Contact: | Yolanda Pollard (News Media)
(504) 576-4238
ypollar@entergy.com
Nancy Morovich (Investor Relations)
(504) 576-5506
nmorovi@entergy.com |
Entergy Reports Improved First Quarter 2003 Earnings
New Orleans, La. - Entergy Corporation (NYSE:ETR) today reported first quarter 2003 earnings of $395 million, or $1.73 per share, with special items contributing $139 million, or 61 cents per share. The special items are attributed to implementing a new accounting standard on nuclear decommissioning assets and liabilities in the utility and non-utility nuclear businesses. In first quarter 2002 Entergy recorded a loss of $78.9 million, or 36 cents per share, on an as reported basis, including a special charge of $260.9 million, or $1.16 per share, recorded in connection with its decision to exit the greenfield power development business.
Entergy earned $256 million, or $1.12 per share, from operations in first quarter this year, compared with $182 million, or 80 cents per share, in the year-earlier period. The 40 percent increase in the quarter's operational earnings was primarily driven by solid performance at Entergy-Koch, LP, as well as improved results at the utility.
"The strong financial results achieved in first quarter 2003 reflect continuous performance improvements across all our businesses," saidJ. Wayne Leonard,Entergy's chief executive officer. "We're committed to achieving and maintaining superior performance in safety, customer service and operations, strong metrics in credit, liquidity and risk, and industry leadership in shareholder returns. We've established bold goals in all areas, and aspirations that were once distant images are now clearly in sight."
Utility Operations
In first quarter 2003, as reported utility earnings were $107.8 million, or 47 cents per share, compared to $102.3 million, or 45 cents per share, in first quarter 2002. First quarter 2003 results included a special item related to the implementation of Statement of Financial Accounting Standards (SFAS) 143, a new accounting standard. The impact of this accounting standard at the utility resulted in changes in the valuation of nuclear decommissioning assets and liabilities which generated a one-time charge of 9 cents per share.
Operational utility earnings for first quarter 2003 were $129.1 million, or 56 cents per share, compared to $102.3 million, or 45 cents per share, in the year earlier period. The increase in first quarter 2003 earnings was due primarily to increased revenues driven by sales growth, particularly in the residential sector, and increased rates. Lower operation and maintenance expenses, primarily in fossil plant operations, also contributed to the improvement.
Higher electricity usage in first quarter 2003 increased residential sales by 8 percent, compared to first quarter 2002. This increase is due primarily to the improvement in the regional economy compared to the depressed economic conditions in first quarter 2002. Commercial and governmental sales were up 4 percent, reflecting increased usage across all commercial customer classes, while industrial sales experienced a decrease of 3 percent quarter over quarter. The decrease in industrial sales is tied directly to the loss of two customers to co-generation. After removing the impact of these losses, industrial sales increased 3 percent, driven mostly by higher usage in the chemicals sector.
Competitive Non-Regulated Businesses
The competitive businesses recorded as reported earnings of $290.8 million, or $1.27 per share, compared to a loss of $175.1 million, or 78 cents per share, in first quarter 2002. First quarter 2003 results reflect the impact of the new accounting standard noted above. Implementing this standard resulted in a one-time gain of 70 cents per share in the competitive businesses, recorded as a special item in first quarter 2003. First quarter 2002 results included a loss of $1.16 per share, which was recorded as a special item. This loss reflected charges associated with exiting the greenfield power development business.
Excluding all special items, operational earnings for the competitive businesses increased 50 percent from $85.8 million, or 38 cents per share, in first quarter 2002, to $130.5 million, or 57 cents per share, in first quarter 2003. The significant increase in operational earnings is a result of strong performance at Entergy-Koch Trading.
Entergy Nuclear earned 86 cents per share in first quarter 2003, on an as reported basis, compared to 18 cents per share in first quarter 2002. The increase was due to the implementation of the new accounting standard discussed above. On an operational basis, Entergy Nuclear earned 16 cents per share in first quarter 2003, compared to 18 cents per share in first quarter 2002. The decrease was due primarily to the impact of refueling outage expense. Three refueling outages were completed in fourth quarter 2002, but there were no refueling outages during fourth quarter 2001. As a result, outage amortization expense recorded in first quarter 2003 increased significantly compared to the same period one year ago.
Energy Commodity Services, which includes earnings contributions from Entergy-Koch, LP and Entergy's non-nuclear wholesale assets, reported earnings of 41 cents per share in first quarter 2003, compared to a loss of 96 cents per share in the same period last year. The improvement quarter over quarter is due primarily to strong earnings in trading and the absence in 2003 of charges recorded in first quarter 2002 in connection with Entergy's decision to exit the greenfield power development business.
Operational earnings in first quarter 2003 were 41 cents per share, compared to 20 cents per share in the same period of 2002 as a result of substantially higher earnings at Entergy-Koch Trading, a subsidiary of Entergy-Koch, LP. The strong trading results were driven by high gas volatility during first quarter 2003 and a well-executed strategy developed through Entergy-Koch Trading's point of view analyses. The improved trading earnings were partially offset by lower income realized at Entergy-Koch's gas transportation subsidiary, Gulf South Pipeline. The reduced pipeline and storage earnings reflect reduced levels of gas throughput during first quarter 2003 compared to the prior year. The income sharing mechanisms that are part of the Entergy-Koch partnership agreement allocated substantially all of the partnership's income to Entergy in the first quarter of 2003.
Parent & Other
Parent & Other recorded a loss of 1 cent per share in both as reported and operational earnings, compared with a loss of 3 cents per share in first quarter 2002. The reduced loss quarter to quarter was achieved in spite of higher interest expense incurred during first quarter 2003.
Outlook
"We are off to a very solid start in 2003," saidC. John Wilder, Entergy's chief financial officer. "The challenges ahead are significant but we are confident that the financial stability we've worked so diligently to establish provides the foundation we need to continue to deliver results. The strong earnings achieved this quarter represent an important first step as we work toward fulfilling our 2003 earnings guidance of $3.75 to $3.95 per share."
Entergy Corporation is an integrated energy company engaged primarily in electric power production, retail distribution operations, energy marketing and trading, and gas transportation. 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 2.6 million utility customers in Arkansas, Louisiana, Mississippi, and Texas. Through Entergy-Koch, LP, it is a leading provider of wholesale energy marketing and trading services, as well as an operator of natural gas pipeline and storage facilities. Entergy has annual revenues of over $8 billion and more than 15,000 employees.
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Entergy's online address iswww.entergy.com
The following constitutes a "Safe Harbor" statement under the Private Securities Litigation Reform Act of 1995: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 the Private Securities Litigation Reform Act of 1995. Although Entergy believes that these forward-looking statements and the underlying assumptions are reasonable, it cannot provide assurance that they will prove correct. Forward-looking statements involve a number of risks and uncertainties, and there are factors that could cause actual results to differ materially from those expressed or implied in the statements. Some of those factors include, but are not limited to: resolution of pending and future rate cases and negotiations, including the Entergy New Orleans rate case and various performance-based rate discussions, and other regulatory decisions, including those related to Entergy's utility supply plan, Entergy's ability to reduce its operation and maintenance costs, particularly at its Non-Utility Nuclear generating facilities including the uncertainty of negotiations with unions to agree to such reductions, the performance of Entergy's generating plants, and particularly the capacity factor at its nuclear generating facilities, prices for power generated by Entergy's unregulated generating facilities - particularly the ability to extend or replace the existing power purchase agreements for the Non-Utility Nuclear plants - and the prices and availability of power Entergy must purchase for its utility customers, Entergy's ability to develop and execute on a point of view regarding prices of electricity, natural gas, and other energy-related commodities, Entergy-Koch's profitability in trading electricity, natural gas, and other energy-related commodities, changes in the number of participants in the energy trading market, and in their creditworthiness and risk profile, changes in the financial markets, particularly those affecting the availability of capital and Entergy's ability to refinance existing debt and to fund investments and acquisitions, actions of rating agencies, including changes in the ratings of debt and preferred stock, changes in inflation and interest rates, Entergy's ability to purchase and sell assets at attractive prices and on other attractive terms, volatility and changes in markets for electricity, natural gas, and other energy-related commodities, changes in utility regulation, including the beginning or end of retail and wholesale competition, the ability to recover net utility assets and other potential stranded costs, and the establishment of SeTrans or another regional transmission organization, changes in regulation of nuclear generating facilities and nuclear materials and fuel, including possible shutdown of Indian Point or other nuclear generating facilities, changes in environmental, tax, and other laws, including requirements for reduced emissions of sulfur, nitrogen, carbon, and other substances, the economic climate, and particularly growth in Entergy's service territory, variations in weather, hurricanes, and other disasters, advances in technology, the potential impacts of threatened or actual terrorism and war, the success of Entergy's strategies to reduce taxes, the effects of litigation, changes in accounting standards, changes in corporate governance and securities law requirements and Entergy's ability to attract and retain talented management and directors.
This earnings release includes non-GAAP measures when describing Entergy's results of operations and financial performance. We have prepared a reconciliation of each of these measures to the most directly comparable GAAP measure in Entergy's investor release which is posted on our website atwww.entergy.com/earnings.
Entergy
639 Loyola Avenue
New Orleans, LA 70113
ENTERGY CORPORATION
Earnings at a glance
First Quarter 2003 2002 %
Operating Revenues $2,037.72 $1,860.83 9.5
As Reported Earnings (Loss) $ 395.01 $ (78.92) 600.5
As Reported Earnings (Loss)
per diluted share* $ 1.73 $ (0.36) 580.6
Operational Earnings per
diluted share $ 1.12 $ 0.80 40.0
*Includes Special Items (EPS):
SFAS 143 Implementation $ 0.61 $ -
Asset impairments - (0.45)
Turbine commitments - (0.62)
Development costs - (0.09)
------ -------
Total $ 0.61 $(1.16)
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Note - dollars in millions except per share amounts, which are
actual.
Entergy Corporation
Consolidated Income Statement
Three Months Ended March 31
(in thousands)
2003 2002 % Inc/(Dec)
(unaudited)
Operating Revenues:
Domestic electric $1,601,738 $1,401,009 14.3
Natural gas 80,238 46,377 73.0
Competitive businesses 355,747 413,448 (14.0)
---------- ----------
Total 2,037,723 1,860,834 9.5
---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses,
and gas purchased for resale 388,040 468,861 (17.2)
Purchased power 368,699 169,486 117.5
Nuclear refueling outage expenses 38,892 25,187 54.4
Provision for turbine commitments, asset impairments,
and restructuring charges (7,743) 401,373 -
Other operation and maintenance 524,898 524,352 0.1
Decommissioning 37,498 18,188 106.2
Taxes other than income taxes 97,737 102,370 (4.5)
Depreciation and amortization 211,046 205,124 2.9
Other regulatory charges (credits) - net 15,253 1,563 875.9
---------- ----------
Total 1,674,320 1,916,504 (12.6)
---------- ----------
Operating Income (Loss) 363,403 (55,670) 752.8
---------- ----------
Other Income (Deductions):
Allowance for equity funds used during
construction 7,286 6,682 9.0
Gain (loss) on sales of assets - net 301 665 (54.7)
Interest and dividend income 29,824 23,525 26.8
Equity in earnings of unconsolidated equity affiliates 128,061 67,244 90.4
Miscellaneous - net 11,315 (3,251) 448.0
---------- ----------
Total 176,787 94,865 86.4
---------- ----------
Interest and Other Charges:
Interest on long-term debt 117,737 123,527 (4.7)
Other interest - net 13,044 15,478 (15.7)
Dividends on preferred securities of subsidiaries 4,709 4,709 -
Allowance for borrowed funds used during
construction (5,719) (5,638) 1.4
---------- ----------
Total 129,771 138,076 (6.0)
---------- ----------
Income (Loss) Before Income Taxes and Cumulative
Effect of Accounting Changes 410,419 (98,881) 515.1
Income Taxes 152,418 (25,898) 688.5
---------- ----------
Income (Loss) Before Cumulative Effect of an Accounting Changes 258,001 (72,983) 453.5
Cumulative Effect of an Accounting Changes (net of income taxes) 142,922 - -
---------- ----------
Consolidated Net Income (Loss) 400,923 (72,983) 649.3
Preferred dividend requirements of subsidiaries and other 5,916 5,940 (0.4)
---------- ----------
Earnings (Loss) Applicable to Common Stock $395,007 ($78,923) 600.5
========== ==========
Earnings (Loss) Per Average Common Share:
Basic $1.77 ($0.36) 591.7
Diluted $1.73 ($0.36) 580.6
Average Number of Common Shares Outstanding:
Basic 223,673,332 221,943,451
Diluted 228,230,756 221,943,451
Entergy Corporation
Consolidated Income Statement
Twelve Months Ended March 31
(in thousands)
2003 2002 % Inc/(Dec)
(unaudited)
Operating Revenues:
Domestic electric $6,847,144 $6,773,291 1.1
Natural gas 159,213 121,895 30.6
Competitive businesses 1,475,567 1,934,121 (23.7)
---------- ----------
Total 8,481,924 8,829,307 (3.9)
---------- ----------
Operating Expenses:
Operation and maintenance:
Fuel, fuel-related expenses,
and gas purchased for resale 2,073,775 3,024,647 (31.4)
Purchased power 1,031,546 827,040 24.7
Nuclear refueling outage expenses 119,298 97,125 22.8
Provision for turbine commitments, asset impairments,
and restructuring charges 19,340 401,373 (95.2)
Other operation and maintenance 2,488,658 2,205,633 12.8
Decommissioning 95,726 32,850 191.4
Taxes other than income taxes 375,830 399,756 (6.0)
Depreciation and amortization 845,102 723,080 16.9
Other regulatory charges (credits) - net (128,146) (18,558) 590.5
---------- ----------
Total 6,921,129 7,692,946 (10.0)
---------- ----------
Operating Income 1,560,795 1,136,361 37.4
---------- ----------
Other Income (Deductions):
Allowance for equity funds used during
construction 32,263 27,948 15.4
Gain (loss) on sales of assets - net 6,248 5,303 17.8
Interest and dividend income 124,623 135,854 (8.3)
Equity in earnings of unconsolidated equity affiliates 244,695 203,910 20.0
Miscellaneous - net 21,845 (14,785) 247.8
---------- ----------
Total 429,674 358,230 19.9
---------- ----------
Interest and Other Charges:
Interest on long-term debt 501,813 539,476 (7.0)
Other interest - net 68,126 144,829 (53.0)
Dividends on preferred securities of subsidiaries 18,838 18,838 -
Allowance for borrowed funds used during
construction (24,618) (23,120) 6.5
---------- ----------
Total 564,159 680,023 (17.0)
---------- ----------
Income (Loss) Before Income Taxes and Cumulative
Effect of Accounting Changes 1,426,310 814,568 75.1
Income Taxes 472,253 321,367 47.0
---------- ----------
Income Before Cumulative Effect of an Accounting Changes 954,057 493,201 93.4
Cumulative Effect of an Accounting Changes (net of income taxes) 142,922 23,482 508.6
---------- ----------
Consolidated Net Income 1,096,979 516,683 112.3
Preferred dividend requirements of subsidiaries and other 23,688 23,536 0.6
---------- ----------
Earnings Applicable to Common Stock $1,073,291 $493,147 117.6
========== ==========
Earnings Per Average Common Share:
Basic $4.80 $2.23 115.2
Diluted $4.71 $2.19 115.1
Average Number of Common Shares Outstanding:
Basic 223,473,977 221,443,909
Diluted 227,776,645 225,245,641
Entergy Corporation
U.S. Utility Electric Energy Sales & Customers
Three Months Ended March
2003 2002 %
(Millions of kwh)
Electric Energy Sales:
Residential 7,843 7,274 7.8
Commercial 5,822 5,598 4.0
Governmental 633 617 2.6
Industrial 9,324 9,590 (2.8)
------- -------
Total to Ultimate Customers 23,622 23,079 2.4
Wholesale 2,513 2,181 15.2
------- -------
Total Sales 26,135 25,260 3.5
======= =======
Twelve Months Ended March
2003 2002 %
(Millions of kwh)
Electric Energy Sales:
Residential 33,151 30,817 7.6
Commercial 25,577 24,730 3.4
Governmental 2,694 2,596 3.8
Industrial 40,752 40,885 (0.3)
------- -------
Total to Ultimate Customers 102,174 99,028 3.2
Wholesale 10,160 8,628 17.8
------- -------
Total Sales 112,334 107,656 4.3
======= =======
March
2003 2002 %
Electric Customers (Year to date average):
Residential 2,243,165 2,228,532 0.7
Commercial 303,920 299,585 1.4
Governmental 15,266 14,892 2.5
Industrial 38,906 38,319 1.5
--------- ---------
Total to Ultimate Customers 2,601,257 2,581,328 0.8
Wholesale 42 36 16.7
--------- ---------
Total Customers 2,601,299 2,581,364 0.8
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