New Orleans, La. – Entergy
Corporation (NYSE: ETR) today indicated that it expects first quarter 2012
financial results to reflect an as-reported loss of approximately $(0.87) per
share and operational earnings of approximately $0.43 per share. First quarter
2012 results included two non-cash charges arising from an asset impairment
taken in accordance with financial accounting rules (classified as a special
item discussed below) and a write-off of a regulatory asset associated with
income taxes (included in operational results discussed below). Results for
first quarter 2011 were $1.38 per share on both an as-reported basis and an
operational basis. Entergy also updated its previously issued operational
earnings guidance for 2012.
As-reported results are prepared in
accordance with generally accepted accounting principles (GAAP) and are
comprised of operational earnings (described below) and special items. Special
items were recorded in the first quarter of 2012 for:
Under GAAP, power plants and other
long-lived assets are generally required to be accounted for on a historical
cost basis, unless a triggering event occurs which requires an impairment
evaluation. In the case of Vermont Yankee, as described in our prior financial
statement filings with the U.S. Securities and Exchange Commission, Entergy has
performed quarterly impairment evaluations since early 2010, triggered by state
actions to shut down the plant early. A number of factors and inputs are used in
the Vermont Yankee impairment evaluation, including the status of pending legal
and state regulatory matters, as well as assumptions about future revenues and
costs of the plant. Under the accounting rules, these inputs are required to be
estimated as of the end of each quarterly period. The decline in the overall
energy market and forward price of energy at March 31, 2012, which is used as an
input in the current accounting analysis, yielded a different impairment result
now as compared to earlier quarters.
The triggering event and impairment
result are unique to Vermont Yankee. This impairment does not reflect a change
in Entergy’s point of view of the economic value of the plant assuming continued
operation through 2032, nor does it impact the company’s continued commitment to
invest to assure safe operations of the plant, which is always the top priority.
It also does not reflect a change in Entergy’s point of view on the legal and
state regulatory proceedings associated with obtaining certainty on continued
operation of Vermont Yankee.
Utility
The quarter-over-quarter
decrease in Utility’s operational earnings was due primarily to higher income
tax expense and lower net revenue. The increase in income tax expense resulted
from a first quarter 2012 non-cash adjustment of approximately $0.25 per share
to write off a regulatory asset for income taxes to appropriately align the
financial accounting treatment with the regulatory treatment of income taxes for
certain items. This regulatory asset represented income tax expense currently
reflected in rates, and as such, cannot be recovered in the future.
Utility net revenue
declined due to a significant unfavorable weather variance reducing sales
volumes compared to the first quarter of 2011. Partially offsetting was growth
in weather-adjusted sales volumes across the three customer classes. Higher
non-fuel operation and maintenance expenses also contributed to the lower
earnings results.
Entergy Wholesale
Commodities
On an operational basis,
Entergy Wholesale Commodities’ first quarter 2012 earnings were below the prior
year period largely due to lower net revenue. This decline in EWC’s net revenue
was driven primarily by lower pricing associated with the nuclear fleet. Also
contributing to the lower results was an increase in non-fuel operation and
maintenance expenses.
Parent & Other
Parent & Other’s
operational results declined during the quarter due to several individually
insignificant items.
Earnings Guidance
As a result of the
non-cash write-offs discussed above and significant unfavorable weather in the
first quarter of 2012, Entergy updated its 2012 operational earnings guidance to
be in the range of $4.85 to $5.65 per share. The revised operational guidance
range also reflects previously identified challenges resulting from the
lower-than-planned pension discount rate and other updated pension assumptions
and lower market energy prices for EWC’s open position, as well as opportunities
to offset these challenges. Entergy’s previous guidance range was $5.40 to $6.20
per share on an operational basis. As-reported earnings guidance for 2012 will
be updated to reflect special items as reported throughout the year. Special
items for the first quarter of 2012 are expected to total approximately $(1.30)
per share.
A teleconference will be
held at 10 a.m. CT on Thursday, April 26, 2012, to discuss Entergy’s first
quarter 2012 earnings announcement, and may be accessed by dialing (719)
457-2080, confirmation code 4034210, no more than 15 minutes prior to the start
of the call. The call and presentation slides can also be accessed via Entergy’s
website at www.entergy.com. A replay of the teleconference will be available for
seven days thereafter by dialing (719) 457-0820, confirmation code 4034210.
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 2.8 million utility customers in Arkansas, Louisiana, Mississippi
and Texas. Entergy has annual revenues of more than $11 billion and
approximately 15,000 employees.
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Additional investor information can be accessed online at
www.entergy.com/investor_relations.
In
this news release, and from time to time, Entergy 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: (i) Entergy’s Form 10-K for the year ended December 31,
2011 and (ii) Entergy’s other reports and filings made under the Securities
Exchange Act of 1934; (b) uncertainties associated with rate proceedings,
formula rate plans and other cost recovery mechanisms; (c) uncertainties
associated with efforts to remediate the effects of major storms and recover
related restoration costs; (d) nuclear plant relicensing, operating and
regulatory risks, including any changes resulting from the nuclear crisis in
Japan following its catastrophic earthquake and tsunami; (e) legislative and
regulatory actions and risks and uncertainties associated with claims or
litigation by or against Entergy and its subsidiaries; (f) conditions in
commodity and capital markets during the periods covered by the forward-looking
statements, in addition to other factors described elsewhere in this release and
subsequent securities filings, and (g) risks inherent in the proposed spin-off
and subsequent merger of Entergy’s electric transmission business into a
subsidiary of ITC Holdings Corp. Entergy cannot provide any assurances that the
spin-off and merger transaction will be completed and cannot give any assurance
as to the terms on which such transaction will be consummated. The spin-off and
merger transaction is subject to certain conditions precedent, including
regulatory approvals and approval by ITC Holdings Corp. shareholders.
