL Group
Framatome
Nuclear Franchise
Scale 10,000 - 19,000 MW
Skill Deep and broad
- BWR
- PWR
- Turnarounds
- Decommissioning
- License renewals
Safety World Class
Cost Top quartile - top decile
Operations 90+% availability
Relationships Framatome
Slide 22
Nuclear Structure Emphasizes Risk Management
Typical Nuclear Risk/Reward
Low Probability Downside
- Major event risk
- Early unit shutdown
- Higher decommissioning costs
Normal Uncertainties
- Market Price risk
- Unit operations risk
Low Probability Upside
- Lower decommissioning costs
- Environmental laws increase prices
- Extended life
- Site expansion
Loading the Dice
(The more you play the more you win)
PPA Protects Revenues (Put)
Fully Funded Decommissioning (option)
Third Party Decommissioning Contracts (put)
Special Purpose Financing (put)
Portfolio Effects
Embedded Options (calls/puts)
Slide 23
Partners:
Entergy
FPL Group
Koch
Others
Telecom Franchise
Entergy Fiber Network 2,150 route miles
[Map of Service Area with Fiber Network]
FPL FiberNet 1,600 route miles
[Map of Service Area with Fiber Network]
Critical Success Factors
- Physical positions
- Optimized design
- Value-added (reliability)
- Trading (bandwidth)
- Partners
Slide 24
Partners:
Entergy
FPL Group
Koch
Others
Pipeline Franchise
[Map of Pipelines in the southeastern U.S.]
Slide 25
Partners:
Entergy
FPL Group
Koch
Trading Franchise
[Map of Entergy and FPL Group plant locations and pipelines in the U.S.]
Slide 26
Our Challenge (Your Opportunity):
Gaining Market Recognition
2001 Price/Earnings Multiples
Enron 51
Calpine 50
AES 33
Dynegy 30
NRG 25
Duke 18
Reliant 14
Southern 14
FPL 12
Entergy 11
Source: Bloomberg, 9/7/00
Slide 27
Addendum
In connection with the proposed merger, FPL Group, Inc. and Entergy
Corporation have filed a joint proxy statement / prospectus with the
Securities and Exchange Commission. INVESTORS AND SECURITY HOLDERS ARE
ADVISED TO READ THE JOINT PROXY STATEMENT / PROSPECTUS, BECAUSE IT CONTAINS
IMPORTANT INFORMATION. Investors and security holders may obtain a free
copy of the joint proxy statement / prospectus and other documents filed by
FPL Group, Inc. and Entergy Corporation with the Commission at the
Commission's web site at http://www.sec.gov. Free copies of the joint proxy
statement / prospectus and each company's other filings with the
Commission may also be obtained from the respective companies. Free copies
of the FPL Group's filings may be obtained by directing a request to FPL
Group, Inc., 700 Universe Blvd., P.O. Box 14000, Juno Beach, FL 33408-0420,
Telephone: (561) 694-4000. Free copies of Entergy's filings may be obtained
by directing a request to Entergy Corporation, 639 Loyola Avenue, New
Orleans, Louisiana 70113, Telephone: (504) 576-4000.
Participants in Solicitation
FPL Group, Inc., Entergy Corporation and their respective directors,
executive officers and other members of their management and employees may
be soliciting proxies from their respective stockholders in favor of the
merger. Information concerning FPL Group's participants in the solicitation
is set forth in FPL Group's Current Report on Form 8-K filed with the
Commission on July 31, 2000, and information concerning Entergy's
participants in the solicitation is set forth in Entergy's Current Report
on Form 8-K filed with the Commission on July 31, 2000.
This document is being filed pursuant to rule 425 under the
securities act of 1933 and deemed filed pursuant to rule 14a-12 under
the exchange act of 1934. This document does not constitute an offer
of sale of securities.
