2008-07-29 06:00:00
Entergy Reports Second Quarter Earnings
NEW ORLEANS, July 29 /EMWNews/ -- Entergy Corporation (NYSE: ETR) today reported second quarter 2008 as-reported earnings of $271.0 million, or $1.37 per share, and operational earnings of $289.2 million, or $1.46 per share, compared with as-reported and operational earnings of $267.6 million, or $1.32 per share, for second quarter 2007.
Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures Second Quarter and Year-to-Date 2008 vs. 2007 (Per share in U.S. $) Second Quarter Year-to-Date 2008 2007 Change 2008 2007 Change As-Reported Earnings 1.37 1.32 0.05 2.93 2.34 0.59 Less Special Items (0.09) - (0.09) (0.09) - (0.09) Operational Earnings 1.46 1.32 0.14 3.02 2.34 0.68 *GAAP refers to United States generally accepted accounting principles. Operational Earnings Highlights for Second Quarter 2008 -- Utility, Parent & Other had higher earnings due primarily to increased revenues. -- Entergy Nuclear earnings increased as a result of additional production and higher power prices. -- Entergy's Non-Nuclear Wholesale Assets business reported lower results due primarily to the absence of the benefit of lower income tax expense recorded in second quarter 2007. "We remain committed and on track in our efforts to add value for our owners and to maintain high quality, affordable service for our customers in an increasingly challenging national economic environment," said J. Wayne Leonard, Entergy's chairman and chief executive officer. "We've achieved solid progress on a number of initiatives in the first half of 2008 and we expect the second half of 2008 to see the realization of a number of our goals and objectives for all of our stakeholders."
Other Highlights -- Entergy Arkansas, Inc. received approval from the Arkansas Public Service Commission for the acquisition of the Ouachita plant, a 789-megawatt load-following combined-cycle gas turbine facility located near Monroe, La. -- Entergy Nuclear received a Top Industry Practice Award (TIP) presented by the Nuclear Energy Institute (NEI). NEI TIP awards recognize nuclear energy operators for innovations that improve safety, economics or plant performance. -- Entergy achieved progress in its effort to secure regulatory approvals for its proposed non-utility nuclear spin-off transaction with receipt of Federal Energy Regulatory Commission and Nuclear Regulatory Commission approvals for the spin-off transaction. Entergy will host a teleconference to discuss this release at 10 a.m. CDT on Tuesday, July 29, with access by telephone, 719-457-2080, confirmation code 2740813. The call and presentation slides can also be accessed via Entergy's Web site at http://www.entergy.com. A replay of the teleconference will be available for seven days thereafter by dialing 719-457-0820, confirmation code 2740813. The replay will also be available on Entergy's Web site at http://www.entergy.com. Utility, Parent & Other In second quarter 2008, Utility, Parent & Other had earnings of $123.4 million, or 62 cents per share, on an as-reported basis and earnings of $141.6 million, or 71 cents per share, on an operational basis, compared to $120.6 million, or 59 cents per share, in as-reported and operational earnings in second quarter 2007. Operational results for Utility, Parent & Other in second quarter 2008 reflect higher revenues from sales growth, partially offset by higher operation and maintenance expense. The higher expense primarily reflects increased charges for storm damages and loss reserves and higher employee benefits expense. Megawatt-hour sales in the residential sector in second quarter 2008, on a weather-adjusted basis, showed a 2 percent increase compared to second quarter 2007. Commercial and governmental sales, after adjusting for weather, were up 3 percent compared to second quarter of last year. Industrial sales in the current quarter were down 1 percent compared to the same period one year ago. The residential sales sector showed an increase quarter to quarter with sales growth across jurisdictions and the most significant increase on a percentage basis at Entergy New Orleans, Inc., where post-storm recovery continues. An increase in the number of customers also contributed to sales growth in the residential sector, as well as the commercial and governmental sectors. Sales in the industrial sector for second quarter 2008 decreased compared to the same quarter of 2007. High utilization in the refining and chemical segments continues to contribute to sales growth although gains in these segments were more than offset by weakness in pipelines and all segments associated with housing, including wood, pulp and paper. National economic weakness is affecting small and mid-sized industrial customers while efficiency improvements driven by high energy prices are producing declining sales in some areas. Entergy Nuclear Entergy Nuclear earned $143.6 million, or 73 cents per share, on as-reported and operational bases in second quarter 2008, compared to $108.7 million, or 54 cents per share, for as-reported and operational earnings in second quarter 2007. Entergy Nuclear's earnings increased as a result of additional production due to fewer outage days and from the Palisades plant acquired in second quarter 2007, as well as higher power prices. These items were partially offset by higher expense primarily associated with deferring costs for only one refueling outage during second quarter 2008 versus deferrals for two refueling outages in 2007 and the effect of including Palisades in the portfolio. An additional item partially offsetting the increase in results for the current quarter was an impairment recorded in second quarter 2008 in connection with decommissioning trust fund investments. With respect to outage days, two planned refueling outages occurred in second quarter 2007 totaling 57 days while one planned refueling outage was completed in second quarter 2008 requiring 19 outage days. In addition, an extended unplanned outage of 28 days is reflected in second quarter 2007 results. Non-Nuclear Wholesale Assets Entergy's Non-Nuclear Wholesale Assets business earned $4.0 million, or 2 cents per share, on both as-reported and operational bases in second quarter 2008 compared to earnings of $38.3 million, or 19 cents per share, on as- reported and operational bases in second quarter 2007. The decrease was due primarily to the absence in the current period of the benefit of lower income tax expense in second quarter 2007 resulting from the resolution of tax audit issues. Outlook Entergy is reaffirming 2008 earnings guidance in the range of $6.50 to $6.90 per share on both as-reported and operational bases on a business-as-usual basis. Guidance for 2008 does not include a special item for expenses, a portion of which were incurred during the current quarter, anticipated in connection with the plan to pursue separation of Entergy's non-utility nuclear business and to enter into a nuclear services joint venture, both discussed below. Business Separation On Nov. 3, 2007, Entergy's Board of Directors approved a plan to pursue a separation of the non-utility nuclear business from Entergy's regulated utility business through a tax-free spin-off of the non-utility nuclear business. Enexus Energy Corporation, formerly referred to as SpinCo, will be a new, independent publicly traded company. In addition, Entergy and Enexus intend to enter into a nuclear services joint venture, with equal ownership. EquaGen L.L.C. has been selected as the name for the joint venture.
Progress achieved since the last quarter update includes: -- Key board and leadership positions at Enexus and EquaGen continued to be filled. -- Regulatory proceedings continued to advance. -- The Nuclear Regulatory Commission approved the transaction on July 28, 2008. -- In Vermont, testimony has been filed, the discovery process is complete and technical hearings begin today. -- In New York, the initial discovery period ordered by the New York Public Service Commission expired and the presiding Administrative Law Judges (ALJs) issued a ruling slightly extending the discovery process, followed within three weeks by initial comments addressing defined issues, with reply comments due two weeks thereafter. -- The Federal Energy Regulatory Commission approved the transaction on June 12, 2008. -- In response to Securities and Exchange Commission comments issued June 9, 2008, an amended Form 10 will be filed in the near future. -- At the Internal Revenue Service, Entergy has completed all submittals and is awaiting a response to its request for a private letter ruling finding that the spin-off transaction qualifies for tax-free treatment for federal income tax purposes for both Entergy and its shareholders. Given receipt of critical NRC approval, the state regulatory approvals are now the critical path. Considering the ruling by the New York ALJs, Entergy now expects the spin completion to occur in the fourth quarter on a month end. Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. Entergy owns and operates power plants with approximately 30,000 megawatts of electric generating capacity, and it is the second-largest nuclear generator in the United States. Entergy delivers electricity to 2.7 million utility customers in Arkansas, Louisiana, Mississippi and Texas. Entergy has annual revenues of more than $11 billion and approximately 14,300 employees. Additional information regarding Entergy's quarterly results of operations, regulatory proceedings, and other operations is available in Entergy's investor news release dated July 29, 2008, a copy of which has been filed today with the Securities Exchange Commission on Form 8-K and is available on Entergy's investor relations Web site at http://www.entergy.com/investor_relations. In this press release, and 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 securities laws, Entergy undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Forward-looking statements involve a number of risks and uncertainties. There are factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, including (a) those factors discussed in Entergy's Form 10-K for the year ended December 31, 2007, (ii) Entergy's Form 10-Q for the quarterly period ended March 31, 2008, and (iii) Entergy's other reports and filings made under the Securities Exchange Act of 1934 and (b) the following transactional factors (in addition to others described elsewhere in this release and in subsequent securities filings): (i) risks inherent in the contemplated spin-off, joint venture and related transactions (including the level of debt to be incurred by Enexus Energy Corporation and the terms and costs related thereto), (ii) legislative and regulatory actions, and (iii) conditions of the capital markets during the periods covered by the forward-looking statements. Entergy cannot provide any assurances that the spin-off or any of the proposed transactions related thereto will be completed, nor can it give assurances as to the terms on which such transactions will be consummated. The transaction is subject to certain conditions precedent, including regulatory approvals and the final approval by the Board of Directors of Entergy. Appendix A provides a reconciliation of GAAP as-reported earnings to non- GAAP operational earnings.
Appendix A: Consolidated Earnings - Reconciliation of GAAP to Non-GAAP Measures Second Quarter and Year-to-Date 2008 vs. 2007 (Per share in U.S. $) Second Quarter Year-to-Date 2008 2007 Change 2008 2007 Change As-Reported Utility, Parent & Other 0.62 0.59 0.03 1.11 1.02 0.09 Entergy Nuclear 0.73 0.54 0.19 1.84 1.16 0.68 Non-Nuclear Wholesale Assets 0.02 0.19 (0.17) (0.02) 0.16 (0.18) Consolidated As-Reported Earnings 1.37 1.32 0.05 2.93 2.34 0.59 Less Special Items Utility, Parent & Other (0.09) - (0.09) (0.09) - (0.09) Entergy Nuclear - - - - - - Non-Nuclear Wholesale Assets - - - - - - Consolidated Special Items (0.09) - (0.09) (0.09) - (0.09) Operational Utility, Parent & Other 0.71 0.59 0.12 1.20 1.02 0.18 Entergy Nuclear 0.73 0.54 0.19 1.84 1.16 0.68 Non-Nuclear Wholesale Assets 0.02 0.19 (0.17) (0.02) 0.16 (0.18) Consolidated Operational Earnings 1.46 1.32 0.14 3.02 2.34 0.68 Entergy Corporation Consolidated Income Statement Three Months Ended June 30 (in thousands) 2008 2007 % Inc/(Dec) (unaudited) Operating Revenues: Domestic electric $2,524,222 $2,194,644 15.0 Natural gas 53,985 42,909 25.8 Competitive businesses 686,064 531,799 29.0 Total 3,264,271 2,769,352 17.9 Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 726,836 595,602 22.0 Purchased power 748,203 601,000 24.5 Nuclear refueling outage expenses 55,840 44,614 25.2 Other operation and maintenance 710,309 639,670 11.0 Decommissioning 46,816 42,080 11.3 Taxes other than income taxes 125,942 116,348 8.2 Depreciation and amortization 247,977 238,653 3.9 Other regulatory charges (credits) - net 34,239 13,345 156.6 Total 2,696,162 2,291,312 17.7 Operating Income 568,109 478,040 18.8 Other Income (Deductions): Allowance for equity funds used during construction 9,085 7,459 21.8 Interest and dividend income 23,399 53,948 (56.6) Equity in earnings of unconsolidated equity affiliates (2,572) 477 (639.2) Miscellaneous - net 3,916 (6,459) (160.6) Total 33,828 55,425 (39.0) Interest and Other Charges: Interest on long-term debt 119,903 124,057 (3.3) Other interest - net 28,030 33,553 (16.5) Allowance for borrowed funds used during construction (4,937) (4,386) 12.6 Preferred dividend requirements of subsidiaries and other 4,975 6,188 (19.6) Total 147,971 159,412 (7.2) Income Before Income Taxes 453,966 374,053 21.4 Income Taxes 183,012 106,451 71.9 Consolidated Net Income $270,954 $267,602 1.3 Earnings Per Average Common Share Basic $1.42 $1.36 4.4 Diluted $1.37 $1.32 3.8 Average Number of Common Shares Outstanding - Basic 191,326,928 196,979,140 Average Number of Common Shares Outstanding - Diluted 197,864,459 203,423,646 Entergy Corporation Consolidated Income Statement Six Months Ended June 30 (in thousands) 2008 2007 % Inc/(Dec) (unaudited) Operating Revenues: Domestic electric $4,570,449 $4,306,104 6.1 Natural gas 143,380 127,861 12.1 Competitive businesses 1,415,176 1,029,446 37.5 Total 6,129,005 5,463,411 12.2 Operating Expenses: Operation and maintenance: Fuel, fuel-related expenses, and gas purchased for resale 1,267,337 1,383,014 (8.4) Purchased power 1,368,845 1,045,239 31.0 Nuclear refueling outage expenses 107,098 87,589 22.3 Other operation and maintenance 1,321,577 1,204,046 9.8 Decommissioning 92,812 79,910 16.1 Taxes other than income taxes 234,513 239,031 (1.9) Depreciation and amortization 492,962 471,063 4.6 Other regulatory charges (credits) - net 69,519 36,885 88.5 Total 4,954,663 4,546,777 9.0 Operating Income 1,174,342 916,634 28.1 Other Income (Deductions): Allowance for equity funds used during construction 18,371 24,717 (25.7) Interest and dividend income 77,680 111,058 (30.1) Equity in earnings of unconsolidated equity affiliates (3,501) 2,101 (266.6) Miscellaneous - net (7,640) (11,778) (35.1) Total 84,910 126,098 (32.7) Interest and Other Charges: Interest on long-term debt 243,047 247,156 (1.7) Other interest - net 60,567 65,768 (7.9) Allowance for borrowed funds used during construction (10,053) (14,915) (32.6) Preferred dividend requirements of subsidiaries and other 9,973 12,409 (19.6) Total 303,534 310,418 (2.2) Income Before Income Taxes 955,718 732,314 30.5 Income Taxes 376,015 252,517 48.9 Consolidated Net Income $579,703 $479,797 20.8 Earnings Per Average Common Share Basic $3.02 $2.41 25.3 Diluted $2.93 $2.34 25.2 Average Number of Common Shares Outstanding - Basic 191,983,266 198,754,673 Average Number of Common Shares Outstanding - Diluted 198,101,863 204,785,090 Entergy Corporation Utility Electric Energy Sales & Customers Three Months Ended June 30 % % Weather- 2008 2007 Change Adjusted (Millions of kwh) Electric Energy Sales: Residential 7,372 6,986 5.5 2.3 Commercial 6,688 6,481 3.2 2.7 Governmental 587 562 4.4 3.4 Industrial 9,730 9,813 (0.9) (0.9) Total to Ultimate Customers 24,377 23,842 2.2 1.1 Wholesale 1,440 1,428 0.8 Total Sales 25,817 25,270 2.2 Six Months Ended June 30 % % Weather- 2008 2007 Change Adjusted (Millions of kwh) Electric Energy Sales: Residential 15,384 14,777 4.1 2.8 Commercial 12,926 12,597 2.6 2.3 Governmental 1,155 1,111 4.0 3.4 Industrial 19,107 19,137 (0.2) (0.2) Total to Ultimate Customers 48,572 47,622 2.0 1.5 Wholesale 2,729 3,066 (11.0) Total Sales 51,301 50,688 1.2 June 30 % 2008 2007 Change Electric Customers (End of period): Residential 2,311,624 2,274,129 1.6 Commercial 328,127 324,923 1.0 Governmental 15,318 15,254 0.4 Industrial 45,427 48,569 (6.5) Total Ultimate Customers 2,700,496 2,662,875 1.4 Wholesale 32 30 6.7 Total Customers 2,700,528 2,662,905 1.4 Customer count data reflects estimates of customers in the hardest hit areas affected by Hurricane Katrina. Issues associated with temporary housing and resumption of service at permanent dwellings render precise counts difficult at this time.
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