New Orleans, La. – Entergy
Corporation (NYSE:ETR) today reported fourth quarter 2007 as-reported earnings
of $193.9 million, or 96 cents per share, compared with $268.3 million, or $1.27
per share, for fourth quarter 2006. On an operational basis, Entergy’s fourth
quarter 2007 earnings were $225.9 million, or $1.12 per share, compared with
$166.9 million, or 79 cents per share, in fourth quarter 2006.
For the year, Entergy’s as-reported earnings were $1.1 billion, or $5.60 per
share, and operational earnings were $1.2 billion, or $5.76 per share. These
results compare with 2006 as-reported earnings of $1.1 billion, or $5.36 per
share, and operational earnings of $997.7 million, or $4.72 per share.
of GAAP to Non-GAAP Measures
Quarter and Year-to-Date 2007 vs. 2006
(Per share in
Less Special Items
to United States generally accepted accounting principles.
Operational Earnings Highlights
for Fourth Quarter 2007
Utility, Parent & Other had lower
earnings primarily due to higher income tax expense.
Entergy Nuclear earnings increased
as a result of higher revenue from pricing, production from the Palisades
plant acquired in second quarter 2007, and lower income tax expense.
Entergy’s Non-Nuclear Wholesale
Assets business reported higher results due primarily to lower income tax
“2007 closed with constructive
resolution of numerous regulatory matters positioning our utility to advance its
growth strategy,” said J. Wayne Leonard, Entergy’s chairman and chief executive
officer. “In addition, the actions necessary to complete the planned non-utility
nuclear spin-off remain on track for a third quarter 2008 close. Consistent with
that, the Entergy Board of Directors has granted authority for $0.5 billion of
the anticipated post-spin $2.5 billion share repurchase program.”
Entergy won three awards from
Edison Electric Institute including an Emergency Assistance Award for power
restoration efforts following a January 2007 ice storm in Oklahoma, as well as
an Advocacy Excellence Award for its low-income initiative and an Outstanding
Achievement Award for grassroots nuclear advocacy efforts in New York.
Final approvals were received and
the separation was completed of Entergy Gulf States into two distinct
companies, Entergy Gulf States Louisiana, L.L.C., and a Texas company, Entergy
Entergy Nuclear supplemented its
filing with the Nuclear Regulatory Commission for the spin-off transaction and
made related regulatory filings in New York and Vermont.
Entergy will host a teleconference to
discuss this release at 10 a.m. CST on Tuesday, Jan. 29, 2008, with access by
telephone, 719-457-2080, confirmation code 8984015. The call and presentation
slides can also be accessed via Entergy’s Web site at www.entergy.com. A replay
of the teleconference will be available for seven days thereafter by dialing
719-457-0820, confirmation code 8984015. The replay will also be available on
Entergy’s Web site at www.entergy.com.
Utility, Parent & Other
In fourth quarter 2007, Utility,
Parent & Other had earnings of $25.1 million, or 12 cents per share, on an
as-reported basis and $38.8 million, or 19 cents per share, on an operational
basis, compared to as-reported earnings of $226.6 million, or $1.08 per share,
and operational earnings of $97.5 million, or 47 cents per share, in fourth
quarter 2006. Earnings for Utility, Parent & Other in fourth quarter 2007
reflect higher income tax expense and the absence of a regulatory settlement
included in fourth quarter 2006 results. Partially offsetting these items were
higher revenue due to warmer-than-normal weather, higher transmission revenue,
and increased recovery of capacity costs. The higher income tax expense resulted
primarily from the absence in the current period of a tax benefit realized in
fourth quarter 2006, as well as the effect of annual income tax adjustments
occurring in the fourth quarter each year across the Entergy companies.
Megawatt-hour sales in the
residential sector in fourth quarter 2007, on a weather-adjusted basis, showed a
modest increase compared to fourth quarter 2006. Commercial and governmental
sales, after adjusting for weather, were up 1 percent. Industrial sales in the
current quarter equaled sales for the same period one year ago.
The residential sales sector showed a
modest increase quarter to quarter. While the number of customers increased with
a corresponding rise in sales volume, usage per customer showed a slight decline
in the quarter. The quarter-over-quarter increase in the commercial and
governmental sectors reflects a similar increase in the number of customers.
Sales in the industrial sector for fourth quarter 2007 equaled those for the
same quarter of 2006 as the loss of one customer to cogeneration earlier in the
year was offset by high utilization in the refining segment as well as some
recovery in spot sales to cogeneration customers.
For the year 2007, Utility, Parent &
Other earned $540.9 million, or $2.67 per share, on an as-reported basis,
compared to $838.8 million, or $3.97 per share, in 2006. Operational earnings in
2007 were $554.6 million, or $2.74 per share, compared to $676.2 million, or
$3.20 per share, in 2006. The lower operational earnings in 2007 were driven by
higher income taxes, non-fuel operations and maintenance, and interest expense.
Partially offsetting factors were higher revenues from sales growth and
regulatory actions, higher transmission revenue, and the positive effect of
accretion associated with Entergy’s share repurchase program.
Entergy Nuclear earned $141.4
million, or 70 cents per share, on an as-reported basis and $159.8 million, or
79 cents per share, on an operational basis in fourth quarter 2007, compared to
$57.7 million, or 27 cents per share, for as-reported and operational earnings
in fourth quarter 2006. The improved operational results in fourth quarter 2007
came from increased revenues from pricing, the production available from
Palisades, which was acquired in second quarter 2007, and lower income tax
expense, partially offset by higher expense primarily associated with including
Palisades in the portfolio. The lower income tax expense was primarily due to a
step-up in the tax basis on the Indian Point 2 non-qualified decommissioning
trust fund resulting from a restructuring of the trusts. This basis change
resulted in a reduction in deferred taxes on the fund and lowered current tax
expense. Annual adjustments in the fourth quarter of each year for consolidated
income taxes also lowered income tax expense.
For the year 2007, Entergy Nuclear
earned $539.2 million, or $2.66 per share, on an as-reported basis and $557.6
million, or $2.75 per share, on an operational basis, compared with $309.5
million, or $1.46 per share, for 2006 on both as-reported and operational bases.
The increase in 2007 operational earnings was primarily due to increased revenue
from higher contract pricing and higher generation due to the addition of
Palisades to the portfolio. It was partially offset by an increase in planned
and unplanned outage days in 2007 compared to 2006.
Non-Nuclear Wholesale Assets
Entergy’s Non-Nuclear Wholesale
Assets business earned $27.4 million, or 14 cents per share, on both as-reported
and operational bases in fourth quarter 2007, compared to a loss of $16.0
million, or 8 cents per share, on an as-reported basis and earnings of $11.7
million, or 5 cents per share, on an operational basis in fourth quarter 2006.
Lower income tax expense associated with annual consolidated income tax
adjustments was the primary driver to higher results on a quarter-to-quarter
For the year 2007, Entergy’s
Non-Nuclear Wholesale Assets business earned $54.8 million, or 27 cents per
share, on as-reported and operational bases, compared to a loss of $15.7
million, or 7 cents per share, on an as-reported basis and earnings of $12.0
million, or 6 cents per share, on an operational basis in 2006. The increase in
operational earnings in 2007 compared to 2006 is also primarily due to lower
income tax expense.
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 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.
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. SpinCo, the term used to identify the new
company yet to be named, will be a new independent publicly traded company. In
addition, SpinCo and Entergy Corporation intend to enter into a nuclear services
joint venture, with equal ownership.
Entergy is targeting third quarter
2008 for completion of the spin-off transaction. Progress achieved since the
spin-off announcement includes:
A steering committee has been
formed to lead the overall process and make final recommendations on all major
business and operational issues; a project management office, with a
cross-section of organizational functions, has been established to coordinate
the spin-off process.
A supplement to Entergy’s original
filing with the Nuclear Regulatory Commission has been provided to the NRC to
reflect the spin-off transaction.
Filings have been made in the
states of New York and Vermont as required under the laws of those states.
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 14,500 employees.
Additional information regarding
Entergy’s quarterly results of operations, regulatory proceedings, and other
operations is available in Entergy’s investor news release dated Jan. 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
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 Annual Report on Form 10-K under (i)
Forward-Looking Statements, (ii) Item 1A. Risk Factors, (iii) Item 7.
Management's Financial Discussion and Analysis, and (iv) Current Report on Form
8-K filed on November 5, 2007 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 incurred by SpinCo
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
Earnings Release [PDF]